The epic Obama-McCain race is not the only one that investors will be watching this evening. A landslide may be brewing in House and Senate contests, which could give the Democrats their greatest dominance since 1965-66, after the Lyndon B. Johnson landslide over Barry Goldwater in 1964.
We'll get a clue fairly early. The polls close in North Caroline at 7:30 ET, and that may bring bad news for incumbent Republican Sen. Elizabeth Dole. We think she'll lose, and Dole could be the first of several Republicans dragged down by President Bush's low approval ratings and the slumping economy.
The endless speculation about whether the Democrats can get to a filibuster-proof 60 seats misses the point. Even if they wind up with 57 or 58 seats, which seems likely, there could be two or three moderate Republicans who could defect and vote to end filibusters. Activist legislation could move in the Senate — including bills to impose a windfall profits tax on oil and gas companies, and a form of price controls on big drug companies that participate in the Medicare prescription drug program.
Results in the House could be just as dramatic. At least 20 seats, perhaps as many as 30, seem likely to go to the Democrats, a trend which should be well-established by 9 pm. When we wake up tomorrow, the Democrats could have a 70-seat majority in the House, perhaps even a majority of close to 80 seats.
The looming landslide in Congressional races has been obscured by the presidential race, where Barack Obama is poised to win solidly, but a landslide still looks unlikely. Several tossup states — Indiana, Missouri, North Carolina, etc. — may revert back to norm; John McCain could win many of these.
The state to watch early this evening will be Indiana, where the polls close at 7 ET. If the networks project the state as likely to support McCain, we could be in for a long night. If Obama is declared the victor in Indiana, we can plan on going to bed early, and his victory speech might come before midnight.
Exit polling often can be boring, but not this year. The key, obviously, will involve attitudes on the economy. The public has turned against the Reagan-era support for tax cuts and spending restraint, and apparently favors a more activist government to deal with problems like home foreclosures. These exit polls will be cited by politicians in the coming weeks as they move to father stimulate the economy.
That's the big issue — what comes in the next few days, as the president-elect — presumably Obama — convenes an emergency economic summit to deal with the deepening recession. We'll look at that part of the story in a blog later today.
Greg Valliere is the chief strategist at the Stanford Washington Research Group, and was previously Managing Dirctor and Chief Strategist with the Schwab Washington Research Group. He is a regular CNBC contributor.