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Jerome Powell keeps his job at the Fed, where he’ll be responsible for preventing inflation from spiraling out of control – without tanking the economy

After weeks of mulling, Biden decided to give Powell another term as Fed chair, which means he will have more influence over the trajectory of inflation than anyone else.

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Biden reappointed Jerome Powell, seated at left, to head the Fed. Some progressives wanted him replaced with Lael Brainard, seated right. AP Photo/Manuel Balce Ceneta

The person who helms the Federal Reserve is one of the most powerful figures in the world. Their job is also one of the most impactful on the lives of ordinary Americans, not to mention others across the world.

That will be especially true in the coming months as the Fed seeks to tame soaring prices without jeopardizing the economic recovery. The consequences of getting it wrong could be catastrophic and result in higher inflation, a return to recession or, worse, the Fed might have to deal with stagflation – in which you get both rising prices and a sluggish economy.

Jerome Powell is the current chair of the Fed, but his first term was set to expire in February. Progressive Democrats had been pushing President Joe Biden to replace him with Lael Brainard, a Harvard economist who is currently serving as the only registered Democrat on the board of governors of the Federal Reserve System. Progressives prefer her in part because she appears to be more sympathetic to more financial regulation and Fed action on climate change.

On Nov. 22, 2021, Biden announced he was sticking with Powell, after weeks in which Wall Street investors, economists like me and other central bankers around the world impatiently waited word. Powell had long been considered very likely to keep the job. Biden also elevated Brainard, nominating her to be vice chair. Both moves are subject to Senate confirmation.

But what are the responsibilities of the Fed and its chair? And what serious challenges will Powell face come 2022 and beyond?

Meet the chair

Most introductory macroeconomics textbooks – like the ones I use to teach my students – note that the chair of the Fed is so influential that he or she can make financial markets crash or soar just by uttering a few words in public. Investors admit they scrutinize and dissect every single word the Fed chair says and even count the number of times a certain key phrase is used – I call it “Fed speech bingo.”

While all of this might be a bit of a hyperbole to make students pay more attention to an admittedly boring chapter on money and banking, it’s undeniable that the Fed chair is very important.

The position is ultimately responsible for regulating the banking system, promoting stability of the financial system and conducting monetary policy by controlling the money supply and setting interest rates – the main duties of the Federal Reserve. Seven governors, including the chair, oversee the Fed, and each has a single vote over key policy decisions like interest rates. But the chair wields significant power by setting the agenda and acting as the public voice of the Fed.

The Fed’s most important job is conducting monetary policy, which involves the control of the money supply in order to promote sustainable economic growth. The main tool used to achieve this is “targeting” the short-term interest rate to achieve low inflation and stable employment. This is what is referred to as the Fed’s dual mandate. In recent years, the Fed has also turned to more unconventional methods, like purchasing commercial bonds and other assets.

What this means for the rest of us is that the Fed helps set the rates we pay on mortgages, car loans, credit cards and other types of borrowing. Lower rates mean credit is cheaper, which boosts the economy. But this in turn can drive up inflation.

The Fed can lift rates to reduce inflation, but raising the cost of credit can hurt economic growth and lead to higher unemployment.

This is exactly the careful balancing act facing the Fed right now.

A nearly empty case of different chicken cuts is displayed at a Publix Supermarket in Miami.
Prices of chicken and other goods have been surging lately. AP Photo/Marta Lavandier

The dual mandate – hawks and doves

Americans across the country are seeing higher prices at the mall, grocery store and gas pump as inflation, as measured by the Consumer Price Index, shows it soaring at the fastest pace in over three decades. At the same time, the labor market hasn’t fully recovered from the pandemic-induced recession early last year, with 4 million fewer employed people than in February 2020.

The focus for the Fed right now is clearly on the price increases that were initially expected to be short-term and should have stabilized by now. Most economists believe the recent price gains reflect temporary supply bottlenecks and the fact that prices fell sharply in the spring of 2020 at the onset of the COVID-19 pandemic, which make inflation figures now look much larger.

The big decision that the Fed and its chair will have to make in the coming months is when to begin raising interest rates to tame inflation. If they move too much or too soon, they risk causing an economic downturn, which could lead to substantial job losses. If they act too little or too late, they risk letting inflation get out of control – as Americans last experienced in the late 1970s.

In the language used by Fed watchers, this is the difference between being a hawk and a dove. That is, a hawk is more concerned more about fighting inflation, while a dove focuses more on growth and jobs.

While most experts on monetary policy believe things would be pretty similar whether Powell or Brainard is in charge, the latter is slightly more of a dove – meaning she was seen as more likely to put employment before fighting inflation.

In 2022, Powell will have to quickly decide what his top priority will be – with the specter of stagflation also emerging as a possible scenario.

Other issues on the chair’s agenda

The Fed is also responsible for fostering stability, integrity and efficiency of the nation’s monetary and financial system, mainly through regulation.

Financial bubbles are inflating in multiple markets from stocks to digital currencies – thanks in part to the Fed’s policy of easy money that has helped drive up prices. Inattention to financial stability was one reason the Fed missed the great financial crisis until it was too late.

Powell will have to decide whether to make this a higher priority, particularly if the Fed lifts interest rates soon. Doing so could cause a market crash.

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Finally, the Fed is facing pressure to tackle problems beyond its mandate, such as climate change and inequality. This is one of the main reasons Brainard’s in the running in the first place.

Progressive Democrats and activists are urging the Fed to use its regulatory powers to restrict the flow of capital away from carbon-intensive industries and redirect the money toward more climate-friendly ones. This idea is controversial because it’s not in its mandate, it risks hurting Fed independence and can ultimately lead to misallocation of resources.

Similarly, Nobel Prize-winning economist Joseph Stiglitz and other liberals want the Fed to do more to fight inequality. Research shows that the Fed’s policies are contributing to wealth inequality.

While the Fed is probably not able to fix the issues of wealth and income inequality – these are complicated, complex issues requiring congressional action, new legislation or law enforcement – it could at least start to pay more attention to its actions so that it is not actively contributing to the problem.

Continuity or change

But the selection of the Fed chair isn’t the only way Biden will be able to leave his mark on the central bank.

Over the next weeks, he has to fill three other open spots on the Federal Reserve’s board of governors, which provides him with an opportunity for a complete makeover and allows him to shift the Fed’s board toward a more Democratic-dominated one. And naming Brainard vice chair also furthers this agenda.

This may mean the Fed could still end up helping the Biden administration pursue progressive goals like fighting climate change and inequality, even with Powell at the top.

Either way, Americans would be wise to pay close attention to the Fed and who runs it.

This story has been updated to reflect Biden’s choice of Powell as Fed chair.

Veronika Dolar does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Spread & Containment

TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

Authored by Paul Joseph Watson via Summit News,

A major morning television show in the UK deleted a Twitter poll asking if vaccines should be made mandatory..

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TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

Authored by Paul Joseph Watson via Summit News,

A major morning television show in the UK deleted a Twitter poll asking if vaccines should be made mandatory after the results showed that 89% of respondents oppose compulsory shots.

Yes, really.

Good Morning Britain, which often tries to set the news agenda, posted the poll which asked the public, “With Omicron cases doubling every two days, is it time to make vaccines mandatory?”

The last screenshots Twitter users were able to obtain before the poll was wiped showed 89% oppose mandatory vaccinations, with just 11% in favor after a total of over 42,000 votes.

People demanded to know why the poll had been pulled, although it wasn’t exactly hard to guess.

Why did you delete this poll, is it because you were asked? Or because it shows the people don’t support this s**t, this tyrannical future your colleagues seem to want. We see you,” commented one respondent.

“Guess that wasn’t the answer they were looking for,” remarked another.

Good Morning Britain has failed to explain why it removed the poll.

However, it’s unsurprising given that the broadcast has been a vehicle for pushing pro-lockdown messaging since the start of the pandemic.

For most of that time, it was hosted by Piers Morgan, an aggressive proponent of lockdowns, mandatory vaccines and face masks.

The show also regularly features Dr. Hillary Jones, someone who at the start of the pandemic warned that face masks could make the spread of the virus worse, before getting the memo and doing a complete 180.

*  *  *

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Tyler Durden Thu, 12/09/2021 - 03:30

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Science

Life Sciences Expansions Take Off as 2021 Wraps Up

Several life sciences companies and life science-focused real estate firms announced expansion plans as 2021 comes to an end.

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Life Sciences Expansions Take Off as 2021 Wraps Up

Several life sciences companies and life science-focused real estate firms have announced expansion plans as 2021 comes to an end. Here’s a look.

Novavax to Expand Maryland Campus

Novavax, on the cusp of getting its COVID-19 vaccine authorized in numerous countries around the world, is expanding its footprint in Gaithersburg, Md., where it is headquartered. The European Medicines Agency (EMA) is expected to authorize the company’s vaccine soon, and so is the U.S. Food and Drug Administration (FDA). Czechia has already ordered 370,000 doses, with deliveries expected at the beginning of 2022. The company also has a deal with Fujifilm Diosynth Biotechnologies to manufacture millions of doses of the Novavax vaccines at its facilities in Billingham, U.K., with a £400 million investment in expansion.

Four Corners Acquired 150,000-Square-Foot Complex in Belmont, Calif.

Four Corners Properties acquired a 150,000-square-foot office building in Belmont, Calif., called the Shoreway Innovation Center. The seller was Westlake Group. Westlake bought it in 2016 for $61 million. The company plans to expand its use for life sciences, noting that 82% of it is currently leased to a mix of tenants with an average of less than three years lease term remaining.

“Shoreway Innovation Center offers the opportunity to bring office and life sciences space to a market where tenant demand is far outpacing available supply,” said Mike Taquino, executive vice president of CBRE’s Northern California Capital Markets team.

Genentech Leases Building Under Construction in South San Francisco

Source: BioSpace

Boston Properties and Alexandria Real Estate Equities are leasing a building under construction in South San Francisco to Genentech. It will be the first phase of a life sciences campus. The building is at 751 Gateway and is 229,000 square feet. The campus will be called Gateway Commons and is a joint venture between the two real estate firms. They expect initial occupancy toward the end of 2024. Genentech has been headquartered in South San Francisco for forty years, with a large corporate headquarters made up of 4.7 million square feet of five neighborhood hubs. The new site is about one mile’s distance from their main campus.

Mispro Biotech to Open New Facility in North Carolina in Early 2022

Mispro Biotech Services plans to open a new facility in Research Triangle Park (RTP), N.C., in early 2022. Mispro is a leading contract vivarium organization (CVO). The new facility, a full-service vivarium research facility, will be central to one of RTP’s biopark campuses.

“Since we first opened our doors here in 2013, we have seen incredible growth in the RTP cluster,” said Philippe Lamarre, chief executive officer of Mispro. “The time was right to expand into a new facility with more space and modern amenities where we can support the influx of biotechs who are seeking in vivo lab space.”

Laura Gunter, president of NCBIO, representing the life sciences industry in North Carolina, noted, “Mispro has become a cornerstone of the Triangle ecosystem as contract research and support companies are finding increased favor. Biotechs of all sizes and therapeutic disciplines are focusing more on their core competencies, which is opening the door to innovation like Mispro’s contract vivarium option. We are pleased to see their decision to expand here and support more North Carolina companies.”

BioSpace source:

https://www.biospace.com/article/life-science-companies-announce-expansion-plans-as-they-wrap-up-2021

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Government

Over 170 companies delisted from major U.S. stock exchanges in 12 months

  Over the years, United States-based exchanges have remained an attractive destination for most companies aiming to go public. With businesses jostling to join the trading platforms, the exchanges have also delisted a significant number of companies….

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Over the years, United States-based exchanges have remained an attractive destination for most companies aiming to go public. With businesses jostling to join the trading platforms, the exchanges have also delisted a significant number of companies.

According to data acquired by Finbold, a total of 179 companies have been delisted from the major United States exchanges between 2020 and 2021. In 2021, the number of companies on Nasdaq and the New York Stock Exchange (NYSE) stands at 6,000, dropping 2.89% from last year’s figure of 6,179. In 2019, the listed companies stood at 5,454.

NYSE recorded the highest delisting with companies on the platform, dropping 15.28% year-over-year from 2,873 to 2,434. Elsewhere, Nasdaq listed companies grew 7.86% from 3,306 to 3,566. Data on the number of listed companies on NASDAQ and NYSE is provided by The World Federation of Exchanges.

The delisting of the companies is potentially guided by basic factors such as violating listing regulations and failing to meet minimum financial standards like the inability to maintain a minimum share price, financial ratios, and sales levels. Additionally, some companies might opt for voluntary delisting motivated by the desire to trade on other exchanges.

Furthermore, the delisting on U.S. major exchanges might be due to the emergence of new alternative markets, especially in Asia. China and Hong Kong markets have become more appealing, with regulators making local listings more attractive. Over the years, exchanges in the region have strived to emerge as key players amid dominance by U.S. equity markets. As per a previous report, the U.S. controls 56% of the global stock market value.

A significant portion of the delisted companies also stems from the regulatory perspective pitting U.S. agencies and their Chinese counterparts. For instance, China Mobile Ltd, China Unicom, and China Telecom Corp announced their delisting from NYSE, citing investment restrictions dating from 2020.

Worth noting is that the delisting of firms was initiated due to strict measures put in place by the Trump administration. The current administration has left the regulations in place while proposing additional regulations. For instance, a recent regulation update by the Securities Exchange Commission requiring US-listed Chinese companies to disclose their ownership structure has led to the exit of cab-hailing company Didi from the NYSE.

Impact of pandemic on the listing of companies

The delisting also comes in the wake of the Covid-19 pandemic that resulted in economic turmoil. With the shutdown of the economy, most companies entered into bankruptcies as the stock market crashed to historical lows.

Lower stock prices translate to less wealth for businesses, pension funds, and individual investors, and listed companies could not get the much-needed funding for their normal operations.

At the same time, the focus on more companies going public over the last year can be highlighted by firms on the Nasdaq exchange. Worth noting is that in 2020, there was tremendous growth in special purpose acquisition companies (SPACs), mainly driven by the impact of the coronavirus pandemic. With the uncertainty of raising money through the traditional means, SPACs found a perfect role to inject more funds into capital-starving companies to go public.

From the data, foreign companies listing in the United States have grown steadily, with the business aiming to leverage the benefits of operating in the country. Notably, listing on U.S. exchanges guarantees companies liquidity and high potential to raise capital. Furthermore, listing on either NYSE or Nasdaq comes with the needed credibility to attract more investors. The companies are generally viewed as a home for established, respected, and successful global companies.

In general, over the past year, factors like the pandemic have altered the face of stock exchanges to some point threatening the continued dominance of major U.S. exchanges. Tensions between the US and China are contributing to the crisis which will eventually impact the number of listed companies.

 

Courtesy of Finbold.

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