big bank money

Investors will have a better picture of the economy’s financial situation this morning as the largest US banks release their quarterly results. Reports from JPMorgan (JPM), Citigroup (VS) and Wells Fargo (WFC) will mark the unofficial start of the fourth quarter earnings season as banks take much of the attention over the next week. The sector has also benefited from recent equity inflows, as a rising rate environment triggers a rotation from growth to value stocks.

On guard: The pandemic stimulus has been good for Wall Street’s biggest banks, with 2021 earnings expected to reach record highs. For example, JPMorgan has seen its deposits grow by more than 50% to $2.5 billion over the past two years, which can be used to make loans and other interest-bearing products. Keep an eye out for loan growth expectations for the year ahead, which could benefit from rising rates (provided they don’t rise too quickly). Total U.S. loans reached $10.8 billion at the end of December, up 2.8% from the end of September, and near the peak soon after the pandemic began in 2020.

A booming stock market has also helped fuel robust business activity, along with increased demand for mergers and IPOs (and the lucrative investment banking fees that come with them). It will be interesting to watch the compensation and the share of big money and bonuses that will be paid to the traders of the investment bank. Meanwhile, corporate lending has also taken a back seat to companies able to raise cash easily during the pandemic, but analysts believe that could change in 2022.

A few precautions: Keeping an eye on the year ahead, investors are curious to know what banks have to say about Omicron’s economics. Consumer spending weakened as the variant emerged towards the end of 2021, and these trends could impact markets and the economy for the rest of 2022. Banks also built up their reserves as they were expecting large pandemic loan losses, and while recent publications have boosted their bottom line, these are expected to be much smaller going forward.

Federal Council

Reports suggest the Fed could get a facelift as Chairman Biden fills the ranks of a seven-member panel that wields big sway over the world’s biggest economy. Biden entered office with a vacancy on the Fed Board of Governors (from Janet Yellen), but saw the subsequent retirement of Richard Clarida and Randal Quarles due to trade scandals. Governors are appointed by the President and confirmed by the Senate for staggered 14-year terms, while the Fed Chairman and Vice Chairman serve four-year terms. Meet the new candidates:

Sarah Bloom Raskin: She served as Fed governor from 2010 to 2014 before becoming deputy treasury secretary to former President Barack Obama. She is also the wife of U.S. Representative Jamie Raskin (D-Md) and is a strong climate change advocate who argues that financial regulators should use their powers to mitigate the risks of climate-related events. If confirmed, she would become the Vice President of Central Bank Oversight (i.e. the most influential government overseer of the US banking system).

Lisa Cook: She is currently a professor of economics and international relations at Michigan State and previously worked as a senior economist with Obama’s Council of Economic Advisers. If approved, Cook would become the first black woman to serve on the Fed’s board. She has also written extensively on the economic consequences of racial disparities and gender inequality, as well as on wages, poverty and income distribution.

Philip Jefferson: He is a former Fed economist who is currently Dean of Faculty and Vice President of Academic Affairs at Davidson College in North Carolina. If confirmed, Jefferson would be just the fourth black man to serve on the panel and the first in more than 15 years. For some or all of the candidates, prepare for opposition in Senate confirmation hearings, where Democrats and Republicans each hold 50 votes. Vice President Kamala Harris can provide a 51st Democratic vote to sever ties in disagreements over the party line, but only if all Democrats approve of someone the entire GOP opposes.

Vaccine mandates

The verdict fell on the Biden administration’s vaccination mandates, with separate rulings for two of the orders. In a 6-3 vote, the Supreme Court blocked a mandate that required companies with more than 100 employees to have them vaccinated or tested weekly, calling the requirement an “encroachment on the lives” of two-thirds of the workforce. private sector. In a separate 5-4 ruling, the High Court allowed another mandate to stand that would require vaccinations for more than 10 million healthcare workers whose facilities participate in Medicare and Medicaid.

Decision: “While Congress unquestionably gave OSHA the power to regulate occupational hazards, it did not give this agency the power to regulate public health more broadly,” the court wrote. “COVID-19 is also spreading at home, in schools, at sporting events, and anywhere else people gather…The law empowers the secretary [of labor] to set workplace safety standards, not general public health measures. Requiring the vaccination of 84 million Americans, selected simply because they work for employers with more than 100 employees, certainly falls into the latter category.”

Responding to the ruling, President Biden said he was disappointed the court blocked “life-saving common sense requirements for big business employees that were squarely based on both science and law.” . As the cases have sown tensions between the federal and state governments, Biden went on to say that “it is now up to states and individual employers to determine whether to make their workplaces as safe as possible for workers. employees, and whether their businesses will be safe for consumers during this pandemic by requiring employees to take the simple and effective step of getting vaccinated.”

Sanitary decision: “COVID-19 is a highly contagious, dangerous and – especially for Medicare and Medicaid patients – fatal disease,” the majority opinion wrote. “Indeed, their [healthcare industry] the support suggests that a vaccination requirement under these circumstances is a simple and predictable example of the health and safety regulations that Congress has authorized the secretary to impose. After all, ensuring that providers take steps to avoid transmitting a dangerous virus to their patients is consistent with the fundamental principle of the medical profession: first, do no harm.”

#futureofwork

While some companies like Robinhood (HOOD) and Twitter (TWTR) are planning for a remote future, others are making big bets on getting employees back to work. Google (GOOG, GOOGL) is paying $1 billion to acquire the rest of London’s colorful Central Saint Giles building, where it already occupies several floors. It’s next to a new 11-storey UK headquarters he’s building nearby, which sits on land behind in the recently gentrified area of ​​King’s Cross.

Quote: “We believe the future of work is flexibility,” wrote Ronan Harris, vice president of Google UK and Ireland. “While the majority of our UK employees want to be on site occasionally, they also want the flexibility of working from home a few days a week. Some of our employees will want to be totally remote. Our future UK workplace has room for all of these possibilities.”

“Good [also] introduce new types of collaboration spaces for in-person teamwork [at Central Saint Giles], while creating more overall space to improve well-being. We’ll be introducing Team Pods, which are new flexible space types that can be reconfigured in multiple ways, supporting focused work, collaboration, or both, depending on the needs of the team. The new renovation will also include covered outdoor workspaces to allow for fresh air to work.”

Outlook: In early 2021, Google announced that it would spend $7 billion over the year to expand its footprint of offices and data centers across the United States. It now appears to be executing a similar strategy overseas, adding 700 employees to its current roster of 6,400 employees in the UK Once construction of its new London complexes is complete, Google will have an employment capacity of 10,000 people in the city.