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Biden plays his power against Covid in the Georgia Senate elections

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The political risks have given a small truce at the beginning of the year to monopolize all the attention of the markets starting this Tuesday, when the elections to the Senate of the State of Georgia in the USA are held. The two seats in the US upper house will largely determine who will gain control of the US Congress, which will pave the way to the presidency of Joe Biden or put the wheels in the wheels of measures so vital for investors as the fiscal stimulus package that the country hopes to face the galloping economic crisis of the Covid. With a narrow margin in the polls for Democrats, analysts and observers predict a cumbersome process until knowing the name of the new senators that will fill operators with uncertainty.

The Democrats must take control of both seats if they want to enjoy the smallest possible majority in the upper house (50 of the 100 seats available but with the decisive vote of the vice president, compared to the 46 they now have -the other two are independent-). This victory would also give them control of the three legislative bodies of the country. Instead, not taking one or both seats, "would challenge the hopes of Biden's party to be able to continue his fiscal agenda, which would likely cause the curve to flatten out as expectations of a public sector boost to demand taper off, ”Rabobank analysts say.

On the other hand, with 50 seats and the vote of the vice president-elect, Kamala Harris, who is the president of the upper house, there are full guarantees that “unemployment benefits will rise rapidly from $ 600 to $ 2,000, and that the infrastructure aid packages will be approved on the fast track in the first quarter, ”says Stephen Innes, analyst at Oanda. For the same reason, expectations of support from central banks (especially through a possible extension of asset purchases), decrease with a double Democratic victory. On the contrary, "it would increase the risk of greater activity by the Federal Reserve (Fed)", if the Republicans are kept in control, they add from Rabobank.

The Upper House in the United States has the power to pass new laws, which to get ahead must have majorities in both chambers. He also has the last word on appointments of the members of the presidential cabinet, Supreme Court justices and federal courts and can serve as a jury if the president is subjected to impeachment or impeachment, as happened with Trump last February at the behest of the Democrats.

The polls, for now, portend a narrow margin for Democratic candidates, just three points ahead of Democratic hopefuls Jon Ossoff and Raphael Warnock over Republicans David Perdue and Kelly Loeffler. This meager lead is cause for concern for experts, as a narrow win in either seat may well could be subject to legal challenge. In any case, almost no one bets that the result is clear at dawn on Wednesday and, instead, alert messages are sent from the main analysis houses that the counting and retelling of the ballots could last days.

All in all, "a Republican win should be positive for the market initiallyWith stocks rising and the US dollar falling, financial markets will celebrate, albeit selfishly, income tax relief, ”says Jeffrey Halley, an analyst at Oanda. On the contrary, a Democratic victory should have precisely the opposite effect. "Any sale of shares after a Democratic victory should not last more than a few days, since the unlimited money at 0% from the Federal Reserve counteracts everything," adds the expert.

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