October 2020

Election Cycles and Market Returns

We are just 28 days from the 2020 Presidential Election. Does the election cycle matter for the stock market?

Here’s the average return each month for the 4 year election cycle. I use returns since the 1960 election. I also include the 90%/10% percentile returns to give you a range.

The bottom line is there isn’t much of a pattern around the election itself.

With that said, there seems to be a big of a short-term hit right before the midterm elections and then a boost in returns after. It is statistically significant. (0.2% per month for the 2 years before, 1.1% per month after)

Overall, there is not a strong, linearly pattern between the cycle and returns.

By Christopher Schwarz, ago

More Permanently Temporary Job Losses

The headline number says good things – unemployment rate is under 8% again. (A lot of this is because participation in the economy is down.) However, the bigger issue is another 350k jobs are permanently lost.

Here’s the updated graph comparing the permanent job losses of the last 3 recessions.

We are halfway to the total permanent job losses of the last recession, which was the worst since the great depression. With Disney laying off 28,000 and maybe 100,000 airline jobs at risk, I expect permanent job losses to continue to increase.

Remember, permanent job losses are much harder to bounce back from…

By Christopher Schwarz, ago