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If this special GA election goes where it looks to be going, the democrats will have complete control of government for 2 years at minimum. This seems consequential for the markets, but I don't think in the way that most presume. A few thoughts... 1/8
The conventional wisdom suggests that democrats will raise taxes, the prospect of tax increases is scary for corporate earnings, and thus a drag on the their stock prices, and the market as a whole. 2/8
However, I don't know if that is even possible - as it would require a level of party unity that democrats rarely can muster. I am speaking to the great Joe Manchin, a conservative old school "Blue Dog Democrat". 3/8
If you think Joe Manchin is going to vote for tax hikes given his electorate, you don't know Joe Manchin. He won't. He will almost ALONE hold the power to basically control ANY party line vote. That's huge. If he is against it, Schumer may not even bring it to vote. 4/8
On the other hand, democrats in control does increase the odds, imho, that Covid will be managed more effectively with better vaccine distribution logistics, which will allow businesses to re-open faster and in more places 5/8
Beyond Covid, democrats also favor immediate additional $1400~ stimulus checks (ironically aligned with Trump at $2k total) - something that will likely receive bipartisan support, provided McConnell won't be there to block it 6/8
Finally, beyond the tangibles, lay the intangibles. Biden is just another politician. An old school, boring, conniving,, kiss-your-baby-then-lie-to-your-face more-center-than-left neoliberal.. and with that comes "normality" - or perhaps just an illusion of it, in any case.. 7/8
All this takes me to my point. I have no clue what the market will do but it seems that the conventional belief might not play out exactly as expected. We may puke a bit... but we could also rally hard, or consolidate b/f picking direction. Be smart. Manage risk. GL! 8/8
