Oh my, Omicron

From: POLITICO's Morning Money - Tuesday Nov 30,2021 01:02 pm

Nov 30, 2021

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Quick Fix

OH MY, OMICRON — Get ready for the new coronavirus variant to feature prominently at today’s hearing with Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen. Powell will tell lawmakers that Omicron could slow the recovery in the U.S. job market and prolong supply chain disruptions that have fueled price spikes. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” he says in his opening statement.

He also says he expects the economy to grow about 5 percent this year, which would still be the fastest expansion in decades, but it’s a drop from the 5.9 percent pace projected by the Fed just two months ago.

Yellen’s prepared testimony says the administration is following the news on Omicron closely (President Joe Biden on Monday said it was “a cause for concern, not a cause for panic”). “We’re still waiting for more data, but what remains true is that our best protection against the virus is the vaccine,” Yellen will tell lawmakers.

Debt limit redux — Just like last quarter’s hearing, the debt limit will be a prominent feature this time around, with the government’s capacity to borrow to pay its bills set to run out soon. Yellen has set Dec. 15 as the deadline for raising the debt ceiling, and she warns in her testimony that if the government is unable to make any of its payments, it would “eviscerate our current recovery.”

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OK, WHAT’S THE DEAL WITH THE OCC? Your guest MM host talked to several senators Monday evening about Comptroller of the Currency nominee Saule Omarova, particularly in light of reporting last week that some moderate Democrats had informed the White House and Senate Banking Chair Sherrod Brown that they couldn’t support her. The upshot? The lawmakers themselves won’t say that they’ve made up their minds. But they really don’t like her proposal that all bank deposits should be housed at the Fed.

Sen. Mark Kelly (Ariz.) said he’d told the White House that he had concerns about her. “I had a very difficult time with the nomination when you look at what she feels the role of the Federal Reserve should be, and also how they would be working with community banks,” he told MM. He wouldn’t say whether he opposed her, but when asked if she couldn’t be confirmed, he responded: “That looks like that might be the case.”

Sen. John Hickenlooper (Colo.) said he hadn’t formally said he was against her, but he too acknowledged “serious concerns.” “I’ve talked to Senator Brown. She came, and we talked to her at some length, and we’re still having discussions.”

Sen. Mark Warner (Va.) was particularly noncommittal, saying he was waiting for her written responses to some of his questions after the hearing: “I still have some outstanding questions for the record.”

The office of Sen. Jon Tester (Mont.), who was first to voice his misgivings, declined to comment on his communications with the White House.

Meanwhile, Sen. Raphael Warnock (Ga.) , whose hesitancy was previously reported by MM, said he was still “taking a look.” Asked if he opposed her, he added: “We’ll see.”

Omarova will presumably need every last Democrat in what has become a bitter and contentious nomination fight, so a “no” from any of these lawmakers would sink her. It seems like that’s what will happen, but Brown hasn’t given any indication yet that he’s giving up. Nor has the White House, which is still putting out a message of strong support in the wake of some unsavory suggestions by Republicans that the Soviet-born academic is a communist.

“She has been treated unfairly since her nomination with unacceptable red baiting from Republicans like it’s the McCarthy era,” a White House official said. “As you saw last week at her hearing, attacks from the GOP fall flat in the face of the facts, but one thing is clear – big banks are running scared because of this nomination.”

IT’S TUESDAY — Kate Davidson will be back tomorrow! Send any tips to her at kdavidson@politico.com or @KateDavidson, and to Aubree Eliza Weaver at aweaver@politico.com or @AubreeEWeaver. And you can always reach me at vguida@politico.com.

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Driving the Day

10 a.m. Powell and Yellen testify at Senate Banking … 10:30 a.m. FDIC Chair Jelena McWilliams holds a press conference on quarterly banking industry data

AMERICANS SET TO GET RELIEF AT THE PUMP — Bloomberg’s Julia Fanzeres: “American drivers are set for a slight relief from stubbornly high gasoline prices at the pump as concerns over the new omicron coronavirus strain are cooling oil’s rally.

“The national average retail price that reached a seven-year high of $3.42 a gallon earlier this month could drop to as low as $3.15 by Christmas, said Patrick DeHaan, head of petroleum analysis at Gas Buddy. So far, the average has only come down by 3 cents in three weeks, according to AAA data. ‘For now, the only direction I see in the national average is down,’ said DeHaan.”

BIDEN SAYS STORES WILL BE STOCKED FOR CHRISTMAS — NYT’s Jim Tankersley and Ana Swanson: “President Biden told executives from some of the nation’s largest retailers on Monday that his administration was committed to partnering with them to untangle supply chains and ensure that American consumers can find everything they want this holiday season, as a surge in shopping tests an already strained global delivery system.

“Mr. Biden had planned to speak following his supply-chain meeting with top executives from large grocers, like Food Lion and Kroger, and a range of retailers, like Best Buy and Etsy. But administration officials abruptly canceled his White House remarks less than a half-hour before Mr. Biden had been scheduled to speak, saying the president wanted to spend more time in conversation with the executives. His remarks were rescheduled for Wednesday.”

NO APPETITE FOR A SHUTDOWN — Our Caitlin Emma and Jennifer Scholtes: “Democrats are preparing a temporary funding fix to keep the government open into the new year, with federal cash set to run out — again — at midnight on Friday.

“The House could vote as early as Wednesday to avert a shutdown, sending the stopgap measure to the Senate. While leaders have yet to settle on an end date, they are mulling mid to late January.”

FRAGMENTED REACTIONS TO OMICRON — NYT’s Jason Horowitz: “In a wrenchingly familiar cycle of tracking first cases, pointing fingers and banning travel, nations worldwide reacted Monday to the Omicron variant of the coronavirus in the piecemeal fashion that has defined — and hobbled — the pandemic response all along.

“As here-we-go-again fear and resignation gripped much of the world, the World Health Organization warned that the risk posed by the heavily mutated variant was “very high.” But operating once again in a vacuum of evidence, governments chose approaches that differed between continents, between neighboring countries, and even between cities within those countries.”

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FTC SEEKS INFO FROM RETAILERS, FOOD COMPANIES FOR SUPPLY CHAIN STUDY — Our Leah Nylen: “The Federal Trade Commission subpoenaed information from nine major retailers and food supply companies Monday as part of a study into supply chain disruptions and their impact on consumers.

“The agency voted 4-0 to request information and documents from retailers Walmart, Amazon and Kroger; wholesalers Associated Wholesale Grocers and C&S Wholesale; foodservice distributor McLane Company; and food industry giants Procter & Gamble, Tyson Foods and Kraft Heinz.”

AMAZON ORDERED TO HOLD NEW UNION ELECTION IN ALABAMA — Our Rebecca Rainey: “A federal labor relations official has ordered a second union election at an Amazon facility in Bessemer, Ala., after finding that the tech giant interfered and violated workers’ labor rights during a high-profile, but unsuccessful, union drive earlier this year.

“The decision by National Labor Relations Board Region 10 Director Lisa Henderson largely rests on the e-commerce giant’s decision to install a mailbox in front of the fulfillment center to collect employees’ mail-in ballots for the union election.”

BECOME A GLOBAL INSIDER: The world is more connected than ever. It has never been more essential to identify, unpack and analyze important news, trends and decisions shaping our future — and we’ve got you covered! Every Monday, Wednesday and Friday, Global Insider author Ryan Heath navigates the global news maze and connects you to power players and events changing our world. Don’t miss out on this influential global community. Subscribe now.

DORSEY LEAVING TWITTER, BUT STORMS WON’T END — Our Emily Birnbaum and Alexandra Levine: “The partisan fury that consumed Twitter during much of Jack Dorsey’s tenure as CEO immediately transferred to his hand-picked successor on Monday — especially from the right.

“Conservative activists and lawmakers heaped attacks on new CEO Parag Agrawal for a caustic 11-year-old tweet condemning anti-Muslim bigotry and some of his past remarks about free speech. Democratic lawmakers, meanwhile, said they’re still looking for the company to clean up its handling of ills such as disinformation, hate speech and invasions of privacy.”

MOVES IN TREASURY YIELDS MUTED AMID OMICRON FEARS — “Treasuries ended Monday near their highs for the session after the market failed to really make a dent in the haven rally from Friday that was driven by concern over the new omicron variant of the coronavirus.

“Front-end yields actually closed out the day slightly lower than where they ended Friday’s holiday-abbreviated session, while rates on longer-term securities were only a few basis points higher on the day.”

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