The Finance 202: Biden taps diverse economic team with a focus on workers

Several who are set to become top advisers share a focus on putting workers first as they prepare to inherit stewardship of the economic crisis. Those lined up for senior economic posts include: Neera Tanden to lead the Office of Management and Budget. The chief executive of the left-leaning Center […]

Several who are set to become top advisers share a focus on putting workers first as they prepare to inherit stewardship of the economic crisis.

Those lined up for senior economic posts include:

  • Neera Tanden to lead the Office of Management and Budget. The chief executive of the left-leaning Center for American Progress helped craft the Affordable Care Act as an adviser in the Obama administration. She would be the first woman of color to serve as budget director.
  • Brian Deese to lead the National Economic Council. Deese cut his teeth in the Obama administration, earning credit as the architect of the auto industry bailout and going on to serve as a deputy director of the NEC. His potential inclusion on Biden’s team has drawn criticism from some liberals, who point to his current role as a managing director at BlackRock, the investment management company.
  • Cecilia Rouse to chair the Council of Economic Advisers. The Princeton University labor economist, and dean of the Princeton School of Public and International Affairs, is an alum of both the Clinton and Obama administrations. She would be the first woman of color to head the White House’s internal economic think tank.
  • Adewale Adeyemo to serve as deputy treasury secretary. Adeyemo, who goes by “Wally,” emigrated to the United States from Nigeria as a child and would be the first Black person to fill the No. 2 post at the Treasury Department. Like Deese, he rose quickly in the Obama administration — becoming a senior international economic adviser — then joined BlackRock, where he did a stint as CEO Larry Fink’s chief of staff. Since last year, he has served as president of the Obama Foundation.
  • Jared Bernstein and Heather Boushey to round out the CEA’s leadership. Bernstein, who was then-Vice President Biden’s chief economist, is a senior fellow at the liberal Center on Budget and Policy Priorities. Boushey is president of the Washington Center for Equitable Growth, a group she co-founded to work on issues related to inequality.

Immediate reviews from an array of thinkers on the left were mostly positive.

From economist and Nobel laureate Paul Krugman:

From University of Michigan economist Justin Wolfers:

From University of Chicago economist Austan Goolsbee, a CEA chair under Obama:

While the team reflects the demographic range Biden has promised to deliver with his appointments, the people on it hew to a more or less shared vision of priorities for the economic recovery.

“In many ways, his team is unified by a commitment to running the economy hot — with strong growth and low unemployment — in order to drive up wages,” the New York Times’s Alan Rappeport and Jim Tankersley write. “And it is likely to signal an embrace of spending funds to help workers, businesses and local governments recover from the pandemic recession, regardless of the effect on the federal budget deficit.”

Jason Furman, the Harvard University economist and former CEA head under Obama, told the Times that Biden’s picks “show that he is quadrupling down on his commitment to working people and raising wages.” Including his selection of former Federal Reserve chair Janet Yellen to lead the Treasury Department, Furman argued Biden “has appointed four of the best labor market economists in the country to head the Treasury and the [CEA].” 

Tanden stands out as a potential lightning rod. 

The longtime Democratic hand has forged a no-holds-barred Twitter persona that has earned her foes among Republicans and the Bernie Sanders wing of the Democratic Party alike.

A spokesman for Sen. John Cornyn (R-Tex.) said she stands no chance of getting confirmed by the Senate:

Josh Holmes, former top aide to Senate Majority Leader Mitch McConnell (R-Ky.), was equally dismissive: 

Those takes are premised on Republicans holding at least one of the two Senate seats in Georgia that will decided by runoff elections on Jan. 5. If Democrats win both races, they will capture control of the chamber, with a 50-50 split and Vice President Kamala D. Harris able to cast a tie-breaking vote, giving Biden a wider berth to secure confirmations for his picks. 

Market movers

Moderna vaccine reaches another milestone as the company applies for FDA approval.

Moderna’s announcement seems poised to jolt post-holiday trading: “Moderna’s filing marks the fourth Monday in a row with good news about the vaccine effort and means the United States could have enough vaccine to treat 20 million people by year’s end, between doses of Moderna’s vaccine and those of another candidate that is about a week ahead from Pfizer and German firm BioNTech,” Carolyn Y. Johnson reports this morning.

“The Food and Drug Administration could authorize the vaccines for emergency use by mid to late December. ‘You don’t want to get ahead of yourself and claim any victories, but this has the makings of a very, very important positive impact on ending this outbreak,’ said Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases …  Both [Pfizer and Moderna] have said they would be ready to distribute a vaccine almost immediately after receiving a green light from the FDA.”

Investors weigh earnings outlook as stocks set records.

The Dow is on track for its best one-month performance in 33 years. “Futures tied to the Dow Jones Industrial Average ticked down 0.7% Monday, signaling that the blue-chips index will enter the final trading session of November down about 200 points,” the Wall Street Journal’s Joe Wallace reports. “The benchmark was up roughly 12.9% month-to-date by the end of Friday.”

Traders want to know whether companies can power the rally even further: “Analysts are projecting that earnings for S&P 500 companies will rise 23 percent next year after falling more than 15 percent this year due to the pandemic, according to IBES data from Refinitiv,” Reuters’s Caroline Valetkevitch reports.

“The S&P 500 is trading at 23 times expected earnings for the next four quarters, only slightly lower than its June peak of 25 times expected earnings — its highest in roughly two decades. Those multiples are well above the long-term average of about 15, based on Refinitiv’s data. The sharp run-up in U.S. shares since March against a backdrop of still-weak earnings has driven up valuations.”

  • Meanwhile, investors are piling into risky ETFs: “Leveraged and inverse exchange traded funds have raked in $16.3 billion through the first 10 months of the year, on pace to top 2008’s record haul of $16.7 billion, according to Morningstar. The funds use leverage to double or triple daily returns and sometimes offer investors a chance to profit off the inverse, or opposite, of an index’s move,” the Wall Street Journal’s Michael Wursthorn reports.

Tesla’s S&P debut will be unlike anything else: “Additions and subtractions to the S&P 500 are normally a ho-hum affair. … But no one has ever tried to add Tesla Inc., a $555 billion company prone to huge swings in price,” WSJ’s Michael Wursthorn and Gunjan Banerji report.

“To avoid missteps, S&P polled big investors on whether they would prefer adding Tesla’s weight all at once on Dec. 21 or split over two trading days in December — an unprecedented move for S&P. … The vote from many appears to be for the two-day option, partly because of Tesla’s size, along with the potential for elevated volatility in the stock market. … Tesla’s addition to the index is expected to be particularly challenging because the company will be the largest to ever join, and it is expected to make up at least 1 percent of the gauge.”

Coronavirus fallout

From the U.S.:

  • Health experts sound the alarm as they expect the surge to continue: “Anthony S. Fauci and other experts urged Americans to take aggressive action as the December holidays loom to mitigate the surge overwhelming hospitals across the country. As the number of coronavirus-related deaths per day rose to its highest point since April, Fauci and others highlighted the importance of complying with mask mandates and physical distancing,” Jacqueline Alemany reports.
  • Thanksgiving eve was the busiest air travel day of the pandemic: “It was the third time in one week that the Transportation Security Administration reported screening more than 1 million daily passengers — a milestone that airports have rarely seen since the pandemic slashed air travel in March,” Shannon McMahon reports.
  • Mall Santas will still see you: “Old Saint Nick will pose for photos from inside an acrylic snow globe in Richmond. He’ll be barricaded behind an eight-foot picture frame in Lakewood, Colo. And in Gruene, Tex., Cowboy Kringle, who wears red leather chaps and a cowboy hat, will keep socially distant by asking visitors to sit on a saddle positioned six feet away,” Abha Bhattarai reports.

From the corporate front:

  • Traditional Black Friday was a bust, but online sales skyrocketed: “Roughly half as many people visited stores on Black Friday as they did last year, according to research firms that track foot traffic. Meanwhile, online spending jumped 22 percent from a year ago, making it the second-best online shopping day ever measured by Adobe Analytics,” WSJ’s Sarah Nassauer and Suzanne Kapner report.
  • More restaurants are pushing back against shutdown orders: “Restaurants and trade groups have filed lawsuits against the bans and criticized policies that they say have made restaurants scapegoats for covid-19’s spread. Restaurant operators in Pennsylvania, New York City and Illinois have held rallies calling for dining rooms to stay open,” WSJ’s Heather Haddon and Julie Wernau report.
  • “Croods” release shows possible promise for Hollywood: “The animated movie is set to become the biggest domestic film debut during the pandemic, bringing in an estimated $9.7 million in North American weekend box office sales. … ‘This is far short of what a traditional Thanksgiving would generate in revenue, but it is actually a great result for the industry during the pandemic,’ Paul Dergarabedian, Comscore’s senior media analyst, said,” according to Bloomberg News’s Yueqi Yang.
  • Zoom investors look post-pandemic: Sales growth is expected to top 300 percent for a second straight period when the company reports today, CNBC’s Ari Levy reports. But “it’s the back half of 2021 that becomes challenging for Zoom because the company will then have to contend with comparisons to the wild growth periods of the pandemic and surge in remote work.”

Money on the Hill

Congress faces closing window for action this year. 

Hopes for a stimulus package are fading. “Congress faces a rapidly approaching deadline to pass a new round of funding for the U.S. government, with dimming odds both of confirming Judy Shelton to the Federal Reserve Board and hashing out another coronavirus relief package,” Bloomberg’s Billy House and Erik Wasson report. 

“Lawmakers have only a few weeks to wrap up work before the year-end holidays, amid the continuing distraction from [Trump’s] unfounded claims about the presidential election he lost to President-elect Joe Biden. That doesn’t bode well for either a retry of a vote on Trump’s nomination of his controversial economic adviser Shelton, or for breaking the months-long stalemate on a stimulus bill. The Senate is set to return Monday afternoon, though [McConnell] hasn’t outlined a full agenda of votes beyond confirming a roster of Trump nominees.”

The transition

When Janet Yellen sent a message to Wells Fargo.

Her final action as Fed chair may preview what she would do at Treasury: “The night before she stepped down as Federal Reserve chair in February 2018, she shocked Wall Street by delivering a crushing blow to America’s most messed-up bank,” CNN Business’s Matt Egan reports.

“Yellen’s decision to put a first-of-its-kind asset cap on Wells Fargo sent a powerful message to the rest of Wall Street that resonates even louder today as she is poised to become the nation’s first female Treasury secretary in the Biden administration … Wells Fargo assured shareholders it expected to get out of the penalty box within months. But the company has been unable to convince regulators to lift the asset cap — restrictions that have eaten into profits by limiting the bank’s ability to make loans.”

  • Female economists are inspired by her nomination: “Yellen’s selection struck a particular chord with women in economics and finance. It’s a relatively small group, and the field has long been criticized for its dearth of women. Yet for decades, women have pointed to Yellen as a trailblazer — one who has not just shattered glass ceilings but also given the women around her hammers of their own,” Rachel Siegel reports.
  • EU pitches post-Trump alliance to curb Beijing: “The E.U. will call on the U.S. to seize a ‘once-in-a-generation’ opportunity to forge a new global alliance, in a detailed pitch to bury the tensions of the Trump era and meet the ‘strategic challenge’ posed by China,” the Financial Times’s Sam Fleming, Jim Brunsden and Michael Peel report of a draft plan.
  • Biden hires all-female communications staff: “Jennifer Psaki, a veteran Democratic spokeswoman, will be Biden’s White House press secretary, one of seven women who will fill the upper ranks of his administration’s communications staff. It is the first time all of the top aides tasked with speaking on behalf of an administration and shaping its message will be female,” Annie Linskey and Jeff Stein report.

Pocket change

OPEC faces divides on multiple fronts.

Key ministers are set to meet this week in Vienna: “The east-west divide is an added conundrum for OPEC+, which [today] and Tuesday needs to decide whether to delay a production increase slated for January — and if so, for how long. Informal talks on Sunday failed to yield an agreement,” Bloomberg News’s Javier Blas reports.

“As well as the geographical split, there’s another crucial divide in the global oil market: while gasoline and diesel demand have recovered to about 90 percent of their normal level, consumption of jet fuel languishes at about 50 percent. … In private, OPEC+ delegates talk about the imbalance in the recovery, both geographically and between refined products.”

HSBC considers leaving U.S. retail banking amid struggles: “Closure of the US retail network would mark the end of the lender’s 40-year long attempt to run a full-service, universal bank in the country. The division made a pre-tax loss of $518 million in the first three quarters of this year, following losses of $279 million last year and $182 million in 2018,” FT’s Laura Noonan and Stephen Morris report.

“HSBC’s American division has been under intense scrutiny for several months as part of the UK lender’s efforts to make even deeper savings than it pledged in February, when it outlined $4.5 billion in cost savings and 35,000 job cuts.”

JPMorgan to double number of Singapore bankers to cater to rich Chinese: “JPMorgan, ranked seventh among private banks in Asia excluding onshore China, competes with Credit Suisse Group AG and Morgan Stanley in attracting Chinese entrepreneurs who become billionaires after listing their companies’ stocks,” Bloomberg News’s Chanyaporn Chanjaroen reports.

“Singapore is popular among the world’s rich to park funds, buy property and set up family offices. While the New York-based bank has a large team of wealth managers in Hong Kong, Singapore is the only Asian center where clients can book assets.” 

Daybook

  • Fed Chair Jerome H. Powell and Treasury Secretary Steven Mnuchin testify before the Senate Banking Committee for the required quarterly Cares Act update
  • The Post hosts an event on inclusive capitalism, featuring Association of Flight Attendants International President Sara Nelson, author Andre Perry and Noble laureate Paul Romer
  • SalesForce.com is among the notable companies reporting its earnings, per Kiplinger 
  • The Labor Department reports the latest weekly jobless claims
  • Kroger, Dollar General, Ulta Beauty, Smith & Wesson, Lands End and Cracker Barrel Old Country Store are among the notable companies reporting their earnings
  • The Labor Department releases the November jobs report
  • AT&T chief executive John Stankey speaks at a Post event about the future of broadband access

The funnies

Bull session

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