Analyst View: Democrat Jones wins Alabama U.S. Senate seat in blow to Trump




  • In US
  • 2017-12-13 15:55:19Z
  • By Reuters

NEW YORK (Reuters) - Democrat Doug Jones won a bitter fight for a U.S. Senate seat in deeply conservative Alabama on Tuesday, dealing a political blow to President Donald Trump in a race marked by sexual misconduct accusations against Republican candidate Roy Moore.


STORY:

KEY POINTS: The stunning upset makes Jones the first Democrat elected to the U.S. Senate from Alabama in a quarter-century and will trim the Republicans' already narrow Senate majority to 51-49, opening the door for Democrats to possibly retake the chamber in next year's congressional elections.

COMMENTS:


PETER CARDILLO, CHIEF MARKET ECONOMIST AT FIRST STANDARD FINANCIAL IN NEW YORK:

"If anything it prompts Congress to get the tax bill signed before year end and they have another week. If they don't they do have a problem."

"From that perspective yesterday's defeat is good news in terms of tax legislation. They're not going to risk tax reform because of the election. While it's a defeat it's actually a positive."

"If the President doesn't sign legislation by year end we have a major problem. That would just speed up the process of a correction. Would it affect the economy, reverse the economic growth? Not in 2018, perhaps in 2019."

"It was a defeat for the Republican Party and Mr. Trump but it also motivates the Republicans to get their act together and get a bill signed."


KEITH LERNER, CHIEF MARKET STRATEGIST, SUNTRUST ADVISORY SERVICES IN ATLANTA, GA:

"Tax reform is still likely to go through. What happened overnight may present an obstacle to the GOP agenda in 2018, but that's arguably less important than tax reform. Perhaps there will be some obstacles to infrastructure, entitlement reform. But from a market perspective, those weren't high-probability anyway.

"The high probability is (tax) gets through. The Republicans have tried to fast-track it before (Jones) gets seated, so it's unlikely his victory will change that.

"We'll have a short-term setback (if the tax bill doesn't pass), and it may cap the upside of the market since companies won't be getting an earnings boost. But if there's a pullback, I think it will be in the 5 to 10 percent range, as opposed to a bear market.

"It's still early, but there looks certainly to be big changes in the midterm with the makeup of the House and Senate.

"As long as the economy is on sound footing, gridlock in Washington is not necessarily a bad thing. It's not necessarily preferable, but with the majority so slim as it is, it's more of a question, does the economy chug along? If the economy continues to move forward, it's less important."


GENNADIY GOLDBERG, INTEREST RATES STRATEGIST, TD SECURITIES, NEW YORK:

"We think one of the possible biggest impact is on the deficit. With the Jones win, it makes it more difficult to pass the tax-cut bill.

"This puts pressure on the Republicans to pass tax cuts before year-end. The question is can they do it? Are we going to see special provisions or deals to get it done. I think it's a 'get it done' mentality. If not, it does bleed into early 2018.

"It lowers the odds of getting anything done in 2018."


L. THOMAS BLOCK, FUNDSTRAT GLOBAL ADVISORS, WASHINGTON POLICY STRATEGY (from research note):

"Bottom line is that the Alabama Senate race doesn't change the basic (Washington) DC headlines, first that tax bill should pass by Christmas, and that there are tough negotiations ahead to solve the budget issues and avoid a government shutdown."


MARC CHANDLER, GLOBAL HEAD OF CURRENCY STRATEGY, BROWN BROTHERS HARRIMAN (from research note):

"(The dollar) did slip to the low for the week against the yen, when it became clear that the Republicans were going to lose the Senate seat in Alabama. This reduced the Republican majority to one in the Senate. Owing the fissures in the party, this is putting at risk other parts of Trump's agenda, which Treasury Secretary Mnuchin acknowledged earlier this week is necessary to achieve the kind of growth levels that the tax bill assumes."


MARKET REACTION:

U.S. stock futures and the dollar dipped on Wednesday, although equities turned around by the open and the S&P 500 Index was last up 0.2 percent.


(Reuters staff)

COMMENTS

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