Experts Are Warning That The Stock Market Could Fall Dramatically If Democrats Take Control Of The Senate – Investment Watch

by Michael Snyder

Stock Market Crash 2021 Pixabay

The outcomes from Georgia are going to have huge implications for the monetary markets.  If Democrats win each of the seats which might be up for grabs, that may give them management of the Senate, the Home of Representatives and the White Home.  For the primary time for the reason that first two years of Barack Obama’s presidency, the Democrats would have a chance to advance their agenda with out compromising with the Republicans, and that’s extraordinarily scary for traders.  The Democrats have made it very clear that they intend to lift taxes on massive companies and the ultra-wealthy, and that wouldn’t be good for the inventory market bubble in any respect.

As I write this text, the 2 races are nonetheless too near name, and we in all probability gained’t know the ultimate outcomes for some time.

However consultants are already warning that we might see an enormous inventory market decline if each Democratic candidates win.  For instance, former Trump adviser Steve Moore is warning that the Dow might fall by 1,000 points

Former Trump senior financial adviser Steve Moore argued on Tuesday, the day voters in Georgia head to the polls for the Senate runoff elections, {that a} Democratic sweep might result in the Dow Jones Industrial Common dropping by 1,000 factors.

Moore says that he got here to this conclusion by inspecting knowledge from the last 60 years

“I regarded on the proof of what’s occurred within the final 60 years or so with respect to the inventory market by way of three totally different eventualities: One is Republicans management every part in Washington, the second state of affairs being Democrats management every part in Washington, the third being divided management of energy and generally the perfect state of affairs for financial development has been when you’ve got divided energy,” Moore mentioned.

“The worst state of affairs during the last 50 or 60 years is when Democrats have management over all of the levers of energy so I’d suppose the historic document is fairly clear on this, {that a} Democrat sweep tonight can be unhealthy for markets,” he continued.

Oppenheimer’s John Stoltzfus is much more pessimistic.  He believes that we might see the inventory market drop by a complete of six to 10 p.c if both Democrats win

That’s based on Oppenheimer chief funding strategist John Stoltzfus, who wrote in a notice to purchasers on Monday that traders could also be spooked by the prospect of elevated company taxes and authorities spending underneath the Biden administration with a Democratic majority within the Home and the Senate.

“A Democratic sweep of the 2 runoff elections in Georgia might trigger the U.S. broad fairness market to expertise a downdraft of anyplace between 6% and 10%,” Stolzfus wrote.

Giant companies had been thrilled with President Trump’s tax cuts, however Joe Biden has mentioned that he intends to eliminate them.

However so as to try this, Joe Biden wants a Senate that’s managed by Democrats, as a result of a Republican-controlled Senate would never go for what he is proposing

Biden has repeatedly mentioned he would roll again President Trump’s 2017 Tax Cuts and Jobs Act and lift the company tax fee to twenty-eight% from 21%, restore the highest particular person tax fee to 39.6% from 37%, tax capital positive factors as abnormal revenue, cap deductions for prime earners, increase the Earned Revenue Tax Credit score for staff over the age of 65 and impose the Social Safety payroll tax on wages above $400,000. With out a Democratic-controlled Senate, these tax hikes are probably off the desk.

At this second, it’s not clear who will win, however traders can be watching the outcomes very, very intently.

In line with officers in Georgia, we should always have a reasonably good concept of who gained by the middle of the day on Wednesday

“Relies upon how shut it’s, however most definitely it’ll in all probability be tomorrow morning. It actually relies upon what number of absentee ballots,” Georgia Secretary of State Brad Raffensperger instructed Fox Information Tuesday morning.

David Worley, a member of the State Election Board, instructed The New York Instances that if processing goes easily, officers will “have a reasonably good concept” of who gained by 1 a.m. Wednesday.

With a lot on the road, spending on these races has reached ranges that we now have by no means witnessed earlier than.  The next comes from Zero Hedge

  • Roughly $404 million was spent on promoting within the Perdue-Ossoff race, based on Promoting Analytics, making it the costliest Senate race ever.
  • Practically $300 million was spent on promoting within the Loeffler-Warnock race, making it the second most costly Senate race ever – behind solely Perdue-Ossoff.

Are you able to think about how a lot good might have been achieved if 704 million {dollars} had truly been spent serving to individuals as a substitute?

Sadly, the sport of politics has develop into all about cash as of late.  The candidate that raises probably the most cash wins the overwhelming majority of the time, and my recommendation for anybody that’s planning to run for workplace is to lift as a lot cash as potential.

As for the inventory market, the ridiculous bubble that we’re witnessing for the time being will inevitably collapse, and it’s solely potential that these election outcomes may very well be a set off occasion.

However whether or not it occurs this week, this month, this yr or a while later, there isn’t a potential manner that inventory costs can keep at such absurdly inflated ranges.

Even when the inventory market fell 50 p.c, shares would nonetheless be overvalued primarily based on historic norms.

By no means earlier than in U.S. historical past have we been extra completely primed for a inventory market collapse, and it isn’t going to take very a lot to push us over the sting.

For the second, we’re watching Georgia, however there can be many extra pivotal moments as we proceed to roll by the early phases of 2021.


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