TIMES.KY

Cayman Islands, Caribbeanand International News
Thursday, Mar 28, 2024

Janet Yellen's first battle is already taking shape

Janet Yellen's first battle is already taking shape

President-elect Joe Biden has made the historic decision to tap Janet Yellen, former chair of the Federal Reserve, as his Treasury Secretary. She doesn't have an easy job ahead of her.

What's happening: Yellen — who, if confirmed by the Senate, would be the first woman in the role — will be tasked with shepherding America's economy out of the pandemic, as well as addressing rampant inequality made worse by the Covid-19 crisis. In a time of deep partisanship, that's a very tough role.

The battle lines of Yellen's first big fight are already being drawn as the need for additional government aid becomes more acute.

House Democrats under Speaker Nancy Pelosi and Republicans led by current Treasury Secretary Steven Mnuchin have been unable to agree on another spending package to help struggling Americans and businesses since March. Now, as Covid-19 cases surge, forcing a wave of new restrictions from local leaders, the urgency is rising.

The situation could be even worse by the time Yellen takes the reins. A new model from Washington University in St. Louis projects that Covid-19 cases in the United States could nearly double over the next two months, demanding a rise in social distancing measures.

Yellen, who led the Fed from 2014 to 2018, when the US economy was still recovering from the 2008 financial crisis, has made her position on the necessity of more stimulus clear.

"While the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support," she said in a Bloomberg TV interview in October.

The question is whether Congress will cooperate. Wall Street has now largely written off the expectation that something can get done this year, with little progress made since the election.

Looking ahead: Control of the Senate — which could give Republicans significant leverage — comes down to a set of runoff elections in Georgia in early January. This will be crucial for determining the path forward, according to Goldman Sachs' Alec Phillips.

"Senate control is probably the most important factor in determining the total amount of fiscal support," he said in a recent research note. "Fiscal stimulus is likely to be much smaller under a divided Congress and the size is likely to grow smaller the longer it takes Congress to pass legislation."

Yellen is known as a clear communicator. But she may have trouble achieving her aims given the conditions.

Wall Street's take: Investors like Yellen, who they see as in sync with current Fed Chair Jerome Powell.

"The US economic response to the pandemic may benefit from more tightly coordinated response from the Fed and Treasury," Mark Haefele, UBS Global Wealth Management chief investment officer, told clients Tuesday.

Both Yellen and Powell are considered doves who will be in favor of keeping policies supportive of the economy in place for some time. Powell and Mnuchin, meanwhile, have clashed recently over the Trump administration's decision to pull the plug on emergency Federal Reserve lending programs.

Wall Street also sees Yellen as known entity who is not expected to be as bold as, say, Sen. Elizabeth Warren in pushing for regulation of corporate players like big banks.

But my CNN Business colleague Matt Egan notes that in early 2018, Yellen imposed unprecedented sanctions against Wells Fargo (WFC) for "widespread consumer abuses." The penalties, which remain in place today, hobbled the bank, which has yet to recover.

Executives prepare for Biden's presidency


The US General Services Administration informed President-elect Joe Biden on Monday that the Trump administration was ready to begin the formal transition process. But Corporate America hasn't wasted any time orienting itself for the Biden era, my CNN Business colleague Paul R. La Monica reports.

I want to wrap up by saying congratulations to President-elect Biden," Walmart CEO Doug McMillon — who also serves chairman of the prominent Business Roundtable — said during the retailer's earnings call last week.

Top executives have expressed hopes for a more stable political environment after nearly four years of disruptive tweetstorms.

"Biden, throughout his career, has shown a tendency toward pragmatism," Kevin Chavous, president of academics, policy and schools for online learning company K12, said during a virtual investor day last week. "He has never really ventured too far to the left, and he's often gone out of his way to open doors to conversations with leadership in Congress on the right."

Others have been busy trying to figure out what Biden's policies, particularly on issues such as trade and regulation, will mean for their bottom lines.

"Commentary from the Biden camp doesn't indicate any early softening on the stance with China," said Jeremy Smeltser, chief financial officer of appliance and plumbing supply company Spectrum Brands Holdings, on a Nov. 13 earnings call.

And the lobbying is already beginning in earnest.

In an open letter dated Monday, Intel (INTC) CEO Bob Swan urged the new administration to invest more in digital infrastructure and manufacturing.

"Your planned investment in American-made goods is critical to U.S. innovation and technology leadership," Swan wrote.

Extreme greed is ruling the market again


The bulls are firmly in control of stock markets as vaccine optimism takes hold, driving expectations that indexes like the S&P 500 — which recently hit a record — can keep pushing higher next year.

See here: The CNN Business Fear & Greed Index, which tracks market sentiment, is now in "extreme greed" territory, having risen in the past week.

Strategists are rolling out ambitious targets for the stock performance next year, despite a lack of clarity on the mechanics of vaccine distribution.

Ed Yardeni, president of Yardeni Research, told clients on Tuesday that he now thinks the S&P 500 could hit 4,000 points by the end of next year, pointing to the number of companies revising profit expectations higher. That would be a nearly 12% jump above the index's Monday close.

"The rebound in 2020 consensus earnings expectations has been remarkable under the (pandemic's) circumstances," Yardeni said.

Goldman Sachs is even bolder, predicting that the S&P 500 will hit 4,300 — a 20% jump over current levels — by the end of 2021. While hope has driven markets higher for much of this year, the bank thinks the next phase of the rally is about to set in.

"From a market perspective, the crucial issue now that the [US] election is out of the way is what will happen to growth," Goldman's strategists said. "This is now increasingly dependent on a Covid vaccine."

Up next


Abercrombie & Fitch (ANF), Best Buy (BBY), Dick's Sporting Goods (DKS), Dollar Tree (DLTR) and J.M. Smucker (SJM) report results before US markets open. American Eagle (AEO), Dell (DELL), Gap (GPS), HP and Nordstrom (JWN) follow after the close.

Also today: US consumer confidence data for November posts at 10 a.m. ET.

Coming tomorrow: Initial US unemployment claims for last week are expected to come in at 730,000, down slightly from the previous week.

Newsletter

Related Articles

TIMES.KY
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×