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November shock? Republicans could still control Congress after the midterms, polls suggest

(Source: marketwatch.com)

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A woman dressed as a suffragette casts her ballot for the midterm elections at the Polk County Election Office in Des Moines on Oct. 8, the first day of early voting in Iowa.

With less than three weeks to go before the midterm elections, there are signs a “blue wave” may not wash across Washington, in a move that could have big implications for U.S. stocks

DJIA, -1.27%

 and other financial assets.

Recent analysis shows the possibility that Democrats could fall short of the seats required to take the majority in the House of Representatives. Republicans’ numbers are trending up in one snapshot of the generic ballot. And survey margins of error allow for the possibility the House and Senate could stay Republican or flip to the Democrats.

Democrats are “close to winning the [House] majority, but they do not have it put away, in our judgment, with Election Day less than three weeks away,” wrote Kyle Kondik, managing editor of Sabato’s Crystal Ball at the University of Virginia, in an analysis on Thursday.

Also read: How America’s top CEOs are spending their own money on the midterm elections.

Forecasters at FiveThirtyEight and CNN predict Democrats will win the House and the GOP will keep the Senate. Look closer at the CNN forecasts, however, and there are cautionary notes.

“The margin of error is wide enough that [Democrats] could end up with 203 seats, short of a majority, or 261 seats, well more than needed for a majority,” writes the network’s analyst Harry Enten about the race for the House. Enten’s Senate forecast has a similar caveat.

The FiveThirtyEight forecast puts Democrats’ chances for control of the House at a solid 84%. Yet there’s also been a slight uptick in Republicans’ chances this week.

To win the House, Democrats need a net gain of 23 seats. To take the Senate, they would need to hold all of their current seats and gain two. That’s always been an uphill battle since Democrats are defending 26 seats to Republicans’ nine this year.

Republican Senate candidates in North Dakota, Tennessee and Texas are leading their challengers, according to recent polling, something that’s putting a damper on Democrats’ hopes of flipping the GOP’s 51-49 majority.

Former House Speaker Newt Gingrich cites those races and others as evidence that his fellow Republicans are motivated following the confirmation process of Supreme Court Justice Brett Kavanaugh, who denied allegations of sexual assault.

See: Midterm messaging revolved around the economy — until the Kavanaugh hearing.

“The sheer viciousness of the smears, lies and character assassination against Kavanaugh galvanized Republicans who had been relatively passive about the election,” Gingrich wrote in an op-ed for Fox News.

How galvanized remains to be seen.

“Based on current data, Democrats could win the House and reach 50-50 in the Senate — or Republicans could retain the majority in both chambers,” wrote Sam Wang of Princeton University on Wednesday.

The Dow Jones Industrial Average has slumped in October, in part on concerns over rising interest rates, protectionist sentiment and global concerns, but also over expectations that the Democrats may take control of the House and stymie the Republican deregulatory agenda.

More Info: marketwatch.com

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