CNN Business/Matt Egan
US debt surged by $7 trillion under Trump. It will go much higher under Biden

President Donald Trump certainly lived up to his self-proclaimed status as the King of Debt during his term in office. The national debt spiked by $7 trillion during Trump’s tenure — and it’s about to soar much higher under his successor.

Armed with a slim majority in the US Senate, President-elect Joe Biden is expected to make the case Thursday for a $2 trillion fiscal package to repair and rebuild the economy. That would be on top of the $900 billion relief package launched last month.

The proposal, made up of $2,000 stimulus checks, state and local aid, and unemployment insurance, aims to shore up a recovery that looks increasingly fragile. The Biden team’s package is a “shoot for the moon” approach, one lawmaker told CNN.

Adding to America’s $27 trillion mountain of debt may be painful, but it’s the wise move given the scale of the problems and dirt-cheap borrowing costs.

“This is not the time to tighten the belt. The economy is in no condition for austerity,” said Joe Brusuelas, chief economist at RSM.

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Fox Business/Megan Henney
Unemployment claims jump to highest level since August amid COVID-19 surge

The number of Americans filing for first-time unemployment aid last week jumped to the highest level since mid-August, the latest sign the economy’s recovery is stalling amid a surge in COVID-19 infections nationwide.

Figures released Thursday by the Labor Department show 965,000 Americans filed first-time jobless claims in the week ended Jan. 9, higher than the 795,000 forecast by Refinitiv economists.

The number is nearly four times the pre-crisis level but is well below the peak of almost 7 million that was reached when stay-at-home orders were first issued in March. Almost 70 million Americans, or about 40% of the labor force, have filed for unemployment benefits during the pandemic.

“The rise and level of new unemployment claims is shocking, at the highest point seen since late August,” said Mark Hamrick, Bankrate’s chief economic analyst. “This reminds us that the economic crisis has not gone away, far from it, at a time when multiple crises have been vying for our attention.”

The number of people who are continuing to receive unemployment benefits rose to 5.27 million, an increase of about 199,000 from the previous week. The report shows that roughly 18.4 million Americans were receiving some kind of jobless benefit through Dec. 26.

The report provides fresh evidence that a record-setting rise in coronavirus cases – the U.S. reported more than 4,200 deaths on Tuesday, bringing the nation’s total to 381,000 – and new lockdown measures are weighing on the labor market. A separate report released last week shows that employers cut 140,000 jobs in December, marking the first loss since the early months of the pandemic.

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CNBC/Stephanie Landsman
Stocks are climbing a ‘wall of worry’ too quickly amid tax risks, Oppenheimer’s John Stoltzfus says

Oppenheimer Asset Management’s John Stoltzfus is questioning the force of the historic market rally.

Stoltzfus, who is the firm’s chief investment strategist, warned clients in a research note this week that “These benchmark moves had even long-term bulls like us wondering if the stock markets are climbing the proverbial ‘wall of worry’ too fast for this early in a year.”

On CNBC’s “Trading Nation,” he cited tax risks under President-elect Joe Biden as a major piece of his concern.

“We still have certain things that are unknowns about the new administration coming in, particularly if they remove the 2017, 2018 tax reform,” Stoltzfus said Wednesday. “It [Wall Street] certainly isn’t recognizing those risks from what we can tell.”

Stoltzfus credits lower taxes under the Trump administration as a key buffer during the coronavirus pandemic’s economic fallout.

“We do believe tax reform helped corporations navigate very troubled waters,” he said.

Stoltzfus’ hunch is investors and traders are more focused on additional near-term federal virus aid and Covid-19 vaccines versus tax threats right now. He believes the market may be genuinely expecting another round of massive stimulus to offset the loss of tax reform.

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Kitco/Anna Golubova
Gold’s 2021 drivers: Ballooning deficits, inflation and overvalued equities – WGC

Gold will remain an attractive investment in 2021 due to ballooning budget deficits, inflation risks, and market corrections, according to the World Gold Council (WGC).

The WGC’s analysis suggested that gold’s trading pattern might be “more subdued” this year but still remain very positive. More specifically, 2021 will see a mix of risk-on sentiment amid growing portfolio concerns.

“Investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navigating potential portfolio risks including: ballooning budget deficits, inflationary pressures, and market corrections amid already high equity valuations,” the report said. In this context, we believe gold investment will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets.”

Looking at high equity valuations, the WGC said that the S&P 500 price-to-sales ratio is at unprecedented levels.

“Going forward, we believe that the very low level of interest rates worldwide will likely keep stock prices and valuations high. As such, investors may experience strong market swings and significant pullbacks,” the WGC said in its Gold Outlook 2021.

Some risks to watch out for in terms of equity performance this year include vaccinations taking longer-than-expected due to logistical complexities or increased number of COVID-19 strain mutations, the report added.

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