McConnell opens door for lame-duck deal on emergency spending

with Brent D. Griffiths The election looks likely to deliver more gridlock if it

with Brent D. Griffiths

The election looks likely to deliver more gridlock if it sends Joe Biden to the White House and preserves Republican control of the Senate. But it may have opened a window in the meantime for an elusive deal on an economic relief package.

Senate Majority Leader Mitch McConnell (R-Ky.) — who hugged the bench this fall rather than engage in negotiations with Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-Calif.) — breathed some new hope into the process Wednesday.

“We need another rescue package,” McConnell said in a news conference in Kentucky, a day after securing his seventh term. “The Senate goes back into session next Monday. Hopefully the partisan passions that prevented us from doing another rescue package will subside with the election. And I think we need to do it and I think we need to do it before the end of the year.”

The Kentucky Republican signaled a willingness to deal, indicating he could accede to Democratic demands for new aid to state and local governments — a red line for some in his ranks. He called it a “possibility,” Erica Werner reports.



Mitch McConnell wearing a suit and tie: Senate Majority Leader Mitch McConnell (R-Ky.), gives remarks in Louisville, Kentucky. (Jon Cherry/Getty Images)


© Jon Cherry/Getty Images
Senate Majority Leader Mitch McConnell (R-Ky.), gives remarks in Louisville, Kentucky. (Jon Cherry/Getty Images)

But key details remain unknown.

Mnuchin and Pelosi in the run-up to the election had been circling an agreement for a roughly $2 trillion package. Sen. John Thune (R-S.D.) last month said a measure with a price tag in that range couldn’t earn 13 Senate Republican votes, the minimum to break a filibuster if it gathered unanimous support from Democrats. And McConnell failed twice to advance a $500 billion version because Democrats opposed it as too small.

Rohit Kumar, a former top McConnell aide now a principal at PwC, says Senate Republicans may see new leverage to demand Democrats agree to come down to a roughly $1 trillion bill after outpacing election expectations. “I think the gravity here shifts a little bit,” Kumar says. “There’s a psychological element to this that can’t be denied: The deal ends up landing closer to the side that’s feeling jubilant.” 

There is no indication Pelosi will agree. The speaker and Mnuchin cut off their talks last week on a frosty note, Erica reported. Addressing reporters last Thursday, she wrote, ”Pelosi expressed optimism” that Biden would win “and suggested she wanted to clear the decks for him. But Pelosi also said she would not accept a small bill with the idea of coming back for more once a Biden administration begins.”



a person standing in front of a mirror posing for the camera: House Speaker Nancy Pelosi (D-Calif.) holds a news conference at the Capitol last week. (AP Photo/J. Scott Applewhite)


© J. Scott Applewhite/AP
House Speaker Nancy Pelosi (D-Calif.) holds a news conference at the Capitol last week. (AP Photo/J. Scott Applewhite)

A resurgent pandemic and a sputtering economic recovery continue highlighting the need for more relief from Washington.

Coronavirus infections topped 100,000 for the first time on Wednesday as the health crisis spreads anew across the map. And private job creation sharply slowed last month, with companies adding 365,000 jobs, “well below the 600,000 estimate from a Dow Jones economist survey,” CNBC’s Jeff Cox reports. “That was the lowest reported gain from ADP since July.”

Those warning flares went up as the economy enters a minefield of threats this winter. “Millions of Americans are also at risk of having their power and water shut off with unpaid utility bills coming due, while protections for renters, student borrowers and jobless Americans will expire by the end of the year absent federal action,” Jeff Stein reported this week. And the airline, hotel, and restaurant industries, already under severe strain, face added pressure as virus spikes force state and local authorities to impose new restrictions.

Kumar says Republican senators encountering the toll of the virus firsthand as they campaigned or spent time back home doing constituent work in recent weeks may sharpen the GOP’s sense of urgency to act. “There is real human suffering” as a result of the virus and economic fallout from lockdowns. Senate Republicans “are likely to react to what they saw” at home, he says.

Wall Street is doubtful Washington negotiators will strike an agreement for major emergency spending.

“Without a president from their party urging them to go big, Republicans are even less likely to go along with massive fiscal stimulus,” LH Meyer’s Kevin Burgett wrote in a note. “They still want things like liability protection for employers and schools, however, so they do have incentives to reach some sort of deal. But any deal is likely to come later and be smaller.”

Treasury bond yields dropped steeply Wednesday as traders trimmed their expectations for big federal spending.

“Investors preparing for a Democratic sweep had anticipated not only trillions of dollars in additional coronavirus aid but also more spending on renewable energy and infrastructure projects—enough, potentially, to at least increase the threat of higher interest rates and drive the 10-year yield to 1% or higher,” the Wall Street Journal’s Sam Goldfarb and Matt Wirz report. “The prospects for that result appeared dim on Wednesday.”

That prompted the biggest one-day decline since April in the yield on the 10-year Treasury note, which fell to 0.768 percent.

Market movers



The Nasdaq market site in Manhattan in 2016. (Shannon Stapleton/File/Reuters)


© Shannon Stapleton/Reuters
The Nasdaq market site in Manhattan in 2016. (Shannon Stapleton/File/Reuters)

Stocks surged on Wednesday.

So much for election uncertainty weighing on investor sentiment. “U.S. markets soared Wednesday, lifted by tech shares, as investors waited for final results in the highly charged presidential race,” Taylor Telford and Hannah Denham report. 

“After whipsawing overnight and surging nearly 800 points at midday, the Dow Jones industrial average ended the session at 27,847.66, up 367.63 points, or 1.3 percent. The S&P 500 added 74.28 points, or 2.2 percent, to settle at 3,443.44… Michael Farr, president of Farr, Miller & Washington, said the post-election rally mirrors what happened in 2016, when investors reckoned with an unexpected result and rallied by morning.”

The Nasdaq rocketed, too.

But that might not be a good sign for the economy: “The index spiked by a staggering 3.9 percent, [putting] the index that’s home to Amazon, Alphabet, Facebook and Microsoft on track for its best day in nearly seven months,” CNN Business’s Matt Egan reports.

“The Nasdaq is up almost twice as much as the Dow, which features more economically sensitive companies like Caterpillar and Home Depot. The Russell 2000, which is most exposed to the strength of the US economy, is barely positive at all.

  • “In some ways, it’s a replay of how tech stocks boomed during the initial phase of the recovery from the pandemic in May, June and July. The rush to buy tech stocks reflects investor sentiment that these companies will thrive even if no major stimulus package comes from a divided Congress and the economic recovery remains fragile.”

Fed wants low profile, but central bank might force the stimulus issue again: “The Fed’s two-day meeting is expected to end Thursday with no new proclamations from the central bank, and Chairman Jerome Powell will be sure to distance himself from the election uncertainty,” CNBC’s Patti Domm reports.

“But he is likely to be asked about one of the most pressing concerns in markets — fiscal stimulus to help the economy recover from the effects of the coronavirus. That topic has been a political hot spot, and it could be resolved in several ways depending on how the election turns out.” 

Video: Wall Street Votes: Deregulation and Future of Big Tech (Bloomberg)

Wall Street Votes: Deregulation and Future of Big Tech

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Campaign 2020



chart: (Graphic by Washington Post staff)


(Graphic by Washington Post staff)

The presidency is still too close to call.

But Biden is on the threshold of securing an electoral college majority: “Biden is 17 electoral votes away from a victory in the presidential race, projected by Edison Research to flip Michigan and Wisconsin. Alaska, Pennsylvania, North Carolina, Georgia, Arizona, and Nevada remain uncalled,” my colleagues report.

“The projection comes as Trump’s reelection campaign attempted to halt vote-counting in Pennsylvania and Michigan, sought a recount in Wisconsin and challenged the handling of ballots in Georgia.”

  • Why this is taking so long: “Close races often take days or weeks to settle. In most states, vote counts aren’t official until weeks after Election Day. But this year, the delays in counting have been amplified by unprecedented levels of mail-in voting expanded during the pandemic,” Harry Stevens, Adrian Blanco and Dan Keating report.



map: (Graphic by Harry Stevens, Adrian Blanco and Dan Keating/The Post)


(Graphic by Harry Stevens, Adrian Blanco and Dan Keating/The Post)

America’s CEOs try to make sense of an uncertain election.

Many see the continuation of gridlock in Washington: “U.S. chief executives were already bracing for a difficult winter heading into 2021 with a pandemic that looks to get worse before it gets better, high unemployment and what many call a desperate need for more economic aid to consumers and some industries. Meanwhile, many say their workforces are strained by months of working in the covid-19 era, as well as the tense political climate,” the WSJ’s Chip Cutter reports.

“If Biden scores an Electoral College victory while Republicans maintain control of the Senate, as some predict, the split would raise questions about how both parties would govern the economy, the pandemic and issues such as infrastructure, said Rich Lesser, CEO of Boston Consulting Group … A split government could be troublesome for industries particularly hard-hit by the pandemic, such as restaurants, said Tom Bené, CEO of the National Restaurant Association trade group and past CEO of global food-service distributor Sysco Corp.”

The K-shaped recovery looks primed to continue: “Business leaders and investors tend to hate uncertainty, and this political situation adds more of it as the nation is already dealing with a second big wave of coronavirus cases and a contentious battle in Congress over another stimulus package. The early read among economists and Wall Street analysts is to buckle up for a wild few weeks,” Heather Long reports.

“Many economists are marking down their forecasts for growth, at least slightly, in the final months of 2020 and early 2021, as uncertainty and covid-19 cases mount. A stimulus package of some sort is still expected to pass, but economists no longer expect it to be more than $2 trillion like it might have been in a ‘blue wave’ scenario, in which Democrats win the White House and the Senate.”

Mike Bloomberg’s big bets didn’t pay off: “The billionaire and former presidential candidate’s more than $100 million investment into three key states fell flat as Trump appears to have captured all of them,” CNBC’s Brian Schwartz reports.

“In the months after Bloomberg dropping out of the Democratic primary, the New York business leader huddled with advisors to plot a spending blitz to help Biden overtake Trump. It was initially decided that most of a $100 million spend would go toward the pivotal state of Florida. Later he would add Ohio and Texas into the mix.”

Coronavirus fallout

Coronavirus cases exceed 100,000 in one day.

The pandemic reached another grim milestone: “Seven states set records for hospitalizations for covid-19, the disease caused by the virus. And Connecticut, Iowa, Maine, Michigan, Minnesota, Nebraska and North Dakota saw jumps of more than 45 percent in their seven-day rolling average of new infections, considered the best measure of the spread of the virus,” Lenny Bernstein, Joel Achenbach, Frances Stead Sellers and William Wan report.



chart, histogram: (Graphic by Washington Post staff)


(Graphic by Washington Post staff)

Trade fly-around



a bridge over water with a city in the background: An industrial area near shipping container terminals along the Port of Newark. (Justin Lane/EPA-EFE/Shutterstock)


© Justin Lane/EPA-EFE/REX/Shutterstock
An industrial area near shipping container terminals along the Port of Newark. (Justin Lane/EPA-EFE/Shutterstock)

The trade deficit narrowed in September.

Rising exports help illustrate a recovery: “The U.S. posted a deficit of $63.86 billion in September, compared with $67.04 billion in August and $47.84 billion a year earlier, the Commerce Department said … The figures were adjusted for seasonal variation,” the WSJ’s Paul Kiernan reports.

“Exports rose 2.6 percent to $176.35 billion, while imports rose 0.5 percent to $240.22 billion, their slowest pace of growth since trade bottomed out in May. Trade has recovered faster than many economists predicted after a collapse in global commerce in March and April, when most world governments were enforcing strict lockdowns to contain the emerging pandemic.”

Pocket change



Jack Ma wearing a suit and tie smiling and looking at the camera: Ant cofounder Jack Ma. (Charles Platiau/Reuters)


© Charles Platiau/Reuters
Ant cofounder Jack Ma. (Charles Platiau/Reuters)

Suspended Ant IPO shows growing regulatory focus on the company.

Questions remain on why China pulled the plug so close to the finish line: “A growing regulatory assault on Ant and co-founder Jack Ma is forcing a reassessment of how much the financial-technology giant is worth and whether the company’s growth and profitability will be severely crimped by Beijing in the years ahead,” the WSJ’s Jing Yang, Xie Yu and Joanne Chiu report.

“Some investors who had been allocated shares in Ant’s heavily oversubscribed dual IPOswhich had been on track to raise at least $34.4 billion — were informed that their orders were canceled, and those that had already sent in money would be refunded. Others were waiting for updates on how they would get their funds back.

Uber, other gig economy companies see California win as a blueprint: “Voters in California on Tuesday approved a ballot proposal by Uber Technologies Inc, Lyft Inc and its allies that cements app-based food delivery and ride-hailing drivers’ status as independent contractors, rather than employees. Uber’s shares rose 12 percent, while Lyft jumped 9 percent. The companies, along with DoorDash, Instacart and Postmates, poured more than $205 million into the campaign,” Reuters’s Tina Bellon and Munsif Vengattil report.

“Uber, Lyft and others have long advocated for what they consider a ‘third way’ in employment law by fusing contractor status with limited benefits. Labor groups have dismissed the proposal as creating a new underclass of workers with fewer rights and protections.” 



Elon Musk holding a phone in a dark room: Tesla CEO Elon Musk speaks during an unveiling in 2019. (Jae C. Hong/File/AP)


© Jae C. Hong/AP
Tesla CEO Elon Musk speaks during an unveiling in 2019. (Jae C. Hong/File/AP)

Elon Musk says Tesla was a month away from bankruptcy: “Tesla was in a serious cash crunch as losses mounted and it struggled to hit various production targets for the Model 3. But Musk hadn’t previously disclosed the company was close to filing for bankruptcy — although he did joke about a bankruptcy filing in a separate tweet on April Fools’ Day in 2018,” CNN Business’s Chris Isidore reports.

“Today, Tesla’s struggles seem to be ancient history. Tesla has recently reported record, sustained profits, an industry-leading profit margin and strong cash flows.”

Jeff Bezos sells more than $3 billion worth of Amazon shares: “Bezos has accelerated his stock sales in the last year. In August, Bezos offloaded more than $3.1 billion of Amazon shares, after selling more than $4.1 billion worth of shares in February. The sales this week bring his total cash out in 2020 to more than $10.2 billion so far, which is a notable jump from 2019, when the Amazon chief sold $2.8 billion worth of shares,” CNBC’s Annie Palmer reports.

“Even with the latest stock sale, Bezos still owns more than 53 million shares worth nearly $170 billion, making him the richest person in the world.” (Bezos owns The Washington Post.) 

Fannie Mae names Sheila C. Bair as new board chair (Yahoo Finance)

Daybook

Today:

  • Fed chair Jay Powell meets the press after the FOMC meeting
  • The Labor Department reports weekly jobless claims

Friday:

  • The Labor Department releases the monthly jobs report

The funnies

Bull session

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