There’s plenty of time between now and the election for The White House and the GOP-controlled Senate to fill the vacancy left by Ruth Bader Ginsburg’s passing and cement a conservative majority on the high court for a generation, we’re told.
Never mind that rushing that decision desecrates Ginsburg’s dying wish and effectively means that the fate of women’s reproductive rights as well as the future of America’s healthcare system will now be subjected to sham proceedings in the Senate, where Democrats have no mathematical hope of putting the brakes on the process in a bid to let voters weigh in.
And yet, when it comes to passing another stimulus bill to rush aid to everyday Americans still reeling from the worst economic downturn in a century, well, that’s just too much to ask, apparently.
While the House is crafting a new, slimmed down relief bill with a $2.4 trillion price tag ($1 trillion less than the HEROES Act), lost in the optimistic headlines Friday is the fact that the headline number is actually $200 billion more than the compromise figure Nancy Pelosi and Chuck Schumer presented to Steve Mnuchin as Democrats’ final offer. (Bloomberg notes the bill adds assistance for the airline industry to “avert massive job losses which could start October 1 [and] includes a bailout for restaurants”.) It’s $900 billion more than the $1.5 trillion compromise bill drafted by the “Problem Solvers“.
The White House has indicated a willingness to go as high as $1.5 trillion, but given that $2.2 trillion was a non-starter in August, it’s not entirely clear why $2.4 trillion will suddenly break the stalemate. Obviously, the idea is to pass this in the House so Democrats can say they tried (again) ahead of the election. And, who knows, maybe starting from $2.4 trillion instead of $3.4 trillion will open the door to an actual deal between Pelosi and Mnuchin.
But, remember, a deal between the speaker and the Treasury secretary is not a deal with Mitch McConnell, who is still nowhere near marshaling broad-based support among Senate GOP’ers for a bill with a cost of more than $1 trillion. Indeed, Mitch had a hard enough time herding cats for his “targeted” ~$600 billion publicity stunt earlier this month.
“The numbers being discussed indicate that the two sides remain quite far apart”, JPMorgan’s Michael Feroli said. The bank cut its outlook for US growth to 2.5% in Q4 from 3.5% previously.
“[It’s] a waste of time”, Kevin Brady, the top Republican on the tax writing committee, said, of the legislation Democrats are drafting. “It doesn’t get us an inch closer”.
But that’s fine, we’re told. After all, this is just a “message bill”, apparently.
Commenting on that, House majority leader Steny Hoyer said such a bill “is one thing but we want to get something signed so people get money”.
Right. Good idea. Because the “message” beleaguered, jobless Americans are going to get from another failure is that Congress can’t get anything done besides cramming through a Supreme Court nominee whose first order of business will quite clearly be to ensure that a contested election outcome is decided in favor of the incumbent. “The Senate is planning to leave Washington for a month of campaigning after work next week, with the possible exception of a vote on a Supreme Court nomination”, Bloomberg dryly writes, in the same piece linked above.
Goldman, which previously suggested that the proximity of the deadline for a CR to avert a government shutdown may force a deal on stimulus, now concedes that’s not happening. “It is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution”, the bank said Wednesday. “This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021”. Like JPMorgan, Goldman also cut its outlook for US growth.
On Thursday, Jerome Powell spoke to lawmakers as one would to children, which is appropriate at this point. “The risk is that [Americans] go through that [stimulus] money and have to cut back on spending and maybe lose their home”, he warned. “That’s the downside risk of no further action”.
Ginsburg’s dying wish (if this is actually true) usurps the US Constitution????
@steve which part of The Constitution, exactly?
Of course in Trump’s Machiavellian world the end always justifies the means and all that matters is whether you get caught or not. For most Americans though there is a value placed on doing the right thing and applying principles to ones actions, not just the raw and unabated grasping of power by any means possible. Sure, the republican senate CAN confirm her replacement, but after what they did and said in 2016 with Garland and an election in 6 weeks, has the thought even occurred to you ‘Should they do it?”.
Steve, I cannot even find the words to describe how uncouth it is to parrot talking points that i) cast doubt on Ginsburg’s dictated last wishes while suggesting that ii) if they are true she is trying to “usurp the Constitution”, during a week when the president refused, multiple times, on live television, to commit to a peaceful transition of power if he loses. This comment effectively accuses a dying guardian of the Constitution of trying to rip it up. That is, frankly, ridiculous. And it’s an especially unfortunate thing to say at a time when the president is literally suggesting, on a daily basis, that he may take actions that are the very definition of “usurping the Constitution”. Steve, with respect (and I mean that, because I appreciate anyone who spends even a minute of their valuable time reading the site), please do not leave this kind of comment again. As I hope to have just conveyed, it is not the comment itself that is problematic, but rather what you are intimating and the potential for that intimation to translate into misinformation in the minds of some readers.
well said
How are you positioned? I’d love to take the other side of your trades. If you’re letting misinformation get to you, sticking to Money Market accounts or hiring a wealth manager would be advisable.
Apparenty it was too rushed to interview Merrick Garland in March and vote in June in 2016. Magically now there is plenty of time to interview the Trump nominee. The wonders of remote legislating and technology- hats off to Mitch McConnell! (sarcasm)
Mr McConnell would now be more in line with the Constitution and tacitly admitting to a previous treasonous act.
He swore to uphold the Constitution. Scalia may have seen it this way.
Both jurist graves have been pissed on by McConnell.
There is a special place in history textbooks (and hell, if you’re into that sort of thing) for spineless “leaders” like Mitch McConnell and his disciples. That said, Mitch is only able to do what Mitch does because Americans are, by and large, thoughtless parrots. When you keep the public un/misinformed and also grant them the ability to elect their officials you reap what you sow. I fear what will happen in/to this country if Trump “wins” re-election.
This election does represent market risk.
Globally Bigly!
Be happy H has the depth, insight and personal values to help us with “Life Construction,” through reviewing political developments – which, after all, are his forte borne of his pedigree.
The only thing that could make this episode more despicable is for Trump to officially nominate a new justice on Yom Kippur.
Politics, including geo-politics, matters, to investment portfolios. DB, GS, BoA, MS, have deep research benches whose letters spill ink on politics. The letters speak in probabilities and they don’t call it politics. I suspect the institutions spend money on this because ultra-rich clients want to know how to position should political scenario A occur compared to scenario B.
For example, Alexander Kocic is a derivatives analyst (more than that, of course), but he spends a lot of time discussing the fracturing of our political system. I’m suspecting that his models have variables to explain variance in possible, future outcomes.
Another example is for the pedestrian, of which I consider myself. Taxes and the Roth IRA. Enjoy the tax free, future benefits now and put as much in as you can for if tax policy changes, due to who gets into office, and taxes go up, policy relating to Roth IRAs could change. Say it gets capped or they eliminate it. Bye bye to some tax-free income in retirement.
A whole other angle of why politics matters is the threat to the rule of law in the U.S. If this election doesn’t go well, shall we just put a fork into the U.S. for a while? Or wait for it to get better? How long to wait, 2028, 2032?
This period is a macro-investors dream. I can’t bribe and pay off politicians. Nor do I have access to insider information. My only choice is to pay attention and try to position.
I think Trump got a reality check when he and Melania went to pay respects (photo opp??) and got loudly booed by the non paid Trump supporter crowd he’s not used to. The only time in US history a standing President got booed off the stage paying respects to a true icon??
There are plenty of articles on your preferred topics. You are getting your money’s worth
I wouldn’t read a Market Risk blog that doesn’t discuss politics. The context provided in this article highlights where the governing party’s priorities lie: not in the economic welfare of the US population but rather the enrichment of the rich. The longer this continues, the longer I allocate a large portion of my portfolio to cash, waiting for companies’ bottom lines to be impacted by widespread loss of domestic purchasing power and for home/car/credit defaults to start in earnest.
I haven’t seen many articles that discuss or suggest a form of Portfolio Construction. That’s up to you.