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Exuberant America — The nation is now buzzing about President Joe Biden’s announcement that every adult American should be able to get a Covid vaccine as of May 1. Which followed his signing of the nearly $2 trillion stimulus package that will soon plow significant cash into millions of Americans’ bank accounts.
Markets continue to rocket higher and pretty much everyone is blowing off the threat of a serious inflation spike or bubble pops in tech, crypto, meme stocks, housing or anything else currently defying any sense of financial gravity.
And the ebullience extends pretty deeply into corporate America, given recent CEO surveys. MM spoke with a top financial services executive who did not want to be identified by name or firm but who shares the sense that the U.S. is on the cusp of a significant boom. But not one that sparks rapid inflation.
“Our view is that the economy is not going to recover so robustly that the unemployment rate drops to a level that would drive serious inflation over the long term. So no, we are not that concerned … Higher rates are obviously good for us but I don’t think they are going that high …
“Basically my mood is optimistic bordering on euphoric. And we have some real room to run before inflation is any kind of a problem. … And there are bubbles. But none that look like they will broadly effect markets.” —
MM Sidebar — All this could be right. Happy days may be here again soon. But whenever the consensus is so uniformly positive – even giddy – we get worried. We’ve laid out the ways things could go wrong before. And they very well may not. Maybe it’s just our ingrained Gen-X skepticism of anything ever being all that good. Reality bites, after all.
“We all lost something” … that’s what Biden said in his primetime speech last night. Ain’t it the truth.
GOOD FRIDAY MORNING — Happy weekend everyone! Hopefully you can trust in good news more than we do! Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
Producer Prices at 8:30 a.m. expected to rise 0.4 percent headline and 0.2 percent core … Univ. of Michigan Consumer Sentiment at 10:00 a.m. expected to rise to 78.0 from 76.8 …
President Biden meets with the “Quad” which includes Prime Minister Narendra Modi of India, Prime Minister Scott Morrison of Australia, and Prime Minister Yoshihide Suga of Japan … In the afternoon Biden will do a more formal celebration of the stimulus in the Rose Garden with members of Congress
FIRST LOOK: TRUMPERS STILL IN OFFICE — Watchdog group Accountable.US is “releasing a new report, ‘MAGA Hangover’, finding Trump administration independent agency leaders still hold 24 key posts in the Biden administration, and at least 104 individuals were appointed under Trump in his final year to various boards, commissions, and councils within executive agencies that don’t require Senate confirmation – many of whom lack qualifications or have conflicts of interest.”
COMING NEXT WEEK — From the Select Subcommittee on the Coronavirus Crisis: “Next Wednesday, March 17, 2021, at 11am, the Select Subcommittee will hold its first hearing of the year, entitled “From Rescue to Recovery: Building a Thriving and Inclusive Post-Pandemic Economy.” It will feature Joseph Stiglitz and AFL-CIO Chief Economist William Spriggs
INFRASTRUCTURE IS … GONNA BE TOUGH — Our Tanya Snyder: “Democrats have promised that infrastructure is next after the Covid relief package is enacted, but that process won’t be quick or easy, with many thorny issues remaining including the scope and size of the package, when and how it will move through Congress and how to pay for it.
“For the next few weeks at least, the administration will be focused on selling the $1.9 trillion Covid package to the public. Congress will continue drafting legislation behind the scenes, but the administration isn’t expected to release any legislative details to inform their work until closer to when … Biden addresses Congress in what would typically be considered a State of the Union speech.”
NELLIE LIANG FOR TOP TREASURY POST — Our Victoria Guida: “Biden plans to nominate former top Federal Reserve aide Nellie Liang as undersecretary of domestic finance at the Treasury Department, where she will play a key role in regulatory reform, housing policy and government debt management.
“Liang, a Ph.D. economist, was the first head of the Fed’s office of financial stability from 2010 to early 2017, overlapping with now-Treasury Secretary Janet Yellen’s four-year term as chair of the central bank. She influenced the Fed’s post-crisis regulations and conducted extensive research into the interaction between interest rate policy and financial stability”
BATCHELDER FOR TREASURY TAX SPOT — Our Brian Faler: “Lily Batchelder will be taking over as the Treasury Department’s point person on taxes. She was named the agency’s assistant secretary for tax policy, the White House announced
“Long rumored to be the leading candidate for the job, Batchelder is well known in Washington tax circles, having previously worked in the Obama administration and on the Hill, as chief tax counsel on the Senate Finance Committee.”
MORE RECORDS FOR STOCK INDEXES — AP’s Damian J. Troise and Alex Veiga: “Several major U.S. stock indexes hit all-time highs Thursday, as a recent stretch of volatile trading in the bond market continued to ease, keeping investors in a buying mood.
“The S&P 500 index rose 1 percent, extending its winning streak to a third day as it scored a record high. The Dow Jones Industrial Average and Russell 2000 index of smaller companies also hit all-time highs. The latest gains came as President Joe Biden signed a huge economic relief bill into law.”
STOCK PICKERS TRAILED MARKET AGAIN IN ROLLER COASTER 2020 — WSJ’s Karen Langley: “In a year prime for stock picking, stock pickers came up short — again. In 2020, 60 percent of U.S. large-cap stock-picking funds lagged behind the benchmark S&P 500, according to new data from S&P Dow Jones Indices.
“Last year’s market tumult was unprecedented: As Covid-19 spread, the benchmark U.S. index lost a third of its value in less than five weeks in February and March, before leaping higher to set new highs in August and ending the year with double-digit gains.”
WALL STREET IS RETHINKING THE TREASURY THREAT TO BIG TECH STOCKS — Bloomberg’s Justina Lee: “Don’t fear Treasury yields killing off the stock market’s golden goose just yet. As the Nasdaq 100 Index recovers from a $1.5 trillion rout, there’s good reason to think technology shares can defy machinations in U.S. bonds.
“Studies from Deutsche Bank AG and Goldman Sachs Group Inc. show the world’s biggest equity sector has a fickle relationship with Treasuries, if it has one at all. Quant powerhouse AQR Capital Management has found little evidence that yields drive how expensive megacaps trade relative to their cheaper counterparts.”
UNEMPLOYMENT CLAIMS FALL, FUELING ECONOMIC HOPE — NYT’s Sydney Ember: “The second year of the coronavirus pandemic is starting with rising hopes for the economic outlook — and a long way to go. Positive signs are emerging as restrictions on businesses lift and the pace of vaccine distributions ramps up. But millions remain unemployed, and many economists are cautioning that a return to pre-pandemic conditions could take months, if not years.
“That reality became all the more evident on Thursday, when the Labor Department reported that a total of 709,000 workers filed first-time claims for state unemployment benefits in the week that ended March 6. Though the figure was 47,000 lower than the week before — and touching the lowest levels of the last year — it was still extraordinarily high by historical standards.”
SMALL BUSINESSES SEEK MORE TIME TO APPLY FOR PPP LOANS — WSJ’s Amara Omeokwe: “Small-business advocates are calling on the federal government to extend the March 31 deadline to apply for a loan from the Paycheck Protection Program, citing recent changes made to the program and delays in processing applications.
“‘Time is not on our side. These businesses need a little more help, and they’re willing to do the work,’ Hilda Kennedy, president of the PPP lender AmPac Business Capital, said Wednesday during a House Small Business Committee hearing focused on the future of the program. Ms. Kennedy was speaking of the very smallest firms, such as those owned by sole proprietors. ‘We need more time to serve them,’ she added.”
BIDEN EYES LEE, ROSENBERG FOR TREASURY UNDERSECRETARY JOBS — Bloomberg’s Saleha Mohsin: “President Joe Biden is considering Nancy Lee, a former Treasury official, to serve as the department’s top diplomat, according to people familiar with the matter.
“Separately, Elizabeth Rosenberg, currently a Treasury adviser and a former senior fellow at Washington think tank Center for a New American Security, is under consideration to lead the Terrorism and Financial Intelligence, or TFI, unit, the people said, speaking on condition of anonymity. TFI oversees most U.S. sanctions authorities and tracks money laundering and other financial crimes.”
HOUSEHOLDS ENDED 2020 WITH RECORD $130.2T IN WEALTH — Reuters: “U.S. households ended 2020 with a record $130.2 trillion in wealth, the Federal Reserve said in a report on Thursday, as rock-bottom interest rates and a massive fiscal rescue stemmed the financial fallout from the coronavirus pandemic.
“Rising equity markets added $4.9 trillion to household assets in the fourth quarter and rising real estate values added around $900 billion, the report showed. Balances in cash, checking accounts, and savings deposits rose by a combined $642.7 billion in the fourth quarter to a record $14.1 trillion. Household wealth rose $12 trillion from the year-earlier period, and consumers paid off a record $118.3 billion in credit card debt.”
BAUCUS JOINS CRYPTO EXCHANGE — Max Baucus, a former Senate Finance chair and ambassador to China, has joined the cryptocurrency exchange Binance Holdings …
Randell Gartin is now a Managing Director at EY. He was previously subcommittee staff director for select revenue measures for House Ways and Means Republicans.
Saharra Griffin is now special assistant to the chair of the Council of Economic Advisers. She most recently was senior research associate at Priorities USA and is also a CAP alum.
DO WE NEED CASH? — Kite & Key Media has a new short video out looking out whether there is any future for hard cash currency.