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Biden Will Condemn Putin, and Promise to Fight Rising Prices

Western unity in the face of Russia’s invasion of Ukraine will take center stage at President Joe Biden’s first State of the Union address Tuesday night, according to excepts from his addressed released by the White House on Tuesday.

“Putin’s war was premeditated and unprovoked,” Biden will say. “He rejected efforts at diplomacy. He thought the West and NATO wouldn’t respond. And, he thought he could divide us here at home. Putin was wrong. We were ready.”

But the president will also be talking about his efforts to tame the raging domestic inflation that has hurt his standing with the American people.

Indeed, the tensions with Russia have heightened concerns that prices for goods, especially oil prices, could skyrocket in the near future, adding to the inflationary pressures that cloud the economy. During his speech, the president will propose bringing production back stateside to counter inflation.

“Lower your costs, not your wages,” Biden will say. “Make more cars and semiconductors in America. More infrastructure and innovation in America. More goods moving faster and cheaper in America. More jobs where you can earn a good living in America. And, instead of relying on foreign supply chains–let’s make it in America.”

With an average 40.7% approval rate in the polls, and looming midterm elections, Biden will work to reframe some of the sticking points that have emerged since he took office last year, while emphasizing the administration’s accomplishments, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute

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Commentary: Recession Fears Are Overblown The president is expected to try to revive sections of the Build Back Better Act, the cornerstone of his economic agenda, which fell apart in December when Democrats failed to garner the support of some key moderate senators and pass the legislation.

“They would like to reframe Build Back Better as a way of combating inflation,” said Edward Mills, Raymond James’ Washington strategist.

The president will call on Congress to create legislation that “lowers cost of everyday expenses working families face and lowers the deficit by rewarding work, not wealth,” the White House said in a fact sheet issued ahead of the speech. The president will urge Congress to take up measures such as lowering costs for prescription drugs, healthcare premiums, education, and child care–all staples of the Build Back Better plan that had bipartisan support.

“My plan to fight inflation will lower your costs and lower the deficit,” Biden will say in his remarks.

Biden will also likely try to drum up support for his Supreme Court nominee, Ketanji Brown Jackson, ahead of her confirmation hearing.

Geopolitical tensions, which escalated after Russia invaded Ukraine last week, will dominate the speech. Biden will talk about “the efforts he has led over the past several months to build a global coalition to fight—fight against the autocracy and the efforts of President Putin to invade a foreign country,” said White House press secretary Jen Psaki in a Sunday appearance on ABC News.

Wells Fargo’s Samana doesn’t expect Biden will announce further sanctions, but could use the speech to emphasize that the U.S. won’t be sending troops into Ukraine. Mills agreed, saying the current sanctions were greater than expected and had yet to go fully into effect.

“I think he’s going to try to use it as a bully pulpit moment, where he further explains the totality of the sanctions that he has put on against Russia,” Mills said.

Presidents generally deliver their first State of the Union speech early in their second year in office, at the end of January or in early February. This year’s remarks were pushed back to avoid conflicts with the Winter Olympics.

Last year, Biden spoke to a joint session of Congress about his first 100 days in office, focusing his remarks on the administration’s plan to tackle coronavirus. Despite the Omicron surge in early January, the state of the pandemic could be another point of pride for Biden, as most states have moved to fully reopen their economies and ease mask guidelines. Some Democrats have been pushing the administration to use Tuesday’s speech to officially endorse a return to normal, according to The Wall Street Journal.

State of the Union speeches aren’t historically major market-moving events, Samana said. Odds that the speech makes waves are even lower than usual, Mills said, given the increasing likelihood that Democrats won’t hold a Congressional majority after the midterm elections. That would make it harder for the administration to pass legislation.

That said, markets will be looking at the way Congress reacts to the speech to determine how divided political discussion is around key issues. The reaction of key swing voters such as Democratic Sen. Joe Manchin of West Virginia will be a focus.

“The more Congress and the president seem to be on the same page on a major geopolitical issue, that gives you an idea of directionally where their support is and that’s generally a market positive,” Mills said.

The markets could also react if Biden were to take a very strong stance on inflation and direct the Federal Reserve to “really go gangbusters” in respect to tackling rising costs, Samana added.

Biden is scheduled to speak at 9 p.m. Eastern. Kim Reynolds, the governor of Iowa, will give the Republican response afterward.

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