It was one of those days that will never be forgotten. A confluence of events -the long-brewing and growing powder keg of anger, animosity, and distrust finally ignited in front of our eyes on Capitol Hill.
We saw a peaceful protest against what many felt was an unfair election, but it quickly morphed into the kind of chaos that still feels unreal. I cannot believe what I saw. Americans invaded the building where elected officials presided as the count of the Electoral College had begun.
There is no doubt folks have a right to express their frustration, but this was 100% unacceptable.
After we get through the requisite outrage, there are deeply rooted issues that must be acknowledged and addressed. There are too many folks in the country being left behind. And a large swath that does not want to be compensated for lost opportunities.
These people want the ability to determine their future and create their path to prosperity. This feeling isn’t new. However, their sense of urgency and panic - that was held in check for the last four years - is slipping away. What’s left are people standing in a puddle of doubt and anger.
It can’t be brushed off with the Hollywood treatment, and it should not be ignored.
I am sure this stoked the overflow of rage yesterday. Protesters showed their angst by disrespecting the police and threatening lawmakers. It was a disastrous action. It felt like the Twilight Zone - just a surreal situation of protesters pushing through police lines, who were protecting the Capitol, only to watch them rush inside.
Those actions were not justified.
Those actions were un-American.
I worry desperately. We need to address the disenfranchisement of those that have felt voiceless for so long, or they will be pushed off even further, or never addressed at all.
It will be the role of lawmakers and the next administration to not just see the images from yesterday but to trace them back to the wells of despair. Something has to be done beyond stimulus checks.
The federal government will be moving in a new direction that elevates climate change to the most urgent issue facing the nation and the world. Many proposed solutions to arrest climate change will be a tall task when the worst offenders do not plan any changes. It will put even more economic pressure on many of the folks that were in D.C. yesterday.
The violence yesterday was awful. Let’s hope it's not a reason not to hear the legitimate pleas of millions that think everything is going to be taken away from them.
Message of the Market
The stock market gave up amazing gains, as images of the Capitol began to dominate TV and social media.
But at some point, the pullback stalled, and the market rally held up, except for the NASDAQ, where selling in tech stocks was a dominant theme of the session. When the dust settled on this crazy session, market breadth was very bullish.
52 Week High
52 Week Low
In the midst of this, the Federal Reserve released its Federal Open Market Committee (FOMC) minutes, which suggested “tapering” will eventually happen and committed to adopting qualitative outcome-based guidance. Neither happened in the last meeting, however.
Obviously, there is a need for the latter to happen a lot sooner than the former. But the fact of the matter is the Fed has new unofficial mandates that go beyond maintaining healthy labor markets and controlling inflation.
The market knows the Fed isn’t going to hike rates, but soon the market may demand the Fed to prove its commitment to accommodation with more aggressive actions. Meanwhile, so-called cyclical stocks that rally with an improving economy dominated the session.
S&P 500 Index
Communication Services XLC
Consumer Discretionary XLY
Consumer Staples XLP
Health Care XLV
Real Estate XLRE
Yesterday, we added new positions in Communication Services and Industrials in our Hotline Model Portfolio.
Initial jobless claims came in lower than expected at 787,000, down 3,000 from the prior week. Expectations was for 752,000. A better gauge, the 4 week moving average declined by 18,750 to 818,750 compared to 219,750 in the prior year.
To see the chart, click here.
Continuing claims decreased to 5.072 million, down by 126,000. And the 4 week moving average dropped by 177,250 to 5,274,750 compared t 1,736,000 in the previous year