October 30, 2006

GRIDLOCK MAKES PLANNING EASY:

No Donkey Serenade for Wall Street (DAN DORFMAN, October 30, 2006, NY Sun)

"Close, but no cigar" is essentially the message on prospective resounding Democratic victories in both the House and Senate that Mr. Gabriel, the Prudential Equity Group's chief Washington strategist, fired off Friday in an election update to the firm's clients.

Barring any last minute dramatic surprises, he now expects the Democrats to retake control of the House, but fall shy in the Senate, a political showing which, he believes, would lead to political gridlock, but pose no serious worries for the stock market. [...]

To win the Senate, the Democrats need to net six new seats. Mr. Gabriel thinks they'll take four, namely Montana, Pennsylvania, Rhode Island, and Ohio. But the key, as he sees it, is that the Republicans' Senatorial prospects in Missouri and Tennessee seem to be stabilizing and he expects the party to hold both seats.

When all is said and done, he says, "it's a benign verdict for the investment community. It won't produce a result that will impede the market rally."

But suppose he's wrong and the Democrats retake control of both the House and Senate?

On that basis, he suggests, all bets are off. "It would then be the beginning of a two-year risk cycle for the market," he says.


Posted by Orrin Judd at October 30, 2006 8:24 AM
Comments

The Dems may indeed get those 4 seats, but what makes him think they'll hold NJ and Maryland, to name 2 at risk on their side?

Posted by: Jim the Chicago at October 30, 2006 4:05 PM

If the Dems take over congress, the last thing we'll need to worry about is the stock market.

Posted by: erp at October 31, 2006 9:38 AM
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