Pro Perspectives 1/7/21

January 7, 2021

Congress formally certified Biden overnight.  So, we officially have a Biden presidency and an aligned Congress.  With that, we know what's coming. 

The Biden Plan calls for a "100% clean energy economy" and "net-zero emissions no later than 2050."  This is a "tranformation of the economy" undertaking, and now he will have support in Congress to fund it and execute on it. 

That means something in the neighborhood of another trillion-dollars of deficit spending is coming.  And expect re-allocation of whatever is needed out of the $908 billion stimulus recently passed. 

The clearest manifestation of this bet on Biden has been Tesla, which has now risen more than 12x since March … 

Tesla is now valued at $770 billion because it makes cool cars, it's a clean energy company.  The biggest, most well funded and most powerful. This company gets to start the U.S. clean energy transformation in the pole position.  With that, the Green New Deal will likely make Tesla the Amazon of energy. 

The next big winner in the Biden presidency will be China.  Biden wants to "normalize" relations with China. That means China goes back to the business that got them so close (pre-Trump) to becoming the global economic superpower — ramping up the global supply chain and manipulating the currency to ensure they maintain global dominance in exporting.  

That means China can get back to 7%+ growth.  They haven't seen it since the first half of 2017 (when Trump entered office).  The IMF expects it (7%+ growth) this year.  

Expect Wall Street to return to the Obama-era mantra of:  investing in China, and passing of the economic torch to Asia.