Biden Logs Best Market Showing Between Election and Inauguration

In stock market terms, Joe Biden’s presidency is off to a roaring start. The question is, of course: Will it be able to keep up the momentum?

On Inauguration Day, the S&P 500 leapt 1.39%, which is the second best such showing since Ronald Reagan’s second swearing-in (January 1985), according to Ryan Detrick, chief market strategist for LPL Financial, who is a dedicated cruncher of historical market stats. Sure, sure, Thursday’s gains were minuscule, at 0.03%, so much remains to be seen about the long-term trend.

What’s more, in the span between the November election and Wednesday, when Biden took his oath of office, the index’s performance was the best ever—14.3%. That outdoes the No. 2 increase, 13.3%, belonging to Herbert Hoover, who took office in 1929. Not to mention the third-best return, of 8.8%, which was a tie: The identical increase occurred for the period after John F. Kennedy’s 1960 victory and Bill Clinton’s second election in 1996.

To Detrick, this wingding start of the Biden market portends a continuation of the current bull run. “Of course, no one knows where we go from here,” he wrote, “but with record monetary and fiscal stimulus, coupled with a huge re-opening later this year, a continuation of this bull market could be in the cards.”

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The measurement period begins with Herbert Hoover’s time, in the late 1920s. That decade is when reliable market-wide data first was developed. The S&P 500’s predecessor was launched in 1926: 90 stocks at the time. The current index first appeared in 1957.

Poor Hoover’s bravura market advance was a misleading bullish signal. Eight months after his election-inauguration stock romp of 13.3%, the market crashed, and the Great Depression followed. Maybe the market’s behavior on his Inauguration Day, down 1.32%, was a bellwether.

The market gave Barack Obama a stinko greeting in the 2008-09 period between his win and his oath: minus 19.9%, capped of by a 5.28% tumble on the day he raised his hand over the Bible and became president. That, of course, was in the thick of the global financial crisis. But the market bottomed in March 2009 and had more than doubled by the end of his second term, rising 144% from his 2008 election to his last day as president in January 2017.

Investors surely must hope stocks follow the Obama template and not the Hoover one.

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Tags: Barack Obama, Global Financial Crisis, Great Depression, Herbert Hoover, Inauguration Day, Joe Biden, John F. Kennedy, LPL Financial, Ryan Detrick, S&P 500, Stock Market

KEY TAKEAWAYS

Bill would create a special partition program that would expand PBGC’s authority.
Pension plans would no longer be able to seek a reduction in benefits under MPRA.
PBGC would begin receiving federal funding and double its maximum guaranteed benefit.

Four Democratic US representatives are introducing legislation they say will protect workers, retirees, employers, and taxpayers from the multiemployer pension crisis and beef up the Pension Benefit Guaranty Corporation (PBGC).

The Emergency Pension Plan Relief Act of 2021 (EPPRA), sponsored by Rep. Robert Scott, D-Virginia; Rep. Donald Norcross, D-New Jersey; Rep. Haley Stevens, D-Michigan; and Rep. Joe Morelle, D-New York, would create a special partition program that would expand PBGC’s authority, increase the number of eligible plans, and simplify the application process.

Under current law, PBGC has limited authority to partition certain troubled multiemployer pension plans. With a partition, the PBGC would assume financial responsibility over some of the benefits of an eligible plan so the plan can remain solvent, and a plan would be able to receive enough financial assistance to keep it solvent for 30 years without cutting earned benefits. Additionally, plans that had previously reduced benefits would have to restore them to the retirees who earned them. In exchange for the financial assistance, each plan would have to comply with certain conditions and would be required to file regular reports to PBGC and to relevant congressional committees.

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The proposed legislation would also require PBGC to annually report to Congress, and the Government Accountability Office (GAO) would be required to evaluate PBGC’s implementation and administration of the special partition relief program regularly. The pension lifeboat would also be required to establish and regularly update a website so plan administrators, employers, participants, beneficiaries, and the public could track the implementation and administration of the special partition relief program. And because PBGC currently receives no federal money, the legislation includes funding to cover the costs of the program.

The EPPRA would also put an end to multiemployer plans’ ability to apply for a suspension of benefits under the Multiemployer Pension Reform Act (MPRA) and would double PBGC’s maximum guaranteed benefit.

PBGC currently provides a maximum guaranteed benefit of $12,870 to a participant in a multiemployer plan with 30 years of service. The guarantee is 100% of the first $11 of the monthly benefit rate, plus 75% of the next $33 of the monthly benefit rate, multiplied by the participant’s years of credited service. The EPPRA would nearly double the guarantee to 100% of the first $15 in monthly benefits per year of service and 75% of the next $70 in monthly benefits per year of service, and it indexes it after that.

Under the bill, a plan in endangered or critical status for a plan year beginning in 2020 or 2021 would be able to extend its rehabilitation period by five years to give it time to improve its contribution rates, limit benefit accruals, and maintain plan funding. The legislation would also allow a plan to use a 30-year amortization base to spread out losses over time instead of the typical 15-year time frame during which investment losses are generally required to be recouped.

The bill was lauded by the Teamsters, which said it would boost the viability of pension plans currently in financial jeopardy.

“With a new administration and new Congress now in place, the Teamsters want to let elected officials know it is time to work together across party lines to secure the hard-earned retirements of retirees and workers,” Teamsters General President Jim Hoffa said in a statement. “These hardworking Americans deserve to receive the benefits they were promised.”

The Congressional Budget Office (CBO) has not yet provided an official cost estimate of EPPRA this term. However, according to the House Committee on Education and Labor, the CBO scored similar provisions in the Heroes Act last year at approximately $52 billion over the 10-year budget window.