As the midterm elections are starting to heat up with various primaries, it is time to revisit how the elections will impact markets. Because Republican victories in the House and Senate would simply be a continuation of the status quo, the big question seems to be what happens if Democrats win one or both. The answer is that there will likely be little impact, but if there is, it could be positive, according to Barron’s. This is because having Democrats control the house (perhaps a likely outcome) would be seen as keeping the White House’s potential overreach on trade and the economy in check.
FINSUM: Historically speaking, the midterms have resulted in strong rallies for stocks. Why wouldn’t it be the same this year? We expect either little effect or a positive one.
President Trump faced nothing short of public and political outrage in the US yesterday, after he essentially sided with Russia’s view of the 2016 election meddling scandal. When asked about Russia’ alleged meddling in the election, Trump insinuated that he believed Putin’s side of the story more than that of US intelligence agencies (though he did not say this outright). That sparked widespread condemnation from political foes and allies alike.
FINSUM: Whatever you think of Trump’s comments, most might agree that these are some of his most provocative and risky comments yet. The reason being that appearing to “side” with Russia might undermine some of his own nationalist voter base.
While all the current political anxiety seems to be centered around the midterm elections and what future that may hold for Republicans, the real trouble could be for Trump in 2020, says Bloomberg. According to economists, all signs are pointing to a recession in 2020. While the current tax cuts and fiscal stimulus will insulate the economy this year and next, “Fading fiscal stimulus, higher and rising interest rates, and cresting world demand could leave the economy vulnerable to a contraction -- just in time for the presidential campaign”, says Bloomberg.
FINSUM: A recession starting in the year of reelection would not be good for an incumbent president, and the timelines do seem to make sense.
Stocks may do well after the midterm elections, but Barron’s is arguing that rise will be preceded by a fall in share pricing leading into the elections. The contention is based on two arguments which rely on historical trends for the market. One is that markets do well in the third year of a presidential cycle, and the other is that stocks tend to do poorly in the summer. All of that points to a market that is likely to start rallying in the Autumn, specifically November 1st, says Barron’s.
FINSUM: While Barron’s does point it out, it is very worthwhile to bear in mind that these types of calls are only as good as the actual catalysts one sees that could really drive them. In this case, the uncertainty over how the Republican party will fair in the midterms may be a key factor.
Fake news has become an important part of the American conversation. People discuss it at work, dinner parties, and at the kitchen table. But one fiercely contested question is whether the right or left side of the political spectrum puts out more fake news. Well, the British seem to have an answer, it is the right, according to the University of Oxford. The university analyzed near 100,000 social media posts to trace the source of fake news, and found that what it calls the “hard right” dominates the use of disinformation.
FINSUM: Obviously take this with a big grain of salt, but an interesting study nonetheless.