To The Moon

2022 mid-term in the United States is near to close, the Democrats took the lead in winning 50 seats and locked the control of the Senate. At the same time, the Republican basically won the House of Representatives, but the leading seats may be only within 15, which means a split Congress. 

It is quite different from the "Red Wave" expected, that is, the Republican Party won a big victory (the House of Representatives led by 30 seats and won the Senate back). The Democratic Party performed stronger than expected.

This is the first time that a large number of mail-in votes are used. Since most of the mail-in votes towards Democrats, made Nevada, Arizona and swing States to flip to Dems in the last minutes. Will Republicans resist it in 2024 President Election?

As for the impact

First, splitting Congress brings greater difficulties to Biden Government.

Although some executive orders can be signed directly by the president, they need to pass Congress when it comes to key issues. The Democrats has always implemented easing fiscal policies by "higher taxes, supporting anti-monopoly and larger government budget".

When Republicans controls the Congress, it is not so easy (basically impossible) for Biden administration to pass budget caps and raise tax rates.

Second, the increasing of overseas worries

When the Biden administration faces more challenges from the Republicans, they are more likely to shift the focus abroad. For example, Russia-Ukraine war, trading issues. Other countries need to be more careful when dealing with the United States.

In addition, the Biden administration's support for Ukraine has been criticized by the Republican Party, and the scale of aid may be limited in the future.

Third, increasing uncertainty of 2024 presidential election.

In several States where the Republican Party lost the Senate election, there were voters endorsed by Trump, and Trump himself said that he would start the 2024 presidential campaign on November 15th. Of course, there are new forces within the Republican Party-Florida Governor Ronald Dion DeSantis, who performed well in the epidemic, publicly expressed his opposition to Trump, which will bring some uncertainty to Republican candidates.

On the Democratic side, in view of Biden's advanced age, most senators do not support Biden's re-election, and hope that others will take his place. The Democratic Party is facing greater challenges in the general election, which brings uncertainty to the 2024 presidential election.

In terms of monetary policy, after the CPI data last week, several Fed officials have spoken.

Williams, chairman of FOMC Permanent Voting Committee and New York Federal Reserve, said-

Long-term inflation expectations in the US are relatively stable, but uncertainty about the outlook for inflation has risen and views on future inflation are increasingly divided, including a high proportion of those expecting deflation.

In 2023, FOMC Voting Committee and Minneapolis Fed Chairman Kashkali said-

It is "too early" to discuss the current tightening policy shift of the Federal Reserve.

In 2023, FOMC Voting Committee and Philadelphia Fed Chairman Huck said-

Now it's time for the Fed to slow down interest rate increasing.

In 2022, FOMC Voting Committee and Kansas Fed Chairman George said-

Supporting a slower pace of interest rate hikes in the United States and calling for a "more cautious" approach to give central banks time to judge how rising borrowing costs are affecting the economy,

In 2022, FOMC Voting Committee and Cleveland Fed Chairman Meister said

Although inflation shows signs of slowing down at present, there are still great risks to inflation. She also said that monetary policy needs to be more qualified and remain restrictive for a period of time, so that inflation can continue to drop to 2%.

It can be seen that the differences between "doves" and "hawks" among Fed officials are getting bigger and bigger, even quite different.