Why stock-market investors say ‘gridlock is good’ in Washington D.C.

“Stock-market bulls are cheering midterm election results that, as expected, saw Democrats take control of the House and Republicans hold control of the Senate, delivering a split Congress and expectations for legislative gridlock over the remaining two years of President Donald Trump’s term,” William Watts writes for MarketWatch.

““Gridlock is good” is an oft-heard mantra when it comes to stocks. It comes from the notion that the likely inability of lawmakers and the president to accomplish much means politicians won’t be able to do much harm nor to undo market-lifting measures already in place,” Watts writes. “Since 1928, stocks have produced an annual average return of 12% in years when a Republican president held office and control of Congress was split between Democrats and Republicans.”

“And in the year following a midterm election that resulted in a Republican president and a split Congress, returns have averaged more than 20%, one of the highest returns of all the scenarios the analysts explored, though they noted that the sample size of midterm years is small,” Watts writes. “The Senate results, meanwhile, will give Republicans more breathing room heading into 2020, which means there is a greater likelihood the corporate tax cuts will survive regardless of the outcome of the presidential election in two years, said Jeffrey Schulze, investment strategist for ClearBridge Investments, an affiliate of Legg Mason, said in a phone interview.”

Read more in the full article here.

MacDailyNews Take: With a U.S. federal government several orders of magnitude larger than any founding father’s worst nightmare, anything that locks it in place, even temporarily, is a Good Thing™.

SEE ALSO:
Wall Street set to rise as investors take split Congress in stride – November 7, 2018

11 Comments

  1. Yup.. no change, no uncertainty,
    Predictability.

    But i sure hope there will be bipartisan cooperation and as a result some fruitful progress…..One that also maintains the positive market dynamics we are enjoying now…..
    Rather than dogmatic stubbornness…and hate at any cost and anarchy 🤞🤞

    1. I watched former DNC chair Ed Rendell on cable news late election night where he warned House takeover Democrats to “legislative” and NOT “investigate.” Good advice to move the country forward and all will find the same common goals in the White House…

  2. Anything that will keep the Demonrats from destroying America even more than they have is worth doing.

    Every shithole city in this country is run by Demonrats. Quicidence? I think no.

  3. Amazing, I’m so happy about the prospect of making money but just look at the comments here.

    Astonishing, but not as astonishing as what I’ve seen under this recent topic: Apple CEO Cook: ‘We are devastated by the senseless violence overnight in Thousand Oaks’, which I think is going to be a repeat of the Parkland massacre topic (http://macdailynews.com/2018/02/15/apple-ceo-cook-prays-for-victims-families-and-loved-ones-of-mass-murder-in-parkland-florida/)

    in that it looks like folks from Apple’s home nation prefer:

    hate to money
    guns to paying respect to the recently departed.

    It’s just an opinion of course and you can hurl all the insults at me as you want but when such an embrace of hatred and guns and a total lack of respect for people who have died in such a tragedy happens like this, I see a de-evolution of civilized behavior. It’s exactly what I thought would happen after 9-11 and it is in full display today. The guns might be able to be removed from the cold dead hands but that hate, wow that will follow you beyond the grave.

  4. Gridlock is great for multinational corporate profiteers.

    Wise checks and balances with nonpartisan sane representatives working on behalf of the people would be best for citizens, and certainly a check to the autocratic tendencies of the crazy orange/grey haired buffoon is a step in the right direction, but the sad reality is that the USA is a bitter divided bipolar nation that can’t even agree on anything. This is the downfall that Russia wanted, and partisan asswipes on this board (D, for one) demonstrate every day how low discourse has fallen. D is not interested in solving problems. He’s a stooge paid to disparage fellow Americans who choose not to suck trump’s little weenie.

    Until the silent majority of decent, sane, moderate voters oust both corrupt parties from power, the gridlock will continue and America will fall further behind in economic competitiveness with the emerging trading blocs around the world. Making America great relies on a healthy labor supply, and that requires universal affordable preventative healthcare and it requires a steady influx of able bodied go-getters who are willing to work hard. Much harder than the undereducated, massively indebted, lard ass couch potato gamers, social media punkes, and opiod addicts that America has bred in the last generation. Neither party is willing to solve anything on these massive issues, but D will find a reason to blame the other team.

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