Wall Street's Take on the Midterm Elections
What is Wall Street's perspective on what might happen November 7? Here are the key takeaways from a Prudential Securities conference call held yesterday by the firm's Washington research term.
There's a 2 in 3 chance of the Democrats' taking the House and a 45 percent chance of their taking the Senate.There's some evidence of Republican support hardening and independents' resistance to the GOP softening. Republican losses could be limited to 20 House seats and three or four Senate seats.GOP retention of both the House and the Senate is the least likely outcome.Don't expect a big market response to a Democratic takeover, especially with the Bush tax cuts safe until 2010.Do expect a more protectionist Congress, which will make trade deals tough to do.Expect a lot of Democratic "noise" over China (outsourcing) and Wal-Mart (employee benefits).Other than minimum-wage legislation, there's not a "lot of low-hanging fruit" for triumphant Democrats to gorge themselves on.If they take the House, Dems could get off to a slow start. There could be many leadership challenges as well as lots of committee renaming.