It was one of those sessions on Thursday where the rally was on autopilot, taking off at the gate, as major indices reached a certain altitude and descended in cruise control.

Constitutional crisis?  No, the scene on Wednesday was horrific. However, the 25^th Amendment chatter is just that, and not helpful for a nation that desperately needs to move toward any semblance of unity.  At the very least, an effort and acknowledgment that we need to put guardrails on the political discourse.

The stock market is looking past all of the D.C. drama and focusing instead on growth. Another reason the market isn’t stumbling from the new reality of Democratic control of the White House – both the Senate and the House. There are still a lot of ambitious goals that will not happen.

In addition to the needed 60 Senate votes for many key proposals, it would be tough to make changes during the pandemic, which requires trillions more in the stimulus. That includes extraordinary tax hikes.

A Reminder of President-elect Joe Biden's policy proposals and what they require to pass:

Policy Proposal	Required for Approval
Repeal Tax Cuts Act & increase capital gains taxes	Congress/51 Senate votes
Provide additional fiscal stimulus & $2K checks.	Congress/60 Senate Votes
Expand ACA and create public option	Congress/60 Senate Votes
Allow Medicare to negotiate drug prices	Congress/60 Senate Votes
New Carbon tax, ban offshore drilling, but not fracking	Congress/60 Senate votes and some exec authority
Climate Change Plan	Congress/60 Senate Votes
Increased banking regulation	Executive Authority/Court Challenges
Abolish private prisons	Congress/60 Senate Votes
Infrastructure	Congress/60 Senate Votes
Increased technology regulation	Executive Authority/Court Challenges
Marijuana decriminalization, but not legalization	Congress/60 Senate votes
Two years of free college & expand debt relief	Congress/60 Senate Votes
Raise minimum wage to $15/hour	Congress/60 Senate Votes
Increase defense spending	Congress/60 Senate Votes
To crack down on China reevaluate tariffs.	Executive Authority
Increased gun safety regulation	Congress/60 Senate Votes/Court Challenges

Source: Briefing.com

Message of the Market

Market breadth was extraordinarily powerful, as the NASDAQ saw 537 new 52-week highs and only 6 new lows. In addition, the up volume was 600% higher than the down volume.

Market Breadth	NYSE	NASDAQ
Advancing	1,925	2,831
Declining	1,222	941
52 Week High	375	537
52 Week Low	5	6
Up Volume	3.54B	5.81B
Down Volume	1.56B	924.06M

The Meek Shall Carry the Market

What makes the first week of 2021 so impressive is it’s happening with the two largest components dragging, while smaller sectors with tiny influence are up so much that it’s carrying the entire index. 

Stacking Chips

After the close, Micron Technology (MU) posted financial results, which beat Wall Street’s consensus on revenue and earnings. Moreover, management hiked its guidance, which gave the stock a slight lift.

Even with the Technology (XLK) sector spinning its wheels, semiconductor names just keep rocketing higher. The iShares PHLX Semiconductor ETF (SOXX) is in the midst of a multi-year monster rally that gained strength after breaking out on July 18, 2016. It’s up 300% since then.

The moral of the story is to ride these waves, rather than overthinking them and missing out on generational periods to change your life. It’s how very wealthy investors approach the market- they are not buying a bunch of diversified mutual funds.

Portfolio Approach

We closed a position to ring the register and free up cash this morning and added to Technology. It worked like a charm on Wednesday when we closed out a position, so we could put Fuelcell (FCEL) in the model portfolio.

Today’s Session

The futures are pointing to a positive across the board despite the miss in the job’s number.  December nonfarm payroll decreased by 140,000 with the unemployment rate remaining the same at 6.7%. Labor Force Participation also was flat at 61.5%. Average hourly earnings increased to $29.81, up 23 cents, and the average workweek decreased to 34.7, down 0.1 hour.

As the pandemic and Covid cases increased, leisure and hospitality lost almost a half million jobs in December,  of which 75% were in food services and drinking places (-372,000). Private education was also down. These reductions were offset in part by increases in professional and business services, retail trade and construction.

Goods Producing +93,000	Service Providing -188,000
Mining +4,000	Retail Trade +120,500
Construction +51,000	Wholesale +25,100
Manufacturing +38,000	Transportation & Warehousing +46,600
	Utilities -400
	Information -1,000
	Financial Activities +12,000
	Professional & Business +161,000
	Education  & Health -31,000
	Leisure & Hospitality -498,000
	Other -22,000

Comments

Very good congressional tally that may keep the socialist barbarians at the gates Richard hart on 1/8/2021 10:38:00 AM

OK I am getting into the swing of how you do things here. Love love love your positive outlook! Debbie on 1/8/2021 10:42:59 AM

Thank you Charles. Yes the Trump Train will continue to roll along. We are afraid of when the biden/obama stimulus check start getting printed and the government doll gets handed out and all that is over and our debt is over the top. Invest, stay out of debt( don't borrow), and pray that President Trump returns to save us again. Lorin K on 1/8/2021 11:05:16 AM

There is no doubt that if printing money was the route to financial success everyone would do it.  This is an emergency but the fact of the matter is they are going to take it too far and use this temporary condition to spend taxpayer money on a dream list on what society should look like.  I will stay vigilant and we will try to mitigate damage at any major turn but not sure what that happens.  I once thought $6.0 trillion was the cliff.  CP Charles Payne on 1/8/2021 4:47:05 PM

Charles: In reviewing your list of "proposed governmental action," I breathed a sigh of relief in seeing that MOST (if not nearly ALL actions) required a 60 Senate seat vote for passage. Phewwww! Nice to know our nation is not going to be completely changed without approval of "the other side of the aisle." Thank you for providing me with such mental and emotional relief. James Warlin on 1/8/2021 2:18:31 PM

Thanks James There are a few slick maneuvers they could try like stuff during budget reconciliation but that's only once a year (twice this year since no budget last year).  But the market knew no wave large enough to truly switch from free markets to "free" markets/  CP Charles Payne on 1/8/2021 4:53:58 PM

After January 20th I am scared to death that we will lose everything we have worked so hard for. Decreased income and a lot of our personal freedom. Sharon jackson on 1/8/2021 5:23:01 PM

Agreed. It currently takes 60 senate votes for most, but their first step will get rid of the filibuster and we are back to 50+1. Right? Leelee Clement Doughty on 1/8/2021 5:55:57 PM

No violence is OK! America is a nation of law and order. We are also a nation UNDER GOD. Dishonest politicians, public officials, and others will not succeed in taking us out from under God. The current battle in DC, and across the land (the world actually), is much more than political, and it will ultimately be won by the side of justice and fairness, upon which our nation was founded. This is not over. Do not give up. Thank you, Charles, for being a steady force for "the people," and for just principles. Vern Heeren Vern Heeren on 1/8/2021 11:22:04 PM

Encouraging yes, but I put nothing pass them. Wait until they change the 60 votes to a simple majority! We are not out of the woods yet. Terry C on 1/9/2021 2:55:16 PM

After January 20th I am scared to death that we will lose everything we have worked so hard for. Decreased income and a lot of our personal freedom. Sharon jackson on 1/12/2021 10:36:25 PM

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