Mid-terms races tighten

JPM with the update.

The GOP maintains its lead in the House and has narrowed its deficit in the Senate. Democrats outraised their Republican counterparts in 22Q3. In the House, Democrats raised $56.5mm to the Republican’s $42.3mm. Politico reports that Democrats have more cash on hand in 45 of 65 battleground races. While the numbers for the Senate have yet to be finalized, Democrats were leading through July, with August the strongest fundraising month of the cycle for Demings [FL], Fetterman[PA], Kelly [AZ], Ryan [OH], and Warnock [GA]. Despite the money differential, the momentum for Democratic Senate campaigns appears to be slowing. With races tightening across the battleground states. Why? Multiple media outlets attribute the renewed GOP hopes to take the Senate to an approach of pitching the party as the better outcome for the economy, as well as continued low approval ratings for Biden, that hang over Democrats.

We have received a number of client questions regarding market outcomes from the mid-terms. If you consider the 4 outcomes shown in the chart below, 3 are likely to be viewed as the same, which includes any scenario where the GOP takes control of at least one branch of Congress. The market is likely to interpret all of those outcomes as removing uncertainty surrounding new regulations and taxes; a slight positive but not enough to change views on index-level earnings.