Congress Certifies Biden Win After Day of 'Insurrection'

Posted on 01/07/2021 7:45 AM

Democrats officially flip Senate, President Trump commits to orderly transition of power

 


In Today’s Updates


 

Market Focus:
• Dollar stronger, equity futures higher, signaling U.S. institutions held after ‘dark day’
• Grassley: ‘Best thing for agriculture is that there is a drought in Argentina and Brazil’
• Jordan issues tender to buy 120,000 MT of milling wheat
• Value of entire cryptocurrency market surpasses $1 trillion for first time
One Argentine strike reportedly ends, but another to get underway soon
• Attaché maintains Brazilian soybean crop projection of 131.5 MMT
• Attaché lowers Argentine bean crop forecast, matching USDA’s latest
• Hungary also dealing with bird flu

 

Politics & Elections:
• Congress certifies Biden win following some pro-Trump supporters storming Congress
• Democrat Jon Ossoff wins Georgia Senate runoff  
• Biden plans to nominate Merrick Garland as attorney general

 

Policy Focus:
• Schumer: More Covid aid ‘one of the first things’ the new Senate does
• Other likely issues ahead: state gov’t aid, infrastructure funding, climate change
• Tax-related changes may be more difficult in new Congress
• IRS to allow tax breaks on forgiven PPP loans after law change

 

China Update:
• U.S. export sales to China continue
WSJ: For Biden, resetting America’s China policy means rejecting Trump approach

 

Energy & Climate Change:

• Stabenow: Establishing ag carbon market a ‘top priority’ of Senate Ag panel
• Ex-Treasury chief joins TPG for climate fund


Food & Beverage Industry Update:
• Tyson reopens Iowa pork plant after a three-week closure
• Smithfield readying to vaccinate workers


Coronavirus Update:
• Moderna vaccine protection likely will act against virus for up to two years
• China’s Hebei province reports 120 new cases of Covid-19

 


MARKET FOCUS


 

Equities today: U.S. stock futures rose this morning and stock markets world-wide were higher, amid investor expectation of higher government spending under a Democratic-controlled Senate, dismissing political violence taking place in the U.S. Congress on Wednesday. Overnight, the MSCI Asia Pacific Index climbed 0.8% while Japan's Topix index closed 1.7% higher.

 

     U.S. equities yesterday: The Dow gained 437.80 points, 1.44%, at 30,829.40. The Nasdaq declined 78.17 points, 0.61%, at 12,740.79. The S&P 500 was up 21.28 points, 0.57%, at 3,748.14.

 

     Since election

 

On tap today:

 

     •  U.S. jobless claims are expected to rise to 815,000 in the week ended Jan. 2 from 787,000 a week earlier. Follow our coverage here. (8:30 a.m. ET) Update: U.S. weekly jobless claims total 787,000, vs 815,000 estimate.
     • U.S. trade deficit is expected to widen to $67.3 billion in November from $63.1 billion a month earlier. (8:30 a.m. ET) Update: The U.S. trade deficit overall for goods and services in November expanded to $68.1 billion versus expectations it would be just over $67 billion.
     • USDA Weekly Export Sales report, 8:30 a.m. ET.
     • Institute for Supply Management's services index for December is expected to fall to 54.5 from 55.9 a month earlier. (10 a.m. ET)
     • Federal Reserve: Philadelphia's Patrick Harker on the economic outlook at 9 a.m. ET, St. Louis's James Bullard on the U.S. economy and monetary policy at 12 p.m. ET, Chicago's Charles Evans on the economic outlook at 1 p.m. ET, and San Francisco's Mary Daly at a virtual Shadow Open Market Committee event at 3 p.m. ET.
     • Japan household spending for November is out at 6:30 p.m. ET.

 

Market perspectives:

 

     • Outside markets: The U.S. dollar index has rebounded from a 2.5-year low hit on Wednesday. Still, an analyst notes the USDX is “in deep technical trouble” as a price downtrend remains firmly in place. Another market suggesting inflation is on the rise is the U.S. Treasury market, whose 10-year note yield this week has pushed above 1.0%. Thursday the 10-year was yielding 1.044%.


     • Crude oil has turned mixed ahead of the U.S. trading start, with U.S. crude trading above $50.75 per barrel and Brent dipping under $54.25 per barrel. Crude oil was higher in Asian action with U.S. crude gaining 29 cents at $50.92 per barrel while Brent crude was up 25 cents at $54.55 per barrel.

 

     • "The best thing for agriculture is that there is a drought in Argentina and Brazil,” said Sen. Chuck Grassley (R-Iowa) after being asked about the impact a Democratic-controlled Senate would have on U.S. agriculture.

 

     • Jordan’s state grain buyer issued a new tender to buy 120,000 MT of milling wheat from optional origins.

 

     • Total value of the entire cryptocurrency market has surpassed $1 trillion for the first time as Bitcoin skyrocketed through $37,700 overnight to hit a fresh record high. Bitcoin, which some call “the new gold,” is already up about 30% since the start of 2021 and in the past 12 months has surged over 380%. It makes up about two-thirds of the crypto market value, followed by Ether at about 13%, according to data from CoinGecko.

 

     If you don’t understand Bitcoin’s surge, some analysts note many large institutional investors have been piling into the market, looking to diversify even more of their assets to hedge against inflation and geopolitical risks. A large number of retail investors and trend-following quant funds have also joined the race recently due to FOMO on a quick and easy buck.

 

     Nikolaos Panigirtzoglou and the team at JPMorgan suggest Bitcoin could rise to $146,000 as an "alternative" currency if it were to match gold in terms of market capitalization. That's a mere 3.8x the current price, but about 35x from the level at which JPMorgan CEO Jamie Dimon called bitcoin a "fraud," and threatened to fire any bank employee dealing with it. David Rosenberg, economist and strategist at Rosenberg Research, considers Bitcoin the biggest market bubble right now, but also sees stocks in bubble territory, and recommends investing in laggards like utilities and energy, as well as gold, which just completed its best year in a decade.

 

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

     • One Argentine strike reportedly ends, but another to get underway soon
     • Attaché maintains Brazilian soybean crop projection of 131.5 MMT
     • Attaché lowers Argentine bean crop forecast, matching USDA’s latest
     • Hungary also dealing with bird flu

 


POLITICS & ELECTIONS


 

— Congress certifies Biden win as 46th president following some pro-Trump supporters storming the chambers of Congress. Jan. 6 was always going to be a sensitive day due to conflicts over details of the Nov. 3 election, but while Congress eventually certified Joe Biden as the incoming president, the day ended up being historic for other reasons as well as lawmakers scrambled to initially leave their chambers following a mob of some Trump supporters who broke windows and did other damage in a riot that resulted in a woman being fatally shot by Capitol Police, and three more people died from unspecified medical emergencies. Overstretched police responded with drawn guns and tear-gas, as scores of rioters smashed windows and entered the Senate and House. Vice President Mike Pence closed out the proceedings early this morning, hours after police had hurried him out of the Senate chamber with rioters inside the Capitol. The House and Senate began the process of counting Electoral College votes Wednesday afternoon, but the proceeding was interrupted for about six hours by a mob that stormed the Capitol Building. The count resumed at about 8 p.m. ET. The tally was 538 votes from the 50 states and the District of Columbia, cementing Biden’s win with 306 electoral votes to President Trump’s 232.

 

     Objections were submitted for six states. Two objections were presented by a Senate and House member:

  • Arizona. The Senate voted against sustaining the objection to Arizona's electoral votes by a vote of 6-93. The House voted against sustaining this objection by a vote of 121-303.
  • Pennsylvania. The Senate voted against sustaining the objection to Pennsylvania's electoral votes by a vote of 7-92. The House voted against sustaining the objection by a vote of 138-282.

     The march to the Capitol: Speaking on Wednesday morning to supporters before the demonstrators had entered the Capitol complex, President Trump urged them to keep up the fight against the election results and march to the Capitol. In a short video posted on Twitter after skirmishes between police and the rioters, Trump asked that the demonstrators remain peaceful, though he continued to embrace the cause of overturning the election. “We have to have peace, so go home. We love you. You’re very special,” Trump said of the rioters. Twitter Inc. later removed the tweet, saying it believed it could contribute to, rather than diminish, the risks of further violence and locked Trump’s Twitter account for 12 hours.

 

     Biden, in an address Wednesday afternoon, called the chaos an "insurrection" that defied the peaceful transfer of power and "borders on sedition."

 

     Senate Majority Leader Mitch McConnell (R-Ky.) called the rioting a “failed insurrection.” Senate Minority Leader Chuck Schumer (D-N.Y.) said that Wednesday would join “that very short list of dates in American history that will live, forever, in infamy.”

 

     Trump issued a statement committing to an orderly transition of power to Biden on Jan. 20. “While this represents the end of the greatest first term in presidential history, it’s only the beginning of our fight to Make America Great Again!” he said in a statement released by the White House. He added that he continued to “totally disagree with the outcome of the election.” Trump’s statement came as staff resigned and as congressional allies abandoned him in the aftermath of Wednesday’s events.

 

     World leaders reacted with alarm, calling the attack a shocking development in one of the world’s most stable democracies.

 

     Business leaders and trade groups denounced the riots. "The insurrection that followed the president's remarks today is appalling and an affront to the democratic values we hold dear as Americans. There must be a peaceful transition of power," said Blackstone CEO Stephen Schwarzman, one of Trump's most loyal allies on Wall Street. "This is not who we are as a people or a country," added JPMorgan CEO Jamie Dimon, while Apple's Tim Cook said it marked a "sad and shameful chapter" and called for those responsible to be held to account. The head of the National Association of Manufacturers, a group representing 14,000 companies in the U.S., even called on Vice President Mike Pence to "seriously consider" invoking the 25th Amendment to remove Trump from office.

 

     WSJ mob

 

     Comments: While Wednesday was a dark day for America, our institutions held. This is likely a reason why the dollar is higher, and equities showed strength during the mob action and carnage.

 

— Democrat Jon Ossoff wins Georgia Senate runoff. Ossoff took the seat formerly held by Republican Sen. David Perdue, following fellow Democrat Raphael Warnock's win earlier in the day. Both lead their defeated rivals by margins that are bigger than the threshold required to trigger a recount. The new Senate will now be evenly split between the two parties at 50-50, with Vice President-elect Kamala Harris serving as the tiebreaker vote.

 

— Biden plans to nominate Merrick Garland as his attorney general. Judge Garland’s reputation as a moderate in his interpretations of law was a factor in leading former President Obama to nominate him to the Supreme Court in 2016, but Senate Republicans refused to grant the judge a hearing or a vote, preferring that Obama’s successor fill the vacancy after that year’s November election.

 

     Biden also intends to nominate longtime national security official Lisa Monaco as deputy attorney general, and Vanita Gupta, who was head of the Justice Department’s civil rights division under President Barack Obama, as the Department’s No. 3. Kristen Clarke, president of the Lawyers’ Committee for Civil Rights Under Law, will be named head of the civil rights division, transition officials said.
 


POLICY FOCUS


 

— Schumer: More Covid aid ‘one of the first things’ the new Senate does. Incoming Senate Majority Leader Chuck Schumer (D-N.Y.) said at a press briefing yesterday that the $2,000 checks will be “one of the first things” the new Senate does. Sen. Sherrod Brown (D-Ohio), who would be in line to chair the Banking Committee, highlighted the need to extend a moratorium on evictions, which runs out at month-end. (Most think this would mean an additional $1,400 besides the $600 signed into law.)

 

     Other topics likely to be considered and approved by a unified government in Democratic party control: infrastructure spending, investments in green energy and aid to cash-strapped local governments.

 

     Tax-related changes may be more difficult based on initial reactions in Washington. While some congressional Democrats want to roll back some of President Donald Trump’s 2017 tax cuts, including raising taxes on corporations and people who make more than $400,000, hurdles are evident as moderate Democrats could join Republicans in blocking or at least tempering increases. Schumer wants to restore federal deductions for state and local taxes that were limited by Trump, but that also may be hard to accomplish. Link to the WSJ’s take on possible tax changes ahead.

 

— IRS to allow tax breaks on forgiven PPP loans after law change. The U.S. Internal Revenue Service will allow businesses that got their Paycheck Protection Program (PPP) loans forgiven to write off expenses paid for with that money, shifting policy after Congress passed new legislation last month. IRS guidance issued overrides previous rules that recipients of PPP loans that had been forgiven couldn’t claim deductions for the wages, rent, utilities and other expenses covered by the loans. The change came after a bipartisan move in Congress to clarify that business owners should be eligible for those tax breaks.
 


CHINA UPDATE


 

—  U.S. export sales to China continue for 2020-21. Net export sales to China for the week ended Dec. 31 included 55,371 tonnes of wheat, 90,424 tonnes of corn, 29,663 tonnes of sorghum, 369,047 tonnes of soybeans and 36,731 running bales of upland cotton.

 

     For 2021-22, there were net sales of 30,000 tonnes of sorghum and 63,000 tonnes of soybeans.

 

     For 2020, there were 3 tonnes of beef and reductions of 11,327 tonnes of pork, with sales of 1,248 tonnes of beef and 2,629 tonnes of pork for 2021.

 

— WSJ: For Joe Biden, resetting America’s China policy means rejecting the Trump approach. With tensions between the U.S. and China rising on many fronts, President-elect Joe Biden will seek to align Western democracies to broadly pressure Beijing, a break with President Trump’s go-it-alone approach, the Wall Street Journal reports (link). “Chinese President Xi Jinping is a step ahead along the same lines, having busied himself in recent years trying to draw traditional U.S. allies into China’s economic orbit.”

 

     Trade has helped China economy (chart source: WSJ):

 

     China economy

 

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

 


ENERGY & CLIMATE CHANGE


 

— Stabenow says establishing ag carbon market will be a ‘top priority’ of Senate Ag panel. Incoming Senate Ag Committee chairwoman Debbie Stabenow (D-Mich.) said she would make it a “top priority” to facilitate establishment of an agricultural carbon market. “We certainly will be deciding ... what bills come to the floor, which is a dramatic difference, and as well as what bills are brought up before the committee,” Stabenow told a congressional pool reporter. “As chair of the Agriculture Committee, we're going to lead an effort to create a voluntary climate exchange and ... climate policy for farmers and ranchers, and that's a top priority for me,” Stabenow said. She was among four Senate sponsors of the Growing Climate Solutions Act last year. Under the bill, the USDA would provide information to farmers and forest owners interested in participating in carbon markets, and it would certify businesses to verify that participating landowners are carrying out practices that capture carbon, reduce emissions, or improve soil health. “While farms and forests have been uniquely impacted by the climate crisis, they can also be an important part of the solution,” said Stabenow when the bipartisan bill was introduced last June.

 

     President-elect Joe Biden made climate change a priority during the transition. Biden said last month that he wants U.S. agriculture to be the first in the world to achieve net-zero emissions of greenhouse gases and that his administration would “create new sources of income for farmers in the process, by paying farmers to put their land in conservation and plant cover crops that use the soil to capture carbon.” The leader of Biden’s USDA transition team advocates creating a “carbon bank” at the agency to finance investment on the farm in practices that slow climate change.

 

— Ex-Treasury chief joins TPG for climate fund. In another signal that climate change policy is ahead, former Treasury secretary Hank Paulson has joined TPG to help run a fund that’ll invest in companies combating climate change. Paulson, 74, will work alongside TPG’s co-founder, Jim Coulter, company spokesman Luke Barrett said. The fund will look to target various climate-related sectors such as solar, electric vehicles and agriculture, he said.

 


FOOD & BEVERAGE INDUSTRY


 

— Tyson reopens Iowa pork plant after a three-week closure. Tyson Foods Inc. has resumed slaughter at a Columbus Junction, Iowa plant, three weeks after idling the pork processing facility due to a mechanical malfunction. The facility plants to gradually scale up production. When it initially closed the facility Dec. 16, the company indicated it would only be idle for a few days of repairs and would shift production to other facilities. The plant slaughters around 10,100 pigs per day, representing around 2% of the country’s slaughter capacity.

 

— Smithfield readying to vaccinate workers. Smithfield Foods, the world’s largest pork processor, indicated it is actively preparing for Covid-19 vaccine distribution to its employees and has medical capabilities at its U.S. plants. It did not provide details regarding those plans, noting circumstances vary by state. The company owned by China’s WH Group is one of the first in the U.S. to say it is readying to vaccinate workers. The meat processing sector was one of the hardest hit by the virus. The U.S. Center for Disease Control and Prevention indicates food and ag workers should receive the vaccine in a later phase, after healthcare workers and those over the age of 75.

 


CORONAVIRUS UPDATE


 

 Summary: Global cases of Covid-19 are at 87,300,343 with 1,885,614 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 21,305,323 with 361,297 deaths.

 

       Link to Covid Case Tracker
       Link to Our World in Data

 

—  Covid-19 vaccine developed by Moderna will probably offer protection against the virus for up to two years, according to the company’s chief executive. The speed at which vaccines have been developed has left scientists with less data than normal about the longevity of any inoculation. The Moderna shot was approved by the EU on Wednesday.

 

— China’s Hebei province reports 120 new cases of Covid-19. North China’s Hebei province reported 51 new locally transmitted Covid-19 infections and 69 asymptomatic cases on Wednesday, after 63 infections were reported a day earlier, local health authorities said today. All but one of the new infections were recorded in Shijiazhuang, the provincial capital. The remaining case was in the neighboring city of Xingtai. In addition, two new cases from overseas were reported in Hebei on Wednesday. With 92 confirmed infections and 149 asymptomatic cases as of Wednesday, the Hebei outbreak marks China’s biggest rise in Covid-19 infections in recent months.

 


 

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