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U.S. markets positively view Republicans as likely to win midterm legislative elections




U.S. markets positively view Republicans

as likely to win midterm legislative elections


Markets view positively the likelihood of Republicans winning U.S. legislative elections on November 8 and the political stalemate scenario, despite concern about a possible debt crisis.



According to Patrick O'Hare of Preventing DotCom

New York markets that have been experiencing a sharp rise in interest rates for months and the potential for an economic slowdown or even a recession "have many concerns", and generally do not care about the elections that occupy the United States.


"We spent a lot of money during the pandemic," Patrick O'Hare added, arguing that brokers would not oppose budget cuts.



David Kotok of Cumberland Advisors explained:


The market is thinking (of elections), but it worries more about the Federal Reserve and the upheaval in the UK.


CFRE's Sam Stovall considered the most representative U.S. equity index, S&P 500, to have risen during the year following the 19 midterm elections since the end of World War II.



While the coming year could establish a precedent

most analysts said the NYSE would recede once the economy entered recession in 2023, before recovering.


This confirmed all polls several days ago, the Republicans' lead in this election.


Economist Karl Ricadona of BNP Paribas noted that restoring opposition to at least one of the two chambers of Congress would lead to coexistence and "a stalemate in Washington that tends not to be bad for markets, because it means the status quo remains."



There won't be any huge endeavors anymore he continued.

  • In three years, US debt swelled by 36%
  • more than $8,000 billion, affected by a series of
  • economic support plans initiated
  • by former President Donald Trump

and then continued under President Joe Biden

to confront the coronavirus pandemic.


"We see tensions between monetary


  • and budgetary policy in many countries,
  • said Crissett Capital's Jack Aplin
  • noting in particular the historical confusion that has caused
  • a major political crisis in the UK.



Consequently

many Governments are preserving households' purchasing power by bearing part of the high cost of energy, contradicting the trend of their central banks, which seek to reduce inflation by tightening leveraging conditions, while Republicans hope that there will be no paralysis.


House Republican leader Kevin McCarthy announced earlier that his party would seek to cut the budget if it regained control of Congress.



The California lawmaker threatened to use


the debt ceiling as a weapon to obtain concessions from President Joe Biden, who must pass Congress to allow the government to meet its financial obligations.


For his part

Ian Schefferdsson of Pantheon Macroaconomics warned that Democrats cannot raise the ceiling on their own and the United States will default" on its debts.


David Kotok also issued warnings that the market does not take this risk into account, and warned that the dollar would be "seriously weakened by debt ceiling manoeuvres", not to mention that interest rates could rise further with the risk of US default.


He continued:

  • When insane individuals are elected to the House of Representatives

  • you open the door to problems"
  • referring to Representative Marjorie Taylor Green of the right.


Sam Stovall commented:


It depends on how they progress, but debt reduction is seen in an environment of high interest rates, rather positively.


Marise Ogg, of Tower Bridge Advisors

argued that the only time policies put pressure on the market, is when doing what affects corporate results, interest rates and dollars, adding: But most of the time it's just making noise and expressing anger, and it's not weighing any weight."



Washington sets negotiating requirement with Moscow


The National Interest revealed that Washington will hold negotiations with Moscow should the Republican Party win the upcoming midterm elections to the United States Congress.


According to a newspaper article by Matthew May, House Republican leader Kevin McCarthy explained that, if he secured a majority, his party would reconsider or even stop the question of Kiev's support.


He said that people would face a recession


and would not write a check for Ukraine without the specific amount, adding that the White House could not only deal with Ukraine's problems.


May called the congressman's statement a hint that it is the basic duty of the U.S. authorities to protect voters' interests, noting that at present, Washington's conduct in the Ukrainian conflict is incompatible with this task.


May asserted that the United States has three objectives


preventing direct clashes with Russia and permanently worsening relations with Russia, and reducing the economic consequences of the Ukrainian crisis, two of which have not yet been implemented by the White House.


Washington's stubborn refusal to negotiate with Russia to end the conflict, or at least a ceasefire, on the false basis that only Kiev has the right to do so, he stressed.


According to the journalist

the Republican majority in the House of Representatives will influence US President Joe Biden's policy towards Moscow, because if aid to Kiev stops, the White House will have to open direct diplomatic channels with the Kremlin.