Right now, the most "powerful" man in America is not the US President Joe Biden, but is Jerome Powell, the Fed chairman. 

Look at Joe Biden's mid term review in the first picture. It's 56% disapproval rating on his job performance. Luckily, he's not depending on this for his year end bonus.[LOL] 

In contrast, when Powell speaks on inflation, interest rate hikes and economy, the stock market shudders in fear. Investors listen intently to his speech. Even people who don't invest, feel the weight of his rate hikes, as it influences borrowing costs and spending decisions of households and businesses. 

Historically, after mid term election is over, the stock market rises and volatility drops.  The best result for the stock market happens when control of Congress was split between Republicans and Democrats, rather than complete Democrat control or complete Republican control. This causes gridlock when passing policies and hence less uncertainty to businesses and the stock market.

There seems to be a good chance of this playing out, as Republican appear to be gaining ground from the polls.

However, this year it's different. [Sad] 

There are so many other forces in play that affects the economy and stock market, other than the midterms.

- Sky high inflation of 8%, and sky high interest rates of 3.75%. Terminal rate is suggested by Powell to exceed 5% eventually next year.

- Ukraine-Russia war is ongoing, but less reported in media now. This creates a sense of uncertainty. Nuclear threat from Russia still lingers, though improbable.

These are dark clouds hanging over the stock market and add a layer of doubt to a possible prolonged rally. 

Any chance of Fed pivot lies in a much lower CPI and/or weakening jobs data (slower wage growth or vacancies, higher unemployment). In my opinion, these will only be seen next year i.e. pivot happens next year.

In the meantime, US Congress passed the Inflation Reduction Act to curb inflation. It benefits companies that promote clean energy. Obviously, $Tesla Motors(TSLA)$is one company that will benefit from rebates on it's electric vehicles. Let's see how that plays out.

Next week we will know if there's any effect of the midterm election being over. Everyone's just waiting for a reason to rally and that includes Santa Claus coming to town.

$S&P 500(.SPX)$

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@TigerStars@Tiger_chat@MillionaireTiger