What the Stock Market Is Saying About the Georgia Runoff

For stock portfolios, that result means some shuffling. U.S. stock futures are mixed, but tech stocks are taking it on the chin.

Nasdaq Composite

futures are off more than 2%, spooked by the possibility for more regulation.

But a Democratic Senate could lead to more Covid stimulus and that is boosting small-cap stocks, which are more dependent on the domestic economy. The

iShares Russell 2000 ETF

is up about 2.3% Wednesday morning.

Stocks linked to renewable energy and climate change are also moving higher.

Tesla

is the sixth most valuable company in the Nasdaq, but its shares are up more than 2% in premarket trading, bucking the broader trend, while the

Invesco Solar ETF

—with the clever stock symbol TAN—is up more than 6% in premarket trading.

The market, quite frankly, wasn’t expecting a Democratic sweep, and it should be noted Perdue could still win. The big moves, however, say otherwise.

—Al Root

*** Take a live look inside Barron’s Roundtable, engage with the members and join the discussion. Members of the Roundtable, including Abby Joseph Cohen and Mario Gabelli, will offer their forecasts for the markets, economy, and stocks in 2021. Barron’s subscribers can sign up here.

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Democrats Near Control of Senate as Warnock Wins Georgia Runoff

Democrats have picked up at least one seat in the Senate, with Democrat Raphael Warnock defeating Republican Sen. Kelly Loeffler in one of two runoff elections in Georgia, according to the Associated Press.

• “I am going to the Senate to work for all of Georgia,” Warnock said in a victory speech. The win makes him Georgia’s first Black senator. Loeffler did not concede, vowing to make sure every vote is counted. “This is a game of inches, we’re going to win this election. We’re going to save this country.”

• The race between Democrat Jon Ossoff and Republican Sen. David Perdue remained too close to call. With 98% of the vote counted, Ossoff narrowly leads Perdue 50.2% to 49.8%.

• “When all the votes are counted we fully expect that Jon Ossoff will have won this election to represent Georgia in the United States Senate,” Ossoff’s campaign said in a statement. Perdue’s campaign called the race “exceptionally close” and said it would “mobilize every available resource and exhaust every legal recourse to ensure all legally cast ballots are properly counted.”

• If Perdue wins, the Republican party would maintain control of the Senate. A Democratic Party sweep would give Vice President-elect Kamala Harris a tiebreaking vote in the Senate, bringing both houses of Congress and the White House all under Democratic control.

What’s Next: In Georgia, a recount can be requested if the vote is within 0.5 percentage points. Secretary of State Brad Raffensperger told CNN that 17,000 mail-in ballots from overseas and military would not be counted until Friday.

—Barron’s staff

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Congress Is Set to Count Electoral College Votes

Electoral votes are expected to be challenged in a joint session of Congress Wednesday, while supporters of President Donald Trump protest in the streets of Washington, creating acrimony around what is usually a ceremonial last step in the presidential election process.

• A joint session of Congress will convene at 1 p.m. Eastern Daylight Time. Vice President Mike Pence will preside over the session. More than a dozen Republicans in the Senate and more than 140 House of Representatives plan to object to the electoral results in a handful of battleground states that Biden won.

• Sens. Josh Hawley, of Missouri, and Ted Cruz, of Texas, are among those planning to object. But many Republicans, including Sens. Tom Cotton, of Arkansas, Tim Scott, of South Carolina, and Pat Toomey, of Pennsylvania, have criticized the effort.

• With challenges from both a representative and a senator, the joint session would recess and each chamber would debate for a maximum of two hours per state challenged. If Republicans force two hours of debate for multiple states’ electors, the proceedings could drag on for hours.

• The move is largely symbolic. Republicans hoping to overturn the election would need a majority in both the House, where Democrats have a majority, and the Senate, where Senate Majority Leader Mitch McConnell has previously urged Republicans not to object to the results.

• President Donald Trump will speak at a march on Wednesday in the capitol ahead of Congress’s meeting. The Pentagon approved Washington Mayor Muriel Bowser’s request to send National Guard troops to support local law enforcement during the planned demonstrations.

What’s Next: Biden’s inauguration is set for Jan. 20. Biden is planning mostly virtual festivities and is urging supporters not to travel to Washington, D.C., because of the pandemic.

—Connor Smith

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China Closes In on Jack Ma’s Empire

Jack Ma’s empire is increasingly in the regulatory spotlight in China and the U.S.—even as the billionaire founder of

Alibaba

hasn’t been seen since October.

• Ma is not missing, CNBC reported Tuesday, but is instead “lying low for the time being” likely in Hangzhou where Alibaba is based. He was last seen at a conference in Shanghai where he blasted China’s financial regulatory system in a public address.

• On Nov. 2, Ma was summoned to a meeting with top government officials. The next day, after Chinese President Xi Jinping intervened, regulators scrapped the initial public offering of Ant Group, in which Ma is the controlling shareholder.

• Because it began as a payments arm of Alibaba’s e-commerce operation, Ant has largely escaped the toughest aspects of Chinese financial regulation. Now China wants to start regulating it like a bank since Ant originates loans to half a billion people.

• Ant runs the digital payment platform Alipay that is used by more than a billion people. On Tuesday, President Donald Trump signed an executive order banning transactions with the payment platform and seven other Chinese apps.

• That’s in addition to other moves made by the Trump administration recently against Chinese companies. Treasury Secretary Steven Mnuchin told the president of the New York Stock Exchange Tuesday that he opposes its decision to no longer delist three Chinese telecommunications companies, Reuters reported.

What’s Next: The path forward for Ant Group’s public offering is unclear as Chinese regulators seek to increase oversight and take a much larger ownership stake in Ma’s businesses.

—Ben Walsh

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As Bitcoin Hits Records, Crypto M&A Heats Up

CoinDesk, a media company that focuses on cryptocurrencies, has acquired TradeBlock, which produces market and trading data, the companies said Tuesday.

• CoinDesk currently runs a website that provides crypto news and pricing with around five million page views a month. It also hosts the crypto industry’s largest conference. TradeBlock has a price index called the XBX that is used by many institutional investors to value their Bitcoin investments.

• Because no single trade price is definitive in cryptocurrencies, owning the industry-standard pricing index could be particularly valuable.

• CoinDesk wants to start monetizing its market data and indexes, which CoinDesk CEO Kevin Worth told The Wall Street Journal amounted to “a recognition that the market has shifted.”

• The deal comes as the price of Bitcoin has surged in the last year from less than $4,000 per coin last March to more than $34,000 recently. That frenetic price action makes data that can provide standard and transparent pricing, both for executing trades and valuing holdings, more valuable.

What’s Next: As Bitcoin’s price continues to surge, so does mainstream interest and involvement in the cryptocurrency. An analyst at J.P. Morgan said Tuesday that Bitcoin could be worth as much as $146,000.

—Ben Walsh

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Brazil President Says His Country Is “Broke”

Brazilian President Jair Bolsonaro said Tuesday that his country was broke and that he could not “do anything” about it, laying the blame on what he called the “press-fueled” coronavirus pandemic.

• State subsidies that had sustained the poorest third of Brazil’s population for nine months stopped this week on concerns about the country’s rising deficit and public debt load.

• “Brazil is broke, boss, I cannot do anything,” Bolsinaro told a supporter who was asking him about his campaign promises.

• The coronavirus pandemic has killed 198,000 Brazilians, the world’s highest death toll after the U.S.’s 360,000.

• Bolsonaro has derided the disease he likened to “a little flu” and condemned “the hysteria” around it, but his popularity has soared in the last year, due in large part to the payouts. Brazil is yet to start its vaccination campaign against the virus.

• According to the latest IMF report, the Brazilian economy shrank by nearly 6% in 2020 and was expected to grow by 2.8% this year. Public debt stands at about 100% of GDP.

What’s Next: The pandemic is expected to spread further in the next weeks after the Christmas and New Year celebrations. And Bolsonaro is running for re-election in 2022. His warning about the state of public finances may have been a way to prepare public opinion for stricter fiscal policies.

—Pierre Briançon

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Dear Moneyist,

My father was always fair, but a bit of a pushover. He had a great career as a computer engineer, was retired, divorced my mom, lived alone in his home and developed dementia 10 years ago.

My sister made herself his power of attorney without consulting me or my brother. I didn’t find out until I did a public-record search on his property three years after the dementia diagnosis. She also signed a reverse mortgage on his property. I was stunned. I talked to my dad and he said he did not do this.

My father’s lawyer said he wouldn’t do anything about my complaints unless my father initiated it. My sister made it difficult to see him or talk to him, and watched him like a hawk. She installed a camera and she moved down the street so, if visitors like myself went to his house, she would show up immediately.

My sister maintained secrecy. Her son moved into his house without paying rent and developed a drug problem. He went to rehab, which must have been expensive since he had no job and no insurance. I hate to think he may have stolen my father’s insulin syringes to use for his drug habit.

Two years ago my father passed away. The weeks leading up to this, my mother told me he “wasn’t well” and “in a nursing home,” but she didn’t know which one. I frantically called dozens in the area, but I couldn’t find out. It was distressing and sad.

My father’s attorney said he now represents my sister, not the estate. My mother said this lawyer—our cousin—also mishandled my father’s 401(k), losing it all. The lawyer said it was lost in the stock market crash. The will said my sister is the executor of his estate. But it was signed and written after he became ill. My father’s will left everything equally to each of my siblings, but it also said gifts didn’t have to be distributed equally.

My sister refused to tell us how the cash from the reverse mortgage was spent. My father had a good retirement income. Over $435,000 was spent in the six years before his death from the reverse mortgage. The lawyer said if my father were in a nursing home during that time he would have had nothing left.

The house was sold and the proceeds split. I can’t help feeling that my sister did not hold up to her fiduciary duty as her power of attorney, and gave it to herself because my father was so frugal.

My sister had no job, and no income other than her boyfriend’s income. But her boyfriend and her son must have six cars by now. Her boyfriend is from another country, and works in construction. I fear they sent money overseas when his sister evidently visited at one point. I know my sister feels her boyfriend is entitled to top dollar for his work and most likely bilked my father’s estate on home repairs.

What should my brother and I do? The estate hasn’t closed yet, I think, but she isn’t talking.

—Disturbed Sister

Read The Moneyist’s response here.

—Quentin Fottrell

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—Newsletter edited by Stacy Ozol, Mary Romano, Anita Hamilton, Matt Bemer, Ben Levisohn