3. Syria – Given Russia’s recent proposal to place Syria’s chemical weapons under international supervision, it’s not clear how far the president’s request for authorization for a military strike against Syria is likely to advance in Congress. While the economic implications of an attack on Syria are muted, fears of a widening conflict would likely lead to some short-term risk aversion. If the legislation is introduced and passes, there may be some near-term stock selling and a short-term bid for oil, although the latter would be muted if the president also authorizes a release from the Strategic Petroleum Reserve.
4. Immigration – While this issue is still contentious, the list of above has pushed it back on the legislative agenda. As such, it’s not even clear if Congress will take up the bill passed by the Senate earlier this year. While the immigration debate holds less near-term significance, comprehensive immigration reform would be supportive of long-term US growth, particularly in an environment in which changing demographics are leading to less organic growth in the labor market.
In short, there are a host of issues to be debated in Washington this fall. In aggregate, they have the potential to induce some short-term volatility, though they are unlikely to impact longer-term fundamentals and the longer-term investment landscape. As such, I would advocate maintaining allocation views and using any volatility as a potential buying opportunity.
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist.