CNBC: RED WAVE, BLUE WAVE: What could happen to markets if Republicans win big or lose big

[NightFox]

Source: CNBC.COM
RED WAVE, BLUE WAVE: What could happen to markets if Republicans win big or lose big on Tuesday

Lengthy but very interesting analysis, don't know that I agree on all of the conclusions but I think there's some good points in the article.


"The midterm elections Tuesday have huge stakes not only for the future of health care, taxes and immigration, but also for the U.S. economy and investors.

Polls and forecasters suggest Democrats have a good chance of taking control of the House, while Republicans are favored to keep a slim majority in the Senate. But deviations from the expected outcome could have massive implications for investors.

Experts consider the GOP holding control of both chambers the second most likely outcome, followed by a Democratic sweep of Congress. It would be virtually impossible for Democrats to win the Senate without also gaining control of the House."

"Scenario 1: Democrats take House, GOP keeps Senate

• Overall stock market: Modestly bullish
• Winners: Drug stocks, defense stocks

Top forecasters consider Democrats flipping the House and Republicans retaining the Senate the most likely outcome. Projections from data journalism site FiveThirtyEight give Democrats about an 85 percent chance of taking House control by flipping at least 23 seats, and the GOP about the same chance of holding the Senate."

"Scenario 2: GOP keeps both, but narrower House majority

• Overall stock market: Very bullish
• Winners: Tax cut beneficiaries, refiners, consumer discretionary

While Democrats have the inside track to gaining control of the House, Republicans could keep a majority if only a handful of toss-up races break their way. The GOP has a small — but still realistic — chance of holding the House. The political data website FiveThirtyEight pegs it at about 15 percent."

"Scenario 3: Democrats take the House and Senate

• Overall stock market: Bearish
• Winners: Industrials, materials
• Losers: Health care, banks

Democrats face a daunting path to flipping the two net seats needed to take a Senate majority. Democratic senators and independents who caucus with them face re-election in 26 states this year, including five Trump won easily. Republicans only have to defend nine seats."