The 2018 Midterm elections have come and gone. Democrats flipped the House, the GOP kept the Senate; and we're like "thank u, next."
But for investors, the midterms were a huge sigh of relief, evident in the Dow Jones Industrial Average closing with a 500+ points gain the next day. And a split Congress should mean a halt to the constant deregulation and rule changes that have left many businesses constantly shifting their operations, explains Jake Raden.
“The beautiful thing about a split Congress is that very little will happen,” Raden says. “[Businesses] can make purchases, supply decisions, product decisions—they don’t have to make those decisions in an environment that’s changing.”
Better protection for the people
If nothing else, the November 6 election was a referendum on the Trump administration’s efforts to roll back parts of 2010’s Dodd-Frank Act – several Senate Democrats who voted to repeal the act lost their reelection bids. The Dodd-Frank Act is a beast of financial reform, coming in at over 2,000 pages, created to protect the average person from another crisis à la 2008. One of the things that Congress was trying to change was the asset amount a bank needs to have to fall under stricter regulations, meaning that the definition of a Big Bank would drastically change.
And guess who controls how Dodd-Frank is applied? That would be Maxine Waters, 80, a California Democrat who staunchly opposes overturning the act. With the Democrats’ win, Waters is next in line to head the House Financial Services Committee when Congress starts its new term in January.
And speaking of “frank,” Waters didn’t mince words during the committee’s first meeting following the midterms. “Make no mistake,” Waters said, “come January... the days of this committee weakening regulations and putting our economy again at risk of another financial crisis will come to an end.” But that’s not all she’s got power over.
Maxine Waters can get the receipts
A Democratic-controlled House could also mean the beginning of several investigations. In her new role, Waters could subpoena financial records and call both executives and officials to testify.
President Trump has previously called Waters a “low IQ person.” And now Waters, one of Trump’s fiercest critics, has the power to issue subpoenas along with something more—a high-profile platform to battle the administration.
One Trump appointee in her sights could be Mick Mulvaney, currently acting head of the Consumer Finance Protection Bureau, a government watchdog agency tasked with protecting Americans from unfair financial practices.
Mulvaney has long been a critic of the bureau and, in June, abolished the agency’s Consumer Advisory Board, which helped identify potential hazards. "Without the support the House, no new deregulatory laws can be passed. Moreover, with broad investigatory and subpoena power, the house can do a lot reign in appointed administrators through inquiries and investigations."
On the west coast, Californians voted yes across the board on health care, approving measures to fund dialysis centers, private ambulance providers, and cage-free eggs. But they did vote “no” on the statewide Proposition 3, which called for an $8.9 billion bond issue for water projects and natural habitat restoration.
The bond issue was filled with “old-fashioned pork barrel” projects many deemed unnecessary and provided no legislative oversight over how state agencies used the funds. Voters also took issue with the bond paying for repairs to federally-owned aqueducts in the Central Valley.
While aqueducts are crucial to California's water infrastructure, researchers are floating the idea of using aquifers–pockets of permeable rock that can hold and transfer groundwork–to store additional water.
According to the California Economic Summit, one aquifer near Sacramento could store “about three times more acre-feet of water than the Folsom dam.”
The continuing debate over dealing with California’s water supply should help out companies operating within Swell’s Clean Water portfolio, especially those focused on infrastructure, say AJ Freeman, a member of Swell’s impact team. “We need water, we need energy, we need to use and consume materials more sustainably,” she says, “and that underpins all of our portfolios.”