Monday Morning Reads

Monday Morning Reads





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In a ceremony that will take place at the White House later today, President Biden will sign the $1T bipartisan infrastructure bill that finally passed in Congress after months of negotiations. The five-year spending package will be financed by tapping unspent COVID relief aid, Medicare rebates and unemployment insurance halted by some states, as well as petroleum reserve sales and 5G spectrum auctions. On Sunday night, Biden named Mitch Landrieu, a former mayor of New Orleans and a former lieutenant governor of Louisiana, as the infrastructure coordinator, who will be tasked with overseeing the "largest infrastructure investment in generations." Jefferies cites five infrastructure stocks to buy now.

Snapshot: The role is similar to the one Biden was assigned to as vice president during the first year of the Obama administration. He oversaw spending from the 2009 Recovery Act, which included $787B to stimulate the economy after the global financial crisis.

"I made it a point every day to stay on top of how exactly the money was spent, what projects were being built, what projects were not being built and how it was functioning," Biden said in a statement. "We owe it to the American people to make sure the money in this infrastructure plan and the Build Back Better plan - which, God willing, we're going to be able to still finish - will be able to be used for purposes it was intended." The package is separate from a separate social "infrastructure" spending measure, which is being held up in the Senate over its price tag.

Highlights from the current bill: $110B was earmarked for repairing the nation's aging highways, bridges and roads. Another $65B will be allocated for internet access, which would improve services for rural areas, low-income families and tribal communities. A further $65B would be spent on modernizing the electric grid, while boosting carbon capture technologies and environmentally friendly energy sources. The package also features $55B for water and wastewater infrastructure, $39B for public transit, $25B for airports and around $12B for accelerating the use of electric vehicles. Infrastructure ETFs like PAVE are building steam.

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Commodity Supercycle, The Debate Continues

Supply disruptions and a push toward sustainability may be driving the commodity boom, even as fiscal stimulus and low rate policies also factor in. Is this temporary, or are supply shocks and their solutions suggesting a period of extended inflation? Our expert roundtable discusses. Learn More

Fourth wave

Coronavirus cases are on the rise in Europe again, with almost 2M infections reported in the last week. That's the most in the region since the pandemic began, according to the World Health Organization, with almost 27,000 deaths reported, or more than half of all last week's COVID-19 deaths globally. The alarming numbers have seen Belgium and Norway reimpose some COVID restrictions, Austria institute a lockdown for the unvaccinated and Germany call for an extended state of emergency.

Bigger picture: U.S. states should look at Europe and take it as "a sign that the U.S. might still see resurgences, as well," said Tom Wenseleers, evolutionary biologist and biostatistician at KU Leuven, a university in Belgium. Hospitals across Minnesota are already operating at "100% capacity" and have issued a plea for the public's help as COVID cases hit an all-time high. Concerns are also growing as the worst of winter sets in, when most people gather and socialize indoors.

Meanwhile, a federal appeals court in New Orleans has halted the Biden administration's vaccine and testing requirements for private businesses. Calling the requirement a "mandate," the court said the rule "grossly exceeds OSHA's statutory authority," though it is not clear whether the 5th Circuit will determine the fate of the order. The Biden administration has asked that it hold off on a ruling until a judicial lottery can take place this week, which will consolidate several challenges before a single appeals court.

Under fire: Last month, the White House called on all WTO members to support an intellectual property waiver for COVID-19 vaccines, a year after India and South Africa pushed for a similar proposal. Pfizer (NYSE:PFE), which has delivered around 2B shots of its vaccine (expected to generate $36B for the company in 2021), is fighting the stance, calling IP rights the "blood of the private sector." It also wouldn't solve supply problems in the short term or allow for quality checks, according to the company, though waiver proponents say that is not the case, and the current framework is leading to global vaccine inequality.

COP26 conclusion

After two weeks of talks, nearly 200 countries struck an agreement to ramp up efforts to fight global warming. Supporters say Saturday's COP26 agreement in Scotland signals new determination among the world's governments to shift away from fossil fuels, though activists cautioned that the deal fell well short of the breakthrough needed to avert eventual climate catastrophe. They specifically pointed to the lack of enforcement mechanisms, relying only on good faith to follow the rules as best they can.

Backdrop: A late change at the insistence of China and India (who say they need more time to develop industry) watered down a pledge to "phase out" coal power, instead committing to "phase down" coal. However, the language marked the first time that coal or fossil fuels were mentioned - and implicitly blamed - in a United Nations climate change pact. China and the U.S., the world's two biggest carbon emitters, also released a joint declaration pledging to cooperate in fighting climate change, but critics say the deal is mostly symbolic.

While an agreement was separately reached on a broad framework that many business leaders hope will encourage cross-border trading of carbon credits among companies, activists had hoped for more formal rules for governments. More than 100 countries further agreed to cut methane levels, and the agreement includes a reference to methane for the first time - but there's nothing binding.

Communique: "We have made progress on the three objectives we set at the start of COP26," said European Commission President Ursula von der Leyen. "First, to get commitments to cut emissions to keep within reach the global warming limit of 1.5 degrees. Second, to reach the target of $100B per year of climate finance to developing and vulnerable countries. And third, to get agreement on the Paris rulebook. This gives us confidence that we can provide a safe and prosperous space for humanity on this planet. But there will be no time to relax: there is still hard work ahead."

Biden meets Xi

The clock is ticking down for a high-profile meeting between President Biden and China's Xi Jinping, which will take place in the U.S. tonight and Tuesday morning in Beijing. While the two leaders have spoken twice by phone since Biden took office in January, today's gathering will resemble a formal bilateral meeting, with leaders on both sides surrounded by high-level aides. The meeting will also take place virtually as Xi has not left China since the pandemic began in March 2020.

Likely topics: Climate change, nuclear nonproliferation, human rights, COVID-19, Hong Kong and Taiwan, intellectual property, cybersecurity and the 2022 Winter Olympics.

For investors, any signals that bilateral trade ties are improving may help bolster sentiment. China wants the U.S. to remove Trump-era tariffs, but the Biden administration is expected to keep them mostly in place until Beijing makes good on its promise to uphold several purchase agreements. China has been running far behind its promises made in a "Phase 1" deal signed in 2020 - to boost purchases of U.S. goods by $200B - and has also not fully met promises to improve IP protections and market access for American agriculture and financial services.

Moreover, the U.S. will raise issues that go beyond the Phase 1 commitments, like China's industrial subsidies for its state-owned companies. Infrastructure could be another hot talking point as China continues to develop its Belt and Road Initiative, which aims to build a series of projects across Asia to Europe. G7 nations have recently sought to counter the effort by launching an international alliance called Build Back Better World, or BBB3.

Outlook: Due to an increasingly fractious relationship, officials on both sides have played down expectations for any concrete conclusions. In other words, while specific issues aren't going to be resolved in the meeting, the U.S. wants to put "guardrails" on the relationship so it doesn't deteriorate. Over the last few months, sweeping crackdowns have also been seen across many of China's economic sectors, showing investors that Xi is willing to force through painful reforms at all costs and making his hold on the Communist Party look even stronger.

Today's Markets

In Asia, Japan +0.6%. Hong Kong +0.3%. China -0.2%. India +0.1%.
In Europe, at midday, London -0.2%. Paris +0.4%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.3%. S&P +0.2%. Nasdaq +0.2%. Crude -1.4% at $79.65. Gold -0.1% at $1865.80. Bitcoin +2% at $65754.
Ten-year Treasury Yield -3 bps to 1.55%

Today's Economic Calendar

8:30 Empire State Mfg Survey

Companies reporting earnings today »

What else is happening...

Elon Musk is up to $6.9B worth of TSLA stock sales; trolls Bernie Sanders.

Taproot, Bitcoin's (BTC-USD) biggest upgrade in four years, goes live.

Merck (NYSE:MRK) potential animal health spin could be next after J&J split up.

Boeing (NYSE:BA) 737 MAX changes win favor from China regulator - Reuters.

Fresh legalization move... Cannabis stocks lead weekly healthcare gainers.

Deere (NYSE:DE) reaches tentative agreement with union to end four-week strike.

Southwest (NYSE:LUV) boosts worker incentives to avert holiday travel disruptions.

Amazon (AMZN) workers in New York withdraw petition for union vote - AP.

White House to nix Intel (NASDAQ:INTC) plan on boosting chip production in China.

Nvidia (NASDAQ:NVDA) set to get in-depth U.K. probe of Arm deal this week

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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