I strive to avoid political opining when at all possible. But the upset of House Majority Leader Eric Cantor, which marked the first time a majority leader has ever lost a primary election, is one of those developments that must be addressed when evaluating the investment landscape.
Why is this development so important?
One reason is that the market does not like uncertainty. Cantor was the odds-on favorite to become the next Speaker of the House. The sudden dethroning of such a high-profile and influential politician introduces a degree of uncertainty about Congressional leadership. But the bigger issue is that Cantor's loss represents the continued failure of efforts to compromise in Congress. In the words of Wall Street Journal reporter Patrick O'Connor, Cantor was "widely viewed as a bridge between the GOP's establishment and tea party wings." Without this "bridge" we could be faced with more political polarization, inertia and inaction.