Shares go up because investors like a divided government



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Inventories rose sharply on Wednesday after the mid-term election results, which gave Democrats control of the House but strengthened Republican control over the Senate.

Split government control has always been good for stocks, said David Rubenstein, co-founder of the Carlyle Group, at the Bloomberg New Economy Forum in Singapore.

"We should not automatically assume that the economy will go south simply because houses are controlled by different parties," he said. "When houses are controlled by different parties, they actually have to make compromises if they want something, and that sometimes tends to be positive."

Election Day in the United States: The next day

Some analysts have speculated that investments in infrastructure, such as road and airport construction, could be an area in which the Trump administration could find common ground. with the Democratic leaders in the House. This could stimulate economic activity.

Other experts have said that the greatest relief for actions is simply knowing where things are.

"In the end, the market is relieved.The unknown is now the known," said Peter Cardillo, chief market economist at Spartan Capital Securities.

Some investors may have feared that an overwhelming Democratic victory that allowed them to conquer the Senate could have caused Republicans to fear two years behind in the 2020 elections. Now this fear has been removed from the market.

"The survey, this time, has basically worked well," said David Joy, chief market strategist for Ameriprise. "We removed an element of uncertainty."

But the relief may be short-lived, said Art Hogan, chief market strategist for B. Riley FBR, as investors revisit pre-election issues, including impending trade disputes with the bank. China and the risk of rising interest rates. The Federal Reserve meets Wednesday to discuss the need to raise interest rates in the future.

Investors should not count on a continuous increase in shares for a year, as was the case after the last 18 mid-term elections.

"It will be interesting to see if this is the norm and not the exception," he said. "The warning for all this is that we have not had a trade war with China after the 18 midterms before that."

At the news of the company, the crowding out of Sessions has resulted in an increase in marijuana stocks. Sessions was an opponent declared to pot legalization in the United States. Marijuana stocks were mixed for most of the day, despite Michigan's announcement of the legalization of cannabis for recreational purposes.
The shares of Canopy Growth (CGC), Cronos (CRON) and Aurora Cannabis (ACB) jumped nearly 10%, while Tilray (TLRY) exploded by more than 30%.

Paul R. Monica from CNN Business contributed to this story

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