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Experts warn stock market could drop dramatically if Democrats take control of Senate – Dateway

Georgia’s results are going to have huge implications for financial markets.

If the Democrats win both seats up for grabs, it will give them control of the Senate, the House of Representatives and the White House.

For the first time in the first two years of Barack Obama’s presidency, Democrats would have the opportunity to move their agenda forward without compromising with Republicans, which is extremely frightening for investors.

Democrats have made it very clear that they intend to raise taxes on big business and the ultra-rich, and that would not be good for the stock market bubble at all.

As of this writing, the two races are still too close to be called, and we likely won’t know the final results for a while.

But experts are already warning that we could see a huge drop in the stock market if both Democratic candidates win. For example, former Trump adviser Steve Moore warns that the Dow Jones could drop 1,000 points …

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Former Trump chief economic adviser Steve Moore argued on Tuesday, the day Georgia voters head to the polls for the second round of the Senate, that a Democratic sweep could lead to a 1,000-point drop in the Dow Jones Industrial Average.

Moore says he came to this conclusion by looking at data from the past 60 years …

“I have looked at the evidence for what has happened over the past 60 years with regard to the stock market in terms of three different scenarios: one is that Republicans control everything in Washington, the second scenario is that Democrats control everything in Washington, the third being divided control of power and in general, the best case scenario for economic growth has been when you have divided power, ”Moore said.

“The worst case scenario in the last 50 or 60 years is where Democrats control all levers of power, so I think the historical record is pretty clear on this, that a Democratic sweep tonight would be bad for the markets.” », He continued.

John Stoltzfus of Oppenheimer is even more pessimistic. He thinks we could see the stock market drop six to ten percent in total if both Democrats win …

This is according to Oppenheimer’s chief investment strategist John Stoltzfus, who wrote in a note to clients on Monday that investors may be scared by the prospect of increased corporate taxes and government spending under the Biden administration with a Democratic majority in the House and Senate.

“A Democratic sweep of the two polls in Georgia could cause the US stock market to drop between 6% and 10%,” Stolzfus wrote.

Big business was thrilled with President Trump’s tax cuts, but Joe Biden has said he intends to get rid of them.

But to do that, Joe Biden needs a Democratic-controlled Senate, because a Republican-controlled Senate would never go for what he proposes …

Biden has repeatedly said he will overturn President Trump’s Tax Cuts and Jobs Act of 2017 and raise the corporate tax rate from 21% to 28%, restore the top tax rate individuals to 39.6% versus 37%, would tax capital gains as ordinary income deductions for high incomes, extend the earned income tax credit for workers over 65 and impose the tax on Social Security wages on wages over $ 400,000. Without a Democrat-controlled Senate, these tax hikes are probably irrelevant.

At the moment, it’s unclear who will win, but investors will be watching the results very, very closely.

According to Georgian officials, we should have a pretty good idea of ​​who won by midday on Wednesday…

“It depends on the proximity, but it will probably be tomorrow morning. It really depends on the number of postal votes, ”Georgia Secretary of State Brad Raffensperger told Fox News Tuesday morning.

David Worley, a member of the State Election Board, told the New York Times that if the process goes smoothly, officials will have “a pretty good idea” of who won at 1 a.m. Wednesday.

With so much at stake, spending on these races has reached levels never seen before. The following is from Zero Hedge…

  • According to Advertising Analytics, around $ 404 million was spent advertising the Perdue-Ossoff race, making it the most expensive Senate race of all time.
  • Almost $ 300 million was spent advertising the Loeffler-Warnock race, making it the second most expensive Senate race ever – behind only Perdue-Ossoff.

Can you imagine how much good could have been done if $ 704 million had been spent on helping people instead?

Unfortunately, the game of politics has become all about the money these days. The candidate who raises the most money wins the vast majority of the time, and my advice to anyone considering running for office is to raise as much money as possible.

As for the stock market, the ridiculous bubble we are witnessing now will inevitably collapse, and it is entirely possible that these election results will be a trigger event.

But whether it happens this week, this month, this year, or some time later, there is no way stock prices can stay at such ridiculously inflated levels.

Even if the stock market fell 50%, stocks would still be overvalued based on historical standards.

Never before in the history of the United States have we been so perfectly prepared for a stock market crash, and it won’t take much to push us through.

For now, we’re looking at Georgia, but there will be plenty of other pivotal moments as we continue to take the early stages of 2021.



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