The Week in Review
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- Donald Trump impeached for the second time
- Stimulus package in the pipeline
Over the course of last week, the markets witnessed significant political and economic events and developments on both sides of the Atlantic. President Donald Trump was impeached for a second time, making him the first US President to be impeached twice. The process of impeachment will now be taken to the Senate, where lawmakers will vote on whether to convict Mr. Trump of “high crimes and misdemeanor” for inciting a mob of rioters to storm through the US Capitol. If convicted, he will be banned from holding public office again and will lose the opportunity to run in the next Presidential election in 2024, as he has already confirmed he will.
His successor, President-elect Joe Biden unveiled on Thursday a stimulus plan with a price tag of $1.9 trillion. The relief package is focused on carrying out the vaccination program while also providing substantial funding for the coronavirus-battered economy. The economic vision for the short-term presented in Biden’s plan includes an additional $1,400 in direct payments to the already approved $600 per adult. The big-ticket spending on Democratic priorities including aid to state and local governments is already facing opposition by the Republicans. In his speech on Thursday, Mr. Biden also shed some light on his longer-term goals by saying that he intends to lay out a bigger stimulus plan that will focus on infrastructure and climate change, key long-term goals set out in his legislative agenda. With a 50-50 Senate, Joe Biden’s job will be increasingly difficult as some of the plans will most likely need 60-vote margins, which are needed to overcome a filibuster.
The US market digested the news throughout the week in a relatively modest fashion. US benchmark indexes were trading in a relaxed mood as investors already anticipated President-elect Biden to push a stimulus package for the US economy.
Recession on the Horizon for the UK
On the other side of the Atlantic, the UK economy is on track for a double-dip recession as per the latest data report. The UK economy shrank by 2.6% in November, for the first time in six months. Even though the contraction was milder than the expected 5.7%, the figures indicate a possible double-dip recession as the UK continues to be under a nationwide lockdown at least until Feb 15. Germany also posted GDP figures on Thursday. Europe’s biggest economy shrunk by 5% last year as a result of the coronavirus pandemic. Here too, the drop was less severe than expected.
As global virus deaths near 2 million, Germany Chancellor Angela Merkel considers a tougher lockdown while France extends tighter curfew measures nationwide. With the rate of vaccinations picking up the pace across Europe, the UK remains on track for the government’s vaccination program to deliver 2 million vaccines per week to a total of 15 million people vaccinated by Feb 15.
On the cryptocurrency front, the price of bitcoin this week has been on the defensive side. The number one cryptocurrency consolidated for the week around the levels of $35,000 to $39,000.
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