“To be clear, our bipartisan agreement does not preclude Republicans from attempting to defeat my Families Plan. Likewise, they should have no objections to my devoted efforts to pass that Families Plan and other proposals in tandem. We will let the American people – and the Congress – decide.
“The bottom line is this. I gave my word to support the infrastructure plan and that is what I intend to do. I intend to pursue the passage of that plan, which democrats and republicans agreed to on Thursday, with vigor. It would be good for the economy, good for our country, good for our people. I fully stand behind it without reservation or hesitation.” - President Biden
President Biden felt the heat, and perhaps he understood the untenable position of holding a bipartisan infrastructure deal hostage, and at the same time, trying to herd all the Democrats together on a monster spending bill that would clock in between $3.0 and $6.0 trillion. President Biden will hit the road on Tuesday to promote the deal.
It is good news for Materials (XLB) and Industrials (XLI), which gave up the ghost on a big-time infrastructure deal on June 1st and proceeded to stumble hard. Last week, Martin Marietta Materials (MLM) and Vulcan Materials (VMC) came on strong, and United Rentals (URI) paced the Industrials. There is a lot of upside potential if this deal happens.
Materials & Industrials & S&P 500
Embarrassment of Riches
Meanwhile, for all the talk of recession, America has never been this rich nor gotten as rich this fast.
There has been a wealth bomb that came with less sweat or effort than any major surge in wealth in American history.
I think this has created an even greater sense of entitlement for folks that got the smallest gains. It means Universal Basic Income (UBI) and other transfer payments.
Absent that, the only thing that will quench their thirst for economic justice would be a massive confiscation of wealth.
There are forces on Capitol Hill that would love to see a combination of both - taxing the rich to pay for an assortment of programs that would essentially give folks the option of working or not working.
To see the chart, click here.
In two weeks, checks go out under the ‘Child Tax Credit’ themes of the past with a new wrinkle – recipients do not have to be working or even looking for work. And Biden wants to make this permanent.
Today’s Session
We are going to come out the gate slowly, but this is going to be a consequential week. The CNN Fear & Greed Index is less fearful, but it is enough to suggest that as the market moves higher, more players will join the party.
The key early in the week is momentum, as breaks out might see indices meander and build new bases at former resistance points.
Portfolio Approach
On Friday, we closed a position in Consumer Discretionary and Technology and added two new positions in Consumer Discretionary in our Hotline Model Portfolio.
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