Trump indicated yesterday that he will block the stimulus bill based mainly on the "fact" that it included other things besides Covid relief (it's also a $1.4Tn budget bill to keep the Government running) and the President says he wants to raise the direct payments from $600 to $2,000 per person, which would add another $400Bn to the bill, completely breaking the budget.
It took two months of fighting to get this bill on the desk and suddenly Trump sounds like a Democrat, demanding a much bigger spending bill than the compromise that was finally passed on Monday with a 92-6 vote in the Senate and a 359-53 vote in the house. If he vetoes it, lawmakers would need to either pass new legislation meeting his demand for larger stimulus checks or vote to override his veto—which requires a two-thirds threshold for passage in each chamber.
The stock market doesn't seem to care (about anything) as it's flat this morning. I think there's a nice percentage play in shorting the S&P (/ES) Futures below the 3,685 line with tight stops above and we could try again, of course, if we get to 3,700. While Congress clearly has the votes to override the President – do Republicans have the will to do so?
Both chambers on Monday also passed a seven-day extension of government funding, which Trump signed early Tuesday morning. If the President doesn’t sign the aid package or have his veto overridden by next Monday, the government could shut down briefly. If Mr. Trump doesn’t sign or veto the bill within 10 days after it is passed, it would become law without his signature. Most lawmakers have already left Washington for the holidays following the bill’s passage, so any refusal to sign by Trump kicks the stimulus into 2021.
“I am also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation, and to send me a suitable bill, or else the next administration will have to deliver a Covid relief package,” he said. “And maybe that administration will be me, and we will get it done.”
“We spent months trying to secure $2000 checks but Republicans blocked it,” Senate Minority Leader Chuck Schumer (D., N.Y.) said on Twitter Tuesday night. “Trump needs to sign the bill to help people and keep the government open and we’re glad to pass more aid Americans need.”
Trump is also expected to veto the National Defense Authorization Act by Dec. 23rd, the last day he is permitted to do so before it would become law. The House is currently slated to return to session on Dec. 28th to vote on overriding that veto, followed by the Senate on Dec. 29th.
Meanwhile, we're locking down for the Holidays – that's the mall in Santa Monica, California on December 8th. “We can’t let up now. We need to continue all our efforts to stop the spread of Covid-19 in a very vulnerable time,” said Dr. Rachel Levine, secretary of health in Pennsylvania, where Democratic Gov. Tom Wolf on Dec. 10th ordered places such as movie theaters and bowling alleys to close through Jan. 4th.
Nearly 85 million Americans are expected to travel from Dec. 23rd through Jan. 3rd, off at least 29% from last year, according to an estimate by AAA. In states across the country, small businesses and restaurants are being hit with de facto lockdowns because of occupancy limits or restrictions on dining. At the same time, big-box retailers have been permitted to stay open, in part because their large stores allow for social distancing, prompting resentment from small-business owners.
In the spring, all but a handful of states issued stay-at-home orders that ground nonessential economic activity to a halt. At the time, states were short of ventilators, testing capacity and personal protective equipment for health-care workers, and lacked treatments for the new virus. Those broad orders slowed the rate of infection and bought time for hospitals to catch up. Now, as case numbers surge, most states are clamping down on activities that help the virus spread while trying to avoid a complete shutdown of the economy.
“We didn’t know how fast the virus was spreading, what we were really dealing with,” said Dr. Mandy Cohen, North Carolina’s secretary of health and human services. “More importantly, we didn’t have our response capabilities up and mature.”
Durable Goods were up 0.9% and that was a bit worse than expected but I'm much more concerned about Pesonal Income, which is down 1.1% and that's much worse than the -0.3% expected by our leading Economorons and almost 100% worse than last month's -0.6%. Consumer Spending is also 100% worse than expected at -0.4% – a total disaster in a normal market cycle but maybe we'll get new highs on this news, right?