Predictions if democrats win GA runoff???

[tyler3535]

What would y’all predict in this scenario? I don’t think the market is pricing this outcome in and could see a 5-10% pullback if the dems take the senate? Thoughts please and why? Happy New Year!!!!!

[stilljammi]

They say the market likes divided government, but I think when the margins are this thin, it's not as big a difference long-term. The most important senators besides the usual are going to be Manchin, Romney and Sasse. Not saying who controls the Senate doesn't matter, but I think you can find pluses and minuses with either outcome: gridlock or massive stimulus. Short term, I think the market would like the stimulus. Happy new year!

[Ericdelee]

Why would it pull back 5-10% if the Dema pull out the wins in Georgia when a few days before the election the S Fund (and all funds really) took off when the polls were all pointing to a Win by Biden? That is what pushed the market forward and then it was the vaccine talks.

Not sure how you’d have an immediate pullback.

[bloobs]

Why would it pull back 5-10% if the Dema pull out the wins in Georgia when a few days before the election the S Fund (and all funds really) took off when the polls were all pointing to a Win by Biden? That is what pushed the market forward and then it was the vaccine talks.

Not sure how you’d have an immediate pullback.

Most people assume that certain "big events" such as elections, state of the economy, pandemics, vaccines, wars, etc. are the reason for significant market up or down movements.
However my observation is that these events (whether it be the risk or actual occurrence) are just used as the excuse by market movers to intentionally trigger the next big breakout or crash.

These Wall Street powers-that-be simply ascribe a convenient story to cover up their latest money making play at the time and duration of their choosing.

[misfit]

Why would it pull back 5-10% if the Dema pull out the wins in Georgia when a few days before the election the S Fund (and all funds really) took off when the polls were all pointing to a Win by Biden? That is what pushed the market forward and then it was the vaccine talks.

Not sure how you’d have an immediate pullback.

Most people assume that certain "big events" such as elections, state of the economy, pandemics, vaccines, wars, etc. are the reason for significant market up or down movements.
However my observation is that these events (whether it be the risk or actual occurrence) are just used as the excuse by market movers to intentionally trigger the next big breakout or crash.

These Wall Street powers-that-be simply ascribe a convenient story to cover up their latest money making play at the time and duration of their choosing.

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Agreed. The few rich make most more poor. Happy New Year. I wish you the best years to come.

[Bubba]

What would y’all predict in this scenario? I don’t think the market is pricing this outcome in and could see a 5-10% pullback if the dems take the senate? Thoughts please and why? Happy New Year!!!!!

I think there would be further rotation in funds. Think value, REITs and small/mid. If they don't win, maybe growth, momentum and large. Also, think the G fund instead of F.

Happy new year!

[VAmanBulls]

Joe Biden said he wants to raise the corporate tax rate back to pre-Trump numbers. If the democrats win in GA, it's more likely Biden will be able to accomplish his stated intention. So the market must adjust to this tax increase somehow in theory. When your estimating valuation, it will impact the price per share estimate and the market multiple used. This is not a political equation, it's a simple mathematical equation.
For example (2022) $197per share X 21 multiple = 4,137 S&P Target
Now a case for a corporate tax increase scenario:
(2022) $158 per share X 20 multiple = 3,160 S&P Target
Just examples from a valuation estimation perspective. Obviously a lot can happen between now and when the actual impact of a tax increase is felt. But for the reasons above, the market may react or adjust with the election as it's forward looking.

[Bubba]

Joe Biden said he wants to raise the corporate tax rate back to pre-Trump numbers. If the democrats win in GA, it's more likely Biden will be able to accomplish his stated intention. So the market must adjust to this tax increase somehow in theory. When your estimating valuation, it will impact the price per share estimate and the market multiple used. This is not a political equation, it's a simple mathematical equation.
For example (2022) $197per share X 21 multiple = 4,137 S&P Target
Now a case for a corporate tax increase scenario:
(2022) $158 per share X 20 multiple = 3,160 S&P Target
Just examples from a valuation estimation perspective. Obviously a lot can happen between now and when the actual impact of a tax increase is felt. But for the reasons above, the market may react or adjust with the election as it's forward looking.

Note that he also wants to spend more, so tax increases don't necessarily lower the S&P. That is how the 90s went well.

[Regularguy]

Why would it pull back 5-10% if the Dema pull out the wins in Georgia when a few days before the election the S Fund (and all funds really) took off when the polls were all pointing to a Win by Biden? That is what pushed the market forward and then it was the vaccine talks.

Not sure how you’d have an immediate pullback.

Most people assume that certain "big events" such as elections, state of the economy, pandemics, vaccines, wars, etc. are the reason for significant market up or down movements.
However my observation is that these events (whether it be the risk or actual occurrence) are just used as the excuse by market movers to intentionally trigger the next big breakout or crash.

These Wall Street powers-that-be simply ascribe a convenient story to cover up their latest money making play at the time and duration of their choosing.

I am really starting to believe this.

[mjedlin66]

I appreciate you all keeping the conversation on topic and reasonable. Market opinions, including how politics can impact the market, are welcome here.

If "both" georgia seats go to the democrats, I anticipate that would be far more significant than the Joe Biden win, because that would mean that both chambers of congress and the presidency are all aligned by one party. That means policy change.

Personally, I would bet against both senate seats being won by the Democrats. My guess is that it's more likely that both go Republican.

If one or both seats go Republican, that means a deadlocked senate. Which means "less" policy change than the alternative.

[Aitrus]

I appreciate you all keeping the conversation on topic and reasonable. Market opinions, including how politics can impact the market, are welcome here.

Agreed. This topic has been informative as well as nonpolitical. It's a refreshing change from conversations we've seen in the past.

In terms of the likely outcome, I agree with MJ's breakdown of the possible results.