- It could be one of the last major bipartisan bills of 2021, but the Senate got it over the line. Late Tuesday, the chamber approved the U.S. Innovation and Competition Act, a $250B package aimed at challenging China's technological ambitions. While the bill passed 68-32 in the Senate, it still needs approval in the House, which has been weighing some different approaches but is likely to see wide support. The measure is one of the biggest government interventions in industrial policy in decades, which trounced traditional party differences over economic policy.
What's in the bill? About $190B would be directed at U.S. technology and research to better compete globally, including money for cutting-edge science and artificial intelligence via the National Science Foundation. Another $54B would increase U.S. production and research into semiconductors and telecom equipment, as well as design and manufacturing initiatives. The Commerce Department will also get $10B in funding to designate regional technology hubs for R&D and will be able to match financial incentives offered by states and local governments to chipmakers who expand or construct new factories.
According to some estimates, federal R&D spending in recent years has totaled less than 1% of U.S. GDP, as well as less than 3% of total government spending, the lowest level since the space race in the 1960s. With regards to semiconductor manufacturing, it's been even worse. The Semiconductor Industry Association says the U.S. share of global chip-making capacity has tumbled from 37% in 1990 to 12% at the present. "We are in a competition to win the 21st century and the starting gun has gone off. We cannot risk falling behind," President Biden declared, while Commerce Secretary Gina Raimondo said the funding could result in seven to 10 new U.S. semiconductor plants.
Response from China: While Beijing has long-embraced a top-down approach to investing in favored sectors, it expressed "strong indignation and resolute opposition" to the U.S. bill, which showed "paranoid delusion of wanting to be the only winner." The measure also banned downloads of Chinese-owned TikTok (BDNCE) on all government devices (not only military and Homeland Security phones) and will block purchases of drones manufactured and sold by companies backed by the Chinese government. It further expanded mandatory sanctions on Chinese entities engaged in American cyberattacks or the theft of intellectual property, while reviewing export controls on items that could be used to support human rights abuses. | TOGETHER WITH  |
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| | Top News  Shutterstock It could be one of the last major bipartisan bills of 2021, but the Senate got it over the line. Late Tuesday, the chamber approved the U.S. Innovation and Competition Act, a $250B package aimed at challenging China's technological ambitions. While the bill passed 68-32 in the Senate, it still needs approval in the House, which has been weighing some different approaches but is likely to see wide support. The measure is one of the biggest government interventions in industrial policy in decades, which trounced traditional party differences over economic policy.
What's in the bill? About $190B would be directed at U.S. technology and research to better compete globally, including money for cutting-edge science and artificial intelligence via the National Science Foundation. Another $54B would increase U.S. production and research into semiconductors and telecom equipment, as well as design and manufacturing initiatives. The Commerce Department will also get $10B in funding to designate regional technology hubs for R&D and will be able to match financial incentives offered by states and local governments to chipmakers who expand or construct new factories.
According to some estimates, federal R&D spending in recent years has totaled less than 1% of U.S. GDP, as well as less than 3% of total government spending, the lowest level since the space race in the 1960s. With regards to semiconductor manufacturing, it's been even worse. The Semiconductor Industry Association says the U.S. share of global chip-making capacity has tumbled from 37% in 1990 to 12% at the present. "We are in a competition to win the 21st century and the starting gun has gone off. We cannot risk falling behind," President Biden declared, while Commerce Secretary Gina Raimondo said the funding could result in seven to 10 new U.S. semiconductor plants.
Response from China: While Beijing has long-embraced a top-down approach to investing in favored sectors, it expressed "strong indignation and resolute opposition" to the U.S. bill, which showed "paranoid delusion of wanting to be the only winner." The measure also banned downloads of Chinese-owned TikTok (BDNCE) on all government devices (not only military and Homeland Security phones) and will block purchases of drones manufactured and sold by companies backed by the Chinese government. It further expanded mandatory sanctions on Chinese entities engaged in American cyberattacks or the theft of intellectual property, while reviewing export controls on items that could be used to support human rights abuses.    | |
| Stocks Major averages closed near the flatline on Tuesday as stocks remained range bound near record highs. Not much changed overnight, with Dow and S&P 500 futures holding steady and contracts linked to the Nasdaq inching up 0.1%. As mentioned yesterday, some traders are staying on the sidelines before the latest inflation figures on Thursday, to gauge whether higher price pressures are temporary as the economy rebounds from the coronavirus pandemic.
Others have plunged headfirst into the wild world of meme trading. Clover Health (NASDAQ:CLOV) has become the latest target of the WSB/Reddit Army, whose sentiment is rapidly expanding to those looking for some outsized gains. The stock skyrocketed 96% to $22 on Tuesday and is up another 18% in premarket trade. Those looking for some quick cash also jumped into Wendy's (NASDAQ:WEN), which rose another 5% overnight following yesterday's 25% advance. The latter move was notable as Wendy's has relatively low short interest (no squeezes) and is an institutional favorite compared to AMC (NYSE:AMC), BlackBerry (NYSE:BB) and GameStop (NYSE:GME).
Quote: "It's different than 1999. It's different in 2008. The number of players today and the amount of capital today is massive compared to what we saw back when it was mostly professionals," said online brokerage pioneer and options legend Tom Sosnoff. "What you're seeing is an entire generation become engaged. So instead of waiting until they're 50 or 60 and trying to figure out what the markets are all about, they're doing it when they're 22 or 23. This is a generational move."
Other happenings: President Biden is looking for a new coalition for his infrastructure bill as talks with key Republican senators collapsed. He'll also depart today on his first trip abroad since taking office. The eight-day mission will seek to strengthen trans-Atlantic ties, including a G7 summit and a NATO gathering, as well as visits with Queen Elizabeth and Russia's Vladimir Putin. | |
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