WASHINGTON – We’re back, after a circuit-breaker problem affecting our home office put us offline for the better part of 4 days. Thanks to a pair of useful YouTube DIY videos – the one reliably useful feature of that politically debased platforms – I managed to trace a pair of affected circuits and replace the breakers. And voilà! We’re back. And just in time to jump into what’s looking like a turnaround Wednesday on Wall Street. Could a stimulus bill be in the works?
As for that turnaround Wednesday? Well, stocks have spent most of the day in the negative zone, perhaps working off earlier rallies. Or, perhaps, getting nervous about America’s still undecided election. (Yeah, it’s undecided, at least officially.) Or, on the third hand, getting nervous about Congress absolute inability to get a second piece of coronavirus stimulus legislation across the finish line.
Whatever the case, the moment the ticker flashed news that at least some in Congress were getting on board a compromise piece of stimulus legislation, traders and investors used the news as an excuse to bid stocks back up at least slightly into the green zone. Ditto the interest rate on bonds, which have been dithering for days.
What could give us a Turnaround Wednesday?
Here’s that potential turnaround news, via ZeroHedge.
“Shortly after 2pm, with neither they party making any headway in its own stimulus proposal, Democrats Pelosi and Schumer announced they back the $908 billion bipartisan plan (profiled below) as the foundation for future negotiations.
“‘In the spirit of compromise, we believe the bipartisan framework introduced by Senators yesterday should be used as the basis for immediate bipartisan, bicameral negotiations’ the top House and Senate Democrats said. ‘Of course, we and others will offer improvements, but the need to act is immediate and we believe that with good-faith negotiations we could come to an agreement.’”
Right. Democrat improvements like bailouts for impecunious Blue States like California and New York. That’s gonna happen, particularly after this year’s phony Presidential Sweepstakes, brought to you, apparently, by political hacks, Chi-coms and a certain mega-wealthy gentleman with dual citizenship whose name cannot be mentioned here. (Because of search engine restrictions.)
What could erase Turnaround Wednesday?
So far, according to ZH, Mitch McConnell is holding the line on this Red State bailout provision for wealthy Blue States.
“While it remains unlikely that Mitch McConnell will agree to the Bipartisan plan, news that Democrats have made a tentative compromise and have lowered their (initial) funding needs to just above $900 billion was enough to send 10Y yields surging.”
And surge those yields did. The key 10-year Treasury is tantalizingly close to a 1% yield, That’s something we haven’t seen since the Chi-coms sent their most excellent coronavirus over here to throw a wrench into the Trump Economic Miracle.
For their part, stocks have made a comeback as earlier noted. Nonetheless, the Dow and the S&P 500 are only up fractionally, while the tech-heavy NASDAQ remains in the red, just slightly below the zero line. Neither the gains nor the NASDAQ losses, however, total more than a fraction of a percent. That means there’s not a lot of conviction out there today. Plus, if Mitch and the GOP stand their ground, they might end up erasing Turnaround Wednesday anyway. We’ll know in roughly half an hour at the 4 p.m. ET closing bell.
Nonetheless, the tone remains bullish. So it’s just possible we may be seeing the opening gambit of an actual Santa Claus Rally today. Hope springs eternal, after all.
No more idle speculation
We’ll stop things there right now. There’s no point opining on a batch of closing averages that remain too hard to predict.
That’s because politics, as expressed by headlines both true and fake, continue to drive stocks. And they continue to do so as we near the finish line of 2020. One thing we can all agree on: It’s been a hell of a year, and not necessarily in a good way. And we all await the conclusion of the year’s final acts, both on the political and on the economic stages. Which seem to be one and inseparable. Just the way America used to be. Hopefully, we can get back to that – and prosperity – in 2021. But we’ll still take a turnaround Wednesday. If we can get it.
– Headline image: Cartoon by Branco. Reproduced with permission and by arrangement with Comically Incorrect.
Slightly modified to fit CDN format.