Last week, we noted a list of concerns relating to the market, which could undoubtedly pressure markets lower. One of those, in particular, was the lack of additional “fiscal stimulus” coming from Congress.
Over the weekend, and summed up in the video below, a collision of events brought concerns to the forefront.
The death of Supreme Court Justice Ruth Ginsberg has sparked a replay of the 2016 passing of Justice Scalia. At that time, President Obama wanted to appoint a replacement for Scalia even as the Presidential election was just a few months away. Congress got into a contested debate over whether a justice should be selected so close to an election. That debate is again on display as President Trump wants to appoint a replacement for Ginsberg as soon as possible. Still, the Democratically controlled Congress is fighting to delay it until after the election.
Politically, this is an incredibly important appointment. Since justices get appointed for life, if President Trump adds another “conservative” justice to the Supreme Court, rulings on more liberal causes could be stymied for a decade or more.
A Collision Of Events
Why is this important to the market? Because Congress is facing three different events that have removed the focus from additional financial support for the economy.
- With the election fast approaching, Congress does not want to pass a fiscal support bill to help the other Presidential candidate. Such is why there are dueling bills between the House and Senate currently.
- September ends the 2020 fiscal year of Congress. Such requires either a “budget,” or another C.R. (Continuing Resolution) to fund the government and avoid another shut-down.
- Lastly, the death of RBG will have the entire Democratic Party, which controls the House, focused on how to stop President Trump from nominating a replacement before the election. All Trump needs is a simple majority in the Senate to confirm a justice that he can likely get.