The Fall Election

I see increasing signs that there will be a pre-election stock rally on the expectation that the Republicans will elect enough party members to the US House for majority control.

This expectation might not reflect the reality of the underlying economy or a true shift in political power. Control of both the House and the Senate might be with narrow majorities for either party. The Republican party might be somewhat split with between the conventional and the Tea Party conservatives.

The prospect of gridlock remains the most likely outcome of the election.

Gridlock might be good as there will be greater difficulty in passing legislation to spend more money or to make government larger. It also means a difficult legislative environment to bring about changes needed in American policy going forward.

I think this will be an extremely interesting and important mid-term election.