KNOWLEDGE CENTER

Knowledge Center Archive

Jun
21
2012

Election Reflections

By James R. Solloway, CFA, Managing Director, Senior Portfolio Manager

In our first quarterly outlook for 2012, we predicted that politics would keep investors busy. That has certainly been the case in the first half of the year, and the drama is likely to continue through all of 2012 and possibly into 2013, causing ongoing consternation for markets and investors.

Elections in Europe have been keeping investors on their toes. French voters elected their first Socialist president since the 1970s, and followed that up by electing a Socialist majority in parliament. Greece was forced to hold a second election following the surprisingly strong showing of left-wing anti-austerity party Syriza. While the pro-austerity New Democracy party eked out a win, a coalition government will need to be formed, and there are formidable fiscal challenges ahead.

In December, we wrote that “2012 elections [in the U.S.] promise to be one of the most important events of the year for the global markets.” In November, U.S. voters will choose a President and, in many states and districts, Congressional Representatives. Given the role of U.S. economic policy since the 2008 financial crisis, the so-called fiscal cliff looming in 2013, and the need for longer-term tax and entitlement reform, this year’s election is a pivotal one for the U.S. and global economies as well as financial markets and investors.

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Election Reflections

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