Ripples, Ripples, Ripples — and Lessons

Hey Influence Traders,

Both K Street and Wall Street are making ripples this week ….

– The Senate confirmed and denied multiple candidates for Biden’s key posts

– The Senate is working to get the next relief bill passed

– The markets are moving … in all directions

– RIPPLES ARE FORMING

Elsewhere, in “it’s sometimes better to stay off radar screen” news, Redditor Roaring Kitty had his FINRA licenses revoked!

As it turns out, Keith Gill, the central and now legendary figure in the RobbinHood/Reddit insurrection that led to the rise of GameStop shares (sounds like part of a Star Wars trilogy), worked with MML Investors Securities, a broker/dealer subsidiary of MassMutual (he is no longer employed by MML).

Apparently, he forgot to list his outside business foray with MML … a NO NO in the registered world.

To sum up — in the past few weeks Gill has been nailed by a class action lawsuit, lost his job, and lost his securities licenses – LESSON LEARNED!

Confirmed … Waiting … Denied

It’s time to play everyone’s favorite new party game, Confirmed! … Waiting! … Denied!

Among Biden’s 23 nominees with Cabinet rank, just 13 have been confirmed by the Senate, which is one of the slowest confirmation starts in recent presidential history.

Confirmed: But this week the Senate did confirm three key nominations, all of whom control substantial budgets and can move ripples.

Secretary of Commerce: The Senate confirmed Gina Raimondo by a vote of 84-15.

Raimondo, whose name was floated as a V.P. candidate, was the first female governor of Rhode Island and formerly served as its elected general treasurer. She is considered to have a sound business acumen, having co-founded Point Judith Capital, an early-stage venture capital firm.

She will head a massive department that works to promote job creation and economic growth across the country.

She will certainly have influence over where money is spent, particularly when the administration puts forth its infrastructure spending bill.

Council of Economic Advisers Chair: The Senate confirmed Cecilia Rouse by a vote of 95-4.

Rouse, a labor economist and dean of the Princeton School of Public and International Affairs, previously served as a member of President Barack Obama’s Council of Economic Advisers and worked for President Bill Clinton’s National Economic Council.

She is expected to be a big advocate for unionizing the workforce. Ohio Democratic Sen. Sherrod Brown, the chairman of the Senate Banking Committee, noted that, “For too long, American workers haven’t had anyone on their side in the White House. That ends now."

In addition to Rouse, Jared Bernstein, Biden’s chief economist when he was V.P., and Heather Boushey, co-founder of the left-leaning Washington Center for Equitable Growth, will serve as members on the CEA.

Secretary of Education: The Senate confirmed Miguel Cardona by a vote of 64-33.

Cardona, a former public school teacher, will be tasked with squaring off with teachers’ unions to negotiate a return to in-person instructions. Many teachers’ unions are fighting reopening plans, but President Biden has pledged to reopen schools by May.

To accomplish his reopening plans, Biden is pushing Congress to approve another $170 billion in education funding, the disbursement of which Cardona will control.

On top of the looming reopening fight, Cardona is facing mounting pressure from the progressive wing of the Dem party to broadly cancel some or all student loan debt. While most in DC agree that canceling debt will require Congressional action, some on the Hill, including Elizabeth Warren, have argued that Cardona can unilaterally act.

Waiting: California Attorney General Xavier Becerra, Biden’s nominee to lead the Department of Health and Human Services, will be voted on this week.

Becerra is expected to receive easy confirmation … but that’s where the easy part stops.

A laundry list of issues have been building up at HHS that will require Becerra’s immediate attention. These include everything from the oversight of hospitals, health care companies and nursing homes during the pandemic to issues surrounding drug pricing, telemedicine and child care services.

Moving on these issues will certainly have an impact on the health and pharmaceutical sectors.

In addition to HHS, the Department of Justice, the Department of Housing and Urban Development, and the Small Business Administration are all waiting for leadership positions to be filled.

All of these departments will play pivotal roles in disseminating the money that will be handed out in the $1.9 trillion coronavirus aid bill. A lack of leadership could lead to a disjointed rollout.

The delays in confirming top posts also mean delays in confirming and seating deputy secretaries and undersecretaries, who are often the ones to actually implement major policy.

Denied: Biden’s cabinet was thrown a curveball when Neera Tanden, his nominee to lead the White House budget office, was forced to withdraw her name from consideration after her nomination faced opposition from both sides of the aisle.

Tanden led the left-leaning think tank Center for American Progress for a decade, during which she gained a reputation as a partisan who frequently targeted Republican lawmakers on Twitter and feuded with progressives including Sen. Bernie Sanders.

LESSON LEARNED – DON’T TWEET ABOUT PEOPLE WHO WILL ONE DATE VOTE TO DECIDE YOUR FATE

Tanden’s withdrawal raises questions about the Biden administration’s budget process since the White House has yet to offer a timeline for releasing its budget.

Most recent presidents submitted written budgets to Congress by the end of February, though Trump didn’t submit his until mid-March.

Relief Bill in the Works

The U.S. Government has unrivaled power to move markets … and it is about to act.

The Senate has been working hard to get the next COVID relief bill passed, including cutting out some pork to appease Republicans.

The original bill that was passed by the House included $1.425 billion in funding to help with transit rail capital projects, including the extension of the Bay Area Rapid Transit line from San Jose to Santa Clara, California.

The House leadership agreed to yank that Pelosi pet project out of the bill.

When the bill passes, money will start to move to some sectors, but not others, and the next stimulus might leave some Americans out.

To try and get the bill passed, Senate Democrats reached a deal with President Biden to limit the eligibility for the proposed $1,400 per person stimulus checks.

The checks will phase out entirely at $80,000 for individuals, as opposed to $100,000 in the version passed by the House, and $160,000 for joint filers. The change could mean many Americans who could have received at least some payment will now receive none.

This change will impact the anticipated impact of discretionary spending the market has been pricing into the relief bill. This could also mean a little less capital flowing into stocks.

Union Windfall

One group that will benefit from the bill is unionized workers.

Early this week, President Biden threw his support behind Amazon workers in Bessemer, Alabama, who have begun voting on whether to join the Retail Wholesale and Department Store Union (RWDSU).

It appears that the Hill is ready to throw some money behind those efforts. The Senate ruled that Congress can include a fix for the $81.2 billion union pension funding crisis as part of the COVID bill.

There are about 1,400 pension plans that cover about 10 million active and retired union workers.

Those plans hold $496 billion in assets but face $1.2 trillion in liabilities.

The administration is committed to pushing unionization. This move will shore up union finances and help make unions more popular with past, current and prospective workers. 

Such money will also alleviate potential financial burdens on employers, effectively buying them off and easing push back on unionization attempts.

Markets React

Some sectors are on the rise – including energy and EV stocks.

Automakers are taking it on the chin due to a microchip shortage.

Interestingly, Tesla (Ticker:TSLA), even with its recent pullback, still has a higher market cap than the 23 companies that make up the S&P 500 energy sector combined.

Bond prices continue to fall sending yields higher, which impacts borrowing costs in global debt markets and could impact multinational companies.


And the major cryptos, Bitcoin (Ticker: BTC) and Ethereum (Ticker: ETH) are inching back up after seeing a pullback last week.

More to come on all these topics as the week’s events begin to settle into the markets.

Cutting Through the Noise for You,

Frank


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