Pro Perspectives 10/7/20

October 7, 2020

Stocks took a hit yesterday afternoon after Trump instructed his team to walk from negotiations on a big stimulus package.

Today, the losses in markets were fully recovered on this …

Just like that, Trump has put the ball back in the court of the democrats. 
It seems unimaginable that Pelosi and company would comply with this suggestion/demand.  They lose all leverage to get what they want out of a stimulus package (what they want is not in this tweet). 

Now Trump gets to tell the American people, he's ready to sign, to get money in your hands, to keep your business afloat, but the democrats refuse.  

And this could bring about the Executive Order option we've discussed.  

Remember, less than two weeks ago, in his testimony to the Senate Banking Committee, Mnuchin said there was there is $200 billion of unspent money from Cares Act 1.0, and $130 billion of unspent money from the Payroll Protection Program.  That's $330 billion. 

The airline and additional PPP money in his tweet totals $160 billion.  That leaves $170 billion in the kitty for stimulus checks.  In the last round, the government sent 160 million payments.  On a flat $1,200, for those that qualify, that would amount to $192 million.

As for markets, with the level of turmoil, most would expect to see the “flight to safety trade” working — with the dollar, treasuries and gold serving as a hiding place.  None are working. 

Rather, what seems to be at work in markets, is the positioning for a Biden Climate Change Plan.  The big loser in that, is the fossil fuel industry.  Biden has vowed to end fossil fuels. 

On the other hand, the big winner, on the week and month, has been utilities.  His plan targets net zero carbon dioxide by 2035, and a $2 trillion outlay. This would be a big payoff on the renewal energy investments that many U.S. utility companies have already made.