Good morning, Bull Sheeters. All eyes are on Georgia. And that’s putting investors in a risk-off mood.

At 2 a.m. Atlanta time, Democrat Raphael Warnock was called as the winner of one of the two Georgia Senate seats up for grabs, and that sent Treasury yields and Chinese stocks soaring. Meanwhile, the dollar and tech-stock futures fell, and they continue to sink. The Ossoff-Perdue race is still too close to call, but the markets there too are pricing in a blue sweep. I explain the implications below.

But first, let’s check in on what’s moving the markets.

Markets update

Asia

• The major Asia indexes are mixed in afternoon trading with the Shanghai Composite up 0.6%.
• President Trump signed an executive order establishing a ban on all U.S. transactions executed on a host of Chinese fintech payment platforms, including Ant Group’s popular Alipay, Tencent’s QQ Wallet and WeChat pay.
• The situation in Hong Kong has grown more tense after police arrested dozens, including an American lawyer, in the latest pro-democracy crackdown. The action triggered a strong rebuke from Antony Blinken, President-elect Joe Biden’s pick for Secretary of State.

Europe

• The European bourses are mixed in early trading with the Stoxx Europe 600 up 0.3% at the open.
• The Russians are calling Saudi Arabia’s surprise cut of crude production a “New Year’s present,” a move that sent Brent and WTI soaring on Monday. It also lifted energy stocks on both sides of the Atlantic.
• Staying with Russia… U.S. intelligence agencies named Russia as the “likely” culprit in the widespread hack on American businesses and U.S. government agencies, a rebuke of President Trump’s claims it was probably China.

U.S.

• In a classic sell-the-news move, U.S. futures dipped once the Associated Press called the U.S. Senate race for Warnock, with Nasdaq futures falling the most.
• The Georgia vote has pushed the 10-year Treasury above 1% for the first time since the March markets collapse as investors bet the Democrats will take a razor-thin majority of the U.S. Senate.

Elsewhere

• Gold is flat, but it’s had a strong start to the year, trading around $1,953/ounce. 
• The dollar is sinking.
• Crude is up slightly after a stellar Tuesday which saw WTI crack $50/barrel, an 11-month high. Texan wildcatters can thank the Saudis for that.
• Bitcoin is up 10% in the past 24 hours, but trade remains incredibly volatile (even for a digital currency.)

***

Politics, and your portfolio

I was prepared to talk to you today about ETFs and your portfolio, but I’m going to switch gears to narrow in on Georgia as things are happening quickly there, and a little context is needed for what we may very likely see and hear at today’s opening bell.

As I type, it’s still too early to call the Ossoff-Perdue race. But the markets are pricing in how this one too will end up. As of 4:15 a.m., the Democrat challenger Ossoff had a greater than 16,000-vote lead. And, with each update on the vote count, stock futures are moving.

The Nasdaq has fallen all morning, now off 2.2%. Investors are nervous about tax policy and a new era of antitrust oversight on Big Tech.

The opposite story is playing out in small caps. Russell 2000 futures are climbing as investors bet one-party control will mean further stimulus spending and a big pledge to increase infrastructure spending. That’s good news for Main Street and for the American consumer, the engine of the U.S. economy.

The ripple effects of such spending, however, would mean more debt, a weaker dollar, a steeper yield curve on Treasurys (we’re already seeing that this morning), and an uptick in inflation. The i-word is the big one to watch. The expectation of higher prices could influence Fed policy (probably not in 2021, mind you) to review its benchmark rate.

If the Democrats were to sweep Georgia, you could bet you’ll be hearing a lot of chatter about the “Taper Tantrum 2.0.” A reminder: the Taper Tantrum happened in 2013 when then-Fed chief Ben Bernanke signaled the central bank would begin to “taper”—not pause, not abandon, but taper, or tap the brakes—its policy of quantitative easing. Stocks then tanked and bond yields soared. The whole panic (with a small p) was much ado about nothing. After the initial swoon, the markets climbed, the economy grew, employers continued to hire, and wages nudged up. It was a mere blip in the decade-long bull market, in other words.

That little history lesson is one to keep in mind as dawn breaks on Atlanta this morning.

***

Have a nice day, everyone. I’m off tomorrow and Friday; Rey Mashayekhi, whom investors adore, will take the keys… Until then, there’s more news below.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

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