Ken Fisher: This Stock Trend Has Global Ripple Effects

Ken Fisher discusses the historical 'midterm miracle' phenomenon in U.S. stock markets during midterm election years. He explains that the first three quarters typically show grinding, sideways movement as politicians engage in extremist rhetoric to appeal to their bases during primaries, creating fear that dampens stock performance. During this period, stocks have risen only slightly more than half the time over the past century. However, the fourth quarter shows dramatically different results, with stocks rising 88% of the time and averaging approximately 7% returns. Fisher addresses whether this pattern affects international markets, explaining that while the correlation isn't perfect, it is significant. He notes that correlations between the S&P 500 and comparable international indexes tend to be over 0.5 for most developed markets, and in the high 80s for the overall market outside the United States. This means positive movements in U.S. stocks during the midterm miracle period tend to ripple out to international markets, though with varying degrees of correlation depending on the specific market and development level.