Joshua Roberts | Reuters
President Donald Trump speaks to the media as he departs for a campaign rally in Fort Myers, Florida, on the South Lawn of the White House in Washington, October 31, 2018.
Republicans successfully turned back a blue wave in midterm races, guaranteeing President Donald Trump’s economic programs remain in tact.
But the president will now be faced by a split Congress, with newly empowered Democrats gaining control of the House of Representatives. The Democrats do not see eye to eye with Trump on many policies, and they may try to impeach him.
“I think there could be much clearer tension. They’re going to subpoena Trump’s tax returns. That could go all the way to the Supreme Court. In the short term, there’s going to be no change to the economic policy. The good economy is baked in for the next 12 months and with the divided government, there could be an infrastructure bill,” said Tom Block, Washington policy strategist at Fundstrat.
Stock futures were higher in evening trading, but well off highs reached when it looked like Republicans had a chance of holding onto the House of Representatives. Treasury yields were lower, and the dollar gave up its early evening gains and was lower against the euro.
“It’s certainly not the blue wave Democrats were hoping for,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors. “Based on what we’re seeing right now, the stock market is liking it. History has shown that the mixed party control is generally the best combination. This is as close to market expectations as we’re likely to see.”
But Ablin also cautioned that Democrats could be tough on Trump. “Is it impeachment or infrastructure?” he said.
“I think it’s a disappointing night for the Democrats, certainly in the Senate. It’s not a disaster,” said Greg Valliere, chief global strategist at Horizon Investments. “One underestimates Donald Trump at one’s own peril. He made the Senate his priority, and this looks like a surprisingly strong showing for Republicans in the Senate.”
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