QUOTES-Investors assess outlook as Democrats look poised to capture US Senate
What we’re seeing this morning is somewhat of a snapshot of what may be in store 3 to 6 months down the road.” GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY CAPITAL MANAGEMENT, PHILADELPHIA "The Georgia senatorial elections tipped in favor of the two Democratic candidates, which gives Democrats, with Vice President Harris' vote, a narrow majority in the Senate and that increases the odds of greater fiscal stimulus and a proposed infrastructure spending package." "With those programs two things happen.Reuters | New York | Updated: 06-01-2021 19:25 IST | Created: 06-01-2021 19:25 IST
Democrats won one U.S. Senate race in Georgia and surged ahead in another on Wednesday, moving closer to a stunning sweep that would give them control of Congress and the power to advance President-elect Joe Biden's policy goals. A democratic win in both races would create a 50/50 Senate, giving Vice President-Elect Kamala Harris the tie breaking vote. Bond yields rose and tech stocks and the dollar fell overnight on the prospect of more stimulus and tougher regulation if Democrats sweep the run-off election. S&P 500 emini futures were down about 0.3%, and Nasdaq futures were down 1.5%.
Raphael Warnock, a Baptist minister from the historic church of Martin Luther King Jr., beat Republican incumbent Kelly Loeffler to become the first Black senator in the history of the state. Democrat Jon Ossoff, a documentary filmmaker, held a narrow lead over incumbent David Perdue in the other race, with a final outcome not expected until later on Wednesday at the earliest. COMMENTS:
DAVID BAHNSEN, CHIEF INVESTMENT OFFICER, THE BAHNSEN GROUP, NEWPORT BEACH, CALIFORNIA (emailed) "I don't expect major stock market implications surrounding a 50-50 tie in the Senate. While the Vice President's vote means that a straight party line vote would belong to the Democrats, some of the market unfriendly policies that investors have been worried about in the event of a Blue Wave are still not going to come so easily. There are now three moderate Democrat Senators (most notably Joe Manchin of West Virginia) and House Democrats maintain a small lead."
"The Democrats' small lead in both the Senate and the House will make it tougher than many believe to pass tax hikes, impose regulation and enact some of the other market unfriendly policies that investors have been worried about under a Blue Wave scenario." "Investors should not be making any portfolio reallocations based off of the Georgia Senate results. If an investor’s asset allocation was to be substantially altered by a 50-50 Senate vs. a 51-49 Senate split, that asset allocation was never constructed well from the outset." PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“It’s even if the Republicans should hold on to the Senate, it’s by a very slim margin. That means the Democrats can say it’s a victory. That means they have a better chance of passing legislation since they can always capture an independent or a more progressive Republican. "In the short term, it could be a catalyst to correct. The market is overbought and is looking for a catalyst to correct. And today’s election results is the perfect catalyst for the market to pull back. That doesn’t mean it’s going to happen immediately.
"If you look what’s happening this morning financials, energy, sectors related to infrastructure are strong, and tech stocks are getting badly beaten. What is that suggesting? Taxes will probably go up and certain sectors of the market could get hit. What we’re seeing this morning is somewhat of a snapshot of what may be in store 3 to 6 months down the road.” GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY CAPITAL MANAGEMENT, PHILADELPHIA
"The Georgia senatorial elections tipped in favor of the two Democratic candidates, which gives Democrats, with Vice President Harris' vote, a narrow majority in the Senate and that increases the odds of greater fiscal stimulus and a proposed infrastructure spending package." "With those programs two things happen. One, there's a chance that greater fiscal spending generates inflation. Two, there's a high probability of greater long-duration Treasury supply. The usual supply-demand dynamics in the market mean that greater supply will push yields a little bit higher." (Compiled by Alden Bentley and the Global Finance and Markets Breaking News team.)
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