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The markets take the midterms in stride
Democrats have reclaimed the House, while Republicans extended control in the Senate. That spells gridlock — and investors are fine with it. As Jack Ablin, the chief investment officer of Cresset Wealth Advisors, told CNBC, “History has shown that the mixed party control is generally the best combination.”
Michael McKenzie of the FT says that the trend could continue, as “the election result seems likely to produce a softer dollar and steady bond yields, which will help” the markets. Now, investors will turn their attention to other issues, including the Fed’s monetary policy and the U.S.-China trade battle.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.
Democrats will try to limit Trump
Now that Democrats control the House, they will start trying to curb President Trump’s agenda. Less clear is what they can achieve.
First on the agenda is likely to be an array of investigations. Politico notes that Democratic lawmakers already have a list of subpoenas and document requests. Other officials, like New York State’s new attorney general, have pledged to investigate Mr. Trump’s business dealings and, potentially, his tax returns.
House Democrats will also have more power to stymie Mr. Trump. Nancy Pelosi, the minority leader, is expected to retake the speakership, while outspoken critics of the administration like Representative Maxine Waters, a skeptic of banking deregulation, are set to assume control of major committees.
But there are limits. Democrats cannot force an end to Mr. Trump’s trade fight with China, nor can they block judicial nominees. And Ms. Pelosi is unlikely to pursue impeachment proceedings. They are likely to work with the president on infrastructure spending and lower drug prices.
“Everybody understands that we have to choose our battles very carefully now,” Representative Jamie Raskin, a Maryland Democrat, told the NYT.
The midterms nudged the diversity needle
So far, Quartz noted, the elections have led to:
• More than 100 women in the House
• The first Muslim women in Congress
• The first Native American women in Congress
• The youngest women in Congress
• The first openly gay person elected as governor
But Bloomberg argues that such records are important only if the new officials can stay long enough to effect real change.
Few signs of significant election interference
For now, election officials and social media companies are breathing a sigh of relief.
At a news conference yesterday, Kirstjen Nielsen, the homeland security secretary, said there was “no indication of compromise to our nation’s election infrastructure that would prevent voting, change vote counts or distrust the ability to tally votes.”
Facebook said that it had shut down more accounts that it believed were spreading misinformation. It also said it had acted against some inaccurate voting information. (Accounts shut down on Monday are said to have been linked to a Kremlin-backed group of internet trolls.) But in general, the day bore no huge drama: “We haven’t seen anything unexpected,” a Facebook representative told the BBC.
But reports of meddling could yet come to light. “I remain convinced that the real action will be after the election when we start to see the voter fraud, hacking claims start to roll in,” Bret Schafer of the Alliance for Securing Democracy told the BBC.
China sees little advantage in the results
The nation had been waiting to see if the midterm elections would dramatically weaken President Trump and help ease geopolitical tensions. But Democratic control of the House looks to give Beijing only a marginal increase in negotiating leverage.
The results are unlikely to soften the U.S.-China trade war. Speaking at Bloomberg’s New Economy Forum in Singapore this week, Gary Cohn, President Trump’s former economic adviser, said: “I wish that I could sit here and say, ‘After the midterm elections, the White House and the administration understand they’ve got to solve trade issues.’” But, he added, “I don’t think there’s an instant cure.”
China and Australia talk trade. Marise Payne is the first Australian foreign minister to visit Beijing in almost three years. She is to meet with her counterpart, Wang Yi, and plans to focus the conversation on trade and human rights.
Financial markets are closed in India until Friday. The country is celebrating the Diwali holiday.
Did Amazon game its HQ2 hunt?
The company’s plan to split its second headquarters between two sites drew complaints that it acted in bad faith. But Amazon probably won’t mind.
John Gapper of the FT says that Amazon’s tactic of looking at smaller cities was “an elaborate charade.” And Robert Engel of the Free and Fair Markets Initiative, a frequent critic of the company, told the NYT, “They’ve duped all of us.”
The quest has gotten Amazon both lots of publicity and the offer of some fantastic financial benefits. But it may have gained something even more valuable, as David Streitfeld of the NYT notes:
“It’s tempting to roll your eyes at this soap opera, but Amazon will walk away from this stunt with a cache of incredibly valuable data,” said Stacy Mitchell of the Institute for Local Self-Reliance, a frequent Amazon critic. “It’s learned all kinds of things from the bidding cities — like their future infrastructure plans — that even their citizens are not privy to.”
Corporate America is at a turning point
Delivering profits to shareholders may no longer be enough. Reflecting on last week’s DealBook conference, Andrew explains that executives have long liked to talk about their role in society, but all too often their promises rang hollow. Now, things seem to be changing:
As our society appears more polarized than ever, and as Washington seems in no hurry to heal this divided country, executives are finding themselves in the unwanted position of trying to play the role of uniter — or in some cases, picking sides.
Also from the conference: Business leaders describe the breakthrough moments in their careers.
Oil prices approach bear territory
U.S. crude prices fell 19 percent in October, after hitting a four-year high of $76 a barrel earlier in the month. Any further drop could end the biggest oil-market bull run since 2008. Here’s more from Stephanie Yang and Amrith Ramkumar of the WSJ:
The market started losing steam last month as falling U.S. stocks dragged down oil prices and raised doubts over the health of the global economy. Meanwhile, the world’s three largest oil producers have increased output to record levels.
“All of this is combining to create way too much supply,” said Gary Ross, chief executive of Black Gold Investors and founder of PIRA Energy Group.
With supply expected to be plentiful, there’s little reason to believe prices will rise again soon. That may be bad news for producers, but it’s a relief to consumers and airlines.
Javier Soltero of Microsoft, who most recently oversaw the company’s Cortana A.I. assistant, is leaving.
Alexander Friedman resigned as C.E.O. of GAM, the Swiss money manager.
Ole Andersen was ousted as Danske Bank’s chairman.
Walt Disney’s deal to buy most of 21st Century Fox may have scrambled succession planning for its C.E.O., Bob Iger.
Bank of America reportedly plans to hire up to 50 senior dealmakers to shore up its investment bank.
The speed read
• Dell is said to have reached out to major holders of its tracking stock to explore raising its buyout offer. (WSJ)
• SoftBank reportedly hopes to raise $18 billion from retail investors in the I.P.O. of its mobile phone business. (Bloomberg)
• Symantec is said to have received a takeover approach from the investment firm Thoma Bravo. (FT)
• China is trying to refashion its Shanghai stock exchange into a haven for tech I.P.O.s. (Breakingviews)
• The hedge fund mogul John Paulson may move to Puerto Rico to slash his tax bill. (Bloomberg)
Politics and policy
• Did the Fox News host Sean Hannity go too far by campaigning with President Trump? (NYT)
• Talks between Secretary of State Mike Pompeo and North Korean officials to plan a second meeting between Mr. Trump and Kim Jong-un were canceled. (WSJ)
• Prime Minister Theresa May of Britain reportedly plans to ask her cabinet to approve her Brexit plan within days. (Bloomberg)
• Larry Fink of BlackRock said that the United States shouldn’t be fighting with its lenders. (Bloomberg)
• France plans to lead a European push to defy U.S. sanctions on Iran. (FT)
• The S.E.C. is considering how gig-economy workers could receive equity in the companies they work for. (DealBook)
• Foxconn may ship Chinese workers to its new Wisconsin plant amid a U.S. labor shortage. (WSJ)
• A judge ruled that Qualcomm must license some of its important patents to rival chip suppliers. (WSJ)
• Cambridge Analytica and the Brexit campaigner Arron Banks misused private data, a British watchdog found. (NYT)
• SoftBank plans to develop a $1.2 billion solar power plant in Saudi Arabia. (Bloomberg)
Best of the rest
• Comcast has grand plans for capitalizing on the European pay-TV market. (FT)
• China granted initial approval for 16 new trademarks to Ivanka Trump, renewing questions about her family’s intermingling of government roles and business interests. (NYT)
• A former JPMorgan Chase trader pleaded guilty to market spoofing. (FT)
• Universities could be revived by megadonors. (Fortune)
• Should Congress demand that the Fed keep inflation at zero? (WSJ op-ed)
• Swiss watchmaker Hublot now sells a timepiece you can buy only with Bitcoin. (Bloomberg)
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