Following are reactions from analysts and investors to U.S. President Joe Biden’s State of the Union speech on Tuesday, in which he challenged Republicans to lift the debt ceiling and support tax policies that are friendlier to middle class Americans.
In his first address to a joint session of Congress since Republicans took control of the House of Representatives in January, Biden hammered corporations for profiteering from the pandemic, and ran through a wish list of economic proposals, such as a minimum tax for billionaires, and a quadrupling of the tax on corporate stock buybacks.
TINA TENG, MARKETS ANALYST, CMC MARKETS, AUCKLAND
“President Biden faces multiple well-known issues that the economy is encountering, such as decades-high inflation, rising interest rates, the endless raising debt ceiling, a shortage of oil supply and deteriorated US-China relations.
“Obviously, he will not get Republicans to agree with all the above matters regarding his policy orientation. With a divided government, President Biden will face a big challenge in the election next year.
“Financial markets are usually pro a Republican government rather than a Democratic government regarding economic growth, monetary policy (though this is independent of the Fed), and diplomatic affairs.”
DAMIEN BOEY, CHIEF MACRO STRATEGIST, BARRENJOEY, SYDNEY
“The most important caveat is that you gotta pass this gridlock that is at the house and the senate.
“That is particularly topical because you’re going to hit the debt ceiling when you get to August. Obviously, Biden is clearly pitching to the Republicans is that they wanna work together. Most people anticipate that is not going to be an easy promise as you get there.”
“There is also redistribution of things where you get the rich to pay more tax. That’s not going to help with consumption a lot.
“So Biden’s whole pitch is about inflation coming down, but it is not my problem because it is here before I got here. But the risk is that if you overstimulate, while you have a tight labor market, that is going to be a problem for short-term rates.
“Does this change the investment themes when the yield curve is still inverted? People are still arguing for hard landing risks, portfolio managers are concerned about everything moving up and down together? No it doesn’t.”
NAKA MATSUZAWA, CHIEF STRATEGIST, NOMURA, TOKYO
“I expected some more hawkish comments on China. Biden should be clearer about how they are going to develop the supply chain away from China. Trade with China is still increasing, rather than decreasing, at this moment. In that sense, he wasn’t hawkish enough.”
Source: Reuters
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