The experience of the last decade in the United States shows that the uncertainty caused by politicians and electoral processes influences the markets by pushing them to move sideways, that is they stop showing reliable and prolonged signs of a rise or fall, which makes them a more serious bet than usual for investors.
However, the acclaimed author, speaker, and former chairman of the Republican Party of California, Tom del Beccaro, said that today, the situation could be different because despite everything, “There is good reason for optimism for American stock markets.”
Indeed, in his report for Fox News, the analyst stated that U.S. stock markets face the future with optimism, finding themselves close to their historic highs and “leading the free world in economic growth, low unemployment rates, rising wages, and potential interest rate cuts.”
He stated, “Politics is generally bad for business,” because it can create uncertainty in markets by threatening to change the status quo, “if not outright harm to business and the economy overall,” especially at a time when the United States is heading into an election year.
“Over the last decade, the uncertainty caused by politicians and the election process has meant that election years have turned into sideways years for the markets,” he said.
If we look at the Dow Jones Stock Index, which is the 30 most powerful companies on Wall Street, we see that it moved sideways in the election years of 2010, 2012, 2014, 2016 and 2018, it then resumed its upward trend after Election Day, said del Beccaro.
That said, he pointed out that there is a huge gulf between what President Donald J. Trump, under whose tenure the country’s economy has seen a remarkable improvement, and what the Democrats promise to do.
“Less than two months after the 2018 election, Democrats started declaring for the presidency with spending plans by some that would increase governments’ share of the economy to well over 50 percent,” he added. “Directly in the crosshairs of investors and markets is “Medicare-for-All” and the potential elimination of the private health care market,” he said.
“Our governments are a potential investment wrecking ball,” he warned, arguing that this year alone the executive will spend the equivalent of 37% of the total GDP, and will “easily” have to disburse more than 10% due to the costs involved in regulating economic activities.
“America remains the best place in the world to invest” despite appearing to be immersed in a permanent electoral cycle, said del Beccaro, predicting, “election uncertainty likely will mean a sideways market in 2020.”