Month: November 2018

Authored by Mike Shedlock via MishTalk,

It takes 23.6% of median income to make the monthly payment on the average-priced home.

In it’s latest report, the Black Knight Mortgage Monitor confuses affordability with payment stress and fails to make an apples-to-apples comparison when determining homes are “more affordable” today than in the period 1995-2003.

Nonetheless, the report is interesting for what it does show. I am passing on a number of suggestions to them as to how to make the report better.

Mortgage Monitor Bullet Points

• It now takes 23.6% of median income to make the monthly payment on the average-priced home, making housing the least affordable it’s been in nearly a decade.

• The monthly principal and interest payment needed to purchase the average-priced home has seen a $190 per month increase since the beginning of 2018, an 18% jump.

• Despite the recent tightening, housing on average across the U.S. remains more affordable than the long term benchmark (1995–2003) of 25.1%.

• Even if home prices were to stay flat, another 0.50% increase in interest rates would make homes less affordable than long term norms.

California Least Affordable

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• California is the least affordable state in which to live, requiring 39% of the median income in the state to purchase the average-priced home.

• Even more noteworthy is the increasing delta between affordability today and California’s own long-term averages.

• It currently requires 7.5% more of the median income to purchase the average-priced California home today (39.3% vs. 31.8%) that it did from 1995-2003.

• While that payment-to-income ratio is still far more affordable than the 59% peak in 2006, symptoms of California’s tight affordability environment appear to be emerging.

Affordability Today vs Historical Average

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• 7 of the 10 states that are now less affordable than long-term averages have seen their rate of home price growth slow over the past six months.

• At the start of 2018, just two states – California and Hawaii – were less affordable than their long-term norms.

• As of today, 10 states have passed those benchmarks and another six are within 1.0% of long-term affordability levels.

• Hawaii is the least affordable state compared to long-term norms, requiring nearly 8% more of median income to make the payment on the average home than long-term averages.

Interesting but Flawed

The stats are interesting but there are a number of fundamental flaws in the reporting.

Median income and payments should be compared to median home prices, preferably by metro-area, but minimally by state.

A few charts will highlight the issues.

Real Median Income vs Sales Price Nationally

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Real Median Income in California vs Sales Price in Western Region

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​I do not have payment data but the decline in interest rates will not offset the rise in home prices.

My charts are flawed as well. I used new home prices even though existing home prices would be a better fit because Fred history on existing sales only dates to September of 2017.

Let’s try one more thing.

Real Median Income vs Case-Shiller 20-City Index

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Understanding Affordability

To understand where affordability really is, Black Knight needs to look at real median household income vs home prices of repeat sales of the same house.

Real median household income has been flat. Home prices sure haven’t been.

It’s the net of rising real incomes vs price (not payment) on the same housethat determines whether or not homes are more affordable.

Using nominal wages to calculate “affordability” is a mistake. The CPI is hugely understated because it does not include home prices.

Those in school or paying for their own medical insurance would also dispute the CPI.

And what about rising property taxes?

Affordability vs Payment Stress

Consider a person who bought a house 20 years ago with a 30-year mortgage and refinanced lower three times without pulling any cash out.

Such a house is not more affordable today in any realistic sense even though payments by the original homeowner are less.

That person has more money to spend (and less mortgage payment stress), not because incomes are up, but because their payment fell (assuming property taxes did not rise too rapidly).

Similarly, a person in a variable rate mortgage in a rising rate environment has more payment stress while there is less payment stress in a falling rate environment.

In this sense, Black Knight also confuses affordability with decreasing mortgage stress on existing homeowners.

Addendum

Real Estate Decoded provided an Inflation-Adjusted – Case-Shiller Home Price Index

Compare the following charts to the Black Knight statement: “Despite the recent tightening, housing on average across the U.S. remains more affordable than the long term benchmark (1995–2003) of 25.1%.“

Inflation Adjusted Case Shiller USA

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Inflation Adjusted Case Shiller 20 Cities + USA

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Click on either chart to expand.

Real median household incomes have been stagnant. Real home prices haven’t.

Lower mortgage payments of existing homeowners do not make homes more affordable.

The Fed blew another housing bubble. Once again, the size of the bubble varies city to city.

I would be very interested in another take on this by Black Knight along the lines suggested above.

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“If you’re a rational investor, you need only two words in your vocabulary: Trump and sell,” says David Stockman, former President Reagan’s Office of Management and Budget director, warning that a 40% stock market plunge is closing in on Wall Street.

While not the first time Stockman has warned of a catastrophe waiting to happen in markets, he told CNBC’s Futures Now that, after the worst monthly loss for global stocks since the financial crisis, that the early rumblings of that epic downturn are finally here.

“No one has outlawed recessions. We’re within a year or two of one,”  adding that:

“fair value of the S&P going into the next recession is well below 2000, 1500 – way below where we are today.”

According to Stockman, Trump’s efforts to get the Fed to stop hiking rates from historical lows is misdirected…

“He’s attacking the Fed for going too quick when it’s been dithering for eight years. The funds rate at 2.13 percent is still below inflation,”

Specifically, Stockman notes the trade war is a major reason why investors should brace for a prolonged sell-off.

“The trade war is not remotely rational,” he said.

If the dispute worsens, it “is going to hit the whole goods economy with inflation like you’ve never seen before because China supplies about 30 percent of the goods in the categories we import.”

Stockman ends on an even more ominous note:

“We’re going to be in a recession, and we’re going to have another market correction which will be pretty brutal,” Stockman said.

“[Trump]’s playing with fire at the very top of an aging expansion.”

For now, all traders can think about is tomorrow – but we suspect Stockman will be right in the end.

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Authored by Paul Craig Roberts,

I never cease to be amazed at the insouciance of Americans. Readers send me emails asking why I ever supported Trump when he was the Establishment’s candidate. If Trump was the Establishment’s candidate, why has the Establishment spent two years trying to destroy him?

The failure to put two and two together is extraordinary. Trump declared war on the Establishment throughout the presidential campaign and in his inaugural address.

As I wrote at the time, Trump vastly over-estimates the power of the president. He expected the Establishment, like his employees, to jump to his will, and he did not know Washington or who to appoint to support his goals. He has been totally defeated in his intention to normalize relations with Russia. Instead, we are faced with both Russia and China preparing for war.

In other words, the same outcome that Hillary would have achieved.

Trump has been so harassed by the Establishment that he is having trouble thinking straight. He was elected by “the deplorables” as the first non-Establishment candidate since when? You have to go back in history to find one. Perhaps Andrew Jackson. Jimmy Carter and Ronald Reagan were not the choice of the Democratic and Republican establishments, and the ruling establishments moved quickly to constrain both presidencies. The Democratic Establishment framed and removed both Carter’s budget director and chief of staff, depriving Carter of the kind of commitment he needed for his agenda. The Bush people that the Republican Establishment insisted be put in positions of power in the Reagan administration succeeded in blunting his reformist economic program and his determination to end the cold war. I fought both battles for Reagan, and I still have the bruises.

Trump is an outsider elected by “the deplorables” whose middle class jobs were offshored by America’s global corporations for the benefit only of the executives and large shareholders. A few people sold out the American middle class, which is shrinking away.

In the rest of the world, Trump’s true allies are the presidents of Venezuela, Bolivia, Nicaragua, the former president of Ecuador, and the former president of Honduras, who was overthrown by “America’s First Black President,” the consequences of which are the caravan moving toward the US border. The Establishment has succeeded in so confusing Trump that he has declared the Establishment’s war against the non-establishment leaders in Latin America.

So what is this midterm US election about?

It is about whether “the deplorables” have been brainwashed by the Establishment’s media whores and fail to support Trump in the House and Senate elections. If the Democrats, whose politics is Identity Politics, get the House and/or Senate, Trump will be completely impotent. The Establishment hopes to drive the lesson home to every future presidential candidate to never again appeal to the people over the vested interests of the Establishment.

In America democracy is a scam. The oligarchy rules, and the people, no matter how they suffer under the oligarch’s rule, must submit and accept. No more presidential candidates, please, who represent the people. This is the lesson that the Establishment hopes to teach the rabble in the midterm elections.

What should this election be about?

If America had an independent media, the election would be about the dangerous situation created by Washington that has caused two militarily powerful countries to prepare for war with the US. This is the most serious development of my lifetime. Everything President Reagan worked for has been overthrown for the material interests of the power and profit of the military/security complex.

If America had an independent media, the election would be about the American police state that, based on the 9/11 lie, the weapons of mass destruction lie, the use of chemical weapons lie, the Iranian nukes lie, the Russian invasion of Ukraine lie, was accepted by the insouciant Americans. Those responsible for these lies, which have caused massive war crimes, for which US administrations should be indicted, are feted and rich. The rest of us have experienced the loss of civil liberty and privacy. Any individual in the way of the police state is mowed down.

If America had an independent media, the election would be about the de-industrialization of the United States. Today, as this article makes clear – the offshoring of American manufacturing and industry has reduced the US military to dependence on Chinese suppliers.

And the Trump administration starts trouble with China!

If America had an independent media, the election would be about the 20 years of US and NATO/EU war crimes against Serbia, Afghanistan, Iraq, Somalia, Libya, Pakistan, Syria, and Yemen, and US and NATO support for Israel’s war crimes against the remnants of the Palestinian people, and US and NATO/EU support for the neo-nazi regime established by the Obama regime in Ukraine to commit war crimes against the breakaway Russian provinces, the populations of which refuse to become victims of Washington’s overthrow of the democratic elected Ukrainian government and installation by “America’s first black president” of a neo-nazi regime.

If America had an independent media, the election would be about the orchastrated demonization of Iran. The completely stupid dope that Trump appointed Secretary of State just declared (the utter fool should not be permitted to open his mouth) that Washington was going to drive Iran into the ground unless the government agreed to behave like a normal state.

What does Pompeo mean by a “normal state.” He means a state that takes its marching orders from Washington. Iran has not invaded any country. The government in power is the continuation of the government that overthrew the Shah, a dictator imposed on Iran by Washington when Washington and London overthrew the democratically elected government of Iran.

What the despicable Pompeo is really saying is that Iran has to go, because Iran, like Syria, is in the way of Israel’s expansion into southern Lebanon, because Iran and Syria supply the Hezbollah militia, which has twice defeated Israeli invasions of southern Lebanon. The vaunted Israeli army is only good for murdering women and children in the disarmed Gaza ghetto.

If America had an independent media, someone would ask Pompeo precisely what Iran is doing that warrants Washington unilaterally, in the face of opposition of the European, Russian, and Chinese signatures to the Iran Nuclear Agreement, pulling out of the agreement and imposing sanctions that no other country on the planet, except Israel, supports?

But, of course, America has no independent media. It has a collection of whores known as NPR, Washington Post, New York Times, CNN, MSCBS, Fox News, etc.

Without an honest and independent media, there is no accountability of government. America has no honest and independent media. Therefore, in America there is no accountability of government.

“The deplorables” are faced with a dilemma. The president they elected has been overcome by the establishment and cannot represent them. Instead, Trump gives his supporters warmonger John Bolton as National Security Advisor and warmonger Pompeo as US Secretary of State. He might as well have appointed Adolf Hitler. In fact, Hitler was a more reasonable person.

So again, America is having an election in which nothing of any importance is discussed.

Unless the American people rise up in armed rebellion, they are finished as a free people, and, of course, they cannot rise up in armed rebellion. Not so much because the police and every agency of the government has been militarized as because Jewish cultural Marxism and the Democratic Party’s Identity Policics have the American people disorganized and at one another’s throats. Cultural Marxism and Identity Politics have divided the American population into victims and victimizers. The true victimizers and true victims are not part of the picture, which is a construction that serves ideological agendas. It is not the oligarchy that is the victimizer, but the Trump-voting white male. It is not the multi-billionaires, but the marginalized former manufacturing and industrial work force that is the source of oppression. This former work force is black and white, but the Democratic Party’s Identity Politics has blacks and whites at each other’s throats.

My conclusion is that America is doomed. The people, with few exceptions, are not smart enough to continue to exist. Perhaps the outcome of the elections today will change my mind. If the vote goes to the Establishment, all is lost.

via RSS https://ift.tt/2JHRaDF Tyler Durden

Less than 24 hours after crippling U.S. sanctions went into effect targeting primarily Iran’s energy sector, and hours after SWIFT suspended Iranian banks from accessing the global financial messaging system, succumbing to pressure from the Trump White House, Iran’s Foreign Minister Javad Zarif has published the Islamic Republic’s official statement in response. 

In a 3-minute video posted to YouTube and published by official government social media accounts featuring Zarif standing in front of Tehran during what appears to be the early morning hours of Tuesday in Iran, the FM condemned what he called the “absurd, unlawful, and fundamentally flawed” anti-Iran sanctions that went into effect Monday and called out the “hypocritical claims of the Trump administration”. He confirmed that Iran has rejected the White House’s latest demands articulated alongside the sanctions, and declared willingness to do battle against Washington’s economic warfare for the long haul. 

FM Zarif said: 

We have weathered difficult times in the face of 40 years of American hostility, relying solely on our own resources. And today we and our partners across the globe will ensure that our people are least effected by this indiscriminate assault in the economic warfare that directly targets the Iranian people.

Among the repeat themes of the short speech was an emphasis of “America’s isolation” and the global community’s willingness to stand by Iran as it “weathers the storm”. He also noted that Washington’s sanctions will only hurt ordinary Iranian citizens. 

FM Zarif also called out the U.S. history of sowing disaster in the Middle East:

The administration appears to believe that imposing illegal draconian sanctions on Iran… will force us to submit to its will.  

Rather than relying on its discredited unilateral addiction to unilateralism and sanctions as tools of statecraft which are today pushing it further into global isolation. The U.S. is better off addressing the catastrophes and crises it has engineered in our region. 

He went through a litany of U.S. sponsored “catastrophes” in the region over the past four decades, making reference to the following:

• “In Afghanistan, the U.S. created al-Qaeda to fight the Soviets.” 
• “Or Iraq, where it supported Saddam Hussein, including his use of chemical weapons against Iran.”
• “Or the later invasion of Iraq to supposedly rid Saddam of those very weapons of mass destruction.”
• “Support for Saudi Arabia and Israel blinds to the US…”

The foreign minister appeared calm and collected as he delivered his even-toned presentation before the camera — a far cry from the “death to America” chants reportedly echoed by protesters on the streets of Tehran and other cities which started last weekend. 

President Trump’s predecessors also began crafting their Iran policy with similar bravado; but came around to accepting and respecting the reality of Iran as they became more experienced in office.
Iran’s Message: https://t.co/ptmSMbOzeC

— Javad Zarif (@JZarif) November 6, 2018

In an indirect reference to the 2015 JCPOA brokered under Obama, which the Trump administration tore up last spring, Zarif said:

Trump’s predecessors also began crafting their Iran policy with similar bravado but came around to accepting and respecting the reality of Iran as they became more experienced in office.

As we noted before it’s true that Europe is trying to disengage itself from the US sanctions, but so far with little success. Its leaders are begging in vain for an exemption for trade in food and medicine to reduce the population’s suffering.

However, Trump is determined – even if these measures are harmful to the European economy – to prevent any transactions between Iran and Europe. This is one of the main reasons why the European continent is looking at implementing a long-term strategy specifically to disengage itself from the Swift messaging service used by banks and financial institutions for all trade transactions worldwide.

But it remains that Tehran is not standing alone against the US and is waiting to see what course global sanctions will take before taking further steps in reacting. Officials in Tehran, convinced that Trump will win a second term, are preparing for a long siege.

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Authored by Michael Snyder via The Economic Collapse blog,

On Tuesday night all of the speculation about the midterm elections will mercifully be over, and there is one potential outcome that is being called a “disaster” for the financial markets. 

Over the past couple of years, stock prices have soared to unprecedented levels, and Wall Street has seemed to greatly appreciate the pro-business environment that President Trump has attempted to cultivate.  Regulations have been rolled back, corporate taxes have been reduced significantly, and many corporate executives no longer fear that the federal government is out to get them.  But after Tuesday, everything could be different.

The most likely outcome appears to be that the Democrats will take control of the House of Representatives and the Republicans will remain in control of the Senate.  For what it is worth, Nate Silver is currently projecting that the Democrats have an 88 percent chance of winning the House and only a 19 percent chance of winning the Senate.

But of course he was also projecting a huge landslide victory for Hillary Clinton in 2016.

In any event, a divided Congress would create gridlock in Washington, and according to Wedbush Securities managing director Steve Massocca that would produce “some negative fallout” for the financial markets…

Steve Massocca, Wedbush Securities managing director said there could be some negative fallout from a split Congress, since Democrats would hold committee chairmen seats in the House. “To what extent are they able to disrupt the Trump agenda will weigh on peoples’ minds,” he said.

“Donald Trump, the agenda, is very good for the markets. Less regulation, lower taxes,” he said.

But in the end, such a scenario is not likely to move stock prices too substantially.

However, if the Democrats are able to take control of both houses of Congress on Tuesday, Massocca believes that would truly be a “disaster” for stock prices…

The least likely scenario – a Democratic sweep – is also seen as the most negative for stocks.

“Disaster,” said Massocca.

Normally by now we would have a really good idea of what is going to happen tomorrow, but at this point the polls are all over the place.

For example, the last generic poll conducted by CNN has Democrats up by 13 points, but the last generic poll conducted by Rasmussen has Republicans in the lead…

One day before Americans head to cast their ballots in the crucial midterm congressional elections, two final polls conducted by CNN and Rasmussen have predicted wildly different results.

The final generic poll conducted by left-leaning CNN has put Democrats 13 points ahead of Republicans. Meanwhile, a separate poll carried out by the more right-leaning Rasmussen agency has suggested that Republicans are leading, but by a much smaller margin of one point.

For the record, Rasmussen was more accurate back in 2016, and in only about 24 hours we will find out who was more accurate this time around.

There are some that are entirely convinced that Republicans will be able to maintain control of both houses of Congress, and needless to say that would almost certainly cause a huge surge on Wall Street.  In fact, one Nevada lawyer is so sure that Republicans will maintain control of the House of Representatives that he just flew to London and bet $130,000 of his own money on that outcome…

A big political gambler I met in Las Vegas in 2016 is in London betting that the Republican Party will keep control of the U.S. Congress. Robert Barnes is essentially wagering that U.S. pollsters haven’t fixed any of the problems that led them astray during the 2016 presidential campaign.

Barnes, a trial lawyer, lives in Las Vegas, frequenting the city’s sportsbooks, but he has to travel to the British Isles to wager on U.S. politics since it’s not allowed in the U.S. On this side of the Atlantic, the bookies know him as a high roller; the political betting team at Ladbrokes even tweeted his photo to mark his arrival and his 100,000 pound ($130,000) bet on the Republicans’ House majority. Given that the entire U.S. primaries betting market is in the single millions in the U.K. and Ireland, that’s quite momentous.

$130,000 is an enormous amount of money, and so I hope that he knows what he is doing.

On the other side, Nancy Pelosi is so confident about the outcome that she has already declared victory on national television.

But of course many other leading Democrats are extremely nervous right now.  They remember the election night debacle of 2016, and they are concerned that something like that might happen again.

Democratic pollster John Anzalone is describing what they are going through as “the bed-wetting phase”…

Haunted by memories of 2016, liberals around the country are riven with anxiety in the campaign’s homestretch. They’re suspicious of favorable polls and making election night contingency plans in case their worst fears come true. Some report literal nightmares about a Democratic wipeout.

“We’re kind of just in the bed-wetting phase now,” said Democratic pollster John Anzalone, a Hillary Clinton campaign alumnus who spent election night 2016 in Clinton’s Manhattan war room.

If the Democrats are unable to take the House, that will probably mean that a late “red wave” has saved the day for the Republicans and it will also probably mean that they will likely increase their Senate majority by a little bit.

In that scenario, we will see a lot more than “bed-wetting” from the left.  Their hopes have been pinned on these midterm elections for nearly two years, and a crushing loss could set off a national temper tantrum of frightening proportions.

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Back in the summer of 2017, to much fanfare President Donald Trump announced that Taiwanese electronics giant Foxconn, best known for making the iPhone, would build a new plant producing LCD panels in Wisconsin that will bring thousands of jobs to the state.

On the surface it was great deal: in what’s being called the “largest economic development project in state history”, Foxconn said it would build a $10 billion plant that will eventually employ as many as 13,000 people, according to the White House and Gov. Scott Walker. To be sure, it was a quid pro quo: to help lure the manufacturer, the state pledged $3 billion in tax and other “performance-based” incentives and local authorities added $764 million. Foxconn must meet hiring, wage and investment targets by various dates to receive most of those benefits.

And while many – including this site – accused the project of being a giant taxpayer-funded boondoggle, calculating that every job created would cost some $230,000 in incentives, a little over a year later and even more disturbing “glitch” in the plan has emerged: according to the WSJ, instead of hiring local talent, Foxconn is considering bringing in personnel from China “to help staff the large facility under construction in southern Wisconsin as it struggles to find engineers and other workers in one of the tightest labor markets in the U.S.“

According to the report, the company has been quietly trying to tap Chinese engineers through internal transfers to supplement staffing for the Wisconsin plant.

And while Foxconn did promise that it would invest $10 billion to build a 22-million-square-foot liquid-crystal display panel plant, hiring 13,000 employees – primarily factory workers along with some engineers and business support positions – it apparently never specified if the workers hired would be American… or Chinese.

Responding to WSJ questions about its hiring plans, the company said its “Wisconsin first commitment remains unchanged,” adding that it still plans to ultimately hire 13,000, and the majority “will work on high-value production and engineering assignments and in the research and development field.”

And while “ultimately” Foxconn intends to hire Americans, it appears to be resorting to Chinese workers in the interim.

Why? It appears that the key hurdle is the tight labor market which is making recruiting a challenge. Unemployment in the state reached a record low earlier this year. At 3.0% in September, Wisconsin’s jobless rate is well below the national average, which hit 3.7% that month—itself a 49-year low.

“It’s very difficult to find skilled labor in our market,” said Loretta Olson, who owns an Express Employment Professionals staffing office in Racine, Wis., near the planned plant. She also serves on the board of the Racine County Economic Development Corp., which worked to attract Foxconn to the area.

In response, area employers are improving benefits and offering more perks to avoid having Foxconn poach their workers, Olson said. She said Foxconn is actively engaged with high schools and local colleges to produce the workers it will need at the plant when it is completed.

“All the technical schools and local universities are gearing up their programs, but I still think Foxconn is going to fall short in terms of finding the people they need,” she said. “They’re going to have to recruit from outside the area.”

And “outside the area” apparently also means China: Foxconn Chairman Terry Gou is looking to company engineers in China to transfer, according to people familiar with the matter.

Here the company has run into yet another hurdle, as some Chinese engineers have expressed reluctance to relocate to Wisconsin, which is less well-known to Chinese workers than U.S. tech hubs in California or New York.

One engineer who declined to give his name said he wouldn’t want to move to a place he worried could be as cold as Harbin, a northern Chinese city known as “Ice City.”

As a result, Chairman Gou is upset that few Chinese workers have volunteered to move to Wisconsin if called upon, the WSJ sources said.

The bizarre twist is hardly good news for Wisconsin Gov. Scott Walker, a Republican, who is in a tight race for re-election, and has been accused by his Democratic challenger, Tony Evers, of making a bad deal with Foxconn. Evers and other state Democrats have said the incentive package given to Foxconn was too large and have highlighted concerns over the company’s changing plans.

In June, Trump, Gou and Walker celebrated Foxconn’s planned investment at a groundbreaking in Mount Pleasant in June. President Trump thanked Mr. Gou for investing in the U.S. and said the plant, about 25 miles south of Milwaukee, “will provide jobs for much more than 13,000 Wisconsin workers.”

While Foxconn may ultimately hit its hiring target, it now appears that a substantial portion of those “Wisconsin workers” will come from China. Which means that despite the spin and posturing, the end results is that US taxpayers will have given Foxconn millions in tax incentives so the company can build a plant in Wisconsin where it hires… Chinese workers.

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With the seemingly interminable campaigning for the midterms, which began shortly after President Trump’s inauguration, finally behind us, investors are watching with baited breath as Americans head to the polls for a midterm vote that’s expected to bring out the highest vote tallies for an off-year election in recent memory. Donors have poured a record amount of capital into the race – all told, Republican and Democratic candidates are expected to spend some $5 billion, according to early projections. The 2018 midterms will be remembered for the surging interest among female voters (much ink has been spilled about how white women betrayed their fellow women by largely favoring Trump in 2016) and the 256 women who won major party primaries in races for the House and Senate.

With polls opening at 6 am in most East Coast states, we’ve put together a summary of bellwether races that political analysts – and investors – will be keeping a close eye on. But just because many of these races are happening in the eastern time zone, doesn’t mean that the results will be in early. It’s possible that control of Congress might not be settled until later this week (of course, the final tally could take even longer to settle if there are recounts.

Here’s Bloomberg (readers can follow the results live here).

It’s possible that control of Congress is settled before midnight, but the unusually large number of close contests, many in states known for slow ballot counting, means the first midterm of Donald Trump’s presidency could go into overtime, perhaps for days after Nov. 6.

With that in mind, here are nine races – three for the House and Senate, and three for the governorship – that investors will be watching closely. All told, voters will cast ballots for 435 House seats, 35 senate seats and 35 governorships.

Republicans are expected to expand their majority in the upper chamber on Tuesday, largely thanks to the sheer number of red-state Democrats who are running to defend seats in states that President Trump carried by double-digit margins in 2016. According to one recent poll, Senate Republicans could expand their 51-50 majority to 56-45. New York Magazine’s Intelligencer blog offered a succinct summary in a post published last week.

The basic reality is this: Using Cook Political Report ratings, there are eight competitive Senate races for seats currently held by Democrats, six of them in states carried by Donald Trump in 2016, and five competitive Senate races in states currently held by Republicans, four of them in states carried by Donald Trump in 2016. To put it another way, Trump carried 10 of the 13 states with competitive Senate races this year, and Democrats are defending significantly more of those seats than are Republicans. But that actually understates the challenge to Democrats. Trump carried four of these competitive Senate states (Montana, North Dakota, Tennessee, and West Virginia) by more than 20 points, and another three (Indiana, Mississippi, and Missouri) by more than 15 points. Two of the three states in this group won by Clinton (Minnesota and Nevada) went for her by less than three points. The one solidly Democratic state on the list (New Jersey) has a scandal-plagued Democratic incumbent with terrible favorability numbers. This map is about as red as it could be.

The odds that Democrats pick up the two seats they would need to flip control of the Senate are much more slim. Political polling site 538 puts the odds at 10%. Below are three races to watch.

The Senate:

Indiana – Joe Donnelly [D] vs. Mike Braun [R] (courtesy of the Guardian):

Democrat Joe Donnelly is trying to fend off Republican Mike Braun in a state that Trump won by 19%. Indiana’s lone statewide-elected Democrat has sought to align himself with Trump on the hot-button issue of expanding the border wall with Mexico. Otherwise, he has portrayed himself as a moderate who works with both parties to pass legislation. “I go against my party all the time,” he said recently.

Arizona – Kyrsten Sinema [D] vs. Martha McSally [R] (courtesy of the Guardian):

Democrats have high hopes for flipping this seat, where representative Kyrsten Sinema is running against Republican representative Martha McSally for the seat left open when Jeff Flake, a sharp critic of Trump, opted to retire, acknowledging that he could not win a primary in the current political climate.

McSally is a former air force fighter pilot who represents a moderate district based in Tucson. Sinema represents a district in the Phoenix suburb of Tempe and is a former Green party activist who transformed herself into a centrist Democrat.

Florida – Bill Nelson [D] vs. Rick Scott [R] (courtesy of CBS News):

…[I]ncumbent Democratic Sen. Bill Nelson is defending his seat against Republican Rick Scott, the current governor. The CBS News Battleground Tracker poll showed them tied for support among likely voters, each with 46 percent support.

The Florida Senate race is one of the most important in the country, and a victory for Nelson or Scott could help determine the partisan balance of the Senate. While the candidates have addressed national issues such as health care and immigration, local concerns are also playing an important part in the race, such as post-hurricane recovery and the influx of toxic “red tide” algae into Florida’s waters.

The House:

Virginia’s 7th Congressional District – Abigail Spanberger [D] vs. David Brat [R] (courtesy of NBC News):

The race pits incumbent Republican Rep. Dave Brat against Democrat Abigail Spanberger, a former CIA undercover operative and first-time candidate. Brat, who ousted House Majority Leader Eric Cantor in a 2014 primary upset by using anti-immigration attacks, was an early adopter of the brand of identity politics that now define the GOP in the Trump era.

Spanberger, who began her career as a federal law enforcement officer working narcotics and money laundering cases, is emphasizing her national security credentials and vowing to focus on health care and prescription drug costs, student loan debt and modern infrastructure.

[…]

The race is seen as a bellwether for whether college-educated suburban voters — especially “Panera moms” who traditionally vote Republican — will repudiate Trump and his brand of politics by voting Democratic or staying home.

Kentucky’s 6th Congressional District – Amy McGrath [D] vs. Rep. Andy Barr [R] (courtesy of the Guardian):

A Lexington-area battle is one of the most competitive and expensive races in the country, pitting the third-term Republican Andy Barr against Democrat Amy McGrath, a retired US marines fighter pilot. Trump won the sixth district by more than 15% in 2016 but with the help of carefully shaped campaign ads that went viral, McGrath holds the edge on campaign fundraising. Polls are virtually deadlocked.

Florida’s 27th District – Donna Shalala [D] vs. Maria Elvira Salazar [R] (courtesy of the Guardian):

National Republicans and Democrats are pouring major resources into the Miami-area 27th district, held since 1989 by the retiring Republican Ileana Ros-Lehtinen. The Democratic nominee, Clinton administration health secretary Donna Shalala, has ramped up her Spanish-language advertising and Hillary Clinton campaigned for her. But she’s facing a stiff challenge from Maria Elvira Salazar, a Cuban-American former broadcast journalist who, unlike Shalala, speaks Spanish. Though Trump won Florida in 2016, Clinton won this congressional district by nearly 20%.

Gubernatorial Races:

Florida – Andrew Gillum [D] vs. Ron DeSantis [R] (courtesy of the Washington Post):

Voters are deciding whether to keep Florida under Republican control with a close Trump ally or elect its first Democratic governor since 1994 — and the first African-American ever — after a campaign marked by a deadly hurricane and gun violence.

Former Republican U.S. Rep. Ron DeSantis is hoping to ride President Donald Trump’s backing to victory in the governor’s race Tuesday, while Democratic Tallahassee Mayor Andrew Gillum has sought to energize his party’s voters as an unabashed liberal.

Gillum’s path to the nomination was a surprise, winning against four better-funded challengers. Hurricane Michael pulled him off the campaign trail in early October when it left nearly all of Florida’s capital without power. He again rushed home Friday, canceling campaign events after a man shot six people at a yoga studio, killing two before taking his own life.

DeSantis won the primary against better-known and better-funded Agriculture Commissioner Adam Putnam based largely on Trump’s endorsement. Trump visited Florida twice in the final six days of the election to try to boost turnout.

Georgia – Stacey Abrams [D] vs. Brian Kempe [R] (courtesy of Newsday):

Democrat Stacey Abrams is vying to become Georgia’s governor, and would be the nation’s first African-American female governor. Georgia Secretary of State Brian Kemp is a Republican who embraces Trump.

What will matter more: winning voters in the middle or turning out the base?

The campaign has been overshadowed by racial issues in its final weeks. Abrams, a former Georgia House minority leader, has blasted Kemp’s performance as the state’s chief elections officer, joining voting rights advocates in accusing him of using his post to make it harder for citizens, particularly minorities, to vote. Kemp maintains he’s merely following federal and state election laws.

[…]

Something to watch: Does the little-noticed third-party campaign of Libertarian Ted Metz get enough votes to prevent either Abrams or Kemp from surpassing 50 percent? If neither one does, under Georgia’s election law, they’d face a runoff on Dec. 4 – extending the campaign for nearly another month.

Kansas – Kris Kobach [R] vs. Laura Kelly [D] (courtesy of Fox News):

Nationally, Kansas has been a reliable state for Republicans. Trump bested Democratic contender Hillary Clinton by about 21 points in the 2016 election.

But Kansas Secretary of State Kris Kobach is facing a tough campaign against longtime state Sen. Laura Kelly. Whoever wins will replace Republican Jeff Colyer, who took over the position once Trump selected Gov. Sam Brownback to serve in his administration. Colyer ran for a full term but was defeated in the GOP primary by Kobach.

Kobach is a staunch ally of the president, who has endorsed him in his gubernatorial bid. He was the vice chairman of the White House’s controversial voter fraud commission, which was dismantled by Trump earlier this year as it faced multiple legal battles and opposition from states. He’s advocated for tough state policies against immigration and has promised to shrink state government and cut taxes.

Although pollsters largely expect Democrats to achieve the net gain of 23 seats needed to take control of the House. However, the Cook Political report shows that Democrats are only favored to defeat 18 sitting Republicans. Dozens more races are seen as tossups. Meanwhile, Republicans are expected to win two Democratic seats. This means that Dems will need to also win at least eight of the ‘tossup’ races to cement their dominance in the lower chamber. In terms of how the outcome might impact markets, Mohamed El-Erian, chief economic adviser at Allianz SE, said markets have largely priced in Democrats taking the House. Stocks could rally if Republicans successfully retain their majorities in both chambers, as investors see scope for further tax cuts. However, if Democrats with the House and the Senate, investors might panic on the expectation that the Dems would seek to undo large chunks of the Trump agenda.

Notably, the only major polling company projecting that Republicans will retain control of the lower chamber is Rassmussen reports, which was also the only major polling firm to call 2016 for Trump (per Real Clear Politics):

But while pollsters like Nate Silver have thrown up their hands in frustration as they worry about being egregiously wrong for the second election in a row, there’s only one thing they can say for sure…

….Somebody is definitely going to win on Tuesday.

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