Here’s my latest video presentation. The article below provides greater details and also reveals an opportunity that allows investors to profitably leverage political and economic conditions.

The yuletide-shortened week brought a mixed close to stocks, as Wall Street weighed the alarming resurgence of coronavirus in the U.S. with the approval in Congress of a long-stalled fiscal stimulus bill.

11th hour theatrics…

It’s been a wild weekend. While vacationing in Florida, Trump on Saturday blindsided Congress by refusing to sign a broad package of legislation that contained pandemic relief, lambasting the relief measure as a “disgrace” because it supposedly didn’t do enough.

The $900 billion COVID relief measure is part of a $2.3 trillion catchall package that includes $1.4 trillion to fund the government through the end of the fiscal year on September 30. The entire omnibus package prevents the government from shutting down, a scenario that Wall Street dreaded.

The COVID relief portion extends expanded unemployment benefits and provides billions of dollars for the distribution of vaccines, as well as funds for small businesses, schools, hospitals, and American families.

Trump abruptly reversed his opposition and signed the legislation Sunday night during an impromptu ceremony at his Mar-a-Lago estate in Palm Beach, after a bit of theatrics on Twitter:

However, Trump’s signature came after two major unemployment programs expired, guaranteeing a delay in benefits for millions of unemployed Americans. Trump begrudgingly agreed to the bill’s $600 stimulus checks for individuals, after his surprise demand that the checks be worth $2,000. The COVID relief bill took months of painstaking negotiations to achieve passage in Congress; the president had remained on the sidelines until last night.

Despite the last-minute drama, the fact remains: stimulus was signed into law and a government shut-down was averted, all of which pleases Wall Street. In pre-market futures trading Monday morning, the three main U.S. stock market indices were poised to open sharply higher, extending last week’s gains.

Small-cap and technology stocks last week continued their bull run, with both the Russell 2000 and NASDAQ indices finishing the week higher. As the following table shows, the tech-heavy NASDAQ has been on fire, rising nearly 43% year to date (see table).

Tech stocks have been soaring this year, as quarantined consumers increasingly rely on technological services and products. The tailwinds for tech should continue in 2021, even when the pandemic finally starts to wane, because this reliance on tech is becoming entrenched.

Don’t let the door hit you…

Threatening the stock market rally is the emergence of a more virulent COVID strain in the United Kingdom.

However, the U.K. also was a source of good news, with reports on Christmas Eve that interminable Brexit negotiations had finally given birth to a deal between Britain and the European Union.

Read This Story: Rue Britannia: What Brexit Means for Investors

The Brexit compromise imposes additional customs checks and inspections on British goods, but spares the country from many tariffs and quotas when trading with Europe. Further details still need to be hammered out and the tentative deal requires approval of the British and E.U. parliaments, but it appears that the long, rancorous nightmare of Brexit is (mostly) over.

In the end, the E.U. proved flexible. After years of tortuous negotiations, the attitude of an exasperated Brussels toward London seemed to be: Just leave already.

Meanwhile in the U.S. last week, consumer confidence slipped. The Conference Board reported on December 22 that its index of consumer confidence fell to 88.6 in December from a revised 92.9 in November, marking the lowest reading since August.

The Commerce Department reported on December 23 that weekly jobless claims in the week ending December 19 rose unexpectedly, reflecting the pandemic’s continued pressure on the economy.

Through it all, the major market indices are trading near record highs, as investors look toward 2021 with renewed hope. During this volatile pandemic year, we’ve gone from bull to bear and back to bull.

The municipal crisis…

Although Trump relented Sunday night and signed the COVID relief package, the bill does nothing for states and localities. That could prove a headwind next year for economic growth and the financial markets.

Because of the pandemic, cities throughout the country are in their worst fiscal shape since the Great Recession of 2008-2009. According to a new report from the National League of Cities, nearly 90% of city finance officers surveyed said their city will be less able to meet its financial needs in the fiscal year 2021 than in 2020 (see chart).

Public sector layoffs are looming, further undermining an already weak labor market. States and localities face budgetary crises, but the federal government isn’t coming to their assistance. Pink slips will soon be wending their way throughout the country to police officers, fire fighters, teachers, sanitation workers, and even health care workers.

The U.S. relief bill falls short when compared to pandemic-induced stimulus implemented overseas. Although it comes in at a hefty $900 billion, the latest U.S. stimulus bill currently offers a much lower level of coronavirus financial aid and stimulus than other developed nations (see chart).

But amid these clouds, I see silver linings. As 2021 gets underway with a new Democratic regime in power, we’ll likely see additional fiscal stimulus to meet pent-up national needs. Stimulus next year should provide long-term upward impetus for markets.

In this week’s run-up to New Year’s Day, keep an eye on key reports scheduled for release: S&P Case-Shiller home price index, year-over-year (Tuesday); Chicago Purchasing Managers’ Index and pending home sales (Wednesday); and initial jobless claims (Thursday). This data should provide clues as to the degree of economic momentum heading into 2021

Also keep in mind, legislative wrangling will continue this week in Congress, as lawmakers address additional budgetary wrinkles.

President Trump on Sunday night signed the omnibus spending package, but at the same time he vowed to send another government spending bill to Congress that would reverse many of the items that were put in the omnibus package that his team fought for and he signed. Trump condemned these items (e.g., foreign aid) as wasteful spending and yet…it was the White House that specifically asked for these items in the first place. If you’re scratching your head, you’re not alone.

And so the chaos continues. We’re enjoying a bull run, but don’t get complacent. It would only take a presidential tweet to torpedo the stock market rally.

Turn to commodities…

Stocks hover at frothy valuations and remain vulnerable to unexpected bad news. What’s an investor to do? Maintain portfolio diversification to different asset classes, including commodities.

Stimulus and a concomitant return to global economic growth in early 2021 should be favorable for commodities, especially copper. The price of copper has been soaring this year and it’s on track to continue rising next year and beyond, which is great news for copper producers.

Copper is vital for building construction, power generation and transmission, electronics, industrial machinery, and transportation vehicles. Copper wiring and plumbing are mainstays of heating and cooling systems, appliances, and telecommunications links.

Next year, as world economic growth picks up steam and infrastructure spending explodes, so will demand for copper. For our favorite investment play on this crucial commodity, click here now.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.