A meeting of the minds; can a stimulus bill be passed before the election?

On Monday Speaker of the House Nancy Pelosi said that there is only a 48-hour window to come to an agreement, or understanding, to wright and pass a fiscal stimulus bill before the presidential election which is now less than two weeks away. Yesterday House Speaker Pelosi said that she “is hopeful for a stimulus agreement this week”.

If the different bodies of government cannot come to an agreement prior to December 31^st the consequences could be devastating to millions of Americans who are in great need of financial assistance. On December 31^st a large portion of the temporary financial aid is set to expire and would lead to millions of Americans not receiving unemployment benefits. It is these unemployment benefits that have kept the millions of  Americans who lost their jobs due to Covid-19 afloat allowing them to pay their rent as well as other financial obligations.

It would also affect the millions of unemployed Americans who currently have a mortgage. In September the U.S. centers for Disease Control and Prevention enacted an eviction moratorium which is set to expire on the last day of 2020. Without additional legislation renters and mortgage holders could face eviction or foreclosure beginning in January 2021. Those mortgage holders that have loans by either the FHA, the VA, Fannie Mae or Freddie Mac have additional security under the “Cares Act” that was passed in March can request up to a year’ worth of forbearance.

In an article by MarketWatch Jack Gillis, Executive Director of the Consumer Federation of America said, “It is daunting to think about what the consequences will be for families, individuals, businesses, our economy when the COVID-19 protections and financial assistance are no longer available.”

Although no formal agreement has been reached, the consequences of inaction would be unforgivable, which has led to optimism that some agreement on a fiscal stimulus package will be forthcoming prior to the presidential election. This optimism has dramatically influenced market sentiment on the safe-haven assets specifically gold and silver taking them dramatically higher this week, and pressured the U.S. dollar resulting in a steep decline.

As of 4:15 PM EST gold futures basis the most active December 2020 Comex contract is currently fixed at $1927.70 which is a net gain of $12.30 (+0.64%) on the day. December silver futures are currently trading at $25.18 after gaining 8/10 of a percent in trading today.  The dollar index which traded to a high of 94.80 at the end of September is currently fixed at 92.625. The dollar has lost almost 2% in value over the last month.

Wishing you as always, good trading and good health,