And the winner is… Jerome Powell again!
This morning, the Biden administration announced it will nominate Powell once again for another term as the Federal Reserve Chairman.
Stocks surged higher on the news as investors believe Powell will continue to support an easy policy for interest rates. Markets tend to do well during times of stability, so keeping the same leadership structure at the Fed will make it easier for investors to handicap the Fed’s moves going forward.
That said, we’re still in a very dynamic period.
Inflation is rising, covid cases are surging in Europe, retirees are worried about their savings, and the stock market is starting to look a bit frothy.
We’ll cover all of that — along with with a 90-year-old’s skydiving passion — in today’s links!
Biden Nominates Powell Again
- WSJ: Jerome Powell to be nominated for second term as Fed Chairman.
- Biden says “we need stability and independence at the Federal Reserve.”
- Powell was named to the Fed’s board 10 years ago by President Obama.
- Powell has signaled that the Fed will leave rates lower for longer.
- MW: Fed should “tack in a more hawkish direction” Bullard says.
- Fed could speed up the taper to $30 billion per month.
- Purchases would be finished by the end of the first quarter.
- Current rate of taper is $15 billion per month with end of purchases in June.
- Federal Reserve: Financial Stability Report.
- Asset valuations: Prices of risky assets have increased.
- Borrowing: Debt owed by businesses at a high level.
- Leverage: Banks are well capitalized, hedge fund leverage elevated.
- Funding risk: Bank funding risk remains low.
Inflation is Worse Than You Thought!
- Visual Capitalist: Which categories hit hardest by inflation?
- The CPI overlooks some key areas of very high inflation.
- Beef, hotels, natural gas, and vehicles all over 20%
- Gasoline prices up 51% over the last year.
- Bloomberg: Soaring fuel prices stoke rush to stockpile firewood.
- There isn’t a set index for firewood pricing.
- But local firewood companies say prices are up 33% from last year.
- Heating costs are expected to be higher – regardless of fuel source.
- Reuters: Oil dives 3% to below $80 per barrel.
- Oil fell last week – first 4-week slide since March 2020.
- Surging Covid cases in Europe threaten to slow economic recovery.
- US WTI crude oil fell to $76.10 on Friday.
Stocks, Crypto and the Economy – What’s Ahead?
- WSJ: IPOs jumping higher. How long will it last?
- More than 900 companies have gone public, raising $300 billion.
- The number of publicly listed US companies is now above 4,000.
- Bloomberg: IPOs raise $600 billion — best year on record.
- Gobal IPOs smashed previous record, raising more than $600 billion.
- 2,850 businesses and SPACs have come to market.
- Rivian, China Telecom, InPost SA are some of the biggest names.
- WSJ: Infrastructure law seen having small positive impact on growth.
- Law includes $550 billion on top of already planned spending for decade.
- The infrastructure bill should increase labor productivity in the long-term.
- Benefits can take years to materialize.
- CoinDesk: Don’t forget, Bitcoin can still experience severe drawdowns.
- Rising leverage in crypto market could be fuel for further selloff.
- Bitcoin’s long-term uptrend line should provide support around $53k.
- Bitcoin pulled back about 13% from all-time highs near $69k.
The Best and Worst of Retirement
- WSJ: How to jump out of an airplane — at age 90.
- Pat Moorehead celebrated his 90th birthday jumping out of a plane.
- With nearly 6,700 jumps on his resume, Pat is a skydiving legend.
- He’ll jump 9 times on his birthday, an inspiration to so many of us.
- Magnify Money: 46% of Americans think they’ll retire in debt.
- Many worry social security benefits could run out.
- The prospect of. stock market crash is another major concern.
- Top retirement destinations include Florida, California & Costa Rica.