U.S. Mid-Terms postscript
Now that it’s all over bar the shouting and inevitable accusations of voter fraud, where does this leave Donald Trump’s administration ? Well, given that even President Reagan, a man more widely lauded now than during his actual time in office, managed to lose control of the lower chamber, Trump has done extraordinarily well. It’s important to remember that this was a turnout battle, and the Democrats committed all their resources to their “Blue Wave” which, as it turned out, wasn’t deep enough to get your socks wet. The Mid-Terms have always been something of a referendum on the performance of the President and many have continued to thrive after worse results than this. The worst-case scenario for all asset markets was Democratic victories in both Upper & Lower chambers of Congress. The Republicans actually managed to strengthen their grip on the upper chamber (Senate), whilst conceding a little ground in the House of Representatives. Although the Democrats will be able to frustrate Trump with investigations, they’d be wise to rein in their more extreme proponents on that front, as that is a tool that can be used to cut both ways, and the Democrat's cupboards are well-stocked with skeletons. While there is still some ideological opposition to the U.S. President that will never be overcome, the realistic view is that deals will be done and the policies of the current Government will continue with minimal disruption. We expect this to be positive for U.S. inward investment, and that Equity markets will be the first to reflect that. This is likely to bring some welcome relief to global equity markets after October’s disappointing performances.