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07.23.2020 by David Robinson

Upcoming Stimulus Bill (Hint: Billions Are Chump Change)

Virtually everyone in Washington agrees that another mega-sized stimulus bill is needed to keep the tenuous US economy in a recovery mode and prevent economic cardiac arrest. Time is of the essence. The expanded unemployment benefit stops at the end of July, increasing the financial pressure on our most vulnerable. The Congressional summer vacation begins on August 7th, which will motivate everyone to get a bill done. New York Times

The challenge? There is substantial disagreement over the stimulus priorities. Washington Post Republicans are not yet in full agreement internally but will insist on liability protection for employers who encourage or require workers to return to work. Democrats want a massive stimulus package ($3 trillion-plus?) with extended unemployment benefits and substantial aid for hospitals, state and local governments, and education. The White House is arguing for a payroll tax cut. Greg Valliere

We can sit back and watch the Washington sausage being made over the next two weeks. This will be Washington at its best and worst. The rhetoric may get ugly, but we are optimistic that a deal will get done. Expect compromise. Agree or disagree with their policies, the key players (i.e., McConnell, Pelosi/Schumer and Mnuchin) are all dealmakers. Some thorny issues will need to be resolved, including whether school funding will be contingent on return to campus/school rooms to force reopening and whether unemployment benefits need to be modified to incentivize a return to work. Look for a bill with a final tab closer to $2 trillion than to $1 trillion (i.e., deficit “smeshaficit”).

Could we get a modest relief rally in the stock market when a deal is reached? Or is the prospect of a large stimulus package already baked into current prices? The devil is likely to be in the details, as the markets will assess the impact of the various provisions. But a failure to reach agreement would not be good.

  • Encouraging Covid-19 Vaccine News: Positive developments in the race to produce an effective Covid-19 vaccine provide the stock market with booster shots in support of current price levels. The US announced an agreement this week to purchase large amounts of Covid-19 vaccine doses from the Pfizer/BioNTech joint venture. CNBC We also learned that the vaccine in development by Oxford and AstraZeneca is showing promise in early trials CNBC
  • Seniors Calculate the Coronavirus Risk: Being older does not make you more likely to get Covid-19, but it makes it more threatening and difficult to treat if you do. This heightened health risk is playing into family discussions every day. We hear from clients and friends. We process it ourselves. When and how can we safely see loved ones? When can we resume our normal travel patterns, etc.? Our sense is that each family sorts it out a little differently, but we all grapple with it almost daily. The linked article does not have answers, but it confirms the questions being asked and the calculus being attempted. New York Times
  • JPMorgan Chase CEO Acknowledges the High Level of Unknown: Jamie Dimon, who leads the mammoth JPMorgan Chase financial institution, has seen a thing or two (to borrow from the Farmers Insurance commercial). After the bank recently announced its second quarter earnings, Dimon frankly spoke to the unprecedented nature of these times, laying out at least five different paths for the US economy to take. CNBC He speaks the truth. We need to prepare for a wide range of outcomes.
  • How to Get Better at Everything and Feel Better: Ok, that was a bit of a teaser, but David Gerken, the former writer for the West Wing, posits that simply slowing down makes everything better. When we slow down, we perform better and are happier and more content. Based on my life experience, this is wisdom and is especially high value advice in these times. Medium
  • Solar Energy Anyone? Interested in solar energy for your home? Tax credits? In retrospect, I do not believe that we have done enough to educate clients on opportunities to implement solar energy in their homes and benefit from tax credits. We have helped individual clients but not systematically publicized the opportunities. Home solar energy is the proverbial win-win. ReVision Energy
  • The Bureau (An Entertainment Recommendation): Annie and I are now officially hooked on The Bureau, an espionage thriller drama about the DGSE, the French equivalent of the CIA. It started on the slow side but has gained both character and plot momentum. I hate paying for movie entertainment beyond our Netflix and Amazon Prime subscriptions, but we did buy this one which is further evidence of my enthusiasm (that and staying up later to watch it!). Sundance Now

Short Takes:

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As always, thank you for reading. Stay safe and be well. We look forward to hearing from you and seeing you in time.

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