Why Investors Should Keep a Close Eye on the Political Environment

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With the 2020 election quickly approaching, it may be time to take a look at how politics can impact the markets. 

Doug Kass, Real Money contributor and author of Doug's Daily Diary, wrote about seven paradigm shifts in the market that concerned him on Monday morning. 

One of the paradigm shifts focused on the current political environment. 

Here's what Kass wrote, "a toxic worldwide political setting seems to be a near-permanent shift and has created a bear market in political decency."

But what exactly does he mean by that and how does it impact the market? Kass explains:

There's such animus between the Democrats and Republicans that they're never going to get anything done together. So we get this polarization and this legislative inertia. Now we have a lot of issues including worsening demographic trends, lower birth rates, and as I mentioned, the widening wealth and income gap and all these things have to be addressed. We have a subpar economic recovery, which is now in its 10th year. And it's taking more and more debt to produce one unit of production. So we have to deal legislatively in one way or another to improve our stead and to move from subpar economic growth to closer to trendline economic growth. And what it means is that if you have slower economic growth, you also have slower progress in US corporate profits. And we're seeing that we began an earnings recession in the fourth quarter, which is continuing in the first quarter and no doubt will continue in the second quarter to be reported.

Want to read about what else has Kass worried? Read his post here

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