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The most enduring cliché in financial circles is that markets hate uncertainty.
It's just not clear the opposite actually exists.
On Sunday, investors were served the latest dose of politically charged uncertainty when President Joe Biden announced plans to drop out of the presidential election as concerns grew over his age and ability to serve a second term.
Biden also announced his endorsement of Vice President Kamala Harris to take his place at the top of the Democratic ticket. But Biden's unprecedented departure from the race will set off a mad scramble for the incumbent party just over three months out from Election Day.
Stocks traded higher on Monday. Several strategists in our inbox on Monday suggested this announcement would lead to increased volatility in markets.
But at least one strategist Yahoo Finance heard from suggested that this, perhaps, was the outcome many investors had been seeking for some time.
In a note to clients on Monday, RBC's head of US equity strategy Lori Calvasina wrote, "As we reflect on Sunday’s announcement, the main thing we’ve been remembering is how so many of the US-based investors we’ve spoken with this year seemed to want different candidates."
In other words, Sunday's announcement — however surprising and discombobulating given the timing, the rollout, and so on — is what many investors had not only expected but wanted.
Which obviates that all investors really have to work with is uncertainty. Stocks don't trade in response to realized corporate results but on anticipated outcomes. Positive or negative stock reactions to an earnings report are about the future, not the past. Even when a company doesn't offer formal guidance.
Elsewhere in her note, Calvasina wrote that the discomfort felt while discussing the election with US clients has been similar to what "one might feel by staring at the sun for too long."
Uncertainty, then, was not a fear but a desire for these folks.
And the opposite proved more painful anyway.
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