Equities Plunge on U.K. Covid News | Congress to Vote Today on Aid, Spending Bills

Posted on 12/21/2020 6:34 AM

Food, ag workers next in line for vaccines


In Today’s Updates


Market Focus:
• Equities plunge by worries over new viral Covid strain in the United
* British pound craters against U.S. dollar
• Oil prices retreat amid expectations of fresh restrictions on European travel, transport
• Iraq devalues its currency by one-fifth
• Rains to continue across Brazil, hotter and drier in Argentina

• Black Sea wheat prices rising

• Ukraine cuts corn export forecast

• Russia to tax soybean exports, too


Policy Focus:
• Ag, food aid, omnibus spending package to be cleared today by Congress
• WRDA included in omnibus spending package


U.S./China update:
• Trump suggests China's to blame for cyberattack in apparent contradiction to Pompeo
• Chinese expert calls for more investigation into ‘environmental spread’ of Covid-19
• China’s hog herd continues to expand.


Trade Policy:
• Sen. Portman endorses nomination of Katherine Tai to be USTR
* Republicans, Dems give trade policy advice to Tai


Food & beverage industry update:
• Food, ag workers next in line for vaccines
• Eat Just is one of several startups producing animal protein

Coronavirus update:
• U.K: New variant of coronavirus is 70% more transmissible than original
• FDA issues emergency use authorization for Covid-19 vaccine developed by Moderna
• How many Americans will take the vaccine?  
• President-elect Joe Biden will receive Covid shot in
• Biden's surgeon general-elect: vaccine to general public mid-summer, early fall 2021


Politics & Elections:
• House chamber in new Congress
• Update on two Jan. 5 Georgia runoff races that will decide control of Senate
• Senate confirms TVA nominees
• Senate confirms Chuck Stones to  Federal Ag Mortgage Corporation board of directors

Other Items of Note:
WSJ: At least 24 U.S. groups installed software w/malicious code by Russian hackers

• A ‘kiss’ from Jupiter and Saturn



Equities today: Dow futures are forecasting a huge plunge, pressured by worries over a new viral Covid strain in the United Kingdom — see details below. The U.K. has been plunged into chaos after the government revealed a new strain of the coronavirus is "out of control." Authorities effectively locked down the southeast of the country including London, restricting travel into and out of the region. Tesla first trades as a part of the S&P this morning.


     U.S. equities Friday: The Dow finished down 124.32 points, 0.41%, at 30,179.05. The Nasdaq declined 9.11 points, 0.07%, at 12,755.64. The S&P 500 was down 13.07 points, 0.35%, at 3,709.41.


     For the week, the major averages eked out gains, with the Dow adding 0.4%, the S&P 500 advancing 1.3% and Nasdaq outperforming with a 3.1% gain for the week.


     The S&P 500 has scored a near 15% increase for 2020, and many analysts expect double-digit gains again in 2021. Strategists in CNBC’s survey expect an average 9.5% rise for the S&P 500.


On tap today:


     • Chicago Fed National Activity Index, which provides a snapshot of national economic activity and inflation pressures, is due at 8:30 a.m. ET.
    • USDA export inspections, 11 a.m. ET.


Market perspectives:


     • Outside markets: The U.S. dollar index is sharply higher today on safe-haven demand and a rebound after hitting a 2.5-year low last week. February Nymex crude oil futures prices are sharply lower and trading around $47.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.91%.


     • Pressure on crude oil futures has built ahead of the U.S. trading start as Covid concerns continue to raise worries about demand. U.S. crude has fallen to around $47.40 per barrel and Brent to around $50.45 per barrel. Crude prices were under pressure in Asian action, with U.S. crude down $1.456 at $47.78 per barrel while Brent crude fell $1.63 at $50.63 per barrel.

     • British pound is on course for its steepest one-day fall against the U.S. dollar since the worst of March’s market rout as the continuing failure to arrive at a post-Brexit trade agreement and new measures in the U.K. to curtail the spread of Covid-19 weighed on British assets.

     • Iraq devalued its currency by one-fifth because of the economic slump caused by the collapse of the oil price. The central bank announced that it would pay the Ministry of Finance 1,450 dinar per dollar, up from 1,182 dinar. Iraq is OPEC’s second-largest crude-oil producer; the oil-price crash has slashed government revenues in half.


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

Rains to continue across Brazil, hotter and drier in Argentina
• Black Sea wheat prices rising
• Ukraine cuts corn export forecast
• Russia to tax soybean exports, too




—  Ag and food aid provisions in latest Covid aid package, and omnibus spending plan, expected to be approved today. The aid to producers and to nutrition beneficiaries is split equally, with $13 billion for producer aid and $13 billion for food and nutrition benefits. The bill provides a 15% SNAP (food stamp) increase for six months rather than the three months that the bipartisan Senate bill had proposed. Sources say Senate Democrats politically spun the food aid funding issue when that issue had been agreed to for days.


     Link to ag producer aid in the package and link to The Week Ahead which also highlighted the provisions.


     The agreement provides a $600 direct check to many Americans, $300 a week in enhanced federal unemployment benefits, and aid for schools, vaccine distribution and small businesses. The direct checks are expected to be $600 per adult and $600 per child, with the amounts decreasing for individuals with more than $75,000 in income and $150,000 for couples. President Trump had pushed for including direct checks in the legislation. Dependents over the age of 16 wouldn’t qualify, just as in the first round of stimulus payments.


     Roughly $280 billion would go toward the Paycheck Protection Program, the bulk of the $325 billion the bill puts toward small businesses. Theater operators and owners of small performance venues would be eligible for $15 billion in grants, and the bill provides $15 billion for airline payroll support. Schools would receive $82 billion under the agreement, and $10 billion would go toward child care.


     Other provisions: The deal includes $25 billion in rental assistance, extends a moratorium on evictions, and as noted, approves $13 billion in funds for food-stamp and child-nutrition benefits — the deal also excludes unemployment benefits from counting as income in SNAP eligibility and puts $400 million into the Emergency Food Assistance Program, which will help food banks meet surging demand. The package includes $7 billion to expand broadband access. And lawmakers agreed to increase the amount of money aimed at combating the virus, adding $30 billion for the procurement and distribution of a vaccine, as well as $22 billion for testing and tracing. Lawmakers also included $1.8 billion in tax credits for businesses to provide paid leave.


    The language will increase the tax deduction for business meals from 50% to 100%. President Donald Trump made the provision a priority, while congressional Democrats opposed it as a “three-martini lunch.” Democratic leaders agreed to the provision in exchange for Republicans agreeing to expand tax credits for low-income families and the working poor in the final package.


     The agreement would extend a tax credit for retaining employees and make it available to PPP recipients, and includes a number of other tax provisions, including extending tax credits for wind and solar projects as part of a broader package of tax incentives that will be attached to the government funding bill. The extensions include:


    • A $1.01 a gallon credit for the production of second generation biofuels would be extended through 2021;

    • A $0.50 per-gallon excise tax credit credit or payment for alternative fuel and $0.50 credit for alternative fuel mixtures would also be extended through 2021;

    • A credit for the purchase of qualified fuel cell vehicle would be extended through 2021;

    • A credit for the sequestration of carbon dioxide would be extended for two years to 2025;

    • A credit for offshore wind would be extended through 2025;

    • A 10% credit for two-wheeled plug-in electric scooters would be extended through 2021;

    • Investment tax credit for solar and fuel cell property would be extended at current level for for projects that begin construction by the end of 2022; and

    • The production tax credit for wind and other renewable sources would be extended at current levels for one year.


     Besides funding for schools and transit agencies, the current agreement extends the deadline for using $150 billion in aid for state and local governments approved earlier this year.


     The final package includes a bipartisan agreement released earlier this month to prevent patients from receiving surprise medical bills, including from air ambulance rides.


    WRDA also included. The broad bipartisan Water Resources Development Act (WRDA) is part of the year-end omnibus package that lawmakers have finalized. The compromise would allow access to up to $500 million for appropriations to the Army Corps from the Harbor Maintenance Trust Fund for the first year, gradually increasing that amount over the next decade for such projects to give the agency adequate time to draw down the $10 billion trust fund balance.


     Next steps: linkage and passage. Congress passed a 24-hour extension of government funding Sunday evening, setting up votes on the relief agreement and a broader spending bill for today. The aid package is tied to a roughly $1.4 trillion annual spending package, and Congress has passed a series of temporary spending bills in recent days to keep the government funded while it finished the negotiations.



Trump suggests China's to blame for cyberattack in apparent contradiction to Pompeo. Secretary of State Mike Pompeo said that while the United States is still unpacking the extent of a massive cyberattack, Russia is “pretty clearly” the responsible party. But President Trump said China could be to blame. “I can’t say much more, as we’re still unpacking precisely what it is, and I’m sure some of it will remain classified,” Pompeo said Friday on the Mark Levin Show. “But suffice it to say, there was a significant effort to use a piece of third-party software to essentially embed code inside of U.S. government systems, and it now appears systems of private companies and companies and governments across the world as well,” he added. Trump said Saturday, however, that China could have been the perpetrator, apparently in contrast to Pompeo's claim. "The Cyber Hack is far greater in the Fake News Media than in actuality. I have been fully briefed and everything is well under control. Russia, Russia, Russia is the priority chant when anything happens because Lamestream is, for mostly financial reasons, petrified of ... discussing the possibility that it may be China (it may!). There could also have been a hit on our ridiculous voting machines during the election, which is now obvious that I won big, making it an even more corrupted embarrassment for the USA," Trump wrote on Twitter.


     The Cybersecurity and Infrastructure Security Agency said last Thursday that the SolarWinds hack was more massive than initially presumed. The Department of Homeland Security said it “poses a grave risk to the Federal Government and state, local, tribal, and territorial governments as well as critical infrastructure entities and other private sector organizations.” The Office of the Director of National Intelligence, CISA, and the FBI branded the cyberattack as “significant and ongoing.” The agencies said in a joint statement that while they “continue to work to understand the full extent of this campaign, we know this compromise has affected networks within the federal government.”


— Coronavirus: Chinese expert calls for more investigation into ‘environmental spread’ of Covid-19. Questions of whether disease can be transmitted via food packaging and other surfaces ‘require us to find patterns and study preventive measures’, Zhong Nanshan says. But Hong Kong professor says there is little evidence to suggest the virus is spread via cold chain products. Link for details via South China Morning Post.


— China’s hog herd continues to expand. China’s pig herd was nearly 30% larger than year-ago in November, according to the country’s ag ministry. The Chinese sow herd expanded more than 31%. The country continues to rapidly expand its hog herd after the African swine fever outbreak cut it roughly in half, though there are questions about the quality of the herd amid the quick expansion.


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




— Sen. Rob Portman (R-Ohio) is one of the first Republicans to publicly endorse the nomination of Katherine Tai to be USTR, calling her experience as the top House Ways and Means trade lawyer good background for the Cabinet post. “I’m glad that Katherine Tai is the likely nominee,” Portman said during a discussion with other former USTRs hosted by the Center for Strategic and International Studies. “I think that will help in terms of moving a trade agenda forward vis-à-vis Congress because she, obviously, knows how we operate, understands [trade promotion authority] well.”


     Trade agenda from a GOP viewpoint. Portman, who served as USTR from 2005 to 2006 in the George W. Bush administration, urged Biden and Tai to push for renewal of TPA, which expires on July 1, so the U.S. can finish negotiations with the United Kingdom on a free trade agreement and pursue talks with other nations, including new free trade deals with Japan and Vietnam, as well as others.


     However, Ron Kirk, who served as USTR during the first half of the Obama administration, cast doubt on Biden seeking immediate renewal of TPA. “I just think we can’t run the risk because we all believe in trade that we somehow think that’s going to force its way onto the agenda. I mean, this is going to be Covid job one, Covid job two, Covid job three, trying to get the economy going,” he said.




— Food, ag workers next in line for vaccines. Food and agricultural workers will join people 75 and over in the next group to get vaccines against the Covid-19 pandemic after health care workers and nursing home residents. The Advisory Committee on Immunization Practices (ACIP) voted 13-1 in favor of the plan put forth by an ACIP work group, which puts the nation’s approximately 30 million frontline essential workers and 19 million persons aged 75 and over in Phase 1B. “Grocery store workers” and those in “food and agriculture” and “manufacturing” also are specifically listed in the second phase (link for details).


     The United Food and Commercial Workers Union applauded the committee's action. “America’s essential workers in grocery, meatpacking, and food processing have been on the frontlines of this deadly pandemic since day one, putting themselves in harm’s way to feed our families during this crisis,” UFCW International President Marc Perrone said. “With Covid-19 cases continuing to skyrocket, hundreds of these essential workers have already died and thousands more are infected daily as they serve our country by keeping our food supply secure… Protecting our country’s food workers is essential to keeping our communities safe and stopping future outbreaks in these high-exposure workplaces,” Perrone said. “CDC Director Redfield must recognize the vital role these essential workers serve by ensuring that they are among the first to receive access to the Covid-19 vaccine.”


     Meat Institute President and CEO Julie Anna Potts applauded ACIP’s guidance and urged state governments to follow CDC’s decision: "Priority access to vaccines is a critical step for the long-term safety of the selfless frontline meat and poultry workers who have kept America’s refrigerators full and our farm economy working. Read the Meat Institute’s comments to the CDC Advisory Committee on Immunization Practices here and its letter to governors here.

— Eat Just is one of several startups producing animal protein not by slaughtering animals or using plant-based ingredients that mimic the taste of meat, but by growing animal cells. Some 60 cell-based meat startups are in process around the world, according to the consultancy Lux Research, and funding for the sector hit $314 million in 2020 — more than 100 times greater than when Dutch pharmacologist Mark Post made the world's first cell-based hamburger in 2013. Axios reports at least eight startups are building or operating pilot production plants to try to drive the price of production down. Cultured meat still costs $400 to $2,000 a kilogram to produce versus the current consumer price tag of $4 a pound for conventional ground beef in the United States.


     Carbon footprint. One study concluded that because of the energy consumption needed to scale up cultured meat, its carbon footprint could be several times that of conventional chicken, though that assumes companies won't use cleaner energy sources.


     Labeling will be key to future consumer acceptance and some in the conventional meat industry have pushed the government to prevent cell-based companies from using the terms "meat" or "poultry."




 Summary: Global cases of Covid-19 are at 76,912,340with 1,695,144 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 17,847,629 with 317,684 deaths.

       Link to Covid Case Tracker
       Link to Our World in Data


— U.K: New variant of coronavirus is 70% more transmissible than original. The U.K. imposed a fresh lockdown to combat a new strain of coronavirus that officials say spreads 70% more easily than the original. Multiple countries have banned travel from the U.K. as the more-infectious strain of Covid-19 takes hold there — Italy, Belgium and the Netherlands suspended travel from the U.K.


     France stopped freight transport travelling across the English Channel for 48 hours; the route is an essential supply line for goods coming into Britain. Many countries, including France, Germany and Ireland, announced restrictions or bans on flights. On Sunday, Britain reported an increase in covid-19 cases of 35,928, the highest daily rise since the start of the pandemic.


— FDA late Friday issued an emergency use authorization for the Covid-19 vaccine developed by Moderna and the National Institutes of Health, paving the way for another 6 million vaccines to be shipped by early this week. It’s easier to store and handle than Pfizer’s, speeding access to more parts of the United States. Inoculations with the Moderna vaccine could start early this week. At least 14 states are getting fewer doses of the Pfizer vaccine in the near term because the federal government said it miscalculated how many doses could be shipped. The federal government plans to distribute a total of 7.9 million doses from Moderna and Pfizer this week.


     Elsewhere, the European Union's chief drug regulator will meet today to consider authorizing the Pfizer vaccine, while Brazil plans to release trial results for China's Sinovac shot on Wednesday.


— How many Americans will take the vaccine? In a Consumer Reports nationally representative survey of 2,851 U.S. adults, 63% said they are very or somewhat likely to get a vaccine when one becomes available. (The survey was done in early to mid-November; that number may well rise as vaccines begin to roll out across the country.)


     States will have flexibility in how they distribute vaccines, according to Kathleen Neuzil, MD, a professor of vaccinology and director of the Center for Vaccine Development and Global Health at the University of Maryland in Baltimore. Because of that, there may be some variation in the ways states distribute vaccines to priority populations, she says.


     Vaccines will be distributed at a wide variety of locations, including hospitals, long-term-care facilities, mobile and temporary clinics, doctors’ offices, and pharmacies, according to the CDC.


     Meanwhile, President-elect Joe Biden will receive Covid shot in public. The president-elect and his wife, Jill Biden, plan to get their first doses today, following Vice President Mike Pence and other senior officials, as part of efforts to tackle any skepticism among the American public. No word yet on whether President Donald Trump will take any vaccine.


— Biden's surgeon general-elect says vaccine could be available to general public mid-summer or early fall 2021. President-elect Joe Biden's choice for surgeon general gave a later timeline to when he might expect the coronavirus vaccine to roll out to the general public. Dr. Vivek Murthy told NBC's Chuck Todd on Sunday that he expects a vaccine to be available for the public closer to the third quarter of 2021, rather than in the spring when other federal officials have suggested. "If everything goes well, then we may see a circumstance whereby late spring, you know, people who are lower risk category can get this vaccine, but that would really require everything to go exactly on schedule," Murthy said. "My guess is that it's more realistic that it may be closer to mid-summer or early fall when this vaccine makes its way to the general population." Officials within the Trump administration, including Health and Human Services Secretary Alex Azar, have said they expect the vaccine to begin coming out by April or May of next year.




— House chamber in new Congress. As a result of the 2020 elections, Republicans netted at least 10 seats. Democrats will have 222 seats, with Republicans at 212. The race to represent New York's 22nd Congressional District, covering a swath of the state's central region, is uncalled. That Democratic majority was already slim (slimmest since 1945) but it is set to shrink further, with three Democrats set to leave Congress for jobs in the Biden administration: Louisiana Rep. Cedric Richmond will join the White House as a senior adviser and director of the Office of Public Engagement, Ohio Rep. Marcia Fudge is set to be Biden’s nominee for housing secretary, and New Mexico Rep. Deb Haaland will be Biden’s nominee for interior secretary. Though each one of them comes from safe Democratic seats, it could take months until special elections are settled, and their replacements have taken office.


     Unknown details: Two seats, in Iowa’s 2nd District and New York’s 22nd District, where the 2020 election was razor-close and the ultimate results, and when they will be known, are up in the air. In the Iowa district, Democrat Rita Hart trailed Republican Mariannette Miller-Meeks by just six votes in state-certified results out of more than 394,000 cast. Hart has said she plans to contest the election in the House. In the New York district, which is undergoing state judicial review, former Republican Rep. Claudia Tenney leads Democratic incumbent Rep. Anthony Brindisi by a dozen votes out of hundreds of thousands cast.


     The far-left Democratic “Squad” that includes New York Rep. Alexandria Ocasio-Cortez, Massachusetts Rep. Ayanna Pressley, Minnesota Rep. Ilhan Omar, and Michigan Rep. Rashida Tlaib is growing, with Reps.-elect Cori Bush of Missouri and Jamaal Bowman of New York joining Congress in January. “I do think that it gives us leverage to use that when it’s absolutely necessary,” Ocasio-Cortez told the Dispatch (link) last week.


— Update on the two Jan. 5 Georgia races that will decide control of the Senate in the new Congress next year. If Democrats manage to unseat both incumbents, the Senate would be split 50-50. Democrats will be able to set the agenda because Vice President-elect Kamala Harris would be able to break any ties. Here’s what we know:


     The candidates: Democrats Raphael Warnock and Jon Ossoff and Republicans Sens. Kelly Loeffler and David Perdue.


     The polls: Although many observers scoff at any mention of polls following haphazard results following November elections, latest polls show the two races are too close to call. But someone will win and that is why many disdain pollsters and commentators who use the toss-up refrain to avoid making predictions.


     Early turnout is high so far. With absentee ballots pouring in and early voting having started Dec. 14, more than 1.1 million people have voted, according to an analysis of data from Georgia’s secretary of state’s office. An estimated 100,000 registered voters who didn’t cast ballots in November have requested absentee ballots for the Jan. 5 election. Through four days of early voting, the number of votes is approaching the presidential election pace. Most voters are voting in-person, but mail voting remains popular. About 477,000 people have cast mail ballots, which is 43% of the early vote. More than 760,000 requested mail ballots have not been returned. About 56% of early voters are white and 32% are Black (compared to 27% in the general election), which is a slightly higher proportion of Black voters than the overall pool of all registered voters. Females make up 55% of early voters compared to 45% for males. Since early voting began on Monday, the state has been receiving an average of about 199,000 votes per day with 220,000 on the first day. Voters 65 and older make up 44% of all early votes (a group that made up 25% of overall general election voters). There’s a big variance in where the votes are coming from. Pickens County has recorded just 36 early votes so far while Fulton has about 125,000 votes. Every county besides Pickens has more than 100 votes. Georgia’s most populated counties are recording the highest number of voters, including DeKalb, Cobb and Fulton counties in metro Atlanta. Overall, 15% of Georgia’s 7.7 million registered voters have already cast ballots.


     Voting factors. The more than 76,000 newly registered voters in the state skew young, some having just turned 18. Both parties have been running major voter-turnout campaigns. Turnout has not topped three-fifths of the general election number in any of the previous four Georgia runoffs since 1992. During the 2017 runoff for Congress between Republican Karen Handel and Democrat Jon Ossoff, turnout rose from 44% in the initial 18-candidate race to 58% in the runoff. In last month’s general election, turnout reached 66%. It remains to be seen whether turnout will continue at this pace during the remaining two weeks of early voting, a period that will force early voting sites to close on Christmas Day and New Year’s Day.


     How Georgia voted in November elections. Republicans outvoted Democrats overall in both Senate races this November, but the four candidates could face a changed electorate in January. Over 68% of Ga. eligible voters participated in the Nov. election. Biden claimed the state's 16 electoral votes by a margin of around 12,000 out of 5 million votes cast in the fall, turning the state blue for president for the first time in 28 years. Biden finished ahead of President Trump by less than one half of 1%, 49.5% to 49.3%., while Ossoff came within 88,000 votes (2 percentage points) of upsetting Perdue. Different rules for the special election for the other Senate seat drew 19 candidates from all parties. The top Republicans, Loeffler and Collins, got a combined 46%. Warnock and his two main Democratic opponents took 45%.


     Demographics: Democrats likely can’t win without a strong showing from African-American voters; the GOP hopes Trump can deliver rural and exurban whites on Election Day, but tensions persist between Trump and Ga. Republicans, making it more difficult for the party to form a united front.


     Total ad spending is stretching past $300 million. GOP donors gave $95 million to their party’s Senate super-PAC and party committee between Election Day and Nov. 23, more than four times as much as the $18 million Democrats gave similar groups over the same period. The Democrats’ Senate Majority PAC raised $89.8 million between Oct. 15 and Nov. 23, but just $10.2 million of that amount came after Election Day. California was the biggest source of contributions for the Democratic candidates, with $26.2 million in donations through ActBlue, and for Republicans, who got $6.8 million. Georgia was the seventh most generous state for Democrats and fourth for the two Republicans. The four Senate candidates won’t file detailed information on their fundraising and spending until Dec. 24, when they file their pre-runoff reports.


— Senate confirms TVA nominees. The Senate this weekend confirmed Beth Harwell (vote of 59-25) and Brian Noland (vote of 84-5) to be members of the board of directors of the Tennessee Valley Authority (TVA).


— Senate unanimously confirmed Chuck Stones to the Federal Agricultural Mortgage Corporation board of directors. Stones was president of the Kansas Bankers Association until retiring in 2019. He’ll join the 15-member board at “Farmer Mac,” which provides a secondary market for agricultural credit.


— The House on Friday passed a bipartisan bill to give farmers and foresters a seat on the FAA’s drone policy committee, sending the Senate-passed measure to President Donald Trump’s desk



— At least 24 U.S. organizations installed software laced with malicious code by Russian hackers, a WSJ analysis of internet records found. The organizations, including Cisco Systems, Intel and Deloitte, installed tainted network monitoring software called SolarWinds Orion, which gave hackers potential access to scores of sensitive corporate and personal data. The attackers also had access to California’s Department of State Hospitals and Kent State University. Link for details.


— Tonight, Jupiter and Saturn “will almost kiss in the night sky,” writes the New York Times (link), appearing as one bright planet. The last time they came this visibly close to each other was in the year 1226. Go out and look southwest in the hour after sunset.



Add new comment