US voters headed for the hills last week, bracing for a ‘red tsunami’, which wiped out before landing. The US midterms saw the Democrats retain control of the Senate, and a photo finish for the House of Representatives - likely going to the GOP, with only Trump-backed candidates wiping out. 🌊 Many voters were swayed by choppy social issues, with 27% citing the Supreme Court overturning Roe v Wade as their top issue. And a high turn out of frothing frosty Gen Zers helped turn the red tide.
Looks like the US may be duck diving gnarly economic headwinds, too, with inflation cooling in October - lower than expectations - with some economists seeing signs it may have peaked. And after beating historical odds, Biden’s stoked. Shaka. 🤟
As for impact on the share markets, a divided government is nothing new in the US. UBS wealth management (UBS) exec Solita Marcelli suggested these results could even be positive, saying legislative gridlock ‘reduces policy and regulatory risk’, which is ‘typically good for markets’.
While some share values temporarily bailed off the leash last week - like Vanguard’s S&P 500 ETF (VOO) dipping 2% as ballots were cast, returning up 6.8%, and the Fidelity Nasdaq Composite Index ETF (ONEQ) dropping -2.4%, recovering up 9% - research shows who’s in power doesn’t affect long term markets. US Bank used 60 years of Bloomberg data and found while US share markets typically underperform before midterms and over perform after, whoever controls Congress is not an indicator of market performance over time.
Vanguard’s own research shows, too, that no amount of alarmist onshore media headlines change the facts; that neither presidential nor midterm elections amp up either market swells or choppy waters. And historical compound return differences between the two party administrations, since 1860, is less than 1%. Yeeeeeeeeew!