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Citi head of US equity trading strategy Stuart Kaiser joins Catalysts to break down how the presidential election could impact both US equities and US-China policy as the latter seeks to recover its struggling economy.

Kaiser expects the election will be 50-50 for markets, stressing the importance of voter turnout. While both sides are deeply divided, he argues, "Who's better or worse, it's a little hard to know, to be completely honest with you. The economic policy seems to be converging rather than diverging."

He notes that both platforms will be negative for equities, calling the election a "big risk event." He explains, "I think it's very hard to trade directionally because we think it's basically a toss up, and you're just going to have to kind of grit your teeth a little bit. I do think if you're expecting what we saw back in 2016, that's probably less likely. And if you're expecting what we saw in 2020, it's probably less likely. This is its own kind of unique event."

In addition to economic policies, Kaiser notes that both Vice President Kamala Harris and former President Donald Trump have similar positions on China. "The agreement there is this has become a bit of an adversarial relationship. So, if you're Chinese policymakers, it's hard to see either of the two candidates being necessarily positive for that."

However, it's not all bad news for China. He explains, "The positive side is that the positioning isn't there. Institutional investors in particular, have been de-risking China for an extended period of time. So if this initial start to stimulus continues and they're actually able to generate some consumer spending, then positioning needs to rebuild, and that would kind of be your bull case."

"I think the bear case is people have depositioned for a reason. And I think it's going to be very, very hard for Chinese policy to really flip the switch on sentiment here," Kaiser concludes.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl