GOP Looks to Retain Senate Control, but Several Races Changed/Changing

Posted on 11/05/2020 9:07 AM

GOP will cut into Dem House majority, with many races undecided | A Pelosi challenge?

 


In Today’s Updates


 

Market Focus:
* U.S. equities are surging higher again
* Investors like idea of divided government
* Federal Reserve to continue discussions about how to provide more support economy
* Bank of England unveils bigger-than-expected round of quantitative easing

* USDA announces two daily export sales
* U.S. trade deficit in goods and services was $63.9 billion in September
* FY 2020 U.S. ag exports beat forecast, imports set a new record
* World food prices rose in October
* Bird flu in Netherlands, Germany
* ANEC expects lighter corn and soybean exports out of Brazil this month

 

Policy Focus:
* McConnell signals Senate action on aid and spending bills in lame-duck session

 

U.S./China update:
* Export sales focus on corn, sorghum, soybeans and beef in latest week
* China suspends entry for most British passport holders on rise in Covid cases
* Reuters: Strong soybean exports to China drive shipments closer to Phase 1 commitment


U.S. food & beverage industry update:
* Supermarkets are accelerating shift to e-commerce
* Breakfast a problem area for the fast-food industry


Coronavirus update:
* U.S. reports over 100,000 new coronavirus cases in single day for first time
* Face masks are in short supply again

 

Politics & Elections:
* 159.8 million people voted in the elections
* U.S. election summary, White House race
* U.S. election summary, Senate
* U.S. election summary, House
* Pelosi could face renewed pressure from her party for generational change
* Exit polls: voters deeply divided over whether pandemic or economy was more impt
* Election nugget from Sabato’s Crystal Ball
* Trump improved his 2016 numbers in rural areas, confounding Democrats
* 'Sympathy wearing awfully thin with regard to U.S. pollsters'
* Regarding $ and elections, no bloom in Bloomberg dough
* Supreme Court orders Pa. Dems to respond in ballot dispute
* Trump campaign sues over counting of late votes in Georgia
* Trump chips away at Biden lead in Arizona
* Trump leads in N.C. but race my not be called for days
* Trump demands Wisconsin recount

* Biden already launches transition website
* The Gap tweeted about a half-blue, half-red hoodie in a plea for political unity


Other Items of Note:
* Sinclair Broadcast Group wrote down value of its regional sports networks
* Trump taps Betsy Weatherhead to lead next National Climate Assessment report

 


MARKET FOCUS


 

Joe Biden is nearing claiming victory in the election, holding 264 of the 270 Electoral College votes needed, according to the Associated Press. He only needs to win one more outstanding state. President Donald Trump's team have already asked for a recount in Wisconsin with his campaign attempting to stop counting in states where he is ahead, while demanding counting continues in states where he is behind. Trump needs to win every outstanding state to claim a second term. See Politics & Elections section for details.

 

     But Trump officials predict his re-election by Friday. “By the end of this week, it will be clear to the entire nation that President Trump and Vice President Pence will be elected for another four years,” said campaign adviser Jason Miller. In a call to talk numbers, the campaign said that its data operation believes it will get the votes needed to win in Pennsylvania and Arizona, and, when added to the expected Georgia and North Carolina wins, a second term will be assured.

 

     In the Senate and House races, Democrats have a reduced majority in the lower chamber and looks to have failed to gain control of the Senate.

 


 

Equities today: Asian and European stock markets were mostly higher. The Dow opened up 350 points higher and surged over 500 points higher in trading. S&P 500 also rallied sharply, after the index jumped 2.2% yesterday. Big winners include health care, technology and private equity companies.

While election outcomes are murky, one impact is not: Investors like the idea of divided government. The prospect of a Democratic president and Republican Senate, and therefore political gridlock, appeals to Wall Street. Investors are betting that higher taxes and regulatory crackdowns on health care and tech companies are unlikely, and that Joe Biden would run a more moderate, predictable administration on other policies. “It’s kind of the best of both worlds,” said Mike Novogratz, a former hedge fund manager who supports Biden. “Generally speaking, a good outcome for business,” said Willy Walker, the CEO of Walker & Dunlop, a commercial real estate company.

 

But the prospect of major unrest or a significant challenge to the results could end the equities rally.

 

     U.S. equities yesterday: U.S. stocks had their best day after a presidential election on record. The Dow finished with a gain of 367.63 points, 1.34%, at 27,847.66. The Nasdaq rose 430.21 points, 3.85%, at 11,590.78. The S&P 500 advanced 74.28 points, 2.20%, at 3,443.44.

 

On tap today:

 

     • USDA Weekly Export Sales, at 8:30 a.m. ET See update in China section.
     • U.S. jobless claims are expected to fall to 741,000 in the week ended Oct. 31 from 751,000 a week earlier. (8:30 a.m. ET) Update: Weekly initial claims for jobless benefits fell by 7,000 to a seasonally adjusted 751,000 in the week ended Oct. 31, the Labor Department said.
     • U.S. labor productivity for the third quarter is expected to increase 7.2% from the prior quarter. (8:30 a.m. ET)
     • Federal Reserve releases a policy statement at 2 p.m. ET and Chairman Jerome Powell holds a press conference at 2:30 p.m. ET.
     • Japan's household spending report for September is out at 6:30 p.m. ET.

 

Federal Reserve officials are likely to continue discussions today about how to provide more support to the economy should the recent rebound fizzle, but this week’s meeting is shaping up to be uneventful. Fed Chairman Jerome Powell will give a presser after the FOMC statement is released.

 

Bank of England announced a bigger-than-expected 150 billion pounds ($195 billion) round of quantitative easing to help the economy as the U.K. enters further Covid restrictions and the post-Brexit relationship with the EU remains uncertain. Benchmark interest rates remain unchanged at 0.1%, though the BOE is exploring sub-zero territory, and has asked British lenders about their preparedness for negative interest rates.

 

     Bank of England rates

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index has sold off sharply in the wake of the election. The other important outside market sees crude oil prices a bit weaker and trading around $39.00 a barrel. Oil market bulls have had a very good week, to suggest at least sideways and choppy price action for that market in the near term. Investors scooped up government bonds, pushing yields on the benchmark 10-year U.S. Treasury note down by their biggest margin since mid-April, further suggesting investors’ stimulus expectations have fallen — a bet that also pushed bank shares down.


     • Crude oil futures have retreated ahead of the U.S. opening bell, giving up some of their gains linked to storm-induced reductions in crude supplies. U.S. crude is trading around $38.85 per barrel while Brent crude is around $41 per barrel. Crude oil was slightly lower in Asian action, with U.S. crude down 7 cents at $38.44 per barrel and Brent crude down 7 cents at $41.16 per barrel.

 

     • USDA daily export sales announcements this morning:

        — 106,000 metric tons of sorghum for delivery to China during 2020-2021
        — 33,000 metric tons of soybean oil for delivery to India during 2020-2021

 

     • U.S. trade deficit in goods and services was $63.9 billion in September, a 4.7% fall on the previous month, which was a 14-year high. Exports, up 2.6% to $176.4 billion, were buoyed by increased food and drink sales, particularly soybeans. President Trump has made reducing the deficit, especially with China, a priority. At $11.5 billion in September, goods exports to China reached their highest level since 2018.

 

     • FY 2020 U.S. ag exports beat forecast, imports set a new record. Exports of U.S. agricultural products reached $135.9 billion in Fiscal Year (FY) 2020 with imports at $133.2 billion for a trade surplus of just $2.7 billion. USDA in August forecast FY 2020 ag exports at $135.0 billion against imports of what would have been a record $131.7 billion which would have resulted in a forecast surplus of $3.3 billion.

 

     The FY 2020 export mark is just above the $135.5 billion figure registered in FY 2019 but well short of the FY 2018 mark of $143.4 billion and even further below the FY 2014 record of $152.3 billion.

 

     What moved the export and import figures past forecast levels were September U.S. ag exports of $12.2 billion against imports of $11.0 billion for a monthly trade surplus that was at $1.3 billion.

 

     The monthly export total was the largest since November 2019 and imports were at their highest since June. U.S. agriculture registered a trade deficit six months during FY 2020, including a record of $1.13 billion in June.

 

     For FY 2021, USDA in August forecast exports to rise to $140.5 billion against imports forecast at $136 billion for a surplus of $4.5 billion.

 

     • World food prices rose in October. Food prices rose in most categories during October, with the UN Food Price Index at 100.9 for the month, up from 97.9 in September. This marked the fifth straight month the index has risen, putting prices up 3.1% for the month and 6% above year-ago levels. Only the meat price index component declined for the month while cereal prices were up 7.2%, driven by a rise in wheat as export availabilities declined and weather uncertainties raised concerns. The vegoil price index reached a nine-month high. But the index still remains well below the peak of 131.9 in 2011, keeping food supplies as a modest cost factor for food-importing countries.

 

     • Bird flu in Netherlands, Germany. Both Germany and the Netherlands have confirmed H5N8 cases of bird flu. The find in Germany was on a poultry farm in the state of Schleswig-Holstein, state officials said. The Dutch Ministry of Agriculture ordered the cull of 200,000 chickens after finding bird flu on a farm in the country, its second find in a month. The initial H5N8 find in the Netherlands was in wild fowl. Germany also has found it in wild birds in the region. The Netherlands held the top spot in the global fresh chicken export market in 2019 at $1.5 billion, accounting for nearly 22% of total fresh poultry exports. Germany was ranked fifth at $436.2 million, just behind the U.S. at $566 million, according to data extracted from the Central Intelligence Agency publication The World Factbook.

 

Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):

• ANEC expects lighter corn and soybean exports out of Brazil this month

 


POLICY FOCUS


 

McConnell signals Senate action on aid and spending bills in lame-duck session. With the Republicans likely keeping control of the Senate, barring any late changes, Senate Majority Leader Mitch McConnell (R-Ky.) said he hopes Congress can clear a Covid-19 aid package and all 12 of the outstanding fiscal 2021 appropriations bills before the end of the year. But he may not be able to sell a package beyond $500 billion. However, he said “state and local aid — a longtime Democratic demand — could be part of the legislation.”

     "Hopefully, the partisan passions that prevented us from doing another rescue package will subside with the election. And I think we need to do it and I think we need to do it before the end of the year."

 

     A post-election lame-duck session could be a short one, with emotions from the topsy-turvy elections likely meaning lawmakers will want to exit as soon as they can. One of the last things this Congress will do is dealing with a funding measure for fiscal year 2021 which began Oct. 1. Stopgap funding for FY 2021 expires Dec. 11.

 

   Spending vs GDP
 

Update on China:

  • Export sales to China of U.S. ag products focus on corn, sorghum, soybeans and beef in latest week. Export sales to China for the week ended October 29 included 2020-21 net sales of 212,327 tonnes of corn, 340,451 tonnes of sorghum, 810,710 tonnes of soybeans, and 47,286 running bales of cotton (after reductions of 38,757 running bales).

    For 2021-22, there were sales of 8,800 running bales of cotton. For 2020, there were net sales of 3,557 tonnes of pork and 10,279 tonnes of beef.

     
  • China suspends entry for most British passport holders on rise in Covid cases. Increased cases of Covid-19 in the UK have prompted China to suspend entry for most foreign passport holders residing in Britain, applying to those holding visas or residence permits issued before Nov. 3. China’s London embassy said the suspension will be “assessed in accordance with the evolving situation and any adjustment will be announced accordingly.” The country said those seeking to visit China for emergency purposes could apply for special case visas.
     
  • Strong soybean exports to China drive ag shipments closer to the Phase 1 commitment. The latest Census Bureau data indicate the U.S. exported $3.13 billion worth of ag and related products to China in September, which shatters the previous record for the month by 50% and marks the highest for any month since November 2017. August’s monthly shipments of $2.15 billion also marked a record for the month, according to a Reuters accounting.

    Soybeans were the main driver of the September shipments, with the oilseed accounting for 62% of the September shipments.

    Corn took the No. 2 spot, making up 5% of the monthly value.

    Pork’s share of the value dropped to a 19-month low of 4% in September, which compares to 25% in February, with both volume and prices sliding. However, the September figure was still a record for the month.

    Rising commodity prices have helped push the dollar tally closer to the $36.5 billion in Phase 1 purchase commitments from China for 2020. The Office of the U.S. Trade Representative recently released a report indicating China has fulfilled 71% of its Phase 1 purchasing targets through early October, though naysayers noted some of those bookings won’t ship by year-end or could be canceled or postponed.

     
  • U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.

Food and beverage industry update:

  • Supermarkets are accelerating the shift to e-commerce, devoting more of their floor space to fulfill digital orders in response to customers’ growing reliance on online shopping. In addition, many are reassessing inventory and expanding sections that have drawn more purchases in recent months, including frozen food and meat.
     
  • Breakfast is a problem area for the fast-food industry, as rising Covid cases keep many Americans at home. Link to WSJ article for details.

    Food at home

Coronavirus update:

  • Summary: Global cases of Covid-19 are at 48,175,559 with 1,226,444 deaths, according to data compiled by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The U.S. case count is at 9,488,276 with 233,734 deaths.

    Link to Covid Case Tracker

    Link to Our World in Data

     
  • U.S. reported over 100,000 new coronavirus cases in a single day for the first time, as infections rose in states across the country. The more than 102,800 new cases reported Wednesday surpassed a record of more than 99,000 set on Oct. 30, according to data compiled by Johns Hopkins University. The total number of confirmed cases in the U.S. neared 9.5 million.

    Epidemiologists and public-health researchers noted several factors, including pandemic fatigue and people attending social gatherings, are contributing to the rise in U.S. cases. The recent increases are affecting broader swaths of the U.S. than the spring and summer surges, when outbreaks were heavily concentrated in a handful of states.

     
  • Face masks are in short supply again. A surge of Covid-19 cases and stockpiling of N95 masks in much of the country have put fresh strains on the supply of critical protective gear. Many health-care facilities continue to ration and reuse masks, even as manufacturers have raised production, and some state health departments said they expect supplies to tighten further.

POLITICS & ELECTIONS


  • 159.8 million people voted in the elections.
     
  • U.S. election summary, White House race: Democrats, pollsters and forecasters began Election Night sure that Joe Biden would cruise to victory. Then he lost Florida early; hoped-for gains in places like North Carolina evaporated; and Democrats began panicking. Donald Trump seemed within sight of a remarkable comeback. But though the polls overestimated him, Biden is now ahead. He has won the crucial upper-Midwestern states of Michigan and Wisconsin and has a narrow lead in Nevada and a bigger one in Arizona. If those hold, he will win the White House. The late vote may also give him Pennsylvania, and hence a comfortable electoral-college win. But Trump claimed victory, and a “fraud” by his opponents, late Tuesday night, and began rolling out his legal challenges as Wednesday unfolded. The counting, and the contention, continue.
     
  • U.S. election summary, Senate: The next presidency hinges on the make-up of the Senate. The upper chamber confirms all federal judges and top executive-branch appointments, ratifies treaties and makes laws along with the House. Despite Democrats’ high hopes, their prospects for flipping the Senate look dim. The Democrats won two seats, in Arizona and Colorado, missed a hoped-for gain in Maine and lost a seat, as expected, in Alabama. They eked out a tight win for incumbent Michigan Sen. Gary Peters over GOP challenger John James. That leaves them 48 seats, short of a majority. Incumbent GOP Sen. Lindsey Graham of South Carolina won by 14 percentage points even though some polls showed him losing or a very close contest. The Senate’s ultimate composition might not be decided until Georgia holds run-off election(s) in January — but these too are most probably Republican holds.

    More details for Senate races of note:

         In North Carolina, Republican Sen. Thom Tillis is ahead of Democrat Cal Cunningham with all precincts reporting. But the deadline for accepting mail-in ballots is Nov. 12, making the final tally uncertain. About 117,000 voters who requested an absentee ballot haven’t voted, according to the North Carolina State Board of Elections, though that number doesn’t yet account for voters who cast their ballot on Tuesday.

         In Georgia, votes are still being counted in areas including the Atlanta suburbs which have leaned Democratic in recent elections. Republican Sen. David Perdue on Wednesday was only narrowly above the 50% threshold to avoid a runoff of his own against Democrat Jon Ossoff, making it possible that both Georgia Senate seats would remain unsettled until runoffs in early January.

         GOP Sen. Susan Collins of Maine defeated Democrat Sara Gideon in her toughest re-election race.

         Democrat Sen. Gary Peters won re-election in Michigan after defeating Republican challenger John James, a Black business executive and former combat veteran.

         In Alaska, Republican Dan Sullivan is ahead and expected to win, although the state’s schedule for counting absentee ballots could delay the result. Besides Alaska, two additional races, one in North Carolina and one in Georgia, remain uncalled.

     
  • U.S. election summary, House: Democrats in the House of Representatives lost several seats they were hoping to win Tuesday night, a blow to the party’s hopes of expanding their majority, as some were projecting Democrats to pick up as many as 15 seats. As states continue to count votes, many House races were decided on election night, showing big losses for several Democrats backed by Speaker of the House Nancy Pelosi (D-Calif.). As of Wednesday evening, Republicans had netted five House seats and could gain several more. Pelosi will keep her majority, but much reduced from 232-197. The GOP flipped two seats in South Florida amid a surge of Hispanic turnout and toppled 15-year Rep. Collin Peterson in western Minnesota. Republicans had picked up a net five seats by Wednesday afternoon They regained seats they’d lost in 2018 in Cedar Rapids, Charleston (S.C.), and Oklahoma City.

    If Biden wins, the GOP will be better poised to retake the House in 2022.

     
  • Pelosi could face renewed pressure from her party for generational change in the leadership’s top ranks. House Speaker Pelosi is facing questions about her ability to win enough votes to retain her leadership, after Democrats shrunk their House majority and some moderates in the party contemplated backing a challenger. Already, two centrist Democrats in the House say they are contacting colleagues to round up support for House Democratic Caucus Chairman Hakeem Jeffries (D-N.Y.), a top Pelosi lieutenant.
     
  • Exit polls show that voters were deeply divided over whether the pandemic or the economy was more important. Polling conducted by Edison Research for the National Election Pool found that 51% of voters favored containing the coronavirus even if it meant hurting the economy. Some 42% favored rebuilding the economy, even if it hampered efforts to slow the virus. The divide was heavily partisan. Of those who favored stopping the pandemic over restarting the economy, 80% voted for Joe Biden. But 67% who preferred opening the economy voted for President Trump.
     
  • Election nugget comes from Sabato’s Crystal Ball: “One has to go back to 1884 to find a newly elected Democratic president, Grover Cleveland, who won without his party also winning both chambers of Congress.” If Biden wins the presidency and the GOP keeps control of the Senate, as many now expect, he will face a wary chamber of Congress.
     
  • President Trump improved his 2016 numbers in rural areas, confounding Democrats. Though still undecided, the 2020 election has already shown that a conservative, populist movement driven by rural voters wasn’t a fluke of 2016 but a potentially durable bloc, the Wall Street Journal reports (link). The evidence can be seen in decisive victories for Trump in states he retained from his 2016 victory — and unexpectedly strong GOP support in states such as Iowa and Maine, which helped down-ballot races as well. In some key states, the president was able to turn out white, rural areas in higher numbers than in 2016. Republican strategists say Democrats lost ground with these households not just on policy but also culturally, citing what GOP voters consider culture wars over political speech and social issues. Republicans won enough of their re-elections to diminish any chance that Democrats could take control of the Senate and are on track to shrink House Democrats’ majority as victories in the suburbs piled up.
     
  • Sympathy is wearing awfully thin with regard to U.S. pollsters who have now been unacceptably far from the market two straight elections,” Eric Lascelles, the chief economist at RBC Global Asset Management, told the New York Times. “I’m not quite sure what we’re going to do if we literally cannot trust pollsters to be within eight points of the correct answer.”

    The polling industry faces major questions about its powers of prediction, its understanding of the electorate and the notion that people might not reveal their true intentions when contacted by pollsters. In the meantime, strategists like Ben Laidler, the head of Tower Hudson, an investment research firm, told the NYT he would take polls “with a bigger pinch of salt” in the future. He noted that political betting markets were less sure about Biden’s chances than opinion polls. Others say that indicators like Google searches and counting signs in yards could take more prominence in election models.

    NY Post cover
  • Regarding $ and elections, no bloom in Bloomberg dough. Mike Bloomberg spent $100 million on pro-Biden ads in Florida, Ohio and Texas ahead of the election — to no avail.
     
  • Supreme Court orders Pennsylvania Democrats to respond in ballot dispute. The Supreme Court ordered Pennsylvania Democrats to respond by this evening in a case challenging the state’s three-day extension for counting mail-in ballots. President Trump has moved to intervene in a lawsuit brought by Pennsylvania Republicans, arguing the state’s Democratic Party and Secretary of State violated the law by extending the time for counting mail-in ballots to Nov. 6 at 5 p.m., despite the state legislature setting the deadline as Election Day. The lawsuit takes issue with a state Supreme Court ruling that postmarked ballots be presumed to have been mailed before Nov. 3, even if not clearly postmarked to that effect.
     
  • Trump campaign sues over counting of late votes in Georgia. The Trump 2020 Campaign and the Republican Party of Georgia filed a lawsuit in the state Wednesday, alleging that officials in a Democratic-leaning county were counting ballots for the presidential race that were received after polls closed Tuesday. The Trump campaign also filed two other lawsuits — in the battlegrounds of Michigan and Pennsylvania -- over vote counting. The Fox News Decision Desk has called Michigan for Democratic nominee Joe Biden.
     
  • Trump chips away at Biden lead in Arizona. The latest update from Arizona’s most populous county shows Joe Biden's lead over President Trump further narrowing in the battleground state. As of early today, Biden led Trump in Maricopa County by 74,514 votes, almost 11,000 fewer than the previous update on Wednesday night. About 5% of the total vote remains to be counted there. Statewide, Biden leads Trump by less than three percentage points. Maricopa County’s next update will come after 9 p.m. Eastern today.
     
  • Biden closes in on Trump on Georgia. The presidential race in Georgia appeared headed for a photo finish as former Joe Biden steadily gained ground on President Trump. The victor will be awarded 16 electoral votes. Biden had begun Wednesday morning approximately 100,000 votes behind Trump, but as county elections workers around the state continued the tabulation of absentee ballots into this morning, Trump’s lead narrowed to 24,000 votes, or 0.5%.
     
  • Trump leads in North Carolina but race may not be called for eight days. North Carolina elections officials said Wednesday a final vote count might not be not be available for another 8 days, when all mail-in votes have been counted. The state board of elections said as of Tuesday evening 117,000 voters who requested mail-in ballots had yet to vote. The state will count all ballots received by Nov. 12 if they were postmarked by 5 pm Nov. 3.
     
  • Trump demands Wisconsin recount. The Trump campaign announced that it will "immediately" request a recount in Wisconsin, a crucial state for Republicans where Democratic nominee Joe Biden currently holds a razor-thin lead. "The President is well within the threshold to request a recount and we will immediately do so," campaign manager Bill Stepien said in a Wednesday statement. Biden leads Trump in the state by about 20,000 votes — 0.7% of 3.2 million ballots cast.
     
  • Biden already launches transition website. Joe Biden and Kamala Harris on Wednesday unveiled their presidential transition website, despite there being no winner of Tuesday's vote. The website, buildbackbetter.com (link), is designed to keep people informed of what Biden and Harris — if they win — will do in the weeks leading up to inauguration on Jan. 20.
     
  • The Gap tweeted about a half-blue, half-red hoodie in a plea for political unity. It didn’t go over well. Link to NYT item.

 


OTHER ITEMS OF NOTE


  • This says it all about sports: Sinclair Broadcast Group wrote down the value of its regional sports networks — which it bought from 21st Century Fox for $8.6 billion last year — by $4.2 billion.
     
  • The Trump administration named Betsy Weatherhead, a veteran scientist who believes climate change is a threat, as the head of the government’s next National Climate Assessment report.

 

Add new comment