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Tags: mobius | markets | dem | midterms | stocks

Mobius: Dems Winning House Would 'Be Bad for US Market'

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Tuesday, 30 October 2018 09:04 AM EDT

Investment guru Mark Mobius warns that Democrats winning the House in midterm elections would ‘be bad for the U.S. market.”

From a technical investing perspective, Mobius told Bloomberg the market "looks very bad."

"It's really broken down the long term trend. If [the S&P 500] goes down by 15 [percent] then we're in completely new territory and you'll see more declines," Mobius, co-founder of Mobius Capital Partners, said in a Bloomberg TV interview.

He also sees the recent correction deepening if Republicans lose control in Congress next week, CNBC reported.

"If, for example, the Democrats get control of the House, I believe this will be bad for the U.S. market," he said. "So you will probably see more of a correction going forward in the U.S. market."

Meanwhile, according to data analyzed by Reuters, the proportion of stocks, regions and sectors that are technically in a bear market has shot up since the start of January, prompting some analysts to conclude the bull run may already be over.

The concern among some analysts is that the surge in securities hitting the 20 percent loss mark could lead to a tipping point and falls of a similar magnitude in overall indexes - which typically leads to a long-term downward trend.

“It’s really an indication that a global bear market has probably already started,” said Albert Edwards, global strategist at Societe Generale.

He said other technical indicators, such as the breadth of the market - the divergence between individual performances within an index - pointed to the same conclusion.

Such rules of thumb about bear markets are by no means foolproof but they are closely monitored by money managers and investors for whom calling market turns correctly is paramount.

Still, Edwards has a reputation for being a so-called permabear due to his often pessimistic views and other analysts caution that the increase in bear market constituents could be read in two ways.

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Mobius: Dems Winning House Would ‘Be Bad for US Market’
mobius, markets, dem, midterms, stocks
Tuesday, 30 October 2018 09:04 AM
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