It looks likely that the stock market has avoided the worst, where we get a chance to catch our breath and try to figure out how to proceed with our portfolios.
2020 will go down in history as one of the most bizarre years for stocks ever. This isn’t so much about the size of the waves this year, it’s about the way that the market reacted to these storms, and in particular, the sheer resilience that the market has shown in the face of some very choppy seas.
We started with a view from many that the market looked overbought, the sort of folks that pay a great deal of attention to the ratio of stock prices to earnings. The bears have been demonstrating on the streets for quite a while now, and their protests that earnings matter were particularly loud last year, banging their pots and pans with spoons annoyingly while life went on as normal, meaning that the market continued on its upward trend and put in one of the better years in recent memory in protest to the protests.
Worrying about earnings ratios has always been a false narrative, where people simply impose these assumptions upon the market arbitrarily, without factual substance, and then still claim that they are right in the face of any amount of evidence to the contrary.
2020 started out the same way, although there were already storms brewing on the horizon in China as COVID gained footing. China locked down, and some wondered if the U.S. would end up doing the same thing as this virus hit our shores, but China is an authoritarian regime and we did not expect the same thing to even be possible in a country that limits government power constitutionally as much as our country does, but we were dead wrong, as the constitution got locked in the basement.
The market tanked on fears of this virus, giving up about a third of its value in a single month, in response to some grotesquely overblown predictions where millions of Americans were projected to lose their lives from this, far more than were lost with the Spanish flu, and this crash took no prisoners, where the undertow was strong enough to sink all boats for a time.
Aside from this apocalypse, one that did not even make sense at the time, the risk here was that the U.S. would shut down their economy in response. As things clarified to the point where the predictions of doom lessened considerably, states started to order businesses to close and residents to stay home, our worst fears realized, and the market decided to then look the other way.
We had to withstand a depression-sized economic contraction for a time, not surprising considering the dramatic effects that lockdowns produce, and there is enough to do in order to keep economies moving forward without having to deal with locking it in the cellar as we did.
We rallied in the face of these lockdowns, we rallied in the face of a long road ahead to get back to where we were before all this, and stocks even surpassed the levels we were before all this happened. We were told that it would probably take a couple of years for the economy to fully heal for this, or even longer perhaps, but we just kept rallying.
We faced a potential crisis of even more disturbing nature, as if this economic self-strangulation wasn’t enough, should the Democrats sweep by winning the presidency, the House, and the Senate, where the most radical party and agendas the country has ever seen, by a long shot, would then stand unopposed, this was the biggest worry of all, yet the market still didn’t flinch much.
When the parties were unable to agree on a new stimulus package that our reeling economy was begging for, the market played little heed. As the election and the very real potential for radical socialists running our country for at least the next 2 years getting closer and closer, the market held its ground for the most part, and even all this could not produce the second market crash that was being called for right after the first one ended and we started to rebound.
What stands out the most in 2020 is the sheer resilience that the markets showed, with concerns of overvaluation, the pandemic, the recession, a failure to provide more fiscal stimulus, the continuing restrictions on business, and the very real threat of our economy and our government being taken over by socialist pirates far more radical than anything the country has even seen still didn’t rattle the market.
The market has remained drunk on the expansionary monetary policies of the Fed, and even though they went to the felt by throwing all of their chips into the pot, we weren’t even bothered that there wasn’t much in reserve, the fact that they made the pot this big was enough for us.
An Election Any Dictator Would be Proud Of
The election came and went, one that at the very least has involved a very disturbing amount of corruption. The Democrats and their high powered backers, including tech companies and the popular media, were not willing to stop at anything to win this election, and whether or not we are able to prove enough fraud to unseat Joe Biden, the presumptive winner, what we have discovered already should truly alarm us if we care at all about elections even having the appearance of legitimacy.
Much of this damage cannot even be undone, short of doing the whole thing over again, as you can’t correct things like hundreds of thousands of mail in ballots being backdated to qualify, or things like Democrats filling out ballots on the street and using a Biden Harris van to fill them out on, filling out ballots by the boxful, or whatever else may have happened that was kept out of sight of observers despite a legal obligation to allow partisan monitoring.
The sheer arrogance and lack of concern by Democrats was simply startling, where they considered themselves so above the law that they didn’t even feel the need to disguise their fraud, and as it has been uncovered, all they have to do is deny it and that’s that. Perhaps having the great majority of the media fully bought into this fraud in their zeal to do anything to remove Trump, where the truth doesn’t count for anything and they do anything to cover it up, maybe this level of confidence isn’t so surprising.
Democratic supporters continue to claim that there is no evidence or basis for these accusations, although if they just keep denying it like they continue to do with the very disturbing evidence we have that Joe Biden peddled his influence as Vice President to several countries, where it didn’t matter at all whether the big guy got paid, as having his son get paid for it is more than enough to convict, especially since Joe had the Ukrainian prosecutor that was going after Hunter’s company fired. If it doesn’t suit their agenda, it simply didn’t happen.
So far, we have illegal extensions of ballot deadlines, completely against the constitution, keeping observers away at polling stations and putting cardboard on the windows as well, and intentionally turning down the signature security software allowing for a lot more illegally filled out ballots to get through, ones filled out by Democrats and not the voters themselves, which we have evidence of.
We have pollsters ordered to commit voter fraud, by signed affidavits to support this, testimony from pollsters who risk their jobs in blowing the whistle on their bosses. They were told things like don’t bother checking signatures or even voter registrations, where the dead are not only voting but are even registering to vote after they died.
Machines in many states have Chinese software that has been found to have a “bug” in it that changes a number of Republican votes to Democratic, Democratic campaign workers have been spotted filling out ballots in full view on the street, batches of ballots seemingly turning up from nowhere, with counts like 23,000 for Joe and not a single Trump vote. There is evidence of poll workers coercing and even demanding voters vote Democratic, and video evidence of this going on during “ballot harvesting,” blank ballots being collected door to door and then sold to Democrats, with video evidence of that as well. More and more evidence is emerging every day.
If this is no evidence, this would be like saying that you have a man murdering someone on video, with witnesses, and the perpetrator has testified he did it, but there’s no evidence for an arrest. The hope is if they keep repeating no evidence in the fake news, people will believe it, just like the Russians are behind the Biden racket, which would make Biden’s son a Russian agent if true and make Joe’s misconduct treasonous.
What is at stake here is much more than the presidency, it is the fears of the Republicans that this mail in voting will allow the opportunity for the Democrats to rig the election coming true, and in a way that is even more alarming than we could have even imagined that is so concerning. If this is allowed to happen without real consequence, there will be nothing stopping them from doing it again. The Juntas could perhaps learn a few lessons about running their fixed elections from this party. This is election fixing 3.0 and they even skipped the 2.0.
Some analysts are worried that the degree of uncertainty surrounding the outcome of the presidential election being subject to litigation creates significant risk for the market itself. Ajay Rajadhyasha, global head of macro research at Barclays, reminds us that the market dropped by 6% during the month that the outcome of the 2000 election between Bush and Gore was up in the air, but this was in the midst of a massive crash, one with so much downward pressure that it is impossible to know what effect this election uncertainty actually played with panic in the streets already going on as the tech bubble burst.
It doesn’t matter a whole lot who ends up the ultimate winner here, and as long as the Democrats cannot just pass whatever legislation they want, we hold the fort for the most part and the great majority of the threat will be contained. Sure, the market would be in a better position if somehow Trump is declared the victor, but we have already reckoned with the very strong possibility that Biden will be president, and a reversal of this would just be a bonus.
The Big Worries are Behind Us, Not Ahead of Us
This should be viewed more as our going from losing everything to getting most of it back with the prospects of suffering an even smaller loss should things change. There’s not a lot of damage that Joe can do himself, putting us back in the Paris Climate Accord for instance, and while this and some other declarations would inflict more harm to our economy, this is nothing compared to what could be done if his party seizes power completely by winning the Senate as well.
In the very likely event that Biden will come out on top and be declared president elect, and this does not happen until Congress declares a victory when the electoral college votes get confirmed, the Republicans will very likely keep control of the Senate, in spite of what some Democrats and others may believe.
The count currently is 50-48 in favor of the Republicans, and they only need 1 of the 2 seats set for a runoff in January to secure a majority. Matt Gertken of of BCA Research pegs the Democrats’ chances of winning both contests at 25%, which is what these odds would be if they just flipped a coin, and ignores the fact that these are Republican seats, that the state leans that way, and especially that Republicans secured enough votes in both contests to win outright but just didn’t get to 50% due to multiple opponents.
When we add the fact that Americans in general have a preference toward not having one party run the show completely, and have spoken out against this in a pretty clear way already, and the fact that Republicans feel even more strongly about this, and that this is a Republican state essentially, the chances of the Democrats winning both these races is far less than 25% and this may actually be very close to zero.
We’re left with a scenario not unlike when Obama was president and Biden was his sidekick, which may not be ideal but isn’t too terrible as long as we’re allowed to play defense with the Senate to keep out all that radical legislation that the Democrats had readied for us. Especially compared to the recession, it will be easy to just look away from the political scene as there won’t be the sort of changes to be all that alarmed with, and given the resilience that the stock market has shown us this year, we can pretty much put that to bed now and focus on other matters.
We have been extremely concerned about the risk of this election and can now breathe easier now that the results are in and the path very likely set. Joe Biden will be President, and the Senate will remain under Republican control, and the margin that the Democrats have in the House has now become razor thin as Republicans almost overtook then in what was clearly not a mandate for radical change. We said no to that, thankfully, very thankfully.
The Democrats have been living in fear of the Affordable Care Act, who Joe Biden played Uncle to, being struck down by the Supreme Court of the United States in an upcoming hearing, but there’s almost no chance of this happening. Justice Amy Coney Barrett explained this well when she compared severability to removing a stick in the game of Jenga, to see if the structure still stands. This one does.
Obamacare can still stand without the contentious penalty, because it already stands now after Trump removed this provision, where people basically pay a fine for not enrolling. Democrats used to say that was essential but now admit the plan can survive just fine without the fines, which the Court will almost certainly conclude as well.
Whether the fines themselves are constitutional or not is another matter entirely, and with Joe Biden planning on reinstituting them, this will make things more interesting, but if the Court rules that this law is severable, as expected, this will pave the way to allow it to be severed once again, this time by court order, so even that will be unlikely to see this bring the Jenga stack crashing down.
The constitutionality of this alleged tax is a much more interesting case though, as for this to be constitutional, it has to be found to be a tax and not a fine, even though it looks nothing like a tax and truly is a fine, one that affects a great deal of Americans, and ones of modest means as well.
We might think that this is more of a philosophical matter, but all additional taxation hurts our economy, whether it is a genuine tax or something illegitimately being passed off as one. Real people pay these fines, and they are not happy, nor is the economy if it has to take this punch. It also bumps up against the Constitution, where we may now enough justices who care about doing what they are supposed to be and check their personal biases in the coatroom.
Having Justice Coney Barrett on the court, a jurist who is more committed to the law over one’s own personal biases, certainly helps the cause of those who want to be rid of this penalty, in contrast to the liberal judges on the court such as Justice Sotomayor, who once dissented that affirmative action is constitutional since it achieves objectives she favors. Her benefiting personally from affirmative action was also a deciding factor for her, even though justices are not entitled in any way to impart their own values.
This is what separates conservative and liberal judges, where conservatives seek to interpret and apply the law as judges are supposed to be bound to, instead of seeking to promote their own agendas by citing things like how many people may be without health insurance and such, which are concerns that only lawmakers get to address as part of the political process. Judicial interpretation cannot decide based on the consequences of the law, as their role is to determine the validity of their application.
With the current structure of the Court, there is at least the potential to become rid of Biden’s fines for good, at least until Congress makes new law on this. With the Senate backstopping things, that would keep this away for a couple of years at least.
This is one of the relatively small things that Joe can punch our economy with, and left to himself, he is too feeble to leave much of a mark. A lot of analysts are seeing the road forward as where the potential for crisis lies, as we sweep up the floor from what was a very real concern of a very big crisis that has been all but averted now.
The biggest threat that has been averted is the Democrats spending our way to economic doomsday, and we are not anywhere as far away from this threat as just about everyone assumes. It’s not that our grandchildren will be left with these burdens, as the risk was that we would push the treasuries market to the hilt where we get to the point where we overwhelm the market by flooding it with so many additional trillions, which risks a deadly treasury rate spike, causing a cascade of rate hikes and spurring even more supply in term, on its way to exploding.
While the debt is going to continue to explode to the upside, it was expected to do so in a manner that the market could probably handle, with GDP moving up along with it. When we instead overwhelm short-term capacity, this extra money needs to be lent by someone, and all those trillions that an all-Democratic government would demand to pay for their radical and monumentally expensive agenda could indeed break the bank and lead to the collapse of the U.S. government, a prospect no one of any political persuasion should even want to risk.
This is what we really need to worry about, although shrinking the economy at the same time is not a fun prospect either. This one would at least be survivable, but the only way to undo the damage of a complete conquest would be for the Republicans to themselves hold all the cards, which given the way that the media is so heinously biased against them, might not happen for quite a while.
The level of ignorance toward these threats is a lot like our finding out later that we came within a few minutes of nuclear war when the fingers were taken of the buttons in the nick of time. They then say we didn’t know how close we came to destruction, it isn’t all that much of an exaggeration to say that we did not know how close we may have come to Biden and his mad lot bringing their mighty hands down upon us in a way that cannot be undone, with hideous results.
We’re starting to see a real clamoring for the old saws that so many push generally, such as diversification and balance, although now that the coast is much clearer, the need for defense has lessened considerably. If stocks are fine, we should always prefer to be in them, and when things look grimmer, like at various times this year, if the risk really isn’t that great, it doesn’t make much sense to want to still expose ourselves to situations that are decidedly negative, such as with a Democratic sweep.
We have practiced much more caution lately in the face of these threats, but the fire is mostly over now and the stock market held up like a champ, and the nuclear missile missed and fell into the ocean instead. You never want to second guess yourself with the benefit of hindsight, and those who have been more careful, either watching their positions much more closely as we did or just stepping aside if you aren’t the sort to want to do that or do not have the skills, have acted wisely enough. No one should ever blame you for being careful when it is wise to, especially yourself.