November 6, 5:00 pm EST

In my note yesterday, we talked about the probable outcomes for the elections.

Whether we see the Republican’s retain control of the house, or lose it, both scenarios should be a greenlight for stocks.

Why? Because the cloud of uncertainty will be lifted. Even if we were to have gridlock in Washington, from here forward, the economy has strong momentum already, and the benefits of fiscal stimulus and deregulation are still working through the system.

Now, given today’s midterm elections are feeling a bit like the Presidential election of 2016 (as a referendum on Trump, this time), I want to revisit my note from election day on November 8, 2016.

As I said at that time, central banks had been responsible for the global economic recovery of the prior nine years, and for creating and maintaining relative economic stability.  And creating the incentives to push money into the stock market (i.e. push stocks higher) played a big role in the coordinated strategies of the world’s biggest central banks.  With that, I said “neither the economic recovery, nor the stock market recovery can be credited much to politicians.  In this environment, in the long run, the value of the new President for stocks will prove out only if there’s structural change. And structural change can only come when the economy is strong enough to withstand the pain. And getting the economy to that point will likely only come from some big and successfully executed fiscal stimulus.”

It turns out, Trump has indeed executed on fiscal stimulus.  And he’s gone aggressively after structural change too (perhaps too early, and with some success, but at a price he may pay for politically).  Still, he’s been able to execute ONLY because he’s had an aligned Congress.

Importantly, the economic policies out of Washington have allowed the Fed to bow-out of the game of providing life support to an economy that was nearly killed by the financial crisis.  That’s good!