All By Themselves

Hey Influence Traders,

 

Happy Halloween!

 

The “Sunday scaries” have taken on new meaning.

 

But it’s not as terrifying as some things we saw on the Hill this week …

 

Inflation

 

Treasury Secretary Janet Yellen argued that inflation is still just transitory and that energy prices will come down shortly.

 

She might be on her own.

 

Or she may have … Inflation Madness!

 

The markets and some foreign policy makers disagree that rising prices are only temporary.

 

And it’s not just an issue for the U.S.

 

Data from Europe showed that prices rose 4.1% year-over-year in October, with core inflation hitting 2.1%, a level not seen in nearly two decades.

 

None of that bodes well for President Biden

 

Recent polls show Americans’ concerns over inflation are eroding their economic confidence and dimming their view of Mr. Biden’s performance.

 

Spending Bill Votes

 

It’s getting hard to keep track of who is supporting whom in spending bill votes.

 

Reality TV shows don’t have this many shifting alliances.

 

Centrist Sens. Manchin and Sinema flexed their muscles over the progressive wing and got the spending Bill ProAm culled down to $1.75 trillion.

 

But the progressives in the House defied Speaker Pelosi who wanted a vote on the bipartisan infrastructure bill.

 

They believe they’ve caved enough and that the bill going from $6 trillion to $3.5 trillion to under $2 trillion goes against why they were elected.

 

Compared with Biden’s original proposal, it looks paltry. Compared with the status quo, it looks like a big deal.

 

They didn’t budge and Nancy didn’t get her vote.

 

And now they’ve all gone home for a long weekend, leaving Nancy on her own.

 

She might be TP’ing some members’ homes. (Surely with the fancy stuff. She can afford it.)

 

The White House had urged the House to pass the infrastructure measure before next week’s gubernatorial elections in Virginia and New Jersey — contests Democrats have said their party cannot afford to lose. 

 

VA in particular is a litmus test of the Biden agenda.

 

Democrat Terry McAuliffe was leading comfortably, but the Republican contender has recently tightened the race.

 

All the polls now show him tied with Glenn Youngkin.

 

The Dems have brought in the big guns to stump for McAuliffe, including Barack Obama and Vice President Kamala Harris.

 

In a telling sign of their nervousness, the McAuliffe campaign hired high-profile attorney Marc Elias, who masterminds election-related legal challenges.

 

Pelosi reportedly advised her caucus not to “embarrass” the president by failing to pass the infrastructure blueprint. 

 

Nevertheless, there was no vote, which was a direct challenge to the Speaker by the progressive wing.

 

Progressives want a simultaneous vote on a reconciliation package and the infrastructure bill.

 

Paying for Spending

 

The wonderful thing about spending bills is that you need to pay for them.

 

We’ve got a proposed tax on billionaires (although the constitutionality of that proposal is being called into question since it is based on unrealized capital gains).

 

Biden believes that his tax framework will raise $325 billion from a 15% corporate minimum tax on companies’ book income. 

 

Book income is what companies report in their financial statements. 

 

One criticism is that the rules for determining book income are determined by a Connecticut-based nonprofit, the Financial Accounting Standards Board, so Congress is effectively handing some of its taxing authority over to a private organization.

 

Energy

 

BREAKING: Coal, oil and natural gas continue to be needed.

 

Energy is on fire (In a good way.)

 

Exxon (Ticker: XOM) posted its biggest profit in seven years and pledged to spend up to $10 billion on its first share repurchases since 2016.

 

Below is a breakdown of the biggest pieces of the $1.8 trillion, 10-year plan, assuming it passes in something like its current form.

 

It’s a double-edged sword for world leaders, particularly Biden, who has vowed to cut greenhouse-gas emissions 50% by the end of this decade.

 

Energy & Infrastructure

 

      • Biden wants to wean the U.S. from fossil fuels.

 

But aging transformers and dated electrical lines are making it hard for homeowners, local governments and businesses to use solar panels, batteries, electric cars, heat pumps and other devices that can help reduce greenhouse gas emissions.

 

Much of the equipment on the electric grid is decades old, which does not allow for the reverse flow of energy back into the grid from green energy sources.

 

The irony is that the infrastructure bill that the progressives are fighting goes a long way to upgrading the electrical grid, so in blocking it to protest not passing the green energy proposal in the spending bill, progressive are … blocking green energy. 

 

      • Meanwhile, Biden is off to Scotland for a climate conference.

 

Russia and China don’t feel the need to attend … in person. 

 

They are flexing.

 

Biden needed a climate win at home to take overseas … he didn’t get it.

 

But it is also a test for European leaders. 

 

They are facing the prospect of soaring electricity prices.

 

Do they use that to argue to wean the continent from fossil fuels more swiftly or more slowly to maintain prices.

 

Under European energy rules, the price of gas drives the price of electricity. 


Gas accounts for a fifth of Europe’s energy consumption, and most of it is imported from Russia.

 

      • Ford (Ticker: F) is still pushing forward on its push for EV dominance.

 

It announced that it is a backer of Rivian, a private company putting out cutting edge EV trucks.

 

When Rivian goes public, F stands to make close to a billion dollars.

 

Supply Chains

 

Supply chain issues persist across the globe and they are hitting almost every segment of the economy.

 

Amazon Inc. (Ticker: AMZN) announced this week that its entire fourth-quarter profit could be wiped out because of labor and fulfillment issues.

 

The supply chain disruptions have been going on for almost a year.

 

They started at the beginning of the pandemic when factories across the globe, but particularly in Asia, were hit hard and shut down or scaled back production. 

 

In response, shipping companies cut their schedules in anticipation of reduced demand.

 

That was a tactical mistake, as demand for goods increased, fuelled by Americans flush with pandemic subsidies who went on buying sprees.

 

At that point, everything across global supplies snowballed.

 

Even manufacturing that came back online could not keep up.

 

But we can. Enjoy the trick-or-treating.

 

And join us for our behind-closed-doors strategy session on Wednesday.

 

Cutting through the noise for you.

 

Frank

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