Blue Wave Still Possible
greg beier macroESG.com wednesday 04 november 2020 11:43 PM ET
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Markets, Politics, and Technology for a Sustainable Future
Old Glory, a famous American flag that survived the Civil War.
The Presidency
At 264 Electoral College votes, if Joe Biden wins Nevada tomorrow (which Hilary Clinton won in 2016), then Mr. Biden is the President.
President Trump could win Pennsylvania, North Carolina, and Georgia – it wouldn’t be enough for Mr. Trump to win.
Though, if Mr. Biden wins these other states, then it would help increase his majority.
The Senate
The Senate is still winnable.
In Georgia, if the winning candidate gets less than 50% of the vote, then the first and second place candidates have to run again in January. In the case of Georgia, both Senators are running as one Senator stepped down so the replacement, Loeffler (who is in 2nd place but the winner will not be above 50%), has to win an election to continue to serve as the replacement.
This creates an interesting dynamic. Both Loeffler and Perdue could run again in January as Perdue is barely winning with 94% of the vote counted. And, in any normal year, it would be logical to assume that in a deeply Republican state like Georgia that they would easily win reelection.
But with the Covid pandemic moving much faster in Europe than any government expected (and these are countries with very high levels of public health capacity), it means that the US is almost certainly to be hit squarely with a massive pandemic. Infections today are already above 100,000 for the first time in a day – and it is just the start of November.
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 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 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.
Barring this development, it would be an ideal time for a Republican to become an independent and caucus with the Democrats.
Lastly, President Biden has spent his life on Capitol Hill and is totally qualified at bringing everyone together.
Investment Implications
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US equities, precious metals, and the dollar will be static to negative until the facts are clear. Once the stimulus is on track, then the rotation from tech can begin and the dollar will appreciate.
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US government debt will rise in this environment.
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Oil will be weak because of its structural reasons and the return of the pandemic to the Northern Hemisphere
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China is a very interesting story and will be written about tomorrow.