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Markets wait for fiscal stimulus

August 14, 2020

August 14, 2020

Is the US printing press broken?Dmitri Demidenko

Democrats and Republicans haggle over every cent and make financial

markets nervous

It’s easier to deal with the fact money is evil when you’ve got lots of money. [S&P 500][1] soared by 51% from March’s trough within 100 days on a significant monetary stimulus. It’s been the best upsurge since 1933. The Fed doesn’t seem to lack for money. However, the Central Bank summons the Congress and the White House to extend financial support, while Donald Trump says state governors can afford to provide some money. So my question is: is the US printing press broken?

The lawmakers had no difficulty providing the first $3 trillion to support the collapsing economy, but providing another relief package is taking a much bigger effort. Treasury Secretary Steven Mnuchin says that Nancy Pelosi,

Speaker of the US House of Representatives doesn’t want to talk to him until he consents to provide another $2 trillion. Keep in touch! And drop in when you’ve got money.

Can this all be about gender issues? Men have never understood women:

- What would you like, Nancy?

- I want to be happy!

- New shoes, then?

- Exactly!

![LiteForex: Markets wait for fiscal stimulus][2]

The same about the fiscal stimulus:

- Nancy, do you think $1 trillion would be enough?

- No, I don’t, she agreed.

Men’s inner world is more complex, while women’s one is more unpredictable. Whatever all this may be about, the confrontation between the Republicans and the Democrats, the main current topic in the financial markets, has dragged on.

S&P 500 had been growing on expectations that the deal would be finally concluded. Then Trump ridiculed his opponents’ demands, related a relief package to mail voting cancellation, and asked state governors to provide money. Thus, investors could smell a rat.  However, the local authorities complained about the pandemic-driven lack of money, which made Trump look even more ridiculous:

- Why does this monument portray the president in such an indecent pose?

- He was supposed to be on a horse, but the city council didn’t have enough money for a horse.

![LiteForex: Markets wait for fiscal stimulus][3]

Trump’s resistance may seem unexpected, even more so because he wasn’t used to sparing money before. Massive tax reform and the first round of fiscal stimuli prove that. The man’s main principle was “after us the deluge” for sure, but the situation changed as the elections are getting closer. The Democrats will most likely manage to portray the support for the unemployed as their victory, which will raise Joe Biden’s rating even higher.

![LiteForex: Markets wait for fiscal stimulus][4]

Trump will have to hold on January’s trade deal with China. China doesn’t fulfil its obligations to buy American products, but the paradox is that trading is almost the only sector of the China-US cooperation. Beijing says that beautiful flowers don’t grow in harsh conditions. I hope they won’t die entirely after the US Trade Representative Robert Lighthizer and China’s Vice Premier Liu He meet on 15th August.

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Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

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Price chart of SPX in real time mode

![Is the US printing press broken?][7]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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