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🎙 "Whatever affects one directly, affects all indirectly." — See who said it at the bottom of the newsletter.
☕ Welcome back. If this email was forwarded to you, sign up here. Today's newsletter is 956 words, a 3.6-minute read.
🎙 "Whatever affects one directly, affects all indirectly." — See who said it at the bottom of the newsletter.
Illustration: Aïda Amer/Axios
Those betting that people want to align stock investments with their political views saw a huge opening this week.
Why it matters: Much of corporate America is at least temporarily turning off the political donation spigot. But who they supported was pushed into the mainstream like never before in the wake of the Capitol mob attack.
What they’re saying: "The world now is paying a lot more attention" to where companies give politically, Jason Britton, who launched the DEMZ ETF on Election Day, tells Axios.
DEMZ tracks companies that have given on average at least 75% of political contributions to Democratic PACs or candidates in the past three cycles.
MAGA is just the opposite, leaving it overly exposed to GOP favoring industries (oil & gas, for one).
Yes, but: Both MAGA and DEMZ have seen only a slight uptick of activity in recent days, according to FactSet data.
Between the lines: The pause in political donations could muddle the makeup of the ETFs, depending on how and when companies move forward.
There could be an effect for the MAGA index down the line, thanks to some companies blacklisting GOP members who voted against election certification.
Worth noting: Other politically focused ETFs — “GOP” and “DEMS” — closed in 2018, just one year after launching.
MAGA ETF investors missed the Big Tech run-up that’s led the market higher. It has little exposure to technology companies, which tend to lean Democratic in their political donations.
DEMZ launched two months ago, but it would have outperformed the S&P every year since 2016, according to a backward-looking price return analysis by S&P Dow Jones Indices.
JPMorgan Chase made a record $12.1 billion in profits in the final quarter of 2020 — in part due to a bump from a release of funds set aside for bad loans. The booming trading division helped, too. (Reuters)
The Trump administration added Xiaomi (the third-largest smartphone maker) to a list of blacklisted Chinese companies — restricting Americans from buying its stock. (CNBC)
President-elect Joe Biden and Fed chairman Jerome Powell had two messages in public remarks on Thursday:
What Biden's saying: "In this moment of crisis, with interest rates at historic lows, we cannot afford inaction," Biden said while unveiling his $1.9 trillion relief package.
Powell cautioned the Fed won’t pull back anytime soon Thursday afternoon.
Between the lines, via the University of Oregon's Tim Duy: A bigger economic package "now suggests more progress toward recovery which in turn suggests earlier tapering. It’s kind of hard to avoid that conclusion."
The backdrop: More signs of economic pain in the face of a surging virus. New applications for unemployment benefits across programs soared to a seven-month high.
The bottom line: You won't see the economic pain "if your scorecard is how things are going on Wall Street," Biden said.
Go deeper on Biden's plan.
Illustration: Sarah Grillo/Axios
A chunk of stimulus payments is missing in action, thanks to a mix-up that put millions of checks into invalid bank accounts.
Why it matters: The IRS (by law) was supposed to get all payments out by today. Now the onus could shift to Americans to claim the money on their tax refund — further delaying relief to struggling, lower-income Americans.
What's going on: Billions of dollars are being returned to the IRS by tax preparers because of the error, though the agency wouldn't say how many payments were incorrectly deposited.
What’s next: "You can wait until the money shows up, or you’re going to file your return and claim your money there," Janet Holtzblatt, a senior fellow at the Tax Policy Center, tells Axios.
Axios’ Felix Salmon writes...Business is both ethical and competent — something that can't be said for the media, government, or even NGOs, according to a major survey from Edelman spanning 28 countries.
By the numbers: Business saw its reputation for being ethical improve by 7 points last year, bringing it solidly into positive territory. Government improved more, but remains the least-ethical institution in the public's mind.
Quote: "Whatever affects one directly, affects all indirectly."
Who said it: Martin Luther King Jr. — born on this day in 1929. He would go on to become the most influential civil rights activist until his assassination in 1968.
Markets is off for Martin Luther King Jr. Day. Dion's back on Tuesday. Happy weekend!