Since the end of the 2nd world war, Americans have voted eighteen times in midterm elections. I’ve gone back and reviewed the total return for the S&P 500 one year after the results came in, and there wasn’t a single time that they were lower.
To top that off, the total returns were about twice the normal gains.
What’s unique, though, this time, is that the Senate remained Republican, which doesn’t happen often and doesn’t generate good years for stocks.
What can we expect, going forward, then? CEOs and investors know one thing for sure – Democrats are here to stay for two years. This brings a sense of assurance, which is a major reason for the good performance that stocks exhibit, no matter who wins midterm elections, historically.
The precious metals market is signaling Dollar weakness.
President Trump has already made comments that he wished his tone was calmer in the past two years. Portfolio Wealth Global believes that he will reinvent himself, following these results, changing colors like a chameleon to blend in.
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Remember, the chameleon is still that, a chameleon, but it is adaptable, so I do expect the theme of pro-business to continue, but the narrative to be completely different.
In other words, the American people will have a new President Trump, less of a provocateur, more a problem solver.
Investors will love this; stocks will too. One thing that isn’t going to be liked is the USD, which might have just seen its best year ever, compared with where we see it headed.
Portfolio Wealth Global is calling bullshit on USD performance this year, and we anticipate it to drop some 20% in the next five years.
We believe the next elections will be the most gruesome and televised in history.
In fact, we are utterly convinced that America has forgotten what a recession is like, so the next will be prolonged and miserable.
As opposed to the 2008 recession, which was deflationary, this will be the opposite.
I will be visiting 10 U.S. states next year, looking at factories, meeting with CEOs, with the goal of gauging for myself, when hiring ceases and layoffs begin. If companies stop hiring, this becomes the leading indicator that something is wrong.
Secondly, look at the 10-yr bond yield.
When it reaches 3.7%, the recession will breathe down our necks. Currentlyy, it is yielding 3.18%.
Lastly, watch silver.
If it pushes towards $18-$20, it’s game over.
Best Regards,
Tom Beck
Research Partner, PortfolioWealthGlobal.com
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