Hey Influence Traders,
Welcome to the (three-day) weekend!
All the snow in my yard is making me think of one thing – SKIING!
We didn’t see a lot coming out of DC this week that directly influences the markets, but there are some signals being sent that will cause ripples down the road.
Since I was away, and in a Mexican tequila haze, I missed a few things myself, so let me give some highlights and look at opportunities:
Impeachment
The House impeachment managers wrapped up their case against former president Trump.
Trump’s defense team presented its case.
You can expect a vote soon after they’re done.
Chance of conviction – nil.
Level of distraction – Mario Level 100
What this did accomplish was slowing down the confirmation of President Biden’s nominees and his agenda moving through congress.
But don’t worry, Biden made that up with executive orders!
Executive Orders
Biden continued his onslaught of executive orders – 52 so far.
· 15 addressing COVID
· 10 on immigration
· 7 dealing with “equity”
· 6 with the economy
· 5 with the environment
But he said it is nothing to worry about since “I’m not making new law; I’m eliminating bad policy.”
Psst – eliminating a law is … making new law.
One that I’m keeping an eye on is his order to elevate climate change to be an essential element of US foreign policy and national security.
Part of the order is the development of new emissions reduction targets, which will be announced by April 22. This could have a massive impact on US industry and lay the foundation for his upcoming green infrastructure spending program.
To telegraph this intent, on Wednesday, Biden also promised to use the government’s purchasing power to fund a federal clean-car fleet.
In light of these announcements, Bloomberg reported that clean-energy companies are raising record amounts of cash through stock offerings.
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Shoals (Ticker: SHLS), a maker of solar-power components, raised $1.9 billion in an upsized initial public offering, pricing the shares above a marketed range.
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Plug Power (Ticker: PLUG), which has seen its stock nearly quadruple since Election Day, announced Tuesday it was selling $1.5 billion in shares.
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Gevo (Ticker: GEVO), a biofuel maker, sold $350 million in stock.
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ReneSola Ltd. (Ticker: SOL), a solar developer, announced two offerings.
Biden also announced that he will soon issue an order addressing the short supply of semiconductors by undertaking a “comprehensive review of supply chains for critical goods.”
The review will look to improve production amid a global chip shortage, which hurts industries like the auto sector.
That was not a sector I was monitoring, but now I am.
Covid-19
The Biden Administration says that it has acquired enough vaccine doses to inoculate nearly all Americans.
Now – how to deliver them? I like Mark Sebastian’s plays on pharmacies.
Nominations
Biden nominated Julie Su to the No. 2 post at the Department of Labor under Marty Walsh. Why is this important?
She is an advocate for unions,so we anticipate power moves from the DOL to promote and enforce unionization efforts that could impact small and gig businesses.
Su currently serves as Secretary of the California Labor and Workforce Development Agency and oversees the enforcement of labor laws and employment programs.
Labor groups love her but she was criticized for the fraud in the state’s unemployment system that occurred under her watch.
Specifically, it was announced last month that hackers, identity thieves and overseas criminal rings stole more than $11 billion of the $114 billion that California paid in unemployment claims last year.
We’ve said that cybersecurity companies should do well under the Biden administration, and this is further evidence of that need.
Government agencies, including the Department of Justice and the Commodity Futures Trading Commission are lining up to go after Robinhood and Reddit.
The DOJ’s fraud section and the San Francisco US attorney’s office have reportedly subpoenaed information from Robinhood.
And Reddit is under investigation by the CFTC for misconduct with traders at the subreddit r/WallStreetBets, who spurred the buying spree of GameStop along with other “meme” stocks.
Finally, the Financial Industry Regulatory Authority warned broker-dealers to be wary of digital platforms with interactive and “game-like” features, as they could run afoul of the regulator’s “Communications With the Public” rule when using them.
Frenzie buying is not going away, but it will certainly be under the microscope.
The Economy
Despite warnings of overspending and inflation, Biden and the Hill are pushing forward with massive additional stimulus.
Many democratic lawmakers were pleased with data indicating that the economy did not heat up as much as anticipated and that the deficits came in lower than expected — which means that the checks can fly!
That has to be paid for, and Sen. Elizabeth Warren might be a key figure in that payment plan.
We know that taxes have to go up to pay for spending.
Warren is set to become a member of the Senate Finance Committee and plans to introduce legislation implementing a wealth tax on fortunes over $50 million.
“Wealth tax” legislation aims to impose a two-cent tax on every dollar of individual wealth over $50 million and an extra surtax on every dollar of wealth over $1 billion.
She has also hinted at a financial transaction tax.
LOOK OUT!
It’s time to “pay the piper” and Bill Griffo from Power Income and I will be diving into that topic heavily.
(Speaking of Bill, grab his incredible new Trade the Fed ebook that was released this week! It will be very useful in the months ahead.)
It was a week of noise in DC … but some ripples are starting to form.
We’re going to keep an eye on how those ripples develop.
Cutting Through the Noise for You.
Frank