Tags: Coronavirus | George Floyd Protests | social | unrest | bigger | covid 19 | relief

Social Unrest May Spur Bigger Pandemic Relief Package, KBW Says

Social Unrest May Spur Bigger Pandemic Relief Package, KBW Says
Protesters gather at Lafayette Square Park outside the White House on May 31, 2020 in Washington, D.C. (Tasos Katopodis/Getty Images)

Monday, 01 June 2020 03:48 PM

Congress may expand the next phase in its efforts to stem the coronavirus pandemic’s economic impact after unrest sparked by the death of George Floyd, a black Minneapolis man who died after a white police officer pressed a knee into his neck for more than eight minutes.

The turmoil “will probably lead Democrats to push for more funds for states and local governments as well as additional spending on social programs not directly related to the Covid-19 crisis,” KBW analyst Brian Gardner wrote in a note. While fiscal conservatives may push for a smaller bill, recent events, along with a report on Friday expected to show a continued surge in unemployment, will probably give Democrats added “leverage,” he said.

Leaning toward a larger Phase 4 bill, which Gardner expects will pass in the next two months, is positive for equity markets, he said. Stocks edged higher on Monday morning, as investors mostly focused on signs of economic recovery.

Vital Knowledge founder Adam Crisafulli said the weekend’s unrest is a small negative for markets as economic activity faces disruption. He pointed out that Amazon.com Inc. curtailed some deliveries, Minneapolis-based Target Corp. closed some stores and some major transportation arteries were shut. Crisafulli will also watch Covid-19 transmissions in weeks ahead after crowds were packed together, particularly in areas off prior peaks, like New York, he wrote in a note to clients.

There’s one area where there may be longer-lasting repercussions, Crisafulli added: The November presidential election.

“The outrage being expressed across the country could translate to rising enthusiasm” for Joe Biden, where the Democrat now trails President Donald Trump by a wide margin, Crisafulli said. But if “law and order” were to “dominate the political narrative (which will happen if the protests continue along the same lines as occurred over the weekend) it would favor Trump,” he said.

Trump “surely must know that he’s on the ropes, with unemployment likely surging to nearly 20% this Friday, with his toothless China policy generating yawns last Friday, with the virus potentially re-igniting, and now with urban riots,” AGF Investments Chief U.S. Policy Strategist Greg Valliere wrote in a note.

“If this doesn’t subside soon, Trump could lose his presidency,” particularly as Biden “has shown empathy and leadership as Trump poured gasoline on the flames with talk of ‘vicious dogs’ to sic on protesters,” according to Valliere. Democrats sweeping the White House and both chambers of Congress would be negative for markets, he said.

© Copyright 2020 Bloomberg News. All rights reserved.


   
1Like our page
2Share
StreetTalk
Congress may expand the next phase in its efforts to stem the coronavirus pandemic's economic impact after unrest sparked by the death of George Floyd, a black Minneapolis man who died after a white police officer pressed a knee into his neck for more than eight minutes.
social, unrest, bigger, covid 19, relief, package, kbw
410
2020-48-01
Monday, 01 June 2020 03:48 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved