For market participants, a constant challenge is interpreting the statements of Washington DC lawmakers. It's tough to determine what is part of negotiations or the typical sausage-making process versus a legitimate breakthrough or breakdown of negotiations.

Obviously, the size and scope of legislation that is passed have a major impact on corporate earnings and outlooks. And, this is obviously, even more, the case with infrastructure which is one of the rare areas of bipartisan agreement and has major implications for a variety of industries.

It's even more complicated at the moment given the sharp divisions in Congress. The Senate is at 50-50 with Vice President Kamala Harris being the 51st vote. This means that moderate Democrats from red or red-leaning states have a lot of power. However, doing too much to appease this group could potentially turn off the more liberal members of the House and Senate whose unanimous support is also necessary for passage.

Last week seemed like a major breakthrough as a bipartisan group of senators reached an agreement on a $1.2 trillion infrastructure bill. It seemed like a perfect compromise as it fell short of many of the measures that Democrats were looking for but included tax hikes and more money for IRS enforcement that Republicans were opposed to.

However, the good feelings ended suddenly when President Joe Biden spoke and said that he would only consider signing the infrastructure bill if it was paired with a reconciliation bill. Of course, Republicans would be opposed to such a development as the reconciliation bill could simply include many of the items that had been negotiated out of the infrastructure bill. Further, it would put them in a tough political position as they would have to decide between opposing infrastructure or letting the reconciliation bill pass.

During the weekend, President Biden walked back his remarks by saying that he "misspoke." So far, it seems that Republicans are willing to forgive him and move on with the infrastructure bill. However, the drama does highlight that President Biden faces a very tough task in getting his legislative priorities passed despite control of Congress.

Yet, it's fair to say that the infrastructure package's passage looks imminent, however, it's far from certain that President Biden's reconciliation passage will be able to make it through Congress.