U.S. President Joe Biden gestures toward Senator Shelley Capito (R-WV) during an infrastructure meeting with Republican Senators at the White House in Washington, May 13, 2021.
Kevin Lamarque | Reuters
President Joe Biden rejected a new Republican infrastructure counteroffer on Friday, but will continue talks with Republicans next week as the White House considers whether it should abandon hopes for a bipartisan deal.
During a conversation with the president Friday, Sen. Shelley Moore Capito, R-W.V., proposed adding about $50 billion in spending to the GOP’s framework, White House press secretary Jen Psaki said in a statement. Republicans last put forward a $928 billion plan. Biden most recently proposed a $1.7 trillion package.
Biden signaled the “current offer did not meet his objectives to grow the economy, tackle the climate crisis, and create new jobs,” she added. Though he shot down the latest proposal, Biden will meet with Capito again Monday and plans to engage with senators from both parties about a “more substantial package,” according to Psaki.
As the talks continue, Democrats have also moved ahead with a surface transportation bill in the House. The legislation could serve as the means to approve major pieces of Biden’s $2.3 trillion infrastructure package through a series of must-pass spending bills.
House Transportation and Infrastructure Committee Chair Rep. Peter DeFazio, D-Ore., unveiled the bill on Friday. It would invest $547 billion over five years in roads and bridges, as well as rail and other public transport.
DeFazio has scheduled a committee markup for the bill Wednesday, a date which could serve as the closest thing to a real deadline for Biden and Senate Republicans to reach a deal on infrastructure. Biden separately spoke to DeFazio to “offer his support” for the markup, the process through which committees advance bills, Psaki said.
The parties have tried to forge a compromise for weeks but appear far from agreement on how much money to spend on infrastructure and how to pay for the investments. Monday marks the date by which Transportation Secretary Pete Buttigieg said the White House wanted to see a “clear direction” in the talks.
Biden could have to decide whether to pursue a massive infrastructure package with only Democratic votes. Members of his own party could complicate the process: Democratic Sen. Joe Manchin of West Virginia on Thursday expressed doubts about using special budget rules to pass a bill as he holds out hope for a bipartisan deal. Biden would need every Democratic vote in the Senate if a plan lacks GOP support.
Biden has told Capito he wants a bill to include at least $1 trillion in new money — or increases to the spending set out under existing policy. The Republican plan would allocate only about $250 billion in new funds.
The president also floated alternatives to his proposal to pay for a bill by hiking the corporate tax rate to at least 25%, a move Republicans oppose. Biden mentioned the possibility of implementing a 15% minimum corporate tax as some profitable companies manage to pay little or no taxes. (The White House stressed that Biden still supports hiking the corporate rate).
However, it is unclear if Republicans will accept Biden’s concession.
The talks have underscored fundamental differences in what the parties consider infrastructure and what they see as the federal government’s role in a changing economy. The White House wants a plan to include not only upgrades to transportation, broadband and water systems, but also investments in clean energy, care for dependent family members, housing and schools.
The GOP wants a more narrow focus on areas including roads, bridges, airports, broadband and water systems.
Whether Biden chooses to craft a bipartisan agreement or pass a bill with only Democratic support, he could face backlash from Democrats. Some progressive lawmakers, including Rep. Jamaal Bowman, D-N.Y., have grown wary of the president’s efforts to cut his original $2.3 trillion proposal in order to win Republican votes.
“If what we’ve read is true, I would have a very difficult time voting yes on this bill,” he said in a statement Thursday. “$2 trillion was already the compromise. President Biden can’t expect us to vote for an infrastructure deal dictated by the Republican Party.”
Still, Psaki signaled Friday that the administration has not shut the door on a bipartisan deal. She told reporters “there’s runway left” on the talks.
However, she suggested the White House would put a cap on how long it negotiates with Republicans.
“There are some realities of timelines” on the talks, she said, “including the fact that Congressman DeFazio is leading the markup of key components of the American Jobs Plan next week.”
Senate Majority Leader Chuck Schumer, D-N.Y., has told his caucus he wants to pass an infrastructure bill by July.
Nike (NKE) reports Q4 2021 earnings beat
A man walks in front of Nike products exhibit, on February 22, 2021 in New York City.
John Smith | Corbis News | Getty Images
Nike on Thursday reported fiscal fourth-quarter earnings and sales that topped analysts’ estimates, fueled by record revenue in its largest market, North America.
The company continues to benefit from consumers seeking out comfortable clothing to wear for workouts but also around the house. Even as people return to schools, offices and other social settings, many are still searching for relaxed options like sneakers and stretchy pants.
Nike also saw a boost to its wholesale business — something that was largely inactive a year earlier during the Covid pandemic, when shopping malls and department stores had to temporarily shut their doors and put orders for merchandise on pause.
Nike shares jumped more than 4% in after-hours trading.
Here’s how the company did during its fiscal fourth quarter, compared with what analysts were anticipating, using Refinitiv estimates:
- Earnings per share: 93 cents vs. 51 cents expected
- Revenue: $12.34 billion vs. $11.01 billion expected
Nike’s net income for the period ended May 31 rose to $1.5 billion, or 93 cents per share, compared with a loss of $790 million, or 51 cents per share, a year earlier. That topped analysts’ forecast of 51 cents per share, using Refinitiv data.
Total revenue rose to $12.34 billion from $6.31 billion a year earlier, topping estimates for $11.01 billion.
In North America, Nike’s biggest market, sales more than doubled to a record $5.38 billion as the company surged from a year earlier when the Covid pandemic was hitting the retail industry the hardest. The region’s sales were up 29% on a two-year basis.
In Greater China, sales were up just 17% at $1.93 billion. Typically one of the fastest-growing markets for Nike, consumers in China have threatened a boycott after some Western brands like Nike expressed concern about allegations of forced labor in Xinjiang.
Digital sales were up 41% compared with the prior year, and rose 147% compared with the same period in 2019.
“Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for Nike’s long-term growth,” said Nike CEO John Donahoe.
Federal Reserve gives U.S. banks a thumbs up as all 23 lenders easily pass 2021 stress test
The Federal Reserve announced Thursday that the biggest U.S. banks could easily withstand a severe recession, a milestone for the once-beleaguered industry.
The Fed, in releasing the results of its annual stress test, said that all 23 institutions in the 2021 exam remained “well above” minimum required capital levels during a hypothetical economic downturn.
That scenario included a “severe global recession” that hits commercial real estate and corporate debt holders and peaks at 10.8% unemployment and a 55% drop in the stock market, the Fed said. While the industry would post $474 billion in losses, loss-cushioning capital would still be more than double the minimum required levels, the Fed said.
If there was an anticlimactic note to this year’s stress test, it’s because the industry underwent a real-life version in the past year when the coronavirus pandemic struck, leading to widespread economic disruption. Thanks to help from lawmakers and the Fed itself, banks fared extremely well during the pandemic, stockpiling capital for expected loan losses that mostly didn’t materialize.
Nevertheless, during the pandemic, banks had to undergo extra rounds of stress tests and had restrictions imposed on their ability to return capital to shareholders in the form of dividends and buybacks. Those will now be lifted, as the Fed has previously stated.
“Over the past year, the Federal Reserve has run three stress tests with several different hypothetical recessions and all have confirmed that the banking system is strongly positioned to support the ongoing recovery,” Vice Chair for Supervision Randal K. Quarles said in a statement.
After passing this latest exam, the industry will regain a measure of autonomy it lost since the last crisis. After playing a key role in the 2008 financial crisis, banks were forced to undergo the industry exam, and had to ask regulators for permission to boost dividends and repurchase shares.
Now, under something called the stress capital buffer framework, banks will gain flexibility in how they want to dole out dividends and buybacks. The stress capital buffer is a measure of capital each firm needs to carry based on the riskiness of their operations. The new regime was supposed to start last year, but the pandemic intervened.
“So long as they stay above that stress capital buffer requirement and all their other requirements every quarter, a bank can technically do whatever it chooses to do with regards to buybacks and dividends,” Jefferies bank analyst Ken Usdin told CNBC this week.
During a background call with reporters, senior Fed officials pushed back against the idea that the new regime resulted in a free-for-all. Banks are still subject to restrictions, and the Fed is confident that the stress capital buffer framework will protect their ability to support the economy during a downturn, they said.
While analysts have said they expect the industry can hike buybacks and dividends by tens of billions of dollars starting in July, the Fed has instructed lenders to wait until Monday afternoon to disclose their plans, according to people with knowledge of the situation. That’s when a flurry of press releases is expected.
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Here’s what you need to know
People queue outside a vaccination center in Sydney on June 24, 2021, as residents were largely banned from leaving the city to stop a growing outbreak of the highly contagious Delta Covid-19 variant spreading to other regions.
SAEED KHAN | AFP | Getty Images
The “delta variant” has come to dominate headlines, having been discovered in India where it provoked an extreme surge in Covid-19 cases before spreading around the world.
But now a mutation of that variant has emerged, called “delta plus,” which is starting to worry global experts.
India has dubbed delta plus a “variant of concern,” and there are fears that it could potentially be more transmissible. In the U.K., Public Health England noted in its last summary that routine scanning of Covid cases in the country (where the delta variant is now responsible for the bulk of new infections) has found almost 40 cases of the newer variant, which has acquired the spike protein mutation K417N, i.e. delta plus.
It noted that, as of June 16, cases of the delta plus variant had also been identified in the U.S. (83 cases at the time the report was published last Friday) as well as Canada, India, Japan, Nepal, Poland, Portugal, Russia, Switzerland and Turkey.
As is common with all viruses, the coronavirus has mutated repeatedly since it emerged in China in late 2019. There have been a handful of variants that have emerged over the course of the pandemic that have changed the virus’s transmissibility, risk profile and even symptoms.
Several of those variants, such as the “alpha” strain (previously known as the “Kent” or “British” variant) and then the delta variant, have gone on to be dominant strains globally, hence the attention on delta plus.
India’s Health Ministry reportedly said Wednesday that it had found around 40 cases of the delta plus variant with the K417N mutation. The ministry released a statement on Tuesday in which it said that INSACOG, a consortium of 28 laboratories genome sequencing the virus in India during the pandemic, had informed it that the delta plus variant has three worrying characteristics.
These are, it said: increased transmissibility, stronger binding to receptors of lung cells and the potential reduction in monoclonal antibody response (which could reduce the efficacy of a lifesaving monoclonal antibody therapy given to some hospitalized Covid patients).
India’s Health Ministry said it had alerted three states (Maharashtra, Kerala and Madhya Pradesh) after the delta plus variant was detected in genome-sequenced samples from those areas.
The detection of a variation to the delta variant largely blamed for India’s catastrophic second wave of cases has stoked fears that India is ill-prepared for a potential third wave. But some experts are urging calm.
Dr. Chandrakant Lahariya, a physician-epidemiologist and vaccines and health systems expert based in New Delhi, told CNBC on Thursday that while the government should remain alert to the progress of the variant, there is “no reason to panic.”
“Epidemiologically speaking, I have no reason to believe that ‘Delta plus’ alters the current situation in a manner to accelerate or trigger the third wave,” he told CNBC via email.
“If we go by the currently available evidence, Delta plus is not very different from Delta variant. It is the same Delta variant with one additional mutation. The only clinical difference, which we know till now, is that Delta plus has some resistance to monoclonal antibody combination therapy. And that is not a major difference as the therapy itself is investigational and few are eligible for this treatment.”
He advised the public to follow Covid restrictions and to get vaccinated as soon as possible. Analysis from Public Health England released last week showed that two doses of the Pfizer–BioNTech or Oxford-AstraZeneca Covid-19 vaccines are highly effective against hospitalization from the delta variant.
The WHO has said it is tracking recent reports of a “delta plus” variant. “An additional mutation … has been identified,” Maria Van Kerkhove, WHO’s Covid-19 technical lead said at a briefing last week.
“In some of the delta variants we’ve seen one less mutation or one deletion instead of an additional, so we’re looking at all of it.”
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