Daily Comment (June 4, 2021)

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

Good morning, all! U.S. equities appear to be headed for a higher open this morning. Today’s report begins with an update on the infrastructure spending negotiations. International news follows, with reports of new sanctions on Belarus and the EU-U.K. probing of a major U.S. tech firm. Economics and policy news are up next, including stories about the House Democrats’ transportation funding bill and a new U.S. investment ban on Chinese companies. China news follows, and we close with our pandemic coverage.

Infrastructure plan developments: On Thursday, President Biden announced that he is willing to make additional concessions in order to fund a bipartisan infrastructure package. Biden has lowered his price tag from $1.7 trillion to $1 trillion and has backed off plans to undo parts of the 2017 tax plan. In its place, he has proposed a minimum corporate tax rate of 15% for companies that have lots of tax credits and deductions. Additionally, he would like to repurpose $75 billion of unused COVID-19 relief aid that was approved under the previous administration. Last week, Republicans unveiled a plan that would provide $928 billion in infrastructure spending, up from the initial offer of $568 billion. Even though this is close to what the president is seeking, he is still holding out hope for additional funding. Senate Republicans are scheduled to meet with President Biden on Friday to discuss the matter further.

Although negotiations with Republicans are ongoing, President Biden is facing pressure from his fellow Democrats to go it alone via budget reconciliation. However, this plan has its own set of obstacles. On Thursday, Senate Parliamentarian Elizabeth MacDonough ruled that only one more automatic budget reconciliation is permissible this year. Hence, Democrats would need to ensure that everyone is on board before going through with this process. Possible holdout Senator Joe Manchin (D-W.V.) has stated that he doesn’t feel comfortable backing the bill without Republican support. At this time, it still appears that the infrastructure plan is likely to make its way through Congress.

International news: Alternatives to the vaccine patent waiver, Netanyahu tries to cling to power, and new sanctions on Belarus.

Economics and policy: Biden’s ban on investment in Chinese companies and House Democrats’ transportation funding bill.


  • Hong Kong police arrested the organizer of the Tiananmen vigil the day before the anniversary of the crackdown on pro-democracy protesters. The police are expected to patrol the streets of Hong Kong to prevent any new protests from springing up.
  • Banks continue to ramp up hiring in Hong Kong despite China’s growing control over the special administrative region.

COVID-19:  The number of reported cases is 171,964,959 with 3,697,399 fatalities.  In the U.S., there are 33,325,218 confirmed cases with 596,391 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The FT has also issued an economic tracker that looks across countries with high-frequency data on various factors.  The CDC reports that 368,375,195 doses of the vaccine have been distributed with 297,720,928 doses injected.  The number receiving at least one dose is 169,090,262, while the number of second doses, which would grant the highest level of immunity, is 136,644,618.  The FT has a page on global vaccine distribution.

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