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Will Electoral Chaos Wreck The Market?

Will Electoral Chaos Wreck The Market?

“Suddenly, nothing worries this stock market… VIX futures contracts for November and December receded sharply, reflecting less anxiety over a contested election result.”

Barron’s (Oct 12, 2020)

“Gridlock Is good”

In a recent interview, I answered a question in an off-handed way, which I now regret. I was asked about the possible impact of a messy election on the market.  

The public fears this sort of prospect, apparently.  

Last year, a poll by Investors Business Daily (IBD)
IBD
and its polling partner Technometrica, surveyed 903 people, asking “Which of the following poses the greatest risk to the current U.S. economy?” 

At the top of the list was “gridlock in Washington.” (This was before Covid of course.)

Disarray in government, such as might be created or exacerbated by a contested vote, cannot be a good thing for the country, right? And since we know that what’s bad for the country is bad for General Motors
GM
, it must therefore be bad for the stock market. 

But IBD offered a knowing contradiction: 

  • “The truth is that they’re wrong. Gridlock is not a threat to the economy. If anything, at this point, it’s a potential blessing.” 

“Gridlock is good” [GIG] is the belief

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