by Bryan Perry

November 24, 2020

Stocks are trading firmly higher as we head into what is seasonally a good time of the year to be long the market. Black Friday specials started last weekend. I went and picked up a pressure washer on sale to clean my deck in what was a warm weekend in Virginia.

For some, power washing is a very fulfilling experience. Seeing the dirt and grime just go away feels a lot like when millions of voters probably took a long hot shower after the polls closed on November 3. The final recounts look to be in, but there are legal cases pending that are looking more like a pretty good movie in the making.

And then there’s Georgia – the future of the Senate is coming down to the Bull Dog state, and what a battle is just starting to take shape. Taking the Senate from the GOP opens the way for a host of socio-economic changes that will come in a parade of bills hitting the House floor when Congress is sworn in.

We all know the agenda by now, but what we don’t know is how much all this will really cost. Joe Biden’s $11 trillion in new spending may be light when all the pork gets added in. Anytime you start promising more retirement and healthcare benefits, the numbers usually soar well past what is proposed.

First, the numbers for those that are not quite sure where all the money is being spent. Biden has proposed $11 trillion in new spending over the decade. His $1.4 trillion health care plan would expand the Affordable Care Act, bring a “public option” to the health exchanges, and expand long-term care assistance. More recently, Biden proposed reducing the Medicare eligibility age to 60, at an estimated cost of $300 billion.

He also has proposed new spending on climate and infrastructure ($2 trillion), Social Security and Supplemental Security Income ($1 trillion according to the Progressive Policy Institute), college, K-12 education, and preschool aid ($1.5 trillion), family leave assistance ($550 billion), “Buy America” investments ($700 billion), housing aid ($640 billion), and combatting opioid addiction ($125 billion). Finally, Biden has endorsed the $3 trillion in stimulus spending passed by the Democratic House. (source: In the words of Howard Dean….Yaaaaaaaay.”

Despite an unprecedented $24 trillion in budget deficits projected over the next decade, Joe Biden is promising the largest spending spree since Lyndon Johnson. And despite the deepest recession in 80 years, Biden is demanding the largest permanent tax increase since World War II.

Can gridlock save taxpayers and the federal budget from these exorbitant costs? It pretty much comes down to how the January 5 runoff Senatorial election tuns out in the peachy state of Georgia. If both Democrats win, Biden will likely succeed on having the majority of his budget wish list sail through Congress.

I imagine we’ll all be listening to the sound of “Georgia On My Mind” a hundred times on the radio leading up to the vote. Hardly something Ray Charles imagined when he sang those wonderful lyrics penned by Hoagy Carmichael back in 1930 and named the 44th greatest song of all time by Rolling Stone Magazine in 2003. It was also named the official state song of Georgia in 1977.

Ray Charles Singing Image

Georgia, oh Georgia
The whole day through
Just an old sweet song
Keeps Georgia on my mind

A win by both Democrats will be a game changer for sure. Investors are keenly aware of a higher corporate income tax being a done deal. For everything else that is on the Biden platform, and the list is long, this is the most important to the stock market.

Biden’s plan to raise the corporate income tax rate from 21% to 28% will likely bring about a period of volatility. How much? Maybe not much. The inertia of money flowing into U.S. stocks of well-run companies is tremendous. And a short-term pull back to adjust earnings to reflect a higher tax rate will likely occur.

However, those same well-run companies in industries enjoying secular growth trends will still experience top and bottom-line growth that will invariably move good stocks higher. This election process has shown that there are willing buyers stepping in to buy each and every market decline. The world is awash in liquidity and its buying equities.

Back to Georgia. There is clearly election fatigue that is only surpassed by COVID-19 fatigue. This runoff election is attracting money that will run well over $100 million in ad campaigns. But voter turnout in runoff elections in Georgia — and across the country — is typically lower than in the preceding general election. It is always a challenge for candidates to convince voters who are tired of politics to go back to the polls so soon after a long, divisive general election season.

In 2008, 2.1 million people voted in Georgia’s Senate runoff election between then-Sen. Saxby Chambliss, the Republican incumbent, and Democrat Jim Martin. That represented a nearly 50 percent drop in the turnout rate from the general election. (source: But this is no ordinary in-state Senate election – it’s an election to determine whether a very progressive agenda is green lighted.

One other factoid that could sway the vote count in either direction. There are no length of residency requirements in Georgia, so if you have just moved Georgia you can register to vote on day one. However, moving to Georgia with the express purposes of voting without any intent to remain a resident is illegal and can result in prosecution (see O.G.C.A. § 21-2-561).

Universal Citation: GA Code § 21-2-561 (2019)

  • Any person who:
    • (1) Registers as an elector knowing that such elector does not possess the qualifications required by law;
    • (2) Registers as an elector under any other name than the elector’s own name; or
    • (3) Knowingly gives false information when registering as an elector
  • shall be guilty of a felony and, upon conviction thereof, shall be sentenced to imprisonment for not less than one nor more than ten years or to pay a fine not to exceed $100,000.00, or both.

How the state would prove these cases is a puzzle in itself and whether the will to go after thousands of new residents to prosecute is unlikely. States are strapped for cash from the pandemic and this would be a high-cost, low-profit endeavor.

So, without the usual charts and graphs to buttress my position on the topic of the week, I just want to express that powerful market fundamentals support higher stock prices even if Congress goes blue. And if people don’t like what comes of it, they’ll vote them out of the House of Representatives in 2022. It’s just that simple.

All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.

Please see important disclosures below.

Also In This Issue

A Look Ahead by Louis Navellier
What to Expect this Holiday Season in Retail Sales

Income Mail by Bryan Perry
One Bulldog of a Senate Runoff is Shaping Up

Growth Mail by Gary Alexander
Twenty Reasons to Be Thankful in 2020

Global Mail by Ivan Martchev
Junk Bonds See Light at the End of the COVID Tunnel

Sector Spotlight by Jason Bodner
What is Your Favorite Stock, and Why?

View Full Archive
Read Past Issues Here

About The Author

Bryan Perry

Bryan Perry

Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.

Bryan’s financial services career spanning the past three decades includes over 20 years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry

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