How midterms could affect the markets, from inflation to energy to cannabis

The midterm hangover… isn’t over. It’s still too close to call, but the US might get a split government, with one GOP-controlled chamber of Congress. Stocks plunged Wednesday after midterm results didn’t show clear gridlock. Investors generally prefer when power’s shared, because historically that’s meant less legislation (it’s harder to agree on things). That can mean fewer potential blockers for business, regardless of which party’s in power.

• Democrats maintained their slim majority in the Senate after key victories in Nevada and Arizona over the weekend. Georgia’s runoff election is slated for December 6.
• If Republicans take the House (which they’re favored to) that’s enough to unlock gridlock. Either way, majorities will likely be slim within both chambers.

Ballot bubbles giving SAT flashbacks… From choosing lawmakers to voting on propositions, Americans’ ballot decisions could have big implications. A few sectors that could be affected:

• Energy: Republican lawmakers have supported US energy independence, and that could lead to easier access to drilling permits if the GOP takes the House.
• Cannabis: Voters in Maryland and Missouri legalized recreational marijuana, joining 19 other states and DC. Meanwhile, Colorado voted to decriminalize and regulate some psychedelic substances (think: magic mushrooms).
• EVs: California voted down an extra tax to build EV infrastructure. Lyft was the biggest backer of the prop, since the funds would’ve helped it meet the state’s requirements.
• Gambling: CA voters also struck down a prop that would’ve allowed gambling companies like FanDuel and DraftKings to offer online sports betting.
• Tobacco: And CA became the largest state to ban flavored-tobacco products after voters upheld the state’s ban. Tobacco titans like Philip Morris and RJ Reynolds had spent big in hopes of overturning it.