The Stock Market Is Bouncing Back Because Trump Still Wants Stimulus - Barron's

The sun sets behind the U.S. Capitol Building in Washington, D.C.

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The stock market really wants more fiscal stimulus. Whether it gets it or not remains as uncertain as ever.

It’s been a crazy 24 hours. After Fed Chair Jerome Powell, essentially, begged the government to pass more stimulus, President Trump in a series of tweets appeared to end negotiations until after the election.

The Dow Jones Industrial Average finished down 375.88 points, and futures were lower after the close as well, pointing to continued losses.

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But just before 10 p.m. Tuesday, the president started tweeting again. He called for Congress to pass a bill providing $1,200 to Americans, as well as support for airlines and small businesses.

Stock futures rallied, and the Dow looks set to open up more than 250 points.

Fiscal stimulus, of course, is just jargon for government spending. The Cares Act, which doled out $1.8 trillion, was a record amount and is credited with helping the U.S. avoid even worse consequences from the coronavirus-induced recession.

The market, though, wants more. Will they or won’t they will be the question of the day and coming weeks. The answer will determine whether stocks go higher or lower, at least until that other big event: the election.

—Al Root

*** The Readback, Barron’s first narrative podcast, returns today with all new episodes. This season, we’ll be diving into Barron’s archives to explore why companies, ideas, and industries thrived, even as others failed to meet their promise. Listen here.

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Trump Pushes for $1,200 Checks, PPP and Airline Aid After Ending Stimulus Talks

After President Donald Trump ended stimulus talks until after the Nov. 3 election, a sudden and unexpected move that sent U.S. stocks sharply lower Tuesday, Trump tweeted that he would sign a stand alone bill for $1,200 stimulus checks to Americans and additional funding for airlines and small businesses.

• Progress in negotiations between the Trump administration and House Democrats since Speaker Nancy Pelosi unveiled a slimmed-down package worth about $2.4 trillion last week had lifted the market in recent sessions.
• Before the president instructed his team to call it quits, Trump held a call with Treasury Secretary Steven Mnuchin, House Minority Leader Kevin McCarthy, and Senate Majority Leader Mitch McConnell. The GOP leaders were reportedly skeptical that they could get their members to support the deal that Mnuchin, the administration’s chief negotiator, was working to craft.
• After the president’s tweet to call off stimulus talks, Pelosi said that “once again, President Trump showed his true colors: putting himself first at the expense of the country, with the full complicity of the GOP Members of Congress.”
• Earlier Tuesday, Fed Chair Jerome Powell said during a remote appearance at an economics conference that the economy could suffer if another round of coronavirus relief isn’t signed into law.

What’s Next: Pelosi and House Democrats have consistently resisted piecemeal stimulus deals thus far, arguing that the American people need a deal that addresses all of the problems caused by the pandemic, not just a few.

—Ben Walsh

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Pence and Harris Set to Square Off in Vice Presidential Debate

Vice President Mike Pence and Sen. Kamala Harris, the Democratic vice presidential nominee, will take the stage at the University of Utah in Salt Lake City at 9 p.m. Eastern Wednesday. USA Today Washington Bureau Chief Susan Page will moderate.

• The vice presidential debate takes on a heightened significance with the president still sick with Covid-19 and his challenger, Joe Biden, 77 years old. Harris, 55, and Pence, 61, will be watched carefully to see if they seem capable of filling the role of Commander in Chief if necessary.
• Page will personally select nine, yet-to-be announced topics, and each will be discussed for 10 minutes. Candidates’ respect for the structure of the debate will be closely watched after President Trump frequently talked over Biden and moderator Chris Wallace during the first presidential debate.
• The candidates will stand 12 feet apart and there may be some kind of a plexiglass partition separating the candidates to help prevent the spread of Covid-19. All attendees except for the candidates and moderator will be required to wear masks during the entirety of the debate.
• The virus continues to spread around the nation’s highest offices. Trump’s advisor Stephen Miller said he tested positive for Covid-19 Tuesday, and several of the nation’s top military officers went into quarantine Monday night after meeting with a Coast Guard admiral who tested positive for Covid-19.

What’s Next: President Trump indicated that he still plans to debate Biden next week, writing on Twitter, “I am looking forward to the debate on the evening of Thursday, October 15th in Miami. It will be great!” But Biden said that the debate should not happen if Trump still has Covid then.

—Ben Walsh

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Big Tech Companies Stifle Competition, House Panel Says

A House of Representatives panel called for Congress to break up big tech, comparing U.S. firms like Apple, Amazon.com, Facebook and Alphabet’s Google to oil barons and railroad tycoons.

• The House Antitrust Subcommittee released a report Tuesday following a 16-month probe into the companies’ practices, like Apple’s App Store, Facebook’s acquisitions of competing social media sites, and Amazon and Google’s dominance in e-commerce and search engines, respectively.
• The report recommended Congress take action by strengthening antitrust laws, limiting such companies’ acquisitions, and separating parts of their businesses.
• “These firms typically run the marketplace while also competing in it—a position that enables them to write one set of rules for others, while they play by another, or to engage in a form of their own private quasi regulation that is unaccountable to anyone but themselves,” Rep. David Cicilline (D-R.I.), chairman of the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee, wrote in the report.

What’s Next: The subcommittee is led by Democrats. Republicans, in a separate response, agreed with antitrust enforcement but didn’t back many of the Democrats’ policies. What actions Congress will take, if any, likely will depend on the outcome of the November election.

—Connor Smith

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Apple Expected to Unveil 5G Phones Next Week

Apple said Tuesday that it would host a virtual event live from its Cupertino, Calif., headquarters on next Tuesday, Oct. 12. The company didn’t say what precisely the event would focus on, but it is widely expected to roll out new 5G phones.

• The press invite for the live feed wasn’t subtle, with large text reading “Hi, Speed,” in a fairly clear reference to the 5G cellular network that is now being built around the country. Other phone manufacturers, like Samsung, are already selling 5G-capable phones in the U.S.
• Some analysts are calling the soon-to-be unveiled generation of Apple phones the iPhone 12, but the company might not stick with its numbering system. The new iPhone lineup is expected to include a 5.4-inch iPhone, a 6.1-inch iPhone Max, a 6.1-inch iPhone Pro, and a 6.7-inch iPhone Pro Max.
• Last month, Apple released a new watch that includes a sensor that measures blood oxygen levels along with two new iPad models.

What’s Next: Apple hasn’t said how many new 5G phones it hopes to sell, but it has reportedly told its suppliers to build 75 million phones. That’s just about as many units as it sold after launching a new phone last year, a bullish sign that demand remains strong.

—Ben Walsh

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EU Launches Second ’Rolling Review’ to Speed Up Approval of Eventual Covid-19 Vaccine

The European health regulator said Tuesday it would launch a rolling review of the coronavirus vaccine being developed by Pfizer and BioNTech, days after it announced a similar decision for the competing vaccine of AstraZeneca and Oxford University.

• A rolling review means the regulator will start examining the data from laboratory, animal and human testing in real time, without waiting for the whole set to be submitted at the end of the so-called phase 3 trials.
• “This does not mean that a conclusion can be reached yet on the vaccine’s safety and effectiveness, as much of the evidence is still to be submitted to the committee,” the European Medicine Agency said in its release.
• As it did in the AstraZeneca case, the EMA said it had launched the process because “preliminary results from non-clinical and early clinical studies in adults (...) suggest that the vaccine triggers the production of antibodies and T cells that target the virus.”

What’s Next: The rolling review will save time on the approval process but does not change anything to the clinical trials process, which will develop at pace. The regulator’s decision is not a political one, and the EMA insists that it will wait for all the data before it makes a decision.

—Pierre Briançon

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Dear Moneyist,

I have been married for 42 years. He is a nice man, with a good personality and great social skills.

I do housework, and take care of other appointments as needed. I cook, do small home repairs and painting etc., and take care of all our financial planning. I worked in a medical career. He was in IT at a prestigious university.

I am getting older. He has this idea that I have all of this money. I do not. I manage it. Everything is in both our names. I manage all our finances. His income is five times my income.

He has always been very passive aggressive. If I ask him for help with tasks, he acts very put-upon and I end up angry. He forgets things that I ask him to do on purpose, and is always late delivering.

He does not do any important little things for me. For instance, he pretends to forget to pick up flowers. We have not been to a movie together for the longest time. He is not interested. He has said he will NOT go out to dinner with me or travel.

He paid for a trip to Paris in 2018, then he wanted the money back. He takes no responsibility for managing our finances or our lives, but he loves to go to the gym and hike by himself. He does not chase women, gamble or drink heavily.

For the past 20 years, I have gone on little jaunts on my own to see old friends and family. I went to Boston last January for a weekend for my birthday. It was fun. I went to museums, and took myself out for dinners. I liked it. Another time, I went to Seattle alone for three weeks. I attended lots of musical events, including symphony and opera.

I plan to do more travel post-Covid. What else can I do? Moreover, what might I realistically expect from him in the years ahead, especially when we finally retire?

—Still Vital

Read The Moneyist’s response.

—Quentin Fottrell

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—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Benjamin Levisohn

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