Tuesday’s Political Sweepstakes: Wall Street vs Election 2018
WASHINGTON. I’ve got my trading screens open today as I do nearly every day. Problem is, I’m not likely to do anything aside from watch. Maybe a little tweak here and there to my currently damaged portfolios, which were hit courtesy of this autumn’s rolling market disaster. But other than that, nothing much. It’s best for most investors to avoid placing bets on today’s Political Sweepstakes as a genuinely puzzled Wall Street wrestles with the real or imagined consequences of Election 2018.
Wall Street faces headline risk BIG TIME Tuesday and Wednesday, November 6 and 7, 2018
Headline risk is one of many stock market risks I’ve dealt with since I began investing in stocks and bonds back in 1979. But rarely has headline risk loomed so large as it has in this year’s midterm elections. Hence, I’m exercising extreme caution today and likely tomorrow.
If you recall, on Election Night 2016, as Donald Trump’s genuinely astonishing electoral college victory slowly but relentlessly took shape, Wall Street futures – essentially bets placed on the next morning’s opening trading action – took a horrifying nose dive, predicting absolute disaster when U.S. markets opened for trading on Wednesday morning, post-Trump Triumph.
And indeed, those cascading futures accurately predicted that early morning market pummeling that launched immediately upon the ringing of the New York Stock Exchange’s opening bell.
But some 5 to 15 minutes later, virtually all stocks suddenly did a dramatic 180, reversing course to the upside with the velocity of America’s latest rocket technology. Until just this past September, when this fall’s sickening correction and / or cyclical bear market cleared the building, it was straight up from there for U.S. markets with only brief if unnerving corrections in between successive and higher re-launches. The Great Trump Bull Market had begun, even though its continued longevity is currently debatable.
All of which shows you that those bearish, waterfalling Election Night 2016 futures bets were right on, they were only good for a wrinkle in time at best. After reversing course, markets never really looked back for a long, long time. Who knew?
But what about Election 2018?
Tuesday’s Political Sweepstakes: Some possible scenarios for Election 2018
All this leads us to this week’s classic trading dilemma. Before we can even figure out what the real reasons were / are for the September-October 2018 stock market slaughter-fest, we’re now wondering what will happen after we learn which of several possible Election 2018 outcomes are set to actually make Wednesday morning’s blaring, overstated political and economic headlines.
Here are the big, if somewhat obvious questions investors are asking right now about our current political sweepstakes:
- What if the GOP retains the Senate, or even adds to its majority?
- What if the Democrats manage to flip the House? And what if they flip it Big Time?
- And if the Dems flip the House, Big Time or otherwise, what happens if they flip the Senate, too?
- Or, what happens if the Republicans retain majorities in both Congressional Houses? More and more Trump? A more Trumpian Congress, since most RINO incumbents decided not to run this year.
- Or, what happens if the House goes Big D and the Senate remains Big R. Will Maxine & Co. insist on impeaching Trump anyway, given almost certain defeat in the Senate, à la Bill Clinton? Or at the very least, will the Trump-GOP agenda stall for 2 years as the Democrats obstruct everything?
- Or, if the GOP sweeps both Houses, will we see more ANTIFA-style violence, as a frustrated George Soros wreaks havoc on stubborn Americans that he can’t seem to bend to his weird, rich-guy Marxist rules?
These and other questions, based again on tonight’s electoral outcome, have endless possible permutations. But in this column, at least, the only ones we’re interested in are what the final results may portend for Wednesday’s stock markets and beyond. How will this year’s edition of America’s political sweepstakes play out? Should we ask the Wise Guys?
What cable TV’s Blow Dries think
The usual investment hacks proclaim that a post-Election 2018 GOP Senate / Democratic-Socialist House would be the best of all possible worlds. That hoary cliché alleges that markets benefit from “divided government.” That’s hackneyed, wishful thinking in my book. Those fronting this theory never had a problem when Democrats exclusively ruled in Washington’s Swamp.
One result of the vastness of America’s current political divide, which pits the country’s disgustingly wealthy, liberal coasts (plus Chicago) against everybody else, it’s hard to see a consistently positive market outcome following the results of today’s political sweepstakes. That is, unless the resulting gridlock means that Congress won’t do anything stupid to derail Trump’s ongoing economic miracle, since they can’t get anything passed.
Of course, most of America’s thoroughly corrupt media journalists – an oxymoron these days if I’ve ever seen one – would love to see both Houses flip Big D. That would make both mega-wealthy socialists and dumbed-down-entirely-by-college millennials ecstatic. They would immediately attempt to re-impose Obama’s socialist – and largely illegal – agenda back on the many Deplorables who’ve only just begun to recover jobs, finances, and their dignity.
If, on the other hand, an impossible miracle occurred, proving the pollsters wrong again and bringing Trump once again a fully Republican Capitol Hill, would we finally see a true repeal and replace of Obamacare?
Not to mention some final, non-amnesty resolution of the never-ending immigration / illegal alien crisis and a return of nationalism both here and abroad? Or would enough RINOs and #NeverTrump fake conservatives remain to stymie Trump’s most ambitious projects?
A veritable plethora of possible outcomes for traders and investors
We investors have before us what the late Howard Cosell would call a “veritable plethora” of possible scenarios and outcomes. None of which is assured. Which, in turn, makes it really hard to call the stock market’s next likely unpredictable turn. It’s hard to place a confident bet on this year’s critical Election 2018 political sweepstakes
Which gets us back to this column’s original premise, which is essentially that “We don’t know what we don’t know.”
That’s why I plan to sit tight today. And not jump to any conclusions first thing Wednesday morning, either. Let’s resolve to keep our powder dry and let the smoke clear. Next, we can wait for a legion of already disgraced media “professionals” to get at least some of the childish rage out of their systems. Likewise, we can give some room for the inevitable Soros-funded left-wing temper tantrums to run their course. If, indeed, those tantrums actually occur. At that point we can buy, sell or short stocks once again with a bit less fear than we have today.
See you tomorrow. If I can survive tonight’s election returns.
Oh, yeah. Vote. And avoid a lifetime of regret and therapy
And BTW, get to the polls today if you haven’t already done so via early voting. My wife and I did so this morning around 10 a.m. That’s when we figured – based on the usual midterm action here – that the polls would be deserted. They were not. They were jammed. I can’t recall the last time this happened here outside of morning and evening rush hours.
Something is happening today. And your vote might make a difference, even if you disagree with my politics. So go cast that vote. Otherwise, you might be kicking yourself in the morning, or getting therapy until Election 2020 gets underway.
Which might happen tomorrow.
— Headline image: Cartoon by Branco. Reproduced with permission and by arrangement with Legal Insurrection.