Finance

Essential financial news & intel to start your week.
May 9, 2021
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Now that we’ve all picked our jaws up from the floor after that jobs report, let’s start thinking about next week. Before we dive in, let’s see if you can remember which of these measures in President Joe Biden’s American Families Plan is the most popular with voters, per last week’s Morning Consult/Politico poll.

 

A: Free preschool B: Child care tax credit C: Two years of subsidized tuition at HBCUs D: Two free years of community college

 

What’s Ahead

The House Financial Services Committee will hold a markup on Wednesday at 10 a.m. Why it’s worth watching: While nothing’s listed yet, I’m expecting to see some progress on bipartisan measures. One to watch: “The Financial Transparency Act,” introduced by ranking member Rep. Patrick McHenry (R-N.C.) and Rep. Carolyn Maloney (D-N.Y.), a senior Democrat on the panel, would require all eight financial regulators to create a set of dispersion standards for the data they collect under current law and publish it in an open-source format.

 

The Senate Finance Committee will hear on Wednesday at 9:30 a.m. from U.S. Trade Representative Katherine Tai on Biden’s 2021 trade agenda. Why it’s worth watching: The Biden administration is considering whether to uphold Trump-era bans on U.S. investments in certain Chinese companies (some reporting suggests they are likely to keep them). Maintaining this blacklist, which includes three of China’s largest telecom companies, would continue a fraught relationship with Beijing. The U.S. relationship with China will be the focal point of questions from both sides of the aisle, according to two committee staffers.

 

The National Association for Business Economics will hold its international symposium on Tuesday and Wednesday. Why it’s worth watching: Keynote speakers include Federal Reserve Board of Governors Vice Chair Richard Clarida, and discussions are expected with central bankers and international finance speakers from around the world. I’ll be keeping an eye on Clarida and other Fed speakers (Fed Governor Lael Brainard will be interviewed by Washington Post reporter Heather Long at a business journalism conference on Tuesday) for comments on where we are in the economic recovery after Friday’s disappointing jobs report.

 

Events Calendar

 

Week in Review

April’s jobs report stunned, with the economy adding only 266,000 jobs during the month, falling well short of expectations from economists. The unemployment rate ticked up to 6.1 percent from 6 percent. 

 

Everyone had a point to make about it. Treasury Secretary Janet Yellen quickly called for calm: “We knew this would not be a 100-day battle, and today’s jobs report underscores the long-haul climb back to recovery,” she said at a press conference

 

Democrats were quick to point out that jobs among women fell 8,000 in April after rising 595,000 the prior month, pointing to the unequal child care burden that women often face and the lack of universal prekindergarten and paid leave for new parents. Some used the opportunity to press for provisions in Biden’s American Families Plan. 

 

“Today’s jobs report is a stark reminder of what American families know all too well: child care is infrastructure. If we want moms and dads to go back to work as this pandemic subsides, we need to provide them with the child care they need,” Sen. Elizabeth Warren (D-Mass.) said in a statement

 

The Chamber of Commerce echoed concerns seen across the aisle that unemployment benefits are keeping people out of the workforce. 

 

“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” Neil Bradley, the group’s chief policy officer, said in a statement

 

Part of the discrepancy between expectation and reality could also be because of seasonally adjusted numbers. Non-seasonally adjusted jobs rose by about 1.1 million, and although seasonal adjustments “more or less” follow a “regular pattern,” the past year has been anything but normal. 

 

But more than anything, the jobs report is a good reminder for the Fed and economic policy watchers that patience is a virtue. The jobs report could be a blip, or it could mean that we’re in for a longer recovery than a lot of people hoped. 

 

Minneapolis Fed President Neel Kashkari on Friday pointed to the jobs report as evidence that the central bank has taken the right approach to adjusting policy in being cautious: “We need to rebuild this labor market and put them back to work,” he said. “Then there will be plenty of time to normalize monetary policy.”

 

In other news

 

  • The House Financial Services Committee had its third hearing on the GameStop Corp. trading frenzy. Lawmakers got off the topic of GameStop very quickly, and asked Securities and Exchange Commission Chairman Gary Gensler for his positions on everything from the Archegos Capital Management meltdown to cryptocurrency regulation.
  • Speaking of Archegos, the Fed flagged high leverage in hedge funds and similar firms in its Financial Stability Report. The report said that the coronavirus pandemic poses the most near-term risk to the financial system. 
  • The U.S. Treasury has allocated an additional $21.6 billion for rental assistance under Biden’s rescue package, and will add new rules aimed at helping renters more directly. 
  • The Biden financial regulation team is coming into form, with Richard Cordray, former director of the Consumer Financial Protection Bureau, picked to lead the Education Department’s Office of Federal Student Aid, which oversees the federal government’s $1.6 trillion student loan portfolio and financial aid programs. Yellen, meanwhile, tapped Michael Hsu, associate director of the Federal Reserve’s bank supervision and regulation division, as first deputy comptroller at the Office of the Comptroller of the Currency (and we learned that former Fed governor Sarah Bloom Raskin reportedly turned down an offer to lead the agency). 
 
Stat of the Week
 

58%

The level of support among all voters for Biden’s $1.8 trillion American Families Plan

 
The Most Read Stories This Week
 
 
Other Finance/Economy News
 
  • White House grapples with reports of labor shortage, inflation as recovery picks up steam (The Washington Post
  • Biden Open to Options on Spending as Congress Takes Over (Bloomberg)
  • Yellen’s comments on inflation spark confusion, clarification as White House tries to navigate economic pressures (The Washington Post
  • The Paycheck Protection Program is out of money. (The New York Times)
  • Jamie Dimon on Booming Economy and Finally Getting Off Zoom (The Wall Street Journal
  • Citi weighs launching crypto services after surge in client interest (Financial Times
 






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