Institutional Investing / Macro Minutes
Macro Minutes: Midterms and Equity Markets
In our most recent Macro Minutes video, Capital Markets Research Analyst Luke Puetz explains how Fisher Investments views the upcoming US midterm election given today’s inflationary environment and discusses how it could impact equity markets.
- Equity markets are about to enter the phase in the US presidential election cycle with the strongest historical returns, the three consecutive quarters that begin with the midterm election.
- The president’s party tends to lose seats in midterm elections, often resulting in a gridlocked government that produces fewer legislative changes, which creates a more stable and orderly environment for business.
- Historically, gridlock promotes a “goldilocks” environment of slow-steady growth with low inflation. For this reason, given today’s uniquely high inflation and fears of tight monetary policy, the upcoming midterm could be a uniquely powerful tailwind for equities.
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