In last month’s post we talked about the market signal that indicated the high possibility that Joe Biden would win election. It may be not much of a surprise to see the election outcome based on the polls and market signals.  But a blue wave did not come as some analyst expected. A split Congress may still be the case.

Here is what check and balance of power comes. A split Congress means the most aggressive policy proposals may be hard to pass. This includes a big increase of corporate tax and initiatives to fund green energy and infrastructure. A fifth COVID-19 relief bill may be the priority for the administration, but a package would have to be smaller than previously discussed to get through the Republican Senate.

Biden Administration is expected to continue hard stance with China though some tariff may be rolled back.  According to estimates from Strategas Research Partners, removal of the China tariffs would increase 2021 earnings for the S&P 500 by more than 5%.

Split Congress means that it will be difficult to tackle some persistent problems in the economy. However, it’s friendly for stock market. From Year 1950 to Year 2019 the average S&P500 annual return in split Congress is at least 3.8% more than one party-controlled congress.

The biggest relief so far after Covid-19 outbreak is that the vaccine developed by Pfizer and partner BioNTech proved better than expected at protecting people from Covid-19 in a pivotal study. The progress of vaccine development seems to be on the track as expected. The news gives hope to those people who are undergoing another wave in Europe and our states. We believe that a well planned fighting against Covid-19 will ensure economy recovery next year.

Before next spring comes, in this dark winter, please take care of yourself and your families. You are welcome to discuss with me if you have any questions, as I am always here to help.

 

IMPORTANT DISCLOSURES

This information has been designed for general informational and educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. Such offers can only be made where lawful under applicable law. These materials have been obtained and derived based on information from public and private sources that Pearl Wealth Management LLC believes to be reliable. However, no representation, warranty or undertaking, stated or implied, is given as to the accuracy or completeness of the information contained herein, and Pearl Wealth Management expressly disclaims any liability for the accuracy and completeness of this information. Pearl Wealth Management does not intend to provide investment advice through these materials and does not represent that any market position, economic forecast, securities or services are suitable for any investor. Investors are advised not to rely on these materials in the process of making a fully informed investment decision and they do not render business, tax or legal advice. Each client or prospective client should consult his/her own attorney, business advisor and tax advisor as to legal, business, tax and related matters concerning the information contained herein. The information, opinions and views contained herein have not been tailored to the investment objectives of any one individual, are current only as of the date noted and may be subject to change at any time without prior notice. Past performance does not guarantee future results. All investing involves risk of loss including the possible loss of principal.


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