In this analytical note from Artan Press, we will briefly discuss the potential US foreign policy scenarios after the November 2020 election. Please be with Artan Press.
The presidential election will have a direct impact on US allies and partners, as well as structural effects on the global system. The question for most analysts in the current context is whether the United States will continue to play an international leadership role after World War II. Or Washington will continue to retreat from its international obligations and will practically follow the path of decline.
If President Joe Biden wins, or Donald Trump is re-elected for a second term, the US role in world economic policy will take on different forms, which we will discuss in this article. Also, the possible policies of the candidates and the consequences of these policies. For US allies in specific areas, such as relations with allies, China, Russia, trade policy, and defense policy, these are issues that we need to address.
*** Impact of Democrat victory in election
President Biden is likely to reaffirm the United States’ commitment to democratic alliances, multilateral cooperation, and the rule of law. But America‘s role in the world under President Biden can play a role under two different scenarios: one is that the United States takes an active leadership role, creates collective action with allies and partners, and the other is that the United States has more restraint; There will be virtually no new political tensions, in which case we expect the dollar to weaken and the US economic index to decline relative.
In such a scenario, we will also see a sharp drop in the global price of ounces. One of the biggest benefits of this is the return of the United States to environmental policy, which makes conditions a little more challenging for mining companies and is likely to increase the price of US mining and industrial products.
It is in China’s best interest for this scenario to happen. Because in this situation, it can make the price of its products more competitive and practically make it harder for American producers by supplying mineral and industrial products at a lower price.
The second scenario is Trump voting and winning the election. The second term of Trump almost certainly means an unpredictable pattern of behavior for the United States on the world stage. Here, too, are two potential scenarios for his election victory.
*** Possible scenarios regarding Trump’s victory in the election
One of these possible scenarios for Trump’s victory is to maintain his approach as we have seen in the first round of Trump’s presidency. Trump’s unpredictable foreign policy policies have left allies skeptical and some even think that Trump will challenge his allies to maintain American political power.
In the case of oil, for example, it may not support Saudi Arabia or renew sanctions on Germany and France. This unpredictable nature of Trump will push the world price of gold to a maximum, and markets such as oil and steel and mining are likely to fall victim to Trump’s policies.
*** Biden’s policies are similar to Obama
If Biden becomes President of the United States, his path will be very similar to that of Obama. As his record of four decades of American public service shows, Joe Biden is an experienced foreign policy nationalist. As Vice President, Biden has had successful experiences in shaping the foreign policy of the Barack Obama administration, from diplomacy and alliances to trade and the global economy.
Aside from his time in the political arena, he has served as chairman of the Senate Foreign Relations Committee and has long established himself as a pro-NATO, free trade, and active US global leader. The global economy will help and end the nightmare of the uncertainties of Trump.
However, while he seems inclined to pursue a more traditional form of American role in the world, Biden must also seek the views of the educated and affluent Democrats. Because some Democrats cannot ignore Trump’s economic progress
Under this scenario, the Biden administration will turn to traditional US foreign policy, committing to multilateral engagement, re-establishing alliances such as the nuclear deal with Iran, advancing the human rights process, and improving human development indicators. These events will improve the process of free and fair trade throughout the world.
*** Biden actions if he wins the election
His administration is working to change the United States as an active global leader, and to work with allies and partners across Europe, India, and the Pacific to make decisions about China’s climate change challenges. Biden is also looking to rebuild domestic resources, including investing in infrastructure and technological innovations that will help the United States strengthen its position outside of the country.
A bilateral agreement is likely, in which a rival power of a great power like the United States with China will be planned. One of the most important challenges facing the United States and its allies and partners is the outcome of this Sino-US agreement, which requires a competitive and sustainable approach between the two countries.
The point to be analyzed is the win-win agreement between China and the United States It is not easy to achieve in both election scenarios, and this issue has a long way to go. Therefore, it is illogical to imagine large changes in world steel export prices in the short term.
*** Predictions of election results
Evidence shows that the capital market index is moving in favor of the victory of the Democratic candidate. Although a bit shocking, the final statistics show that the performance of US stock indices is influential on the election results. Based on the changes, stock market indices and the overall performance of stock markets in the period close to the election have affected the outcome and at least been able to accurately predict the outcome of the election.
According to the results of this study, since 1928, nearly 90 years ago, the performance of the prestigious S & P500 index in the last three months close to the election has been a relatively accurate measure of victory.
Whenever this index has had a positive performance in the last three months of the US presidential election, the incumbent president has won the next term, and whenever the performance of this index has been negative during this period, the then US president must present himself for defeat.
This index also has high performance accuracy; Since 1928, 87% of the time, and since 1984, about 36 years ago, it has worked 100% of the time.
Given that the trend of this index has been declining in recent days and there is still one trading day (Monday) until the election, based on these results, it can be said that the predictive weight of this index is to some extent towards Biden’s victory.
*** What is the chance of success in the latest polls?
Recent polls suggest Biden’s chances of winning the US presidential election today (November 1) have increased; The chance of success is 30% higher than Trump:
Biden chance of success: 64.6%
Trump’s chance of success: 34.6%
*** The gold market is affected by the US election
According to analysts, the gold market is witnessing a very small volume of trades and the price of gold is based on algorithmic trades and investors are waiting for the ambiguities to be resolved, along the market.
Given the many ambiguities that exist, analysts do not recommend selling gold in the run-up to the election, and in fact most of them say that you should wait for the post-election events and the long-term macro factors that support the price of gold.
With just three days left until the start of the US election mainstream, world markets will be closed for the weekend until tomorrow.
Kitco’s latest weekly gold survey in the week leading up to the US election shows that retail investors are cautious at a time when Wall Street investors are bullish on gold. Some Wall Street analysts have been watching the post-election market situation. These analysts believe that after the US election, the role of long-term economic principles, the need for financial stimulus and the intensification of the corona outbreak will be highlighted again.
*** What effect does the US election have on the Iranian market?
Baitullah Sattarian, Housing Economics Expert: The United States has weakened economically and politically and the issue of sanctions has lost its effect. The victory of Biden or Trump is no different for the Iranian economy and the housing market. Housing is a part that is affected by economic parameters. Changing expectations for the US election is seen as an important factor in changing market channels.
In a way, the result of the US presidential election; This time it has become a big gamble for the public opinion of our country. We see a kind of fear in the hearts of buyers; They are afraid of falling dollars and prices if Biden wins the election and the subsequent emotional fall in domestic steel prices … but we know that in our markets, rising prices are always a sign and falling prices are difficult and erosive …
Today, the market reaction to the stock exchange supply base rate was a kind of disregard, that is, the micro-population does not seem to care what the stock exchange supply base rate is at the moment, apparently it does not think of buying this week either, maybe the price gap has widened …
But on the other hand, today the ribbed rebar market is not willing to reduce the price even more and currently stands on the floor of 12,000 to 12,200 Tomans + vat; It seems that below this price is not affordable for the supplier …
*** What effect does the unexpected news of Trump’s victory have on the domestic market?
Another issue to consider is that experience has shown that if demand remains weak, supply may react to exports again in response to this disregard, and supply volumes may re-enter the engineering and dripping phase …
In short, at the moment, the prevailing atmosphere is the atmosphere of fear of falling prices, but on the other side of the coin can be the unexpected news of Trump’s victory and the re-ignition of the markets …
This must also be taken into account; Assuming Biden wins the election; Neither the half dollar will fall quickly and emotionally, nor will the steel market be willing to reduce prices so easily and in the short term; Our impression is that even if the free market dollar rate drops emotionally; Eventually, the steel market, unlike the emotional dollar and gold market, will turn to a further recession, and in the first stage, we will enter a phase of heavy recession; After that, if the declining trend of the dollar is established or, in other words, stabilized, then after a period of severe recession, prices may gradually decrease …
But on the other side of the coin is Trump’s unexpected victory, which is being reported right now; We will have a jump of 1000 Tomans in a fraction of an hour
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