Dow snapped 3-day losing streaks on stimulus hopes

calendar 19/10/2020 - 13:27 UTC

The U.S. stock market (Dow Jones Industrial Average) closed around 28606.31, edged up almost +0.39%, and snapped 3-day losing streaks on renewed hopes of the stimulus (CARES Act 2.0), upbeat retail sales, and consumer confidence data. Dow was also boosted on COVID-19 vaccine optimism as Pfizer said it would apply for emergency use of its vaccine as soon as it reaches safety milestones. Dow heavyweight Boeing outperformed after the EU Aviation Safety Agency said the 737 Max jet was safe to fly again.

The market is now almost assured that whoever be in the White House after Dec’20 (Biden or Trump), the CARES Act 2.0 for around $2T is almost a done deal and it may be a reality even by Monday/Tuesday (19-20th Oct), as Pelosi and Mnuchin (Trump) is actively engaged in negotiations and formal texts of the next COVID-19 relief package.

On late Saturday, Pelosi’s spokesman Hammill tweeted about the 48-hours deadline for the CARES Act 2.0 deal soon after another round of daily concall between Pelosi and Mnuchin:

“The Speaker and Secretary Mnuchin spoke at 7:40 p.m. by phone tonight for just over an hour. While there was some encouraging news on testing, there remains work to do to ensure there is a comprehensive testing plan that includes contact tracing and additional measures to address the virus’s disproportionate impact on communities of color. There remains an array of additional differences as we go provision by provision that must be addressed in a comprehensive manner in the next 48 hours. Decisions must be made by the White House in order to demonstrate that the Administration is serious about reaching a bipartisan agreement that provides for Americans with the greatest needs during the pandemic.”

Later, Hammill clarified that Pelosi means by the end of Tuesday, not Monday for the 48-hours deadline. Moreover, on Saturday, Mnuchin’s spokeswoman Crowley tweeted: “Secretary @stevenmnuchin1 and @SpeakerPelosi spoke for an hour and 15 minutes tonight. Their staffs will continue discussions, and they have agreed to speak again on Monday”.

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On Sunday (18th Oct), Pelosi virtually issued a 48-hour ultimatum (20th June) to Trump (White House) to agree for the CARES Act 2.0 to pass and implement it (at least part) before the 3rd Nov election; otherwise, the CARES Act 2.0 may be further delayed due to possible post-election uncertainty and it may be postponed to Jan’21. In a weekend interview, Pelosi said her concerns now focused on some ambiguities in legal texts of the White House version:

“The deadline only relates if we want to get it done before the election, which we do. We’re saying to them we have to freeze the design on some of these things---What is the language? ... Shall is different from ‘may’. The difference amounts to this: When you say ‘may,’ you’re giving the president a slush fund. He may do this, he may grant, he may withhold. But despite the difference, I’m optimistic--We’ve been back and forth on all this.’

On Saturday, the Senate Majority Leader McConnell (RNC) said the Senate will try to pass a standalone skinny stimulus bill (around $500B) next week for PUA/PPP extension: "Republicans do not agree that nothing is better than something for working families. The American people need Democrats to stop blocking bipartisan funding and let us replenish the PPP before more Americans lose their jobs needlessly. But If Speaker Pelosi ever lets the House reach a bipartisan agreement with the Administration; the Senate would of course consider it. But Americans need help now”.

On Sunday, Pelosi responded: “McConnell is among his many statements. The Trump Administration must negotiate in good faith. They told us they would put a light touch on our most recent proposal for testing & tracing. Instead, they took a chainsaw to the proposal, cutting more than half of our proposal.

Earlier Saturday, Trump said:I believe I could quickly convince Senate Republicans to back a good deal. If you said a trillion-eight if you said 2 trillion if you said 2 trillion-two--- many numbers -- I’m willing to go higher than that--I will take care of that problem in two minutes”.

Technical Outlook: SPX-500, DJ-30, and NQ-100 (Futs):

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