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I am not in a position to predict the outcome of the elections or the prospects for improvements in public health conditions. But I have some confidence in identifying possible economic scenarios and their consequences, and in this matter, timing is important. Whether a comprehensive policy response is adopted now or in a few months has a direct bearing on its potential impact.
After all, for every day that lawmakers delay, there will be even fewer hires, more layoffs, and an increased risk of corporate bankruptcy, especially among the growing number of companies whose financial resilience is eroding as they face tighter credit conditions. and your cash burn continues. Consequently, the longer the delay, the greater the problems that any future package will have to address and the more difficult it will be to design and implement.
In recent years, investors have tended to be richly rewarded for neglecting traditional determinants of market value and focusing on just one thing: abundant and predictable injections of liquidity into the market. But the next few months will likely be a bigger test for this bet. Wall Street has decoupled from Main Street in a way few expected. It would be a mistake to keep extrapolating into the future without stopping to ask about the increasing collateral damage and unintended consequences.
