Thursday, January 7, 2021

Trump promises orderly transfer of power — Biden win certified — Wall Street gets bullish

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By Ben White and Aubree Eliza Weaver

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Quick Fix

Biden win certified by Congress — After one of the darkest days in the recent history of the United States — marked by a violent mob storming the U.S. Capitol urged on by President Donald Trump — Congress got back to business and certified President-elect Joe Biden's win at around 3:30 a.m. Images from the fanatical attack on the Capitol, which resulted in four deaths, will embarrass the nation for decades.

But once law enforcement finally restored order, the peaceful transfer of power continued. And it featured remarkable rebukes of Trump from Senate Majority Leader Mitch McConnell and Sen. Lindsey Graham (R-S.C.), among others. Vice President Mike Pence also essentially rebuked the president and performed his ceremonial duties. Wall Street blew off the attack in DC and rallied hard on hopes for bigger fiscal stimulus after Democrats secured a Senate majority with two wins in Georgia.

Trump promises to leave peacefullyVia tweets from Dan Scavino for Trump after the certification: "Even though I totally disagree with the outcome of the election, and the facts bear me out, nevertheless there will be an orderly transition on January 20th …

"I have always said we would continue our fight to ensure that only legal votes were counted. While this represents the end of the greatest first term in presidential history, it's only the beginning of our fight to Make America Great Again!"

The main question now, for markets and the nation , is whether the attacks were the last gasp of conspiracy theory fueled Trump supporters or the start of wider unrest around the country. MM's bet is on the former, especially after the Scavino tweets. But there are no guarantees.

Talk of impeaching and removing Trump immediately circulated around DC. So did whispers of Cabinet members attempting to remove the president using the 25th amendment. Neither are likely to happen. And Trump, hunkered down in a darkened White House, got kicked off Twitter for at least 12 hours as well as having other social media accounts blocked.

For now the hope among investors and top Wall Street executives (as well as the broader business community) is that the worst of the chaos is over and a Democratic Washington will inject trillions of dollars more in fiscal stimulus into the economy and Biden will usher in a calmer era of governance. Fears of higher taxes and tougher regulations are largely on hold for now.

Wall Street gets bullish — Via Goldman Sachs: "We have revised our forecasts to reflect the results of the Georgia elections. With control of the Senate by a narrow margin, Democrats are likely to pass further fiscal stimulus in Q1 that we expect to total about $750bn, including $300bn in stimulus checks. …

"However, discouraging news on the virus front—including the slow pace of vaccination and the emergence of more infectious virus strains—suggests that the spending boost from stimulus will be more lagged than usual."

Pantheon's Ian Shepherdson with a significant caveat: "Everything has changed in Washington after the Democrats won the Georgia Senate runoff elections, except the need to find 60 votes for fiscal measures which can't be passed via reconciliation."

David Bahnsen, founder of the Bahnsen Group, emails : "It has been my rather unpopular thesis for a while that there would not be huge stock market implications one way or the other to a 50-50 tie in the Senate, because it actually did not mean 'Democrat control of the Senate' the way too many have believed. … [E]xtreme leftist legislative victories are not going to come so easy, and therefore it becomes much less obvious how that is priced into the stock market."

GOOD THURSDAY MORNING — It really does seem to be over. But it won't be REALLY over until Trump actually speaks to the nation and says what was in the tweet. 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.

 

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Driving the Day

BIG BUSINESS MOVES AGAINST TRUMP — Our Lorraine Woellert: "A group representing U.S. manufacturers said … Pence should consider moving to eject … Trump from office. A lobby representing corporate executives called on Trump himself to end the chaos in the nation's capital. Bank CEOs were bluntly angry.

"The storming of the U.S. Capitol by Trump supporters on Wednesday, after the president urged a larger group of protesters to march on Congress, spurred an outpouring of unusually emotional condemnations from influential business leaders who had long been supportive of the president and his party. … National Association of Manufacturers President and CEO Jay Timmons … raised the specter of the 25th Amendment"

HOW TRUMP BROKE THE GOP — Our Burgess Everett, Marianne LeVine, and Melanie Zanona: "Republicans started the day losing the Senate. They ended it with … Trump's supporters losing their minds.

"Jan. 6, 2021 might have been remembered for an intraparty battle over whether to certify … Biden's election win or who to blame for the Georgia defeats. But instead it will go down as the day that broke the Republican Party as we know it and began the GOP's ultimate reckoning with Trumpism. It literally took a riot."

RESIGNATIONS MOUNT — Our Daniel Lippman and Lara Seligman: "Deputy national security adviser Matt Pottinger has resigned, and two other senior White House officials — national security adviser Robert O'Brien and deputy chief of staff Chris Liddell — are considering stepping down after Wednesday's storming of Congress …

"It's unclear who would become national security adviser if O'Brien followed Pottinger in departing. O'Brien hurried back to Washington from Florida on Wednesday night … O'Brien has been among the most loyal Trump officials in the administration."

BIDEN AIDES HOPE FEVER HAS BROKEN — Our Natasha Korecki, Alice Miranda Ollstein, and Megan Cassella: "Biden and his allies have long argued that Republicans would eventually recognize the need to break from … Trump. They never imagined that Trump would make the case for them before he left office.

"On Wednesday, as supporters of the president ransacked the Capitol building in objection to his election loss, those close to Biden expressed a mix of horror and hope that the chaos playing out in the nation's capital would serve as a 'shock to the system' for Republican lawmakers and compel them to more firmly ditch their party's leader."

TECH GIANTS BOOT TRUMP — Our Cristiano Lima: Twitter and Facebook locked … Trump's accounts and YouTube removed one of his videos after throngs of his supporters rioted inside the U.S. Capitol … marking the harshest confrontation to date between the president and the social media companies.

"Twitter also threatened to permanently suspend Trump from the platform if he violated its rules again — even as a chorus of Democrats, civil rights activists and others urged the company to kick him off now for stoking attacks on the legitimacy of his election loss."

Markets

STOCKS RALLY ON STIMULUS HOPES, DESPITE DC PROTESTS — AP's Stan Choe, Damian J. Troise and Alex Veiga: "Wall Street rallied Wednesday on expectations of more stimulus for the economy, though the enthusiasm was dampened by chaotic scenes in the nation's capital.

"The S&P 500 rose 0.6 percent after having been up 1.5 percent earlier, while the Dow Jones Industrial Average closed at a record high. Investors piled into stocks of smaller companies, banks and other businesses that would be winners if Democrats push through more economic aid for hurting Americans and businesses. The yield on the 10-year Treasury topped 1 percent for the first time since March."

And health care stocks held firm as investors downplayed risks after Democratic gains — Reuters' Lewis Krauskopf: "U.S. healthcare shares rose on Wednesday as Georgia elections appeared to shift Senate control to Democrats — long considered a risk for the sector — with investors factoring in support for current government insurance programs and downplaying chances for systemic overhauls"

SLUMPING DOLLAR CREATES PROBLEMS FOR CENTRAL BANKS EVERYWHERE — Bloomberg's Greg Ritchie and Susanne Barton: "The euro and yen are flirting with valuations unseen for years as dollar weakness creates headaches for policy makers the world over. …

"But strategists say Europe's shared currency is heading toward $1.25, a level it hasn't traded above consistently in over six years, with the European Central Bank proving willing to verbally bat down forays higher."

 

A NEW YEAR MEANS A NEW HUDDLE IS HERE: Huddle, our daily congressional must-read, has a new author! Olivia Beavers took the reins this week, and she has the latest news and whispers from the Speakers' Lobby. Don't miss out, subscribe to our Huddle newsletter, the essential guide to all things Capitol Hill. Subscribe today.

 
 
Fly Around

AFTER PRESSURE, NYSE AGAIN PLANS TO DELIST THREE CHINESE FIRMS — NYT's Alan Rappeport: "The New York Stock Exchange reversed course again on Wednesday, saying it will remove China's three major state-run telecommunications companies from the exchange.

"The decision followed a day of pressure from the Trump administration and Congress after the exchange had decided to let the companies — China Unicom, China Telecom and China Mobile — remain listed. That twist came a week after the exchange said the companies' shares would be delisted to comply with President Trump's executive order on China investments."

And now the U.S. is weighing adding Alibaba and Tencent to that ban — WSJ's David Lim, Jing Yang, Gordon Lubold and Alexander Osipovich: "U.S. officials are considering prohibiting Americans from investing in Alibaba Group Holding Ltd. and Tencent Holdings Ltd., a potential escalation of the outgoing Trump administration's efforts to unwind U.S. investors' holdings in major Chinese companies."

FED OFFICIALS FRETTED OVER VIRUS SURGE AT DECEMBER MEETING — NYT's Jeanna Smialek: "Federal Reserve officials were warily eyeing a surge in coronavirus cases at their Dec. 15-16 meeting, but they hoped that vaccine breakthroughs might set the stage for a strong economic rebound in 2021.

"'With the pandemic worsening across the country, the expansion was expected to slow even further in coming months,' according to minutes from the gathering of the Federal Open Market Committee, released Wednesday. 'Nevertheless, the positive vaccine news" was "viewed as favorable for the medium-term economic outlook.'"

AMAZON TO SPEND $2B IN HOMEBUILDING NEAR KEY U.S. OFFICES — Reuters: "Amazon.com Inc said on Wednesday it would spend $2 billion to create affordable homes in regions where three of its major U.S. employment hubs are located. The company said it intends to create at least 20,000 affordable housing units in Puget Sound area of Washington State, Virginia's Arlington and Nashville in Tennessee."

 

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