Stocks rise after Trump backs relief for airlines—Larry Kudlow and others on what’s next

Stocks were up on Wednesday after President Trump, who on Tuesday had said he was ending talks on coronavirus relief legislation, urged Congress to approve coronavirus relief for airlines and other targeted measures.

Here's what four experts are saying.

Jim Cramer, host of CNBC's "Mad Money," sees a bifurcated recovery.

"What happens is no stimulus is fabulous for a considerable part of the market — all the companies in tech that are stay-at-home, people are going to still stay at home, because we don't have a Covid killer. The smaller restaurants, I mean, they can't exist. We're going to have a world where there's going to be a Taco Bell or Chipotle on every corner."

Larry Kudlow, White House economic advisor, says relief needs to be targeted.

"There are several things that we believe will provide great assistance to specific targeted areas of this economy. I don't think the recovery depends on a massive assistance package. However, I do think renewing or extending the PPP small business loans would be a tremendous assistance. I think the airlines definitely need a lot of help. There's probably $25 billion in there. … We've always argued that the schools need to open for the kids and for the economy, jobs. We've always had $105 billion in there, more or less. We've put in extra money for vaccines … And I think what President Trump was saying yesterday is that, all right, we're too far apart with a gigantic bill. Yes, we've only got four weeks to the election and we've got a justice of the Supreme Court to get past. It's too close to the election, not enough time to get stuff done at this stage of the game."

Don Schneider, who covers U.S. policy research at Cornerstone Macro, says stocks should rise in the case of a Democratic win this November.

"If you're very short-term focused, I think the market probably will go up if Democrats win, because the fiscal impulse is going to be bigger. I think in all three election scenarios, whether it's a Democratic sweep, divided government with Biden in office or with Trump as president, you're probably going to get a phase-four deal either way. It's probably going to be biggest under Democrats. And then, lastly, just in terms of the core agenda, Trump really hasn't sketched out much, but Biden has. And what Biden has sketched out, it's very expansionary in the short term in the sense that he's prepared to spend a lot more than he's willing to tax, so in the short term, I think that's only positive."

Savanthi Syth, airlines analyst at Raymond James, explains why relief for airlines would be beneficial.

"The second payroll support is about saving jobs, and there's a benefit to the economy and shareholders as well. If you don't furlough, not only is it good for employees and morale, [but] if the economy recovers faster, you'll be able to recover airline service faster as well if you don't go the furlough route. And so there is a benefit to the economy and investors, but the second payroll support is really about saving jobs. Because if it doesn't go through, then … what you're doing is resizing the airline for the new level of demand, but you are guessing what that new level of demand is."

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