On Tuesday night all of the speculation about the midterm elections will mercifully be over, and there is one potential outcome that is being called a “disaster” for the financial markets. Over the past couple of years, stock prices have soared to unprecedented levels, and Wall Street has seemed to greatly appreciate the pro-business environment that President Trump has attempted to cultivate. Regulations have been rolled back, corporate taxes have been reduced significantly, and many corporate executives no longer fear that the federal government is out to get them. But after Tuesday, everything could be different.
The most likely outcome appears to be that the Democrats will take control of the House of Representatives and the Republicans will remain in control of the Senate. For what it is worth, Nate Silver is currently projecting that the Democrats have an 88 percent chance of winning the House and only a 19 percent chance of winning the Senate.
But of course he was also projecting a huge landslide victory for Hillary Clinton in 2016.
In any event, a divided Congress would create gridlock in Washington, and according to Wedbush Securities managing director Steve Massocca that would produce “some negative fallout” for the financial markets…
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