Some use the analogy of an individual "paying their bills." This reflects the fact that the debt ceiling does not prescribe the amount of spending, but only ensures that the government can pay for the spending to which it has already committed itself. The debt ceiling had routinely been raised in the past without partisan debate or additional terms or conditions. The Republican Party, which gained control of the House of Representatives in January of 2011, demanded that President Obama negotiate over deficit reduction in exchange for an increase in the debt ceiling, the statutory maximum of money the Treasury is allowed to borrow. The crisis led to the passage of the Budget Control Act of 2011. I own Fluor, J.P Morgan, Merck, Pfizer for one or more clients.The ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit reached a crisis in 2011 that was centered on raising the debt ceiling. If they’re right, I think some beneficiaries could be agricultural commodity companies such as Archer Daniels Midland (ADM), semiconductor makers, Apple AAPL and the big auto makers, General Motors GM and Ford Motor F.ĭisclosure: I own Apple, Nucor and Sterling Construction personally and for most of my clients. Morgan has been writing that a thaw in the frosty U.S.-China trade relationship is less of a long shot than people think. So far, Biden has continued Donald Trump’s hard line on trade with China. That should help financial stocks, notably banks such as J.P Morgan Chase (JPM) and Bank of America BAC. īiden’s reappointment of Jerome Powell as head of the Federal Reserve probably means that interest rates will rise, but slowly. That bodes sell, I think, for pharmaceutical companies such as Merck MRK and Pfizer PFE. He will, I believe, press for increasing access to health care, though nowhere near as fast as his party’s left wing wants. Possible plays here include Sterling Construction Co. I believe Biden will continue to push vigorously for infrastructure spending, following up on passage of the recent infrastructure bill. To tilt the odds in your favor, it may help to try to guess how Biden’s policies will affect the market in the next three years. Whether the market continues to perform well depends in part on unclogging the nation’s ports, combatting the current labor shortage, and containing the latest variant of the coronavirus. Markets prefer strong Presidents, regardless of party. His approval rating lately has been near 43%, down from about 55% in the first days of his administration. Spending on roads, bridges and internet superstructure should add to demand for many firms.īiden’s polling numbers, however, hint that the market’s strength from January to November may not last. Passage of an infrastructure bill also gave the stock market a shot in the arm. Scientists brought out a vaccine for Covid-19 shortly after he took office. Why has Joe Biden done so well, so far? Part of the answer is lucky timing. So the inflation-adjusted gap is more modest. However, inflation has been higher (4.22%) under Democrats than under Republicans (1.80%). Studies by Ned Davis Research show that stocks have gained 7.98% per year under Democratic president, versus only 3.6% per year under Republican ones. Bush and Herbert Hoover bring up the rear – the only three with negative returns. Among Republicans, Donald Trump, Gerald Ford and Dwight Eisenhower have terrific numbers.
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