The long-awaited exit of U.S. President Donald Trump from the White House is upon us today, Wednesday, January 20, 2021, which will pave way for the entry of President-elect Joe Biden and his vice, Kamara Harris who won the November 3 election against the incumbent.
As the world gears up for the new administration, investors are more optimistic that things will be better under Biden than they have been with Trump. This optimism was evidenced on the stock market with the rising of stocks first after Biden was announced the winner of the election in November last year and now only a few hours to his inauguration.
Contracts on the Dow Jones Index Average added more than 50 points, or 0.2%, as the overnight session kicked off. Shares of entertainment streaming company Netflix (NFLX) spiked 12% in late trading after the company added more users than expected in the Q4 FY2020, surpassing 200 million paid subscribers for the first time ever.
President-elect Joe Biden’s inauguration will take place at the West Front of the Capitol around noon in a scaled-down, socially distant event. There has been beefed up security around the Capitol as Federal Bureau of Investigations (FBI) had warned of protests by Trump supporters on inauguration day.
Biden’s first days in office plans
In his first hours in the office, Biden promised to sign executive orders to address the COVID-19 pandemic, virus-stricken economy, climate change, and racial equity, according to a memo over the weekend from incoming White House Chief of Staff Ron Klain.
In one of the ways Biden pans to revive the American economy that has been hit hard by the pandemic, he unveiled a $1.9 trillion stimulus package proposal last week that would include better stimulus checks than what was passed by Congress towards the end of last year. Bidens proposed stimulus package also includes extended unemployment benefits and aid to state and local governments, among other measures.
Biden’s nominee for the position of Secretary to the Treasury Janet Yellen advocated for significant additional coronavirus relief spending during her confirmation hearing before the Senate Finance Committee on Tuesday. Yellen revealed her readiness to work with the Biden administration on its other priorities as well, which include increasing infrastructure investment, enacting environmental protection legislation, and eventual tax reforms.
As has been the case with previous stimulus packages, the proposed $1.9 trillion stimulus package was not immune to resistance from Republican lawmakers, many of whom were drawn back by passing another major package that they suggested might not be targeted enough to provide support only to those who need it most.
Investors still hopeful despite COVID-19 numbers spiking
Although the U.S. rolled out COVID-19 vaccination last month, only 12.9 million people have been vaccinated from the over 30 million doses distributed, and the number of infections and deaths keeps rising.
Yesterday, Tuesday, January 19, 2021, the U.S. passed 400,000 total coronavirus-related deaths and confirmed infections are in excess of 24 million. Deaths and hospitalizations have spiked in the last week, as the post-holiday spike emerged in full force.
However, investors who are hungry for a better economic future are optimistic that this is bound to change, as Biden promised to ramp up the vaccination exercise, planning to have one million vaccines administered every day.
The president of Payne Capital Management, Ryan Payne issued his analysis of the forward-looking stock market to Yahoo Finance.
“Markets are forward-looking, so it’s not exactly about the immediate coronavirus increase in case, hospitalizations. It is more about what the economy is going to look like later this year.
“And I think when you start looking at [the fact that] you have a new president, you have a Democratic majority in both the House and the Senate.
“The one thing I think we can bet on here is we’re going to see a lot of spending everything from this $1.9 trillion bill they’re trying to pass, on top of the $3 trillion we already passed last year plus the $900 billion we already passed in December, ” Payne said.
He added, “We could see some infrastructure deal down the line which will be another multi-billion dollar bill. We’re just looking at so much liquidity out there, and I think what the market is telling you right now — you’re starting to see interest rates go up, you’re starting to see commodity prices go up — that inflation is a real thing and printing all this cash is certainly going to cause inflation as we look out later in the year.”