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Wall Street weighs in on the midterm elections

midterms wall street

Democrats took control of the House in the 2018 midterm elections Tuesday, while Republicans expanded their majority in the Senate. Here's what analysts on Wall Street said that could mean for the economy and financial markets.

SEE ALSO: The Dow jumps more than 250 points after Democrats take House and Republicans strengthen Senate majority

On trade

“Congress over the years has ceded a great deal of authority on trade to the Executive.  Because of this, the President will be free to pursue a more aggressive strategy on trade with China, if he wants to do so. The crucial question is whether he will want to make a deal with Xi Jinping or not. While continuing tough rhetoric on trade would not directly hurt the President politically, it would damage both the global economy and U.S. economy, which could leave him more vulnerable in 2020.” - David Kelly, chief global strategist at JPMorgan Funds

“Congress has limited power to restrain the President on trade regardless of which party is in control. But even if investors are right and the legislative gridlock provides a check on the Trump administration, we still think that European equities will come under pressure next year. This is because we expect the US economy to slow sharply then. If history is any guide, European stocks would probably perform just as badly as their US peers in this scenario.” -Simona Gambarini, markets economist at Capital Economics

On infrastructure

“Democrats might be willing to support more money for infrastructure if it included improvements to the electrical and internet grids.  However, a lack of money and a lack of available construction workers suggests that a moderate rather than large infrastructure bill is the most that could occur.” - David Kelly, chief global strategist at JPMorgan Funds

“It is possible that President Donald Trump and the Democrats could agree a deal to boost infrastructure spending, but there is probably more chance of an extended government shutdown. Overall, though, the midterms are unlikely to have a significant impact on the economy.” - Nikhil Sanghani, assistant economist at Capital Economics

“While Democrats in Congress might favor increased infrastructure spending, they could seek to finance it by reducing defense spending. That would limit the boost to the industrial sector overall. We are cautious on the sector, which is being constrained by concerns that the industrial economic cycle has already peaked and by rising trade protectionism.” - Justin Waring, investment strategist at UBS Financial Services

On health care

“Our Health Care analysts have viewed a split Congress as the most positive outcome for their sector, since no major legislation would likely be enacted. Though with more Democrats in Congress, our Health Care Facilities team seems some possibility Democrats may pursue a moderate policy agenda based on stabilizing the exchanges/encouraging more states to expand Medicaid, which they see as positive for facilities and mixed for managed care organizations.” -Bank of America Merrill Lynch

See the rest of the story at Business Insider

Full "The Business Insider: The Money Game" article

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