A partial digest

It’s day 45 of the Biden-Harris administration.

The $1.9 trillion stimulus package is being put through the paces. Wrangling in the Senate continues, with a vote nigh. As expected, a $15 minimum wage raise didn’t make the cut.

H.R. 1319, the American Rescue Plan Act of 2021, will be passed by Senate Democrats over the objections of Republicans, it’s believed. Then, a variation of it will be sent back to the House for another vote before making it to Biden’s desk. Democrats are working against a March 14 deadline, when existing UI benefits expire.

Members of Congress on both sides…

A partial digest

Friday was day 38 of the Biden-Harris administration. Presidential actions included an executive order on America’s supply chains.

The stimulus vote took place in the House and the $1.9 trillion package cleared this initial hurdle. Next, the Senate, where some anticipate it will be stripped of the provision increasing the minimum wage to $15/hr. Whatever version the Senate ends up with and [possibly] passes will be sent back to the House for a new vote. If all goes well, it will then be sent to Biden’s desk. As the wrangling continues, the markets will behave accordingly.

Equities and the economy…

A partial digest

It’s day 31 of the Biden-Harris administration. The nation has returned to the now familiar holding pattern of awaiting a stimulus package.

All EIP 2 payments have been issued, says the IRS.¹ The steps to follow if we didn’t receive ours are here. They include using the GMP tool to check payment status, requesting a payment trace with the IRS, and claiming a tax credit on our federal returns.

Discussions around inflation are frequently fear-based. They are also often launched by individuals motivated by selling others on the ownership of inflation assets.

Gold — one of those [in]famous inflation assets…

A partial digest

It’s day 24 of the Biden-Harris administration.

Concern is growing over the worsening worldwide semiconductor shortage, the news of which began in earnest a couple of weeks ago, but traces some of its roots to the Trump administration’s trade wars. Since chips are a critical component of so many goods we consume in our increasingly digital world, one question is how one hedges such a thing, now that it’s reached a point of critical mass.

First, we’d want to seek out the source of the bottleneck. Sometimes, that can be with the most primary ingredients in the making of the…

A partial digest:

Friday was day 17 of the Biden-Harris administration.

Pfizer’s CEO echoed Moderna’s in advancing the possibility that COVID-19 is here to stay and vaccinations will become a routine part of life, as with the flu.

Those interested in how a >100% short interest position was achieved in GameStop [GME] would do well to read up on the SEC’s Regulation SHO.

To be more specific, the following parameters may or may not have been adhered to by the various parties involved:

  • There is language within the regulation around how broker-dealers mark the securities orders we place when we are trading (long…

A partial digest:

It’s day ten of the Biden-Harris administration.

Volatility was the name of the game this past week, with the VIX on the CBOE gaining over 50% by EOD Friday.

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  • Hedge funds have long had the potential to pose systemic risk to the financial system in the United States. Most, if not all, graduate-level students of finance would have come across the LTCM case study at some point during their programs.
  • Yes, hedge funds, brokerages, GameStop (GME), and r/WallStreetBets were a thing, but so was GDP growth that was low enough that the United States capped off 2020 in the hole…

A partial digest:

It’s day three of the Biden-Harris administration.

We may be approaching a serious inflection point in the markets. In the United States,

  • Initial jobless claims remain extremely elevated (see more below).
  • The health crisis marches on. Not all people can work or go about their lives if they’re falling ill. Variants and a sluggish vaccine rollout will make a difficult task of gaining the upper hand.
  • Chapter 11 company bankruptcies were higher in 2020 than in all previous years since 2012, in spite of record support, according to the American Bankruptcy Institute. Corporations, among them zombies, have only borrowed more…

“There is never ‘one thing’ for the market.”

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Image by strichpunkt from Pixabay.

One theory making the rounds of late is that wealthy investors would have preferred more split government to a Democrat sweep in election 2020. A so-called blue wave would have been reason for concern, given that it would raise the chances of impending tax hikes (among other things).

However, this preference was not echoed by the markets once the election cycle finally came to its conclusion, indeed in Democrats’ favor. Quite the opposite occurred January 6–8 as first Georgia’s senatorial runoff results, and then Congressional affirmation of Biden-Harris, were met with risk-on rallies.

Certainly, there are salient historical examples where…

A partial digest of what we learned:

Biden revealed plans for a $1.9 trillion aid package that includes $1,400 checks, raising the federal minimum wage, and coronavirus-specific spending. This is in keeping with expectations that Democrats would introduce more stimulus measures in the next term cycle, but it can now be paired with a higher likelihood of passing given the blue wave of election 2020.

Stimulus is friendly to oil and other commodities (not gold), as well as to equities. That said, the health and labor situations are abysmal, and businesses continue to struggle or fail. Therefore, we may experience push and pull in the markets, i.e…

Philip Valenta, MSF

Intersectionist :: https://philipvalenta.com

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