Federal Reserve Chairman Jerome Powell
Mark Wilson/Getty ImagesIt’s Fed day on Wall Street but Chairman Jerome Powell is likely to be a bit player on Wednesday.
The Federal Open Market Committee, the one that sets short-term interest rates, will issue a statement Wednesday afternoon. In the past, it was a must-watch event—like the Oscars. Like this year’s Oscars, it can be skipped.
It’s not that the Fed doesn’t have an important job to do. It’s tasked with making sure people are working and inflation doesn’t get out of hand. But with the unemployment rate still 6% and core inflation, which excludes commodity prices, running below 2%, there is virtually no chance interest rates will change.
Yes, the Fed has other ways it could surprise investors. A slowdown in bond purchases would move markets, but that’s not going to happen. The biggest risk might simply be a slip of Powell’s tongue.
Wall Street will watch the Fed because it has to—but it will be riveted to President Joe Biden, who will sell his $1.8 trillion American Families Plan to the American people starting at around 9 p.m. Wednesday. It’s designed to increase funding for education with free prekindergarten and community college, and will be funded with higher taxes.
These days, Pennsylvania Avenue is where the action is.
—Al Root
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Biden Boosts Hourly Pay for Federal Contract Workers to $15
President Joe Biden raised the federal minimum wage to $15 an hour for hundreds of thousands of federal contract workers on Tuesday, moving closer to fulfilling his campaign pledge to institute a federal minimum for all workers.
- In an executive order, Biden raised wages for cleaning and maintenance workers, nursing assistants caring for veterans, cafeteria and food service workers, workers with disabilities, and seasonal outfitters and guides on federal lands, who were excluded from the federal minimum by President Donald Trump.
- The new wage is 37% higher than the current minimum pay of $10.95, enacted by President Barack Obama in 2014. The order also ends the tipped minimum wage of $7.65 an hour for some federal contractors, giving them the same $15 minimum. The increases will take effect by March 30, 2022, and be indexed to inflation after that.
- The White House said the pay increase will boost productivity, morale, and retention, and cut absenteeism, recruitment and supervisory costs. The increase is not expected to cause major job losses or cost taxpayers more money, the White House said.
- At least 27 states, cities and counties already pay a $15 minimum hourly wage. California, Massachusetts, and Connecticut are among the states that will hit that rate by 2023, according to the National Employment Law Project.
What’s Next: Biden tried to raise the federal minimum wage to $15 an hour as part of his $1.9 trillion coronavirus relief package, but the provision was eliminated in the Senate. The White House said the president still plans to push for its enactment to fulfill a campaign promise.
—Janet H. Cho
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Less Stringent Mask Rules and a Return to the Office by July
Americans have made “stunning progress” on handling the coronavirus recovery since January, President Biden said in comments about new masking rules that mark yet another step in achieving his July 4 target date for life getting “closer to normal.”
- The Centers for Disease Control and Prevention’s revised guidelines say fully vaccinated Americans don’t need to wear masks while walking, hiking, biking, running solo, dining outdoors, or gathering in small groups outside.
- Although vaccinated people are less likely to catch or spread the virus, the CDC still recommends wearing masks in crowded places such as stadiums and concerts, in indoor gatherings with unvaccinated people, and while at the barber, beauty salon, mall, movie theater, or house of worship.
- “The bottom line is clear: if you’re vaccinated, you can do more things, more safely, both outdoors as well as indoors,” Biden said, suggesting that as an incentive for people to get the vaccine.
- In another sign of a return to normalcy, JPMorgan Chase told about 162,000 U.S.-based employees that they should return to the office on a consistent basis by early July. The company said it would continue safety protocols like cleaning and air filtration, mask wearing and daily health checks.
What’s Next: Confirmed Covid-19 cases are still averaging about 55,000 a day, while the pace of vaccinations has slowed from 3.2 million a day in mid-April to about 2.7 million a day, according to CDC figures. More than 96 million people, or 37% of adults, are fully vaccinated.
—Janet H. Cho
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Profits Soar as Tech Firms Benefit From At-Home Habits
Tech companies Microsoft, Alphabet, and Advanced Micro Devices rolled out quarterly earnings on Tuesday that beat expectations—by a mile in Google’s case—and set optimistic expectations for coming months as the economy climbs out of the pandemic.
- Working from home raised demand for cloud services and boosted online advertising as companies tried to reach consumers who were watching videos and other content and checking in with friends on social media sites. Gaming consoles were also a popular pandemic entertainment.
- Microsoft, approaching a market value of $2 trillion, reported revenue of $41.7 billion and adjusted earnings per share of $1.95. Cloud services business Azure had 50% revenue growth year over year, Xbox revenue rose 34%, and personal computing revenue rose 19%. Analysts expected EPS of $1.78.
- Alphabet reported an earnings beat of $26.29 per share, sending its shares up nearly 5% in after-hours trading. Analysts had forecast EPS of $15.70. Revenue of $55.3 billion compared to expectations for $51.7 billion, driven by gains in advertising.
- AMD reported revenue of $3.45 billion and raised guidance for the year. Adjusted EPS of 52 cents was well above the expected 44 cents. The chip maker cited growth in data center and gaming revenue. For the full year, it said revenue is expected to increase 50%.
What’s Next: It’s the beginning of big company earnings, with reports due out from Apple and Facebook on Wednesday and Amazon on Thursday. With favorable comparisons to last year, analysts are focused on what companies are saying about revenue and profit for this year and beyond.
—Liz Moyer
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EU Legal Complaint Against AstraZeneca Heard in Brussels Court
The European Union lawsuit against the British-Swedish pharmaceutical group and developer of the world’s most used Covid-19 vaccine began to be heard by a Brussels court Wednesday under an emergency procedure.
- The European Commission, the EU’s executive body, accuses AstraZeneca of failing to abide by its contract to deliver 300 million vaccine doses by the end of June, and alleges the company has no credible plan to deal with the shortages and delays that have affected its operations.
- AstraZeneca only delivered 30 million of the 120 million promised in the first quarter. It says that its only legal constraint was to make its “best efforts” to deliver the doses, and that it is under no obligation to deliver to the EU doses manufactured in the rest of the world.
- The bitter row has played a part in the delay of vaccination campaigns in the EU, where only 8% of the total population is now fully vaccinated, vs 29% in the U.S. and 19% in the U.K.
- Wednesday’s one-hour hearing will be followed by two similar sessions on May 26, with the judge expecting to be able to issue a ruling by the end of June.
What’s Next: Many governments, including France and Germany, were skeptical about the Commission’s lawsuit, fearing it will not help accelerate their vaccination drive. But Europe is already contemplating a future without the Oxford/AstraZeneca jab, as it is about to sign a contract for 1.8 billion doses of the Pfizer - BioNTech vaccine.
—Pierre Briançon
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Deadline for New ID for U.S. Air Travel Is Extended Again
U.S. air travelers will have two more years to ensure their driver’s licenses are Real ID compliant. The Department of Homeland Security pushed back a 2021 deadline for the new identification requirement due to the pandemic.
- Though every U.S. state now issues driver’s licenses that comply with the Real ID Act of 2005, some took longer than others. DHS said in a statement that only 43% of all state-issued driver’s licenses and ID cards are the new ones.
- Covid-19 restrictions led some states to cut capacity at motor vehicle department locations and shift to appointment-only scheduling. A Real ID license is marked with a star at the top of the card.
- “As our country continues to recover from the Covid-19 pandemic, extending the Real ID full enforcement deadline will give states needed time to reopen their driver’s licensing operations and ensure their residents can obtain” the license or ID card, Secretary of Homeland Security Alejandro N. Mayorkas said in the statement.
What’s Next: Starting on May 3, 2023, U.S. adults planning to fly will need a Real ID compliant license, or another TSA-acceptable form of ID like a U.S. passport.
—Connor Smith
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Dear Moneyist,
My mom recently passed away.
I have taken care of my mom’s finances for the last 10 years. It was always her money, but I made sure all her bills were paid. She lived in her own house until about 7 months ago. She then moved in with me. She was 89 years old and could not take care of herself any longer.
For the last 10 years, I have taken care of paying her bills, so mom put me on all of her checking/savings accounts. My mom trusted me to take care of all her finances as well as all aspects of her life/care, and any house repairs/problems.
As I am joint on her banking accounts, do I need to report this to the probate lawyer? More importantly, do I need to tell my 3 siblings about the money in these accounts? If I am joint on her accounts does that make me the beneficiary, and does it need to be disclosed?
My sisters are bugging me about mom’s accounts. I haven’t told them anything. Mom didn’t want me to talk to them about her money, and I never have until now. What should I do? Am I legally bound to disclose the accounts?
Thank you for your advice.
—Daughter/Sister
Read The Moneyist’s response here.
—Quentin Fottrell
***
—Newsletter edited by Liz Moyer, Stacy Ozol, Mary Romano, Matt Bemer, Ben Levisohn
April 28, 2021 at 07:20PM
https://www.barrons.com/articles/forget-the-fed-bidens-1-8-trillion-plan-is-what-matters-51619612401
Forget the Fed. Biden’s $1.8 Trillion Plan Is What Matters. - Barron's
https://news.google.com/search?q=forget&hl=en-US&gl=US&ceid=US:en
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