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Investors Perhaps Too Enthusiastic About Future Fiscal Stimulus (Janus Henderson, 6 min read) After analysing Fed meetings, speeches, and beige book releases, Janus Henderson estimates that accommodative monetary policy only explains the rise of the S&P 500 to about 2750. The remainder of the rally is likely due to ‘expectation of continued fiscal accommodation’, yet this expectation of additional fiscal stimulus could disappoint. In this scenario, they estimate the S&P would correct to around 2700. [Bearish US equities]
The Stock Market and MMT: The DOW Is Not Your Friend (CEPR, 4 min read) Rising stock prices lead to a stock wealth effect on consumption. This article argues that the inflationary pressures of rising stock market prices lead governments to pursue deflationary policy that disproportionately affects non-stockholders. Otherwise stated, as the rich spend more money on stocks, the poor have less money to spend on consumption.
COVID-19 and Implications for Automation (NBER, 11 page read) The paper provides the first analysis of the demographic groups and US labour markets that face joint risks from COVID-19 and automation. They find (i) mid-educated females are more like to be in occupations at high risk from transmission and automation; (ii) geographically, commuting zones that are diffusely distributed across the US are likely to be impacted; and (iii) sectors that could be notably affected are healthcare, office and administrative support, and protective service occupations.