Experts have been warning that the stock market could be set for an extraordinary crash in case of a favorable result for Democrats, since it would probably scare investors away and prompt a major sell-off, which could then lead to another dramatic stock market crash , and put an end to the era of incredibly overvalued assets, finally popping the stock bubble. That’s what we’re going to examine in this video.
The Georgia Senate runoff will be decisive for what happens next in both Main Street and Wall Street. Republican David Perdue is taking on Democratic challenger Jon Ossoff, while Republican Kelly Loeffler faced Democratic candidate Raphael Warnock. Now, Democrats are counting on Ossoff to win, so that the Senate would have a 50-50 split, meaning that Vice President-elect Kamala Harris would have the crucial deciding vote that could push through Biden’s priorities as soon as he takes office.
The results are expected to have enormous impacts on the financial markets. If Democrats win both of the seats, they will effectively have control over the U.S. Senate, the House of Representatives, and the White House. That is to say, for the first time since the Obama’s administration, the Democrats would have an opportunity to advance their agenda without compromising with the Republicans.
Yesterday, the day voters in Georgia headed to the polls, former Trump senior economic adviser Steve Moore argued in an interview that a Democratic sweep could drive the Dow Jones Industrial Average to decline by 1,000 points. According to Oppenheimer chief investment strategist John Stoltzfus, a blue win could trigger a stock market sell-off of up to 10%. He alerted that it could cause the U.S. broad equity market to experience a downdraft of anywhere between 6% and 10%.
For the past four years, big corporations and large conglomerates were thrilled by Trump’s tax cuts, but Biden has repeatedly stated throughout his campaign that he had plans to roll back Trump’s Tax Cuts. A Democratic victory would also mean the incoming president would have more flexibility to implement other plans of his agenda, including the expansion of the payroll tax for Social Security, new tax credits, and fewer deductions, as well as another round of massive government spending. Needless to say, all of these changes won’t be appreciated by investors.
At the moment, what we do know is that Democrat Raphael Warnock has already guaranteed his Senate seat after defeating incumbent Republican Senator Kelly Loeffler. With so much on the line, the level of spending on both runoffs has been unprecedented. Advertising Analytics data pointed out that nearly $404 million was spent on advertising in the Perdue-Ossoff race, making it the most expensive Senate race ever recorded.
As for the stock market, at this point, the main concern surrounding a blue wave is that very soon more fiscal spending could be launched, therefore, Fed rates would surge faster than expected, which would resonate in the amount of easing and in the strength of the dollar. The election result could be the trigger event that would pop the enormously-inflated market bubble, but at this stage of the crisis, stock prices have been at such absurdly inflated levels for so long, that it wouldn’t take much for us to be witnessing a catastrophic collapse. We have never experienced before a market that is so perfectly primed for a meltdown. It’s just impossible to sustain the current valuations for much longer, and several market watchers have been signaling a sharp stock market crash in the coming weeks or months.
As the race remains close, and there are no evident odds of who is ultimately going to be the winner, our financial and economic future remains uncertain. For now, we keep on watching the next developments of the Georgia elections, as they can determine the destiny of our country. But we can’t forget that many other pivotal events are about to be unfolded, and they are going to completely change the course of the United States history.