In yet another of his forays on Twitter, the American president yesterday tapped Wall Street‘s optimism by stating that he did not intend to reach an agreement with the Democrats, with a view to a new stimulus program, leaving that for when he wins the elections. A few hours later Trump came to change his irreducible position by indicating that Congress should approve some support after all, which in practice should make little difference since the market does not anticipate that Democrats will give in to approve a few hundred billion in stimulus, when his proposal is far superior and comprehensive, while with the scenario of Biden’s victory on November 3, increasingly likely, the blue side of American politics is now in a position to wait and see.
Photo by Markus Winkler.
In reality if up to a certain stage, while the candidates were closer to each other in the polls, the theme of the stimulus being approved quickly was important, now investors are focused on the afterwards, namely they just want a loose victory for the Democrats to facilitate the approval of the aid package, which is much more generous than that of the Republicans. Hence, until the elections, depending on the polls, the sentiment should remain the more volatile and the smaller the distance between Biden and Trump, not least because a disputed election will result in a legal duel that will last for a few more long weeks, also postponing the long-awaited fiscal oxygen balloon, at a stage when monetary measures can already add little more benefit, as Jerome Powell indicated Tuesday.
