Wall Street Shrugs Off DC Drama, Mitch McConnell Faces Tough Choice On Trump Curveball

President Trump's apparent distaste for the small size of direct payments to citizens ($600) and the enormous give-aways to states and foreign countries in the package deal congress sent to him on Monday caused some shock waves at the Capitol on Wednesday, prompting House Speaker, Nancy Pelosi, to agree with the president on larger stimulus checks ($2000), while Republicans clearly thought the Trump curveball was a split-fingered fastball, consequently whiffing, and looking bad doing so.

Whether intentional or not, Trump's pitch back at congress put Senate majority leader, Mitch McConnell, in an untenable position. Bear in mind, as a backdrop to the ongoing funding debate, that it was McConnell who, from the Senate floor, recently congratulated Joe Biden on winning the presidency, an outcome vehemently opposed by Trump.

McConnell has warned Republican senators not to challenge the electoral college votes which are to be presented to congress on January 6th, and now he faces a choice of either denying larger stimulus checks to Americans or giving up his long-standing fiscally-conservative position, thereby conceding to both the president and to House and Senate Democrats. No matter which way McConnell leans, he's going to lose stature among colleagues and party loyalists, to be seen as a nothing better than a grand poseur interested only in his political position of power.

Similarly, House minority leader, Kevin McCarthy, faces the same choice with regard to the Republican caucus, but he shot back at Pelosi, suggesting that while Democrats clearly favor larger stimulus checks, they are silent on the various pork expenditures that were pointed out as unacceptable by Trump.

Essentially, only President Trump will eventually come out of this mess looking good, preferring that tax dollars (and largely, borrowed dollars) be spent directly on taxpayers instead of special interests, foreign governments, states, and municipalities.

For its part, congress has once again shown its true self to the American people as 535 people who have little interest in the welfare of American citizens, always opting for political expediency over meaningful legislation.

On Wall Street, the reaction was a resounding "meh," the wizened professional bankrollers viewing the latest escapades of fiscal gerrymandering as business as usual from the political crowd.

Stocks were higher, with the exception of the NASDAQ, which posted a minor loss. Precious metals were, on the main, stagnant, while WTI crude oil prices continued to retract from recent highs above $49 per barrel, resting at $47.77 at Wednesday's close. Long-dated treasuries (10-year to 30-year) remain elevated with the short end flatlining at the zero bound, so, nothing much has changed in this shortened holiday week.

Thursday will be a shortened session for stocks, closing at 1:00 pm ET. Futures are pointing to a relatively flat open, as news flow has not provided anything startling in the macro sense and many traders have already exited for Christmas. After today, there will be only four more full sessions for the year as January 1, 2021 falls on next Friday.

How the politicians will sort out their self-engendered fiscal disaster remains up in the air, though the government will run out of money on December 28 if a continuing resolution is not conclusively agreed upon in congress and signed by the president by then.

What's riding on the dual track COVID relief and continuing resolution is which party will ultimately prevail in the eyes of Americans and whether congress sees fit to play Grinch or Scrooge with skinny stimulus checks or put on Santa Claus gear and spread the wealth to the people.

Happy Holidays!

At the Close, Wednesday, December 23, 2020:
Dow: 30,129.83, +114.32 (+0.38%)
NASDAQ: 12,771.11, -36.80 (-0.29%)
S&P 500: 3,690.01, +2.75 (+0.07%)
NYSE: 14,398.62, +77.28 (+0.54%)