Hamas/Israel War Gets U.S. Lawmakers’ Attention; May Impact House Speakership Vote

USDA reports Thursday | Inflation reports Wed. & Thurs. | IMF forecasts Tuesday

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October 08, 2023 04:32 PM

Hamas/Israel War Gets U.S. Lawmakers’ Attention; May Impact House Speakership Vote

USDA reports Thursday | Inflation reports Wed. & Thurs. | IMF forecasts Tuesday

Washington Focus

The attack on Israel by Hamas adds urgency to GOP efforts to elect a new House speaker. They head into a conference vote as soon as Wednesday with two strong candidates and no clear favorite between House Majority Leader Steve Scalise (R-La.) and Trump-backed Rep. Jim Jordan (R-Ohio). The need to focus on Israel may help get a House GOP leadership decision this week, several lawmakers said.

Lawmakers have emphasized that a delay in filling the role could slow any efforts to help Israel. “We have to move quickly on this,” said Rep. Michael McCaul, the Republican chairman of the House Foreign Affairs Committee, said Sunday on CNN. “We’re just in too dangerous of a time to be playing games with our national security.” On Fox News, Jordan said Sunday that his first move as speaker would be to help Israel. “I want to give them what they need to win,” Jordan pledged on the program Sunday Morning Futures. Scalise also pledged full support. “Make no mistake: The United States will always stand with Israel, our greatest ally in the Middle East,” he wrote on social media. “They must defend themselves as their citizens are slaughtered by Hamas terrorists. They have our full support and our prayers.”

The Pentagon announced an initial emergency military assistance package for Israel on Sunday, as well as the movement of U.S. Navy ships and aircraft closer to Israel as a show of support. The initial Israeli request will not require new funding to be approved by Congress. President Biden spoke with Israeli Prime Minister Benjamin Netanyahu on Sunday — the two leaders’ second call since the Hamas invasion began.

An Israeli official confirmed Americans are among the “scores” of hostages being held in Gaza following one of the largest attacks on Israel by militant group Hamas in decades, and U.S. Secretary of State Antony Blinken said officials are still working to verify reports of American deaths — as the total Israeli and Palestinian death toll exceeds 1,100.

Iranian security officials helped plan Hamas’s Saturday surprise attack on Israel and gave the green light for the assault at a meeting in Beirut last Monday, the Wall Street Journal reported (link), citing senior members of Hamas and Hezbollah, another Iran-backed militant group. Senior Israeli security officials have pledged to strike at Iran’s leadership if Tehran is found responsible for killing Israelis. The strike was intended to hit Israel while it appeared distracted by internal political divisions over Prime Minister Benjamin Netanyahu’s government. It was also aimed at disrupting accelerating U.S.-brokered talks to normalize relations between Saudi Arabia and Israel that Iran saw as threatening, the senior Hamas and Hezbollah members said, according to the WSJ article.

Of note: The U.S. has no Senate-confirmed ambassador to Israel, despite President Biden nominating former Treasury Secretary Jack Lew in early September. Sen. Tommy Tuberville (R-Ala.) is still blockading senior military promotions, which Pentagon officials have warned is damaging U.S. national security policy. However, some GOP supporters note If the Democrats just abandoned their abortion policy, he would lift the hold. They chide the Biden administration for choosing abortion over U.S. national security. The Senate is on recess this week.

— The House speakership race heats up this week, with the contest now between two GOP members. House Majority Leader Steve Scalise (R-La.) and Ohio Rep. Jim Jordan have announced their candidacies, and others could still enter the race, but it remains to be seen whether the conference can coalesce around a viable successor to Kevin McCarthy (R-Calif.). Late last week, former President Donald Trump endorsed Jordan.

The House GOP conference will hold its internal election for speaker Wednesday morning after a Tuesday evening “candidate forum,” according to a schedule distributed by Republican Conference Chair Elise Stefanik of New York. On Monday night, the conference will also meet behind closed doors for a “member-only discussion.” Phones are to be checked at the door and staff aren’t allowed into the meeting, the invitation says.

— House GOP leadership race between Scalise and Jordan. On Saturday, a third possible contender, Rep. Kevin Hern of Oklahoma, said he would not run and urged his Republican colleagues to unify behind either Steve Scalise (R-La.) or Jim Jordan (R-Ohio). Hern said he believed a three-man race would “create even more division and make it harder to elect a Speaker.”

Differences between Steve Scalise, 58, and Jim Jordan, 59:

Rep. Steve Scalise (R-La.):

Has spent nearly a decade working his way up House leadership.
Viewed by some as a product of the traditional system.
Pitches himself as a unifier.
History of incremental gains and compromise.
Voted to raise the debt ceiling multiple times.
Supports Ukraine funding.
Voted for the 2018 Farm Bill but against the 2014 and 2008 Farm Bill.
Defends Trump but is less vocal.
Known for developing relationships across different party factions.
Known for personal touches and hospitality.
Faced criticism for appearing before a white-supremacy group in the past.
Diagnosed with multiple myeloma, a blood cancer.

Rep. Jim Jordan (R-Ohio):

Committee chairman more aligned with antiestablishment conservatives.
Support of McCarthy’s allies.
Seen as more willing to fight without compromise.
Endorsed by former President Donald Trump.
Former wrestling coach who argues for a go-to-the-mat mentality.
Voted against a measure to avoid a government shutdown
Voted to raise the debt ceiling less frequently.
Opposed Ukraine funding.
Voted against the 2018, 2014 and 2008 Farm Bill.
Defends Trump more vocally.
Uses regular television appearances to criticize Democrats.
Co-founder of the conservative House Freedom Caucus.
Advocates for a deeper dive into leadership accountability.
Not known for the same personal touches and hospitality as Scalise.
No reported health concerns in the way of his candidacy.

— GOP proposes raising Speaker nomination threshold to whole House majority. Over 90 House Republicans, including members from various factions, led by Fitzpatrick and Rep. Chip Roy (R-Texas), have initiated a push for a special meeting to consider amending the rules governing the nomination of a Speaker of the House. The proposed amendment seeks to increase the threshold required to elect a speaker, shifting from a majority within the GOP conference to a majority of the entire House.

This change aims to ensure that Republicans can nominate a speaker with a unified front, reducing the need for multiple rounds of voting on the House floor, as witnessed during McCarthy’s speaker race in January.

— A growing number of House GOP lawmakers want to alter a rule allowing one lawmaker to demand a “motion to vacate.” In January, then Kevin McCarthy (R-Calif.) agreed to the one-member rule as a way of placating far-right/rebel lawmakers, many of whom had long questioned his support for their causes.

Background: Until 2019, a single member could call for a “motion to vacate,” or oust the speaker. Democrats changed the rule that year so that it would take a majority of one of the parties to agree to proceed. Reps. Steve Scalise (R-La.) and Jim Jordan (R-Ohio) have not said whether they would back rules changes.

The problem: It would take 217 votes to change the rule. There are currently 221 Republicans in the House, with one seat vacant. Eight Republicans deployed the rule to undo McCarthy. Rebel Rep. Matt Gaetz (R-Fla.), the architect of McCarthy’s demise, told Fox News Digital that he would be “open-minded” about a possible change.

— U.S. senators arrive in China, seek diplomacy over conflict, and potential meeting with President Xi Jinping. A bipartisan delegation of U.S. senators, led by Majority Leader Chuck Schumer (D-N.Y.), landed in China on Saturday, expressing a commitment to fostering competition rather than conflict with the Asian superpower. The senators engaged in discussions with Shanghai Communist Party secretary, Chen Jining, and have planned meetings with senior officials in Shanghai and Beijing, including the hope of meeting Chinese President Xi Jinping.

Schumer emphasized the importance of maintaining a cooperative relationship between the world’s two largest economies and stated that the U.S. aims for economic competition with China but does not seek confrontation.

This visit follows a series of high-level visits by officials from the Biden administration to ease escalating tensions between the two nations.

The U.S. hopes to pave the way for a potential meeting between President Biden and Xi at the Asia-Pacific Economic Cooperation summit in San Francisco in November, although China has yet to confirm the Chinese leader’s attendance.

The bipartisan delegation includes Republican senators Mike Crapo of Idaho, Bill Cassidy and John Kennedy of Louisiana, as well as Democratic senators Maggie Hassan of New Hampshire and Jon Ossoff of Georgia.

The senators intend to address concerns of fair competition for American companies operating in China, with a particular focus on Micron Technology Inc., which has a substantial presence in the states represented by some of the delegation members. Market access issues, the flow of chemicals used in the production of fentanyl, human rights, and the investment climate for U.S. businesses in China are among the topics to be discussed during the delegation’s visit.

— Rep. Cole: McCarthy’s ‘cuts’ deal with conservatives now void. Rep. Tom Cole (R-Okla.), the House Rules Chair, declared that the appropriations cuts orchestrated by former Speaker Kevin McCarthy (R-Calif.) in a secretive deal with conservatives last June no longer hold weight with McCarthy no longer in power. In an interview with Politico (link), Cole stated, “This agreement was faulty from the beginning. It’s changed over time, and now in a sense, it doesn’t exist at all because McCarthy isn’t the speaker anymore.” He further emphasized that the new speaker would have to address this issue.

The more challenging task of addressing non-defense programs lies ahead, with the collapse of the agriculture appropriations bill last month serving as an example.

Big difference between Senate and House. While the Senate Appropriations Committee has followed the spending caps set in the debt ceiling agreement, the House has diverged significantly, creating a substantial gap in their respective budget proposals.

House rules also make it challenging for Democrats or moderate Republicans to adjust the spending bills during floor debates.

Economic Reports for the Week

September inflation data and the start of earnings season will be the highlights for investors this week. The stock market will be open on Monday, but U.S. bond markets will be closed in honor of Columbus Day.

The unofficial start of third quarter earnings season comes on Friday, with results from several big banks. Citigroup, JPMorgan Chase, and Wells Fargo will all report before the market opens, as will BlackRock and UnitedHealth Group. Other companies publishing results next week include PepsiCo on Tuesday, and Delta Air Lines, Domino’s Pizza, Fastenal, and Walgreens Boots Alliance on Thursday.

Also Thursday, focus will be on the U.S. Bureau of Labor Statistics’ (BLS) Consumer Price Index for September. Economists are predicting increases of 0.3% in both the headline CPI and the core CPI, which excludes food and energy components. That would bring the year-over-year rates of inflation to 3.6% and 4.1%, respectively, both lower than in August.

The BLS will also report the Producer Price Index on Wednesday. The headline PPI is expected to be up 1.6% year over year and the core PPI is seen rising 2.3%.

Federal Reserve watchers will focus on Wednesday’s release of minutes from the central bank’s mid-September policy meeting.

Other economic data out this week include a pair of sentiment indicators. On Tuesday, the National Federation of Independent Business will release its Small Business Optimism Index for September, then on Friday, the University of Michigan will publish its Consumer Sentiment index for October.

Also this week: A ten- and 30-year bond auction, a key focus, especially given the recent volatility across the yield curve. A weak Treasury auction could ignite further upside risk to rates.

The International Monetary Fund (IMF) issues its latest World Economic Outlook on Tuesday.

Monday, Oct. 9

Holiday: U.S. gov’t closed.
Federal Reserve speakers: Lorie Logan

Tuesday, Oct. 10

The NFIB small business optimism index has been below the historical average of 98 for 20 months in a row. September’s consensus is 91.2 versus 91.3 in August.
IMF issues its latest World Economic Outlook.
Federal Reserve speakers: Raphael Bostic | Neel Kashkari | Mary Daly

Wednesday, Oct. 11

MBA Mortgage Applications
Producer prices in September are expected to rise 0.3% on the month versus a 0.7% increase in August. The annual rate in September is seen at 1.7% versus August’s 1.6% increase. September’s ex-food ex-energy rate is seen rising 0.2% on the month and 2.1% on the year versus August’s 0.2% on the month and 2.2% yearly rise.
Atlanta Fed Business Inflation Expectations
FOMC Minutes
Federal Reserve speakers: Raphael Bostic

Thursday, Oct. 12

Jobless Claims for the Oct. 8 week are expected to come in at 209,000 versus 207,000 in the prior week.
Consumer Price Index: Core prices in September are expected to hold steady at a monthly increase of 0.3% to match August’s 0.3% increase. Overall prices are also expected to rise 0.3% on the month after August’s as-expected percent 0.6% increase which hit expectations. Annual rates, at 3.7% overall and 4.3% for the core in August, are expected 3.6% at 4.1% respectively.
Treasury Statement: Forecasters see a $30.0 billion deficit in September that would compare with an unexpected surplus of $89.3 billion in August this year and a very substantial deficit of $429.7 billion September a year-ago. September is the final month of the government’s fiscal year.
Fed Balance Sheet
Money Supply
Federal Reserve Speakers: Raphael Bostic

Friday, Oct. 13

Import and Export Prices: Import prices rose a higher-than-expected 0.5% in August which are the expectations for September. Export prices, which rose 1.3% in August and was much higher than expected, are expected to rise 0.6%.
Consumer sentiment in the first indication for October, which in September fell 1.4 points to 68.1, is expected fall further to 67.5.
Federal Reserve speakers: Patrick Harker

Key USDA & international Ag & Energy Reports and Events

USDA’s Crop Production and WASDE reports come Thursday.

On the energy front, the International Energy Agency will publish its monthly Oil Market Report on Thursday, as will the Organization of Petroleum Exporting Countries. The U.S. Energy Information Administration releases its Short-Term Energy Outlook on Wednesday.

Monday, Oct. 9

Ag reports and events:

Holiday: Canada, Chile, Japan, South Korea, Taiwan, U.S.