“The Market Can Remain Irrational Longer Than You Can Remain Solvent” — John Maynard Keynes

1. Gene-Editing Stocks Are Biotech’s New Cutting Edge — In October, two scientists won the Nobel Prize for their 2012 discovery and development of Crispr-Cas9. Now, the promise of that technology—effectively molecular scissors that can find and edit almost any part of a cell’s DNA—is causing shares of companies looking to commercialize gene-editing therapies to surge. Crispr-Cas9 is the second generation Crispr technology, which has the potential to alter specific portions of the genetic code in ways that could provide treatments for a number of inherited genetic disorders and many kinds of cancer. New Crispr technology is being commercialized at an incredibly rapid pace. Beam Therapeutics, which is developing a next-generation gene-editing tool called base editing, has seen its shares rise sixfold since its initial public offering in February 2020.
2. Biden Takes Office as 46th President & Issues First Round of Executive Orders — President Joe Biden signed 15 executive orders and two executive actions early last week on issues ranging from a mask mandate to rejoining the Paris climate accord. “I thought there’s no time to wait. To immediately address the pandemic, Biden signed an order mandating masks on federal property as well as on all planes, trains, and other transit systems between states. He also created a new office of White House Covid-19 response that reports directly to him.
As promised during the campaign, Biden lifted the controversial ban on travel from several majority-Muslim countries that had been put in place by the Trump administration. He also ordered an end to construction of the Mexico-U.S. border wall and a moratorium on deportations.
He is also calling for an extension of the federal eviction moratorium through March 31 and freezing student loan payments on direct federal loans through Sept. 30.
In addition to rejoining the Paris climate accord, Biden took executive action to stop the U.S. withdrawal from the World Health Organization, reinstate rules limiting methane emissions, and revoke a permit for construction of the Keystone XL oil pipeline.
3. Europe Mulling Stringent New Travel Bans as Virus Variants Keep Spreading — European Union leaders convene in a video summit to discuss ways to restrict travels into the region, as new, aggressive variants of the coronavirus threaten to overwhelm many countries’ health care systems. Most governments already require a recent negative test before allowing in foreign visitors, and France or the U.K. then require a second test within days of arrival. Countries such as France or the Netherlands have banned all incoming visitors from the U.K., save for essential travel, on account of the highly infectious new virus variant fast spreading in Britain.
4. Bitcoin Price Plunges — The world’s biggest cryptocurrency by market value dropped about 12% over the past day to just over $31,000 as of Friday morning. Janet Yellen, the nominee for Treasury Secretary in the Biden administration, did mention the risks of crime and fraud that Bitcoin poses in a hearing, but the selling pressure didn’t really coincide with her comments.

On a related note, Bank of America noted that the market has reached bubble territory ….

The week ahead — Economic data from Econoday.com:

“Prosperity brings expanded lending, which leads to unwise lending, which produces large losses, which makes lenders stop lending, which ends prosperity, and on and on. . . . Look around the next time there’s a crisis; you’ll probably find a lender.” ― Howard Marks

1. Corporate America Reacts to Capitol Hill Riot With Donation Pause — a growing list of U.S. companies are suspending or re-evaluating how they choose to make contributions to political candidates as pressure grows on them to distance themselves from the mob that stormed Capitol Hill. Among the companies that paused political giving was America’s largest bank by assets, JPMorgan Chase, which gave $5.3 million to candidates over the course of the 2020 election cycle, according to federal filings.
Marriott and Dow said that they will stop donations to Republicans who objected to President-elect Joe Biden’s victory being certified. Hallmark is asking Senators Josh Hawley of Missouri and Roger Marshall of Kansas, both of whom objected to Biden’s certification, to return the $7,000 and $5,000 the company donated to their respective campaigns.
2. Europe Steps Up Defenses Against New Covid Variants — new, aggressive mutations of the coronavirus first discovered in the U.K. and South Africa are forcing governments to increase the severity of lockdowns and other restrictions, and prompt a clampdown on rulebreakers. The new variant has already been detected in countries such as Germany, France, Spain, Ireland and Denmark, with some requiring negative Covid tests from inbound travelers. The French prime minister refused to rule out the possibility of a third national lockdown. The government has so far stopped short or such a step, contrary to most other EU countries. But a national curfew is already in place, along with the closure of bars, restaurants and public venues.
3. President Trump Impeached for the Second Time — the House voted 232 to 197 to impeach President Donald Trump for “incitement of insurrection” in connection with the Capitol riot that left five people dead. The vote was largely along party lines, with 10 Republicans joining House Democrats in support of the resolution.
This is the first time in American history that a president has been impeached twice. Trump was impeached on Dec. 19, 2019, for abuse of power and obstruction of justice related to his actions to pressure Ukraine to investigate the business dealings of Hunter Biden, the son of now President-elect Joseph Biden. The Senate will wait until after Joe Biden is inaugurated to begin its trial. “There is simply no chance that a fair or serious trial could conclude before President-elect Biden is sworn in next week,” Senate Majority Leader Mitch McConnell said in a statement.
4. Biden Set to Announce 100 Million Shot Plan — President-elect Joe Biden on Thursday will unveil details of his plan to deliver 100 million Covid-19 vaccine shots during the first 100 days of his term Thursday, as the U.S. remains far behind its rollout plan. Over 10 million Covid-19 vaccine doses have been administered to Americans so far, putting the U.S. on track to fall well below the 50 million doses by the end of January that the Trump administration had aimed for. To increase the pace, Biden has said that he wants to invoke the Defense Production Act to boost vaccine production, establish mass vaccine sites run by the federal government, and increase the funding being sent to state and local governments to help pay for their rollout efforts.
5. Biden Outlines $1.9 Trillion Stimulus and Vaccine Program — President-elect Joe Biden unveiled a $1.9 trillion stimulus and vaccine distribution plan in a Thursday night address from Wilmington, Del. “A crisis of deep human suffering is in plain sight,” said Biden, who drew attention to the growing divide between the wealthiest Americans and everyone else. “We have to act and we have to act now.” To that end, his American Rescue Plan includes direct payments of $1,400 sent to most Americans, bringing the total delivered in a second round of checks to $2,000 including the $600 payments passed in December. It also extends federal unemployment insurance through September, increases them to $400 a week and raises the federal minimum wage to $15 an hour. Biden is also calling for $350 billion in aid for state and local governments, $170 billion for schools, and $70 billion to fund Covid-19 testing and vaccination. To support small business, he is proposing a new $15 billion grant program plus $35 billion for low-interest loans and early-stage capital for entrepreneurs.
6. Taiwan Semi Is Betting Chip Demand Will Keep Rising — chip maker Taiwan Semiconductor said it would spend $28 billion to boost production capacity to meet the growing demand for its chips. 5G smartphone launches and Taiwan Semi’s next-generation processor technology, which Apple uses in several of its computers, helped the company report fourth-quarter net income of $5.01 billion with sales rising 22% to $12.7 billion. Executives’ comments on an earnings call suggest that the company would increase capacity investments by about 50% compared with 2020. A weak 2019 saw low levels of production investment in the industry last year that, combined with Covid-19 shutdowns and surging demand from videogame consoles to cars, led to global shortages.

The week ahead — Economic data from Econoday.com:

1. Europe Braces for Another Fiscal Push to Support Economy Through New Lockdowns — British Chancellor of the Exchequer Rishi Sunak announced on Tuesday a £4.6 billion ($6.2 billion) package of “top-up grants” for some 600,000 businesses in the retail and hospitality industries. The announcement comes after several government-financed measures since the beginning of the pandemic in March 2020, including a “furlough” job support scheme due to expire at the end of March.
The U.K. government spent the equivalent of more than 8% of GDP in immediate direct fiscal spending in 2020 to counter the pandemic’s consequences. That’s roughly the same amount as Germany, and significantly more than France, Italy or Spain. Other European governments are now considering other rounds of fiscal stimulus to take into account the unexpected severity of the pandemic’s second wave. German Finance Minister Olaf Scholz last month announced a doubling of Germany’s borrowing plans for 2021 and has stated that he would be ready to spend more if needed.
2. Congress Certify Biden’s Win — after a day of turmoil, when a violent mob halted the ratification of President-elect Joe Biden’s electoral college victory, the joint session completed the count and affirmed Biden’s defeat of President Trump, with 306 electors to the incumbent’s 232. See more below. Trump commits to orderly transition of power. The president issued a statement early this morning committing to an orderly transition of power to Biden on Jan. 20, but said he continued to “totally disagree with the outcome of the election.”
3. Democrat Jon Ossoff Wins Georgia Senate Runoff — Democrats Jon Ossoff and Raphael Warnock won both Senate runoff races in Georgia, giving Democrats control of the U.S. Senate and easing the path for President-elect Joe Biden’s appointments and legislative agenda. Mr. Warnock defeated Republican Sen. Kelly Loeffler, while Mr. Ossoff took the seat held by former Republican Sen. David Perdue, whose term expired over the weekend. The new Senate will be evenly split between the two parties at 50-50, with Vice President-elect Kamala Harris serving as the tiebreaker vote, if it comes to that.
4. Pelosi Lays Out Plan for Impeachment of President Trump — Speaker Pelosi said Democrats will bring a resolution on Monday calling on Vice President Mike Pence and cabinet members to remove the president using the 25th Amendment under unanimous consent. If that fails, it will be brought for a full vote Tuesday. Pence would then have until Wednesday to respond or “we will proceed with bringing impeachment legislation to the Floor,” Pelosi said in a letter to Democratic lawmakers. So far only one Republican, Sen. Pat Toomey of Pennsylvania, has explicitly said that Trump “committed impeachable offenses.” Both Toomey and Sen. Lisa Murkowski (R., Ak.) have called President Trump to resign and Sen. Ben Sasse (R., Neb.) has said he would consider voting to remove the president from office.

Below is the Year End poem that recap the major Events of 2020

The week ahead — Economic data from Econoday.com:

“The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological. Investor” ― Howard Marks
HAPPY NEW YEAR