- Congressional passage of spending and pandemic aid bills slips into weekend or early next week
- Moderna vaccinations expected to begin next weekÂ
- Odds are little changed for Georgia Senate seat run-offs
- European Parliament sets Brexit deadline of Sunday
- U.S. LEI to show smallest increase since May
- U.S. current account deficit to expand
Congressional passage of spending and pandemic aid bills slips into weekend or early next week — Washington’s political leaders still expect to reach an omnibus spending bill and a pandemic aid bill before leaving for their holiday break. However, the process on Thursday was slowed by last-minute demands and the process of writing legislative text.
Congress today may pass a several-day continuing resolution to replace the CR that expires today. However, there were reports that some Republican Senators would object to another CR, which would mean that a partial U.S. government shutdown would start tomorrow.
The $900 billion pandemic aid bill now under consideration contains the key measures that are acceptable to both parties, such as $300 per week in supplemental unemployment benefits, $600 stimulus checks, another round of PPP aid, $17 billion for airlines, and a host of other aid measures. The bill leaves aside the two main contentious issues of state-local government aid and the pandemic liability shield, leaving those issues to be hashed over again in early 2021.
Moderna vaccinations expected to begin next week — The FDA’s advisory committee Thursday afternoon voted 20-0 to endorse the approval the Moderna Covid vaccine. The FDA could officially approve the vaccine as early as today, allowing Moderna vaccinations to ramp up starting next week.
Moderna is planning to produce 20 billion doses of its vaccine in December and 85-100 doses for the U.S. in Q1-2021. Moderna’s production goal for calendar 2021 is between 500 million and 1 billion doses.
The second approved vaccine will provide a welcome psychological boost for the American public as they face the worst of the pandemic yet. New cases of Covid in the U.S. reached a record high of 264,267 on Monday, and the 7-day average on Wednesday reached a record high of 225,374. The number of U.S. deaths from Covid reached a record high of 3,835 on Wednesday, and the 7-day average on Wednesday was at a record high of 2,567.
Odds are little changed for Georgia Senate seat run-offs — The betting odds have been remarkably stable for the run-off elections on January 5 for the two Georgia Senate seats. Early voting in that election has already begun. Democrats would have to win both elections to take control of the Senate and oust Senate Majority Leader McConnell.
The betting odds at PredictIt.org, for whatever they are worth, are at 70% for Republican control of the Senate and only 33% for Democratic control of the Senate. The polls are close for both races, which makes predicting the outcome difficult, especially since some political observers have questioned whether President Trump’s attack on the validity of the November 3 election might suppress turnout among Republican voters.
While the odds for Democratic control of the Senate are relatively low at 33%, that particular outcome would have major implications because Democrats would then have full control of Washington, with control of the presidency and both houses of Congress.
The question would then be whether Senate Democrats would do away with the filibuster, thus giving Democrats carte blanche to pass legislation. However, Senator Manchin (D-WV) recently said that he would vote against doing away with the filibuster, meaning Democrats apparently would not have enough votes for that move. Nevertheless, Democrats with control of the Senate could still pass major tax and other bills through the budget reconciliation process, which requires only a majority vote in the Senate and is insulated against a filibuster.
European Parliament sets Brexit deadline of Sunday — The European Parliament said that it will only be able to ratify a UK-EU trade agreement if there is a deal by Sunday since it needs time to review the deal. The UK Parliament has more flexibility for a vote right up until the December 31 end of the transition period.
The good news is that the UK and EU seem to have reached an agreement on level playing field issues, leaving fishing as the last roadblock. UK Prime Minister Johnson on Thursday said that the EU’s position on fishing was “not reasonable,” indicating that he plans to seek every available concession until the last minute.
The markets seem to believe that a UK-EU trade agreement is a done deal, since it is difficult believe the two sides would allow Brexit chaos on January 1 with so few remaining issues. The British pound this week has rallied sharply on expectations for a deal. GBP/USD on Thursday posted a new 2-1/2 year high and closed the day up +0.56%.
U.S. LEI to show smallest increase since May — The consensus is for today’s Nov U.S. leading economic indicators index to show an increase of +0.5% m/m, which would be a solid increase although the smallest since the LEI recovery began in May. The LEI in October was still down -2.9% y/y, illustrating that U.S. economic conditions remain challenging.
U.S. current account deficit to expand — The consensus is for today’s Q3 current account deficit to expand to -$187.0 bln from Q2’s -$170.5 bln. The U.S. current account deficit remains huge due to long-term structural issues and the heavy hit to U.S. exports caused by the pandemic. Today’s expected deficit would be almost double the $94 billion deficit seen in Q4-2016, just before President Trump took office.
