The Focus on Interest Rates Isn’t the Whole StoryMany of my recent posts have focussed on the impact of higher interest rates.
The thing is that going forward there is another elephant in the room.
A considerable part of the rise in the stock market until this year has been due to massive stimulus spending by the Biden Administration to the tune of trillions of dollars. In fact l would argue that things this year would be much worse for it not to be more trillions of so ending getting approved by the US Government.
So what may be different going forward?
Current polls suggest that in the midterm elections in November, the Republicans will take the House and the Democrats will continue to hold the Senate. If this ends up being the result, then the Republicans in the House will likely stop any further massive spending plans that Biden proposes and so there will not be Givernment spending to offset the impact of higher rates.
If anything it will at least delay spending or create a great deal of uncertainty and this is not good for the market.