• President-elect Joe Biden revealed his $1.9 trillion emergency relief plan, including $400 billion for measures such as additional vaccines and testing; more than $1 trillion in economic relief via stimulus payments, enhanced unemployment insurance and other related benefits; and $440 billion in aid for communities and businesses. Sen. Chuck Schumer (D-N.Y.), incoming Senate Majority Leader, convinced Biden to consider a higher price tag on the package than he was originally thinking, a person familiar with the conversation said. (The Washington Post) 

• The Treasury Department announced changes to Fannie Mae and Freddie Mac that will allow the mortgage giants to retain more of their earnings, while effectively ending the Trump administration’s bid to end government conservatorship of Fannie and Freddie, leaving their fate up to the Biden administration. Advisers close to Biden said he wouldn’t be eager to privatize the mortgage giants, and would instead focus on using Fannie and Freddie to promote housing affordability and homeownership. (The Wall Street Journal) 

• On his last day as acting comptroller of the currency, Brian Brooks and the OCC finalized the “fair access” rule that has drawn the ire of banking and consumer groups alike, but it’s not likely to survive the Biden administration, according to industry watchers and experts. The fair access rule, effective April 1 and finalized just 10 days after the comment period closed, would prohibit banks from refusing to lend to entire categories of controversial businesses, including oil drillers, private prisons and firearms manufacturers. (Morning Consult) 

• JPMorgan Chase & Co.’s net income jumped 42 percent in the fourth quarter to $12.1 billion, helped by surging trading revenue and a boost from releasing loan loss reserves. The bank released $2.9 billion in reserves for loan losses, with JPMorgan Chief Executive Jamie Dimon citing positive news about the coronavirus vaccine and another round of stimulus checks as contributing factors. (Financial Times) 

Jobs Market Has Long Recovery Ahead, Says Fed’s Powell
Jon Hilsenrath, The Wall Street Journal

The U.S. is a long way from a strong job market, Federal Reserve Chairman Jerome Powell said Thursday, an indication that the central bank’s easy-money policies will remain in place for the foreseeable future. Friday’s U.S. jobs report—which showed the U.S. lost 140,000 payroll positions in December—pushes the central bank farther from its goals, though officials and many private economists expect the economy to rebound this year as a Covid-19 vaccine is distributed through the population. 

‘Sizable’ stimulus needed from the United States, IMF managing director urges
Heather Long, The Washington Post

International Monetary Fund Managing Director Kristalina Georgieva is urging the United States to go big on additional stimulus to aid the economy as the pandemic rages and to ensure low-income workers are not left behind. “We do need more stimulus. In the United States, fortunately, there is fiscal space to do so,” Georgieva told The Washington Post, adding that she favored “sizable support.”

After speaking out about an insurrection, CEOs are eager to move on
Ben White, Politico 

Many of America’s most influential companies spent the past week swiftly issuing statements of condemnation and pausing campaign contributions after the violent attack on the U.S. Capitol. Now they’re trying to quietly fade into the background with an impeachment trial looming and warnings proliferating of further turmoil across the nation.

U.S. Unemployment Claims Rise as Coronavirus Weighs on Economy
Gwynn Guilford and Hannah Lang, The Wall Street Journal

The number of workers filing for jobless benefits posted its biggest weekly gain since the pandemic hit last March and the head of the Federal Reserve warned the job market had a long way to go before it is strong again. Applications for unemployment claims, a proxy for layoffs, rose by 181,000 to 965,000 last week, the Labor Department said Thursday, reflecting rising layoffs amid a winter surge in coronavirus cases.

To succeed, Biden must create more jobs than any president in recent history
Heather Long, The Washington Post

The U.S. economy that President-elect Joe Biden is set to inherit on Jan. 20 is in a deep hole, with a recovery that is stalling, a pandemic that is raging and more Americans out of work than what he faced when he entered the White House as vice president amid the Great Recession. Biden’s top challenge will be getting Americans back to work. 

Biden will inherit the most challenging labor market in decades
Eli Rosenberg, The Washington Post

President-elect Joe Biden will inherit a labor market still badly bruised from the economic blows sustained by the coronavirus pandemic when he takes office on Jan. 20, as the country’s jobless numbers slide backward, pressured by surging cases. The December jobs report, which was released last week, painted a bleak picture of the country’s unemployment crisis.

Biden aims for new course on trade, breaking with Trump and Democratic predecessors
David J. Lynch, The Washington Post

It may not take long for President-elect Joe Biden to distinguish his trade policy from his predecessor’s “America First” approach. When members of the World Trade Organization meet in Geneva to agree on a new chief, probably within a few weeks of Inauguration Day, Biden could drop the Trump administration’s veto of the consensus candidate, former Nigerian finance minister Ngozi Okonjo-Iweala, and allow her to become the first woman to head the global trade body.

A Year On, China Falls Short on Trade-Deal Targets
Yuka Hayashi, The Wall Street Journal

The U.S.-China trade pact signed a year ago is being credited for improving business conditions for some American companies, even if a cornerstone of the deal—China’s commitment to greatly increase purchases of U.S. goods—has fallen short. Under the deal brokered by the Trump administration, China agreed to purchase about $159 billion in U.S. goods by the end of 2020. 

WSJ Survey: U.S. Economic Growth Will Exceed 4% in 2021
Harriet Torry and Anthony DeBarros, The Wall Street Journal

The U.S. economy will grow 4.3% this year, as the country exits the grip of the coronavirus pandemic, economists forecast in a Wall Street Journal survey. Economists raised their growth prediction for 2021 U.S. gross domestic product in the January survey, saying vaccinations and the prospect of additional financial relief from Washington for individuals and businesses brightened economic prospects. 

U.S. Retail Sales Likely Were Soft in December as Covid-19 Cases Rose
Harriet Torry and Sarah Nassauer, The Wall Street Journal

Consumers likely continued to hold back on retail spending during the December peak of the holiday season as the country confronted a surge in coronavirus infections. Economists surveyed by The Wall Street Journal forecast retail sales decreased a seasonally adjusted 0.1% in December from a month earlier.

Stocks, Yields Fall as Reflation Trade Sputters: Markets Wrap
Cecile Gutscher, Bloomberg

U.S. futures dropped with stocks in Europe and Asia as President-elect Joe Biden’s much-anticipated $1.9 trillion Covid-19 relief plan came under scrutiny. The dollar pushed higher and Treasury yields declined.

Goldman eyes deals to boost Marcus
Matt Scuffham, Reuters

Goldman Sachs Group Inc is considering acquisitions to bulk up its consumer banking unit Marcus, after the Wall Street firm slowed loan and deposit growth at its fledgling business last year in the wake of the coronavirus pandemic, three bank sources said. Goldman management has put an “extremely high” bar for any deal to be large and transformational, the sources cautioned.

Wells Fargo close to deal with buyout firms for asset management business
Joshua Franklin and David French, Reuters

Wells Fargo & Co is in exclusive talks to sell its asset management business, which manages more than $607 billion on behalf of customers, to a private equity consortium led by GTCR LLC and Reverence Capital Partners LP, according to people familiar with the matter. The divestment would represent the U.S. bank’s biggest shake-up since former Bank of New York Mellon Chief Executive Charles Scharf joined as CEO in 2019.

Deutsche Bank chief says €18m Wirecard loss shows value of its risk management
Olaf Storbeck, Financial Times

Christian Sewing points to relatively small hit from payment provider’s collapse despite €80m exposure.

Debt collectors, payday lenders collected over $500 million in federal pandemic relief
Peter Whoriskey et al., The Washington Post

A Texas firm that describes itself as one of the nation’s largest medical bill collectors was racking up consumer complaints last year. “For months this company has been reporting inaccurate, unverifiable, erroneous things on my credit report and I am sick of it!!!” states one consumer’s report to the Consumer Financial Protection Bureau in January 2020.

James Simons Steps Down as Chairman of Renaissance Technologies
Gregory Zuckerman, The Wall Street Journal

James Simons, who helped lead a quantitative revolution that has swept the world of finance, is stepping back from his hedge fund on the heels of a terrible year for clients, but a terrific one for the firm’s employees. Mr. Simons, among the largest financial backers of Democractic candidates in recent years, told investors he was retiring as chairman of Renaissance Technologies LLC’s board of directors as of Jan. 1.

BlackRock assets surge to record $8.68tn
Michael Mackenzie, Financial Times

World’s largest fund manager boosted by run in equities that helped it beat forecasts.

Investors race into munis as Biden announces stimulus plan to cash-strapped states
Colby Smith and Eric Platt, Financial Times

President-elect’s proposed package of $1.9tn in aid bolsters appeal of even financially stressed localities.

Pension funds stick by Blackstone despite closeness to Trump
Mark Vandevelde and Billy Nauman, Financial Times

Founder Stephen Schwarzman was one of president’s staunchest backers on Wall Street.

Mortgage rates spike to highest levels in nearly two months
Kathy Orton, The Washington Post

One week after falling to all-time lows, mortgage rates rebounded sharply to their highest levels since mid-November. According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average climbed to 2.79 percent with an average 0.7 point.

Democratic Senate control will give Biden freer hand in pursuing tax agenda
Yeganeh Torbati, The Washington Post

President-elect Joe Biden will take office making a promise reminiscent of the last Democratic administration: to raise taxes on the wealthiest Americans to pay for ambitious domestic social programs to help people in the midst of an economic calamity. During his campaign, Biden ran on raising taxes on the wealthy, corporations and estates, expanding tax credits for modest earners and exempting individual taxpayers making less than $400,000 from tax increases.

Stripe Bans Trump, but Donations Still Come Through
Peter Rudegeair and Emily Glazer, The Wall Street Journal

Stripe Inc. has stopped processing payments for President Trump’s fundraising apparatus. Directly, that is.

Winklevoss Twins Consider Taking Gemini Crypto Exchange Public
Olga Kharif, Bloomberg

Bitcoin billionaires Cameron and Tyler Winklevoss said they’re considering taking Gemini Trust Co. public amid the resurgence of interest in cryptocurrencies. “We are definitely considering it and making sure that we have that option,” Cameron Winklevoss, co-founder and president of the New York-based digital-asset firm, said in an interview. 

Crypto investment firm Grayscale sees 900% jump in assets to $20 billion amid bitcoin frenzy
Kate Rooney, CNBC

Grayscale saw its assets under management skyrocket as Wall Street used it as a proxy to invest in bitcoin. The New York-based investment firm kicked off last year with $2 billion in assets and ended with more than $20.2 billion.

Working Women of Color Were Making Progress. Then the Coronavirus Hit.
Diana Coyle, The New York Times

For years, the story of working women in the United States has been one of slow but steady progress. Against this backdrop, the latest monthly employment figures from the U.S. Bureau of Labor Statistics delivered an acute shock.

Better Bunching, Nicer Notching
Marinho Bertanha et al., The Board of Governors of the Federal Reserve System

We study the bunching identification strategy for an elasticity parameter that summarizes agents’ response to changes in slope (kink) or intercept (notch) of a schedule of incentives. A notch identifies the elasticity but a kink does not, when the distribution of agents is fully flexible.