Tag: stimulus plan

Yellen Joins The Party

Posted on by George Yacik

When then-President-Elect Joe Biden nominated Janet Yellen to be his Treasury secretary last month, the markets rejoiced. The former Federal Reserve chair was a known quantity, and investors hate uncertainty – they knew what they were getting. Even better, they liked what they were getting—a monetary dove who favors low-interest rates and supports an interventionist government and Fed. While she wouldn't be on the Fed in her new role, she still holds the same views.

Moreover, since she is Jerome Powell's immediate predecessor, and they both worked together on the Fed for several years, it was pretty much a given that the two will work closely and harmoniously together for the good of the country, as the times demand.

But the markets were also relieved that Biden did not bow to the so-called progressives on the extreme left of his party and pick someone more to their liking, instead choosing someone with safe, relatively moderate views that both parties could support – as indeed they did, by an 84-15 Senate vote. In other words, Biden wanted – and the markets demanded – an adult in the room, and that's what they got with Yellen.

Or did they? Continue reading "Yellen Joins The Party" →

Is More Stimulus A Slam Dunk?

Posted on by George Yacik

If there were any doubts about whether more federal helicopter money would be falling from the sky, those doubts should have been erased by several major events that happened last week.

The latest event—which likely sealed the deal—was the December jobs report, which showed the economy losing 140,000 jobs, the first drop in payrolls since last April. If Congress needed another reminder of how many people are still suffering out there and that more help is needed, that should do it.

The second event was the Democrats prevailing in the special elections for Georgia's two Senate seats, giving the party an effective majority in that body to continue holding on the House. On paper, of course, both parties have 50 seats in the Senate. But let's not forget that Vice President Kamala Harris will hold the tie-breaking vote.

But her vote probably won't be needed in the current political environment. While the Democrat majority seems razor-thin, if existent at all, we can be fairly certain that votes in favor of more stimulus will be much greater than that and bipartisan, thanks to the riot on Capitol Hill on Thursday. In light of what happened, how many Republicans do you think will be brave enough to vote against the Democrats on just about anything, particularly more stimulus checks, which many of them already favor? Continue reading "Is More Stimulus A Slam Dunk?" →

Bank of Japan To Release More Stimulus?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Yep, it's the same old story; once again, Japan is just muddling through. Private consumption is weak and inflation is practically non-existent. And inflation could get worse with the latest plunge in oil prices. And with Japan barely slogging through, investors' call for the BoJ to amp its efforts are on the rise.

So what's the problem? In the eyes of the BoJ, the situation isn't really bad enough to require further intervention.

What The BoJ Sees

So why wouldn't the BoJ want to add any more gunpowder to an already aggressive stimulus plan? The answer comes in two parts.

The first part was covered extensively in my last article and thus needs little elaboration. That is the BoJ wants the Abe government to shoulder some of the burden. It needs to fulfill its own side of the bargain and push forward much needed financial reforms.

And the second part? The BoJ wants to hold some gunpowder in its arsenal... just in case things get worse. With the Chinese stock market meltdown radiating across the world, the BoJ wants to make sure it has enough "weapons" to unleash. But so far, in the eyes of the BoJ, it's not yet bad enough to risk the economy.

Graph of Japanese Annual Inflation
Chart courtesy of The Statistic Bureau of Japan

Let's take a quick look at the latest key data. November's inflation figure (annualized), albeit rather low, still wasn't the textbook definition of deflationary pressures. From a total of 10 various segments, from food to energy to housing, only transportation and energy fell on an annual basis while Housing prices were unchanged at 0%. Despite the dismal numbers, for deflation to be a risk, prices of most items need to fall. And as the chart below shows, that has yet to happen. Continue reading "Bank of Japan To Release More Stimulus?" →