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Stephen Moore doubts need for $2T stimulus, predicting US economic growth

Stephen Moore doubts need for $2T stimulus, predicting US economic growth

Stephen MooreStephen MooreOn The Money: Trump gambles with new stimulus strategy | Trump cannot block grand jury subpoena for his tax returns, court rules | Long-term jobless figures rise, underscoring economic pain Trump gambles with new stimulus strategy Trump economist touts nation’s low poverty rate MORE, an economist and adviser to President TrumpDonald John TrumpNorth Korea unveils large intercontinental ballistic missile at military parade Trump no longer considered a risk to transmit COVID-19, doctor says New ad from Trump campaign features Fauci MORE, said he doesn’t think the country needs a $2.2 trillion stimulus package to help the economic recovery from the coronavirus pandemic, predicting that growth would happen naturally. 

“The economy really is showing signs of picking up. I don’t care what the newspapers say,” he said Sunday on John Catsimatidis’s radio show on WABC 770.

“I see really strong numbers coming in for the third quarter… 30 percent to 35 percent growth, which shatters the all-time record for growth in one quarter.”

“At this point, I’m not so sure we need a $2 trillion stimulus bill,” he added. “I think the fourth quarter will be just as strong as the third quarter.”

At the start of the month, House Democrats passed a $2.2 trillion stimulus package amid stalled negotiations between House Democratic leadership and the White House. The $2.2 trillion price tag is less than the mammoth $3 trillion stimulus bill the lower chamber passed in May of this year. 

The Senate GOP have put forth a paired down bill with a price tag of $1.1 trillion in late July, though Democrats immediately rejected the sum, saying that it was not enough to address the economic and health impacts of COVID-19. 

The remarks come amid negotiations on a stimulus deal between Speaker Nancy Pelosi

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Traders are confused by the stimulus back-and-forth and have their doubts about the market gains

Traders are confused by the stimulus back-and-forth and have their doubts about the market gains

Some are calling it “a la carte stimulus,” with aid for airlines in Column A, PPP aid in Column B. 



a group of people standing in front of a building: The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, October 2, 2020.


© Provided by CNBC
The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, October 2, 2020.

Whatever it is, hopes for stimulus — preelection, postelection, comprehensive package, stand-alone deal, whatever and whenever — is supporting breakouts in cyclicals like industrials, materials, consumer discretionary and banks.

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Many big names like Caterpillar, Eaton and FedEx have broken to new highs. Materials stocks like Martin Marietta, Vulcan Materials and Nucor are up 10% in the last week. Even bank stocks like US Bancorp are breaking out to multimonth highs. 

For some, the cyclical rally is getting way too stretched.

“The action over the last couple weeks is baking a lot of positive news into the market,” said Jack Miller, head of trading at Baird.

Alec Young, chief investment officer at Tactical Alpha, agrees. “We are quietly getting overbought. The market is looking a little tired, the size of the rallies is getting smaller, with little waves of selling,” he said. “It’s true cyclicals are rallying, but they have not shown any ability to do longer-term rallies.”

“I don’t think this market is very compelling, and I am pulling back and waiting to see what happens,” he added.

Others also have doubts about this rally. They note that volume on up days has been notably light while on down days it’s notably heavier. This implies there’s not much buyer conviction, that much of the rally is simply sellers holding onto stocks unless prices rise.

Jim Besaw, who manages $3 billion as chief investment officer at GenTrust, said this signals that many still don’t believe the rally: “The market is underpositioned. That’s why the markets

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