Ken Fisher thinks the mid-term elections have laid the groundwork for a significant jump in stocks.
“Markets don’t like big sweeping actions,” Fisher told Bloomberg. “Right now, every politician is chirping and burping and carrying on. It’s been in the interest of the Republicans running for office to talk down the economy. That goes away immediately after the election. Come June, you’ll see how quiet the political landscape will be — very little legislation and a lot of baby kissing.”
Fisher says that early in a president’s term, the president is able to push forward his toughest bills because at that point, he has the most power relative to the opposition party that he will ever have. And that, he says, “freaks people out”. As his term goes on, however, fewer big initiatives are proposed, and stock returns tend to be better. The gridlock created by this week’s mid-term elections should also make it tougher to pass sweeping reforms, which should benefit stocks, according to Fisher. He says the S&P 500 could rise as much as 16% in the next six months, Bloomberg reports.
Fisher isn’t keen on talk of a new round of quantitative easing, a program expected to be in the $500 billion range. “Something on the low side of that might cause people to freak out negatively and something that’s too big might cause people to freak out negatively,” Fisher said. “In a world where the U.S. economy is growing, I’m not sure why any of this makes any sense. In the long-term, money creation doesn’t do anything but cause inflation.”