The next 90 days should offer opportunities for investors following the midterm elections. Rodrigo Campas of Reuters explains why the investment environment looks positive. The Republican gain of the US Senate majority is likely to influence Fed policy and thus the U.S. economy. Bloomberg offers an analysis of what sort of changes we can expect in the coming months. Voters of both parties were disgruntled with Congress as they went to the polls yesterday, but people who believe the conventional wisdom about politics may be surprised over the coming months. According to Greg Valliere of the Potomac Research Group, many conceptions about a “broken congress” are based on Washington myths.

Investors Eye Opportunities As Republicans Take U.S. Senate
–  History shows a bullish bias in stocks after midterm elections. Since 1928, the S&P 500 has posted a median return of 7 percent in the 90 days after a midterm, with returns positive 86 percent of the time, according to Barclays.

Scrutiny Of Fed Seen Intensifying In A Republican Senate– “A Republican House and Senate will make life more difficult for Janet Yellen and the Fed,” said Sarah Binder, who studies the relationship between Congress and the central bank as a senior fellow at the Brookings Institution in Washington.  “Greater scrutiny of the Fed’s decisions and GOP pressures to tighten monetary policy more quickly and rapidly will constrain the Fed’s autonomy and encourage second-guessing of Yellen’s leadership,” Binder said.

The Six Biggest Washington Myths –  If you think Washington is hopelessly broken or that the Federal Reserve is bitterly divided between hawks and doves, you’re wrong, according to Greg Valliere.  Valliere is the chief political strategist for the Potomac Research Group, a DC-based political consulting firm. He spoke to an audience of 200 at FundForum USA in Boston on October 28. Valliere prefaced his remarks by positioning himself on the 50-yard line, not promoting the left, right or any specific political ideology.

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John R. Day, Bill Ennis, Stephanie Davidson and Matt Heller

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