The Week Ahead: April 3-9, 2017

US-China leaders meet | Supreme Court | Farm bill hearings | Employment report

A Friday Senate vote on Neil Gorsuch as a Supreme Court justice, a meeting between US and Chinese leaders, several more House farm bill hearings, FOMC minutes and a Friday Employment report are the highlights from Washington this week.

Senate consideration of the nomination of Neil Gorsuch will dominate the chamber’s action. The Senate Judiciary Committee plans to vote on Gorsuch’s nomination today, after postponing the vote a week. That would set the stage for Majority Leader Mitch McConnell (R-Ky.) to file for cloture, setting up a midweek vote to end debate, and, if that succeeds, a confirmation vote before lawmakers leave for a two-week Easter recess. It looks like fewer than eight Democratic votes will be garnered and if so, Republican leadership will change the rules of the Senate to approve Gorsuch on a majority rule vote rather than allowing a filibuster to thwart his nomination amid failure to receive 60 votes.

So far, 31 of the chamber’s 48 Democrats have lined up against limiting debate; two -- West Virginia’s Joe Manchin and North Dakota’s Heidi Heitkamp -- favor the nomination. Sen. John McCain (R-Ariz.) said he is working with Democrats to try to reach a long-term deal to confirm Gorsuch, while preserving the minority party’s ability to block future high court nominations.

A Senate vote on the nomination of Sonny Perdue to be the next USDA Secretary will not likely be taken up by the Senate as the Gorsuch Supreme Court nomination looms large, but Senate Agriculture Chairman Pat Roberts (R-Kan.) continues to seek a vote before the April 7 Easter recess or quickly after the chamber returns. But once the Senate returns, Congress must pass a measure to fund the federal government. That could push back a vote on Perdue into May. Keeping the government funded is a top priority for lawmakers as the deadline to prevent a funding lapse approaches. Lawmakers are set to return from Easter recess just four days ahead of April 28, the last day for which current funding is allocated.

In the House, Majority Leader Kevin McCarthy (R-Calif.) has set votes on measures that would ease a registration rule for venture capital funds and relax disclosure rules for employee stock options. A third bill, dealing with self-insured health plans, also could come up. Off the floor, keep an eye out for talks among House Republicans over reviving their Obamacare repeal legislation, which leaders pulled earlier this month to avoid an embarrassing defeat.

Russia investigation. House Intelligence Committee Democrats are pressing Republicans to allow the panel to proceed with two canceled hearings tied to its investigation into Russia’s meddling in the US election. Committee Chairman Devin Nunes (R-Calif.) scrapped the hearings -- one a closed-door interview with FBI Director James Comey, and the other an open hearing with former acting Attorney General Sally Yates, former Director of National Intelligence James Clapper, and ex-CIA Director John Brennan. Nunes is under scrutiny for his handling of the probe, after the New York Times reported yesterday that two White House officials had provided him with reports showing that Trump and his associates were named incidentally by US spy agencies monitoring foreign officials.

Other action on the Hill as they gear up for a two-week recess that will see them out of Washington until the week of April 24 include hearings on the US-Mexico border fence, rural air service, multimodal freight policy, the Fed’s mandate and the nomination of Scott Gottlieb to be FDA Commissioner. Other sessions will include farm bill hearings on commodities and farm credit programs along with a session on tax reform on rural America. House hearings will also include infrastructure in the twenty-first century and financial regulatory opportunities.

Chinese President Xi Jinping will meet President Trump on Thursday and Friday in Florida to talk about trade and security issues. Trump tweeted last week that the meeting would be a “very difficult one in that we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.” China’s leader is expected to bring along others who some say will including various buying missions of US products.

Friday’s key jobs report will be a focus along with updates on manufacturing and consumer credit. The week begins with the PMI and ISM reading on manufacturing along with Construction Spending on Monday. Tuesday reports include International Trade and Factory Orders, followed by releases Wednesday that include the ADP Employment update and the PMI Services and ISM Non-Manufacturing report. The only release Thursday is the Weekly Jobless Claims update. But the attention remains the highest on Friday to see if the March Employment report continues to show strength in the jobs market. Also out Friday – Wholesale Trade and Consumer Credit. It will take report data that is outside the level of expectations to get markets to shift views relative to the potential for Fed rate increases.

Minutes from the March 14-15 Fedral Open Market Committee (FOMC) meeting arrive Wednesday. Those will be focused on for the commentary from Fed officials on how they expect the rate increases to unfold the remainder of the year. That could shed some additional light on the that situation since it remains the market focus. Key will be if traders can decipher the potential for even more than a total of three rate hikes this year. So the minutes will be key even though there was the post-meeting press conference that accompanied the session. There are a handful of Fed speakers, too. New York Fed’s Dudley speaks on Monday and Friday – always a speaker of note since he is always a voter. Richmond Fed’s Lacker (2018 voter) is also on the schedule Monday. Tuesday will see what are billed as “farewell " remarks from Fed Gov. Tarullo who is leaving. But as we saw this week, it will take comments that run counter to what the market is accustomed to get much attention.

With planting intentions data out of the way, traders will now shift their focus considerably toward weather and what that signals for the potential for farmers to get the crops planted in the levels indicated in the Prospective Plantings report. We also get the resumption of the national Crop Progress report, with attention there on winter wheat and how it made it through the winter in states that haven’t been reporting ratings since November. Even as weather will be a focus, demand still is on the radar. That keeps the weekly updates on Grain Inspections and Weekly Export Sales in the cross hairs. The arrival of Chinese President Xi Jinping for a late-week meetings with President Trump is also expected to bring some Chinese buyers to the US and so there could be announcements on sales commitments by those buyers. Other data from USDA will include the monthly industrial reports on Grain Crushings, Oilseed Crush, cotton and wheat use. And the US Ag Trade Data comes out on Wednesday. And if the past week is any indication, there could be more South American crop increases unless flooding in Argentina has hampered crops there.