Jan. 6 was a dark day in American history. On a day that should have been devoted to the task of counting the electoral votes, Congress was evacuated as rioters raided the Capitol building. And the stock market doesnâ€™t care.
After rising on Wednesday to a record, Dow Jones Industrial Average futures are looking at a higher open Thursday, with futures up 0.5%.
Sometimes people believe that stock prices should reflect everything they see and feel. That is not the case. The stock market cares mainly about money, especially now that the situation in Washington has returned to something resembling normal.
Bleakley Advisoryâ€™s Peter Boockvar summed it up well in a Wednesday note to clients: â€œThere should be no mystery as to why the markets didnâ€™t care about what happened in the [Capitol] yesterday, however disturbing, disgraceful, and embarrassing it was,â€ he wrote. â€œItâ€™s because it has no bearing on the direction of the economy, earnings, and interest rates. Itâ€™s that simple.â€
The Senate runoff election in Georgia was a far bigger deal, not because itâ€™s making a moral judgment but because of the impact it would have on the economy. Investors are betting that more stimulus will be coming, and that taxes wonâ€™t go up. That would boost economic growthâ€”and corporate earnings too.
And thatâ€™s all the market really cares about.
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Congress Certifies Biden Victory After Mob Storms Capitol
After an hourslong halt to proceedings as violent protesters stormed the Capitol, roaming through the Senate floor and breaking into lawmakers offices, Congress has certified Joe Bidenâ€™s victory in the Nov. 3 presidential election.
- As Congress met for the usually perfunctory duty of certifying the Electoral College results Wednesday, a pro-Trump mob forced their way past Capitol Hill police. The House and Senate went into recess as lawmakers rushed to secure locations before law enforcement responded to restore order.
- A woman who was shot inside the Capitol during the chaos died. Police at one point drew their guns on the floor of the House as Trump supporters tried to enter the chamber through a barred door.
- FBI SWAT teams, members of the D.C. and Maryland national guard, Virginia state police, and Montgomery County police were deployed to help the Capitol Police remove protesters, restore order and do security sweeps before a 6 p.m. curfew went into effect in the capital.
- President-elect Joe Biden called the protest a mob and added that the situation â€œborders on sedition.â€ In a video released on social media after Biden spoke, President Donald Trump told his supporters to go home, but fueled their grievances by saying â€œI know your pain. I know your hurt. We had an election that was stolen from us.â€
- Twitter and Facebook both temporarily suspended Trumpâ€™s account after he posted the video on both platforms because it included false claims about the election. After Bidenâ€™s victory was certified, Trumpâ€™s aide posted a statement from Trump on Twitter that said he disagrees with the outcome and that he would â€œcontinue our fight.â€ He also said an orderly transition would occur on Inauguration Day.
- Business and world leaders, ranging from JPMorgan Chase CEO Jamie Dimon to U.K. Prime Minister Boris Johnson, decried the violence. Members of Trumpâ€™s staff, including Mick Mulvaney, have resigned.
- The National Association of Manufacturers, one of the countryâ€™s largest lobbying groups, suggested that Vice President Mike Pence consider invoking a provision of the 25th Amendment that allows members of the presidentâ€™s cabinet to temporarily remove him from power.
Whatâ€™s Next: Itâ€™s unclear why exactly the Trump supporters so easily breached the police line protecting the Capitol but the former chief of the U.S. Capitol Police, Terrance Gainer, said in an interview Wednesday that there were clear failures. Those failures are likely to be closely examined in the coming weeks.
Ossoff Wins Georgia Race, Giving Democrats Control of Senate
Jon Ossoff emerged victorious from his runoff race against incumbent Georgia GOP Sen. David Perdue, handing Democrats control of the Senate by a slim margin after Raphael Warnock beat GOP incumbent Kelly Loeffler.
- Their victories, in what for decades has been a solidly Republican state, provides a boost for the incoming Biden administration. The size and scope of the legislation President-elect Joe Biden can now pass is significantly larger, even with the GOP holding 50 Senate seats.
- â€œHelp is on the way,â€ soon-to-be Senate Majority Leader Chuck Schumer said Wednesday. â€œOne of the first things that I want to do when our new senators are seated is deliver the $2,000 checks to the American families.â€
- In addition to more direct stimulus checks to most Americans, a Democratically-held Senate opens up the possibility for another round of aid that could run into the trillions of dollars and include additional federal unemployment payments, funding for state and local governments and other items Democrats have backed.
- President-elect Biden will also have more latitude in nominating members of his cabinet for confirmation in the Senate. On Wednesday, Biden put forward Merrick Garland, the federal appeals court judge who was Barack Obamaâ€™s nominee for the Supreme Court in 2016, as his pick for Attorney General.
- Garlandâ€™s nomination will leave a vacancy on the federal bench, which Biden is now signaling he is more confident in his ability to fill with a Democratic majority.
Whatâ€™s Next: Beyond stimulus measures, a Democratic majority in the House and Senate opens up the possibility of more ambitious legislative efforts on things like health care, climate change, and criminal justice reform.
NYSE Will Go Ahead With Delisting Chinese Telecoms
In a major reversal, the New York Stock Exchange said Wednesday it will proceed with its plan to delist three Chinese telecom companies.
- On Monday, the NYSE abruptly called off the decision it announced last Thursday to delist the American depository receipts, or ADRs, of telecoms China Mobile, China Telecom, and China Unicom, by Jan. 11.
- Now, the NYSE says it will indeed follow through with the plan it announced a week ago to delist the three Chinese telecoms to comply with an executive order signed by President Trump prohibiting Americans from investing in companies that do business with the Chinese military.
- The announcement came one day after Treasury Secretary Steven Mnuchin reportedly called the president of the New York Stock Exchange to say that he disagreed with an earlier decision to reverse course on the delisting.
- â€œI hope that this embarrassing incident makes clear that there is a strong, bipartisan consensus that the United States will not allow Chinaâ€™s exploitation of U.S. capital markets, or Wall Streetâ€™s role as facilitator, to continue unimpeded,â€ Sen. Marco Rubio (R., Fla.) said.
Whatâ€™s Next: The number of companies that are removed from U.S. stock exchanges could grow, with the Departments of Defense, State and Treasury considering banning Americans from investing in e-commerce giant Alibaba and tech behemoth Tencent, both of which are listed on the NYSE.
New York Gov. Cuomo Calls for Legalizing Cannabis, Online Sports Betting
New York delivered a win for two vices, announcing proposals for legalizing cannabis and allowing statewide online sports betting.
- For months, analysts have pointed to budget shortfalls spurred by Covid-19 as a potential catalyst for more states to expand online sports betting and recreational marijuana. Gov. Andrew Cuomo delivered on both in one day.
- â€œNew York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in revenue here at home, which will only strengthen our ability to rebuild from the Covid-19 crisis,â€ the governor said.
- Shares of firms in sports betting and cannabis soared on Wednesday, while marijuana stocks had already received a jolt from Georgiaâ€™s Senate runoff. With Democrats taking control of the Senate, bulls expected a clearer path to marijuana decriminalization.
Whatâ€™s Next: Both efforts might be a ways off. Lawmakers in New Jersey debated recreational pot for years before turning to a ballot initiative. Theyâ€™re still figuring out the details on approving sales. Meanwhile, JPMorgan analyst Daniel Politzer forecasts legal online sports betting in New York in 2023.
Britain, EU Head for Vigorous Post-Brexit Battle on Financial Services
A major chunk of trading in euro-dominated shares has been moving from London to European continental exchanges since the beginning of the week, after the U.K. left the EU single market, and the two sides are now headed toward uncharted confrontation over the future of European finance.
- Financial services were not covered by the post-Brexit trade deal struck just before Christmas before Britain and the EU, and Prime Minister Boris Johnson has admitted that the deal â€œperhaps [did] not go as far as [he] would likeâ€ on the matter.
- U.K. financial services providers and banks lost on Jan. 1 the so-called passport that gave them the right to operate without restrictions throughout the EU, and now depend on unilateral decisions from European authorities to extend them an â€œequivalenceâ€ decision based on regulatory convergence, sector by sector.
- Billions of share trading have moved this week from London to exchanges set up in Amsterdam or Paris, to the tune of about Â£6 billion ($8 billion) a day.
- Bank of England Gov. Andrew Bailey told U.K. lawmakers on Wednesday that he did not expect quick equivalence decisions from the EU, but insisted Britain should not become â€œa rule takerâ€ by mimicking EU regulations just for the sake of obtaining an access to European markets.
Whatâ€™s Next: Britain and the EU have pledged to negotiate a â€œmemorandum of understandingâ€ by March to sort out the rules under which financial firms could operate in each otherâ€™s markets. The EU seeks to repatriate business and jobs, and London wants to keep its financial might without abiding by EU regulations.
The way home appraisals are conducted could soon changeâ€”what would that mean for homeowners and buyers?
A federal watchdog agency is investigating ways to modernize the process used to determine how much a home is worth.
The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, issued a â€œrequest for inputâ€ on the policies and practices surrounding home appraisals. The regulator is seeking input on a range of proposals, including relaxing key standards that Fannie and Freddie require lenders to abide by for the loans they back.
â€œModernizing the appraisal process has the potential to create a more streamlined and accurate collateral valuation process,â€ FHFA Director Mark Calabria said in announcing the request for information. â€œBut if modernization is not properly adopted, it could have negative unintended consequences.â€
Indeed, while the proposed changes could lead to time- and cost-savings for consumers, experts told MarketWatch that taking the wrong steps could disadvantage consumers, particularly people of color.
Read more here.
â€”Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Ben Levisohn