Change could be coming to U.S. antitrust laws—and that would mean big changes for investors, too.
Antitrust legislation can be thought of as the rules of a game, in this case, the money game. The law determines how businesses conduct themselves with each other and with U.S. consumers—and it contains the penalties for breaking those rules.
Not everyone is happy with those rules. U.S. senator from Minnesota Amy Klobuchar, the newly ensconced chair of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, has already expressed her eagerness to “take on Big Tech,” saying regulation for large internet firms has been inadequate.
Now, Sen. Klobuchar plans to introduce legislation that would make large mergers harder to complete.
The goal is to keep the game fair. That’s a noble goal, but changing the rules makes things harder for investors. They like mergers—of all sizes. Buying other companies is a good place for companies to reinvest cash flow, tap new businesses and find new sources of growth. Limiting mergers could also force companies to spend more on dividends and buybacks, something politicians have decried.
Ultimately, changing antitrust law is like the NFL moving the extra point back because it became too easy for kickers to make extra points. After the change, the NFL became more entertaining.
Investors don’t want entertainment, though. They want certainty.
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Biden Open to Sending Fewer Americans $1,400 Stimulus Checks
President Joe Biden said Wednesday that he would support sending $1,400 stimulus checks to a smaller, more targeted set of Americans but held firm on the dollar value of payments.
- “We can better target that number. I’m OK with that,” Biden said in a meeting with House Democrats, The Wall Street Journal reported. But the $1,400 amount, he told them, isn’t something he will budge on. A group of Republican lawmakers had proposed lowering that amount to $1,000.
- Biden is, however, open to lowering the income level for phasing out the checks. Previous stimulus checks began to phase out at $75,000 a year in income for individuals and $150,000 a year for households.
- St. Louis Fed President James Bullard argued Wednesday that economic growth looked strong enough to not require another round of stimulus. “Do [Democrats] want to invest a lot in this recovery that already looks strong or do they want to save firepower to do other things that they might want to do,” Bullard said.
- One option might be to put money saved by sending checks to fewer people toward increased federal unemployment payments. Sen. Ron Wyden (D., Ore.) said he made it clear to Biden that the $400 a week the White House has called for “is a floor, not a ceiling.”
- While the debate on direct payments intensifies, Biden’s inclusion of a $15 an hour minimum wage in his stimulus proposal appears under threat. Sen. Joe Manchin (D., W.Va.) reiterated Wednesday his opposition to including items that aren’t directly budget related in a bill passed under the legislative rule known as reconciliation.
What’s Next: On Thursday, the Senate will take the next step to passing a stimulus bill with a simple, and likely solely, Democratic majority by adopting a budget. That will give senators about two weeks to write a filibuster-immune stimulus bill.
A Ray of Hope on the Jobs Front
Friday’s January jobs report is expected to bring good news, with economists forecasting the U.S. will gain a total of 100,000 nonfarm payroll jobs during the first month of the year after December’s loss of 140,000 jobs.
- A key item to pay attention to will be how pandemic-sensitive industries perform. In December’s data, there was a contrast between the leisure and hospitality, personal services, local government and education sections, which collectively shed jobs, and everything else, which gained jobs.
- There is an indication that as the holiday surge in the Covid-19 pandemic across the U.S. recedes, the number of people going out to restaurants is increasing, which could mean that restaurants stopped shedding workers.
- On Wednesday, payroll provider ADP gave investors hope that such a snapback could occur. Private employers added 174,000 jobs in January compared to a revised loss of 78,000 in December, the company said.
- Overall, “we’re seeing growth percolating beneath the surface,” Gregory Daco, Oxford Economics’ chief U.S. economist said Wednesday.
What’s Next: In the short-term, growth is likely to be dependent on the severity of the pandemic and the speed of vaccination efforts. Improvement on those fronts will help the hardest hit industries, like leisure and hospitality, and their workers.
Cannabis Stocks Rally After Democrats Lead Overhaul Effort
Three prominent Senate Democrats committed to advancing marijuana legislation this year. Pot stocks are soaring.
- Senate Majority Leader Chuck Schumer and Democratic Sens. Cory Booker of New Jersey and Ron Wyden of Oregon put out a joint statement earlier in the week saying they will put forward and advance “comprehensive cannabis reform legislation.”
Following the announcement, the
ETFMG Alternative Harvest
exchange-traded fund, which has exposure to cannabis firms, rose for three consecutive days, gaining 22% over that period. It’s up 62% year-to-date.
- Marijuana stocks have rallied in the weeks since Democrats won both Georgia Senate runoffs. As the Senate’s minority leader, Mitch McConnell, who is a critic of recreational pot, now has less power to derail cannabis bills passed in the House of Representatives.
What’s Next: Alliance Global Partners analyst Aaron Grey notes while marijuana bills would be good for pot stocks, Democrats also have other priorities, such as Covid-19 relief, raising corporate taxes, and health-care revision.
House to Vote on Sanctioning Rep. Marjorie Taylor Greene
After House Minority Leader Kevin McCarthy said Wednesday that he won’t remove Rep. Marjorie Taylor Greene (R., Ga.) from her Education and Budget Committee posts, the full House is set to vote Thursday to do so.
- Greene, a first-term representative from a safe GOP seat in northwest Georgia, has faced bipartisan criticism for embracing conspiracy theories like QAnon, appearing to endorse violence against House Speaker Nancy Pelosi, antagonizing a survivor of the Parkland shooting, and casting doubt on the Pentagon attack on 9/11.
- McCarthy issued a statement Wednesday criticizing Greene, saying, “past comments from and endorsed by Marjorie Taylor Greene on school shootings, political violence, and anti-Semitic conspiracy theories do not represent the values or beliefs of the House Republican Conference.”
- In a fundraising email on Wednesday afternoon, Greene told supporters she is being punished because she “stood with President Trump.”
- Meanwhile, House Republicans voted to keep Rep. Liz Cheney of Wyoming as GOP conference chairwoman after she was one of only 10 Republicans, and the only member of the party’s House leadership team, to vote to impeach former President Donald Trump.
What’s Next: Removing a Congress member from committee assignments is a significant punishment that limits their influence. The GOP stripped Rep. Steve King of Iowa of his committee assignments in 2019 after he publicly questioned what was wrong with the idea of white supremacy and King lost a primary contest in 2020.
Britain Cautiously Eyes Encouraging Pandemic Numbers
The U.K. is past the peak of the coronavirus pandemic second wave, chief medical officer Chris Whitty said Wednesday, as the number of people in the country having received the first jab of a vaccine passed the 10 million mark.
- Hospital admissions and deaths have been falling throughout the U.K., Whitty said. However, he cautioned that the number of infections, although falling, was still “incredibly high,” and he didn’t rule out the possibility of a third wave.
- The number of Covid deaths passed the 100,000 mark earlier this week. The U.K. has the worst death toll among major western countries, with more than 1,600 fatalities per million inhabitants.
- But it is also way ahead of the pack in its vaccination campaign. Fifteen percent of the U.K. population has already received a first shot of one of the authorized vaccines. That compares to almost 10% in the U.S., and 2-to-4% in the EU.
- Prime Minister Boris Johnson said he would set target dates later this month for the gradual easing of the current lockdown, but Whitty cautioned that pressure on the National Health Service would not recede before all the over-50s have been vaccinated.
What’s Next: The U.K. government seems to be well on the way to erasing the memory of its controversial performance dealing with the virus in 2020 with a swift and decisive 2021 vaccination campaign. Barring serious side effects or disappointments, this could have major political and economic consequences.
GameStop’s wild ride has put a spotlight on Robinhood and other stock-trading apps. What should investors know about using these apps?
As social media has stoked interest in an assortment of stocks that recently were being shorted by hedge funds, Robinhood and similar, low-cost trading and investing platforms have served as an important tool.
On Reddit, in particular, a community of day traders has organized to send the price of multiple stocks skyward, from shares in companies such as
to commodities such as silver. This activity was enabled by these apps, which have made it significantly easier to trade investments.
Throughout this saga—even after some of these platforms temporarily prohibited buying and selling of stocks like GameStop—Robinhood saw record growth, according to an analysis from JMP. On Friday, traders downloaded the Robinhood app more than 600,000 times, well above the record set last March.
But Robinhood isn’t the only trading or investing platform seeing customer growth lately. Competitors like Webull and SoFi saw similarly elevated numbers of app downloads last week, JMP noted.
“While there is intense focus today, over the long run we believe firms that offer their customers the best experience, the most innovative tools and services to manage their finances, and competitive pricing will continue to enjoy the strongest growth in the industry,” JMP Securities analyst and head of business development Devin Ryan and vice president of equity research Brian McKenna said in the research note.
Here are five considerations wannabe day traders and investors should make before using an app to tap into the markets.
Read more here.
—Jacob Passy and Andrew Keshner
—Newsletter edited by Matt Bemer, Anita Hamilton, Ben Levisohn, Mary Romano, Stacy Ozol