Investors give new President a warm welcome
Yesterday, Biden was sworn in as the 46th President of the United States. With this, a new era has begun, fortunately without the feared major disturbances. American investors are happy with the fresh president and gave him a warm welcome to the financial markets by closing at new record levels. The Dow-Jones index closed 0.8 percent higher, the S&P 500 1.4 percent, and the NASDAQ even gained 2 percent. The day’s gains were the best on the day of a new president’s inauguration since President Reagan’s second term in office in 1985. Surprisingly, the rise of the stock markets was led by the FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google). Surprisingly, because they are likely to face tougher regulations under this new administration (see below). So it was not only the swearing-in of the new president that pushed these shares higher. The strong figures from Netflix also contributed to this. The larger than expected increase in new subscribers was positively received by investors. Netflix gained almost 17 percent yesterday on the figures. During the trading day, the five FAANG stocks were all up at least 3 percent. The last time this happened was on 6 April last year. Since Biden’s election victory in early November, the S&P 500 has risen more than 12 percent. This has not happened since the election of President Hoover in 1928. Of course, this is not only due to Biden’s election victory; the sight of vaccines against corona also contributed (heavily) to this.
Straight to work
After the ceremony, Biden did not waste any time and went straight to work in his new official residence at 1600 Pennsylvania Avenue. No less than 15 decrees were signed by him. Among them were such notable ones as the decision to rejoin the WHO, the World Health Organization, and to have the United States rejoin the Paris Climate Agreement. He also went to work on the approval of the previously announced 1 900 billion-dollar massive aid package for the American citizens and businesses affected by the coronapandemic. The death toll in the United States has now exceeded 400,000, making this pandemic more deadly than the number of American casualties during WWII.
Special ‘competition czar’ in Biden administration?
President Biden is considering appointing a special compliance officer for competition and antitrust issues. This official would have to supervise in particular the large American tech companies that are suspected of abusing power and violating competition rules. In particular, the US government is already pursuing legal actions against Facebook and Alphabet (Google) for alleged abuse of power. American politicians are also investigating the elimination of competition by Apple and Amazon. The newly appointed regulator should have a coordinating function between the White House and the Department of Justice and the Federal Trade Commission, the government bodies that currently deal with competition rules.
ECB interest rate decision
This afternoon, the policy committee of the European Central Bank will meet for the first interest rate decision of the year. Little fireworks are expected. The ECB is expected to leave the policy rate unchanged. ECB boss Lagarde is also likely to tell the ECB that it will keep monetary conditions as accommodating as possible throughout the eurozone. It is not yet entirely clear whether the ECB will introduce changes to its ongoing bond-buying programmes. In the last interest rate decision in December, it was also decided to extend the PEPP programme. The so-called Pandemic Emergency Purchase Programme was increased from EUR 1,350 billion to EUR 1,850 billion. In addition, the maturity was extended to at least the end of March 2022, and it was decided that reinvestment would be extended. This afternoon we will see whether this is sufficient for the time being or whether further measures are necessary.