Top News  Shutterstock Minutes from the last Fed meeting saw FOMC members point to a brighter outlook for the economy, while agreeing to provide continued support via near-zero interest rates and large monthly bond purchases. Several of them even noted that the recent $1.9T pandemic relief package could improve the position of small businesses slammed by the pandemic, boost consumer spending and contain long-term damage to the labor market. That builds on the latest hiring surge in March, as well as an unemployment drop and business reopenings.
Similar viewpoint: The outlook was echoed by Jamie Dimon, who estimated the coming economic boom could last until 2023. In his annual letter to shareholders on Wednesday, the JPMorgan CEO said strong consumer savings, huge deficit spending, more QE, expanded vaccine distribution and a $2.3T infrastructure plan could lead to a "Goldilocks moment" of fast, sustained growth alongside inflation and interest rates that drift slowly upward. The permanent effect of that growth will depend on the "quality, effectiveness, and sustainability of the infrastructure and other government investments," he added. "Spent wisely, it will create more economic opportunity for everyone."
Investors responded in kind, as the S&P 500 notched a fresh closing high of 4,079.95 on Wednesday. Stock index futures climbed further overnight, with contracts linked to the S&P 500 up another 0.4%, and the Dow and Nasdaq ahead by 0.2% and 0.8%, respectively. Further helping sentiment was a statement from the U.S. Treasury, which said Biden's tax proposals would generate about $2.5T over 15 years in an effort to pay for eight years of infrastructure spending.
On tap: Fed Chair Jay Powell speaks at an IMF event later today, where he is likely to share his views on the global recovery and monetary policy outlook. Investors will also be tracking the latest Labor Department update on the number of Americans filing for unemployment benefits for the first time. Economists expect the downward trend to continue given the rehiring across the economy, with first-time claims totaling 680K during the week ended April 3.
   | | Top News Shutterstock Minutes from the last Fed meeting saw FOMC members point to a brighter outlook for the economy, while agreeing to provide continued support via near-zero interest rates and large monthly bond purchases. Several of them even noted that the recent $1.9T pandemic relief package could improve the position of small businesses slammed by the pandemic, boost consumer spending and contain long-term damage to the labor market. That builds on the latest hiring surge in March, as well as an unemployment drop and business reopenings.
Similar viewpoint: The outlook was echoed by Jamie Dimon, who estimated the coming economic boom could last until 2023. In his annual letter to shareholders on Wednesday, the JPMorgan CEO said strong consumer savings, huge deficit spending, more QE, expanded vaccine distribution and a $2.3T infrastructure plan could lead to a "Goldilocks moment" of fast, sustained growth alongside inflation and interest rates that drift slowly upward. The permanent effect of that growth will depend on the "quality, effectiveness, and sustainability of the infrastructure and other government investments," he added. "Spent wisely, it will create more economic opportunity for everyone."
Investors responded in kind, as the S&P 500 notched a fresh closing high of 4,079.95 on Wednesday. Stock index futures climbed further overnight, with contracts linked to the S&P 500 up another 0.4%, and the Dow and Nasdaq ahead by 0.2% and 0.8%, respectively. Further helping sentiment was a statement from the U.S. Treasury, which said Biden's tax proposals would generate about $2.5T over 15 years in an effort to pay for eight years of infrastructure spending.
On tap: Fed Chair Jay Powell speaks at an IMF event later today, where he is likely to share his views on the global recovery and monetary policy outlook. Investors will also be tracking the latest Labor Department update on the number of Americans filing for unemployment benefits for the first time. Economists expect the downward trend to continue given the rehiring across the economy, with first-time claims totaling 680K during the week ended April 3.
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| Legislation President Biden is willing to negotiate on the proposed corporate tax rate increase that's intended to help pay for his $2.3T infrastructure plan. "I'm willing to listen to that," he replied when asked if he'd consider a lower corporate tax rate than the 28% plan he's proposing (the current rate is 21%). Republicans have balked at the proposed level of spending, the plan's priorities and the tax increases, while some companies like Raytheon (RTX) are forecasting a big dent to their bottom lines if the package goes through in its current form.
Responding to the concerns, Biden defended the broad scope and size of the infrastructure plan. "The idea of infrastructure has always evolved to meet the aspirations of the American people and their needs," he declared. "And it is evolving again today." Besides such traditional infrastructure projects as fixing roads and bridges, the Biden plan includes broadband networks, childcare initiatives and raising wages for health care workers.
How to pay for it? Biden said there are "many other ways we can do it... I'm willing to negotiate that." Besides a corporate tax hike, the plan would gain funding from other measures, such as boosting the global minimum tax for multinational corporations and closing so-called offshoring loopholes. "Building the infrastructure of tomorrow requires major investments today," Biden continued. "The divisions of the moment shouldn't stop us from doing the right thing for the future."
Yellen weighs in... In an op-ed piece for the Wall Street Journal, the Treasury Secretary said the Tax Cut and Jobs Act of 2017 has led to the lowest corporate tax collections level since WWII, at 1% of GDP, and the TCJA didn't even encourage companies to relocate their operations to the U.S. Other countries responded by lowering their taxes as well, resulting in a "race to the bottom," and the TCJA made the first 10% of returns earned by foreign assets tax-exempt. Moreover, the legislation allowed corporations to bring their foreign profits back to the U.S. and pay the 21% rate or keep them anywhere else in the world, "where the U.S. will charge you around half that." (11 comments)
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