By Patricia Zengerle
WASHINGTON (Reuters) – U.S. backers of the Iran nuclear deal are increasingly confident of enough Democratic support to ensure it survives review by Congress, despite fierce opposition by majority Republicans and a massive lobbying drive.
By the time the House of Representatives recessed for the summer last week, no senior Democrat in the chamber had come out formally against the agreement and several central figures, including Minority Leader Nancy Pelosi, were strongly in favor.
Pelosi said she was confident that if, as expected, Republicans pass a “resolution of disapproval” to try to sink the deal, a promised veto of that measure by President Barack Obama would be sustained.
At least 44 Democrats in the House and 13 Democrats in the Senate would have to defy Obama and join Republicans in opposing the deal to get the two-thirds majorities in both chambers needed to override a veto.
“More and more of them (House Democrats) have confirmed to me that they will be there to sustain the veto,” Pelosi told reporters.
The United States was the prime negotiator in the July 14 agreement between world powers and Iran to curtail Tehran’s nuclear program in exchange for lifting sanctions, and its engagement is essential for implementing it.
In the last two weeks, the White House has rolled out its big guns at congressional hearings and private meetings to advocate for the deal, which Obama says is not perfect but is the best way to keep Iran from getting a nuclear bomb.
Powerful pro-Israel lobbying groups that believe it would endanger the Jewish state by empowering Iran have been especially active, although some pro-Israel factions support the deal.
Opponents had hoped influential Democrats would come out against the deal early, to give momentum before the recess.
But despite signs of skepticism, the few Democrats who did openly oppose it, including Representatives Grace Meng and Juan Vargas, are not among those considered influential on the issue.
“That shows the strength of the firewall we have here,” a senior Democratic congressional aide said.
At least 13 Democrats in the Senate and 44 in the House would have to join Republicans in opposing the deal to get the two-thirds majorities in both chambers needed to override a veto.
PRESSURE ON JEWISH LAWMAKERS
To date, no Senate Democrat has formally announced opposition, although many are undecided. A few influential leaders, including number two Democrat Dick Durbin, are strongly in favor.
The Senate recess begins on Friday and both houses return to Washington on Sept. 8. Congress then has until Sept. 17 to accept or reject the pact, which the White House considers one of the major foreign policy initiatives of the Obama presidency.
“I’m encouraged right now,” said Democratic Representative David Price, who has taken on the task of convincing lawmakers from both parties to back the deal. But he cautioned that it is still early in the process.
The pressure has been particularly strong on high-profile Jewish Democrats known as strong supporters of Israel.
The New York Post put Senator Chuck Schumer, the number three Senate Democrat, on its front page, under the headline: “Where’s Chuck? Senator hides from Post’s Iran questions.” Schumer says he has not made up his mind.
Other prominent Jewish Democrats say they are still undecided, including Representative Eliot Engel, the top Democrat on the House Foreign Affairs Committee.
“There’ll be a lot of pressure on Democrats to support the president,” Engel told Reuters.
Engel met with Obama in the Oval Office last Wednesday, and Israeli Ambassador Ron Dermer at the Capitol on Thursday.
He said it would be “very tough” to win over enough Democrats to override the president’s veto. But when asked if he would vote to do so, Engel said, “I’m considering it.”
Stock Market Gains This Pandemic
Last Monday’s market opened with a new round of confidence as stock market gains this pandemic Tech stocks continued their surge, adding $291.66 billion in combined market valuation. Investors also celebrated promising developments in the race for a coronavirus vaccine.
The Nasdaq Composite gained 2.5% and established a new record high of 10,767.09. S&P 500 rose 27.11 and managed to gain 0.8%. The Dow Jones hovered at a potential loss but managed to close the day with an additional 8.92 points, equal to less than 0.1% gain.
The slew of corporate earnings announcements scheduled for this week kickstarted the trading activity Monday. John Ham of the New England Investment & Retirement Group, says this week is all about earnings. While there is interest in large-cap tech stocks, the market will need “actual money managers” to help drive up lesser names. Ham noted that there are still “a lot of people sitting on the sidelines.”
Related Article: As Earnings Season Begins, Prepare For A Bumpy Ride
TECH Stocks Leads the Way
NASDAQ Rides High
Nasdaq reached an all-time high of 10,767.09, a surge of 263.90 points or 2.5% gain. This peak is Nasdaq’s 28th for the year. Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Google (GOOGL), Tesla (TSLA), Microsoft (MSFT) and Facebook (FB) all shot up, adding a total $291.66 billion in market valuation overnight.
After Goldman Sachs adjusted Amazon’s price target to $3,800 per share, its stock rose 7.93%. This added $116.92 billion in the company’s valuation. Amazon’s total market cap is now $1.59 trillion. Owner Jeff Bezos added #13 billion to his net worth overnight.
Tesla gained 9.47% as investors anticipated the company’s June earnings announcement. The automaker added $26.36 billion to its market cap. Microsoft gained 4.3% and added $66.82 billion. Apple closed with a 2.11% gain, added $35.53 billion. Google (Alphabet) was up 3.1% and added $32.08 billion. Facebook closed 1.40% higher and added $9.67 billion. Netflix gained 1.91% and increased its value by $4.28 billion.
S&P 500 Gains As Well
S&P 500 ended up with 3,251.84 points, or 0.8% higher than previous. Tech stocks also blazed the trail, with big gains in Apple, Microsoft, Facebook, and Google.
Investors took notice of recent developments in the race for a coronavirus vaccine. The big winner was UK Biotech firm Synairgen, who shot up 552%.
Investors also digested a mix of news from trials of coronavirus drugs and vaccines. Shares of the UK biotech firm, Synairgen shot up to 552%. The company announced last Monday that its experimental drug prevented serious coronavirus symptoms. This meant that the chances of a patient dying or requiring a ventilator lowered.
AstraZeneca shares dropped 4%, despite the announcement of good results. Early-stage trials show that the company’s experimental vaccine-induced antibody and T-cell production. While share prices increased 10% in London, the NYSE trades brought them back to earth. Analysts noted that trial results were only preliminary and below expectations.
With the US still dealing with outbreaks, the prospects for recovery get dimmer. Jason Pride, Private Wealth Chief Investment Officer, sees the market reacting to pharma. He said: “Renewed outbreaks in the U.S. highlight the reality that a return to normal economic activity may be very difficult, if not impossible, without a widely available cure/vaccine. As a result, markets are likely to remain sensitive to developments from this leading vaccine candidate.”
Holding its Breath for Stimulus Packages
Investors are also on alert for any changes in the political landscape.
People are on standby for the conclusion of the European Union meeting in Brussels. Leaders are discussing a $2.1 trillion budget that aims to serve as a coronavirus recovery fund.
People are also monitoring updates for the anticipated next round of stimulus aid in the US. What the final form of the bill is unknown at this point, as the two parties are worlds apart. Republicans want to limit the budget to $1.5 trillion while Democrats want it much higher. The only thing certain at this point is that both parties agree that relief will be much needed right now.
Watch this video as Heath Terry speaks about the Stock Market Gains This Pandemic:
Let us know what you think. Drop some thoughts at the comment section below.
Buffett Has Had A Terrible Year, And It’s Part of His Plan
It hasn’t been easy being Warren Buffett in 2020.
In late May, Bill Ackman’s Pershing Square hedge fund dumped its stake in Berkshire Hathaway. He said that he felt he could be more “nimble” at deploying capital than the typically ‘slow and steady” approach by Berkshire.
In June he became a bit of a punching bag for Dave Portnoy, the founder of Barstool Sports and now a day trader. Portnoy said he was “better at the stock market” than Buffett. He even added, “I’m better than he is. That’s a fact.”
The most recent knock against Buffett comes from a tweet by Roundhill Investments CEO and co-founder Will Hershey. He listed the five companies that have lost the most value this year. Berkshire Hathaway is fifth on the list, having seen $90 billion in value disappear. To compound the difficult year for Berkshire, two of the companies that have lost even more value this year, Wells Fargo and JPMorgan are two of the four largest Berkshire holdings.
Most of the criticisms aimed at Buffett have been similar to why Pershing Square pulled its investment: a lack of buying activity, particularly during the market correction from February through late March.
With a reported $137 billion in cash, Berkshire was nowhere to be found during the market swoon. It only recently dipped its toes back into the buying pool. When it did, it spent $10 billion for a stake in Dominion Energy’s natural gas assets.
According to one Buffett follower, this is all part of his plan.
Shane Parrish, who writes the heavily followed Farnam Street blog, said during a recent interview with Business Insider, “You have to be willing to look like an idiot in the short term to get the best long-term results. I’d suggest that because the future has become increasingly uncertain, he’s preparing for the widest range of possible futures.”
Parrish says that during the February to late-March correction, no investors really knew what was going on. Part of Buffett’s plan, says Parrish, is to do nothing until you know the best course of action.
“When you don’t understand with a certain degree of certainty, you sit out until you do.”
He added “People always seem to want the optimal solution for the moment, and thus he ends up looking out of touch at times. But you have to be willing to do something different to get different results.”
Buffett is sitting on cash to protect his investors and to be ready for whatever the market brings, said Parrish.
“You can’t win if you don’t finish… you can’t compound if you zero out,” Parrish said. “In periods of high uncertainty, you want to ensure you have the most possible options.”
If we see another leg down in the market, and Buffett is able to buy good, quality businesses at an even cheaper price than during the recent correction, there will be a lot of naysayers eating crow.
Unemployment Rate Declines to 11.1%
Coming at the heels of a surprising May performance, the US economy showed tenacity as it beat analyst predictions once again. The Bureau of Labor Statistics yesterday reported that the US added 4.8 million non-farm payrolls to the job market in June. This is 1.8 million more jobs than expected. This shows unemployment rate decline to 11.1%.
Related Article: Trump Says Economy ‘Roaring Back’ in June As 4.8 Million Jobs Added
Us Generated 4.8 Million Jobs Last June, Unemployment Declines to 11.1%
The majority of new jobs came from the private sector. The hospitality and leisure industry led the way with 2.1 million payrolls or 44%. Restaurants and bars recorded the most gains in the industry, posting 1.5 million new jobs. Meanwhile, government jobs remain few, with only 33,000 new ones during the month.
The increase in jobs so pulled down the unemployment rate to 11.1% in June, which is 2.2% lower than last month’s rate of 13.3%. Meanwhile, April’s 14.7% unemployment rate was the highest since the Depression Era of the 1930s. The 11.1% is still a high number, considering that the previous highest unemployment rate since 1941 is 10.8% in 1982.
While the new jobs showed efforts to reopen the economy, the recent spike in coronavirus cases now threatens any further progress. In a Washington Post report, the US set a new record of single day coronavirus cases, posting 55,220 cases on July 2. Establishments that opened last June have started closing again as a precaution.
Unemployment Also Rises
The US also reported 1.4 million workers filing for unemployment benefits for the first time. This brings the total number of Americans filing for unemployment at least two weeks in a row up to 19.3 million.
The current government stimulus package (CARES Act), provides an extra $600 unemployment insurance. This provision expires by July 31, after which Congress will debate on new rules and amounts. This also allows even self-employed workers to file for claims. Regular unemployment benefits before the coronavirus pandemic remain in effect.
Bars and restaurants in particular, who accounted for 30% of the increase in jobs last June, are in danger of laying off workers again, as states are rethinking their strategy of reopening their economies. This could lead to re-closing open establishments and delaying the reopening of outlets about to open. Either way, the industry is still affected by the ongoing health crisis. Bureau of Labor Statistics Commissioner William Beach noted that “After two months of job gains…that sector is still down 3.1 million jobs since February.”
Mixed Reactions, Uncertainty for July
While the news garnered positive reactions from various sectors, there were causes for concern among analysts. Glassdoor Chief Economist Andres Chamberlain looks at the report as a sign of good things to come: “Today’s positive jobs report does provide a powerful signal of how swiftly US job growth can bounce back and how rapidly businesses can reopen once the nation finally brings the coronavirus under control — a reason for optimism in coming months.”
Some are fearing the worst is yet to come. The rising number of infections hampered economic recovery efforts. Businesses and state governments have begun reconsidering plans for their gradual reopening. The effects of the second wave on unemployment will most likely show up in the July and August reports. Michael Pearce, the senior US economist at Capital Economics, believes that a full job market recovery will be more difficult while the US remains in recession. The fresh outbreaks have hampered efforts to jumpstart economic activity as “we expect the recovery from here will be a lot bumpier and job gains to be more muted.”
Goldman Sachs analysts believe that over half the United States is now reconsidering their reopening plans and will bring back restrictions on public activities. They estimated that among the states, only Vermont and New Hampshire are safe to reopen.
Watch this video about Unemployment Rate in US last June:
In the fifth month of the outbreak, new infections keep sidetracking the US’s plans to reopen the economy. Despite the rising coronavirus cases, many Americans insist on going back to work. This explains the increasing numbers in the labor market.
Given the resurgence of the virus, do you think the economy will still be on the rise and unemployment rate will continue to decline? Let us know in the comments section below!
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