Trump is easily beaten in the stock market after Biden’s election


The S&P 500 has gained 10% from Election Day to an all-time high. During the post-election period in 2016, about 5.5% of the rally doubled.
Raised by high-flying tech stocks, including Nasdaq Adventuress (AMZN) And Zoom (ZM), Stunning 15% since 3 November. This marks a confrontation of 5% since the election of Nasdaq nearly four years ago.
They are impressive returns, especially considering Trump would repeatedly “crash” stocks warned by Americans if Americans failed to reclaim him. This has hardly been the case, at least until now.

Even though President-Elect Joe Biden has a (very) early boast, Wall Street’s post-election celebration is not entirely – or even primarily – about Biden’s victory. Rather, both are being driven by a sense of relief that nightmare election scenarios were avoided and, perhaps most importantly, that vaccines will hopefully help end the epidemic.

“There were certainly a lot of concerns before the election that could lead to social and political unrest,” said the advisory firm, president of advisory firm Yardani Research. “There have been no riots on the streets. The market focused on the fact that the constitutional system still works.”

Goldilocks for shares

Investors are also relieved that neither party will have independent rule in 2021 to implement the new policies. The “Blue Wave” did not happen and Republicans unexpectedly gained seats in the House of Representatives.

The GOP will retain control of the Senate until Democrats remove both January runoff in Georgia. Even if the Democrats win those Georgia races, they will have hardly any supremacy, although with a 50/50 split, Vice-President Elect Kamala Harris will cast a decisive vote to break any deadlock.

Michael Arron, chief investment strategist at State Street Global Advisors, said, “All this suggests that more extreme views, to the left or to the right, will not become law. It is being observed.”

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For example, Democrats would have very few shots to raise taxes on corporations or the rich. Republicans are likely to block Biden’s broader climate law. Only the infrastructure breaks through the gridlock.

Trump called Biden “Sleepy Joe” during the campaign, but many investors did not take a break from the chaos and unpredictability of Trump’s era. The latest example of this happened on Tuesday night when Trump shocked his allies by threatening to block a $ 900 billion relief package.

“For investors, it’s to some extent the best of both worlds,” Aron said of the election result. “You get a more predictable foreign and trade policy, while your domestic policy does not seem as progressive as some of the worst apprehensions.”

Vaccines to protect

The post-election rally went into high gear Pfizer (PFE) And BioNTech (BNTX) Announced on 9 November that his vaccine against Kovid-19 was highly effective. Moderna (mRNA) A week later followed suit with a similar announcement. Both vaccines have since received emergency-use authorization from the FDA.

“It gave investors confidence that there is a light at the end of the tunnel,” Aron said.

This is the reason why Wall Street has largely seen the last skies of Kovid-19 cases, hospitalizations and deaths.

Not all markets are outperforming their post-election 2016 performance. For example, the Dow’s 10% jump since Election Day is just below its 9% gain during the same period of 2016.

Fed factor

Of course, the economic world today is very different than it was four years ago.

Subsequently, recovering from the Great Recession, signs of aging were visible. Investors believe that this recovery is just beginning – and they do not want to miss out on gaining in the market (especially if last time).

“The central question in 2016 was: How do you continue recovery?” Said Nicholas Colas, co-founder of Datatrack Research. “Now the question is what kind of recovery from the worst recession after the Great Depression will be.”

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And unlike 2016, the Federal Reserve never has the itch to lift interest rates from the basement anytime soon. In June, Fed Chairman Jerome Powell said: “We’re not even thinking about raising rates.”
Recently, the Fed promised to keep its foot on the incentive pedal. At its December meeting, the central bank pledged to buy bonds at least by “equal momentum” until there is more progress in repairing the economy.

The backdrop of easy Fed policy is essentially forcing investors to place bets on stocks. And this is far more important for investors than politics.

“Whoever sits at the Resolute Desk doesn’t matter,” said Collaz. “What matters is policy.”

Melts

The big question now is whether this rally has gone out of hand.

Not only is the stock booming, but it is clear from Dordash and AirBnB’s monstrous debut that the IPO market is also red-hot. Investors are investing money in blank-check companies known as SPAC. And the M&A market is becoming steamy.

“There are some red flags that suggest warming the market,” said Aaron of State Street. “I wouldn’t be surprised if you saw a 5% to 10% improvement in the first quarter. It would be healthy.”

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Yardeni is also hoping that the market will cool down.

“A correction is a good way to keep the bull market on track without a major recession,” Yardney said. “Melt-ups are, by definition and experience, followed by meltdowns. They are fun and painful along the way.”

In other words, the biggest concern at this stage of Wall Street’s epidemic is that things may be a little too good.

Conversely, Main Street is struggling to get a bus – and hopes Washington will come to the rescue with more aid.

This is yet another reminder of America’s K-shaped recovery and the harsh unfairness of economic life in 2020.

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