Biden, Central Banks and earnings season

The earnings season in the US continues to gain momentum. And with rare exceptions such as Netflix (stocks literally skyrocketed by 15% yesterday), we see a similar picture: good financials come out, but the stock not only does not grow, but even declines. One of the explanations for this is the fact that stocks are very overvalued and it is physically much easier for them to fall than to rise. It is quite possible that this is one of the signs of the upcoming correction in the US stock market.

But for the correction, it is necessary at least to switch the attention of the markets from the stimulus package in the United States to the state of the economy or a pandemic, or at least to be puzzled by the fact that stimulus are only being planned and there is no fact in general. The fact is that for some elements of Biden's plan, votes are needed not from 50 senators, but from 60. That is, Biden needs to convince at least 10 Republican senators. It is unlikely that it will be easy and fast, if at all that would be.

But until Biden stops talking about stimulus in each of his public appearances, shifting attention will be difficult. So yesterday, entering the office as President, Biden mentioned the need to support the US economy and its citizens.

And although Biden is now taking all the attention of the financial markets, this does not mean that nothing else is happening. The current week is extremely busy with meetings of the Central Banks. Yesterday, for example, the Bank of Canada announced its decision on the parameters of monetary policy. The rate was not changed as expected, but it was noted that due to the pandemic, Canada's GDP in the first quarter will decrease by 2.9%. After that, the Canadian dollar has strengthened significantly, which, in our opinion, is a good opportunity for its sales.

Today the ECB will announce its decision on the parameters of monetary policy. And the Bank of Japan has already decided to leave rates unchanged.