The stock market likes President Biden so far. Both the S&P 500 and the Nasdaq 100 indexes are up about 14% since he was elected. We can speculate on why, but one factor has to be that investors are looking forward to a lower level of the volatility in the meaning of the term than was present during President Trump’s term.

Unity

President Biden’s inaugural speech stressed the theme of unity, for the most part, which would be a good thing. If he means it, he can promote unity by not making any changes to the tax code punitive and/or retroactive. While it is likely that individual and corporate tax rates will have to go up to pay for the explosion in spending we had in 2020 and that we will likely expand on in 2021, because we still have major issues related to Covid, it would be best to take a gradual approach to tax increases. Don’t make tax increases retroactive so that at least we can make plans for them. The stock market will appreciate that. As to the punitive part, it doesn’t make sense to vilify wealthy taxpayers while at the same time to ask more of them. If President Biden can at least show some appreciation to the top 10%, that would help toward the Unity goal. A spoonful of sugar helps the medicine go down. Previous Presidents who sought to raise taxes didn’t necessarily follow Mary Poppins’ advice.

Bipartisanship

I don’t really know what President Biden means exactly by Unity, but surely part of it involves bipartisan legislation. With the insiders now firmly back in control in DC and with Republicans likely looking for ways to move forward in a good light, there are likely many ways for the R’s and the D’s to work together. One area is immigration reform and another is infrastructure spending, which is perhaps the 2020’s version of FDR’s WPA. The hope for infrastructure spending is cited as one of the reasons the stock market has run up to the extent that it has since Biden’s election. Infrastructure is a hanging curve over the plate, so let’s see if the Biden administration can hit it.

IMO

President Biden says he wants Unity, but others in his party seem to want blood instead. Biden stands a better chance of achieving Unity if he can keep a check on the bloodthirsty motives of others. I believe the stock market is more likely to reward President Biden if Unity, whatever it means, wins out. I wish him luck!