If you regularly read these pages you know the last thing we want for the economy is another fiscal stimulus round. With today’s downward step function in the markets – notably Tech – we are one step closer to Fiscal Stimulus II.
President Trump values short-term market valuations far more than long-term economic health. Therefore, we expect that Trump will pressure the GOP Congress over Labor Day weekend to acquiesce and accept something close to Pelosi’s $2 Trillion fiscal stimulus “compromise”. Fiscal Stimulus II will provide market support, enable zombie companies to “pretend and extend”, prolong the inevitable regarding looming credit downgrades and defaults, and further flame the moral hazard fire. Hardly a surprise as fiscal conservatism in Washington is a myth.
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