Spending Bill Breakdown

Hey Influence Traders,

It’s going to be a roller coaster week for the Biden Administration.

They got a quick win on Monday when the President signed the $1.2 trillion infrastructure bill into law.

But the CBO is supposed to release its score on the boondoggle spending bill (the “Build Back Better” plan) on Friday.

A bad score will give Joe Manchin the air cover he needs to delay the vote indefinitely.

Inflation is already going vertical and many politicians don’t want to dump coal on that fire.

The inside word from Dem leadership is that they are expecting a good score and for Manchin to cave.

The real world is not so sure.

To prep, Dem operatives are working overtime to try and convince the public that injecting $1.75-$1.85 trillion of new capital into an already bloated economy will reduce, not add to, inflation concerns.

That would be some fine slight-of -hand, I mean magic, I mean …

Infrastructure Bill

In a joyous White House ceremony to mark a much-needed political win, President Biden signed the $1.2 trillion bipartisan infrastructure bill into law on Monday.

Surrounded by lawmakers from both parties, Biden claimed that the bill will improve the day-to-day life for many Americans by replacing lead pipes, implementing broadband and improving public transit.

The bill passed with House lawmakers also agreed to take up his boondoggle bill through budget reconciliation, a social spending bill focused on climate, childcare and health care programs. 

The $1.2 trillion bill contains roughly $550 billion in new funding.

It will provide for new investments in roads, bridges and railways, and will replace lead pipes to provide clean drinking water to communities, establish a network of electric vehicle charging stations and help expand internet access countrywide.

Former New Orleans Mayor Mitch Landrieu (D) has been designated by Biden as a senior White House adviser to coordinate the implementation of the bill.

Most economists agree that the bill is necessary to upgrade critical infrastructure and will help people and businesses from electric vehicle manufacturers to rural web surfers.

Spending will also go to help clear backlogs at the nation’s ports, although no details have been announced.

As an indication of his priorities for the bill, the President will head to a General Motors (Ticker: GM) plant to highlight funding as many as 500,000 electric vehicle charging stations and improving the nation’s electric grids.

While a lower funding amount than initially proposed, Biden believes that this money will accelerate a shift to lower-emission cars and trucks.

The spending package was intentionally designed to deliver money over several years, in part to avoid fueling inflation, unlike the boondoggle bill that will directly inject money into pockets.

However, officials announced yesterday that the administration will focus on “shovel-worthy” projects to dump money into the economy more quickly. 

I score the bill as having a positive inflationary impact.

CBO to release Build Back Better score by Friday

The Congressional Budget Office (CBO) expects to release a full cost estimate of the Build Back Better “Boondoggle” Bill by the end of the day Friday.

Pelosi is biting her nails as she wants to get a vote on the bill before the end of the week.

When they struck a deal to move the infrastructure vote forward, party moderates agreed to vote for the social spending package once a CBO score was received.

That agreement was referenced, not so subtly, by VP Harris at the infrastructure bill signing who noted that “This bill, as significant as it is, as historic as it is, is part one of two.”

Even if the bill passes the House, it faces hurdles in the Senate where it is likely to be tweaked if passed at all.

Joe Manchin has expressed reservations about moving too quickly on the bill and has made it clear that a bad CBO score will indefinitely delay it.

And some early signals are not looking good for a perfect score.

A left leaning tax policy group stated that provisions included in the bill would violate Biden’s pledge that tax hikes will only affect Americans earning $400,000 or more.

The Tax Policy Center noted that “Taking into account all major tax provisions, roughly 20 percent to 30 percent of middle-income households would pay more in taxes in 2022.”

While the tax increases would be “very small," any hike would contradict Biden’s oft-repeated claim that tax hikes implemented to cover the cost of his $1.75 trillion spending bill would only apply to the wealthiest Americans.

Republicans have argued that is not the case and will jump on this news.

On top of that, even some House moderates have conceded that the bill will not pay for itself as intended.

Part of the President’s plan is to beef up the IRS to crack down on tax evaders to raise revenue.

But the director of the CBO stated on Monday that the IRS proposal would yield far less than what the White House was counting on – about $120 billion over a decade versus the $400 billion that the administration is counting on.

If that is reflected in Friday’s report it will be a huge setback for the legislation.

All of this means that additional tax hikes will be necessary, and that will not sit well with the Manchins on the Hill.

Best Defense is a Good Offense

In anticipation of bad news, administration officials are urging lawmakers to disregard the budget office assessment.

They argue the CBO is overly conservative in its calculations.

With regard to its inflationary impact, the Biden admin, including Treasury Secretary Janet Yellen, went on the show circuit over the weekend to push the narrative that the best remedy for inflation is to pass the multi-trillion-dollar social welfare and climate change bill. 

Here’s the “logic” – the bill will boost the social safety net and make it easier for people to return to work.

According to Yellen, higher labor force participation, especially among women, will help lower inflation.

She thinks that a lack of money for child and elder care is making women stay home.

So, to summarize, giving people who are staying home more money will urge them to go back to work, and inserting money into an already bloated economy will lower inflation.

The poverty threshold for families with children is $26,354 per year.

Currently, those families can receive up to $65,200 in cash, food, housing, medical care and educational support from taxpayers. If passed, the boondoggle bill will add another $11,300 to that total.

I’m not sure how $77,000 in government benefits will encourage people to go back to work.

Even the NY Times noted that the primary culprit for current inflation is the “great shift in Americans’ purchasing and employment patterns.”

In a sign of further inflation, Tyson Foods (Ticker: TSN), which produces around one in five pounds of all beef, chicken and pork in the U.S. announced price hikes on all food items.

That hike will push revenue up about 12% to $12.8 billion and increase earnings to $1.36 billion … close to a year over year double.

But it will also hit our pockets during the holidays.

Tough Timing

Speaker Pelosi wants a vote by the end of the week.

Even if she gets it, the future of the bill in the Senate is unclear and lawmakers are bracing for debate on it to keep them in town well into December. 

Schumer has prioritized the National Defense Authorization Act before Thanksgiving, meaning consideration of the boondoggle bill will slide further into December.

Inflation and Biden’s Fed pick

The President is considering whether he should renominate Federal Reserve Chairman Jerome Powell for another term.

And inflation is looming large over that decision.

Power Income guru Bill Griffo might disagree, but the Vegas odds makers are long Powell winning another term in February.

He has broad support among both parties, is seen to have adequately addressed the pandemic-driven market meltdown, and generally sees eye-to-eye with Biden on market issues.

On the flip side, Biden is getting pressured from the progressive wing of his party, which seems to have more and more influence, to replace Powell with a dovish Democrat.

They want someone who will support tighter financial regulation and a more aggressive response to climate change.

So far, the decision is being kept quiet.

FDA – Revolving Door

President Biden is nominating Dr. Robert M. Califf, a former commissioner of the Food and Drug Administration during the Obama administration, to lead the agency again.

The FDA has been without true leadership for years.

If confirmed, Califf will lead an agency that is responsible for more than $2.8 trillion worth of food, medical products, and tobacco.

The FDA regulates products accounting for about 20 cents of every dollar spent by consumers in the United States.

A number of prior candidates were dropped on complaints that they were too close to the pharmaceutical industry.

Califf is a former cardiologist who has been a forceful advocate for tobacco control.

But he has long been a consultant to drug companies and ran a research center at Duke University that received funding from the drug industry.

During his previous stint as commissioner, Dr. Califf sought to permit pharmaceutical companies to advertise off-label uses for F.D.A.-approved products, which was blocked by other agencies since the practice is not actually permitted.

Is there truly no one qualified to lead the agency who does not have ties to Pharma?

Acting Commissioner Dr. Janet Woodcock was considered for the helm but was highly criticized (including by Senator Joe Manchin) for being too close to the pharmaceutical industry.

Manchin holds Dr. Woodcock responsible for the approval of opioid drugs that devastated his state and made it clear that he would never vote to confirm her.

I’m going to discuss some of the issues and politics around the bills, as well as some potential Biden appointees.

Tomorrow, trading guru Andrew Giovinazzi and I are going to go even deeper at 2pm EST with a Capitol Gains show and tell you some trades that we think could benefit from these bills.

Register to join us here.

DC is creating ripples in the market.

The live Power Moves Portfolio trade log is here.

Cutting Through the Noise for You.

Frank

Breaking up is Hard to Do!

Hey Influence Traders,

It was a tough economic week for the Biden administration.

Not just in terms of raw numbers, but in reputation.

There is a growing consensus that the administration does not have a good handle on the economy … from both sides of the aisle.

Jobs Report

We received a not-so-rosy jobs report.

The impact of the report was felt in Biden’s declining approval rating.

There are 10.4 million job openings in the US.

Yet, in September, a record 4.4 million people quit their jobs.

That churn is making it very difficult for employers to fill vacancies.

The Biden administration continues to assert that it’s spending programs, if passed, will fix supply chains, ease inflation, and create employment.

The NY Times declared that there was no doubt those fixes would work, it was just a matter of when.

I think the real question is … How, not when?

PPI & Inflation

The Producer Price Index hit 8.6% – it’s highest level since 2010.

With the cost of goods rising, it’s no wonder we also saw 30-year high inflation numbers.

The U.S.’s inflation is being viewed by economists as increasingly more permanent than “transitory.”

One bruise to the administration came from Larry Summers, the former top economic adviser to President Obama.

In response to the inflation report, Summers stated that the Biden White House has been “behind the curve” in their predictions about rising prices during the pandemic.

He told CNN that “I think that the policymakers in Washington unfortunately have almost every month been behind the curve … [t]hey said it was transitory; it doesn’t look so transitory. They said it was due to a few specific factors; doesn’t look to be a few specific factors. They said when September came and people went back to school, that the labor force would grow, and it didn’t happen.”

Despite the growing consensus that it is moving in the wrong direction, the White House has continued to argue that passing all its domestic policy agenda items will ease inflation and end supply chain disruptions.

Social Spending Bill

Even if the White House were to somehow be correct, passage of the social spending bill is looking less and less likely.

The Congressional Budget Office (CBO) is scoring the budgetary impact of the legislation.

That score will be pivotal to garner votes in the House and Senate.

If the score is above $1.75 trillion, Joe Manchin and other centrists will have a sound reason to oppose the measure and/or push for additional cuts.

That will not sit well with progressives who are already ticked that their $3.5 trillion measure has been halved.

Manchin has already indicated that he is concerned about the rise in inflation and does not see a need to vote on the boondoggle bill until potentially 2022.

Even if passed in the House, the delay in the House vote on the bill will further hurt its chances of being taken up in the Senate anytime soon.

Senate Majority Leader Schumer wanted to start debate on the boondoggle bill this week.

But the delay has caused him to turn to other legislation.

Schumer announced this week that the Senate is “likely” to take up the National Defense Authorization Act (NDAA), a massive defense policy bill, this coming week.

That puts any vote on the boondoggle bill in perpetual limbo.

Global Build Back Better?

Since more spending always seems to be the answer, the Biden administration looks to launch a global infrastructure financing program.

The program is intended to counter China’s Belt and Road initiative and could be announced as soon as January.

It will fund between five and 10 flagship projects.

The administration intends the “Build Back Better World” program to counter Chinese influence by offering funding for projects with higher labor standards, a focus on climate considerations and helping disadvantaged groups like female entrepreneurs.

The administration is identifying high-profile projects to receive early funding.

In response, a Chinese spokesman stated that China believes there’s “enormous space” for cooperation on infrastructure around the world.

He emphasized that “Different initiatives don’t offset or replace each other … [and that the] world needs efforts to build bridges, not blow up bridges.”

The White House hopes the initiative can help democratic nations counter Beijing’s massive trillion-dollar project to finance infrastructure projects across the developing world.

The administration has not yet stated how much money it will devote to the plan.

Climate News

The big agreement to come out of the climate summit in Glasgow was … an agreement for governments to come back next year with stronger plans to curb emissions.

The group wants nations to slash their carbon dioxide emissions in half in the coming decade.

They also want wealthy nations to “at least double” funding by 2025 to protect the most vulnerable nations from the hazards of climate change and curb fossil fuels.

That will promote further green energy initiatives.

Breakups

One of the biggest producers of windmills is General Electric (Ticker: GE).

And that division might go it alone.

GE was formed in 1892 and has sold everything from aircraft engines to lightbulbs to washing machines to medical equipment.

But like many behemoths, it became too big for itself, particularly with its foray into capital financing.

GE announced this week that it will be breaking itself into three businesses.

It will keep its aviation business but spin off its health care division in 2023 and its energy businesses in 2024.

The new energy and power company will include wind turbines and gas-fueled power generators that produce about one-third of the world’s electricity. 

Its success will be determined, in part, by the ability of the power business to shift to alternative energy sources.

And there is plenty of demand for alt energy to power EV cars and trucks.

Just look at the appetite for the IPO of Rivian (Ticker: RIVN) that occurred this week.

The company, which has made under 160 trucks so far and sold even fewer (most of those made went to employees), saw its stock price go up 50% in its first two trading days.

It raised nearly $12 billion through the IPO and now has a market cap equal to Ford (Ticker: F) and General Motors (Ticker: GM), companies that sell millions of cars a year.

But the EV market is hot and will continue to get hotter, so it could be a fun EV ride.

Cutting Through the Noise for You.

Frank

Cyber Baby!

Hey Influence Traders,

It’s awesome when a government report lowers your spending power by actual percentage points overnight.

Inflation

The consumer price index (CPI), which tracks inflation, rose 0.9% percent last month pushing the annual rate to 6.2% … the highest rate since November 1990.

Even the core rate, which excludes food and energy (which are on fire), was up to 4.6%, higher than September’s 4% rise and the largest increase since 1991.

Inflation has now topped 5% for the fifth straight month.

Infrastructure Bill

Most economists have warned that the $1.2 trillion infrastructure bill and $1.75 trillion boondoggle social spending plan will further overheat the economy. 

But in a speech at the Port of Baltimore this week, Biden the economist argued that his infrastructure plan would cure the supply chain problem, keep shelves full over the holiday season, and — somehow — lower inflation. 

Despite heading out for an Infrastructure-palooza tour, Biden has yet to actually sign the bill.

It looks like he is waiting until Monday to do so.

One theory for the delay is that he plans on holding the infrastructure bill hostage.

The Congressional Budget Office (CBO) is currently scoring the roughly $1.75 trillion boondoggle reconciliation bill.

That score is due out around Nov. 15 (Monday).

If it gets a bad score, which could dissuade the enthusiasm of some on the Hill, Biden could tell House moderates that he will refuse to sign the infrastructure bill unless they pass his boondoggle bill first.

A group of moderate Democrats are holding firm that a final CBO score is a prerequisite to their voting for the boondoggle bill.

And issues continue to simmer over the boondoggle bill in both Houses.

Wealthy Blue state Democrats want to make changes to the $10,000 state and local tax (SALT) deduction cap, but can’t decide how: 

      • The House has proposed substantially raising the level of the cap.
      • Senate Dems want to exempt taxpayers under a certain income level.

It does not look like the boondoggle bill will reach Biden’s desk without a SALT resolution.

Cyber Threats

Yes, you have to pay a little to protect yourself from cyber threats, but it’s worth it.

Those attacks are on the rise.

The past summer has seen reports of private and public sector breaches.

A California security firm recently announced that foreign hackers have breached nine organizations in the defense, energy, health care, technology and education sectors.

They are attempting to steal key data from US defense contractors and other sensitive targets.

This has caused the Biden administration to take notice and should bode well for cybersecurity companies:

      • U.S. companies have to beef up their cyber protocols.
      • Enough red flags have gone up indicating that we need to better ensure security.
      • Defense in the years ahead will be more about computers than tanks.
      • China and Russia have made it clear that we need to expect constant threats to our tech infrastructure.

Earlier this year, the White House announced an executive order requiring higher levels of security from government software suppliers.

More recently, Biden has ordered all federal agencies to review their cyber protocols and to immediately patch holes.

A recent survey found that nearly 75% of tech leaders think the government’s response to the SolarWinds hack and its aftermath has been average or fair and not a single respondent said the response was excellent.

And 33% of respondents said that the chief technology priority for the Biden administration should be defining a national cybersecurity protocol.

On top of executive action, the new infrastructure bill includes $50 billion to make infrastructure more resilient to both cyberattacks and natural disasters.

We Are Watching Cyber Firms

When Biden put out his emergency cyber order to all Fed agencies that they needed to review and patch, we went long Mandiant, Inc. (Ticker: MNDT) and FireEye, Inc. (Ticker: FEYE) in CapGains.

In the past, we’ve looked at Palantir Technologies Inc. (Ticker: PLTR), which is a solid play on cyber security and should benefit from infrastructure spending.

I like PLTR as a long-term hold, but the stock is very “range bound” so trading guru Andrew Giovinazzi has had to be creative in his trading strategies.

In addition, we are watching:

      • Ping Identity Holding Company (Ticker: PING)
      • CrowdStrike Holdings (TICKER: CRWD)
      • CyberArk Software (TICKER: CYBR)
      • Proofpoint (TICKER: PFPT)

DC is creating cyber ripples in the market.

And we’re taking advantage in CAPITOL GAINS, where we’ve closed three wins this month, with more in sight.

Cutting Through the Noise for You.

Frank

Show Me The Money!

Hey Influence Traders,

I hope that you’re having a fantastic start to your week.

President Biden sure is after taking it on the chin last week.

Infrastructure Bill

The President is basking in the passage of the $1.2 trillion infrastructure bill which he hopes will resuscitate his flatlining approval ratings.

The bill includes nearly $600 billion in federal aid to improve highways, bridges, dams, public transit, rail, ports, airports, water quality and broadband, and it has states clamoring over where the money should be sent. 

Initial estimates indicate that $47 billion will go towards climate resilience, which is intended to help communities prepare for projected increases in extreme fires, floods, storms and droughts.

The White House is buoyed by that political win … I’m told they’ll be sending surrogates out across the country to tout it starting today, including high-ranking members of Congress.

I’ve got a man on the ground who will be attending one such meeting, so we’ll get some inside scoop.

Spending Bill

Biden was so excited about the infrastructure bill that he immediately began pressing for the passage of his boondoggle social spending bill.

But that is going through a Congressional Budget Office (CBO) review and could take some time. It also faces an uncertain future in the Senate.

Domestic Schmomestic

Biden was so giddy on Monday that he announced that his administration was considering shutting down another domestic source of oil.

The Army Corp of Engineers has been tasked with conducting an environmental impact review on a pipeline in Michigan.

Depending on the outcome of that review, Enbridge Inc.’s Line 5 pipeline, which connects Canada to Michigan, and moves about 500,000 barrels of crude oil a day, could be slated for termination.

Who wants oil independence anyway?

Return Trip: Travel is Back

Good news for international travelers to the U.S.

Fully vaccinated travelers will once again be allowed to enter the country … if they can show proof of vaccination and a negative coronavirus test taken within three calendar days of travel.

JFK has already seen an uptick in travelers coming in, which bodes well for the travel and tourism sector, particularly in large tourist areas like NYC.

Cap Gains

My week has started out hot — some of the CAPITOL GAINS trades that Andrew Giovinazzi and I have put on made #PowerMoves.

We knew the impact that the passage of the infrastructure bill would have on certain sectors, and they popped.

As we’ve discussed, coal is not going away but it needs to get cleaner.

Direct Air Capture, which siphons carbon out of the air, is an early tech, but I like it.

Most of the leading companies are still private, but Norwegian company Aker Carbon Capture (Ticker: AKCCF) is now in the Cap Gains line-up.

Captured carbon can be buried or resold for other uses like fuel, plastics and carbonated soda For instance, Coca-Cola (Ticker: KO) is a big buyer.

Coal-fired power plants would be eligible for billions of dollars in extra tax breaks under Biden’s economic legislation if they install carbon-capture systems.

The infrastructure bill also includes a ton of money to build out a nationwide system of charging stations.

Earlier this year we looked at ChargePoint (TICKER: CHPT), but were admittedly early.

However, CHPT is one of the world’s largest suppliers of EV charging stations and will benefit from infrastructure spending — EV installations are on the rise to the tune of 500,000 locations.

DC is creating ripples in the market.

Cutting Through the Noise for You.

Frank

Is that Progress?

Hey Influence Traders,

You might be having a good one, but President Biden and Nancy Pelosi are taking victory laps.

Pelosi was able to push back on objections from the progressive base to get a vote on the $1.2 trillion infrastructure package without moving forward on a vote for the $1.85 trillion boondoggle spending bill.

The House passed the infrastructure bill and now it moves to Biden’s desk for signature.

Biden said he will not sign the bill this weekend but that he will hold a signing ceremony “soon” so lots of people can attend.

In the politics game we call that “priorities.”

The legislation passed is intended to upgrade the nation’s transportation and utility infrastructure over the next five years.

The bill contains $550 billion in new spending to improve roads, bridges and rail, expand electric vehicle charging stations, expand broadband, and remove lead pipes.

To get the deal done, Pelosi got a group of moderates to agree to support the boondoggle bill if a forthcoming Congressional Budget Office assessment matches a cost analysis from the White House.

Thirteen Republicans voted in favor of the infrastructure bill, while six progressive Democrats voted against it to protest the spending bill not being voted on at the same time.

The spending bill thus remains on hold.

Trade Policy – Climate Focused

President Biden has promised to use trade policy as a tool to mitigate climate change.

He announced that the US and EU would try to limit carbon emissions as part of a trade deal on steel and aluminum.

The arrangement would use tariffs or other methods to encourage the production and trade of metals made with fewer carbon emissions and block dirty steel and aluminum from China.

If finalized, it would be the first time a U.S. trade agreement includes specific targets on carbon emissions.

Secretary of Commerce Gina Raimondo believes it will be good for the US because the “U.S. leads the world in our clean steel technology.”

That should make domestic steel producers happy.

Domestic Policy: Climate Focused

The US is taking carbon reduction seriously … with some laughter that will not make all domestic producers happy.

On Friday, Energy Secretary Jennifer Granholm laughed at a question about boosting America’s domestic oil production, calling it “hilarious.”

That should not make domestic producers happy or help prices at the pump.

The US wants to rely on foreign producers.

Since taking office, Biden has …

      • Suspended oil drilling leases in the Arctic National Wildlife Refuge and other federal oil leases
      • Rejoined the Paris climate agreement, eliminated subsidies for the fossil fuel industry, revoked permits for the Keystone XL Pipeline and converted the government’s fleet of vehicles to electric power.

Clean Energy = Uranium

As we’ve stated, a true green wave is going to require uranium.

And it won’t be solely for large scale nuclear reactors.

Russia is experimenting with heating homes and hot water by pumping heat from small reactors directly into homes.

The Russians have put a small reactor in a barge floating off a Siberian town that creates direct residential heating by circulating water between the power plant and homes.

Instead of wasting the heat that is typically vented as steam through cooling towers, this method captures it.

Nuclear power is on the upswing.

I like the uranium producers, which is why Cameco Corp. (Ticker: CCJ) and Denison Mine (DNN) are going into the CAPITOL GAINS portfolio.

Cutting Through the Noise for You.

Frank

Wrap Up

Hey Influence Traders,

Mark Sebastian, Bill Griffo and I had a heck of a show yesterday afternoon. Thanks to all who attended!

Bill dissected recent moves by the Fed.

I discussed the impact of Tuesday’s elections on the markets.

Mark tied it all together and put on some trades to CAPITOL-IZE on those ideas.

If you want to catch the replay, grab the trades and get a month of Mark’s Big Money Flow program all for just $99, give our Customer Care Team a call this morning at 1-888-872-3301.

Election Tuesday

Tuesday saw a referendum on the Biden agenda … and it was not positive for El Presidente.

The marquee race was in Virginia, which saw a clean sweep for the Republicans.

They took the office of governor, lieutenant governor and attorney general, plus the legislature went red.

This will be the first time there is a Republican in the governor’s mansion in 12 years.

It’s particularly impactful since Virginia has been gravitating steadily blue.

New Jersey remained in Democrat hands, but at a 1% spread means the race was close enough to cause concern for the Dems, who were expecting a double-digit win.

In a fun twist, the president of the New Jersey State Senate looks like he might lose to his Republican truck-driver challenger. 

Dem Steve Sweeney is going for a 7th term, but is trailing Republican challenger Edward Durr by a couple of thousand votes.

Durr spent only $153 on his general election campaign, according to campaign finance filing, so a loss would be extra stunning.

Election Impact

Tuesday was a clear repudiation of the Biden agenda.

Biden is personally suffering the lowest approval rating of any president at this stage of the presidency.

The major complaints were that the Dems have been pushing too many social issues and are moving too far left.

They also caught criticism for failing to work together and pass legislation, particularly the bipartisan infrastructure bill which is generally viewed favorably and polls well.

That raises interesting issues for Dems on the Hill

They now know that they are vulnerable in the coming midterms, so do they listen to the people or push forward with their pet programs?

They didn’t take long to answer that question.

The prevailing view of the Dem staffers I’ve spoken to is that they lost because they’ve not done enough to push their agenda.

That means that they are going to press hard on passing their social spending programs.

The Dems are arguing that the best way for them to salvage midterm elections is to unify around their party platform and go all in.

It is also a clear sign of the growing influence of the progressive wing of the party.

They are driving policy and influencing leadership.

Biden seemed unphased by Tuesday’s results, stating that “people want us to get things done … and that’s why I am continuing to push very hard for the Democratic Party to move along and pass my infrastructure bill and my Build Back Better bill.”

The White House believes that Tuesday’s results should add to the urgency of passing the Biden agenda.

Apparently, Speaker Pelosi is on board.

Yesterday morning, in a snub to moderate Senator Joe Manchin, Nancy Pelosi announced that they were putting paid family leave back in the spending bill.

Manchin was not happy, reasserted that the provision is wrong for the spending bill and doubled down on opposing it.

The word on the Hill is that the Dems are going to try and slip more provisions back in.

However, there remains a lot of inter-party disputes, so we are still in a wait-and-see mode.

Word from DC is that Speaker Pelosi is lining up a vote on Biden’s agenda whether or not Manchin is on board.

House leaders are frustrated with Manchin and want to put their foot on the gas instead of the brake on passing the boondoggle bill. 

Regardless of the success in the House, Manchin’s vote is essential for the bill’s passage in the Senate.

In response to Pelosi, Manchin reasserted his opposition, stating that the “unbelievable” Republican victories in Virginia’s statewide races Tuesday validate his concerns about inflation and moving too quickly.

Market Impact

With the Dem push to support passage of the boondoggle bill, green energy remains hot.

On top of that, Biden came back from Scotland and declared a climate win overseas (the rest of the world would disagree, but who’s counting?).

With a green push in the infrastructure and boondoggle bills, pushing EVs will remain a priority —  and that requires lithium.

Andrew Giovinazzi and I have our eyes on Quantumscape Corp. (Ticker: QS).

QS is pioneering solid-state lithium metal batteries.

The go-to batter today is lithium-ion, which has liquid electrolyte as opposed to a solid one.

Solid state batteries have more power capacity and less risk of explosion.

Coal and fossils are still going to run hard – Britain is expecting a “long, cold winter” and is buying a ton of coal from Russia.

Coal use is not slowing down, but there is a move to make it more green.

That is where Direct Air Capture comes in.

It is a technology that siphons carbon from the air, which can then be buried or reused to make fuel, plastics and carbonated soda.

That is why companies from Exxon to Coca-Cola are interested in the technology.

Moreover, under some of Biden’s proposed legislation, coal-fired power plants would be eligible for billions of dollars in tax breaks if they install carbon-capture systems.

Some of the leading carbon capture companies are still privately held.

But Norwegian company Aker Carbon Capture (ADR Ticker: AKCCF) is being added to the CAPITOL GAINS portfolio.

Cutting Through the Noise for You.

Frank

High Alert

Hey Influence Traders,

We’ve got a climate summit in Glasgow (it was a real snooze fest for some), spending bill drama on the Hill, a tight race in Virginia and a Fed meeting.

I’ll discuss all those things today, but I’ll also be going deep on those topics tomorrow with Option Pit CEO Mark Sebastian and Power Income guru Bill Griffo.

We are going to hold a special Option Pit Insiders meeting tomorrow at 4pm EST.

And clicking here is the only way to get in.

In the meantime, let’s get an update …

Hoo Boy

When India makes the most exciting announcement at a meeting of world leaders, you know it must be a snooze fest.

India will go carbon neutral … by 2070.

Since President Biden did not have a domestic climate spending bill to tout at the meeting, his opening comments fell flat, although he did state that the US has a plan to achieve “net-zero” greenhouse gas emissions by 2050.

The White House released a whitepaper on its website in support of that plan.

He is stepping it up on Day 2 by taking a leadership role on reducing methane.

The president announced that more than 90 nations have signed onto a U.S.-EU pledge to collectively reduce global methane emissions 30% below 2020 levels by 2030.

Of course, the meeting has drawn the disdain of climate activists who noted that the estimated 13,000 tons of CO2 produced by the jets flying into Glasgow for the meeting is as much as 1,600 Britons produce in a year.

Spending Bill

Joe Manchin is done with the progressives in the party holding up a vote on the infrastructure bill to force a vote on the boondoggle spending bill that he says “no one understands.”

Manchin is demanding that a vote take place immediately on the infrastructure bill.

In typical fashion, the progressives showed little care for Manchin’s thoughts.

Rep. Pramila Jayapal, head of the Congressional Progressive Caucus, said that, “We intend to pass both bills through the House in the next couple of days.”

In productive comments, Rep. Cori Bush referred to Manchin as “anti-Black, anti-child, anti-woman and anti-immigrant.”

Speaking of Pelosi, whom I guess is still in charge, she indicated that she will try to bring the bills for vote this week.

Even if she gets the spending bill passed in the House its future in the Senate is not certain.

The Hill needs to act as there are other deadlines looming.

Dec. 3 is the next pivotal date as that is when the extended transportation funding that was put into place to buy time for the infrastructure bill runs out.

It’s also the date when the country is expected to hit the debt ceiling.

Democrats punted on these issues a month ago, and they are again looming. 

VA Gubernatorial Race

All eyes are on the race in Virginia.

A few recent polls have Republican Glenn Youngkin with a slight lead over Terry McAuliffe.

I don’t put a lot of faith in polling.

And this is a litmus test race for the Dems so they are spending big and bringing out the big guns.

That can draw a lot of last minute voting activity.

It will be fun to watch and even more fun to discuss the fallout in detail tomorrow during our exclusive Option Pit Insiders session.

The outcome just might dictate how the resolution of the spending bills plays out.

Fed Meeting

The Fed begins its two-day meeting today.

The prognosticators believe that the Fed will scale back asset purchases.

Bill Griffo has a lot to say on the subject.

On top of the US, traders have priced in an upcoming 15 basis point hike from the Bank of England, which will be an attempt to stave off a surge in inflation.  

Join us tomorrow LIVE for reaction to the fallout, attendee-only trades and a month of full access to Mark’s Big Money Flow!

Cutting Through the Noise for You.

Frank

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

Back to DC

Hey Influence Traders,

Andrew Giovinazzi and I went deep on energy, Virginia and Brazil this week.

We explained why forces in play have caused a seismic shift in the energy sector and how you can benefit from it.

Even the New York Times admitted that “Coal Stocks Rise, Even as the Planet Warms.

We also discussed why all eyes, from the White House to the Hill, are on the Virginia’s governor’s race.

Finally, we told you why political strife in Brazil is leading to investment opportunities.

If you missed out, Capitol Gains membership is now closed.

But it will be back one day … maybe.

Back to DC

Now we go back to DC where the talks on the spending bills are … still stalled.

Earlier this week saw a bunch of announcements from the White House and the Democrat leadership from both houses that a deal was at hand.

But that came to a screeching halt on Wednesday.

Part of that is the Virginia gubernatorial race.

The race between Democrat Terry McAuliffe and Republican Glen Youngkin is tightening.

An easy win for McAuliffe, a former governor of the state, has now become a fight.

Rather than distance himself from a down-ballot race, the president has tied himself increasingly to it.

The race has become a litmus test on Biden’s policies ahead of the midterm elections.

Joe Biden and Democrats can’t afford a loss.

That is causing some Dems to put the brakes on spending talks to gauge the outcome of that race.

If they lose, they will negotiate down the spending bills with a straight face.

If they win, they will declare it a referendum on their policies and press last-minute for a meatier bill.

Manchin Tax

The other issue is Joe Manchin from West Virginia.

He successfully got some green energy provisions knocked out of the mega-spending bill.

He then helped negotiate some of the tax provisions, including the Billionaire’s tax, which seemed to have broad Dem support (and it polled well, which the Dems love to see).

Dem leadership thought they finally had him on board.

Heck, he spent the weekend with President Biden in Wilmington, Del., and agreed that Dems might have to take action to raise the debt ceiling on their own.

Well, it turns out that he’s not onboard.

Manchin did a 180 on the Billionaire’s tax and declared it to be divisive.

Pelosi, Schumer, et. al, are not happy.

What Now?

Back to the drawing board on some issues.

The progressive wing of the party is done cutting programs … they feel they’ve given up enough.

One idea being floated is to keep as many programs as possible but just limit the number of years they will be in force as a means to keep down the costs.

That’s a solid strategy since we all know that once a major government program goes into effect it is almost impossible to stop or unwind.

If the Dems go that route, they will certainly draw the ire of Republicans, which could further dent the left’s armor.

Wednesday morning started with paid family leave, climate change provisions, Medicare and Medicaid expansions and a tax on billionaires as the remaining open items.

By the end of the day, Dems had already caved on including the paid family and paid medical leave provisions (something dear to Bernie Sander’s heart) and Manchin appears to be throwing a roadblock at the billionaire’s tax.

The White House said that no matter what, it wants to see at least $500 billion in climate provisions in the bill.

Infrastructure Bill

The infrastructure bill has taken a back seat to the spending proposal.

The uncertainty of the spending bill is not helping the bridge-and-tunnel bill’s prospects.

Many Dems believe that passing the infrastructure bill could help Dem gubernatorial candidates, but the progressive wing is doubling down on opposing the popular public works bill until a larger benefits package is finalized.

Biden is heading overseas for a climate meeting this week and wanted the bill wrapped up prior.

It’s not looking good.

Nothing is easy in DC!

But we make it easy to understand.

Cutting Through the Noise for You.

Frank

Leading Nuclear Indicators

Hey Influence Traders,

Andrew Giovinazzi and I went deep on DC and world events this past week.

We explained why forces in play have caused a seismic shift in the energy sector and how you can benefit from it.

Lo and behold, a slew of headlines later in the week echoed our thoughts.

As you know, we like to keep you ahead of the curve.

But you need to be part of the Capitol Gains experience, which you can do by clicking here.

And there’s more news …

We’re going live this Tuesday!

Virginia is up for grabs, Brazil is in an uproar and Russia and OPEC continue to cozy up.

And we’ll show you how to trade it all when you register here.

Now for my weekend ruminations …

Snitches Get … PAID!

In New Jersey, snitches get stitches.

In finance, they get paid!

An insider blew the whistle on Deutsche Bank AG’s manipulation of global interest rate benchmarks.

That information helped U.S. and U.K. regulators investigate Deutsche and led to $2.5 billion in fines against the bank.

It also led to a nearly $200 million whistleblower award for assisting the probe.

The payout is the largest ever by the Commodity Futures Trading Commission.

Supply Chain Updates

Clogged ports continue to contribute to global supply chain shortages.

Policymakers continue to struggle with the supply chain concerns.

It is sparking issues with everything from consumer goods to semiconductors.

This has caused domestic factors to slow down or close and is hurting economic growth.

Treasury Secretary Janet Yellen described the phenomenon as a “very, very unusual shock.”

But the administration can’t decide what to do about it … or even the cause.

Depending on which talking head is on the TV, it is either a buying spree issue, a container ship issue, a port issue, or a truck issue.

Perhaps it’s a combination of all.

Clearly there is a mismatch of strong pent-up demand for goods fueled by coronavirus aid checks and higher savings rates pitted against supplies constrained by production shutdowns, dwindling inventories and worker shortages.

One headline item is clear – we have a record number of container ships parked off the California coast.

The director of the Long Beach port said the backlogs will likely last until next summer as container ships continue to arrive, despite moving to 24/7 operations.

Enter Florida Gov. Ron DeSantis

He believes that Florida “can be part of the solution.”

He announced this week that:

      • “We’ve got capacity, and all of our ports can offer these businesses good incentives if they reroute their ships.”
      • “We’ve already had some ships rerouted. We expect to have more, but if you’re going to sit off the coast for days on end, you might as well just bring it to Florida. We’ve got great logistics on the ground that can get it to market.”

And, of course, the Republican governor couldn’t help but take a shot at his left wing cousins on the left coast by emphasizing that “unlike California, ports in Florida are always operated with 24/7 service.”

Gotta love Politics!

Spending Bill Watch

We are on watch for the final version of the spending bill.

Speaker Pelosi stated this week that an agreement is imminent.

But a lot of cutting still needs to occur.

That’s why Sen. Joe Manchin was not so optimistic.

What we know for sure is that the progressives are not happy.

Their optimism for seismic social change has dwindled.

What is on the rise is inter-party finger-pointing.

It’s going to make for another interesting week on the Hill.

And we will continue to monitor and analyze the situation in Capitol Gains.

One thing we do know is that green energy pushes need to be reevaluated (more on that below).

Revolving Doors

My wife often asks me, what exactly do you do?

I explain to her that I analyze how the actions of DC and Wall Street intersect, including the revolving door of players that move between the two.

She said – “Example?”

I said – “Vaccines!”

Many have wondered how vaccines and boosters with limited testing data have been so easily fast tracked, approved and heavily pushed by the administration.

Here’s three reasons that highlight the revolving public-sector, private-sector revolving door that is a pillar of my system.

      • Pfizer (Ticker: PFE): Former FDA Commissioner Scott Gottlieb sits on the board of Pfizer.

He also sits on the boards of Illumina (Ticker: ILMN) and Tempus Labs, which sell FDA-authorized COVID-19 test kits.

Finally, he sits on the board of Aetion, which partners with the FDA to research COVID-19 policy.

      • Moderna (Ticker: MRNA): Stephen Hahn, who led the FDA when it authorized MRNA’s COVID shots, now is an executive with Flagship Pioneering, the VC firm that helped launch MRNA, and which holds 20 million shares valued at $6.5 billion.

      • Johnson & Johnson (Ticker: JNJ): JNJ board member Mark McClellan has served in a number of government positions and was the FDA commissioner from 2002-2004.

Follow the money and the revolving doors!

Uranium Squeeze

After our Wednesday event I got a number of questions about uranium.

I hinted that a big squeeze may be coming, and folks asked me to elaborate, so here goes:

Many pushing for a green energy future have not been fans of nuclear energy.

But the reality is slowly setting in that we can’t go green without it … and it may be a bigger part of the equation than ever.

The core of nuclear power (no pun intended) is uranium.

And after many years of lackluster performance, the commodity is running hot and about to get hotter.

The Sprott Physical Uranium Trust holds 1/3 of the market, continues to buy, and since August has been taking uranium out of market circulation.

SPUT has removed over 15.3 million pounds of uranium, all told. For perspective, a gigawatt-class reactor uses around 450,000 pounds per year.

On top of that, a contact at the SEC let me know this past week that another fund backed by the world’s largest uranium producer, Kazatomprom, is raising up to $500 million to also buy uranium.

If ANU Energy OEIC, in which Kazatomprom is participating, also removes (i.e., stacks and stores) uranium, a price squeeze could be a go.

And that is why Andrew and I will continue to make #PowerMoves for you in the Capitol Gains portfolio.

Be sure to join us LIVE on Tuesday.

Cutting Through the Noise for You.

Frank