President Trump and the First Lady both confirmed this past week that they contracted the COVID-19. Their diagnosis left investors with a strong sense of uncertainty.
If there is one thing the markets do not like, it’s uncertainty—about the upcoming election, the health of the economy (no pun intended), and pretty much everything else in between.
It is not out of the realm of possibility that we could see more cases close to Trump and the White House. Even those staff members who’ve tested negative since the President’s disclosure could still be diagnosed with the virus in the coming days since the incubation period is up to 14 days.
While this might seem to be the perfect twist in the TV Drama this 2020, and it might seem like we are pushing forward without any history to learn from, that’s actually not entirely true. We have seen many Presidents get sick (not necessarily from COVID-19 or even this close to an election) and worse, yet we have still managed as a country to pull through rather successfully.
As for the economy and markets, this has not always been the case. Of course, a sick President in his 70s is not good. This is especially the case when Trump is a male in his 70s and overweight for his age putting him at a higher risk of experiencing worse symptoms.
In general, the disease has affected people very differently too as if things couldn’t get more unsettling. Over 7 million Americans were infected with COVID-19 and many of them are experiencing “long symptoms”. These include shortness of breath, blood clots, kidney damage, and foggy thinking. There are also a lot of neurological symptoms, which are of course very scary to consider in the case of Trump who in theory might be the most powerful person in the world right now as the U.S. President.
To be fair, this would also be the case for former Vice President and Democratic nominee Joe Biden if he were to win the election and then contract the disease. Honestly, this adds even one more level of uncertainty to consider. Not only does our current President have the disease, but his opponent and potential winner of the race is also at high-risk. Meaning, regardless of the outcome of the election, our presidential situation is a very risky one from a health perspective.
So what does this mean for us? First, Trump may have a mild case and recover very quickly. Obviously, his campaign will still be impacted. The President had to cancel some rallies, which have been his preferred method for bringing his platform to the public. This may actually work in his favor. Greg Valliere, the chief U.S. policy strategist of AGF Investments, said, “When Reagan was shot, he handled it with humor and he got sympathy from the public, and it helped him. So this could ironically be a plus for Trump.”
But I think, most importantly the nation and investors, in particular, were slapped in the face with a hard truth. There isn’t anything certain about what is going to happen within the upcoming months. In less than a month, we will be choosing between two candidates to determine who will be our President for the next four years, both of whom are at high risk for experiencing the worst-case scenario upon contracting the disease. This is the person directly responsible for our economy, markets, policies that affect both, as well as our business relationships with the rest of the world. It’s very unsettling to think that we can’t escape the fact either of the presidential candidates, regardless of the outcome, may not be healthy enough to perform his duty.
We have been through Presidents having serious health problems. George Washington had a number of serious health issues. Eisenhower had a heart attack in his first term and a stroke in his second. If President Trump becomes very sick (or potentially Biden if he wins the election), it’s possible he or his team would invoke the 25th Amendment which in part stipulates a temporary transfer of power to a vice president. Presidents Reagan and W. Bush did in 1985, and in 2002 and 2007 respectively before colonoscopies (for those of you who follow that kind of thing.)
The bottom line is that we have always recovered economically from these types of events. But it certainly explains why markets did not perform well last week and why we may continue to see poor performance throughout the duration of 2020. Hopefully, with a new year, we will also have a new sense of certainty with the world we are living in.
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