Connect with us


Wall Street is already eyeing Biden’s next trillion-dollar spending plan




“The $ 1.9 trillion stimulus has been adopted without mass and the Biden administration has now set its sights on a major infrastructure bill,” he told the AFS analyst on Monday Arne Petimezas.

Treasury Secretary Janet Yellen has indicated that no time will be wasted working.

“Infrastructures, education and training, climate change [and] other longer-term priorities will be on our list to address next, “Yellen said in an interview with NBC last week.

But so far there are few details, leaving investors in danger of a wide range of riddles about the ambition with which the legislation will be.

Goldman Sachs expects the White House to propose at least $ 2 trillion for infrastructure, but believes the price could reach up to $ 4 trillion if the next fiscal package also tries to address issues related to child care and health.

In addition to the size and scope of the package, expect that much of the upcoming discussion will focus on how the U.S. government plans to pay for the initiative.

“Increases in capital gains and corporate tax rates appear to fund some of that, although we believe it will be difficult for Congress to agree on more than $ 1 trillion in these offsets,” he said. Goldman strategists said over the weekend.

On the radar: A rise in corporate taxes could cause traders to re-evaluate their bloody view of revenue. The conversation around the package could also fuel concerns about inflation and government bonds, which recently contributed to a rise in yields and a drop in high-tech technology stocks.

Wall Street tries not to get ahead of itself. For now, Citigroup estimates that the next package will include about $ 750 billion in infrastructure and $ 1 trillion to expand the improved tax credit for minors, and will be funded in part by raising the corporate tax rate by 28%. at 28%. But it is also a 30% chance that “nothing will be approved before the end of the year.”

Investor Information: Stock selectors who want to bet on an infrastructure plan have many names to choose from. Some may already benefit from the hype.

American concrete (USCR) has risen 67% this year, while Caterpillar (GAT) has gained about 26%. He IShares US Infrastructure ETF (IFRA) has increased by 16% over the same period. The sector will be under the microscope in the coming weeks and months, as the goals are set and the debate on legislation materializes.

Could US economic growth rival that of China this year?

For decades, the Chinese economy has grown much faster than the US. But that could change in 2021, as the U.S. recovery from the pandemic picks up strength.

Details, details: Economists have rapidly improved their US growth forecasts thanks to the approval of Biden’s $ 1.9 trillion stimulus package, which is much larger than many thought possible just a few months, according to my CNN business partner Matt Egan.

Goldman Sachs calls for US GDP growth in 2021 of 7%, while Morgan Stanley forecasts 7.3% growth. If realized, this level of growth would exceed the Chinese government’s modest official target of more than 6%.

Disclaimer: This estimate is believed to be extremely conservative. Economists surveyed by Refinitiv expect China’s economy to grow 8.4% this year.

But an American economic uptake, especially if infrastructure talks gain strength, could change the usual growth dynamics, at least temporarily. Oxford Economics predicts that the U.S. contribution to global growth in 2021 will be stronger than China’s for the first time since 2005.

“The U.S. economy will once again become the global locomotive. And it will help get the rest of the world out of this Covid crisis,” said Gregory Daco, chief economist at Oxford Economics.

This is exactly what happened: in data released on Monday, China reported that retail sales for the first two months of the year fell slightly, while the boost in factory production and investment spending remained better. .

“[January to February] economic data suggests the economy remains resilient, although the peak of the recovery has lagged behind, ”Larry Hu of the Macquarie Group said in a note to customers.

Stripe is now the most valuable private startup in the United States

The Stripe online payment processor is officially the most valuable private startup in the United States.

The last one: the company announced over the weekend that it had raised another $ 600 million in funding. Stripe said it will use the money to invest in Europe, where it already works with top companies like Axel Springer, Jaguar Land Rover, Deliveroo and Klarna.

“The growth opportunity of the European digital economy is immense,” John Collison, president and co-founder of Stripe, said in a statement.

This round of funding values ​​Stripe at $ 95 billion, a sharp rise from $ 36 billion in April 2020. This puts it ahead of SpaceX and Instacart, according to CB Insights data.

By way of comparison, Uber (UBER) it was valued at $ 76 billion in 2018 before debuting on Wall Street in 2019.

What happens next: It now focuses on whether Stripe, which has benefited from a rush to shop online during the pandemic, will take steps to make itself public. Should the call be made soon, the interest would be huge, as investors reward high-growth tech companies that are considered promising bets in the long run.

Until next time

The New York Fed’s Empire State Manufacturing Survey for March publication at 8:30 am ET.

Next Tomorrow: Retail Sales and Industrial Production Data in the US.