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Market Expert: Ginsburg Vacancy 'Enhances Already Toxic Environment'

Market Expert: Ginsburg Vacancy 'Enhances Already Toxic Environment'
Justice Ruth Bader Ginsburg (J. Scott Applewhite/AP)

By    |   Monday, 21 September 2020 09:25 AM

One financial expert warns that the loss of U.S. Supreme Court Justice Ruth Bader Ginsburg, who died on Friday at age 87, adds to the political venom as global stock markets already navigate volatility amid the ongoing coronavirus pandemic.

The Dow was set to drop 500 points at the open on Monday as concerns about fresh coronavirus-driven lockdowns and the inability of Congress to agree on more fiscal stimulus raised fears about another hit to the domestic economy.

“Politically, her passing enhances an already toxic environment,” says David Bahnsen, a financial adviser in California, though he adds that it’s too soon to predict the market impact, Barron’s reported.

Another round of business restrictions would threaten a nascent recovery in the wider economy, analysts said, and could spark a flight from equities. The first round of lockdowns in March had led the benchmark S&P 500 to suffer its worst monthly decline since the global financial crisis, Reuters explained.

The index has since rebounded, thanks to historic global stimulus, but is on track to halt a five-month winning streak as investors dump heavyweight technology-related stocks.

Thomas Mantione, managing director at UBS Private Wealth Management in Stamford, Connecticut, said the passing of U.S. Supreme Court Justice Ruth Bader Ginsburg also decreases the chances of another fiscal stimulus package to help lift the domestic economy from a deep recession.

"You've now put yet another negotiating factor into that fiscal stimulus policy response, which makes it even less likely to pass before the November election," Mantione said.

Congress has for weeks remained deadlocked over the size and shape of a fifth coronavirus-response bill, on top of the approximately $3 trillion already enacted into law.

Keith Lerner, chief market strategist for SunTrust Advisory Services, says the Court vacancy doesn’t change the market’s underlying narratives. “The forces that have fueled the rally and lately caused stocks to wobble—including Fed policy and the impact of Big Tech on the S&P 500—remain intact. But Lerner also sees more potential for volatility to persist after election day,” Barron’s explained.

“This adds more fuel to a very high pressure, high-emotion election, but it’s not a game changer by itself for market impact,” he says.

One Wall Street strategist contacted by Barron’s said that it was too soon to say how the markets would react to the upheaval over the court vacancy.

“I hosted a poker game last night and you could drive a truck through the debate—whether it would be better for Biden or Trump,” the strategist said. “Markets were volatile and consolidating over the last two weeks. The elections increase uncertainty and this is another issue that the market has to grapple with.”

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One financial expert warns that the loss of U.S. Supreme Court Justice Ruth Bader Ginsburg, who died on Friday at age 87, adds to the political venom as global stock markets already navigate volatility amid the ongoing coronavirus pandemic.
ginsburg, vacancy, stock, markets, financial
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2020-25-21
Monday, 21 September 2020 09:25 AM
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