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Short term market movements mean nothing. It's all sentiment as you say. The markets don't want political chaos and uncertainty, is all I think you can deduce from that.
I have one big question. The economic expansion that began in 2010 and ended in early 2020 was long, and the longer an expansion generally the longer its follow-up recession.
The coronavirus recession was short and rebounded quickly, and was in many ways artificial. It was not caused by misallocating capital during the preceding years, or a seized up financial system. Rather it was a recession by fiat, the bad effects were papered over, and the recovery was sharp. All that makes me think there are still ten years' worth of economic clutter that has accumulated and will eventually need to be cleaned out with an organic recession.
So back to the big question: is the coronavirus recession the recession that will kick off a new expansion cycle, or will there be another recession soon enough?
I think that's the point. Markets want stability. That's why saw the increase today as today's events flagged stability.
We started our recession just prior to covid hitting. We were able to crawl out of it by multi-trillion dollar stimulus package. It's not the covid recession that we should be worried about... it's the bubble that we've built with stimulus over stimulus and cheap lending. I think you're right in that it is coming... and unrelated to covid or the election.
The markets do not reflect the health of the general economy. If it weren’t for the extraordinary stimulus funding from the federal government, my guess is consumer spending and business investment would be down double digits. The cumulative effects of this pandemic are still in our future as small businesses disappear and consumers adjust their spending habits.
Politics and investing are very clearly related, especially at this stage of our history
i agree , at this point in time the two are joined at the hip ..you can not separate them . as anti politics as i am , it is hard to ignore the effects politics are having on our investments and economic well being .
these are unprecedented times we are in ..
politics set the perception of the big future picture and like keeping a big ship on course , many of us nudge our portfolio's in different ways based on the perception and effect we think politics will have on the portfolio.
relative to equities this is the largest position in gold i have held .
but i am more concerned with playing the cards i am dealt the best way i can then i am interested in the politics behind those moves .
kind of like we want to know how to be good parents without knowing all the biology and science pertaining to the formation of that baby .
Last edited by mathjak107; 11-05-2020 at 04:53 AM..
Americans keep thinking the POTUS makes the law when the most important part of our govt is the senate. Whoever is the speaker of the house controls the fate of the country, really.
Whenever McConnell speaks, Obama and Trump has to listen. Neither of them argued or bad mouthed him. That's how powerful the speaker of the House is.
He has strategically blocked Obama's SCOTUS nominees and succeeded in using Harry Reid's nuclear option to the fullest.
Yet Americans only care about Trump when it's the senate that makes the laws. It doesn't matter if Obama made all these executive orders they amount to nothing more than pet projects compared to real laws like the ACA and Freedom Act.
Americans keep thinking the POTUS makes the law when the most important part of our govt is the senate. Whoever is the speaker of the house controls the fate of the country, really.
Whenever McConnell speaks, Obama and Trump has to listen. Neither of them argued or bad mouthed him. That's how powerful the speaker of the House is.
He has strategically blocked Obama's SCOTUS nominees and succeeded in using Harry Reid's nuclear option to the fullest.
Yet Americans only care about Trump when it's the senate that makes the laws. It doesn't matter if Obama made all these executive orders they amount to nothing more than pet projects compared to real laws like the ACA and Freedom Act.
1) The trade war will stop. Markets will like that.
2) The election demonstrated that the population is done stressing out about covid. They don't care anymore. Few governors are going to impose stay-at-home restrictions now. Might see a few lockdowns at the county and city levels. We might get a mask mandate; that'll be the extent of it. If I were a local official I would start planning to increase ICU and morgue capacity, because it seems like people are just ready to be done regardless of how many get sick and die.
3) There is still the Fed who will do QE Infinity if need be.
4) Taxes will not go up. Markets will like that.
5) They will keep the budget the same and just deficit spend the shortfalls from low taxes.
1) EXACTLY CORRECT!
Not a big fan of Jim Cramer, but he said exactly that a few weeks ago. With a Biden/Harris election you have more of a Free Trade scenario with China as opposed to a Fair Trade scenario under Trump/Pence. Markets generally prefer the former scenario and lends more confidence to rise in stock prices for many companies. I'm buying more stocks right now.
2) Correct, unfortunately the rural red states will be hit very hard if case numbers continue to increase as they lack healthcare infrastructure and hospitals in addition to large expanses of rural areas with no hospitals at all.
3) Fed will continue to do the same as it has, asset inflation will begin to become a larger problem, interest rates will remain at 0% indefinitely due to a weak labor market and higher unemployment rates. Consumer spending will remain below pandemic levels as we have saving rates at greater than 10% currently.
4) Taxes- higher end corporate tax rates might increase, any middle class tax increase would be more tied to what happens at the local level via property tax increases due to increased assessments going back to asset inflation.
5) The Biden/Harris administration will be more fiscally conservative than Trump/Pence- I expect to see the federal budget deficit decline at the end of their four year term.
Our country has spent almost $6 trillion on "stimulus"
And what have we got from all that "stimulus?" Basically a stagnant economy.
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