Pelosi’s 48 Hour Stimulus Deadline – Rounding Out The Circular Firing Squad?

Pelosi is on the verge of a stunning victory.  She has set a 48 hour deadline for a stimulus package “before the election.”  Trump has signaled openness to a package larger that $1.8 Billion.  She could find herself sending a close-to-$2 billion deal to the Senate.  With language she largely dictated.

But the victory comes after that.  Watching the Republican party tear itself apart with just weeks to go before the election.  Putting McConnell in a lose-lose position.  Either he…

  1. …passes the bill with mostly Democratic votes.  Probably after conceding even more to Chuck Schumer along the way (who can and will push for more concessions that will just peel away more Republican votes).  Sparking a howl of protest from “no compromise” Republican base voters.  RINO!  Depressing Republican voter turnout.
  2. …sticks with his caucus and votes the bill down.  Making the Party look like the heartless jerks they are.  Sparking a wave of anger that boosts Democratic turnout.

Even better (for Nancy), a desperate Trump is on the verge of committing his fading clout to getting the bill passed.  Either he passes a “betrayal” bill or he fails.  Either way, Trump ends up looking like a loser to base voters that value “winning” over common sense.

It is brilliant politics.  It probably doesn’t, however, lead to any checks going out.

Out in the markets, we remain in a race between a darkening economic reality and levitating investor optimism.    I’ve been wildly wrong about the sustainability of that optimism.  However, given the continuing uncertainty of the next 6 -12 months, I remain confident there isn’t much more to it beyond good feelings  We don’t know enough to know more.  That is the difference between “uncertainty” and “risk.”  So, absent hard facts, we are left with emotion and narrative. 

The market narrative could continue to “look through” the immediate negatives.  It might decide to stop looking ahead and look down.  My crystal ball has been pretty crap lately so I have no idea.  But if it happens. I don’t think a narrative shift will be a gentle one.

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