In retrospect: stocks soared after Trump’s tax cuts in 2017 overwhelmed corporate profits and then plunged at record speed when Covid-19 began attacking the United States. Since then, however, they have been rising rapidly, repeatedly reaching the all-time high. Deep political polarization and the worsening of the pandemic were not enough to contain Wall Street.
Biden did not give as much emphasis as Trump to actions as an indicator of the country’s strength or well-being.
“The idea that the stock market is growing is his only measure of what is going on,” Biden said of Trump in the final presidential debate in October. “Where I come from in Scranton and Claymont, people don’t live on the stock market.” (According to the latest Gallup survey, 55% of Americans have some exposure to the stock market, many through retirement accounts.)
Still, Wall Street will be watching to see if the market momentum can be maintained. The chatter has increased in recent weeks, as corporate valuations, especially in the technology sector, have gone up a lot.
“Many investors fear that the stock market has recovered very quickly and that there are signs of excess beginning to emerge in parts of the financial system,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs, told clients this week. “This is a reasonable concern, considering that the recovery of the shares since the low of the market in March last year was remarkable.”
Oppenheimer said that while a correction – or a 10% decline in shares from the recent peak – seems “increasingly likely”, the chances that the shares will enter a new down market, falling 20% from highs recent years, next year look “pretty low.”
He points to expectations for strong global economic growth in 2021 as the pandemic subsides, as well as “unprecedented” political support.
On this front, however, they remain unknown. While Federal Reserve Chairman Jerome Powell emphasized that interest rates could remain at historic lows for the foreseeable future, the fate of Biden’s $ 1.9 trillion stimulus package will depend on its ability to generate some Republican support. . In a divided Washington, this will not be an easy task.
Netflix reaches the age of majority reaching 200 million subscribers
The most recent: the streaming service told investors on Tuesday that it now has more than 200 million subscribers globally, after adding 8.5 million in the fourth quarter of 2020 – exceeding its own expectations.
It was not the only sign that Netflix has become a mature player in Hollywood and Wall Street.
The company also said that it will no longer need to borrow money to finance day-to-day operations and that it will explore the return on cash to shareholders through the repurchase of shares.
Investor’s view: the shares rose 13% in the pre-market trades, causing them to reach their all-time high on Wednesday.
Competition in the streaming market remains fierce, of course. ViacomCBS ‘new streaming service, Paramount +, will go live in early March, the company said on Tuesday – joining an increasingly crowded field that also includes Disney +, Apple TV +, Amazon Prime Video , Peacock from Comcast, HBO Max from AT&T and more.
But investors think Netflix seems to be in a good position to maintain its place in front of the group. UBS, for example, raised the company’s stock to a “buy” rating after it posted profits, citing continued strong global subscriber growth “even [against] growing competition [and] robust growth “in the first half of 2020.
Rich Greenfield of LightShed Partners pointed out on Twitter that, although investors previously seemed concerned about how Netflix would finance its huge content production machine, the tone has changed.
The question now, he says: “What are you going to do with all the cash that you will start generating in 2022 and after?”
Janet Yellen shows Biden’s tough stance in China
Janet Yellen, appointed President-elect Joe Biden to head the Treasury Department, made it clear that the new government will maintain a tough approach to dealing with China – setting the stage for lingering tensions between the world’s two largest economies.
“China is hurting American companies by dumping products, raising trade barriers and providing subsidies to corporations,” she said.
The position was echoed by Antony Blinken, Biden’s nominee to head the State Department, in his comments on Tuesday before the Senate Foreign Relations Committee.
“President Trump was right to take a tougher approach to China,” said Blinken. “I strongly disagree with the way he acted in several areas, but the basic principle was the right one.”
What it means: The battle between the United States and China in trade and technology has been the main source of uncertainty for investors for the past four years. With Biden, it won’t go away.
Next
Joe Biden will take the oath as the next president of the United States at 12 noon Eastern Time.
Tomorrow: economists expect 910,000 more unemployment benefits applications for the first time, a sign of the weakness in the US labor market.