The Week Ahead: Apr. 18-24, 2016

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In Washington, budget work continues on both sides of the Hill. But that work may well end up as merely an exercise with expectations still pointing toward an omnibus spending plan to keep the government funding October 1-forward.

Ag, energy and water FY 2017 spending measures are among those in the House that will be considered.

The next hearing on the financial situation in US agriculture arrives, with a House Ag subcommittee looking at tightening credit conditions.

Food tank summit. The research group Food Tank will hold its annual policy summit in Washington from April 20–21. The summit will focus on combating food waste, reducing obesity and improving nutrition. Key speakers include Jeffrey Dunn, president of the Campbell Fresh division at Campbell Soup Co., which announced in January that it supported a nationwide, mandatory labeling system for food made from genetically modified organisms. Also speaking are USDA Sec. Tom Vilsack and House Agriculture Committee Chairman Mike Conaway (R-Texas).

The Senate will likely resume consideration of an energy bill (S 2012) that would expedite the federal approval process for liquefied natural gas exports, streamline the approval process for electric transmission lines, increase cybersecurity protections for the electricity grid and expedite the licensing process for hydropower projects. The Energy Policy Modernization Act of 2015 also incorporates the bulk of a prior bill (S 720) that would authorize funding for measures to increase energy conservation in federal data centers, establish voluntary national model building codes and boost energy efficiency in the manufacturing and commercial sectors, among other things.

As part of a deal, the Senate will voice vote nearly 30 amendments, including a measure by Sen. David Vitter (R-La.) requiring the Bureau of Safety and Environmental Enforcement to conduct a review of the well control rule’s economic impact on small businesses.

The deal also will have eight roll-call votes, including an amendment by Sen. Johnny Isakson (R-Ga.) that would instruct federal loan agencies to assess a borrower’s expected energy costs when financing a house. Each amendment is subject to a 60-vote affirmative threshold.

Senate approval likely. Speaking on the Senate floor, Senate Majority Leader Mitch McConnell (R-Ky.) said he expected the Senate to pass the underlying bill.

The Joint Economic Committee takes a look at the US tax code, but nothing will happen there until 2017 or beyond in terms of any major changes.

Immigration focus. The Supreme Court will hear oral arguments Monday in a case that could kill the executive actions President Barack Obama took in 2014 to save nearly 5 million illegal immigrants from deportation. The now-eight-justice bench could deadlock in deciding whether the president overstepped his executive authority – without a ninth member since the death of Justice Antonin Scalia. A 4-4 tie would still be a win for Texas and the 25 other states challenging a pair of executive actions –– which created the Deferred Action for Parents of Americans (DAPA) initiative and expanded the Deferred Action for Childhood Arrivals (DACA) programs –– that a lower court put on hold in February 2015.

A host of housing updates are ahead, dominating the economic releases in the coming week. Monday opens with the Housing Market Index, followed by Tuesday’s update on Housing Starts and then Existing Homes Sales on Wednesday. A few other matters get thrown into the mix on Thursday via weekly jobless claims, the Philadelphia Fed update and Chicago Fed National Activity Index, followed by the FHFA Home Price Index and Leading Indicators. The only key economic update on Friday will be the PMI manufacturing index flash report. Traders will continue to gauge how the data plays into the upcoming Fed meeting, but expectations remain minimal that rates could rise at that session. Updates out of China will be key, but the initial focus will be digesting the developments out of Doha, Qatar where oil producers meet April 17, with the main attention on whether they can agree to an output freeze and whether any action that comes from the meeting will be binding or merely voluntary. That will have a lot to say about how equity and energy markets open the week ahead.

The Fed blackout period arrives Tuesday, a week ahead of the start of the next Federal Open Market Committee (FOMC). But, there will be some “last-minute” Fed appearances, with three scheduled for Monday – NY Fed’s Dudley (always a voter), Minneapolis Fed’s Kashkari (2017 voter) and Boston Fed’s Rosengren (2016 voter). Once those three speakers are out of the way, traders and others will be left to their own devices relative to Fed policy prospects ahead as they look at the economic data that rolls in.

Ag interests will have both domestic and foreign developments on their minds as the week opens. The situation in Brazil with their president facing a possible impeachment will be closely monitored by soybean traders in particular. The Brazilian currency, the real, has risen as the potential impeachment vote gets closer. For the domestic focus, the initial report of the week will be the Crop Progress update which is expected to show hefty corn planting gains but still no national soybean planting update. Winter wheat condition marks will continue as a focus, especially with the downturn for the week ended April 10. Thursday’s Weekly Export Sales update continues to be watched to see if the sluggish pace of US sales of corn, soybeans and wheat to foreign buyers picks up any steam. And Friday’s reports will include two monthly updates for the livestock sector – Cold Storage and Cattle on Feed. Coming on Friday, the market impact of those reports typically gets a little more muted than if it came without a two-day break in trading. Weather conditions in other counties could also catch markets’ attention, particularly if rains pick up again in Argentina.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.