The House Looks Gone, but do Democrats Have a Chance in the Senate?
Author: Greg Valliere
June 6, 2022
NEWS THIS WEEKEND CONFIRMED the Democrats’ free fall, as average gasoline prices neared $5 per gallon, and a very modest gun reform bill inched toward passage. A big political story this week will be the recall vote against the progressive district attorney of San Francisco. Imagine that — Democrats are in trouble in San Francisco.
DEMOCRATS ARE HOPING to gain traction on gun regulation, abortion, and the prime-time hearings that begin this week on the Jan. 6, 2021 riots. The latter will generate enormous media attention, but whether it will switch many votes remains to be seen.
THAT BRINGS US TO THE NOVEMBER ELECTIONS: Republicans need to gain only five net seats to take the House, and we think they’ll pick up at least 20 (and we’re on the low side; it could be a 30-plus blowout). So the real suspense will be races for the Senate, which currently is tied, 50-50.
THE DEATH OF ROE V. WADE, likely this summer, could produce a reaction in northern states like New Hampshire, where Democrats could hang on by a thread. There’s still a plausible path for Democrats to maintain Senate control, but that’s looking less likely as the party’s environmentalists howl over Joe Biden’s July trip to Saudi Arabia in an attempt to get to get more oil production.
THE SENATE MATH: There’s a 50-50 tie, with 21 Republican seats up for re-election compared to 14 Democratic seats. In normal times, that would point to the Democrats keeping control, but these aren’t normal times. There are two major themes in the Nov. 8 vote:
FIRST, can the Democrats pick up any seats? They have only three possibilities: taking out Sen. Ron Johnson in Wisconsin, winning the open seat in Ohio, where J.D. Vance (R) could make rookie mistakes, and taking the open seat in in Pennsylvania, where Lt. Gov. John Fetterman (D) has looked erratic on his health issues. At most, the Democrats might pick up one seat.
SECOND, Could the Republicans pick up seats? Yes, in New Hampshire, Arizona, Nevada, and possibly Georgia, where the party faces a problem that vexes Mitch McConnell: the GOP has some weak candidates in states like Georgia. So we’ll say the GOP could pick up one or two seats.
SO HERE ARE OUR ODDS:
Republicans gain control of the Senate by two seats, 20%;
Republicans gain control by one seat, 30%;
A tie, broken by Kamala Harris, 30% chance;
Democrats keep the Senate by one seat, 20%.
IT CAN’T GET MUCH CLOSER THAN THAT, with a tie going to the Democrats. The defining factor, of course, is inflation. Unless gasoline prices plunge this summer (highly unlikely), the Republicans are likely to gain control of the Senate.
INVESTMENT IMPLICATIONS: Even if Democrats keep the Senate by a seat or in a tie, their near-certain loss of the House will doom the Biden agenda in the last two years of his first term. We continue to believe he will not seek re-election.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2022 AGF Management Limited. All rights reserved.