Dems Keep Senate Control; House Outcome Still Undecided

Russia/Ukraine | COP27 | Weakened Trump may announce his candidacy Tuesday

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November 13, 2022 08:19 AM

Russia/Ukraine | COP27 | Weakened Trump may announce his candidacy Tuesday

Washington Focus

Lawmakers will return to Washington as they prepare for leadership elections and a lame-duck legislative session. Key ahead: Stalemate and likely fireworks on two spending issues: the fiscal year (FY) 2023 budget (latest funding deadline is Dec. 16) and perhaps a push to increase or suspend the debt limit, but that could wait until the new Congress. Meanwhile, talks on a potential year-end tax package are expected to ramp up as lawmakers return.

Election update:

Senate: Democrats kept control of the Senate on Saturday, making it harder for Republicans to thwart President Joe Biden’s agenda. Sen. Catherine Cortez Masto’s victory in Nevada against GOP and Trump candidate Adam Laxalt gave Democrats the 50 seats they needed to keep the Senate, since Kamala Harris, the vice-president, can cast tiebreaking votes. The Nevada win reflects the strength of Democrats across the U.S. this election year. Seeking re-election in an economically challenged state that has some of the highest gas prices in the nation, Cortez Masto was considered the Senate’s most vulnerable member, adding to the frustration of Republicans. Meanwhile, Sen. Mark Kelly (D-Ariz.) was re-elected in Arizona against challenger Blake Masters, who said he would not yet concede he had lost the election, tweeting on Saturday: “For my people who knocked doors in 115 degree heat, and for the million+ Arizonans who put their faith in me, we are going to make sure that every legal vote is counted. If, at the end, Senator Kelly has more of them than I do, then I will congratulate him on a hard-fought victory. But voters decide, not the media; let’s count the votes.” Masters blamed Senate GOP leader Mitch McConnell (R-Ky.) for Kelly’s lead. “Had [McConnell] chosen to spend money in Arizona, this race would be over, we’d be celebrating a Senate majority,” Masters said. In Georgia a runoff vote is already scheduled for Dec. 6.

Democratic edge in the Senate is vital for President Joe Biden as it will allow his party to approve judicial nominations, executive branch appointments, and set the legislative agenda even if Republicans gain control of the House of Representatives.

House: Neither party has had a decisive victory yet, but the GOP is nearly there. Link to how to track the remaining House races via the New York Times tracker.

The other big race being watched in Arizona is a bitter contest for governor pitting Democrat Katie Hobbs, the secretary of state, against Kari Lake, a Trump-backed Republican and former television news anchor who has refused to say she would accept the result of her election if she loses.

Abortion was a vital factor in securing a better performance for Democrats than almost anyone expected. According to exit polls, 27% of voters said abortion was the single most important issue in determining their vote — only just behind inflation, which was listed by 31% of voters. Those who chose abortion as their top issue broke more than 3 to 1 for Democrats. Some 76% of them voted for President Biden’s party and 23% for Republicans, according to the main national exit poll. The political impact of abortion was even more pronounced in some high-profile races.

Former President Donald Trump is expected to announce a third run for president on Tuesday, while Florida Gov. Ron DeSantis last week delivered Republicans one of the most sweeping statewide victories in Florida in recent memory with his 19-point victory.

High-profile Trump endorsees like Dr. Oz in Pennsylvania and Nevada’s Adam Laxalt went down to defeat in the Senate. Candidates who endorsed Trump’s unproved claims of election fraud pertaining to 2020 fared especially badly. Doug Mastriano lost the gubernatorial race in Pennsylvania by double digits, as did Dixon in Michigan. Don Bolduc, the Republican senatorial candidate in New Hampshire, who had backed Trump’s erroneous claims and then reversed himself upon winning the GOP primary, lost to Sen. Maggie Hassan (D) by 10 points. Based on exit polls, 58% of voters said they held an unfavorable view of the former president, against 39% who viewed him favorably. The vast majority of those viewing Trump unfavorably voted for Democratic candidates.

Writes NYT columnist Jamelle Bouie: “There is a real chance that Trump, if he loses the nomination, decides to run for president anyway. And if he pulls any fraction of his supporters away from the Republican Party, he would play the spoiler, no matter who the party tried to elevate against him. Republican elites might be done with Trump, but Trump is not done with the Republican Party.”

Impact of elections on farm bill debate. Depends in part on who controls the House because leadership of the Ag Committee would see definite changes if the GOP wins. In the Senate, veteran Debbie Stabenow (D-Mich.) will lead the Ag panel, assuming she does not jump to another spot. She is up for re-election in 2024. She has proven a staunch defender of her interests in farm bill battles in the past (specialty crops, urban farming, etc.). During the last farm bill, moderate GOP Sen. Pat Roberts (R-Kan.), who led the Ag Committee, gave Stabenow billions of dollars for her favorite policy items, a reason why the farm bill sailed through the Senate.

No southern-state lawmaker will lead the Ag panel as the Democrats retained control of the Senate. That means Sen. John Boozman (R-Ark.) will be the ranking member making sure southern interests are addressed among a usual Midwest state bias during the debate.

The fate of a farm bill is simple: it all depends on the funding level for food and nutrition, which take up around 85% of all farm bill spending. If Republicans control the House and get too aggressive on altering the food stamp (SNAP) program, history shows this is not how to get a farm bill enacted.

If the GOP wins control of the House, many veteran farm bill observers signal a one-year extension, largely due to the work new leadership must do relative to hearings, etc.

Update on Russia/Ukraine. Ukraine’s Foreign Minister Dmytro Kuleba pressed Southeast Asian countries for political and material support in his county’s fight against Russia, while accusing Moscow on Saturday of playing “hunger games” with the world by holding up shipments of Ukrainian grain and other agricultural products. Kuleba told reporters on the sidelines of the Association of Southeast Asian Nations summit that with a deal allowing Ukraine to export grain and fertilizer due to expire Nov. 19, the world needed to pressure Russia not to object to its extension, saying Ukrainian products were critical in Africa and Asia.

More than just continuing the deal, however, Kuleba accused Russian inspectors of “quiet sabotage,” saying they were intentionally dragging their feet in allowing shipments through. Not only does Russia have “to remain part of the initiative, it also has to instruct its inspectors to act in good faith and to avoid any measures, any steps, that create obstacles and hinder the export of Ukrainian agricultural goods to the global market,” he said. “Russia should — must — stop playing hunger games with the world.”

Key Economic Reports and Events for the Week

The Federal Reserve is trying to cool the economy by raising interest rates. Two areas that will show up quickly: consumer spending on big-ticket items and housing. This week’s reports on October retail sales, home building and existing-home sales will help show where Fed policy is hitting hardest.

Monday, Nov. 14

Federal Reserve: John Williams speaks

Tuesday, Nov. 15

Bureau of Labor Statistics releases the producer price index for October. The consensus estimate is for an 8.3% year-over-year jump, two-tenths of a percentage point less than in September. The core PPI, which excludes volatile food and energy prices, is expected to increase 7.2% matching September’s gain. The PPI is still historically elevated, but more than three percentage points below its record high from this past March.
Empire State Manufacturing
Federal Reserve: Patrick Harker speaks

Wednesday, Nov. 16

MBA Mortgage Applications
Census Bureau reports retail sales data for October. Economists forecast a 0.5% month-over-month gain, while sales excluding autos are seen rising 0.6%. Both estimates are half a percentage point above September’s figures.
National Association of Home Builders releases its Housing Market Index for November. The consensus call is for a 36 reading, two points lower than in October. The index has fallen more than 40 points this year, as surging mortgage rates have soured home builders’ outlook on the sector.
Export and import prices
Industrial Production and Capacity Utilization
Business Inventories
Federal Reserve: John Williams speaks

Thursday, Nov. 17

Jobless Claims
Census Bureau reports new residential construction statistics for October. Starts of privately owned housing are expected to come in at a seasonally adjusted annual rate of 1.4 million, roughly even with the September data. Starts have fallen nearly 20% this year, as the housing market continues to slow and canceled deals grow.
Philadelphia Fed Index
Fed Balance Sheet
Money Supply
Federal Reserve speakers: Raphael Bostic; Loretta Mester; Neel Kashkari

Friday, Nov. 18

Conference Board releases its Leading Economic Index for October. Economists expect a 0.4% month-over-month decline, matching September’s. The index has fallen for most of this year, and the Conference Board now sees 2022 gross-domestic-product growth at a sluggish 1.5%.
National Association of Realtors reports on existing-home sales for October. The consensus estimate is for a seasonally adjusted annual rate of 4.36 million, 7.5% fewer than in September. The median existing home sold for $384,000 in September, up 8.4% from the figure a year earlier.

Key USDA & international Ag & Energy Reports and Events

International Grains Council’s monthly report comes Thursday while there are several ag-related conferences this week.

Monday, Nov. 14

Ag reports and events:

Export Inspections
Crop Progress
CFTC Commitments of Traders weekly report on positions for various U.S. futures and options (delayed release as Friday was a holiday)
Malaysian Palm Oil Council’s Internet Seminar, through Nov. 18