Wall Street hikes expectations for size of Biden’s spending package

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Big money managers say spending plan will total $1.9T: BofA

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wall Street Wealth managers are raising their expectations regarding size President Bidens Infrastructure package, according to a survey conducted by Bank of America.

Investors say the spending plan, made up of both a bipartisan bill and a conciliation package, will increase to $1.9 trillion from $1.7 trillion last month.

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Bank of America’s chief investment strategist Michael Hartnett wrote that investors were “more bullish on the passage of the bilateral bill and the reconciliation package at some point in the autumn”.

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The Charlotte, NC-based lender surveyed 232 participants with $807 billion in assets between September 3 and September 9.

House Democrats earlier this week outlined their plan to increase taxes on corporations and the wealthiest Americans thanks to Biden’s proposed $3.5 trillion “human infrastructure plan,” which was to be sought by the Senate through budget reconciliation to avoid Republican filibuster. will need to pass.

The tax hike includes raising the top corporate tax rate from 21% to 26.5%, the top personal income tax rate from 37% to 39.6% and the top capital gains tax rate from 25% to 20%.

But Sen. Joe Manchin, DW.VA, publicly opposed the plan, saying he did not see the urgency of passing a massive spending package. Munchkin will instead take a wait-and-see approach and may favor $1 trillion to $1.5 trillion to spend on top of a roughly $1 trillion bipartisan infrastructure plan.

House Democrats plan new tax hike for $3.5T bill: Here’s the proposal

While Wall Street fund managers are raising their hopes about the size of Biden’s infrastructure package, they are becoming less concerned about inflation.

A Bank of America survey found that a net-1% of global consumers are expecting a rise in prices, down from a positive 93% in April.

A net 69% of respondents said inflation is “temporary” from 65% in August. Just 28% think inflation is “permanent”.

Despite declining inflation expectations, the vast majority of respondents, a net 84%, continued to believe the Federal Reserve would begin to ease before the end of this year. A net 19% said the Fed would indicate tapering at next week’s meeting while 66% believed the central bank would wait until the fourth quarter.

Forty-nine percent of investors said the COVID-19 delta variant would be the most likely reason the Fed would delay its tapering. Another 36% pointed to the strength of the labor market.

As investors prepare for the Fed’s taper, their cash holdings have increased slightly to 4.3%. There is nothing to panic as the equity security is at its lowest level since January 2018. Additionally, some investors are positioning their portfolios for credit events, recessions or stagflation.

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While inflation was seen as the “biggest tail risk” for the sixth time in seven months, long tech was seen as the “most congested trade” for the third straight month.

Opponents should create conditions for a recession by going long bonds and utilities, short commodities, banks and Europe. The survey found that stagflationists should move to Japan for longer energy and less health care and technology.


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