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I don't want to make this thread about politics, except to map out the lay of the land and predict how that will affect the economy.
We are probably heading for a Biden/Harris presidency and a Republican Senate.
That means the Republicans will get religion on spending. No more stimulus. All those people whose rent was deferred and who could not be evicted, will be evicted.
We put the coronavirus recession on hold until the election. Now that the dust is settling, we appear to have ended up with the worst combo for economic expansion, as Republicans will be incentivized to maximize economic pain in the next two years to try to win the House.
At the same time, no major legislation will be passed for at least two years, and Republican control of the courts means executive action will be severely constrained.
The federal government will be neutered as the effects of the coronavirus recession finally play out.
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.
Breadth of the market indices is essentially flat: 17-14 and 16-14. It is mainly the large cap techs which spend heavily on stock buybacks which just exited the quiet period late last month. 200 billion dollars is being deployed, while the market was oversold on Friday and bounced at the base of the range (don't care to call it a double top). There was a big sell off in the big cap techs on Thursday which made the frontrunning of the buybacks very profitable.
The Republicans wants a much larger PPP giveaway program which was rife with corruption and fraud to the extent people were boasting about the scams. They also introduced a blanket foregiveness bill which was pulled.
The stimulus checks are merely to distract the public which wants them. The main issue for the politicians are the other programs which constitute 70-90 percent of any potential spending bill.
So you're saying that a Biden presidency and a Republican senate will slow down the stimulus juggernaut? (which is the only thing this "market" has going for it- "stimulus")
I disagree. Yes, the Republicans might have more backbone under a Biden presidency than a Trump presidency, but not by much. The "stimulus" will be there. Everyone agrees that "stimulus" is necessary for the economy. The size of the "stimulus" will be somewhat smaller in a Republican controlled senate, but there will still be plenty of it. When the economy is faltering and people are hurting, no one wants to stand in the way of "stimulus."
However, we will overdose on stimulus and end up killing the dollar.
It's been watching the market respond to the the election. The markets were up yesterday, but then they dipped when Trump falsely claimed he won. This morning when Biden looked in better shape, the markets rocketed. It's all sentimental, but it makes sense.
wrong,the market figures no matter who wins,there will be contesting,but with a Republican senate it will rein in all the reckless spending of the democrats.
No matter who wins,there will be a stimulus bill,and it would be HUGE.
Tomorrow jobless figures could put a pause on the market run,plus Biden would be in the White House,sell your AMZN,FB,GOOGL,MSFT,ROKU,ZM and pay less capital gain tax .
It's been watching the market respond to the the election. The markets were up yesterday, but then they dipped when Trump falsely claimed he won. This morning when Biden looked in better shape, the markets rocketed. It's all sentimental, but it makes sense.
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?
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