Macro Minutes: US Elections & Equity Markets

Key Points

• Markets do not favour Democrats or Republicans, however returns in election and inaugural years differ with election results.
• Investors tend to celebrate Republican victories in election years, whereas equities struggle when a Democrat is elected. Those trends, however, usually reverse in inaugural years.
• In analysing corporate, personal income, and capital gains taxes over time, we find they don’t influence equity returns in any predictable way.