GRIDLOCK IS GOOD: Neither the right nor the left will dominate Congress for the next two years, as Republicans head toward control of the House by a small majority — and as Democrats have a shot of maintaining control of the Senate in a 50-50 tie, perhaps depending on a Dec. 6 runoff in Georgia.
ACTIVIST LEGISLATION from the White House or the Senate will die in the House; investors won’t have to worry about tax law changes or huge new spending. In the Senate, it’s possible that liberal judges will win confirmation, reflecting public opposition to harsh abortion curbs, but filibuster rules will prevail, thwarting Joe Biden’s agenda.
MOST ANALYSTS, INCLUDING US, GOT IT WRONG: There was no Republican Red Wave, as voters in state after state rejected candidates who claimed the 2020 election was rigged. Mainstream Democrats in states like New Hampshire won by painting their GOP opponents as too radical.
OUR INITIAL TAKE is that while Democrats exceeded expectations, they have to grasp some lessons: the country doesn’t want massive new spending, fossil fuels are necessary, crime and the porous border have to be addressed, etc. For the Republicans, the lesson is clear — Donald Trump hurt the party in several races and may become a noisy distraction by winter.
A TRANSFORMATIVE ELECTION: Biden’s influence is waning; many Democrats won despite him, not because of him. And Trump endorsed polarizing and inexperienced candidates. A new crop of politicians will emerge as voters seek fresh faces; a major winner last night was Florida Gov. Ron DeSantis, who’s clearly ascendant. The Democrats’ new stars may be Michigan Gov. Gretchen Whitmer and Maryland Gov.-elect Wes Moore.
WE’RE IN AN ERA OF ENDLESS CAMPAIGNS: The next one will begin in a week as Trump announces his candidacy. This will fascinate the Washington chattering class, but for the markets, the focus will shift to whether a recession looms, whether the Fed will end its tightening this winter, and whether a truce and negotiations are possible in the Ukraine war.
A VICTORY FOR THE COUNTRY: For us, there was one huge takeaway from the election: there were no widespread voting irregularities — a few snags but nothing to further inflame the country’s deep divisions. Anxiety over social unrest may subside; elections are messy but for last night at least, the system worked.
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