Trader action on Monday would have shown a preference for Harris over Trump.
On social media, users joke that there is a “reverse Cramer effect.”
As the elections in the United States develop, predictions about who could occupy the White House have not been long in coming.
One of the analysts in the American financial field, Jim Cramer, from CNBC, has released a prediction: the market—in your opinion— seems to anticipate a victory for current Vice President Kamala Harris about former President Donald Trump.
Cramer bases his analysis on recent market movements, which he says reflect investors’ perceptions of the possibility of a Harris presidency.
During his Mad Money show, he noted, “I’m not sure the market is right about what a Harris presidency would mean for businesses, but at least now we have a model of what Wall Street thinks it will mean.”
For example, he mentions the rebound in the construction sector represented by the shares of Toll Brothers, Inc., a luxury home construction company. Shares skyrocketed from $146 in the morning to $151 at the time of writing.
Among other sectors that would benefit, Cramer mentioned those companies dependent on imports, which could experience a recovery under expectation of a more moderate trade stance from Harris.
In contrast, former President Trump has promised apply extensive tariffs which, depending on the market, could affect multiple industries.
Furthermore, Cramer explained that operators try to anticipate election results and look for signs of insider information.
However, his prediction is called into question, since Cramer has been characterized by making predictions that generally end up being completely opposite..
A sample of these failed forecasts emerged in early October 2023 when said that he was not interested in investing in cryptocurrencies because “Mr. Bitcoin” was “about to fall.”
The truth is that, during that same month, bitcoin went from $27,000 to $34,000, as can be seen in the following graph. TradingView.
Then, 5 months later, the digital currency hit a new all-time high when it hit $73,800, boosted by spot bitcoin ETFs. For this reason, many consider Cramer’s analyzes to be a “reverse indicator.”
For several years now, Cramer has also been responsible for criticizing bitcoin. In 2021 he came to say that bitcoin had structural problems.
What Cramer said has sparked ridicule on social networks such as suggesting that his prediction could instead indicate a Trump victory.
Polls in favor of Kamala Harris
For Cramer, the market’s optimism towards Harris is reinforced by surveys like the one by Des Moines Register/Mediacom Iowawhere Harris leads Trump 47% to 44%.
This result was surprising, since Iowa has traditionally leaned toward Republican candidateshaving last endorsed a Democrat in 2012, with Barack Obama.
However, the race remains very close. According to the site FiveThirtyEightwhich analyzes large-scale statistical data, Harris leads national polls with 48%while Trump is very close with 46%.
These percentages reflect the complexity of the electoral scenario and suggest competition that could extend until after election day.
A call for caution due to possible volatility in the market
Despite the market’s apparent favoritism toward Harris, according to Cramer, Neuberger Berman, a well-known investment management firm, has advised caution against the possibility of strong volatility.
The company warned that it would be risky to make premature portfolio adjustments based on survey resultswhich show a close difference. For them, investors should be prepared for volatility rather than trading based on polls.
The firm also believes that, in the weeks following the elections, there could be opportunities to take tactical positionsonce the result is clear.
“It is important to take into account what is already priced in the markets and, above all, stay anchored in the long-term dynamics that will survive the political noise.”
Neuberger Berman, investment management firm.
In addition, Neuberger Berman highlighted that prediction platforms have leaned towards a victory for Donald Trump. An example is Polymarket, a decentralized platform where users bet on future events, as reported by CriptoNoticias.
There reflects an inclination towards a Trump victory, with a 62% probability over Harris’ 37%, as seen in the following image.
This apparent contradiction in market perceptions and surveys highlights the uncertainty and possibility that the outcome not known until several days after the electionsor even longer, says a report from the firm.
With a considerable margin of error in both national and state polls, Neuberger Berman warns that divided government could emerge, and uncertainty over control of Congress — especially the House of Representatives — could prolong volatility in the markets.
In this sense, advise avoiding active positions inclined towards one result or anotherwith the exception of assets that can diversify portfolios, such as gold and other commodities.