The most important race of the 2016 United States election cycle, the one which will ultimately most move markets is not for the presidency. The race which will most impact the lives of the average American and maybe the average citizen of the world is one you probably had no idea even existed. The 20th most populous state in the Union, Wisconsin, is host to the race which will most change the course of U.S. history. Russ Feingold, the former senator from Wisconsin is running against incumbent Senator Ron Johnson in a rematch of their 2010 Senate race.
Why is this race so important? Feingold is not your average politician. Feingold, perhaps most famous for sponsoring a law, more commonly known as "McCain-Feingold," which was meant to curb the influence of money in politics, is a champion of progressive ideals. While the Supreme Court ended up opening the flood gates to money in politics following "Citizens United," the acceptance that money is corrupting U.S. politics is gaining momentum. The emergence of Bernie Sanders and his success was not a one-off, but rather a signal of things to come.
Senator Feingold is also known for being the only U.S. senator to vote against the "Patriot Act." Whether or not you believe the "Patriot Act" infringed upon civil liberties is beside the point. Imagine a room full of 99 of your colleagues at a time of panic. Imagine a chief executive that says "you're either with us or against us." The courage it took to face the entire Senate and say "no" in and of itself is enough to warrant a Senate seat. Democracies should rarely if ever come to unanimous decisions when it comes to legislation. How can all senators or congress-people vote the same way if all represent differing constituencies with different ideas and experiences? Unanimous votes mean a lack of critical thinking and Senator Feingold had the courage to do such critical thinking.
Unfortunately, President-elect Hillary Clinton (too soon?) did not share Senator Feingold's view and as my senator - one that I actually voted for - voted along with her other colleagues and authorized the Patriot Act. Secretary Clinton, in debating Bernie Sanders during the primaries said that although she did not regret voting for the Patriot Act, she does regret how it was implemented by the Bush administration. Having the forethought to know that such a law would be abused is what America needs and frankly, the world needs, in terms of leadership.
The progressive push that began with the election of President Barack Obama, which was subsequently derailed during mid-term elections, has gained steam during Sanders's campaign, and will continue under the leadership of Senator Feingold. Whether that takes the form an actual presidential run or not is yet to be seen. However, Feingold's presence in the U.S. Senate will give comfort to the average American even "While America Sleeps," to quote his namesake book. I know I will sleep easier every night, knowing there is at least one senator that has a proven track-record of independent and critical thinking who will vote his or her conscience in the face of influence and pressure by the elites that have bought their way into American politics.
How will markets react in the coming days? Hillary Clinton's election is, as I stated in April, a foregone conclusion. The doves of the Federal Reserve Bank (Fed), led by Chair Janet Yellen, have signaled a willingness to delay any rate hike with Yellen pointing to a desire to try out a "high-pressure" economy, low rates even as inflation rises. Late Monday other Fed officials were slated to make comments on Yellen's words, however, the earlier hike would be in December, after which, no new hikes would probably come for at least six months. Clinton's alignment with many large Wall Street banks will signal her interest in keeping rates low and thus take some heat off of the independent Federal Reserve.
A Democratic win in the Senate, in which a Feingold victory is crucial, would probably be joined by a Republican win in the House to complement the Democrats' retaining the White House. This scenario, essentially gridlock, would be most favored by Wall Street and the multi-year rally would continue. Should Clinton signal an intent to put out global fires in armed conflict areas, emerging markets would also join in, in any global rally.