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There Will Be Virus Relief Legislation

The following is Thursday’s status check of developments in the US that can influence economic, health and political outcomes from Mace News:

Now at the top of the agenda, the negotiations that went another three hours, breaking up at a late hour in House Speaker Pelosi’s office on that legislation restoring some kind of enhanced unemployment benefits and many, many other kinds of support deemed vital to hold off a steep decline in economic activity and an increase in joblessness.

The talks continue Friday, with so much optimism about the outcome. So much. After all, the US stock markets ended higher, the Nasdaq had its 20th record close. Well, maybe a little trepidation around the edges. Especially after Pelosi delivered her bon mot on CNBC when it was suggested Republicans might respond to an offer in the spirit of the late and legendary John Lewis. “Perhaps you mistook them for somebody who gives a damn.”

How could it not all be worked out? Everyone knows the script for these reflex cliffhangers on Capitol Hill after fiscal cliffs, government shutdowns and faceoffs as debt limits reached their X-days. There is a mounting frenzy of partisan name-calling, a huddle for a last long negotiating session, an announcement of a tentative agreement, which barely passes as leadership twists arms into pretzels. Then President Trump tweets his objections, raising the possibility he won’t sign, and then he takes credit for everything.

Should he want to risk Congress overturning any veto, and giving up the chance to actually get any credit, that could prolong the process. By that time every congressional corpuscle will be straining to get to Reagan National Airport and home to campaign and they won’t let a mere veto stop them.

But isn’t President Trump renewing his threat to use executive orders to redeploy left over CARES Act funds, hundreds of millions of dollars, and do without Congress? His morning tweet was, “I’ve notified my staff to continue working on an Executive Order with respect to Payroll Tax Cut, Eviction Protections, Unemployment Extensions and Student Loan Repayment Options.”

At least the last one might be legally possible. Most of the rest would likely cause more problems than they solved, tie up execution for weeks or months and be a tangled mess of presidential overreach. But you can hear the cheering from newsrooms everywhere. Do it! Let’s break some more new ground before Election Day.

Anyway, Trump said he might have something ready to sign by Saturday morning. The Mnuchin/Meadows/Pelosi/Schumer negotiating team has another 24 hours or so to do what everyone expects they will find a way to do. But it won’t all get done for a paltry trillion dollars.

  • On the campaign trail President Trump was warming up, telling Whirlpool plant employees in a very long speech how he saved American washing machines and the incandescent light bulb. He mocked all his favourite targets from Joe Biden to Alexandria Ignacio Cortez for 56 minutes while recounting every achievement and every anti-Obama rollback.

In tweets and remarks he said Biden “is against God,” and against guns, in fact, will take them away “immediately and without warning.” Biden took the bait and later said he’s actually for God. Ohio Governor Mike DeWine, of course, had to retreat to a Columbus quarantine instead of being at Trump’s side, having learned first-hand how great it is to have the kind of near-instant virus test results the president and everyone around him enjoys. DeWine grew very popular in Ohio by ignoring White House nonchalance about the virus early on and locking down to an effective extent. And, to the relief of medical personnel everywhere, Trump did wear his mask again. For Biden, it was a day for outreach to the Latino community.

  • Trump did reimpose 10% tariffs on the solidified electricity known as aluminium, from Canada, which immediately scheduled a news conference to announce its retaliation. What sounds at first like a simple move against Canada shipping excess aluminium at low prices, costing American jobs, is actually a convoluted many-layered conflict that was put off while USMCA, or CUSMA as it’s called in Canada was being nailed down. There’s a foreign-owned firm asking for US protection, Russian aluminium, pandemic-caused distortions in the market and suspect motivation as the tariffs are considered misguided by many on both sides of the border. Take an hour and Google the history for a case study in confusion.
  • Speaking of trade, top US business lobbyists are gearing up their pitches for a change in US-China policy for any new Biden administration. Sure, they argue, it’s long past due to hit back with reciprocal sanctions, Internet retaliation, vs. IP theft, press constraints, judicious tariffs – but that’s beside the point. A “demonisation” posture is bush-league diplomatic practice, they say, making policy’s reaction function totally predictable and worse, prone to manipulation by the other side.

Flexibility is a great-power attribute when playing 3D chess instead of a single-shooter video game. So the “velvet glove” approach is far more effective, ready to apply excruciating pressure or gentle nudges according to our own national interest and perhaps with a smile, not simply launch ham-handed hits when the other side pushes the hot buttons. We should be guided by our interests, not their interests, a real “America First” approach. Would Biden be receptive to exorcising the “demon” approach? Meanwhile Trump signed an order that in September will ban transactions with WeChat/Tencent in addition to TicTok/ByteDance as the Internet Cold War settles in.

  • One bright spot for a least a few newspapers at the top. The NY Times said its digital revenue has outpaced print advertising revenue for the first time. For much of the rest of what survives in the newspaper industry, for which the print advertising model has failed, not as much hope with their much more limited local and regional digital audiences.
  • Once upon a time Alan Greenspan gave a speech about the then burgeoning “winner take all” economy. The pandemic seems to have narrowed the field of winners and given them an extra push. St. Mary’s College Prof. Vincent Deluard tweets the FAANG stocks plus Microsoft are now capitalized at around $7 trillion, more than financial, energy, industrial and material sectors combined. Much of their earnings don’t originate within a certain country with 11.1% unemployment.
  • Segueing to Friday morning’s monthly unemployment report from the BLS, the previews note how seasonal adjustment factors are almost irrelevant in a unique year bereft of recurring patterns. Almost a million teachers were out of the classroom a lot earlier than usual and maybe get added back in Friday. The 20thweek of initial benefit claims greater than a million hint that a lot of the latest layoffs are going to be persistent, collateral damage from employers who have given up. Wednesday’s ADP-Moody’s Analytics private payrolls preview was way below expectations for rebound job creation. So what will the numbers really mean when they were based on a snapshot three weeks ago? Incidentally, the morning’s claims numbers: seasonally adjusted 1.186 million, -17.3%. Unadjusted 984,182, -18.5%.
  • The National Weather Service upgraded the top of the range for serious storms this season to as many as 24 versus 19 in the previous forecast. Whether hurricanes made landfall or not, the changing climate means more rain than in the recent past. Lake Michigan’s shoreline is being encroached by rising waters, according to a WSJ story accompanied by some beautiful drone video.
  • New York Governor Andrew Cuomo may deliver his decision Friday on how much if any in-classroom schooling there will be at the start of the school year.
  • Other than the jobs report, upcoming data includes wholesale inventories at 10am ET and the Federal Reserve’s report on consumer credit at 3pm.
  • As far as the virus goes, another 2,000 Americans dead in the last two days. New total 159,553 (NYT Tracker). As one talking head observed, fifty to sixty thousand new US cases every day while in all of China, 50. Hot spots popping up in Florida, Arkansas, Texas, Mississippi, Georgia, Kansas but some improvement elsewhere.
  • Nassim Nicholas Taleb, who already had more than 600,000 twitter followers, adding more since Black Swan man has been showing pictures of his blasted childhood home in Beirut. He notes upon the departure of Calpers chief investment officer, “I guess the debate about the ‘value’ of tail risk hedging has ended.”

Colin Lambert

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