Republicans Upset at Trump Re: Covid Aid; GOP to Block Dem Attempt for Higher Payout

Posted on 12/24/2020 7:37 AM

China imported record amount of corn in November
 


In Today’s Updates


 

Market Focus:
• Markets close early today, Friday holiday
• Christmas Eves are typically far quieter trading sessions
• S&P 500 trades at 22 times analysts’ expected earnings
• National Weather Service predicts a ‘wide range of hazardous weather’

• No major U.S. economic reports will be released today
• Resurgence of the virus is hurting the U.S. economy
• Britain's pound is rising against dollar on U.K./EU Brexit developments
• Assets under management at private-debt funds have rocketed
• Soybean market is dominated by the oil market
• Aid for loggers and truckers in Covid/stimulus package
• ADP stops receiving corn at a processing plant in Nebraska
• Vietnam’s rice export prices jump to decade-high on supply woes
• Argentine port strike moves into its third week

• Dryness may curb soybean area in Argentina

• Limited reaction expected to H&P Report

 

Policy Focus:
• What President-elect Biden told the New York Times
• Trump’s criticism of virus stimulus bill angered congressional Republicans

 

China update:
• Beijing cracks down on Alibaba and Ant Group
• China suspends additional timber shipments from Australia
• U.S. badly miscalculated what kind of leader Xi Jinping would be: WSJ
• China plans to keep grain production above 650 MMT
• China imported a record amount of corn in November

 

Trade Policy:
• Taiwan clears imports of U.S. pork produced with ractopamine
• World trade monitor update
• Reuters: India, Bangladesh near rice trade deal

 

Food & beverage industry update:
• Supplies of holiday hams and some pork products stretched Re: Covid-19


Coronavirus update:
• Biden talks about his virus plan
• U.S., Pfizer strike vaccine-supply deal

 

Politics & Elections:
• Trump issues 26 more pardons
• Trump vetoed a $740 billion military spending bill
• WSJ editorial: Trump vs. a GOP Senate
• Andrew Yang is running for New York City mayor
• New DOJ chief


Other Items of Note:
• Update on rocket attack on the U.S. Embassy in Baghdad on Sunday
• Merry Brexmas: U.K. and EU near agreement for post-Brexit deal, but…

 


MARKET FOCUS


 

Equities today: Financial and equity markets will trade abbreviated hours today and light trade volume is expected as a result. Markets will be closed Friday in observance of Christmas. U.S. stock futures are edging higher. Global stock markets that were open Friday were mostly up. The Hang Seng Index rose 43.46 points, 0.16%, at 26,386.56. The Nikkei was up 143.56 points, 0.54%, at 26,668.35. The Shanghai Composite fell 19.21 points, 0.57%, at 3,363.11. European markets were upbeat on continued progress between the U.K. and the European Union on a Brexit deal — details below. The Stoxx 600 was recently up 0.2% with most regional markets seeing gains up to 1.3%.

 

     Christmas Eves are typically far quieter trading sessions, with volumes on the NYSE and Nasdaq about 36.8% of a normal day, according to data from FactSet, which goes back to 2007. More historical data: The S&P 500 has averaged a 0.5% gain on Christmas Eve, according to Dow Jones Market Data, and could mark the beginning of a Santa Claus rally, which is the tendency for stocks to rise over the last five trading sessions of December and the first two trading sessions of January.

 

     The S&P 500 trades at 22 times analysts’ expected earnings — its most expensive level since the dot-com bubble. It also trades at its richest multiple to its inflation-adjusted earnings over the past decade — the valuation method popularized by economist Robert Shiller — in nearly 20 years.

 

     U.S. equities yesterday: The Dow ended up 114.32 points, 0.38%, at 30,129.83. The S&P 500 was up 2.75 points, 0.07%, at 3,690.01. The Nasdaq, however, declined 36.80 points, 0.29%, at 12,771.11.

 

The National Weather Service predicts a “wide range of hazardous weather” — including blizzards in the Midwest and freezing temperatures in the South — through Christmas Day.

 

On tap today:

 

     • No major U.S. economic reports will be released today as the U.S. government is closed for the Christmas Eve holiday.

 

Resurgence of the virus is hurting the U.S. economy: Personal income fell in November for the second straight month, and consumer spending declined for the first time since April. The Covid situation is also likely a factor in New Home Sales dropping 11% from October to a level of 841,000 in November. The Univ. of Michigan’s Consumer Sentiment reading also declined to a mark of 80.7.

 

     Economic reports show lag

 

Market perspectives:

 

     • Grain and livestock markets will observe an abbreviated trading session, closing at 12:05 p.m. CT. Government offices are closed today. All markets and government offices are closed on Friday for Christmas.

 

     • Outside markets: The U.S. dollar index is lower in early U.S. trading. February Nymex crude oil futures prices weaker and trading around $47.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.94%.


     • Crude oil futures are lower ahead of the shortened trading session, with U.S. crude trading around $47.60 and Brent around $50.75 per barrel. Crude prices continued to firm in Asian markets after sizable moves higher in U.S. action Wednesday. U.S. crude was up 12 cents at $48.24 per barrel while Brent was up 14 cents at $51.38 per barrel.

 

     • Soybean market is dominated by the oil market.  Says one trader/analyst: “Palm oil continues to surge in price as export tariffs out of Malaysia go in place January.  Palm oil production, sun production, as well as canola have all had a decline in supplies.  Soy oil is having to make up some of the difference.”

 

     • Britain's pound is rising against the dollar on reports that the U.K. and EU are on the verge of striking a post-Brexit trade agreement.

 

     • Assets under management at private-debt funds have rocketed from less than $200 billion in 2007 to $850 billion by the end of March this year, according to the latest data available from Preqin. Fundraising slowed this year, but funds have almost $300 billion of uninvested capital.

 

     • Aid for loggers and truckers. Tucked inside the new $900 billion coronavirus relief package is $200 million in aid for loggers and trucking companies.

 

     • Archer-Daniels-Midland Co. will stop receiving corn at a processing plant in Nebraska as the idling of its dry ethanol mill causes grain to pile up. A spokeswoman for ADM, one of the world’s largest agricultural commodity traders, confirmed the move was “related to the dry mill closure” and that the facility will be back receiving corn on Dec. 28.

 

     • Vietnam’s rice export prices jump to decade-high on supply woes. Prices of 5% broken rice shipped from Vietnam, the world’s second-biggest exporter, have surged to the highest in more than a decade due to tight domestic supplies, according to the Vietnam Food Association. Farmers in several areas of the Mekong Delta rice belt opted for two plantings instead of three as they switched to other crops because of weaker rice prices previously and repetitive salinity intrusion, local traders and exporters told Bloomberg. Rice prices in Vietnam are expected to stay strong until the end of January, when the winter-spring crop harvesting begins. Vietnam is estimated to have shipped 5.7 million tons of rice in the first 11 months of 2020, a drop of 2.9% from a year earlier, according to the General Department of Vietnam Customs.

 

     Vietnam rice

 

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

     • Argentine port strike moves into its third week
     • Dryness may curb soybean area in Argentina
     • Limited reaction expected to H&P Report

 


POLICY FOCUS


 

—  What President-elect Biden told the New York Times on some topics:

 

    He expressed confidence in his ability to forge bipartisan compromises and said the same people doubting his ability to do so had previously questioned his ability to win the presidency. “I respectfully suggest I beat the hell out of everyone else,” he said. “So I think I know what I’m doing.”

 

    He cited a $15 minimum wage and climate policies as two areas where he was optimistic. “I’m going to be able to get stuff done on the environment you all are not going to believe,” he said, explaining that Americans were now experiencing the effects of climate change and demanding change. “I couldn’t have gotten it done six years ago,” he added.

 

    Biden said he was appointing people with significant government experience partly because of the damage the Trump administration had done to the federal government: “One of the reasons you need old hands is that old hands know where the old bodies may be buried.”

 

    He criticized the idea, favored by some Democrats, of using executive action to forgive $50,000 in student debt per borrower: “I think that’s pretty questionable,” he said. “I’d be unlikely to do that.” But he suggested he was open to forgiving $10,000.
 

— Trump’s criticism of the virus stimulus bill has angered congressional Republicans and given Democrats an opening to say that they, like Trump, favor bigger one-time checks for families. The bill passed this week with large enough margins that Congress may be able to override a veto, if Trump issues one.

 

     House Democrats plan to seek unanimous consent to increase direct stimulus payments in the spending bill passed by Congress Monday. House Minority Leader Kevin McCarthy (R-Calif.) told fellow Republicans that the move will fail.


 


CHINA UPDATE


 

Chinese antitrust authorities announced they were investigating Alibaba. Shares in Alibaba tumbled today, extending a recent pullback, as China stepped up pressure on the e-commerce giant and its billionaire boss Jack Ma. The e-commerce giant will be scrutinized over rules which force sellers to list exclusively on its platform. It is the first such investigation into one of China’s tech champions. Last month regulators barred Alibaba’s sister company, Ant Group, from listing in Hong Kong and Shanghai. The Communist Party is unhappy with Jack Ma, the firms’ founder, for criticizing state-owned banks.

 

     Alibaba

 

— Trade tensions continue to rise as China suspends additional timber shipments from Australia. Imports of timber from the Australian states of New South Wales and Western Australia have been suspended by China after local customs authorities found pests in cargoes from those states, according to China’s General Administration of Customs. China had already barred imports of timber from Victoria, Queensland, Tasmania and South Australia. This is the latest in what has become escalating trade actions between the two, including Australia lodging a complaint at the WTO over China’s imposition of tariffs on imports of Australian barley.

 

— The U.S. badly miscalculated what kind of leader Xi Jinping would be, says a Wall Street Journal article (link). In his eight years as China’s leader, “Xi has pursued an expansive, hypernationalistic vision of China’s future, displaying a desire for control and a talent for political maneuvering,” the article notes. “Xi’s swift reversal of more than three decades of apparent movement toward collective leadership and a less intrusive party has surprised both U.S. officials and much of the Chinese elite. In hindsight, though, the roots of his approach are visible in key episodes of his life.” (Source of graphic: WSJ)

 

     Xi life

 

— China plans to keep grain production above 650 MMT. Guaranteeing sound grain production and food security is a top policy priority for Beijing, according to an ag ministry official. The country will take action to ensure the country's total grain output remains above 650 MMT in the coming year, vowing to maintain its sown area above 116.67 million hectares in 2021. The country saw a 704,000-hectare increase in its sown area in 2020, reversing the downward trend from the previous four consecutive years.

 

— China imported a record amount of corn in November, offering another burst of optimism for prices that are heading for their longest rally since 1988. China bought 12 times more corn last month than a year earlier, customs data showed today. For the first 11 months of the year, imports more than doubled to 9 million tons, further exceeding its World Trade Organization commitments of 7.2 million tons for the first time ever. The surge in corn pushed up China’s overall grain prices, and the country has boosted imports of other feed grains including barley and DDGs to narrow the supply gap, Tang Ke, an official at China’s agriculture ministry, said at a media briefing today. Higher prices are likely to encourage local farmers to increase corn acreage next year, which should help ensure basic self-sufficiency, Tang added. The government has also resumed state corn sales to help bolster supply at a time when sales from farmers are poised to expand. China imported 1.23 million tonnes of corn imported in November, up 1,130% from November 2019, with imports at 9.04 million tonnes through November, up 122.7% from the year-ago period.

 

     China corn imports

 

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

 

 


TRADE POLICY


 

— Taiwan clears imports of U.S. pork produced with ractopamine. Measures to allow imports of pork from hogs produced using the feed additive ractopamine were approved by Taiwan’s parliament despite efforts to halt the action by the main opposition party, the Kuomintang (KMT). KMT lawmakers denounced the action, declaring that U.S. pork produced with the feed additive was “poison.” The Taiwanese government has taken the position that no one will be forced to eat the pork and the action will bring Taiwan in line with international norms. There are a mix of countries that allow and those that ban imports of pork from hogs raised on ractopamine. Premier Su Tseng-chang told reporters the government would protect the health of citizens. The action is also seen by many as an effort by Taiwan to secure a free trade deal with the U.S. which has complained about Taiwan’s ban on importing pork produced with ractopamine.

 

— World Trade Monitor: In October 2020, world trade grew again by 0.7% compared to September 2020. Due to continued growth in world trade since June, trade growth is still about 0.7% below the level at the end of 2019. The growth in October is, however, a lot lower than in September, when world trade increased by 2.7%. The months of November and December, which saw a rapid spread of Covid-19, can still have a negative impact on world trade. (CPB publishes a World Trade Monitor every month on behalf of the European Commission. It takes two months for the figures to become available.)

 

— Reuters: India, Bangladesh near rice trade deal. Bangladesh is said to be finalizing the purchase of 150,000 tonnes of rice — 100,000 tonnes of parboiled rice and 50,000 tonnes of white rice — under a government-to-government deal with India, according to sources quoted by Reuters. A spokesman for India’s National Agricultural Cooperative Marketing Federation of India (NAFED) confirmed negotiations with Bangladesh, saying they were “in a position to supply up to 500,000 tonnes of rice to Bangladesh.” Bangladesh in November issued its first international tender in three years in a bid to boost supplies while India is coming off a bumper rice harvest and has offered its rice on the world market at a steep discount to usual exporters Thailand and Vietnam. The report indicated India could sell parboiled rice at around $407 per tonne on a CIF basis and white rice at around $417 per tonne, about one-third under comparable prices from Thailand or Vietnam. The shipment is expected to take place in the first quarter of 2021.

 


FOOD & BEVERAGE INDUSTRY


 

— Supplies of holiday hams and some pork products are being stretched as Covid-19 precautions challenge meatpackers’ workforces. The Wall Street Journal reports (link) that some meat suppliers are placing limits on how much pork supermarkets can order, grocers said, leading to less variety and fewer pork promotions ahead of Christmas. The pandemic has prompted some major processors, including Smithfield Foods Inc. and JBS USA Holdings Inc., to provide paid leave for workers considered higher risk due to their older age or pre-existing conditions, the companies have said. Some meat companies have made additional hires to offset higher-risk workers’ absences. To space workers farther apart, some meat plants have slowed processing speeds. Bacon, dinner sausages and lunch meat have also been in tight supply, grocery companies said.

 

     Pork purchases stretched


CORONAVIRUS UPDATE


 

 Summary: Global cases of Covid-19 are at 78,810,611 with 1,732,834 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 18,466,227 with 326,232 deaths.
 

       Link to Covid Case Tracker
       Link to Our World in Data

 

— Biden talks about his virus plan. “It will be the first priority, the second priority and the third priority — to deal with Covid and bring down the spread and bring down the death rate,” President-elect Joe Biden told the New York Times during a phone call yesterday. He will ask Americans to wear masks and will require them where he can, he said. He will ask governors to take similar steps and to wear masks themselves as role models. The current rate of infection is “staggering,” Biden said. “It’s going to be incredibly high — the damage and the death toll.”

 

— U.S., Pfizer strike vaccine-supply deal. Under a new deal reached with the U.S. government, Pfizer will provide an additional 70 million doses by the end of June, with 30 million to follow by the end of July.

 


POLITICS & ELECTIONS


 

—  Trump issues 26 more pardons. President Trump granted clemency to Paul Manafort, his former campaign chairman; Roger Stone, his friend and confidant; Charles Kushner, the father of his son-in-law, Jared Kushner; and other loyalists in a new batch of pardons and commutations. Sixty of the 65 pardons granted before Wednesday went to individuals with personal or political connections to Trump.

 

— Trump vetoed a $740 billion military spending bill that would rename military bases named for Confederate leaders. The bill’s supporters may have enough votes to override this veto.

WSJ editorial: Trump vs. a GOP Senate… His vetoes could cost Republicans the two Jan. 5 Georgia runoffs. The editorial begins: “President Trump is leaving office as he entered, with a whirlwind of action that gets more attention than it accomplishes. He may also take down his party’s chances of winning the Senate runoffs on Jan. 5. Does he care?” The editorial noted Trump vetoing the National Defense Authorization Act (NDAA) that passed the House and Senate with overwhelming votes. “The House and Senate probably have the votes to override the veto, but the event could still cause problems for GOP Sens. David Perdue and Kelly Loeffler as they try to win their seats in two weeks. They’ll now have to flip their previous votes in favor of the NDAA or put themselves at odds with Trump.” The same goes for Trump’s threat to veto the giant Covid relief and omnibus spending bill that passed Congress this week. “If he objected to the bad policy in the bill, he’d have a point. But Trump is griping that the $600 direct payments to Americans in the bill are too small; he wants $2,000, which would cost another $350 billion or so. The President’s negotiators signed off on the $600, and now Democrats are echoing Trump’s new demand and putting the Georgia Senators in a second bind.” The editorial ends, “Losing control of the Senate would let Democrats take a machete to his legacy, but only one man knows what is really going on in the head of Donald J. Trump.”

 

— Andrew Yang is running for New York City mayor. The former Democratic presidential contender — who won support among younger voters, especially the Silicon Valley crowd — filed the paperwork to enter the race, joining a field that includes Ray McGuire, the former Wall Street deal maker, and Scott Stringer, the city’s comptroller.

 

— New DOJ chief. Jeffrey Rosen became the new head of the Justice Department today, inheriting an agency under pressure from President Trump in the waning days of his administration.

 


OTHER ITEMS OF NOTE     


 

— Update on rocket attack on the U.S. Embassy in Baghdad on Sunday. It was the largest attack on the Iraqi capital’s Green Zone since 2010, numbering 21 missiles. Secretary of State Mike Pompeo has blamed “Iran-backed militias” for the attack. On Wednesday, Pompeo, acting Defense Secretary Christopher Miller and national security adviser Robert O’Brien met to discuss options to dissuade Iran and the Shiite militias it supports from attacking U.S. personnel in Iraq. Pompeo has warned Iraqi officials that the U.S. was prepared to close its embassy in Baghdad if the rocket attacks didn’t cease.

 

— Merry Brexmas: Britain and the European Union seem to be near a post-Brexit trade agreement, but... Without a deal in place by Jan. 1, Britain and the EU would default to World Trade Organization rules, levying tariffs on each other’s goods. U.K. and EU officials late Wednesday agreed to the framework of a Brexit deal between the two, but a final announcement had not yet emerged as of early this morning. Indications are that details on fishing were one of the heaviest lifts late in the negotiations. While the framework has apparently been agreed to, negotiators were expected to work through the night and potentially into this morning to finalize the language. However, if they are unable to do so, the negotiations would pick up again after Christmas. At this stage, the European Parliament is unable to meet again this year and the deal — reported to be around 1,000 pages — would have to be provisionally cleared by individual governments with the European Parliament then acting on the plan early in 2021. Britain's pound is rising against the dollar on reports that the U.K. and EU are on the verge of striking a post-Brexit trade agreement. The full legal text and details are likely to be released this morning, and would include provisions for zero tariffs or quotas on all goods, as well as protect cooperation in areas like aviation, transport, security and energy.  But wait… Reuters this morning flashed: “EU official says trade talks snagged on fishing; deal may still be hours away. U.K. source says Brexit trade deal talks could have 'some hours to run.'” The fishing issue has held up an agreement in recent months, but people briefed on the talks say there would be a 5.5-year transition period — under which EU boats can still access U.K. fishing waters — though the bloc's rights will be knocked down by a quarter. It's been over four years since the U.K. voted to leave the European Union

     Brexit


 

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