The election analysis provided by Charles Schwab & Co., Inc. does not constitute and should not be interpreted as an endorsement of any candidate or political party.
While the election remains too close to call, investor attention will soon turn back to Capitol Hill, where senators will reconvene on Nov. 9 and House members on Nov. 16 for what is known as a “lame duck” session of Congress.
"There are important policy issues that likely won't be altered much regardless of the election outcome, including the Federal Reserve's monetary policy and antitrust focus on U.S. technology giants, about which there is bipartisan support," says Schwab Chief Investment Strategist Liz Ann Sonders. “There is also bipartisan support for more fiscal stimulus—however, the two sides remain far apart on the details and a divided Congress may not be able to bridge that divide.”
Debate over another round of coronavirus aid and economic stimulus likely will be at the top of the agenda for the post-election session. After passing four major aid bills totaling about $2.8 trillion in March and April, election-year politics thwarted any further stimulus legislation.
House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin spent weeks negotiating another round of stimulus earlier this fall, to no avail. The two did narrow the gap between them. House Democrats approved a $3.4 trillion aid package back in May, but Pelosi slimmed that down to about $2.2 trillion prior to the election. The White House, which over the summer had drawn the line at an aid package of about $1 trillion, upped its offer to nearly $1.9 trillion in late October.
Gaps still remain on the details, with the two sides still bickering over how much aid should go to struggling state and local governments, the size of enhanced unemployment benefits, how much should be set aside for virus testing and treatments, and whether to offer liability protection to businesses, among other issues.
And the X factor has always been the Senate, where Republicans will hold a narrow 53-47 majority until the new Congress is sworn in in January. Republicans in that chamber have been mostly on the sidelines of the Pelosi-Mnuchin talks and have consistently voiced opposition to a large aid package.
The hope is that the post-election atmosphere might lend itself to a more compromising spirit on Capitol Hill that could produce a consensus aid bill before the end of the year.