by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
June 28, 2021
JOE BIDEN’S REPUTATION as a shrewd negotiator took quite a hit this past weekend. His seeming demand for two infrastructure bills, not just the one that he and negotiators agreed to, astonished allies and angered Republicans, prompting aggressive White House damage control that has kept the $1 trillion bill alive.
WE’RE HEARING THAT BIDEN felt he needed to assure progressive Democrats that he would not abandon the second bill, a nearly $2 trillion package of social spending that has no Republican support. But issuing an ultimatum that the two bills had to be considered “in tandem” nearly blew up the talks — and reinforced suspicions that Biden is inclined to cave in to demands from the left wing.
MANY REPUBLICANS FAVOR THE FIRST PACKAGE, which addresses highways, bridges, dams, broadband, clean water, etc. We think that measure could win 60 Senate votes, thus avoiding a filibuster, some time before the August recess.
BUT THE SECOND BILL could only pass via the reconciliation process, which would require support from all 50 Senate Democrats — a far more difficult task, unlikely to receive a vote until well into the fall. So there will be one bill this summer, and we’ll stick with 60-40 odds that it will pass, despite Biden’s gaffe last Friday.
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TWO BIG STORIES THIS WEEK: In the political world, it’s the imminent indictment of the Trump Organization on a wide range of charges, mostly involving tax fraud. Trump will mock charges from liberal prosecutors in New York as a “witch hunt,” but more Republicans will question whether Trump’s legal woes are worth sticking with him when there are rising stars like Ron DeSantis who don’t have baggage like Trump’s. No one has baggage like Trump’s.
IN THE FINANCIAL WORLD, the big story will be Friday’s unemployment report, which comes amid reports that in states where jobless benefits have ended, workers are returning to the work force.
BIDEN, WHOSE JOB APPROVAL NUMBERS have stalled out, needs a good number — perhaps the jobless rate falling to 5.7% and nonfarm payrolls rising by 700,000 would convince the markets and the public that a solid recovery is still on track.
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CONGRESS HAS LEFT SWELTERING WASHINGTON for the next two weeks, so we won’t publish every day until after the July 4 holiday.
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This post was first published at the AGF Perspectives Blog.