Historically, the last two years of a president’s term have been great for stock investors as shown below. We can blindly follow history and hope that this is once again the case, or we can examine the facts in front of us and decide if there is reason to be suspect.
Public policy matters to markets and the economy and as a result a significant determinant of the next two years depends on what happens tonight. While the pollsters from both sides of the aisle are claiming victory, the fact of the matter is no one knows what this election may bring. Trump proved the pollsters wrong two years ago and we have little reason to believe they have it right this time. The results depend heavily on the much anticipated “Blue Wave” and whether Democratic turnout can offset the successes, economic and otherwise, of the Trump administration’s first two years.
The question of whether or not the Republicans can keep control of the House and Senate has vast implications for the economy and markets. The following Cheat Sheet provides our latest thoughts on three election result scenarios and what each might mean for the stock and bond markets as well as Federal Reserve policy, the U.S. dollar and economic activity. Please click on the picture to enlarge it.
Michael Lebowitz, CFA is an Investment Analyst and Portfolio Manager for RIA Advisors. specializing in macroeconomic research, valuations, asset allocation, and risk management. RIA Contributing Editor and Research Director. CFA is an Investment Analyst and Portfolio Manager; Co-founder of 720 Global Research.