Displaying items by tag: midterms

(Washington)

The midterm elections are finally in the rearview mirror, and generally speaking, the results are exactly what the market expected. That means it may be time for a rush back into stocks after the turmoil of the last month. One analyst put it this way, saying “Following this week’s volatility and the FANGs selloff this week, we’re likely to see traders getting back in and buying the dip. The elections have been a win for both the Republicans and the Democrats, and this will bring balance to the market”.

FINSUM: We do suspect investors will breath a sigh of relief. Firstly, things went according to plan, but secondly, a split Congress is in some ways the best case scenario for stocks.

(Washington)

Well the midterms are finally here. However, one thing has become apparent—how these elections will affect financial advisors has not been discussed nearly enough. One of the big concerns advisors should have is about what happens if the Democrats take the House. In this scenario, it seems likely regulation would grow much toughed as fire & brimstone-like Maxine Waters (D-Calif.) would taken the helm of the House Financial Services Committee. Additionally, Republican-led deregulatory measures could be scuttled. One area of possible positivity could be on new legislation for retirees, including new measures to encourage people to save for retirement.

FINSUM: Perhaps the biggest worry regards some sort of defeat of the new SEC rule with renewed support for the DOL rule 2.0. The Democrats fiercely advocate for a comprehensive fiduciary standard, so their ascendance in the House could lead to that becoming a reality.

(New York)

Barron’s has made an argument to investors. Despite all the turmoil recently, and the potential threat of the midterm elections, it says you should stick with stocks. Part of the reason is historical—stocks have usually continued to do well even when Congress flips (though the sample size historically is small). For instance, the stock market continued to perform well when Congress turned against Obama. On a policy front, the outcome looks positive too, as Democrats could limit some of the less popular policies of the Republicans, like a trade war, which would help US corporates.

FINSUM: We think the election is going to be positive for shares if everything goes as it is forecasted to. Any change from the blue House-red Senate prediction might shake markets.

(Washington)

Here is an eye-opener for investors: one of the biggest market reactions to the midterms is likely to be in munis. In particular, yields on munis are expected to fall is the Democrats take the House, which would result in a split Congress. The reason why is that such an outcome would likely limit the further possible damage that could be wrought by Republican tax proposals. However, since the market is anticipating this outcome, if Republicans do maintain their hold on the House and Senate, then yields could rise sharply. The call on the moves comes from Barclays.

FINSUM: The most likely outcome right now seems to be a blue House and a Red Senate, which would mean smooth sailing and likely gains for munis.

(New York)

For the first time in over a decade, Wall Street is giving more to the Democratic party than the Republican party. For the last ten years, big Wall Street banks and financial houses have leaned towards giving more to Republicans, who had a more favorable policy agenda. However, the pendulum seems to have swung the other way on the back of the kind of disruptions some current Republican policies may bring to bear (e.g. trade war). Bankers themselves are also giving more to Democrats.

FINSUM: Bloomberg framed this giving as an attempt by Wall Street to “soften a blue wave”. That sounds like a fair characterization to us—Wall Street wants to make sure to soften the hard edge of some possible forthcoming democrat policies.