Attempted assassination of presidential candidate Donald Trump

Audio update: Attempted assassination of presidential candidate Donald Trump (3:14)
The attack has added complexity to an already tumultuous election season (recorded early 15 July).

What happened?
On Saturday evening, former US President Donald Trump was wounded in an assassination attempt during a campaign rally. A bystander was killed, and two others were critically wounded. The assailant was shot dead by security services.

The Trump campaign team said the former president is “fine,” and pictures showed him raising a fist to supporters as he was being escorted away after the attack. President Joe Biden said that he was “grateful to hear that he’s safe and doing well” and that “everybody must condemn” the violence. The assailant was identified, though his motives are still unclear.

What's the context?
The attempted assassination comes at a highly charged moment in US politics, with the campaign marked by intense rhetoric, significant media coverage, and a divided electorate. The shooting took place just over two weeks after the first televised debate between the two candidates, which led to an increase in the polling lead for former President Trump.

Assassination attempts on US presidents or candidates are unfortunately not uncommon in US history. Four sitting presidents and one candidate have been assassinated since the founding of the republic. In 1981, Ronald Reagan was the most recent sitting president to be wounded in an assassination attempt.

What are the implications for the election?
In the near term, we expect reduced formal campaign activity as security measures are increased and campaign messaging is reviewed. We note that the Biden campaign has already paused communications. This could lead to more controlled and less accessible campaign events, which would impact voter engagement and campaign dynamics.

A key question will be how the assassination attempt affects swing voter attitudes. President Reagan saw an immediate increase in his popularity following the attempt on his life in 1981, though the bump in support ebbed within three months following the incident.

In the aftermath of the recent Biden/Trump debate, we revised our election scenario probabilities, now ascribing a 45% probability to a “red sweep,” 30% to a Democratic victory with a split Congress, 15% to a Trump victory with a split Congress, and 10% to a “blue sweep.”

For now, with the Republican National Convention set to commence, we leave the aforementioned election scenario probabilities unchanged.

Investment conclusions
The attempted assassination of former President Trump adds a new layer of complexity to an already tumultuous election season. We have said that investors should not make major portfolio swings in response to campaign developments or in anticipation of any particular election result, and that applies in this case too.

Investors looking to navigate the potential for increased market volatility and to reduce exposure to political uncertainty can consider the following strategies:

In equities, we think investors should manage exposure to individual stocks and sectors that could be more at risk in different election outcomes. This includes the consumer discretionary sector, which would likely suffer from higher import tariffs. To manage potential election-related volatility, investors can use defensive structured investment strategies, such as capital preservation or yield-generating approaches for election-sensitive stocks or cyclical sectors like energy, industrials, and financials.

In fixed income, while we like quality bonds, investors should be mindful of potential risks in longer-duration bonds if concerns about the US deficit increase. In currencies and commodities, we like the safe-haven Swiss franc and gold. We also think investors should manage exposures to currencies sensitive to US trade risks, including the Chinese yuan and the Mexican peso.

We will continue to monitor campaign developments closely and will keep you informed about the potential implications for the election and markets at ElectionWatch 2024.