Elections 2020: The red-hot 'blue wave' exchange on Wall Street unravels as the presidential result hangs in the balance

Elections 2020: The red-hot 'blue wave' exchange on Wall Street unravels as the presidential result hangs in the balance

While the result of the presidential election remains in the balance, one thing is becoming abundantly evident in the early hours following election day. Wall Street's red-hot "blue wave" exchange is at threat of unravelling. Since about Wednesday morning, the Democrats were reported to have a net gain of one seat in the Senate. Early Senate race forecasts from Iowa, South Carolina, Texas, and Montana indicate that Republicans will maintain control. This means that the Senate will remain Republican. The Democrats are likely to maintain control of the House. Former Vice President Joe Biden is actually in the lead in the big Electoral College race, but the counting of votes continues in crucial frontline states. The Democrats called for a net gain of three seats in the Senate and Biden to win the White House and take back majority control. Or, in other words, to bring a "blue wave" into Washington D.C. “The partial results so far suggest lower odds that Democrats win both the White House and Senate than prediction markets and polls-based statistical models implied at the start of Election Day,” noted Goldman Sachs Chief Economist Jan Hatzius early Wednesday morning. Shareholders have put themselves in recent months behind the concept of a blue wave that would lead to a comprehensive recovery plan within the first 100 days of Biden as president. Goldman, for his part, saw a new $2.5 trillion stimulus package happen shortly after the blue wave finally moved through Capitol Hill. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all flirted to historic highs in mid-October. Presently Wall Street is beginning to unwind in fears that there will be no new stimulus or a much smaller package at any point in early 2021. Dow Jones Industrial Average Futures — which has flirted with gains and losses since the election night — tumbled 119 points today at 5:35 a.m. ET. Ten-year treasury yields plummeted as shareholders nibbled on the wake of confusion over safe-haven government debt. “Under a narrow Republican Senate majority, we would expect no major tax increases but also a fiscal stimulus package of less than $1 trillion,” Hatzius said. That runs counter to what was valued by the market on election night. One market that is paying for early negative action is the Nasdaq. Nasdaq's futures rose by about 2% at 5:35 a.m. ET, man. “Biden with a Republican Senate is really good for tech as well,” said EvercoreISI strategist Dennis DeBusschere. Shareholders should, though, ought to think carefully about this. Biden advocated for the abolition of Section 230, which will wreak havoc on the corporate models of tech companies such as Facebook , Google and Twitter. Senate Republicans have also been protesting about the influence of Big Tech. Source: finance.yahoo.com