CICC strategy: possible scenarios and influence deduction after Trumps diagnosis

category:Finance
 CICC strategy: possible scenarios and influence deduction after Trumps diagnosis


Analysts pointed out that the existing information is not enough to help us make an accurate judgment, and there is a possibility that the final result will not have much impact on the election and the market in retrospect; but it is certain that this will further increase the uncertainty of the path, that is, the increase of volatility or the odds ratio of different situations. If the current diagnosis is correct, analysts will deduce the future evolution for investors reference.

In addition, trump will have intensive campaign rallies in the next few days, focusing on several key swing states, such as Florida, Wisconsin, Arizona and so on, which will not be held normally. Given that trump is still lagging behind in national polls, especially in the key swing states mentioned above, the isolation will inevitably have an impact on the campaign and even the election.

2) But if the symptoms are serious, the recovery time is long, the presidential functions can not be performed in a short period of time, or even affect the final election ability, it will bring greater and longer-term uncertainty.

On the whole, the severity of the second round of the epidemic in the United States and Europe is much lower than that in the first round from March to April. The proportion of new deaths in the newly diagnosed cases is only 2% or even lower, far lower than the peak of 8-9% in the peak period from March to April. This is related to the fact that the majority of infected people in the second wave of epidemic are young people, which may also indicate that the toxicity of the new outbreak is gradually decreasing. However, the effect of new coronavirus on the elderly will be nonlinear amplification. According to the CDC research statistics of the United States Centers for Disease Control and prevention, the hospitalization rate of the elderly aged 65-74 is five times that of the young people aged 18-29, and the mortality rate is as high as 90 times; if it is the elderly aged 75-84, the hospitalization rate and mortality rate will rise to 8 times and 220 times. In fact, eight out of every 10 deaths in the United States are over 65 years old.

So in the next two weeks, the severity of Trumps illness and the speed of recovery will be key. If the patient is seriously ill and temporarily incapacitated (referring to British Prime Minister Johnson once entered the ICU), according to the 25th amendment of the constitution, it may be necessary to temporarily transfer the presidential power to Vice President burns and recover after recovery (since the 25th amendment came into effect in 1967, there have been only three times, one for Reagan and two times for George W. Bush) Colonoscopy temporarily transfers power). But it is more critical. However, if the patient is seriously ill and cant recover from the election day, it may affect the voters confidence in whether their physical condition can smoothly assume the functions of president, and then affect the election. After all, this time point is too close.

In more extreme cases, if it is too serious to continue to run for election, how the candidates decide will bring more variables to the general election and policy prospects.

Whether Biden, the Democratic presidential candidate, will also be diagnosed in the next few days deserves close attention. Given that the first round of presidential debate just ended two days ago, Bidens test results will be particularly critical after Trumps diagnosis. If the same diagnosis is made, the prospect of the election may be more uncertain. However, according to media reports, vice president burns test results were negative.

1) Or it will slow down the process of resuming work which is currently being re promoted. In the United States, after the second round of epidemic situation gradually eased in early August, some States gradually started the process of returning to work again. However, the presidents diagnosis will have a negative impact on the overall promotion of work resumption and psychological emotions, not to mention that trump has always been a supporter of actively promoting the resumption of work, which will not exclude a certain drag on the short-term economic recovery and data;

2) The further increase of election uncertainty may make the market continue the current volatile pattern, and investors may also take a wait-and-see attitude, and even turn to defense and risk aversion in stages. In the October rush period of a normal election year, the market tends to weaken, not to mention the potential so-called October surprise. For example, in the 2016 FBI survey on Hillary Clintons mailgate, the US stock market remained weak from September until the election vote in early November. The emergence of the current situation has increased the variables and uncertainty of the future. Of course, it is possible that in the end, it will not have a great impact in the end, but the short-term certainty may suppress the mood.

3) Whether it is possible to become a catalyst for the financial policy to break the situation. At present, the second round of fiscal stimulus in the United States is still in deadlock. The Democratic led house of Representatives has just passed a new $2.2 trillion stimulus package. However, it is expected that there may still be resistance in the Republican controlled Senate. After October 3, the two houses of Congress will not be working at the same time for about a month. Whether the risk and pressure caused by the presidents diagnosis of infection will, to a certain extent, become a catalyst to break the current deadlock and deal with the current dilemma, which deserves our attention. If it can be passed, it will provide some support to the market.

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