London Daily

Focus on the big picture.
Wednesday, Nov 04, 2026

Janet Yellen's first battle is already taking shape

Janet Yellen's first battle is already taking shape

President-elect Joe Biden has made the historic decision to tap Janet Yellen, former chair of the Federal Reserve, as his Treasury Secretary. She doesn't have an easy job ahead of her.

What's happening: Yellen — who, if confirmed by the Senate, would be the first woman in the role — will be tasked with shepherding America's economy out of the pandemic, as well as addressing rampant inequality made worse by the Covid-19 crisis. In a time of deep partisanship, that's a very tough role.

The battle lines of Yellen's first big fight are already being drawn as the need for additional government aid becomes more acute.

House Democrats under Speaker Nancy Pelosi and Republicans led by current Treasury Secretary Steven Mnuchin have been unable to agree on another spending package to help struggling Americans and businesses since March. Now, as Covid-19 cases surge, forcing a wave of new restrictions from local leaders, the urgency is rising.

The situation could be even worse by the time Yellen takes the reins. A new model from Washington University in St. Louis projects that Covid-19 cases in the United States could nearly double over the next two months, demanding a rise in social distancing measures.

Yellen, who led the Fed from 2014 to 2018, when the US economy was still recovering from the 2008 financial crisis, has made her position on the necessity of more stimulus clear.

"While the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support," she said in a Bloomberg TV interview in October.

The question is whether Congress will cooperate. Wall Street has now largely written off the expectation that something can get done this year, with little progress made since the election.

Looking ahead: Control of the Senate — which could give Republicans significant leverage — comes down to a set of runoff elections in Georgia in early January. This will be crucial for determining the path forward, according to Goldman Sachs' Alec Phillips.

"Senate control is probably the most important factor in determining the total amount of fiscal support," he said in a recent research note. "Fiscal stimulus is likely to be much smaller under a divided Congress and the size is likely to grow smaller the longer it takes Congress to pass legislation."

Yellen is known as a clear communicator. But she may have trouble achieving her aims given the conditions.

Wall Street's take: Investors like Yellen, who they see as in sync with current Fed Chair Jerome Powell.

"The US economic response to the pandemic may benefit from more tightly coordinated response from the Fed and Treasury," Mark Haefele, UBS Global Wealth Management chief investment officer, told clients Tuesday.

Both Yellen and Powell are considered doves who will be in favor of keeping policies supportive of the economy in place for some time. Powell and Mnuchin, meanwhile, have clashed recently over the Trump administration's decision to pull the plug on emergency Federal Reserve lending programs.

Wall Street also sees Yellen as known entity who is not expected to be as bold as, say, Sen. Elizabeth Warren in pushing for regulation of corporate players like big banks.

But my CNN Business colleague Matt Egan notes that in early 2018, Yellen imposed unprecedented sanctions against Wells Fargo (WFC) for "widespread consumer abuses." The penalties, which remain in place today, hobbled the bank, which has yet to recover.

Executives prepare for Biden's presidency


The US General Services Administration informed President-elect Joe Biden on Monday that the Trump administration was ready to begin the formal transition process. But Corporate America hasn't wasted any time orienting itself for the Biden era, my CNN Business colleague Paul R. La Monica reports.

I want to wrap up by saying congratulations to President-elect Biden," Walmart CEO Doug McMillon — who also serves chairman of the prominent Business Roundtable — said during the retailer's earnings call last week.

Top executives have expressed hopes for a more stable political environment after nearly four years of disruptive tweetstorms.

"Biden, throughout his career, has shown a tendency toward pragmatism," Kevin Chavous, president of academics, policy and schools for online learning company K12, said during a virtual investor day last week. "He has never really ventured too far to the left, and he's often gone out of his way to open doors to conversations with leadership in Congress on the right."

Others have been busy trying to figure out what Biden's policies, particularly on issues such as trade and regulation, will mean for their bottom lines.

"Commentary from the Biden camp doesn't indicate any early softening on the stance with China," said Jeremy Smeltser, chief financial officer of appliance and plumbing supply company Spectrum Brands Holdings, on a Nov. 13 earnings call.

And the lobbying is already beginning in earnest.

In an open letter dated Monday, Intel (INTC) CEO Bob Swan urged the new administration to invest more in digital infrastructure and manufacturing.

"Your planned investment in American-made goods is critical to U.S. innovation and technology leadership," Swan wrote.

Extreme greed is ruling the market again


The bulls are firmly in control of stock markets as vaccine optimism takes hold, driving expectations that indexes like the S&P 500 — which recently hit a record — can keep pushing higher next year.

See here: The CNN Business Fear & Greed Index, which tracks market sentiment, is now in "extreme greed" territory, having risen in the past week.

Strategists are rolling out ambitious targets for the stock performance next year, despite a lack of clarity on the mechanics of vaccine distribution.

Ed Yardeni, president of Yardeni Research, told clients on Tuesday that he now thinks the S&P 500 could hit 4,000 points by the end of next year, pointing to the number of companies revising profit expectations higher. That would be a nearly 12% jump above the index's Monday close.

"The rebound in 2020 consensus earnings expectations has been remarkable under the (pandemic's) circumstances," Yardeni said.

Goldman Sachs is even bolder, predicting that the S&P 500 will hit 4,300 — a 20% jump over current levels — by the end of 2021. While hope has driven markets higher for much of this year, the bank thinks the next phase of the rally is about to set in.

"From a market perspective, the crucial issue now that the [US] election is out of the way is what will happen to growth," Goldman's strategists said. "This is now increasingly dependent on a Covid vaccine."

Up next


Abercrombie & Fitch (ANF), Best Buy (BBY), Dick's Sporting Goods (DKS), Dollar Tree (DLTR) and J.M. Smucker (SJM) report results before US markets open. American Eagle (AEO), Dell (DELL), Gap (GPS), HP and Nordstrom (JWN) follow after the close.

Also today: US consumer confidence data for November posts at 10 a.m. ET.

Coming tomorrow: Initial US unemployment claims for last week are expected to come in at 730,000, down slightly from the previous week.

Newsletter

Related Articles

0:00
0:00
Close
Department for Business and Trade Overhauls Protection Standards for Digital Animation and Moving Image Files
Intellectual Property Office Introduces Thirty-Month Grace Period for International Product Launches
Intellectual Property Office Targets Anti-Competitive Filings With New Powers to Verify Novelty Before Registration
Creative Industries Minister Ian Murray Praises Regulatory Reforms to Safeguard Small Businesses and Micro-Enterprises
Government Unveils Major Design Framework Overhaul to Protect British Creators and Boost Economy
Global Asset Management Reports Surge in British Dividend Payouts Driven by Strong Financial and Mining Sectors
HM Treasury Confirms Strongest Group of Seven Growth Figures as Fiscal Consolidation Plans Progress
Department for Energy Security and Net Zero Approves Construction of New North Sea Offshore Wind Hub
Northern Ireland Executive Finalizes Public Sector Pay Agreements Following Months of Inter-Agency Negotiations
Welsh First Minister Eluned Morgan Secures Cross-Party Support for Regional Clean Energy Infrastructure Bill
Competition and Markets Authority Launches Formal Investigation Into Dominant Artificial Intelligence Cloud Partnerships
United Kingdom Foreign Secretary David Lammy Concludes High-Level Diplomatic Mission to Washington and Ottawa
Scottish Government Announces Emergency Housing Investment Package to Address Escalating Urban Homelessness
Chancellor Rachel Reeves Finalizes Corporate Tax Adjustments Ahead of Upcoming Business Investment Summit
National Health Service England Unveils Emergency Winter Resilience Plan to Combat Projected A&E Overcrowding
Bank of England Monetary Policy Committee Votes to Hold Base Interest Rate Steady at Four Point Seven5 Per Cent
UK Gross Domestic Product Expands by Zero Point Four Per Cent in Third Quarter Driven by Resilient Services Growth
Northern Ireland Executive Agrees on Multi-Year Public Sector Pay Restructuring Framework at Stormont
Department for Transport Confirms Acceleration of Electric Vehicle Charging Infrastructure Rollout Along Strategic Motorways
Welsh Government Announces Emergency Funding Package to Support Agricultural Sector Facing Severe Weather Impacts
High Court Rules in Favor of Environmental Coalition Over Government Carbon Reduction Plan Deficiencies
Office for National Statistics Reports Stable Retail Sales Growth Supported by Strong Digital Commerce Volumes
Scottish First Minister John Swinney Secures Cross-Party Support for Renewable Energy Export Expansion
National Health Service Digital Reports Major Breakthrough in Reducing Elective Waiting Lists Across England
Chancellor Rachel Reeves Outlines Infrastructure Spending Reforms to Boost Regional Economic Growth Across Northern England
Bank of England Holds Baseline Interest Rate at Five Percent Amid Persistent Core Inflation Pressures
House of Lords Advances Representation of the People Bill to Modernize Electoral Law Ahead of General Election
Financial Markets and Private Equity Assess Tax and Corporate Realignment Following Recent Chancellor Budget Adjustments
Justice Committee Warns Legal Aid Is a Service in Managed Decline Due to Inadequate Government Funding Responses
Royal Navy Intercepts Russian Intelligence Vessel and Warships Across Intensive North Sea Operations
Business and Trade Committee Slams Government Policy on China as Fragmented and Lacking Strategic Direction
Home Secretary Shabana Mahmood Softens Immigration Plans Following Intensive Cabinet Backlash Over Settlement Timelines
Automotive Industry Data Reveals Continued Acceleration in Battery Electric Vehicle Registrations Across British Dealerships
High Court of England and Wales Rules on Landmark Legal Challenge Regarding Local Government Housing Mandates
Department for Energy Security and Net Zero Approves Expanded Offshore Wind Infrastructure Along Scottish Coastline
Competition and Markets Authority Launches Broad Investigation Into Artificial Intelligence Infrastructure and Cloud Partnerships
United Kingdom and European Union Launch High-Level Preparations for Bilateral Defense and Security Summit in Brussels
National Health Service England Unveils Emergency Workforce Reforms to Alleviate Winter Accident and Emergency Pressures
Chancellor Rachel Reeves Finalizes Autumn Budget Adjustments to Meet Fiscal Rules and Fund Public Services
Bank of England Prepares for Interest Rate Decision Amid Rising Bond Yields and Inflationary Pressures
House of Lords Begins Detailed Legislative Scrutiny of Representation of the People Bill and Cyber Security Laws
Metropolitan Police Detain More Than Three Hundred Individuals Following Large-Scale Demonstration Outside London Embassy
Home Office Prepares Stricter Residency Rules Requiring Vulnerable Migrants to Wait Decade for Settlement Rights
Professional Mental Health Bodies Demand Statutory Regulation for Counsellors and Psychotherapists
National Grid Confirms Construction of Britain's Largest Electrical Substation to Power Teesside Data Centre
Prime Minister Keir Starmer Travels to Samoa for Commonwealth Summit Amid Debates on Economic Cooperation and Reparations
Home Office Implements Enhanced Digital Border Controls and Visa Processing Systems at Major Airports
Office for National Statistics Reports Stable Employment Participation Rates Across Regional Labor Markets
Department for Business and Trade Announces Strategic Partnership to Secure Critical Mineral Supply Chains
Scottish Government Unveils Regional Economic Development Strategy to Boost Advanced Manufacturing in Glasgow and Dundee
×