TRANSKRIPTIO 🔗
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Thank you for joining Brett and I for today's episode
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of the Simply Financial Podcast. I'm your host, Christopher Calandra.
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I'm joined with Brett DiPasquale, part of the team here
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at Elliott Wealth Management, represented by the two of us.
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We want to increase your financial IQ with today's discussion,
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which is going to be brief, but we want to
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cover sort of post-midterm election analysis and sort of thoughts
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for the markets and the economy moving forward. Brett, does
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that sound like a pretty good summary of what we
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want to talk about?
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People are talking about it, so I think it's pretty good.
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So to set the stage, if you don't know, if
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you've been living under a rock, the Democrats had a
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wildly successful, uh, midterm election results. Uh, they picked up,
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I don't know how many seats in the house, but
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they got firm grip on the house. They really over, uh,
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over produced expectations in the Senate that they have 56
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Senate seats. And by historical standards, this is pretty normal.
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Often the out party does well in the midterm elections.
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That's pretty normal. I do think with that said, though,
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the strength and breadth of the Democrats' success on Election
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Day was surprising, even to the most optimistic Democrats and Republicans.
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So that's kind of where we find ourselves in terms
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of our clients and the work we do with investment
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advisory and financial planning and investment management. What do you
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think this means for everyone, Brett?
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I honestly don't think it means much. I mean, obviously,
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we knew going into the midterm elections, there was one
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of three outcomes that was going to come about. And
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there was a pretty strong sentiment that the Republicans weren't
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going to hold both the House and the Senate. It
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was looking like the Senate could have been up for
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grabs now that we see that it definitely wasn't. But
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I mean, overall, it doesn't really mean much for markets.
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Markets like certainty. And they definitely got some certainty on
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Tuesday night.
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Yeah, and as of this recording, the early results for
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the markets, the market's knee-jerk reaction has been nothing but positive, right?
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Yeah, correct. Yeah, it looks like it'll rally very nicely
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going forward. Might have a few bumps in the road,
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but overall, everything looks strong.
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Do you think, Brett, that, again, we don't know how
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the markets will perform by the time this is published?
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Of course, you know, there's a little bit of a delay.
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between when we record and when we publish. But let's
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just assume that this short-term trend continues. The market thrives
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after the election. Do you think that's more because the
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markets are welcoming of Democrat policies and legislation that might
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be passed? Or do you think it's more of what
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you said that The market's just happy it has more
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certainty than it did the day before the election. Or
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the third choice, do you think it's more welcoming of, hey,
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we're going to have gridlock, not much is going to happen,
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and we could just focus on the economy?
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I think it's a combination of number two and number three.
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I think that the certainty is the number one thing.
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I think number two would also be that we will
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have gridlock. But it's going to be interesting to see
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the direction that the new Democratic House and Senate take,
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whether it's going to be more litigation against the current administration,
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what type of ideas come out of them, and whether
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they're accepted or not. And I think that's going to
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be really the key, especially in 2027 before an upcoming
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2028 election, which I can't believe we're even talking about that.
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I agree with you. And I think the first option
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I gave you is the least important. And that is
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because it's very unclear to me, and I think to
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most people, what the Democratic Party will want to do
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with this new power that it has in Congress. Most
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of the politicians that ran They have varying ideas on policies,
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and of course they have some ideas, maybe good, bad,
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and ugly, whatever. But I don't think there's really a
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unifying initiative that the Democrats seem to be able to
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rally around. So it's very unclear what they're going to
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do with this power, if anything. Would you agree with
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that assessment?
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Yeah, I think the biggest plan for them as of
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now is is going to be to try to undo
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some of the things that have been done over the
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past two years. Whatever new ideas come out of that
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are yet to be seen, but even looking forward a
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little bit, we've got some big things that could possibly
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be reversed going into 2028, including the new tax cuts
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from last year. So a lot of those things are
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yet to be seen, but it's gonna be interesting.
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Even if they're passed out of both the House and
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the Senate, Seems likely the Trump, President Trump would veto them.
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That is his signature legislation. So I think that's sort
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of dead on arrival. Is that fair?
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I would hope so. I would hope so.
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Yeah. And then from a historical perspective, these swings in
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midterm elections, it's pretty common. You know, Obama in the
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midterm elections, he lost lots of seats. Clinton experienced that.
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I believe George W. Bush did too. We had less
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of that in the Biden administration. But there is a
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historical precedent for this. This is not new territory. But
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from a historical perspective, we've looked as market watchers and
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knowledgeable about the history of the markets. This is really
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no big thing, right? Which is what you said at
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the beginning.
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Yeah, I don't think so. I don't think so at all.
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I was in a meeting with you. We don't do
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many joint meetings these days, but we were together in
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a client meeting before the election. One of the things
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I got wrong, by the way, was I said that
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I thought the Republicans would hold the Senate. Boy, that
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was wrong. I probably should call Marianne and apologize. You
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thought the Democrats would take both the House and the Senate.
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So you were correct. One of the additional points I
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had made in that meeting is one of the good
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things is with the certainty you talked about, And now
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with this divided government that probably means mostly gridlock, I
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think the positive is that the markets could then focus
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on what's happening in the economy with this AI revolution
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and with corporate profitability and the job market being healthy.
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I think the positive is that there's going to be
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less going on in the political world that might impact
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the markets. Could be wrong about that, but that's my
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current thought. And that means the markets could focus on
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the real economy. And there's some good things in the
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real economy, especially if we could get things wrapped up
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in Iran and have oil prices come down some more.
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What do you think about that?
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Yeah, I think so. I think the biggest thing right
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now is the Iran war. It's inflation that's kind of
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piggybacking off of that with energy prices. So I think
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that's a big one. And I'll also mention this, too.
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Just taking a look at the big picture, which is
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what we've been discussing with clients a lot, is the
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market's had a great run since 2022. So we've had
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some really, really good years. And historically, midterm election years
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do underperform. So big picture-wise, where we're at for the
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year in 2026 looks great. So with the strength of
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the economy that you were mentioning, businesses are doing well,
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people are spending money, it's a lot of green flags
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for 2027.
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Very good. Well, let's leave it there. Everyone that's listening,
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if you have any questions or want to discuss any
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of this further, especially if you're freaked out about the
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results of the election, you could reach out to us.
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If you're clients, you have our email and phone numbers,
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but for anyone else, you could go to our website, elliottwealth.com.
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You could sign up for a complimentary consultation, get more
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information on the work we do for clients, how we
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help our clients win with money. Thank you for listening
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to today's episode of the Simply Financial podcast. We will
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be back with you on the next episode very soon.
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