The House Passes Build Back Better Bill – Closing Bull Nov. 19th, 2021

Quick Summary:

In this week’s Closing Bull, we take a look at Biden’s $1.2 trillion infrastructure bill, the Build Back Better bill has been passed by the House, a climate deal has come in from COP26 summit in Glasgow, companies are propping up gas prices, the clever people at Walmart plan ahead to stock up for the holidays, and a fun fact to end off with.

Let’s get into it!

Key News This Week:

  1. Market recap.
  2. President Biden signs $1.2 trillion infrastructure bill.
  3. The House passes the Build Back Better (BBB) bill.
  4. News of a climate deal from the COP26 summit in Glasgow.
  5. Gas prices are out of control.
  6. Walmart plans ahead and stocks up for the holidays.
  7. Fun fact.

Read the Transcript

Welcome to my financial markets’ re-cap for the week.

Before we get to the news, a quick update on the system. I mentioned last week that we were still in a long trade, well, we finally exited the trend this week, and what a monster win that was. 

We surged ahead to a new equity peak for the year. So congratulations to all that took advantage of that forecast, we nailed it!

Now we are back to cash, but another one is coming soon. I am very bullish going into the year-end, so more good times coming I believe.

So that was the (AMAZING!) system update, what was the news this week?

Well, potholes are officially on notice. President Biden signed the $1.2 trillion infrastructure bill into law this week, which paves the way for historic federal investments into roads, transit, broadband, and much more during the next five years. But, as good as that is for the economy, that’s not all, he’s not done spending, oh no…

Today the House passed the Build Back Better (BBB) bill. This gigantic package, supported by Democrats but opposed by Republicans, pours a further $1.75 trillion into everything from education to healthcare to fighting climate change.

There was a delay as Democrats had been waiting on a report from the Congressional Budget Office (CBO), a nonpartisan agency that crunches the numbers on major pieces of legislation to determine how much they would cost.

Some Democrats refused to vote on the bill until the CBO report was released—and it was released yesterday.

So how much will the triple BBB Bill cost?

Well, the CBO said that Build Back Better will add $367 billion to the federal deficit over a decade, indicating that the bill isn’t fully paid for by initiatives to boost revenue.

However, in its bottom line, the CBO did not include one of those initiatives—a plan to give the IRS more resources to enforce tax collection and the Treasury department thinks that an IRS crackdown on tax evaders would bring in at least $400 billion in revenue. Covering the deficit hole.

It’ll now head over to the Senate, where Democrats have a razor-thin majority. Expect lawmakers to take a big fat Sharpie to the legislation in order to gain support from moderate Democrats in the chamber. But it won’t change much and will likely go through soon.

Over the weekend, we got news of a climate deal from the Cop26 in Glasgow. Ministers have sent a signal on the shift away from the world’s dirtiest fuel, coal, with a deal calling for efforts to also “phase down” subsidies for fossil fuels.

The ultimate goal was to limit global warming to 1.5C above pre-industrial levels.

The climate talks have agreed to get countries to strengthen their 2030 emissions-cutting targets by the end of next year in a bid to limit this dangerous warming.

The Pact was watered down at the last minute following a push by India and China to change the language in the deal from “phase out”, to “phase down” coal.

However, it’s a positive step by the world leaders and it’s the first explicit mention of fossil fuels in a UN climate agreement. 

Progress indeed!

In other news, Gas prices are out of control. 

President Biden asked FTC or Federal Trade Committee Chair Lina Khan to investigate potential “anti-consumer behavior” by energy companies to prop up gas prices at the pump, even while the prices decline for unfinished commodities that make up gasoline.

The price of Gasoline has not decreased.

Biden had earlier this month asked OPEC to increase oil production to ease shortages and keep prices in check — but so far, OPEC has said ‘nope, we’re going to do our own thing’, and they are a law unto themselves.

US gas prices are up more than 60% from a year ago, hitting seven-year highs. 

Biden underscored that the two largest gas companies — Exxon and Chevron — are on track to nearly double their profits from 2019. Pointing out that they are fast to increase prices when oil becomes more expensive but slow to decrease them when prices retreat. I get Biden’s point!

This is interesting, Walmart planned ahead and is stocked up for the holidays with 11.5% more inventory than last year. 

Now, how did they do that in the face of well-documented supply chains bottlenecks?

I mean last month, shipments from Asia took twice as long and cost twice as much as in pre-pandemic.

Well, the clever people running not only Walmart, but Home Depot, and Costco started paying for private ships as early as May this year to keep shelves stocked. Each ship costs approximately $140,000 to rent, but when you need your stuff, you do what it takes.

In fact, Home Depot reported stronger-than-expected sales partly because of inventory management helped by chartering ships.

So, with US holiday spending expected to hit a record $800B+ this season — it’s great news for retailers with inventory, but a missed opportunity for those running short and not having the economies of scale those clever people at Walmart have.

Lastly, I’d like to finish up with a Fun Fact:

Did you know that there’s a 50% chance any item of clothing you own has a zipper that says “YKK” on it?

Japanese company YKK produces half of the world’s zippers and is an 80-year-old company with over 70 factories worldwide.

So if you were ever wondering why it says YKK, now you know!

That’s it from me, it’s the weekend, time to down tools, have a great weekend, thanks for watching and bye for now.

Leave a Comment