Howdy Folks
Well, it probably does not shock anyone that the world’s financial markets (this includes our markets) are indeed impacted by who is in charge. Financial policy, government spending, regulation, etc can all shape the environment that companies operate in, and ostensibly earn money in. Profits drive earnings, and earnings help drive stock prices, as these profitable companies appear to be “attractive investments” to large investors, who then buy stock, resulting in positive price direction in the stock price.
With that established, what political party results in the best stock market performance? For this information, the expert is Mr. Jeff Hirsch, of The Stock Trader’s Almanac.
With a sitting Republican in the White House, the following scenarios, and past historical annual S&P 500 average, is as follows:
Republicans control both chambers: +12.9%
Republicans and Democrats each control one chamber: +7.3%
Democrats control both chambers: +4.9%
Current polling, surveys, etc seem to indicate that the Democrats will control both the Senate and the House of Representatives. I have even spent countless hours in recent weeks using ChatGPT, Grok, Claude, and Gemini (the “name brand” AI/LLMs) and they all make the same conclusion: Democrats are well-positioned to take the House. The Senate remains a coin flip with a slight Democratic lean.
In an abundance of conservative caution, I have returned 100% to the G-Fund until November 3 comes, and goes. Once the dust settles, I will re-assess. If the markets explode upward 1,000 points on November 4, well, that is just something I am going to have to live with. We know from past trends that the weakest scenario, for the markets, is a sitting Republican and both House and Senate controlled by Democrats.
One may ask “Well, even with Democrats controlling both chambers, the market has been positive.” Indeed but we have some additional economic and structural issues in play: Inflation, military action against Iran, oil prices, interest rates remain a concern. A Republican President and Democrat controlled House/Senate would result in substantial gridlock on important issues.
The next few weeks will be “exciting times” – I will be spending them camped out in the G-Fund.
Hope everyone has a great day, talk to you soon….
-Bill Pritchard
