As Biden’s campaign to secure backing for his $1.9 trillion fiscal stimulus package rolls on, the president has been forced to make his first concession so far. Interestingly, the concession was not made with the opposition party but with senior members of the president’s own party.

Direct Stimulus Adjustments Made

Biden and Senate Democrats hammered out an agreement to limit the scope of the direct stimulus cheques. The $1.4k direct stimulus cheques will now be phased out from higher earning Americans after members of the party took issue with the uniformity of the planned payments. Under the solution agreed upon, US citizens earning more than $80,000 per year and couples earning more than $160k jointly will be blocked from receiving the payment. As a result of the compromise, roughly 9 million fewer households will now receive the payments.

Unemployment Allowance Increase Kept

Despite the compromise made over direct stimulus, Biden stuck to his guns over the increase in employment benefits. Biden is pushing for unemployment allowances to be increased from $300 to $400 per week and refused to budge on this issue.

Minimum Wage Increase Scrapped

Biden has already suffered losses on this bill. The intended minimum wage increase to $15 was scrapped last week with the Senate parliamentarian noting that the item could not be included in the package given that the Democrats are employing a special protocol which will allow them to pass the bill via a simple majority. Expectations ahead of the voting on the bill are tense. The Senate is split 50 50 between the two parties and Biden will need to secure the backing of all Senate Democrats as well as some members of the opposition in order to pass his bill.

Timing Issues

There are also timing issues with the bill. The Senate was due to receive the bill today, however, due to a delay, the bill will now be introduced tomorrow at the earliest. However, even if it looks as though Biden can get the bill through the Senate, Republicans are threatening to cause severe delays to the legislation such as the insistence that the entire bill, all 500 pages, be read out in full instead of just the title along with the offering of amendments.

Market Showing Disappointment

In all, the package is looking somewhat to different to the initial offering made by Biden. The loss of a minimum wage increase and the 9 million household reduction in those receiving the package will be a big blow to the effect on consumer spending and has been reflected in the lacklustre sentiment seen in risk markets this week.

Technical Views

SP500

The S&P500 is continuing to correct lower this week. Price is currently testing last week’s lows and the rising trend line from 2020 lows which, while intact, keeps the near-term bias bullish. However, should price slip below there, the next levels to note are 3714.50 and 3586 thereafter.

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