Congress finally gets the deal done — Don't freak over the mutations — Wall street mostly likes the deal

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Dec 22, 2020 View in browser   By Ben White and Aubree Eliza Weaver Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. Programming note: Morning Money will not publish from Thursday, Dec. 24, through Friday, Jan. 1. We'll be back on our normal schedule on Monday, Jan. 4. Quick Fix It costs a lot to win and even more to lose — First, prepare yourselves for a few "Deal" references in the following headlines. Because it's almost Christmas and why not throw in a little Jerry Garcia? The deal in question here of course is the $900 billion coronavirus relief package finally passed by Congress early this morning which includes all that we expected including $600 direct payments to individuals and families, enhanced unemployment benefits, small business aid and funding for distribution of the Covid-19 vaccine. The headline here works because it cost A LOT to win this deal, meaning months of economic slowing that didn't need to happen. But it would have cost much more to lose and NOT get this done. It's a win for both parties and frankly the White House. And as much as we have banged on about Congressional inaction, it's far better they sealed this thing than left town with nothing. What it means in brief — Struggling families will get a shot of cash (though not really enough) and those left jobless by Covid-19 will get a reprieve from losing enhanced benefits (though the benefits will be halved.) There is no state and local aid and no liability shield from Covid lawsuits for corporations. Perhaps most importantly, small and midsized business that would not have survived the winter may now make it (more on which below). Joe Biden will now take office with at least a slightly firmer federal cushion keeping the economy from nosediving. Total outlays to replace economic activity lost to the virus now total close to $4 trillion. Biden will want much more when he takes office but unless Democrats sweep Georgia, he's probably not going to get it. Wall Street is likely to reward Washington on Tuesday morning though investors are now freaking out about Covid-19 mutations (more on which below) and travel bans on those coming from the United Kingdom. So celebrations over the relief bill may be short-lived or perhaps not materialize at all. U.S. futures were slightly lower around 1 a.m. EST after the bill passed by overwhelming majorities in both houses. How that deal went down — Our Burgess Everett, Heather Caygle, and Marianne LeVine with the tick-tock: "There's been an enormous rush on all sides to take credit for the final product, but everyone compromised. The give-and-take in the second-largest stimulus deal ever was real, according to interviews with more than a dozen lawmakers and aides. "Republicans spent more than they wanted, and McConnell dropped his 'red line' of liability protections. President Donald Trump and the odd couple of Sens. Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) got their stimulus checks, but smaller than requested. Now the question on everybody's mind is: what took so long?" GOOD TUESDAY MORNING — Well, they did it! Can we all go home now? Well not quite yet, but almost. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. Driving the Day DON'T FREAK ABOUT THE MUTATION — Via our esteemed POLITICO Nightly colleague Renuka Rayasam: "This isn't the first time the Covid-19 virus has mutated. In February, the virus strain that spread in Europe had more than a dozen mutations to the spike protein , which the virus uses to enter cells. It's highly contagious and quickly became the dominant form of Covid. … "Now it's happening again. United Kingdom Prime Minister Boris Johnson effectively canceled holiday gatherings because of a British variant. … The virus has been mutating at a rate of one to two changes a month. Most mutations so far are related to how contagious the virus is and not necessarily how lethal it is. Covid vaccines that have been given preliminary FDA approval and those in development will likely still be effective against these new strains" WHAT'S IN THE BILL — It's like SERIOUSLY long. Like 5000-pages plus long. You are not going to read it all, just admit it. So our Caitlin Emma and Marianne LeVine break it down for you. "The colossal year-end package … will provide another round of direct payments, enhanced unemployment benefits and billions of dollars for struggling industries in what still amounts to a less generous package than the $3 trillion response mounted at the beginning of the pandemic. Unemployment benefits expire in mid-March, likely setting up another deadline for additional congressional action early next year." HELP FOR SMALL BIZ BUT MAYBE NOT ENOUGH — Our Zachary Warmbrodt: "Congress is about to unleash hundreds of billions of dollars in aid to small businesses, a long-awaited injection of relief that some employers, economists and advocates say won't be nearly enough as the economy faces a worsening winter slowdown. … "[W]hile many struggling businesses are desperate for help as the pandemic surges, the resurrection of the program more than four months after it was shut down will only provide short-term support. The small business aid will cover up to three-and-a-half months' worth of payroll costs — well short of how long many of them expect it will take to bounce back" HOW FED PROGRAMS ALMOST BLEW IT UP — Our Victoria Guida: "When the Federal Reserve unleashed a massive market intervention at the onset of the pandemic in March, the central bank was widely praised for its aggressive move to calm panicky investors. "Yet a dispute over those same programs threatened to derail Congress's latest economic relief package until Senate Minority Leader Chuck Schumer reached a compromise … with Sen. Pat Toomey (R-Pa.)." TERMS OF AGREEMENT — "Under the deal, Toomey achieved his goal of ensuring that the Biden administration can't restart Fed programs for businesses, states and cities after they wind down at the end of the year. But he agreed to narrower language to head off what many Fed watchers said would have seriously restricted the central bank's emergency powers." NEW ON THE BIDEN ECON TEAM — Also via Victoria: "Biden … announced more members of his White House economic policy team, bolstering its progressive credentials alongside National Economic Council Director Brian Deese. "David Kamin, who worked as a senior budget official under President Barack Obama, will be deputy NEC director, and Bharat Ramamurti, a former aide to Sen. Elizabeth Warren (D-Mass.), will be deputy NEC director for financial reform and consumer protection." WALL STREET MOSTLY LIKES THE DEAL — PNC's Gus Faucher: "The bill will be extremely important in supporting the U.S. economy through a very difficult period in late 2020 and early 2021. … "With support from the federal government, consumers should be able to maintain their spending over the next few months. Aid to small and medium-sized businesses will allow more firms to remain open until widespread vaccination takes hold and the pandemic begins to recede. Thanks in large part to the stimulus, economic growth should pick back up by the spring." HACKERS BREACHED TOP TREASURY SYSTEMS — Also via Zach: "Hackers breached systems in a Treasury Department division that is 'home to the department's highest-ranking officials,' a top senator said … the newest disclosure in the massive cyberattack on the federal government. "Citing Treasury staff, Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee, said in a statement that the agency suffered a 'serious breach, beginning in July, the full depth of which isn't known.'"   TUNE IN TO NEW EPISODE OF GLOBAL TRANSLATIONS: Our Global Translations podcast, presented by Citi, examines the long-term costs of the short-term thinking that drives many political and business decisions. The world has long been beset by big problems that defy political boundaries, and these issues have exploded over the past year amid a global pandemic. This podcast helps to identify and understand the impediments to smart policymaking. Subscribe for Season Two, available now.     Markets STOCKS ROILED AS NEW COVID STRAIN IN BRITAIN OVERSHADOWS U.S. STIMULUS — NYT's Eshe Nelson and Matt Phillips: "Financial markets were jolted on Monday by the news that a fast-spreading variant of the coronavirus had led to the suspension of some trade and travel with Britain and another lockdown in London, a new threat that overshadowed progress in Washington toward a long-awaited economic aid package." IPO FRENZY DRIVES RECORD $435B IN STOCK SALES — Bloomberg's Drew Singer: "In a year that saw a pandemic upend financial markets and economies around the globe, U.S. companies and their largest shareholders raised a record $435 billion with stock sales. That's far above the previous high of $279 billion set in 2014, according to data compiled by Bloomberg." TESLA JOINS S&P 500 — WSJ's Peter Santilli: "The electric car maker is the biggest company ever to join the S&P 500, the most widely tracked broad stock-market benchmark. Shares of Tesla have surged 70% since S&P Dow Jones Indices announced its planned addition in November, boosting the company's market value to more than $650 billion. "That's more than three times the value of Berkshire Hathaway, the second-biggest addition to the index by market value, when it was added to the S&P 500 in 2010. Tesla is currently the sixth-largest publicly listed firm in the U.S. by that measure." But on its first day, Tesla stock took a hit — AP's Tom Krisher: "Monday was its first day of being included in the prestigious S&P 500, and it didn't go well. Shares tumbled 6.5 percent to $649.86 even though the index as a whole lost only 0.4 percent. The stock hit a record high on Friday."   A NEW YEAR, A NEW HUDDLE: Huddle, our daily must-read in congressional offices, will have a new author in 2021! Olivia Beavers will take the reins on Jan. 4, and she has some big plans in store. Don't miss out, subscribe to our Huddle newsletter, the essential guide to all things Capitol Hill. Subscribe today.     Fly Around EVICTION, FORECLOSURES FOR FHA LOANS EXTENDED — NYT's Matthew Goldstein: "The Department of Housing and Urban Development has extend a moratorium on evictions and foreclosures on home mortgages its insures against default, protecting many first-time home buyers. The moratorium will now run through Feb. 28. It had been set to expire at the end of the month. "The foreclosure moratorium applies to mortgages backed by the Federal Home Administration, a division of the federal housing department. In recent years, F.H.A. guaranteed mortgages have become a major way for first-time buyers to acquire homes. The biggest underwriters of F.H.A. mortgages have been so-called nonbank lenders that are not affiliated with a major bank." GOLDMAN, MORGAN STANLEY LEAD BANK RALLY AFTER STRESS TESTS — Reuters' Sinead Carew: "U.S. bank shares outperformed the broader market on Monday, led by Goldman Sachs and Morgan Stanley, after the Federal Reserve said stress test results meant the sector could resume stock buybacks for the first time since the coronavirus-led downturn. "The Fed said the biggest U.S. banks had enough capital to withstand over $600 billion in losses from a short, sharp economic slump, as well as a moderate longer-lasting downturn, and would now be permitted to pay out dividends and buy back stock on a limited basis."   Follow us on Twitter Mark McQuillian @mcqdc Ben White @morningmoneyben Aubree Eliza Weaver @aubreeeweaver Victoria Guida @vtg2 Katy O'Donnell @katyodonnell_ Zachary Warmbrodt @Zachary Kellie Mejdrich @kelmej   Follow us

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