FOCUS: U.S. equitiesAs poor as September was in the financial markets, October was its mirror image. These extremes happen with regularity in markets, fair value is just a pit stop on the way to oversold or overbought. Such volatility is easily explained. The recent U.S. Federal Reserve statement that sounded somewhat dovish was followed within minutes by a hawkish-sounding Fed chair, Jerome Powell.
U.S. mid-term elections normally tilt in favour of the opposition and create a form of political impasse. Markets like that. Historical studies illustrate that the second half of presidential cycles provide superior returns. Since 1948, when a Democrat occupies the White House and Republicans take control of Congress, the market has returned almost 17 per cent annualized for the remainder of the presidential term.
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