What The "Blue Wave" Really Means For Investors

Ladies and gentlemen, apparently we have a choice between the dawning of the Age of Aquarius and the end of Western civilization.

Those are the options being offered in the wake of the election. Depending on which television channel, Wall Street commentator or internet expert you happen to encounter, we are entering a happy new land run by Democrats, with peace, love and chicken grease for everybody, or the socialists are taking over and all our children will be transgender by lunchtime.

There will be free stuff for everybody. Taxes will go through the roof. It is a coup. It is a government takeover. It is the greatest thing that ever happened or the worst thing that ever happened.

The mainstream media has its programming lined up. Wall Street has opinions to sell. The internet experts, many of whom apparently acquired their expertise sometime between breakfast and their second social media post, have declared themselves certain.

Allow me to offer a less dramatic interpretation.

The Republican Party received a solid butt whipping. No question about it. The president told America to vote as though he were on the ballot, and I think America did exactly that.

He was not a popular president heading into this election. The war in Iran is massively unpopular. The tariffs have not won many friends, and some of the tax policies have not helped his standing either.

The bottom half of the population is struggling. Even among those further up the economic ladder, with a couple of dollars in the bank, the mood is hardly festive. Read the University of Michigan and Conference Board consumer confidence surveys. People are unhappy, and that unhappiness showed up at the ballot box.

However, before we conclude that the world ends in January, we should spend a moment considering how the government actually works. I realize that is asking a lot when there are television panels to fill and angry posts to publish.

The Democrats will control both houses of Congress. We expected the House. The Senate margin, frankly, is a shocker. I am still trying to wrap my head around Texas, never mind the fact that Kansas and Iowa were even in play.

What they do not have is a margin sufficient to override a presidential veto. That requires two-thirds of both chambers.

The president has already indicated that he intends to veto legislation coming out of a Democratic Congress. This does not strike me as a shocking development. More radical proposals can clear Congress, arrive at the White House and then disappear into the dustbin of history with the stroke of a pen.

We are looking at two years of intense political theater. The Democrats have the votes to pass legislation. They do not have the votes to force it past a presidential veto on their own.

There are checks and balances. Congress has two chambers, the president has his role and the courts have theirs. The courts do not get to vote on legislation.

Allegedly.

This is not a reason to panic. It is a reason to expect a great deal of noise.