Tag Archives: Bidens

Legendary investor Jeremy Grantham says Biden’s $1.9 trillion stimulus plan will make the stock market bubble even worse


Legendary investor Jeremy Grantham warned investors during a Bloomberg interview that the $1.9 trillion in federal aid President Joe Biden is seeking from Congress will further inflate the stock market bubble.

The GMO co-founder told Erik Schatzker that he has “no doubt” some of the stimulus aid will end up in the market. He said the “sad truth” about the last stimulus bill passed in 2020 was that it didn’t increase capital spending and didn’t increase real production, but it certainly flowed into stocks. 

The plan that Biden is proposing contains a $1,400 boost to stimulus checks, robust state and local aid, and vaccine-distribution funds. Grantham said that if the package passed is worth $1.9 trillion, it could lead to the dangerous end of the bubble.  

“If it’s as big as they talk about, this would be a very good making of a top for the market, just of the kind that the history books would enjoy,” said Grantham.

“We will have a few weeks of extra money and a few weeks of putting your last, desperate chips into the game, and then an even more spectacular bust,” he added. 

Read more: A notorious market bear who called the dot-com bubble says he sees ‘fresh deterioration’ in the market indicator that first signaled the 1929 and 1987 crashes – and warns that stocks are ripe for a 70% drop

Grantham has long-warned of the ballooning bubble he sees in the US stock market. In his investor outlook letter in the beginning of January, he detailed how extreme overvaluations, explosive price increases, frenzied issuance, and “hysterically speculative investor behavior” all demonstrate that the stock market is in a bubble that not even the Fed can stop from bursting.

“When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years,” Grantham told Bloomberg.

Grantham also said that the combination of fiscal stimulus and emergency Fed programs that helped inflate the bubble could increase inflation.

“If you think you live in a world where output doesn’t matter and you can just create paper, sooner or later you’re going to do the impossible, and that is bring back inflation,” Grantham said. “Interest rates are paper. Credit is paper. Real life is factories and workers and output, and we are not looking at increased output.”

He told investors to seek out stocks outside of US markets, as many other countries haven’t seen the huge bull market the US has. He called emerging markets stocks “handsomely priced.”

“You will not make a handsome 10- or 20-year return from U.S. growth stocks,” said Grantham. “If you could do emerging, low-growth and green, you might get the jackpot.”

Read more: GOLDMAN SACHS: These 22 stocks still haven’t recovered to pre-pandemic levels – and are set to explode amid higher earnings in 2021 as the economy recovers

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Covid vaccine: Experts say Biden’s strategy could benefit from good timing

“They’re going to take advantage of the learning curve,” said Vijay Samant, a former Merck executive who oversaw the production of three successful vaccines during his tenure. Samant said vaccine manufacturers have had months to work out supply bottlenecks and that manufacturing was always projected to speed up in the coming months — a boon for the Biden administration.

“They may get a lot of credit because all of a sudden vaccine doses are going to become available and it’s, ‘Oh, well, we did it,’ ” Samant said. “Let me tell you, that’s how it works. They’re on the right end of the curve.”

Connecticut Gov. Ned Lamont, a Democrat, sounded similarly optimistic Thursday, predicting that vaccine supply will rapidly increase in February and March. The governor was fresh off a call with Pfizer, during which the company “reiterated their plan to significantly ramp up production in February,” said the governor’s spokesman Max Reiss. Much of that ramp-up is taking place even before the Biden administration makes any moves under the Defense Production Act.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, appeared to agree with the assessment Thursday.

In an interview on ABC’s “Good Morning America,” Biden’s chief medical adviser expressed confidence in the President’s once seemingly far-reaching goal to vaccinate 100 million people in his first 100 days.

“I feel fairly confident that that’s going to be not only that but maybe even better,” Fauci said, adding that he had looked at the contractual agreements that had been made. “The amount that will be coming in, we will be able to meet that goal.”

Still, questions remain about where US vaccine supply currently stands. The new administration has touted robust federal plans to launch huge vaccination sites and deploy mobile units to hard-hit communities, at the same time some states are canceling appointments at existing vaccination sites, citing a lack of vaccine supply.

Biden’s team has said it’s flying somewhat blind when it comes to the supply of vaccine and how it has been allocated across the country. A source close to the transition told CNN that the Biden team had been denied access to critical resources it needed to accurately gauge the supply and prepare to take over the rollout before Biden took office.

“The cooperation or lack of cooperation funds from the Trump administration has been an impediment,” White House Covid-19 coordinator Jeff Zients told reporters. “So we don’t have the visibility that we would hope to have into supply and allocations.”

To be sure, there’s still not nearly enough vaccine available — in the US or worldwide — and the US has stumbled at getting shots into arms quickly. But the Biden administration also appears to be trying to manage expectations, playing up the shambles the Trump administration left behind while figuring out what concrete steps it can take to improve vaccine manufacturing and distribution.

The Biden administration has not clearly articulated what it’s doing to immediately improve vaccine supply, except to task agencies with looking for opportunities to use the Defense Production Act.

Biden “absolutely remains committed to invoking the Defense Production Act in order to get the supply and the materials needed to get the vaccine out to Americans across the country and remains committed to his goal of getting 100 million shots in the arms of Americans in the first 100 days,” White House press secretary Jen Psaki said Thursday.

The White House did not address how they would be communicating or working with states, but in a statement to CNN spokesman Kevin Munoz reiterated that they would be “listening to the unique needs of states and tailoring the federal government’s resources and guidance accordingly to ensure we are getting vaccines in the arms of Americans as quickly and safely as possible.”

White House officials said they have asked the Department of Health and Human Services to look for all potential sources of a type of syringe that can help extract more doses of the Pfizer vaccine from each vial. On Thursday, Biden said he would sign an executive order to use the Defense Production Act to direct federal agencies and private industries to “accelerate the making of everything that’s needed to protect, test, and vaccinate and the care of our people.”

A former administration official told CNN that the Trump administration had already implemented the Defense Production Act to assist each of the six vaccine manufacturers, as well as on needle and syringe contracts.

“We’ll be working paying close and careful attention to all of the components of the supply chain to ensure manufacturing keeps up with what we need,” Tim Manning, the White House Covid supply coordinator, told reporters. “The Defense Production Act is a powerful tool — powerful set of tools — and there are many ways we can use it to help ensure that there are adequate and growing supplies of vaccine.”

Samant, the vaccine expert, said the administration would be better off focusing on the availability of raw materials like lipids rather than specialized syringes.

“It’s like the most ridiculous thing to chase after,” Samant said of ramping up syringe production, adding that such a move might, at best, improve vaccine supply by 5%.

For the Biden team, it’s critical to understand how much supply is on hand and how much could realistically be available in the coming months. States have said they need clear and consistent guidance on vaccine supply so they can continue to streamline their vaccination programs.

“We will work to provide projections on supply. We hear over and over from governors and local leaders that they just don’t know what supply is coming and can’t plan. We will absolutely across the next few days to get our arms around what’s going on, make sure that we are communicating with states and localities, so they can prepare, effectively,” Zients added.

According to one health official involved in the vaccine distribution process, hospitals receiving the Moderna vaccine complained of being completely in the dark on when they were receiving it and how much they were getting and, in some cases, were sent scrambling when they received surprise shipments. Moderna declined to comment.

All these problems are now landing squarely in the lap of the new administration.

Some state officials said they’re already concerned about what the administration’s plan will be to allocate vaccines and communicate with states.

Under the previous administration, then-Vice President Mike Pence and members of the Covid task force held regular calls with the nation’s governors during most of the pandemic. While some governors found the calls largely useless, they could at least rely on the briefings as an opportunity to hear from high-ranking medical experts and ask questions of the administration.

A day after Biden took office, state officials told CNN there is still a lot of confusion as to how states will be working and communicating with the Biden administration as the pandemic continues to surge and vaccine distribution is woefully behind.

According to one Republican state official, the National Governors Association has reached out to some of its governors about working with the Biden administration on Covid. However, not all governors are members of the organization and it remains unclear how the administration plans to work with those outside the association.

A Democratic state official said they, too, had not had any regular communication with the new administration.

Dr. Bechara Choucair, the White House vaccinations coordinator, has been in touch with some governors but had not laid out how the administration would tackle vaccine allocations.

Biden said Thursday that each state would be assigned a liaison with the Federal Emergency Management Agency.

But in a news briefing Thursday, Psaki couldn’t offer any more specifics on how the Biden administration will improve communications with states.

The new Covid team, she said, “will be engaging with governors, Democrats and Republicans, mayors, local elected officials, to gain a better understanding of what’s happening on the ground.”

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Joe Biden’s inauguration featured on global front pages

But for the most part, it was Biden who commanded the spotlight. Here’s a selection of front pages from various parts of the world.

Canada’s National Post was one of many papers to pick out Biden’s proclamation, made in his inaugural address, that “democracy has prevailed.”

It noted Biden’s message of healing, writing that “an extraordinary, sometimes violent, transition of American power came to a peaceful end Wednesday.”

United Kingdom

The UK’s Guardian newspaper highlighted the same line, splashing a picture of Biden delivering his speech across its front page, while The Daily Telegraph, focused on another line — Biden’s call to end “this uncivil war” that has divided the US.

Britain’s tabloid papers approached the inauguration with typical zeal, ignoring the high-minded rhetoric of Biden’s speech in favor of a swipe at his predecessor. “Don’s Gone… Let’s Go Joe!” the Daily Mail wrote. The Metro encouraged Biden to “Now Make America Great Again,” re-purposing Trump’s long-running slogan. The Daily Mirror called Wednesday “A day of hope” and the Daily Express said it was a “Big Moment for the US and Britain.”

Scottish newspaper The National went so far as to bid “good riddance” to Trump — adding the words “you’re fired” in reference to the former president’s past role on TV series “The Apprentice.”

But the most irreverent front page came from the Daily Star, which superimposed Trump’s face onto a picture of the Incredible Hulk.

Ireland

Biden has spoken frequently of his Irish heritage, and his win was marked by front page headlines across the country. The Irish Examiner called it “A New Day,” while The Irish Times said he “reset the tone” with his address.

Italy

“Welcome Back America” was the message on the front of La Stampa, one of Italy’s most-read newspapers. Trump was widely unpopular across western Europe, and many EU leaders expressed relief at the beginning of Biden’s term.

Spain

Spain’s El Mundo welcomed Biden with the frank assessment that “There is much to heal in the US.” Spanish Prime Minister Pedro Sanchez said after Biden was sworn in: “Today is a great day … We’ll work with the US for democracy and the reinforcement of a more just, sustainable & inclusive global governance.”

Australia

Most of Australia’s Thursday papers went to print before Biden was sworn in, so many focused on Trump’s departure — with a fairly clear stance on the outgoing leader. “Don Let the Door Hit You on the Way Out” was the West Australian’s blunt sendoff, while the tabloid NT News opted for a pun in its equally dismissive farewell.

Nigeria

The Guardian picked up on Biden’s promise to lead all Americans, not just those who voted for him. Nigeria’s Burna Boy was included on Biden’s official inauguration playlist on Wednesday.

Hong Kong

The South China Morning Post, a Hong Kong-based daily for English readers, featured a picture of Biden with his wife, Jill Biden, and the Second Family waving during the ceremony.

United Arab Emirates

Meanwhile, Gulf Today referred to Trump as a “trumped-up leader” in its front page coverage of the inauguration of Biden, which featured an image of the 46th president taking the oath.

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