News: Welcome to debate day — Stick a fork in stimulus?

Thursday, October 22, 2020

Welcome to debate day — Stick a fork in stimulus? — Wall Street moves away from Trump

Oct 22, 2020

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Quick Fix

Welcome to debate day — So here we go. Final one-on-one showdown between President Donald Trump and Democratic nominee Joe Biden of the 2020 campaign takes place tonight in Nashvegas (aka Nashville, Tenn.). Final debates often don't mean that much given most people have made up their minds. And that could be even more the case this year given an astonishing 42 million Americans have already voted, around 20 percent of the entire 2016 turnout.

Those early voting numbers lean hard to Democrats while Republicans count on dominating Election Day turnout. They also mean Trump has increasingly limited chances to change the narrative of an election that may be slipping out of his reach. To wit: Biden is now running close to Trump in Texas (!) (which has huge early voting totals) while opening up a larger lead in Pennsylvania. If Biden takes Pa., Mich. and Wisconsin and holds states Hillary Clinton won, the race is over.

Not at all a lock that this winds up happening. We all know what people thought going into Election Day 2016. But Trump unquestionably needs a knockout performance tonight and it may be harder for him to achieve given that his microphone will be muted at times , leaving him unable to interrupt Biden and go on the attack. Biden needs only to turn in a solid performance and ignore Trump's attempts to goad him about his son or anything else.

Wall Street is not likely to play any role in tonight's debate, to the delight of financial services CEOs everywhere. The economy may not take the spotlight either given it doesn't even show up in the list of six topics.

Stick a fork in stimulus? — Can MM take a victory lap yet? We don't mean to make light of an issue that is of critical importance to tens of millions of struggling Americans. It's a very serious thing.

But we've said for months that a new tranche of stimulus won't come until after the election. And Trump seemed to kill things entirely with his tweet on Wednesday dumping on the entire exercise. One senior White House official told us the tweet "put a damper" on any possibility of a last minute deal.

And House Speaker Nancy Pelosi gave the game away a little bit by noting that stimulus could slip past the election. Ya don't say? We remain convinced Pelosi had (and has) no intention of helping Trump get a giant stimulus bill to sign in the final days before voting ends on Nov. 3. Could we still be wrong? Of course. We've been wrong before. At least a time or two.

GOOD THURSDAY MORNING — Gird your loins for the final smackdown of 2020. Chances are it won't be as bonkers as the last one. But who knows. Email me your takes on the debate on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

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Driving the Day

Final debate in Nashville moderated by NBC's amazing Kristen Welker runs from 9:00 p.m. to 10:30 p.m. … Initial jobless claims at 8:30 a.m. expected to remain extremely elevated at 875K down from 898K …

WALL STREET CONTINUES TO MOVE AWAY FROM TRUMP — CNBC's Brian Schwartz: "Conservatives on Wall Street and in the broader finance community apparently no longer consider … Trump a worthy investment.

"People in the securities and investment industry pumped $20 million into his 2016 run for president … This time, though, donors in the same industry have given just over $13 million to back Trump. It doesn't look like he'll make up the difference in the campaign's final stretch, either, according to GOP strategists. Meanwhile, many of the people who donated to his inaugural committee have disappeared from the fundraising scene."

McCONNELL DOESN'T WANT ANY STIMULUS — Paul Waldman and Greg Sargent in WaPo: "There's a frenzy underway in Washington over whether we'll get another round of stimulus spending … But a lot of it seems disconnected from reality, with regular statements of optimism emanating from key players as they insist a deal could be on its way.

So let's cut through all that and focus on this unfortunate reality: Mitch McConnell will do all he possibly can to kill any big stimulus bill before the election. And he'll probably succeed. … If Joe Biden wins and Republicans hold the Senate, McConnell will do all he can to strangle the Biden presidency by preventing any big stimulus from passing, no matter how bad the economic misery from the recession gets."

MM SIDEBAR — This is in fact now the worst case scenario for Wall Street: A Biden win and Republicans holding the Senate. If Trump wins, investors can celebrate continued low taxes and regulation. If Democrats sweep, they can celebrate the likelihood of $2-$3 trillion or more in fresh stimulus in January or February. If the result is more divided government they can celebrate … nothing.

NEW THIS A.M.: SENATE DEMS PRESS SEC — Via our Kellie Mejdrich: "Senate Democrats led by Sen. Sherrod Brown of Ohio called on the SEC to withdraw a proposal to limit the number of investment managers required to produce public reports on their holdings, according to a letter sent to SEC Chair Jay Clayton.

"Three other lawmakers signed the letter in addition to Brown, the top Democrat on the Banking Committee: Sens. Tammy Baldwin of Wisconsin, Chris Van Hollen of Maryland and Jack Reed of Rhode Island. They blasted the proposal that the regulator first advanced without Democratic support in July."

BRAINARD: LACK OF STIMULUS BIGGEST RISK TO ECONOMY — Our Victoria Guida: "Federal Reserve Governor Lael Brainard … said the biggest risk to the economic recovery, beyond the coronavirus, is the danger that Congress won't pass additional aid for people and businesses hammered by the fallout from the pandemic.

"'Apart from the course of the virus itself, the most significant downside risk to my outlook would be the failure of additional fiscal support to materialize,' she said in a speech to the Society of Professional Economists. 'Too little support would lead to a slower and weaker recovery,' she added.

Markets

STOCKS SLIP ON WALL STREET — AP's Stan Choe, Damian J. Troise and Alex Veiga: "Stocks [closed] lower on Wall Street as negotiations continue to drag on in Washington over delivering more aid for the economy. The S&P 500 lost 0.2% Wednesday after spending much of the day wobbling between gains and losses"

S&P 500 RALLY POWERED BY ASSETS YOU CAN'T SEE OR TOUCH — Bloomberg's Sarah Ponczek: "Take all the physical assets owned by all the companies in the S&P 500, all the cars and office buildings and factories and merchandise, then sell them all at cost in one giant sale, and they would generate a net sum that doesn't even come out to 20% of the index's $28 trillion value. Much of what's left comes from things you can't see or count: algorithms and brands and lists."

THE PLAY-BY-PLAY GUIDE TO CAPITOL HILL: With the Senate up for grabs, members of Congress are hitting the campaign trail in the final weeks of a historic election. How are the pivotal races playing out? Will control of the Senate flip? Keep up to speed on the people and politics of Capitol Hill with our Huddle newsletter, a play-by-play guide to all things Congress. Subscribe today.

Fly Around

NASDAQ SAYS NJ TAX PLAN WOULD RAISE COSTS FOR INVESTORS — Bloomberg's Lananh Nguyen and Jonathan Ferro: "New Jersey's proposal to tax financial transactions will drive investors out of the stock market, according to exchange operator Nasdaq Inc.

"'There have been taxes levied in other countries in the past on financial transactions, and the net result is that investors end up paying more to participate in the market,' Nasdaq Chief Executive Officer Adena Friedman said in an interview Wednesday on Bloomberg Television. 'We are clearly, clearly an opponent to the financial-transaction tax.'"

ECONOMY RECOVERING SLOWLY, BUT SOME SECTORS STRUGGLING — Reuters' Jonnelle Marte, Ann Saphir and Dan Burns: "The U.S. economy continued to recover at a slight to modest pace through early October as consumers bought homes and increased spending, but the picture varied greatly from sector to sector, the Federal Reserve said on Wednesday.

"The Fed's Beige Book report was decidedly more upbeat than the September version, with more districts using the words 'positive' and 'optimistic' to describe various aspects of their local economies."

WHY THE FED'S $4T LIFELINE NEVER MATERIALIZED — NYT's Jeanna Smialek: "As companies furloughed millions of workers and stock prices plunged through late March, Treasury Secretary Steven Mnuchin offered a glimmer of hope: The government was about to step in with a $4 trillion bazooka.

"The scope of that promise hinged on the Federal Reserve. The relief package winding through Congress at the time included a $454 billion pot of money earmarked for the Treasury to back Fed loan programs. Every one of those dollars could, in theory, be turned into as much as $10 in loans. Emergency powers would allow the central bank to create the money for lending; it just required that the Treasury insure against losses."

FINANCIAL FIRMS GEAR UP FOR BIDEN, BOLDER CFPB — WSJ's Orla McCaffrey and AnnaMaria Andriotis: "Lenders are worried the days of a business-friendly Consumer Financial Protection Bureau are numbered. Mortgage lenders and financial-technology firms negotiating with the agency over potential settlements are pushing to resolve their cases quickly, according to people with knowledge of the cases. Their thinking, these people said, is that penalties and enforcement will be much harsher if Joe Biden becomes president in January."

ANALYSIS: CHINA, U.S. ECONOMIES DIVERGE OVER PANDEMIC RESPONSE — Reuters' Andrea Shalal and Gabriel Crossley: "The United States and China dealt with the spread of the devastating coronavirus pandemic in vastly different ways, and that split is reshaping the global battle between the world's two leading economies.

"About 11 months after the Wuhan outbreak, China's official GDP numbers this week show not only that the economy is growing, up 4.9% for the third quarter from a year earlier, but also that the Chinese are confident enough the virus has been vanquished to go shopping, dine and spend with gusto."

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