The rebound from January’s late swoon has been miraculous and we must acknowledge that some degree of perfection, for the landscape we have, is already priced in; an accommodative Fed, $1.9 trillion in fiscal stimulus, and an improving vaccine rollout.
Upon a marathon of votes Thursday night and into Friday morning, Democrats in the Senate have pieced together Biden’s plan through the budget reconciliation process. The news began lifting risk assets late Thursday and those tailwinds carried into the weekend.
Despite the massive beat, a gloomier market backdrop could’ve zeroed in on founder and CEO Jeff Bezos stepping down and marked it as a negative. Instead, the stock is up more than 2%, breaking out of a technical wedge.
We can’t ignore the dash-for-trash, stick-it-to-Wall-Street short squeezes. We do believe the dislodging of many corners of the market last week aided waves of selling or liquidation, but we also think the market was left wanting more on the stimulus front.
The flood gates opened through yesterday’s Federal Reserve policy meeting and U.S. benchmarks closed sharply lower. The committee left policy unchanged, but the risk landscape has been on shaky footing due to ongoing fiscal policy delays in Washington.