@Financial.Velociraptor what is meant by "nt."?
Regarding the question in the title, my answers (guesses) are:
- Trump loses and claims the election was rigged - YES
- Trump wins and Harris files legal challenges - YES
- Trump loses and his voters engage in mass demonstrations - YES
- Trump loses and his voters engage in destructive riots - YES
- Trump loses and his voters found militant/terrorist groups that launch deadly attacks for the next 5 years with casualties in the hundreds to low thousands - YES
- Trump loses and his voters organize into an army / peels off divisions of the US military and start an insurgency that puts the economy in reverse and kills tens/hundreds of thousands - NO
You are suggesting 1-5 would have zero stock market consequences because they are already reflected in valuations??
1, 3, and 4 already happened in late 2020 / early 2021 with little discernible effect on stocks.
2 is a non-event if it does happen. Hillary lost in 2016. Stocks maintained their long run trajectory. Trump filed legal challenges in 2020/2021 and there was no appreciable economic effect.
5 could lead to economic and social disruption, but because Trump already lost once and nationwide economic disruption didn't happen in 2021, I don't think markets are pricing that in.
6 is perceived as so unlikely that almost nobody is selling stocks on the risk. Bear in mind that Republicans and apathetic centrists own the vast majority of stocks, and when they hear Trump talk about using the military against the "enemy within" - his political opponents, journalists, scientists, institutions, etc. they just dismiss it as his style of bluster.
For the U.S. economy to swing into a non-routine deep recession or depression, consumer behavior would have to change. That could happen if, for example, something made consumers so anxious that the
personal savings rate shot up from 4.8% to, say, 15%. COVID briefly accomplished this, but political violence as in scenarios 5 and 6 could do so as well.
Another thing that could break consumers might be a large added cost. Increases in fossil fuel prices did this in the 1970's and again in 1990. Trump's attempts to replace income taxes with tariffs could cause a sudden one-time rise in prices and create what economists call
deadweight losses that discourage spending. No one seems to remember from history class how
tariffs were one of the causes of the Great Depression.
Political violence could erupt before mid-January, as it did in 2021, but I would guess even this scenario is far fetched before early December. The earliest tariffs could come is probably 12 months from now, and that's a stretch. They may never come, given Trump's tendency to promise big but actually spend his time watching TV. As with Trump's first term, the effects of economic policy changes - if they even happen - would not be felt until years 3 and 4.
