What’s happening: “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump tweeted Tuesday.
But Trump’s remarks effectively shut the door on a larger-scale agreement between House Leader Nancy Pelosi and Treasury Secretary Steven Mnuchin, which investors had hoped would yield at least $1.5 trillion in additional spending very soon.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” he said. “Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth.”
Powell said that right now, the risk of “overdoing it” on spending is smaller than the risk of not spending enough.
“Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” he said.
That view was echoed by the Business Roundtable, the powerful Washington lobby made up of top CEOs.
“We are deeply troubled by the sudden halt of negotiations,” the Business Roundtable said in a statement. “Communities across the country are on the precipice of a downward spiral and facing irreparable damage.”
The scene: Trump’s announcement comes as gains in the job market have stalled and the bounce in consumer spending appears to be running out of steam. Last week, top US airlines said they would cut tens of thousands of jobs when additional assistance failed to come through.
Josh Lipsky, director of programs and policy at the Atlantic Council’s GeoEconomics Center, said the breakdown of negotiations puts the US economy at risk of a double dip recession.
“Stepping away from stimulus and hoping the economy holds on until December or January is gambling with the health of the largest economy in the world,” he said.
Remember: Investors are increasingly looking ahead to next year, banking that Democrats can take control of the Senate and White House and pass an ambitious stimulus plan quickly in 2021.
Goldman Sachs has said this would lead to a faster economic recovery. Without the gridlock sparked in part by conservative budget hawks, Democrats would have leeway to pass a much more generous package, potentially north of $2 trillion.
Congressional probe: Big Tech wields monopoly power
In a 450-page report released Tuesday, staffers for the House Judiciary Committee’s antitrust panel said there’s “significant evidence” that the companies’ behavior has hindered innovation, reduced consumer choice and weakened democracy, my CNN Business colleague Brian Fung reports.
“These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement,” the report said. “Our economy and democracy are at stake.”
Why it’s big: Pressure on these companies from Washington is growing. The findings set the stage for possible legislation to curtail the power of the Big Tech. Antitrust enforcers at the Justice Department and the Federal Trade Commission are also gearing up for potential litigation against some of the companies.
The report laid out several recommendations to curtail Big Tech’s dominance, ranging from “structural separation” — forcing companies such as Amazon not to compete on the same platform it operates — to providing antitrust enforcement agencies with new tools and funding.
The response: Google said the report was the product of complaints by rivals opportunistically seeking an edge, while Apple said it does not have dominant market share in any of its business segments.
“Large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong,”Amazon said in a blog post.
Investor insight: Tech stocks took a hit Tuesday on the news. Amazon fared the worst, sliding more than 3%. But Wedbush analyst Daniel Ives said he still expects these stocks to rally 15% or more into year-end.
Billionaire wealth hit a new record this summer
The dramatic rebound in tech stocks helped the wealth of the world’s billionaires hit a fresh high over the summer.
Billionaire wealth increased to $10.2 trillion at the end of July, up from a previous peak of $8.9 trillion in 2017, according to a report from Swiss bank UBS. The total number of billionaires increased to 2,189 from 2,158 over the same period, my CNN Business colleague Hanna Ziady reports.
Innovators in the tech, healthcare and industrial sectors are faring better than those in entertainment, financial services and real estate.
That contrasts with most of the past decade, “when steady growth and buoyant asset prices lifted billionaire wealth in all sectors,” according to the report.
“In the last two years those using technology to change their business models, products and services have pulled ahead,” UBS said. “The Covid-19 crisis just accentuated this divergence.”
Billionaires are giving away more of their wealth than ever before. Some 209 billionaires publicly committed $7.2 billion between March and June. However, their accumulation of wealth comes as the ranks of the world’s poor are swelling. The research arm of the United Nations has warned that global poverty could increase this year for the first time since 1990.
Minutes from the Federal Reserve’s September meeting post at 2 p.m. ET.
Coming tomorrow: Initial jobless claims for last week post after companies like Disney, American Airlines and United Airlines announced layoffs.