Displaying items by tag: politics

In his first public appearance as a Federal Reserve governor, Stephen Miran argued that Trump’s economic policies are lowering inflation and opening the door for sharper rate cuts. Miran cast the lone dissenting vote at the Fed’s recent meeting, favoring a steeper cut than the quarter-point reduction approved by his colleagues. 

He downplayed concerns that tariffs are raising consumer prices, claiming instead that foreign countries are bearing the costs—an assertion disputed by many economists. Miran confirmed he was the outlier in Fed projections, pushing for rates as low as 2.75% to 3% by year-end and promising to lay out his case in an upcoming paper. 

His dual role as both a Fed governor and member of Trump’s Council of Economic Advisors has raised questions about the central bank’s independence. 

Finsum: While Fed Chair Jerome Powell emphasized that policy will ultimately be shaped by data-driven arguments, not politics, Fed independence is at risk.

While a far cry from the size and scope Dems were originally hoping for Biden’s multi-agenda bill will hit his desk after passing the house, but what does this mean for the market and the U.S. economy? The bill is $430 billion dollars and will change taxes, healthcare, and climate policy. The plan hopes to slash carbon emissions by 40% within the decade spending a hefty $369 billion. However, it plans to generate $737 billion through tax changes and will have a net impact of $300 billion in deficit reduction according to the CBO. For the market, the stock buyback provision will be critical, but congress says it will generate $74 billion on its own. Still, this has been a key avenue for corporate spending in the last decade and Wallstreet will claim it forces inefficient maneuvers by corporations. The inflation reduction act will only make a very small impact on inflation over the next decade according to experts.

Finsum: Equity buyback taxes are very dumb, distorting how companies effectively spend money with excess revenue will only hurt the economy and the companies.

(Washington)

Those who lean right might not want to consider it, but polls have been showing Biden and the Democrats leading (poll issues being a major issue, but ceteris paribus….). That said, investors have a duty to consider what would happen in the event of a Biden win, or a Democratic sweep. While Democratic wins in the House and presidency are quite plausible at this point, a win in the Senate still looks like a challenge. Let’s consider two scenarios then: a Biden win with a split Congress, and a Democratic sweep. In the first scenario, markets do not worry a whole lot. The Republicans holding onto the Senate would mean many of the left’s more radical proposals would be blocked. What about a Democratic sweep? That could be different, as Democrats could push through anything they wanted. However, even that scenario is looking less dire for investors because Biden is not moving to the left as much as feared. Also, since his priority will be to reopen the economy, sharp increases in taxes seem unlikely in the near term.

FINSUM: It still seems unlikely that Democrats could sweep given the Republican’s 53-47 lead in the Senate. So if Biden wins and the Democrats keep the House, it would probably be an okay (no big moves) scenario for investors.

(Washington)

The first round of the Democratic debates a few weeks ago was a little disappointing from an entertainment perspective. All the candidates seemed loathe to argue with one another, so the overall debate didn’t have the electric atmosphere that many of the candidates seem to have outside the debate venue. However, tonight and tomorrow should be different, as Joe Biden is likely to be under heavy attack as the frontrunner. The field of candidates is thinning and the stakes are much higher this time, which means there are likely to be more aggressive tactics. Biden himself has said he won’t be so friendly this time around.

FINSUM: If we had to make a call right now, we would say that Trump is likely to win re-reelection. Our reasoning is simple—the candidate most likely to win the Democratic bid is probably the one most tolerable to Republicans (i.e. Biden), which means the average American voter is more skewed to the right than to the left.

(Washington)

Bernie Sanders has just made his big pitch to America’s Millennial generation. The candidate has vowed to eliminate all student loan debt for both undergraduates and grad students, and make all future tuition free. To fund the $1.5 tn write-off, he is planning a new tax on stock, bond, and financial derivatives trades which he forecasts would bring in $2.4 tn over a decade. One of the things that differentiates this plan from others, like Warren’s, is that it will eliminate all debt, not just that of the lowest income borrowers.

FINSUM: This is an interesting plan from a strategic perspective because it not only appeals to the left and the young, but also the richest of the young because it would eliminate all debt regardless of income. This point has brought criticism from some Democrats.