(Washington)

President Biden wasted no time in appointing a new Department of Labor chief. He has named Martin Walsh as Secretary of Labor. Walsh is currently the mayor of Boston and his history offers some insights into what his agenda may be. The Democrats have made very clear that one key component of their agenda is to undue the current DOL 2.0 rule and revamp it with a much stricter Obama era-like rule. That said, the naming of Walsh slightly complicates that picture. He was a union leader in Massachusetts and Biden has celebrated that Walsh is the first union member to lead the DOL in over half a century. Therefore, most think his immediate focus will be on workers’ rights issues and the gig economy rather than on wealth management.

FINSUM: It is hard to say how this will play out, but the naming of Walsh certainly makes it seem like a new rule may be slower in coming than some have feared.

Gold had a very strong 2020 as investors feared chaos from the pandemic. See the full story here on our partner Magnifi's site

Advisors don’t need to be told that rates are at ultra-low levels. Yet despite this, munis are still maintaining their attractiveness. See the full story here on our partner Magnifi's site.

(New York)

The market has been a bit choppy to start the year, including a loss over the last five days. See the full story here on our partner Magnifi's site.

(New York)

Any way you slice it, 2021 seems like it will be a good year for munis, and not because the financial condition of municipalities is so great (it isn’t!). One of the main reasons why is the incoming administration and Congress. Between Biden’s stimulus plans and the now Democrat-controlled Senate, the odds for large amounts of local and state financial support from the federal government are quite high. This part of equation is well understood, but there is a second aspect of the Democrats’ plans that will also be beneficial to munis: they plan to raise taxes on the wealthy. Higher taxes on the wealthy would directly increase demand for munis bonds, which means they should have a tailwind this year.

FINSUM: The part about increased taxes and how it drives muni demand has not been discussed enough. We think this is an excellent angle and combined with financial stimulus, should set up a couple years of smooth sailing.