Today on Market Vision, I want to share four reasons I believe the U.S. economy and markets are going to be resilient and positive in 2021 and beyond.
Reason 1: Stimulus Picks Up the Pace
Number one, stimulus. Since the second quarter of 2020, in the middle of a pandemic, Washington has not been able to get their act together around a stimulus bill and get another round of stimulus going for the U.S. economy.
We think that changes over the course of the next couple of months, and that will be stimulative for the economy. That's number one.
Reason 2: The Great "Melt Up"
Number two, the great melt-up. While mom-and-pop and local main street stores have struggled to put up with the lockdowns and the shutdowns, big box stores have flourished.
While many local organizations, locally owned and operated organizations have struggled, that business has melted up either to online retailers or big box retailers. We've talked about that a lot recently, but that great melt-up actually helps us as investors.
Main street businesses don't have stock on Wall Street to buy, but big box retailers and online retailers do. We own those stocks, and as business floods their way, we benefit because the stocks appreciate. So the great melt-up is helping investors.
Reason 3: Opening Back Up
Number three, opening up. If we think about the economy like a hot air balloon, the Trump administration has effectively been hanging on the gas nozzle, trying to get this thing off the ground, trying to pull off their V-shaped recovery that we hear so much about.
The win for the incoming Biden administration is in cutting the sandbags loose. As Trump has been hanging on that gas nozzle trying to get this economic balloon off the ground, at least a half a dozen, very large blue states have been closing down, keeping the economy weighted down while Trump tries to get this collective balloon off the ground.
The win for an incoming Biden administration is to take the Trump output and then cut the sandbags loose. You cut sandbags loose, the economy takes off like a rocket, and Joe Biden looks like the rockstar hero.
Whether he is or not, that's a conversation for a different discussion. We don't get political here...
Reason 4: Record New Business Growth
So there's stimulus, the great melt-up, opening up, and then here's the hidden Easter egg. Number four is that we are having a massive, massive resurgence in business startups.
You may be thinking, "In the middle of a pandemic, we've got more businesses opening up than ever before? All we're hearing about is main street businesses that are struggling."
Yes. Main street businesses have been struggling, but it's funny how financial incentives change people's behavior.
No Stimulus Equals More Start Ups
With all of the stimulus in the first half of the year and the extended unemployment benefits and so on and so forth, what's actually happening is people are going out and starting businesses.
Why is that? Because if I go get a W2 job, I have to report it and I lose my benefits. If I start a business, I don't even have to tell anybody I have a business until I file for taxes next year and that could be October if I file an extension. Financial incentives change people's behavior.
We're getting tons of startup businesses this year and that's really interesting. I think it's a hidden Easter egg in our economic recovery numbers that is not playing out yet and not showing up in the real economy yet. So those four things, stimulus, the great melt-up, opening up, and small business startups, are four things I think give us a tailwind for the economy and the markets heading into 2021.