Weekly Wrap-Up – Organize Baby!

Hey Influence Traders:

 

Despite the media and pharmaceutical companies’ best efforts, Omicron is thankfully appearing to be a non event.

 

While it is to be taken seriously, it does not seem to be causing severe illness or death.

 

The media wants to continue to drive a ratings frenzy by scaring the snot out of everyone.

 

Pfizer (Ticker: PFE) and BioNTech said a third dose of their COVID-19 vaccine neutralizes the omicron variant.

 

No one saw that profit declaration coming!

 

In a largely ceremonial vote, Dems Joe Manchin and Jon Tester joined all 50 Republicans to vote to nullify President Biden’s vaccine mandate for large employers.

 

Even if the measure somehow passes the House, which is beyond unlikely, Biden will veto it.

 

End of the measure!

 

Regardless of the noise, let’s hope the positive health trend continues.

 

Transportation Spending

 

The $1.2 trillion infrastructure bill has now been stewing for months.

 

The law provides money for several categories of infrastructure, including:

 

      • Roads, bridges and tunnels;
      • Power infrastructure and clean energy transmission;
      • Electric vehicle (EV) charging stations and electrification of vehicles;
      • Rail, freight, ports, public transit, and airports; 
      • Expansion of broadband;
      • Clean drinking water and wastewater facilities; and
      • Other U.S. infrastructure and economic development programs.

 

The bill also refunded the U.S. Department of Transportation’s (“DOT”) surface transportation program (“STP”) for 5 years.

 

The DOT administers multiple highway, motor vehicle, rail, and transit programs under the STP umbrella.

 

The infrastructure bill provides most of the surface transportation funding through existing federal grant programs run by DOT and establishes some new ones.

 

The majority of funds distributed under the bill will flow through these federal programs to states with contracts and grants being awarded by state, tribal, and local or regional governmental entities, and with some direct federal funding.

 

This puts tremendous power into the hands of Transportation Secretary Pete Buttigieg, who will control $126 billion in new spending over the next five years (1/5 of the new authorized spending).

 

Buttigieg will oversee the distribution of assets through competitive grant programs that allow DOT to pick and choose which projects get funding.

 

For example, the DOT recently awarded $40 million to Henderson, Nevada, to remodel a highway that cuts through a poor neighborhood into a boulevard with bike lanes, pedestrian improvements and dedicated transit lanes, allowing the city to finish the job 3-1/2 years earlier than projected.

 

So where else will money flow?

 

Demand for DOT is high across the board.

 

But Reuters reported recently that research shows that states that vote for the president in power have gotten more of these competitive transportation dollars under past administrations.

 

That could mean a boom for Blue states.

 

Killing Carbon

 

For the first time in American history, a sitting president has ordered an end to overseas financing of coal plants and other carbon-intensive projects.

 

Biden’s order mandates the end of direct project financing of $250,000 or more as well as indirect support such as technical assistance to pipeline operators.

 

A cable to foreign embassies directed that “Our international energy engagement will center on promoting clean energy, advancing innovative technologies, boosting U.S. clean-tech competitiveness and providing financing and technical assistance to support net-zero transitions around the world.”

 

There are provisions for individual government officials to seek exemptions, which you can expect to come fast and furious.

 

Some initially thought that might be good for domestic producers, but the directive comes just days after Biden signed an executive order calling for the federal government to achieve net zero carbon emissions by 2050.

 

There is no love for carbon in this White House.

 

Spending & Inflation

 

Inflation is the talk of the town in DC these days.

 

No one in that bubble of a city can seem to figure it out.

 

Republicans are echoing most Americans that it is getting out of hand.

 

Inflation, Inflation, Inflation 

 

U.S. inflation hit its highest pace since 1982 in November.

 

In addition to the 6.8% pace, core prices showed a sharp jump.

 

The White House said the report was flawed as it didn’t capture recent downward movements in gasoline and natural gas prices or declines in shipping costs.

 

But retailers, warehouses, suppliers and shipping companies are still scrambling to meet demand.

 

The current admin is arguing that fears are overblown and that it is just political gamesmanship. 

 

The Biden admin is saying that it is unfair press coverage on this topics (and his admin in general) that is driving his low approval rating, not his performance.

 

Ummm, ok!

 

This is putting Dems in a tough position.

 

Their go-to strategy is to spend their way out of bad ratings.

 

But they need to accept and balance the impact on inflation.

 

Biden continues to argue that his Build Back Better boondoggle bill will somehow lower inflation, as injecting trillions of capital into a system often does.

 

Democrats are feeling an increased sense of urgency to quickly get President Biden’s social spending and climate package across the finish line, due to the pending expiration of the expanded child tax credit at the end of the year.

 

They don’t want to see money taken out of the pockets of their voting base.

 

On top of that, the NY Times reported this week that America’s pandemic-era excess savings are “dwindling.”

 

While bad news for retailers that does take some pressure off inflation concerns.

 

But the boondoggle bill would easily offset that impact.

 

Also, many states, flush with cash from budget surpluses, are considering tax cuts.

 

That will put more money in pockets and … drive inflation

 

If the build back better boondoggle goes through, that will be inflation squared.

 

That could be one reason why Joe Manchin is digging his heels in not to rush a vote on the boondoggle spending bill.

 

Debt Ceiling

 

A debt ceiling crisis looks to have been averted through some interesting political wrangling.

 

Republicans want the Dems to shoulder a debt ceiling raise on their own.

 

But Dems needed Repub help to … do it on their own.

 

So Senate Minority Leader McConnell cobbled together a handful of Repub senators to vote with Dems (64-36) to close debate on the debt ceiling bill.

 

It sets up a one-time exemption to the filibuster on raising the debt ceiling

 

This will allow Senate Dems to pass it on their own without a single Republican vote.

 

Crisis averted!

 

Organized Labor

 

The Biden administration wants unionized labor to increase.

 

The admin has been promoting companies with unions, such directing money to EV initiatives at Ford (Ticker: F) and General Motors (Ticker: GM) over rival Tesla (Ticker: TSLA).

 

US unionization hit its high of 35% in the 1950s.

 

It has been steadily declining since.

 

But workers today are feeling empowered with a powerful backer in the White House and are demanding higher wages and benefits.

 

In addition, over 40 union groups from companies like John Deere (Ticker: DE) and Kellogg (Ticker: K) have engaged in perceived successful strikes this year.

 

That has driven additional interest.

 

And labor got a win this past week.

 

Starbucks (Ticker: SBUX) saw three separate “store-by-store” elections this week in sunny Buffalo, NY.

 

The company initially argued that any union vote should be regional and involve all 20 chain locations in the area, but that argument was rejected by Biden’s National Labor Relations Board.

 

The votes drew high profile supporters like Sen. Bernie Sanders.

 

One of the locations voted to form the first union at a company-owned Starbucks in the coffee chain’s 50-year history.

 

The two others voted – one against unionizing, the other will have a recount.

 

Baristas have been trying to organize for months, and the appearance of CEO Howard Schulz to Buffalo to persuade workers not to strike was not enough.

 

Starbucks is having its worst stock year since 2017, and this will not help.

 

Starbucks has 9000 company owned locations, and is certainly concerned that dominos could start to fall.

 

Arizona Starbucks workers have already filed a petition for a union vote.

 

This could put further pressure on retail prices and, in turn, inflation!

 

Cutting Through the Noise For You.

 

Frank

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