Institutional Investing / Macro Minutes

Macro Minutes: Midterms and Equity Markets

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In our most recent Macro Minutes video, Capital Markets Research Analyst Luke Puetz explains how Fisher Investments views the upcoming US midterm election given todayโ€™s inflationary environment and discusses how it could impact equity markets.

Key Points

  • 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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