US Elections

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On Tuesday, November 8, Americans may go to the polls. 435 new members of the House of Representatives will be elected. Currently, 220 House seats are held by Democrats and 212 by Republicans (there are still 3 vacant seats). Furthermore, 35 new senators may also be elected (out of 100). Of those 35, 21 are in the hands of Republicans and 14 Democratic seats. In the Senate, Vice-President Kamala Harris now has the deciding vote in the 50–50 balance of Democrats and Republicans. The moment the Democrats lose control of the House or Senate, then it becomes much more difficult for Biden to get legislation through the House. Furthermore, this election may be seen as a referendum on Biden’s performance. Until recently, Biden was the least popular president ever, but that has improved in recent months. Furthermore, there are elections for a total of 36 governors and several other local positions. Linked to these elections are also referendums in several states, including on abortion legislation.

As always, this election is about the economy. The increased cost of living, higher interest rates, and falling house and stock prices form the basis of voter behaviour, arguing against a Democratic win. Currently, according to polls, 45 percent of Americans vote Democratic, and also 45 percent of Americans vote Republican. So it is about the 10 percent of people who have not yet made up their minds. Furthermore, Republicans are more motivated to vote, so low turnout usually favours Republicans.

In only three of the last 22 midterm elections did the party that had also delivered the president before that win. That was the case with Roosevelt in 1934, Clinton in 1998, and Bush in 2002. In this respect, too, things are not going well for the Democrats.

According to several websites where bets can be made on the outcome, the Republicans are in favour, in both the Senate and the House of Representatives.

There is such a thing as the four-year presidential cycle in the stock market. Monetary and fiscal policies have a major impact on financial markets. Politicians want the economy and stock market to do well and boost the economy ahead of the presidential elections. A bear market usually occurs in the first half of the four-year term, in the second half, the third year shows the best performance. That period starts after the midterm elections.

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