9 November 2022
If you are covering the US midterm elections and the impact for investors and markets, please find below a comment from Stuart Clark, portfolio manager at Quilter Investors:
“The US midterms has delivered an uncertain result that is likely to drag on for some time to come. The House of Representatives was always likely to flip to the Republicans and it appears as if it is on course to do so. The Senate remains up for grabs, however, as key races in Georgia and Arizona remain to close to call.
“Ultimately the market is clinging to the view that the split power will be beneficial for markets as more extreme policies are gridlocked out and watered down. But ultimately what does gridlock in the current environment mean for the ability to deliver requisite policy and enable the US economy to emerge out of the current situation. The arguments in favour of split power in the legislative chambers of the US will prove to be flawed as we are in a period of higher interest rates and will once again see the lack of agreement for budgets and of course the debt ceiling. The shift to a split executive/legislative will likely fail to boost the market as other forces overwhelm, primarily the inflation and growth dynamics. As such, investors will need to remain calm and patient while the political risk plays out.
“While the rhetoric and uncertainty is only going to ramp up in advance of the general election in 2024, these results could point to the beginning of the end of Donald Trump. While he would look to implement pro-business policies if re-elected in 2024, the division and chaos brought about by his previous presidency means markets could cheer the fact there could be a less bombastic character running for president. But with the country so split down political lines, this very much remains to be seen.”
