Read on Twitter
Stepping back from the horrible events of yesterday, it's worth talking about what the investment implications are of the Dem's Senate victories in Georgia.
So first thing to note is that Manchin likely becomes the most important Senator - so nothing radical is passing
So first thing to note is that Manchin likely becomes the most important Senator - so nothing radical is passing
The GOP will rapidly re-find their abandoned deficit-hawkism, but expect massive deficits from here on out. So I can't really see the sense of holding long bonds here. And a weak dollar will likely be a theme of next few years.
Expect marginal rates on taxes on high incomes to rise sharply, likely offset some by the reinstatement of the SALT deductions. Cap gains rates also rising here - just don't know the timing. The threat of rising cap gains (unless retroactive) will cause massive profit-taking
(That's why raising cap gains rates always produces a subsequent drop in revenue - brings the revenues forward). So I expect ongoing weakness in the stocks that have done best over the last few years. So very much a rotation here, as some underperforming sectors come back
We will see some pressure on drug prices - Medicare will be able to negotiate. That threat has been coming for years, but it will finally arrive. Hard to know how much of this is already in the market and to what extent rare drug pricing will be impacted.
Covid is going to impact the world for longer than people expect - vaccine supply, vaccine denial and mutations will mean this is going to be with us for the foreseeable future.
On a macro level, expect China's ascendancy to steadily continue with their minimal Covid impact. Less uncertainty from a Biden Administration and perhaps a more cooperative attitude from China - expect some deals with China buying US stuff.
A decade from now there will be as many new drugs coming out of China as the US. Everywhere you look in biology research you see a flood of papers out of China - still lower quality on average, but the quality is increasing. More trials in China too.
Alternative energy will clearly boom - but that play might already have mostly played. Expect continued weakness in commercial real estate in big cities as more remote work. The virtual world becomes increasingly important - that is going to be a decades-long trend
Aside from the political changes, we will increasingly see the impact of AI - that will maybe stress society further, with more jobs lost (think truck drivers and Uber drivers) and more pernicious bots and fakes that are impossible to detect. Computer security going to be big.
Murdoch will be gone soon, and his heirs might control Fox. Always going to stay on Right, but perhaps the climate-denial type stuff will end. The TrumpTV end of the spectrum will exist, but no advertiser support except for pillow guy types. FB and Twitter will clamp down now.
I look forward to a calm and steady four years as the US rebuilds society and its credibility from the damage of the Trump years. The split in society is deep, and FB, Fox and Twitter share much of the blame here. Hopefully the GOP can also rebuild and recover from the cult.
For me, climate change remains the biggest existential threat to my young grandchildren's future. We've lost four years in that struggle, the ultimate tragedy of the commons. It requires collective action by all countries and hopefully more technological solutions will emerge.
