By Kevin Muir of “The Macro Tourist” fame; reposted here with permission
There’s a lot of chatter going around today about how “since World War 2, there has not been a down period for the S&P 500 in the twelve months following the mid-term elections.”
That seemed a little incredible, so I decided to do some work confirming. Sure enough, it’s spot on correct!
Figuring I couldn’t add much to this discussion, I choose to make a fancy chart instead. It’s kind of like putting your crappy essay in a really nice presentation jacket.
So without further ado, here are the eighteen mid-term election periods since 1946.
Sometimes a paltry 2-3% performance, and the path to go positive passes from 3 up to 6-8 negative months to a final spur, or like in Reagan’s 2nd mandate a steady rise followed by a crash. Winners are Clinton, Eisenhower, and Kennedy, constant rise with small swings. Not bad Bush father too. Statistically the sample remains small, it might be a fluke, can it happen that by tossing a coin the first 17 launches are head? Yes. But another statistics say that by taking a random month in the 90 years history of the SP500, the probability that after 12 months you have a positive return is somewhere near 80%. So in reality, mid term elections or not, we always have a probability to see a rise 4 times on 5 starting a November.
some pundits are saying GOP control and ease of tax reform passage etc is what the mkt likes. but others say gridlock is what the mkt likes. noted above 80% of the time one year returns are positive.
might a positive reaction by the mkt to a larger positive outcome for Dems be interpreted as ‘better to balance djt’, and gridlock too.
also djt doesnt want to address immigration, just yell and whine about it….control of congress and WH, he could have passsed and signed –anything– and claimed progress or success. but then he wouldnt be able to rant about immigrants and continue his polarizing speech to gin up his ‘base’.
and can anyone tell me which of those samples is analogous to today? For just one thing, which of them had POTUS Trump and his clown school (er cabinet) in the WH????