Macro Minutes: Midterms and Equity Markets

In our most recent Macro Minutes video, Capital Markets Research Analyst Luke Puetz explains how Fisher Investments views the upcoming US midterm election given today’s inflationary environment and discusses how it could impact equity markets.

Key Points

  • Equity markets are about to enter the phase in the US presidential election cycle with the strongest historical returns, the three consecutive quarters that begin with the midterm election.
  • The president’s party tends to lose seats in midterm elections, often resulting in a gridlocked government that produces fewer legislative changes, which creates a more stable and orderly environment for business.
  • Historically, gridlock promotes a “goldilocks” environment of slow-steady growth with low inflation. For this reason, given today’s uniquely high inflation and fears of tight monetary policy, the upcoming midterm could be a uniquely powerful tailwind for equities.

*The foregoing information constitutes the views of Fisher Investments based on information believed to be reliable. There can be no assurances that Fisher Investments will continue to hold these views. These views may change at any time based on new information, analysis, or reconsideration.
About Fisher Investments

Founded in 1979, Fisher Investments is an independent, fee-only investment adviser with $197 billion under management.* Fisher Investments maintains four principal business units, Fisher Investments Institutional Group, Fisher Investments Private Client Group, Fisher Investments 401(k) Solutions Group and Fisher Investments Private Client Group International, which serve a global client base of diverse investors. The clients of Fisher Investments and its affiliates include over 100,000 clients. Founder and Executive Chairman Ken Fisher’s “Portfolio Strategy” column for Forbes ran from 1984 through 2016, making him the longest continually running columnist in the magazine’s 90+ year history. He has also authored several New York Times bestsellers on finance and investing. (*As of 3/31/2022)