“I’m Not Ruling Anything Out”: Stocks Soar After Manchin Hints At Caving
It’s as if Monday’s Facebook-driven tech rout never happened.
With yields soaring higher as breakevens surge to levels last seen back in June, one would think that tech names would be accelerating their previous day freefall led to the downside by Facebook, as the company’s whistleblower is currently bashing the company before Congress. Well, one couldn’t be further from the truth and futures are currently at session highs, more than reversing Monday’s losses, led by the Nasdaq which is up 1.7%.
And while it is not immediately clear what is behind this burst higher which was triggered the moment cash trading opened, one cited catalyst is that Senator Joe Manchin, who until today adamantly repeated that $1.5 trillion is his ceiling for the Biden infra package, earlier today showed first signs of cracking, with CNN reporting that Manchin said he was not ruling out a USD 1.9-2.2tln social spending plan.
“I’m not ruling anything out,” he told CNN. President Joe Biden is visiting Michigan on Tuesday to press for action on the package and a separate bipartisan infrastructure deal, as infighting between Democratic moderates and progressives has slowed down his agenda. Here is CNN:
Speaking to reporters, Manchin also would not commit to the new timeline set by party leaders to find a deal on the social safety net expansion by October 31. And he sounded resistant to calls from progressives and other top Democrats to raise his $1.5 trillion price tag for the package, which many in his party view as too low to achieve key policy objectives.
On Tuesday, however, Manchin did not rule out a $1.9 trillion to $2.2 trillion price tag for the social safety net package, a range Biden has floated privately. “I’m not ruling anything out,” Manchin said when asked by CNN if he would rule out that number.
As trading desks promptly noted, Manchin knows that some compromises will need to be made, especially if laced with some generous pork for his constituents. That said, it remains unclear how the critical Democrat vote in the senate, that of Sinema, will swing and whether she feels the same as Manchin, although as Forex Live’s Adam Button notes, “if she loses Manchin, it’s going to be lonely.”
Meanwhile, David Rosenberg who takes every uptcik in the market a little to personally, summarized the market’s euphoric mood “Sounds like Manchin is starting to cave! Did I really say $1.5 trillion? Market loves it, but it won’t like the tax bite when that comes.”
Sounds like Manchin is starting to cave! Did I really say $1.5 trillion? Market loves it, but it won’t like the tax bite when that comes.
— David Rosenberg (@EconguyRosie) October 5, 2021
Tue, 10/05/2021 – 11:27