News : Tuesday will determine the nature of Biden's presidency — Trump's efforts will fail

Monday, January 4, 2021

Tuesday will determine the nature of Biden's presidency — Trump's efforts will fail — Markets take it in stride

Jan 04, 2021

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Quick Fix

Georgia run off will determine Biden's early presidency — The nature of President-elect Joe Biden's first two years will be determined Tuesday with the two Senate runoffs in Georgia. Republicans remain favorites to win at least one and hold the Senate, denying Biden the ability to quickly pass big stimulus and other liberal priorities. But it's hardly a lock.

Biden advisers are preparing fiscal plans for a GOP Senate. And they think they will have opportunities to work with the GOP on small business programs and the Earned Income Tax Credit, among other areas, as well as several administrative actions they can take to fight economic inequality especially on the housing front.

But they privately acknowledge that their lives will be massively easier if Democrats can win both Georgia races. One person very close to Biden tells MM: "It's just a huge difference if you can have both houses. You would just see so much more stimulus, both direct checks and more targeted relief. … And you would have much more of an effort to reform the entire unemployment system."

What's actually going to happen this week — Welcome back from the holiday "break." It didn't really feel like one with all of President Donald Trump's efforts — abetted by some Republicans in Congress — to try and overturn the legitimate election results either when Congress meets on Wednesday to certify the election or even after that.

To be sure, none of this is going to work. Congress will affirm Biden's win on Jan. 6 and he will be inaugurated on Jan. 20. Markets are pretty much taking all the noise in stride, rising on vaccine hopes and essentially blowing off all of Trump's efforts, including an insane call to Georgia GOP Secretary of State Brad Raffensperger asking him to "find" 11,000 votes to give him the state. Raffensperger rebuffed Trump.

Risk appetite grows anyway — Via Bloomberg: "The dollar sunk against Asia's emerging-market currencies on the first trading day of 2021, a sign of the growing risk appetite among investors as economic data improved and vaccines are rolled out.

"The yuan and Indonesian ringgit led the charge against the greenback, with the Chinese currency surging to its strongest since June 2018 after a slew of improving purchasing managers indexes across the region bolstered sentiment. Assets from stocks to gold and cryptocurrencies also rallied."

GOOD MONDAY MORNING — Welcome to 2021! Everything isn't that much different. Yet. 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

DRIVING THE WEEK — Couple of huge moments including the Georgia votes on Tuesday and the Congressional session on Wednesday to certify the election results. Markets seem to like gridlock at this point so a Democratic sweep (while promising significantly more stimulus) could still knock stocks down a bit … But maybe not that much.

Wall Street is expecting noise on Wednesday with GOP opposition in the House and Senate to finalizing the election results along with the potential for potentially violent protests. But anything more than symbolic opposition and a few rallies could test Wall Street's view that this is all political theater …

December jobs report on Friday at 8:30 a.m. expected to show a gain of just 50K as the Covid surge and late stimulus approval continue to damped the hiring recovery. Unemployment expected to tick up to 6.8 percent with average hourly earnings up 0.2 percent.

WHAT GEORGIA MEANS — Cap Alpha's Ian Katz: "[T]he obvious stakes are the prospects for Democratic legislation such as tax increases through the budget reconciliation process. … The heads and even second-tier officials at most financial regulators must be confirmed by the Senate.

"We've been skeptical that there will be any collaborative spirit from Senate Republicans regarding Biden nominees. Republicans can reject or hold up nominees for agencies including the Treasury Department, CFPB, SEC and OCC that they deem too progressive. … With a 50-50 tie, the Democrats would have the slimmest possible margin of control, with the vice president casting any necessary tie-breaking vote. But Democrats would chair the Senate committees."

SENATE GOP IN OPEN WAR — Our Burgess Everett and Marianne LeVine: "Senate Republicans are in open war against each other as … Trump's presidency comes to a close, with his baseless claims of widespread election fraud animating what will be the defining schism of the Trump era.

"As the new Congress was sworn in Sunday, the Republican Party splintered badly as at least 12 senators planned to join about 140 House members to contest … Biden's election win"

PELOSI BACK AS SPEAKER — Our Heather Caygle, Sarah Ferris, and Olivia Beavers: "Nancy Pelosi was elected speaker of the House for the 117th Congress, clinching the gavel for the fourth — and potentially last — time as she prepares to steer one of the most sharply divided chamber through the final turbulent days of the Trump era.

"Pelosi won 216 votes to secure the speakership with five Democrats breaking ranks to support someone else or vote present. All Republicans voted for House Minority Leader Kevin McCarthy. … Now Pelosi must guide the slimmest House majority in decades"

MODERNA COULD GIVE HALF OF RECOMMENDED VACCINE DOSE — Our Brianna Ehley: "The federal government is in talks with Moderna about giving half the recommended dose of the company's Covid-19 shot to speed up immunization efforts, the head of the Trump administration's vaccine rollout said ...

"Operation Warp Speed chief adviser Moncef Slaoui said there is evidence that two half doses in people between the ages of 18 and 55 gives 'identical immune response' to the recommended one hundred micorogram dose, but said the final decision will rest with the FDA. 'It will be based on facts and data to immunize more people,' Slaoui said on CBS' 'Face the Nation,' adding,' of course we continue to produce more vaccine doses.'" His remarks came amid intensifying concern that the Covid vaccine distribution has been slower than expected."

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Markets

INVESTORS BET THE 'EVERYTHING RALLY' WILL CONTINUE — WSJ's Amrith Ramkumar: "Investors ended one of Wall Street's wildest years on record by piling into everything from bitcoin to emerging markets, raising expectations that a powerful economic comeback will fuel even more gains.

"The vast climb known as the 'everything rally' accelerated late in the year, sending the S&P 500 to its 33rd record of 2020 last week. Following an early-year collapse, the broad U.S. equity gauge, global stocks and an index of raw materials each rose at least 35 percent from the end of March through the end of the year"

CHINA SECURITIES REGULATOR: NYSE DELISTING 'POLITICAL' — Reuters: "China's securities regulator on Sunday said New York Stock Exchange plans to delist three Chinese telecom firms are 'political' and that the impact will be 'limited.'

"The NYSE on Thursday said it would delist China Mobile Ltd, China Unicom Hong Kong Ltd and China Telecom Corp Ltd following President Donald Trump's move in November to bar U.S. investment in 31 firms that Washington says are owned or controlled by the Chinese military."

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

ECONOMISTS EXPECT TOUGH SLEDDING IN WINTER, THEN A REBOUND — WSJ's Harriet Torry: "Headed into 2021, the U.S. faces a surge in coronavirus cases, new restrictions on business, cautious holiday shopping and slowing economic growth. Forecasters anticipate that the Labor Department's December jobs report, due to be released Friday, will show the labor market closed the year on a weak footing.

"Economists surveyed by The Wall Street Journal expect to see employers added 68,000 new jobs in December, down from 245,000 a month earlier. That would mark the slowest month of the labor market's recovery since May. As the Covid-19 pandemic drags into another year, however, economists see several reasons for optimism."

DOLLAR SLIPS IN TO 2021 AS INVESTORS RIDE DOWNTREND — Reuters' Tom Westbrook: "The dollar started the new year more or less where it left off - under pressure from investors who reckon low U.S. interest rates and an eventual worldwide recovery from the coronavirus pandemic will make it a laggard against other major currencies.

"In early Asia trade on Monday, still thinned by holidays, some short sellers were again adding to bets against the dollar and unwinding a small bounce it enjoyed on the last trading day of 2020 when profit-taking lent support."

MINORITY-OWNED COMPANIES WAITED MONTHS FOR LOANS, DATA SHOWS — AP's Joyce M. Rosenberg and Justin Myers: "Thousands of minority-owned small businesses were at the end of the line in the government's coronavirus relief program as many struggled to find banks that would accept their applications or were disadvantaged by the terms of the program.

"Data from the Paycheck Protection Program released Dec. 1 and analyzed by The Associated Press show that many minority owners desperate for a relief loan didn't receive one until the PPP's last few weeks while many more white business owners were able to get loans earlier in the program."

HOW THE AMERICAN MORTGAGE MACHINE WORKS — WSJ's Telis Demos: "Every family needs a home, and so do the many risks created by the 30-year mortgage that is standard in America. Finding an investor to take each of those risks is a job of the Rube Goldberg contraption that is the U.S. housing-finance industry. Investors who don't understand how it all fits together might one day find themselves scrambling for shelter.

"Originators are probably the most familiar players to investors. They sit at the front of the process, and in many cases deal directly with borrowers. But for a mortgage with typical terms and size, they are usually not the player that ultimately owns the loan."

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