Midterm Elections

Article Index

Republican Midterm Election Victories Could Crush Stocks and Bonds Before Sending Them Higher

Markets have rallied on the belief that resounding Republican victories in yesterday's (Tuesday's) midterm elections will reset Washington agendas and lead to more business-friendly policies.

However, market participants may be surprised to find that the successful pursuit of three major Republican principles could initially sink stocks and bonds before creating a base from which they might rally later in 2011.

Indeed, following the adage "buy the rumor, sell the news" might be the best strategy for investors right now.

To find out more about how Tuesday's elections will impact the stock market, read on...

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Question of the Week: Readers Eager for U.S. Economy Overhaul After Midterm Elections

A tense Congressional tug-of-war carried on before midterm elections this week as Republicans and Democrats fiercely campaigned for seats in the U.S. House of Representatives and Senate.

This Republican-Democrat contest was the hottest in years as voters debated over which candidates would be the most likely to lift the United States out of a morass marked by near-double-digit unemployment, sluggish economic growth and a terrifying $1.29 trillion budget deficit.

Although Republicans were poised to take control of Congress, a significant number of seats remained vulnerable until the very end.

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We Want to Hear From You: What Stock Market Moves Will You Make After Midterm Elections?

Now that the hotly contested midterm elections have been decided, U.S. voters will watch to see if newly elected officials will deliver on promises to lift the nation out of its economic morass.

Many voters made their decisions out of frustration over current economic conditions. Government spending, ineffective stimulus measures and stubborn unemployment were the biggest issues among voters this year. And given the potential for change in U.S. economic policy, investors are eager to see what the stock-and-bond markets will do in the months to come.

Although there is unlikely to be any quick decision making in Washington, investors will hope for the status quo in at least one area - a continued market rally, which is the norm for midterm election years.

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Voters Frustrated With U.S. Economy Turn to Republicans in Midterm Elections

Republicans predicted huge gains before today's (Tuesday) midterm elections, as voters fueled by frustration over the struggling U.S. economy are eager for change in Washington.

A poll in The Wall Street Journal asking voters which party they hoped would be in charge gave the GOP a six-point edge of 49% to 43%. About half of the Republican voters said frustration and protest over Democratic policies fueled their election decisions.

"The Democrats are about to feel the full force of a tidal wave, tsunami or a 7.0 earthquake," said Democratic pollster Peter Hart, who co-directed the survey.

Survey co-director and Republican pollster Bill McInturff called the results a "grim set of data that projects a larger election for Republicans than 1994."

In 1994 the GOP regained Congressional power with a gain of 54 seats in the House of Representatives after 40 years in the minority spot. This year they need a net gain of 39 seats to win the House.

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How Far Will Fed Go To Get Economy Rolling?

The market has been marking time lately as investors await the election results and the much -anticipated Federal Reserve announcement after the Federal Open Market Committee wraps up their meeting on Wednesday.

The Fed is expected to provide a peek into its next round of quantitative easing, now considered a fait accompli. The only question seems to be how far the Fed will go to reinvigorate the economy.

But unless Republicans fail to capture the House of Representatives on Tuesday, the Fed's next move could provide market bulls with just the ammunition they need to send the bears running for the hills.



Read on to find out how far the Fed will go...

Will Midterm Elections Ignite a Stock Market Rally?

The Democrats and Republicans have spent a record $3.5 billion in preparation for this year's midterm elections. But regardless of the outcome - whether you're a Democrat or Republican - the good news is that the stock market traditionally has performed well during midterm election cycles.

"The question is, 'Did the markets go up in the midterm election years by more than average in non-election years?' Brian Gendreau, market strategist for Financial Network told U.S. News & World Report. "And the answer is, 'Yes, by a huge amount more.'"

In the period from 1922 to 2006, the average gain of the Dow Jones Industrial Average over the 90 trading days following midterm elections (roughly November until mid-March) was 8.5%, according to a new study authored by Gendreau. That's almost 5% higher than the Dow's gains in non-election years.

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An Open Letter to Washington: How to Fix the Deficit and End the Bush-Tax-Cuts Debate

Dear Mr. President and members of Congress:

In the months that follow Tuesday's midterm elections, and into the New Year, you all face three very significant challenges. You must:

  • Find a solution to the Bush-tax-cuts controversy.
  • Rein in the huge-and-growing U.S. budget deficit.
  • And better police Wall Street, which got us into this mess in the first place.
You can solve all three of these problems with a single, simple proposition. And you can do so without having to ask U.S. taxpayers to dig into their wallets or savings.

Let me explain.



To see Hutchinson's solution, and to see how to join our campaign, please read on...

Investment Strategies: Three Ways to Profit - No Matter Who Wins Tuesday's Midterm Elections

If you're worried that next week's midterm elections could further cloud an already-uncertain investment landscape, take a page from the investment playbook of Money Morning's Keith Fitz-Gerald: Position yourself to profit no matter which party wins on Tuesday.

During an interview with Fox Business Network journalist Stuart Varney yesterday (Tuesday), Fitz-Gerald detailed three strategies that will afford investors both safety and significant profit potential - whether the Democrats or Republicans carry the day.

For the full story - and a look at the video - please click here...

We Want to Hear From You: What Are the Top Three Issues You Want To See Addressed After Midterm Elections?

A tense Congressional tug-of-war will come to an end in less than a week, when the intensely sought-after seats in the U.S. House of Representatives and Senate are filled after the Nov. 2 midterm elections.

The Republican-Democrat contest is the hottest in years. The voter debate is about which candidates will be the most likely to lift the United States out of a morass marked by near-double-digit unemployment, sluggish economic growth and a terrifying $1.29 trillion budget deficit.

As campaigning time wanes, it's clear that an increasing number of seats are vulnerable.

"Let me tell you something," U.S. Vice President Joe Biden wrote Monday. "I've been around campaigns for a long time and I have never seen a midterm election with this many races in play."

Experts described this campaign season as more volatile than most because of a major possible shift in power.

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Question of the Week: The Battle Over Bush Tax Cuts is Destined for Deadlock

Democrats and Republicans have staked out their territory in the battle over the Bush tax cuts in the run up to November's midterm elections. However, readers remain unconvinced that the two parties will reach common ground on the issue anytime soon.

Most Republicans want to see all expiring tax cuts extended. Senate leader Mitch McConnell, R-KY, last week proposed legislation to continue the tax cuts indefinitely, wanting to show party unity after House Minority Leader John A. Boehner, R-OH, hinted that he'd be willing to compromise and vote for U.S. President Barack Obama's plan of continuing only middle-class tax cuts.

"If the only option I have is to vote for some of those tax reductions, I'll vote for them," Boehner told CBS's "Face the Nation" Sept. 12. Boehner had previously proposed extending the Bush tax cuts for two years.

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With Mid-Term Elections Looming, Will Democrats Fire Back with a Second Stimulus

Data last week showed a job market that's careening down a steep street with no breaks. Yet investors were able to shrug off employment concerns, as the stock market actually ended the week up 1.5% due to that rockin' Monday on the first day of the month.

That's because there is growing speculation that the Democrats are plotting a surprise stimulus in the run up to November's mid-term elections.

Let me explain...



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Battle Over Expiring Bush Tax Cuts Likely to Shape Fall Elections

A colossal battle is shaping up in Congress over what to do about the Bush-era tax cuts that are set to expire at the end of this year. It's an issue that entails sufficient economic and political consequences that could shape the fall elections and fiscal policy for years to come.

The expiring tax breaks received little public attention this year as Congress tussled with heavyweight issues like healthcare reform and financial regulation. But the fate of the tax cuts will be a major focus of debate in September when lawmakers return to Washington from their summer recess and the midterm campaign gets rolling.

"It has enormous ramifications for the fall and clearly will be one of the dominant issues," Sen. Ron Wyden, D-OR, told The New York Times. "This is code for the role of the federal government, the debate over the size of government and the priorities of the nation."

Democratic party leaders, including President Barack Obama, have said they want to extend the tax cuts for individuals earning less than $200,000 and families earning less than $250,000, while letting the cuts expire as scheduled for those exceeding those thresholds.

Most Republicans, and some Democrats, want to extend the tax cuts for everyone, characterizing any tax increases on anyone in this fragile economy as unwise. If no action is taken, taxes on income, dividends, capital gains and estates will all rise.

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Money Morning Mailbag: Will Elections and a Resignation Open the Door for U.S. Budget Changes?

Administration officials announced this week that the White House Budget Director Peter Orszag plans to leave U.S. President Barack Obama's Cabinet before work on the next U.S. budget begins, which could be some time in the next few weeks. Orszag would be the first member of President Obama's Cabinet to exit.

The U.S. budget is under scrutiny as the budget deficit is forecast to hit $1.6 trillion by 2011. A President-appointed panel is currently working on budget reduction plans to be presented in a report due in December.

Orszag's strategies as former head of the Congressional Budget Office (CBO) supported a stop to deficit spending, but once he was placed in the budget driver's seat, making significant cuts was nearly impossible with recovery progress slow and unemployment high. Orszag instead ended up helping outline the $787 billion stimulus package in 2009.

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The Midterm Elections: No Panacea for the U.S. Economy

With many of the primaries past, and the November 2010 midterm elections less than five months away, it is worth taking a look at what policy changes we might expect from the next U.S. Congress. Both the political and economic worlds have changed one hell of a lot since the last elections, in 2008.

Thus, even though U.S. President Barack Obama is slated to remain in office until at least 2013, the Congress elected in November will be very different from the one that was elected in November 2008.

For a view of the future after the U.S. midterm elections, please read on...