While I cannot say that it doesn’t matter who occupies the White House, it’s important to put the presidency into perspective. Naturally the members of the Fed’s Open Market Committee (FOMC), in directing our monetary policy, can have a bigger impact on markets and the economy than the President. While the President appoints the 12 Fed governors, all but the chairman and vice-chairman serve 14-year terms, and their terms are staggered. (The chairman and vice-chairman serve four-year terms.) They are all confirmed by the Senate. Also, five presidents of regional Federal Reserve Banks also sit on the FOMC. So the next president (or any president) does not call the shots on monetary policy.

Second, under our three-branch system of government with its checks and balances, the president’s powers are in fact rather limited–although you wouldn’t know it when you listen to all the promises being made by the candidates. For example, a president could propose massive infrastructure spending spree that could create a lot of construction industry jobs. But it could only become a reality if Congress agreed to fund it.

And even if the majority of members of Congress are of the same political party as the president, that doesn’t guarantee the President will get his or her big wishes granted. When the country is as divided as the U.S. seems to be today, it is unlikely that the next president will win by a large enough margin to claim and convince Congress that he or she has a mandate from U.S. citizens to making big changes.

It seems more likely that other forces, including the price of oil and global economic trends, will have a far bigger impact on investment markets than the outcome of the U.S. presidential election, after accounting for some inevitable volatility around Nov. 8th.

Source:  Mark Germain