Several Big Developments Over the Long Holiday Weekend
Author: Greg Valliere
April 18, 2022
THE WAR, plus continued gun violence in the U.S. and — of course — Elon Musk obscured several other important stories:
Joe Biden’s Messy Divorce With Environmentalists —
STILL ANOTHER POLITICAL PROBLEM FOR PRESIDENT BIDEN, whose polling numbers have plunged among young people and Hispanics: his decision late last week to drill for more fossil fuels on federal land has produced a fierce backlash from environmental groups.
BIDEN’S DECISION OBVIOUSLY IS A RESULT of soaring gasoline prices and a global need for more fossil fuels as the war intensifies between Ukraine and Russia. But this looks like a “lose-lose” proposition — supporters of more drilling say it’s too little too late, while the Green Movement is livid.
A PROPOSED INCREASE IN BIOFUELS — always a voter favorite in Iowa — will have a modest impact on gasoline prices, and tapping the Strategic Petroleum Reserve also will have a minimal impact. So Biden will boldly allow drilling on 144,000 acres of federal land, but it’s far less than the oil industry sought, not impacting gasoline prices for nearly a year.
THIS HAS ENRAGED ENVIRONMENTALISTS, who believe Biden has gone soft on fossil fuels as Green legislation stalls in Congress. Several news services reported over the weekend that Gina McCarthy, the top climate adviser in the White House, will resign in the next few weeks.
An Important Signal From Shippers —
THE FREIGHT MARKET clearly is in a slowdown; March data from truckers, compiled by the Cass Freight Index, showed virtually no growth, with prices pulling back from recent highs. Spot rates are down 37% since December.
THIS COINCIDES WITH A STEEP DROP in the sea shipping industry, where container rates also are falling; rates are down by 16% since the beginning of the year. There are several reasons, including the Draconian Covid clampdown in Shanghai and a reduction of Ukrainian grain shipments.
TRUCKING AND SHIPPING REPORTS ARE one of the data points that former Fed Chairman Alan Greenspan always devoured, looking for economic trends. The early 2022 trends from the shipping sector seem to point to reduced demand and lower inflation.
A New Bank Regulator Nominated for the Fed —
AFTER FAILING TO WIN APPROVAL of Sarah Bloom Raskin as the Federal Reserve’s top bank regulator, the Biden Administration is about to nominate Michael Barr as the Fed’s vice chairman for supervision. Barr is hardly a shoo-in, but he has a decent chance of winning confirmation.
UNLIKE RASKIN, Barr has not advocated an activist Fed role on climate change. He probably will be acceptable to Sen. Joe Manchin, the West Virginia Democrat who scuttled Raskin’s nomination, and he should win support from all of the party’s progressives, including Sen. Elizabeth Warren, despite some concern about his private sector work and his failure to produce an even more aggressive Dodd-Frank law when he played a key role at the Treasury Department.
BARR’S NOMINATION confirms a growing perception among progressives that they have to tone down their goals. Of the potential regulators, only Gary Gensler, the SEC Chairman, been confirmed — and he has surprised some observers with his fairly lenient stance on cryptocurrencies.
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