The froth in Hong Kong came off fairly dramatically Tuesday, as the Hang Seng tumbled and Tencent dropped more than 6% after an absurd rally capped by a double-digit, single-session gain to start the week.
The sour mood was at least partially attributable to signs from mainland officials that Beijing may be getting uncomfortable with speculative excess. The PBoC withdrew liquidity, a move that seemed at odds with recent media coverage suggesting no tightening would occur prior to the Lunar New Year holiday, while an adviser to the central bank warned on asset bubbles.
In addition to Tencent, the selling in Hong Kong dented Hong Kong Exchanges & Clearing, which dove more than 7%. Mainland investors spent the month pouring money into Hong Kong shares. On Bloomberg’s data, onshore funds’ buying in January summed to 40% of 2020’s total.
More broadly, the MSCI Asia Pacific Index dropped the most in two months as risk sentiment was subdued in Asia, in part on concerns about the fate of stimulus in the US, where Republicans and Democrats were poised for a monthslong standoff over virus relief.
Speaking of that, Mitch McConnell agreed to drop a demand that Chuck Schumer promise to preserve the filibuster, clearing the way for — and I’m sighing out of frustration as I write this — the Senate to be organized. Headed into the week, the chamber hadn’t even moved beyond the results of the Georgia runoffs, as McConnell’s stonewalling prevented Democrats from assuming control of a chamber they won.
Take a moment to consider what that means in common sense terms: Voters really don’t matter all that much. They elected Democrats, but McConnell simply refused to strike a power-sharing agreement. That resulted in a delay lasting weeks.
On Monday night, McConnell essentially tried to suggest he didn’t really relent. Rather, he cited support for the filibuster from Joe Manchin and Kyrsten Sinema, and attempted to call that a guarantee. (It’s not.)
“With these assurances, I look forward to moving ahead with a power-sharing agreement modeled on that precedent,” McConnell said.
Again, there were no “assurances.” And as McConnell is surely aware, this now means Republicans cannot irritate Manchin and/or Sinema at any point. If they do, they risk the so-called “nuclear option” — Democrats eliminating the filibuster, clearing the way for legislation to pass with a simple majority. That would require Joe Biden’s blessing, though. Democrats would need Kamala Harris’s vote. Biden has supported the filibuster, and nobody knows how patient with Republicans he’s willing to be. Additionally, Manchin is unequivocal for now. “[I] don’t support throwing away the filibuster under any condition,” he said Monday. Conditions do have a habit of changing.
Schumer’s spokesman called McConnell’s (now defunct) demand that Democrats promise not to “nuke” the chamber “ridiculous.” McConnell will need to tread very lightly going forward. “Assurances” from Manchin and Sinema notwithstanding, Democrats are extremely wary of Republican obstruction. “I feel pretty damn strongly [about the filibuster], but I will also tell you this: I’m here to get things done,” Montana Democrat Jon Tester said. “If all that happens is filibuster after filibuster, roadblock after roadblock, then my opinion may change.”
You get the idea. What I would emphasize is that it took nearly three weeks after the Georgia runoffs just to get the chamber organized. That’s how paralyzed the Senate is. That’s what I meant Monday, in “Same As It Ever Was?”
The Senate did manage to get Janet Yellen confirmed for Treasury. The vote was 84-15 on Monday evening.
Meanwhile, in Italy, where the deficit is poised to rise above 9% this year (and that matters in Italy, by the way, because it isn’t a monetary sovereign), Prime Minister Giuseppe Conte was set to tender his resignation to Mattarella. The idea, apparently, is to avert a loss in the Senate and then simply come back as the head of a new government. Maybe Donald Trump should have tried that instead of the whole insurrection thing.
Oh, and the “My Pillow” guy is banned from Twitter for “repeated violations” of the site’s Civic Integrity Policy.