Monday Morning Coronavirus Package Re-Vote Rescheduled For Noon

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by Tyler Durden
Sunday, Mar 22, 2020 - 11:15 PM

Update (0005ET): Monday's procedural vote will not be held at Noon - several hours into the trading day, vs. the 9:45 a.m. vote McConnell originally called to 'see if there's a change of heart' during the first 15 minutes of trading.

In closing remarks, McConnell accused Democrats of "playing Russian roulette with the market."

Update (2335ET): With futures still flirting with limit down as of this writing, Senate Majority Leader Mitch McConnell has set a new vote on the motion for Monday morning at 9:45 a.m. - "15 minutes after the (US) markets open to see if there's a change of heart," he said.

McConnell said that the vote would be called off if a deal is reached before then on the latest virus tranche.

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Update (2115ET): Senate Democrats were able to successfully block the coronavirus stimulus package from moving forward as five GOP senators were absent due to coronavirus or precautionary self-quarantine.

Senators voted 47-47 on advancing a “shell” bill, a placeholder that the text of the stimulus legislation would have been swapped into, falling short of the three-fifths threshold needed to advance the proposal.  

Hopes of a quick stimulus deal quickly unraveled on Sunday as the four congressional leaders and Treasury Secretary Steven Mnuchin failed to break the impasse. Senate Majority Leader Mitch McConnell (R-Ky.) also delayed the procedural vote for three hours as they tried to get a deal. -The Hill

Senator Rand Paul (R-KY) was not present after announcing Sunday morning that he had contracted coronavirus and would self-quarantine. Two GOP colleagues he interacted with - Utah Sens. Mitt Romney and Mike Lee, also self-quarantined.

Meanwhile, GOP Sens. Rick Scott (FL) and Cory Gardner (CO) previously announced self-quarantines unrelated to Paul's announcement.

Senate Minority Leader Charles Schumer (D-N.Y.) said the bill includes “problematic” provisions and that McConnell should have made the negotiations include both chambers and the White House from the beginning. 

“Unfortunately, the legislation has not improved enough in the past three hours,” he said. 

McConnell appeared visibly angry as he spoke from the Senate floor after the bill failed, pledging to force the vote again. -The Hill

"The American people are watching this spectacle. I’m told the futures market is down 5 percent. I’m also told that’s when trading stops. So the notion that we have time to play games here with the American economy and the American people is utterly absurd," said McConnell.

"The American people expect us to act tomorrow, and I want everybody to fully understand if we aren’t able to act tomorrow, it will be because of our colleagues on the other side continuing to dither when the country expects us to come together and address this problem," he added.

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Update (1845ET):  The coronavirus funding package failed to gain enough votes in a procedural vote Sunday evening at 6:35 p.m., however voting continued.

Efforts to seal the deal come amid four members of Congress testing positive - including GOP Sen. Rand Paul.

The bill was on tenuous ground throughout the day, with an earlier vote postponed because Senate Majority Leader Mitch McConnell didn't have the votes.

"Leader McConnell had to postpone his 3 p.m. cloture vote on the motion to proceed because, thanks to Leader Chuck Schumer and Senate Democrats, he did not have the 60 votes required," said Speaker Nancy Pelosi (D-CA) in a Sunday statement.

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Update (1815ET): And just like that, futures quickly went limit down shortly after opening.

Gold, meanwhile, is catching a bid and is now above $1500.

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Update (1700ET): Speaker Pelosi says that Congress is 'finalizing' the stimulus legislation.

According to the WSJ's Nick Timiraos, one draft of the bill would allocate $425 billion into the Treasury for the Fed to cover losses on lending facilities. This will allow the Fed to provide a new generation of emergency lending programs that could prop up markets for securitization, investment grade corporates, longer-dated munis or small business loans.

At the conclusion of a Sunday meeting with top congressional leaders and Treasury Secretary Steven Mnuchin, Pelosi told a staffer "We are so far apart."

Recall in 2008, the House's rejection of a $700 billion bailout - when Pelosi was also speaker - sent the Dow down nearly 7%. At the time, "House minority leader John Boehner, R-Ohio, said after the vote that passage would have been possible if it had not been for Pelosi's "partisan speech,"" according to CNN.

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Update (1510ET): With talks having broken down, Senate Majority Mitch McConnell (R-KY) has delayed an initial Senate vote on the stimulus package from 3 p.m. until 6 p.m. Sunday.

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Update (1254ET): Lawmakers failed to hammer out an agreement after having deadlocked on several key provisions, according to The Hill.

"We continue to talk," said Senate Minority Leader Chuck Schumer.

House Speaker Nancy Pelosi (D-Calif.) said after the meeting that House Democrats would offer their own stimulus package that she hoped would be “compatible” with the Senate’s package.

I don’t know about Monday but we’re still talking,” Pelosi told reporters, referring to the preferred GOP timeline for passing a bill.

The impasse comes as the Senate will hold a first procedural vote at 3 p.m., where bipartisan support will be needed to move forward.

Democrats will meet at 1 p.m. to discuss their strategy. McConnell has given no indication that he will delay the vote, potentially forcing Democrats to either move forward with the GOP leader’s plan or block the bill from advancing. Schumer did not say as he left the meeting if Democrats would allow the bill to move forward. -The Hill

McConnell says he still want to pass a stimulus package on Monday - describing talks as "very close," but acknowledging that people are still "elbowing and maneuvering for room."

"Now we’re at a point in the discussion where people will shortly have to say yes or no," he added.

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With unemployment surging and GDP crashing, negotiations over a massive coronavirus stimulus package are coming down to the wire, as a 3 p.m. vote looms in the Senate over what is expected to cost between $1.5 - $2 trillion.

After blowing past two deadlines that Senate Majority Leader Mitch McConnell (R-KY) set for a deal, failure to come to an agreement could spell further disaster for the markets come Monday.

Republicans have drafted a bill which reflects agreements they've reached with Democratic lawmakers, and what they believe will be acceptable compromise on areas of disagreement. However, on Saturday night a spokesman for Senate Minority Leader Chuck Schumer said that there was no agreement yet, and that Democrats would not sign on to McConnell's proposal without negotiation.

"We look forward to reviewing their first draft and negotiating a bipartisan compromise," said the spokesman, according to The Hill.

Congress's top leaders - the so-called 'four corners' met at 11 a.m. today to continue negotiations; the first time House Speaker Nancy Pelosi will have sat down with McConnell to discuss the massive deal.

After just one hour, Pelosi said that negotiations are ongoing, but that Democrats would be 'introducing our own bill' and that a bipartisan agreement hasn't yet been reached.

Limits on firms getting loans

A key sticking point for Democrats are enhanced worker protections using the loans as leverage, according to Schumer and Pelosi.

One GOP draft of the bill says companies receiving loans must keep employees on staff “to the extent possible,” but Democrats want to change this provision to offer loan forgiveness only if at least 90% of the workforce is retained, according to a person familiar with the negotiations.

Democrats took issue with the discretion that the Treasury secretary has for the money going to corporations, including which companies receive funds, the person said. Mnuchin would also have the option to waive restrictions on stock buybacks under the Republican proposal, the person said.

Democrats also want a more than two year restriction on increasing executive pay for companies that receive federal loans, the person said. -Bloomberg

On Sunday, Treasury Secretary Steven Mnuchin appeared on Fox News, where he outlined key provisions of the impending deal which he expects to pass on Monday - including up to $3,000 for a family of four, and a massive lending facility of up to $4 trillion to maintain liquidity.

"Working with the Federal Reserve — we’ll have up to $4 trillion of liquidity that we can use to support the economy," he said, adding "Those are broad-based lending programs. ... We can leverage our equity working with the Federal Reserve."

For an overview of what could happen if this deal isn't passed, Guggenheim Investments' CIO Scott Minerd offered some thoughts last week (in case you missed it).

Needless to say, failure would sap much-needed confidence from markets which have already lost around 35% since the coronavirus spread globally last month.

What does this mean for markets and futures? While we wait for the regular 6pm reopening, the spread-betters at IG are indicating a Dow down some 562 points as of this moment, with the Dow set to open somewhere in the mid-18,000s.