Elections and Markets

There's a place where the light won't find you
Holding hands while the walls come tumbling down
When they do
I'll be right behind you
--Tears for Fears

The last two changes in party control of the presidency coincided with major market declines. 2000. 2008. Electorates are likely to place blame on sitting administrations for big market declines.

And blame is justified. Administrations have enacted or condoned monetary and fiscal policies sure to drive booms followed by inevitable busts. Recently it has taken about the length of a two term presidency for these cycles to play out.

We can be confident that it will be similar this time. The sitting administration will seek to move heaven and earth to prop markets up thru November of 2016 so that it increases the chance that a representative from its party remains in the Big Chair.

Whether it will be successful at doing so is a different issue entirely. History suggests that it will prove difficult.

position in SPX