The content from PowerFeed goes here. And continues here.The Republican Party's Warren Harding took over as president in 1921...
Editor's note: Yesterday, Chaikin Analytics Chief Market Strategist Pete Carmasino explained why he believes we're on the edge of another "Roaring Twenties"-style bull run.
Today, he'll discuss the history behind one of America's greatest boom periods. As he explains, it shares a lot of similarities with today's market environment.
Additionally, please note the markets and our Chaikin Analytics offices will be closed Monday, January 20, for Martin Luther King Jr. Day. As a result, we won't publish our Chaikin PowerFeed e-letter that day. Look for your next issue on Tuesday, January 21.
Now, we'll turn it over to Pete...
Why the 'Roaring Twenties' Era Looks Similar to Today
By Pete Carmasino, chief market strategist, Chaikin Analytics
The Republican Party's Warren Harding took over as president in 1921...
The U.S. economy was weak at the time. The country had spent a lot of money in World War I. By some estimates, it spent more than half its GDP to fund the war effort.
But Harding saw things through a simple lens...
He believed the U.S. would flourish if he could help American businesses grow.
Like President-elect Donald Trump today, Harding put together a team to help him do that. He picked Herbert Hoover to run the Commerce Department. And he put Andrew Mellon in charge of the U.S. Treasury.
Their goal was clear...
Run the U.S. like a business – cut costs and boost growth.
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Sounds familiar, right?
If you ask me, that's a lot like what Trump envisions with entrepreneurs Elon Musk and Vivek Ramaswamy.
Harding became the first U.S. president to submit a budget to Congress. His team also cut tax rates. But one of his biggest moves was pushing the Emergency Tariff Act of 1921...
This temporary measure shielded U.S. farmers from cheap imports.
Wheat prices had crashed from $2.50 to less than $1 per bushel by late 1921.
The tariff helped temporarily stop the bleeding. And importantly, it paved the way for the Fordney-McCumber Tariff Act of 1922 to become the lifeline for American farmers...
Imagine watching your livelihood crumble before your eyes. U.S. farmers faced that situation after World War I. And it had ripple effects across the country, of course...
When farms thrived, entire communities could prosper. Schools could stay open. And businesses could keep operating across every Main Street in America.
So these tariffs didn't just save the farms. They preserved America's heartland.
Under the Fordney-McCumber Tariff Act, the average rate for taxable U.S. imports jumped to 38.5%. For context, the average is around 4% today. So 38.5% is massive in comparison.
These tariffs helped American businesses in many ways. Take car ownership, for example...
In short, the tariffs protected U.S. carmakers from foreign competition. They allowed the carmakers to scale production and lower their costs.
Ford Motor's (F) Model T is a prime example. The iconic car's price dropped from $850 in 1908 to $290 by 1924. That made cars a lot more affordable for the average American.
The results were staggering...
In 1921, 9 million cars drove around America's roads. By the end of the decade, that number had soared to more than 27 million.
In 1929, 1 out of every 5 Americans owned a car. In comparison, only 1 out of every 37 English citizens and 1 out of every 40 French citizens owned a car at the time.
The tariffs also boosted related industries...
Rubber-tire production surged. Steel demand increased. Oil consumption rose dramatically. That created a ripple effect throughout the economy.
Americans also introduced or improved a lot of household goods during that period...
Radio ownership skyrocketed. Americans went from owning only 60,000 radios in 1920 to 10 million in 1929. Electric refrigerators and washing machines entered many homes as well.
Connect the dots...
Someone had to make all that stuff.
U.S. manufacturing jobs soared. That brought an economic boom. And the rest is history.
For us, the lesson is clear...
Tariffs can be powerful tools. They can shield vulnerable industries from foreign competition. They can allow American businesses to adapt, innovate, grow, and thrive.
In short, these two tariffs in the early 1920s showed how smart policy can make a real difference in Americans' lives.
We often forget that lesson in today's global economy. But sometimes, a little protection can go a long way. It can be the difference between survival and collapse for many Americans.
These steps shaped the start of the Roaring Twenties. And the economy bounced back fast.
Calvin Coolidge took over as president when Harding died in 1923.
He continued the push for growth. And he focused on tax cuts. He led the country as Congress passed two big laws – the Revenue Acts of 1924 and 1926.
I don't need to get into the details of each law. They essentially cut taxes for all Americans. The top tax rate fell from 73% in 1921 down to 24% by the end of the decade.
Coolidge also kept spending low. And while he led the country, the U.S. budget shrank.
Now, we know the past. And with Trump's second inauguration just around the corner, we know how it relates to today.
Regardless of how you feel about Trump, we're heading toward a pro-business administration. So as investors, it's our job to find out ways to make money from that shift.
And with the Power Gauge at my side, that's exactly what I'll be doing this year.
Good investing,
Pete Carmasino
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.16%
9
14
7
S&P 500
-0.19%
77
269
152
Nasdaq
-0.7%
18
55
27
Small Caps
+0.2%
362
1086
452
Bonds
+0.32%
Utilities
+2.53%
5
21
5
— According to the Chaikin Power Bar, Large Cap stocks are more Bearish than Small Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+5.92%
Materials
+4.28%
Utilities
+3.58%
Industrials
+3.09%
Financial
+2.72%
Real Estate
+2.34%
Discretionary
+1.36%
Health Care
+0.5%
Communication
-0.73%
Staples
-0.75%
Information Technology
-1.45%
* * * *
Industry Focus
NYSE Technology Services
10
18
7
Over the past 6 months, the NYSE Technology subsector (XNTK) has underperformed the S&P 500 by -2.30%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #7 of 21 subsectors and has moved down 1 slot over the past week.
Top Stocks
AVGO
Broadcom Inc.
AMZN
Amazon.com, Inc.
APP
AppLovin Corporation
* * * *
Top Movers
Gainers
DXCM
+5.52%
AMT
+5.41%
CEG
+4.81%
EL
+4.76%
CCI
+4.63%
Losers
UNH
-6.04%
USB
-5.64%
TXN
-5.13%
CRL
-4.66%
AAPL
-4.04%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
SCHW, STT
BLK, CFG, FAST, HBAN, RF, TFC
SLB
TXN
No earnings reporting today.
Earnings Surprises
MS Morgan Stanley
Q4
$2.22
Beat by $0.54
BAC Bank of America Corporation
Q4
$0.82
Beat by $0.05
JBHT J.B. Hunt Transport Services, Inc.
Q4
$1.53
Missed by $-0.09
USB U.S. Bancorp
Q4
$1.01
Missed by $-0.04
UNH UnitedHealth Group Incorporated
Q4
$6.81
Beat by $0.07
* * * *
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