CHARLES SCHWAB‘s Jeffrey Kleintop writes:
A top risk for investors, elections may see a shift from centrist to more populist policy that could slow exports, raise inflation, and increase volatility in the global markets.
In our 2024 Outlook and in our recently published Mid-Year Outlook, we identified elections as a top risk for investors this year, likely bringing the return of volatility from some of the lowest levels measured by the stock market volatility indexes in the U.S. and Europe (VIX and VSTOXX) in decades. Volatility jumped last week in reaction to the decision by French President Macron to call a snap election to be held at the end of June, after his party had disappointing results in the European Parliamentary elections. The move risks an abrupt change in domestic leadership that could worsen France’s already stretched budget deficit. French government bonds sold off and took the banks that own them along for the ride. The volatility could continue with the French election still weeks away and more elections in other countries for investors to consider over the remainder of the year…
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