Market Rally

Forbes is reporting that the midterms elections largely followed expectations. With congress in gridlock, it could be favourable for investors. However, the effects of the tax cuts are waining and further tax cuts aren’t expected. For this reason, many investors are starting to look outside of the US for value stocks.

Rick Rule on Market Rebound

The US Midterms–happening today–are usually bad for the incumbents. Tomorrow, we could have a rally because there’s so much liquidity given the U.S. tax cut, artificially low interest rates. If the Democrats control both houses, liquidity would diminish and be bad for markets though. Also, there could be gridlock ahead in Washington but good for markets, because there’d be no interference from either party. Commodities should rise on a valuation basis. The commodities complex id priced near/at the price of production. Also, commodities are also economically sensitive–we are in the 9th year of an economic recovery and he can’t see this lasting. Also, Americans and Canadians make the mistake from looking at the world economy through an American lens. We should consider MANY parts of the world instead.

We could see a rally because of the liquidity due to the tax cuts and the low interest rates. A gridlock for Washington might good for the markets as non of the parties would interfere.