First Seat Looks Like a Democrat Win
The results of the Georgia state senate run-offs in the US are almost all in now. So far, the results indicate that Democrat candidate Raphael Warnock looks almost certain to have won the first of the two seats being contested. Warnock's win will unseat the current Republican senator Kelly Loefler. With this win, the Democrats move one step closer to taking control of the Senate, which can still be achieved should they also win the second seat. Warnock will now become the first black senator in the state of Georgia.
Second Seat Neck And Neck
98% of the ballots have now been counted among Georgia's 159 counties. in the second seat run-off, Democrat candidate Jon Ossoff is currently tied with Republican candidate David perdue. If Ossoff can take the second seat, this means the senate will be split down the middle between the two parties, allowing the incoming Democrat VP Kamala Harris the deciding vote. Such a win would represent the first time that Democrats had control of the White House, the Senate and the House of Representatives for the first time since Obama came to office in 2009.
Importantly, for the markets, such a win would make it far easier for Joe biden to pass through policy changes. The main focus is on expectations of much higher fiscal stimulus in the event of a "blue sweep". Democrats were pushing for a much larger stimulus package towards the end of last year, around the $2.4 trillion mark, which had to be strongly watered down to appease Republicans. If Democrats take the senate, the market will be highly expectant of a larger package going through, eldning greater support to equities markets and keeping the dollar under heavy selling pressure over Q1.
Trump Cries Foul Play
Trump has already been highly critical of the run-offs, adding to his accusation of electoral fraud. Taking to Twitter, Trump wrote : “Looks like they are setting up a big ‘voter dump’ against the Republican candidates. Waiting to see how many votes they need?”. Trump himself has been accused of attempting to commit electoral fraud following the publicising of a phone call between him and the Georgia secretary of state where he was telling the official to "find him" more than 11,000 votes.
The S&P continues to hover around the 3714.50 level. While still supported by the longer term bull trend, and the rising trend line support, momentum studies having been flagging bearish divergence on the recent move higher. However, while price holds above the 3586 level, the near term bias remains bullish.
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