In Brief: What The Blue Sweep Means For US Stocks
Following the Georgia runoffs, anyone whose forecast for the US economy and, relatedly, for asset prices in 2021, was based on D.C. gridlock, had to reevaluate their position.
While it's true that a razor-thin Senate majority means "transformational" change (so to speak) isn't in the cards, I'd gently note that, depending on your definition of "transformational," no such policies were likely in the first place.
Joe Biden isn't a "transformational" president. He's a Beltway wall fixture. And, c
What does it mean? Armageddon! Mass hysteria! Cats and dogs living together! I’m paraphrasing from Repub political ads.
Also a Fed and Treasury that are coordinated, dovish and activist.
The Republican tax cut of 2018 was carried out as a reconciliation measure and passed in the Senate on a 51-48 vote. Major provisions expire in 2025. No Democrats in the Senate voted in favor of the act, so it would stand to reason that all Senate Democrats would be in favor of rolling the act back, or at least modifying tax policy. I don’t see why this couldn’t be done with a simple majority under reconciliation, unless I’m missing something.
High operating leverage is fine to the upside but at 10x (like the levels found in hospitality, travel and leisure, health care, utilities and infrastructure, a 10% decline in throughput erases all profits! (it’s the math.)