The Winners We Know
Lawyers are already getting involved... The 'blue wave' trades unwind... The winners we know... More states legalize sports betting... A green sweep... The 'gig economy' lives for now... A massive COVID-19 breakthrough...
We don't know who won just yet...
But we're getting closer.
As we wrote on Monday, early mail-in voting in the 2020 presidential election gave Democratic challenger Joe Biden an early lead... Yesterday and last night, in-person voting went Republican incumbent Donald Trump's way... And as we write today, millions of mail-in votes are still being counted.
As they come in, these final votes look to be largely favoring Biden. But a result is not clear yet, and it might not be for days or weeks ahead...
Some states thought it would be a bright idea to start counting mail-in votes on or just before the night of the election... And some of those states and others are accepting postmarked ballots for up to another 10 days.
So in the meantime, Americans play the waiting game until all the votes are counted... And lawyers sit at their desks, watching with everyone else to see how they can contest results. The challenges have already begun in at least two states.
This isn't exactly shocking, of course...
As we said a week ago, "If things don't go smoothly on Tuesday night or in the days thereafter, should we be surprised? Probably not." And we continued in more detail in Monday's Digest...
The question about this year's election isn't just "who?" but also "when?"
Only eight states expect to have at least 98% of unofficial results reported by noon the day after the election... and 22 states and Washington, D.C., are allowing postmarked ballots to arrive after Election Day.
The "battleground" states of North Carolina and Ohio, for instance, will accept postmarked ballots through November 12 and November 13, respectively. Depending on how the Electoral College map looks in the days ahead, it's possible things won't be "official" for weeks...
In other words, if you fall asleep early tomorrow night, you might not miss anything but the various talking heads bloviating on TV.
But we were wrong in one way... We did learn a few valuable things last night...
Some decisions have already been made, like a continued split legislative branch of government for the next two years. Republicans still appear to control the Senate... and Democrats continue to hold the majority in the House of Representatives.
As we said yesterday, these results did matter in the short term for the economy and markets... They give a little more clarity on if or what type of massive stimulus package or other legislation we may see next from Congress.
The Senate and House results basically eliminate the total free-for-all that would have been possible if Democrats took a clean sweep of the White House and Congress.
Even if Biden wins, any bills will need approval of Republicans in the Senate... And if Trump wins a second term, he'll still have to deal with the Democratic-controlled House.
In other words... same story, different year.
This result essentially told Wall Street that it's time to unwind the 'blue wave' trades...
That's how Stansberry NewsWire editor C. Scott Garliss put it earlier today...
He explained that Wall Street money managers had been preparing for a potential "blue wave" in Congress and the White House.
They presumed this wave would have included things like a "breakup of Big Tech" push... a supersized stimulus package (as big as $5 trillion) by early next year... higher corporate taxes... and tailwinds for green-energy companies.
Scott also noted the big-ticket consideration of health care reform.
On balance, all of these factors potentially weighed on stocks in the months ahead, according to Scott, but "now those trades are being unwound." As he wrote today in the NewsWire...
Technology is rallying because the potential for increased taxes and regulation has lessened. Bonds are gaining because the economic growth potential may have eased. And alternative energy and infrastructure names are giving back gains on diminished spending outlook.
Today, the benchmark S&P 500 Index finished up 2.2% and the tech-heavy Nasdaq Composite Index was up 3.8%, erasing a good chunk of the losses they saw last week during their pre-election sell-offs.
Elsewhere, though, some trends keep running down their expected tracks...
One 'known' trend that continued during the election? More and more Americans are loving cannabis...
The list of state motions "down the ballot" that voters passed last night are being overshadowed by all the focus on the presidential results. But they're pretty remarkable on their own...
We're talking about the handful of states that legalized cannabis last night. Nick Koziol of our NewsWire team reported on the "green sweep" of results...
Five states legalized cannabis in some form or another last night through ballot measures. Four states – Arizona, Montana, New Jersey, and South Dakota – legalized cannabis for adult recreational use. And one state, Mississippi, legalized cannabis for medicinal use.
After these changes, 15 states and Washington D.C. will have legalized cannabis for adult recreational use. And 34 will have legalized it for medicinal purposes.
It's not surprising... States are looking for some way to pay for all of their deficits, after all. But it's notable that more states are going this route just years after it was unthinkable for many...
In any case, this news provides tailwinds to the cannabis industry and its related stocks... as Cannabis Capitalist editor Thomas Carroll has been banging the table about recently.
Thomas believes federal legalization of cannabis will happen sooner than most people imagine... and that a handful of companies are better-positioned than their competition. If you're interested in learning more about what to expect in Cannabis Capitalist, click here.
It's the same story with sports betting...
Nick also reported on the growing number of states that have decided to legalize sports betting...
Last night, voters in three states – Maryland, South Dakota, and Louisiana – likely passed ballot measures that will legalize betting on sporting events in those states. Prior to the election, 19 states had legalized sports betting, and another four had passed laws to legalize it.
After last night's ballot measures, more than half of U.S. states will have legalized sports betting in some form.
That's right... Sports betting will now be legal in New Orleans, potentially near Mount Rushmore, and here in Maryland, where the proposal included the language that sports-betting revenue was to be used primarily to fund public education.
As we've said, state governments are looking for tax revenue wherever they can get it. And if it means adding legal sportsbooks (or letting people smoke cannabis for fun or medicinal reasons), so be it.
As our colleague Alan Gula noted in the December 2019 issue of our flagship Stansberry's Investment Advisory newsletter, New Jersey – to look at just one state – is taxing land-based sports-betting revenue at 8.5% and online betting at 13%. Those are not insignificant numbers.
Neither is this... As a result of increased legalization, analysts at independent research firm MoffettNathanson have estimated that the online and sports-betting market will grow to $18 billion in revenue by 2025.
This, of course, is good for sports-betting companies, too... like Flutter Entertainment (PDYPY), which owns daily fantasy sports site FanDuel, and DraftKings (DKNG). These two companies hold more than 80% of the U.S. legal betting market share.
Some subscribers may remember that our Investment Advisory team recommended Flutter back in August 2019, in part because of our expectation that more states would legalize sports betting in the years ahead. As we wrote in the February 3, 2020 Digest...
The trend in sports betting isn't going away, and there are still plenty of additional opportunities to take advantage of it right now.
That's very much the case today. Folks who took our team's advice on Flutter were up 49% at that point... And the stock is now up roughly 130% through today's close.
In California, Uber (UBER) and Lyft (LYFT) caught a break for now...
Voters passed a measure that exempted the ride-sharing companies, as well as food-delivery service DoorDash, from reclassifying their drivers as employees.
This would have thrown these companies' "gig economy" business model upside down and substantially increased their costs. As Stansberry's Big Trade editor Bill McGilton wrote in a Digest last October...
Classifying an employee as a contractor saves money because the employer doesn't have to provide expensive benefits like health insurance or paid time off. The employer also doesn't have to pay federal payroll taxes on what it pays its contractors (about 7.65% of salary costs in California).
International investment bank Barclays estimated the conversion would have cost Uber $500 million and Lyft almost $300 million per year in California alone. That's why the two companies spent $200 million trying to get voters to pass this measure, which they did.
But this is just the first of likely many battles for these two companies and those like them. The "gig economy" is alive – for now. As Bill explained to Nick of our NewsWire team...
The trend to reclassify gig economy workers as employees isn't limited to just California. Multiple U.S. states are considering similar laws. And in Europe, the U.K. and France are considering the same.
Finally, remember COVID-19? That's like 'middle of the paper' news today...
But we have big news to share on this front. And the fact that it's being overlooked alone presents an opportunity...
It comes from Stansberry Venture Technology editor Dave Lashmet, who has been on top of the science of COVID-19 since we first started hearing about it back in January and February.
This isn't new. Dave is often well ahead of the curve when it comes to developments in science and technology... Just take a look at what his recommendation of Biogen (BIIB) is doing today – up an astounding 40%-plus on positive news about its Alzheimer's drug.
Today, Dave is explaining the big picture about COVID-19. He says that 2.7% of the American population has tested positive. And among these 9 million patients, the disease has been 2.5% lethal...
These number suggests to Dave that "the pandemic could get much worse."
What's more, Dave says 'we don't know how the pandemic will end'...
It has become increasingly more clear to folks that getting the SARS-2 virus might not lead to lifelong immunity. For example, other human coronaviruses spread globally in four-year cycles. And according to Dave in a brand-new Venture Technology special report...
There's no large-scale data on how well COVID-19 vaccine candidates protect you or for how long. And until there are data on vaccine efficacy, it's hard to balance side effects versus the benefits.
We think a vaccine is coming. But until we see the rival data sets in an open forum for peer review, we don't know which vaccine maker could come out on top. And even with a vaccine, distributing it to 333 million people will be a challenge. It's doable. But it won't be fast.
Ninety percent national vaccine coverage could take three or four years.
In other words, tens of millions of Americans will remain at risk for the next four years...
And with the prospect of global travel, there's little reprieve for hundreds of millions of folks worldwide unless everyone wears N95 respirator masks until they can get a vaccine.
This is why Dave believes testing will be so important – particularly a rapid, simple test for COVID-19 that is both reliable and easily accessible. And one company recently came up with just that, yet we don't hear many people talking about it so far...
Dave says more people will know about this company and its product as soon as next week. This is good for our collective health, of course – and it could be great for your wealth, too.
According to Dave, you could make more than 500% in the next six months if you buy this company's shares today. Click here for all the details. (And Venture Technology subscribers, check out Dave's exciting research right here... You can already access it at no additional charge.)
New 52-week highs (as of 11/3/20): Green Thumb Industries (GTBIF), Ingersoll Rand (IR), KraneShares CICC China Leaders 100 Index Fund (KFYP), Zebra Technologies (ZBRA), and Zendesk (ZEN).
In today's mailbag, feedback on yesterday's Digest about what to watch for – no matter who wins the presidential election. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Hey Corey, After convincing me of the tremendous threat of our debt, I sure would like a more balanced assessment of giving credit where credit is due. In light of how the Right has contributed, it doesn't seem fair to only say, 'Sure, our current 'crony capitalist' system is broken...'
"Why won't you detail what the Right is doing wrong? Don't we need to acknowledge everything and come together if we are going to have a chance of doing well in the future?" – Paid-up subscriber Tim D.
Corey McLaughlin comment: If we spent all of our time yesterday writing about what everyone all over the political map is doing "wrong," it would have been a very, very long Digest... too long for our taste on Election Day.
But because you asked, I'll share what I believe is a great excerpt on this very topic... It comes from former Digest contributor P.J. O'Rourke in the October issue of American Consequences magazine. P.J. pretty much covers the spectrum of how blame can be placed...
The political parties claim to be able to navigate us around or through war hazards and economic crises... But the pilots they bring on board are often hopeless landlubbers looking through the wrong end of the telescope with their nautical charts upside down. (I'd say we've got two of them on offer this November 3.)
In fact, Republicans and Democrats often take us to exactly where you'd expect they wouldn't...
For the past 150 years, the most broadly punishing financial panics, recessions, and depressions have begun while for-the-love-of-money Republican presidents were in power, rather than share-the-wealth Democrats:
- The Long Depression of 1873 to 1879 – Ulysses S. Grant
- Panic of 1882 – Chester Alan Arthur
- Panic of 1893 – Benjamin Harrison
- Panic of 1907 – Theodore Roosevelt (OK, trust-busting TR was tough on big business so maybe we can blame this on his inner Democrat.)
- The Great Depression – Herbert Hoover
- Stagflation of 1973 to 1975 – Richard Nixon
- Dot-com Bubble Burst – George W. Bush
- The Great Recession – W. again
To add perplexity to paradox, during most of the 20th century it was the internationalist, peace-loving, why-can't-we-all-just-get-along Democrats – not the bellicose, saber-rattling Republicans – who sent the nation into combat:
- WWI – Woodrow Wilson, who'd been elected on the promise he'd keep us out.
- WWII – FDR, who got elected by promising something similar, though less of it.
- Korea – Truman (who, in fairness, made no such promises).
- Vietnam – JFK and LBJ.
The pattern became proverbial. "Elect a Republican, get a depression. Elect a Democrat, get a war."
Of course, since then, the pattern has gotten mixed up, with Republicans taking the lead in sending troops to godforsaken places and Democrats doing their best to impoverish us all with high taxes, social spending, regulatory interference, and vows to implement lots more of all three.
If there ever was a pattern... You think you know what party is what, then that party goes all whatchamajigger.
First it was the Democrats who favored low tariffs and free trade, then it was the Republicans. First it was the Republicans who supported racial equality, then the Democrats took over. Democrats used to be able to count on blue-collar workers, then there was nothing left to count. Southerners once were "yellow dog Democrats" who'd "vote for a yellow dog" rather than vote Republican – then southerners elected the mutt. John F. Kennedy lowered taxes. George H. W. raised them.
Anyway, we did acknowledge the problems yesterday, as you pointed out.
But in the bigger picture, we often find it more valuable to offer solutions and practical guidance to all of our problems, which most people know at this point...
That's why we spent more "ink" in yesterday's Digest suggesting that everyone give Porter's book, The Battle for America, a read. It offers up many great pieces of advice – rather than rehashing how we got here. Same goes today.
All the best,
Corey McLaughlin
Baltimore, Maryland
November 4, 2020