Washington DC Moves Forward

JANUARY 27, 2021

Before getting into this week’s policy news, we would like to share that starting next week, we will be expanding the range of topics beyond Washington. We will be transitioning our weekly updates to “Wednesday’s Wisdom”, focusing on one investment theme for the week. In addition to policy news, we will cover topics on equities, fixed income, non-traditional investments, and investment styles.

Executive Orders

During his first days in office, President Biden has issued numerous executive orders covering climate, economy, health care and social issues. In the table below, we highlight some of most relevant actions to investors.

With a new government in place, Senate Republican Leader Mitch McConnell is working with incoming Democratic Majority Leader Chuck Schumer to establish rules on how to govern the Senate (i.e., budgets, committee seats, etc.). Sen. McConnell has focused on the potential removal of the filibuster rule, which requires 60 Senate members to end a discussion in the Senate. Sens. Manchin (D-WV) and Sinema (D-AZ) have publicly stated their opposition to removing the filibuster rule. Recall that the Senate is split 50-50 amongst the political parties and Vice President Kamala Harris can break a 50-50 vote tie.

Articles of impeachment of former President Donald Trump were sent to the Senate on Monday. The trial is expected to begin the week of February 8^th. As it relates to markets, this may disrupt the pace of new policy initiatives to be reviewed and approved. Congress is seeking to confirm Biden’s cabinet members in advance of the impeachment trial.

On Monday, Sen. Chuck Schumer noted an ideal time to pass the next wave of COVID-19 fiscal aid would be in mid-March. By the end of March, extended unemployment benefits from the December 2020 package signed by former President Trump will expire.

Recapping Wednesday’s Washington DC Wisdom

We started Wednesday’s Washington DC Wisdom in early August 2020. Over the last 25 Wednesdays, we have covered Presidential election scenarios, Senate scenarios, stimulus talks, polling data, and more. With Joe Biden inaugurated as the 46^th President last week, the 2020 election cycle can officially conclude. However, politics never stops, and from time to time we will revisit market-moving policy news in our new series.

Before moving ahead, we wanted to share some of our favorite charts over the last 25 weeks.

Markets generally go up: Irrespective of who is in power, US equities have maintained a long-term positive trend over decades.

Who is in power matters to industries: Evidenced by our election baskets, certain segments of the market have more to gain or lose than others.

The betting market was cautious going into mid-October on the General Election

Expectations in the Senate whipsawed: While the Democrats ended up with both branches of Congress and the White House, the “Blue Tsunami” prognostication did not come to pass.

1. Source: NBC News, “Here’s the full list of Biden’s executive actions so far”, January 25, 2021.
2. Source: The Wall Street Journal, “Article of Impeachment Sent to Senate for Second Trump Trial”, January 25, 2021.
3. Source: Capital Group, “Election watch: What the U.S. race means for investors”, July 29, 2020. Additional sources included in the Chart.
4. Source: Hightower, Bloomberg. Data through January 22, 2021.
5. Source: Bloomberg, as of October 13, 2020.
6. Source: RealClearPolitics, PredictIt, Bloomberg.

Disclosures

Investment Solutions at Hightower Advisors is a team of investment professionals registered with Hightower Securities, LLC, member FINRA/SIPC, & Hightower Advisors, LLC a registered investment advisor with the SEC. All securities are offered through Hightower Securities, LLC and advisory services are offered through Hightower Advisors, LLC. This is not an offer to buy or sell securities. No investment process is free of risk and there is no guarantee that the investment process described herein will be profitable. Investors may lose all of their investments. Past performance is not indicative of current or future performance and is not a guarantee. In preparing these materials, we have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public and internal sources; as such, neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Hightower shall not in any way be liable for claims and make no expressed or implied representations or warranties as to their accuracy or completeness or for statements or errors contained in or omissions from them. This document was created for informational purposes only; the opinions expressed are solely those of the author, and do not represent those of Hightower Advisors, LLC or any of its affiliates.