Stocks are trading slightly higher this morning as investors digest the latest round of stimulus drama. After requesting $2,000 checks for qualifying U.S. citizens, President Trump kicked the coronavirus relief bill back to Congress.
In the House, GOP lawmakers then blocked Democrats from passing the payment increase. And while normally it’d be a surprise to see Republicans go against a President of their own party, the reality is that the White House hasn’t always seen eye-to-eye with Republican legislators since 2016.
Trump often found himself quarreling with them over key issues. The coronavirus relief bill being the most recent.
In terms of the original $900 billion stimulus package, though, POTUS likely has the American people on his side. The bill passed over the weekend included payments of only $600 to Americans, which seemed relatively small next to a list of massive cash distributions for foreign countries. Israel was set to receive $3.3 billion. Egypt, $1.3 billion.
Branches of the U.S. military were set for multi-billion-dollar windfalls as well.
All-in-all, roughly $15 billion (approximately 2.2% of the total relief package) was committed to areas unrelated to the U.S. economy. That left a bitter taste in the mouths of many, including the President, who called the bill a “disgrace” earlier this week.
If Congress can’t come to terms, Americans are likely to receive the original $600 checks opposite the $15 billion of excess “government pork,” which will remain in the bill.
And though that might be discouraging for bulls, it’s also not the only development weighing on investors during today’s shortened Christmas Eve trading session.
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U.K. Prime Minister Boris Johnson just announced a Brexit trade deal, at long last, following four and a half years of negotiations. Back when talks first started, analysts were worried that the U.K. would isolate itself, severely limiting trade with continental Europe for the sake of gaining greater independence.
The deal announced by BoJo this morning, however, was far less potent. In the end, it focused more on the U.K. fishing industry than anything else. Johnson said that, for the first time since 1993, “we will be an independent coastal state with control over our waters.”
The Prime Minister then went on to add that he’s secured £100 million to “modernize” Britain’s fishing fleets.
The E.U., meanwhile, will retain most of its economic control over group of constituent nations. In that regard, little will change from the U.K. and E.U.’s pre-Brexit arrangement. It might not be what most “pro-Brexiters” wanted, but it’ll likely be enough to remove a significant chunk of uncertainty from world markets.
The British Pound, which is already up big since bottoming in early March, jumped higher relative to the U.S. Dollar in response to the deal.
With the dollar locked in a downtrend, the pound could continue its surge in 2021. It’s something that should keep Forex traders engaged while the stock market chops sideways short-term.
So, regardless of what happens with the stimulus bill, bulls can feel slightly more confident now that the “Brexit bomb” has finally been disarmed. It’s not a huge win, per se, but it’s a step in the right direction as economies attempt to recover from the Covid pandemic.
The pro-Brexit crowd may have left the bargaining table somewhat underwhelmed, but hey, at least they get to keep their fish. That’s arguably worth celebrating, simply because it means a more drastic course of action was avoided.
Which, ultimately, should help stabilize equities for the time being.