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WashingtonWise Investor: Episode 23

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Markets and Economy Out of Sync: Does It Matter?

The stock market seems to shrug off an economy battered by unprecedented unemployment and plummeting GDPbut is that disconnect sustainable?

In this episode of WashingtonWise Investor, Mike Townsend is joined by Liz Ann Sonders, Schwab’s chief investment strategist, to discuss today’s gaping divide between the markets and the economy. They also share what data investors should be watching and why, provide an overview of which sectors may perform better than others, and consider the implications of a growing number of big-name bankruptcies.

Mike also examines the latest developments in Washington, including the possibility of compromise on a major infrastructure spending bill, changes that may be coming to the SEC, and the debate over this fall’s presidential debates.

You can read Liz Ann’s mid-year outlook here: 2020 Mid-year Outlook: U.S. Stocks and Economy.

WashingtonWise Investor is an original podcast from Charles Schwab. If you enjoy the show, please leave a rating or review on Apple Podcasts.

Click to show the transcript

MIKE TOWNSEND: Around the country, there are signs that some things are returning to normal, or at least a new sort of normal. In New York City, some offices, restaurants, and other businesses have begun reopening. Most national parks are welcoming visitors for modified visits. It appears increasingly likely that there will be Major League Baseball games this year. And the president held his first public rally in months.

Here in the nation’s capital, the work of Congress continues. After nearly a month away, the full House of Representatives is back in town for a series of votes on issues like police reform and a proposal to make the District of Columbia the 51st state. The Senate’s own police reform legislation is already bogged down in partisan bickering—so that certainly feels normal.

But as the country slowly wakes up from its hibernation, there is worrisome data coming from states like Florida, Texas, and Arizona that have been more aggressive in re-opening—those states are seeing alarming spikes in COVID cases. It’s a grim reminder that we remain a long way from truly “normal.”

Welcome to WashingtonWise Investor, an original podcast from Charles Schwab. I’m your host, Mike Townsend, and on this show, our goal is to cut through the noise and the nonsense of the nation’s capital and help investors understand what’s really worth paying attention to.

On today’s episode, I’ll be talking to Schwab’s Chief Investment Strategist Liz Ann Sonders about the disconnect between economic data and market performance, as well as what to watch for as the economy slowly reopens and “normal” tries to make its reappearance. Liz Ann will join me in just a few minutes. But first, let’s take a look at a couple of other stories making news right now

I want to start with the Securities and Exchange Commission, which found itself thrust into the spotlight this week. As regular listeners of this podcast know, I follow the SEC pretty closely and often find myself in the weeds of rule proposals from the agency that regulates the markets, trying to explain how those rules affect individual investors. But generally speaking, it’s one of the most low-key regulatory agencies in Washington, rarely finding its way on to the front pages.

That changed last weekend when the White House announced its intention to nominate current SEC Chair Jay Clayton to be the United States Attorney for the Southern District of New York, which includes New York City. That announcement came after the attorney general’s very public—and very controversial—removal of the sitting U.S. attorney, Geoffrey Berman, last weekend.

SEC Chair Clayton suddenly finds himself in the middle of a political firestorm. Democrats on Capitol Hill are incensed about the administration’s actions with regard to Berman. And some on Capitol Hill have already begun to question Clayton’s qualifications for the job. Before heading the SEC, Clayton was a long-time securities lawyer in private practice in New York—not a prosecutor.

Clayton is a political independent who is seen as having a squeaky-clean reputation, and for the more than three years that he’s been at the SEC, he’s done little to sully that image. Under his leadership, the SEC has produced its share of regulation, prosecuted bad actors in the securities arena, and generally stayed out of the headlines. Suddenly, his political independence may be at risk.

Clayton told the SEC staff over the weekend that he would remain at the agency until confirmed to the new position, a process that in ordinary circumstances could take many weeks at a minimum. But almost immediately, there are questions about whether he’ll even get a chance. Senate Minority Leader Charles Schumer of New York has already called on Clayton to withdraw his name from consideration and indicated that he would block his nomination. Traditionally, senators are granted pretty wide latitude in supporting or blocking nominations for the U.S. attorney positions in their state. Schumer’s opposition means Clayton’s path to the Manhattan position may be impossible.

Clayton was widely expected to leave the SEC at the end of this year anyway—he’d made no secret of his desire to return to New York. So the agency was likely to change leadership in a few months regardless. But now the chairman finds himself buffeted by controversy, which could impact his leadership at the regulatory agency for the rest of this year.

All of this could get a public airing today, June 25, when, coincidentally, Chair Clayton is scheduled to testify before a House Financial Services subcommittee about the capital markets and emergency lending during the pandemic. Suddenly, that relatively routine appearance on Capitol Hill is likely to be more politically challenging for the SEC chairman.

Meanwhile, the possible departure of the SEC chairman wasn’t the only headline of the week at the agency. Last Thursday, the White House announced that the president would nominate Caroline Crenshaw, an SEC attorney, to be one of the five commissioners at the agency. Crenshaw, a Democrat, would fill a seat that was vacated by former Commissioner Robert Jackson in February. At the SEC, three of the commissioners come from the party that controls the White House, while the other two seats are reserved for the party not in the White House.

Crenshaw has been at the SEC since 2013, serving as a counsel to two commissioners, as well as an attorney in the compliance and examinations office and in the division of investment management, which oversees mutual funds and exchange-traded funds. She still needs to be confirmed by the Senate. That process should begin this summer. If confirmed, she would be the third woman on the five-member commission, joining Republican Hester Peirce and Democrat Allison Lee. So whatever happens at the top, change is afoot at the SEC.

On Capitol Hill, there’s been an interesting series of developments with regard to infrastructure legislation. I’ve discussed before how it seems like lawmakers have been talking about the need to allocate major federal dollars to infrastructure for years now. It’s one of the few issues in Congress on which there is actually quite a bit of bipartisan consensus: Members of both parties have long been in agreement on the basic concept that the nation’s roads and bridges and ports and the like are in need of major work. But they’ve been unable to come to an agreement on how to fund those needs—and that has always been the stumbling block.

This year, there’s real pressure for action. The current law that funds surface transportation projects expires on September 30 of this year and needs to be renewed. If Congress doesn’t renew the law, then most federally funded highway projects would stop in their tracks, and new projects would be frozen before they even got started.

Both parties have long understood the deadline. The Senate’s Environment and Public Works Committee unanimously approved a five-year, $287 billion plan nearly a year ago—but that bill has never received a vote from the full Senate.

In recent weeks, interest in infrastructure spending has picked up quite a bit. President Trump has suggested that a $1 trillion infrastructure package could be a cornerstone of the next coronavirus aid package. The White House argument is that infrastructure spending is both sorely needed and a key economic stimulus measure that would get people working. In the current pandemic, infrastructure jobs have a particular appeal since most would be outside, where it can be easier to maintain social distance and where the risk of spreading the virus is lower.

Democrats had been saying that the focus of the next coronavirus aid bill should be emergency needs, and that infrastructure could wait, perhaps until September.

Fast-forward to last week, when House Democrats changed their strategy. First, the House Transportation Committee approved a five-year, $500 billion plan, albeit on a party-line vote, that includes about $300 billion in highway funds, a little more than $100 billion dollars for public transit, and money to help out Amtrak. Then House leaders took that bill and wrapped it into a package of other measures, some of which are part of the HEROES Act, the emergency spending proposal that the House passed in May, but which is still waiting for a Senate response.

The combined package, known as the Moving America Forward Act, is a staggering 2,300-page bill that totals about $1.5 trillion dollars in spending. In addition to the highway bill, it includes $100 billion dollars for broadband expansion, $100 billion for affordable housing, $100 billion for low-income schools, $70 billion for clean energy projects, $65 billion for water projects, $30 billion for hospitals, $25 billion for the Postal Service, and more. The expectation is that the bill will get a vote in the House next week.

The missing ingredient? Still no plan for how to pay for it. House leaders say they have done that intentionally, that those decisions should be part of the negotiations between House Democrats and Senate Republicans in the coming weeks. But there are also whispers that, if this is part of an emergency spending strategy related to the coronavirus, then maybe Congress can pass another giant bill without debate over the additional debt. After all, even Fed Chair Jerome Powell has been pretty direct in calling on Congress to keep spending.

I think investors should watch how this unfolds in the coming weeks. Senate Republicans won’t just agree to the House plan, but it should spark a real dialogue. And it’s possible, just maybe, that the stars are lining up for this one. There’s the September 30 deadline for highway funding, which neither party wants to let lapse. There’s pressure from the White House to get something big done on infrastructure. There’s a certain logic to creating jobs that are outside, where it’s potentially safer. There’s the sense that repairing roads and bridges is politically appealing to just about everyone. So stay tuned on this one.

Finally, a piece of breaking news for investors. Earlier this week, the IRS issued a clarification regarding required minimum distributions from retirement accounts. When Congress passed the CARES Act at the end of March, one of the provisions waived all required minimum distributions from retirement accounts for 2020, regardless of the age of the accountholder. But there was some confusion about whether individuals who had already taken required minimum distributions this year could roll those back into their accounts. A subsequent IRS ruling in the spring answered some questions, but not all.

This week’s IRS guidance makes things plain and simple.

First, no one has to take a required minimum distribution this year, regardless of your age.

Second, if you took a required minimum distribution in 2020 before the CARES Act was passed, you can roll that distribution back into your account if you choose—and you have until August 31 to do so.

And finally, if you took monthly distributions earlier this year, you can roll all of them back into your account. The old rules limited you to one rollover per year, but the IRS has waived that rule.

Further details on the new rules can be found on schwab.com or the IRS website.

On my Deeper Dive this week, I want to take a closer look at why there seems to be such a disconnect between the economy and the markets and what the coming months might look like as the U.S. economy starts to reopen. There’s no one better to talk about those issues with than Liz Ann Sonders, chief investment strategist here at Charles Schwab. Liz Ann, thanks so much for joining me today.

LIZ ANN SONDERS: Oh, thanks for having me, Mike. Looking forward to it.

MIKE: Liz Ann, let’s begin with what I know is the most common question you’re getting asked by clients during your virtual events these days, and that has to do with this perceived disconnect between the economy and the stock market. We’re all keenly aware of the tens of millions of jobs that have been lost since March, the slowdown across much of our economy, yet the market has risen 39% since the bottom on March 23. So what’s your take on this?

LIZ ANN: So first of all, let me … let me caveat what I’m going to say with the truth, that I don’t think this is a normal environment in any way, shape, or form. So I just want to mention that, because the first thing I’ll say is that it is customary in the long history of kind of connecting the dots between what the stock market is doing and what the economy is doing that the stock market tends to sniff-out economic inflection points in advance. It’s why it is a member of all the popular indexes of leading economic indicators. So it’s often … it’s also the reason why I often say that when it comes to the relationship between economic data points—whether it’s GDP, or the unemployment rate, or retail sales, or job growth, whatever it is—that when it comes to stock market behavior, better or worse tends to matter more than good or bad. So it’s that change in direction that tends to allow stocks to trigger.

In addition, if we go back to the March 23 low, which you referenced, Mike, in terms of the gain we’ve seen off of that, you could argue and can still argue that at that point, the market, at down 34%, was discounting a pretty dire economic scenario. Now, you could quibble with the speed with which we bounced off that low, and where we are now, maybe having priced in too rosy a scenario, but in addition, we have seen huge rebounds in a lot of the economic data. We’ve seen it in retail sales. We’ve seen it in industrial production. We’ve seen it in job growth.

Now, I think the difference this time, and this is something that will be analyzed for some time, is that, although I think rate of change tends to matter more than level most of the time, I think analyzing this environment is going to require an analysis of level, too. Because we took the level of so many of these indicators down to such an extreme that, naturally, the bounces off those incredibly low levels in percentage increase terms look massive. But we’re coming off such depressed levels that I think the next several months will be more of a tell in terms of what the new normal looks like versus just the initial month of rebound data.

But that’s what the market has, clearly, been keying off, not to mention massive amounts of liquidity and income replacement from the combination of the Fed and Congress at a speed that is unprecedented. So that’s been a big kind of power driver behind the speed and strength of the market.

MIKE: Well, Liz Ann, let me follow up on that point that you made, because markets rallied last week on the news that retail sales were up 18% in May. This strikes me as kind of a great example of the misleading use of statistics in headlines. Because while retail sales may have gone up 18%, they were starting from a catastrophically low place—basically all retail was shut down—so they didn’t have anywhere else to go but up. So how are investors supposed to interpret these kinds of numbers when they are starting from these record lows? Is this actually a meaningful development?

LIZ ANN: Well, you have to … I don’t want to use the term “grain of salt,” but you have to understand the power, sort of the law of small numbers. And don’t look past huge percentage increases but dive a little bit deeper. Look at relative to prior highs. Yes, retail sales, you know, record increase in the course of one month, but we’re still down about 40% from the prior highs in retail sales. So you’ve got to look at a mix of numbers. You can look at month-over-month or quarter-over-quarter, but also look at level, look at the long-term trend to get a sense of what the real magnitude of improvement has been relative to what the compression was leading into this.

So oftentimes, the headlines, of course—that’s the nature of the media—­are going to, you know, be the most bombastic. So it will be the “best ever” or the “worst ever.” We have to do an additional amount of work to really get a sense of what the trend is.

MIKE: Well, you keenly watch all these different economic statistics that come out every week and, I guess I’m wondering what are you watching right now? What data points are there that might help investors get a better sense of how the recovery is going?

LIZ ANN: Yeah, so in terms ofassuming the question is about the economic recovery and not specific to the stock market, in and of itselfI think it’s always important to focus on leading indicators. When you’re trying to gauge a move from inside a recession to out of a recession, it’s important to track leading economic indicators. I mentioned the stock market as being one of those, but there are others. And they include things like new orders in the manufacturing surveys, ISM New Orders. It includes things like initial unemployment claims. And that, in particular, because of the hit to the labor market, is an important leading indicator. But every variety of claims. So when we get the every Thursday morning at 8:30 a.m. Eastern Time release, there’s sort of three important metrics in this sort of broader category of claims that are worth analyzing.

The weekly number—and you can do a cumulative total of the weekly number. But importantly, four-week average, which tends to sort of even the trend out, because it can be very volatile. And most importantly, a metric called continuing claims. That is individuals who continue to be on unemployment insurance. The initial claims are just people who file. They won’t be on continuing claims if they subsequently get a job. Sometimes they file, but they’re not eligible, so they’re not actually getting the insurance. So continuing claim really measures the number of people that are still out of work collecting unemployment insurance. That’s a key metric. And then some kind of newer leading indicators that I think are more specifically tied to the current environment. Things like TSA traveler throughput, you know, how many people are getting back on … are in the skies. You can look at Apple and Google mobility trends that look at, are people getting out in their cars? So there are really short-term, in the moment, high-frequency leading indicators that tell you whether there’s sort of traction happening as the economy opens up.

And then a lot of anecdotes. You know, we know that even if there’s a second wave in the virus, there’s a low likelihood, as I’m sure you agree, Mike, because we talked about this earlier, that we’re unlikely to see a, you know, federally or even state-mandated full-on shutdown of the economy, even if we get a bunch of second waves. But that doesn’t mean business owners might not opt to close things down. Consumers might opt to sort of stay at home a little bit longer. So we have to take the anecdotes, as well, especially in areas where the virus becomes a problem again in terms of how businesses and consumers are reacting and behaving.

MIKE: You talked about anecdotes. Let me share a couple of my own experiences that lead up to another question about what the reopening of the economy may look like. I dropped off my car at my dealership for an oil change the other day, and my teenage daughter picked me up. She looked at all the new cars on the lot of the dealership and asked me, “Who’s buying a car right now?” And I thought, yeah, that is a good question. I mean, myself, I’ve barely even driven my car in the last three months—so I’m not even really buying gasoline.

Another example is my own credit card bill, which is almost entirely grocery stores and take-out restaurants right now. I’m not spending money going out to concerts and shows and baseball games. But I’m not only not buying tickets to those events, I’m not buying the drinks and snacks and maybe the dinner before the show, all the things that go along with a night out. So it strikes me that while the data may show incremental upticks in retail activity, it could be a long time before people do things like buy cars, or expensive clothes, or go to concerts and games, or travel. So does that mean the retail numbers are going to flatten out after sort of an initial burst of recovery, and then we’ll be in for a long wait for the rest of the economy to really get going again?

LIZ ANN: I guess the best answer is probably. You know, I don’t know exactly what the trajectory of retail sales is going to look like. But yes, I think even if it’s not just the first month into recovery, let’s even carry it a month or two beyond that, I think what it represented, and may represent for more than just a month, is pent-up demand­is just itchiness to get out. It also, I think, is a function of the stimulus checks. And there have been myriad surveys done of recipients of the stimulus checks, who certainly in the event that they’re not unemployed and received it, a lot of surveys have said they view it as sort of found money, and money that they’re less inclined to save and more inclined to consume, especially after having been, you know, shutdown in our homes, with only online shopping available to us. So important will be the next several months of trends and to see whether it remains sort of a broad category or it starts to narrow down, to your point, whether it’s cars or apparel.

I think we’re … the world is changing, and needs, from a consumption perspective, are changing. I would expect home improvement, things that are required for home offices, will continue to be in demand, but I personally think to myself, I have no need to buy true, traditional business attire anytime soon. I have plenty of it in my closet, but you know, for Zoom meetings, it’s just not the same as when people were out on the road and business travel. So there’s so many categories. You mentioned sports—we also have to consider the ripple effects. You know, we can think of it in sort of headline terms, but we have to think of the ripple effects.

MIKE: Well let’s build on that a little bit, because one thing I want to ask you is whether there are sectors that are looking stronger to you over, say, the next six to twelve months? And maybe, is that strength tied to areas where you see jobs returning more quickly than in other areas?

LIZ ANN: So right now, we actually only have one sector of the 11 … these are the, you know, GICS classification within the S&P 500® of sectors. So that’s the, sort of the standard definition of sectors. Right now, we only have one sector on which we have an outperform rating, and that is healthcare. And that’s been an outperform for, I think, about 10 months. So that’s not a COVID-specific recommendation. But certainly is a beneficiary in broad terms of COVID because embedded in it is where we might have companies creating and developing the therapeutics, the vaccinesthe biotechnology companies are in there. It really represented kind of a defensive leadership position on the way down and has done well on the way back up. You know, within the neutral- or market perform-rated sectors, I would say we, you know, have a marginal bias toward, still, technology, and there might even be an opportunity in financials.

But for the most part, we’ve actually been—not deemphasizing our sector recommendations, but one of my consistent messages in this recent environment has been I think factors will matter more in terms of leadership than sectors. And the factors, in particular, that I think are relevant for investors to consider are quality factors. So balance sheet quality and stability, positive cash flows, quality of management teams. And I think that will define outperformance more so than specific sectors. And you can, you know, apply sort of quality screens to every sector and probably can find high-quality companies across the spectrum of sectors. So I would have that be more of the focus—­factors over sectors.

MIKE: Let’s talk about the flip-side of high-quality companies. We’ve seen some big-name companies—Hertz, J.C. Penney, Neiman Marcus—they’ve already declared bankruptcy. And more companies will undoubtedly follow. Now some of these companies were already deeply troubled, and the pandemic really just pushed them over the edge. Will these companies just disappear, or will they be bought and then brought back to life?

LIZ ANN: Well, we don’t know. We know that many of the facilities that the Fed has stepped in with—in some cases, pages from the ’08 playbook that they brought back into the mix and other facilities, particularly some of the Main Street Lending facilities that didn’t exist then and they put together for the express purposes of helping this very unique environment—those haven’t been tapped to a significant degree. And there’s controversy as to whether that’s because they were rolled out so quickly and there’s a lack of understanding, or maybe the better news side is that companies are not in sort of the dire straits of what was potentially worst-case scenario, not requiring them to have to tap the Fed’s facilities. We haven’t seen spreads blow out.

So yes, there could be some companies—and I won’t speculate on which ones, I don’t analyze individual companies—that ultimately get restructured and do survive. Unfortunately, I also think there will be many of these so-called zombie companies, even if they don’t declare bankruptcy, that are simply kept afloat by virtue of interest rates staying very low for the next several years. And that means that we sort of avoid so-called creative destruction. Again, there are perils to that. You know, there’s good news in the sense that people working there get to keep their jobs, but there are negative unintended consequences of that.

What concerns me most is just how much speculation in the trading world, especially by retail investors, is happening in those names, with, at times, what you can pick up from the anecdotes, limited understanding of what it means to invest in a company that has filed for bankruptcy and where the equity holder sort of sits in the priority line. And it’s not in front.

MIKE: Yeah, that’s certainly something that, you know, has made headlines recently, particularly with Hertz Rental Cars for example. That’s been something that’s attracted a lot of attention.

I want to go back to something that you touched on a little bit earlier, and that’s the sort of longer-term changes to our economy. I’m thinking a year or even five years down the road. The pandemic seems likely to produce really fundamental changes in how we work, how we shop, whether we go to big events like concerts and sporting events. How profound do you think the changes to our economy will be? And what are the implications for investors?

LIZ ANN: At this stage, I think they’re going to be fairly profound. And not just some of the ones you touched on. I think the ability for many people to work remotely and do it in a manner that doesn’t mean a dent to productivity—I think that genie is out of the bottle for many companies. That doesn’t mean everything is going to be done remotely, there won’t be any more in-person meetings. But the combination of concerns about whether it’s this virus or future viruses, and the benefits of social distancing to work-life balance, and the fact that productivity, in general, didn’t get dented. We’ve seen many corporate leaders say they’re rethinking how they’re going to attract and retain talent and can be more diverse in terms of where that is. It gives particularly younger people the opportunity to not have to live in expensive metropolitan areas and have more freedom to live in less expensive areas.

So I think that that is a secular shift. It’ll have fits and starts, and again, it’s not going to be everybody works from their basement now, but I think that’s important. That has implications, obviously, for commercial real estate, probably paramount among the areas where there are implications.

I also think that we’re likely to see a shift, not away from consumer spending being an important driver of our economy. You know, never underestimate the U.S. consumer, as is often said. But the recent high of about 70% of U.S. GDP being driven by consumer spending, I think that’s probably going to fade. And I think what will take up, pick up some of that slack, will be the investment side of the U.S. economy—so healthcare investments, continued investments in technology for efficiency and productivity, and whether it’s robotics or artificial intelligence, big data, etc. And then infrastructure, as well, which we generally think of as sort of a government thing, but I think a combination of, you know, public-private.

So we could see a morphing where we become more of an investment-led economy than a consumer-led economy. I don’t think the numbers will be such that the consumer is less important, but coming out of World War II until about 1980, investment was a big driver of the economy. And we’ve just had such a lack of investment in many key areas. And I think, certainly, in the healthcare area that was brought into the spotlight by virtue of the virus and the need to invest in healthcare. So I think that could be an important secular shift.

That’s not a bad thing for the health of the U.S. economy. It causes displacement in terms of jobs, and need for training and education, but I think that may be a longer-term secular shift.

MIKE: Well, it’s certainly going to be interesting to see how all that plays out over time. I can say for myself, I miss a lot of things right now, but the thing I do not miss is the 90 minutes I spend commuting every day to downtown Washington. So Liz Ann, always fascinating to talk to you. I really appreciate you joining me.

LIZ ANN: My pleasure. Thanks, Mike.

MIKE: You can find consistently great content from Liz Ann on the Insights tab of schwab.com, but I highly recommend following her on Twitter, where she tweets a lot and shares some of the most interesting charts you’ll see on the state of the markets and economy. You can follow her @LizAnnSonders.

On my Why It Matters segment, a quick follow-up to the last episode, which focused on U.S.-China relations. On June 22, we got a taste of just how important the state of that relationship is to the markets. White House trade advisor Peter Navarro was being interviewed on Fox News that evening, when he responded to a question about the U.S.-China trade deal by saying, “It’s over.” That caused futures markets to plunge temporarily as the White House scrambled to clarify Navarro’s comment.

Within an hour or so, President Trump himself tweeted out that “The China trade deal is fully intact”—his strongest defense of the trade deal in weeks. Navarro said that his comment was taken out of context and that he was referring more broadly to the declining level of trust between the two countries, not to the trade deal itself.

The kerfuffle underscored the careful balance the White House is trying to strike. The president has been highly critical of China in recent weeks on issues like the origins of the coronavirus and China’s hard-line stance against Hong Kong. The president believes there is a political advantage to focusing on China, particularly its role in the spread of the virus, in the run-up to the November election. But the trade deal is perhaps the signature accomplishment of the president’s first term, so he’s being careful not to put the deal in jeopardy.

And the markets clearly care about the China deal as well, as illustrated by the swift market reaction to Navarro’s comment. It only highlighted the tricky balance the White House will try to maintain over the next four months.

Finally on my Election 2020 update, you know the election is getting closer when the candidates start debating … about debates.

Former Vice President Joe Biden, the Democratic presidential nominee, formally committed to participating in this fall’s presidential debates. This isn’t a surprise, of course, but it was his campaign’s first official acknowledgement of the fact.

The non-partisan Commission on Presidential Debates had announced last year that the three debates would take place as follows: September 29, at the University of Notre Dame in South Bend, Indiana; October 15, at the University of Michigan in Ann Arbor, Michigan; and October 22, at Belmont University in Nashville, Tennessee.

However, in yet another sign of just how complicated pretty much everything in life has become these days, the University of Michigan announced on Tuesday that they would be unable to hold the second debate due to concerns about doing so in a safe manner during the coronavirus pandemic. An alternative location is under consideration at this time, with Miami reportedly a leading contender.

The commission also announced last year that a debate between the vice presidential candidates will take place on October 7, at the University of Utah in Salt Lake City.

Interestingly, over the last week or so, surrogates for the president have been pushing to add a fourth presidential debate to the schedule, and to push the schedule earlier, given that many more voters than ever before could be voting by mail this fall and could potentially do so weeks ahead of Election Day. That’s a major change of position for the campaign. In January, President Trump said publicly that he was not sure that he would participate in any of the three presidential debates at all in the fall. Of course, as numerous political analysts have pointed out, asking for more debates is a common tactic of campaigns that find themselves trailing in the polls, which is the situation for the Trump campaign at the moment.

Bickering over the timing and logistics of debates is a time-worn tradition at every level of politics, so expect a lot of back and forth in the coming weeks between the two presidential campaigns over the various details.

Well that’s all for this episode of WashingtonWise Investor. We’ll be back with a new episode in two weeks, when we’ll take an extensive look at voting logistics and how the pandemic is impacting the way Americans will vote up to and on Election Day.

Please take a moment to subscribe so you don’t miss an episode. And if you like what you’ve heard, leave us a rating or a review on Apple Podcasts or your favorite listening app—those ratings and reviews really do matter.

For important disclosures, see the show notes or schwab.com/washingtonwise, where you can also find a transcript.

I’m Mike Townsend, and this has been WashingtonWise Investor. Wherever you are, stay safe, stay healthy, and keep investing wisely.

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