Midterm primaries are underway. Although the midterm elections are still five (5) months away, it is apparent that a Republican or “Red” wave is spreading across the nation. The Cook Political Report with Amy Walter is forecasting that the GOP will gain between 20-35 seats in the House of Representatives. Additionally, a recent national poll from Quinnipiac University showed Republicans with a four-point edge on the generic ballot. Furthermore, although the Democrats currently control the Senate; it is by the narrowest of margins. Presently, fifty (50) Republicans , forty-eight (48) Democrats and two (2) Independants (who caucus with the Dems) make up the Senate. In the event of an even vote, Vice President Kamala Harris currently breaks any tie, giving the Dems a miniscule advantage. Come November, thirty-five (35) Senate seats will be up for grabs. Of these, fourteen (14) are held by Democrats and twenty-one (21) are held by Republicans. The GOP is feeling confident that they will be able to maintain their seats and win over some of those Democrat seats due to President Biden’s low approval ratings. This will allow the Republicans to regain control of the Senate. The reality is that things appear to be getting worse for Democrats the closer we get to the election.

What does this mean for the stock market and the economy? According to Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania, “The most favorable outcome for markets would be a Republican win in both the House and the Senate….If Republicans take the House and not the Senate, that would also be a relatively favorable outcome.” Forbes analyzed market data going back to 1945 to review how election results impact the stock market. According to the data, best returns have come under a Democratic President that is kept in check by a Split or  Republican Congress, with the S&P 500 average gain being 13.6% under a Split Congress and 13.0% gain under a unified Republican Congress. If history is an indicator, the Dems loss in the midterm elections could mean a huge win for investors. 



Voters also express a favorable advantage in Republicans on a range of economic issues. In a poll taken earlier this year, forty-eight percent (48%) of respondents said that they had more confidence in Republicans handling the economy compared to thirty-eight percent (38%) favoring Democrats. This comparison is significant as the poll also found that the economy was the top concern among registered voters. Voters also expressed more faith in Republicans over the Democrats on the issues of gas prices (45% to 36%), jobs (45% to 41%), taxes (45% to 39%), inflation (46% to 34%), crime and safety (45% to 35%). 

President Biden’s  “plan” to fight inflation is actually a blueprint for more misery: more government spending, more labor regulations, more attacks on energy production, and massive tax hikes on businesses. A full economic recovery—including functioning supply chains—requires a full reopening across the world, unleashing of our fossil fuel energy resources here at home, and a cessation of using the central bank to finance deficit spending.

A“red sweep” of the midterms will bring accountability to President Biden and the Dems government irresponsible spending habits. Under these conditions, the stock market should thrive, and might be our country’s best chance at an economic recovery. 

Tickers to consider: AAU.V, SSVR.V,  CEI,  FRSX, RNAZ, PPCB & TZA

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