This week started out with an early example of how much the markets will dictated by US elections. With news that the FBI stood by its previous decision to not charge Hillary Clinton over her E-Mails, markets have spike considerably. The Dollar has also gained some ground. This goes to show the amount of volatility that will be seen in the next couple of days, not to mention after the results of the election.
The results of the election could move markets significantly, especially with a Republican win of Donald Trump. This will be due to the uncertainty that a Trump presidency will bring, look at the reaction of the Mexican Peso as a clear example of market participants ebbing and flowing around this prospects. But more importantly is to look longer term, into the next year, where the markets have not been too busy to look. There will no doubt be winners and losers in the immediate aftermath of the election, but how does the next year look in terms of global growth, politics in Europe and Japan, and Debt concerns in China.
The election could change the market paradigm, but if we get the status quo, markets will look to a new paradigm. Many pundits and hedge fund managers are talking about the valuations of the market being too high or having room to grow. The reality of the market's current valuation will be judged from the view of the landscape after the fog of the election is gone.