Divided government favored by public equity markets: Partner https://www.cnbc.com/video/2020/10/...favored-by-public-equity-markets-partner.html Reed Smith’s David Adelman weighs in on the U.S. election and explains why the markets tend to favor a divided government.
Stock Market to Rise With Divided Government By Matt November 16, 2018 at 3:15pm https://thepoliticalinsider.com/stock-market-divided-government/ “‘Gridlock is good’ is an oft-heard mantra when it comes to stocks. It comes from the notion that the likely inability of lawmakers and the president to accomplish much means politicians won’t be able to do much harm nor to undo market-lifting measures already in place.” But is it true? As it turns out, the market tends to not like politicians meddling in it, regardless of what end of the political spectrum they’re part of.”
Traditionally the stock market in the U.S. rises best with a divided government (by party). This environment implies government regulation stability since no new major initiatives will be undertaken that will impact the market while the government is divided.
They already asked voters if they were better off now compared to 4 years ago. Over 56% said they were better off now under President Donald Trump compared to under President Barack Obama with Joe Biden then, the Vice President. If the investors thought, Joe Biden was winning, it would be crashing because of the $4 trillion in additional taxes he will be raising on practically everyone. That is not even counting higher capital gains tax rates which would crash the stockmarket almost immediately.
I've read this. I've also read numerous releases from JPM and Goldman where they are saying the best case is an all blue election - precisely for the reason I stated earlier. Were I interested in changing your mind on this, I would go back and find them and post them, but I'm not. You are welcome to your opinion and they are welcome to theirs.
The Big Boys (hedge funds, mutual funds, banks and brokers) move the stockmarket. Even they are not dumb to see how $4 trillion in new taxes including, rolling back the corporate tax rates reduced by President Donald Trump and raising capital gains tax rates is a bad thing for the stockmarket as a whole. We are talking economic policies which will only tank the stockmarket.
Earnings haven't affected valuations up until this point, so why would we believe a further deterioration would do so now? Its about liquidity. The Fed. Fiscal spending is added juice and gives the Fed's liquidity some actual impact to the greater economy. Markets love this, even if the end game is a total cataclysm.