Premarket Share: Janet Yellen is heading to Congress. The stakes have never been higher


What’s happening: Not only does Yellen have to try to get the US economy back from its steepest contraction on record – he’ll also have to persuade Congress to get on board with Biden’s $ 1.9 trillion stimulus package, Because some looms were given at the price price tag.

According to written testimony written by CNN Business, “When economists look back on the epidemic, I hope they will conclude that the Congressional actions hurt a lot.” “But more must be done. Economists don’t always agree, but I think there is a consensus now:”

Without further action, we risk a longer, more painful recession – and later the long-term traces of the economy. “

Wall Street hopes Congress will back the Biden administration to pass another major relief bill, with millions of Americans still unemployed and new jobless claims on the rise.

But scale could be a major sticking point, with Biden’s team advancing an additional $ 1,400 incentive check, aid for state and local governments, and a wave of funding for the Kovid-19 vaccination and testing.

One of Yellen’s biggest challenges would be to persuade more conservative lawmakers that the benefits of adding the US $ 27 trillion debt load would increase the cost.

“Neither the President-Elect, nor I propose this relief package without appreciation for the nation’s debt burden,” Yellen’s prepared testimony reads. “But right now, with interest rates at historic lows, the smartest thing we can do is big.”

Yellen has a point: the United States can borrow for 10 years, compared to about 3%, while former President Barack Obama assumed office. But if interest rates rise, it can be difficult to reduce the country’s debt load.

Given Yellen’s background at the Fed, he would be able to speak on these issues – as well as any concerns about inflation from additional spending – with authority. Investors will be listening.

Jim Reid of Deutsche Bank said in a note to customers on Tuesday, “One would expect a lot of questions about debt stability and the Fed’s role.”

A personal comment: Yellen, in his prepared remarks, also cited his “working class” background in Brooklyn, where his father, a doctor, treated people from the family’s basement.

“He was the kind of doctor who treated the entire patient,” his prepared comment read. “He knew about his life; about when he was fired or couldn’t pay. They remain some of the clearest moments of my childhood.”

Bank earnings are a mix of optimism with uncertainty

The bank’s earnings show that the economy is expected to improve later this year.

Newest: JPMorgan Chase ()Jpm) – which on Friday recorded a record profit of $ 12.1 billion for the fourth quarter – said it had issued $ 2.9 billion in reserves to cover bad debts.

This is a sign that the bank feels that the economic situation is set to improve, not worse, thanks to vaccination programs and incentives.

In a conference call with reporters, CEO Jamie Dimon said the country could have a “very healthy economy” over the summer – especially if unemployed Americans and small businesses “who desperately need help” from the incoming Biden administration and Congress Get more incentive payments.

However, he insisted that many remain unknown. The bank still has more than $ 30 billion in credit reserves as a cushion when the situation worsens. And outside of mortgages, which are experiencing an epidemic boom, lending to consumers is muted.

Investor Insight: JPMorgan Results Look Better Than Investors Citigroup ()C) And Wells Fargo ()Wfc). Attention goes now Bank of america ()BAC) And Goldman Sachs ()GS), Which releases the results on Tuesday.

Goldman might be the one to see how busy the banks were. Companies are rushing to raise capital as they prepare for the next phase of the business cycle. Trading revenue also looks healthy.

China’s weak growth is the envy of the world

If you grade the world’s largest economies on a curve, China would top the class.

My CNN business associate Lauryn said that according to government data, the world’s second-largest economy has expanded 2.3% in 2020 compared to a year earlier.

This is China’s slowest annual growth rate in decades. No, the country has had a worse year since 1976, when GDP fell by 1.6% at the time of social and economic tumors.

But compared to other major world economies, which were in deep and prolonged recession, China comes out on top. The expansion also defeated estimates. For example, the International Monetary Fund predicted that China’s economy would grow by 1.9% in 2020. It is the only major world economy that the IMF expects to grow.

Big picture: Economists say the momentum from China’s economy will be crucial to global recovery in 2021. On this front too, there was good news: GDP grew 6.5% in the fourth quarter compared to a year earlier, up from 4.9% during the third quarter.

The data underline some problems, which may lie further. There has been an uptick in industrial production, while retailing remains fragile.

This raises the question: Has the epidemic sidelined China’s efforts to move its economy from one manufacturing to another? If so, what would the long-term prospects for growth mean?

next

Bank of America, Goldman Sachs, Charles Schwab ()SCHW) And before the State Street report opened to US markets. Netflix ()NFLX) After the closure.

Also today: Janet Yellen’s hearing before the Senate Finance Committee will be confirmed from 10 a.m. ET.

Coming tomorrow: results from Morgan Stanley ()M / s) And Procter and gamble ()PG).

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