Election day is Nov 6
The big question in the US midterms is whether Republicans can hold the House and Senate or if they will lose one and send the US into gridlock.
Goldman Sachs' equity team is out with a note on what will come after the elections if Democrats take one chamber.
"If the consensus expectation of a divided government turns out to be correct, the most likely political consequences would be an increase in investigations and uncertainty surrounding fiscal deadlines," David Kostin, Goldman's chief U.S. equity strategist, said in a note to clients.
Three sectors are likely to remain solid -- pharma, defense and aerospace -- because gridlock will likely mean no new regulations and no cuts to spending.
Hopes for a better tone with China and trade policy are likely misplaced.
"Our economists believe that the President's veto power and the lack of political consensus regarding appropriate trade policy reduce the likelihood that either Democrats or Republicans enact legislation that will resolve the ongoing trade tensions," Kostin wrote. "In fact, market pricing suggests that the China-US trade conflict is worsening."
An area of focus will be infrastructure, which is an issues that both US parties have talked about support. However, Kostin believes efforts will fall short. They suggest clients stay in tech "given stable growth, high margins, limited macro sensitivity, and strong cash flow generation," with software and services firms particularly solid.
