• Federal Reserve Chairman Jerome Powell said in an interview with CBS News that a rate increase this year is “highly unlikely” and that he expects the economy will “start growing much more quickly and job creation coming in much more quickly.” Powell also said that the Fed is involved in a research and development project on the digital dollar, a “very large, complex project” that will require significant involvement from Congress and the public. (Bloomberg) 
• The Securities and Exchange Commission found that some investment firms possibly misled investors on ESG efforts, although the agency didn’t name the firms or say how many of them were involved in the review. The SEC discovered examples of some investment firms delivering misleading statements, in addition to finding that some portfolio managers didn’t consistently disclose their ESG strategies and their proxy voting didn’t align with ESG stances. (The Wall Street Journal) 
• President Joe Biden’s first budget request includes $1.5 trillion in further spending areas like education, health and environmental protections, rolling back cuts in these areas from the Trump administration. The budget proposal will now go up for consideration in Congress, where Democrats are likely to rely on Republican support for the extra spending as the party also tries to pass Biden’s infrastructure plan. (The Washington Post) 

Jobless claims rise, bucking employment rebound story

Axios

CEO Pay Surged in a Year of Upheaval and Leadership Challenges
Theo Francis and Kristin Broughton, The Wall Street Journal

CEO pay surged in 2020, a year of historic business upheaval, a wrenching labor market for many workers and unprecedented challenges for many leaders. Median pay for the chief executives of more than 300 of the biggest U.S. public companies reached $13.7 million last year, up from $12.8 million for the same companies a year earlier and on track for a record, according to a Wall Street Journal analysis.

The Other Reason the Labor Force Is Shrunken: Fear of Covid-19

Gwynn Guilford, The Wall Street Journal

A little over a year ago, Chanee McLaurin was a few weeks into a new job selling insurance when she began to hear coughing in her office. Co-workers, one after another, stopped showing up.

Defaults Fall Again, Aiding Rally in Low-Rated Debt

Sebastian Pellejero, The Wall Street Journal

Defaults by low-rated U.S. companies have fallen to their lowest level in 10 months, helping to extend sharp rallies in the markets for junk bonds and floating-rate loans. Defaults for an index of speculative-grade loans to U.S. companies over the past year fell to 3.15% as of March, according to S&P Global Market Intelligence’s LCD.

Simple Math Is About to Cause an Inflation Problem

Reader Pickert, Bloomberg

No economic question is being debated more hotly right now than whether the U.S. will see a sharp rise in inflation. But the answer for the next few months is simple: Yes. Due to the way the government’s inflation metrics are calculated, what will appear to be significant price increases are all but guaranteed.

More than 100 corporate executives hold call to discuss halting donations and investments to fight controversial voting bills

Todd C. Frankel, The Washington Post

More than 100 chief executives and corporate leaders gathered online Saturday to discuss taking new action to combat the controversial state voting bills being considered across the country, including the one recently signed into law in Georgia. Executives from major airlines, retailers and manufacturers — plus at least one NFL owner — talked about potential ways to show they opposed the legislation, including by halting donations to politicians who support the bills and even delaying investments in states that pass the restrictive measures, according to four people who were on the call, including one of the organizers, Jeffrey Sonnenfeld, a Yale management professor.

Raw Materials Prices Have Surged. Corporate Profits Are Likely Next.

Ryan Dezember, The Wall Street Journal

Prices are surging for raw materials, leading to higher costs for companies from home builders to clothing makers. If history repeats, that will be a boon to corporate bottom lines and investors as well.

Why big-spending Biden can shrug off GOP warnings of inflation

Victoria Guida, Politico 

Republicans are warning that President Joe Biden is taking a risky gamble that he can carry out his massive spending plans without triggering runaway inflation. Biden is betting on history as his defense. The specter of raging inflation — the erosion of consumer purchasing power — has become central to the debate about whether the government can afford Biden’s multitrillion-dollar “Build Back Better” programs.

Goldman Sachs Warns Biden’s Tax Package Will Cut Earnings Growth

Nikos Chrysoloras, Bloomberg

Joe Biden’s tax hike proposals will deal a severe blow to corporate earnings growth next year, Goldman Sachs Group Inc. strategists warned, highlighting a headwind for U.S. equities following a rally that has pushed prices to record highs. The U.S. president wants to raise corporate income tax to 28% and set a 21% minimum levy on global corporate earnings. 

New York Congressman Pushes to Restore SALT Tax Deductions

Jimmy Vielkind, The Wall Street Journal

U.S. Rep. Tom Suozzi has taken a leading role in fighting to restore a tax deduction that is important to people who live in and around New York City, and in doing so might be laying the groundwork for another gubernatorial run. Mr. Suozzi, a Democrat who represents parts of Queens and Long Island, has said he won’t support President Biden’s planned infrastructure and tax package unless it contains language that would restore the full deductibility of state and local income and property taxes, or SALT.

US political battle lines form on Biden global tax plan

James Politi and Aime Williams, Financial Times

Republicans say proposal could put American companies at a ‘competitive disadvantage.’

Nobel Economist Warns Against Wealth Tax to Pay for Pandemic

Lizzy Burden, Bloomberg

A wealth tax is a bad way to pay off pandemic debts and probably would become permanent if introduced, Nobel Prize-winning economist Angus Deaton said. Levies on high-earners would be “very difficult to implement” and give the wealthy “huge incentives to avoid it — and avoid it they will,” said Deaton, a Princeton University professor who is working on an official study of inequality in the U.K.

Business Roundtable Starts Major Ad Campaign Opposing Tax Hikes

Nancy Cook, Bloomberg

As congressional lawmakers return from a two-week recess, the Business Roundtable is starting a multimillion-dollar campaign aimed at stopping tax increases proposed as part of President Joe Biden’s $2.25 trillion infrastructure plan. The group’s radio and digital advertisements, airing within the Washington D.C. market, will extol the benefits of the U.S.’s current tax regime and contend that the Biden administration shouldn’t attempt to raise corporate tax rates during an economic downturn.

Democrats Tie Infrastructure Package to Unionization Push

Eliza Collins and Kate Davidson, The Wall Street Journal

President Biden has called on Congress to pass the most significant changes to labor laws in decades as part of his $2.3 trillion infrastructure proposal. But getting that pro-union proposal through Congress could be a high hurdle for Democrats, even as a labor vote at Amazon.com Inc. put a new spotlight on the issue.

Beyond Pandemic’s Upheaval, a Racial Wealth Gap Endures

Patricia Cohen, The New York Times

Not since Lyndon Baines Johnson’s momentous civil rights and anti-poverty legislation has an American president so pointedly put racial and economic equity at the center of his agenda. President Biden’s multitrillion-dollar initiatives to rebuild infrastructure in neglected and segregated neighborhoods, increase wages for health care workers, expand the safety net and make pre-K and college more accessible are all shot through with attention to the particular economic disadvantages that face racial minorities.

A tale of two tapers: This time is different for a Fed focused on jobs

Howard Schneider and Ann Saphir, Reuters

Eight years ago this month Jerome Powell, still in his rookie year as a Federal Reserve governor, surveyed the U.S. job market and declared it was good enough for the central bank to reduce the support for the economy it had rolled out to fight the 2007 to 2009 financial crisis. The unemployment rate had just hit a post-crisis low of roughly 7.5%. But for Blacks it remained a catastrophic 13%, a fact not raised by Powell or any other policymaker during their meeting.

With Economy Poised for Best Growth Since 1983, Inflation Lurks

Gwynn Guilford and Anthony DeBarros, The Wall Street Journal

Ronald Reagan was in the White House, “Return of the Jedi” was in theaters, and economic growth hit an astonishing 7.9%. The U.S. has produced many more Star Wars films since 1983, but growth has never approached that level—until this year, if economists are right.

Banks Need to Be Safer Than Is Needed. Yes, That’s a Paradox
Peter Coy, Bloomberg Businessweek

A buffer that can never be used is no buffer at all. A crate of Spam in the basement that you’re not allowed to eat, even if you’re starving. 

Credit Suisse’s U.S. brokerage files lawsuit over personal data leak

Reuters

The U.S. brokerage subsidiary of Credit Suisse Group AG has disclosed that former employees’ personal data was leaked last month and that it had filed a lawsuit over the matter, in the latest snafu for the Swiss banking giant. Credit Suisse Securities has sued one or more individuals for sending private information about former employees to media outlets, law enforcement and former employees via a March 20, 2021 email, according to a legal filing on Thursday.

Credit Suisse, After Archegos, Faces Tough Choices on Investment Bank

Margot Patrick, The Wall Street 

When Credit Suisse Group AG announced a $4.7 billion hit from the Archegos Capital Management meltdown, there was a silver lining: The rest of its investment bank did so well in the quarter, the overall pretax loss would only be $1 billion. The situation exposes the bank’s dilemma. Its investment bank, which takes on more risk, has been its profit engine, making up for its larger, slower-growing wealth-management business.

US put off derivatives rules for a decade before Archegos blew up

Joe Rennison et al., Financial Times

Regulation of swaps used by Bill Hwang was pushed back once again by Covid.

Archegos Exposes SEC Blind Spots, Dithering on Market Oversight
Robert Schmidt and Benjamin Bain, Bloomberg

The U.S. Securities and Exchange Commission was supposed to be able to spot a whale like Bill Hwang by now. As the financial world knows, it didn’t. Will the agency be able to catch the next one?

We Asked Congress’s Freshmen to Give Up Stock Trading. Few Were Willing.

Ron Lieber, The New York Times

It’s easy to forget that just a year ago, senators from both parties were under Justice Department scrutiny for potentially profiteering from the coronavirus with well-timed stock trades. Both of Georgia’s Republican senators took a pounding over their trading. Jon Ossoff, the Democrat who defeated Senator David Perdue, side-eyed Mr. Perdue’s transaction reports and declared him a crook. 

Investors lament being frozen out of Biden infrastructure plan

Mark Vandevelde and Michael Mackenzie, Financial Times

Asset managers and pension funds hoped public-private partnerships would give opportunities.

Millennium builds out risk management with ex-Goldman Sachs hires

Laurence Fletcher, Financial Times

Hedge fund is set on business expansion after navigating market volatility through pandemic.

How Biden hopes to fix the thorniest problem in housing

Katy O’Donnell, Politico 

President Joe Biden is proposing a historic infusion of federal money into housing as part of his $2 trillion infrastructure package, but the plan is already running into doubts about whether it’s enough and resistance from the very people he needs to make it a reality. A key element of Biden’s $213 billion proposal is offering cities federal dollars to encourage them to ease zoning rules that drive up housing costs, impede the construction of affordable homes and often prevent people of color from moving in. 

Millennials are ready to take over the real estate market

Brianna Crane, Axios

Over the last several years, millennials have rented to stay nimble and keep work opportunities open. Now, they’re ready to buy.

Jack Ma’s Ant Group Bows to Beijing With Company Overhaul

Jing Yang, The Wall Street Journal

Ant Group Co., the financial-technology giant controlled by billionaire Jack Ma, will apply to become a financial holding company overseen by China’s central bank, overhauling its business to adapt to a new era of tighter regulation for internet companies. In a statement, the People’s Bank of China said Ant representatives were summoned to a meeting Monday with four regulatory agencies that also included the country’s banking, securities and foreign exchange overseers.

Bitcoin Nears Record Before Largest U.S. Crypto Exchange Listing

Joanna Ossinger, Bloomberg

Bitcoin neared an all-time high on Monday after a record run for stocks and ahead of a listing by the largest U.S. cryptocurrency exchange. The token rose as much as 2.6% to $61,229, the highest in nearly a month but still short of the March 13 peak of $61,742. Bitcoin is up almost ninefold in the past year, a return that towers above that of more familiar assets like equities or bullion.

Biden Team Eyes Potential Threat From China’s Digital Yuan Plans

Saleha Mohsin, Bloomberg

The Biden administration is stepping up scrutiny of China’s plans for a digital yuan, with some officials concerned the move could kick off a long-term bid to topple the dollar as the world’s dominant reserve currency, according to people familiar with the matter. Now that China’s digital-currency efforts are gathering momentum, officials at the Treasury, State Department, Pentagon and National Security Council are bolstering their efforts to understand the potential implications, the people said.

Larry Summers: ‘I’m concerned that what is being done is substantially excessive’

Martin Wolf, Financial Times

Former treasury secretary criticises the scale of Biden’s fiscal policy and warns it could lead to overheating and wasted resources.