US retail sales jumps 5.3%, thanks to $600 stimulus checks


The $600 stimulus checks got Americans shopping again

NEW YORK — Those $600 stimulus checks got Americans shopping again.

After three months of declines, retail sales soared a seasonally adjusted 5.3% in January from the month before, the U.S. Commerce Department said Wednesday. It was the biggest increase since June and much larger than the 1% rise Wall Street analysts had expected.

The $600 stimulus checks, sent out at the very end of last year, pushed people to buy new furniture, clothing and appliances.

Darryl Crum bought a new washing machine with his stimulus money, since his old one wasn’t spinning clothes well enough anymore. He chose a model that was made in America and bought it from a family-owned store instead of the major chain he usually gets appliances from.

“As I see it, the goal was to stimulate the economy,” said Crum, who is retired and lives in DeKalb, Illinois. “And I contributed.”

How long spending will continue without more stimulus checks remains to be seen.

Retail sales slumped in the last three months of 2020 as stimulus money dried up, job growth was nonexistent and a surge in virus cases kept people away from stores during the critical holiday shopping season. In fact, the Commerce Department said Wednesday that December’s drop was actually larger than it first reported, revised to be down 1% instead of a decrease of 0.7%.

But economists expects stronger economic growth in the second half of this year as vaccines are more widely distributed and Americans are less fearful of catching the virus.

Besides strong sales at furniture and appliance stores in January, sales jumped an eye-popping 23.5% at department stores after slumping 3% in the last year. Online sales soared 11% and spending at restaurants, which have been hard hit by coronavirus restrictions, rose 6.9% last month.

“American shoppers blew the doors off retailers in January,” said Sal Guatieri, an economist at BMO Capital Markets, in a note to investors. “Many households treated themselves after a less-than-merry holiday season.”

Wednesday’s report covers about a third of overall consumer spending. It doesn’t include haircuts, hotel stays and other services, which have been badly hurt by the pandemic.

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Follow Joseph Pisani on Twitter: @ josephpisani

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Global spending on green economic stimulus slowly tracking upwards: study



FILE PHOTO: Larches stand in the snow near the village of Seefeld, Austria, November 14, 2019 REUTERS/Angelika Warmuth/File Photo

February 12, 2021

By Matthew Green

LONDON (Reuters) – Massive post-pandemic stimulus packages are mostly failing to support action to tackle climate change or halt the loss of biodiversity, but the amount of green spending is slowly tracking upwards, according to a study https://643e8587-b887-4b39-86d3-edefb98f6abf.usrfiles.com/ugd/643e85_ff2e6bc7fbd242e7bcb50d05b7219e8b.pdf published on Friday.

Advocates of rapid action to slash planet-warming emissions see the packages as a once-in-a-generation opportunity to invest at the scale needed to a catalyse a shift to a low-carbon economy in time to avoid catastrophic global warming.

Of a total of $14.9 trillion in stimulus spending announced globally since the pandemic began, so far $1.8 trillion is being used to mitigate the impact of polluting sectors such as energy, transport, industry, farming and waste, the report found.

Nevertheless, moves by countries including the United States, Canada, China, Japan and others to support sectors such as renewable energy, electric vehicles or afforestation suggest recoveries are becoming more green-tinted, said the study by think tanks Vivid Economics and Finance for Biodiversity.

“We are seeing momentum building towards a greener stimulus package, but there’s still a long way to go,” Jeffrey Beyer, an economist at Vivid Economics and co-author of the report, known as the Greenness of Stimulus Index, told Reuters.

Although U.S. spending has so far mostly propped up business as usual, President Joe Biden’s moves to act on climate change and environmental protections since taking office in January sharply improved the country’s ranking.

Canada’s ranking also gained after the government announced a range of green investments in sectors including energy efficiency and ecosystem restoration.

Japan was ranked the top green stimulus country in Asia after adopting measures designed to boost cleaner energy and transport, although the gains were outweighed by the country’s continued backing for fossil fuels.

China’s score, also weighed down by its support for heavy industry, improved due to plans to expand wind and solar.

(Reporting by Matthew Green in London; Editing by Matthew Lewis)



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Changing political winds – and a unique crisis – allow Democrats to go it alone on stimulus package


The last time a Democratic administration tried to push through a major economic stimulus in a time of crisis, painstaking negotiations with Republicans resulted in a watered-down compromise. Now, President Biden and the Democratic Party are looking to go big — and potentially go it alone — on a massive stimulus package.

Biden has met with Republican senators and stated his desire to get their votes on his $1.9 trillion American Rescue Plan, meant to help battle both the COVID-19 pandemic and the economic damage it’s done to millions of Americans. However, both the new president and Democratic leaders in Congress are moving forward with a process called reconciliation that would allow them to pass much of the relief plan without a single Republican vote.

Both the size of the package and their approach to gaining GOP votes are departures from how the Obama White House and congressional Democrats handled the aftermath of the 2008 financial crisis.

“The way I see it, the biggest risk is not going too big, it’s if we go too small,” Biden said Friday. “We’ve been here before. When this nation hit the Great Recession that Barack and I inherited in 2009, I was asked to lead the effort on the economic recovery act to get it passed. It was a big recovery package, roughly $800 billion. I did everything I could to get it passed, including getting three Republicans to change their votes and vote for it. But it wasn’t enough. It wasn’t quite big enough. It stemmed the crisis, but the recovery could have been faster and even bigger. Today we need an answer that meets the challenge of this crisis, not one that falls short.”

U.S. President Joe Biden speaks during a meeting with Vice President Kamala Harris, Speaker of the House Nancy Pelosi (D-C.A.), and the Chairs of the House committees to discuss a coronavirus relief package in the Oval Office of the White House in Washington on Friday, February 5, 2021. (Stefani Reynolds/The New York Times/Pool via Getty Images)

President Biden at a meeting on Friday in the Oval Office to discuss the coronavirus relief package. (Stefani Reynolds/The New York Times/Pool via Getty Images)

At the start of Obama’s tenure, with the economy in tatters and large majorities in both chambers, Democrats sought Republican votes while attempting to appease the most conservative members of their own caucus. Obama and Biden did get three Republican votes in the Senate but none in the House, and the total cost — roughly $800 billion — was decried as too small by many economists at the time of its passage, leading to the slower recovery the current White House is hoping to avoid this time around. The price tag came down from $920 billion after negotiations between two Republican senators from Maine, Olympia Snowe and Susan Collins, and Sen. Ben Nelson, a moderate Democrat from Nebraska.

“These aren’t easy times, obviously, for America,” said Snowe when explaining her vote. “Given the gravity of the circumstances economically, I thought it was important to be part of a process that could yield a consensus-based solution.”

Despite concessions meant to earn Republican support that weakened the legislation, Obama was still criticized for not following through on his promises of bipartisanship and unity.

“That this is bipartisan legislation is simply not accurate,” Sen. John McCain said at the time. “We want to work with the other side, and this is not the example that I think the American people wanted.”

Sen. Chuck Grassley, R-Iowa, complained that Republicans “didn’t have a chance to negotiate,” while the GOP’s Senate leader, Mitch McConnell, decried the cost, saying, “Yesterday the Senate cast one of the most expensive votes in history. Americans are wondering how we’re going to pay for all this.”

Democrats were also displeased with the final package, with then-Sen. Tom Harkin of Iowa stating, “I am not happy with it. You are not looking at a happy camper. I mean, they took a lot of stuff out of education. They took it out of health, school construction, and they put it more into tax issues.”

The crises are different — a pandemic that has killed nearly 500,000 Americans while upending life for millions more versus a total economic collapse. But while today’s Republicans have also attempted to turn Biden’s calls for bipartisanship and unity against him by criticizing him for going it alone on COVID-19 relief, the White House has taken a broader view of bipartisanship.

U.S. Senate Minority Leader Mitch McConnell (R-KY) speaks to reporters after the weekly Republican caucus policy luncheon on Capitol Hill in Washington, U.S., January 26, 2021.  (Jonathan Ernst/Reuters)

Senate Minority Leader Mitch McConnell speaks to reporters on Capitol Hill on Jan. 26. (Jonathan Ernst/Reuters)

White House press secretary Jen Psaki has repeatedly said that the relief legislation is bipartisan because of the wide support it shares in the country, even among Republicans, even if it doesn’t garner any GOP votes. A recent poll from Yahoo News and YouGov showed more Americans supporting than opposing all 20 pieces of Biden’s agenda, including 74 percent support for $2,000 checks and 58 percent support for a minimum wage increase.

“The president ran on unifying the country and putting forward ideas that would help address the crises we’re facing,” Psaki said Friday. “He didn’t run on a promise to unite the Democratic and Republican Party into one party in Washington. This package has the vast majority of support from the American public. This is something that people want. They want to see it passed. They want these checks to get into communities. They want this funding to go to schools. They want more money for vaccine distribution.”

Republicans have also attempted to criticize Biden for both the cost of the package and the process of using reconciliation, citing the deficit and national debt. But their use of reconciliation to pass a massive tax overhaul in 2017 primarily benefiting the wealthy has undercut their argument and earned a dismissal from the president.

“What Republicans have proposed is either to do nothing or not enough,” Biden said Friday. “All of a sudden, many of them have rediscovered fiscal restraint and the concern for the deficits. But don’t kid yourself: This approach will come with a cost. More pain for more people for longer than it has to be.”

The shift in Democratic strategy has a number of roots. There are the presidential campaigns of Sen. Bernie Sanders, the democratic socialist who now chairs the Budget Committee and will be a key figure in reconciliation, along with the rise of Rep. Alexandria Ocasio-Cortez, who has become a prominent figure in Democratic politics and an outspoken advocate for progressive positions.

There were also the actions of former President Donald Trump, who advocated for $2,000 checks and paid little attention to the deficit throughout his term, diminishing arguments from the right about fiscal concerns, in addition to the Federal Reserve changing its policies on inflation and unemployment. Finally, Democrats have dealt with over a decade of McConnell slowing the Senate to a crawl while in the minority and running roughshod while in the majority. Their frustrations finally boiled over when combined with the urgent crisis facing Americans.

Sen. Bernie Sanders, D-Vt., during a hearing on Jan. 27, 2021 on Capitol Hill in Washington. (Graeme Jennings/Pool via AP)

Sen. Bernie Sanders at a hearing on Capitol Hill on Jan. 27. (Graeme Jennings/Pool via AP)

This time around, even senators hailing from states Trump won easily aren’t balking at the 10-digit price tag on the legislation. Last week, Sen. Joe Manchin of West Virginia said he wasn’t opposed to the administration’s $1.9 trillion cost but wanted a bipartisan process. Manchin has expressed opposition to some details of the rescue plan, including a $15-per-hour minimum wage and eligibility for $1,400 checks, but he voted to advance the reconciliation process. Trump won the Mountain State by nearly 40 points in 2020.

Sen. Jon Tester of Montana, a state Trump won by 16 points, said earlier this month in a CNN interview, “I don’t think $1.9 trillion, even though it is a boatload of money, is too much money. I think now is not the time to starve the economy.”

The Senate is key in these negotiations, as House Speaker Nancy Pelosi holds a narrow Democratic majority.

In addition to moderate Democrats being open to the large number, the White House has publicly rejected an economist who has previously had an outsize influence in the party. Larry Summers was treasury secretary under Bill Clinton and a key adviser for the Obama administration who pushed for the 2009 stimulus to be smaller. Last week, in a Washington Post op-ed, Summers made a similar argument, saying $1.9 trillion was too large and could open the door to a devastating inflationary cycle.

Speaking at the White House podium on Friday, Biden’s economic adviser called Summers’s assertion that Biden’s team wasn’t properly concerned with the potential for inflation “flat-out wrong.”

“I think that the idea now is that we have to hit back hard, we have to hit back strong if we’re going to finally put this dual crisis of the pandemic and the economic pain that it has engendered behind us,” Jared Bernstein said. “We’ve constantly argued that the risks of doing too little are far greater than the risks of going big, providing families and businesses with the relief they need to finally put this virus behind us.”

Sen. Brian Schatz of Hawaii summarized a popular Democratic response to Summers, writing, “Why would we listen to the economist who admits he went too small last time if he’s warning us to go small again? I swear this town is nuts. It’s like people can only remember thirty names and so they just keep going back to the same people.”

Cover thumbnail photo illustration; Yahoo News; photos: AP, Stefani Reynolds/Bloomberg via Getty Images, Getty Images.

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Rather than increased taxes, borrowing to fund Budget stimulus, says Nirmala Sitharaman


Finance Minister Nirmala Sitharaman said Friday the Budget FY22 provides for enhanced government capital expenditure, especially in infrastructure, health and agriculture sector. The Budget also seeks private sector participation in a big way and provides space to set up of private DFIs, she said at a post-Budget interaction with top CEOs held by the Confederation of Indian Industry (CII).

Though the government will provide some capital for the proposed Development Financial Institution (DFI), the body will also raise capital from the market. In addition, the DFI Bill will provide legislative space for private DFIs.

Similarly, the asset reconstruction company to manage non-performing assets will be floated as a holding company by the banks themselves, with support from the government, she said.

“Contrary to the expectations of a Covid-19 tax, the Government has chosen to fund the Budget stimulus through higher borrowing, rather than increased taxes,” she said, as per a Finance Ministry statement. The spending push will focus on high multiplier areas like infrastructure which would facilitate private investments in power, roads, ports, airports, apart from healthcare and agriculture.

CII president Uday Kotak said the Budget focus on growth and transparency was on right track. Budget proposals also displayed the government approach of encouraging private enterprise and respecting the markets, he said.

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Dow Jones Rallies As Kamala Harris Breaks Senate Stimulus Deadlock; GameStop Surges Amid Breakouts


The Dow Jones Industrial Average rallied as Vice President Kamala Harris cast her first tiebreaking vote in the Senate to advance the coronavirus stimulus package. Meanwhile, a GameStop (GME) rally was fading while Nike (NKE) and Cisco (CSCO) were the best blue-chip performers.




X



Among EV stocks, Tesla (TSLA) and General Motors (GM) were up slightly. Big 2020 winner Zoom Video Communications (ZM) made a bullish move. Software firm ChannelAdvisor (ECOM) was among stocks passing buy points.

Vice President Harris cast the tiebreaking vote after the Senate was deadlocked 50-50 over the coronavirus relief package. The party-line vote came after a marathon 15-hour session considering amendments.

The House is looking to pass a stimulus bill within two weeks. Democrats are looking to force through a rescue package with no Republican votes if necessary.

“On Monday we will begin working on the specifics of the bill,” Pelosi told reporters after meeting with President Joe Biden in the White House. Biden has proposed a $1.9 trillion package, but Republicans say the price tag is too high.

Nasdaq, S&P 500 Poised To End Week Higher

The Nasdaq was the best-performing major index of the day, tacking on around 0.6%. Seagen (SGEN) was leading with a gain of around 14%, with Activision Blizzard (ATVI) and Zoom Video close behind.

U.S. Stock Market Today Overview

IndexSymbolPriceGain/Loss% Change
Dow Jones(0DJIA)31150.09+94.23+0.30
S&P 500(0S&P5)3887.95+16.21+0.42
Nasdaq(0NDQC )13854.58+76.84+0.56
Russell 2000 (IWM)221.11+2.49+1.14
IBD 50 (FFTY)46.55+0.62+1.35
Last Update: 2:46 PM ET 2/5/2021

The S&P 500 was only just behind the Nasdaq, rising by 0.4%. Strong performers included casino stock Wynn Resorts (WYNN), which rose around 8%, and Estee Lauder (EL).

Volume was mixed compared with the same time on Thursday. It slipped more than 7% on the Nasdaq and rose around 4% on the NYSE.

Sectors were almost all positive. Materials and consumer staples were the top performers, with technology the only laggard.

Small caps were outperforming the major indexes. The Russell 2000 gained just over 1%.

Growth stocks were performing best of all, with the Innovator IBD 50 ETF (FFTY) gaining around 1.4%. Digital Turbine (APPS) was the top IBD 50 stock, rising by more than 12% after soaring 20% Thursday on earnings.

Nike Stock Boosts Dow Jones

The Dow Jones Industrial Average was lagging the other major indexes. However, it was still up 0.3% as it tries to reach on an all-time high.

Sportswear giant Nike was the top performer, rising by more than 3%. It is closing in on a flat-base buy point of 148.05. Its Composite Rating of 73 is not ideal. Cisco Systems was another standout performer, rising by around 2%.

GameStop Rallies After Robinhood Move

GameStop stock rallied more than 10% Friday, but was well off session highs. It is on track to sink more than 80% for the week.

The rally came after Robinhood lifted trading restrictions on the Reddit short-squeezed stocks. GME shot up amid coordinated trading by retail investors using the WallStreetBets chat room on Reddit.

The end of the trading limits came after Treasury Secretary Janet Yellen met with federal regulators Thursday over market volatility stemming from GameStop stock and the other short squeezes.

Among other stocks promoted on the chat room, cinema chain AMC (AMC) fell more than 5%, while BlackBerry (BB) gained almost 7%.

Zoom Video Stock Retakes Key Benchmark

Zoom Video was a notable outperformer, rising more than 7%. This saw the stock move decisively clear of its 50-day line after several session trading around the key technical benchmark.

The coronavirus lockdown play was one of the big winners in 2020, up nearly 400%.

ZM stock was added to SwingTrader earlier in the session after a bullish move over the 400 level.

Tesla Stock Rallies As Nio Hits Skids

IBD Leaderboard stock Tesla rallied almost 1%. It will be aiming to end in positive territory after two down days in a row. The stock is still on track to close up for the week.

Tesla stock still has a best-possible IBD Composite Rating of 99, helped by stellar 12-month price performance. It’s trading near highs and holding above the 800 level after finding support at its 21-day exponential moving average.

Auto giant General Motors was up around 0.3%. GM stock is trying to once again reach a profit-taking zone after previously breaking out from a cup base on positive EV news. The buy point was 46.81.

Chinese rival Nio looks set to fall for the second day in a row as it gave up around 2%. It is on track for a second down week in a row. A previous breakout from a cup base with a 57.30 buy point failed because it erased a double-digit gain from the buy point.

These Stocks Pass Buy Points

Retail software stock ChannelAdvisor broke out of a cup base with a 22.42 buy point. It formed a first-stage base after a strong recovery from coronavirus-crash lows.

The RS line has been spiking since the start of 2021. It is also up more than 420% from its 12-month lows. ECOM stock has a strong Composite Rating of 93.

Translate Bio (TBIO) also broke out of a cup base. The buy point here is 28.14. Its relative strength line is in new high ground, confirming the breakout’s strength.

TBIO stock has a strong Composite Rating of 90, but it’s not profitable yet. It went public in June 2018.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.

YOU MIGHT ALSO LIKE:

These Are The Best Robinhood Stocks To Buy Or Watch Now

See 22 Stocks Expecting 100% To 800% Growth In Q4

Get Full Access To IBD Stock Lists And Ratings

What’s New In IBD Leaderboard? Check Out Top Growth Stocks Here

These Are The 5 Best Stocks To Buy And Watch Now



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Can my ex-husband file a joint tax return without my consent? He tried to take both my stimulus checks, but I got the better of him


Dear Moneyist,

I’m 62 years of age, I have stopped working and I am currently receiving Social Security. My husband is intending to file a joint tax return, and told me straight out that he does not intend to give me any of our joint tax return, because he said that I am no longer working. What can I do about this? I was discarded after 40 years of marriage.

He also tried to keep my $600, but I was ready for him. I persuaded him to pay for a washer and dryer and I managed to get my $1,200 stimulus by the skin of my teeth. I took the $1,200 out while divorce proceedings were occurring and I still had bank access. (He got angry, but I still managed to get the better of him.)

The Moneyist: ‘I feel like she has joined some abusive cult’: My wife makes $25,000 and only gets 1.5% annual pay raises. What can I do?

The Internal Revenue Service only has a 2019 joint tax return, as we were still husband and wife in 2019. Last year, he filed our joint return electronically against my wishes and without me knowing, and deposited the tax return in his bank account. Our divorce was finalized last November, so I know longer have access to his bank account.

Do I have any legal right to the return? Can he file a return without my consent, and no signature? How do I get the IRS to recognize me as a separate person for any stimulus that comes my way in 2021? I assume the IRS will use my 2020 tax return? I got a five-figure settlement from him in our divorce instead of alimony. Do I have to file taxes on the settlement?

Discarded After 40 Years

Want to read more? Follow Quentin Fottrell on Twitterand read more of his columns here

Dear Discarded,

You have asked me a lot of questions, and I will endeavor to answer them. Before I do, however, I want to offer two pieces of advice. Firstly, file a 2020 return. Secondly, hire an accountant to go over your finances. It can be a difficult transition when someone else — namely, your ex-husband — has been taking care of the finances and filing your tax returns. 

Thirdly, it’s time to cut the emotional and fiscal connection to your ex. If you don’t want him to file joint returns, don’t hit him up for money for a washer and dryer. Your divorce has been finalized. That’s as good a time as any to not depend on him for anything. Anytime he does you a favor, even if it’s something he owes you, it complicates your newfound freedom.

The Moneyist: My ex-husband put his wife on his life-insurance before he died, going against our divorce. Now she’s battling me in court

As for the IRS, you can verify your identity with the IRS here. The phone lines are open, but customer-service support is limited at this time. You can select your state here for the Taxpayer Advocate Service, and report fraud here. It’s possible to file a joint tax return when you are still going through a divorce, but he should have sought your signature to do so.

Is your divorce settlement taxable? Such questions are best answered by your divorce attorney prior to your divorce to minimize your tax liability. The Tax Cuts and Jobs Act eliminated deductions for alimony payments. Whether or not, divorce settlements are taxable can depend on how they are structured; read more on that here.

The time has come to take matters into your own hands: Contact the IRS, file a tax return, talk to an accountant, circle back with your attorney, stop playing games of cat-and-mouse with your husband over stimulus checks and washers and dryers, and warn him that it is illegal to file a joint return without your consent, and tell him you will take action if he does.

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

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Biden on Immigration and Covid-19 Stimulus, Trump Impeachment: Live Updates


Credit…Anna Moneymaker for The New York Times

Former President Donald J. Trump will offer his first formal impeachment defense on Tuesday, when his legal team is scheduled to deliver to the Senate a written answer to the House’s charge that he incited a deadly insurrection last month when a mob of his supporters assaulted the Capitol.

The former president is all but certain to wave off the bipartisan charge as illegitimate, but the exact shape of his defense remains to be seen after a last-minute shake-up of his legal team. While Mr. Trump is said to have wanted the trial to include a full defense of his bogus election fraud claims that helped ignite the attack, his advisers and Republican senators are pushing a less inflammatory argument that trying a former president is simply unconstitutional.

The filing is scheduled to arrive alongside a lengthier written brief from the House impeachment managers preparing to prosecute Mr. Trump for “incitement of insurrection” that outlines their own theory of the case. Taken together, the two documents should provide the clearest preview yet of how Mr. Trump’s second impeachment trial will play out when it begins in one week.

Though Republican senators appear to be lining up to once again to acquit Mr. Trump, the arguments could determine the difference between a near-party-line verdict like the one that capped the former president’s first trial or a bipartisan rebuke.

Few facts in the case are in serious dispute. TV news broadcasts carried live video on Jan. 6 of Mr. Trump encouraging thousands of his supporters outside the White House to go to the Capitol and “fight like hell” to overturn the election by confronting lawmakers who were meeting there with Vice President Mike Pence to formalize his loss. Rioters dressed in Trump garb and chanting “hang Pence” violently clashed with the police and ransacked the Capitol, sending lawmakers and the vice president fleeing.

The House managers, led by Representative Jamie Raskin, Democrat of Maryland, plan to vividly highlight that course of events in their pretrial brief. They will argue that the Jan. 6 assault was the climax of a monthslong campaign by Mr. Trump to sow doubts about the election, spread false claims that he won and then finally use Congress to try to overturn President Biden’s victory.

People familiar with the prosecution said the filing would also include a detailed argument that the framers of the Constitution intended impeachment to apply to officials who had committed offenses while in office.

Mr. Trump sharply criticized the impeachment push in the waning days of his presidency and argued that the remarks he gave on Jan. 6 to thousands of supporters he summoned to Washington were “totally appropriate.” The House moved within a week of the riot to impeach him.

His lawyers, Bruce L. Castor Jr. and David Schoen, will have to walk a fine line to placate both Mr. Trump and Republican senators, many of whom have disavowed Mr. Trump’s false claims to have won the election and criticized his actions on Jan. 6.

Senator John Cornyn, Republican of Texas, warned the president’s team on Monday to steer away from rehashing his grievances and debunked theories about election fraud. Better, he said, to focus on rebutting the particulars of the House’s charge.

“It’s really not material,” Mr. Cornyn told reporters in the Capitol. “As much as there might be a temptation to bring in other matters, I think it would be a disservice to the president’s own defense to get bogged down in things that really aren’t before the Senate.”

President Joe Biden returning to the White House after visiting injured service members at Walter Reed National Military Medical Center in Bethesda, Md., on Friday.
Credit…Anna Moneymaker for The New York Times

President Biden plans to sign three executive orders on Tuesday aimed at further rolling back his predecessor’s assault on immigration.

In one order, the president will direct the secretary of homeland security to lead a task force that will try to reunite several hundred families that remain separated under former President Donald J. Trump’s “zero tolerance” policy, which sought to discourage migration across the country’s southern border. More than 5,000 families were separated.

The Senate is expected to confirm Mr. Biden’s nominee to run the Homeland Security Department, Alejandro N. Mayorkas, on Tuesday.

Under Mr. Biden’s order, the federal government will seek to either bring parents to the United States or return children to parents who are living abroad, depending on the wishes of the families and the specifics of immigration law.

In two other orders, Mr. Biden will authorize a review of Mr. Trump’s immigration policies that limited asylum, stopped funding to foreign countries, made it more difficult to get green cards or be naturalized, and slowed down legal immigration into the United States

Mr. Biden is to formally announce the three orders on Tuesday afternoon at the White House. They help satisfy some of his campaign promises but underscore the difficulty the new president faces in unraveling scores of individual policies and regulations.

Senate Minority Leader Mitch McConnell of Kentucky had strong words about Representative Marjorie Taylor Greene, Republican of Georgia.
Credit…Oliver Contreras for The New York Times

Senator Mitch McConnell said on Monday that the “loony lies and conspiracy theories” embraced by Representative Marjorie Taylor Greene amounted to a “cancer” on the Republican Party, issuing what in effect was a scathing rebuke to the freshman House Republican from Georgia.

In a statement reported earlier by The Hill, Mr. McConnell of Kentucky, the minority leader, never named Ms. Greene, but he referred to several of the outlandish and false conspiracy theories she has espoused and warned that such statements were damaging the party.

“Loony lies and conspiracy theories are cancer for the Republican Party and our country,” Mr. McConnell said. “Somebody who’s suggested that perhaps no airplane hit the Pentagon on 9/11, that horrifying school shootings were pre-staged, and that the Clintons crashed J.F.K. Jr.’s airplane is not living in reality. This has nothing to do with the challenges facing American families or the robust debates on substance that can strengthen our party.”

House Republican leaders in the past week have been mostly silent as pressure mounted to respond to the cascade of Ms. Greene’s problematic social media posts and videos that have surfaced in the past week, in which she endorsed a seemingly endless array of conspiracy theories and violent behavior, including executing Democratic leaders.

Mr. McConnell’s comments intensified pressure on Representative Kevin McCarthy of California, the minority leader, who is to meet with Ms. Greene later this week amid calls from outside Republican groups and some members of his own party to revoke the Georgia freshman’s committee assignments.

Ms. Greene offered her own retort in response to Mr. McConnell on Twitter, saying “the real cancer” on the party was “weak Republicans who only know how to lose gracefully.”

As Republicans splinter over how to deal with Ms. Greene, Democrats are seizing on the infighting to make her the avatar for an array of G.O.P. lawmakers.

The Democratic Congressional Campaign Committee on Tuesday began a $500,000 advertising campaign on television and online tying eight House Republicans, including Mr. McCarthy to Ms. Greene and QAnon, an effort to force them to make a public affirmation about Ms. Greene.

“Congressman Don Bacon,” an ominous-sounding voice intones in the ad targeting the Nebraska Republican, “he stood with Q, not you.”

The strategy is similar to the one Republicans employed against Democrats last summer during the protests over racial injustice, when they sought to paint all Democrats as in favor of defunding the police, including President Biden, who repeatedly said he did not favor it.

Democrats in Washington have adopted Ms. Greene as the symbol of the post-Trump Republican Party, aiming to elevate her profile as part of an effort to divide the G.O.P. while seeking to force Republicans to vote on whether to allow her to remain on House committees. On Saturday, Speaker Nancy Pelosi’s press office issued a news release under the headline “Minority Leader McCarthy (̶G̶O̶P̶)̶ (QAnon) Embraces Marjorie Taylor Greene.”

House Democrats on Monday indicated that they were prepared to unilaterally remove Ms. Greene from her committees if Mr. McCarthy does not act, advancing a measure to strip her of assignments that will be considered by the House Rules Committee on Wednesday.

Protestors surrounded the Capitol as they breached the doors on Jan. 6.
Credit…Jason Andrew for The New York Times

Nearly a dozen people who the authorities said made politically motivated threats by social media or phone have been charged with federal crimes — most of them were nowhere near Washington on the day of the Jan. 6 riot.

In recent weeks, law enforcement has arrested a Proud Boys supporter in New York accused of posting violent threats on the social media network Parler; a Colorado man charged with sending a text about “putting a bullet” in Speaker Nancy Pelosi; and a man near Chicago implicated in a voice mail message about killing Democrats on Inauguration Day.

Even though they were not physically present during the Jan. 6 attack on the Capitol, they have become part of its sprawling fallout, as investigators scour the country to track down hundreds of rioters and examine whether right-wing extremist groups were involved in organizing the attack.

Law enforcement agencies have long struggled to decipher whether online statements could lead to real danger, wary of bringing cases hinged largely on speech that could be protected by the First Amendment. But the volume of tips about threats has skyrocketed since the Capitol assault, compelling some officials to decide not to wait to see if violent language developed into action.

When law enforcement officials are concerned about a violent social media threat that has not led to any real-world action, that person will often get a knock on the door from the F.B.I. with a warning. But former officials have called the Capitol riot a “9/11 moment” for domestic violent extremism, a catalyzing event that has pushed local and federal resources around the country to focus on one top priority, with a much lower tolerance to wait and see if threats materialize.

Brian Miller was sworn in as Special Inspector General for Pandemic Recovery during a Senate Banking, Housing, and Urban Affairs Committee nomination hearing on Capitol Hill in Washington in May. 
Credit…Pool photo by Alex Wong

The Biden administration has moved aggressively to undo former President Donald J. Trump’s policies and dislodge his loyalists from positions on boards and civil-service jobs, but it has hesitated on a related choice: whether to remove two inspectors general appointed by Mr. Trump under a storm of partisan controversy.

At issue is whether the new administration will keep Eric Soskin, who was confirmed as the Transportation Department’s inspector general in December, and Brian D. Miller, a former Trump White House lawyer who was named earlier in 2020 to hunt for abuses in pandemic spending.

Both were confirmed over intense Democratic opposition after Mr. Trump fired or demoted a number of inspectors general last year, saying he had been treated “very unfairly” by them.

By ousting or sidelining inspectors general who were seen as investigating his administration aggressively, Mr. Trump undercut a longstanding tradition that presidents refrain from firing inspectors general without cause.

Mr. Trump also named inspectors general who were overwhelmingly opposed by Democrats — breaking with another tradition that nearly all inspectors general since Congress created the independent anti-corruption watchdog positions in 1978 were confirmed unanimously or by voice vote without recorded opposition.

The Biden team wants to repair what it sees as damage to the government wrought by Mr. Trump through his many violations of norms. It also wants to restore and reinforce those norms, according to people briefed on its internal deliberations about inspectors general dating back to the campaign and transition.

“It’s very possible — and it would be a real mistake — for the Biden people to remove those I.G.’s because they were appointed by Trump,” said Danielle Brian, the executive director of the Project on Government Oversight, a government watchdog group.

Ms. Brian was one of the few outside observers to call attention to a little-noticed push by Senator Mitch McConnell of Kentucky, then the majority leader, to get Mr. Soskin confirmed as the Transportation Department inspector general. The 48-to-47 vote to confirm Mr. Soskin made him the first such official to take office on a purely party-line clash.

The office Mr. Soskin now controls has been investigating whether Mr. Trump’s Transportation secretary, Elaine Chao, improperly steered grants to Kentucky as her husband, Mr. McConnell, was seeking re-election there. During the lame-duck session, Mr. McConnell used his power to prioritize getting Mr. Soskin confirmed over four other inspector general nominees who had been waiting for floor votes longer, raising the question of why he was trying to ensure that a Republican appointee would control that post even after Mr. Biden took office.

Earlier in the year, only one Democrat voted to confirm Mr. Miller, who had worked in the Trump White House. Others rejected him on the grounds that he was seen as too close to the Trump administration to aggressively hunt for waste or fraud in pandemic spending during an election year.

The Biden team appears not to have reached any decision about what, if anything, to do about Mr. Soskin and Mr. Miller.



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Dow Jones Futures Loom: What To Do Before Monday’s Market Open; GOP Stimulus Compromise Floated, GME Stock In Focus


Dow Jones futures will reopen Sunday evening, along with S&P 500 futures and Nasdaq futures, with investors looking for signs that the stock market rally will find support or keep retreating. A group of centrist GOP senators proposed a $600 billion stimulus compromise.




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Last week the major indexes broke through key levels, with leading stocks also struggling. The stock market rally may be undergoing a character change. Investors need to be more cautious, perhaps reducing exposure, especially if they haven’t already done so.

The GameStop (GME) saga is likely far from over. GME stock, AMC Entertainment, Koss (KOSS), Express (EXPR) and other short-squeeze plans had another mammoth week of ultra-volatile gains. But the risks are extremely high. Investors are better served following a consistent strategy and trading rules, not taking wild bets.

The GME stock experience has the Robinhood trading app reeling, while regulators are eyeing the situation.

China-based Tesla (TSLA) EV rivals Nio (NIO), Xpeng Motors (XPEV), Li Auto (LI) and BYD Co. (BYDDF) will report January sales in the coming days, perhaps as early as Monday. All four EV stocks suffered sharp weekly losses, with Nio stock closing slightly below a buy point. Tesla stock also retreated last week following its earnings miss.

Keep an eye on MSFT stock. Microsoft (MSFT) retreated below at least one buy point Friday but closed the week with solid gains. It’s the best-looking tech titan after fellow Dow Jones component Apple (AAPL) reversed lower last week on its earnings.

Microsoft, Tesla and Apple stock are on IBD Leaderboard. Microsoft stock also is on IBD Long-Term Leaders and the IBD 50.

GOP Stimulus Compromise

A group of 10 centrist Republican senators on Sunday proposed a $600 billion stimulus package that would extend extra jobless aid through June and provide more vaccination funding. It would also include direct checks of up to $1,000, but with lower income limits. The group noted that a $900 billion stimulus bill just passed last month, while some funding remains from prior relief packages.

President Joe Biden has touted a $1.9 trillion stimulus package with $1,400 checks with higher income limits.

Getting 10 Republicans on board would mean a stimulus package could get 60 votes to override a filibuster.

Democrats are mulling using budget reconciliation bill to pass stimulus with a bare majority, but there are downsides to that. One, it’s unclear if anything close to $1.9 trillion could pass the House and Senate. Second, the reconciliation bill must be budget neutral or better over 10 years, and can only be used once a year. Biden would like to use reconciliation later this year for a big spending package, perhaps for infrastructure and health care, that would be financed with sharp tax hikes on corporations and capital gains.

Dow Jones Futures Today

Dow Jones futures will open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.

Keep an eye out on silver and related stocks, as social media pushes a #silversqueeze message. The iShares Silver Trust ETF (SLV) rose 5.6% last week.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


Legendary growth investor Mark Minervini joins IBD experts in Monday’s Must-Watch IBD Live.


Coronavirus Cases

Coronavirus cases worldwide reached 103.42 million. Covid-19 deaths topped 2.23 million.

Coronavirus cases in the U.S. have hit 26.73 million, with deaths above 451,000. The actual number of Americans who have contracted Covid-19 may have topped 100 million.

New Covid cases are falling sharply in the U.S., with hospitalizations also tumbling. Deaths appear to have peaked as well. California has lifted restrictions on much of the state, while New York City will allow indoor dining starting on Valentine’s Day.

Coronavirus Vaccines

Coronavirus vaccinations have picked up over the last several days, topping one million shots for 11 straight days, with 1.6 million or more in the last three. Nearly 29 million shots of the Pfizer or Moderna (MRNA) vaccine have been given as of Jan. 29. While the country is months away from herd immunity, as vaccinations expand that should start to have an impact on the spread.

Meanwhile, more vaccines are on the way.

Novavax (NVAX) said Thursday night that its Covid vaccine was 89.3% effective in a late-stage U.K. trial. But it was 95.6% effective vs. the original coronavirus strain and 85.6% effective vs. the highly contagious U.K. strain. A separate trial found that it’s 60% effective vs. a South African variant.

Johnson & Johnson (JNJ) said its one-shot vaccine is 72% effective in the U.S., but less so in trials in Latin America and South Africa. J&J fell 3.6% Friday. Novavax skyrocketed 65% to a new high. Moderna stock leapt to a high but pared its gain to 8.5%.


What Is A Short Squeeze And What Is Going On In GameStop, AMC


Stock Market Rally Last Week

U.S. Stock Market Today Overview

IndexSymbolPriceGain/Loss% Change
Dow Jones(0DJIA)29980.84-622.52-2.03
S&P 500(0S&P5)3714.04-73.34-1.94
Nasdaq(0NDQC )13070.70-266.46-2.00
Russell 2000 (IWM)205.47-3.25-1.56
IBD 50 (FFTY)43.12-0.96-2.18
Last Update: 4:10 PM ET 1/29/2021

The stock market rally last week started off strong, but sold off Wednesday and Friday for big losses. Selling was broad-based.

The Dow Jones Industrial Average fell 3.2% in last week’s stock market trading. The S&P 500 index lost 3.3%. The Nasdaq composite skidded 3.5%, or 4.8% from Monday’s all-time intraday high.

Microsoft stock fell 2.9% on Friday to 231.96, back below the 232.96 buy point, according to MarketSmith analysis. But shares still rose 2.7% for the week. That followed a 6.25% jump for MSFT stock in the prior week. Microsoft stock is still above early entries such as 228.22, which arguably was the best resistance point.

In contrast, Apple stock fell 5.1% last week, and 9% from Monday’s all-time high. Shares fell below their buy point on Thursday and through the 21-day line on Friday.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 6.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) skidded 6.6%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 2.7%, even with MSFT stock as the top component. The VanEck Vectors Semiconductor ETF (SMH) retreated 5.9%.

This is an important time to read The Big Picture.

GME Stock Won’t Stop

GME skyrocketed 400% last week and 1,625% for January. AMC stock shot up 278% for the week and 525% last month. KOSS stock erupted for an 1,816% gain last week and 1,760% for the month. Express stock rallied 235% last week and 559% in January.

But that belies enormous volatility. On Thursday, GME stock plunged 77% in less than 90 minutes from its intraday high to low.

Brokerages, especially Robinhood, have come under fire for restricting trades, at least temporarily, on GME stock and other squeeze plays. Some of that reflects higher collateral requirements from clearinghouses. Robinhood is struggling to navigate the situation in terms of finances and public relations.

WallStreetBets, the subreddit group that has helped fuel the short squeeze wave, now has 7.5 million members, doubling in two days. That indicates how many more people, often with little investing experience, may trying to ride the wave. But that also means millions of potential investors buying, say, GME stock at 300 or more — a far cry from the 18.84 at the end of 2020 or 4.01 at the end of last July.

In a game of musical chairs, you don’t want to be the one left standing. When the squeeze plays finally end, GME stock, AMC stock and others will likely come under enormous pressure.

Beating the market consistently requires a lot of hard work and sound principles. Jumping into wild-story stocks is nothing like that.


Nine Investors Instantly Make $16 Billion On GameStop Stock ‘Squeeze’


China EV Sales Loom

China electric-car makers Nio, Xpeng, Li Auto and BYD had a rough time last week but have boomed over the last several months, as production and deliveries skyrocket. Can the companies and stocks keep up the momentum?

All these EV makers are ramping up output as fast as they can, with pro-EV license plate policies in Shanghai and elsewhere fueling demand. So expectations are generally high for January sales.

However, some government policies may wane after February. Meanwhile, China EV supply is set to explode. In addition to Nio, BYD, Li Auto and Xpeng, many other global automakers, local giants and startups flooding the market.

Tesla is looking to double production from its Shanghai plant in 2021. Volkswagen (VWAGY) is beginning a huge EV push in China with the ID.4.

If supply starts to outstrip demand, the impact on sales and prices could be fierce.

In particular, the Nio EC6 crossover faces competition from the Tesla Model Y and the upcoming VW ID.4. The made-in-China Model Y, which began deliveries last month, is slightly cheaper than the EC6. Meanwhile, the soon-to-launch, made-in-China ID.4 is $20,000 cheaper than the Model Y.


Learn How To Time The Market With IBD’s ETF Market Strategy


Nio Stock, Tesla Stock

Nio stock fell 8% last week to 57, just below a 57.30 buy point. Shares could end up forming a new consolidation with a 67.09 entry.

Li Auto stock sank 6.4% and Xpeng stock nearly 15%, both closing slightly below now-declining 10-week lines. Investors should probably wait for Li and XPEV stock to retake late-January highs before starting a position.

BYD stock lost 8.2%, reversing from record highs to about its 21-day line. The profitable EV and battery maker is extended from a buy zone.

Tesla stock fell 6.3% last week after earnings missed and core margins came in well below views. Shares closed below their 21-day line for the first time since Nov. 16, when news broke late that Tesla stock would join the S&P 500 index. The TSLA stock chart doesn’t look damaged, but it also doesn’t have a reasonable buy point in sight. Tesla stock likely needs to forge a new base or rebound from its 50-day or 10-week line before investors start or add to a position.

Stock Market Rally Analysis

The stock market rally suffered serious losses on Wednesday and Friday, with earnings and guidance from Apple, AMD, Facebook and Tesla among the catalysts. But to understand last week’s retreat you have to start at the beginning. On Monday, stocks briefly sold off, then rebounded to end at new highs.

But the Nasdaq closed 8.2% above its 50-day moving average, the biggest gap since early September.

When the Nasdaq is more than 6% above its 50-day line, the risks of a pullback are relatively high. The more the Nasdaq gets extended, the higher the odds a pullback will be larger.

Of course, as the late-August frenzy showed, the Nasdaq can get even more extended, but the goal is to play the odds, not try to top-tick every rally. (Besides, the late-August/early-September run-up ended very abruptly.)

Think of it this way. Investors should buy in confirmed market uptrends because, on balance, the broader market and most stocks should trend up. But when the Nasdaq is extended, the odds that the market will continue to trend up are lower, at least temporarily.

Monday was a day when you could have been defensive. It was definitely a signal to take the foot off the gas a little bit. Selling into strength, cutting laggards, being wary of new buys and trimming overall exposure somewhat were all prudent steps.

Taking those actions could have better prepared you for later in the week. After Tuesday’s quiet session, the stock market rally suffered a significant sell-off on Wednesday, with AMD spurring selling in many chip names. The Nasdaq fell to its 21-day exponential moving average, while the S&P 500 undercut that level. The Dow Jones dropped all the way to its 50-day line.

On Thursday, the stock market rally rebounded, but gains faded in the late afternoon, especially on the Nasdaq. Apple stock and Facebook reversed lower, but it was also a sign that the market may not rush to new highs.

On Friday, the stock market rally tried to erase early losses, but soon sold off through Wednesday’s lows. Apple again was a problem, but so were Facebook, Lam Research and Tesla stock.

The Nasdaq plowed below its 21-day line, closing below its key level for the first time since Nov. 3. The S&P 500 closed just below the 50-day line, while the Dow sharply undercut that level.

What’s Next For The Market Rally?

Can the Nasdaq reclaim its 21-day line while the Dow and S&P 500 find support at the 50-day line? Or will the Nasdaq drop to or even below its 50-day?

Remember, even if the stock market rally regains old highs in the near future, that doesn’t mean all leaders will follow. Software stocks have slumped for a few weeks. Cyclicals reversed hard the past couple of weeks. Chip-equipment names sold off hard in recent days.

Ideally, the stock market would move sideways for a few weeks, letting the major indexes ride their 50-day lines for a time. Leading stocks would set up in new bullish bases or pull back gracefully to their 50-day or 10-week lines.


Why This IBD Tool Simplifies The Search For Top Stocks


What You Should Do Now

Investors should be more defensive after this past week. You may want to take some more profits, cut losers loose and generally reduce exposure, especially if you didn’t so last week. So analyze your current holdings. What are your must-holds and which are lower tier?

What’s the game plan for the week ahead? If the market closes below last week’s lows, that would be a bad sign. What will you do with your stocks at various points?

Keep in mind that earnings season is still very heavy. Just on Tuesday, Amazon.com (AMZN), Alibaba (BABA), Google parent Alphabet (GOOGL) and Chipotle Mexican Grill (CMG) report earnings.

Yes, the stock market rally could race right to new highs. It’s still a market uptrend and not a correction. But the investing climate is not as favorable right now as it was in November or after the post-crash April follow-through day. Staying invested but not reckless is prudent to preserve your capital and your psyche.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Even Karl Marx used his stimulus payment to bet against professional traders


In 1864, Karl Marx received an £820 bequeath from an old friend who had died.

A huge stimulus payment, essentially.

It was far more money than he’d ever earned from his journalism, and he wasted no time spending it.

His wife, Jenny, had their new home in London redecorated and furnished.

“I thought it better to put the money to this use rather than to fritter it away piecemeal on trifles.”

They bought pets for their children (three dogs, two cats, and some birds), which they named after Karl’s favourite alcoholic drinks (Whisky, Toddy, etc).

They took the family on a three-week holiday to Ramsgate, Kent, one of 19th century England’s most famous seaside towns, where Karl spent much of the time sulking in bed in their guest house, in pain, after a malignant carbuncle erupted above his penis.

German philosopher Karl Marx was reportedly an enthusiastic investor in the stock market.(AP: Michael Probst)

Back in London, they blew more of the money on a large party for their daughters, where 50 of the girls’ friends were entertained until the early hours of the morning.

And deliciously — especially for anyone who’s been engrossed by the GameStop saga this month — Karl used some of his stimmy cheques to speculate on the stock market, relishing the chance to inflict pain on professional traders.

In a letter to his maternal uncle, Lion Phillips, a wealthy Dutch businessman, he even bragged about his winnings.

“I have, which will surprise you not a little, been speculating — partly in American funds, but more especially in English stocks, which are springing up like mushrooms this year … [and which] are forced up to quite an unreasonable level and then, for the most part, collapse,” he wrote.

“In this way, I have made over £400 and, now that the complexity of the political situation affords greater scope, I shall begin all over again.

“It’s a type of operation that makes small demands on one’s time, and it’s worthwhile running some risk in order to relieve the enemy of his money.”

In a letter to Friedrich Engels, his great friend and benefactor, Marx even dreamed of the fortune he could have made if he’d had more money to buy stonks.

“Had I had the money during the past 10 days, I’d have made a killing on the Stock Exchange here,” he wrote.

“The time has come again when, with wit and very little money, it’s possible to make money in London.”

Marx wasn’t the only one

The above story is recounted wonderfully by Francis Wheen, the British journalist, in his 1999 award-winning biography of Marx.

According to Wheen, historians have struggled to find hard evidence for Marx’s stock trades, and some suspect he may have invented the story “to impress his businesslike uncle”.

“But it may be true,” Wheen also says, enticingly.

Tristram Hunt, in his 2009 biography, The Frock-Coated Communist: The Revolutionary Life of Friedrich Engels, details how Engels played the stock market, too.

Engels figured it was perfectly acceptable to jump into shares because “the stock exchange simply adjusts the distribution of surplus value already stolen from the workers”.

In other words, go ahead lad, you’ll simply be taking some money back from the 1 per cent.

Although, as usual with Engels, things were a bit more complicated than that, given he was a member of the wealthy manufacturing class himself, and he did far more than dabble in the stock market.

According to Hunt, Engels’ probate at death revealed a stock portfolio worth more than £2 million in today’s money.

He had shares in everything from the London and Northern Railway Company, to the South Metropolitan Gas Company, the Channel Tunnel Corporation Ltd, and even some imperial investments, including in the Foreign and Colonial Government Trust Company.

It meant Engels’ experience of the stock market, and the type of behaviour that goes on there, was not rudimentary.

Engels opposed the ‘stock exchange tax’

In an exchange of letters (in early 1883) with Eduard Bernstein, a German socialist and politician, Engels agreed with Bernstein that a recent public outcry against a “stock exchange tax” was a “petty-bourgeois” concern.

Nevertheless, he said, he was against the tax too.

He said a stock exchange tax already existed in England, where he lived, in the form of a simple, everyday stamp on the transfer document (at the time, 0.5 per cent of the amount paid, plus a small transfer fee), and the consequence was “that the real speculation on the stock exchange is in margin dealings where no actual transfer takes place”.

“Hence [the stock exchange tax] only affects the so-called ‘solid capital investment’,” he said, because it diverts trading activity into unproductive side-bets that didn’t face taxation.

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S.
Trying to beat the wealthy on the stock market has been going on for decades.(Reuters: Lucas Jackson)

He figured any attempt to control traders’ behaviour with taxes was fruitless.

“Nor has anything ever been devised that the stock market speculators cannot circumvent.”

He told Bernstein the stock exchange should “be allowed to deploy perfectly freely, so that even the most stupid can see where the present economy is taking them,” and it was a shame the stock exchange fell victim to exploitative trading practices because, when used properly, it had obvious revolutionary potential.

“[It] vastly accelerates the concentration of capitals and is therefore as revolutionary as the steam engine,” he said.

“Had the stock exchange in America not created colossal fortunes, how would large-scale industry and a social movement have been possible in that land of farmers?”

It’s humorous food for thought.

Redditors enjoyed fee-free trading

A man wearing a mask walks out of a GameStop store.
Users of the social media platform Reddit have driven the price of GameStop up for several months.(Reuters/Carlo Allegri)

Jump forward to the recent shenanigans on Wall Street, where individuals who use the website Reddit have, in past months, been purchasing as many GameStop stocks as humanly possible (using their stimulus cheques from the US government) and sending GameStop’s stock price soaring, causing some hedge funds, who had placed bets that GameStop’s price would only fall, to lose billions of dollars as a consequence.

Many of the Redditors have been using a trading app called Robinhood, which allows them to trade for free — essentially, with no stock exchange tax.

(Although, as the US regulator found, Robinhood’s execution of its customers’ trades has been so poor behind the scenes, in recent years, that the financial costs for its customers have outweighed the benefits of commission-free trading).

The founders of the app, former physics students Vladimir Tenev and Baiju Bhatt, say they created the app “to democratise finance,” having been inspired by the Occupy Wall Street movement that emerged from the wreckage of the 2007-08 global financial crisis.

Now, there are calls for “free” trading apps to be better regulated.

The Reserve Bank returns from Summer holidays, with gusto

Aside from last week’s mayhem on Wall Street, it will be a week for central bank watchers this week.

We’ll see the resumption of normal duties for the Reserve Bank of Australia.

The RBA board will hold its first monthly interest rate meeting for the year on Tuesday.

Philip Lowe, the RBA governor, will be speaking in Canberra on Wednesday, at the National Press Club.

The theme of his speech will be “The Year Ahead”, which seems self-explanatory.

On Friday, he will then appear before a parliamentary committee in Canberra, the House of Representatives Standing Committee on Economics, at 9:30am.

The RBA will also release its quarterly “Statement on Monetary Policy” on Friday, at 11:30am.

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Biden’s ‘Buy American’ order likely to have little impact on Canadian firms, but U.S. stimulus may lift their fortunes


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The Buy American Act dates back to 1933, and put measures in place to ensure that U.S. taxpayer dollars support the U.S. economy — although exactly how to do so has been a challenge as the economy has become more and more global in nature.

Today, the U.S. federal government awards an estimated US$600 billion in goods and services contracts every year.

During his campaign for president, Biden had promised to protect U.S. manufacturing jobs and in a press release on Monday, he said his order means “that when the federal government spends taxpayer dollars they are spent on American-made goods by American workers and with American-made component parts.”

It’s not as if this is brand spanking new for Canadian business

Doug Porter, chief economist, BMO Capital Markets

The order also creates a new agency to review all waivers of the Buy American requirement, and which will publicly report the details of any waivers.

Waivers should only be “used in very limited circumstances — for example, when there’s an overwhelming national security, humanitarian or emergency need,” Biden said.

While that appears to draw a clear line in the sand, which would restrict Canada from any fiscal stimulus measures, there’s always a chance it may not.

The Conservative party’s international trade critic, British Columbia’s MP Tracy Gray, has pointed out that a decade ago, Stephen Harper’s government won waivers for Canada from the Buy American Act, and she urged Prime Minister Justin Trudeau’s Liberal government to push for a similar exemption.

“Canada and U.S. trade are closely tied — but this Buy American plan puts our mutual economic recovery at risk,” she said in a statement.

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