- Weekly market focus
- Trump signs pandemic aid and omnibus spending bills
- Georgia Senate seat races remain very close
- U.S. pandemic infection levels plateau
Weekly market focus — The U.S. markets this week will focus on (1) relief that President Trump on Sunday night signed the pandemic aid and omnibus spending bills, averting the possibility of a U.S. government shutdown on Tuesday, (2) the pandemic statistics, which have leveled off in the past week but may see a new surge in early January due to holiday travel and gatherings, (3) the Treasury’s sale of $176 billion of T-notes today and tomorrow, (4) continued U.S. political uncertainty ahead of the two Georgia Senate seat run-off elections on January 5 and the scheduled certification by Congress on January 6 of Joe Biden as the next President, and (5) this week’s light U.S. economic calendar.
The European markets are breathing a sigh of relief after the UK and EU last Thursday reached a final Brexit trade agreement just before this Thursday’s December 31 deadline. The UK Parliament is expected to approve the deal this Wednesday (Dec 30). EU government envoys last Friday issued a statement endorsing the deal, which was enough for the agreement to go into effect on January 1 even though it will take up to four months for the EU to complete the formal ratification process.
In Asia, the focus will continue to be on whether President Trump, during the remaining 23 days of his Administration, launches any more sanctions or other measures against the Chinese government or companies.
Trump signs pandemic aid and omnibus spending bills — President Trump on Sunday night signed the $900 billion pandemic aid bill and $1.4 trillion omnibus spending bill. That means that unemployment benefits will resume after lapsing on Saturday, and that some citizens will receive $600 stimulus checks. There will also be another round of PPP aid to small businesses and a host of funding measures for other entities and initiatives including pandemic funding.
Mr. Trump had no real choice but to sign the bills since his demand for $2,000 stimulus checks was opposed by Congressional Republicans and was causing a politically-damaging split among Republicans. Republicans were concerned that Mr. Trump’s actions were hurting the Republican candidates in the upcoming run-off elections for the two Georgia Senate seats.
The fact that Mr. Trump signed the omnibus spending bill means that the U.S. government is now funded through September 30. That means there will be no new threat of a government shutdown until the 2022 fiscal year begins on October 1, 2021.
Even though Mr. Trump signed the pandemic aid and omnibus spending bills on Sunday night, Congress is still returning to Washington early this week to try to override his veto of the $741 billion National Defense Authorization Act, which provides discretionary spending to the Defense Department. The House is expected to vote today, and the Senate is expected to vote tomorrow. The bill has strong bipartisan support, and the veto override is expected to succeed.
Georgia Senate seat races remain very close — The markets are closely watching the prospects for the run-off elections for the two Georgia Senate seats on January 5. If Democrats win both those seats, they will take control of the Senate and will be able to approve at least parts of the blue-wave agenda depending on the status of the Senate filibuster rule.
In its poll-of-polls, FiveThirtyEight reports that the Republican Perdue is slightly ahead of Democrat Ossoff by a margin of 48.2%-47.7%, respectively. In the other Georgia race, Democrat Warnock is slightly ahead of Republican Loeffler by 48.2%-47.6%.
The betting odds at PredictIt.org, for whatever they are worth, are at 69% for Republican control of the Senate after the Georgia run-off elections and 33% for Democratic control. Early voting in Georgia began last week, and turnout is at a record high.
U.S. pandemic infection levels plateau — New U.S. Covid infections in the U.S. have plateaued in the past week, although there is likely to be a new spike in early January due to increased travel and gatherings of friends and family over the Christmas and New Years holiday.
The 7-day average of new U.S. Covid infections on Friday fell to a 3-week low of 189,578. The 7-day average of Covid-related deaths on Saturday fell to a 2-1/2 week low of 2,219.
Meanwhile, vaccination rates are ramping up as both Pfizer and Moderna vaccines are being rolled out for health care workers and nursing home residents. Bloomberg reports that 4.4 million vaccine doses have been given worldwide, with 1.94 million of those doses in the U.S. Vaccinations are now ramping up in Europe and Latin America.
