I'm Phil Orlando, Chief Equity Strategist at Federated Investors.
How might the outcome of the 2020 election effect your outlook?
We're expecting market-friendly election results and that is our underlying base case. Embedded within our expectation for the year though, we think the market will have a barbell shape, that the first part of the year will be driven by underlying market fundamentals which we think are quite strong but as we get into the middle of the year we think there is an increased chance of election related noise. So you've got the end of the primaries, the conventions, the debates, the election itself and if we're right that we get positive election results and we think the market ends the year on a very powerful high note during November and December. One thing to watch for is the performance of the S&P 500 during the three month period, August, September, October. Over the last 70 years this has been a leading indicator that has had about a 90% accuracy. If the stock market is positive in those three months the incumbent party tends to win. If the stock market is negative the opposition party tends to win. So we'll be watching that indicator closely for clues as to whether or not our market-friendly election result forecast proves accurate.
Views are as of 12/12/2019 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. S&P 500 Index: Is an unmanaged capitalization-weighted index of 500 stocks designated to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Federated Advisory Services Company 19-30205 (12/19)