The new heights you’ve ever achieved
After Jerome Powell’s re-nomination as Fed Chairman was short-lived.
The market quickly decided President Joe Biden’s pick was hard-line — bond yields saw their highest daily rise in two weeks and tech stocks sold off to close. both fahren closed, although
They did not earn.
Tuesday can be more of the same, albeit not as severe.
What is behind this? The schedule for the first rate hike by the Fed, in the eyes of investors, shifted to earlier next year after the news. Markets are pricing in their first price hike by June, with investors Seeing a 50-50 . chance May come in May.
The reaction may seem strange, especially when the reset indicates a bet on continuity and stability.
Continuity is definitely a buzzword so why is the market reacting? It’s still the same as Powell after all.
This can be explained in part by resolving outside bets on Fed Governor Lyle Brainard for the role, which was seen as more pessimistic. Of course, it also removes uncertainty, which may be the biggest factor.
However, aside from the re-nomination, it is possible that other factors, most notably inflation, have changed the Fed’s way of thinking.
Departing Vice President Richard Clarida said the Fed should consider cutting bond buying at a faster pace at its December meeting, citing “upside risks” to inflation. This would pave the way for an early price increase.
Add to that Powell’s pledge to prevent inflation from entrenching and it will get tighter.
*** Join Barron Associate Technology Editor Eric J. Savitz this afternoon for a chat with Ryan Jacob, CEO of Jacob Internet Fund, about the next step for Internet stocks. Register here.
Biden chose continuity with Powell as Fed Chair
By keeping Powell as Fed chair for a second term and promoting Brainard to vice president, Biden has opted for continuity as he faces a rocky road to winning Senate approval for his $1.85 trillion social spending plan.
Biden stressed the need for Powell’s “steady, independent” leadership during the pandemic, showing that he is cautious while still convincing markets that he will not hesitate to act. Inflation takes place at a very high temperature. Powell was appointed Fed Chairman in 2018.
While the Progressive Democrats lobbied for Brainard, Powell will have The easiest Senate confirmation process And relatively more stable when dealing with rapidly rising prices. Investors in banks and other financial institutions saw this as good news. SPDR financial sector selected rose 1.4%.
Washington and Wall Street praised Powell for cutting interest rates to zero, buying large amounts of bonds and offering loan programs to businesses and local governments. When the Covid-19 pandemic started. Several lawmakers who confirmed his presence in 2017 are still in Congress.
Some observers said the October CPI, which shows prices rising at their highest rate in 31 years, may have been the deciding factor. with the Public concern about rising inflationIt would have been dangerous for Biden to replace Powell with someone perceived to be more cautious.
What then: With Randall Quarles resigning in December, Clarida’s term expiring in early 2022, and two seats vacant, Biden has the opportunity to Filling four seats and reconfiguring The Federal Reserve’s seven-seat Board of Governors.
–Lisa Belfuss and Janet H. Chu
Vacation travel kicks off as crowds approach 2019 levels
Americans are back in their pre-pandemic holiday habits after Covid-19 thwarted Thanksgiving gatherings last year, with an estimated 53.4 million people expected to travel this week, up 13% from 2020, according to the AAA.
U.S. gas prices averaged $3.40 a gallon on Monday, $1.30 more than a year ago, per GasBuddy. study found 32% of Americans Plan to travel this Thanksgiving, with 13% of that number expecting to spend up to three hours in the car.
Thanksgiving holiday bookings this week through Thursday are up 70% compared to last year and Just shy of 2019 levelsAccording to Adobe data. About 4.2 million people are expected to travel this weekend.
On Sunday, 2.2 million people passed through checkpoints at US airports, 95% of the total on that date in 2019. Transportation Security Administration Administrator David Pekosky said the US would beat Friday. Epidemiological record of passengers for one day End of this week.
Delta Airlines And
United Airlines Both expect to fly only 12% fewer passengers than in 2019. United expects it to be the Sunday after Thanksgiving. Busiest day since the epidemic began, The The New York Times mentioned.
What then: Canada, which opened its land borders to fully vaccinated Americans on August 9, said it will require essential workers, professional athletes and others previously exempt from public health orders to be fully vaccinated against Covid-19 to enter, starting January 15. .
–Janet H Chu
Lawsuit exposes tensions between Tesla and JP Morgan
Long simmering tensions between
NS. NS. Morgan ChaseAnd and their visionary executives, Elon Musk and Jamie Dimon, have appeared in a lawsuit brought by the bank saying Tesla owed it $162 million from a deal it helped arrange seven years ago, The Wall Street Journal mentioned.
Tesla, with a market capitalization of More than 1 trillion dollars, represents a lucrative source of Wall Street fees, but JPMorgan has not made any claims, the report said. Its bankers have not worked on any Tesla offer or transaction since 2016.
JPMorgan was among the banks that worked on Tesla’s initial public offering 11 years ago but ranked behind the others On offer, including
Goldman Sachs And
Tesla paid JPMorgan for it $15 million for advice The magazine, citing Dealogic, reported that capital markets have operated in the past decade. Goldman made nearly $90 million.
Although it is a car lender, JP Morgan frequency With electric car makers, the magazine reported, citing people familiar with the matter who said bankers are concerned about the long-term value of electric car batteries.
What then: Tesla said on
Samsung unveils plans for a chip-making plant in Texas
The plant will be based in Taylor, in central Texas, and will generate about 1800 jobs, with production beginning in 2024. Samsung already operates a manufacturing center in Austin, about 30 miles from Taylor.
Samsung and Texas Governor Greg Abbott The Korean group’s decision is scheduled to be officially announced on Tuesday afternoon, according to some. Reports. But Samsung hasn’t made it yet Final decision on the site, according to one report. Samsung did not immediately respond to a request for comment.
The Biden administration is pushing through Congress a $52 billion bill, commonly known as CHIPS Law, to Help fund semiconductor research and manufacturing in the United States
What then: Samsung has been on an investment spree since de facto leader Jay Y. Lee was released from prison, where he was serving a prison sentence for corruption. The group plans to spend more than $200 billion and hire 40,000 in the next three years.
Over 135 million Americans are eligible for booster shots
More than three million Americans have received boosters for Covid-19 since the Centers for Disease Control and Prevention and the Food and Drug Administration approved them for all adults, the White House said, bringing the total of the boosters to more than 36.1 million.
Eligibles include more than 135 million adults who have received their second shot from
modern More than six months ago, or their vaccinations
Johnson & Johnson Vaccine two months ago. US Covid-19 cases are top 18% from last week.
CDC Director Dr. Rochelle Walinsky said that people who are not immunized are nine times more likely to be hospitalized and 14 times more likely to die.
As of Monday’s deadline, 95% of the more than 3.5 million federal workers have Comply with vaccine mandates The White House’s coronavirus response coordinator, Jeffrey Zentes, said that he or she has applied for a waiver. It includes 93% of TSA employees.
White House chief medical advisor Dr. Anthony Fauci said public health officials still don’t know How often is the reinforcement? will need. He said they hope the boosters will provide longer and more durable protection than the initial shots.
What then: Parts of Europe are entering new lockdowns to try to control a new surge in cases, but “We are not going in that direction,” Zenitz said on Monday, adding, “We can limit the spread of the virus without having to shut down our economy.”
–Janet H Chu
Be sure to join Barron’s Daily Virtual Exchange Challenge this month and Show us your stuff.
Every month, we’ll start a new challenge and invite our newsletter readers – YOU! – Create a wallet using virtual money and compete against the Barron’s Community and MarketWatch.
Everyone will start with the same amount and can trade as much or as little as they want. We’ll track down the leaders, and at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s daily newsletter.
Are you ready to compete? Join the challenge and choose your stocks Here.
—Newsletter Editing by Liz Muir, Camilla Imperiale, Robert Steiner