Trading Day: Shakeout in shadow of US politics

Group 1: New York City Mayoral Election - Zohran Mamdani, a 34-year-old Muslim democratic socialist, is likely to be the next mayor of New York City, proposing tax hikes on individuals earning over $1 million and increasing corporate taxes [1] - The income tax increase will impact approximately 1% of filers, while the corporate tax hike will affect around 1,000 of the city's 250,000 businesses [1][7] Group 2: Economic Impact of Government Shutdown - The Congressional Budget Office (CBO) estimates that an eight-week government shutdown will reduce Q4 annualized real GDP growth by 2 percentage points, although much of this decline is expected to be recovered [2] - The ongoing government shutdown has reached its 35th day, causing significant disruptions such as halted food assistance for the poor and unpaid federal workers [3][11] Group 3: Market Reactions and Trends - Wall Street experienced a tech-led selloff, with the Nasdaq down 2% and the S&P 500 down 1.2%, influenced by warnings from top U.S. bank CEOs about a potential market pullback [4][6] - The dollar index reached a three-month high above 100, while the British pound fell to a seven-month low at $1.30, indicating currency market volatility [4][8] Group 4: Federal Reserve Dynamics - The Federal Reserve is facing deepening divisions among its members regarding interest rate policies, posing a challenge for Chair Jerome Powell's leadership [6][10] - Recent dissent within the Fed has highlighted differing views on monetary policy, with some members advocating for further rate cuts while others express caution [9][14] - The polarization within the Fed could lead to increased market volatility and uncertainty, impacting investor sentiment [20][21]