Citigroup say that with just eight days left until election night, the chances of a Donald Trump presidency are rising—and investors should brace for even more surprises ahead.
The FBI's investigation of potentially new emails related to Democratic presidential candidate Hillary Clinton's use of a private email server rocked markets, sending stocks and the peso down, and gold up. The emails reportedly came from a device owned by disgraced former congressman Anthony Weiner.
According to the team of analysts led by Tina Fordham, the event could have a meaningful impact on the presidential race And the news is likely just the beginning of more, potentially game changing news that could move economic indicators.
"We continue to emphasize the potential for more Black Swan events emerging making things more complicated for forecasters and pollsters," the team wrote.
Other Wall Street and political commentators have also added that the two candidates, who have been under public scrutiny even before the elections, are likely to bring out all the dirt they have on each other in the eleventh hour in a bid to sway their voters.
That means that investors should hold their breath for "revelations" on the scale of Trump's 2005 tapes (in which he talks about women in a vulgar manner), or John Podesta's leaked emails, as markets continue to react to the shifting odds of a Clinton, or Trump win.
Either way, the team noted, nobody wins in the long run, regardless of who takes the election.
We also restate our view that the tenor of this campaign and heightened polarization does not bode well for governance, regardless of who wins the election. The FBI announcement could increase the risk that if Trump loses he does not accept the result, as he has threatened. If a Clinton victory transpires and she presides over a Republican-controlled or divided Congress, the risk of continuous investigations and future impeachment risk is non-negligible.
The team reduced their odds of a Clinton win to 75% from 81%.