Election Day: Dems Forecast to Gain Control of House, GOP to Retain Senate

Posted on 11/06/2018 6:35 AM

Many close House, Senate, governor races could change final outcomes, perhaps in major way


It's Election Day, with a record number of people voting early — 31 million early ballots were cast as of Monday morning in participating states, a record-breaking number.
     All major election prognosticators are predicting Democrats will gain control of the House, with differences on how many seats they will garner. Dave Wasserman, House editor of the bipartisan Cook Political Report, puts the range at 25 to 40 seats, with a net gain of 23 seats by the Democrats needed to control the chamber. The final forecast from Larry Sabato at the University of Virginia’s Center for Politics has Democrats netting 34 seats in the House, with a potential upside of 40 or more.
     The Senate looks like Republicans will retain control, but there are several very close contests that could expand the GOP margin, or make for a long night for them. For example, races in Texas and Tennessee are closer than they should be. The current Senate ratio is 51-49.
     Democrats are expected to have a solid showing in governor races. Republicans currently hold 33 governorships, compared with 16 for Democrats and one independent. There are 36 gubernatorial races today (Republicans must defend 26 of them) and Sabato has Democrats netting 10 governorships.
     Costly elections. $5.2 billion was spent by candidates, political parties and outside groups on House and Senate contests this cycle, according to the nonpartisan Center for Responsive Politics; 2018 tops spending records for any congressional midterm cycle.
     Today's midterm elections could greenlight recreational marijuana in two more states. If approved, Michigan and North Dakota would join nine others, plus Washington D.C., where recreational use is already legal. Some cannabis-related measures are at stake in Missouri, Utah and Ohio, while races in Florida and Kentucky will be viewed by some as referendums on pot.
     Some other ballot initiatives include: San Francisco will vote on taxing big companies headquartered there, with proceeds used to fight the city’s rampant homelessness. Idaho, Nebraska, Utah and Montana will vote on expanding Medicaid. Washington, the “Evergreen State,” will vote on a carbon tax, and Florida may restore voting rights to felons. Voters in 37 states will consider 155 ballot questions.

 

The House and Senate will return to Washington to resume work on Tuesday, Nov. 13. Several key issues await the lawmakers, including funding for four agencies, including USDA, because their stopgap funding measure expires Dec. 7. President Trump is expected to turn up the heat on getting funding for a wall along the southern border.

A new farm bill vote will likely be put on the agenda, assuming departing House Speaker Paul Ryan (R-Wis.) allows it. Key for him will be whether post-election there will be a majority of Republicans voting for the measure, which is expected to look more like the Senate measure when it comes to food stamps, something conservative GOP members in the House will not like.

Sources signal a lot of farm bill compromises have been made on remaining issues, including some of the most contentious topics.

Kicking the farm bill to 2019 does not have many supporters, if any, for several reasons: (1) The process would have to start all over again; (2) Contentious amendments could surface regarding the sugar and crop insurance programs; and (3) If lawmakers ever return to focusing on deficits and debt (both rising, with deficits expected to exceed $1 trillion, farm bill spending will not be spared.

"The Chinese side is ready to have discussions with the U.S. on issues of mutual concern and work for a solution on trade acceptable to both sides," Vice President Wang Qishan told the Bloomberg New Economy Forum. Ahead of his expected meeting with President Xi later this month, President Trump has threatened to impose further tariffs on $257 billion of Chinese imports if the two countries cannot reach a trade deal.

China's COFCO Meat inks deals for beef, mutton. Agreements have been signed for the purchase of more than 1 billion yuan ($145 million) in beef and mutton from JBS Australia and New Zealand's Anzco Foods, according to a statement from COFCO Meat.

The deals were announced as part of the International Import Expo in Beijing and come as Chinese President Xi Jinping said the country aims to import $30 trillion of foreign goods and $10 trillion in foreign services over the next 15 years and open several sectors of its economy to foreign investors.

An analysis by Caixin Media indicated the pledge by China could be relatively easy to meet — China imported $1.84 trillion in goods last year. However, the pledge on services could require more action China as their services imports totaled $468 billion in 2017.

Other items of note:

  • U.S., North Korea seeking second Trump-Kim summit. U.S. Secretary of State Mike Pompeo will meet Thursday in New York with a top North Korean official as the two governments work toward a second summit between President Trump and Chairman Kim Jong Un, the State Department said Monday. Pompeo will meet Kim Yong Chol, vice chairman of the North Korean Central Committee and the country's former intelligence chief, the State Department said. The two officials will discuss pledges made following the June summit in Singapore between Trump and Kim, "including achieving the final, fully verified denuclearization" of North Korea, according to the State Department. The talks come as North Korea ramps up anti-U.S. rhetoric, with the country's foreign ministry saying Friday that it may resume nuclear work absent sanctions relief from the United States.

  • President Trump said Monday that he would "probably not" meet with Vladimir Putin on his trip to Paris this weekend, after saying last month that he would likely meet with the Russian leader. On Friday, he will travel to Paris for two days to attend a military parade celebrating the 100th anniversary of the end of World War I. Putin is also expected to attend the event. Trump said he would meet with Putin at the Group of 20 summit in Argentina later this month.

  • The tight market for warehouse and transportation workers is starting to bite the earnings of food suppliers, the Wall Street Journal reports (link). “Sysco Co. sent a chill through the sector with an earnings report that fell short of expectations because of rising costs, including spending to get workers in place and to transport its goods.” The Houston-based business is being weighed down by some of the labor and capacity constraints that are squeezing companies even as demand in the U.S. economy races ahead. Sysco’s overtime expenses rose in the past quarter rose, and executives say the cost of hiring and retaining warehouse workers and drivers hurt profit. “The food distributor is raising its prices, as are many companies facing rising input costs. But like others, Sysco is finding that its costs are rising faster than it can pass along the higher prices in many areas.”

  • American farmers are hoping the U.S. trade war with China will end before their soybeans start to rot, notes a New York Times article (link). As a result of the dispute, soybean sales to China have fallen 94% compared with last year.

Markets. The Dow on Monday closed up 190.87 points, 0.76%, at 25,461.70. The Nasdaq fell 28.14 points, 0.38%, at 7,328.85. The S&P 500 was up 15.25 points, 0.56%, at 2,738.81.

The Treasury department is due to sell $106 billion of short-term bills at 11:30 a.m. ET and $27 billion of 10-year notes at 1:00 p.m ET.

The oil market, where prices have been under pressure lately, will get both the EIA’s energy outlook and API U.S. inventory data today. In Canada, crude is trading for $43 a barrel below U.S. benchmark prices due to bottlenecks, fueling a lucrative business for refiners including Exxon Mobil Corp. and Phillips 66. Link to Wall Street Journal article.

China buys of Iran crude could be 360,000 bpd for six months: Reuters. China would be able to purchase 360,000 barrels per day (bpd) of Iranian crude oil for 180 days, according to sources quoted by Reuters. The U.S. waiver would require China to disclose counter-parties and settlement methods, the report said. China customs data shows the country bought an average of 655,000 bpd of Iranian crude over January-September. Meanwhile, Japanese Trade Minister Hiroshige Seko said his country is expected to resume its imports of Iranian crude via the waiver they received from the United States. "It would be up to the judgment of private firms, but based on this decision, the (Japanese) companies would likely prepare for resuming Iran crude imports," Seko said at a briefing. However, he would not comment on import volumes and would not say whether Japanese imports of Iranian crude would fall to zero after the 180-day period. Japanese Foreign Minister Taro Kono indicated the U.S. and Japan will continue to discuss the situation to make sure energy supplies are stable and Japanese companies are not negatively impacted. Japan imported around 172,000 bpd of Iranian crude in 2017. The eight countries granted waivers — China, Japan,  India, South Korea, Italy, Greece, Taiwan and Turkey — imported over 80% of Iran crude oil exports of about 2.6 million bpd in 2017, according to Refiniv Eikon.

PBOC chief says China's market liquidity abundant. Four cuts to the reserve ratio requirement (RRR) by the People's Bank of China have translated into ample liquidity in the country, according to People's Bank of China Governor Yi Gang. "There is a lot of water in the pool, and the liquidity is reasonably abundant," Yi told the state-owned Economic Daily. "But another job for us this year is how to make such liquidity flow to private companies and where they are most needed." The shifts by the PBOC have released some 2.3 trillion yuan ($32.56 billion) in new financing into the market, Yi noted.

Chinese Premier Li says country will avoid competitive currency devaluation. China will not opt to undertake a competitive currency devaluation and will keep the yuan basically steady, according to statements from Chinese Premier Li Keqiang. The country will pursue tax cuts and will help small firms facing funding difficulties and widen access for private firms in infrastructure. Further, he noted the country would not resort to a major stimulus effort to boost the economy. However, he also cautioned the Chinese economy is facing downward pressure and the global economy could also come under pressure.


 

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