Bull Sheet - Brace Brace, For Biden’s Stimulus Plan

The main event today will be the unveiling of incoming US president Biden’s stimulus plan. The overall price tag of the package will likely be the main variable for markets, but the details and scope of the proposal could also prove crucial. According to reports, the package of proposed measures is expected to amount to USD 2 trillion, i.e. USD 700 billion more than what the Democratic leader in the House of Representatives, Chuck Schumer, proposed yesterday.

The aid is to include extending support for the unemployed, but also supporting state authorities during the pandemic. Nevertheless, nuances such as the speed of implementation of individual solutions may turn out to be key.

The Democrats' position in Congress is not that comfortable - they control the Senate, but in this case it will be necessary to support at least 10 Republican Senators. They may only be favourable to some projects that they believe are worth implementing quickly due to the pandemic. You shouldn't count on more.

Especially that if the "judgment over Trump" theme does not appear in the Senate until after January 20, it may only intensify the axis of the political dispute, and the worst is if it obscures other, much more important topics.

Watching markets behaviour this morning it can be seen that there is a willingness to play the "Biden stimulus", but there is no visible excessive outburst of optimism, the wow factor is not present.

What’s with the recent dollar recovery?

US Dollar pops to highs after 90 level retest, gold pulls back as bond yields drop across Europe, boosting the Greenback's relative yield advantage. I am bullish on greenback until proven otherwise.

Dominik Stone

Tokenhouse Yard

City Of London, EC2R 7AS

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