First Republican presidential debate means it's time to pay attention to 2024: Morning Brief

Brian Sozzi

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A wise person once gave me this bit of life advice: See around corners, and you will see yourself successful.

I would like to pass that wisdom to all of you investors reading this newsletter today.

Apply its message to your channel surfing on Wednesday night, and tune into the first Republican presidential debate.

Some will say this is in fact a non-event for markets.

And maybe they are right to an extent.

I don't think futures are going to crash Wednesday night if former Vice President Mike Pence says he hates tech stocks like Apple (AAPL). Nor do I believe futures will rip higher if Florida Governor Ron DeSantis says he would like to slash corporate taxes to 5% (but raise them to 90% for Disney).

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morning brief image

It's Aug. 23, 2023, light years and 3,077 news cycles away from Election Day on November 5, 2024. None of the folks slated to be on the stage this week are polling particularly well and stand to be non-factors politically come November 2024.

Moreover, the Republican front-runner for the presidency — former president Donald J. Trump — isn't going to be on stage as he deals with various legal problems and plays head games with his opponents from one of his resorts.

But Wednesday night should be of interest to all investors for at least two reasons.

First, it will offer an early snapshot into the potential headline risk to stocks as the presidential election cycle intensifies into 2024 and another heated Trump vs. Biden battle takes shape.

Already, from a historical perspective, markets don't act well during the fourth year of a presidency, according to new data from Bank of America.

Going back to 1928, the S&P 500 has fallen on average from January to May in the final year of a presidency.

Just imagine if the people on the Republican debate stage stink it up, ceding more ground to Trump. Won't another contentious match-up between Trump and Biden inject fresh volatility into markets in early 2024? It very likely will — and more so possibly than the historical average — suggesting it's good to get a feel of things right out of the chute in debate season.

Then on the other hand, who knows? The people on stage Wednesday may impress the nation and their policies on business will garner greater attention. Maybe one person begins to stick out as a strong contender to Biden, which could have implications for markets. If you don't do your due diligence today, you risk being behind the eight ball tomorrow.

Smart investors appear to be getting this, which heartens me.

"We’re keeping a close eye on polling data and betting markets for the 2024 Presidential race, which has been coming up more in our conversations over the past few weeks," RBC Capital Markets strategist Lori Calvasina said. "We expect the presidential election will continue to come into focus as equity investors start to contemplate the 2024 outlook."

I am not going to argue with Lori; she is one of the best on the Street. Turn on the debate Wednesday night, and bring a notepad.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com

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