HANNAFORD: Trump, midterms, and the 'Coming Market Sugar Rush'

The new year could/should be a happy one indeed for investors, thanks to Donald Trump and the November 3 mid-term elections... Thus Petar Pejovic, a Calgary-based Senior Portfolio Manager at Wellington-Altus Private Wealth, and tonight’s guest on the Hannaford show. Pejovic says the lead-up to the midterms will incentivise the incumbent Republican administration to aggressively stimulate the economy..It’s a familiar pattern in midterm cycles. The party in power, eager to retain or expand control of Congress, typically prioritizes policies that boost growth and voter sentiment."The incumbent party wishes to win," says Pejovic. “Their odds improve dramatically with low unemployment, rising stock markets, and when people have money in their pockets.”.So what do we look for?Pejovic anticipates increased money creation through further debt issuance, potential interest rate cuts, and expanded money supply. This is a well-used playbook, observable in past cycles: flood the system with liquidity to make the economy appear robust by election day.The result? A favorable environment for risk assets, particularly stocks, making Pejovic optimistic about equities in 2026, precisely because of these incentives."History would suggest that risk assets typically perform well," in midterm years, he says, though he cautioned there are "no guarantees in life." He points to broader "risk assets" – including stocks – as beneficiaries of this pre-election pump.The implication is clear: expect upward pressure on the stocks as policymakers pull levers to engineer a feel-good economy..And gold… Pejovic is known for his long-standing bullishness on gold. Although, “it’s not so much that gold has been rising. It’s the dollar that’s been falling.”In other words, he views gold not as an asset that's "rising," but as a constant store of value while fiat currencies like the US dollar depreciate due to relentless debt-fueled money creation. While he avoided specific predictions on magnitude (noting that last December even he wouldn't have forecast gold's explosive 2025 gains of 60% from $2,700 to around $4,300+ per ounce,)More debt means more money supply, dilution, and monetary inflation – eroding purchasing power."And more money creation equals more debt equals more dollar devaluation," Pejovic says, "which probably means assets like gold should be higher at this time next year.".With the US federal debt at $38 trillion and annual interest payments exceeding $1 trillion (surpassing the entire US military budget,) Pejovic sees a vicious cycle that midterms could exacerbate. To juice the economy and jobs data ahead of November 2026, expect even more stimulus. This devaluation dynamic should propel gold higher, continuing its role as a hedge against monetary expansion. Central banks, including aggressive buyers like China, are already stockpiling gold for this reason – preserving wealth amid eroding fiat systems.Pejovic acknowledges risks, such as a potential recession if slowdown signals (like downward-revised jobs numbers) persist. However, he believes incumbents will work tirelessly to avert this, reversing any weakness to avoid high unemployment entering the election. Policies like deportations of illegal immigrants could also indirectly support employment figures, further motivating economic boosting..Overall, Pejovic remains "optimistic" for 2026. The midterm incentives bode well for both stocks (as risk assets thrive on liquidity) and gold (as a direct beneficiary of dollar weakening). He suggests the real potential reversal – for risk assets – might come post-midterms in 2027, once election pressures ease.In a world of trillion-dollar deficits and debt spirals, Pejovic's message echoes his prior advice: hard assets like gold preserve purchasing power, while politically timed stimulus could deliver strong returns for equities. Investors eyeing 2026 may find his historical pattern-based view compelling – midterms often mean markets get a pre-election lift.The Hannaford show is posted at seven o clock.

HANNAFORD: Trump, midterms, and the 'Coming Market Sugar Rush'

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