Jerome Powell Reloaded

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For those who don’t remember, the hedge fund borrowed from banks to take stock and other positions, using extreme leverage. Each bank was unaware Archegos had borrowed from another. Should they be regulated better? Absolutely. Except that’s not the Fed’s job. Archegos happened because of a loophole in laws related to the Securities & Exchange Commission (SEC) that allowed single family offices to avoid most regulations. The Fed controls can and does regulate the risk levers at various banks. Since the financial crisis more than a decade ago, our banks are much better capitalized. Could the Fed do more? Of course. But considering two of the biggest crashes in US history were precipitated by Fed policy, we’d rather they focus on interest rates. Sponsored [7 Best Stocks for December – Free]( Zacks experts are unveiling the 7 top stocks to buy in December. These top picks are reduced from a list of 200 Zacks Rank #1 companies. Strengthen your portfolio or protect your retirement savings with our newly released report – free. Read more. Federal Reserve Jerome Powell Reloaded Key Takeaways - President Biden renominated Jerome Powell to the Fed Chair job from 2022-2026. - Recent scuttlebutt put Lael Brainard in the running, someone seen as more aggressive in bank regulation and climate change. - A spat of ethics issues and resignations amongst the Fed put Powell’s nomination briefly in doubt. The wait is over. President Biden picked Jerome Powell to lead the Federal Reserve ahead of the February 2022 deadline. A little backstory Jerome Powell was nominated by former President Trump in 2017 to serve the 2018-2022 term. Before joining the Fed, Powell was a partner at the private investment firm The Carlyle Group. He also served as assistant and undersecretary of the Treasury during former President H.W. Bush’s administration. What’s the Fed’s role? Twice a year the Fed Chair testifies before Congress on issues including the Fed’s monetary policy and objectives. The chair also regularly meets with the Secretary of Treasury. The Fed Chair’s main gig is serving as the head of the Federal Open Markets Committee (FOMC), which sets short-term US monetary policy and interest rates. Eight times a year, the seven members of the FOMC meet along with five reserve presidents of the Fed. Who else was in the running? Speculation ramped up in recent weeks that President Biden might go for Fed Governor Lael Brainard. Brainard, a veteran of the Clinton and Obama administrations, was seen as more progressive and a champion to fight financial risks at banks and climate change. She is also the only Democrat on the Fed board. Recent Controversy Powell had been widely expected to be renominated until recently. Multiple Fed officials found themselves embroiled in an ethics scandal eventually leading to several resignations. It turns out some Fed members were engaged in trading stocks at the same time they were implementing policies aimed at boosting markets. Prominent liberal voice Massachusetts Senator Elizabeth Warren doesn’t care for Powell saying he is a “dangerous man” who did little to regulate banks. Where we go from here The Fed finds itself in a position it hasn’t seen since the 1970s: high demand and low supply driving inflation. Recently, the FOMC announced it would taper its bond-buying program over the next several months. Markets have now priced in two rate hikes next year starting in June. Investors fear that stocks, largely driven by low-interest rates, will falter even as the economy struggles to recover from Covid. This situation is eerily similar to the late ‘70s when OPEC restrictions on oil drove energy prices through the roof. To combat the situation, the FOMC, led by Chair Paul Volker, jacked up interest rates past 15% to cut off demand and tame inflation. It worked. But it also drove the US economy into a recession, albeit briefly. The Bottom Line: Markets like certainty. Keeping Powell as the head of the Fed sends a signal that current plans aren’t changing. So, we can expect the taper program to wind down on cue with higher rates likely in the middle of next year. News & Insights Freshly Squeezed - [Top 10 Stocks to Invest in According to Alan Fournier’s Pennant Capital]( - [More Analysis on Existing Home Sales]( - [New Poll Shows Almost All Americans Are Deeply Concerned About Inflation As Prices Explode All Over The Country]( [Make sure to sign up for The Juice to keep receiving our premier investment newsletter.]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [whitelist us](. Update your email preferences or unsubscribe [here](. View our privacy policy [here](. Copyright ©2021 InvestingChannel. 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