As we write, the results of Georgia’s elections are down to the wire, but it looks likely that the Democratic Party will capture both of the state’s U.S. Senate seats. That would give us a 50/50 split in the Senate, with Vice President Kamala Harris as the tiebreaker — in other words, the Democrats will narrowly control both the White House and Congress.
Narrowly is the operative term. It is a narrower margin than President Obama had when he took office in 2009, and if the down-ballot results from November are an indication, the “blue wave” is far from robust, and might well be reversed after two years of the Biden administration’s governance. (Governing is a very different thing from winning an election, and the world Mr Biden is facing is fraught with many potential flashpoints.)
In the meantime, the margin is narrow enough that it would seriously challenge Democratic efforts to get radical legislation through. For example, West Virginia’s Democratic senator, Joe Manchin, has already said he won’t be the vote that allows the Supreme Court roster to expand. It is likely that other moderates might baulk at this and other measures promoted by the party’s left wing.
That said, more robust fiscal stimulus certainly seems to be in the cards, as well as ramped-up support for green themes, even if the full panoply of the Green New Deal is off the table. As we have observed recently, nothing goes straight up forever, and this market will eventually face a significant correction. However, that could be months away, or years away for the next bear, whenever it arrives. We don’t know, and neither does anyone else. But we do know that in the meantime, we can add to our investments in green themes — especially batteries, the decarbonization of energy, the electrification of transport, and novel materials — and certain inflation themes, including gold, bitcoin, and our favored foreign markets (India, South Korea, Japan, and emerging markets) — to our stable of “usual suspects” for the year ahead. Those “usual suspects” include the tech growth stocks which performed well in 2020, and we believe many of which can continue to perform in 2021: AI, the internet of things, cybersecurity, business digitization, networking and 5G, and cutting-edge biotechnology and genomics.
Thanks for listening; we welcome your calls and questions.
