Dow gave back 31, advancers over decliners 2-1 & NAZ added 36. The MLP index went up 1+ to the 169s & the REIT index was fractionally higher to 410. Junk bond funds inched higher & Treasuries rose in heavy demand. Oil recovered 2+ to 61 & gold climbed 15 to 1744.
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Dems will be able to pass Pres Biden's $2.2T spending bill with a simple majority vote due to a ruling by the Senate parliamentarian, according to Senate Majority Leader Chuck Schumer. That means Dems will need just 50 votes, with VP Kamala breaking the tie, avoiding the need for 60 votes to break a filibuster & allowing passage without a single Rep vote. The ruling effectively gives Dems an opportunity they might not have otherwise had to use the special reconciliation procedure on the bill. Schumer said that the Senate Parliamentarian would allow a revised budget resolution to contain reconciliation instructions pursuant to a little-known workaround. “While no decisions have been made on a legislative path forward using Section 304 and some parameters still need to be worked out, the Parliamentarian’s opinion is an important step forward that this key pathway is available to Democrats if needed,” Schumer added. Generally, the fast-track process is only allowed to be used on a spending bill once per fiscal year. However, the Senate Parliamentarian was asked whether Dems could use Section 304 of the Congressional Budget Act of 1974, as Schumer noted, to use it again. The Parliamentarian’s interpretation of Section 304 allows Dems to modify the budget resolution for the current fiscal year to potentially include instructions for another piece of legislation.
Ruling opens door for Dems to pass $2T Biden bill with 50 votes, without GOP
Sen Joe Manchin said that he does not support Pres Biden's proposed tax increases on corps as part of a nearly $2.3T spending proposal, potentially dealing a fatal blow to a key revenue raiser included in the infrastructure initiative. Biden's plan would raise the corp tax rate to 28% from 21% & increase the global minimum tax on US companies to 21% from about 13%. The White House said the tax increases would pay for the proposed investments in the nation's roads & bridges, transit systems, schools & hospitals over the course of 15 years. But Manchin — a moderate Dem who has become one of the most powerful members of the 50-50 Senate — said that 28% is too high & could hurt American competitiveness. He suggested the package could be paid for by boosting the corp rate to 25% & closing tax loopholes used by wealthy Americans to dodge taxes. "As this bill exists today, it needs to be changed," he said. "Bottom line is, that's what legislation is all about. This bill will not be in the same form you've seen introduced or seen people talking about." Reps have widely rejected the sweeping economic package, meaning that Dems will almost certainly have to pass the measure via budget reconciliation, the obscure Senate rule the party used last month to approve Biden's $1.9T American Rescue Plan without a single GOP vote. With narrow majorities in the House & Senate, Dems will need to secure the support of almost every member in their party to muscle through the package. "If I don't vote to get on it, then it's not going anywhere, so we're going to have some leverage here," Manchin added. "It's more than just me. There's six or seven other Democrats who feel very strongly about this. We have to be competitive, and we’re not going to throw caution to the wind.”
Key Democratic senator rejects Biden tax hike to finance $2T spending plan
Consumers across the globe spent $900B more at online retailers in 2020 compared with the prior 2-year trend, according to a report by the Mastercard Economics Institute. Shoppers are heading back to restaurants & returning to stores to buy clothes & shoes in person. Yet they will continue to stock their fridges & hunt for good deals online — a sticky habit developed during the pandemic. Nearly every retailer's online sales jumped as shoppers were stuck at home. As consumers picked up online purchases in the parking lot & got packages or takeout dropped at their doorsteps, e-commerce made up about $1 out of every $5 spent on retail globally, an increase from about $1 out of every $7 spent in 2019. Mastercard chief economist Bricklin Dwyer said about 20-30% of the $900B in gains will continue into 2021 & next few years. However, the long-term e-commerce gains will be uneven & will depend on what a retailer sells, how they adapted their business model & how consumers prefer to shop. For some merchandise, such as clothing, shoppers may prefer to go back to brick-&-mortar stores where they can try on an outfit before buying it. In certain retail categories, such as electronics, online purchases already drove a larger share of overall sales, so there was less room to grow. Grocery & discount stores will see the most dramatic & lasting shift to e-commerce. Grocers will likely retain about 70-80% of the digital sales gains that they saw during the peak of the pandemic & discount stores will retain about 40-50% of them. For both sectors, online sales made up only a single-digit share of overall sales before the pandemic — creating an opportunity for more noticeable gains. Clothing stores, restaurants & sporting/toy stores saw the biggest initial spike during the pandemic, however, but only kept 10-20% of that peak in sales. Electronics & department stores had the highest penetration of online sales before the pandemic, with e-commerce making up about 55-60% & 40-50% of their total sales, respectively. For the 2 sectors, their expected permanent shift will be around 20-30% of their peak jumps. Dwyer said grocers face unique hurdles — even as more consumers shop online for produce, meats & other ingredients. Only about 10% of overall grocery spending is thru e-commerce, he added. “You have to trust someone else to pick your peaches,” he said. “You have to have trust for someone else to deliver your goods and still have them good when they arrive. So that really is some of those barriers that we’re crossing.”
The fate of the new spending bill is far from certain. Even if the Dems are allowed to squeak by with the narrow margin iin the Senate, the 50th vote looks to be a no. Getting little attention, the bill in the House nay not be able to pass with the narrow & fragile margin the Dems have. While haggling goes on, the economic recovery is fairly strong.
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