Bottom Up Update on USD, Gold, Silver
Shortly after the jobs report on Friday, the market will shift to focusing on US stimulus talks. As we wrote about earlier in the week, the market is sensing the strong hand that Pelosi has and her determination to push through extended employment benefits.
Republicans have proposed a $1 trillion package that includes a drop in special benefits to $200/week from $600/week, but Democrats are pushing for no change through year-end. Initially the thinking would be that they would split the difference, but Pelosi believes she has the leverage to get nearly everything Democrats want. She estimates voters will blame the President and his party if a deal isn't struck.
So far that's led to a deadlock. Pelosi said there will be a deal at some point but she doesn't appear to be in any rush to lower her demand from $3.4 trillion in spending. Meanwhile, the White House is planning an executive order to delay payroll tax collection in an attempt to appear proactive, or to handcuff Democrats into making the waiver permanent when it ends.
There's no doubt the lack of benefits is already hitting consumer wallets and it could quickly sap overall spending. How much patience does the market have? If the jobs report is weak, it could run out quickly.
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