The Capital Letter: Week of January 4

There was an apocryphal story that used to float around the markets that the morning after the Bolshevik ...

BY ANDREW STUTTAFORD Image January 09, 2021

The Capital Letter: Week of January 4

There was an apocryphal story that used to float around the markets that the morning after the Bolshevik coup, prices rose on the St. Petersburg exchange. Sadly, but fortunately for Mr. Market's frequently battered reputation, it's not true. (The exchange had been closed for quite a while.)

Quite what label to apply to Wednesday's disgraceful "events" (an insurrection, an attempted putsch, a cosplay coup, a riot) will be discussed for a long time after the courts have passed sentence on a good number of the perpetrators. What the full political and thus, by extrapolation, economic consequences might be are also as yet (and probably for some while) unknowable, but, at a guess, they will be to push the political pendulum quite a bit to the left, something that, at some time, the markets will have to consider.

However, looking, say, at the S&P on Wednesday afternoon, investors remained calm (there was a slight sell-off), although the occupation of the Capitol was by no means over by the time U.S. markets closed. The S&P had recovered all its losses within an hour of the opening the next day, and at the time of writing (2 p.m., Friday) was up on the week.

The market's focus had returned to the reality that the Republicans' double defeat in Georgia was going to mean effective Democratic control of the Senate, and to investors that meant another round of stimulus.  Daniel Tenreiro discussed this in yesterday's Capital Note, which is (like all issues of the Capital Note, well worth reading—to sign up, go here). Please take a look, in particular, at what Daniel has to say about the "imperial circle," something for ...   READ MORE





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