On Tuesday President Donald Trump tweeted a video heavily criticizing the recently passed coronavirus stimulus/relief bill–and a huge funding bill to keep the government running–and implying that he could veto the bill.
Today, Wednesday, December 23, stocks barely budged. The Standard & Poor’s 500 was up 0.07%. The Dow Jones Industrial Average gained 0.38%. The NASDAQ Composite was down 0.29% and the NASDAQ 100 fell 0.51%. The small cap Russell 2000 picked up 0.87%. The iShares MSCI Emerging Markets ETF rose 1.02%.
Why the lack of reaction?
First, the market doesn’t much care because the President wants more stimulus rather than less–$2,000 checks instead of $600.
Second, the market thinks that a Trump veto would be easily overridden. The package of coronavirus relief and government spending passed 92-6 in the Senate and 359-53 in the House. Both chambers need only two-thirds to override a veto.
The real danger is delay of a month or so as Congress overrides any veto or Trump tries a pocket veto–which lets him kill a bill if he hasn’t signed it or vetoed it in 10 days of it arriving on his desk–if Congress isn’t in session. With advance notice of a veto threat, it’s likely that Congress would manage to stay in session in a pro forma fashion until this Congress expires in early January. The timing there might let Trump kill the bill without a veto requiring a new Congress to repass the legislation after January 6.
If Trump doesn’t sign the spending bill by December 28, the government will run out of money and face another shutdown.