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Midterms can be stock market gold, but wild cards remain
Government’s ‘free stuff’ ultimately costs economic growth: Lance Roberts
RIA Advisors Chief Investment Officer Lance Roberts discusses how the gap between the upper class and mid-lower classes is getting smaller.
Midterm election years historically have created a windfall for investors eliminating uncertainty.
Historically, within three months or in 60 trading days, all three of the major market averages have gained, on average, between 6.4% and 9.2%, as tracked by Jeff Hirsch’s Stock Trader’s Almanac.
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However, this year the reaction may be more muted, according to Goldman Sachs.
MIDTERMS AND YOUR TAXES
"Most observers appear confident that Republicans will win a House majority. That expectation, along with the difficulty congressional Democrats had in passing a scaled-back fiscal package this year, has likely led to expectations that Congress will do little next year regardless of the election outcome," according to a research note by Jan Hatzius, head of Goldman Sachs' global investment research division, and his team.
The Senate is still too close to call as of Election Day, they added.
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Hatzius, who is also the firm’s chief economist, also says there will be macroeconomic impacts with a divided government.
"The need to raise the debt limit in 2023 could lead to meaningful fiscal tightening in 2024, and divided government could make a fiscal response to a potential recession less likely to pass and smaller if it does," the note added.