News : Infrastructure week to last six months (at least) — But it's still gonna be all Dems

Monday, April 5, 2021

Infrastructure week to last six months (at least) — But it's still gonna be all Dems — Stocks rise on U.S. jobs numbers

Apr 05, 2021

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Quick Fix

Infrastructure week to last … six months — Congress is out this week for Easter break giving President Joe Biden the spotlight to further retail his $2 trillion infrastructure plan that includes around $2 trillion in increased corporate taxes. But there isn't going to be anything quick about any of this. It's both a giant center piece of Biden's larger economic agenda and a vexing monster of a plan without a clear legislative future.

Via Compass Point's Isaac Boltansky : "Infrastructure week is going to last for 6 months as our base case is that a large reconciliation package in September/October will be necessary to carry the bulk of these provisions across the finish line;

"[W]e firmly believe many of the initial proposals will be moderated … It will be a bruising few months on Capitol Hill, and there are still potholes on the road ahead, but we believe the odds still favor the enactment of a multi-trillion dollar spending package with new taxes on corporations, capital, and high-earners offsetting a portion of the total cost."

This is most likely the correct view — Biden is not getting any of the big stuff done on infrastructure (broadband, green energy, clean water) with a bipartisan majority. And he's definitely not getting the corporate tax hikes he wants done with any GOP votes at all.

But he has to get them done. And he will eventually do so with only Democratic votes. And then he and the rest of the party can wait and see if the jobs boom continues (which it probably will in even larger numbers, at least for a couple months) with limited inflation. If all of this falls into place … well it would probably be a decent 2022 for Democrats.

GOOD MONDAY MORNING — Hope everyone had a nice Easter weekend! And seriously hope everyone saw the amazing UCLA-Gonzaga game. We've got the Zags finishing the undefeated job tonight but it should be a good one. 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 WEEK

The 2021 World Bank and International Monetary Fund meetings begin on Monday … Fed Chair Jerome Powell speaks at the IMF meeting on Thursday at noon … President Biden gives Easter remarks Monday and speaks on the state of vaccinations in Virginia on Tuesday. Biden will deliver remarks on his "American Jobs Plan" on Wednesday.

STOCKS RISE ON US JOBS NUMBERS — Via Reuters: "Global stock prices rose to a 1 1/2-month high on Monday after data showing a surge in U.S. employment while U.S. bonds came under pressure on worries the Fed … may bump up interest rates sooner than it has indicated.

"U.S. S&P500 futures traded 0.5% higher, maintaining their gains made during a truncated session on Friday though tech-heavy Nasdaq futures lagged behind, trading almost flat. In Asia, Japan's Nikkei rose 0.8% while MSCI's broadest index of Asia-Pacific shares outside Japan was almost flat, with China closed for Tomb-Sweeping day and Australia on Easter Monday."

BIDEN'S INFRASTRUCTURE FOCUS… INEQUALITY — Our Victoria Guida: "Republican lawmakers for years have longed to pass legislation that would rejuvenate the nation's aging infrastructure and boost economic growth. They might finally get it with … Biden as president but with a focus they never counted on: targeting inequality.

"Biden's $2 trillion plan is aimed at boosting productivity — the key to raising wages and improving American living standards — by generating jobs, and bolstering transportation, communications systems and power lines. But he wants to do that not just by investing in the regions that already have the most potential but by also directing capital into underserved areas where people suffer the most from potholes, poor public transportation and lack of internet access.

"It would represent the government's most extensive bid to spend federal dollars not just on helping poor people but on revitalizing the places where they live: housing, child care centers, water systems, roads and public transit. It's an ambitious experiment that is part of Biden's pledge to combat racial and economic inequality."

BUTTIGIEG PROMISES PLAN WILL PAY FOR ITSELF — Our Maria Carrasco: "Transportation Secretary Pete Buttigieg … Biden's American Jobs Plan would pay for itself while upgrading infrastructure from decades past. 'Right now, we're still coasting off of infrastructure choices that were made in the 1950s,' Buttigieg said on NBC's 'Meet the Press.' 'Now's our chance to make infrastructure choices for the future that are going to serve us well in the 2030s and on into the middle of the century.'

"'Across 15 years, it would raise all of the revenue needed for these once-in-a-lifetime investments,' he said. 'So by year 16, you'd actually see this package working to reduce the deficit.'"

WHY IT'S GONNA BE DEMS ONLY — Our David Cohen: "Speaking to host Chris Wallace on 'Fox News Sunday,' [Roy] Blunt said that of the $2 trillion .. only about 30 percent of it was truly dedicated to what has traditionally been called infrastructure. 'I think there's an easy win here for the White House if they would take that win, which is make this an infrastructure package, which is about 30 percent, even if you stretch the definition of infrastructure some, it's about 30 percent of the $2.25 trillion we are talking about spending"

MM SIDEBAR — I mean come on. Democrats won't settle for anything much below Biden's $2 trillion package. The idea that he will cut a couple small deals with the GOP is … absurd.

Markets

HIGH-FLYING MARKET TO TAKE CUES FROM INFRASTRUCTURE PLANS, UPCOMING EARNINGS — Reuters' Lewis Krauskopf: "Biden's massive infrastructure proposal and the upcoming corporate earnings season could offer investors fresh insight on the sustainability of a rally that has taken stocks to all-time highs. …

"Evidence of strengthening economic and corporate growth could support investor confidence after a quarter that saw solid stock gains but also a worrying surge in bond yields and pockets of market volatility, including the wild ride in GameStop shares and the meltdown of highly leveraged family office Archegos Capital. Investors also are set to get a snapshot of how companies are performing a year after the onset of the pandemic when corporate earnings kick off in earnest in mid-April."

STEP INSIDE THE WEST WING: It actually is infrastructure week ... and it will be for a while. What is the administration's plan to get its top legislative priority through Congress? Add Transition Playbook to your daily reads for details you won't find anywhere else about the state of play of the administration's top priorities and biggest challenges. Track the people, policies and power centers of the Biden administration. Subscribe today.

Fly Around

WORLD ECONOMY RISKS 'DANGEROUSLY DIVERGING' EVEN AS GROWTH BOOMS — Bloomberg's Rich Miller and Enda Curran: "The world economy is on course for its fastest growth in more than a half century this year, yet differences and deficiencies could hold it back from attaining its pre-pandemic heights any time soon.

"The U.S. is leading the charge into this week's semi-annual virtual meeting of the International Monetary Fund, pumping out trillions of dollars of budgetary stimulus and resuming its role as guardian of the global economy following President Joe Biden's defeat of 'America First' President Donald Trump. Friday brought news of the biggest month for hiring since August."

SMALL BUSINESS OWNERS FEEL WEIGHT OF PERSONAL DEBT GUARANTEES — WSJ's Ruth Simon and Heather Haddon: "Small-business owners taking on debt or signing a lease often end up providing a personal guarantee, in which they promise to be responsible for the payments if the business can't pay.

"Increased vaccination rates, the loosening of state restrictions and the $1.9 trillion stimulus package are raising hopes that these businesses can make it through. At the same time, the weight of those guarantees isn't dissipating. Many businesses have accrued debt after deferring rent, loan and other payments, and owners worry the stimulus funds will only go so far.

MINORITY ENTREPRENEURS STRUGGLED TO GET SMALL-BUSINESS RELIEF LOANS — NYT's Stacy Cowley: "Southern Bancorp is a lender serving the Arkansas and Mississippi Delta, where poverty rates are among the highest in America and decades of redlining shaped neighborhoods with little generational wealth.

"When the Paycheck Protection Program for small businesses started last April, so many of Southern Bancorp's customers didn't qualify for the relief money that the Arkansas bank's chief executive, Darrin Williams, turned to donors to raise money for $1,000 grants so it wouldn't have to turn applicants away empty-handed."

PARTS OF BIG TECH, HEALTH CARE COULD BLOOM THIS MONTH — CNBC's Stephanie Landsman: "Some struggling Big Tech names may make a comeback this month. BTIG's Julian Emanuel is targeting a corner of the market that isn't directly correlated to economically sensitive trades as the second quarter begins. 'The plays that have benefited the last several months — the reopening plays value, small caps — may in fact take a pause because they've run so far,' the firm's chief equity and derivatives strategist told CNBC's 'Trading Nation' last week."

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