(A woman walks with an umbrella in the rain past a U.S. flag painted on a building in the Manhattan borough of New York, February 16, 2016.Carlo Allegri/Reuters)
Markets have been a bit wobbly the past couple of weeks.
In fact, the S&P 500 closed down for the ninth-straight day Friday — something that has not happened since December 1980. (However, the actual percentage decline was not enormous.)
Stocks have been punctured as of late by a combination of mixed third-quarter earnings results as well as tightening in polls ahead of Tuesday's election.
And as we get closer to November 8, analysts and economists argue that we could be in for some volatility in the aftermath.
We rounded up several quotes from recent Wall Street research that we received regarding upcoming election:
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Regardless who wins, the US is looking at heightened political risk. "The tenor of this campaign and heightened polarization does not bode well for governance, regardless of who wins the election. Issues such as low trust in institutions, bipartisanship, identity politics and demographic divides will continue to fuel political risk in the US," said Tina Fordham, chief global political analyst at Citi.
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"Prepare for volatility." "What to do with a more uncertain race? Anchor to realpolitik but prepare for volatility," wrote Michael Zezas, chief municipal strategist at Morgan Stanley. "We think this week will be a volatile one, but unlike a month ago, risk assets now reflect a meaningful 'fear' premium."
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What the two candidates might mean for a potential December rate hike. "We believe that were the election to result a Trump victory, the knee jerk-reaction is likely to be a risk off, a flight-to-quality bid in front to intermediate Treasuries, and a steeper 5s30s Treasury curve, especially as the resulting tightening in financial conditions will likely reduce the probability of a Fed hike at the December meeting," wrote Barclays' Rajiv Setia, Anshul Pradhan, and Amrut Nashikkar. "In the case of a Clinton victory, as a knee-jerk reaction, risk assets should perform well and the 5s30s curve should flatten as the probability of a Fed hike at the December meeting should rise."
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Uncertainty might take longer to "dissipate" this time around. "Will the historical pattern of a post-close-election rally hold? We think so, though uncertainty this time may take longer than usual to dissipate," wrote a Deutsche Bank team led by Parag Thatte.
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There's a possibility stocks could see a repeat of what happened after the 2000 election. If Clinton narrowly wins and Trump claims that the election was "rigged," and challenges the result in the courts, then "under those circumstances, the infamous 2000 election suggests that the uncertainty could persist for at least a month and could weigh heavily on the stock market during that time," wrote Paul Ashworth, chief US economist at Capital Economics, adding that a Clinton victory might not necessarily be good for stocks in the long-run.
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Longer-term economic predictions about a Trump victory are difficult given the fact that he is an unknown and unpredictable candidate. "Given the uncertainty surrounding exactly what a Trump presidency would mean for trade and economic policy, we wouldn’t expect to make any immediate changes to our economic forecast," Ashworth wrote. "More generally, over the longer-term, everything (including the direction of stocks, bonds and the dollar) would depend on what sort of president Trump becomes. Unfortunately, even on the eve of the election we have no firm idea of what sort of leader he would be."