The big increases in stock prices every day this week show that Wall Street thinks that it will very shortly get what JPMorgan Chase “ordered” in an election-analysis letter to clients on Monday morning: a) election of Joe Biden; b) consequent return to COVID shutdowns and decline in the real economy; c) new increases in money-printing “quantitative easing” by the Federal Reserve. It may even get d) quickly negotiated new “COVID relief” legislation in the Lame Duck Congressional session, or what Wall Street calls “reflation trading.” The last is indicated by comments of Senate Majority Leader Mitch McConnell after his own re-election.
McConnell was cautious about claiming he would be Majority Leader in the new Congress, which is not completely assured. But clearly the great leverage which House Speaker Nancy Pelosi thought she would have during the Lame Duck session has disappeared along with four or five seats of her House majority. Pelosi’s caucus members will blame that on her, for rejecting a “relief” bill proffered up to nearly $2 trillion by Treasury Secretary Mnuchin, which those Democratic members wanted passed before Election Day. So McConnell apparently thinks he can now negotiate for the Senate GOP directly with Pelosi. And any legislation agreed on during the Lame Duck will have to get the signature of President Donald Trump.
Federal Reserve System Chair Jerome Powell, who spoke Thursday afternoon, talked about “prevalent downside risks” to the economy and of course asked for “fiscal stimulus” by Congress, the fake term for “relief and bailout” bills used by the coordinated chorus of European central bankers, IMF officials, etc. But Powell also made clear the Fed is continuing to buy $120 billion/month in securities in its QE program, specifically disagreeing with the IMF’s chief economist’s statement of Wednesday, said “Monetary policy is not out of ammunition.”
