'Relief' In Washington Extends Record Run

December 29, 2020 08:40 AM
Equity Index futures

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Monday's Close

E-mini S&P 500 Futures (March): Settled at 3727.50, up 32.50

E-mini Nasdaq-100 Futures (March): Settled at 12,832.75, up 128.25

U.S. benchmarks are extending their record run on the heels of “relief” in Washington. Still, the drama continues. As expected, the House ran with comments from President Trump last week and yesterday passed a bill increasing direct payments for individuals to $2,000. The legislation is supposed to hit the Senate today, likely to get shot down, and it’s still unclear whether they plan to vote or ignore the maneuver.

Regardless, it echoes a great divide; a divide that this stock market rally may be dependent on. The checks and balances that make our nation great may end up blocking the increased payments, but they’ll quickly come front and center in a week from today when the Georgia runoff election is held for the state’s final 2 Senate seats. For now, Republicans hold a majority which makes for a split Congress. Historically in the year after an election, gridlock outperforms a sweep. Although increased stimulus checks may not get passed, other integral parts of this bull market, such as taxes and Big Tech, are likely to be much safer.

Fiscal stimulus in Washington isn’t the only tailwind. The FTSE 100 and Nikkei 225 are each higher by at least 2%. Last week, in the eleventh hour, the UK and EU reached a post-Brexit free-trade deal and today’s open exudes a sigh of relief. There’s also added strength from the anticipation of UK regulators approving AstraZeneca’s vaccine today. The Nikkei’s historic run continues: after gaining 15% in November, it’s added more than 4% in December, half of which came today. Today’s rip takes the index to the highest point since August 1990, when it was collapsing.

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