Congressional approval of President Biden's stimulus plan stimulated activity in the markets yesterday and there was certainly plenty to go around from the Dow advancing 237 points to Bitcoin (BITCOMP) soaring past $40,000, spurred on by Elon Musk. The S&P (SPX) closed at 3,916, up 0.74%, the Dow (DIA) closed at 31,386, up 0.76% and the Nasdaq Composite (COMP) closed at 13,988, up 0.95%. Currently, futures for all 3 indices are trading lightly in the red. The rocket ride continues for now.

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Contributor Lance Roberts in a TalkMarkets Editor's Choice article titled Extraordinary Popular Delusions & The Madness Of Crowds continues to maintain that we are in a dangerous market bubble and cites the following signs among professional and retail investors alike:

• Bullish Psychology - "market bubbles are a function of “psychology,” as investors’ herding behavior drives prices higher. Therefore, price and valuations are only a reflection of that psychology."

• Confirmation Bias - "One of the signs that you have entered into a mania phase is when people have trouble absorbing non-conforming information. “Confirmation bias” is a psychological behavior where individuals disregard any information which conflicts with their current beliefs...There are currently many signs of exuberance in the market from retail traders."

• A Failure To Think Logically - "Overpaying for value, investing in fundamentally unsound companies, and speculating without any knowledge of the investment were all forgiven by rising prices. However, when the psychology reverses, those mistakes will both be revealed and brutally punished." 

• Doing The Wrong Thing - "the trouble with bubbles is they prove very tempting opportunities to do the wrong thing. Many investors will take their chances and disregard the warning. They will follow overly optimistic projections to the top and will also follow them back down to the bottom. Some will try but fail to resist the temptation."

As usual Roberts cites credible sources and charts to illustrate these points. A good read.

TalkMarkets contributor Ironman finds signs of recovery in both the U.S. and China. In his article U.S.- China Trade Surged In December 2020  Ironman notes that trade between the U.S. and China has returned to near pre-COVID and pre-Trump/Xi trade tension levels.

"Year over year, the value of goods traded between the U.S. and China surged in December 2020...Taking a step back to look at the modern history of trade between the U.S. and China, we see that the level of goods traded between the two countries has swung from an extreme low a year ago to nearly recover to pre-trade war highs."

Below is one of the charts he includes to illustrate the resurgence in trade between the two countries:

Note the jump in the graphs from January to December 2020. The blue line shows U.S. imports from China and the red line shows U.S. exports to China. Ironman further notes:

"To the extent that the growth rate of a country's imports reflect the relative health of its economy, the trade data suggests China exited its coronavirus pandemic recession in the second quarter of 2020, while the U.S. exited the coronavirus recession at or shortly after the end of the third quarter."

Stay tuned as economic activity in 2021 continues to unfold.

The Staff at TalkMarkets contributor Upfina looks at January U.S. employment data in  Good Employment Report?  and note the following:

"Job creation in January was good given the circumstances (the third wave of the pandemic). We’ve seen three straight weekly declines in jobless claims to end the month which implies the potential for improved February job creation. "

You can see where the jobs were created in the chart below:

However, the chart presents a mixed picture and major problems in the job market continue to persist.

"The labor report was weak on an absolute basis, but it was better than December. There was positive job creation which is about all you can hope for in a pandemic where entertainment is shutdown. The worst part of the report was the increase in permanent layoffs."

Consult the full article for a fuller blown picture of the current state of the U.S. labor market.

Contributor Martin Armstrong gives a full round-up of current international market action in Market Talk – Monday, Feb. 8, but I want to conclude this week's column with some notes he has included about Secretary Yellen's take on the impact of President Biden's stimulus package.

"Treasury Secretary Janet Yellen is not concerned about the impact the $1.9 trillion coronavirus stimulus package may have on inflation. Yellen stated that the biggest risk would be to “leave workers and communities scarred by the pandemic,” and believes employment could reach pre-pandemic levels by 2022 if stimulus is provided. “I’ve spent many years studying inflation and worrying about inflation, and I can tell you, we have the tools to deal with that risk if it materializes. But we face a huge economic challenge here and tremendous suffering in the country. We’ve got to address that. That’s the biggest risk,” Yellen stated."

Till next week be sure to hold on to the seat of your (investment) pants because as this kids song says it seems that "Zoom, zoom, zoom, we're going to the moon."