Ukraine
The heads of state of two NATO partners meet at the White House on Monday with more in common than headlines might indicate. Neither German Chancellor Scholz nor President Biden wants war in Ukraine. Both understand that economic, financial, and security sanctions leveled against Russians will hurt German, Ukrainian, and Russian individuals, and non-military businesses more than President Putin or his war council. Each has reasons to see Nord Stream II progress under circumstances controlled by Berlin. The Senate is close to agreement on sanctions legislation targeted at Putin; some senators remain focused on blocking Nord Stream II in the event of war. Tamping down perceptions of wide gaps in their strategic thinking would benefit both leaders as well as Ukraine and NATO.
Digital Money
The House Financial Services and the Senate Agriculture committees will each hold a hearing on stablecoins on Tuesday (10:00 a.m.) and Wednesday (10:00 a.m.), respectively. We doubt Congress will agree to legislation this year but an executive order due anytime from Biden likely will focus on financial stability and transparency issues. The potential impact on the US banking industry and possible positive payments benefits of the geometric growth of the coins were studied in a Federal Reserve Board staff discussion paper recently posted on the Fed’s website.
Energy
The Senate Energy Committee on Thursday at 10:00 a.m. is scheduled to explore the “opportunities and challenges” of hydrogen power. The languishing FY22 reconciliation bill could be a vehicle for tax credits and other subsidies originally included in the lifeless Build Back Better proposal from last year. We continue to believe that green, clean energy and the Child Tax Credit remain engines for what could be accomplished under reconciliation, or less likely, bipartisan legislation this spring or summer.
Rearview Mirror
The US equity market was still open last Friday when the House approved its version of legislation to enhance US capacity to compete with China in the semiconductor manufacture business. We blasted out a quick email to our “Policy Only” list before the close. Yet we wanted to show John Roque’s scoring of the sector (using the Philly SOX index), two-thirds of which are weak. House passage gave the index a baby bump around 1:00 p.m. that lasted through the close. We think bigger bumps could come as the House and Senate iron out differences between their competing proposals either in a conference committee (likely) or a less formal manner at the leadership level before sending the legislation to the president for his signature.
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Source: 22V Research
