**Why Midterm Election Years Are Tough for the Stock Market**
**These months are historically the weakest for the market in a presidential term. Aside from coincidence, there are several possible explanations.** **By Jeff Sommer, The New York Times, April 22, 2022**
**<snip history>**
**In the first half of a presidential term, when the White House and Congress get down to the mundane business of governing, there is frequently a compelling need to pare down government spending or to encourage (substitute “pressure,” if you prefer) the nominally independent Federal Reserve to raise interest rates and restrict economic growth. The best time to inflict pain is when a presidential election is still a few years away, or so the theory goes.**
**As Mr. Hirsch told me back then, it’s good politics “to get rid of the dirty stuff in the economy as quickly as possible,” an exercise in fiscal and monetary restraint that tends to depress stock market returns in the second year of a presidential cycle....** [end quote]
That goes extra in 2022 when the Fed will raise rates and do Quantitative Tightening to try to quell rampant inflation.
Expect a tough year for stocks in 2022 but a spring-back in 2023…unless the Fed (plus other Macro problems) cause a recession, which is likely.
No-one can say METAR isn’t on top of what’s going on with the stockmarket.
It’s the bottom line that counts.
I’m starting to doubt that the March low was the bottom. The good news is that with lower prices, stocks are not as inflated – growing (shrinking?) into their valuation.
The Captain
From the Captain’s watch list
Down from all time high
**Down% Symbol Company**
96.7 NNDM Nano Dimension Ltd.
95.2 XL XL Fleet Corp.
94.2 EVGN Evogene Ltd.
91.6 SFIX Stitch Fix, Inc.
90.6 NVTA Invitae Corporation
88.4 PSNL Personalis, Inc.
88.1 QS QuantumScape Corporation
87.8 PTON Peloton Interactive, Inc.
87.3 DMTK DermTech, Inc.
86.8 FSLY Fastly, Inc.
86.7 PACB Pacific Biosciences of California, Inc.
85.9 TSP TuSimple Holdings Inc.
85.4 SSYS Stratasys, Inc.
83.9 EDIT Editas Medicine, Inc.
83.0 LSPD Lightspeed Commerce Inc.
82.1 ZM Zoom Video Communications, Inc.
81.7 SPWR SunPower Corporation
80.8 UPST Upstart Holdings, Inc.
80.2 TDOC Teladoc Health, Inc.
42.6 ENPH Enphase Energy, Inc.
18.3 TSLA Tesla Motors, Inc.
The Covid economic shutdown and emergency stimulation by the Fed and Congress were literally once-in-a-generation actions. They were far more intense than the stimulus after the 2008 financial crisis. That’s why we have inflation now.
Go back to 1980-82 for the market’s reaction to a Fed that is determined to control inflation. And the markets (stock and bonds) were not in bubbles in 1979 as they are now.
The March low was not the bottom. I think the bottom will happen in October.
The March low was like the earthquakes that happen before a volcano erupts. It was a warning
The probably Chinese banking crisis real estate based and the highs in FED interest rates coincide with early 2023? The FED might have put off their actions raising rates to a point where supporting the US economy later in 2023 becomes an options as needed. Plans within plans the FED economists map it out a thousand ways from Sunday.
