Financial media are busy spreading the story that midterm elections kick off a bull market cycle in stocks. It’s not without statistical foundation, but in the scheme of things it’s a mere asterisk next to the major market forces of inflation, interest rates, and the bond market. We’re in a bear market, and it has to be remembered that Wall Street is in the business of selling stocks, and will play up any angle it can find to gin up buying interest. For evidence, look no further than the financial media’s utter silence on the hard fact that stocks have lost ground to that “pet rock” known as gold so far this millennium.
Synthetic Systems, by the way, fully takes into account election cycle seasonality. However correct or incorrect its forecasts may be, resist the temptation to add seasonality to its conclusions … it would be double counting. As we noted when we posted the last update, seasonality is on the list of factors covered. It is not an “external” factor to be separately accounted for. If anything, the relatively new phenomenon of a period of uncertainty while results are fully tabulated might warrant separate consideration, and not necessarily in the bullish direction.
Nuff said for now … rest assured tomorrow’s CPI release will be an order of magnitude more significant for financial markets.