U.S. Political Risk
Macro Perspectives: Tue 5 Jan 2021
Are the ingredients in place for another roaring twenties?Â
The 1920s were defined by innovation (the automobile and widespread access to electricity), the 2020s will be defined by innovation (omnipresent connectivity via 5G and practical solutions to some of the climate change factors). Add to that, we have trillions of dollars of new money floating around to fund this next wave of the information revolution.
This new year, we have plenty of risks to consider.
Today we get the state senate runoff in Georgia - a democrat sweep would open up a scenario of a Biden presidency and aligned Congress, which would likely lead to a multi-trillion dollar clean energy spend. NB: both the oddsmakers and the polls have the edge going toward the democrat candidates.
That would add even more fuel to the asset price fire, putting "inflation risk" (and more likely hot inflation) in the crosshairs. We saw some of that view materialise in markets yesterday with gold and broad commodities higher, the dollar lower.
On January 6th, Congress will formally count the electoral college votes. The expectation is that it will be objected by members of the Senate and the House. It should be a wild day - stocks have just started pricing-in some of that risk.
