Trump hated Powell. Now Republicans want Powell to remain Fed chair
Trump hated Powell. Now Republicans want Powell to remain Fed chair
From CNN Business’ Matt Egan
A pair of Congressional Republicans praised Federal Reserve Chairman Jerome Powell on Wednesday and called for him to remain in charge of the US central bank.
“There is a great deal of uncertainty right now. What I am certain of is this: You have earned and deserve another term as chair of the Federal Reserve,” said Rep. Patrick McHenry, the ranking member of the House Financial Services Committee.
Powell, a Republican and former investment banker, was nominated to lead the Fed by President Trump — who later blasted his handpicked Fed chief.
Trump, worried about roiling financial markets, repeatedly slammed Powell for raising interest rates. At one point in 2019, Trump questioned whether Powell is a “bigger enemy” than Chinese President Xi Jinping.
Powell’s four-year term as chairman expires in February and it’s unclear whether President Joe Biden will renominate him or seek to make his own mark on the Fed.
“You have proven to be a steady hand through the pandemic and our ongoing recovery, you have defended the independence of the Fed,” McHenry said.
Rep. Andy Barr, a Republican from Kentucky, said he joined McHenry’s view that Powell has “earned another term” as Fed chief.
The endorsements came despite concerns from Republicans about surging inflation. Barr said the latest consumer price figures painted a “grim picture.”
The stock market (and healthcare workers) want more scrubs
From CNN Business’ Paul R. La Monica
Doctors and nurses aren’t necessarily known for their fashionable work attire. But FIGS, the scrubs maker that went public in May and has nearly doubled in value since then, is trying to change that.
“We view ourselves as a lifestyle brand for on shift and off shift,” said Trina Spear, co-founder and co-CEO of the company, adding that FIGS is just getting started.
Spear told CNN’s Alison Kosik on “Markets Now” that FIGS still has a lot more room to grow, especially overseas. She added that a key factor about the company’s business is that there are very high replenishment rates, as people in the medical profession always need new uniforms.
FIGS currently only sells its medical garb in the US, Canada, Australia and the UK. Spear said the global healthcare apparel market is a $79 billion opportunity and that FIGS has just a 2% share of the US market.
“Many healthcare professionals around the world are excited for FIGS,” Spear said.
Still, the company has faced some growing pains — including a pretty big public relations miscue. FIGS was widely criticized last year after a video ad made fun of doctors of osteopathic medicine (or DOs) and women health care professionals in particular.
The now deleted ad showed a model pretending to be a DO who was reading a book called “Medical Terminology for Dummies”… upside down.
Spear said the ad was a “marketing misstep” and that the company immediately apologized for it and wants to ensure that nothing like that ever happens again.
“We are all about celebrating our healthcare professionals,” Spear said. “Healthcare professionals are the new icons.”
Employers still facing pressure to raise wages, ADP economist says
From CNN Business’ Paul R. La Monica
The job market has improved rapidly over the past year, but there are still many challenges for both employers and workers.
“Businesses do have choices,” said Nela Richardson, chief economist at ADP (ADP), on the CNN Business Markets Now live show on Wednesday.
Richardson told CNN’s Alison Kosik companies are pressured to fill job openings, yet there are limits as to how much companies can push wages higher to attract new talent — because they also have existing workers to pay.
Meanwhile, Richardson also noted that “hiring is still a challenge” even as “there are millions of people still unemployed.”
For many people looking to return to the workforce, especially women, many barriers that still exist: The lack of affordable day care is a particular problem for working mothers, she noted, adding that women overall continue to be paid less than their male counterparts.
ADP data shows the wage gap has narrowed somewhat lately, with women now making 82% of salaries for men in comparable jobs. But the main reason that this has improved from 80% previously is because more lower-paid women have dropped out of the workforce during the pandemic.
Powell: Home prices are rising at ‘high rate.’ But no ‘reckless’ lending (yet) that led to housing bubble
From CNN Business’ Matt Egan
Federal Reserve Chairman Jerome Powell acknowledged Wednesday that home prices are skyrocketing in the United States but downplayed concerns about another housing bubble.
“Housing prices are moving up across the country at a high rate,” Powell told lawmakers. “I suppose the good news is this is not being driven by the kind of reckless, irresponsible lending that led to the housing bubble and that led to the last financial crisis.”
The Fed chief added that this kind of risky lending is not happening, “at least so far.”
Still, Powell conceded that surging home prices — existing home prices spiked by 24% in May from a year earlier — is hurting for first-time homebuyers.
“Housing prices are moving up and of course that makes it more difficult for entry level buyers to move into the housing market,” Powell said. “That is a concern.”
Some economists have warned that the Fed’s massive bond-buying program is making the situation worse, effectively pouring gasoline on a housing market that is already on fire.
Global consumer confidence continues to rise
From CNN Business’ Paul R. La Monica
Cue the Nina Simone. Consumers around the world are feeling good. The Conference Board said Wednesday that global consumer confidence hit a new all-time high during the second quarter, up slightly from the first quarter.
The reasons are pretty obvious. More Covid-19 vaccine distributions have helped boost the economy and stock market. People are going back to work. They’re traveling. And coronavirus cases, despite an alarming uptick in some parts of the world due to the Delta variant, are still declining.
The Conference Board said that confidence was up in 42 of 65 markets surveyed, with the biggest jumps in North America and Europe — where vaccination rates are higher. But confidence fell in Asia (particularly in India) as well as Latin America.
The global economic recovery “remains highly uneven“, according to Dana Peterson, chief economist of The Conference Board.
She added that many economies are still struggling to contain Covid-19 because of a shortage of vaccines, new variants, and supply-chain bottlenecks that are raising prices.
Still, Peterson noted that “the elevated level of global consumer confidence bodes well for spending and, consequently, the global economic revival in the second half of this year and into 2022.”
Of course, consumers aren’t always the most reliable judges of what’s next for the economy. Sentiment is a tricky thing that often follows news headlines and the state of the stock market.
Consumers have notoriously been overly bullish just before economic or market meltdowns. That was the case in January 2000. Consumer confidence hit a then record high just as tech stocks were about to implode. Sentiment was also at a high level in 2007 before the housing market crashed.
Steven Mnuchin says Fed Chair Jerome Powell is wrong on inflation
From CNN Business’ Matt Egan
Former Treasury Secretary Steven Mnuchin suggested Wednesday that Federal Reserve Chairman Jerome Powell is not worried enough about inflation.
“I respectfully disagree with him on his not being concerned,” Mnuchin told CNBC, referring to Powell’s stance on inflation.
Mnuchin, who pushed former President Trump to nominate Powell, praised the Fed chairman’s performance and described him as a “close friend who I have a lot of admiration for.”
But Mnuchin said he agrees with BlackRock CEO Larry Fink, who said Wednesday he doesn’t think inflation will be transitory.
“It’s important for the Fed to make sure they get ahead of the curve so they don’t end up with 4% or 5% interest rates, which would really slow down this recovery,” Mnuchin said, adding that Treasury and Fed models “can’t really predict” what will happen to inflation after massive stimulus by the central bank and federal government.
The former Treasury Secretary also called for the Fed to scale back its asset purchases.
During prepared remarks on Wednesday, Powell reiterated his view that inflation will remain “elevated in coming months before moderating.”
Meanwhile in the CNBC interview, though Mnuchin confidently expressed his take on inflation, he repeatedly declined to say whether Trump is lying when he says the 2020 election was stolen.
Wells Fargo made nearly $4 billion last quarter, despite tumbling loans
From CNN Business’ Matt Egan
Wells Fargo swung back into the black during the second quarter as the US economy rebounded from the pandemic.
The troubled bank earned $6 billion, recovering from a loss of $3.8 billion a year ago. Wells Fargo’s per-share profit blew away expectations.
Wells Fargo (WFC) also slashed its allowance for credit losses by $1.6 billion, with CEO Charlie Scharf saying credit quality remained “exceptionally strong.”
Booming markets also sparked big gains for Wells Fargo’s venture capital and private equity investments.
Kyle Sanders, analyst at Edward Jones, said his team was “encouraged” Wells Fargo did not report new costs linked to the bank’s various scandals.
“Wells’ revamped leadership team is very talented and has brought a heightened sense of urgency to address past miscues,” Sanders said in an email.
However, like other banks, Wells Fargo is dealing with shrinking demand for its key money maker: loans. The bank reported a 10% drop in average consumer loans and a 22% tumble in commercial loans.
Scharf acknowledged the “headwinds of low interest rates and tepid loan demand remained.”
Wells Fargo’s share price, which for years badly trailed rivals, climbed 3% Wednesday morning.
US stocks climb ahead of Fed testimony
From CNN Business’ Matt Egan
US markets kicked off trading solidly higher on Wednesday.
- The Dow jumped 175 points, or 0.5%.
- The S&P 500 also gained 0.5%.
- The Nasdaq climbed 0.8.%.
The rally comes despite another hotter-than-expected inflation report that showed producer prices jumped by 7.3% in June.
Federal Reserve Chairman Jerome Powell is likely to get grilled on inflation by lawmakers during a hearing later on Wednesday. In his prepared remarks, Powell reiterated that inflation will remain elevated for several months before cooling off.
US stocks retreated modestly on Tuesday on renewed inflation worries.
Jerome Powell: Inflation will stay hot before cooling off
From CNN Business’ Matt Egan
Federal Reserve Chairman Jerome Powell expects inflation to stay hot in the coming months before cooling off, according to prepared remarks Wednesday.
“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Powell said in testimony to the House Financial Services Committee.
Powell noted that inflation metrics are being exaggerated by the fact that prices completely crashed last spring when the pandemic erupted. As the year-over-year comparisons become more typical, this temporary phenomenon will go away in the coming months.
But the Fed chief expects these “rapid” price hikes to “partially reverse” as bottlenecks ease.
Powell reiterated that the Fed “would be prepared” to act if officials saw signs that inflation expectations were persistently above the central bank’s goals.
Given the rapid recovery and surging inflation, the Fed discussed removing some of its emergency stimulus during its June meeting. Powell said the Fed will continue to discuss in upcoming meetings whether it should scale back its asset purchases.
“We will provide advance notice before announcing any decision to make changes to our purchases,” Powell said.
Source: http://rss.cnn.com/~r/rss/cnn_topstories/~3/tGrIDxyDtmY/h_97b32c5358e6485cdf7f873dcd5ad856
