Tags: 2018 Midterm Elections | robert shiller | midterm | market | prediction | stock

Shiller: Midterm 'Anxiety, Anger' Make Market Predictions Impossible

(AP/Jessica Hill)

By    |   Tuesday, 06 November 2018 01:24 PM

Nobel Prize-winning Yale economist Robert Shiller warns that there is so much animosity surrounding this year’s midterm elections that it is impossible to predict just how the stock market will react.

"This is a very different midterm election," he recently told CNBC.

"There's a lot of anxiety at this point. A lot of anger. I don't think this is easily grouped into past midterm elections. So, I think that the history of the market responses to that doesn't tell us very much," said Shiller, the co-founder of the Case-Shiller Index, which tracks home prices around the nation.

"Even if the election is very disturbing, it doesn't tell us that something very dramatic is going to happen in the stock market," he said. "The market is almost unforecastable over short intervals of time. And, that's because it's not just the level of emotion, it's the overall narrative that goes along with it," said Shiller, who was awarded the Nobel Prize in Economic Sciences with Eugene Fama and Lars Peter Hansen in 2013.

Shiller acknowledges economic and earnings growth has been solid. However, he questioned investor sentiment around the numbers, CNBC.com explained.

"It's partly the Trump narrative. He promised to make America great again, and the economy is growing," he said.

"It's not as outrageously good as some people would have you believe."

To be sure, U.S. stocks rose on Tuesday, as strong earnings and easing of trade tensions lifted materials and industrial sectors, but trading volumes were light as uncertainty about the outcome of U.S. midterm elections kept investors on the sidelines, Reuters reported.

Financial markets are bracing for President Donald Trump’s Republican party losing control of the House of Representatives, while retaining the Senate.

A political gridlock between the White House and Congress could hinder Trump’s pro-business agenda and raise concerns about political instability, but most analysts say this may not be the worst outcome for the stock market.

Many fear that there could be a sharp selloff in the market if the Democrats sweep both the House and the Senate. In contrast, stocks may rally on hopes of more tax cuts if Republicans retain control of the House.

However, some respected economic gurus do have predictions of how the market will react.

Billionaire Thomas Peterffy predicts that the stock market will plunge up to 15 percent should Democrats take the House and Senate in the midterm elections.

The founder and chairman of Interactive Brokers, one of the nation’s leading digital brokers, says the market will surge back to record highs if Republicans retain control and ward off a Blue Wave on Tuesday.

“If the Republicans win, the market is not going go down. The market is going to go up,” he told Newsmax TV in an exclusive interview.

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Nobel Prize-winning Yale economist Robert Shiller warns that there is so much animosity surrounding this year's midterm elections that it is impossible to predict just how the stock market will react.
robert shiller, midterm, market, prediction, stock
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2018-24-06
Tuesday, 06 November 2018 01:24 PM
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