Transcription of the video “U.S: a Democratic wave"

[Jean-François Robin, Global Head of Natixis CIB RESEARCH speaks in front of the camera]

 

“Quick reaction to the midterm elections. Trump said: « Do as if I were on the ballot, and if it's the case, the referendum is quite clear, the message is clear ». This is the biggest victory by the opposition since 1974 in the US. It's a landslide victory for Democrats, not only gaining the House, but the Senate.

 

Four seats were needed and, despite a very difficult agenda this year for the midterm elections, they won not only four, but seven seats for the Senate. So we are going to see a Congress with a Democrat majority in the US, with lots of surprises: not only Texas, but Kansas for the first time since 1932, Ohio or Carolina where Trump had won by 18 points, now he lost it. So this is a landslide victory for Democrats.

 

What could be changing after that? Not much. Trump is governing by decree, especially for tariff, especially for wars, especially for external policy. It's not going to change much, but clearly this is maybe the start of the beginning of something a bit different for the Trump administration. Trump is not the winner, so this is maybe going to change the dynamic.

 

We are going to see more on domestic agenda, on health, on purchasing power. That's an affordability vote as well, so we are going to see that. We’re probably going to see changes as well regarding Ukraine, for instance, with a trans-partisan agenda within the Congress between Republicans and Democrats, a little bit more pro-Ukraine than Trump was before. So clearly, we might see some changes.

 

As for the market, obviously, a split Congress is usually very good for market: +15% on average when you have a split Congress. Well, it remains to be seen, but clearly we are not going to see many laws, for me, I don't think that we are going to see Trump very interested in negotiating major laws.

 

So probably less spending than expected in a way, which is good for bond market. If the situation in Iran calms down without the Congress’ support, it's good for inflation going forward, because oil prices should be going down. And it's probably good as well for the stock market, as I said, overall.

 

But for the tech companies, we’ve seen that among 30 resolutions voted for data centers, 29 were voted against data centers. So a bit of a pushback here that we have to think through, the ecosystem around tech is going to be a little bit more fragile. Cryptocurrencies, and tech companies are going to be a little bit on the back foot after that.”