House Set to Clear $2 Trillion Phase 3 Rescue Package Today; Push for Phase 4

Posted on 03/27/2020 7:37 AM

CRP | State Dept. shifts H-2 visa process | EPA mulls several RFS compliance shifts

 


In Today’s Updates



* House set to pass the $2 trillion Phase 3 rescue package today... by noon ET
* Pelosi details Democrats' priorities for next rescue package
* Pelosi wants to focus on infrastructure in Phase 4 bill; more food stamp funding
* Coronavirus cases in the U.S. passed the record set by China
* China closes its borders from midnight
* Covid-19 worst-case scenario not materializing
* Trump, Xi hold telephone conversation, pledge to cooperate in fight against virus
* Trump to hear recommendations from coronavirus task force this weekend
* Trump administration drops plans to send military forces to the border
* UK Prime Minister Boris Johnson tests positive for coronavirus
* Lawmakers ask for tariff deferral
* Fed's balance sheet exploded by more than half a trillion dollars
* New OPEC+ deal to balance oil markets might be possible
* USDA accepts 3.4 million acres into CRP via general signup
* State Department shifts H-2 visa process
* Rescue plan tax cost
* U.S. indicted Nicolas Maduro for 'narco-terrorism'
* Panic buying, food hoarding driving up price of eggs, milk and other staples in Midwest
* Cal-Maine Foods, largest egg producer, closed higher Thursday as egg prices soar
* EPA backs off on pollution rules
* EPA mulls delaying deadline for oil refineries to comply with RFS regs past March 31
* EPA weighs letting oil refiners sell winter-blend gasoline later in year
* Trump promises GOP convention will be held this August
* Cotton AWP drops sharply
* Dow again enters bull market territory

 


MARKET FOCUS


 

Markets: U.S. stock index futures are presently pointed toward lower openings when the New York electronic day session begins, on a corrective pullback following this week’s very strong gains. Dow futures slid just over 600 points, while S&P 500 and Nasdaq futures fell 2.5%. Asian markets headed for the best week in three decades. Oil was little changed as Treasuries and the dollar rallied. Gold fell. The peso tumbled after Mexico was cut by S&P.
 

Federal Reserve Chairman Jerome Powell said the U.S. economy “may well be in a recession,” but that the central bank is taking unprecedented action to help ensure economic activity can resume as soon as the coronavirus pandemic is under control. The Fed has slashed its benchmark rate to zero and unveiled a series of programs to boost lending. By Friday, it will have also purchased nearly $1 trillion in Treasury and mortgage securities over the past two weeks.
 

The Fed's balance sheet exploded by more than half a trillion dollars over the past week, roughly twice the pace of the next-largest weekly expansion during the global financial crisis. Total assets held by the central bank topped $5T for the first time as it attempts to keep credit flowing to all corners of the market, including Treasurys, commercial paper and municipal bonds. In an interview aired yesterday on the Today show, Fed Chairman Jerome Powell said there was essentially no limit to the Fed's emergency lending ability and doesn't see inflation resulting from current policies.
 

     Fed update
 

A new OPEC+ deal to balance oil markets might be possible if other countries join in, according to Kirill Dmitriev, head of Russia’s sovereign wealth fund. Dmitriev and Energy Minister Alexander Novak were Russia's top negotiators in the production cut deal with OPEC (the existing pact expires on March 31). Who would be the new members? President Trump said last week he would get involved in the Saudi-Russia oil price war at the appropriate time amid Moscow's longstanding frustration with rapidly growing U.S. shale.
 

About all those border rumors... Dow Jones reported the Trump administration dropped its consideration of plans to send military forces to the border, citing a U.S. official.

 


POLICY FOCUS


 

House today to vote on Rescue Plan 3. House Speaker Nancy Pelosi (D-Calif.) predicted the House by noon ET today will clear the rescue package by a large, bipartisan margin. “Our members want to come back in order to have the debate, and we expect to have a voice vote on it,” Pelosi told reporters Thursday. “But if we don’t, we’ll be prepared for whatever it is. One way or another . . . we will be passing the bill.” House leaders hope to pass the $2 trillion stimulus bill by voice vote but should a recorded vote be requested, it may take more time. If a recorded vote does take place, voting will be done alphabetically in groups of 30 members over an extended period of time (15 groups).
 

     One Republican to watch will be Kentucky Rep. Thomas Massie, who told 55KRC talk radio in Cincinnati on Thursday that he’s opposed to the stimulus bill and suggested he’s considering asking for a roll call vote or objecting if there’s not a quorum. “I’m having a really hard time with this. Because they’re saying, ‘Well it’s hard to travel, yadda yadda yadda,’” Massie said. “Well, last night, 96 out of 100 senators voted. All we would need is 218 out of 435 to vote.” In the interview and in a tweet, Massie pointed to constitutional language that says a majority of the House would be needed for a quorum to do business. Some of Massie’s colleagues have already responded to his comments and are preparing to amp up the criticism if he follows through on his threat. “If you intend to delay passage of the #coronavirus relief bill tomorrow morning, please advise your 428 colleagues RIGHT NOW so we can book flights and expend ~$200,000 in taxpayer money to counter your principled but terribly misguided stunt,” Minnesota Democrat Dean Phillips tweeted at Massie.
 

     C-SPAN has agreed to a request from House leadership to air video statements from lawmakers who may be unable to travel back to Washington for Friday's session on the third coronavirus package (HR 748).
 

     Rescue details
 

Pelosi details Democrats' priorities for next rescue package. House Speaker Nancy Pelosi (D-Calif.) Thursday laid out Democratic demands for the next phase of the legislative coronavirus response. Pelosi said she spoke with Treasury Secretary Steven Mnuchin on Thursday morning and laid out her wish list for follow-up legislation:
 

     • "A better definition of who qualifies for family and medical leave"
     • Health care worker and pension protections, which she said Senate Majority Leader Mitch McConnell (R-Ky.) said could be done in the next phase
     • Increasing SNAP (food stamp) benefits by 15%
     • More funds to state and local governments
     • Free coronavirus testing, doctor visits and follow-up treatment
     • Equitable funding for Washington, D.C., residents
     • A higher amount of direct payments to Americans, noting House Democrats' bill would have given individuals $1,500 while the bill passed by the Senate provides $1,200. "I don't think we've seen the end of direct payments," she said.

 

     Pelosi also wants to focus on infrastructure in Phase 4 bill, specifically job creation and U.S. infrastructure building, she said yesterday in a Bloomberg TV interview. Infrastructure is a public health, business and economic issue, Pelosi said. Senate Appropriations Chairman Richard Shelby (R-Ala.) has called several times for an infrastructure package to help long-term economic recovery efforts. Pelosi said there has always been bipartisan support for an infrastructure deal.
 

     Vice President Mike Pence said the Trump administration was open to a fourth bill to support states. “Already we’re hearing from some governors about the need for additional resources, and we will evaluate those very carefully,” Pence said at the White House’s press conference yesterday. “I think the Secretary of the Treasury’s already indicated and congressional leadership has already indicated a willingness to remain open to that.”
 

USDA accepts 3.4 million acres into CRP via general signup. USDA has accepted 3.42 million acres into the Conservation Reserve Program (CRP) via the general signup that ended Feb. 28. There were 3.84 million acres offered for enrollment, with 3.42 million acres accepted that were under the Environmental Benefits Index (EBI) cutoff of 210, or 89% of those offered.
 

TOP 10 STATES WHERE LAND WAS ACCEPTED

State

Offered (Acres)

Accepted (Acres)

Percent Accepted

Texas

657,292

540,481

82%

Kansas

450,066

436,120

97%

Colorado

547,866

435,455

79%

Washington

283,374

277,533

98%

Iowa

274,562

267,182

97%

Oregon

141,311

139,830

99%

Montana

161,038

132,885

83%

Nebraska

148,368

131,209

88%

N. Dakota

139,912

126,152

90%

Oklahoma

129,627

122,247

94%

Total U.S.

3,839,488

3,418,597

89%

    
     As of January, there were 21.95 million acres in the CRP with the Fiscal Year 2020 cap on acreage in the program at 24.5 million. With contracts on 5.36 million acres set to expire Sept. 30, that would take CRP acreage down to 16.9 million. With the general contracts under the signup results announced Thursday starting Oct. 1, 2020, that would bring acreage in the CRP back up to 20.01 million as of Oct. 1.

 

     There is a continuous signup effort underway and those contracts start on the first day of the month after the CRP contract is approved. There is an option for those that had CRP contracts that expired Sept. 30 of 2017, 2018 and 2019 to offer those acres to re-enroll under the continuous signup. Contracts on those acres cannot start any later than Oct. 1, 2020. It is not clear how many of these prior expired acres are being or could be offered during the continuous signup.
 

     If there were a repeat of the record continuous signup level of 1.35 million each in 2016 and 2017, that would still put acreage in the program at only 21.51 million acres, well below the 24.5-million-acre cap for FY 2020. And it would be even further below the FY 2021 (starts Oct. 1) cap of 25 million acres.
 

     The possibility was also available to those with contracts that matured Sept. 30, 2017, 2018 and 2019 to offer eligible acres for the general signup that closed Feb. 28 and the results of which were announced Thursday. It is not clear how many of the acres enrolled via that effort were ones that were covered by the provision allowing for 2017, 2018 and 2019 expired acres to be offered.
 

     Impact: These details will help in determining the exact impact of the CRP signup results in terms of how many acres that will be enrolled were previously in the CRP and how many acres had not been under a CRP contract previously.
 

     Earlier this month, House Agriculture Committee Chairman Collin Peterson (D-Minn.) expressed concern about the enrollment, as glitches and documentation issues early on caused delays for some applying farmers. In response, USDA Secretary Sonny Perdue told Peterson he was “amenable” to holding another general signup if numbers fell short and reiterated his commitment to seeing the 24.5-million-acre cap reached. Peterson released a short statement commending the release of final general signup numbers and reminded “cow-calf operators about the CRP Grassland option that helps provide an incentive to keep land in grass and provides the natural benefits to grassland that running livestock provides.” CRP Grassland signup runs through May 15.
 

State Department shifts H-2 visa process. After having suspended visa processing at embassies March 20, the State Department announced it is still continuing to process returning H-2 visas and will now allow consulates to waive in-person H-2 interviews on first-time and returning H-2 applicants “that have not apparent ineligibility or potential eligibility.” (There are H-2A and H-2Bs and this covers both.)
 

     The interview waiver can also apply to those whose previous visas expired within the last 48 hours and did not require a waiver of ineligibility to the last time they applied if they are applying for the same classification as their prior visa. “We anticipate the vast majority of otherwise-qualified H-2 applicants will now be adjudicated without an interview,” the State Department said. Link to questions and answers.
 

     Both USDA Secretary Sonny Perdue and House Ag Committee Chairman Collin Peterson (D-Minn.) welcomed the move relative to H-2A visa applicants that work in throughout the ag sector.
 

     Visas
 

Coronavirus update:

  • Summary: Covid-19 cases have been reported in 176 regions or countries around the world, with the number of confirmed cases at 542,788 and deaths at 24,361, according to Johns Hopkins University data. There are 85,996 confirmed cases in the U.S., moving the country to the top of the list in terms of cases worldwide, but the U.S. death toll of 1,300 is well below Italy, which tops the list at 8,215 deaths. Spain reported its deadliest day with 769 fatalities.

    Cases
     
  • Worst-case scenario not materializing. Worst-case projections for the spread of coronavirus aren’t supported by evidence emerging from outbreaks in China, South Korea, and Italy, said Deborah Birx, the immunologist advising Vice President Mike Pence. “There’s enough data now of the real experience with the coronavirus on the ground to really make these predictions much more sound,” Birx said at a White House press conference yesterday.
     
  • The World Health Organization noted “encouraging signs” as pandemic deaths fell in several countries.
     
  • U.K. Prime Minister Johnson says he has coronavirus. He will isolate himself but will continue to lead the government. He is the first leader of a major Western country known to have contracted the virus.
     
  • The Navy will administer virus tests to all of the more than 5,000 sailors aboard an aircraft carrier after at least 23 tested positive.
     
  • President Trump to receive new coronavirus recommendations. Based on the latest data, Trump's advisers will outline the next steps in the fight to combat the pandemic and restart the economy. Plans include classifying counties by low, medium and high "risk" levels, though state governors will have the ultimate say on whether to relax stay-at-home orders and business closures. President Trump has repeatedly noted the Farm Belt will likely be one of the first areas opened up with new guidelines.
     
  • Trump, China’s Xi hold COVID-19 conversation. President Donald Trump tweeted early this morning that he had spoken to Chinese President Xi Jinping, and did not use the “China virus” label in his social media posting. “Just finished a very good conversation with President Xi of China. Discussed in great detail the CoronaVirus that is ravaging large parts of our Planet. China has been through much & has developed a strong understanding of the Virus. We are working closely together. Much respect!” Xi reportedly assured Trump that China had been open about the spread of covid-19 from the beginning.
     
  • China closes its borders from midnight. With domestic cases on the decline, China will no longer accept most foreign citizens into the country, even those with residence visas. Only diplomatic, emergency, and certain high-skilled visa holders will be allowed entry.
     
  • Trump suggested that Americans should consider scrapping the tradition of handshakes — forever. Trump said Americans shouldn’t entirely abandon social-distancing practices when the pandemic ends, like shaking hands. “Maybe, people aren’t going to be shaking hands anymore,” Trump said, adding that he discussed the practice with Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases. “He was saying the regular flu would be cut down by quite a bit if we didn’t do that,” Trump said at Thursday's briefing.
     
  • Trump favors cruise ships paying U.S. taxes to get coronavirus aid. President Donald Trump is open to the idea of making foreign-flagged cruise ships register in the U.S. in order to get federal loans to support operations amid coronavirus-related shutdowns. Trump said at a White House press conference yesterday there were senators who objected to including cruise lines for those reasons. He said cruise-line companies should change their official homes to the U.S. if they want to get federal loans. “There were some senators that didn’t want to do anything. I do like the concept of perhaps coming and registering here. It’s very tough to make a loan to a company when they’re based in a different country,” Trump said. “We’re going to work very hard on the cruise-line business, and we’re going to try and work something out.”
     
  • Trump says he will visit Norfolk, Va., Saturday to see off Navy hospital ship heading to New York to aid coronavirus response.
     
  • Lawmakers ask for tariff deferral. House Minority Leader Kevin McCarthy (R-Calif.) and Sen. Dianne Feinstein (D-Calif.) are among lawmakers who signed a letter (link) yesterday to the Trump administration seeking deferral of at least 90 days on all tariffs amid the coronavirus outbreak.

Other items of note:

  • Rescue plan tax cost. The Joint Committee on Taxation (JCT) estimates the tax provisions of the roughly $2.2 trillion coronavirus economic aid package (HR 748) will cost $591 billion over a decade. The largest single piece, tax rebates to U.S. households, will contribute $292 billion, JCT said.
     
  • U.S. indicted Nicolas Maduro for 'narco-terrorism.' The Justice Department also offered a $15 million reward for intel that leads to the Venezuelan president’s arrest. Maduro said that it was part of U.S. efforts — including support for his rival Juan Guaido — to boot him from power.
     
  • Panic buying and food hoarding is driving up the price of eggs, milk and other staples in the Midwest, the Des Moines Register reports (link).
     
  • Cal-Maine Foods, the nation's largest egg producer, closed higher Thursday as egg prices continue to soar as consumers stock up on staples in the wake of the virus outbreak. Wholesale egg prices have tripled since early March.
     
  • Second-largest egg producer in U.S., Rose Acre Farms, on Wednesday urged an appeals court to uphold a jury decision that it doesn’t owe $1 billion in damages to egg buyers in an antitrust conspiracy case.
     
  • EPA backs off on pollution rules. The Trump administration will temporarily relax civil enforcement of various environmental regulations, a move it says is necessary given worker shortages and travel restrictions related to the coronavirus pandemic. In a memo issued Thursday, the Environmental Protection Agency said it wouldn’t go after companies that fail to satisfy many “routine monitoring and reporting obligations” because of the coronavirus, as long as they documented why they couldn’t fulfill the mandates, worked to resolve the issues, and sought to minimize the effects.
     
  • EPA mulling delaying deadline for oil refineries to comply with the nation's biofuel regulation past March 31, to help the industry cope with fallout from the coronavirus, agency chief Andrew Wheeler said on Thursday.
     
  • EPA is weighing letting oil refiners sell winter-blend gasoline later in the year to account for reduced demand in the midst of the coronavirus crisis, Administrator Andrew Wheeler said Thursday. "We are looking at the fuels issues on a separate basis and that would be a case-specific issue," Wheeler told reporters on a conference call, adding the agency hopes to have "some sort of announcement on the fuels" as soon as today.
     
  • Trump promises GOP convention will be held this August. Trump said that the Republican National Convention would go forward as planned this August even as the coronavirus has caused the cancellation of large-scale events all across the U.S. Democrats are scheduled to hold their convention in Milwaukee from July 13-16. The Republican convention is to be held from Aug. 24-27, and the president told Sean Hannity on Fox News last night that “We’re quite a bit later than them, which I think is good.” Trump said there was “no way” he would cancel the convention. “It’s going to be incredible.”
     
  • Cotton AWP drops sharply. The Adjusted World Price (AWP) for cotton dropped to 44.99 cents per pound, effective today (March 27). This is the lowest mark since the AWP the week of April 1, 2016, when it was at 44.48 cents per pound. USDA did not announce another special import quota for upland cotton as prices have fallen below the trigger point for such an action.

Markets. The bear market is over. The Dow on Thursday gained 1,351.62 points, 6.38%, at 22,552.17. The Nasdaq rose 413.24 points, 5.60%, at 7,797.54. The S&P 500 moved up 154.51 points, 6.24%, at 2,630.07.
 

     Index
 

     The S&P 500 recorded its quickest three-day advance in nine decades, after falling into a bear market at the fastest rate ever.
 

     Quick bear


 

 

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