Traders are unphased by the chaos that we experienced on Capitol Hill yesterday as stock futures are set to build more gains today. This is mainly because investors are optimistic about the possibility of more stimulus from Democrats. The US Senate is going to be less cumbersome because Vice President-elect, Kamala Harrison has the power to swing the pendulum in Democrats’ favour as the Senate is split 50/50 between Republicans and Democrats.
Basically, this is the first time in 10 years where Democrats will control the House, Senate, and the White House. This means a strong possibility of bills getting passed by lawmakers. However, it is important to keep in mind that the chaos which we saw yesterday has halted the Electoral vote count, and now, we may have to wait for days before we see the final resolution. Although the outcome is going to be the same, which is the Blue Wave, and traders are already positioned for this.
It is important to keep in mind that the task ahead for Joe Biden isn’t going to be a walk in a park. That is because lawmakers have shown that they have big differences between them, and the public is fully divided. Pushing more aggressive stimulus and fund spending with higher taxes is the strategy that the President-elect, Joe Biden, is going to use. Another round of $2,000 stimulus cheques could sweeten the public as most of the frustration is mainly due to higher unemployment numbers and lower business activity around the country.
Yesterday’s ADP number and Fed meeting remained in the background as traders had not been able to pay much attention to these events following the historic protests at Capitol Hill. One thing which traders should pay attention to is that the US job market has taken a serious U-turn, and it is only a matter of time before it reaches the peak of the Covid level. The ADP number released yesterday gave us a taster for the upcoming US Non-Farm Payroll number, which is due tomorrow. The chances are that tomorrow’s number is going to be a lot weaker because the Weekly Jobless Claims numbers in the previous weeks came in a lot weaker than the market expectations. The FOMC minutes confirmed yesterday that the Fed is still very dovish as some members saw the potential need for future adjustments to asset purchases, which confirms the Fed’s commitment to keeping interest rates unchanged for the foreseeable future.
The most important question that many are asking is whether the risk-on rally can continue? Well, the Dow Jones Industrial Average and the S&P 500 both logged record highs yesterday. Disruption to a peaceful transfer of power has shaped 2021 very differently, and it is likely that this year is going to be immensely problematic. But if the pandemic really comes under control, and the third wave of national lockdown that we see in most of the countries across the globe doesn’t replicate into a fourth wave, we could see some pent up demand for the remaining year. That scenario could boost the global stock market higher.
Bitcoin: Mighty Dollar’s Influence Massively Impacted Yesterday
The unprecedented drama on Capitol Hill has seriously dented the influence of the mighty dollar. As a result, the Bitcoin price printed another record high yesterday. The crypto beast, Bitcoin, is clearly heading towards the next important price level, which is $40K. Only a couple of months back, many would not have believed this when we said that the crypto rally had only just begun because Bitcoin price reaching the 20K price level was only a recovery, and the real bull rally has only begun.