Congressional certification of the presidential election results could take into Thursday
Markets await the Georgia Senate-seat election results
U.S. ADP employment report expected to fizzleCongressional certification of the presidential election results could take into Thursday — The timing of today’s Congressional certification of the presidential election results is uncertain but not the final outcome. Some Republican members of Congress intend to object to today’s certification. However, they will only be able to slow down the process, not change the final outcome.
Republican members of Congress reportedly intend to contest the certified results of at least three states, i.e., Arizona, Georgia, and Pennsylvania. The states will be called out in alphabetical order for certification by Congress of the Electoral College votes. If an objection is issued by at least one member of the House and Senate, then up to two hours of debate will ensue and then a vote. The process begins today at 1 PM ET.
There is speculation that the process could last late into the evening or even into Thursday, depending on the number of objections. Republican House members have said they will object to at least six states, although Republican Senators have only committed to three states so far.
An objection to a state’s electoral votes is sustained only if both the House and Senate vote in favor. That will not happen because Democrats control the House. Moreover, the Senate will not vote in favor because the majority of Republican Senators plan to join with Democrats in rejecting the objections.
Washington DC today is braced for protests and counter-protests that could turn violent. In addition, President Trump is planning to deliver an outdoor speech to protesters today in a park just south of the White House, according to reporting by Bloomberg.
After Congress certifies the presidential election results today or tomorrow, then the election process is complete. There are no more events on the schedule that President Trump could use to try to overturn the election results, except more lawsuits of the type that have been unsuccessful thus far. Inauguration Day is now only two weeks away on January 20.
Over the next two weeks, the markets will remain on guard for any last-minute actions by President Trump regarding pardons, sanctions, or executive orders. The markets are also on guard for the outside possibility of U.S. military action given recent media reports that President Trump has asked advisors about delivering a military blow to Iran, and that Mr. Trump personally ordered the aircraft carrier USS Nimitz this past weekend to stay in the Middle East, reversing the Pentagon’s plan to have it return to its base in the U.S.
Markets await the Georgia Senate-seat election results — The markets are eagerly awaiting the results of yesterday’s run-off elections for the two Georgia Senate seats, which will determine control of the Senate. The election results could be available relatively quickly if the races are not close. However, the vote-counting could also drag on for days if the results are very close and there are lawsuits and demands for recounts. November’s presidential race was so close in Georgia that it took media outlets ten days to call the race.
If Democrats win both of the Senate-seat elections, then Democrats will have full control of Washington and will be able to pass at least parts of President-Elect Biden’s agenda. If Republicans win at least one of the Georgia Senate seat races, then Senate Majority Leader McConnell will remain in charge and will be able to block Mr. Biden’s initiatives, likely leading to gridlock for at least the next two years.
FOMC meeting minutes — The FOMC today will release the minutes from its Dec 15-16 meeting. The FOMC at that meeting maintained its dovish stance, leaving its funds rate target unchanged at 0.00%/0.25% and its QE program unchanged at $120 billion per month.
However, there was a little disappointment that the FOMC did not indicate an inclination to boost QE in response to the pandemic surge or shift some of its QE buying towards the longer end of the Treasury curve. Some market participants were hoping that Fed Chair Powell would show some willingness to boost its QE program because of the renewed economic damage being caused by the pandemic surge.
The FOMC did provide a very vague hint on how long its QE program might last by saying that it intends to continue its $120 billion QE program “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” That was a bit more descriptive than the Fed’s former language that it would continue its program “in coming months.”
The federal funds futures curve is flat as far out as it trades, i.e., late 2022, indicating expectations for no rate hike at least through late 2022. The Eurodollar futures curve, which trades much farther out into the future, indicates that the market is not expecting the first rate hike until mid-2023. The market is then expecting a fairly steady rise of about one 25 bp rate hike per year, leading to an overall +150 bp rate hike by 2029.
U.S. ADP employment report expected to fizzle — The market consensus is for today’s Dec ADP employment report to show a small gain of +63,000, down sharply from Nov’s +307,000. Hiring in November likely dropped off sharply due to the pandemic surge and increased business restrictions in many areas of the country. Payrolls have so far risen by 9.9 million from the pandemic trough but would have to rise by another 9.7 million to match February’s pre-pandemic level.