The lines of battle for Yellen’s first major battle are already stretching as the need for further support from the government becomes more acute.
Led by House Speaker Nancy Pelosi and current Treasury Secretary Steven Mnuchin, House Democrats and Republicans have been unable to agree on another spending package since March to help struggling Americans and businesses. Now that Covid-19 cases are accelerating and a wave of new restrictions are being forced on local leaders, the urgency is increasing.
The situation could be even worse by the time Yellen takes over the reins. A new model from the University of Washington in St. Louis predicts that Covid-19 cases in the United States could nearly double over the next two months, demanding an increase in social isolation.
Yellen, who led the Fed from 2014 to 2018, when the U.S. economy was still recovering from the 2008 financial crisis, made clear its position on the need for further stimulus.
“While the epidemic is still severely affecting the economy, we need to continue with extraordinary budget support,” Bloomberg TV said in an October interview.
The question is whether Congress will work together. Wall Street has now largely outlined the expectation that something can succeed this year, with little progress since the election.
Looking Ahead: Senate scrutiny – which could give Republicans significant influence – will lead to a series of elections in Georgia in early January. This will be key in determining progress, according to Goldman Sachs Alec Phillips.
“Senate scrutiny is probably the most important factor in determining the total amount of fiscal support,” a recent research note said. “The fiscal stimulus is likely to be much smaller during a split congress, and the size is likely to be smaller the longer it takes Congress to pass legislation.”
Yellen is known as a clear communicator. But given the circumstances, you may have trouble achieving your goals.
Taking Off Wall Street: Investors like Yellen, seen in sync with Fed Chairman Jerome Powell.
“The U.S. economic response to the pandemic could be helpful from a more coordinated coordinated response from the Fed and the Treasury,” Mark Haefele, UBS’s director of investment in global asset management, told clients Tuesday.
Both Yellen and Powell are pigeons who will support the maintenance of pro-economic policies for a time. Meanwhile, Powell and Mnuchin clashed recently over a decision by the Trump government to pull the plug out of the Federal Reserve’s emergency lending programs.
Wall Street also sees Yellen as a well-known entity who is not expected to be as bold as, say, Senator Elizabeth Warren when it comes to advocating for the regulation of corporate players such as large banks.
Leaders prepare for Biden’s presidency
The U.S. General Services Office on Monday informed President-elect Joe Biden that the Trump administration is ready to begin the formal transition process. But Corporate America has not wasted its time navigating the Biden era, writes Paul R. La Monica of CNN Business.
“In summary, I would like to congratulate the president-elect, Biden,” said Doug McMillon, CEO of Walmart, who also serves as chairman of the outstanding business roundtable, during the retailer’s last week’s revenue call.
Top leaders have expressed hopes for a more stable political environment after a disturbing tweet storm of nearly four years.
“Biden has shown a willingness to pragmatism throughout his career,” said Kevin Chavous, president of science, politics and school at K12 online learning company, on a virtual investor day last week. “He never really ventured too far to the left, and often did his best to open the door to conversations with the leaders of the right-wing Congress.”
Others were busy figuring out what Biden’s policies mean, especially on issues like trade and regulation, in terms of their key achievements.
“Comments from the Biden camp do not indicate that the stance on China will ease any time soon.” said Jeremy Smeltser, CFO of appliance and plumbing company Spectrum Brands Holdings, in a November 13 earnings call.
And lobbying is already beginning in earnest.
“The planned investment in U.S.-made products is critical to U.S. leadership in innovation and technology,” Swan wrote.
There is once again an extreme greed in the market
Bulls are firmly in control of the stock markets as vaccination optimism prevails, leading to expectations that indices such as the S&P 500, which has recently reached a record, could rise further next year.
Strategists are setting ambitious targets for next year’s stock performance, despite the fact that the mechanics of vaccine distribution are unclear.
Ed Yardeni, president of Yardeni Research, told clients on Tuesday that he now believes the S&P 500 could reach 4,000 points by the end of next year, pointing out companies that are making higher profit expectations higher. That would mean a jump of almost 12% over the index’s closing on Monday.
“The boom in consensus income expectations in 2020 was remarkable in the (epidemic) context,” Yardeni said.
Goldman Sachs is even bolder and predicts that the S&P 500 will reach 4,300 by the end of 2021 – a 20% jump from current levels. While hope has pushed markets higher for much of this year, the bank says the next phase of the rally is set to set in.
“From a market perspective, the most important issue now is that [US] the election is out of the way, what will happen to growth, “Goldman’s strategists said. It is now increasingly dependent on Covid vaccination. “
Even today: U.S. consumer confidence data on November 10 at 10 p.m.
Tomorrow is coming: U.S. unemployment claims are expected to rise to 730,000 last week, down slightly from the previous week.