With key policies on trade, tariffs, and taxation hanging in the balance, investors worldwide are closely watching the upcoming U.S. presidential election.

In a time of global economic uncertainty, this episode of Smart Advice explores the potential impact of different election outcomes. Featuring Michael Sager, Managing Director and Head of Multi-Asset and Currency Management at CIBC Asset Management.

Whether you're a seasoned investor or just getting started, understanding these dynamics can help you navigate volatility and make informed decisions for long-term financial growth. Tune in for Michael’s analysis and insights on how the election might shape your investment strategy in the months ahead.

Three reasons you should listen to this episode:

1. Learn how the upcoming U.S. presidential election could impact global financial markets and what that means for your investments.
2. Discover the key differences in Kamala Harris and Donald Trump’s economic policies.
3. Understand how to stay focused on long-term investment goals amidst election-related market volatility.

Resources

• Michael Sager - LinkedIn
• CIBC Asset Management Insights Hub - Website
• Visit CIBC for more Smart Advice

Episode Highlights

[00:22 ] U.S. Election Market Outlook

• The U.S. is Canada's biggest trade partner; any changes in the U.S. economy affect Canada’s too.
• Pre-election market volatility fluctuates due to uncertainty and the short-term rally post-election, which depends on the election outcome.
• The three notable possibilities are a Republican sweep, Democratic sweep, or a divided government on market activity.
• A sweep enables more policy initiatives, which can have a significant impact on economic outcomes and markets.

[3:25 ] Michael: “Having a sweep of either for the Republicans or the Democrats enables more policy initiatives, which of course have the potential to have a much bigger impact upon economic outcomes and therefore the markets”

[04:32 ] Historical Context and Market Implications

• Michael looks back at historical data since 1928, showing no significant difference in market performance between election and non-election years.
• Canadian citizens should see the long-term drivers of markets, such as economic growth, inflation, Fed policy, and technological innovation.
• The conversation highlights the potential for a divided government to limit substantive policy changes.
• Looking at the bigger implications for markets and economies is just as critical as seeing the immediate effects.

[06:08 ] Economic Impact of U.S. Trade Policies on Canada

• Michael clarifies that both administrations have used tariffs to restrict the economic growth and technological development of China.

[07:17 ] Michael: “Both administrations, there's a commonality. There's not too many things they agree on, but one of them is that they need to restrict the economic growth, development, and technological development of the Chinese economy.”

• The Trump administration has been more aggressive with tariffs, but the Biden-Harris administration has not rolled back these tariffs.
• The potential impact of the U.S. elections on global trade partners like Canada and Europe is far-reaching, depending on who takes the presidency.

[09:44 ] Tariffs, Deregulation, and Taxes

• Tariffs decrease growth and more inflation, which are negative for equities. They lead to higher interest rates than would have occurred without the increase in tariffs.
• There are significant differences in deregulation policies between Trump and Harris, with Trump supporting deregulation in sectors like energy and finance.

[15:10 ] Michael: “The overall impact of all of these competing policies is likely to be relatively small, and to some extent it depends on the sequencing of the policy as to what the outcome for growth, for inflation, for equities, for rates, what that looks like through time.”

• The economic impact of their policies varies. Deregulation is generally positive for growth; regulation has more nuance behind it.
• Michael explains that a Trump administration would renew all tax cuts and possibly implement additional fiscal stimulus.
• Conversely, Harris seems committed to renewing tax cuts for those earning less than $400,000 and introducing tax increases for the wealthy.

[19:37 ] Key Takeaways for Investors

[20:39 ] Michael: “The best course of action is to look through that uncertainty, figure out long term investment goals and stay focused on those and stay invested again.”

• Michael advises staying invested and focusing on long-term goals, emphasizing that long-term investment goals should guide decision-making.
• Other factors like economic growth, inflation, and central bank policy have a greater long-term impact on portfolio performance.
• Michael encourages investors to stay invested and focused on their long-term goals despite the market uncertainty.

About Michael

Michael Sager is the Managing Director and Head of Multi-Asset and Currency Management at CIBC Asset Management.  He is an experienced financial expert with a rich background in portfolio management and economic research from prestigious institutions like Wellington Management, JP Morgan Asset Management, the European Central Bank, and the Bank of England. Michael brings deep insights into global markets. He holds a PhD in Economics from the University of Warwick and a Master's degree in Economics from the University of London.

Michael’s work is focused on helping investors navigate complex financial landscapes by providing clear, actionable advice on asset management, currency strategies, and market outlooks. His expertise in understanding how political shifts, such as U.S. election outcomes, have an economic impact on global markets makes him a trusted voice in guiding individuals and institutions through uncertain times.

Connect with Michael Sager on LinkedIn.

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