Monday Musings: January 25, 2021

Jan 25, 2021


Public Trust Credit Team
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Former Federal Reserve Chief Janet Yellen to be sworn in by Senate as Treasury Secretary

Last Friday, the U.S. Senate Finance Committee unanimously approved Janet Yellen’s nomination as Treasury secretary; the former Chair of the Federal Reserve is expected to be officially sworn into office early this week. Yellen will be overseeing President Biden’s ambitious spending plans as he pushes for Congress to back his $1.9 trillion pandemic relief package. She remains supportive of Biden’s spending proposal in what would be the second-largest emergency spending package in U.S. history, should it receive legislative approval.  
The former Fed Chief reiterated her stance on a large fiscal package during her hearing with the Senate Finance Committee last week, expressing to Senators her view that Congress needs to “act big” if the U.S. economy hopes to avoid the risk of a prolonged recession and longer-term job losses. According to an article in Reuters, Yellen expressed to Senators that she would definitely consider backing the raising of tax rates for small businesses, imposing a new minimum corporate tax rate, and raising capital gains taxes. With expectations for higher tax rates and increased government borrowing, Yellen’s stance on economic policy certainly marks a change in philosophy compared to the prior administration that should help to take the pressure off the Fed in spurring a faster economic recovery.

Biden is in the White House and Brady is in the Super Bowl, but the world has changed

Some might be saying “deja vu” reading the title above, but we offer two new data points as a measure of how different the world is and how adaptable American businesses have become. Normally, the Public Trust Credit Team would be preparing for the Structured Finance Association’s annual gathering in Las Vegas around this time of year, but the 2021 conference was moved from February to May and shifted again to July. To address the delay, a broker-dealer organized a virtual conference to provide video conferences in place of face-to-face meetings. While these meetings cannot replace the opportunities to look administrators in the eye and network with colleagues, they can certainly aid in due diligence.
Although this year’s Super Bowl will feature Tom Brady for the tenth time, it will not be airing product advertisements from stalwarts Budweiser, Pepsi, or Coca-Cola. Each pointed to the COVID-19 pandemic as the reason with some indicating they will purchase air time to educate the public on vaccinations. Here’s to hoping 2022 will allow credit analysts to converge on Las Vegas to discuss structured finance, enjoy a drink, and probably lament that Tom Brady played in yet another Super Bowl.
All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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