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).

“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 political gridlock proved desirable, more generally. The absence of gridlock could clear the way for one party to execute its full agenda, which by nature can alienate (and possibly even harm) entire portions of the population. …

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. volatility that persists for the foreseeable future. …

A partial digest of what we learned:

Emboldened as always, Trumpists overran the Capitol. People died. Trump may be impeached again. Both insiders and outsiders suspect he was attempting to engineer a coup. His Twitter account was suspended twice last week, the second time for good. With his license to communicate with the general public effectively revoked and the app of choice of his followers, Parler, also getting taken down, Trump’s filth can’t fly far. He has no immediate outlet. Even some of his own zombies are coming to and turning on him.

Multiple days remain until January 20, but there are few people who will, or even can, do his bidding anymore. His own officials are resigning. Furthermore, it’s unlikely that anyone in a significant position within the country’s power structure will take a call from him any longer, let alone an order. …

First off, happy new year.

A partial digest of what we learned:

Trump signed off on the stimulus and Congressional budgetary spending bill (Consolidated Appropriations Act, 2021). Treasury and the IRS indicated that stimulus checks already started going out last Tuesday night. Meanwhile, an upgrade to $2k checks couldn’t even get a vote in the Senate. Yes, the size of stimulus checks that the government has already begun sending out was still being debated as of Friday night, and may be taken up again by the new 117th Congress, which convenes Sunday. …

A partial digest of what we learned:

Lame what? Trump sends the $892 billion in coronavirus stimulus packing back to Congress for amendments including $2k payouts to households, the likelihood of which isn’t great. Never mind that the package is not as large as hoped, and is disappointing in its breadth, as well, leaving out elements such as much needed help for states and municipalities.

Pelosi will reportedly call a full floor vote regarding the checks on Monday. All along, the Democrats themselves wanted bigger checks for households. However, if they think Trump’s involvement on this front gives them leverage over the GOP to get it done, they can forget about it. For McConnell, Toomey, and others, the notion is probably DOA. …

A partial digest of what we learned:

Will it be $908 billion, or only $748 billion if aid to states and municipalities gets axed to keep COVID-19 lawsuit protections out? The disputes don’t end there. A stimulus package accord may be derailed by sticklers for an irreversible end to Federal Reserve lending programs, much against Powell’s wishes. Then, there’s a lack of agreement over $1,200 checks to households.

It’s probable that traders have priced in at least $908 billion for the next aid bill, whenever it arrives. A smaller bill would mean that equity valuations have overshot the mark, on this front.

The bigger question is whether equities and other assets are overpriced, more generally, or if developments have indeed been accurately priced in and there are yet more positives coming down the pike. That would leave markets with room to run and traders to jockey further for position. …

A partial digest of what we learned:

The FDA has authorized Pfizer-BioNTech’s vaccine for rollout in the United States effective December 11, 2020. A panel that advises the government agency strongly suggested it be implemented on December 10. BNT162b2 is already being used to inoculate residents of the UK, and Canada issued emergency authorization in the middle of the week.

States will decide who receives the vaccine within their geographies over the next couple of days, but healthcare professionals and residents of long-term care facilities will be prioritized.

One grand notion being circulated is that through the combination of the three vaccines expected to be authorized for emergency use in the US, enough shots could be distributed by the middle of next year to vaccinate all of the willing. …

A partial digest of what we learned:

With several states certifying their election results in the week ending December 4, including Arizona and Wisconsin — and California with its 55 votes doing so on Friday — Biden has officially accumulated enough pledged electoral votes to become the next president of the United States.

As outlined before, all states must certify their results and resolve any legal challenges and disputes regarding said results by this coming Tuesday. If any issues are left pending, Congress gets involved.

It would appear that six states, evenly split, have yet to certify their results. …

Week in review

A partial digest of what we learned:

CNN reported that the General Services Administration (GSA), through admin Emily Murphy, has notified the Biden-Harris campaign that the Trump administration is prepared to begin the formal transition process. As Trump has pointed out, that is separate from whether he continues to contest the election.

On Thanksgiving day, Trump indicated that he would leave if Biden were declared the winner by the Electoral College. However, multiple steps must still be performed to get to that actual announcement.

January 6 is when Congress meets in a joint session to tally the electoral votes that were received by Pence by December 23 after being cast on December 14. At that point, Pence, being the president of the Senate, announces the victor. …


Philip Valenta, MSF

Intersectionist :: https://philipvalenta.com

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