Inertia and indecision to decide the outcome.
The spectre of President Trump is looming larger than ever with investors certainly taking risk off the table - or at least holding fire until the outcome of Tuesday's vote is known, next Wednesday (AEST).
What seemed unthinkable until recently to those outside the Trump camp is now a distinct possibility, but this is going to be difficult to predict and according to the polls, will go down to the wire. There is no doubt that like the recent Brexit vote, it will be the voters who DON'T vote who will decide the outcome of who sits in the White House for the next four years.
As bizarre as this might seem in a country with compulsory voting such as Australia, there is no doubt that Americans, and probably the British, who think a system whereby an upper house candidate can do secret deals and thus, in spite of only achieving a minute vote in percentage terms, hold sway over the government of the day, is equally crazy. Or that the State with the smallest population has the same representation in the Senate as the largest.
And while on politics and Brexit, an interesting dilemma has emerged for British MP's, with the High Court ruling overnight that any decision to invoke Article 50 to leave the EU must be made in Parliament. Should each MP follow the outcome of a national referendum, where less than 40% of the eligible population voted to leave? Or should they abide by the wishes of the voters of their own constituency, who elected them in the first place, the majority of whom may have voted to stay?
Meanwhile to markets: Trump as Commander-in-Chief would undoubtedly un-nerve markets if for no other reason than it will invoke change, uncertainty, and a fear of the unknown. A second President Clinton (back) in the Oval Office will unnerve investors based on higher taxes, and a Democrat who according to many, (including the Russians who have reportedly been behind her hacked email account) has a dubious past.
Hence risk off.
Meanwhile October fund performances have yet to emerge, but with the ASX falling 2.15% over the month for a 12 month return of 6.1% there is likely to be the usual range.
FUND REVIEWS released this week: Insync Global Titans Fund
And on that note, have a great weekend.
Regards,
Chris
CEO, AUSTRALIAN FUND MONITORS
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