Go Big Or Go Home!

Go big or go home!  Stocks got a lift from Biden’s nominee for Treasury Secretary, Janet Yellen. Yellen called for aggressive fiscal stimulus and the market liked it… even though it was kind-of expected.




Two-president session.  We only get this every eight, or occasionally, 4 years.  We will start today’s session under one President and end it under a new one.  The question is will we feel any different… from a market perspective, that is?  If we filter out all of the bluster, scandals (both real and fake), politics, and brinksmanship, what has the market gotten from ’45’, Trump that is?  His most notable contribution to the stock market has got to be the 2017 Tax Act which helped individuals a bit adding to consumer spending… which you know by now… is always good.  The most grateful recipient of tax love however, was corporate America, which received a HUGE tax break and the ability to repatriate cash stranded in non-US sheltering countries.  The theory was to put more cash in the hands of companies who would hire more employees and invest in new US-based business activity, thus providing a boost to the economy. Well, that didn’t quite work out the way the supply-sided economists thought it would.  The companies weren’t exactly stingy with the cash as many used it to provide bonuses… TO SHAREHOLDERS. They used it for dividends and stock buybacks, which are loved by stock owners.  Cash dividends are applauded… for obvious reasons, while buyback benefits are a bit more ambiguous. Buybacks cause less shares to be outstanding.  If there are less shares outstanding, common stock holders are technically worth more.  In actuality, outstanding shares is the number in the denominator in the highly watched Earnings Per Share (EPS).  When that number goes down, EPS goes up, giving the impression of earnings growth, even though the actual earnings may have fallen.  BUT, that certainly did help markets rally, even in the face of the many challenges created by the Administration.  The Trade War with China, while it set an important precedent, actually cost stock owners growth.  Lax energy policy? Nope, that cost dearly as the energy sector languished under Trump’s tenure, giving up -41.49%.  Cozying up to pipeline builders? Nope, the Alerian MLP Infrastructure Index, which is comprised mostly of midstream energy storage and pipelines fell by -53.91% during Trump’s tenure.  Of course, energy’s woes were compromised by the pandemic, but the sectors were still down quite a bit by the onset of the crisis.  Of course, it wasn’t all losses.  The Nasdaq Composite rose by +135% during Trump’s term in office.  The President did love his social media.  Twitter, his favorite until a few weeks ago, rose by +176% during Trump’s DC days.  You may recall that the President has a particular disdain for Jeff Bezos and Amazon, whose stock soared by +269% during his Administration.  Trump never failed to refer to the New York Times as the “the failing – New York Times”.  Its stock… soared by +222% throughout his stay in the Whitehouse, obviously not failing. One thing the market loves is fiscal stimulus, and President Trump was certainly instrumental in the passing of the $2.9 trillion Cares Act which helped spur the S&P up by +46% since its passing in the early days of the pandemic.  So, by the closing bell, the market will be presided over by ’46’, Joe Biden.  His proposed Treasury Secretary Janet Yellen had a few things to say in her testimony yesterday.  Most notably: the new Administration believes in big fiscal stimulus, no immediate change in taxes, a continued tough posture against China, and a stronger dollar (but not too strong to negatively affect US exports).  The market liked what Biden through Yellen had to say.  Whether that positive vibe will continue or not is the big question.  At this point we have to say ’45’, thank you for your service… ’46’, we wish you luck… we could all use some of that.




Stocks rose yesterday on Janet Yellen’s stimulating testimony, which she gave from her nicely decorated home.  The S&P500 rose by +0.81%, the Dow Jones Industrial Average climbed by +0.38%, the Russell 2000 Index jumped by +1.32%, and the Nasdaq Composite plumped up by an additional +1.53%.  Bonds rose as well and 10 year treasury yields remained unchanged at 1.08%.




– NAHB Housing Market Index (Jan) is expected to come in at 86, unchanged from December.

– Inauguration proceedings will be continuous throughout the day. The Senate is in session.  They will swear in 3 new Senators as lawmakers continue to vet Biden’s cabinet nominees.

– This morning, United Health Group, Proctor & Gamble, Bank of New York Mellon, US Bancorp, Morgan Stanley, and Fastenal all beat earnings estimates.  We will hear from United Airlines, Discover Financial Services, Alcoa, and Kinder Morgan after the bell.


daily chartbook 2021-01-20


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