Trump Administration and House Face Reckoning on Virus Relief

(Bloomberg) — Stimulus talks between the Trump administration and congressional Democrats will reach a fork in the road on Tuesday as both sides either quickly seal a deal or the House moves to pass a Democratic proposal and leave town for pre-election campaigning.



Donald Trump wearing a suit and tie: President Donald Trump


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President Donald Trump

The House released its $2.2 trillion proposal Monday night and the White House greeted initially it with silence.

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Its reaction will likely come in a morning call between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin that largely determines whether another coronavirus stimulus gets done.

While the details of the legislative text adds clarity to the talks, the top-line spending level is no closer to that so far supported by Republicans. President Donald Trump has indicated he could agree to as much as $1.5 trillion in aid — still higher than the $650 billion put forth in a “skinny” aid package by Senate Republicans earlier this month.

Should no deal be forthcoming, House Democrats have said they intend to proceed on their own in voting on the new plan, allowing the party’s candidates in the Nov. 3 elections to highlight a recent vote on coronavirus relief. The last vote was on the bigger, $3.4 trillion Heroes Act back in May.

The negotiations have been at an impasse since August.

Read More: Latest Democratic Relief Bill Would Extend Airline Aid to March

Pelosi said earlier Monday that the White House would have to agree to “much more” spending for a fresh round of stimulus if there is any hope of striking a deal before the election. “We can get this done,” Pelosi said Monday on MSNBC, while emphasizing the need for more money.

She spoke to Mnuchin on Monday evening and they planned to talk again on Tuesday, her spokesman said.

A key source of division has been Democrats’ push for large-scale aid to state and local authorities. The plan released Monday has $436 billion for one year of assistance, less than a previous demand for $915 billion, which had triggered scorn among Trump administration officials who called it a bailout for poorly run states.

The Democratic plan includes new aid for airlines, restaurants and small businesses that wasn’t in the original House package, and it has more than double the amount for schools.

The bill would provide another round of $1,200 direct relief payments to individuals and $500 per dependent — less than the $1,200 for dependents Democrats originally proposed. It also has $600 per week in extra unemployment benefits through January, the same amount that expired in July and helped disposable incomes surge even as the economy tipped into recession.

Housing Aid, Virus Testing

The legislation continues the Heroes Act’s aims of bolstering housing assistance, with tens of billions of dollars to assist renters and homeowners make monthly rent, mortgage and utility payments.

Read More: Why the True Covid Death Toll May Be Way Over 1 Million

Also included is $75 billion for coronavirus testing, contact tracing and

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Home Improvement Stocks Vie With Tech for an Investor Reckoning

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Photographer: Christina Mendenhall/Bloomberg

Global tech stocks aren’t the only ones due an investor checkup. Home improvement companies have also surged during the pandemic, and it’s fair to ask if this is as good as it gets.

An equal-weighted basket of 30 of the world’s biggest home improvement companies is up 23% this year, easily besting the 2% rise in the MSCI AC World Index, according to data compiled by Bloomberg. The gauge has almost doubled from its March lows, outpacing even the 63% rise in the high-flying Nasdaq-100 Index.

The gains have left stocks in the basket — including U.S. giant Home Depot Inc., Kingfisher Plc from the U.K. and Germany’s Hornbach Holding AG — trading on an average of 25 times forward earnings, up from 19 times at the end of February.

Global home improvement stocks have surged this year

While the coronavirus has upended large swathes of the global economy, worldwide lockdowns have ignited a boom in home improvements. Home Depot reported second-quarter revenue growth that was more than double an already high level of expectations, while reports from Germany suggested do-it-yourself sales soared by 16% in the first half.

Covid Do-It-Yourself Boom Is Turning All of Us Into Hipsteaders

But in a stock market that’s ever forward looking, some are beginning to question whether the boom is sustainable, particularly as lockdowns ease and stimulus payments from governments look set to come to an end.

“The Covid-19 crisis pulled forward record levels of demand for home improvement projects as many consumers had more time and money to work on their residences,” Jessica Rabe, co-founder of DataTrek Research, wrote in a note Tuesday. “Once there’s a vaccine it will enable a greater share of disposable income to transition back to vacations and activities outside the home.”

According to Rabe, U.S. home improvement shares in particular trade around record levels with high valuations, and will have “very tough” sales and earnings comparatives to beat next year — which could disappoint investors.

“It is hard not to believe that time is coming for home improvement stocks,” she said.

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