Wall Street has been waiting with great anticipation for another stimulus package, as many on Main Street continue to suffer. But amid a dizzying stream of tweets, comments and conversations this week, a comprehensive pre-election deal looks complicated.
In recent days, stimulus talks have taken place after President Trump on Tuesday called for negotiations to stop. Now they are starting to work. We are starting to have some very productive conversations,” he said in an interview on Fox Business.
However, those discussions may not be as productive as the president claims. As talks between President Nancy Pelosi and Treasury Secretary Steve Mnuchin resumed on a fragmented deal focused on airline aid, President Pelosi said at a press event Thursday that
Amid the ups and downs, analysts are trying to figure out what a deal or no deal could mean for investors. According to Dan Ives, managing director of equity research and analyst at Wedbush Securities, a failed deal could translate into a 5% hit on the markets. On the other hand, he predicts that the ink in a stimulus deal would be “an incremental catalyst that could represent another 5% advantage to the market in the coming months,” he told us by email.
President Trump suspended talks on Tuesday when he tweeted that he had “instructed my representatives to stop negotiating until after the election, when, immediately after he wins, we will pass “Despite the president’s return to the negotiating table Wednesday morning, prospects for a swift passage of a stimulus bill have been significantly weakened,” analysts at LPL Financial wrote in a note Wednesday, while LPL’s Jeff Buchbinder wrote Thursday that “the odds are against it.” “Analysts went on to say that the impact on sentiment from not passing a bill is likely to be greater than the direct impact on gross domestic product, but both will affect to families and businesses, although they argue that no matter who wins the bills. Elections, we are likely to get a similarly sized stimulus bill. “
Mark Haefele, chief investment officer at UBS Global Wealth Management, came to a similar conclusion. Investors should keep their eyes on Capitol Hill for now. Ives concludes: “It’s a nervous stock market that needs good news from the Beltway.”
