la gente esta muy loca wrote:
A little macro exercise:
Election results
#___1___2___3___4___5___6
P___D___D___D___R___R___R
S___D___R___R___D___R___R
H___D___D___R___D___D___R
What are your probabilities for each scenario? What will be the effect of the election result on further fiscal economic stimulus ( and it's composition ) and what will be the stock market reaction?
1 = 40 : higher taxes + most stimulus = poor market
2 = 30 : higher taxes + less stimulus = worst market
3 = 2 : no change taxes + less stimulus = status quo market
4 = 6 : higher taxes + most stimulus = poor market
5 = 20 : no change taxes + most stimulus = best market
6 = 2 : no change taxes + moderate stimulus = status quo market
I am theorizing best market is divided government and less taxes. I see stimulus as a short lived phenomena, once absorbed by the economy, then you have to deal with realities of the business cycle. In regards to the election generally, I believe whoever is in power will have serious social and economic challenges.