What Joe Biden's State Of The Union Address Means For Markets: Why This Analyst Sees Challenges Ahead

In a State of the Union address to the nation late Tuesday, U.S. President Joe Biden touched on several topics that could impact the standing of the American economy. Here's a look at Cowen's take on what it means for the markets.

What To Know: The State of the Union provides insights into the president's priorities over the year ahead. Cowen analyst Jaret Seiberg broke down the implications Wednesday in a new note to clients.

Biden said the Consumer Financial Protection Bureau has done an excellent job in its fight against "junk fees." His speech included praise for the agency's proposal to cut back on late fees for credit cards, Seiberg said.

"We are dubious Congress will enact the President's bill to curb other junk fees, but we believe the CFPB is likely to keep the pressure on the banks. That means continued focus on overdraft fees and new risk for ATM fees, foreign exchange fees, and wire transfer fees," the Cowen analyst said.

Related Link: Biden Spotlights Job Creation, Bi-Partisanship In State Of Union To Divided Congress

Biden also called on Congress to raise the stock buyback tax because the present rates are not high enough to discourage public companies from engaging in buybacks, Seiberg said.

Although Cowen doesn't think the higher buyback tax will ever get enough support from House Republicans to pass, the firm noted that it's not a zero-probability event.

The president also urged the opposing party to raise the debt ceiling, noting that no one wants the U.S. to default on its bills. He also stayed firm in his reluctance to accept cuts to Social Security or Medicare.

"We believe this reflects the challenge ahead. It is easy to call for spending cuts in exchange for a debt ceiling hike. It is harder to make those cuts actually occur," Seiberg said.

Cowen pointed out that nothing was said in the way of crypto. Although this was surprising given the ongoing FTX fiasco, Cowen took it as a reminder that crypto isn't a "top tier issue politically."

SPY Price Action: The SPDR S&P 500 SPY is trading down 0.93% in the wake of the State of the Union address.

Crypto markets are also trading lower, led by declines in Bitcoin BTC/USD and Ethereum ETH/USD. The pair was trading slightly lower over a 24-hour period at last check, although the latter was up against less selling pressure, according to Benzinga Pro.

Photo: FolsomNatural from Flickr.