POLITICS AND THE MARKETS

Politics and markets are often intertwined on a short term basis.

News channels that are broadcasting 24 hours a day are in constant need for something to keep viewers watching. The more people watching, the higher the ratings and the more money the networks make from advertisers. Boring news doesn’t keep people watching, but news about potential impeachable offenses or possible colluding with our enemies is good for their revenues. The news media does not need a lot of hard evidence to generate some headlines that grab your attention.

Bill Clinton spent a lot of his time in office fighting various charges. In 1998, he was impeached for perjury and obstruction of justice by the House of Representatives. FYI- the S&P 500 was up over 28% in 1998.

Wednesday May 17, 2017 the Dow Jones Industrial Average closed down 372 points with most reports attributing the decline to troubles in the Trump White House. The general bond market was up approximately .5% and gold up 1.6% - a good example of why we implement diversification to help smooth out declines like this.

But the bigger point is how the stock market performed in 1998 when the President of the United States was impeached. Warren Buffet was interviewed last week and said that he does not think one bit about elections when he invests his money in the stock market.

Consumers and businesses have a far greater impact on the economy than does the government. Federal, state and local spending account for approximately 18% of our economy, with private consumption, investment and trade accounting for 82%. Actually the economy influences who we pick for president more than the president affects the economy.

The media can lead us to think that the markets are tied to the ups and downs of the White House. Well, we know that short term there can be a link, but longer term it is the economy, profits and interest rates that drive market returns.

The market had been unusually calm and volatility is bound to come back at some point, and various reasons will be given for its return. We need to remember that some degree of volatility is the norm for markets and not get caught up in the scary headline of the day.

Thank you as always and do not hesitate to give us a call with any questions, thoughts or concerns you may have.

Thanks Again,
Beach

Views expressed in this newsletter are the current opinion of the author, but not necessarily those of Raymond James & Associates. The author's opinions are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. There is no assurance these trends will continue or that forecasts mentioned will occur. Diversification and strategic asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future results. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.