Immediate Impact

Joe Biden is causing ripples that are going to immediately impact the economy. Some will help to stimulate the economy in the short-term and allow people to survive through the pandemic shutdown.

Those moves could cause pain down the road, but that is not the current concern.

Other executive moves are going to immediately put the breaks on existing policies. Some companies are going to lose, but where one loses another might gain.

Housing Foreclosures and Rent Abatement

Housing foreclosures and evictions will be delayed until at least March 31, 2021. According to the Census Bureau, almost 12% of homeowners with mortgages are late on their payments and 19% of renters are behind.

The federal moratoriums will allow people to stay in their homes even if they cannot afford their monthly bills. While this will stem the negative impact of the pandemic pullback on individuals, it will also mean that billions of dollars in housing costs will continue to go unpaid.

While short-term beneficial, we are kicking the can down the road and will have to address the impact of these policies at some point.

Environmental Impact – Keystone Pipeline

Biden intends to reverse many of Trump’s environmental rollbacks, but that process could take years and will be met with pushback from Republicans and business groups. But that is why executive orders on some items can be efficient.

The biggest news was the rescinding of the construction permit for the Keystone XL oil pipeline, which was intended to transport oil from the Canadian oil sands to the Gulf Coast. The developer of the pipeline, TC Energy (TRP) announced it was suspending work on the pipeline. Its stock pulled back about 5% after the announcement but then rebounded.

As Mark Sebastian recently pointed out, this does not mean that the Canadian range will stop producing oil. It just means that a different method of transporting the oil will need to be used, so keep an eye on railroads and trucking companies.

Regulation Freeze

The new president issued a freeze on all new regulations put in motion by Trump to give his administration time to evaluate which ones it wants to move forward. He is specifically concerned with regulations “harmful to public health, damaging to the environment, unsupported by the best available science, or otherwise not in the national interest.”

Such telegraphing means that we can expect a very active pen from Biden during his first weeks in office, and I’m going to be digging into the specific impacts of his actions over that same time period.

Biden did not discuss raising taxes, the next $1.9 Trillion in stimulus spending (which some commentators are already arguing it too little an amount), or the anticipated $2 Trillion infrastructure spending package. As Bill Griffo noted today in his Power Income piece, Janet Yellen is savvy enough to know that the boat should not be rocked to early with talk of tax increase.

So while there is still more to come, Biden certainly came out swinging early. And I’m here to monitor future moves.

Cutting through the noise for you.

Frank


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