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How would markets react to a Biden win? — The presidential election is still four months away, but with polling showing former Vice President Joe Biden with a healthy lead over President Donald Trump, investors are starting to think more granularly about what a Biden presidency would mean for them. JPMorgan’s take? It wouldn’t be as bad as people might think.
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“The consensus view is that a Democrat victory in November will be a negative for equities. However, we see this outcome as neutral to slight positive. First, it remains to be seen how much of Biden’s campaign agenda is implemented if he is elected and what the make-up of his cabinet will look like. … Secondly, Biden’s proposed policy priorities were introduced in a healthy economy during the Primaries/pre-COVID-19. Given the current economic weakness, business recovery and job growth are likely to be prioritized over policies that could dampen economic growth.”
Market Policy Partners in a note said they’re skeptical that “any significant price action is currently premised upon the still deeply uncertain outcome of November’s election, aside from bets on heightened volatility like in VIX futures, which is not a meaningful directional bet.” But that’s likely to change by September or October.
“First and foremost, financial analysts are focused on Biden’s tax plan. He has stated that he would partially reverse the 2018 corporate tax cut, raising the rate to 28%. This move, in addition to increases of rates elsewhere, would take about 12% off the total 2021 earnings-per-share of the constituents of the S&P 500 according to Goldman Sachs’ estimates.”
But, on the positive side for the S&P 500, Biden hasn’t expressed support for breaking up tech giants like some of his Democratic opponents did. And as the JPM analysts note, who knows how his plans would change, given the pandemic?
PPP loans revealed — The Trump Administration on Monday publicized the names of more than 650,000 employers who received Paycheck Protection Program loans valued above $150,000 — though it’s just a fraction of the total borrowers, with more than 80 percent of the transactions approved below that threshold. The disclosures — amassed in a giant spreadsheet — shed new light on the wide range of government support delivered through the business assistance program.
More from our Zach Warmbrodt et al.: “Among the loan recipients were private equity-backed restaurant groups Five Guys, P.F. Chang’s and TGI Friday’s. The Americans for Tax Reform Foundation, which touts the benefits of smaller government, got aid. So did the Congressional Black Caucus Foundation and the Congressional Hispanic Caucus Institute. Religious organizations and Goodwill Industries obtained funds, as did about 40 Planned Parenthood affiliates. The law firm founded by David Boies — who represented Al Gore in the 2000 election recount and defended Harvey Weinstein — took a loan. And Kanye West’s company, Yeezy LLC, received a loan for $2 million to $5 million.”
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DRIVING THE WEEK — House Financial Services subcommittee holds a hearing on paycheck security at noon on Tuesday … Financial Stability Board Chairman and top Federal Reserve official Randal Quarles gives a speech at the Exchequer Club at 1 p.m. on Tuesday … House Energy & Commerce subcommittee holds a hearing on risks to consumers during the pandemic at noon on Thursday … House Financial Services subcommittee holds a hearing on challenges for women and minority-owned businesses at noon on Thursday
WHITE HOUSE DEFIANT ON COVID-19 — Our Max Cohen: “After a holiday weekend during which the total number of American Covid-19 deaths approached 130,000, White House officials committed to keeping the economy open as cases mount and local officials clamor for new measures to fight the outbreak.
“Mayors in hard-hit states such as Florida and Texas publicly urged President Donald Trump to approve a national mandate for wearing masks. Instead, the president on Monday afternoon focused on the declining coronavirus death rates and aired his grievances with the media.”
LAWMAKERS STARE DOWN FUNDING CLIFF — Our Heather Caygle, Marianne LeVine and Sarah Ferris: “As the U.S. enters its sixth month of grappling with the coronavirus pandemic — with cases soaring and unemployment claims hovering in the millions — Congress is again facing a double-barreled dilemma: how to address both the health and economic catastrophes threatening the country.
“And in typical Congress fashion, lawmakers have teed up a crunch time crisis this month, giving themselves just a few weeks to wrangle together a massive bipartisan coronavirus relief deal and ship it to President Donald Trump.”
SMALL BUSINESS DATABASE CONTAINS ERRORS — CNBC’s Dan Mangan: “They can’t show you the money because they didn’t get it — despite what the government says. Several companies that purportedly received forgivable loans as part of a federal relief program said that they did not apply for — much less get — the funds that are detailed in a database of loans released Monday.
“That database includes information about the lion’s share of $521 billion so far approved under the Paycheck Protection Program, which is aimed at helping small businesses affected by the coronavirus pandemic.”
WHAT YOU NEED TO KNOW ABOUT FANNIE AND FREDDIE — Pro Analysis is here to help you get up-to-speed quickly on emerging issues, understand the power dynamics of who’s involved and how the process may unfold. Read the latest from our Katy O’Donnell.
CONGRESS PRESSED TO RESCUE BLACK-OWNED FIRMS — Our Zach Warmbrodt and Megan Cassella: “Lawmakers negotiating the next small business rescue package are facing mounting pressure to direct more aid to minority employers who are hurting the most during the pandemic but have struggled to access hundreds of billions of federal dollars unleashed since March.
“Business groups and consumer advocates are lobbying Congress to rethink a model that has leaned heavily on distributing funds via private lenders because of concerns that the smallest businesses lack relationships with traditional banks. A bipartisan proposal by Sens. Steve Daines (R-Mont.) and Cory Booker (D-N.J.) — backed by the U.S. Chamber of Commerce — would make $50 billion in grants available to state and local governments for the smallest businesses and nonprofits.”
CORPORATES PAUSE AFTER Q1 BORROWING BANANZA — FT’s Eric Platt and Joe Rennison: “Bankers say companies are now assessing the damage wrought by the crisis and waiting before they borrow more, even as debt markets remain wide open. Padded by the extra cash, companies raised just $70bn last week through debt markets, the lowest since mid-March when the coronavirus crisis sent stock and bond prices tumbling. US issuance dropped to just over $5bn in the holiday-shortened week, according to data provider Refinitiv.”
STOCKS BOUNCE POST-HOLIDAY — WSJ’s Anna Isaac and Akane Otani: “Global stocks have rallied to start the week, with China’s Shanghai Composite Index soaring to its highest level since early 2018. That was even as data continued to point to a rise in coronavirus cases in the U.S., which some investors have worried might force officials to further delay reopening plans across the country.”
UBER EATS POSTMATES — WaPo’s Faiz Siddiqui and Taylor Telford: “Uber is acquiring food delivery app Postmates, a major coup for the ride-hailing company as it aggressively expands its second largest business offering, Uber Eats, amid a global pandemic that has cut sharply into trip revenue.
“The $2.65 billion all-stock deal announced Monday streamlines the industry to three major competitors: Uber, DoorDash and Grubhub. In a Monday conference call announcing the deal, Uber chief executive Dara Khosrowshahi said there is ‘plenty of room’ for three players in the U.S. delivery market, and the Postmates deal would allow Uber Eats to become more efficient, lower costs and increase options for customers.”
DAKOTA RULING LEAVES OIL COMPANIES ON THE HOOK — Reuters’s Tim McLaughlin and Liz Hampton: “Large investors in the Dakota Access Pipeline, including Phillips 66, could be on the hook for hundreds of millions in payments, after a U.S. court on Monday ordered the shutdown of the major artery. The U.S. District Court for the District of Columbia ordered Energy Transfer LP to shut and empty the largest pipeline from the North Dakota shale oil fields within 30 days, saying the U.S. Army Corp of Engineers failed to provide an adequate environmental impact statement.”
BUFFETT MAKING MOVES WITH DOMINION OIL BUY — WSJ’s Jinjoo Lee: “The deal’s timing might show that Mr. Buffett sees a silver lining in the regulatory headaches: More barriers for new pipeline build-outs could mean better value for existing ones. The pace of pipeline build-outs has long lagged behind the production of oil and gas; even with reduced production recently, pipelines will likely have plenty of business going forward. The acquisition also includes a 25% stake in the only operating liquefied-natural-gas export terminal on the East Coast.”
TRANSITIONS — Virginia Boney is now deputy director of policy and strategic planning at the Commerce Department. She most recently was a senior adviser at the VA, and is an alum of legislative affairs at the National Security Council and the White House.
… and ICMYI, Andrew Olmem, former deputy director of the White House’s National Economic Council, “has returned to the firm [Mayer Brown] in Washington DC as a partner in the Public Policy, Regulatory & Political Law practice.”
WEEKEND WEDDING — Jack Rivers, VP at Goldman Sachs, married Kristen Askin, also a VP at Goldman. The couple, who both work in the global markets division, met as analysts early in their careers and fell in love, and got married at Stanwich Church in Greenwich, Conn. Pic.