08 Oct LIFE IS INDEED STRANGER THAN FICTION!!
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%.