Equities reversed the previous days decline after the President backed a piecemeal approach to aid.  The Administration is backing $1,200 stimulus checks, $25 billion to hard hit airlines and $135 billion for small businesses.

Some are also stating a reason for yesterday’s advance was Biden’s growing lead in the polls and are now speculating that victory by him would bring an increase of federal spending.  There is increasing talks of a “blue wave.”

I would like to regress for a moment.  If federal spending and government intervention is the elixir of stellar economic growth and prosperity, why have the social democratic European countries had and are still floundering?  Government is part of the problem not the resolution to the problem.

However, if an untruth is repeated often enough it viewed as truth until reality suddenly re-appears.

Speaking of reality, Big Tech has a massive reason to fear of a Democratic victory, much less a blue wave.  According to the House, the proposal put forward is the most aggressive antitrust proposal since the Trust-Busting Years when railroads and oil tycoons were pursued.

Some would scoff at this notion, stating that it is only posturing.  I do not agree with this view for it was written by Democratic staff members and the most powerful members of the House as well as the Chairman of and the full House Judiciary Chairman signed off on the proposal.

The Republicans on the subcommittee have been less than enthusiastic stating “the proposal advocates radical proposals that would refashion antitrust law in the vison of the new left.”

Four of the five largest companies in the S & P 500 are targeted, amounting to almost 20% of the index’s capitalization.   Unfortunately, it is almost impossible to win against the long arm of government.  As noted above, government is part of the problem not the resolution to the problem.

There is not a single time in history when government intervention/trust busting produced higher prices of companies/sectors targeted.

Against this backdrop and if the market is all knowing, can a case be made that a Biden victory or Blue Wave is nothing but media hyped fiction?  Technologies led the yesterday’s rebound.  Wow!  This is a unique view!

Commenting briefly about the bond market, the $35 billion 10-year auction was met with tepid demand.  Yields climbed to the highest level in four months.  Is this increase in yield the result of greater than expected growth?  Or is it the result of greater federal spending?  Or perhaps a Biden victory?  I would argue it could be all three of the above.

Last night the foreign markets were up.  London was up 0.47%, Paris up 0.50% and Frankfurt up 0.64%.  China was closed for a holiday, Japan up 0.96% and Hang Sang down 0.20%.

The Dow should open flat amid optimism that lawmakers will reach a stimulus deal.   The 10-year is up 5/32 to yield 0.78%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.