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Fed Chair Pick Expected This Week; Clarida, Waller Discuss Tapering More Quickly; Why Japan Appears Immune to Inflation Surge, So Far

11/22/2021 | 09:05am EDT

Good day. President Biden faces one of the most important economic policy decisions of his presidency, which is expected this week, when he decides who should lead the Federal Reserve after Chairman Jerome Powell's term expires in February. On Friday, two liberal Democratic senators said they would oppose a second term for Mr. Powell because they want the central bank to play a more aggressive role addressing climate change. Meanwhile, two Fed governors have opened the door to the possibility that the central bank could move more swiftly to end its asset-buying stimulus effort. And as inflation has surged in much of the world, Japan so far seems immune to price pressures.

Now on to today's news and analysis.

Top News

Biden Nears Endgame on Fed Chair Decision

President Biden has signaled he is looking for continuity in Fed policy because he is considering whether to reappoint Jerome Powell for a second four-year term as chairman or elevate governor Lael Brainard, who has strongly backed the central bank's interest-rate policy over the past four years. Instead, the president's choice may turn on politics rather than economics, because Mr. Powell's candidacy has divided progressive Democrats and led to competing views inside the Biden administration.

Two Democrats Oppose Powell for Fed Chair, Citing Climate Change

Sens. Jeff Merkley (D., Ore.) and Sheldon Whitehouse (D., R.I.) issued a statement calling on President Biden to appoint a Fed chair "who will ensure the Fed...shares the administration's view that fighting climate change is the responsibility of every policy maker. That person is not Jerome Powell."

Two Fed Officials Weigh Prospect of Speeding Bond-Buying Taper

"The economy is in a very strong position" and "there is upside risk to inflation," Fed Vice Chairman Richard Clarida said Friday, adding that, depending on incoming data, the central bank could discuss increasing the pace of its pullback in bond buying at its December policy meeting. Also Friday, Fed governor Christopher Waller said: "For my part the rapid improvement in the labor market and the deteriorating inflation data have pushed me towards favoring a faster pace of tapering and a more rapid removal of accommodation in 2022."

Clarida Warns Against Coordinated Global Monetary Policy

Federal Reserve Vice Chairman Richard Clarida signaled skepticism toward adopting coordinated interest-rate policies among major central banks at a conference on Friday.

U.S. Economy

Biden Aims to Close Gaps Among Lawmakers for Reconciliation Bill

The Biden administration is moving to close gaps between House and Senate Democrats on its $2 trillion education, healthcare and climate package, so it can finalize the bill that serves as the centerpiece of the president's agenda.

House Passes Social Spending and Climate Bill

What's in the Roughly $2 Trillion Build Back Better Bill

The Surprise Winners: Wall Street and Tobacco Companies

Tax Plan Inflames Democratic Debate in Senate Over Spending Bill

A Popular Tax Trick for Savers Is Eliminated in House Bill

IPOs Keep Jumping Higher. How Long Will the Ride Last?

Valuations are frothy, market debuts are splashy and everyone's got a SPAC. After decades, the roster of public companies is growing. That could mean big changes for business.

How the Pandemic Helped Fix the Retail Industry

The Covid-19 pandemic was supposed to deliver a knockout punch to department stores and specialty retailers. Instead, many of them are bouncing back healthier.

Nebraska Now Has the Lowest Unemployment Rate of Any State, Ever

Nebraska logged the lowest unemployment rate of any state on record in October, reflecting the acute labor shortages that have quickly swept across the nation amid an economic recovery that is without parallel. Nebraska's unemployment rate ticked down to 1.9% last month, well below the national jobless rate of 4.6% and the lowest for state records tracing back to 1976, Labor Department data show.

Key Developments Around the World

Why Japan Appears Immune to Global Inflation Surge, So Far

At a time when Americans and Europeans are wrestling with rising inflation, Japan shows how to keep consumer prices virtually flat . After decades of very low inflation, Japanese shoppers resist paying higher prices and businesses seldom try to lift them. Companies hoard cash and stint on investment, and keep the labor market rigid so workers can't easily move to growing businesses and get pay increases.

PBOC Holds Policy Rate Unchanged, but Cut Likely Coming, CE Says

China's central bank held its loan prime rate unchanged on Monday but it is likely to cut the rate before long, said Capital Economics. The People's Bank of China has appeared more willing to loosen policy in other ways lately, most notably its recent efforts to encourage banks to step up mortgage lending. "As economic strains continue to grow, there will be more pressure to relieve the financing strains of indebted borrowers," CE said in a note. Capital Economics expects the central bank to cut the LPR before the end of the year. (Dow Jones Newswires)

Turkey's Currency Crisis Raises Costs, Threatens Financial System

Turkey's currency crisis is driving up the cost of food, medicine and other essentials for average Turks, and poses a threat to the country's banks and large companies if the lira's slide isn't arrested, economists said.

Financial Regulation Roundup

Wall Street Fines Fall 18% in First Year of Biden Administration

The Securities and Exchange Commission obtained $3.9 billion in fines during its latest fiscal year, which ended in September. The SEC set a record for fines imposed through its civil enforcement actions in 2020, when the total surpassed $4.6 billion.

McKinsey Paying $18 Million to Settle Insider-Trading Controls Probe

McKinsey & Co. has agreed to pay $18 million to settle allegations that it didn't adequately guard against the risk of insider trading involving investments in companies for which the firm was also a consultant.

Tax Proposal Would Create Problems for Investors and Companies

A Democratic proposal to tie taxes for big companies more closely to their financial accounting could distort public financial disclosures, inject politics into accounting rule-making and complicate financial reporting for large companies, according to accounting and tax experts and investors.

Cross-Border Tax-Rate Gaps to Shrink as Democrats Advance Biden Agenda

Hackers Circle as Individual Investors Pour Cash Into Crypto

The crypto boom among mom-and-pop investors has led hackers to increasingly target small investors, according to cybersecurity experts, lawyers and law-enforcement officials.

Alex Murdaugh Indicted on 27 Counts of New Financial Crimes

Alex Murdaugh, the disgraced South Carolina lawyer who is facing charges of swindling his late housekeeper's sons out of millions of dollars in an insurance settlement, has been indicted on new financial-crimes charges.

Pension Cash Dwindles, Risking Liquidity Crunch

Bigger private-market bets, inflation fears and a surge of retirees are putting public retirement funds at risk of a cash crunch that would force them to sell assets at losses to pay pension checks.

Forward Guidance

Monday (all times ET)

9 a.m.: Bank of Israel releases policy statement

10 a.m.: National Association of Realtors releases October U.S. existing-home sales

12:30 p.m.: European Central Bank's de Guindos gives speech at online ceremony organised by Bank of Spain

Tuesday

Time N/A: Central Bank of Nigeria releases policy statement

6 a.m.: Bank of England's Haskel speaks on inflation at Adam Smith Business School

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

Commentary

Modern Monetary Theory Isn't the Future. It's Here Now.

The infrastructure act signed into law last week marked a defeat for the faction of progressive economists in ascendancy in 2020, WSJ's James Mackintosh writes. For these advocates of modern monetary theory, the insistence by both political parties that all the $550 billion of new spending be matched by offsetting revenue, known as "payfors," goes against their belief that money is merely a tool for government. This is a temporary rhetorical setback. The reality is that MMT's ideas have insinuated themselves deep into government, central banking and even Wall Street -- and the infrastructure act is in fact deficit-financed anyway.

Basis Points

Global supply-chain woes are beginning to recede, but shipping, manufacturing and retail executives say that they don't expect a return to more-normal operations until next year and that cargo will continue to be delayed if Covid-19 outbreaks disrupt key distribution hubs.

California's Inland Empire tied the Phoenix region for 2020's biggest gain in households from migration nationwide, taking in newcomers from pricier locales

Services activity in the middle of the U.S. stayed positive in November, albeit below October's level, while expectations for future activity remained upbeat, according to the Kansas City Fed. The Tenth District Services Survey's composite index, a weighted average of indexes covering revenue/sales, employment and inventory, came in at 14 for November, down from 18 in October but up from 13 in September. (Dow Jones Newswires)

(END) Dow Jones Newswires

11-22-21 0904ET

Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.07% 0.70465 Delayed Quote.-4.16%
BANK OF CHINA LIMITED 1.32% 3.06 Delayed Quote.7.47%
BRITISH POUND / US DOLLAR (GBP/USD) 0.12% 1.24778 Delayed Quote.-8.76%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.09% 0.78029 Delayed Quote.-1.91%
EURO / US DOLLAR (EUR/USD) -0.19% 1.05594 Delayed Quote.-7.89%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.28% 0.012884 Delayed Quote.-4.30%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.20% 0.63957 Delayed Quote.-7.97%
PUBLIC FINANCIAL HOLDINGS LIMITED 0.42% 2.41 Delayed Quote.-7.69%
S&P 500 -0.36% 3885.89 Real-time Quote.-18.16%
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