Politics jumps into stocks

Option Pit Stop [fstp, logo, header] May 29, 2024 [ag views, logo, header] Politics jumps into stocks Normally politics jumps into stocks when companies get too big. Remember Microsoft Inc (Ticker: MSFT) in the early 2000s? Bill Gates did not kiss the Congressional ring so they went after MSFT for a Window monopoly that quickly folded with the advent of the smartphone. That is the usual politics and business mix and Bill Gates became a very active “humanitarian” after that and very vocal politically and MSFT became a big congressional donor. We do have some poor bond auctions as the market tries to absorb the ridiculous output of the Biden Administration but COVID spending sets the precedent and government spending is more now than in 2020. That will be an issue someday but VIX is running hot with short term IV running very hot in a market going nowhere. [ded] I think traders are somewhat concerned about the Trump trial in Manhattan and are starting to plan for a guilty verdict there. At least price the options for it by jacking up the implied volatility. I do expect VIX to drop back to 12 after the verdict is out but there might be a few wild days just after it. You never know with a jury trial. - AG  [logo, pit profits] Want to find YOUR winning fit? Give our Customer Care Team a call at [1-888-872-3301](tel:/1-888-872-3301) Monday-Friday from 9 a.m. - 5 p.m. EST. Or email them anytime at [support@optionpit.com](mailto:/support@optionpit.com)  [logo, fvix, header,] NVIDIA is a vampire  Hey Traders, In today’s video: - Why NVDA is a vampire - Why interest rates are key - Covering the VIX and major indexes [yt]( [Click here to watch the video!]( - Mark --------------------------------------------------------------- Want to get Mark's Trader's Edge updates directly to your inbox?[Click this link to sign up!](  [fomo, header, logo,] SMH makes another all time high  Yo Pit Crazies, [Check out Option Pit University](. It is my goal to make OPU the best option education platform on the planet. It will only get better. The Market Vectors Semiconductor ETF (Ticker: SMH) is on a one way train to supernova status. Thanks to Nvidia Corp (Ticker: NVDA) taking over the world and maintaining a lead in the all important AI chip tech, having a 10 for 1 stock split and running over shorts, SMH created a halo effect around all the other semis. [ded]( 6 month chart in SMH Is the run over? Will it ever end? Who knows? [But we can do something about it in the Trading Desk.]( - Mark --------------------------------------------------------------- Receive the Option Pit "Ticker of the Week" breakdowns as soon as they are released. [Click this link to sign up!](  [fpri] It Doesn’t Get Much Easier Than This  Hey Income Hunters, Negative sentiment continues to dominate stocks as economic conditions and hedge funds positioning is reported to be negative according to Goldmans weekly positioning report. But seriously, when was the last time fundamentals or even economic conditions dominated stock flows? If, over the past few years you just focused on financial conditions driven by the Fed and the Treasury you were able to catch the critical swings in the markets. So, guess what, the Bloomberg Financial Conditions Index continues to remain at the highs of the last 15 years! [ded]( There is one key indicator that shows the potential for a short-term drop and [we’ll take a closer look here …Â]( - Bill --------------------------------------------------------------- Never miss an edition of Bill Griffo's Power Income Newsletter ever again. [Click this link to sign up!](  [fpip] Beef Up Your Soil  Hi Shoppers, You know how I like to collect quotes and anecdotes. Here is a good one from Virginia Woolf: “One cannot grow fine flowers in thin soil.” As options traders in order to be successful and make money we always need to be beefing up our soil. We can never stop learning. [Lucky for you, we have an excellent educational library here at Option Pit.]( And even luckier for you, we have decided to extend our one time lowest price offer so you can still OWN this library. That’s right. You purchase this 48 hours of educational video library one time and it is yours forever. [There is a huge range of topics it covers, check it out here.]( On top of the 50 hours we will be adding new additional videos on a weekly basis you will also own. This deal has limited time, you need this education. [On to the trade idea in Merck (Ticker: MRK).]( - Licia --------------------------------------------------------------- Join Licia's trading community and start receiving her Profits In Pumps Newsletter. [Click this link to sign up!](  [fprm] The Impact of Legislation and Executive Actions on Stocks Over the Past Three Years  Hey Influence Traders, The third installment of our 5-part Capitol Gains series is here! In the last article, we went over how I analyze the movement of money between D.C. and Wall Street, how it can point to where certain sectors or stocks might be headed, and the trading strategies that Andrew Giovinazzi and I utilize to maximize our chance of success. In this article, we are going to review how actual and proposed legislation, as well as executive actions, impacted stocks over the past few years and how such government action has shaped market trends and how it offers guidance for navigating future changes. Introduction The financial markets are highly sensitive to government actions, including legislation and executive orders. Over the past three years, various policies have significantly influenced stock performance across sectors, particularly as the current administration has advanced its priorities and responded to ongoing economic challenges. In this third installment of our Capitol Gains series, we will explore how specific legislative actions and executive orders have shaped the market landscape. By understanding these impacts, investors can gain valuable insights into how government decisions drive market trends and identify potential investment opportunities. Congressional Legislation 1. American Rescue Plan Act (March 2021) The American Rescue Plan Act (ARPA), a $1.9 trillion stimulus package, was one of the first major legislative actions under President Biden. The act aimed to address the economic fallout from the COVID-19 pandemic. It included direct payments to individuals, extended unemployment benefits, support for small businesses, and funds for vaccination efforts. Impact on Stocks:  - Big Pharma: it goes without saying that Big Pharma entered its glory years as companies like Pfizer (Ticker: PFE) and Moderna (Ticker: MRNA) soared with vaccine mandates.  - Consumer Discretionary: Stocks in this sector, including retailers and consumer goods companies, saw a significant boost due to increased consumer spending from direct stimulus payments.  - Technology: Companies benefiting from remote work trends, such as Zoom (Ticker: ZM) and Microsoft (Ticker: MSFT), continued to perform well. ZM peaked at the height of the lockdown and then came back to earth.  - Travel and Hospitality: Stocks in this sector took initial hits but experienced a rebound as vaccination efforts progressed, and consumer confidence in travel and leisure activities increased. 2. Infrastructure Investment and Jobs Act (November 2021) Signed into law in November 2021, the $1.2 trillion bipartisan infrastructure bill aimed to rebuild America's infrastructure, including roads, bridges, public transit, and broadband internet. Impact on Stocks:  - Construction and Materials: Companies in construction, engineering, and materials sectors, such as Caterpillar (Ticker: CAT) and Vulcan Materials (Ticker: VMC), saw a positive impact from anticipated infrastructure spending.  - Technology and Telecommunications: Broadband and 5G infrastructure investments benefited technology companies focused on networking and telecommunications. As money started to flow, mining companies, like rare earth miner MP Materials (Ticker: MP), required to support the build out also benefited.  - Clean Energy and Electric Vehicles (EVs): The emphasis on clean energy infrastructure, such as electric vehicle charging stations and renewable energy projects, benefited companies in the clean energy sector. Stocks of solar, wind, and EV-related companies saw positive impacts, with boosts to companies like Tesla (Ticker: TSLA) and ChargePoint (Ticker CHPT). While many initially jumped on the bill’s announcement, we made rumor trades but then got out when the lack of actual money flow never hit bottom lines. 3. Inflation Reduction Act (August 2022 Aimed at reducing inflation, this act included measures to lower prescription drug prices, invest in renewable energy, and impose a minimum tax on large corporations. Impact on Stocks:  - Healthcare: Pharmaceutical companies faced pressure due to drug price negotiation provisions, affecting stocks like Pfizer (Ticker: PFE) and Johnson & Johnson (Ticker: JNJ).  - Renewable Energy: Significant investments in clean energy technologies positively impacted companies like NextEra Energy (Ticker: NEE) and Enphase Energy (Ticker: ENPH).  - Corporate Giants: The minimum tax provision impacted large corporations, potentially affecting their profitability and stock performance. 4. CHIPS and Science Act (2022)  In response to the global semiconductor shortage, the administration took steps to bolster domestic semiconductor manufacturing, including the CHIPS and Science Act, which provided funding for semiconductor research and development. Impact on Stocks:  - Semiconductor Companies: Major players like Intel Corp. (Ticker: INTC) and Taiwan Semiconductor Manufacturing (Ticker: TSM) benefited from government support aimed at increasing domestic production capacity. TSM, in particular, received massive government support to open manufacturing facilities in the U.S.  - Technology Sector: Broader technology companies reliant on semiconductors, such as Apple Inc. (Ticker: AAPL) and NVIDIA Inc. (Ticker: NVDA), saw positive impacts as supply chain issues began to ease.  - Automotive Industry: Improved semiconductor supply chains benefited automotive manufacturers facing production delays due to chip shortages. For example, we determined that Ford (Ticker: F) was able to secure its own chip supplies and we traded on that fact.  Executive Actions and Trade Policies Policies that originate in the oval office can have just as big an impact, and in many cases move just as much money, as those from the Hill. - - Executive Actions on Climate Change President Biden issued several executive orders to address climate change, including rejoining the Paris Agreement and setting ambitious targets for carbon emissions reduction. Impact on Stocks:  - Energy: Traditional fossil fuel companies faced headwinds due to regulatory pressures, while renewable energy companies experienced tailwinds.  - Automotive: The push for electric vehicles and clean energy initiatives benefited EV manufacturers and related industries.  - Utilities: Utilities investing in renewable energy infrastructure saw positive impacts on their stocks, as did support companies like upstart Nuscale Power (Ticker: SMR), which builds small modular reactors. - - Trade Policies and International Relations Trade relations, particularly with China, remained a key focus, as did support for Ukraine, which impacted various sectors, including technology, energy exports, green energy manufacturing, and defense. Impact on Stocks: - Technology: Companies with significant supply chain dependencies in China, such as AAPL, experienced stock volatility.  - Energy Exporters: Energy and commodities exporters like LNG exporter Kinder Mogan (Ticker: KMI) experienced fluctuations that we traded based on news.  - Green Energy: Manufacturing companies with global supply chains, like First Solar (Ticker: FSLR), were forced to navigate the complexities of trade policies.  - Defense: While we waited for official defense budgets, we knew that the Biden Admin was funneling tremendous amounts of money and support to Ukraine. We also knew, from work in military circles, who was getting some of that money and what the military needs were coming from Ukrainians, which allowed us to be early in stocks like drone maker AeroVironment (Ticker: AVAV). Conclusion Legislative actions and executive orders over the past three years played a crucial role in shaping stock market trends. By understanding the impacts of policies such as the Tax Cuts and Jobs Act, the Infrastructure Investment and Jobs Act, and executive orders on climate change, we made and will continue to make informed decisions and capitalize on market opportunities. In the next part of our series, we will explore the best sources of information on what is happening in D.C., the military, and other key areas. Stay tuned as we continue to delve into the intricacies of government actions and their influence on the financial markets. - Frank --------------------------------------------------------------- Get all your DC Insider info inside of Frank Gregory's "Power Movies" Newsletter. [Click this link to sign up!]( --------------------------------------------------------------- Don't miss when our traders go live! Get an alert everytime we open the live rooms to all of our readers for free by selecting the calendar you use below. 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