Biden Comments on Economy, Aid, Trade Policy

Posted on 11/17/2020 8:15 AM

CFAP 2 payouts now exceed $10 billion


In Today’s Updates


Market Focus:
* Tesla's Musk's wealth grew by $15 billion after firm scored entry into S&P 500 index
* Fed’s Clarida more confident re: economic recovery with vaccines
* USDA: 195,000 metric tons of corn to Mexico during 2020-2021
* Softs futures markets had big upside days Monday
* Citibank analysts project the U.S. dollar will decline by up to 20% in 2021

* Ministers from oil-producing countries meet today
* Germany to slaughter additional birds due to avian influenza
* Beyond Meat launching new plant-based burger varieties
* Cordonnier cuts Brazilian corn and Argentine bean crop projections

* Consultancy cuts grain production and export outlooks for Ukraine

* FranceAgriMer’s outlook for soft wheat exports beyond the EU edges higher


Policy Focus:
* Biden gives initial signals on trade policy
* Biden keeps pushing for Covid aid
* Odds rising for another stop-gap spending plan
* CFAP 2 payouts over $10 billion
* Grassley on GAO report: USDA must verify farm program payments go to farmers
* Quebec to bar sales of new gasoline-powered passenger cars from 2035


U.S./China update:
* FBI: Two-year old plan to stop cyberattacks has made significant progress
* Kissinger warns Biden of U.S./China conflict
* Chinese VP calls for global solidarity and shift away from protectionism
* Coronavirus could lead to a shift in global supply chains away from China

Coronavirus update:
* Big difference in vaccines
* Rep. Cheri Bustos (D-Ill.) tests positive for Covid-19


Politics & Elections:
* Biden warns “more people may die” unless Trump co-operates with transition team
* Biden has meeting about and comments on the economy
* Some key members of Biden staff today expected today
* Pelosi asking caucus to again pick her as the top Democratic chief
* Yellen asked if she will be Biden's Treasury secretary
* Judy Shelton’s Fed nomination vote razor thin

Other Items of Note:
* Senate passes Grains Standards re-authorization
* Mark Zuckerberg and Jack Dorsey face Senate Judiciary panel today
* U.S., Mexico agree to shield against double tax




Equities today: U.S. equity futures edged lower, signaling a lower opening after Monday saw the S&P 500 gauge at its second consecutive record close on optimism about new Covid-19 vaccines. Most major Asian equity benchmarks ended the day with muted gains. Japan’s Nikkei 225 index rose 0.4%, while Hong Kong’s Hang Seng Index ticked up 0.1%. China’s Shanghai Composite Index fell 0.2%.


     U.S. equities yesterday: The Dow gained 470.63 points, 1.60%, at 29,950.44, clinching its first all-time high since February, representing the fastest rebound from a bear market low since 1991 (193 trading days). The Nasdaq moved up 94.84 points, 0.80%, at 11,924.13. The S&P 500 was up 41.76 points, 1.16%, at 3,626.91.


     Tesla shares soared 13% as the electric-car maker is set to become one of the 10 most valuable companies in the S&P 500 index on Dec. 21, after reporting five consecutive quarters of net profit.. Meanwhile, Elon Musk's wealth grew by $15 billion after Tesla finally scored an entry into the S&P 500 index. The billionaire is on track to become the world's third-richest individual.




On tap today:


     • U.S. retail sales for October are expected to increase 0.5% from the prior month. (8:30 a.m. ET)
     • U.S. import prices for October are expected to be unchanged from a month earlier. (8:30 a.m. ET)
     • U.S. industrial production for October is expected to increase 1% from a month earlier. 9:15 a.m. ET)
     • National Association of Home Builders housing market index for November is expected to hold steady at 85, unchanged from a month earlier. (10 a.m. ET)
     • European Central Bank President Christine Lagarde speaks to Bloomberg New Economy Forum at 11 a.m. ET.
     • Federal Reserve: Chairman Jerome Powell speaks to a Bay Area Council event at 1 p.m. ET; Atlanta’s Raphael Bostic, San Francisco's Mary Daly and Boston's Eric Rosengren speak at an event on racism and the economy from 1 p.m. to 3 p.m. ET; New York's John Williams moderates a discussion for the Economic Club of New York at 2 p.m. ET; and Richmond’s Thomas Barkin speaks to the Charleston, S.C., Metro Chamber of Commerce at 3 p.m. ET.
     • Japan provisional trade figures for October are out at 6:50 p.m. ET.


Fed’s Clarida more confident re: economic recovery with vaccines. Federal Reserve Vice Chairman Richard Clarida said prospects for the economic recovery were brightening due to progress in the development of vaccines to fight the Covid-19 pandemic. Clarida said his baseline forecast for 2021 always included the expectation for a vaccine, but now he feels more confident about that assessment.


Market perspectives:


     • Outside markets: The U.S. dollar index is lower again early today. The other important outside market sees crude oil prices near steady and trading around $41.30 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.89%.

     • Crude oil prices have given up gains linked to optimism about a Covid vaccine. U.S. crude was trading under $41.25 per barrel and Brent under $43.75 per barrel. Futures were firmer in Asian activity with U.S. crude trading at $41.43 per barrel and Brent crude at $43.82 per barrel.

     • USDA daily export sale: 195,000 metric tons of corn for delivery to Mexico during the 2020-2021 marketing year.


     • The “softs” futures markets (coffee, cocoa, sugar, orange juice and cotton) all had big upside days Monday, with most of those markets hitting multi-month highs.


     • Citibank analysts project the U.S. dollar will decline by up to 20% in 2021, citing widespread distribution of vaccines to combat the coronavirus pandemic and ongoing monetary easing. “When viable, widely distributed vaccines hit the market, we believe that this will catalyze the next leg lower in the structural USD downtrend we expect,” the U.S. bank said in a research note. “Given this set-up, there is the potential for the dollar’s losses to be front-loaded, with the USD potentially falling by as much as 20% in 2021.”


     • Ministers from oil-producing countries will meet today, amid an uncertain outlook for crude markets. Members of the Organization of the Petroleum Exporting Countries and allies slashed production by a historic 9.7 million barrels in May to boost oil prices, as Covid-19 shredded demand. Producers planned to increase the flow gradually as cars returned to roads and more planes took flight —demand has recovered somewhat from the depths of the second quarter. However, a surge in covid cases is again tempering oil demand. Last week OPEC lowered its expectations for oil demand in 2020 by 9.8m million barrels a day, to about 10% below the level last year. Today’s meeting of the Joint Ministerial Monitoring Committee cannot adjust OPEC’s targets for production, but it can make recommendations ahead of a bigger meeting at the end of the month.


     • Germany to slaughter additional birds due to avian influenza. Discovery of an H5N8 highly pathogenic avian influenza (HPAI) on another German farm will see the country slaughter up to 70,000 birds as a response. The find on a farm near Rostock in the eastern state of Mecklenburg-Vorpommern will mean about 4,500 chickens will be culled at the farm, but the 70,000 figure comes as the farm has several other locations. Another 16,100 turkeys were culled in the state earlier this week and Denmark ordered the cull of 25,000 chickens after a find on a farm there. Other detections have been found in France, the Netherlands and Britain. This will continue to build trade disruptions for poultry exports in these countries to destinations outside the European Union (EU).


     • Beyond Meat launching new plant-based burger varieties. Beyond Meat on Monday (Nov. 16) unveiled two new versions of its plant-based Beyond Burger that will be available nationwide by 2021. The new and improved Beyond 35 burger contains 35% less total fat and 35% less saturated fat than traditional 80/20 ground beef, which amounts to about 5 grams of saturated fat. Meanwhile, the new Beyond 55 burger, represents the plant-based producer’s vision for a low-fat burger, as it contains 35% less total fat than 80/20 ground beef, but also has 55% less saturated fat, amounting to about 3 grams of saturated fat.


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

• Cordonnier cuts Brazilian corn and Argentine bean crop projections
• Consultancy cuts grain production and export outlooks for Ukraine
• FranceAgriMer’s outlook for soft wheat exports beyond the EU edges higher




Biden gives some initial signals on his trade policy. Joe Biden will provide more detail on his trade policy once he assume office, but on Monday he said he told world leaders that labor unions and environmentalists will be “at the table” when he's negotiating any new trade deals. Biden also assured those he talked with that he won’t pursue a “punitive” trade policy but that he’s going to “invest in American workers to make them more competitive.”


     Asked to comment about the Sunday-signed Regional Comprehensive Economic Partnership (RCEP), Biden said it was premature to discuss the RCEP. However, he noted “We need to be aligned with the other democracies … so that we can set the rules of the road instead of having China and others dictate the outcome.” But he declined to say whether he would join a new China-backed Asian trade pact signed on Sunday. Biden said he could not yet discuss U.S. trade policy because he had not taken office “and there’s only one president at a time.” Biden told reporters hat he had a detailed trade plan he would discuss on Jan. 21, 2021, the day after he is due to be sworn into office.


     Asked why he would not comment on plans for trade agreements when he has said he would rejoin the World Health Organization and the Paris Climate Accords, Biden said: “You’re asking me about whether I’d join a specific proposal, the details of which are now only being negotiated among those nations. It would require a negotiation.”


Biden keeps pushing for Covid aid. President-elect Joe Biden Monday kept up a push for lawmakers to agree on a Covid aid/stimulus plan, with an urging that Republicans need to come up to Democrats’ aid level of at least $2.4 trillion. "It has all the money and capacity to take care of each of those things, now," Biden told reporters. "And the idea the president is still playing golf and not doing anything about it is beyond my comprehension.”


     As for Republicans, he said “at least … a dozen [Senate Republicans] have the courage to stand up and save lives and jobs now."


     Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) made clear Biden’s push for a large aid bill isn’t coming soon. “We’re not going to pass a gigantic measure right now -- and the question is will we pass it later? Doubtful,” he said, hours after Biden spoke. “Start with the skinny bill,” he said, referring to a roughly $500 billion GOP proposal.


     At least some Covid-19 assistance could potentially be attached to a spending bill that will be needed to avoid the federal government shutting down after Dec. 11 -- when current funding runs out. Sen. Roy Blunt (R-Mo.), a member of McConnell’s leadership team, said yesterday the “most critical” aspects of Covid-19 relief could be added to that omnibus package. Even so, there’s bipartisan opposition to attaching a whole stimulus package to the omnibus bill or any stopgap spending measure, according to Sen. Roger Wicker (R-Miss.).


     Most observers predict any extensive Covid aid plan will be pushed into 2021, especially if lawmakers cannot come to terms on a broad spending plan for the rest of Fiscal Year (FY) 2021.


Odds rising for another stop-gap spending plan. While Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) said Monday that after discussions with House Speaker Nancy Pelosi (D-Calif.) that the two sides are “90% there” on fiscal year (FY) 2021 spending, expectations are rising that another short-term spending plan will be the result, keeping the government operating through February to early March. The current stop-gap spending measure runs through Dec. 11.


     The effort would also likely include some form of Covid-19 aid, though more limited than if a stand-alone measure were able to be agreed to. T


     Also factoring into the situation is President Donald Trump and whether he would accept a major appropriations package or favor another extension keeping the government operating for the most part at FY 2020 levels.


CFAP 2 payouts over $10 billion. Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) now total $10.08 billion as of Nov. 15 with 616,103 applications approved.


     Acreage-based payments account for the largest share at $4.99 billion, followed by livestock ($2.74 billion), sales commodities ($1.34 billion), dairy ($980.8 million) and eggs/broilers ($28.3 million).


     Payments for corn ($2.76 billion), cattle ($2.21 billion), sales commodities ($1.27 billion) and soybeans ($10.6 billion) are at $1 billion or more, followed by milk ($980.8 million), wheat ($550.0 million), hogs/pigs ($459.0 million) and upland cotton ($229.2 million).


     By state, Iowa still leads at $953 million, with Nebraska at $687.7 million), Minnesota at $665.5 million, Illinois at $637.8 million, California at $618.2 million, Kansas at $526.3 million, Texas at $482.3 million, South Dakota at $462.9 million, Wisconsin at $441.4 million and North Dakota rounding out the top 10 at $370.2 million.


    Signup for the effort continues through Dec.11 and USDA continues to solicit producer enrollments.


     Payments under the CFAP 1 effort stand at $10.42 billion with USDA seeking to wind that program down, calling on those producers who have not submitted requested forms to so by Nov. 20.


     CFAP 10


Grassley says GAO report means USDA needs to do more on verifying farm program payments go to farmers. A Government Accountability Office (GAO) report (link) on USDA farm program payments shows that while USDA has improved its compliance reviews on eligibility for farm program payments, more oversight is still needed.


     Sen. Chuck Grassley (R-Iowa), long backing tightening farm program payment rules to make sure those dollars go only to producers that have “dirt under their nails,” requested the review and said it shows that there needs to be more done on that front. “Congress must fix this broken system in the next Farm Bill,” Grassley said. “I look forward to continuing to work with the USDA as they address much-needed changes to FSA office operations to implement these recommendations.”


     GAO said that the issues are focused mostly on state FSA offices, pointing out that there no systematic monitoring of performance compliance reviews.

     The report said that 19 of the top 20 farms that received payments in 2016 and 2017 are in the south.


     GAO made an additional five recommendations for USDA and FSA to implement so that only those actively engaged in farming are utilizing the payments and the program is used for its original purpose. This will keep the matter as an issue as the next farm bill is developed, with that process expected to get underway in 2021.


Quebec to bar sales of new gasoline-powered passenger cars from 2035. Quebec is following the lead of California and other states in announcing a ban on the sale of new gasoline-powered passenger cars from 2035. British Columbia has already announced it will phase-out fuel-powered cars and trucks over 20 years, with a total ban on sales or leases in 2040.


     The province aims to have 1.5 million electric vehicles on roads by 2030 as part of a C$6.7 billion ($5.1 billion) five-year plan to reduce its greenhouse gas emissions by 37.4%. The provincial government also said it would push to have 100% of its fleet of cars, vans and SUVs and 25% of its pickups to be electric by 2030.


     The province said they would renew electronic vehicle and charging station rebates for citizens that provide up to $6,100 on the purchase or lease of a new electronic vehicle to individuals, businesses, organizations and Quebec municipalities.


     The Quebec action was criticized by the Canadian Vehicle Manufacturers’ Association, with its head Brian Kingston tweeting, “Consumers need more support to buy new (zero-emission vehicles) ZEVs, not bans on internal combustion vehicles.”


     The orders thus far do not ban the use of non-electric vehicles, meaning the downturn in fuel demand may not be as dramatic as feared. Still, it will reduce overall fuel demand and will also potentially reduce overall miles driven unless ranges on electronic vehicles increase significantly over the next decade. And the increase will also put more demand on electric grids and charging infrastructure.


Update on China:

  • The FBI said the two-year old China Initiative intended to stop cyberattacks has made significant progress. FBI Director Christopher Wray noted the agency "opens a new China-related counterintelligence case nearly every 10 hours and we'll continue our aggressive efforts to counter China's criminal activity."
  • Kissinger warns Biden of U.S./China conflict. Former U.S. Secretary of State Henry Kissinger said the incoming Biden administration should move quickly to restore communication lines with China that frayed during the Trump years or risk a crisis that could escalate into military conflict. Absent any cooperative action, “the world will slide into a catastrophe comparable to World War I,” he said at the opening session of the Bloomberg New Economy Forum. He said military technologies available today would make such a crisis “even more difficu lt to control” than those of earlier eras.
  • Chinese Vice President Wang Qishan called for global solidarity and a shift away from protectionism as Beijing prepares for the Biden administration. “Countries must rise above exclusive blocs and reject the ‘zero-sum’ mentality,” Wang said at the same Bloomberg forum. “We should build an open world economy that works for all.”
  • Coronavirus could lead to a shift in global supply chains away from China, Nobel Prize-winning economist Esther Duflo said Monday. Speaking at the CFA Institute's European Investment Conference, Duflo said: "The dominance of China means there is a fragility in supply chains that was evident at the beginning of the pandemic." That offers a chance for other countries to benefit from businesses diversifying their suppliers, she said. However, such changes will require much work from industry associations and governments, she said.
  • U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.

Coronavirus update:

  • Summary: Global cases of Covid-19 are at 55,108,151 with 1,328,685 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is 11,206,054 with 247,229 deaths.

    Link to Covid Case Tracker

    Link to Our World in Data

    Covid new cases

  • Big difference in vaccines. Moderna's candidate remains stable at 2° to 8°C (36° to 46°F), the temperature of a standard home or medical refrigerator, for 30 days, which could help concerns expressed over storage and distribution. Pfizer's vaccine must be stored frozen at negative 94 degrees Fahrenheit (-70° C), most likely needing dry ice (-109 degrees Fahrenheit) for shipment.
  • Rep. Cheri Bustos (D-Ill.) has tested positive for Covid-19. The House Ag member wrote on Twitter that she’s “experiencing mild symptoms” and will work remotely from her home in Illinois until she’s cleared by her doctor.


  • Joe Biden warned that “more people may die” unless President Donald Trump co-operates with his transition team — not least in co-ordinating America’s vaccination program.
  • Biden has meeting about and comments on the economy. Biden met with the chief executives of General Motors and Microsoft, as well as key labor leaders, yesterday before speaking in detail about the economy for the first time since winning the presidential election. “We’re ready to come together. The unity was outstanding,” Biden said of the virtual meeting, which he attended from Wilmington, Delaware.

    Biden added that “on the call, I made it clear to the corporate leaders. I said, ‘I want you to know I’m a union guy. Unions are going to have increased power.’ They just nodded, they understand. It’s not anti-business. It’s about economic growth, creating good-paying jobs.”

    The Biden administration’s economic agenda is based on the “Build Back Better” proposals offered during the campaign. He said no government contract will be given to companies that don’t build their products in the U.S.

    Biden laid out a $700 billion “Buy American” manufacturing plan that would include $400 billion in additional federal purchases of products made by American workers over the course of his first term as well as $300 billion for federally funded research and development. In all, the Biden campaign estimates that its proposals on manufacturing and buying American will create 5 million jobs.

    He has also said it is a moral and economic necessity for the government to better support those who care for children and the elderly, proposing spending $775 billion over 10 years that would add jobs and boost pay for caregivers, eliminate the waiting list for home and community care under Medicaid and provide preschool for all 3- and 4-year-olds.

    Biden avoided committing to more lockdowns to control the coronavirus pandemic, saying when pressed by a reporter that the necessity for more stay-at-home orders "depends on the state."

  • Biden is planning to announce some key members of his staff today: Rep. Cedric Richmond of Louisiana to oversee public outreach; Jen O’Malley Dillon, who managed Biden’s presidential campaign, as a deputy chief of staff; and Steve Ricchetti, a longtime confidant, as a counselor to the president.
  • Pelosi is asking the caucus to again pick her as the top Democratic chief, and its nominee for speaker. But the official vote for the speaker position occurs on the chamber floor in January, with members of both parties participating.

    At least 10 moderates who opposed Rep. Nancy Pelosi (D-Calif.) as House Speaker in 2019 were re-elected: Jared Golden of Maine, Mikie Sherrill of New Jersey, Abigail Spanberger of Virginia, Jason Crow of Colorado, Ron Kind of Wisconsin, Conor Lamb of Pennsylvania, Kurt Schrader of Oregon, Kathleen Rice of New York, Jim Cooper of Tennessee and Elissa Slotkin of Michigan. Another two, Anthony Brindisi of New York and Ben McAdams of Utah, are in uncalled races. Pelosi has already pledged to serve only through 2022.

    House Democrats this week will elect most of their leadership team for the 117th Congress, making choices in contested races that will determine the ideological, racial and gender balance of caucus decision-makers. The Democratic Caucus will meet virtually Wednesday and Thursday to vote for all leadership positions, except Democratic Congressional Campaign Committee chair and freshman leadership representative. The DCCC election will occur the week of Nov. 30. The freshman class has yet to set a date for its election. This week’s elections include three contested races: assistant speaker, caucus vice chair and caucus leadership representative, a position reserved for members who’ve served five terms or less.

  • Former Federal Reserve Chair Janet Yellen did not report she is in the running to become the next Treasury secretary, while voicing support for policies in tune with the man who’ll make that decision, President-elect Joe Biden. “I don’t have anything for you on that I’m sorry,” Yellen said yesterday when asked at Bloomberg's New Economy Forum about the reports. Asked if she thought she’d be good at the job, she said, “It’s for other people to decide, I think.” Bloomberg News reported on Nov. 13 that Yellen is under consideration to be Biden’s Treasury secretary, along with several others.

         Participating in a panel discussion at the virtual forum, Yellen said it was critical for U.S. lawmakers to provide further help to an economy recovering from a pandemic-induced nose-dive because the Fed has limited monetary tools left after pushing interest rates to near zero.

  • Judy Shelton’s Fed nomination vote razor thin. President Trump’s controversial pick for the central bank faced new opposition, as Sen. Lamar Alexander, Republican of Tennessee, said he would vote against Shelton’s nomination. A confirmation vote may come down to a tiebreaker decided by Vice President Mike Pence.

    Alexander joins Sens. Susan Collins (R-Maine) and Mitt Romney (R-Utah), who said they would vote ‘no’ over the summer. Democrats are also expected to oppose Shelton’s nomination, and Republicans hold a 53-to-47 majority in the Senate. It is unclear whether Pence will have to break a tie as a spokesman for Alexander said he will not be in Washington this week because of family matters, so he won’t be present to vote on the nomination if it occurs this week.

    But Sen. Rick Scott (R-Fla.), who is expected to support Shelton, will be in quarantine this week, according to spokesman Chris Hartline, after coming into contact with someone Friday night in Naples, Fla., who later tested positive for the virus. If Scott and Alexander both miss the vote, it could come down to a 49-to-49 tie if Vice President-elect Kamala Harris votes. If that occurs, Pence would be needed to break the tie.

    Should the vote drag into next month, incoming Sen. Mark Kelly (D-Ariz.) will be seated, which would lower Shelton’s chances.




  • Senate passes Grains Standards re-authorization. Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) announced Monday that the Senate has passed the bipartisan U.S. Grain Standards Reauthorization Act of 2020. “The Senate has unanimously approved the Grain Standards Reauthorization Act, which will allow America to continue fostering a healthy domestic grain market and positive relationships with our trading partners,” said Roberts. It authorizes $23 million per year, through fiscal 2025, to carry out operations under the act, according to a summary of the legislation (link). Now it’s on to the House, where action is needed before a temporary stopgap measure expires on Dec. 11.

    The Senate measure includes several improvements that promote increased data and information-sharing to benefit the system and its users, including:
       * Requiring delegated state agencies to notify users of Official inspection or weighing services at least 72 hours in advance of any intent to discontinue such services;
       • Ensuring FGIS user fees are directed solely to inspection and weighing services;
       • Reporting requests for waivers, exceptions and other specific services received and granted by FGIS; and
      • Directing FGIS to complete a comprehensive review of the current boundaries for the officially designated grain inspection agencies in the domestic marketplace.

  • Mark Zuckerberg and Jack Dorsey, the bosses of Facebook and Twitter, respectively, face the Senate Judiciary Committee today. Panel members will press the tech officials on "Censorship, Suppression, and the 2020 Election" in what's likely to be another multi-hour hearing of grievances. The last hearing, by the Senate Commerce Committee, was about reforming Section 230 of the Communications Decency Act, but the pressing policy issue barely came up and morphed into ongoing complaints about bias on the platforms. It's the first grilling of social media leaders since the election.
  • U.S., Mexico agree to shield against double tax. The U.S. and Mexico have renewed a joint effort to prevent American taxpayers from getting hit with taxes twice on manufacturing and assembly functions in Mexico. The deal, announced today, includes a mechanism to address outstanding accounts that both Washington and Mexico City authorities agree is inconsistent with the transfer pricing profile of the Mexican entity.


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