The markets woke on Monday to yet more political wrangling in the U.S.
We had heard from the U.S administration of its plans to deliver yet we’ve seen the U.S Senate fail to deliver a bipartisan vote.
As far as voters are concerned, it should have very little to do with the party divide as the coronavirus spreads across the U.S.
Support is needed to avoid something far dire than many will have likely experienced during the GFC.
The Democrats had an opportunity to support the smooth sailing of a whopping $1tn Coronavirus Bill.
We then saw the blame game kick in at a time when many Americans are likely to be in a state of panic.
While we continue to lambast the shortcomings of the EU structure, that of the U.S is no better. The Republican Party won the election.
Yes, we can debate whether they won it fair and square until the end of time but they won. Trump and the team should, therefore, be able to navigate through the current crisis without any political wrangling.
Trump’s position is akin to a UK minority government and we saw what happened to Theresa May.
Joe Biden will have been licking his lips at the prospect of taking Trump on in November. The latest speed bump suggests that the Democrats should work out their priorities before even running for the top job…
Unsurprisingly, the markets have spoken, with the Dollar taking a knock this morning.
Trump and the U.S administration could take the higher road and just sit back and let the Democrats implode.
It’s a big number, but these are also unprecedented times. When you see entire cities in shutdown mode, it is going to take more than a pat on the back to get things going.
At the time of writing, the Dollar Spot Index was down by just 0.02%, with a European session rebound reversing heavy losses.
What Lies Ahead
Expect the Democrats to counter with some whimper of an attempt to ease panic across the country.
I’m guessing that it won’t even come close.
Ironically, we are also hearing of senators wanting to stop feeding corporate greed. Ultimately, however, the corporates are the ones that hire and deliver growth.
I heard over the weekend of the Republican dissatisfaction of tax savings being used for buyback schemes.
It’s a shame really. When you consider Trump’s bragging of the record highs in the U.S equity markets, how else did that happen?
Your average investor will not have complained either. After all, U.S equities were at record highs and at a time when the U.S and China were at each other’s throats…
What really lies ahead?
Well, the first thing we need is for containment measures to begin taking effect. This is not going to be tomorrow, which suggests more pain ahead. Hopes of the damage being limited to the 1st quarter have also gone.
We are also looking at a Q2 write-off. The printing presses will undoubtedly be overactive but, with the services sector in shutdown mode, will it really help?
Having raised concerns back in mid-January over the market’s laissez-faire attitude to the virus, I now wonder whether it would be better to hold back now until containment measures take effect.
After all, governments don’t have a bottomless pit of funds. Or do they?
This article was originally posted on FX Empire
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