Senate Returns to Focus on Unfinished 2021 Agenda

House returns Jan. 10 | Scaled-back BBB | Supreme Court and Proposition 12
 

Washington Focus

The Senate returns Monday with leftover 2021 issues front and center early this year. They include:

     (1) BBB: A scaled-based Build Back Better (BBB) package that will at minimum get the acceptance of centrist Sen. Joe Manchin (D-W.Va.); some BBB-type issues could find themselves split off into separate legislative initiatives that could have support of some Republicans, reportedly including Sen. Mitt Romney (R-Nev.) relative to child credits.

     (2) Nominations: Late December saw more nominees approved but a lot more remain. Look for Senate Majority Leader Chuck Schumer (D-N.Y.) to take more aggressive action. The Senate Health, Education, Labor and Pensions Committee on Wednesday will vote on the nomination of Robert Califf to head the Food and Drug Administration. Califf, a cardiologist, served as FDA commissioner in the final year of the Obama administration.

     (3) Fiscal year (FY) 2022 spending as the current stopgap continuing resolution (CR) runs through Feb. 18.

     (4) Democrats continue to push election reform/voting rights legislation, but a filibuster reform would be needed in the Senate, but this is not favored by all Democrats. President Biden has signaled he could back modifications to the filibuster if needed to pass voting-rights legislation. Creating a new precedent to change the filibuster rule would require a majority vote in the Senate, and Manchin as well as Sen. Kyrsten Sinema (D-Ariz.) have said they oppose eliminating the rule. That is why lawmakers are discussing modifications to the filibuster, short of eliminating it outright.

     (5) Another Covid aid package, but such assistance does not have the support that most prior packages garnered. Still, look for this topic to be discussed in the weeks ahead.

     The pending BBB includes about $90 billion in agriculture, forestry and nutrition provisions and several biofuel and clean energy tax incentives

The Senate Committee on Rules and Administration on Wednesday will hold a hearing on the oversight of the U.S. Capitol Police following last year's attack on the Capitol. U.S. Capitol Police Chief Thomas Manger and other witnesses are expected to appear.

The Supreme Court on Jan. 7 decides whether to hear a challenge to California’s Proposition 12 standards for hog and poultry production. We will have a special report on this topic on Sunday or Monday. The court also will consider challenges on year-round use of E15, and wetlands regulation. The court typically announces the following Monday whether it has granted the petitions.

     Regarding year-round E15, Growth Energy filed a petition in October, arguing that the Clean Air Act (CAA) provides the flexibility to allow “fuel blends whose concentration of ethanol exceeds 10%.” The appeals court said no, noting the CAA’s “plain text,” which only allows up to 10% ethanol. EPA said the petition should be denied and that the D.C. Circuit’s holding “does not conflict with any decision of this court or any other court, and it has limited legal and practical consequences.”

     The other Supreme Court item involves a long-running dispute between two Idaho landowners and EPA over an area of property deemed wetlands by the agency. Chantell and Michael Sackett were victorious in 2012 when the high court ruled that they could challenge EPA’s compliance order requiring restoration of the purported wetlands. The Ninth Circuit Court of Appeals ruled that EPA has authority over an Idaho residential property the agency says contains protected wetlands. The dispute dates back to 2004 when Chantell and Michael Sackett purchased a lot 300 feet away from Priest Lake, one of Idaho’s largest lakes, and started to fill the property with sand and gravel as allowed by county building permits. EPA then issued an order declaring that the property contained wetlands federally protected by the Clean Water Act (CWA) and requiring removal of the fill or fines of up to $40,000 per day. In 2012, the U.S. Supreme Court ruled that the Sacketts had the right to challenge EPA’s determination that the areas were jurisdictional wetlands under the CWA, and the legal battle has waged on in the district court. The Ninth Circuit this week ruled that the Sacketts’ property shares enough pivotal environmental connections — the requisite “nexus” — with Priest Lake. EPA has urged the court to deny the petition.  

American Farm Bureau Federation’s annual meeting begins Friday, in Atlanta.
 

Economic Reports for the Week

Key economic report comes Friday with an update on the employment situation.

Monday, Jan. 3

• Census Bureau reports construction spending data for November. Consensus estimate is for the total to rise 0.6%, month over month, to a seasonally adjusted annual rate of $1.61 trillion. That would be a record high, surpassing October’s $1.6 trillion.   

Tuesday, Jan. 4

• Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey. Economists forecast 11.2 million job openings on the last business day of November, 167,000 more than in October. Job openings remain near the record level of 11.1 million set earlier this summer.
• Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for December. Expectations are for a 60.5 reading, roughly even with November’s figure. The ISM’s PMI has had 18 consecutive monthly readings of more than 50, indicating expansion in the U.S. manufacturing sector.   

Wednesday, Jan. 5

• MBA Mortgage Applications
• Federal Open Market Committee (FOMC) releases the minutes from its mid-December monetary-policy meeting.
• Bureau of Economic Analysis reports light-vehicle sales for December. Consensus estimate is for a seasonally adjusted annual rate of 13.5 million vehicles. That would be 4.7% more than in November, but 17.2% less than the level a year ago. Supply constraints, especially a global shortage of semiconductors, have hampered auto sales for much of the second half of 2021.
• ADP releases its National Employment Report for December. Economists forecast an increase of 360,000 jobs in private-sector employment, with 5.4 million jobs added this year, after a loss of 9.5 million jobs in 2020.

Thursday, Jan. 6

• Jobless Claims
• ISM releases its Services PMI for December. Economists forecast a 66.9 reading, about two points below the November figure, which was a record high for the index’s 23-year history.
• Department of Labor reports initial jobless claims for the week ending on Jan. 1. For the four weeks in December, claims averaged 199,250, the lowest reading since October 1969.
• Fed Balance Sheet
• Money Supply  

Friday, Jan. 7

• Department of Labor releases the employment report for December. The economy is expected to add 374,000 jobs, after a gain of 210,000 in nonfarm payrolls for November. The unemployment rate is seen edging down to 4.1%, from 4.2%. Payroll gains have come in well below estimates in three of the four previous jobs reports, with an average shortfall of 343,300. The labor-force participation rate is likely to tick up to 61.9%, from 61.8%.
   

Key USDA & international Ag & Energy Reports and Events 

The United Nations’ FAO monthly food price index comes Thursday. Markets will also focus on Brazil and Argentina weather, the International Cotton Advisory Committee’s global balance report and the USDA’s weekly grain and soy export data during the week.

          On the energy front, OPEC+ meets virtually on Tuesday to discuss the oil market.

Monday, Jan. 3

     Ag reports and events:

• Export Inspections
• Cotton System Consumption and Stocks
• Fats & Oils: Oilseed Crushings, Production, Consumption and Stocks
• Grain Crushings and Co-Products Production
• CFTC weekly commitments of traders; this report with data through Dec. 21 is delayed from usual Friday slot
• Global cotton balance report from the International Cotton Advisory Committee
• Public holiday in China, Japan, Russia, U.K., Canada, Australia, New Zealand, Nigeria, various others

Energy reports and events:

• OPEC holds internal meeting to discuss candidates for Secretary-General, day before full OPEC+ meeting

Tuesday, Jan. 4

     Ag reports and events:

• State stories
• Purdue Agriculture Sentiment
• EU weekly grain, oilseed import and export data
• Holiday: New Zealand, Russia

     Energy reports and events:

• API weekly U.S. oil inventory report
• OPEC and non-OPEC Ministerial Meeting, virtually

Wednesday, Jan. 5

     Ag reports and events:

• Broiler Hatchery  
• Malaysia’s Jan. 1-5 palm oil exports
• Holiday: Russia

     Energy reports and events:

• EIA weekly U.S. oil inventory report
• U.S. weekly ethanol inventories
• Genscape weekly crude inventory report for Europe’s ARA region

Thursday, Jan. 6

     Ag reports and events:

• Weekly Export Sales
• Dairy Products
• FAO World Food Price Index
• Port of Rouen data on French grain exports
• Holiday: Russia

     Energy reports and events:

• EIA natural gas storage change
• Russian weekly refinery outage data from ministry
• Insights Global weekly oil product inventories in Europe’s ARA region

Friday, Jan. 7

     Ag reports and events:

• CFTC Commitments of Traders report
• Peanut Prices
• Holiday: Russia

     Energy reports and events:

• Baker Hughes weekly U.S. oil/gas rig counts