The Election is Finally Over: We Have Divided Government

I understand that no one is 100% happy with the results of this or any election.

For those folks who wanted the House, Senate, and Presidency to remain all Blue, you are disappointed. For those that desired the House, Senate, and Presidency to turn all Red and pass your agenda, you remain disappointed. 

For the equity markets, they love a divided government. It represents a system of checks and balances that are meant to keep both sides from spending too much money and gaining too much power. 

Throughout history, the United States economy has done better with divided government, as have the equity markets. In fact, more often than not, one-party rule has led to increased deficits and recessions. Point in fact today, we have entered a period of recession, inflation, and an overall negative view of the economic future.

Here is what now lies in front of us for the next two years:

• Pressure to lower government spending and get the budget somewhat in control.

• Pressure to deal better with China, our most important rival and adversary.

• Pressure to improve the energy sector and get back to energy independence.

• Nancy Pelosi, Mitch McConnell, and Chuck Schumer will feel pressure to resign from their leadership positions.

• Pressure will be put on President Biden to not seek another term.

• Pressure will be put on the Federal Reserve to bring back lower interest rates.

• We will begin the most expensive Presidential race in history, with a new non-incumbent from each side. 

• Lots of investigations to come of Hunter Biden and the FBI.

I love the political world. It’s fun and dynamic, but unfortunately, can be polarizing and negative. In any case, enhancing the conversation about improving the economy, lowering inflation, and augmenting the energy sector to lower gas prices are great conversations to have.