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As hopes fade for a major stimulus, here’s what it means for the fragile economy

first_imgThe HEROES Act that the House passed in May calls for $3 trillion in spending across a variety of areas, from unemployment benefits to student loan relief, rent and mortgage assistance and testing and tracing programs related to the coronavirus pandemic.- Advertisement – – Advertisement – As the question remains over who will capture the hotly contested presidential race, one casualty quickly emerging from fallout is the massive stimulus package Democrats were hoping to get to boost the economy.A blue-wave victory in Tuesday’s elections was expected to cement funding as high as $3 trillion.Instead, the likelihood that the Senate will stay in Republican hands, combined with a presidential race that at least is tilting to Democrat Joe Biden, likely translates into something smaller – or no deal at all.- Advertisement – The U.S. Capitol is seen in the morning on November 4, 2020 in Washington, DC. The nation awaits the results of a historic presidential election between President Donald Trump and his Democratic challenger, former Vice President Joe Biden with swing states still too close to call.Al Drago | Getty Images Republicans, though, seek a smaller, more tailored approach aimed mostly at enhanced help for displaced workers and limited aid elsewhere, to the tune of less than $1 trillion.With the mixed bag of results off the election, Wall Street consensus quickly formed around a package that would be closer to what the GOP is proposing, with uncertainty over when it could get passed.“We’re still likely to see a fiscal support package, but I would suspect the total size to be no more than $1 trillion,” said Steve Friedman, senior macroeconomist at MackKay Shields. “We’re much lower now in this divided government scenario.”What it means for the economyThe stakes around the size of the stimulus are considerable with the economy on uncertain footing heading into the winter.While GDP rose at a 33.1% annualized pace in the third quarter, employment gains are slowing and overall growth is expected to pull back. The economy is still in a technical recession that began in February, and whether negative growth returns could be contingent on how much more fiscal juice is needed and when it arrives.“If you just didn’t do anything, it would clearly be a tremendous toll on many, many households, but it wouldn’t necessarily cause a double-dip recession,” Friedman said. “It would just slow the pace of the recovery in an aggregate sense.”The political rancor comes at a time of heightened concern over the coronavirus spread.Daily case growth has been around the highest of the pandemic, and hospitalization rates are climbing as well. European nations are again shuttering businesses to battle Covid-19, and if that should come to the U.S., it would complicate the recovery.“It’s a little bit unsettling because of course we’re all watching what’s going on with Covid-19 and in Europe seeing the containment measures coming in,” said James Knightley, chief international economist at ING Investment Management. “We could be entering a period where we could be talking about negative growth once again in the U.S. That political backdrop doesn’t make it easy to see a swift fiscal response to this.”Lacking action from the fiscal side, financial markets again could turn their eyes to the Federal Reserve for more monetary help.Though the central bank’s arsenal is somewhat limited, it still has some weapons to deploy. The Fed could increase its monthly asset purchases and extend the duration of the bonds it is acquiring as part of more aggressive quantitative easing. It also could use stronger guidance about what it will take to raise rates, and use its purchases to control the yield curve.What the Fed could doThe Fed concludes its two-day meeting Thursday. Markets don’t expect much in terms of action, but Chairman Jerome Powell could indicate what measures if any officials are considering to aid in the recovery.“The Fed could consider easing terms to facilitate the flow of credit. The Fed could also ramp up the QE program, buying Treasuries and [mortgage-backed securities] at a faster rate, as well as corporate credit as needed, particularly if it sees concerns over market liquidity,” Michelle Meyer, U.S. economist at Bank of America Global Research, said in a recent note. “The Fed has tools and will use them, in our view.”Meyer said a Biden victory combined with a split Congress likely would see stimulus of $500 billion to $1 trillion “passed after inauguration but with some delay. There is also some chance of continued gridlock in this scenario.”Markets didn’t seem to mind any of it Wednesday, rallying strongly despite the uncertainty hanging over the election.Prospects of the kind of gridlock that Wall Street seems to prefer combined with continued likelihood of some form of stimulus helped fuel the strong move higher.“What the market tends not to like the most is when you have one-party controlling the presidency, the House and the Senate. That blue wave that was talked about earlier clearly is not going to happen,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “Markets have the tendency to move more on what they expect than what actually happens. Some of what has kept the market buoyant is the continued commentary from Nancy Pelosi and Steve Mnuchin that they’re still taking and still negotiating.” – Advertisement – “That’s the most dangerous arrangement of variables from an economic perspective, precisely because it makes the stimulus less likely,” said Eric Winograd, senior economist at Alliance Bernstein. “The economy still needs stimulus. The way things are going now is that it’s unlikely it will get stimulus and certainly it won’t get large stimulus.”House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been representing their respective sides in negotiations that occasionally show promise but mostly reflect just how far apart the two sides are when it comes to the extent of help needed.last_img read more

The Latest: Keeneland 5-day, fan-free summer meet approved

first_imgThe FFF says that “the two relegations for the 2019-20 season are maintained and the second division will remain at 20 clubs for the 2020-21 season.”The French government ordered soccer and rugby leagues to be canceled at the end of April because of the coronavirus pandemic.___Bologna says a member of its staff may have coronavirus and if it is confirmed the entire squad will go into quarantine.Bologna says the latest series of tests revealed “a suspected positive case for COVID-19.” Keeneland canceled its 16-day spring meet in March amid public health concerns because of the coronavirus outbreak. That initially eliminated the $600,000 Grade 2 Blue Grass and $400,000 Grade 1 Ashland, which award points toward the Derby and its sister race for fillies, Oaks. The track last week requested the special meet, which the KHRC granted after Ellis Park made the dates available.The Ashland and Blue Grass are now back in play for the Oaks and Derby, which are set for Sept. 4-5 at Churchill Downs in Louisville.“Keeneland appreciates the quick response of the Commission to our request, and we applaud all their work on behalf of Kentucky racing during these unprecedented times,” said Keeneland President/CEO Bill Thomason, who also thanked Ellis Park in a news release.Added Ellis Park general manager Jeffrey Inman, “We are all in this together, and Ellis Park is pleased to work with Keeneland on a plan that benefits our horsemen and Kentucky racing.”Keeneland plans to run at least nine races each day and will feature 10 graded stakes events. International travel restrictions became a problem for KHL teams. The league has teams in six countries but most are in Russia.The projected Sept. 2 start date is broadly in line with other recent KHL seasons.___The French soccer federation has rejected the league’s bid for a 22-team second division next season to save clubs from being relegated.The French league voted last week to allow Le Mans and Orléans to stay in the second division while Pau and Dunkerque were promoted from the third division. But the executive committee of French soccer’s governing body has overruled that decision. The league says players are now able to train as a group and “engage in tackling while minimizing any unnecessary close contact.”Play has been suspended in the world’s richest league since March 13.The league says “discussions are ongoing as work continues toward resuming the season.”Players returned to training last week and have been practicing in small groups with social distancing maintained.___ May 27, 2020 More AP sports: https://apnews.com/apf-sports and https://twitter.com/AP_Sports,Tampa Bay Lightning advance to face Dallas Stars in Stanley Cup finals, beating New York Islanders 2-1 in OT in Game 6 Share This StoryFacebookTwitteremailPrintLinkedinRedditThe Latest on the effects of the coronavirus outbreak on sports around the world:___The Kentucky Horse Racing Commission has approved Keeneland’s request for a five-day, spectator-free meet July 8-12 that will allow the running of marquee prep races for the rescheduled Kentucky Derby and Oaks. Associated Press The club says that as a precaution the team will train individually on Thursday.It would be the first positive case in Serie A since the teams started training in groups if it is confirmed.Serie A has been suspended since March 9 because of the coronavirus pandemic. The league is hoping to restart on June 13.___The Spanish soccer federation says it will allow games to be played on Mondays and Fridays until the end of the season even though a judge has denied the Spanish league’s official request to play on those days. ___The Kontinental Hockey League says it plans to return on Sept. 2 to open the 2020-21 season.The last KHL game was played on March 12. The season was then suspended because of the coronavirus pandemic.The KHL is widely considered to be the strongest hockey league outside the NHL. It ended its 2019-20 season part-way through the playoffs without declaring a champion.The league says Sept. 2 is a preliminary date which could be subject to “necessary corrections” depending on how the coronavirus situation develops. The Latest: Keeneland 5-day, fan-free summer meet approved The final Asian qualifying place for the women’s soccer tournament at the Tokyo Olympics is set to be decided in February.The Asian Football Confederation says the postponed two-leg series between China and South Korea will be played Feb. 19 and 24. No venues for the games were announced.The games were previously postponed because of the coronavirus outbreak. The 2020 Tokyo Olympics have been postponed for one year.The 12-team women’s tournament is scheduled to start in Japan ahead of the Olympic opening ceremony on July 23, 2021.___ League president Javier Tebas has said he wants matches to be played every day but the federation had been against the idea.The federation says it “wants to clearly show its good will” and is also willing to extend the exception into the beginning of next season depending on how the pandemic progresses and if games will continue to be played without fans.The league says it will appeal the judge’s decision. It says it jeopardizes the soccer industry in Spain. The league was not able to schedule matches on Mondays before the competition was suspended in mid-March.___Premier League clubs have voted unanimously to resume contact training in the latest step toward restarting the soccer season amid the coronavirus pandemic.last_img read more