29 January 2021

1) As President Biden’s proposed $1.9 trillion dollar stimulus bill is debated by law makers and the press, Biden says he’s no longer afraid to spend big on economic relief. It’s not just smart fiscal investments, including deficit spending, it’s the return on investments in jobs, in racial equity that will prevent long-term economic damage with the benefits far surpassing the costs. But the national debt has soar by more than $7 trillion dollars during the last four years, and for the last quarter, the federal budget deficit was $572 billion, which is up more than 60% from the same period a year earlier. Fears are growing over the now massive national debt, a debt larger than at the end of World War II (as percent GDP), plus many other western and even third world nations have similar huge debts. There are real fears that if one of those nations economy collapses, then other economies will be dragged down, including Americas. Biden supporters counter that the low interest rates make it more palatable to borrow, with the rate on the 10-year Treasury bond hovering around 1.1%.

2) A new way to manipulate the stock market made the news, that uses modern computer technology and the internet to drive stock prices up and down. Called a “pump and dump” scam, it has pitted the professional stock traders of Wall Street against amateurs trading on the internet (also known as non-professional individual investors) with apps like Robinhood and Reddit. The scammers buy up the shares cheap, then spread rumors that drive the stock price higher while encouraging other investors to get in on the supposed windfall. When the stock hits a high point, the scammers dump their shares, leaving unsuspecting investors holding the bag. In addition to other stocks, the stock for GameStop is the main name in stories this week. The stock started at $4 a share six months ago, rising to $483. Short traders had determined that GameStop was a failing company that would not survive, and so were buying up the stock planning to sell short, which they had bought up on credit. The amateurs, using the internet and social apps started talking up how great the stock was as they also bought up stock, both driving up the price. As the stock price became excessively high, the short sellers were force to actually buy the stock at a price above the short price, resulting in huge losses for the Wall Streeters. The amateurs then sold off their stocks to the unsuspecting, causing the stock to tumble down.

3) General Motors announces its goal to eliminate selling all their gas and diesel vehicle models by 2035 and be completely carbon neutral by 2040. California had announced that it will no longer allow the sale of new gas-powered vehicles by 2035.

4) Stock market closings for – 28 JAN 21:

Dow 30,603.36 up by 300.19
Nasdaq 13,337.16 up by 66.56
S&P 500 3,787.38 up by 36.61

10 Year Yield: up at 1.06%

Oil: down at $52.18

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