Cyclical ETFs In Spotlight On Biden's American Rescue Plan

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President-elect Joe Biden has finally announced details of his $1.9-trillion stimulus plan, which has been named the American Rescue Plan. The new relief package will extend the additional federal unemployment payment through September and will raise it to $400 per week. The new plan also includes $1,400 of direct payments to many Americans and extends the federal moratoriums on evictions and foreclosures through September, per a CNBC article.

The stimulus proposal also allocates $350 billion in state and local governments support, sets aside around $70 billion for coronavirus testing and vaccination programs and increases the federal minimum wage to $15 per hour, according to the same CNBC article.

It is worth noting here that there is ambiguity regarding whether Biden’s proposal will be approved in Congress. Democrats have taken control of the U.S. Senate with two Georgia victories. Notably, an effective control of the U.S. Congress by the Democrats is likely to bring in higher fiscal stimulus funding and faster implementation of nationwide vaccination in order to curb the pandemic along with higher allotment of funds for infrastructural development and boosting jobs in the near future. However, Democrats will have to convince some moderate members of their own party and some Republicans to raise spending, per a CNBC article.

Meanwhile, the introduction of this new trench of funding will definitely bring some changes to the investing climate. In fact, Savita Subramanian, Bank of America’s head of U.S. equity strategy, said on CNBC’s “Fast Money” that the market leadership could move from tech stocks to cyclical stocks in 2021 with some push from the additional government spending, according to a CNBC article. In this regard, she said, “we’ve got this petri dish where everything that was good for tech and secular growth is starting to change,” as stated in the above-mentioned article.

Last month, President Donald Trump finally signed the new coronavirus relief and government funding package worth $900 billion into law. It included $600 stimulus checks to Americans, $300 per week in augmented federal unemployment insurance for unemployed individuals, around $300 billion in aid for small businesses, including $284 billion in forgivable Paycheck Protection Program (per the sources), and tens of billions of dollars across other provisions like rental assistance, vaccine distribution funds, COVID-19 testing and contact tracing efforts and broadband support.

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