Chart of the week

Source: CNN Business, Fear & Greed Index, 29.10.2022

The chart shows the mood of investors on the stock markets in the USA. A month ago, there was extreme panic sentiment and now investors are already getting greedy again.
Why this is important
It usually pays to invest against the tide. Historically, when most investors are negative, there have always been the best times to enter the markets. This would have been the case a month ago as well. Consolidation would do the markets good now before they rise further.

US elections - current polls and impact on the stock markets
The mid-term elections will be held in the USA on November 8. The midterm elections are the elections to the US Congress that take place between two presidential elections.
The U.S. Congress, a bicameral British-style parliament, consists of two "houses," the 435-seat House of Representatives and the 100-seat U.S. Senate. Under U.S. electoral law, one-third of the senators and the entire House of Representatives must be re-elected every two years. At the same time, some of the U.S. governors and the composition of the parliaments of most U.S. states are redetermined on this occasion.
In the past, in the midterm elections, actually always the party that does NOT provide the president has won seats. Currently, the Democrats have the majority in the Senate and the House of Representatives.

Source: FiftyThirtyEight, House Forecast, 29.10.2022

The graph shows the current forecast for the elections to the House of Representatives. Republicans would need to win 5 seats to take the majority. In 11 states, the candidates are very close in the polls. So close, in fact, that no forecast is possible. Nevertheless, most polling institutes currently expect the Republicans to win the House of Representatives.

Source: FiftyThirtyEight, Senate Forcast, 29.10.2022

The chart shows the change in poll numbers since polls began on the outcome of the Senate elections. At the beginning of the polls, Republicans were in the lead. The ruling by the highest court in America that individual states can ban abortion radically turned the tide. Democrats were flooded with registrations from new female voters.
Now the tide seems to be turning and the Democrats are about to lose their lead.

Source: FiftyThirtyEight, How pupular is Joe Biden, 29.10.2022

The chart shows poll numbers that indicate how many Americans approve of Joe Biden's policies. Biden's ratings are currently even worse than Trump's at the same time in his tenure. Trump's poll numbers were already a historic low. Biden is currently a mortgage for Democrats and is dragging down poll numbers.
The majority of Americans vote for the president or party that will bring them a better economic future. The current highest inflation in decades and the high gasoline prices are blamed on Biden.
The election result has a major impact on the stock market. Generally, Republicans are seen as more pro-business and Democrats as advocates of more regulation. So a Republican win of either House should have a positive effect on the markets.
Currently, a Republican win would have big effects in two areas:
- Republicans remain supporters of the "America First" credo introduced by Trump.
The larger support contributions and arms deliveries to Ukraine must be approved in the Senate. If the Senate turns, it is likely that financial support to Ukraine will decrease. In extreme cases, this could lead to a turn in the war.
- Democrats are currently working on massively more regulation in the Bitcoin sector. Democrats from the strongly left-wing spectrum of the Republicans such as Elisabeth Warren or Alexandria Ocasio-Cortez regularly make the Bitcoin markets tremble with their proposals.
A majority in both chambers of parliament would lead to much looser bitcoin regulation.

Source: Twitter, ecoinometrics, @ecoinometrics, 29.10.2022

The chart shows the price of bitcoin in the biggest bear markets to date. The time for a turnaround seems to have come. The outcome of the US elections could be the initial spark for a larger recovery.

Source: Isabelnet, 26.10.2022

The chart shows the volume inflows and outflows in Bitcoin ETFs. There has been very little movement in the Bitcoin market in recent months. There were neither major volume inflows nor outflows. This could now change soon.

Good corporate earnings, but technology stocks, weigh on the market.

Source: Factset, S&P 500 Earnings Season Update, 21.10.2022

The chart shows how many companies from which sectors exceeded their earnings forecasts. So far, the majority of published results have exceeded expectations. This has also driven the stock market last week and at the beginning of this week. However, the chart above is from 10/21/2022.

At the end of last week, the big technology stocks Microsoft, Google, Facebook and Amazon completely disappointed and put the market under strong pressure.

Source: Trading Economics, United States Corporate Profits, 29.10.2022

The chart shows the sum of all profits of the companies from the S&P 500. The figures are as of Q2 2022, but it is already apparent that a new high will also be achieved in Q3 2022. You can see this more impressively on the following chart.

Source: Trading Economics, United States Corporate Profits, 29.10.2022

The chart shows the total of all companies included in the S&P 500 since 1950. The slump in the COVID crisis was more than made up for. Corporate profits in the United States rose 6.2 percent in the second quarter of 2022 to a new record high of $2.53 trillion.
In the current phase of the long-term financial market cycle, fears of higher interest rates driving the stock market down and good corporate results driving the stock market up regularly alternate.

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