Outside of housing, there’s little in the way of data on the docket stateside in the new week, which means the price action could well be hostage to stimulus wrangling and other political concerns.
Earnings season will roll on, yes, but markets don’t appear particularly interested in that right now. All eyes are on D.C. and all paths converge on the campaign trail, where Donald Trump on Saturday evening joined in a “lock her up” chant at a rally in Michigan, where right-wing militia recently hatched a plot to kidnap governor Gretchen Whitmer. The crowd at the president’s Muskegon event appeared to celebrate the scheme, the details of which could have walked right out of a Coen Brothers screenplay. Trump indulged them. “Lock ’em all up,” he said. Whitmer was incredulous. “This is exactly the rhetoric that has put me, my family, and other government officials’ lives in danger,” she said.
Nancy Pelosi and Steve Mnuchin spoke for more than an hour on Saturday evening. The story remained generally unchanged. There’s an agreement on testing, but not much else. “There remains work to do to ensure there is a comprehensive testing plan that includes contact tracing and additional measures to address the virus’ disproportionate impact on communities of color,” Pelosi’s deputy chief of staff Drew Hammill said. US equities struggled last week as the odds of a pre-election deal faded.
“There remains an array of additional differences as we go provision by provision that must be addressed in a comprehensive manner in the next 48 hours,” Hammill added, noting that “decisions must be made by the White House in order to demonstrate that the Administration is serious about reaching a bipartisan agreement that provides for Americans with the greatest needs during the pandemic.”
It’s still not clear why these talks are ongoing. There is virtually no chance of a comprehensive package becoming law before election day. Perhaps there’s utility in having an agreement ahead of time in case Trump wins, but even there, it’s hard to see what the point is. If Trump wins and the Senate flips, Democrats may look to renegotiate with more leverage. If Trump loses and the Senate flips, then Democrats would be free to pass whatever kind of stimulus bill they see fit. If the Senate doesn’t flip, then it’s all right back on Mitch McConnell.
Over the weekend, McConnell reiterated his position. The Senate will vote Wednesday on a $500 billion bill that would fund some additional aid for the jobless, a second round of Paycheck Protection Program loans and grants, $100 billion for schools, “more” testing, “more” tracing, and additional vaccine research.
McConnell released a statement which sounds convincing until you remember that he and his members are standing in the way of a bill that is between three and four times larger than that.
“Speaker Pelosi has wasted months playing political games with the health and financial security of American families,” McConnell said. “Working families have spent months waiting for Speaker Pelosi’s Marie Antoinette act to stop. They should not have to wait any longer.”
That is, of course, absurd, but you have to hand it to Mitch — it will sound convincing to a notoriously gullible electorate comprised mostly of voters who, even if they had the time to follow every twist and turn in the negotiations, wouldn’t, out of respect for their own sanity.
It’s unquestionably true that Pelosi is engaged in gamesmanship and that is, in fact, delaying the provision of aid to those who need it. However, McConnell conveniently fails to mention that both Steve Mnuchin and Donald Trump now support spending almost the exact same amount as Pelosi and Chuck Schumer — namely, around $2 trillion, four times what McConnell is willing to consider.
“If Speaker Pelosi ever lets the House reach a bipartisan agreement with the Administration, the Senate would of course consider it,” he said. I suppose that depends on your definition of “consider.” McConnell spent most of last week explicitly saying that the deal Pelosi and Mnuchin are busy crafting is a non-starter.
“I don’t think so,” Mitch remarked, when asked in Kentucky whether it’s possible that Senate Republicans would pass an agreement that both the White House and Democrats bless.
This is another case where there’s plenty of blame to go around, but at the end of the day, the situation just “is what it is,” to quote the president. Trump wants to spend $2 trillion. Democrats want to spend $2 trillion. McConnell doesn’t. It’s just that simple.
His weekend statement deftly skirts that, but he made no such effort in Kentucky last week. “That’s where the administration’s willing to go,” he said, of Trump’s “go big” mantra. “[But] my members think what we laid out, a half a trillion dollars, highly targeted, is the best way to go.”
He did get one thing right on Saturday, though. “Nobody thinks this $500 billion+ proposal would resolve every problem forever,” McConnell said. “It would deliver huge amounts of additional help to workers and families right now while Washington keeps arguing over the rest.”
If McConnell wanted to instill a bit of confidence in the legislative process, he could have just said that — just those two sentences, leaving out the silly “Marie Antoinette” reference, which most Americans aren’t going to understand anyway.
Oh, and in case you were curious as to whether Mitch made sure to underscore what’s actually important to him and Senate Republicans, the answer is yes. Although the words “Trump” and “Mnuchin” appear nowhere in McConnell’s statement, Amy Coney Barrett features on the literal bottom line.
The Senate will take a quick couple of votes on PPP and the narrow stimulus package on Tuesday and Wednesday, respectively, “before turn[ing] to Judge Barrett’s nomination immediately after it comes out of committee,” he said.