How the U.S. Election and Covid-19 Vaccine will Create a Sling Shot
I was planning to write how we would Not be getting the “sling shot” affect if Donald Trump loses the election, however, I believe that we will still continue to make our 20% returns. Why? Today two major drug companies announced that they have very positive results on their vaccine with no side effects. The stock market shot up 5% in futures trading and Gold is plunging. It means that the lock downs are coming to an end. Hopefully soon, we can all return to normal life with a stronger economy.
So let’s summarize why the stock market did not crash but went up after the initial results of the election.
As you probably already know, there are three parts to the USA election: (1) The President, (2) the House and (3) the Senate. First, the President creates a new bill such as lowering taxes and then passes it on the House. Then the house creates the law and forwards it to the Senate to pass the bill. Therefore, the Senate has the last word and all the power, as we all witnessed during the last impeachment proceeding.
For the second election in a row, the democrats have relied on skewed polls to try to convince everyone that a big “blue wave” was going to happen and that they were going to take all three positions in a huge landslide; this is what caused the markets to be volatile before the election. The markets don’t do well with uncertainty but when that uncertainty wilts away, the markets rally.
The big “blue wave” never happened and the Republican Senate never lost a seat. Therefore, they have all the power to create gridlocks so that the Joe Biden administration, if elected, cannot increase taxes and cannot get rid of oil. In fact oil is up 10% today.
The House also started to turn red as the Democrats lost 8 seats to the Republicans. In two years, when the mid-term elections come up, it is expected that the Republicans will flip the House red. So even if Donald Trump does not win at the end, the Republicans overall did win! That is why the markets were going up last week.
Also, some of the lawsuits that started today seem very legitimate. You may need to remember that the same thing happened in Florida in 2000 when mail-in-votes were counted after the voting stations had closed, allowing Al Gore to take Florida and the presidency. Then George Bush took them to court and 36 days later George Bush was the actual President. So the old saying “it’s not over until the fat lady sings” holds true right now.
As for the Market rally today it was due to the vaccine announcement that supposedly has a 90% chance of preventing Covid-19 with no side effects – this was a much better result than was expected in their trials. Also, this is what Donald Trump said was going to happen before the election as he was the one that cut the red tape to significantly speed up the process.
Therefore, the Republicans can thank Donald Trump for his massive rallies and now everyone can thank him for fast tracking the vaccine. The “sling shot” will most likely occur because everyone will be able to travel again (the airline stocks are going back up) while the economy will come roaring back.
If Joe Biden holds on to the presidency he will probably take the credit for the vaccine, but it was set up by Donald Trump. If Donald Trump loses it would have been because of his controversial personality and not because of what he accomplished.
Either way, the market will very likely go up!