Regardless of our personal feelings about election results, history tells us that markets generally prefer a divided government. Splitting governance between both parties typically means fewer sweeping policy changes that could introduce uncertainty.
If you're looking for perfect clarity, you won't find it here. From where I stand, the crystal ball looks murky as heck. Even the economic data strategists rely on is confusing, complex, and contradictory.
When the Fed sets higher interest rates, it increases the cost of credit across the entire economy, making mortgages, car loans, credit cards, business financing, etc. more expensive. Investors worry that those higher rates will slow the economy (and maybe tip it into recession) and ding company performance.
Can we trust a summer rally? Is the bear market over? Probably not. There are a lot of hurdles ahead, including the Federal Reserve's interest rate hikes and earnings results from companies affected by those consumer spending changes, and election season.
Stagflation is a buzzword combining "stagnation" and "inflation" and signifies an economy plagued by low economic growth, high inflation, and high unemployment. We saw it in this country in the 1970s during an oil crisis.