YESTERDAY WAS A RECORD DAY FOR BOTH TECH AND HOUSING SENTIMENT

The WSJ wrote “technology companies are set to end the year with their greatest share of the stock market yet, topping the dot-com era peak.”  The Journal stated that companies involved in the tech sector now compromise 40% of the S & P 500, eclipsing 1999’s peak of 37%.  A major difference between 2020 and 2000 is the massive concentration of wealth in four or five companies as compared to fifty.

Bloomberg opines today’s risk is even greater than that of 20 years ago given antirust lawsuits and investigations that exist on three continents against four of the largest companies in the world.  Bloomberg writes this risk is not remotely discounted, especially as it takes years to resolve these issues.

Speaking of risk, many think a “blue wave” will be positive for the economy and the stock market.  Is this the result that many in both government and Wall Street are Keynesians, an economic philosophy that believes government spending will increase economic activity?

The stock market historically does best under a Democratic administration given the propensity to spend.  However, the amount of proposed deficit spending is at historical levels that is almost equivalent to the failed economic policies of the “Banana Republics.”

Speaking of spending, equities declined yesterday as the odds of another stimulus declined.   Little attention was focused on homebuilder confidence that rose to an all time high in records going back to 1985.  Historically home building [and prices] correlate to economic momentum and rising confidence.

Last night the foreign markets were mixed.  London was up 0.33%, Paris up 0.69% and Frankfurt down 0.20%.  China was up 0.47%, Japan down 0.44% and Hang Sang up 0.11%.

The Dow should open nominally higher after House Speaker Pelosi said differences were narrowing in negotiations.   The 10-year is off 4/32 to yield 0.79%.

 

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