by Greg Valliere, AGF Management Ltd.
ALL THE FOCUS ON 2020 ELECTIONS seems to be on the presidential race — but for investors, the Senate election will be almost as important. It’s a close call, and the markets will have to pay attention because the Senate is the firewall that blocks activist legislation that emerges from the House.
THE REPUBLICANS enjoy a 53-47 majority now but will have to defend 23 seats next fall (including two special elections) compared to 12 for the Democrats. Many of the GOP seats are in safe districts, but the party has four seats that are vulnerable; in order of risk — Cory Gardner, the underdog in Colorado to John Hickenlooper; Martha McSally in Arizona; Thom Tillis in North Carolina, and possibly Susan Collins in Maine. We’ll predict the Republicans lose two or three of these four.
IF THE DEMOCRATS TAKE ALL FOUR of these seats, they could capture the Senate; they need a net pickup of four seats if Donald Trump retains the presidency or three if he loses. But there’s a complication — the Alabama seat held by Democrat Doug Jones is likely to revert back to the Republicans. No other Democrat-held seat looks seriously vulnerable.
SO OUR PREDICTION is that the Republicans lose three seats and gain one, in Alabama, but a net of two will not be sufficient to give Democrats control of the Senate. We would add one important asterisk: a landslide win by Trump could solidify GOP control of the Senate, while a landslide loss by Trump almost certainly would return the Senate to the Democrats.
OUR EARLY ODDS: We think the Republicans have a 60% chance of keeping their Senate majority, while maybe losing a seat or two. We think the Democrats will fall just short. There won’t be comparable suspense in the House, where the Democrats are clear favorites to maintain their majority.
ONE THING IS SURE: The leftist House will send a steady stream of activist legislation to the Senate, but we expect the wily Mitch McConnell — who should win re-election next fall — to keep that legislation bottled up. McConnell will focus on judicial confirmations, where he has had an astonishing record of success.
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HAPPY U.S. THANKSGIVING: We have much to be thankful for — including the loyal support from our readers in the United States, Canada and around the world. We’ll be off until next Monday; in the meantime, our sincere thanks and warm wishes to you and your families.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.
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This post was first published at the AGF Perspectives Blog.
