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The Best of What They Said and I Read Week Ending 11/8/2020

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice


 Barron’s – November 6, 2020 – The Stock Market Doesn’t Care Who the President Is – Ben Levisohn

  • “…By all accounts, it should have been a terrible week for the stock market. At the close of trading on Friday, we still didn’t know whether Joe Biden or Donald Trump had won or which party would control the Senate. There was also set to be at least two recounts—one in Georgia, and one in Michigan—with likely more to come. It’s the kind of uncertainty that the market is supposed to hate.”
  •  “Instead, stocks embraced the unknown. The Dow Jones Industrial Average gained 1821.80 points, or 6.9%, to 28,323.40 this past week, while the Nasdaq Composite advanced 9% to 11895.23. The S&P 500 rose 7.3% to 3509.44, its best election week since 1932. The Cboe Volatility Index, or VIX, slumped 35%, its largest weekly drop since the last presidential election and the fourth-largest decline on record. The market’s fear index showed no fear.”
  •  “The consensus quickly coalesced around the idea that a divided government would be good for stocks. Without Democratic control of the Senate—something that may not be determined until January if both of Georgia’s Senate races go to a runoff, which seems likely—there can be no tax hikes, no Green New Deal. Changes will be made, of course, but they will most likely be at the margins.” 
  •  “…The economy might be a better explanation for the market’s surprising strength. Every week we hear that the pandemic is about to make it head south, and every week the data hold up better than expected. On Monday, the Institute for Supply Management said its manufacturing index rose to 59.3, the highest since 2018, while new orders, the most forward-looking component, jumped to its highest level in 17 years. October’s payrolls report was also far better than expected, as the U.S. added 638,000 new jobs and the unemployment rate fell to 6.9%. “The economy is chugging along despite the pandemic,” says Barry Knapp, director of research at Ironsides Macroeconomics.”


 U.S. Global Investors – November 6, 2020 – Frank Holmes

  • “…As I write this, former vice president Joe Biden has not yet been named president-elect, but with him leading in the crucial battleground states of Pennsylvania and Georgia, it looks more and more likely that he will be sworn in this January.  The market seems to have predicted this outcome. If the S&P 500 is up between July 31 and October 31 before an election, it has historically favored the incumbent party. And if it’s down, it has favored the challenger. Following a loss of 5.6% last week, the S&P was underwater about 4 basis points from the end of July.”
  •  “…Legal marijuana is becoming the American norm, writes Bloomberg, as ballot measures passed in Arizona, Mississippi, Montana, New Jersey, and South Dakota, adding to the 33 states that already allow it for medical or recreational purposes. Adult-use pot will be legal in 15 of those states.”


 Bloomberg – October 27, 2020 – A Rare Bipartisan Bill Would Expand Retirement Savings Options – Laura Davison

  • “…New bipartisan legislation to expand retirement saving options for workers is one of the few policies that has a chance of moving through Congress no matter who wins next week’s presidential election.  Representatives Richard Neal and Kevin Brady, the top Democrat and Republican on the House Ways and Means Committee, introduced legislation Tuesday to help workers save more for retirement and encourage employers to offer retirement plans.”
  •  “The bill would automatically enroll employees in their company’s 401(k) retirement plan, increase a tax credit for low-and-middle income individuals who save for retirement, and allow individuals who are at least 60 years old to save more for retirement in tax-favored accounts.  Bipartisan support for the proposal means it could pass both chambers and be signed into law even if Democrats and Republicans continue to split control of the White House and Congress next year.”
  •  “The plan addresses a problem that has been exacerbated by the coronavirus pandemic: Americans haven’t saved enough for retirement. The U.S. Government Accountability Office said last year that nearly half of people age 55 or older have nothing saved for after they stop working, a problem that has likely increased as unemployment has risen and individuals have had to tap savings for day-to-day expenses.”
  •  "The legislation offers new incentives to older savers. It would raise the age at which individuals are required to start drawing on their retirement accounts to 75 from 72. The bill would also make it easier for savers to make charitable donations from funds in their individual retirement accounts.  The legislation includes benefits aimed at young workers, allowing them to pay down student debt instead of contributing to their retirement account, but still receive an employer match in their retirement plan. The plan would also extend flexibility for military spouses who are saving for retirement."

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