WASHINGTON – Traders and investors have optimistically pinned their hopes this week on some kind of new stimulus bill from The Swamp. But Treasury Secretary Steve Mnuchin has just poured cold water on the optimists. It’s clearer still that no deal, other than one that gives House Speaker Nancy “President-elect” Pelosi 99% of what she demands, is going to happen prior to November 4. That’s how you define a Pelosi deal.
Markets have consistently traded on rumor all year, and this morning was no exception. That’s because, after a brief ray of sunshine Wednesday morning, investors got word on the latest predictable breakdown in “negotiations.” Meaning Mnuchin once again failed to give up enough to salvage an all Pelosi deal. The Dow and the other major averages (S&P 500 and NASDAQ) predictably tanked not long after today’s 9:30 p.m. ET opening bell.
The Dow is currently (1:15 p.m.ET) off only 0.37% at the moment The S&P is faring a bit worse, off 0.57%. But the volatile NASDAQ is off nearly 1%, although it’s attempting a half-hearted recovery as we write this.
Mr Market continues to trade on headlines, not financials
Markets have consistently traded on rumor all year. This morning was no exception. We’ve complained about this habit for ages, noting that the high-speed trading machines and algorithms tend to react only to headline news (sometimes fake). Facts, like dividends and PE ratios don’t bother them much, leaving old-time traditional value investors like yours truly at an impasse. Do we just go with the flow? Sometimes, these days, you have to.
News and stats on the Mnuchin vs Pelosi negotiations
As to this morning’s upsetting headline, CNBC provides a bit more color.
“Stocks fell on Wednesday, giving back an earlier gain, after comments from Treasury Secretary Steven Mnuchin dampened expectations of a deal being reached on new coronavirus aid….
“Mnuchin said around midday that getting a deal done before the election would be difficult, adding that both sides were still far apart on certain issues. He also noted, however, that Democrats and Republicans are making progress in some areas.”
Correction, Steve. Doing a deal won’t be difficult. It’s impossible. Either Nancy gets her way in a total Pelosi deal and the GOP, Steve Mnuchin and President Trump cave. Or no deal. Simple as that.
Why hasn’t Mnuchin or the GOP caved? (Yet…)
A flaccid GOP has accustomed leading Democrats to insist on fiscally irresponsible deals in order to bail out Blue cities and states that have taxed themselves into oblivion. And right now, Pelosi and her pals are insisting on the same. And screw the rest of America, the America that has, often without knowing, supported these impecunious Blue State governments for decades.
The media won’t report on this chicanery, instead insisting on portraying the GOP as “mean-spirited” and worse. And since that’s the only thing the average citizen reads, sees or hears these days, it tends to become the perceived truth. Which, of course, damages the GOP in any upcoming elections. Like this year’s Festival of Pain. Steve Mnuchin is trying hard to make disparate ends meet. But it seems like a loser’s game prior to this year’s Presidential Sweepstakes.
Does US Rep and would-be US Senator Doug Collins have an original solution?
Outgoing Georgia Republican Representative and Georgia Senate hopeful Doug Collins apparently wants to solve the Pelosi deal problem by stretching the boundaries of the 25th Amendment. You know, the one that’s supposed to unhorse Trump but is being readied for doing the same to incoming President Biden, likely in the first half of 2021. (If he wins, of course.)
This from the Tylers at ZeroHedge:
“House Speaker Nancy Pelosi (D-CA) may get a taste of her own medicine after Rep. Doug Collins (R-GA) introduced legislation to push for her removal as House speaker because she “does not have the mental fitness” to lead the House.
“‘Speaker Nancy Pelosi’s unwillingness to abide by the Constitution, combined with her recent actions, call into question her own mental fitness, which is why it’s critical that the House of Representatives demand her removal from the line of succession,’ Collins told Fox News.”
But this lovely fantasy will never happen. Even an un-stuffed Supreme Court would unanimously strike it down. Pelosi would survive to fight another day.
Again, politics intrudes mightily on our financial column today. But, since so much trading is headline driven, this is what’s happening right now with financial headlines riveted on this morning’s negative news and not on increasingly excellent, if unexpected, corporate earnings as earnings season proceeds at its usual leisurely pace.
A new Biden “Bombshell”?
Speaking of headline risk, the New York Post printed a verifiable bombshell in this morning’s issue, claiming extensive, verifiable documentation on Hunter and Dad’s Excellent Ukraine Adventure has just surfaced.
“Hunter Biden introduced his father, then-Vice President Joe Biden, to a top executive at a Ukrainian energy firm less than a year before the elder Biden pressured government officials in Ukraine into firing a prosecutor who was investigating the company, according to emails obtained by The Post.
“The never-before-revealed meeting is mentioned in a message of appreciation that Vadym Pozharskyi, an adviser to the board of Burisma, allegedly sent Hunter Biden on April 17, 2015, about a year after Hunter joined the Burisma board at a reported salary of up to $50,000 a month.”
Read the details at this NY Post link. We’re reading that Twitter has taken down the Post’s tweet on the topic, although we’ve yet to verify this. It would be typical of America’s favorite Marxist site, which is ever more closely editing out actual news. I.e.,news reported by outlets and individuals the CensorTwits don’t like.
But again, we digress. Meanwhile, Mr Market continues to remain unhappy. Today, it appears, only a GOP cave to President-elect Pelosi will get him to put on his happy face again. Is that what Mr Market really wants?
Have a good one.
– Headline image: Cartoon by Garrison, courtesy of Grrgraphics. Resized to fit CDN format.