Good morning! Nvidia held its annual shareholder meeting on Wednesday. CEO Jensen Huang answered questions about the company’s meteoric rise over the last year.

Nvidia, Huang said, has achieved a “virtuous circle” in reference to its platform, technology, and growing user base.

On deck today: How the Biden-Trump showdown impacts markets, Amazon in the $2 trillion club, and a plummeting yen.

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Politics will take a backseat to 3 bullish drivers

As powerful as the Oval Office might be, it won’t be what makes or breaks the stock market this year. 

President Joe Biden and former president Donald Trump face off in the first debate of the election cycle tonight, but investors look set to remain unbothered. 

Immediate portfolio moves will likely be limited to those tied to betting markets like Kalshi and BetOnline, where traders are wagering on everything from how many times Biden will say “folks” to how long it will take for Trump to utter “fake news.” 

Otherwise, few on Wall Street anticipate much to change in equity markets. 

Already, the S&P 500 has performed unusually well for an election year.

It’s up 15% through the first six months of 2024 even though, historically, the index trades weaker ahead of a presidential showdown. 

Meanwhile, the VIX, which tracks implied volatility for S&P 500 options, is hovering just under 13.

That’s far below its three-decade average of 19.5, and suggests investors see little reason for concern in the months ahead.

The lack of market jitters can in part be chalked up to the lack of uncertainty over the nominees.

As the election date gets closer, that volatility should ramp up. 

Over the last century, market volatility as measured by the VIX jumps 25% on average from July to November during election years, according to Bank of America.

That said, more volatility doesn’t mean the market narrative at large will change. 

I attended an event hosted by UBS on Wednesday in New York City, and the upcoming election was indeed a hot topic.

Yet David Lefkowitz, the head of equities for UBS Global Wealth Management, pointed out that the three bullish drivers of the year remain intact: 

“All that is pretty equity-friendly,” Lefkowitz told me and a group of reporters over lunch.

“Valuations are clearly at the high end, but we think they make sense.”

Taken together, those themes support the Fed’s case for rate cuts.

Increasingly, looser policy seems to be a case of when not if — no matter who sits in the White House.

“What we’ve been telling clients is to stay invested,” Lefkowitz said. “It’s a constructive environment.” 

What’s your view on how the presidential race can influence financial markets? Hit reply to this email or let me know on X @philrosenn.

*At a glance:

Elsewhere:

📦️Amazon just joined the $2 trillion valuation club. It’s the fifth company to hit that milestone. Shares climbed nearly 4% on Wednesday to join Nvidia, Apple, and Microsoft, and Alphabet in rarefied air. So far in 2024, Amazon stock is up 27.5%. (CNBC)

💴The Japanese Yen hit a 38-year low against the dollar. Wide interest rate differentials between the US and Japan’s economies have tilted markets in favor of the greenback. Currency traders continue to speculate whether the Bank of Japan will intervene to boost the yen. (Reuters)

🏦The Fed just conducted its annual stress test on US banks. The exercise found that banks would have the capital to withstand severe market and economic turmoil. Overall, banks appeared to have received a relatively clean bill of health despite suffering steeper losses than usual this year. (Yahoo Finance)

Rapid-fire:

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