Stocks move big on Georgia Senate election results — sector recap

No one man should have all that power… Except Biden — who’s just been given even more power over federal laws and legislations.

The Georgia Senate election on Jan. 5 gave Biden control of both the House and Senate — making it easier to implement major policies. Most notably…

• New economic stimulus could benefit the overall economy by putting more money into the hands of consumers and small businesses.
• Increase corporate tax from 21% to 28% which will lower corporate profits and negatively impact stocks.

Biden’s impact on the stock market — increased taxes and more economic stimulus

The fate of the stock markets rests on one last election outcome — a vote on Jan. 5 for Perdue’s Senate seat in Georgia, which decides the party that controls the upper chamber.

Biden’s impact on the technology sector – rising taxes and increased regulation

What does Biden mean for all those tech stocks investors love hoarding? Bad news first…

• Increase taxes on tech companies, who already pay fewer taxes on their income generated outside the US. Biden’s plans are to double the tax rate on the income these companies make internationally to 21%.
• Changes to Section 230, a law that protects platforms like Facebook from being sued for user-posted content. Biden had previously called for the law to be revoked or removed — bad news for social media companies.

Biden’s impact on the oil & gas and renewables sector

In July, Biden proposed a massive $2t budget to be spent over 4 years on clean energy sources. This will include:

• Achieving net-zero emissions by 2050 and transforming the US transportation sector towards electricity use.
• Installing a network of electric car charging infrastructure and battery storages across the US.

A Republican Senate, which is in favor of fossil fuels, will look to prevent much of this from seeing the light of day.

Nobody Likes a Sore Loser

On Sept 23, 2020, when Trump was asked whether he would commit to a peaceful transition of power, he refused to answer. So what does this mean? Well, if Trump loses, he could possibly challenge the results… This would bring the final decision to the Supreme Court.

• History has shown us that a delay in election results negatively impacts stock markets. This time might not be so different…

How did we get here? With COVID still upon us, the US has turned to voting by mail for the US 2020 presidential elections. At the start of September, Trump argued that voting by mail will lead to voter fraud and skew the results.

The Imperfect Storm

Don’t wake me up when September ends. The market volatility will be far from over — try December. The S&P 500 is down over 8% from their Sept. 2 peak and stock markets are whipsawing up and down. Sorry to break it to you, but this may only be the beginning.