Mark Avallone, founder and president of Potomac Wealth Advisors, joined Cheddar News to discuss what a divided Congress means for policy response, the economy and markets along with Medicare and tech regulation. 

Mark Avallone, founder and president of Potomac Wealth Advisors, joined Cheddar News to discuss what a divided Congress means for policy response, the economy and markets along with Medicare and tech regulation.&nbsp;

What a Divided Congress Means for Policies

news everyone, while democrats were able to keep control of the Senate in the midterm elections. Republicans did flip the House. Something that promises to bring gridlock to Congress for the next couple of years. It does put President biden's domestic agenda in danger. But there are also some economic factors at play like the possibility of another debt ceiling standoff and how the government would respond if the country falls into a recession next year. I'm joined now by Mark Avalon, president of potomac wealth financial advisory firm. Mark thanks so much for coming on the show gridlock in Congress. We've always heard has historically been a positive for the stock market. Is that true? Well it has historically been and I think we saw a lot of that earlier in the run up we had in october leading up to the election was for a variety of factors. But one of them could have been the notion that there was going to be split in Congress, which we had the other positive at this point. From a political timing standpoint is the year following. Um Midterm election is usually a very good one for stocks. So that those are two tail winds that investors are looking at coming off these low valuations of course inflation. The biggest factor moving the stock market impacting americans their budgets. And a factor that voters took to the ballot box as well. This midterm election season. Mark any indication as to how gridlock in Washington might impact the policy response out of D. C. To bringing down prices. Well that's a great question And the reality is in the short run Congress really can't control prices. This is the only thing they really could do out of Washington is free up more energy. And I know that's not popular on both sides of the aisle. But this inflation genie was built by the Federal Reserve. It was built by stimulus checks, covid response. So just by doing nothing by half having a split Congress, we're going to have less spending. Certainly hopefully there's no need for stimulus and and bailout checks and then the covid spending is gone and the Federal Reserve is it's it's it's own area. And they've already signaled they're on the inflation fight. So our our outlook is that inflation will moderate but mostly because the market forces the fed and gridlock in Washington. Well it is interesting mark, I'm reading here that house Republicans at least according to their 2023 budget proposal, they want to raise the minimum age for Medicare and social security to 70 years old. That would cause a fiscal shock. I think to many older Americans might these programs be at risk? Well, I don't know if the programs are at risk but certainly people on the bubble of benefiting from them would have a change a dramatic change in plans. And I don't see that going anywhere. And actually it's not a good political talking point for the republicans. So if people in the party are saying that they might want to get Advised differently. Um, I think the bigger immediate issue is, can we get something bilateral on social security? Because the projections there are that the fund will not be able to make full redemptions into the 20 30s. So hopefully we can get something modest, prudent bi partisan without each party beating each other up and and the usual trash talking because younger people really deserve a Washington that works in this area. I think a lot of people want a Washington mark, you're right, that does actually work and and one that works for them to say the least. So let's talk about tech regulation because this has seemingly been a bipartisan matter over the past few years. A lot of companies, big tech companies getting looked into by lawmakers and attorney generals across the country. What might be on the horizon for tech regulation in a divided congress? Well, that's great observations because it always has been at least the past few years under a big microscope. But what's interesting, it's under a big microscope from both parties. It's just what each party wants to focus on. The incoming conservative majority are gonna want to clamp down on what they feel are restrictions on free speech, awoken mentality that permeates and penalizes those that don't that don't, those that don't subscribe, whereas on the other side of the aisle, they want to make sure that there's some sort of censorship or or toning down of heated rhetoric. So you have this really interesting debate around free speech and how each party is coming at it differently. We also have how they're gonna look at Tiktok and and the role and the availability of even having a Tiktok in a few years. So it's gonna be very busy from a tech perspective. I think the one area they're gonna gain agreement on is something to do with Tiktok, which we're getting increasing scrutiny from the Homeland Secretary and other people in that area that make it a nonpartisan issue. So I think we might look at something there which could benefit companies like facebook or twitter and we'll see how that unravels. So obviously we know the republican party wants to rein in government spending mark. And the biden administration has tried to tout a lowering budget deficit government deficit as a win this past year. So do you think gridlock in D. C. Can rein in the government budget? Well, I do think gridlock helps look, the republicans say they want to slow down spending. But that's usually when democrats are in power, that there's no evidence that republicans slowed spending when they had the power everybody likes to win votes back home. That's the reality. But with gridlock now is the time republicans can say no and they certainly are going to say no on agenda items that are favorable to death democrats the time for the democrats to get their climate bill was a few months ago and they did because you're not going to get much more spending in that area. Now, you might see bilateral agreement on cyber and things related to national security. The democrats who have been big supporters of aid to the Ukraine, we're gonna have a hard time saying no to an increased defense allocation because we're we're using and depleting materials and equipments we have. So I think you're going to get agreement in cyber security and defense, which is odd bedfellows for democrats and republicans to be in. But that's something I'd look for. All right. Mark Avalon, president at potomac wealth of financial advisory firm. Mark, thank you.