Here Comes The Election

Among the many variables expected to affect the markets this year will be the sideshow we affectionately call a Presidential election year. News about the elections will garner headlines throughout the year, competing with events such as two wars which are being fought on the other side of the globe. Politics and government news has always affected the economy, for example threats of shutting the government down over budget bickering. However, the Presidential election season has the ability to take the rhetoric to another level.

As usual, we will not get into politics in this commentary. However, as events unfold which could affect the economy’s performance, connections will be made. Just remember, as noisy as things get, we must separate the rhetoric from reality. For example, while there may be threats of a government shutdown, an actual shutdown rarely happens, and essential services are not shut off if it does happen. This does not mean the markets will not react to the noise and the last-second deals which inevitably come into place.

Meanwhile, we still must react to the day-to-day happenings. Next week we will witness a triple whammy to end the month of January. In the past 10 days we have had reports on inflation. And next week we have the first meeting of the Federal Reserve’s Open Market Committee for the year, the first data from January in the form of the jobs report and the first measure of economic growth for the 4th quarter of last year. As Hatcher said in the movie Rundown – “That’s a lot of cows”! Busy week coming up.