Commentary

Stock Futures Tumble As Phase 3 Stimulus Package Stalls In Senate

Negotiations between Senate Republicans and Democrats over an emergency “Phase 3” stimulus package broke down yesterday, leading to a failed vote to move the bill forward. The impasse put the breaks on an injection of about $1.8 trillion into the economy and is in addition to earlier stimulus measures.

“Senate Majority Leader Mitch McConnell led a meeting [Sunday] with Treasury Secretary Steven Mnuchin, Minority Leader Chuck Schumer, House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy to hammer out the sticking points. But Democrats left the meeting protesting that the bill is a corporate slush fund that doesn't do enough to protect workers from layoffs, gives the Treasury too much power to make its own decisions, and doesn't provide any money for state and local governments, among other complaints,” Alayna Treene reports  for Axios.

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“McConnell then pushed a 3 p.m. vote on a motion to proceed -- which requires 60 votes -- to 6 p.m., giving the two sides more time to negotiate. After a series of additional talks, the cloture vote failed along party lines 47-47, forcing the group back to the negotiating table,” Treene adds.

“Having missed a self-imposed deadline at 5 p.m. Saturday to strike an agreement with Democrats, Republicans began drafting and circulating their own text on Sunday, which was obtained by The New York Times,” write  Emily Cochrane, Jim Tankersley and Jeanna Smialek.

“Democrats complained that the Treasury secretary would have too much discretion on how to allocate the industry-specific funds loans, and that it would not outright require that recipients hang on to their employees. And they were concerned that the bulk of the money -- $425 billion to guarantee potential losses on Federal Reserve programs  -- would be available to prop up companies with few restrictions,” they continue, before listing additional points of contention.

“It’s not big enough, it’s not bold enough,” said Senator Doug Jones, (D-Alabama). “It doesn’t get to the cities, into the communities. It doesn’t get to individuals. It’s a start, but it is not there -- it’s not even half a loaf, it’s a couple of slices.”

“Mr. Jones, who is facing a difficult re-election race in a conservative state, said he was not concerned with the political consequences of voting against moving forward on the plan,” Cochrane, Tankersley and Jeanna Smialek point out.

“There’s more political risk if we don’t get the message to Senator McConnell that we need to get this done,” Mr. Jones said. “That’s where the political risks are.”

“Treasury Secretary Steven Mnuchin played shuttle diplomacy all afternoon and night, exiting the Capitol just before midnight after his sixth face-to-face meeting with Senate minority leader Charles E. Schumer while expressing optimism. ‘I think we’re very close. The teams are going to work through the night. We’re going to regroup the principals in the morning,’ Mnuchin told reporters,” Erica Werner, Seung Min Kim, Rachael Bade and Jeff Stein write  for The Washington Post.

“And while Schumer also struck an upbeat tone -- saying he was ‘very hopeful’ of a deal Monday morning -- McConnell left the Capitol visibly angry and blaming Schumer for blowing up an emerging deal early Sunday. If the sides do not reach pact by the early afternoon, a series of votes will unfold that are like to be a replay of Sunday’s blocked path, except this time the U.S. financial markets will be open and trading,” they continue.

“So we're fiddling here, fiddling with the emotions of the American people, fiddling with the markets, fiddling with our health care. The American people expect us to act tomorrow,” McConnell said, Allan Smith, Haley Talbot, Julie Tsirkin and Josh Lederman report for NBC News. “And I want everybody to fully understand if we aren't able to act [Monday], it’ll be because of our colleagues on the other side continuing to dicker when the country expects us to come together and address this problem.”

Indeed, “the rapid spread of coronavirus  cases and Washington’s delay over an economic rescue package rattled markets early Monday, sending U.S. stock futures, global stocks and oil prices lower. S&P 500 futures fell 3%, after briefly hitting the maximum 5% loss allowed in a single session. That suggested U.S. shares would face further pressure Monday. Last week, the Dow Jones Industrial Average and S&P 500 indexes registered their worst weeks since October 2008,” Joanne Chiu and Anna Isaac reported  at 6:17 a.m. this morning for The Wall Street Journal.

“The futures market is really getting hit on the fact that the stimulus and fiscal relief package was falling foul of the political impasse in the Senate,” Andy Maynard, managing director of equities sales and trading at China Renaissance Securities, tells them.

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