Washington Week Ahead: Russia/Ukraine, State of the Union Address, and Fed Chair Testimony - Could it Get Any Busier?

This is the most electric Monday morning in Washington we can remember in a long, long time.  Congress has returned from being in recess last week for the President’s Day holiday completely focused on Russia’s invasion of Ukraine and the massive implications to geopolitics and global economics. 

Moreover, Congress is preparing for the President’s State of the Union speech Tuesday night and Federal Reserve Board Chair Pro Tempore Jay Powell’s testimony before the House Financial Services Committee Wednesday and the Senate Banking Committee Thursday.

We would note this is going to be an unusual State of the Union (SOTU) address (as if the last two were not unusual enough due to COVID).  What will be unusual? Specifically, leading up to the SOTU, we normally see a flurry of “leaked” policy ideas and initiatives from the White House – “trial balloons” – to get a sense of the reaction of Congress as well as voters.  Not this year.  It has been virtually “radio silence” from the White House.  

So what should we expect?  We believe this will be more a “State of the World” than a “State of the Union” speech.  The President is likely going to focus heavily on Russia’s violent aggression in Ukraine, the growing unified reaction globally to Russia, and what he intends to do next to convince Russia to cease and desist. 

On the domestic front, look for President Biden to push for some form of Build Back Better (BBB) – no price tag will be mentioned but we would anticipate in the $500 billion to $1 trillion range.  This will come with President Biden adding to the sense of urgency for the US to develop alternative energy sources (remember, the US still is a significant buyer of Russian oil).

Additionally, we expect the President to talk about inflation and possible new programs his Administration intends to pursue to get it in check – this will likely include new releases from the Strategic Petroleum Reserve (SPS) to help lower spiking gasoline prices.

The President will be giving his remarks in the face of new, historically low poll numbers. A new Washington Post/ABC News poll released Sunday showed only 37 percent of voters approve of his job performance while 55 percent disapprove.  Moreover, only 33 percent of voters support Biden’s handling of the Russia/Ukraine situation while 47 disapprove.

The President’s address will face not just the normal rebuttal speech from a designated Republican (this year’s rebuttal will be given by Iowa Governor Reynolds (D-IA) but for the first time a fellow Democrat: Representative Talib (D-MI) will deliver a formal response on behalf of Progressive Democrats complaining about the lack of progress on BBB as well as effectively highlighting the increasingly stark divisions within the Democratic Party between moderates and progressives. 

Federal Reserve Chair Powell’s testimony – both days – will be of maximum focus to not only the markets but Congress.  Normally, what you see on the first day of congressional testimony is what you get the second day.  But with global events moving as fast as they are, what Powell says on Wednesday may change by Thursday.  Watching the Russian markets effectively collapse this morning and global corporations scramble to meet new sanction rules clearly has global markets on edge.

We will be sending updates this week as events change.  Until then, please let us know if you have any questions.