America voted on Tuesday, and as the dust settles the results are coming clear. First, there was no ‘Blue Wave’ of Democrats sweeping the Trump Republicans out of office. Yes, the Dems made gains, but those gains were small by historical standards. We saw a closer split among the State governorships and a 10 to 15 seat House majority, while the Republicans expanded their Senate majority, perhaps as high as 55 to 45. The main result appears to be increased partisan polarization.

As for expectations, it looks like Congress will be gridlocked for a while. The new House majority will likely try to reverse the tax cuts or impede President Trump’s trade policy . However it is unlikely this will be able to push the government into a new course. The Senate is highly unlikely to pass any of the new House majority’s bills. But as one wag once pointed out, when the House and Senate are too gridlocked to help you, they can’t hurt you either.

Industry Flexes its Muscle

Honeywell International

President Trump took office promising to bring manufacturing jobs back to the US, and his policies – in trade, taxes, and government regulation – favor business and manufacturers. Honeywell International (HON – Research Report), with its hands in a wide variety of posts from aerospace to home building to industrial safety to materials technologies, is well positioned to take advantage of an improving industrial climate.

It shows in the company’s stock performance. HON started moving up in January 2017, and continued to appreciate for that whole year. The stock leveled off and started showing more volatility this year, but still hit its peak value – $163 – this past September. After losing ground in October, a strong quarterly earnings report has helped the stock rebound.

Five-star analyst Peter Arment (Track Record & Ratings), writing from Baird, agrees that Honeywell is on track for growth. He describes “significant long-term upside in Honeywell shares as organic growth improves coupled with the strategic actions of its spinoffs,” adding that “healthy organic growth, automation investments, and an active M&A pipeline, should allow the company to replenish the lost earnings at a higher margin profile.” He gives HON a ‘Buy’ rating, with a price target of $187. Honeywell’s average upside forecast is $170, 13% higher than the current $150 share price.