Five Drivers of Markets in a Biden Administration
The reasons to be bullish on stocks continue to mount.
Bloomberg, January 20, 2021
Government spending only accounts for about 20% to 25% of the economy, but during a pandemic induced depression, it is even more important. We may see an even bigger stimulus in 2021 than 2020, and that should filter into company revenues and profits. As the new administration comes into office, consider their policy goals and priorities: Stimulus, more stimulus and taxes.
There are many drivers of these issues but as we saw in 2020, Keynesian stimulus was one of the very biggest. Consider these drivers in 2021:
Market Reset
2020 Stimulus:
2021 Stimulus:
Even more stimulus
Taxes
How quickly will the post-pandemic economy recover? Are we over- or under-estimating future earnings? Will investors still remain enthusiastic for equities as they get pricier? These discussions are subtly cloaked guesses as to what the world will look like over the next 12 months in a Biden administration, including whether improvements in economic activity and corporate earnings are already reflected in market prices.
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I originally published this at Bloomberg, January 20, 2021. All of my Bloomberg columns can be found here and here.
Via David Grey
