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With U.S. midterms behind us, let's focus on what really matters


I could try to tell my colleagues that I did a lot of overtime analyzing election results this week, but I don't need to. Anybody who knows me understands that I enjoy election nights.

Whether I'm watching provincial, federal or midterm elections in another country, I mostly appreciate the human nature on display as individuals put their names on a ballot and elaborate on their platforms and communicate to their constituents. I also enjoy seeing the results and hearing the sometimes brutally honest voice of the voter.

Today, both political parties in the United States are claiming victory as midterm election results are counted and finalized.

No surprises last night

Fortunately there haven't been many surprises; things have played out largely as we've expected: We've learned that the Democrats will lead the House of Representatives with a small but meaningful majority, while the Republicans will lead the Senate after winning a few more seats to secure a narrow majority.

Although the results show just how politically divided Americans are at the moment, politics don't influence markets over a 12-month period, policies do. As both sides claim victory, it is still too soon to know what legislative priorities each side will have going forward.

Less uncertainty is always good

For markets, any uncertainty creates volatility. Markets rallied Wednesday morning as the results came in and some of that uncertainty dissipated.

That said, midterm elections are not a surprise event. Different results and their ramifications are both areas we've examined closely in our regular analysis of geopolitical events; our investments are positioned accordingly.

Analyzing what really matters

Now that midterm elections are behind us, from a global macro perspective we can now focus on economic growth, trade, interest rates, central bank policy and corporate earnings – all of which will play a significant role in our positioning going forward.

For example, when reviewing current conditions to make tactical portfolio adjustments, our analysis at the moment includes, but isn't limited to watching Italy negotiate the amount of debt the country can shoulder with the European Union, a number of Brexit related scenarios and most importantly, the ongoing trade dispute between China and the U.S. This is just a portion of the investment considerations and decisions being made within MD portfolios every single day.

As always, we will continually analyze these scenarios and others, as we closely monitor geopolitical events which could impact our positioning and markets at large.

If you have any questions about your portfolio, please contact your MD Advisor.