Dividends and Vaccine news likely to hurt case for US stimulus: investors

We all hope the COVID vaccine happens sooner than later, however realistically the distribution of the vaccine for all people will take months. However in Washington what will politicians do? before the election some Republicans after 4 years of President Trump realized the actually stood for lower government spending and lower government deficits, they wanted a small stimulus. There were others who thought if you send voters a check just before they vote, they would vote for the President since the letter would be signed by the President. The Democrats wanted a great deal more money for people, hospitals and state government who are not collecting millions in tax revenues because people are not spending on entertainment and restaurants they way they use to.

In an article by David Randall of Reuters, noted Jonathan Golub, chief US Equity Strategist for Credit Suisse saying “You have to assume in general that whatever level stimulus you would have received will probably be less because policy makers will say that the economy will mend.” Pfizer has announced a vaccine is 90% effective and will soon be able to used if they receive the necessary certification process.

Mohamed El-Erian, chief economist at Allianz SE, the corporate parent of PIMCO cautioned that stimulus relief was still required to minimize the pandemic’s economic and social effects. The inclination is to argue that the fiscal support is no longer needed. That would be wrong.

Jabaz Mathai, head of US rates strategy at Citigroup wrote neverthelesss a stimulus package would be ideal to create a bridge for the economy.

Will we receive a stimulus and how much is the question, in some ways some of the answers will be clarified after January 5 Georgia election for 2 Senate seats as the Senate is tied between the 2 parties.

Linking to dividend paying stocks, for companies which consistently earn profits a stimulus helps ensures people keep spending and paying their bills. We know there is a part of society which has not been able to work full time because of the shutdowns. Given the US economy is influenced by consumer spending, a stimulus package would help the economy and that would be a good thing.

There are more questions than answers, till the next time – to raising questions.

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