Traders are growing more uneasy about the chances for a stimulus bill passing in the U.S. Senate.
Speaker of the House Nancy Pelosi set a 48-hour deadline for passing a stimulus bill before the election, and that deadline applies to her negotiations with Treasury Secretary Steve Mnuchin. We still don’t know whether Senate Republicans will cooperate with the White House.
Meanwhile, pandemic-related restrictions are going back into place in the U.K. and Europe, which could be a sign of things to come in the U.S. At the very least, they will affect the global economy.
While we can’t predict the effect of shutdowns in Europe, we still feel the odds favor a successful stimulus bill if for no other reason than political expediency (on both sides). If we are correct, then consumer and business spending should remain stable in the short term.
However, we still want to be cautious about increasing our exposure to consumer stocks right now. A bullish position in United Parcel Service (NYSE:UPS) is the right balance between consumer and business spending.