The Super Tuesday TurnaroundThe world is still somewhat linked to the U.S. economy in many ways.  Most commodities are still traded in dollars; the petrodollar is alive and well, in spite of Russian, Chinese, and Iranian efforts to remove it from global trade.  Global markets take their key off Wall Street in a continuous cycle.  The effect is not nearly as great as it was twenty years ago, but the knock-on effects of Wall Street gyrations are still there.  With Chinese growth now shrinking, the American economy is once again front and center as global growth is hard to find.  I’m not saying this is preferably or even right; I’m just saying it’s the facts.  

So any economist or investor worth their salt will want to know what is going to happen in the States over the next few years when considering where to place their assets.  A lot of visibility will be shined on this question this coming Tuesday when twelve U.S. states cast their ballots in the presidential primary election.  Much of the uncertainty regarding the office of the most powerful man in the world for the next four years will be removed from the market.  No matter who wins, typically this marks a turning point in investor and economic sentiment.

CNBC reports, The evidence suggests investors tend to panic about who the presidential nominee will be.  But that panic and rebound only come in years when there is an obvious nominee that everybody had been expecting to win.  Super Tuesday brings out the true herd mentality of the investor base — skittishness when uncertainty lies ahead, and overconfident jumping on the bandwagon when the coast is clear.

The U.S. has experienced an unexpectedly sharp, equity market correction since the start of 2016 as many geopolitical uncertainties have spooked investors.  The Chinese slowdown and stock market collapse, the price of crude oil falling seventy percent along with similar price drops in other commodities, the European migrant situation, terrorism, have all had their negative effects on the markets.  The war in the Middle East is throwing all kinds of ‘what ifs’ into the equation.  Tensions in the South China Sea and on the Korean Peninsula are not small issues.

If the Super Tuesday elections point to a clear front runner in both parties, then much uncertainty could be removed from investor calculations. With a more clear path forward for the American economy, people and companies may start making investor decisions and pick up some value in the beaten down prices available across all asset classes.  The creation of a clear cut winner typically marks a bottom in the American equity markets.

This year the situation is even more pronounced because of the fact that Hillary Clinton is under FBI investigation and Donald Trump has totally upended the political process in American and no one really knows where this thing is going.  A little visibility would be a welcomed respite to millions of pots of money who are acting like deer in the headlights.

Prior to the possible liftoff in equity prices over the next few weeks, investors should take a view of the market, interest rates, currencies, etc and position yourself to take advantage of the situation and the market guidance this event may provide.  How will the election impact the dollar?  How will the election impact the E.U.?  How will the election impact interest rates?  If you can pick the winner, you can position yourself nicely in the face of the political events to come.  

L. Todd Wood is a former emerging market debt trader with 18 years of Wall Street and international experience.  He is also an author of historical fiction thriller novels.  His first of several books, Currency, deals with the consequences of overwhelming sovereign debt.  He is a contributor to many media outlets and is a foreign correspondent for Newsmax TV.