With the market clutching at straws, and paying close attention to every "insider report" on the ongoing status of fiscal stimulus talks between Democrats and Republicans, moments ago stocks dipped following the latest cold water on deal optimism when Politico's Jake Sherman reported that President Trump held a call with Steven Mnuchin, House Minority Leader Kevin McCarthy and Senate Majority Leader Mitch McConnell about coronavirus relief talks, during which many republicans expressed "lots of skepticism" about the relief package being discussed with House Speaker Nancy Pelosi.
And, as has been known for the past two months, the two sides remain at odds over aid for state and local governments.
🚨NEWS from me and @BresPolitico: @realDonaldTrump just held a call with @stevenmnuchin1, @GOPLeader and @senatemajldr on Covid relief talks.— Jake Sherman (@JakeSherman) October 6, 2020
Lots of skepticism in the GOP ranks about the shape of a package under discussion with Pelosi and whether a deal is possible.
The bottom line, contrary to recent expectations that Trump's covid diagnosis made a Congressional deal slightly more likely, it appears that the dominant status quo from the past months remains unchanged, and that both sides are unwilling to budge over that final $600BN difference (recall that Republicans are at $1.6 trillion and Dems are at $2.2 trillion), which with every day that passes and brings us closer to the election, makes a deal unlikely.
In kneejerk response stocks dipped lower after hitting a session high 3,410 earlier...
... which as we earlier highlighted is the gamma "call wall" barrier which has emerged as the biggest resistance preventing an acceleration in the S&P to 3500 or higher.