COVID Stimulus Package Announced
In a speech delivered overnight, incoming US president Joe Biden outlined his plans to help the ailing US economy and those suffering financially as a result of the COVID pandemic. Biden, who is due to be sworn in on January 20th, had pledged to deliver a significant stimulus package as a matter of urgency if elected and has now given the market a first glimpse at what that package will look like.
The package on offer is worth $1.9 trillion and will include $1 trillion in support for households, with $1,400 direct payments to all American citizens, if the bill passes through Congress. The package also includes $415 billion for resources to help curtail and diminish the virus as well as $440 for small businesses. Biden has vowed to bring the virus under control and openly criticised Trump over the course of his handling of the pandemic.
In Addition To $900 December Package
Importantly, the new stimulus package will be in addition to the $900 billion package approved in December. For US citizens, this means the $1,400 direct payment will come on top of the $600 direct payment included in that package. The spread of the virus is still very much a threat in the US with over 200,000 new cases per day and a daily death toll passing the 4k figure consistently now.
During Biden’s speech, which was televised during prime time in the US, he told Americans: "A crisis of deep human suffering is in plain sight and there's no time to waste. The very health of our nation is at stake, we have to act and we have to act now. There will be stumbles, but I will always be honest with you about both the progress we're making and what setbacks we meet."
Expanded Testing & Tracking
In terms of how Biden plans to fight the virus, the democrat leader has outlined plans to inject $20 billion into vaccination programmes and is also calling for $50 billion to me made available to expand testing and a further $130 billion to ensure schools can re-open by the springtime. Biden’s plan would also create a further 100,000 public health worker roles for contact tracing. Biden is also calling for supplemental unemployment allowances to increase from $300 to $400 per week to help the almost 11 million people still out of work across the country.
Looking at the reaction in equities markets, there seems to be an air of disappointment. Equities had been rallying firmly over recent weeks in anticipation of a large, new stimulus package. Last year the democrats were calling for a $2.5 trillion package so perhaps the $1.9 trillion package on offer has underwhelmed some market participants as a watered-down version of Biden’s campaign pledge. With the US Dollar retaining a bid across the week, equities have seen their recent bull trend put on further pause.
The S&P remains capped by the 3821.75 level this week which has seen selling pressure turn price lower once again. Despite the minor correction, while price is still above the 3714.50 level, the near-term bias remains bullish. Below there, the next support is down at the 3586 level where the rising trend line from 2020 lows offers further support.
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