US Mid-Terms: Still The Economy, Not The Tea Party

- "The Tea Party movement, the latest manifestation of a deeprooted tendency in the US, is now set to dominate coverage of the run-up to the 2 November Mid-Term elections."
- "But we doubt that its recent successes in the Republican primaries will have any significant impact on the outcome of the Mid-Terms where the economy will remain pivotal."
- "Overall, it remains our view that the Republicans are likely to secure a majority in the House of Representatives but will struggle to do likewise in the Senate."
- "Irrespective, we anticipate gridlock in Congress through to 2012, even though a Republican majority in one or both houses would be an incentive to reach compromises with the Democrats."
- "Most importantly to sentiment in the short to medium term, we look for agreement to be reached on extending all the Bush tax cuts for 12 months once the Mid-Terms are out of the way."
- "Beyond that, we expect little agreement on fiscal policy other than, possibly, more help at the margins for business."
- "We also expect bipartisan agreement on keeping the pressure on the Administration to take more punitive action against China’s alleged “currency manipulation”."
- "We do not expect possible Republican efforts to repeal healthcare reform to be successful."
- "Legislation to limit carbon emissions now looks unlikely; so the Administration may resort to regulatory measures."
- "Sarah Palin, the Tea Party’s de facto leader, appears to be positioning herself to run in the 2012 Republican presidential primaries. We do not dismiss her chances."

Nomura Special Report 20100921

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