It 'looks like the clock has run out' on a new stimulus, says Fundstrat's Washington strategist

Published Mon, Oct 26 202010:27 AM EDT

(This story is for CNBC Pro subscribers only.) With the presidential election only a week away, "it looks like the clock has run out" on a second Covid-19 stimulus bill for now, according to Fundstrat. The firm said the negotiations will likely take place in a Lame Duck session, the historically unfruitful period of time after a November election and before the beginning of the new Congress. "Lame Duck sessions of Congress are usually not very productive, especially if the election results in a change to lineup for the coming year. Defeated members are usually pretty dejected, and some don't return to DC," Fundstrat Washington Policy Strategist Thomas Block told clients. The White House and head legislators have been in tit-for-tat negotiations over a second fiscal package to aid ailing Americans struggling from the coronavirus pandemic for months. House Speaker Nancy Pelosi and the Democrats want to spend north of $2 trillion but most Senate Republicans oppose another massive spending program. President Trump has flip-flopped on the issue from calling off talks to saying he wants to spend more than the Democrats. Meanwhile, Covid-19 cases in the U.S. are spiking into the winter months. Congress' ability to pass legislation during the so-called lame-duck period after the election could depend on who wins pivotal races for the White House and congressional seats. If the presidency or Senate control change hands, the shift would not take effect until January. "If the President is defeated, he may not be in a mood to put together a big deal; no matter the result of the election Mitch McConnell and the Republicans who support a 'skinny' bill will be in control of the Senate in the lame duck," said Block. "It is hard to guess what the role of a defeated President would be in lobbying for Republican votes." Block noted that the most important deadline for the lame duck is Dec. 11, which is the deadline on the current Continuing Resolution. A 2021 budget or another Continuing Resolution is needed by the December deadline, to prevent a government shutdown. "It is possible that the [Continuing Resolution] could be the legislative vehicle to belatedly get a relief bill through," said Block. "Both sides will have leverage in an effort to avoid a shutdown before the holidays, and if there are any election changes this could be the last vote under the current Presidential and Congressional leadership." Block said a $2 trillion deal is unlikely; however, more "unemployment insurance, PPP small business loans, money for testing, vaccine distribution and education would be core to any bill that is part of a budget bill." Federal Reserve Chair Jerome Powell and many economists have warned of potentially devastating economic consequences if Congress fails to pass more aid.

Nancy Pelosi and Steven Mnuchin

Reuters

(This story is for CNBC Pro subscribers only.)

With the presidential election only a week away, "it looks like the clock has run out" on a second Covid-19 stimulus bill for now, according to Fundstrat.

The firm said the negotiations will likely take place in a Lame Duck session, the historically unfruitful period of time after a November election and before the beginning of the new Congress.