Both the Fed and Biden had big meetings this week. Biden gave a “this-is-not-a-state-of-the-union” state of the union address on part 2 of his “infrastructure” plans. The Fed had a “we’re-not-tapering-and-inflation-is-temporary” meeting on monetary policy. Let’s quickly dive into both to see if we and the markets learned anything new for the economy.
The Fed met first this week and left policy unchanged. This was not a surprise and had been telegraphed out to every economist, trader and politician ahead of time. What this means is that the outcome was pre-ordained, and no surprises were had. (I’m guessin’ Sen. Cruz…
Is it big? Yes. Is it bold? Yes. And we can get it done.
Fact Check: these are all true.
At the Carpenters Pittsburgh Training Center, President Biden formally announced his $2 trillion plus “American Jobs Plan” (AJP) targeted at increasing growth in jobs for the US economy. This is not merely an infrastructure plan, but truly a wide ranging spending plan covering a gamut of goodies areas outside of roads, bridges and tunnels. Candidate Biden proposed many of these during the campaign and is following through on those promises. Unlike the…
Yesterday, the European Union released a sweeping 30-year plan to achieve net zero and reshape the economy. This has broad implications for every EU sector. The plan also has implications for the world including the United States infrastructure plans.
The EU plan includes carbon pricing as the key component to placing a cost on emissions. The Emissions Trading Scheme or ETS is a revamp of the previously ineffective 2005 carbon market. The pay forces large emitters, like power generators and steel makers, to buy credits to cover the cost of their carbon production. The new plan broadens the scope of…
How Sen. Joe Manchin now controls the US Senate and the Federal Reserve
(All the research articles’ urls used to create this are at the end)
Let’s do a quick run through two topics impacting the economy and markets.
Federal Reserve monetary policy. On Wednesday, the Fed left interest rates and monetary policy unchanged. This was not a surprise. (Statement and Presser)What did change was the members’ expectations on inflation and when they would begin to raise interest rates. On inflation, the number of members on the committee thinking inflation had risks to the upside jumped from 5 to 13…
Why Biden’s policies are in danger
The inflation story keeps getting legs as more and more companies are citing inflation concerns in their investor calls and interviews. As a matter of fact, The word “inflation” is being mentioned in post-earnings conference calls by the most companies in at least 11 years, enough to set a fresh record, according to research provided by FactSet.
As an example, the CFO of retail giant Costco Richard Galanti said this on the company’s latest earnings call:
“Chips shortages are impacting many items from an inflation standpoint, some items more than others. And with regard…
Today, the US BLS releases its monthly employment data. The expectations were for 950k NFP with some predicting as high as 1.4m new jobs created. The unemployment rate was expected to fall from 6.0% in March to 5.8% in April. Prior to the release, the US 10yr yield was 1.57% and the S&P futures were +9.
BLS said the NFP was 266k and UE was 6.1%. These are massive misses. Stocks bounced around from negative to positive, but bond yields dropped 8bps immediately. But it gets worse, March NFP was revised down from 916K to 770k. The table below shows…
Why Democrats will move on it
Key Takeaway: It is a logical political path, prepare for it now
Where we’ve been
After the passage of the $1.9 trillion stimulus bill, the Biden administration is moving on to the other items on their legislative agenda. As we’ve been writing and speaking over the last 18 months, this is an ambitious list of spending and tax programs to drive Democrats’ agenda. The list includes the environment ($1.7T), infrastructure ($1.3T), healthcare ($650B) and affordable housing ($640B).
While Democrats have a unified government with the House, the Senate and the presidency, they have a…
A Hint of Better Times Ahead
What’s astonishing about this data is how strong job creation was during a February cold snap that forced people to stay inside and a devastating storm which plunged Texas into the dark.
379,000 more workers found work in February, quite a surprise from the 225,000 expected.
But I’m Still An Apocaloptimist
My apologies: There is no returning to a pre-pandemic economic “normal”
We have seen the best our technology can produce when Moderna and Pfizer announced their vaccines at the end of December. The speed and efficacy are breathtaking and miraculous. As of this week, the US has given out over 57 million doses and globally it’s 186 million. At this rate, the Biden administration is easily meeting their goal of 100 million doses in 100 days as the nation is immunizing 1.69 million per day according to Bloomberg’s Covid-19 Vaccine Tracker. …
Andrew B. Busch is the former 1st Chief Market Intelligence Officer for the US government.