Goldilocks in the Senate
It is thanks to Trump that the Democrats have won a majority in the Senate. After the presidential elections in early November, Trump did everything he could to be declared the winner. More than 50 judges considered the matter and all came to the same conclusion: Joe Biden is the next President of the United States. He then put pressure on the people involved in organising the elections, including many Republicans. Even Vice President Pence was forced by Trump to block Biden’s victory. For a moment, Trump even speculated on military intervention, with the result that generals in the Pentagon immediately indicated that they supported the Constitution and not the individual. Apparently, enough Republicans in Georgia believed the president and stopped voting. Why run the coronary risk if the election was rigged anyway? While the Republican candidates were still leading in Georgia at the end of last year, both Democrats eventually won. This means that the Democrats have a narrow majority in the Senate.
The Democrats and the Republicans each have 50 seats. Vice-President Harris will have the deciding vote. Because of this narrow majority, there is less fear among investors of unpleasant measures such as higher taxes and more regulation. There is always a Democratic senator who does not want to support such an unpopular measure. At the same time, it is possible to get a majority for a large fiscal support package. Higher government investments, and also a more sustainable economy, are now within reach. Democrats are spending heavily, which is why the 10-year interest rate in the United States could exceed 1% for the first time since spring 2020. That is good news for the financial sector. With all those planned investments and tax injections, a Democratic majority is also good for the US economy. You can also count on better coordination in dealing with the corona crisis. So the final election result is actually exactly right, just like in the fairy tale of Goldilocks. Enough for a substantial boost to the economy, but not higher taxes and other less popular measures.
With the blue wave comes a green wave. The left-wing of the Democrats would like to see a comprehensive Green New Deal. Biden has indicated that he will spend 2 trillion dollars on combating the climate crisis. Shares of sustainable companies have performed excellently recently. However, this means that popular sustainable companies are not cheap. The green stamp makes them more expensive than their grey counterparts. The best combination for the coming months are companies that have lagged behind recently due to their sensitivity to the economic cycle but are now actively working on their sustainable image and reputation.