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The U.S. Stock market (Dow Jones Industrial Average: DJ-30) closed around 31008.69 Monday, slips almost -0.29% (-89 points) on 11th hour Trump chaos and doubts about big fiscal stimulus despite Biden trifecta. On Monday, as highly expected, House Democrats, led by Speaker Pelosi have introduced a resolution to impeach outgoing President Trump for a second time, setting the stage for a vote on Wednesday unless VP Pence uses his constitutional authority to remove the president from power (under 25th Amendment).
Speaker Nancy Pelosi issued this statement after House Republicans blocked a request for Unanimous Consent to take up legislation by Congressman Jamie Raskin calling on the Vice President to mobilize the Cabinet to activate the 25th Amendment to remove the President:
“On Wednesday, the President incited a deadly insurrection against America that targeted the very heart of our Democracy. The President represents an imminent threat to our Constitution, our Country, and the American people, and he must be removed from office immediately.
Today, in pro forma session, Leader Hoyer introduced a Unanimous Consent request to take up legislation by Congressman Jamie Raskin calling on the Vice President to mobilize the Cabinet to activate the 25th Amendment to remove the President.
The House Republicans rejected this legislation to protect America, enabling the President’s unhinged, unstable and deranged acts of sedition to continue. Their complicity endangers America, erodes our Democracy, and it must end.
The House will next take up the Raskin legislation in regular order to call upon the Vice President to activate the 25th Amendment to remove the President. We are further calling on the Vice President to respond within 24 hours after passage.
As our next step, we will move forward with bringing impeachment legislation to the Floor. The President’s threat to America is urgent, and so too will be our action.”
As per reports, although, Pence has not issued any official remarks on DNC/Pelosi's request to move Trump immediately from the White House (Presidency), he was open about the proposal but wants to meet Trump before any such unprecedented executive harsh action (invoking 25th Amendment).
On Monday, a senior White House official confirmed that Pence has met with Trump and had a good conversation:
"The two had a good conversation. They reiterated that those who broke the law and stormed the Capitol last week do not represent America's first movement backed by 75 million Americans. President Trump has no intention of resigning his office before his term comes to an end on January 20. And Vice-President Pence has no intention of invoking the 25th Amendment of the Constitution to remove President Trump is unfit to discharge his duties---as Democrats are demanding. They pledged to continue the work on behalf of the country for the remainder of their term”.
‘Traitor’ Pence was victimized by Trump to allow the EV counting in the Congress, leading to Capitol Hill seize last Wednesday (6th Jan) and demand of ‘open hanging’ of Pence by some Trump supporters (rioters). As per reports, Pence is also furious with Trump’s Capitol Hill chaos, but he is also concerned about more ‘madness’ from Trump if the U.S. Congress tries to remove him through the 25th Amendment. Thus Pence is ensuring a smooth transition process on 20th Jan.
The market is now almost relieved that Trump will leave the White House of his own by 20th Jan (even without participating in Biden's inauguration or congratulating him) and need not to be ‘escorted out’. Thus the focus is now on Biden admin and his strategy to combat COVID and the corona recession. The incoming President Biden said Trump should no longer hold office, though he said his legislative agenda is the priority, including a multitrillion-dollar stimulus package (CARES Act 3.0).
On Monday, Biden tweeted:
$600 is simply not enough when you have to choose between paying rent or putting food on the table. We need $2,000 stimulus checks.
The work of the next four years must be the restoration of democracy and the recovery of respect for the rule of law, and the renewal of a politics that’s about solving problems — not stoking the flames of hate and chaos.
Folks, I just received the second dose of my COVID-19 vaccine — and just like the first dose, it was safe, quick, and painless. I urge everyone to get vaccinated once it’s your turn. Because only together can we save lives and beat this virus. Getting America vaccinated will be one of the greatest operational challenges we’ve ever faced, but my administration will spare no effort to get it done. We’re going to ensure the vaccine is distributed quickly, equitably, and free of charge to every American.
The stimulus addicted Wall Street is getting some boost from Biden’s repeated call for $2000 stimulus checks (CASH Act) despite some concern over some centrist/moderate Democrat’s opposition. But techs were under renewed pressure after several social media platforms including Twitter, FB, IB, and YouTube suspended Trump’s account to prevent further political riots.
Amazon slips after Twitter's alternative social-media platform Parler sued the e-commerce giant, alleging antitrust violations, following its removal from the cloud-hosting service Amazon Web Services (AWS). Meanwhile, multiple big U.S. corporates companies, including GS, JPM, Microsoft, Visa, and Citigroup to name a few, came out over the weekend and Monday noting plans to reviews to suspend political donations to Trump & co and especially to those Republicans, voted against EV result.
There is a mass-exodus from Twitter, mostly by die-hard Trump supporters and also from WhatsApp to Signal, Telegram (over recent privacy notice by FaceBook). The market is concerned about negative implications on ad revenue for such continuing mass-exodus from Twitter and other listed social media companies.
The market is now concerned about the runaway valuation of Wall Street despite COVID stimulus and vaccination optimism. The Fed is now indicating QE tapering after Dec’21 as by Mar’22, both sides of the Atlantic (U.S.-Europe) should achieve significant herd immunity against the invisible enemy and the society/economy should operate almost normally.
The valuation of SPX-500 at a glance:
As per the current run rate/trend, the CY20 EPS maybe around 97.24, and assuming gradual normalization (U-shaped recovery), the CY24 EPS maybe around 171.49, and with an average PE of 22, the fair value would be around 3830. The SPX-500 already made 3826.69 Monday on hopes & hypes of Bidenomics and elimination of COVID; i.e. it’s discounting the CY24 projected earnings. Ideally, Wall Street should discount now CY23 EPS as herd immunity should be achieved by H1CY22. In that sense the CY23 fair value should be around 3195; i.e. pre-Nov election low. The question is whether the Fed will allow such 15% correction in SPX-500/Wall Street?
The risk-assets may correct on CARES Act 3.0 disappointment as, despite Biden trifecta, it’s not 100% guaranteed amid razor-thin majority and the reality that some centrist Democrats may oppose any big-bang CARES Act 3.0 or CASH Act ($2000 COVID relief checks almost every American) amid surging U.S. debt. All focus, now on actual action by Biden admin after 20th Jan inauguration (for CARES Act 3.0 and any tax hikes).
Technical Outlook: SPX-500, DJ-30, and NQ-100 (Futs):
Technically, whatever may be the narrative, sustaining above 30800, Dow Future may scale 32000 levels; SPX-500 now has to sustain over 3800 for 3980-4000, while sustaining above 12500, NQ-100 may scale 14300 in the coming days.
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