The Threecap
Three things to recap this past week.
1. An Election Rebound
After selling off in October, markets quickly rebounded this week after seeing election results. Market indices charged ahead, with the Dow Jones gaining 6.11%, the S&P 500 gaining 6.47%, and the NASDAQ gaining 8.04%. More encouraging economic news has arrived, with the unemployment rate falling 1.0% to a six-month low of 6.9%. The economy appears to be on a slow road to recovery.
Many believe markets reacted positively this week because the expected “Blue Wave” hit a wall, with the Republicans appearing likely to maintain Senate control. Such developments mean “‘any substantial activity on taxes, as well as [new legislation] to control the major tech firms’” would be unlikely to come to fruition, according to chief investment officer Brad McMillan. Moreover, despite many changes due to COVID-19, the election proceeded as normal, with nearly all results coming out by Saturday, certainly calming developments for markets.
2. The Beginning of a COVID-19 Winter
Experts were fearing months ago that COVID-19 would see a strong resurgence in cold winter months, and their predictions appear to be confirmed. In the United States, cases are quickly approaching the 8-digit mark, currently sitting at over 9.8 million.
Internationally, many large nations are struggling as well to contain the pandemic. The United Kingdom was forced to declare another temporary lockdown after cases began exploding. India, Brazil, and Russia lead in case counts behind the U.S., with European nations such as France, Spain, and the U.K. following closely.
3. Biden Declares Victory
Joe Biden has been declared President-Elect, and will become the 46th President of the United States. Biden is expected to have an ambitious policy plan, especially on the economic and fiscal side. Biden is likely to raise taxes on those making more than $400,000 a year, targeting the upper-middle class and above. Moreover, the Biden administration will aim to increase unionization and collective bargaining, seeking to decrease the rising wealth gap in the United States. Finally, the President-Elect has indicated he would like to implement small business stimulus for those hurt by the COVID-19 pandemic.
Advocates have cited a need to address rising inequality in America, while others have pushed back against raising taxes. It remains to be seen what the effect of these policies would be on the overall economy.
Recent Articles
The Federal Reserve’s Dual Mandate
The center of monetary policy in the U.S. is the Federal Reserve System. It’s composed of a board and twelve regional banks, which each have their own boards. It has a mix of public and private elements; it can increase the amount of money in the economy, but also attempts to turn a profit. Based on these characteristics, one might think that it’s extremely complicated. But the Federal Reserve can fundamentally be boiled down to its overarching purpose – the dual mandate.
Exchange-Traded Funds and Mutual Funds
Stocks and bonds are two of the most common and familiar investments that investors are aware of. Both of these are individual securities, granting the investor the ability to select individual investments. However, many people struggle with the responsibility of researching and managing a portfolio. As a result, they turn to mutual funds and exchange-traded funds (ETFs).
Recent Podcast
In this episode, Rohan Gupta and Alex Patel talk to Andy Rachleff, the CEO of Wealthfront, about automated money management. They delve into topics like passive investing, the benefits of automation, financial advisory, and much more!
Check out the episode to learn about the COVID-19 market so far in a simplified way!
Finance Tip
“When you know the impact of little expenses, you will realize that there is nothing little in this world.” ― Manoj Arora