Election Day Tuesday: Who Controls Senate May Not be Determined Nov. 8

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Washington Focus

Tuesday is Election Day. Remember, if you do not vote, you cannot complain about the results. All 435 House seats are up for grabs; about one-third or 34 Senate seats. The party in power in Washington typically loses ground in midterm elections, and this year the Democrats control the House, Senate and presidency. Here is a link to a Pro Farmer special report on the midterms and their long-term implications.

House: The GOP needs a net gain of five seats to take control, and polls signals it is not a matter of if but how many net seats Republicans garner. Most predictors are in the 15 to 30 seat area. The actual total is key to how GOP leaders can govern, or not govern, the chamber.
Senate: The number of toss-up Senate races are focusing on Wisconsin, Pennsylvania, Georgia, Nevada, Arizona and New Hampshire. Poll aggregator FiveThirtyEight rated the outcome in the Senate as slightly favoring a GOP takeover as of Nov. 3. The nonpartisan Cook Political Report with Amy Walter on Friday adjusted its projection for Senate contests in the direction of Republicans, saying the outcome could vary from no change to a net GOP gain of three seats.

Key Senate races:
Nevada: A likely GOP pickup by newcomer Adam Laxalt, with Hispanic voters important. President Joe Biden won the Hispanic vote by 26 points… Democratic Senate incumbent Catherine Cortez Masto has only a 10-point spread.
Arizona: Dem incumbent Mark Kelly had early consistent lead, but race has tightened with GOP candidate Blake Masters gaining support, especially from GOP Governor candidate Kari Lake, who is expected to win over Dem candidate Arizona Secretary of State Katie Hobbs.
Ohio: Polls show GOP candidate Vance in a squeaker against Dem Rep. Tim Ryan.
Wis.: Dems thought they would wrest control from incumbent GOP Sen. Ron Johnson, but he now leads Dem challenger Mandela Barnes… seen as too liberal.
Ga.: Very close contest between incumbent Dem. Raphael Warnock and GOP challenger Herschel Walker, a candidate with several issues. Key may be possible coattails for Walker via Georgia Gov. Brian Kemp, who is ahead of Dem challenger Stacey Abrams. If no candidate wins more than 50% of vote… runoff on Dec. 6. More than 2.5 million Georgia residents cast ballots during early voting, which ended Friday. That shattered the state’s previous midterm early-voting record of 2.1 million set in 2018, according to Gabriel Sterling, chief operating officer for the Georgia secretary of state’s office, which oversees elections.
Pa.: Jump ball in a seat currently held by retiring centrist GOP Sen. Pat Toomey. Dem candidate John Fetterman had early lead, but health problems have GOP candidate Dr. Mehmet Oz closing the gap. A late debate helped Oz. The FiveThirtyEight average of polls shows the contest essentially tied.
N.C.: Close contest between Democratic Senate nominee Cheri Beasley vs. Republican hopeful Ted Budd, who is currently ahead in most polls by a few points but within the margin of error.
N.H.: Sen. Maggie Hassan (D., N.H.) has seen her polling lead over Republican challenger Don Bolduc diminish, with a top Republican official on Sunday suggesting the state was now winnable after independents started breaking late for the GOP. Hassan enlisted Sen. Amy Klobuchar (D-Minn.) and Transportation Secretary Pete Buttigieg — rivals from the 2020 Democratic presidential primary —to campaign for her Sunday in the state.
Governors: Twenty governorships currently held by Republicans are up for grabs, besides the 16 on the Democratic side. The Arizona, Oregon, Kansas, Wisconsin and Nevada gubernatorial races are all toss-ups. The spread of Florida Gov. Ron DeSantis’ likely victory will be important for the 2024 presidential race. Registered Republicans in the state now outnumber Democrats by 300,000.
Spending: $16.7 billion is the new projected total spending on state and federal elections that blows away the 2018 record. Federal candidates and political committees are expected to spend $8.9 billion, while state candidates, party committees and ballot measure committees are on track to hit more than $7.8 billion, per OpenSecrets.
Pre-election voting. 39,272,372 early votes as of 1:16 a.m. ET, per the United States Elections Project. “Number of early votes cast surpasses early-vote total in 2018 midterm election,” according to the Washington Post (link).
Independent voters usually decide close elections, and late polls show this group trending toward Republicans.
Hispanic voters. First a caveat: this is not a monolithic group… Hispanic voters in Florida are different than those in Texas, for example. Polls show this voting segment increasingly favoring Republican candidates. Why? Border issues, crime, religious issues (including abortion) and a move away from the Democrats favored approach of transfer payments to the sector. Hispanic voters’ gravitation toward the GOP is especially evident in South Texas. Voters in the Rio Grande Valley have the chance to send three GOP Latinas to Congress — a historic feat for a region that has been represented historically by male Democrats.
Minority Republican candidates. Thirty-six Latino Republicans are on the ballot from Florida to Oregon, that could help double the representation they have in the conference if they win. Roughly 30 Black Republicans are also on the ballot. Two of them, John James in Michigan and Wesley Hunt in Texas, are expected to win, which could double the number of Black Republicans serving in the House from two to four. And with 13 Asian American Republicans running for the House, those ranks could expand as well. Regardless of Tuesday’s outcome, we are likely to witness the largest number of Republican women serving in the House’s history. Eighty are on the ballot, 27 of them incumbents seeking re-election.
Suburban white women. The latest Wall Street Journal poll shows a clear shift with this group since its last poll in August. The new survey found that they favor Republicans in congressional races by 15 percentage points. In the WSJ’s August poll, white suburban women favored Democrats by 12 points. And that seems to be because these women are turning their attention to inflation and the economy over abortion, and they think Republicans do a better job on those issues. Biden’s approval rating has dropped among white suburban women, with 38% approving and 60% disapproving of his job performance. In August, 51% approved and 48% disapproved.
Key election year issues: (1) Watch where late spending has gone; (2) Excuses. For example, the White House is raising eyebrows with its midterm strategy, which has President Biden largely staying out of key battleground states in favor of safer spots; (3) Issues: Concern about the economy, inflation, crime and border favor Republicans; (4) Anxiety about abortion following the Supreme Court Ruling and so-called “democracy” concerns are usually listed high among Democratic voters. “There’s been a real bifurcation of the House landscape between red and purple states vs. blue states,” said David Wasserman, who analyzes House races for the nonpartisan Cook Political Report with Amy Walter. “In blue states, where Democrats control both state and federal government, they’re being blamed doubly for high crime and inflation. In purple and red states, Democrats have been more successful in making it more of a choice election since Republicans pushed for abortion bans.”

Post-election analysis will likely prove, again, that pocketbook issues (economy, inflation (gas, food, etc.) were the best indicators of final election results. They may also show that crime was far more important in some races than the Democrats calculated. “The attempt by Democrats to make [the election] about something else — that’s a very, very complex thing to try to pull off,” said David Winston, a Republican pollster who advises House and Senate GOP leadership. He likened Democrats’ message to voters as, “No, your No. 1 issue really isn’t the No. 1 issue.”

Bottom line: “Historical trends are difficult to break, and the fundamentals in this election remain in place: When the economy is struggling, the party [that holds the White House] suffers,” said Nathan Gonzales, editor and publisher of Inside Elections, a nonpartisan campaign analysis newsletter.
Polls: A significant number of voters do not trust political polls, some for good reason. The debate after elections will again be on how the polls fared. But even election predictors admit the polls have gaps regarding accuracy.
Election predictors: A current issue is criticism of some election analysts on the number of toss-up races, both in the House and the Senate. Someone has to and will eventually win, which is why naysayers think the too-safe analysts should at least say which party the toss-ups are learning toward. The Cook Political Report with Amy Walter, a nonpartisan election watcher, rates 35 of the country’s 435 seats as “tossups,” meaning that either party has a good chance of victory. Of those tossups, 10 are seats that Republicans are defending. The remaining ones are all pickup opportunities for Republicans. Tweets Wasserman: “I've fully expected criticism for having 35 House races in Toss Up at @CookPolitical, and empathize to some extent. But guess what? There are just a lot of really close races this year — with higher uncertainty than past cycles as the reliability of polling has declined.” He adds: “I believe it's healthy to convey that uncertainty. That said, I also don't believe all our Toss Ups are alike. At some point before Tuesday, I'll publish my best (semi-educated) guesses on where each of these Toss Ups will land, just as I did in 2018. So, stay tuned.”
What to watch on election night for signals of eventual outcomes. Here are the races election experts tell us to watch:

Indiana: 1st district. Usually Democrat. If it goes GOP, bad night for Dems.
Va.: 2nd and 7th districts. Both are currently held by Dems. Others include the 10th district but that would be a major GOP win if garnered.
Texas 15th district: Illegal immigrants make this a big issue for the district currently held by a Democrat. If it flips, the border issue could play in other races.
Calif. 13th, 47th and 49th districts: Republicans are sensing some gains in very blue California, and these are three House races to watch.
Florida: Margin of GOP Sen. Marco Rubio’s likely win in Florida. If it’s five points or more, GOP gains in other state elections are likely. Ditto for GOP Gov. Ron DeSantis. Some experts believe DeSantis could be the first Republican gubernatorial candidate in 20 years to win Miami-Dade County, the state’s most populous and a majority-Hispanic jurisdiction that has long been a Democratic stronghold.
Oregon: If the first GOP governor is elected in some 40 years, that means the state could lose three current Democrat-held House seats.
New York: This is a wild card, but Dem Governor Kathy Hochul is now running just ahead of GOP challenger Rep. Lee Zelding.

Bottom line: If most of these are realized, the story of election night: Blue state gains for Republicans, and it would mean crime was a major election issue.

David Wasserman Tweets: “Here's my rough thinking early on Election Night:

- “If #VA02 Luria (D) holds on, better night for Dems than expected

- “If #IN01 Mrvan (D) or #VA07 Spanberger (D) lose, Rs likely winning 20+ seats… A word of caution, though: at least in VA, the very first results reported are likely to favor Rs. Extra caution is warranted in #VA07, where Prince William Co.'s mail ballots are critical to Rep. Abigail Spanberger's (D) path to victory and could be the last to be counted.

- “If #NH02 Kuster (D) or #VA10 Wexton (D) lose, Rs likely winning 30+ seats”

The U.S. and Taiwan will begin in-person trade talks in New York under a new joint initiative announced in June — one which China strongly opposes. The “conceptual discussions” on the U.S./Taiwan Initiative on 21st Century Trade — a plan first announced in June — will take place on Nov. 8 and 9 and will involve representatives from the National Economic Council, Commerce and Treasury departments, the Office of the U.S. Trade Representative, which will lead the delegation, said in a statement on its website Thursday. The talks will take place under the auspices of the American Institute in Taiwan — the de facto U.S. embassy — and the Taipei Economic and Cultural Representative Office in the U.S.

The trade initiative aims to reach agreements in areas including trade facilitation, good regulatory practices, strong anti-corruption standards, and addressing distortive practices of state-owned enterprises.

COP27 began Sunday in Sharm el-Sheikh, Egypt, and will run until Nov. 16. COP27 is centered on the themes of decarbonization, the energy transition, innovative solutions, pro-climate finance, nature and biodiversity, and more. Link to the schedule.

U.N. climate talks began with a deal to discuss how rich countries can help pay for the damages caused by global warming elsewhere. The breakthrough, reported in advance by Bloomberg, will allow diplomats to officially debate so-called “loss and damage” for the first time during the two-week conference in Egypt’s Sharm el-Sheikh resort. Developing countries have been demanding a discussion on climate reparations since Conference of Parties, or COP, meetings started in the early 1990s.

The Federal Reserve Bank of Dallas and Kansas City will host their seventh joint energy conference, "Energy and the Economy: The New Energy Landscape," in Houston and virtually on Thursday. The all-day conference features Gretchen Watkins from Shell PLC, Toby Rice from shale gas producer EQT Corp., and Sandhya Ganapathy from EDP Renewables on a panel to discuss the changing U.S. energy landscape. The conference follows Biden's recent attacks on the oil and gas industry for "war profiteering" and his call on Congress to impose a windfall tax on the industry's record profits.

Global conference. Emily Blanchard, chief economist at the Department of State; Richard Cantor, vice chairman of Moody's Investors Service; and World Bank Group Chief Economist Indermit Gill are among the speakers at the Peterson Institute for International Economics' "Next STEP Global Conference," taking place Wednesday through Friday.

American Express CEO Stephen Squeri will speak at a noon webinar hosted by The Economic Club of New York on Thursday.

Other key events include:

Monday, Nov. 7

Energy, winter and climate change. Georgetown University discussion on "Winter is Coming: Europe, Energy, and Climate Change," as part of the In The News series.
U.S./Japan relations. Brookings Institution discussion on "Economic security in the Indo-Pacific: Implications for U.S./Japan relations."
China cyberattacks. Institute of World Politics lecture on "PRC (People's Republic of China) Cyberattacks on Taiwan: What the U.S. Should Learn from Them."

Tuesday, Nov. 8

Immigrants and politics. American Enterprise Institute for Public Policy Research discussion on "The Politics of Immigrants."

Wednesday, Nov. 9

Midterm elections’ impact. American University (AU) holds a virtual media briefing on "the results of the midterm elections and what they mean for President Biden's agenda, Congress, and the 2024 presidential race."
Energy and the next Congress. The Heritage Foundation holds a discussion on "What Will Happen to Energy in the Next Congress?"
Midterm election analysis. New York University, Washington, D.C. virtual discussion on "The Midterms: What Happened — and Where Do We Go From Here?"
China outlook. Brookings Institution virtual discussion on "Xi's Sweep: Beyond China's 20th Party Congress."
U.S./China relations post-election. Carnegie Endowment for International Peace virtual discussion on "U.S./China Relations After the Midterms."
China/Russia ties for natural gas. Atlantic Council virtual discussion on "China/Russia natural gas ties: The role of Central Asia."
U.S./China relations. Heritage Foundation virtual discussion on "What China's Strategic Breakout Means for the U.S."
North America issues. Wilson Center's Canada Institute and Mexico Institute discussion on a new report, "North America 2.0," focusing on "the future of the trilateral relationship."
Economic impacts of severe weather. Energy Department virtual meeting of the President's Council of Advisors on Science and Technology to discuss cyber resilience and the economic impacts of extreme weather.

Thursday, Nov. 10

Critical minerals issues. Wilson Center's Canada Institute discussion on "Critical Minerals: Strategic Challenge and Positive Opportunities for Canada and the USA," as part of the Canada/United States Law Institute 2022 Experts' Meeting.
Climate and energy issues. Resources for the Future discussion on "Confronting Dual Crises: Advancing Climate Progress During an Energy Crisis," as part of the U.N. Framework Convention on Climate Change's 27th Conference of the Parties (COP27).
Transatlantic business. U.S. Chamber of Commerce "Transatlantic Business Works Summit: Seizing the Moment From Words to Action."
Farm Credit meeting. Farm Credit Administration meeting including an update on Farm Credit System Funding Conditions, and Farm Credit System Building Association Budget for 2023.
Midterm election analysis. Atlantic Council virtual discussion on "America votes: Transatlantic trendlines in the midterm elections."
U.S. midterm elections. American Enterprise Institute for Public Policy Research Election Watch discussion on "What Happened and Where We Are Now."
U.S. midterm elections – results and impacts. Brookings Institution discussion on "2022 elections: Results and implications."
Israeli elections. Middle East Institute virtual discussion on "Breaking Down Israeli Election Results."
Saudi oil. Wilson Center Kennan Institute for Advanced Russian Studies and Middle East Program virtual discussion on "Saudi Arabia and Oil: Between the United States and Russia."
War in Ukraine impact on information. National Press Club's American Legion Post 20 meeting with a discussion on "the war in Ukraine, and efforts to get accurate information into Ukraine and Russia."

Friday, Nov. 11

Holiday. U.S. Veteran’s Day holiday. U.S. gov’t offices are closed but U.S. futures and most financial markets trade normal hours, but bond markets are closed. There will be several observances in Washington relative to the holiday.
Industrial decarbonization. Resources for the Future discussion on "Industrial Decarbonization, Border Measures and Climate Clubs," as part of the U.N. Framework Convention on Climate Change's 27th Conference of the Parties (COP27).

Economic Reports and Events for the Week

The economics calendar will be dominated by the October Consumer Price Index report on Thursday. The Labor Department’s October report on consumer prices will show whether underlying price pressures persisted or eased. Bank of America noted that transportation services prices and new auto prices, food/beverage prices and apparel prices are still elevated, but medical care services prices, used car prices, food/beverage prices and apparel prices are forecast to have moved lower. Earnings will also continue this week, with Disney, Rivian Automotive, Rolox and Nio some of the notable reports.

Monday, Nov. 7

Federal Reserve reports consumer credit data for September. In August, total consumer debt rose at a seasonally adjusted annual rate of 8.3%, to a record $4.68 trillion. Revolving debt — primarily credit cards — jumped 18.1%.
Federal Reserve Bank of Boston President Susan Collins and Cleveland Fed President Loretta Mester will speak at the Women in Economics Symposium.
Richmond Fed President Thomas Barkin will speak at the bank's "Demystifying Inflation" seminar.
Eurozone finance ministers meet in Brussels.

Tuesday, Nov. 8

Election Day. The midterms will determine which party controls Congress for the next two years. Polling suggests that Republicans will retake the House of Representatives, while the Senate looks like a toss-up. But some chamber will keep or win control… details above.
National Federation of Independent Business releases its Small Business Optimism Index for October. Consensus estimate is for a 92 reading, roughly even with September’s. The index has had readings below its 48-year average of 98 for nine consecutive months, as inflation and labor shortages continue to challenge small-business owners.
China’s National Bureau of Statistics releases October figures on consumer inflation. Consumer prices in China rose 2.8% in September from a year earlier, at a quicker pace than the 2.5% annual pace the prior month.

Wednesday, Nov. 9

MBA Mortgage Applications
Commerce Department releases September figures on U.S. merchants’ wholesale inventories, which increased in August at a faster pace than in the previous month.
Richmond Fed President Thomas Barkin will speak at the "Top of Virginia Economic Summit."
New York Fed President John Williams speaks at the SNB-FRB-BIS "High-Level Conference on Global Risk, Uncertainty, and Volatility."

Thursday, Nov. 10

Jobless Claims: Labor Department reports the number of workers’ filings for unemployment benefits for the week ended Nov. 5. Initial jobless claims have hovered near the 2019 weekly average of around 218,000 in recent weeks, a sign of a persistently tight labor market.
Bureau of Labor Statistics releases the Consumer Price Index for October. Economists forecast that the CPI will show an increase of 8%, year over year, following an 8.2% jump in September. The core CPI, which excludes volatile food and energy prices, is expected to be up 6.5%, a tenth of a percentage point less than previously. While the CPI is down nearly a full percentage from its recent June peak, the core CPI hit a four-decade high in September. The S&P 500 index fell 3.3% this past week as the Federal Open Market Committee raised the federal-funds rate by three-quarters of a percentage point for the fourth consecutive meeting and reiterated that taming inflation was its No. 1 priority.
Fed Balance Sheet
Money Supply
Philadelphia Fed President Patrick Harker will speak to the Risk Management Association's Philadelphia Chapter.
Federal Reserve Board Governor Christopher Waller will discuss central bank digital currencies at a Queensland University of Technology event.
Kansas City Fed President Esther George gives a noon keynote at a Dallas Fed event, "Energy and the Economy: The New Energy Landscape."

Friday, Nov. 11

U.S. Veteran’s Day holiday. U.S. gov’t offices are closed but U.S. futures and most financial markets trade normal hours, but bond markets are closed. There will be several observances in Washington relative to the holiday.
University of Michigan releases its Consumer Sentiment Index for November. The consensus call is for a 59.7 reading, about even with the previous data. In October, consumers’ one-year expectation for inflation was 5%, while longer-run expectations were 2.9%.
U.K.’s Office for National Statistics releases third-quarter gross domestic product and September figures on trade and industrial production. The British economy grew marginally in the second quarter, but is expected to contract in future quarters because of the country’s cost-of-living crisis and higher interest rates.

Key USDA & international Ag & Energy Reports and Events

USDA on Wednesday releases its supply/demand updates via the WASDE report. Not much change is expected, but the focus will be on world supply and demand numbers.

On the international front, China’s first batch of October trade data will be published Monday, while France’s agricultural ministry will update its 2022 crop production estimates during the week.

Monday, Nov. 7

Ag reports and events:

Export Inspections
Crop Progress
Amber Waves, November issue
China’s first batch of October trade data, including soybean, edible oil, rubber and meat imports