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Market Regains Footing On Hopes Of More Stimulus

Market Regains Footing On Hopes Of More Stimulus

Market Regains Its Footing

“Live by the sword, die by the sword.” – Matthew 26, 26:52

Such was the lesson quickly retaught to President Trump when we decided to halt stimulus talks on Tuesday, sending the market careening into the red. By Wednesday, Trump quickly reversed and has been talking up more stimulus all week.

The inherent problem of tying your Presidency to the stock market is that it’s all fine until it isn’t. The market crash in December of 2018, and again in March 2020, should have been a wakeup call. Unfortunately, it wasn’t, and now valuations, deviations for long-term means, and speculation have increased risk significantly.

Also, while more stimulus may be a great short-term “fix” for the economy, and ultimately the market when the Federal Reserve monetized the debt issuance, as discussed in this week’s #MacroView:

“More debt doesn’t lead to stronger rates of economic growth or prosperity. Since 1980, the overall increase in debt has surged to levels that currently usurp the entirety of economic growth. With economic growth rates now at the lowest levels on record, the change in debt continues to divert more tax dollars away from productive investments into the service of debt and social welfare.”

Nonetheless, the market rallied on what is for now “hope” of more stimulus. There is still no deal on Capitol Hill, and the parties are still far apart primarily on funding for states and municipalities.

Market Regains Its Footing

As I penned last week, we were expecting a rally this week.

“Notably, while the rally that we have witnessed from the recent lows has eaten up a fair bit of the previous oversold condition, the MACD “buy signal” was triggered on Friday. Such suggests that we could see some additional buying next week.”

The market did indeed

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