The Powell question — Infrastructure deal ahead? — Pandemic reshapes career goals

From: POLITICO's Morning Money - Tuesday Jun 22,2021 12:05 pm

Jun 22, 2021

Presented by Accountable.US

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Quick Fix

The Powell question — Fed Chair Jerome Powell got his first Oval Office face time with President Biden on Monday and he testifies before a House select committee today on the Covid-19 response. All of this comes ahead of a decision the White House has to make later this year on whether to re-nominate Powell for another term as chair of the world’s most important financial institution.

Conventional wisdom — which may well be correct — holds that re-nominating Powell will be a no-brainer for the White House. He is completely aligned with West Wing views on inflation and is largely dismissive of the “dot plot” projections of rate hikes next year. He’s also a fantastically nice guy. And Biden is not known for ditching people like Powell.

But but but … The renomination is not a lock. The left will push for more diversity and a non-Republican in the big chair. And should inflation really take hold and become an economic and political problem for the White House, Powell would be the natural fall guy.

MM has had several Wall Street folks reach out to suggest that the central bank chair could be in trouble late this year if all the “transitory” talk on price increases proves incorrect and inflation becomes a headache for the White House. It would be pretty rich to blame Powell given the administration’s own big spending plans but that doesn’t mean he couldn’t take the blame.

GOOD TUESDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

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Driving the Day

President Biden meets with FEMA Administrator Deanne Criswell and Homeland Security Advisor and Deputy National Security Advisor Dr. Elizabeth Sherwood-Randall to discuss FEMA’s ongoing efforts to respond to and prepare for extreme weather events …

House Select Subcommittee on Covid-19 holds a hearing at 2:00 p.m. with Powell on “Lessons Learned: The Federal Reserve's Response to the Coronavirus Pandemic” … Senate Banking has a nominations hearing at 10:00 a.m. for Brian Eddie Nelson to be Treasury undersecretary for terrorism and financial crimes; and Elizabeth Rosenberg to be assistant Treasury secretary for terrorist financing.

ALSO TODAY: BRT FLY IN — Per the BRT: “[Today] and Wednesday, Business Roundtable is convening a virtual Fly-In with more than 30 tax directors (Chief Tax Offices, Global Heads of Tax) of major U.S.-headquartered companies to discuss the real-life impacts that corporate tax proposals (rate and international) under consideration by policymakers would have on their business operations.

BIPARTISAN INFRASTRUCTURE DEAL … COULD HAPPEN?? — Via Burgess Everett and Marianne LeVine: “The Senate’s bipartisan group is racing to finalize an accord on infrastructure, hoping to clinch a deal totaling $579 billion in new spending as soon as this week.

"The group of 21 senators, roughly evenly split between both parties, is sketching out its spending plan in far greater detail than previously reported, with a four-page breakdown circulating Capitol Hill and reviewed by POLITICO.

“But the effort is still a work in progress … Details on how to pay for the proposal remain elusive, though the group has identified funding mechanisms for legislation that could total more than $1 trillion when new spending is included with the current transportation baseline. The White House has rejected proposals to gradually increase the gas tax alongside inflation as well as charge fees for electric vehicles.”

FIRST LOOK — Via our Zachary Warmbrodt: Former CFTC Chairs Timothy Massad and J. Christopher Giancarlo are joining a new advisory board formed by the Financial Technology Association, in the latest example of fintech startups gearing up for increased Washington scrutiny.

The new board will also include Ben McAdams, a former Democratic lawmaker who served on the House Financial Services Committee, and Richard Berner, who was the first director of the Office of Financial Research during the Obama administration. They’ll advise the trade group’s members, which include Betterment, Plaid and Ribbit Capital.

SURVEY: PANDEMIC LEAVES MANY RECONSIDERING CAREER GOALS — Via Aubree: The Covid-19 pandemic has changed how we approach many aspects of our daily lives, from health and safety to relationships and work. According to the latest “Pulse of the American Worker” from Prudential, nearly one in four workers are planning to look for a new job post-pandemic — with half citing compensation as the number one reason, followed by work/life balance challenges at 38 percent and lack of growth opportunities at 34 percent.

Additionally, half of all workers say that the pandemic has made them reevaluate their career goals and if given the chance, 53 percent they would actually retrain in a different field or industry.

With 46 percent of workers saying the pandemic has changed what it takes to get their jobs done, skills training is at the forefront. Eight in 10 workers support Congressional action to encourage employers to offer job training to their employees, and more than three-quarters of workers support allowing workers to use federal education grants for short-term job training programs.

COMPANIES BINGE ON TECH AND EQUIPMENT — Our Victoria Guida: “U.S. companies are pumping money into new technology equipment at a blistering pace, fueling hopes that … Biden’s plans to fire up the economy will lead to stronger wages and higher longer-term growth.

“The jump in corporate investment in computers and other information technology is the biggest the U.S. has seen in decades — and not just in comparison to what was spent during the pandemic recession. In the first three months of the year, investment was up nearly a quarter from the same period in 2019, when the economy was humming along in the year before the coronavirus struck.”

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Markets

WALL STREET ENDS SHARPLY HIGHER — Reuters’ Devik Jain and Noel Randewich: “Wall Street rallied on Monday, with the Dow completing its strongest session in over three months as investors piled back in to energy and other sectors expected to outperform as the economy rebounds from the pandemic.

“The small-cap Russell 2000 and the Dow Jones Transports Average, considered a barometer of economic health, both jumped about 2 percent. The S&P 500 value index, which includes banks, energy and other economically sensitive sectors and has led gains in U.S. equities so far this year, surged 1.9 percent, outperforming a 0.9 percent rise in the growth index.”

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Fly Around

POWELL: ECONOMY GROWING RAPIDLY, INFLATION UP — AP’s Christopher Rugaber: “The economy is growing at a healthy clip, and that has accelerated inflation, Federal Reserve Chair Jerome Powell says in written testimony to be delivered Tuesday at a congressional oversight hearing.

“Still, Powell reiterated his view that inflation’s recent jump to a 13-year high would prove temporary. ‘Inflation has increased notably in recent months,’ Powell said in the prepared remarks. He blamed the rise on several factors, including sharp price declines last year at the onset of the pandemic, which make inflation figures now, compared with a year ago, look much larger.”

FED’S WILLIAMS EMPHASIZES FLEXIBILITY IN INFLATION GOAL — NYT’s Jeanna Smialek: “John C. Williams, president of the Federal Reserve Bank of New York, said on Monday that he expects the recent acceleration in price gains to prove temporary, and offered an optimistic view of the nation’s economic outlook as widespread vaccines and business reopenings drive growth.

“Still, Mr. Williams cautioned ‘the data and conditions have not progressed enough’ for the Fed’s policymaking committee ‘to shift its monetary policy stance of strong support for the economic recovery.’ Mr. Williams was delivering remarks before the Midsize Bank Coalition of America.”

Kaplan, Dalio and Bullard echoed calls for the Fed’s pivot toward inflation — Bloomberg’s Christopher Condon: “The Federal Reserve’s policy outlook needs to be more attuned to inflation risks, according to a number of influential voices who spoke Monday. Dallas Fed President Robert Kaplan said he favors starting the process of tapering the central bank’s ongoing bond purchases ‘sooner rather than later,’ while his counterpart from St. Louis, James Bullard called it ‘appropriate’ that policy makers last week opened the taper debate.”

SEC WANTS MORE CLIMATE DISCLOSURES — WSJ’s Dave Michaels: “The Securities and Exchange Commission is preparing to require public companies to disclose more information about how they respond to threats linked to climate change—and businesses are gearing up for a fight.

“The SEC’s new chairman, Biden administration appointee Gary Gensler, has said climate-related disclosure is a top priority, and President Biden met Monday with Mr. Gensler, Treasury Secretary Janet Yellen, and other top financial regulators to discuss the issue. The SEC has already sought industry input, much of which arrived last week, for a rule proposal that could be issued by October.”

SCOTUS GIVES GOLDMAN A DO-OVER IN SECURITIES FRAUD SUIT — NYT’s Adam Liptak: “The Supreme Court on Monday gave Goldman Sachs another chance to try to persuade an appeals court that it should not be liable to investors who said they had lost as much as $13 billion as a consequence of what they called false statements about the investment bank’s sales of complex debt instruments before the 2008 financial crisis.

“The investors argued that the statements were at odds with what they said were conflicts of interest at the bank, which they accused of packaging and selling securities intended to fail even as it and its favored clients bet against them. Goldman has denied deceiving investors.”

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For Your Radar

TRUE LENDER RULE EXAMINED — Brookings has a new blog by CRL President Mike Calhoun that “calls for the House to vote to nix the rule: ‘Passing this measure is needed to protect consumers and to preserve long-standing precedent permitting states to enforce their laws.”

TRANSITIONS — Alex Gilden is joining Accenture to consult in its applied intelligence practice. He previously was economic adviser to the chief economist at API. … Jarrod Loadholt is joining Ice Miller as a partner. He previously was director of legislative and regulatory affairs at Credit Karma.

A message from Accountable.US:

Dear Corporate America:

(a) protect voting rights
(b) remain a member of the U.S. Chamber of Commerce

Pick one. You can’t do both.

Corporate America has pledged to speak up and protect Americans’ sacred right to vote … but many remain members of the U.S. Chamber of Commerce, a group that has poured millions of dollars into voter suppression efforts and backing anti-democratic actions. You can’t protect democracy and support the U.S. Chamber.

It’s time to live your values and #DropTheUSChamber. TAKE ACTION: dropthechamber.org