The Day at a Glance | October 15 2020

The Top

· There will be no fiscal stimulus in the United States before the election.

· Boris Johnson, Prime Minister of the United Kingdom, said he feels disappointed with the slow advancement in Brexit negotiations and will decide whether or not to continue with negotiations after the European Summit (Oct. 15-16).

· Economic indicators: Jobless claims in the United States exceeded estimates (898k vs 825k e.).

Economic environment

United States Secretary of the Treasury Steven Mnuchin assured yesterday that there would be no new fiscal stimulus before the election. Mnuchin assured that he will continue to have conversations with House of Representatives leader Nancy Pelosi, however, he thinks it`s highly unlikely to see a legislative approval in the next weeks considering there is little time left and that there are many points of disagreement. Mnuchin implied that political interests have incentivized Democrats to avoid reaching an understanding and considered that the upcoming election, along with the Democrats` aversion of giving President Trump a victory, is something that has played a role in there not being an agreement. The differences are also noticeable in the White House and Republican legislators. Senators have strongly criticized Mnuchin for giving in too much and they are resistant to a package worth more than $1 billion dollars. The future of the stimulus will now depend on the election, even though markets speculate that partial measures could be approved in order to avoid the most contentious issues, but that unemployment aid could be extended up to February-March and renew the loans to small and medium sized businesses program. This would leave out issues such as aid to State and local governments or resources for a national testing program and following up on COVID-19 cases. December 11th is thought to be the day on which a partial package could be presented by the President, since on the same day, legislation must be defined for the new fiscal year`s government funding. The lack of stimulus means that the economy could slow down in the last months of 2020 and will have to wait until 2021 to regain momentum. Additionally, there are risks concerning a new outbreak in the country as well as weaker consumer confidence.