Stocks are trading flat again this morning as lawmakers negotiate in Washington. With a $900 billion coronavirus bill on the table, investors don’t seem overly impressed.
The market might even dip if the relief package passes.
Overall, bulls were hoping for far more than $900 billion. Multi-trillion-dollar packages proposed in the past had investors seeing green.
The current version of the legislation is a little disappointing by comparison.
The market’s also looking for continued dovishness from the Fed, which is set to release a monetary policy statement this afternoon alongside remarks from its Chairman, Jerome Powell.
But more immediately pressing are the ongoing stimulus package discussions, which according to members of Congress, have been productive.
“I’m optimistic that we’re gonna be able to complete an understanding sometime soon,” Senate Majority Leader Mitch McConnell said last night.
Senate Minority Leader Chuck Schumer chimed-in as well, adding that legislators are “making progress, and hopefully we can come to an agreement soon.”
Analysts say it’s crucial that Congress passes a deal, and soon, if stocks are going to stay afloat.
“Stimulus remains a key focus for the market, as it is the necessary bridge to expansive vaccinations,” said Lindsey Bell, Chief Investment Strategist for Ally Invest, in a note to clients.
“Market participants would like to see a deal sooner rather than later given the expectation for economic data to slow near-term. In the absence of a deal, turbulence could pick up.”
Weighing down on sentiment is November’s retail sales data, released earlier this morning. The Commerce Department measured a 1.1% decline in retail sales, beating the 0.3% drop predicted by Dow Jones-polled economists.
“Bottom line, expect a cut to Q4 GDP forecasts after the disappointing sales data,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote.
“Now that we are on the cusp of handing out more money, that should help in coming months but if things aren’t open, not by much except online.”
“Handing out more money,” in this case, would be direct payments to consumers. The stimulus bill being workshopped at the moment would put $500-$600 in the pockets of qualifying Americans.
That’s not a fortune by any means, but it could be enough to encourage a retail blast through the holiday season.
Does subsidizing retailers make sense, though? The money is intended to cover living expenses. But as we’ve seen in the past, consumers are using the cash to go online shopping instead.
Amazon will undoubtedly absorb a sizable portion of the next stimulus disbursement as a result. CEO Jeff Bezos, the world’s richest man, should only grow wealthier at the behest of the federal government.
All while small businesses close-up shop permanently due to Covid-19 restrictions.
It’s an early stage of the dystopia that socialists have long warned capitalists about, where a small number of uber-powerful corporations dominate the marketplace.
Ironically, however, strict lockdown measures – the same ones left-leaning Americans almost unanimously support – have spurred-on this transition.
Not the free market.
The cause doesn’t matter, though. Like it or not, the world is still on this path.
And unless monopoly-busting agencies take action (hint: they won’t), it’s going to stay that way. Not even a vaccine-driven economic reopening will be able to reverse the damage completely. A torrent of liquidity, stimulus, and weakened fiat currencies have made that a guarantee.
It’s no wonder that a cash alternative like Bitcoin, which just hit $20,000, has grown so popular.
Because, overall, the entire financial system is crumbling, ultimately diminishing the wealth of anyone foolish enough to hold a significant number of dollars.
Which, unfortunately, describes the vast majority of American households.
