Morgan Stanley mener, at investorerne skal tage højde for, at der ikke som ventet kommer en ny finanspakke inden valget. Men da der er udsigt til en demokraisk valgsejr, også med flertal i Kongressen, er der udsigt til en langt mere aktiv finanspolitik i det kommende år. Opsparingen er så stor, at der er udsigt til et rimelig stort forbrug i de kommende måneder trods fraværet af en finanspakke – i overgangen fra et styre til et andet. Det giver optimisme, også for investorerne, mener banken.
Should Investors Prepare for No Stimulus?
With mixed signals coming from the White House and Congress, should investors be concerned about no further stimulus? Why there may still be good news.
For months, the market debate on the next U.S. fiscal stimulus has been framed in terms of whether or not D.C. would act quickly. With one tweet, the president provided a clear ‘no’ to that question. In that tweet, he announced the White House would pull out of negotiations with Democrats over key differences on state and local aid. I
nstead, he would focus on trying to win the upcoming election to return to the negotiating table from a position of strength.
So should investors be concerned? After all, Fed Chair Powell just yesterday warned that without further stimulus, the U.S. economy could slip. We agree this is a credible risk, but importantly, there’s still time before investors have to think differently about the trajectory of markets in 2021.
That’s because our economists now see evidence that U.S. consumption can carry on longer without fiscal support given built up excess household savings.
This is good news as there remain many viable political paths toward stimulus over the next few months. We see three of the four most likely post-election outcomes delivering stimulus by early 2021.
The biggest potential stimulus could come in a Democratic sweep. In this scenario, in addition to an upsized COVID-19 relief package, we believe the ‘plausible policy path’ is further fiscal expansion. This is something we’ve detailed on this podcast before, but it boils down to the view that Democrats enjoy legislative consensus around their spending agenda, but not around sufficient tax increases to fund it.
So for the moment, the stall in stimulus isn’t a reason to think differently about your market outlook.
