Blue Wave is Complete With Historic Diversity

Gregory C. Beier

Macro ESG Strategist & Founder

Sustainability Arbitrage LLC

Wednesday, January 6, 2021 10:45 PM EST

“Markets, politics, and technology for a sustainable future.”

Blue Wave is Complete With Historic Diversity

Blue Wave is Complete

The election of Raphael Warnock and Jon Ossoff in the Georgia Senate run-off elections has completed the Blue Wave.

Macro ESG Called It Months Ago

Macro ESG called on July 23 in “Macro ESG Daily: We Are At an Inflection Point” that "...the Senate is going to fall to the Democrats too. It’s going to be a political Armageddon."

And this is exactly what happened today.

Macro ESG called it on October 15 in “Red Alert 2 = Republicans to Lose Senate” with the following analysis:

“Republicans to Lose Senate Majority 

1. Given the dangerous trajectory of the pandemic as we get closer to the election

2. combined with the swing states suffering the brunt of the infections (which means hospitals will hit capacity and triage units and field hospitals will be opened on the fly),

3. along with the record fundraising of the Democrats that

4. will likely lead to the airwave being saturated with their messaging and

5. Donald Trump’s messaging having lost its inherent newsworthiness (that got him a lot of free airtime the last go around),

I am now calling “check-mate” on the Republicans losing the Senate. “

Please click this Wayback Machine link to verify.

Macro ESG described on November 4th the opportunity for the run-off to occur in Georgia and the likelihood of the pandemic creating trouble for the sitting incumbents in “Blue Wave Still Possible”

“The pandemic is the outlier event that could change the January run-off vote for both candidates, if it were to happen, and favor the Democrats, particularly as Perdue has a vote share of 50.2% - and that 0.2% lead could easily go under the 50% threshold with the mail-in-ballots that are likely to favor Democrats.

This is a remarkable development and is not being discussed much in the national press. But it is a very real path that would give Mr. Biden control in the Senate and allow him to put a grand agenda quickly into law. “

Macro ESG called on December 16 in “Democrats to Win Both Seats in Georgia” that is summed up with, “In the absence of the wide lead that I was expecting at the electoral college, I believe that the voters of Georgia are going to deliver a stinging rebuke of the Republican party... When Joe Biden has a Senate majority to work with, he will be able to pass a wide range of transformational bills that will drive the United States into an entirely new direction, shifting global power dynamics dramatically - and all due to two parliamentarian positions in one but of 50 states.”

Historic Diversity From Georgia

• Raphael Warnock is the first African American Senator to win an election in the Deep South without being an incumbent since Reconstruction (the period following the Civil War).

  • I mention “without being an incumbent” because Senator Tim Scott, an African American Republican Senator from South Carolina, was appointed by Governor Nikki Hayley in 2013, did win reelection in 2016 - but as an incumbent - a significant distinction.

  • Just for historical perspective - the last African American Senator from the Deep South was Blanche Bruce, who was born into slavery in 1841, and was elected to the Senate in 1874 from Louisiana - as a Lincoln Republican.

• Similarly, Jon Ossoff is the first Jewish Senator from the Deep South to be elected to the Senate since Benjamin Jonas, a Democrat, who was elected in 1879 from Louisiana.

Washington Riot

As I’ve been referring regularly to the writings of Yale political theorist Stephen Skowronek since May - the key to confirming the arrival of a transformational president is that the previous president has to be so bad that it washes out the old system and drives US politics to go into an entirely new, centrist direction.

This has been the element that has been unmistakenably missing from the Trump presidency and has now been satisfied today with the shameful events in Washington this afternoon at the US Congress building. Not since August 24, 1814, when the British burned Washington - has the Capitol Hill building suffered violent damage of any kind.

Republicans and Democrats are both incensed (even 5 of the original 11 Senators broke with the President in their announced objection to the electoral vote certification process), and this will likely lead to rapid decline in the Trump movement and will be committed to driving a new direction of change.

Investment Implications

Biden is empowered to lead a major new change. With that in mind, I am going to republish large tracts from the June 14th “Global Investing Post-Trump.”

• “Growth will be in renewables, public health, technology privacy, education, infrastructure, basic materials, micro-agriculture, and affordable housing. 

• Decline will be in military spending, corporate jets, ultra-luxury brands, financials, hydrocarbons, consumer finance, social media, online shopping, and cellular services.

China is actually in bigger trouble on trade under Biden.

• China will be contained by a renewed US/EU alliance.

• The Biden Administration will lead a serious diplomatic effort to strengthen NATO and joint EU/US initiatives. The UK begins the long arc of swinging back into the EU.

• China will continue to grow but the Belt and Road program will degenerate into a failed fringe initiative.

Technology will be attractive – just not as attractive.

• Large tech companies will be broken up.

• Privacy rights, establishment of international norms.

• China 5G production will be diminished.

Human rights will be the hallmark issue under Biden – and around the world.

• The sharp edge of US foreign policy initiatives will be centered around human rights, restoring America’s traditional legitimacy after the two failed wars in Iraq and Afghanistan and the bizarre Trump messaging.

• This will put China under pressure, highlighting their structural weaknesses, particularly with the Uighurs and the decline of Hong Kong.

  • Lesser developed countries will become less enthusiastic about taking Chinese money and government support.

  • Chinese language study will decline around the world.

• The strong-men will fall – Duterte in the Philippines, Bolsonaro in Brazil, Erdogan in Turkey, Orban in Hungry, etc.

Russia.

• Putin will become isolated but will move to align with the West out of fear of growing Chinese power.

• G7 leaders will continue to shun him. Russia is stuck in a periphery of its own making.

The Covid crisis.

• The covid crisis is accelerating again and it may ultimately end with broad national shutdowns to protect countries from a second wave.

• If this were to happen, America would undoubtedly move to a single-payer health care system within 5 years - leading developing nations to follow suit.

Oil becomes a stranded asset.

• The move to renewable energy becomes a global goal.

• Crown Prince MBS will become a leader in the renewables movement through Aramco and the aggressive investment of Saudi cash. He really doesn’t have any choice - he has to build a wildly successful corporate play, or he is finished politically.

• Investment in hydrocarbons falls to a trickle.”