Politics- It looks like the fight over Supreme Court Justice Ruth Bader Ginsberg's seat has sunk negotiations between Democrats and Republicans for another
coronavirus aid bill. - That means Trump may have just unwittingly chosen a Supreme Court seat over the US
economy and thestock market . - The market had been selling off for weeks as hopes for a bill declined. And in the days since Justice Ginsberg passed, it took another big leg down.
- It's hard to see what could bring the market back to life before the election in November, which is sure to be volatile.
- This is an
opinion column. The thoughts expressed are those of the author.
With 41 days until the election, it seems President
The market has been selling off for three weeks, waiting testily for Washington to pass another coronavirus aid package to help support the economy. The Democrats have pushed for a $3 trillion package since June, but Republicans in the Senate have remained ideologically opposed to spending that much money and have favored a pared down version that comes in around $1 trillion.
Negotiations had started, then stalled, and then started again until Friday, when Supreme Court Justice Ruth Bader Ginsberg passed away. That has geared Washington up for a nasty fight.
Trump and Republicans want to fill the seat as quickly as possible, even though they have argued that Supreme Court seats should not be filled during an election year — that's why the blocked President Obama's nomination of Merrick Garland in 2016. Democrats want to hold Republicans to their prior standard and wait for the outcome of the election.
Now reports indicate that negotiations have ceased once again. This after, just this week, Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell testified before Congress that more stimulus is needed to help get the economy back on track. Based on its continued weakness, the stock market agrees, and given the stalemate in DC it's hard to see what could turn it around before the election.
It's the pandemic, stupid
The stock market is still all about the pandemic. That is why it is on track for the first monthly loss since the coronavirus hit the US in earnest back in March. The market's malaise is following right along with growing COVID-19 cases around the world. Here in the US daily new cases have surged 20% from last week to this week. In Europe people are concerned there could be more lockdowns.
The message from the market is clear. As the broad indexes have fallen, "stay at home stocks" like Zoom and Peloton have started taking off again.
This market is demanding Washington pay attention to the virus and help the economy, but it is unlikely to get that focus — or relief — thanks to this new fight over a Supreme Court seat.
Could we see a reversal of fortunes? Maybe, but consider what we have ahead of us. Experts like Dr. Anthony Fauci have been warning that cases could rise as the weather cools and flu season sets in.
Another negative in that fact that come October companies will start reporting third quarter earnings. There could be some bright spots, but remember that third quarter — July, August, and September — is the quarter the rest of the country (not just New York, Washington and California) was fighting to get their COVID surge under control, so it may not be all great news.
Finally there's the election in November. Because of the virus, millions of Americans will be voting by mail. That means we may not know the outcome of the election until later than usual. A judge in Wisconsin just ruled that mail-in ballots can be counted for six days after election day.
Analysts over at Morgan Stanley think it could be up to a month before who know who our next President will be, and that during that time we can expect the stock market to feel as queasy as the rest of us.
Even after that, though, the market will still be squarely focused on the pandemic. And with rancor in Washington rising along with cases at the moment, it's hard to see what will give it a boost.