The Political Economy in Perspective

By all accounts last week was a very good week for the President of the United States and a tough week for the Democratic Party. The outcomes of three major events raise several issues that likely will impact the political landscape. Whether these events have a lasting effect, i.e. impact the November election, or are simply a temporary blip on the political landscape no one really knows. We believe that last week’s events will have a lingering effect and could very well impact the November election outcomes. Our rationale for this conclusion is straight forward. In a reasonably efficient market investor continuously evaluate the inflow of information and adjust their market valuation accordingly. Much of the market valuation and forecast methodology can be transferred to the political economy. For example, a strong economy, a rising stock market, rising employment are considered indicators of an improving economy and job approval ratings. If this correlat

ion is causal as we have described , then an improvement of these indicators results in an improvement in the incumbent reelection chances. Such an approach is useful when assessing the likelihood of success of the different presidential candidates , a party’s control of the White House , the Senate and or Congress.

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Information contained in or attached to research report is for informational purposes only, does not constitute investment advice, and is not an advertisement or an offer of investment advisory services or a solicitation to become a client of LJE. The information is obtained from sources believed to be reliable, however, accuracy and completeness are not guaranteed by LJE.

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