Stocks on Wall Street rose to new heights on Monday after President Donald Trump, in a sudden reversal , backed down from his threat to block the COVID aid bill and signed it, restoring unemployment benefits to millions of Americans and averting a federal government shutdown.
All three major Wall Street's major indexes closed at record levels.
Hilary Kramer of Kramer Capital says the rally is broad.
"It was very well received, that stimulus package, from the market, because we're seeing intraday highs on all of the major indexes. And when I look at the stocks that are moving today, and we look at the 52 week highs, there's so much breadth in the market. It's not in any way just focused on technology and cloud-based companies. We have TJMax, we have Ferrari hitting 52 week highs, Deere and when I see that Goldman Sachs, it shows that there's real buying going on."
Even stocks battered by coronavirus lockdowns, such as airlines and cruise lines, moved higher.
Royal Caribbean, Carnival and Norwegian Cruise all rose by at least 3% and airline stocks, such as American, gained as carriers are set to receive $15 billion in additional payroll assistance under the new government aid.
Tesla jumped after a report said the electric-car maker will start operations in India early next year.
While Lockheed Martin also edged up after the company said it delivered 123 F-35 jets in 2020, near the top end of its revised outlook.
YAHAIRA JACQUEZ: All three major Wall Street indexes are rising this Monday afternoon and even hit record highs earlier, this after President Donald Trump signed a $2.3 trillion pandemic aid bill that will provide economic relief for millions of Americans and will fund the federal government. Here with me to talk about today's market action is Hilary Kramer of Kramer Capital Research. Thank you so much for being with us.
HILARY KRAMER: Oh, it's a pleasure to be here today.
YAHAIRA JACQUEZ: Hilary, we finally have a stimulus package, and investors seem to be pleased. What are your thoughts on the $900 billion, and how supportive will that be for an economic recovery?
HILARY KRAMER: Well, there'll certainly be a jump up in the economy, and that's why it's called stimulus, because there's going to be a payment that everyone's going to receive, and that payment will go right into being spent for everything from food, to rent, to even some non-necessities, but it still means the economy is running.
However, we have this dichotomy, we have this absolute disconnect between the stock market, which continues to hit new highs, and has created this schism between the wealthy, who have become the uber-uber-wealthy, and those that don't have money. And so in reality, we're not really solving any problem-- and we're not solving a problem. Yes, would $2,000 have been better than $600? Yes, of course it would have been. But at the same time, we need people to go back to work. So my answer to you is, it has helped the stock market go up, but it's not really solving any of our problems.
YAHAIRA JACQUEZ: On that point, do you have any assumptions baked in on another stimulus package that we may be getting in 2021? Do you have any operating assumptions on that?
HILARY KRAMER: Yes. And the assumption is this, that we are going on, and the work that we do. We feel that the reason the market continues to rise is that a non-coronavirus world has already been baked into the stock market. We're especially seeing that today, now that the true coronavirus-hit companies like cruise lines and airlines are coming back, and we have seen real, actual travel. Yesterday, there was as much travel as we have seen since March 15. To me, that's really good news.
And it's also been-- the experts have told us, it's not the airlines and traveling that's making people sick. It's by not conforming to mask-wearing, or not being careful in small groups. So those are all good things.
However, we think-- and what we're baking into our assumptions, is that-- and it wouldn't matter if it were President Trump, and it doesn't matter the Democrats, President Biden. We have to see and will see taxes rise. It's just inevitable, because we are spending massive amounts. Anyone who wants to get a sense of it, in 2008, we had the financial crisis, and we were at the meltdown of the entire global financial banking world, truly, we had $1 trillion stimulus. We have already spent more than $7 trillion on stimulus.
We are going to see Treasury yields stay down low at 0% forever. Matter of fact, that's why our strategy is to buy banks, because the banks are making so much money. They borrow at 0%, and a mortgage is at 3%, so they're making plenty of margin there. But the banks haven't participated in this incredible rally that anything that has the last name of "Cloud" in its title has accelerated.
YAHAIRA JACQUEZ: And we did see those companies deliver great returns for investors in 2020. If banks are what you're putting your money on, would you say that the glory days for those other companies-- the Zooms, the Teslas, that were able to deliver so much for investors this year, would you say that those are over?
HILARY KRAMER: Yes. It's gone as-- we're as frothy as we're going to be when it comes to the DocuSigns, when it comes to Zoom, when it comes to even the Teladoc, because we-- also, the competition has come in, and traditional competition has come in as much as new players. So although we have Zoom, you have companies like Zoom coming into the market. But then we also have Google Meets. We have Skype. We have Cisco. And so there's just too much competition, and it will be a time that our world will change.
Now, commercial real estate may see an unbelievable historic crash, because there are companies that have no intention of ever going back to work, but it's not because of coronavirus, but because they've discovered-- corporations have discovered that they can-- the cost and overhead of having real estate, and maintaining it, is such an expense unto itself. So we may see that there, but we're not going to continue to see every cloud software company and every coronavirus company continue to rise simply because it's a play on a new lifestyle.
YAHAIRA JACQUEZ: Yeah. And would you say that there are any companies that maybe people thought were gone for dead this past year, but that you would now think that they're undervalued, and there's room for growth from here on out?
HILARY KRAMER: Crocs. Crocs, the plastic sandal shoes. Crocs has done an amazing job coming back, knowing how to advertise. Crocs is so popular again with the younger generation. And Wall Street thinks it's over and done, and they're not realizing what's going on, which is that-- how sales are done today. I think that there's been all this focus on advertising on Facebook, but when-- as you know better than anyone, Yahaira, it's really about TikTok. Dunkin' Donuts is so popular because of the Charli drink, a person who's on TikTok and followed by everyone. And Crocs and so much has changed in the way advertising is taking place, and what was considered new advertising, which is on Facebook and Instagram, is really old-world advertising now. We're in a whole new paradigm moving forward, and the investors who are cuing into that are the ones that are going to make money. So Crocs is going a lot higher. It's going tons higher.
YAHAIRA JACQUEZ: Yeah, and as you said, it's a new world, and trends on TikTok are definitely part of that new world. Hilary, thank you so much for being with us today. Hilary Kramer of Kramer Capital Research. I'm Yahaira Jacquez, and this is Reuters.