Biden Drops Out… What’s Next?
ICYMI: Earlier today, President Biden announced that he will be dropping out of the 2024 presidential race and endorsed VP Kamala Harris for the President for the Democratic ticket. While this was rumored for several weeks, what does this mean geopolitically for the United States?
President Joseph Biden (Left) and Vice President Kamala Harris (Right)
Catch-Up Quick: Last month, President Trump, 78, and President Biden, 81, engaged in a nationally-televised debate where President Biden’s debate performance raised questions on his ability to run effectively against President Trump and carry out the duties of president for another four years. This led to a massive backlash within the Democratic party as dozens of house members and senators called on the president to step aside. Despite weeks of dismissing these calls, President Biden officially withdrew from the presidential race today, endorsing VP Kamala Harris to be the Democratic candidate for president.
Other Quick Key Facts
Polling for President Trump has trended upward since the debate, particularly within key battleground states
World leaders have begun to brace for the Republican presidency
President Trump and President Biden have vastly different economic policy plans and viewpoints on handling current geopolitical events and foreign policy
This event does not automatically “confirm” VP Harris is the Democratic nomination as she must still be nominated at the Democratic Convention
There are other leading candidates for the presidency including California Gov. Gavin Newsom, Pennsylvania Gov. Josh Shapiro, and Minnesota Sen. Amy Klobuchar
Short-Term Implications: Uncertainty. Currently, the Democratic party is scrambling to confirm the next candidate for the Democratic nomination for president. In the short term, this will not have any major geopolitical effects as President Biden is still remaining as president. Furthermore, VP Harris would likely continue to share President Biden’s foreign policy strategies if elected to the presidency. However, this allows the rest of the world to expect another president in power, each with their own strategies of executing foreign policy. This could potentially delay peace treaties in the Russo-Ukrainian war or the Israel-Hamas war if world leaders believe they could receive favorable treatment with President Trump. This has also started some rumors of President Biden installing Democratic Supreme Court justices to create a more liberal court for years to come.
Long-Term Implications: This event could lead to rippling effects across the United States and the globe, particularly if the Republican party ascends to the presidency. In future newsletters, we will highlight certain industries and the geopolitical implications if Democrats or Republicans secure control of Washington and the Presidency. However, you can find some key highlights below:
Semiconductors: President Trump has states that Taiwan should “pay for its own defense”, raising massive geopolitical implications given the cruciality of Taiwan for the U.S. and the semiconductor industry
Russo-Ukrainian War: President Trump has promised to end the conflict “before taking office” which could test the relationship between the US and Ukraine and Russia
Israel-Hamas War: President Biden has consistently pushed his proposal, introduced nearly two months ago, to end the conflict, raising chances of an extended conflict if Israel or Hamas believe President Trump could help them achieve more of their demands
Macro Roundup
Empire State Manufacturing: -6.6 vs -6.0 expected
U.S. Retail Sales: 0% vs -0.4% expected
U.S. Retail Sales minus autos: 0.4% vs 0.1% expected
Home build confidence index: 42 vs 44 expected
Housing starts: 1.35M vs 1.3M expected
Initial Jobless Claims: 243k vs 229k expected
Other Highlights
J.D. Vance nominated as Republican Party VP candidate
“Trump Trade” is in full effect in U.S. markets
Lower-income Americans feel the pinch… affluent Americans keep spending
Blackrock hits a record 10.65T in AUM
AT&T reveals massive hack affecting over 110M users in 2022
Gold hits record highs
U.S. rate cut bets rise significantly; traders price in 100% chance of rate cut in Sept.
JPY strengthens significantly alongside other global nominal currencies
Crowdstrike update creates “biggest IT blackout in history” and causes mass chaos worldwide
What’s the Big Picture: Weakening of U.S. dollar and flock into safe-haven assets amid US political uncertainty. With a greater likelihood of a Republican presidency, the USD would likely continue to depreciate and investors would flock to safe-haven assets, such as gold. Currently, there is a 100% chance of a rate cut in Sept. and a ~65% chance of two rate cuts by year-end.
Looking Ahead
As earnings season kicks into high gear, here are the major economic events to monitor this week:
Monday: Earnings season continues: Verizon, Truist Financial, & SAP lead the way
Tuesday: Alphabet, Tesla, Coca-Cola, Visa, GE, UPS, among others report earnings; US existing home sales
Wednesday: AT&T, Chipotle, General Dynamics release earnings; US new home sales
Thursday: Initial jobless claims; US Q2 GDP numbers
Friday: US PCE index
Geopolitics Weekly Digest is a weekly newsletter updating you on short and long-term news in the geopolitical environment. We seek to become your news source providing you with research and analysis into geopolitical topics worldwide.
