Connect with us


JPMorgan: Powell Is At Risk Of Losing His Job

JPMorgan: Powell Is At Risk Of Losing His Job

With Fed Chair Powell’s term expiring in February, debate is starting to swirl about his fate: will Biden keep him, grateful for monetizing all the trillions in stimmies the president has unleashe



JPMorgan: Powell Is At Risk Of Losing His Job

With Fed Chair Powell's term expiring in February, debate is starting to swirl about his fate: will Biden keep him, grateful for monetizing all the trillions in stimmies the president has unleashed to purchase votes kickstart hyperinflation, or will more progressive elements in the Democratic party hold out for an even more librrrral Fed chair.

According to WSJ's new Fed-whisperer, Nick Timiraos, Powell "who enjoys broad support in markets and among lawmakers from both parties" is viewed by some inside and many outside the administration as the front-runner for the job, but if Biden decides he would prefer his own pick, rather than the Republican chosen by President Trump, Fed governor Lael Brainard is the most likely candidate to succeed him. More:

Some Democrats want Mr. Biden to replace Mr. Powell. They prefer the White House name a woman or member of a minority to lead the central bank as part of a broader push for diversity at the top ranks of the U.S. government. “Leaving aside my policy differences with the current leadership of the Fed, it would be a huge missed opportunity to reappoint a conservative white male as Fed chair,” Graham Steele, a former Democratic Senate aide, wrote in a tweet last year. Mr. Biden announced his intent Monday to nominate Mr. Steele to a top Treasury Department post.

But while the WSJ's conclusion was ambiguous and did not hint at either outcome as more likely, JPMorgan's chief economist, Michael Feroli, was more definitive warning that "Fed chair Powell faces an uphill challenge in securing a second term as Fed chair" adding what we already know namely that "if Biden opts for change, Governor Brainard is positioned as the leading contender."

Feroli starts off by praising Powell’s response to the COVID-19 financial crisis and recession which "was aggressive, creative, and determined; his leadership during that period has justly received applause from economists and legislators across the political spectrum." Praise notwithstanding, Powell "is now at risk of losing his job."

As he further notes, even though the framework review that he led moved monetary policy in a direction favored by progressives, the Fed has responsibility for more than just monetary policy (see "The Central Banks New Mandate: Social Justice, Race, Gender Issues, Climate Change And Inequality"). Given the central bank’s significant regulatory and supervisory powers, Feroli thinks that left-leaning voices in the administration likely will not want a Republican like Powell to remain chair, and thus JPMorgan sees "a significant chance that Powell is not nominated to serve another four-year term as chair after his current term expires in January. (Moreover, even though Powell’s term as governor goes to 2028, we suspect he would resign if not re-nominated as chair)."

If Powell isn’t nominated, Feroli thinks governor Brainard is the most likely replacement. Brainard has been a governor since 2014 and generally has been viewed as one of the more dovish members of the FOMC. Equally important for her chances of being nominated, "she has favored a more activist use of the Fed’s regulatory powers. Given her stated views on the economy and monetary policy, it is reasonable to conclude that a Chair Brainard would continue to tilt monetary policy in a dovish direction."

Other names that have been mentioned as possible Fed chairs include Michigan State professor Lisa Cook and Howard University professor and AFL-CIO chief economist William Spriggs. While less is known about their views on monetary policy, it’s clear from their public comments and research that they would also place strong emphasis on the Fed’s full employment mandate. Any of these candidates—Brainard, Cook, or Spriggs—would almost certainly reinforce the Fed’s current dovish stance. However, the Fed’s current policy stance is already laser-focused on providing accommodation. This raises the bar for how much more dovish any of these candidates can push the Committee.

In addition to a new chair, next year the Fed could see a few other changes in key positions.

  • First, there’s still a vacancy on the presidentially-appointed Board.
  • Second, it’s pretty clear that Quarles will not be nominated for another term as vice chair of supervision when his term in that role ends this October. However, he has indicated that he may stay on as governor even if he loses his leadership role (his term as governor ends in 2032).
  • Third, Vice Chair Clarida’s term as governor and vice chair ends next January. Even though he spear-headed the framework review that should further the administration’s economic priorities, the same political dynamics that may put Powell’s job at risk could also affect Clarida.

As Feroli concludes, these decisions could interact; if Quarles and Clarida departed the administration could be assured of a Democratically-controlled Board even with Powell as chair.

* * *

That said, no matter how the DC politics play out, JPMorgan believes that the Board is almost certain to remain focused on the Fed’s employment mandate next year, which was recently reinterpreted by the Fed’s framework review. The Fed will now no longer seek to minimize deviations from full employment, but rather shortfalls from full employment. To be sure, even Feroli is unsure how this will materially change how the Fed conducts policy as "it’s hard to find instances where the Fed tightened policy only because unemployment was too low (though it has hiked when low unemployment was forecasted to lead to inflation)."

The review also changed the employment mandate to be “broad-based and inclusive.” Conceptually, there is no simple way for the Fed to use one tool, the interest rate, to target differing objectives. In fact, many have argued that using such a simple, blunt tool, will only lead to even more labor market distortions while blowing the already biggest asset bubble in history even bigger.

As a practical matter, the FOMC may get "bailed out" by economic developments. One prominent dimension of a more inclusive labor market is the narrowing of black-white employment outcomes (Figure 1). Some of this narrowing has come from a deterioration in white prime-age labor force participation. In any event, the broad-based and inclusive clause may be a check the Fed doesn’t have to cash.

If this understanding is correct, then FAIT should at the least seek to move inflation expectations (here proxied by the Fed’s Index of Common Inflation Expectations) back to where they were before the Fed began its most recent hiking cycle.

Beyond that, the practical implication of the new framework will be policy that maximizes employment subject to the constraint that inflation expectations do not break out of the historical range, which when it comes to consumers, we already know they have through the 1-year point. Should inflation not revert to baseline fast, the Fed will be in deep trouble.

Finally, Feroli also cautions that there is "a modest risk that if a leadership transition is viewed as too extremely dovish by the market, this may ironically induce a more hawkish policy response to insure the Fed hasn’t completely lost inflation-fighting credibility." He goes on:

When President Reagan surprised the market on June 2, 1987, by nominating the perceived dove Alan Greenspan for Fed chair the dollar weakened and the 10-year Treasury note sold off 27 basis points on the day. From his first day as chair on August 11, 1987, until Black Monday on October 19, 1987, the Fed hawkishly surprised the markets, and the minutes indicate it was motivated by concerns that the markets were losing faith in the Fed’s inflation credibility.

This risk would only become a consideration if market-based inflation expectations—and inflation expectations more generally—moved into a range that was materially and persistently above the Fed’s 2 percent average inflation goal. Given that the market - if not consumers - has taken FAIT in stride, this is probably a pretty low risk, particularly if the next chair is already known to market participants.

Tyler Durden Thu, 07/22/2021 - 11:34

Read More

Continue Reading


Top Stories This Week: Gold Manipulators Go to Court, Silver’s Industrial Side in Focus

Catch up and get informed with this week’s content highlights from Charlotte McLeod, our editorial director.
The post Top Stories This Week: Gold Manipulators Go to Court, Silver’s Industrial Side in Focus appeared first on Investing News Network.



The gold price held above US$1,800 per ounce this week, finishing the period around that level, which is down from last week’s July high point of around US$1,830. 

Marc Lichtenfeld of the Oxford Club is one market watcher who’s struggling to understand why gold isn’t doing better this year. We had the chance to speak this week, and he pointed to money printing, the impact of COVID-19 and inflation as factors that should be pushing gold to record highs.

So far in 2021 those elements have have failed to do the trick, and Marc said he sees a disconnect between the yellow metal’s traditional fundamentals and what’s happening in the market.


Dig In To Find Out The Latest Outlook On Rare Earth

All The Information You Need To Make Wise Investments. Don't miss out!

“There just seems to be a disconnect between what are the traditional gold fundamentals and what’s happening out in the world … it’s really difficult to try to figure out what is happening with gold and why gold isn’t at record highs” — Marc Lichtenfeld, the Oxford Club

Of course, some would argue that price manipulation is the reason gold isn’t moving, and this week there was more news on that front. Chat logs were released in a spoofing trial for two former precious metals traders from the Bank of America’s (NYSE:BAC) Merrill Lynch unit, and they show one of the traders bragging about how easy it is to manipulate the price of gold. The trial isn’t over yet, but in its opening arguments that trader’s attorney said he stopped spoofing after he found out it was illegal.

Looking over to silver, I heard this week from Collin Plume of Noble Gold Investments, who thinks industrial demand will help push the white metal above the US$40 per ounce mark in the next 12 to 18 months. Silver has struggled to pass US$30 so far this year.

Solar panels are one of silver’s key uses, but it’s also found in other high-tech applications such as electronics and electric vehicles. Collin isn’t aware of any commodities that can replace silver in its end-use markets, and with demand “through the roof,” he expects to see shortages of silver by next year.

With silver in mind, we asked our Twitter followers this week if they think its industrial or precious side is driving the most demand right now. By the time the poll closed, about 70 percent of respondents said they think the precious angle is more important.


Uranium Soared Last Year While Other Resources Tumbled

What's In Store For Uranium This Year? Find Out In Our Exclusive FREE 2021 Uranium Outlook Report featuring trends, forecasts, expert interviews and more!

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

We’re going to finish up with the cannabis space, where there was a major announcement last week.

A group of Democratic senators headed by Senate Majority Leader Chuck Schumer introduced a draft of the Cannabis Administration and Opportunity Act, which among other things would remove cannabis from the Controlled Substances Act. The long-awaited bill will need 60 votes to get through the Senate, and opinion is split on whether that will actually happen.

INN’s Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares Investments, who thinks it has “no chance of passing,” but remains optimistic about prospects for American cannabis companies.

“No one should expect US (cannabis) legalization anytime soon. We should expect reforms; they’re not coming as fast as anyone would like to see, but everybody agrees we’re going to get some form of banking reform in the near future … we’ll see baby steps” — Dan Ahrens, AdvisorShares Investments

Why? In his opinion, these stocks remain undervalued compared to their Canadian counterparts, and are operating well even without federal cannabis approval. Any legalization progress would be a bonus.

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there’s someone you’d like to see us interview, please send an email to

And don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.


Profit from resource markets this year

Read our new report to get started!

The post Top Stories This Week: Gold Manipulators Go to Court, Silver’s Industrial Side in Focus appeared first on Investing News Network.

Read More

Continue Reading


Top 5 Rubber Stocks to Buy in 2021

Here are some of the best rubber stocks to buy right now. Increased demand and supply chain disruptions are putting pressure rubber prices.
The post Top 5 Rubber Stocks to Buy in 2021 appeared first on Investment U.



When it comes to investing, all the attention tends to go to healthcare, tech and increasingly renewable energy. But these aren’t the only stocks on the block, and some old mainstays can also add value to your portfolio. One of those old, reliable industries is rubber: it always has some level of demand, and that won’t likely change anytime soon. But recent economic conditions make rubber even more intriguing than usual. One of the biggest uses of rubber is car tires, and sharp economic recovery is likely to mean a sharp demand for new cars. Hence, we may also see a sharp increase in demand for rubber as many people head to the dealer to buy a new car. There’s more to it than just the auto industry, of course. CNBC reported that disruptions in the supply chain are also causing major disruptions. And we use rubber for many different essential items, including personal protective equipment and countless other items. With increased demand and supply chain disruptions, rubber stocks are poised for a rise. Here are some of the best rubber stocks to buy:
  • Goodyear Tire & Rubber (Nasdaq: GT)
  • Trinseo (NYSE: TSE)
  • Michelin (OTC: MGDDY)
  • Carlisle Companies (NYSE: CSL)
  • Protolabs (NYSE: PRLB)
If you’ve never invested in rubber stocks before, you might be wondering if they are a good investment. Let’s consider that question before looking at each stock more closely. And if you want to see how your investment portfolio might grow, check out our free investment calculator.

Is Rubber a Good Investment?

Rubber can certainly be a good investment because it is nearly ubiquitous; it is used in many different products, including tires, footwear, pharmaceuticals, textiles and many other products. As Zacks notes, rubber is among the most profitable industries when it comes to natural resources. But rubber isn’t exactly the most innovative product. Perhaps it was decades ago, but these days, it’s something most of us are just used to seeing. We don’t really demand rubber so much as the products that contain it. Hence, it’s only when demand for those products increases that the demand for rubber spikes. And as mentioned earlier, we are at a point right now where many people are looking to buy new cars, and rubber’s use in tires could cause a surge in demand. However, these things can be very cyclical. The Zacks page linked above highlights this very well. There, you can see the rubber tires industry has a YTD performance of 42.90% compared to 16.09% for IVV, an S&P 500 fund. But as good as that sounds, the 5-year performance for rubber tires is -33.71% compared to 112.67 for IVV. Given the downside risk, rubber is probably best used as part of a balanced portfolio containing more well-round assets, such as funds like IVV.

Rubber Stocks to Buy Now

If you want to “bounce” your returns upward with rubber stocks, here are some of the best rubber stocks to buy right now. Keep an eye on them as the situation with the auto industry progresses.

Goodyear Tire & Rubber

Goodyear Tire & Rubber is a tire manufacturer that makes tires for a variety of uses. Tires for automobiles are one of the biggest uses of Goodyear tires. However, they are also used on buses, trucks, aircraft, motorcycles, mining equipment, industrial equipment and farm equipment. In addition to the Goodyear name, it also has Dunlop and Kelly tires under its belt. Goodyear has been around since 1898 and was the first global tire manufacturer to enter the Chinese market. It produces a range of tires, rubber products and chemicals across the U.S. and Canada.


Trinseo is a global materials company that manufactures latex, plastics and synthetic rubber. Notably, it produces plastic for Lego. When it comes to rubber, Trinseo produces styrene-butadiene rubber (SSBR). This material is primarily used in high-performance tires. In addition to Legos, its plastic is used in automotive applications, LED lighting and medical devices. Trinseo is growing rapidly, with 17 manufacturing and 11 research facilities worldwide. In addition, it is already seeing healthy revenue increases as it continues to grow. Its website notes Trinseo is “dedicated to making a positive impact on society,” and it will support the “sustainability goals of our customers in a wide range of end-markets.”


Michelin is another name that is big in the tire manufacturing business, and the demand for new cars places it squarely on this list. In addition to the Michelin tire brand, the company also owns BFGoodrich and Uniroyal. BFGoodrich is a premium tire brand for sports cars, offroad vehicles and light trucks. Michelin is the largest tire manufacturer in the US and the second-largest in the world. It has 34 plans in two countries and had over $8 billion of sales in 2020. Its revenue has been increasing, as has its stock price. As the situation with the auto industry evolves, it will be interesting to see how Michelin fares.

Carlisle Companies

Founded in 1917 and based in Scottsdale, Arizona, Carlisle Companies is about more than just rubber. It is more of an umbrella under which there are a number of different operations. Its products and services include healthcare, commercial roofing, aerospace and electronics, lawn and garden, agriculture, energy, mining and construction equipment, and dining. Of course, there are many uses for rubber and plastic across these industries. In 2018, Carlisle Companies released a plan called Vision 2025 in which it detailed how it will continue to grow over the next 100 years.


Protolabs is an intriguing company. It produces low-volume 3D printed, CNC-machining, sheet metal fabrication and injection-molded custom parts. These parts are then used for short-run production and in prototypes. The company describes itself as the “world’s fastest digital manufacturing service.” It also provides rubber, metal and commercial plastics. Given its business model, it was able to produce several items during the coronavirus pandemic, including face shields, plastic clips and items used in test kits. They were in turn used in Minnesota hospitals, where the company is based.

More Investing Opportunities

The rubber stocks above might produce some big returns for investors. Although, there are many industries and stocks to choose from. So, here are some more investing opportunities and research… If you’re looking for expert analysis delivered straight to your inbox, consider signing up for Profit Trends. It’s a free e-letter that’s packed with investing tips and tricks. Whether you’re new or already an experienced investor, there’s something for everyone. The post Top 5 Rubber Stocks to Buy in 2021 appeared first on Investment U.

Read More

Continue Reading


Biden Says New Cuba Sanctions Are “Just The Beginning” 

Biden Says New Cuba Sanctions Are "Just The Beginning" 

President Biden says the newly announced sanctions against Cuba are "just the beginning" after rare widespread protests took over multiple cities on the communist-run island starting…



Biden Says New Cuba Sanctions Are "Just The Beginning" 

President Biden says the newly announced sanctions against Cuba are "just the beginning" after rare widespread protests took over multiple cities on the communist-run island starting earlier in July. In the Thursday fresh sanctions announcement Biden condemned "the mass detentions and sham trials that are unjustly sentencing to prison those who dared to speak out in an effort to intimidate and threaten the Cuban people into silence," according to a White House statement

Specifically these latest sanctions target the defense minister and the National Special Brigade of Cuba’s Interior Ministry (on top of broader decades-long US sanctions against the government and economy).

Cuban Americans at a protest in Miami, via AP

Biden said these two officials in particular are spearheading the crackdown on Cuban protesters. He suggested there's much more to come.

"This is just the beginning — the United States will continue to sanction individuals responsible for oppression of the Cuban people," Biden said.

The administration further said it's working to "restore internet access" in Cuba after widespread shutdowns were reported over this month as Cuban security forces struggle to gain control of the demonstrations, largely driven by an economy in tatters, food and fuel shortages, and severe mismanagement of the pandemic crisis. 

Currently, the US even prohibits remittances, barring Cuban-Americans from sending money to their families, with last year Western Union also shutting down all money-sending services to Cuba after the Trump administration re-imposed sanctions. 

The Biden White House since he took office has vowed to "review" Trump era policies, but so far has kept them in place and now even appears to be ramping up the pressure once again. He again hinted this week that there could be a policy change toward "easing" restrictions. 

Cuba has for its part alleged a foreign hand behind the recent protests, especially following the so-called "Cuban Twitter" initiative of the past decade, which was long ago exposed as part of Washington's covert efforts to stir unrest on the island. 

Tyler Durden Fri, 07/23/2021 - 20:40

Read More

Continue Reading