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Looking back: Stocks exploded after Trump’s tax cuts in 2017 supercharged corporate profits, then plunged at record speed when Covid-19 began to beat the United States. Since then, however, they have skyrocketed, repeatedly reaching unprecedented heights. Deep political polarization and a worsening pandemic were not enough to hold Wall Street back.
Biden didn’t put as much emphasis as Trump on stocks as an indicator of the country’s strength or well-being.
“The idea that the stock market is booming is its only measure of what’s going on,” Biden said of Trump during the last presidential debate in October. “Where I’m from in Scranton and Claymont, people don’t live on the stock market. (According to the latest Gallup poll, 55% of Americans have some exposure to the stock market, a lot through retirement accounts.)
Even so, Wall Street will be watching to see if market momentum can be sustained. Chatter has risen in recent weeks as valuations of companies, especially in the tech sector, have jumped too high.
“Many investors are concerned that the equity market has rebounded too far and too fast and that signs of excess are starting to appear in parts of the financial system,” said Peter Oppenheimer, chief global equities strategist at Goldman this week. Sachs. “This is a reasonable concern considering that the rebound in stocks from the bottom of the bear market in March of last year has been remarkable.”
Oppenheimer said that if a correction – or a 10% decline in stocks from their recent peak – seems “increasingly likely,” the chances of stocks entering a new bear market, falling 20% from their recent peak. at recent highs, seem “quite low.”
It highlights expectations of strong global economic growth in 2021 as the pandemic abates, as well as “unprecedented” political support.
On this front, however, unknowns remain. While Federal Reserve Chairman Jerome Powell has pointed out that interest rates may remain at historically low levels for the foreseeable future, the fate of Biden’s $ 1.9 trillion stimulus package will depend on its success. ability to generate Republican support. In a divided Washington, it will not be an easy task.
Netflix matures with 200 million subscribers
The latest: The streaming service told investors on Tuesday that it now has more than 200 million subscribers globally, having added 8.5 million in the fourth quarter of 2020 – exceeding its own expectations.
This wasn’t the only sign that Netflix has become a mature player in Hollywood and Wall Street.
The company has also said that it will no longer need to borrow money to fund its day-to-day operations and will consider returning money to shareholders through share buybacks.
Investor Insight: Stocks rose 13% in pre-market trading, pushing them to an all-time high on Wednesday.
Competition in the streaming market is of course fierce. ViacomCBS ‘newly renamed streaming service Paramount + will go live in early March, the company said on Tuesday – joining an increasingly crowded area that also includes Disney +, Apple TV +, Amazon Prime Video, Comcast’s Peacock, AT & T’s HBO Max, etc.
But investors believe Netflix appears to be in a good position to keep its place at the top of the pack. UBS, for example, upgraded the company’s shares to a “buy” rating after reporting earnings, 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 while investors previously seemed worried about how Netflix was going to fund its massive content production machine, the tone has changed.
The question now he says, “What are you going to do with all the money that you start to generate in 2022 and beyond?”
Janet Yellen presents Biden’s tough stance on China
Janet Yellen, President-elect Joe Biden’s candidate for the Treasury Department, has made it clear that the incoming administration will maintain a tough approach to dealing with China – paving the way for prolonged tensions between the two largest economies in the world.
“China is reducing the prices of American companies by dumping products, erecting trade barriers and granting subsidies to companies,” she said.
This position was echoed by Antony Blinken, Biden’s candidate for head of the State Department, in his comments Tuesday to the Senate Foreign Relations Committee.
“President Trump was right to take a tougher approach on China,” Blinken said. “I strongly disagree with how he did it in a number of areas, but the rule of thumb was right.”
What it means: The battle between the United States and China over trade and technology has been a major source of uncertainty for investors over the past four years. Under Biden, that doesn’t go away.
next
Joe Biden will be sworn in as the next President of the United States at 12 p.m. ET.
Coming tomorrow: Economists expect 910,000 additional first-time unemployment claims to be additional, a sign of weakness in the US labor market.
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