Tag: finance

The last few weeks have seen the short-end of the yield curve panic, pricing in more than 4 rate-hikes from Dec 2022 to Dec 2024…

Source: Bloomberg

And Bond yields have screamed higher in recent days as fears of rampant inflation and a Fed on the sidelines prompts selling…

Source: Bloomberg

And as bond yields rose so growthy big-tech was monkey-hammered lower…

So, are market participants calling The Fed’s bluff and demanding they step in with even more dovish easing to rescue rates (and thus big tech)? How else will the government afford the $1.9 trillion ‘stimmy’ absent low rates and a will Fed buyer.

As Nomura’s Charlie McElligott notes, a reversal “squeeze” in USTs could come FAST – especially in-light of the magnitude of the aggregate “Short” position in Global Fixed-Income across CTA Trend universe, with the Nomura QIS CTA model showing the largest “Short” position in both TY and Global DM Bonds in our model history, dating-back to 2010…

This “big short” from CTAs in Global DM Bonds dynamic then has created the kindling for a blast of “mechanical” buy-to-cover flow into a potential Rates rally on Fed jawboning on Financial Conditions (which have tightened recently)…

…or say, SLR clarity…

The potential for a policy announcement from the Fed regarding Banks supplementary leverage ratio (SLR) rule—the window is shrinking for the Fed to address very seriously market “plumbing” concerns about the complete opacity surrounding the forward-path of the SLR exemption for Banks—meaning the Fed need to clarify to the market whether the SLR relief is going to be extended, while at the same time state whether Treasuries, Reserves or both (!) will be exempted again; this shocking lack of “market feel” from the Fed (as seen last week in Chairman Powell’s complete avoidance of the issue in testimony to Congress)  is contributing to the Treasury selloff, as Banks lack visibility whether they can continue to expand their balance sheets with purchases of USTs…or conversely, need to shed balance-sheet, deposits and USTs

…and if Bonds rip higher and Rate vol collapses, legacy long-term “Momentum” longs in bond-proxy Nasdaq and Mega-Cap Tech would likely see explosive moves higher again too.

For now however, Rates / USTs path of least resistance continues WEAKER until we hear from the Fed as we await this week’s potential Rates “inflection catalysts”; but here are today’s estimated “buy-to-cover” levels for CTAs in said current Global DM Bond “shorts” of note:

What could get bonds up there? Feb jawboning…

Perhaps that is why there is a SIGNIFICANT amount of Fed-speak this week, coming ahead the blackout kicking-off this Saturday (Brainard today, tomorrow), Evans (Wednesday), Powell (Thursday at noon EST) along with Williams, Bostic, Kaskari, Mester, Daly and Harker sprinkled throughout as well. As Nomura’s Rob Dent notes, this obviously comes at a critical time for the Rates space, with timing which would allow them to push-back against the Rates move with enhanced “forward guidance,” under the guise of “tightening in financial conditions” – perhaps even “Operation Twist” trial balloons?

Update (1525ET): The WSJ was incorrect in claiming Abramowitz was representing Cuomo’s office for his sexual harassment scandal, telling Bloomberg that he’s only representing the nursing home scandal.

“My firm and I are representing the Executive Chamber on the Nursing Home matter. We have not been retained on the sexual harassment matter,” he said in an email.

*  *  *

New York Governor Andrew Cuomo’s administration has retained a prominent white-collar defense attorney following allegations of sexual harassment and Justice Department inquiries over COVID-19 nursing home deaths, according to the Wall Street Journal.

Attorney Elkan Abramowitz – a former federal prosecutor – confirmed with the Journal that he is now representing Cuomo’s ‘executive chamber’, which includes the governor and his closes aides. Abramowitz is dealing with both scandals as New York Attorney General Letitia James joins the DOJ in investigating the embattled New York bigwig.

The Democratic governor faces an investigation overseen by State Attorney General Letitia James into whether he sexually harassed women who previously worked in his administration. Mr. Cuomo acknowledged he had sometimes been overly personal while interacting with staff and said he was sorry if anyone mistook it for unwanted flirtation.

Cuomo’s apology strategy is going well…. pic.twitter.com/lJ8OY3ORee

— Jim Roberts (@nycjim) March 1, 2021

Two women have accused Cuomo of sexual harassment ranging from inappropriate questions, to touching, to forcibly kissing. One accuser says Cuomo clearly wanted to sleep with her.

Over the weekend, Cuomo denied forcibly kissing former aide Lindsey Boylan, who said the governor would also go out of his way to touch her “on my lower back, arms and legs.” He did, however, seemingly admit to using inappropriate language.

Cuomo also said last week that the state is cooperating with three inquiries from the US Attorney’s Office in the Eastern District of New York located in Brooklyn, as well as the DOJ’s Civil Rights and Civil divisions based in Washington. Brooklyn prosecutors have requested data on the number of people who died in New York nursing homes during the pandemic.

Meanwhile, the governor has stepped out of the public spotlight – last making a televised pandemic briefing on Feb. 19, while his public schedule remains empty according to Bloomberg.

Cuomo’s uncharacteristic silence comes a day after he agreed to an independent probe by a special investigator after a second former aide accused him of sexual harassment. Cuomo stopped short of having New York Attorney General Letitia James lead the probe, a move championed by dozens of other lawmakers.

…

On Monday, state Senator Todd Kaminsky introduced a bill that would allow the attorney general to conduct a criminal investigation without a referral from the governor, a move he said would strengthen independent oversight of the governor and other state officials.

“Clearly where the governor is involved there is a conflict,” said Kaminsky.

Veteran Democratic consultant Hank Sheinkopf told Bloomberg: “The problem is he’s being squeezed on the left and the right, and if there are more accusations of sexual harassment or governmental incompetence or corruption, he’s going to have a very difficult time surviving,” adding “He has very few friends.“

Authored by Isabel von Brugen via The Epoch Times,

Four people were arrested in Texas last month on 150 counts of voter fraud dating back to the 2018 Medina County Primary Election, according to reports.

The Texas attorney general’s Election Fraud Unit on Feb. 11 arrested Medina County Justice of the Peace Tomas Ramirez, and earlier detained Leonor Rivas Garza, Eva Ann Martinez and Mary Balderrama on election fraud allegations, News4SA reported.

According to a release from Texas Attorney General Ken Paxton’s office, the case involved allegations of vote harvesting at assisted living centers in Medina County in the 2018 Medina County Primary Election.

Ramirez faces one count of organized election fraud, one count of assisting voter voting ballot by mail, and 17 counts of unlawful possession of a ballot or ballot envelope, according to the news outlet.

Balderrama is charged with one count of organized election fraud, nine counts of illegal voting, two counts of unlawful possession of ballot or ballot envelope, one count of mail ballot application, two counts of unlawfully assisting voter voting by mail, two counts of tampering with government record, and eight counts of election fraud.

Garza faces a single count of organized election fraud, two counts of illegal voting, eight counts of unlawful possession of a ballot or ballot envelope, two counts of election fraud and four counts of fraudulent use of an absentee ballot by mail.

Martinez is charged with a single count of organized election fraud, nine counts of illegal voting, 28 counts of unlawful possession of ballot or ballot envelope, three counts of purportedly acting as an agent, five counts of tampering with government record, 14 counts of election fraud, and four counts of fraudulent mail ballot application, according to News4SA.

The Texas attorney general’s office didn’t immediately respond to a request for comment by The Epoch Times.

In a separate incident, Raquel Rodriguez, a Texas woman who bragged about being able to deliver thousands of votes for tens of thousands in cash was arrested in January on charges including election fraud and illegal voting.

Rodriguez was filmed during an undercover project by Project Veritas, an investigative journalism nonprofit. She was recorded in footage released last year that she could deliver “at least 5,000” votes “county-wide” for $55,000 in cash and that it would hire her “entire team.” She acknowledged what she was discussing could land her prison time.

Based on the footage, Paxton, a Republican, opened an investigation. That probe led to the arrest, Paxton announced on Jan. 13.

Rodriguez faces a prison sentence of up to 20 years if convicted.

Back in September 2015, Bloomberg first discovered a little known JPM quant named Marko Kolanovic, and wrote that “You know you’re a straight-up baller when Zero Hedge writes in a non-ironic way about your prediction.” After that, it didn’t take a long time for Marko – whose market analysis at the time was indeed second to none – to become a household name, and in some cases, a Tolkienesque name, with some TV channels fawning at the quant they dubbed “Gandalf”, while others went all out, calling the eastern european “half man, half god.”

Since then – as we have extensively profiled – Marko’s predictive and analytical track record got somewhat spotty, which was to be expected when coupled with several high level promotions the Croat was tasked with not just providing objective, impartial analysis but more importantly, toeing the perpetually bullish line promoted by JPMorgan thus eroding some of his hard-earned “street cred”, but it didn’t matter: by now everyone on Wall Street knew his name.

And so, one thing led to another, and with Marko making increasingly more frequent TV appearances and capitalizing on the rampant inflation hitting all assets and commodities, this morning we witnessed some title inflation as well, because as Bloomberg reports, the largest US commercial bank promoted Marko “Gandalf” Kolanovic to a new role as chief global markets strategist and named several executives to the bank’s global research leadership team under new head Jeremy Barnum.

Kolanovic, previously global head of macro quantitative and derivatives strategy, will now oversee research for cross-asset, equity strategy and quantitative and derivatives strategy, according to a memo sent to staffers Monday and seen by Bloomberg. He’ll continue to sit on the bank’s global research leadership team and will report to Barnum, who was appointed to a new role as global head of research in a reshuffle a month ago.

Marko’s promotion appears to be necessitated by a sudden burst of the departures within JPM’s top research ranks. The bank’s two former global heads of research, both equity and fixed income, are out: Nicole Grainger, global equity research head, and Matt Jozoff, co-head of FICC research – who were both on the bank’s research leadership team – have decided to pursue other opportunities, according to the memo. It wasn’t clear which firm they are going to. Sunil Garg, who ran international equity research, is also pursuing “new opportunities” but will stay on for a transitional period and join Barnum’s research leadership team on an interim basis, according to the memo.

In addition to Kolanovic, the bank named several new leaders to its global research leadership team, all of whom will report to Barnum:

• Steve Dulake, global head of credit research
• Gloria Kim, global head of index research
• Pedro Martins, head of Latin America equity research
• Nick Rosato, who runs North America equity research

Bloomberg also notes that Bruce Kasman, global head of economic and policy research, and Luis Oganes, global head of emerging markets, currencies and commodities research, will remain on the research leadership team, as will Hussein Malik, global head of rates, securitized products and public finance research.

In 2020, the global research “team showed exceptional thought leadership, helping clients navigate the most complex and dynamic market environment in recent memory,” Barnum wrote in the memo. “I believe these individuals, in partnership with Joyce Chang, will enable us to bring the best of our expertise to clients and deliver the JPMorgan platform with maximum impact.” Chang is chair of global research.

Via SchiffGold.com,

Last week, Peter Schiff appeared on NDT News to talk about the Federal Reserve’s increasing dovishness. He said despite all of the assurances from Jerome Powell that the central bank’s monetary policy isn’t stoking inflation, the economy and the dollar are both at risk for collapse. The Fed is the only thing standing in the way and it can’t stand there forever.

During this interview, Peter also touched on his recent Twitter debate with Elon Musk about bitcoin.

Jerome Powell claims that the Federal Reserve is not blowing up bubbles, there is no inflation threat, and that its easy money policy will continue for years. Peter said Powell gets more and more dovish every time he talks.

I think it’s a necessity because the US economy is in need of more artificial support every time he speaks because the only thing the economy has got going for it is the Fed. Because it’s a phony economy. It’s not real. And it’s completely dependent on increasing levels of inflation. So, the Fed keeps on printing money while pretending it has no effect on interest rates, no effect on asset prices, and claiming that the market doesn’t even need its help.”

During his testimony on Capitol Hill, Powell even claimed the Fed’s bond-buying programs weren’t having any impact on interest rates. He thinks there is plenty of demand for US Treasuries without the central bank’s intervention into the market. Never mind that the Fed now holds a record percentage of US debt.

If that were true, why is the Fed buying all these bonds in the first place? The truth is that’s the only thing standing between us and complete economic collapse – is the Fed. But the only thing standing between the Fed and collapse is the value of the dollar.”

The Fed has also expanded the money supply by a record amount. Powell says that doesn’t really matter either and claimed that there is no longer any relationship between the supply of dollars and the value of those dollars.

Well, the laws of supply and demand are still in effect. And if Powell keeps printing dollars, eventually there’ll be no demand, and the value, the price, is going to collapse. And that’s when it all hits the fan.”

Peter also addressed his Twitter battle with Elon Musk about bitcoin. Musk purchased about $1.5 billion of bitcoin through Tesla.

Once you own bitcoin, you’re really obligated to talk your book because the only way to prop up the price is to con other people into buying it.”

In one tweet, Musk said, “Money is just data that allows us to avoid the inconvenience of barter. That data, like all data, is subject to latency and error. The system will evolve to that which minimizes both.” Peter said Musk doesn’t seem to understand money.

He said to me that money is just data and it’s not. That’s not what money is. Data can represent money, but money is a commodity like gold and silver. That’s money. What we use today, Federal Reserve notes, or people that use euros, or Japanese yen, those are what you call money substitutes. They’re not actual money. In fact, when the Federal Reserve issued notes backed by gold and silver, the gold and silver was the money. The notes were currency. And what gave the currency value was the money, the gold, that backed it up. So, currency is also a money substitute. But what we have now is a substitute for legitimate currency and that’s fiat currency. The difference between real currency and fiat currency is real currency is backed by actual money whereas fiat currency is backed by nothing. The dollar is fiat currency. Bitcoin is fiat digital currency. But the problem is it doesn’t even function as a currency. So, it’s really nothing. What bitcoin really is is a digital token. And you have people who are collecting bitcoin and you have people who are trading bitcoin. So, it has a price, but that price is a function of all the speculation. But at the end of the day, these bitcoin collections are going to have no value because there’s nothing unique or scarce about bitcoin and the price is going to collapse.”

Less than two weeks ago, we reported on the fact that The Bill & Melinda Gates Foundation is bankrolling an activist educational group that believes math is racist and that arriving at an objective answer is an example of “white supremacy.”

Yes, really.

Specifically, as Summit News noted at the time, a conglomerate of 25 educational organizations called A Pathway to Equitable Math Instruction asserts that asking students to find the correct answer is an “inherently racist practice.”

The organization’s website lists the Bill & Melinda Gates Foundation as its only donor.

“In fact, over the past decade, the Bill & Melinda Gates Foundation has awarded over of $140 million to a variety of groups associated with Pathway. Their “antiracist resources” are at the epicenter of a new training course for teachers offered by the Oregon Department of Education throughout the state,” reports National File.

“Three of the most prominent organizations receiving grant money from the Gates’ are The Education Trust, Teach Plus, and WestEd, all non-profit 501c organizations.”

A guidebook for teachers produced by Pathway called ‘Dismantling Racism in Mathematics Instruction’ ludicrously claims that mathematics “is used to uphold capitalist, imperialist, and racist views.”

Teachers are instructed to blame non-white students getting answers wrong on “white supremacist practices,” which are truly to blame for the “underachievement” of minorities.

This liberal, progressive insanity appears to have triggered Michael “Big Short” Burry who unleashed his usual acerbic, and entirely accurate, wit on Gates and the entire concept of math being racist…

“Math is a form of #whitesupremacy? Where I’m from, whites are the dummies in math. South and East Asians apparently didn’t get the message whites use math to #suppress them. Would be a #LOL moment at the local high school, at whites’ expense. “

Burry went on:

“Apparently an old rich white man is behind this. I’m really starting to think old white people are out of touch. Wait, I already knew that…”

The outspoken market savant concluded:

“I am of a generation that I know junior people who worked with Gates. Brilliant, exacting, and intimidating. Could and would pick apart and embarrass anyone in the room who was not prepared. Open conflict was his weapon. The right answer was never wrong.“

Ending with the all too telling hashtag: #formenotforthee

WTI has suddenly crashed from a strong overnight open up to $63, down to below $60 this morning.

While the catalyst is unclear, a number of market participants are pointing to a story in The Financial Times that warns the Brazil-variant of the virus has been found to evade natural immunity.

The P. 1 Covid-19 variant that originated in Brazil and has spread to more than 25 countries is around twice as transmissible as some other strains and is more likely to evade the natural immunity people usually develop from prior infection, according to a new international study.

…

It was also “able to evade 25-61 per cent of protective immunity elicited by previous infection” with any earlier variant, the researchers found, in a sign that current vaccines could also be less effective against it.

Those headlines do not fit well with the ‘almost back to normal’ narrative being pumped around the world, which was shaken this morning as China’s factory activity growth slipped to a nine-month low in February, sounding alarms over Chinese crude buying…

“One negative is more and more talk about Chinese oil demand maybe faltering, that they bought all the oil that they’re going to need for a while,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

“There’s some talk that their strategic reserves are filled up, and so some people are betting against the Chinese continuing to drive oil prices.”

OPEC+ meet on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market. ING analysts said OPEC+ needs to avoid surprising traders by releasing too much supply.

“There is a large amount of speculative money in oil at the moment, so they will want to avoid any action that will see (those investors) running for the exit,” the analysts said.

The big question is, will this be enough to reverse the momentum as we warned yesterday that CTAs had gone “all-in” on oil…

 

Get ready for the next round of lockdowns and the next leg down in demand expectations.

2018 was not a good year for bitcoin, and for cryptos in general: after hitting an all time high in December of 2017, much of the remainder of 2018 was spent with the crypto bubble deflating, with early crypto investors first casually than fervently taking profits and dragging the price of cryptos ever lower. The punchline came in September, when as we reported at the time Goldman – clearly disappointed with the lack of upside momentum – suspended its fledgling crypto trading desk plans…

… sending bitcoin tumbling back below $7000.

Well, fast forward a little over two years forward when following the 7-fold increase in the price of bitcoin since Goldman’s cowardly exit, the bank – which has lost some of its top executives in recent weeks – has made a less than triumphant return and according to Reuters, has restarted its cryptocurrency trading desk and will begin dealing bitcoin futures and non-deliverable forwards for clients from next week.

As before, the team will sit within the U.S. bank’s Global Markets division, the Reuters source said, which means that while Goldman is putting on one trade for its prop traders, it will be using its flow desk to have clients to the opposite.

The desk is part of Goldman’s activities within the fast-growing digital assets sector, which also includes projects involving blockchain technology and central bank digital currencies, the person said.

Reuters adds that as part of this renewed bitcoin trading effort, the bank is also exploring the potential for a bitcoin exchange traded fund and has issued a request for information to explore digital asset custody.  The trading desk reboot comes amid growing interest by institutions in bitcoin, which has exploded more than 470% over the past year, outperforming any asset class pitched by Goldman’s research desk.

Of course, the real reason why Goldman is interested in getting back to bitcoin is due to its wild volatility, which while painful for holders is extremely valuable for prop traders, and makes both the underlying token and related derivatives attractive for investors willing to take riskier long or short positions as they hunt for yield in a record-low interest rate environment.

As Reuters reminds us, since the first unsuccessful attempt by Goldman to launch a trading desk in 2018, market infrastructure for bitcoin and other large cryptocurrencies has significantly matured, with many established financial institutions offering products and services, including CME Group Inc, Intercontinental Exchange Inc and Fidelity. The developments have helped to attract more mainstream companies to the sector, ranging from those offering crypto services to retail or institutional investors, to companies opting to hold bitcoin on their balance sheets

Last month, Tesla said it had bought $1.5 billion worth of bitcoin, while Bank of New York Mellon Corp said it had formed a new unit to help clients hold and transfer digital assets.

Then, on Monday morning, hedge-fund billionaire Dan Loeb took to Twitter to share his thoughts on the subject. “I’ve been doing a deep dive into crypto lately,” he said. “It is a real test of being intellectually open to new and controversial ideas.”

Loeb’s comments were in response to a blog post titled “NFTs and a Thousand True Fans” by Chris Dixon, a general partner at the venture-capital firm Andreessen Horowitz. In Dixon’s post, he expounds upon the role that non-fungible tokens will have on digital creators.

Meanwhile, crypto continued to win over the world’s biggest financial institutions. As reported earlier, Citigroup laid out a case for Bitcoin to play a bigger role in the global financial system, saying it could become “the currency of choice for international trade” in the years ahead.

Bitcoin was 8.4% at just over $49,000 on Monday, despite the latest attempt by the NY Attorney General to spark a selloff: New York’s top law enforcement officer issued a scathing statement on the market and warned consumers about its susceptibility to “speculative bubbles” and abuse by criminals. “Cryptocurrencies are high-risk, unstable investments that could result in devastating losses just as quickly as they can provide gains,” Attorney General Letitia James said Monday in an investor alert.

Well, of course they are, and it’s because of their massive risk that they provide just as massive returns, something which has not been lost on all those who held on to the token for the past several years and are now extremely rich thanks to it.

Less than a month ago, Lex Greensill was heralded as “the king of supply-chain finance”…

London-based Greensill Capital was heralded for apparently revamping the humdrum business of supply-chain finance, a kind of lending that speeds up payments between companies. Bloomberg reported in early Feb that the 44-year-old financier says the firm provided $150 billion to businesses and customers in 175 countries last year.

However, in what is now a prophetic warnings, Bloomberg noted that some view him as an aggressive risk taker who’s often pushing the boundaries in an area of finance less regulated than traditional banking, noting that Greensill Capital has been embroiled in scandals involving some of the biggest names in global finance.

Loans it helped to arrange were the focus of conflict-of-­interest accusations last year involving Credit Suisse Group AG and Masayoshi Son’s SoftBank Group Corp, and the firm was at the center of a 2018 crisis at Swiss asset manager GAM Holding AG that brought down a star trader.

“We’re doing things a little different to what’s been done before, and that’s always going to kind of garner attention and commentary,” Greensill says from his home in northwest England.

“I recognize by doing that, it does from time to time make us a target.”

Fast forward three weeks to this morning and the ‘king of supply chain finance’ appears to have no clothes…

Bloomberg reported this morning that Greensill’s empire was unraveling fast as two major backers had abandoned the firm:

Credit Suisse Group AG on Monday froze a group of supply-chain-finance funds that it ran with help of the financier.

The funds combined held about $10 billion in assets, most of it in Greensill-sourced securities.

Separately, SoftBank Group Corp.’s Vision Fund has substantially written down its $1.5 billion holding in Greensill Capital, and is considering dropping the valuation to close to zero, according to people familiar with the matter.

The writedown occurred at the end of last year, said one person.

Specifically, a part of the funds is “currently subject to considerable uncertainties with respect to their accurate valuation,” according to a notice the bank sent to investors.

“Greensill acknowledges the decision by Credit Suisse to temporarily gate the two Supply Chain Finance Funds dealing in Greensill-sourced assets,” a spokesperson for the firm said by email.

“We remain in advanced talks with potential outside investors in our company and hope to be able to update further on that process imminently.”

The Wall Street Journal reported Sunday that the bank was concerned about Greensill’s exposure to a single client, U.K.-based steel magnate Sanjeev Gupta, according to people familiar with the matter.

 

Germany’s finance watchdog is examining whether a Bremen-based bank Greensill bought in 2014 was tied too closely to Gupta’s GFG Alliance Ltd., according to people familiar with the matter who asked not to be identified because they weren’t authorized to talk.

Loans to Gupta made up about two-thirds of the bank’s assets in 2019.

Greensill won’t say whether the Federal Financial Supervisory Authority is investigating, and BaFin, as it’s known, declined to comment.

A few short hours after these headlines on Greensill losing big backers, The Wall Street Journal is now reporting that the company is in talks with private-equity giant Apollo Global Management to sell its operating business for around $100 million, according to people familiar with the talks.

For context, in October, the firm had been considering a capital raising that would have valued it at $7 billion.

Greensill’s apparently dismal dive into illiquid assets (and liabilities) follows the fall of infamous U.K. stock picker Neil Woodford in 2019 who ploughed large amounts into unlisted or thinly-traded companies and was forced to freeze his funds to allow for an orderly liquidation. H20 Asset Management also had to freeze funds under pressure from the French regulator because of illiquid investments tied to German financier Lars Windhorst.

When will The Fed start buying all this extremely illiquid crap on to its (the US taxpayers) balance sheet? Somebody do something!

Senate Democrats are ditching a proposal to use tax code to penalize corporations which don’t raise the minimum wage for their lowest paid workers, according to Bloomberg. According to two anonymous sources, the move comes after Democrats were left seeking alternatives after the Senate parliamentarian nixed raising the federal minimum wage to $15 an hour as part of the $1.9 trillion pandemic relief package.

With the minimum wage discussion out of the way, for now, the Senate “could begin consideration of the stimulus measure as soon as Wednesday — with final votes as soon as late Thursday — pending full Democratic support and sign off from the parliamentarian,” according to the report.

The tax penalties were proposed by Senate Finance Committee Chairman Ron Wyden (D-OR) and Budget Committee Chairman Bernie Sanders (I-VT, who notoriously didn’t pay his own campaign staff $15 an hour until he was called out), however it became clear over the weekend that pushing the issue would risk failure, as all 50 Senate Democrats would need to agree on specific language in order to avoid missing a March 14 deadline for extending expiring supplemental unemployment benefits, according to one of Bloomberg‘s sources.

The decision removes a major complication in the Senate and could speed approval of the rest of the package in the chamber. In addition to getting the backing of all 50 senators who caucus with Democrats, the tax language also would have had to pass muster with the parliamentarian, the House and the administration and be signed by Biden — all in a two-week period.

Still, dropping the minimum wage increase from the stimulus could create other headaches for both Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi. –Bloomberg

On Saturday, the House narrowly passed their version of the stimulus (219-212) which includes the $15 an hour minimum wage which had no GOP support. Two moderate Democrats voted no to the party’s signature issue. With House and Senate Democrats divided on the issue, “the conflict is bound to increase tension between the two wings of the party with Biden in the middle.”

The current big-ticket items in the bill include $1,400 direct payments to individuals, a $400 weekly federal unemployment benefit through Aug. 29, and help for those having difficulty in paying rents and mortgages during the pandemic.

On Monday, progressive lawmakers sent President Biden and Vice President Kamala Harris a letter spearheaded by Rep. Ro Khanna (D-CA) which demands they set aside the parliamentarian’s ruling on minimum wage within the upcoming stimulus package. Signatories included Alexandria Ocasio-Cortez (D-NY), who said on Friday: “Really our options right now, at least our immediate options on this specific issue, is to do something about this parliamentary obstacle or abolish the filibuster.”

There is a deep problem in our democracy when the Executive branch is willing to bend over backwards to defer to arcane Senate rules to deny Americans a $15 wage but at the same time ride roughshod over Congressional rules & procedures to launch military strikes abroad.

— Ro Khanna (@RoKhanna) February 27, 2021

“We’re moving ahead with a bill that probably will get no Republican votes in the Senate, but will have broad Republican support in the country,” Democratic Senator Chris Coons told CNN‘s “State of the Union” on Sunday. 

.@ChrisCoons: “We’re moving ahead with a bill that probably will get no Republican votes in the Senate but will have broad Republican support in the country.” https://t.co/17YZcWNQbW pic.twitter.com/gaGZKQsc0A

— The Hill (@thehill) March 1, 2021

Meanwhile, Congressional GOP say the plan is still too expensive, and includes items such as transportation projects which have nothing to do with the pandemic.

“It’s $1.9 trillion, more than half of it won’t even be spent in this calendar year … So how could it be about COVID relief? No one expects a year from now that we’ll be in the COVID crisis we are in now,” GOP Senator Rob Portman told ABC‘s “This Week.”

Pressed on passing COVID-19 relief through the reconciliation process, GOP Sen. Rob Portman tells @GStephanopoulos that “this is not like taxes or health care, this is COVID relief, which has always been a bipartisan issue.” https://t.co/4pmiQc2UO0 pic.twitter.com/30pxcXrwMg

— This Week (@ThisWeekABC) February 28, 2021

 Both chambers must pass the same version of the bill before sending it to Biden’s desk.