22 Jan January 22, 2021
Week in Review
Stimulus
Moderate Republican senators expressed skepticism about the need for a new fiscal stimulus plan as large as the $1.9 trillion one proposed by President Biden last week. Speaker Pelosi told donors that she expects Democrats to pass Biden’s proposed stimulus using the reconciliation process, avoiding the need for Republican support in the Senate. Equity markets pulled back from their highs as these questions about the timing and magnitude of the expected stimulus package arose.
Our Take: Significant market moves that are based on headlines surrounding the expectations of actions by governments and central banks are always likely to be more volatile than those based on changes in fundamental economic data.
Municipals
Fitch Ratings issued a downgrade on the Port Authority of New York and New Jersey this week. According to Bloomberg, Fitch’s downgrade from AA- to A+ affects $22.6 billion of consolidated debt. Fitch had placed the credit on negative watch last summer.
Our Take: The Port Authority of New York and New Jersey continues to struggle financially due to the pandemic. Fewer travelers and commuters have led to lower-than-expected revenue. This week’s downgrade could lead to higher borrowing costs for the Port Authority.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.