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Market Takes China’s Response in Stride, Risk Appetites Recover

Overview: The market is judging China’s response to Speaker Pelosi’s visit in a mild way and risk appetites returned. Equity markets are higher, even…

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Overview: The market is judging China's response to Speaker Pelosi's visit in a mild way and risk appetites returned. Equity markets are higher, even though Chinese shares weakened. Europe's Stoxx 600 is edging higher after two days of small loses, and US futures enjoy a firmer bias. The surge in US rates yesterday has calmed. The US 10-year yield is firm near 2.76% and the 2-year yield is up a couple of basis points near 3.07%. European yields are 4-5 bp higher and the peripheral premium has narrowed a little. The dollar, which was buoyed by the jump in rates yesterday, is mostly softer today. The Scandis lead the move, while the Swiss franc and New Zealand dollar are softer. Swiss CPI was in line with expectations, with the EU-harmonized measure, rising to 3.3% from 3.2%, easing fears of an intermeeting move by the SNB. Among emerging market currencies, Asian currencies underperformed, along side the Turkish lira, sandbagged by another rise in CPI (79.6%). Gold reversed lower yesterday from $1788 and found support today near $1755. September WTI is consolidating $93-$95 a barrel, inside yesterday’s range, which was inside Monday’s. OPEC+ announcement is awaited on September quotas. US natgas collapsed 7% yesterday but is around 1% higher today. Europe’s benchmark natgas is around 1.25% higher after rising about 4.5% over the last two sessions. Iron ore is off 3.8%, roughly matching the decline of the past three sessions. Copper snapped a six-day rally on Monday. It edged lower yesterday and is trading slightly heavier today. September wheat is trying to snap a three-day, nearly 5.5% drop. It is trading about 1.7% better today. 

Asia Pacific

China escalated its protest of the third highest US government official's visit to Taiwan. It the most senior visit since Gingrich 25 years ago. Beijing announced live-munition drills and missile tests as it sent ships surrounding Taiwan. It also sent nearly two dozen aircraft into Taiwan's air defense identification zone. It is thought to be the most provocative military activity in as much as 20 years. Beijing has also announced some trade restrictions with Taipei. A Chinese-based electric vehicle battery manufacturer, Contemporary Amperex Technology has halted plans to build plants in North America. Nevertheless, on balance, so far, the market is judging Beijing's response as mild. How it plays out in Chinese domestic politics is not clear. 

Reports suggest that the US has sent four warships into the area, including an aircraft carrier. Speaker Pelosi defended her visit in a Washington Post op-ed piece claiming that her trip was a "signal to the world that Washington stands with the self-governed island’s “vibrant, robust” democracy and has a “sacred vow” to support its defense amid growing threats from Beijing. The underlying question is not about her intention but the timing. It seemed not to have been coordinated with the Commander in Chief. Nor does the visit now seem part of the broader American strategy. Moreover, the signal has been sent numerous times and various channels. That is to say, the benefits are repeating the signal seems minor compared with the costs, which will likely include any hope that Beijing participates in cooperative ventures, including a cap on Russian oil prices. The US appears to have lowered the price of China being a free rider. Ironically, and importantly, both the US and China share one thing and with some justice, both claim the other is trying to change the relationship with Taiwan unilaterally.

Meanwhile, China's Caixin services PMI held fared better than expected.

The market had expected some weakness after the "official" version. Instead, it rose to 55.5 from 54.5. However, it was not sufficient to overcome the drag from the manufacturing sector, and the composite reading eased to 54.0 from 55.3. Australia's final services and composite PMI trimmed the weakness in the preliminary report. The services PMI fell to 51.1 not 50.4 (flash) from 52.6. The composite stands at 50.9, not 50.6, after 52.6 in June. Separately, Australia also reported a 1.4% rise in Q2 retail sales. This was a little better than expected, but it was blunted by the downward revision in Q1 to 1.0% from 1.2%. Tomorrow, Australia reports June trade figures. Flattish exports are expected to see the trade surplus narrow a little. In contrast to Australia, Japan's final services and composite PMI worsened from the preliminary reading. The services PMI fell to 50.3 from the 51.2 initial estimate from 54.0 in June. The composite drew close to the 50 boom/bust level at 50.2 from 50.6 flash and 53.0 previously.

The 17 bp jump in the US 10-year yield yesterday helped lift the dollar from nearly two-month lows near JPY130.40. It jumped back to almost JPY133.20 before the North American close and has edged higher today, reaching JPY133.90. That nearly retraced half of the dollar's slide from the July 27 high (~JPY136.45). The next retracement objective (61.8%) is closer to JPY134.75. The Australian dollar fell almost 1.5% yesterday, its biggest decline in nearly three weeks. The Aussie peaked on Monday around $0.7045 and fell slightly through $0.6915 yesterday. Follow-through selling today saw it approach $0.6885, before bouncing back to $0.6940. A move above $0.6950-60 would lift the technical tone. However, the buying enthusiasm has waned in Europe, and the risk is a return to the lows and possibly a test of the $0.6865 area. The Chinese yuan recovered yesterday and is little changed today in a narrow range (~CNY6.7450-CNY6.7600). The PBOC set the dollar's reference rate at CNY6.7813 vs. median expectations (Bloomberg's survey) for CNY6.7806.

Europe

Data from the ECB confirms what many in the market suspected. Officials are already drawing on the flexibility negotiated at the end of last year for recycling the proceeds of maturing bonds bought under the Pandemic Emergency Purchase Program. The ECB reports the data in two-month intervals. In June/July, the Eurosystem's holdings of Italian, Spanish, Portuguese, and Greek bonds increased by 17.3 bln euros. The holdings of German, French, and Dutch fell by 18.9 bln euros. The Transmission Protection Instrument is an emergency tool.

Germany and France's final July service and composite PMIs were higher than the preliminary reports. Spain's reading was not as weak as expected, but Italy's disappointed. Italy's composite, like Germany's, is below the 50. Germany's was revised to 48.1 from 48.0, while Italy's came in at 47.7 (median forecast Bloomberg's survey was for 49.7). France's service PMI was revised to 53.2 from 52.1, to pare the decline from 53.9 in June. The composite is at 51.7 rather than 50.6 of the flash estimate and 52.5 in June. The aggregate composite is at 49.9, down from 52.0 in June but slightly better than the 49.4 initial estimate. The UK's final services and composite PMI were revised down to 52.6 and 52.1 from the flash estimates of 53.3 and 52.8, respectively. Lastly, we note that the German trade balance jumped to 6.4 bln euros from a revised 900 mln euros in May, which was initially reported as a 1 bln euro deficit. Exports rose 4.5% while imports crept up by 0.2%. And Italy's retail sales dropped 1.1% in June, while earlier this week, Germany reported an unexpected 1.6% plunge (the median forecast in Bloomberg's survey was for a 0.3% increase).

The euro posted key downside reversal yesterday (traded on both sides of Monday's range and settled below Monday's low). However, follow-through selling today has been limited to the $1.0150 area were options for nearly 700 mln euros expire today. The session high is just shy of $1.02, where another set of expiring options (for 1.14 bln euros) have been struck. Sterling also saw some follow-through selling today, but it was limited to the $1.2135 area. A break of the $1.2120 area could spur further losses. However, ahead of tomorrow's BOE meeting where the swaps market has about an 80% chance of a 50 bp hike discounted, sterling sales may be limited.

America

The June JOLTS report added to the accumulating evidence that the labor market has lost momentum. We have been tracking the four-week moving average of jobless claims. It stands slightly below 250k. Jobless claims bottomed in late March/early April near 170k. In raw terms, jobless claims bottomed around 166k in mid-March, the week that the Fed began its tightening cycle, and were at 256k in the week ending July 23. Job openings collapsed by 605k in June, the most on record outside of when Covid first struck. It is the third consecutive monthly decline for a cumulative drop of 1.16 mln, and near 10.7 mln are at a nine-month low. In the Summers/Blanchard debate with the Fed's Waller/Figura, the nearly 10% drop in job openings has not boosted unemployment. Let's see what happens with the next 10%. That said, the JOLTS data and the rise in weekly jobs claims during the survey week warn of downside risks to the 250k median forecast (Bloomberg survey) for the July jobs report out Friday. 

The Federal Reserve is tightening financial conditions and the market pushed back recently. The S&P 500 rallied 9.1% last month, the most since November since 2020. The 10-year note yield tumbled 36 bp in July and the two-year yield fell by nearly twice as much, even though the Fed delivered its second consecutive 75 bp rate increase. On a broad trade-weighted basis, the dollar appreciated by the most since March 2020 (2.2%), on the other hand, moving the desired direction by the Federal Reserve. The Goldman Sachs Financial Conditions Index eased by 0.47% last month. It has been alternating between tightening and loosening of financial conditions on a monthly basis for the past six months. 

It is understandable, and should be expected, that the Fed pushes against pre-mature easing of financial conditions. The market clear recognizes that the Fed is not done. The Fed funds futures are pricing in another 100 bp in hikes this year. That would raise the target to 3.25%-3.50%. The median June dot (Fed's Summary of Economic Projections) was at 3.38%. The divergence is a 2023 story. The median dot is 3.75%. The implied yield on the December Fed funds futures briefly approach 3.75% in the middle of July. It traded near 2.65% last week. It rose to 2.92% yesterday as the market heard the pushback from the Fed's Kashkari, Evans, Daly, Mester, and Bullard. The former two do not have the vote but cited to illustrate the uniformity of the message. Still, the implied yield of the December 2023 Fed funds contract is more than 40 bp below the implied yield of the December 2022 contract. More of the same in terms of Fed officials today, with Barkin and Harker joining Bullard, Daly, and Kashkari. Data includes the final PMI, ISM services, and factory orders with the final durable goods report.

The US dollar bottomed on Monday against the Canadian dollar slightly ahead of CAD1.2765 and by the end of the yesterday it had recovered to almost CAD1.29. It edged a bit higher earlier today but remained below CAD1.29 but has come back offered to test CAD1.2850. Support is seen in the CAD1.2815-30 area. The greenback jumped 2.2% against the Mexican peso yesterday, its biggest advance since mid-June. The momentum carried it a little higher today (~MXN20.8335) before sellers emerged to knock it back below MXN20.64 in the European morning. Support is seen in the MXN20.55-59 band.

 


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Government

TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022

A weekly stock market preview and the data that will impact the tape. Sunday Evening Futures Open – Stock Market Preview Weekend News And Developments…

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A weekly stock market preview and the data that will impact the tape.

Sunday Evening Futures Open – Stock Market Preview

Weekend News And Developments

Berkshire Hathaway dramatically slowed new investment in the second quarter after setting a blistering pace at the start of the year, as the US stock market sell-off pushed the insurance-to-railroad conglomerate to a $43.8bn loss.

China’s southern island province of Hainan started mass Covid-19 testing on Sunday, locking down more parts of the province of over 10 million residents, as authorities scramble to contain multiple Omicron-driven outbreaks, including the worst in capital Sanya, often called “China’s Hawaii”.

Cuba: 17 missing, 121 injured as fire rages in oil tank farm in Matanzas City

Equity positioning for both discretionary and systematic investors remains in the 12th percentile of its range since January 2010, according to Deutsche Bank published last week.

Fisker Inc. (NYSE:FSR) unveils a process for qualifying US-based reservation holders of the Fisker Ocean all-electric SUV to retain access to the existing federal tax credit. The current $7,500 tax credit would be unavailable should Congress pass the Inflation Reduction Act of 2022 and President Biden signs the legislation into law.

Former Labour prime minister Gordon Brown has called for an emergency budget before the UK hits a “financial timebomb” this autumn. Mr. Brown said millions would be pushed “over the edge” if the government does not address the cost of living crisis.

Israel said Sunday it killed a senior Islamic Jihad commander in a crowded Gaza refugee camp, the second such targeted attack since launching its high-stakes military offensive against the militant group just before the weekend. The Iran-backed militant group has fired hundreds of rockets at Israel in response, raising the risk of the cross-border fighting turning into a full-fledged war.

NexJ Systems (TSX: NXJ) announced financial results for its second quarter ended June 30, 2022.

Rhine river hit by drought conditions, hampers German cargo shipping. According to reports, transport prices have shot up as drought and hot weather have affected water levels in the river Rhine in Germany leading cargo vessels to reduce loads during transportation.

Taiwan’s defense ministry said it had detected 66 Chinese air force planes and 14 Chinese warships conducting activities in and around the Taiwan Strait on Sunday, Reuters reports. Thursday’s drills involved the live firing of 11 missiles.

Unifor: 1,800 members from across the country arrive in Toronto this weekend before Monday’s start to the union’s 4th Constitutional Convention, where delegates will elect a new National President and vote on key priorities and initiatives. Unifor is Canada’s largest union in the private sector, representing 315,000 workers in every major area of the economy. 

U.S. rate futures have priced in a 69% chance of a 75 bps hike at its September meeting, up from about 41% before the payrolls data. Futures traders have also factored in a fed funds rate of 3.57% by the end of the year.

What The Analysts Are Saying…

Anybody that jumped on the ‘Fed is going to pivot next year and start cutting rates’ is going to have to get off at the next station, because that’s not in the cards. It is clearly a situation where the economy is not screeching or heading into a recession here and now.” — Art Hogan, chief market strategist at B. Riley Financial

“It is not a market bottom, things are not going to go up consistently from here because we are going to be buying low tech products for a while, so everyone has something to make up as COVID demand = pre-COVID​, there are fewer units for this. Reality check – unlike ‘Big Tech’, consumer discretionary related companies are offering more cautious guidance.”Morgan Stanley analyst commentary on a potential market bottom

The fact of the matter is this (Aug. 5 nonfarm payroll report) gives the Fed additional room to continue to tighten, even if it raises the probability of pushing the economy into recession. It’s not going to be an easy task to continue to tighten without negative repercussions for the consumer and the economy”. — Jim Baird, chief investment officer at Plante Moran Financial Advisors

“We are surprised to not see investors start to chase upside calls in fear of underperforming the market. People are just watching.” — Matthew Tym, head of equity derivatives trading at Cantor Fitzgerald

What We’re Watching

Psychedelic Sector Gaining Momentum: What started out as bottoming action after a protracted multi-quarter decline has now morphed into a tangible bullish impulse. We believe Netflix new docuseries How To Change Your Mind has played an important roll in the creation of critical mass awareness for the sector—and a rebound in broad market risk assets hasn’t hurt. At the tip of the spear for this sentiment shift is COMPASS Pathways plc (CMPS), which has risen 62.64% since  the docuseries debuted on July 12. Price on the benchmark Horizons Psychedelic Stock Index ETF has now breached the 20-day MA/EMA.

We are watching to see if investor sentiment shifts into laggard names such as Cybin Inc. and MindMed, which has continued to fall following a proposed 15-1 reverse stock split initiative announced this year. Many Tier-2/3 names still 90%+ off their highs…

Revive Therapeutics (RVV:CSE, RVVTF:OTC): This has been on our radar for the last couple of weeks, and remains on our watch list. The company has already confirmed that their statistician is in possession of 210 unblinded patient data for its Phase 3 clinical trial to evaluate Bucillamine to treat COVID-19. The company is currently attempting to revise endpoint data from a hospitalization/death focus to a symptoms focus. If they are to achieve this, it will mark a material event in the course of the trial.

YTD performance (+33.09%), Revive Therapeutics (RVVTF); Red line = 7day EMA

We believe an endpoint decision, either positive or negative, is imminent and will have cause a material price action event.

Consumer Price Index, August 10: Consumer inflation expectations for July are released by the New York Fed, while the University of Michigan’s preliminary survey of consumers for August is on tap. Taken together, these should give investors a better picture of how consumers are feeling about current economic conditions. 

As of June, it’s running at 9.1% on an annual basis. Investors, economists and consumers will be watching to see if price increases are easing as everything from gasoline to food is elevated.

Given the mixed signals on the overall state of the economy (i.e. indications of recession vs. this week’s strong nonfarm payrolls number), CPI will be in-focus by market participants. Scotiabank expects 8.9% y/y (9.1% prior) and 0.4% m/m for headline CPI; ex-food-and-energy: 6.1% y/y led by a 0.6% m/m gain.

Pot stocks earnings continue, with several Tier-1/Teri-2 names reporting including Curaleaf Holdings, Trulieve Cannabis, Marimed Inc., Cronos Group, TerrAscend Corp. and more. Last Wednesday, Green Thumb Industries allayed fears somewhat that this earnings season would be a write-off, producing solid numbers which beat expectations on several key metrics. An additional strong report or two will go a long way to help improve sentiment for a sector that’s been decimated over the past six quarters.

U.S. Economic Calendar

TIME (ET)REPORTPERIODMEDIAN FORECASTPREVIOUS
Monday, August 8
11:00 AMNY Fed 3-year inflation expectationsJuly3.60%
Tuesday, Aug. 9
6:00 AMNFIB small-business indexJuly89.589.5
8:30 AMProductivityQ2-4.30%-7.30%
8:30 AMUnit labor costsQ29.30%12.60%
Wednesday, August 10
8:30 AMConsumer price indexJuly0.30%1.30%
8:30 AMCore CPIJuly0.60%0.70%
8:30 AMCPI (year-over-year)July-8.70%9.10%
8:30 AMCore CPI (year-over-year)July6.10%5.90%
10:00 AMWholesale inventories (revision)June1.90%1.70%
2:00 PMFederal budget (compared with year earlier)July-$302 billion
Thursday, August 11
8:30 AMInitial jobless claimsAug. 6265,000260,000
8:30 AMContinuing jobless claimsJuly 301.42 million
8:30 AMProducer price indexJuly0.20%1.10%
Friday, Aug. 12
8:30 AMImport price indexJuly-0.80%0.20%
10:00 AMUMich consumer sentiment index (preliminary)Aug.5352
10:00 AMUMich 5-year inflation expectations (preliminary)Aug.2.90%

Meme Of The Week

Key Earnings (US Markets)

DateCompanySymbolEarnings estimate
Monday, August 83D SystemsDDD$0.00 per share
BarrickGOLD$0.22
BioNTechBNTX$7.08
EnergizerENR$0.76
News Corp.NWSA$0.08
NovavaxNVAX$5.18
Palantir TechnologiesPLTR$0.03
Take-Two Interactive SoftwareTTWO$0.86
Tyson FoodsTSN$1.97
UpstartUPST$0.08
Tuesday, Aug. 9Akamai TechnologiesAKAM$1.31
AramarkARMK$0.24
Bausch HealthBHC$0.91
Carlyle GroupCG$1.07
CoindeskCOIN-$2.68
Cronos GroupCRON-$0.07
EbixEBIX$0.58
EmersonEMR$1.29
GlobalFoundriesGFS$0.45
Grocery OutletGO$0.24
H & R BlockHRB$1.24
Hilton Grand VacationsHGV$0.88
Hyatt HotelsH$0.03
IAC/InterActiveCorpIAC-$2.35
iRobotIRBT-$1.55
Maxar TechnologiesMAXR$0.12
Norwegian Cruise LineNCLH-$0.83
Plug PowerPLUG-$0.20
Rackspace TechnologyRXT$0.16
Ralph LaurenRL$1.71
RobloxRBLX-$0.26
Spirit AirlinesSAVE-$0.46
Super Micro ComputerSMCI$2.35
SyscoSYY$1.11
The Trade DeskTTD$0.20
TTEC HoldingsTTEC$0.85
Unity SoftwareU-$0.21
Warner Music GroupWMG$0.20
World Wrestling EntertainmentWWE$0.55
Wynn ResortsWYNN-$0.97
Wednesday, August 10AppLovinAPP$0.50
CoherentCOHR$2.13
CoupangCPNG-$0.10
CyberArk SoftwareCYBR$0.01
Dutch BrosBROS$0.07
Fox Corp.FOXA$0.77
Franco-NevadaFNV$0.98
Jack in the BoxJACK$1.42
Manulife FinancialMFC$0.76
MatterportMTTR-$0.14
Pan Am SilverPAAS$0.14
Red Robin GourmetRRGB-$0.16
SonosSONO$0.21
TraegerCOOK$0.04
Wendy’sWEN$0.22
Wolverine World WideWWW$0.65
Thursday, August 11AerCapAER$1.42
BaiduBIDU$10.92
Brookfield Asset ManagementBAM$0.69
Canada GooseGOOS$2.98
Cardinal HealthCAH$1.18
Dillard’sDDS$2.88
Flower FoodsFLO$0.27
IlluminaILMN$0.64
LegalZoomLZ$0.02
Melco Resorts & EntertainmentMLCO-$0.44
NioNIO-$1.36
PoshmarkPOSH-$0.25
Rivian AutomotiveRIVN-$1.63
Ryan Specialty GroupRYAN$0.35
Six FlagsSIX$1.04
Solo BrandsSOLO$0.28
ToastTOST-$0.12
Utz BrandsUTZ$0.12
Warby ParkerWRBY-$0.02
W&T OffshoreWTI$0.37
Wheaton Precious MetalsWPM$0.32
Friday, Aug. 12Broadridge FinancialBR$2.65
Honest CompanyHNST$-$0.09
Spectrum BrandsSPB$1.42

FDA Calendar

None

Source: CNN Business – TDR’s stock market preview sentiment indicator

Past Week What’s Hot… and What’s Not

Source: TradingView – TDR’ stock market preview what’s hot this past week

Top 12 High Short Interest Stocks

TickerCompanyExchangeShortIntFloatShares O/SIndustry
BBBYBed Bath & Beyond Inc.Nasdaq46.38%61.57M79.96MRetail (Specialty Non-Apparel)
ICPTIntercept Pharmaceuticals IncNasdaq43.76%23.62M29.71MBiotechnology & Medical Research
MSTRMicroStrategy IncNasdaq39.29%9.32M9.33MSoftware & Programming
BYNDBeyond Meat IncNasdaq37.91%56.79M63.54MFood Processing
SWTXSpringWorks Therapeutics IncNasdaq37.51%31.64M49.41MBiotechnology & Medical Research
BIGBig Lots, Inc.NYSE37.37%26.49M28.92MRetailers – Discount Stores
EVGOEvgo IncNasdaq35.65%67.76M69.00MUtilities – Electric
UPSTUpstart Holdings IncNasdaq35.60%72.32M84.77MConsumer Lending
BGFVBig 5 Sporting Goods CorpNasdaq34.65%20.85M22.33MRetailers – Miscellaneous Specialty
SRGSeritage Growth PropertiesNYSE34.38%23.58M43.68MReal Estate Operations
NKLANikola CorporationNasdaq32.77%265.95M421.14MAuto & Truck Manufacturers
BLNKBlink Charging CoNasdaq32.54%33.98M50.20MUtilities – Electric

Tags: stock market preview, stock market preview August 8, 2022.

The post TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022 appeared first on The Dales Report.

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Senate Passes $740 Billion Tax, Climate Package — Will Go To House Next

Senate Passes $740 Billion Tax, Climate Package — Will Go To House Next

Update (1532ET): After much wrangling, the Democrats finally passed…

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Senate Passes $740 Billion Tax, Climate Package -- Will Go To House Next

Update (1532ET): After much wrangling, the Democrats finally passed their sweeping economic package through the Senate on Sunday.

The estimated $740 billion "Inflation Reduction Act" - far less ambitious than their original $3.5 trillion vision - next heads to the House, where its passage is a foregone conclusion. According to Axios, a vote could come as early as Friday before it heads to President Biden's desk.

The package includes provisions to address climate change, pharmaceutical costs, and a supercharged IRS.

"It’s been a long, tough and winding road, but at last, at last we have arrived," said Senate Majority Leader Chuck Schumer (D-NY). "The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century."

As the Washington Post notes, "Senators engaged in a round-the-clock marathon of voting that began Saturday and stretched late into Sunday afternoon. Democrats swatted down some three dozen Republican amendments designed to torpedo the legislation. Confronting unanimous GOP opposition, Democratic unity in the 50-50 chamber held, keeping the party on track for a morale-boosting victory three months from elections when congressional control is at stake."

And as Axios reports,

The Senate returned to the Capitol Saturday afternoon, and began voting late Saturday night and into Sunday on a series of amendments — part of the process known as "vote-a-rama."

  • Senate Republicans offered dozens of amendments aimed at minimizing the bill, including stripping out funding for the Internal Revenue Service and eliminating COVID-19-related school mandates.
  • Democrats held firm in their unity, with the help of Harris, of preserving the core elements of the package and voting down each GOP amendment.

.  .  .

The bill includes:

  • $370 billion for climate change - the largest investment in clean energy and emissions cuts the Senate has ever passed.
  • Allows the federal health secretary to negotiate the prices of certain expensive drugs for Medicare.
  • Three-year extension on healthcare subsidies in the Affordable Care Act.
  • 15% minimum tax on corporations making $1 billion or more in income. The provision offers more than $300 billion in revenue.
  • IRS tax enforcement.
  • 1% excise tax on stock buybacks.

Drilling down on the climate portion - Axios' Andrew Freedman writes:

  • This includes tax incentives to manufacture and purchase electric vehicles, generate more wind and solar electricity and support fledgling technology such as direct air capture and hydrogen production. 
  • Independent analyses show the bill, combined with other ongoing emissions reductions, would cut as much as 40% of U.S. greenhouse gas emissions by 2030, short of the White House's 50% reduction target. However, if enacted into law, it would reestablish U.S. credibility in international climate talks, which had been flagging due in part to congressional gridlock. 
  • As part of Democrats' concessions to Sen. Manchin, the bill also contains provisions calling for offshore oil lease sales in the Gulf of Mexico and off the coast of Alaska, and a commitment to take up a separate measure to ease the permitting of new energy projects. 

*  *  *

Senate Democrats late on Aug. 6 advanced a mammoth spending bill on climate and energy, health care, and taxes, after overcoming unanimous Republican opposition in the evenly divided chamber.

The procedural vote to advance the Democratic bill - which authorizes over $400 billion in new spending - was 51–50 after Vice President Kamala Harris arrived at the Capitol to cast a vote, breaking the deadlock in the Senate over the measure that Democrats say would reform the tax code, lower the cost of prescription drugs, invest in energy and climate change programs, all while lowering the federal deficit.

The vote means that senators will have 20 hours to debate on the measure, followed by a vote-a-rama, a marathon open-ended series of amendment votes that has no time limit. After that, the bill will head to a final vote. The measure is anticipated to pass the chamber as early as this weekend.

The House, where Democrats have a majority, could give the legislation final approval on Aug. 12, when lawmakers are scheduled to return to Washington.

The vote came after the Senate parliamentarian - the chamber’s nonpartisan rules arbiter - gave a thumbs-up to most of the Democrats’ revised 755-page bill.

But Democrats had to drop a significant part of their plan for lowering prescription drug prices, Parliamentarian Elizabeth MacDonough said.

The provision would have essentially forced companies not to raise prices higher than inflation. MacDonough said Democrats violated Senate budget rules with language in the bill imposing hefty penalties on drugmakers who raise their prices beyond inflation in the private insurance market.

As Mimi Nguyen Ly details at The Epoch Times, while the bill’s final costs are still being determined, it includes about $370 billion on energy and climate programs over the next 10 years, and about $64 billion to extend subsidies for Affordable Care Act program for federal subsidies of health insurance for three years through 2025.

It also seeks generate about $700 billion in new revenue over the next 10 years, which would leave roughly $300 billion in deficit reduction over the coming decade, which would represent just a tiny proportion of the next 10 year’s projected $16 trillion in budget shortfalls.

A large portion of the $700 billion—an estimated $313 billion—is expected to be generated by increasing the corporate minimum tax to 15 percent, while the remaining amounts include $288 billion in prescription drug pricing reform and $124 billion in Internal Revenue Service tax enforcement.

According to the current version of the bill, the new 15 percent minimum tax would be imposed on some corporations that earn over $1 billion annually but pay far less than the current 21 percent corporate tax. Companies buying back their own stock would be taxed 1 percent for those transactions, swapped in after Sinema refused to support higher taxes on private equity firm executives and hedge fund managers. The IRS budget would be increased to strengthen its tax collections.

The White House said in a statement of administrative policy on Aug. 6 that it “strongly supports passage” of the bill.

“This legislation would lower health care, prescription drug, and energy costs, invest in energy security, and make our tax code fairer—all while fighting inflation and reducing the deficit,” the statement reads.

“This historic legislation would help tackle today’s most pressing economic challenges, make our economy stronger for decades to come, and position the United States to be the world’s leader in clean energy.”

Republicans say the legislation is simply an alternate, dwindled version to the Democrat’s earlier Build Back Better bill—a multitrillion-dollar social spending package that was a major agenda of President Joe Biden—that Democrats have now dubbed the “Inflation Reduction Act of 2022.”

Senate Minority Leader Mitch McConnell (R-Ky.) said Democrats “are misreading the American people’s outrage as a mandate for yet another reckless taxing and spending spree.” He said Democrats “have already robbed American families once through inflation and now their solution is to rob American families yet a second time.”

“There is no working family in America whose top priorities are doubling the size of the IRS and giving rich people money to buy $80,000 electric cars,” McConnell said in a separate statement on Twitter.

“Americans want Washington to address inflation, crime, and the border—not another reckless liberal taxing and spending spree.”

Democrats have said the measure would “address record inflation by paying down our national debt, lowering energy costs, and lowering healthcare costs,” but Republicans have criticized the measure as having no potential other than to make matters worse, nicknaming the legislation “Build Back Broke,” in part because the bill would fulfill many parts of Biden’s Build Back Better agenda.

“The time is now to move forward with a big, bold package for the American people,” said Senate Majority Leader Chuck Schumer (D-N.Y.).

“This historic bill will reduce inflation, lower costs, fight climate change. It’s time to move this nation forward.”

But not every Democrat is buying what Chuck is selling...

As John Solomon reports at JustTheNews.com, Sen. Bernie Sanders, the former presidential candidate and proud socialist, on Saturday attacked President Joe Biden‘s Inflation Reduction Act for failing to live up to its name, after the non-partisan Congressional Budget Office declared it would have a minimal impact on surging prices.

“I want to take a moment to say a few words about the so-called Inflation Reduction Act that we are debating this evening," Sanders said just after voting with Democrats to advance the bill to debate on the Senate floor.

"I say so-called because according to the CBO and other economic organizations that have studied this bill, it will in fact have a minimal impact on inflation."

CBO declared this week that the $740 billion piece of legislation would only affect inflation by 0.1% in either direction.

"I don't find myself saying this very often. But on that point, I agree with Bernie," Sen. John Thune, R-S.D., told Insider.

Overall, economic analysts are divided on the measure, with some having predicted that the bill will worsen inflation and lead to stagnation in growth.

As Will Cain explained in an excellent monologue reality check, "look at the name of the bill, whatever it is, you can be sure the legislation will do the opposite."

Finally, as Goldman details in a new notes, the net fiscal impact of these policies continues to look very modest, likely less than 0.1% of GDP for the next several years...

While the final outcome may still yet differ in details, the fiscal impact is likely to be similar.

Tyler Durden Sun, 08/07/2022 - 15:32

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UN Warns Of ‘Worrying And Dangerous’ Conspiracy Theories

UN Warns Of ‘Worrying And Dangerous’ Conspiracy Theories

The United Nations would like everyone to be on the lookout for ‘worrying and dangerous’…

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UN Warns Of 'Worrying And Dangerous' Conspiracy Theories

The United Nations would like everyone to be on the lookout for 'worrying and dangerous' conspiracy theories - especially those that might lead people to the conclusion that COVID-19 escaped from a lab in Wuhan, China... you know, the thing the WHO just admitted could very well be the case, and which Sen. Rand Paul (R-KY) has launched recent investigations into.

Some background

Before we get into the UN's latest salvo in the war over narratives (feel free to scroll down if you're a regular reader); We know from government contracts, FOIA records, and leaked emails that the US government was conducting risky gain-of-function research on US soil until former President Obama banned it in 2014 over ethical questions raised by the scientific community. The 'research' included manipulating bat Covid to be more transmissible to humans, and following Obama's ban, was funneled overseas to the Wuhan Institute of Virology through New York nonprofit, EcoHealth Alliance - whose CEO Peter Daszak secured lucrative contracts to study and manipulate bat coronaviruses in Wuhan China four months before Obama's ban.

Daszak was the guy behind The Lancet's "it couldn't have come from a lab" Natural Origin statement - for which he reportedly engaged in a "bullying campaign" - before generating significant controversy over conflicts of interest involving many of its authors and co-signatories, to which the Lancet later admitted.

The first $666,442 installment of EcoHealth's $3.7 million NIH grant was paid in June 2014, with similar annual payments through May 2019 under the "Understanding The Risk Of Bat Coronavirus Emergence" project.

Then, in 2017, a subagency of the National Institutes of Health (NIH) - headed by Dr. Anthony Fauci - resumed funding a controversial grant to genetically modify bat coronaviruses in Wuhan, China without the approval of a government oversight body.

Notably, the WIV "had openly participated in gain-of-function research in partnership with U.S. universities and institutions" for years under the leadership of Dr. Shi 'Batwoman' Zhengli, according to the Washington Post's Josh Rogin.

We also know (thanks to a FOIA lawsuit by The Intercept) that Daszak wanted to release 'Chimeric Covid Spike Proteins' Into Bat Populations Using 'Skin-Penetrating Nanoparticles,' only for the 'DEFUSE' proposal to be denied by DARPA on the grounds that it was too risky.

Further reading:

We challenge the UN to 'debunk' any of the above.

Now that you're up to speed

Enter the UN's new #ThinkBeforeSharing campaign, which helps people "learn how to identify, debunk, react to and report on conspiracy theories to prevent their spread."

To aid gullable individuals navigate the information highway without hitting any conspiracy potholes, UNESCO provides some helpful infographics - one of which thanks Stephen Lewandowsky - Australian psychologist and co-author of a March 2022 Scientific American report complaining about how "The Lab-Leak Hypothesis Made It Harder for Scientists to Seek the Truth."

So the default position of those behind the UN's "watch out for conspiracy theories" campaign is that the lab leak is a conspiracy theory. Right.

They recommend taking action when you've "identified a conspiracy theory," but that you don't get lured into an argument with a conspiracy theorist.

"Any argument may be taken as proof that you are part of the conspiracy and reinforce that belief," which will cause the conspiracy theorist to "argue hard to defend their beliefs."

So what to do? Show "empathy," and avoid "ridiculing them."

"If you are certain you have encountered a conspiracy theory," you must "react" immediately and post a link to a "fact-checking website" in the comments.

In short - this (from 2020):

Stay safe out there citizen!

Tyler Durden Sun, 08/07/2022 - 14:00

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