Goldilocks Has Left the Building
By John Stoltzfus,
Chief Investment Strategist
Give Peace a Chance
Gridlock returns to the Hill as voters exited the polls last night.
The midterm election moves into the rear-view mirror as Democrats win back the House of Representatives and the Republicans maintain their leadership of the Senate. Both sides claim victories from the outcome of the election.
The dollar weakened, and stocks rallied overnight in Asia and moved broadly higher in Europe as the news crossed the tape. Stateside equity futures moved higher before the opening. Bonds rallied modestly. Pollsters regained some credibility as the outcome of US elections came out pretty much in line with expectations.
While political pundits begin to ponder what the outcome likely means down the road, markets globally celebrate America’s two-party system.
The outcome of the election could see at least some action on infrastructure and drug prices favored by “both sides of the aisle.”
Prospects for the administration’s Tax Cut 2.0 and The Wall fade hard.
The trade war and Fed monetary policy remain center stage in starring roles to garner market participants’ attention.
We see the results of the election as overall positive for the political system, the economy, and the global markets. The devil’s in the details, so investors shouldn’t expect to hear the proverbial whistle blow an “all clear signal.”
We remain positive on the outlook for the US economy and global equity markets, and expect cyclical sectors to likely outperform. Consumer Discretionary, Information Technology, Industrials, and Financials remain among our favorites.
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