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Biden Backs Powell for Second Term at Federal Reserve's Helm, Will Advance Brainard to Vice Chair

11/23/2021 | 09:23am EST

Good day. President Biden said he would nominate Federal Reserve Chairman Jerome Powell to a second term leading the central bank, capping months of behind-the-scenes talks with senior aides over one of the world's most important economic policy posts. The decision reflected a desire by Mr. Biden to maintain stability at the Fed amid public concerns about high prices for everything from groceries to fuel, administration officials said. Several lawmakers of both parties expressed support for Mr. Powell on Monday, while Sen. Elizabeth Warren reiterated her opposition to his nomination. Two other progressive Senate Democrats also said they would oppose Mr. Powell's nomination. Mr. Biden said he would also nominate Fed governor Lael Brainard as vice chairwoman of the central bank's board of governors.

Now on to today's news and analysis.

Top News

Biden to Nominate Powell for Second Term as Federal Reserve Chair

President Biden said he will nominate Federal Reserve Chairman Jerome Powell to a second term leading the central bank, opting for continuity in U.S. economic policy despite pushback from some Democrats who wanted someone tougher on bank regulations and climate change.

Mr. Biden said he will also nominate Fed governor Lael Brainard as vice chairwoman of the central bank's board of governors. Prominent liberals like Sen. Elizabeth Warren (D., Mass.) had warned the president against picking Mr. Powell, and progressive groups mounted a last-ditch campaign to pressure the president to tap Ms. Brainard for the top job.

Powell Nomination for Second Fed Term Draws Bipartisan Support

The top-ranking Republican on the Senate Banking Committee and several GOP colleagues backed President Biden's planned nomination of Jerome Powell for a second term as Fed leader, paving the way for his confirmation despite some Democratic opposition.

Analysis: Powell Will Face a Very Different Economy in a Second Term

Jerome Powell has arguably been the most dovish chairman in the Fed's modern history, giving priority to full employment in an era in which inflation seemed extinct. In his second term he may have to give priority to inflation at the risk of sacrificing jobs, Greg Ip writes.

Powell Is Here to Stay. Is Inflation?

Why Do Prices Keep Going Up and What's the Cause of Inflation?

Fed Picks Leave Open Questions on How it Will Regulate Wall Street

President Biden's decision to reappoint Jerome Powell as Federal Reserve chairman and elevate governor Lael Brainard signals continuity on monetary policy but leaves open questions on the direction the central bank will take in regulating Wall Street.

Biden's Chance to Remake the Federal Reserve's Board of Governors

Derby's Take: Fed Balance Sheet Plans Could Affect Huge Reverse Repo Use

By Michael S. Derby

It may be that financial markets are seeing something approaching the high water mark for the Federal Reserve's reverse repurchase agreement facility.

The Fed's so-called reserve repos take in cash from money-market funds and other eligible firms, and over the course of 2021 have seen explosive growth, rising from nearly no demand in the spring to massive inflows. On Monday, financial firms flooded nearly $1.6 trillion into the central bank tool, which compares with a Fed balance sheet standing at $8.6 trillion. Read more.

U.S. Economy

U.S. Home Sales on Track for Biggest Year in 15 Years

Existing-home sales rose 0.8% in October from the prior month to a seasonally adjusted annual rate of 6.34 million, the highest pace since January, the National Association of Realtors said. October sales fell 5.8% from a year earlier.

Minimum Wage for Federal Contractors to Rise to $15 an Hour

Starting Jan. 30, all new contracts or contract extensions will require the higher minimum wage, which will be indexed to inflation, the Labor Department said in announcing it had finalized a rule President Biden had called for.

Holidays Are Looking Less Scary for FedEx, UPS and Postal Service

Holiday shoppers are giving package carriers an early gift. FedEx Corp., United Parcel Service Inc. and the U.S. Postal Service may wind up having a much easier time dealing with the holiday crunch than some forecasters predicted.

Key Developments Around the World

Turkish Lira Tumbles After Erdogan Defends Rate Cuts

Turkey's currency crisis intensified after President Recep Tayyip Erdogan defended an unorthodox policy of cutting interest rates to fight soaring inflation.

Austria's Return to Covid-19 Lockdown Is Met With Anger, Resignation

For at least 20 days, residents will have to stay home and all nonessential shops will close, and the restrictions could be extended if the pressure on hospitals remains acute, with police saying they would enforce the lockdown.

El Salvador to Issue 'Bitcoin Bond' in 2022

El Salvador is planning to issue next year $1 billion in U.S. dollar-denominated 10-year bonds backed by bitcoin, the latest effort by the economically stressed Central American nation to attract crypto capital.

Bank of Korea Expected to Raise Base Rate This Week

The Bank of Korea is expected to raise its base rate at Thursday's policy meeting, as it dials back stimulus brought on by the pandemic and seeks to curb inflation and household debt fueled by low borrowing costs, a poll by WSJ shows. All 34 analysts surveyed in the poll expect the central bank to raise the base rate by 25 basis points to 1% after the last rate increase in August. The analysts expect further increases next year, as the recovery continues and inflation accelerates. (Dow Jones Newswires)

Financial Regulation Roundup

AmEx Pitched Business Customers a Tax Break That Doesn't Add Up

American Express Co. salespeople laid out a strategy for businesses to use AmEx to pay employees and suppliers, so they could earn rewards to convert into untaxed cash and deduct transaction fees for tax purposes.

Life Insurers Use Riskier Assets to Back Consumers' Policies

U.S. life insurers are backing Americans' policies with bigger slugs of riskier, higher-yielding investments. Holdings of real estate, below-investment-grade bonds, mortgage loans, private equity, hedge funds, limited partnerships and privately placed debt increased 39% from 2015 to 2020.

Forward Guidance

Tuesday (all times ET)

8:30 a.m.: U.S. Commerce Department releases October durable-goods data

10 a.m.: Bank of England's Bailey, Cunliffe speak at Economic Affairs Committee parliamentary hearing on central bank digital currencies; U.S. Commerce Department releases October new-home sales

1 p.m.: Bank of Canada's Beaudry speaks on risks to financial system stability to Ontario Securities Commission

1:40 p.m.: European Central Bank's de Guindos speaks at event in Madrid

8 p.m.: Reserve Bank of New Zealand releases policy statement

Wednesday

5:10 a.m.: European Central Bank's Panetta gives speech at conference in Paris

8:30 a.m.: U.S. Commerce Department releases second estimate of third-quarter GDP

10 a.m.: University of Michigan releases final November U.S. consumer sentiment; U.S. Commerce Department releases October personal income and outlays

11 a.m.: European Central Bank's Schnabel speaks at University of Sofia event

2 p.m.: U.S. Federal Reserve releases Nov. 2-3 meeting minutes

Commentary

Today's Shortages Could Soon Become Tomorrow's Gluts

In the throes of the sticker shock many Americans have been experiencing lately, it is hard to remember an oft-repeated lesson: Shortages can suddenly turn into gluts, Justin Lahart writes.

Chinese Stimulus Goes Green

Over the past decade or so, Chinese stimulus efforts have tended to feature housing and steel as the main course, with green infrastructure as a side, but now Beijing appears to be eyeing greens for the main, Nathaniel Taplin writes.

A Global Carbon Price Is a Mirage

Anyone who expects a global agreement to lead to a global carbon price -- often touted as the most financially efficient way to decarbonize the global economy -- is misreading this essentially political market, Rochelle Toplensky writes.

Basis Points

The U.S. economy gained momentum in October following sluggish growth in the last few months, according to the Federal Reserve Bank of Chicago, which said its Chicago Fed National Activity Index rose from minus 0.18 in September to 0.76 last month, topping the 0.17 consensus forecast from economists polled by FactSet. (Dow Jones Newswires)

Consumer confidence in the eurozone fell in November for the second consecutive month as rising Covid-19 cases and high energy prices dented consumers' moods, the European Commission said. It noted its measure of confidence in the single-currency area decreased from minus 4.8 in October to minus 6.8, the lowest level since April. The reading misses the minus 5.5 consensus forecast of economists polled by The Wall Street Journal. (DJN)

Brazilian economists expect the country's 12-month inflation rate to end this year higher than 10%, according to the Central Bank of Brazil's weekly survey. The median forecast by 137 economists was for Brazil's main measure of consumer prices to be at 10.12% in December, up from last week's forecast of 9.77%, according to the survey. It was the 33rd consecutive week in which the forecast rose, and the first time this year it topped 10%. (DJN)

Mexico received $24.8 billion in foreign direct investment in the first nine months of this year, 45% of it in manufacturing industries and 14% in mining, the Economy Ministry said. The U.S. was the source of half the investment in the January-September period, followed by Spain with 11%. Updated FDI for the same period a year earlier was $25.3 billion. (DJN)

(END) Dow Jones Newswires

11-23-21 0923ET

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