The Weekly Commentary - 05/31/2021
Republicans Look Set to Make an Infrastructure Counteroffer
Taking on a country in the midst of a pandemic has arguably forced Joe Biden to make some pretty bold and gutsy moves in his short time in office. The White House is currently trying to push through an eye-watering stimulus package targeted at infrastructure to get money flowing through the US economy again. The White House initially suggested a bill that equated to $2.3 trillion with that money to be spent on US transportation and broadband. However, the administration cut that to $1.7 trillion; hoping to have the bill pushed through on a bipartisan agreement.
However, that bill looks set to fail as Republican support for it was weak. The party believes it far too high to agree to. To put it into more context, the Republicans initially suggested an infrastructure spending scheme that would cost $568 billion. The belief, now, is that they will increase that to $1 trillion in an infrastructure counteroffer. The administration has said that it will do all it can to come to a bipartisan agreement before Memorial day. Whatever the outcome, improving broadband services in the US will undoubtedly help those who are looking to make use of the many services now available online.
Biden Targets a Global Floor to Corporation Tax – and Has Support
Biden’s call for a floor to corporation tax the world over has divided critics. To some, it seems sensible and stops a race to the bottom. Many think that it will stop some countries continually lowering their own corporation tax to attract investment and benefit from any tax payouts – however low thanks to a minimal tax rate. However, to others, it is simply too left-wing.
Wherever you stand, the Deputy Treasury chief believes that the G7 countries will give their mass support to having corporation tax set at 15% at least the world over. That means some of the 7 biggest economies in the world – including France, Germany and Japan – will be backing Biden’s idea. Interestingly, however, the suggested minimum rate of 15% is far lower than the current rate in the US. At present, corporation tax in the US is 21%. In fact, Biden is trying to push through a corporate tax rate hike to 28% to help pay for his large stimulus package in a post-pandemic era.
The Deputy Treasury chief gave a small insight as to why Biden has put forward a global rate that is so much lower than his proposed domestic one. The current US administration feels that by championing a global floor to the corporation tax rate – even if it is low at 15% – it will give them the ability to come back to make it higher if needs be at a later date.
Amazon Being Sued by Washington DC
Amazon has come a long way since it started trading in Jeff Bezos’s garage selling books. Now, it sells almost anything a person wants or needs – while continually looking for markets to enter and disrupt. However, it has come into hot water this week when Washington DC filed a lawsuit against the retail tech giant claiming that Amazon was knowingly inflating the prices of goods across the ‘entire online retail sales market’. The lawsuit asserts that as a result, Amazon benefits from its anti-competitive practices – just at a time when its sales have soared due to the COVID-19 pandemic restrictions and lockdowns.
In response, the company maintains that it is anything but anti-competitive and has been a lifeline to many small businesses through some extremely tough times – both now and before the pandemic. The spokesperson for the company has said that ‘The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store. Amazon takes pride in the fact that we offer low prices across the broadest selection’.
The outcome of the lawsuit will be of note, not only to see whether Amazon has been using its size and power to inflate products across the entire market, but also due to the timing of the case. Amazon, along with other tech giants Facebook and Google, are coming under increased scrutiny from regulators for being too big and powerful. Keeping up to date with the outcomes of this scrutiny by using the best investment news websites, will really help anyone with a tech-heavy portfolio.
Bitcoin Trading at $40,000
It is hard to keep up with the market movements of Bitcoin. At one point this year, the world’s first cryptocurrency was faring well for longer and longer spells of time – helped by a loud and avid supporter in Elon Musk. However, over the last 10 days to 2 weeks, it has had a volatile period along with other cryptocurrencies – not helped by the avid supporter in Musk who suddenly turned his back, vocally, on Bitcoin. He claimed that the currency was not run sustainably enough and was detrimental to the environment.
This week, though, Bitcoin has managed to claw back a large part of its recent losses and briefly traded at just above $40,000. Just last week, it was trading much lower at $30,000. The entire market itself seems to be enjoying a good run. Cryptocurrencies like Ethereum were seeing price rises of over 10% in just a 24-hour period.
The reason for this volatility and swift comeback? The crypto world, last week, suffered a blow as both China and the US asserted their intention to tighten regulation surrounding cryptocurrencies, with particular emphasis on how holders of the currencies pay tax. The market reacted strongly with fast and quick sell-offs. However, Bitcoin rose to its $40,000 barrier this week, again, thanks to Elon Musk and another US billionaire – Ray Dalio.
Musk announced that he had been talking with Bitcoin miners in the US about ensuring the use of renewable energy resources to ensure that their carbon footprint was greatly minimized. Ray Dalio, on the other hand, simply asserted that he was a holder of Bitcoin – which many investors saw as a comfort and encouragement to buy more.