Great Week For Markets; Not So Much For Democracy

January 10th, 2021

Larger Stimulus Checks?

Yes on this front. Expect at least $2,000 checks to get out quickly, pushing equities even higher. This is already baked into the market, but there's room for upside - especially with larger checks. Dems to Raise Taxes? Not so fast. While it’s true the Dems secured Senate rule following victories in Georgia, considering the razor-thin majority and current state of the economy, tax reform might not be a priority in 2021. This bodes well for stocks. Political Unrest and Markets: When it comes to the performance of the financial markets, we don't think political unrest or the outcome of the Georgia runoff will inhibit the economy's ability to grow. And based on performance of the S&P, NASDAQ, and Russell 2000 this week, neither does the market. Watch Big Tech: Apple, Tesla, Microsoft, Amazon, Google and Facebook make up a record chunk of the S&P - over 25%. In a post COVID world, or if/when there is a market correction, these stocks will be the first to decline. Volatility Index (^VIX): We do expect, however, the volatility index to stay high. This provides opportunities for stock pickers as the market makes broad swings by the day and week (e.g., Russell 2000 strength this week). Oil on a Run: As we discussed in our 2021 Market Forecast, oil is already starting to perform, closing this week over $50 / barrel. This is a level last seen almost a year ago in a pre-COVID world. As the economy gets back on track in a post vaccine recovery, oil will break through $65 / barrel. Oil is a good investment right now. Run Russell Run: The small cap Russell 2000 ran wild this week, closing up almost +6.0%. This is a massive number, and once again suggests the rotation from large cap to small cap continues. Bitcoin Surge: The digital cryptocurrency surged to over $40,000 Saturday for the first time ever as the total value of the cryptocurrency market surpassed $1 trillion this week. Bitcoin was trading at $7,800 a year ago. We maintain that bitcoin will be a mainstream currency in the near future. And that's your one minute weekly market scoop.

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