Market Pulse

Market Pulse

November 22, 2021

In focus

President Biden announced on Monday that he would re-nominate Federal Reserve (Fed) Chair Jerome Powell for a second term. He also nominated current Fed Governor Lael Brainard as Vice Chair to replace current Vice Chair Richard Clarida when his term expires in January. President Biden stated that he would name a Vice Chair for Supervision and other nominees for the vacant spots on the Board of Governors at a later date.

Having Chair Powell lead the Fed with Governor Brainard as his number two will maintain much of the status quo. Both are well respected and experienced policymakers. Chair Powell has been a member of the Fed Board of Governors since 2012, has been chair since 2018, and briefly served at the U.S. Treasury under former President George H.W. Bush. Governor Brainard is a PhD economist, has been a Fed Governor since 2014, and served at the U.S. Treasury under former President Obama. 

Powell’s renomination is seen as the safe, bipartisan choice given his broad support in Congress, his nomination to serve as a governor under President Obama, and his elevation to chair under President Trump. Replacing Powell with Brainard would have been more controversial given that her nomination would have been done to appease a few Democratic senators, who said she more closely aligns to their political objectives.

On the monetary policy front, Powell and Brainard aren’t significantly different. Brainard is considered a bit more dovish, but she isn’t likely to dissent from Powell on monetary policy decisions. Her record demonstrates a more hands-on approach to climate change and bank regulations, and she had dissented during former Vice Chair for Supervision Randal Quarles’ tenure as the regulations chief.

A look back

  • Global stocks were mixed on the week with the MSCI ACWI ending the week in negative territory. U.S. stocks finished the week with modest gains while international developed and emerging markets equities slumped.
  • The House of Representatives passed President Biden’s Build Back Better plan. This came after the Congressional Budget Office found that the plan would add $367 billion to the deficit over 10 years. This estimate was demanded by moderate Democrats. Its fate is still uncertain in the evenly-divided Senate.

A look ahead

  • The Fed is releasing minutes on Wednesday from the Federal Open Market Committee meeting in November (FOMC). Market participants will look for hints about changes in how the Fed has been thinking about inflation and the tapering of asset purchases which will start this month.
  • Economic releases: New & Existing Home Sales, MarkitManufacturing & Services, Wholesale Inventories, Q3 GDP, Personal Spending & Income, Core PCE, U of Michigan Consumer Sentiment, FOMC meeting minutes, Durable Goods Orders.


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