Private prisons, payday lenders and marijuana stocks plummet in first look at Biden market
Investors made it clear on Wednesday which companies would win and lose in President Joe Biden’s economy, selling gunmakers, jar suppliers, private prison operators and payday lenders, and buying guns. Gambling, Gambling, Beer Stocks and Wholesale Technology.
What happened: Private prison operator CoreCivic and private prison REIT Geo fell 7.8% and 4.1%, respectively, while marijuana ETF MJ fell 2% and payday lenders World Acceptance and EZCorp each fell more than 1%.
- On another side: Penn National gained 5.5% with DraftKings up 3.7%, and the VICE ETF on cigarettes, alcohol and gambling gained 1.6%. The Nasdaq 100 rose 2.3%.
Why it happened: Biden issued an executive order freezing the OCC’s fair access rule, which required banks to serve all businesses, including industries such as private prisons, chemical companies, and gun manufacturers.
- And Trump nominee Kathy Kraninger has resigned as director of the Consumer Financial Protection Bureau, giving Biden the go-ahead to appoint FTC Commissioner Rohit Chopra, a sidekick of Senator Elizabeth Warren who worked with she at the creation of the CFPB, as the next director.
This was followed by a WSJ report that Biden was set to appoint Michael Barr, former Obama treasury official, comptroller of the currency, as the main regulator of the big banks.
- If this is true, “Barr would be part of a model where Biden selects moderates for cabinet and other high-level positions, but chooses progressives for second-level positions,” notes Jaret Seiberg, financial services analyst. and housing policies for Cowen Washington Research Group.
- “The problem for us is whether this trend continues until the summer when Biden has to choose a new vice president for Federal Reserve oversight and fall when he has to choose a new Federal Reserve chairman. . “
The big picture: Biden has set out an ambitious and progressive agenda that is consistent with the policies he laid out in his competition for the Democratic presidential nomination against the Senses. Bernie Sanders, Kamala Harris and Warren, far left.
- This contrasts with the moderate centrist he presented himself in the general election campaign against Trump.
What to watch: Seiberg adds that he is awaiting further economic policy orders from Biden today. This could include a campaign proposal to provide $ 15,000 in tax credits to first-time homebuyers.
- Such a policy would dump gasoline on the already booming housing market, as record mortgage rates have already drastically lowered the monthly cost of homeownership.
- For first-time buyers who only need to put down 3% on a conventional mortgage, $ 15,000 would be the down payment to buy a $ 500,000 home.
Biden also unveiled an executive order ordering the Department of Housing and Urban Development and the Federal Housing Finance Agency to refrain from seizing borrowers who fail to repay loans guaranteed by government loan guarantors like Fannie Mae, Freddie Mac and rural housing service.
- This will help maintain housing stability during the pandemic, but will also likely increase the constraint on housing supply and push prices up further.
Biden also ordered the Department of Education to freeze the repayment of student loans issued by the government until September 30.
Watch this place: Stopping student loan repayments should free up additional income for borrowers, but should also fuel the housing and equity markets.
Also look at this space: Biden’s expected big bank regulator Barr is said to be another top official with a cryptocurrency cachet, joining SEC presidential candidate Gary Gensler.