Schroders global investment economist George Brown wrote that in 2024, American voters are likely to see Biden and Trump once again compete for the presidency. The decision-making attitudes of either candidate will be drastically different, but their ability to implement policies will depend on whether they can gain control of the U.S. Congress. Although many things could still happen before this year's U.S. election, this competition seems to be a closely contested race, which will be good news for investors. A year from now, Americans will return to the polls to elect the next U.S. president for the next four years. Current President Biden is seeking re-election and is expected to be chosen as the Democratic Party's presidential candidate, as he faces fewer opposition voices. Former President Trump faces stiff competition in the Republican primaries, but holds nearly a 45% lead over his closest challenger, Florida Governor Ron DeSantis. While nothing is certain in politics, a second competition between Biden and Trump seems inevitable. This is not the first time U.S. presidential candidates have faced each other again in elections, as there have been six such instances in past competitions, involving candidates like Dwight Eisenhower, Adlai Stevenson, Grover Cleveland, and Robert F. Kennedy Jr. Regardless of who wins, if they cannot control the U.S. Congress, their victory will not have much significance. All 435 seats in the U.S. House of Representatives will be up for reelection, and 34 out of 100 seats in the Senate will be contested. Currently, each party controls one of the houses by a narrow margin. Since early 2023, Biden's legislative agenda has been hindered, partly due to some extreme conservative Republican lawmakers obstructing party leadership. However, there are many reasons for Biden to be optimistic about his electoral prospects. Apart from the advantage of being the incumbent, under his governance, the U.S. economy has remained strong, the job market has tightened, and inflation has significantly slowed down. Additionally, escalating tensions in the Middle East may also provide some support, as geopolitical tensions usually trigger a "rally 'round the flag" effect. Despite these favorable factors, Biden's approval rating remains low. Currently, his approval rating is not only close to its lowest level during his presidency, but also lower than the early stages of most previous U.S. presidents' first terms. However, part of the reason for Biden's unpopularity is related to the immigration issue, which has become a focus of voter attention. In September 2023, with a significant increase in undocumented immigrants from Venezuela, the number of crossings at the U.S.-Mexico border reached a record high. U.S. public opinion polls also show that American voters have reservations about Biden's age. When he was elected in 2020, he became the oldest president in U.S. history at the age of 78. If Biden successfully wins re-election, he will be 86 years old by the end of his second term. Although Trump is only three years younger than Biden, a poll shows that only 1% of voters believe Trump is outdated or elderly, while this percentage is 26% for Biden. However, Biden is neither as unpopular as Trump nor as polarizing. This means that voters leaning towards neutrality and non-partisanship may ultimately support Biden's re-election, even if reluctantly. If re-elected, Biden may try to restore his initial legislative agenda. In the "Build Back Better Act" proposed by Biden in 2021, it included over $3.5 trillion in spending on environmental and social welfare projects, accounting for over 10% of U.S. GDP. This proposed legislation was reduced to $2.2 trillion after passing the U.S. House of Representatives and was eventually weakened into the "Inflation Reduction Act" due to opposition from moderate Democratic Senator Joe Manchin, who may lose his seat in this year's election. The size of the stimulus measures in it, totaling $437 billion, is significant but only about an eighth of the original proposal. Biden may seek to resubmit some previously rejected bills, such as funding for childcare subsidies, universal pre-kindergarten education, paid family leave, and paid sick leave, but this may heighten concerns about the fiscal sustainability among the public, pushing up U.S. Treasury bond yields. Schroders Global Investment also warns investors to be cautious as Biden may attempt to raise the highest tax rates on corporate, personal income, and capital gains, as well as strengthen regulations in sectors like banking and healthcare, potentially leading to some selling pressure on certain stock sectors. As for Trump, Schroders Global Investment believes he may be a popular candidate among betting companies to win the U.S. election, but he must first secure the Republican nomination. Additionally, as Trump is facing several court cases, he has not been able to participate in the campaign activities leading up to the primaries. On January 15, Trump is required to appear in court for defamation charges from E. Jean Carroll, coinciding with the first presidential caucus or party conference elections in Iowa. He is also facing trials over attempting to overturn the results of the 2020 U.S. election on March 4, the day before "Super Thursday," where 14 Republican state primaries will take place. Despite these challenges, Trump's significant following on social media may not hinder his chances in the primaries. Regarding Trump's potential second presidency, the only certainty is uncertainty. On one hand, he could be convicted and sent to jail, leading to a prolonged constitutional crisis or even riots. Additionally, Trump's foreign policy may further isolate the U.S., especially if he chooses to reduce sanctions on Russia. Therefore, investors should be prepared for financial market volatility, as this could lead to an influx of funds into safe-haven assets, pushing up prices of safe-haven assets like government bonds and gold.Global Investment in its report mentioned that it is difficult to predict the performance of various asset classes during the second term of President Biden or former President Trump, as it can only speculate on the policies they will implement. However, it is possible to compare their performance in the financial markets during their first term. Based on a 60/30/10 investment portfolio, the financial markets achieved a total return of 35% during Trump's presidency, in line with other first-time presidents since the early 1970s. In contrast, during Biden's current term as president, the financial markets have only achieved a return rate of 8.5%. Without the high-growth technology companies known as the "Big Seven", this number would be even lower.However, investors hoping for higher returns after Trump's re-election may be disappointed. Analysis shows that re-election of a former US president typically leads to lower nominal returns for major asset classes, aside from the 10-year US Treasury bond yield. But this is not necessarily bad news. Historically, inflation during the second presidential term is usually more moderate, even excluding the period of interest rate hikes during the late 1970s and early 1980s under the Carter and Reagan administrations. Most importantly, GDP is typically higher and the unemployment rate lower during a president's second term. Another common factor during their presidency is the ability to control the US Congress. The outcome of this year's US presidential election seems uncertain as to whether the winning candidate can secure a third consecutive win. Moreover, out of the 34 contested Senate seats, the three closely contested seats belong to the core group of the Democratic Party in the Senate. Therefore, if Biden wins, he may likely face a hostile Senate. Similarly, even if Trump wins the presidential election, if he loses for the third time, the Republican Party will lose the majority in the House of Representatives by a slim margin of 221-212. In either case, it will hinder presidential legislation and weaken their ability to fulfill party policy promises during the campaign. However, the gridlock in Capitol Hill could provide support for the financial markets. A divided government forces compromise, which helps to moderate the extremes within each party and provides a more stable policy landscape for investors. Since the 1948 US presidential election, when a president faces a divided Congress, the average total return for the US stock market is 14.3%, compared to a modest increase of 13.0% under a unified government. This difference is even more pronounced at the party level - in the past, with a divided Congress, Democratic presidents led to a 18.8% increase in the financial markets, while under Republican presidents, the increase was 12.0%.