President Biden has renominated Jerome Powell as Federal Reserve Chairman, but what does that mean for inflation and your wallet? If Powell passes the Senate (which he should) then he will be left to clean up surging prices, which haven’t been seen in decades. Experts say he’ll have to own the outcome of effective yet highly controversial policies he implemented – as will Biden. According to the WSJ, the market is now focusing on two questions: Is Powell right to think that inflation is transitory, and will the economy be strong enough to allow rates to return to something like normal over the next few decades? At the moment investors are answering yes, it will be transitory, and no, the economy won’t be strong enough to raise rates back to normal.

 

WSJ via Fox Business/James Mackintosh
Powell is here to stay. Is inflation?

Markets climb a wall of worry, and the renomination of Jerome Powell as Federal Reserve chairman takes away one important uncertainty.

It was possible that President Joe Biden would pick Lael Brainard, who was nominated as Mr. Powell’s deputy instead, and her approval process might have hit trouble in the Senate. By leaving Chairman Powell in charge that worry was removed, meaning policy stays on its previous, exceptionally easy, course.

The market response to taking away a risk is easy to predict. Stocks and other risky assets go up, and bonds, gold, and other safer assets go down. So it was, if not to a huge extent. How prices react is one way to define an asset, and on this basis bitcoin is a risk asset, since it jumped while gold fell.

You can read the full story, here.

 

Yahoo Finance/Javier E. David
‘Continuity’ means both Biden and Powell own inflation response: Morning Brief

Monetary policy just got a lot more political.

The first part of Jerome Powell’s tenure as Federal Reserve chairman was defined by an increasingly acrimonious battle with the president who appointed him.

The next phase of the Powell-led central bank will be defined by its response to surging prices. And President Joe Biden — who on Monday decided to reappoint Powell in the face of pressure to shift course — will now find his political fortunes inextricably bound to Fed policy in a way his recent predecessors have not.

It bears repeating that, while the Fed chair is a political appointment, the hallmark of monetary policy is its independence. It’s one of the reasons why former President Donald Trump found himself so enraged with Powell that he openly flirted with the idea of jettisoning him.

Presuming that Powell passes Senate confirmation, which by all indications he will, given the relatively high levels of bipartisan support he enjoys, both he and the president will find themselves joined at the hip as a still vigorous economic expansion gives way to inflation.

By opting for Powell over Lael Brainard, Biden decided the former was “the right man for the job,” as Jared Bernstein, a key advisor to Biden, told Yahoo Finance on Monday.

You can read the full story, here.

 

CNBC/Pippa Stevens
U.S. to release oil from reserves in coordination with other countries to lower gas prices

President Joe Biden said Tuesday that the administration will tap the Strategic Petroleum Reserve as part of a global effort from energy-consuming nations to calm 2021′s rapid rise in fuel prices.

The coordinated release between the U.S., India, China, Japan, Republic of Korea and the United Kingdom is the first such move of its kind.

In total, the U.S. will release 50 million barrels from the SPR. Of the total 32 million barrels will be an exchange over the next several months, while 18 million barrels will be an acceleration of a previously authorized sale.

“The President stands ready to take additional action, if needed, and is prepared to use his full authorities working in coordination with the rest of the world to maintain adequate supply as we exit the pandemic,” the White House said in a statement.

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