The Day at a Glance | December 8 2020

The Top

· US Senate Leader Mitch McConnell has not backed the bipartisan fiscal stimulus proposal.

· AMLO nominates Galia Borja Gómez as Deputy Chair of Banxico to take Javier Guzman`s place at the start of 2021; Tatiana Clouthier for the Department of Economy.

· Economic indicators: Europe`s 3Q20 GDP revised (4.2% annual vs 4.3% prev.); Inflation in China, 0.8% e. annual for November.

Economic environment

Mitch McConnell, Republican leader of the US Senate, has not shown signs of backing a bipartisan effort to extend fiscal stimuli and aid due to the pandemic. McConnell has continued to promote his own plan, which is worth less than the $908 billion dollar package proposed by the group of legislators from both parties – in order to break the impasse in negotiations. McConnell has maintained pressure on Democrats for them to only allow the extension of unemployment insurance payments, aid to small businesses and funds for the distribution of vaccines. However, Democrats maintain a firm stance with regards to funds being allocated towards state and local governments; additionally, they are against the implementation of legal protection of employers from lawsuits related to employees getting the virus in the workplace. Both issues are the main obstacle that impede an agreement from being reached before the Christmas and New Year`s recess. Legislators have until Friday to discuss and approve Government expenditures and it`s expected that aid given during the pandemic will be included in the package. Nevertheless, the lack of agreements could force the approval of a measure that will give them one more week of negotiations. Aid provided to households and businesses have been necessary in recent weeks once the virus`s new wave has started to affect the labor market and incomes of small businesses.

Mexico`s President has nominated Galia Borja Gómez, Treasurer of the Federation, as a candidate to take the current Deputy Chair Javier Guzman`s place in 2021. Guzman will leave the bank on December 31st and the President has nominated Borja Gomez to take his place, which the Senate must approve. Borja is considered a person close to Arturo Herrera, current Secretary of Finance and Public Credit, and it`s believed that that her concerns as a member of the Governing Board will focus on aiding economic growth through lower interest rates. This contrasts with Javier Guzman`s current position, who in the last year has been one of the Board`s members that have shown great concern due to inflationary risks and possible financial episodes that will affect its trend, backing up a more cautious stance. Borja`s approval would crystalize a majority of officials picked by the President in the Governing Board and could tip the balance towards a more accommodative monetary policy. The Senate is expected to approve the nomination, as Morena holds majority.