Aurelia Butler

Many investors have been expecting that Fed Chair Jerome Powell, who was nominated for the role by President Donald Trump in 2017, would be renominated for another four-year stint. Still, it is not seen as a done deal. Biden is still weighing whether to keep Powell as chair or elevate Fed Governor Lael Brainard to the post, an administration official said on Wednesday.Here are some questions investors may have: Who, when, how? Online betting website PredictIt https://www.predictit.org/markets/detail/7398/Whom-will-the-Senate-next-confirm-as-Chair-of-the-Federal-Reserve gave Powell a 74% chance of being confirmed by the U.S. Senate as of Thursday while the odds that Brainard would be nominated were 26%. Based on recent historical announcements, a pick should have been made by now. Prior announcements had come earlier in the calendar. Powell was nominated by Trump on Nov. 2, 2017, Janet Yellen, now U.S. Treasury Secretary, was nominated by President Barack Obama on Oct. 9, 2013 and Ben Bernanke was nominated by President George W. Bush on Oct. 25, 2005 and renominated on Aug. 25, 2009. Whoever Biden nominates will first be vetted by the Senate Banking Committee before going to a vote in the full Senate, where a simple majority would be needed.Powell, a Republican, has done more than any recent Fed chair to cultivate relationships on Capitol Hill, meeting regularly with members of both parties. At least one Democratic member of the Senate Banking Committee, Jon Tester of Montana, has endorsed Powell for a second term, while one other Democrat, Elizabeth Warren of Massachusetts, has said she would oppose him. Most observers believe Powell would get the backing of most, if not all, of the Republicans.Why is it important for markets? While the leadership of the U.S. central bank is always important to markets, Biden’s decision takes on heightened significance this year as the Fed has announced plans to start tapering its $120 billion in monthly bond purchases. At the same time, the Fed is monitoring a historic surge of inflation as global supply chains remain disrupted by the coronavirus pandemic. Some investors have said they would like to keep the status quo to ensure predictability.Moreover, Powell’s current term, due to run out in February 2022, has proven positive for risk assets, with the S&P gaining 74.5% since his appointment on Feb. 5, 2018 and hitting a series of new records in part helped by emergency measures the Fed launched in response to the coronavirus pandemic.What will it mean for monetary policy? Brainard, who was nominated to the Fed board by former President Obama in 2014, is widely seen as more dovish, or favoring looser monetary policy, than Powell in part because of her push to retain super-easy monetary policy until there is more progress on job recovery. https://www.reuters.com/business/feds-brainard-more-progress-recovery-ahead-though-still-far-goals-2021-06-01 However, while more dovish policies may be better for riskier assets like stocks, investors have expressed caution about changing the horses at this point in the race to recover from the pandemic. Some thought that a change at the helm risked a misinterpretation of Fed policy and could increase volatility. What else could change? A change at the top would also have consequences for Wall Street regulation on a slew of issues from bank capital and fair lending to climate-change risks and cryptocurrencies. Over the past four years Brainard opposed many de-regulatory changes led by Vice Chair for Supervision Randal Quarles and backed by Powell, and many on Wall Street expect her to be much tougher on the industry if she gets the job.”Replacing one dove by another would not necessarily change the outlook for monetary policy but would place greater emphasis on aspects like bank regulation and climate change,” wrote analysts at Societe Generale (OTC:SCGLY). More

Investing.com — U.S. employment vacancies data and the University of Michigan’s consumer sentiment poll head a quiet Friday for economic data. Russia keeps Europe on edge with aggressive posturing on the borders of Ukraine and Poland. Stocks are set to edge higher but are still on course for an inflation-stamped down week, and the COP26 ends as it began, in distinctly underwhelming fashion. Here’s what you need to know in financial markets on Friday, 12th November.1. JOLTS, inflation expectations in focusThe U.S. labor market – and its ability to drive inflation – will be in focus again later, as the Labor Department releases its monthly Job Openings and Labor Turnover Survey.Analysts expect the number of vacancies to have fallen slightly in October to 10.30 million from 10.44 million in September, but that’s still not far off the all-time record of 11.10 million seen in August. It’s also nearly 3 million above its pre-pandemic peak in 2019.The University of Michigan also releases its consumer sentiment survey for November, where the focus is likely to be on the inflation expectations subindex, which hit its highest since 2008 last month. Given the barrage of headlines about actual inflation hitting a 30-year high in October, that seems vulnerable to an upside surprise.2. Russia rattles its saber at EuropeRussian saber-rattling reached its loudest in some years, buttressing the efforts of its ally Belarus to deflect fresh EU sanctions against its leadership over fraudulent elections and political repression.  The Kremlin has massed troops on its Ukrainian border again, prompting U.S. diplomats to warn that Russia may make a fresh incursion into the country that it invaded seven years ago. It’s also conducting joint military exercises with Belarus near the town of Grodno in northwest Belarus, which borders on both Poland and Lithuania.Meanwhile, the standoff between Polish border security guards and thousands of migrants deliberately delivered  to the border by Belarusian President Alexander Lukashenko continues. Lukashenko threatened to stop supplies of Russian gas through the key Yamal-Europe pipeline on Thursday. While the Kremlin is unlikely to allow such an overt politicization of its gas supplies, the move indirectly raises the pressure on Europe to allow the start of exports through the Nord Stream 2 pipeline.The ruble – one of the year’s best-performing currencies – fell against the dollar for a third straight day, by 1%, to a five-week low.3. Stocks set to open higher; Chinese e-commerce giants have a mixed Singles DayU.S. stock markets are expected to open a touch higher Friday, with sentiment driving direction in the absence of major market-moving news.By 6:15 AM ET (1015 GMT), Dow Jones futures were up 78 points, or 0.2%, on course for a weekly loss thanks to rising fears of inflation and higher interest rates. The S&P 500 futures contract was up 0.1% and the Nasdaq 100 contract also edged up 0.2%.Stocks likely to be in focus later include Beyond Meat (NASDAQ:BYND), which has lost nearly 20% this week against a backdrop of a weaker outlook (it still trades at over 10 times forward sales). Chinese e-commerce giants Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) will also be in focus after mixed fortunes on their ‘singles day’ sales event. Gross merchandise value processed by Alibaba’s Taobao marketplace grew at less than 10% for the first time ever.4. COP26 ends with another victory for fossil fuelsThe world’s biggest hot air fest came to a characteristically underwhelming conclusion in Glasgow, Scotland, as negotiators at the COP26 conference watered down yet another pledge to move beyond fossil fuels and head off the risk of catastrophic climate change.A draft final declaration from the summit softened language on phasing out coal power and removing subsidies for fossil fuel use – largely at the insistence of Arab countries, according to Reuters.That adds to failures earlier in the week to make any substantial progress on creating a global market for carbon, enforcing earlier promises to help poorer countries finance the energy transition, or committing to annual reviews of how countries implement their promises.Agreement on long-term energy ideals was arguably never going to be realistic, given the short-term energy crisis currently afflicting many parts of the world, and the absence of Xi Jinping, who chose to stay home to secure a mandate from the Communist Party to rule as long as he wants.5. Oil prices fall again as stronger dollar weighsCrude oil prices fell overnight, leaving them barely ahead of the gain line for the week, as a stronger dollar continued to make life harder for non-U.S. buyers.By 6:30 AM ET, U.S. futures were down 1.7% at $80.20 a barrel, threatening to dip below $80 for the first time this week. Brent futures were down 1.5% at $81.67 a barrel.Baker Hughes’ rig count later will give fresh indications as to whether U.S. producers are accelerating production plans in response to the recent surge in prices, or whether they are continuing to prefer to repair balance sheets. The CFTC’s net positioning data will round off the week. Last week’s data showed that money managers were not excessively long of oil, by historical standards. More

LONDON (Reuters) – The Bank of England will be the first major central bank to raise interest rates but whether that initial increase comes as soon as next month or if it waits until early next year has divided economists polled by Reuters.Britain’s central bank surprised markets – but not a majority of the economists Reuters surveyed in October – by leaving Bank Rate unchanged at a record low of 0.10% last week.While the median forecast in the Nov. 8-12 poll was for a 15 basis point increase on Dec. 16, just under half of those polled, 21 of 47, said the Bank would hold firm. If it does act next month it would be its first December hike since 1994.”The meeting in December is now clearly ‘live’. Particularly important for the MPC will be the two upcoming labour market releases,” said Marchel Alexandrovich at Jefferies (NYSE:JEF).”If both are decent, the majority of the MPC could well be minded to increase Bank Rate by 15 basis points in December. However, if the December report is on the soft side, then it would clearly be more prudent for the decision on rates to be delayed until February.” Graphic: UK economy and Bank of England policy outlook https://fingfx.thomsonreuters.com/gfx/polling/akpezmerwvr/Reuters%20Poll%20-%20UK%20economy%20and%20Bank%20of%20England%20policy%20outlook.png Markets have also largely priced in a December rise.While economists’ forecasts for a December increase were on a knife edge, a rise in the first quarter of 2022 appears baked in, most likely in February when the Bank publishes its quarterly Monetary Policy Report. All but one of 44 economists are forecasting an increase by the end of March.Following that first rise to 0.25% next month, medians showed the Bank adding another 25 basis points in the second quarter before pausing until the beginning of 2023 when it will take borrowing costs to 0.75%. In October, that third increase was pencilled in for the latter half of 2023.LAGGARDBritain’s economic recovery from the coronavirus pandemic lagged behind that of other rich nations last quarter. Official data on Thursday showed GDP growth of 1.3%, the weakest three-month growth since the country was under lockdown in early 2021.The country faces the additional headache of Brexit which has further exacerbated supply chain issues caused by the pandemic.”It remains difficult to disentangle the impact of the pandemic from Brexit, which will become clearer through time. But the relative weakness in business investment and trade likely reflects some impact from the new trading relationship,” said Allan Monks at JP Morgan.Growth in this quarter and next was put at 1.0% and 0.8% respectively, both weaker than predicted last month. Across 2022 growth was forecast at 5.0% and in 2023 at 2.1%, unchanged from last month. The economy was expected to be back to pre-COVID levels by the end of March, almost 75% of respondents said.But while weaker growth would likely stay the BoE’s hand, inflation forecasts have increased dramatically and will remain more than double the Bank’s 2.0% target for a longer period.Inflation will average 4.1% this quarter, 4.2% next and 4.2% in the second quarter of 2022. Last month the respective forecasts were for 3.9%, 4.0% and 3.5%. The average for 2022 was now seen at 3.2%, up from October’s 2.8% forecast.BoE Governor Andrew Bailey said last week the Bank would act if it sees expectations of higher inflation pushing up wages, having previously said it would have to act to contain inflation expectations.Unemployment levels were seen pretty stable, peaking early next year at 5.0% before drifting down to 4.6%, giving some comfort to policymakers who are debating whether or not to raise rates.”I think they should. The labour data are quite strong,” said Brian Hilliard at Societe Generale (OTC:SCGLY), who expects a December increase.(For other stories from the Reuters global long-term economic outlook polls package) More

How well did you keep up with the news this week? Take our quiz.Belarus president Alexander Lukashenko has threatened to block the transit of gas and goods to Europe if the EU imposes further sanctions on his regime over the migrant crisis on the Belarusian-Polish border. Thousands of migrants from countries including Iraq, Syria and Yemen have gathered on the Belarus-Poland border in recent days. The EU accuses close Russian ally Belarus of funnelling migrants to its borders with the bloc.But in signs of a climbdown by Minsk on Friday, Belarus’s national airline said it would no longer allow citizens of Iraq, Syria and Yemen on to flights from Turkey to Belarus. In addition, the Kremlin said the Belarusian leader did not consult it before making threats to cut off oil supplies to the EU, according to Reuters. Meanwhile, there were reports overnight that Washington has warned its European allies of a potential invasion of Ukraine by Russia. US intelligence services have been monitoring a build-up of Russian forces close to the Ukrainian border, Bloomberg reported. The Kremlin reacted to the reports by saying there was no prospect of a Russian invasion of Ukraine. However, the Russian currency fell 0.4 per cent against the dollar and the Moscow stock market was down nearly 1 per cent.Thanks for reading FirstFT Americas. Here’s the rest of today’s news — GordonFive more stories in the news1. Toshiba board backs radical plan to split A radical plan to split Toshiba into three companies has set Japan’s oldest conglomerate on a new collision course with investors. 2. AQR hedge fund parts with five top managers Computer-powered hedge fund group AQR Capital Management, led by Clifford Asness, is to remove five partners from its ranks and trim its bond arm. Since assets peaked in 2018 many of the strategies used by the Greenwich, Connecticut-based fund have failed to generate sufficient returns. 3. Chinese Communist party clears way for Xi to tighten grip on power The CCP yesterday passed its first “historical resolution” in 40 years, in a development likely to pave the way for President Xi Jinping to stay in office until at least 2028.4. Moderna rejects claim that US co-invented Covid jab tech A rift between Moderna and the US government deepened yesterday after the biotech group dismissed claims by the National Institutes of Health that three of its scientists should be recognised as co-inventors of a patent underpinning the company’s Covid-19 vaccine.5. Uber chief flies into London amid driver shortage Uber’s chief executive Dara Khosrowshahi spent 24 hours in London this week — his first international trip during the pandemic — as the ride-hailing giant faces a shortage of 20,000 drivers ahead of the peak Christmas season. COP26 digest Global negotiators were locked in eleventh hour wrangling over critical components of a climate agreement on the final day of COP26, with a call to phase out fossil fuel subsidies weakened but still on the table.Payments by rich countries to developing countries to help them fund their adjustment to climate change is proving to be a major sticking point in the final hours of the UN climate conference.Opinion: We should not be too quick to dismiss “blah, blah, blah” on climate, writes Gillian Tett.Thanks to readers who shared thoughts about the progress — or lack thereof — at COP26. From reader John Bittleston in Singapore: “Has enough meaningful progress been made at COP26? Obviously not but the spreading of co-operation plus the US-China agreement suggests that co-operation is now the buzzword. That is a big step forward”The day aheadFinal day of COP26 It is crunch time for negotiators at the COP26 climate summit. Key issues on climate financing and carbon markets remain unresolved, according to the latest version of the latest working text. Here’s a reminder from our reporters in Glasgow of the five key issues to keep an eye on. Brexit talks The UK must respond in kind to the EU’s “really constructive proposals” or risk “complete instability” in Northern Ireland, the Republic of Ireland’s Europe minister warned ahead of talks between Brexit negotiators for the UK and EU today.Libya conference French president Emmanuel Macron will co-host an international conference on Libya in Paris today. Egypt’s president Abdel Fattah al-Sisi is also due to attend. (Reuters)Argentine midterm elections Polls show the centre-right opposition alliance is about 10 percentage points ahead of the ruling Peronist party ahead of Sunday’s midterm congressional elections. An electoral setback risks turning the Alberto Fernández presidency into a lame duck administration ahead of the 2023 general election.What else we’re reading and watchingPrime broking braces for new era European and US banks have long used prime broking, a business with steady if unspectacular returns, to forge more lucrative relationships with hedge funds. Credit Suisse’s decision to exit the business in the wake of the fallout from the collapse of Archegos Capital highlights how the industry is changing.The messy politics of Fed chair nominations The appointment of a Federal Reserve chair is rarely smooth but the decision on whether to reappoint Jay Powell is particularly fraught. Spiralling inflation and a trading scandal present an unedifying backdrop for the president who must decide soon on Powell’s fate. Here’s what some of Joe Biden’s predecessors in the Oval Office had to contend with.Rivian and Tesla have inherited Thomas Edison’s power to thrill The founder of General Electric was a technical wizard and a showman but the company he founded became boring. His spirit lives on in Elon Musk, a master at mixing technology and celebrity. But how long will it last, asks John Gapper.Hong Kong’s ‘new normal’ A heightened state of security since the 2019 pro-democracy protests has yet to loosen. And the widespread police presence feels especially strange in a city with one of the lowest crime rates in the world, writes Primrose Riordan.Taylor Swift’s battle to shake off the suits The pop star has waged a bitter, scorched-earth war on a private equity fund that owns her masters. It looks like in this instance, the singer will emerge victorious in her battle with the suits, writes Anna Nicolaou.WeekendOur shut-in days are over, and that means a return to old routines — and parties. As the spirit of socialising once again exerts its grip on New York and London, Alex Bilmes, editor in chief of Esquire, welcomes the change but asks what are the rules. More