Sunday, August 12, 2018

Mueller Investigation Akin To Poison Ivy. Michael Ordman Updates. Market Thoughts and Trends.



Just another week in Mueller's Collusion Land!

Mueller's investigation  has become like a poison ivy vine that is itching to ensnare every one it touches.  The man and his gum shoe staffers are out of control.  It is government run amuck.  There seems to be no end to where Mueller believes he can tread.  Whether you like Trump or not, Mueller's impact is disruptive to the operation of the office of the president.  It undercuts the credibility of our nation's chief executive.

There is plenty of evidence Russia intruded in our election and attacked our nation through technology which will be an ongoing attempt to disrupt our faith in our nation's voting process.  Most important of all, there is sufficient proof Hillary, The FBI and various senior members of the nation's entire intelligence apparatus were under the control of those who hated Trump, wanted to undercut his legitimate ability to function and to destroy his elected status.

This should be of concern to Democrats if they have any interest in the welfare of our nation, regardless of who is sitting in The Oval Office. If Mueller's investigation is allowed to continue it  will create serious consequences regarding the results of the mid-year election.Winning at any price may be the goal of Democrats who seek to impeach Trump,  protect Obama's withering  legacy while bringing about a course correction in where our nation is heading. This is the blood thirsty game those engaged in wicked partisan politics play.  It is a vicious game, it is a destructive game.  When the nation's best interests become secondary to a desire to recapture political power at any price those who care for this country must act.

This is what the upcoming mid term election is all about. Will those who care about America rise to the occasion, show up and make their disgust known? It is time to call a halt to intimidation and character assassination.  It is time to embrace capitalism and reject socialism.  It is time to get return to the business of putting our nation back on track.  Only time will tell if we are incapable of doing so because we are irreparably a house divided .
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A laundry list of Israeli accomplishments and progress from Michael Ordman. (See 1 below.)

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Market update.

I am not endorsing Zack's thinking.  Just posting for it's interest.

As for my own thoughts, now that the earning reporting season is about over, I believe, in addition to the mid-term election, the next two factors impacting the market will be resolutions, if any, of the trade confrontation  ( do not expect much regarding China just yet) and Fed Action.  Will they raise interest rates, how will they react to the rise in inflation and positive economic news?

My friend who writes The Rant is right to discuss action in The Middle Est but I am not sure it will take place and end as he has forecast.  Things never go as neat as one might wish and wish does not always beget the thought.

Israel doe not intend to occupy Gaza and would like to avoid a costly war, which will resolve nothing, and only lead to more calumny dumped on Israel which never wins in terms of public opinion.

On the other hand, Israel is unwilling to yield to Iran and given the opportunity might well be willing to rid the Middle East of the Ayatollah menace given a combined and united opportunity.

Earnings will continue to make good comparisons but at a diminishing rate and I suspect The Fed will raise rates but not be aggressive in their commentary. Near term, I see modest downward market pressure gaining the upper hand. (See 2 below.)
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Dick
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1)
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In the 12th Aug 18 edition of Israel’s good news, the highlights include:

  • Israeli scientists have discovered an enzyme to prevent spinal cord injuries.
  • An Israeli disabled children’s charity is recognized by the United Nations.
  • Israelis win top two prizes at European Debating Championships.
  • Whilst global coral reefs are dying, Eilat’s reef is growing.
  • Israelis have achieved ultra-low friction for boosting computer performance.
  • New direct flights from Israel to Washington DC and China.
  • Israelis win gold at athletics, acrobatics and ten-pin bowling for the blind.


ISRAEL’S MEDICAL ACHIEVEMENTS

New treatment for Leishmaniasis. I reported previously (see here) on Israel’s work to combat Leishmaniasis - a deadly parasitic disease common in the Middle East. Now Professor Shulamit Michaeli, at Israel’s Bar-Ilan University, is working to commercialize a compound that in 20 minutes kills two types of Leishmania parasites.
https://www.israel21c.org/nanodrug-tames-leishmaniasis-and-other-parasitic-diseases/

Reading memories in the brain. (TY UWI & TIP) Israeli scientists have discovered that both positive and negative memories are stored in genes within areas of the brain that can be retrieved even post-mortem. The findings could one day help treat patients with psychiatric disorders such as OCD, schizophrenia and trauma.
http://nocamels.com/2018/04/israeli-scientists-uncover-innovative-method-to-read-memories-even-after-death/
https://elifesciences.org/articles/31220

Enzyme can prevent spinal-cord damage.  Tel Aviv University scientists have discovered an enzyme that controls blood glutamate levels and could help patients recover from spinal injuries if administered soon after an accident. Reducing the release of glutamate after a trauma enabled lesions at the injury site to regenerate.
https://www.israel21c.org/new-study-offers-hope-of-recovery-from-spinal-cord-injury/

First Israeli coral-based knee replacement. (TY MR) I reported previously (see here) about Israeli startup CartiHeal which invented the Agili-C knee implant that uses coral-derived material to repair damaged knee cartilage. Doctors at Jerusalem’s Hadassah hospital have just performed the first Israeli Agili-C surgery.
https://www.jns.org/patient-receives-new-knee-made-from-coral-thanks-to-israeli-startup/

His ankle is now his knee.  Jacob A’s lower leg was amputated after a work accident.  But his foot was fine, so in Israel’s first “rotationplasty” operation, doctors at Haifa’s Rambam hospital turned it upside down and made the ankle joint into a knee joint.  Once Jacob has a prosthetic fitted, he should be able to walk normally.
http://aforam.org/his-ankle-replaces-knee-function-after-rare-surgery-at-rambam/

Bio-protection for life. I reported previously (see here) on Israeli startup Nobio (previously named Nanolock) and its revolutionary nano-polymer that causes bacteria to die immediately on contact. Nobio has just raised $3.6 million of funds to help it obtain FDA approval. See also new video.
https://www.timesofisrael.com/israeli-startup-nobio-creates-particles-that-kill-bacteria-on-contact/
https://www.youtube.com/embed/6N7IewAHQkM?rel=0 https://www.nobio.com/technology/

$4 million to advance cancer resistance testing.  I reported previously (Jun 2017) on Israeli biotech NewStem which is developing a stem cell platform to test cancer treatments in the lab before potentially wasting them on patients. NewStem has just received $4 million of funds from an unlikely source – Hollywood Media Corp.
https://www.timesofisrael.com/israeli-stem-cell-startup-raises-4-million-for-chemo-effectiveness-technology/

The future of medicine is being formulated in Israel.  British philanthropist David Dangoor writes that Israel is at the forefront of development of personalized medical innovations that can solve prohibitive and largely ineffective medical treatments being used in the UK and elsewhere.
https://www.jpost.com/Opinion/The-future-of-medicine-is-being-formulated-in-Israel-562881

Sweet protein gives hope to diabetics. Israeli startup Amai Proteins has synthesized the protein thaumatin, found naturally in the Nigerian katemfe plant, which acts as a sweetener but does not raise blood sugar or insulin levels. Amai have conducted initial test tastings and have raised NIS 3 million of funding.
https://www.israel21c.org/new-sweet-protein-holds-out-hope-for-diabetics/


ISRAEL IS INCLUSIVE AND GLOBAL

UN honors Israeli special needs youth movement. The United Nations’ Economic and Social Council (ECOSOC) has given “Special Advisor” status to Israeli NGO Krembo Wings (see here).  It recognizes the youth movement as a world leader, integrating disabled children with other children.
https://unitedwithisrael.org/israeli-youth-movement-for-special-needs-children-appointed-special-adviser-to-un/

First female legal advisor to Israeli rabbinical court. Shira Ben-Eli has been appointed to serve as a judicial assistant to the Jerusalem District Labor Court - one of the most senior positions in the Orthodox-run court system. The position involves close contact with the court’s decision-making processes.
https://www.jta.org/2018/08/05/news-opinion/woman-named-judicial-assistant-israeli-rabbinic-court

Israeli soccer to be color-blind friendly.  Israel’s Premier League is to adopt new kit guidelines to help color-blind supporters. Green and red have been defined as identical colors and if the colors of opposing team kits clash, the away team will be required to use an alternate outfit of black or white or stripes.
https://jewishnews.timesofisrael.com/israeli-football-league-to-become-colour-blind-friendly/

Jerusalem scores a goal for peace.  I reported previously (see here) on the soccer event organized by Kulna Yerushalayim that united so many of Jerusalem’s Arab and Jewish kids. Here is an Israel21c video of the event.
https://www.youtube.com/embed/Fvkw9dFqP1w?rel=0

“Jerusalem” for Guatemala volcano survivors. Israeli medical NGO Zaka is working with the Guatemala Jewish community to build 100 homes for evacuees from the recent Guatemala volcano eruption. The homes have been named, “The Jerusalem Neighborhood” and those completed are already housing affected families.
https://unitedwithisrael.org/israelis-spearhead-efforts-to-build-jerusalem-neighborhood-in-guatemala-for-volcano-victims/

Gala event to support humanitarian work of Israeli doctors.  The “Life & Hope” Project Gala, in support of the remarkable humanitarian work of Israeli doctors around the world, will take place on 9th Dec 2018, in Miami Beach, Florida. Performers include Gloria Estefan and the Miami Symphony Orchestra. https://friendsofziv.org/event/
http://www.nbc12.com/story/38555951/life-hope-red-carpet-black-tie-event-celebrates-humanitarian-israeli-doctors  https://newsblaze.com/world/israel/israel-added-value-humanitarian-aid-nation_134612/

Debating champions. (TY UWI) Israelis won the European Universities Debating Championship in Serbia. Noam Dahan and Tom Manor won the main competition, beating teams from Oxford and Cambridge Universities. Amichay Even-Chen and Ido Kotler won the “English as a Second Language” category.
https://www.jpost.com/Israel-News/Sports/Israeli-teams-defeat-top-European-universities-in-debating-564308


SCIENCE AND TECHNOLOGY

Boosting Indian agriculture. (TY UCI) Israel continues being a frontrunner on the world stage in agricultural technology. This video from I24 news shows how in a region of India with a rainy climate, this technology has enabled urban farmers to grow tomatoes successfully.  https://www.youtube.com/embed/nj-hgY9kFeg?rel=0

Eilat’s coral reef is growing.  I’ve reported previously (see here) on the excellent state of Eilat’s coral reef, in sharp contrast to the damage being caused to the coral reefs of other countries.  The latest report from Eilat’s Interuniversity Institute for Marine Sciences shows that Eilat’s reef is growing at a rate of 0.5% per year.
http://www.sviva.gov.il/English/ResourcesandServices/NewsAndEvents/NewsAndMessageDover/Pages/2018/08-Aug/Annual-Red-Sea-Report-Notes-Coral-Reef-is-Actually-Growing.aspx
https://www.youtube.com/embed/2UF8HFslZ8g?rel=0

Helping Thailand with cybersecurity. (TY Nevet) The Embassy of Israel in Thailand hosted the "Israel Cyber Security Roadshow 2018". Twelve Israeli cyber security companies showcased their products and services to Thai companies interested in mitigating cyber-attacks.
https://www.bangkokpost.com/news/general/1515518/

Swipe right for home.  I reported previously (Mar 2015) about Israeli startup Impris and its ability to launch apps with one finger without even looking at your smartphone.  Now Impris has adapted this technology to cars so that you can control music, phone calls, messaging, and navigation without taking your eyes off the road.
https://www.timesofisrael.com/swipe-right-for-home-israeli-startup-brings-finger-motion-tech-to-car-commands/

Anyone can build VR websites. Israeli startup DoublX VR has developed a platform that allows anyone or any organization to upload video from a 360-degree Virtual Reality camera. It generates a Virtual Reality website in 3D to watch with VR glasses.  All for free, without having to write a single line of computer code.
https://doublx.com/  https://www.youtube.com/embed/OpH1EWw2kSU?rel=0
https://www.youtube.com/embed/53437UHeJdI?rel=0

Unravelling complex contracts. Israeli startup Uhura Solutions has developed an Artificial Intelligence (AI) platform that can analyze even the most complex of customer contracts, isolate the key terms and help make vital business decisions.  Aimed at financial institutions, it can save hours of work and eliminate human errors.
https://uhurasolutions.com/  https://www.youtube.com/embed/pV81gURUO24?rel=0

Tell your story.  I reported previously (Nov 2015) on Israeli startup Apester which offers tools for on-line publishers such as quizzes and polls to promote user feedback. Now Apester has launched a story tool for embedding onto a website or integrating into social platforms such as Instagram or Snapchat.
https://www.calcalistech.com/ctech/articles/0,7340,L-3743759,00.html  https://apester.com/
https://www.youtube.com/embed/U1_ZR2mpZyo?rel=0

Monitoring industrial machinery. Israel-based startup EcoPlant Technological Innovation develops a cloud-based system for monitoring industrial machinery. Its purpose is to improve energy efficiency and equipment uptime. EcoPlant has just raised $1.7 million in funds.
https://www.calcalistech.com/ctech/articles/0,7340,L-3743762,00.html  http://www.ecoplant.co/
https://www.youtube.com/embed/lKnb88wtzXs?rel=0

Israel is the driving force of tomorrow’s cars. (TY Percy & Stanley) Although Israel is not a car manufacturer, many people are unaware of Israel’s partnership with manufacturers from around the world. This article by Viva Sarah Press gives an insight behind the scenes of very possibly the vehicle that you are driving.
http://nocamels.com/2018/08/israel-auto-tech-cars-of-tomorrow/

Robot pepper picker. Ben Gurion University scientists are part of the team that built the Sweeper robot pepper picker together with other international companies as part of a European Horizon 2020 funded project. The BGU team developed the fruit detection and maturity classification technology.
https://www.digitaltrends.com/features/agribots-are-pushing-farming-into-the-future/

Protect against electromagnetic radiation. Israeli startup Green Elmf manufactures cables that cancel out the electric magnetic discharge from wired infrastructure. The technology was developed by two Technion Professors. The result is less electrical interference and possibly better health, especially for young children.
https://www.youtube.com/aCReF_LRnzE?rel=0
http://www.green-elmf-cables.com/  https://www.youtube.com/embed/sV7d_0oAInY?rel=0

Fighting fire with lasers.  (TY TIP) The main cause of a fast-spreading forest fire is when the leaves at the top of the trees catch fire. Israel’s Fighting Treetop Fire (FTF) is developing algorithm-controlled laser beams for helicopters or trucks to remove leaves, thin branches and pine needles off treetops in the path of a forest fire.
https://www.israel21c.org/new-laser-solution-could-slow-spread-of-forest-fires/
https://www.fightingtreetopfire.com/  https://www.youtube.com/embed/1ZKyGgE5s9M?rel=0

Super-lubricity for super performance.  Researchers at Tel Aviv University and Tsinghua University in China have discovered a method to dramatically reduce friction. It promises to generate much faster computer processing. This ultra-low friction is known as super-lubricity.
http://www.jewishpress.com/news/on-campus/microscale-superlubricity-could-pave-way-for-future-improved-electromechanical-devices/2018/08/02/   https://www.nature.com/articles/s41563-018-0144-z


ECONOMY & BUSINESS

Israel gets another “A”.  True to its promise, (see 5th Aug) ratings agency Standard & Poor (S&P) raised its rating for Israel from A+ to AA-. S&P citing Israel’s steady economic growth and improved debt outlook.  AA- is Israel’s highest ever rating from any international rating agency and will save billions in interest repayments.
https://www.timesofisrael.com/credit-scoring-agency-gives-israel-its-highest-ever-rating/
https://www.youtube.com/embed/zIzYs-q6aCg?rel=0

Deep Tech links Israel to Korea. Israeli equity crowdfunding company OurCrowd’s Labs/02 incubator has joined with Korean VC firms Development Trusts NI and Yozma Kore to help setup startups in both countries. Labs/02 focuses on technology startups in AI, deep learning, autonomous transportation and smart cities.
https://www.calcalistech.com/ctech/articles/0,7340,L-3743773,00.html

UK’s Centrica funds Israeli electric vehicle charging.  British energy company Centrica has co-led a $12 million funding round for Israeli startup Driivz.  Driivz develops and sells cloud-based electric vehicle charging network management software.  Already over 200,000 drivers make use of the service.
https://www.calcalistech.com/ctech/articles/0,7340,L-3743783,00.html

United Airlines starts Tel Aviv to Washington route. (TY Jewishpress.com) United Airlines is marking its 20th year of service to Israel with the first ever nonstop flight between Washington Dulles International airport and Tel Aviv’s Ben Gurion airport. The three-times-a-week service commences on 22nd May 2019.
https://www.prnewswire.com/news-releases/united-airlines-announces-new-nonstop-service-between-washington-dc-and-tel-aviv-300691132.html

Direct flights from Guangzhou. China’s Hainan airlines has just commenced its new direct service between Tel Aviv and the South China city of Guangzhou. Hainan already operates direct flights from Israel to both Beijing and Shanghai and is to add Shenzhen. Chinese tourism increased by 41% in 2017 compared to 2016.
https://www.calcalistech.com/ctech/articles/0,7340,L-3743696,00.html

Gateway to the sun. Due to open early in 2019, Eilat’s new Ilan and Assaf Ramon International airport is expected to service 2 million passengers annually. https://www.youtube.com/embed/zJHMFUkZQFg?rel=0


CULTURE, ENTERTAINMENT & SPORT

Massive Lego sculptures in Tel Aviv.  An exhibit at Tel Aviv’s port features 25 works by the award-winning Lego artist Sean Kenney of New York, who uses Lego bricks - thousands of them - to construct sculptures featuring famous sites, portraits, animals and objects from everyday life.  Open daily until 31st Aug.
https://www.timesofisrael.com/everything-interlocks-at-lego-exhibit-in-tel-aviv-port/
https://www.jpost.com/OMG/Lego-artist-showcases-behemoth-Lego-sculptures-in-Tel-Aviv-port-563386

August in Jerusalem.  This month’s Jerusalem events include the International Arts and Crafts Fair (till 18th), Puppet festival (till 16th), Water festival (27-29th) and 15 activities at 15 shekels each (last 15 days in Aug).
https://www.israel21c.org/150-artists-to-display-work-at-annual-jerusalem-fair/
https://www.janglo.net/index.php?option=com_adsmanager&page=display&catid=99&tid=450816

Putting life into old clothes. No, not a new washing powder.  Jerusalem’s Israel Museum is using Israeli on-line shopping app Zeekit (see here) to generate a virtual reality personal fashion show featuring pre and post-state clothes. Museum visitors take a “selfie” and in five minutes can see themselves wearing the exhibits.
https://www.timesofisrael.com/israel-museum-uses-app-to-bring-old-clothes-alive-at-fashion-exhibit/
https://www.timesofisrael.com/israel-museum-exhibit-puts-decades-of-israeli-fashion-on-runway/

World’s lowest resort gets upgrade.  (TY ILTV) The Dead Sea resort is soon to get luxuriously upgraded. A new leisure complex is to be built, with two hotels, a visitor’s center, entertainment and culinary venues, a spa and shops. The complex’s designer is Moshe Safdie, responsible for some of Israel’s most iconic buildings.
https://www.israel21c.org/new-hotel-and-leisure-complex-to-be-built-at-the-dead-sea/
https://www.youtube.com/embed/fbJiTq6hWtU?rel=0

Alanis Morrisett wows Tel Aviv.  Canadian rocker Alanis Morissette marked her third performance in the country, in front of a sold-out crowd of 15,000 at Rishon Lezion’s Live Park. She performed her best hits, including “All I Really Want,” “Hand in My Pocket,” “You Learn,” “Head Over Feet,” and “Ironic.”
https://www.timesofisrael.com/alanis-morissette-delivers-crowd-pleasing-concert-in-tel-aviv/
https://www.youtube.com/embed/40KRL__qAYo?rel=0

Cool off at Israeli nature reserves.  Nice video of five Israeli resorts to enjoy this summer while keeping cool.
https://www.youtube.com/embedXhLNsH6qXgo?rel=0

Golan to Eilat bike trail. Cyclists will soon be able to bike all the way from Mount Hermon in the north of Israel, to Eilat in the south - completing the 1,200 km Israel Trail for bikes. The Israel Lands Authority is to invest NIS 45 million over 3 years to build 600km of cycling paths and complete the national trail.
http://www.jewishpress.com/news/sports-news/golan-to-eilat-bike-trail-to-be-completed-by-2021/2018/08/07/

Gold for Israeli acrobats at World Championships.  (TY UWI, Janglo and Leonie) The Israeli men’s team won the gold medal at the 2018 Acrobatic Gymnastics World Championships in April.  I didn’t report this at the time, but the videos have just been widely circulated. Israel also came second overall in the medals table.
https://en.wikipedia.org/wiki/2018_Acrobatic_Gymnastics_World_Championships#Results
https://www.youtube.com/embed/k1ATBZis7-o?rel=0
https://www.facebook.com/IsraelinUSA/videos/1883862094993378/

Blind Shlomi is world champion again.  I reported previously (see here) on Israel’s Shlomi Lazmy, who won the 2018 Tenpin Bowling World Championships for the blind.  Well Shlomi has just won the 2018 gold medal as well.  https://www.israel21c.org/israeli-blind-bowler-wins-world-championship-for-2nd-time/

First Israeli woman to win Euro athletics gold. Lonah Chemtai Salpeter became the first Israeli woman to win gold at a European Athletics Championships when she won the 10,000 meters in Berlin. The former nanny to Kenya’s ambassador to Israel married Israeli running coach Dan Salpeter and took Israeli citizenship in 2016.
https://jewishnews.timesofisrael.com/european-athletics-championships-israel-wins-historic-gold-medal/


THE JEWISH STATE

Italian Jewish history is preserved in Jerusalem. (TY UCI & I24 News) The art of the Jews of Italy has been preserved in the Umberto Nahon museum of Italian Jewish art in Jerusalem - one of the most beautiful buildings in the Holy City.  https://www.youtube.com/embed/idgqTX7LkQE?rel=0 http://ijamuseum.org/

2000-year-old earing found in Jerusalem.  A spectacular gold earring, shaped like a horned animal and dating back to the 2nd or 3rd century BCE, during the Hellenistic period, was discovered during excavations of the Givati Parking Lot in the City of David National Park encircling the Old City walls.
http://www.jewishpress.com/news/israel/jerusalem/2000-year-old-golden-earring-discovered-in-city-of-david/2018/08/08/
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How Midterm Elections Affect Stocks
Stocks are generally not influenced by a single factor. It is usually a multitude of factors pushing and pulling prices at any given time. Earnings may serve as tailwinds breathing positive momentum into stocks, while tariffs could do the opposite and serve as headwinds. Leading economic indicators may boost investor sentiment and the relative attractiveness of stocks, while high valuations could discourage some investors from buying. At any given time, the confluence of these factors determines the direction of stock prices, in our view.

One such factor that gets little airtime, but that we'd like to discuss this week, is midterm elections. At Zacks Investment Management, we are politically agnostic in our approach to investing, favoring no party over the other. Our concern is on policy and how it may affect property rights, corporate profits, and economic growth. It doesn't matter what side of the aisle it comes from - but it does matter.

Perhaps that's why historically, stocks have tended to get jittery in midterm election years, as the balance of power in Washington undergoes a potential shift. Let's look at some of the historical data first, and then we'll explain why we think stocks have behaved this way in midterm election years.
Could Midterm Elections Mean Increased Volatility? 

This has often been the case throughout recent history, but no matter the outcome, the best strategy, in my view, is to stay steady and keep an eye on key economic indicators. To help you do this, we are offering all readers a look into our just-released August 2018 Stock Market Outlook report.

This report will provide you with our forecasts along with additional factors to consider:

• What produces U.S. optimism in 2018?
• Forecast for the S&P
• Small-cap vs. large-cap returns
• Which sectors are hot and which are not?
• What industries within those sectors most merit your attention?
• Odds of recession
• And much more.

 Volatility in a Midterm Election Year: By the Numbers

Let's start by taking a look at the last four midterm election years. The table below takes a look at S&P 500 corrections during years of midterm elections, but then also takes a look at what the market did in the 12 months following the correction2:














As you can see from the table, stocks have tended to display a volatile streak in midterm election years. Going back even further to 1962, the average correction during a midterm election year was an eyebrow-raising -19%.
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But here's the kicker: since 1962, the average bounce for stocks following the midterm correction was a sturdy +31%. The table also shows that in the last four midterm election years, stocks have rebounded considerably following the downside volatility enduring during the year.

Going even deeper, if we look at the average monthly returns of the S&P 500 in midterm election years (going back to 1962), we find that from April to September the S&P 500 has posted negative returns.4 

Bottom line, stocks have tended to wobble, and we think there's a reason why. Because midterm election years can mean a shift in the balance of power in Congress, it also means that there is an increased risk of one party enacting new laws and/or policies in the lead-up or once the power dynamic is set. Markets, in our view, do not like policy uncertainty.

But we see a flip side to this hypothesis - once midterm elections happen and the markets know how the table is set, so to speak, the uncertainty fades and corporations (stocks) have a better idea of what to expect from Congress in the coming two years. Perhaps this is why since 1946, the S&P 500 has not declined in the 12 months following a midterm election, with the average price return in the 12-month period following a midterm election from 1950 - 2014 being +15.3%. 5 

We do not think 2019 will be the exception. 

Bottom Line for Investors 

In my view, investors would be wise to brace for a noisy, sometimes ugly fight in this midterm election cycle, and we wouldn't be surprised if markets responded with increased volatility - as has often been the case throughout recent history. But as we mentioned earlier, we do not believe stock prices are influenced by one factor alone. While the mudslinging surrounding midterm elections may create some headwinds for stocks, the positive news surrounding earnings, jobs, income, and spending may help support the longer-term upward trend. History has also shown that corrections in midterm election years are often followed by solid positive returns in the years that follow, and we could very well see that being the case in this cycle as well. 

That being said, I believe there are steps an investor can take when building a portfolio to help prepare for different outcomes with the goal of ensuring that the level of risk and exposure corresponds with your investment objectives. In my view, diversification is a key part of that, as is focusing more on the fundamentals over day-to-day price movements.

To help you do this, I invite you to download our Just-Released August 2018 Stock Market Outlook Report >> 

This Special Report is packed with newly revised predictions that can help you base your next investment move on hard data. For example, you'll discover Zacks' view on:
• Which sectors are hot...and which are not
• 2018 end of year forecast for the S&P 500
• Why global oil prices are rising again
• Small cap vs. large cap returns
• Our view on the odds for a recession in 2018
• And much more...
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