The sado-masochistic market rose after hours, when having sold off into the close on the reality that no stimulus deal is coming before the election, it rebounded from session lows after Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke at 3pm today for 53 minutes and "continued to narrow their differences" on a coronavirus relief package, Pelosi aide Drew Hammill said Monday, even as time to reach agreement on a stimulus deal by by Election Day has all but run out.
"The Speaker continues to hope that, by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election,” Hammill tweeted, adding that "The two principals will speak again tomorrow and staff work will continue around the clock."
The Speaker continues to hope that, by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election. The two principals will speak again tomorrow and staff work will continue around the clock. (2/2)— Drew Hammill (@Drew_Hammill) October 19, 2020
The change in tone came after Pelosi earlier in the day told House Democrats that "significant areas of disagreement" are standing in the way of any deal, prompting stocks to selloff into the close. Democrats have been steadfast in refusing to compromise on their non-covid related priorities for local governments, workers, schools and health care. Hammill said Democratic committee chairmen have been directed to work with their Republican counterparts on a solution.
And while Emini futures jumped about 10 points on the news...
... the odds of a deal remain virtually nil as WaPo reported, noting that "a stimulus deal with Treasury Secretary Mnuchin is not sounding imminent based on comments from Pelosi and committee chairs" citing sources on the House Democratic caucus call.
Meanwhile, according to Fox's Chad Pergram explained, Mitch McConnell filed cloture on his new $500 billion coronavirus bill, although since it needs 60 yeas to end a filibuster it is "Likely going nowhere."
McConnell files cloture on his new $500 billion coronavirus bill. Will ripen for procedural vote to end filibuster Wednesday. Needs 60 yeas. Likely going nowhere— Chad Pergram (@ChadPergram) October 19, 2020
Finally Politico's Jake Sherman said that according to a Democrat caucus call, while there has been some progress in stimulus discussions it's not enough, with Pelosi reiterating the Tuesday deadline for a deal.
Trump, who has flip-flopped on the issue, first ending negotiations with Democrats, then saying he wants a bigger fiscal stimulus than even the Democrats are asking for, had the final say: "We’re discussing it today very solidly - we’ll see what happens,” the President told reporters in Arizona. “Nancy Pelosi at this moment does not want to do anything that’s going to affect the election, and I think it will affect the election negatively for her."
While Trump has said he’s ready to match the $2.2 trillion spending level demanded by Democrats, or even go higher, Senate Majority Leader Mitch McConnell has consistently warned that most GOP senators will oppose any coronavirus relief package that big.
We can only hope that this farce will conclude tomorrow, although in the world of politics where it's all about the fingerpointing, we wouldn't be surprised if this remains a key market catalyst up until Nov 3.