The Week Ahead: Feb. 22-28, 2016

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USDA’s Agricultural Outlook Forum, continued political-party wrangling over the timing of a successor to a Supreme Court opening, Fiscal Year 2017 budget hearings with Cabinet members, USDA Secretary Tom Vilsack testifying on the state of US agriculture, and the Senate Ag Committee business meeting Thursday on Sen. Pat Roberts’ (R-Kan.) bill on GMO food labeling highlight the week ahead in Washington.

On the House side, several high-ranking administration officials, including Secretary of State John Kerry, Defense Secretary Ashton Carter, Attorney General Loretta Lynch and Vilsack are scheduled to testify before House Appropriations about Obama’s fiscal 2017 budget request.

Senators will seek to confirm a new Food and Drug Administration commissioner, and linking money to fix the lead-contaminated water system in Flint, Michigan, to bipartisan energy legislation, S 2012. Democrats blocked an effort to cut off debate on the energy bill, insisting on more upfront funding to fix Flint’s corroded water pipes, balking at a Republican proposal that primarily consisted of loans.

Zika money. The Obama administration will soon formally request $1.8 billion in emergency funding to fight the Zika virus. House Republican appropriators urged the administration to tap existing Ebola funding now, and pledged to consider replacing those funds as part of the regular Fiscal 2017 appropriations process. Last week, the Centers for Disease Control and Prevention urged Congress not to rely on Ebola funds. The Senate Health, Education, Labor and Pensions Committee plans a hearing Wednesday on the growing public health threat posed by the virus.

Recreational use of federal land. Most federal lands would be open for recreational hunting and fishing activities under H.R. 2406, which would also bar the Army Corps of Engineers from prohibiting the possession of firearms at water project sites. The measure would make it easier to expand shooting ranges, facilitate commercial filming on federal lands, and exempt ammunition and lead fishing tackle from the Toxic Substances Control Act. It would ease restrictions on the importation of certain polar bear remains and African elephant ivory or items containing ivory. Advocates for antique gun collectors and the music industry have been pressing for changes, saying that federal regulations unfairly target owners of antique ivory-inlaid guns and musical instruments without affecting elephant poaching. The Natural Resources Committee approved the bill Oct. 8 by a vote of 21-15.

Appropriations. The House Appropriations Committee has teed up a series of hearings featuring Obama Cabinet members before the following subcommittees:

• Secretary of State Kerry, Wednesday before State-Foreign Operations.
• Defense Secretary Carter and General Joseph Dunford, the chairman of the Joint Chiefs of Staff, Thursday before Defense. The day before, General Philip Breedlove, NATO’s supreme commander for Europe, plans to testify before the same panel.
• Budget Director Shaun Donovan, Tuesday before Financial Services and General Government.
• Commerce Secretary Penny Pritzker, Tuesday before Commerce-Justice-Science.
• Homeland Security Secretary Jeh Johnson, Wednesday before Homeland Security.
• Attorney General Loretta Lynch, Wednesday before C-J-S. Thursday, Federal Bureau of Investigation Director James Comey plans to testify before the panel.
• Transportation Secretary Anthony Foxx, Wednesday before Transportation-HUD.
• Health and Human Services Secretary Sylvia Mathews Burwell, Thursday before Labor-HHS-Education.

Budget. Authorizing committees also plan hearings on the fiscal 2017 budget request:

• Kerry is scheduled to testify Tuesday before the Senate Foreign Relations Committee.
• Frank Klotz, the undersecretary for nuclear security at the Department of Energy, and Monica Regalbuto, the assistant secretary of Energy for environmental management, are among those scheduled to testify before the Senate Armed Services Strategic Forces Subcommittee Tuesday about the Energy Department’s atomic energy defense activities and programs.
• Admiral Harry Harris Jr., commander of the US Pacific Command, and General Curtis Scaparrotti, commander of U.S. forces in Korea, are scheduled to testify Tuesday before the Senate Armed Services Committee.

Link to full House appropriations witnesses this week.

Back to a full week for markets with several economic updates on the horizon regarding housing, manufacturing, consumer activity and an update on the US economy for the fourth quarter of 2015. Monday opens with the Chicago Fed update and PMI manufacturing flash report, followed by a busy Tuesday of releases that include the S&P Case-Shiller house price index, Consumer Confidence, Existing Home Sales, and the Richmond Fed manufacturing report. Wednesday updates include the PMI services flash report and New Home Sales, followed by Durable Goods, weekly jobless claims and the FHFA House Price Index on Thursday. The week closes out with the second reading on fourth quarter GDP, followed by International Trade in Goods and Consumer Sentiment.

While stocks scored gains last week, markets are clearly sensitive to economic updates from the US and China in particular. The focus on China remains how their economy is performing and whether the data continue to prompt expectations for more stimulus actions to be deployed. And there will also be a focus on the deal reached between Britain and the European Union (EU) which will pave the way for a vote in the UK on whether to remain in the bloc.

More Fed speakers on the schedule to monitor in the week ahead, with some key officials delivering remarks. One of the more-closely watched will be Fed Vice Chair Fischer who speaks on Tuesday. Wednesday’s docket includes Richmond Fed’s Lacker, Dallas Fed’s Kaplan (2017 voter) and St Louis Fed’s Bullard, a voter this year. Atlanta Fed’s Lockhart speaks on Thursday along with San Francisco Fed’s Williams, the latter seen as a close ally of Fed Chair Yellen. Friday’s speakers will be of note as they are Fed Governors Powell and Brainard, both voters on the FOMC. The focus remains on any signals on timing of any rate action by the Fed, but the expectations on that front have declined dramatically in recent days and weeks.

The big focus for agriculture will be USDA’s Outlook Forum held near Washington, DC. The confab features release of updated thinking by USDA economists on the outlook for planted acreage for major crops this season along with the detailed balance sheets for major crops and livestock. The balance sheet details will be released Friday morning while the overall economic situation for ag and potentially acreage levels will come in Thursday’s opening session. Also in conjunction with the sessions, USDA will release their updated outlook for food prices and the forecast for US ag exports.

Beyond the Outlook Forum, other USDA data that will garner attention include the monthly Cold Storage report on Tuesday and Weekly Export Sales figures on Thursday. Weather updates out of South America will be important given the flooding in Argentina. Traders will also monitor any new tenders for wheat by Egypt and await a decision by Russia on their wheat export tax status.

The budget plans for several USDA agencies will be examined. Wednesday will feature a key hearing by the House Ag Committee as they examine the status of the rural economy, a session that will no doubt focus heavily on the downturn in US farm income forecast by USDA and the challenges facing farmers with current crop prices.

A session on the water outlook for California is on the schedule, along with a Senate session on oversight of the Renewable Fuel Standard (RFS). The Senate Ag Committee also will hold a business meeting Thursday on Sen. Roberts’ bill on GMO food labeling.

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