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Mark Lennihan / AP

Markets sprinted into Tuesday's close, with the Dow Jones picking up more than 118 points — its 8th gain in as many trading sessions — to finish up 12.5% since Election Day. Here are three reasons investors are chipper:

  • The promise of corporate tax cuts: No government policy has as much of a direct effect on corporate profits as income taxes. With Republicans promising a 15 percentage-point decrease in the headline corporate tax rate, investors are betting Washington will soon increase corporate earnings without managers having to lift a finger.
  • Rising wages: Years of Federal Reserve stimulus has finally gotten the jobs market hot enough that firms are giving out significant, broad-based wage increases. This has boosted investor optimism that the U.S. consumer can regain its pre-crisis health.
  • The end of an earnings recession: Overall corporate earnings fell for 15 straight months before the trend reversed in the third quarter of 2016. The turnaround coincided with a renewed hope for business-friendly federal policy to send stocks to all-time highs.

Risks abound: There's plenty of evidence that investors are getting ahead of themselves however.

The Shiller PE ratio compares today's stock price with a 10-year average of corporate earnings. Investors are paying more today for a dollar of earnings than at any point during the lead up to the financial crisis, suggesting if Washington can't come through with profit-boosting initiatives, the best stocks can do going forward is move sideways, if not down.

Expand chart
Data: multpl.com; Chart: Andrew Witherspoon / Axios

Go deeper

Scoop: Gina Haspel threatened to resign over plan to install Kash Patel as CIA deputy

CIA Director Gina Haspel. Photo: Win McNamee/Getty Images

CIA Director Gina Haspel threatened to resign in early December after President Trump cooked up a hasty plan to install loyalist Kash Patel, a former aide to Rep. Devin Nunes (R-Calif.), as her deputy, according to three senior administration officials with direct knowledge of the matter.

Why it matters: The revelation stunned national security officials and almost blew up the leadership of the world's most powerful spy agency. Only a series of coincidences — and last minute interventions from Vice President Mike Pence and White House counsel Pat Cipollone — stopped it.

Updated 8 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus deaths reach 4,000 per day as hospitals remain in crisis mode — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden says, "We will manage the hell out of" vaccine distribution — Biden taps ex-FDA chief to lead Operation Warp Speed amid rollout of COVID plan — Widow of GOP congressman-elect who died of COVID-19 will run to fill his seat.
  3. Vaccine: Battling Black mistrust of the vaccines"Pharmacy deserts" could become vaccine deserts — Instacart to give $25 to shoppers who get vaccine.
  4. Economy: Unemployment filings explode againFed chair: No interest rate hike coming any time soon —  Inflation rose more than expected in December.
  5. World: WHO team arrives in China to investigate pandemic origins.

John Weaver, Lincoln Project co-founder, acknowledges “inappropriate” messages

John Weaver aboard John McCain's campaign plane in February 2000. Photo: Robert Schmidt/AFP via Getty Images)

John Weaver, a veteran Republican operative who co-founded the Lincoln Project, declared in a statement to Axios on Friday that he sent “inappropriate,” sexually charged messages to multiple men.

  • “To the men I made uncomfortable through my messages that I viewed as consensual mutual conversations at the time: I am truly sorry. They were inappropriate and it was because of my failings that this discomfort was brought on you,” Weaver said.
  • “The truth is that I'm gay,” he added. “And that I have a wife and two kids who I love. My inability to reconcile those two truths has led to this agonizing place.”

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