HedgeTalk: Political Uncertainty Puts 2020 Federal Stimulus Bill At Risk

By: John Trefethen, Director & Co-Founder

With the passing of Justice Ruth Bader Ginsburg late last week, a Federal pandemic relief package occurring prior to the November 3rd presidential election is all but lost. President Trump’s push to fill the supreme court vacancy prior to the November 3rd election is setting up a fight in the Senate that will consume lawmaker’s time, leaving little to no time to consider a federal stimulus bill. Causing potential for further delay of a relief bill is the prospect of post-election legal battles to determine the outcome of the presidential election. This scenario lessens the probability for further Federal stimulus in 2020, becoming a veritable roadblock to the recovery of the US economy. In a September 23rd interview that Federal Reserve (“Fed”) Vice Chair Richard Clarida gave on Bloomberg TV, he said that due to the depth of the shock to the economy from the shutdowns stemming from the pandemic, the economy is at least three years from a full recovery, assuming additional meaningful Federal stimulus in 2020. To be considered a full recovery, he said that the economy will need to achieve the Fed’s stated goals of 2% inflation and maximum employment. Clarida said additional Federal stimulus will be needed to reach the stated goals. Without it, a full recovery will take longer than three years. Below is a table showing the Back-to-Normal Index (“BTNI”), which was created by CNN Business and Moody’s Analytics. The BTNI combines 37 indicators, including traditional government statistics such as retail sales and durable good orders, and metrics from a host of private firms such as Zillow, OpenTable, the Mortgage Bankers Association and Google to capture trends nationally and across states. As of mid-August, the US economy was operating at just 76% of “normal.” As bad as that is, it is a significant improvement from mid-April when the BTNI was just 59%. Since Mid-April, the BTNI has trended upward. It hasn’t reflected the V-shaped recovery that many had hoped for, but it has been a recovery none-the-less. More troubling is the reversal of that recovery beginning in early September. The political turmoil and almost inevitable post-election legal proceedings will further delay a Federal stimulus bill and likely push the BTNI lower for the foreseeable future.

Results of the BTNI are also available on state-by-state basis. The table below highlights the five states with the highest BTNI and the five states with the lowest BTNI as of August 19th.

Note: You can request a summary of all 50 states by emailing HedgeStar at info@hedgestar.com with “BTNI State Data” in the subject line.


There is uncertainty on when the pandemic will subside, uncertainty about the Supreme Court nomination process, and uncertainty with who will occupy the White House - and when that will be determined. What is all but certain is that there will be volatility in the financial and commodity markets for the foreseeable future. More than ever, thoughtful hedging strategies related to exposure to interest rates, foreign currencies and commodity prices are necessary to preserve company operating margins and future earnings.

If you want to learn more about hedging reach out to a HedgeStar expert today!





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