According to a partner, the Democrats look set to take back the House. The Senate is closer. A divided government is the most likely outcome and I do not expect the vote itself to move markets much. It has been discussed to death, and most of it is priced in.
What interests me more is what comes after. If the Democrats take the House, and possibly the Senate, how does Trump respond? Tariffs, fiscal policy, executive orders: all of it becomes less predictable. Trump does not sit quietly when things do not go his way. Expect surprises.
The bigger risk right now is the Middle East according to a client. We have already seen how fast a move in oil spills into bond yields and then into risk assets. Another escalation would bring volatility straight back.
There is no shortage of things to worry about. Social media is full of World War III and the end of the world as we know it. Should we start stocking up on food? A little preparation is sensible. I’m not turning my house into a warehouse just yet.
Our job as investors is to separate real risk from noise. Right now there is plenty of both and the list grows by the day. I’m staying out of the markets in the near term. Uncertainty is not the end of the bull market. Do not confuse the two.