House GOP Tries to Line Up Support to Fund Government Through December

Summary

Brian Gardner discusses the midterm outlook, including Republican financial advantages, the likely outcome of a Democratic House and Republican Senate, resulting gridlock, and a potential government shutdown. He highlights a market-moving provision in the defense authorization bill that could restrict stock buybacks for a wide range of companies doing business with the Pentagon.

• Democrats expected to flip the House but face an uphill battle in the Senate due to candidate quality and red-state terrain.
• Gridlock and performative posturing likely to dominate the next two years, shifting focus to 2028.
• A wide-ranging Senate defense bill provision could restrict stock buybacks for any firm contracting with the Pentagon, not just defense contractors.
• The buyback restriction debate will likely intensify in the fall, not before Labor Day.
• Investors are currently not focused on this regulatory risk, but Gardner says they need to watch it.
• Republican fundraising advantage at the committee level may limit Democratic gains, but individual Democratic candidates are often better funded.
• Trump is a legislative lame duck but retains significant authority through regulatory and court actions.