Biden Gives Powell a Second Term as Fed Chair

Biden Applauds Powell’s COVID-19 Actions

President Biden nominated Jerome Powell to a second term as chair of the Federal Reserve. Powell was the chair all through the COVID-19 pandemic, rolling out unprecedented stimulus to keep the US economy afloat.

Before the announcement, there had been talk that Biden might nominate Fed Governor Lael Brainard. Instead, Brainard was named vice-chair of the board of governors, giving her oversight over a variety of Fed policies.

When announcing Powell’s nomination, Biden pointed to his actions in the early days of the pandemic including cutting interest rates close to zero, buying back over $4 trillion in bonds, and launching several lending programs. Powell’s nomination will now go to the Senate for confirmation.

Staying the Course

Powell’s nomination has bipartisan support and is expected to pass in the Senate. The decision to keep Powell at the helm of the Fed is part of Biden’s aim to maintain stability during a time of economic uncertainty. The supply-chain issues have not abated, and prices for everything from food to gas are skyrocketing.

Markets React Favorably to Nomination

Wall Street seemed pleased with the Powell nomination as it takes some of the uncertainty out of the equation. Investors are paying close attention to the Fed’s plans for unwinding its pandemic bond-buying program. They are also wondering when the central bank may raise interest rates.

The Fed already indicated it plans to end its bond-buying program by late spring or early summer. Fed officials have also said they will not raise interest rates until the tapering is complete, but these plans could change depending on the strength of the labor market and inflation trends. Though uncertainty still looms, Biden’s decision to nominate Powell for a second term as Fed chair was reassuring for investors.

The Average Christmas Debt for Americans Is Around $1,381

Maintaining a budget is hard at any time of year. But when the winter holiday season is on the horizon, and the time has come for gifts to be purchased, decorations to be pulled out, and parties to be attended, budgeting can easily and quickly fall by the wayside.

It can feel like your best laid plans go to waste once Thanksgiving hits. Between holiday celebrations, extra treats for coworkers, travel plans, and more, it’s easy to see how the average Christmas debt for Americans is around $1,381.

You may think you’ll lose ground on working toward your financial goals during the holidays, but did you know the SoFi Credit Card is actually designed to help you achieve them while still enjoying the season? And we’re shaking things up even more by giving away $1,000,000 worth of reward points* to make life for our members a little bit easier. Apply now!

Space Satellite Market May Be Overheated

Space Satellites Draw Investor Attention

Space data companies BlackSky Technology (BKSY), Spire Global (SPIR), and Planet Labs are among the startups getting a lot of attention from investors. These investors, which include SPACs and venture capitalists, are betting demand will continue to grow for satellites that take pictures of the Earth and follow and record radio signals. Space satellite startups raised more than $5 billion last year and another $4 billion so far in 2021 compared to just $1.4 billion in 2015.

Dozens of companies have entered the market. The government is a big customer in the satellite market, but increasingly these startups are targeting commercial buyers. Despite strong demand, the market is getting crowded and it may be difficult for all of these satellite companies to survive.

Leaders to Emerge

As the space satellite industry progresses, a smaller number of companies are expected to emerge as market leaders in various parts of the satellite industry. As companies grow, they may use the capital they raise to make acquisitions and consolidate the industry.

Take the remote sensing market as one example. Last year it had $2.6 billion in sales, with over 800 remote sensing satellites orbiting the planet. Most of these satellites are controlled by companies, not the government. Maxar Technologies (MAXR) and Airbus (EADSY) have established businesses. Planet Labs is seeing business growth, with sales projected to hit $693 million by early 2026 compared to $113 million for this fiscal year which ends January 31.

Is Consolidation Coming?

Not all space satellite companies are enjoying strong growth like Planet Labs. BlackSky is forecasting revenue to come in at $34 million this year, which is down from its past forecast of $40 million. Meanwhile Spire Global lowered its revenue projection for the year to between $40 and $42 million from $54 million. BlackSky blamed supply-chain difficulties while Spire cited delays in closing deals.

The space satellite industry is raising a lot of capital but it is still heavily reliant on the government for its business. The commercial market is small and hasn’t proven it will take off in a big way, which means consolidation in the space satellite realm may be inevitable. The companies which can land government contracts, and simultaneously expand commercially, stand to survive.

Inflation Could Ease Next Year

Inflation Could Cause Inventory Gluts in 2022

With prices for everything soaring in recent months, some consumers are feeling like there’s no end to inflation in sight. But current inflation trends could lead to a glut of inventory in 2022, especially for appliances, vehicles, and furniture. Prices for these items saw double-digit gains last month.

Inflation is also driving prices for ancillary products and services higher. The lack of new vehicles makes it difficult for rental car companies to replace vehicles in their fleets. As a result, there are fewer cars to rent, which drove prices 49.2% higher in October. The cost of buying a used car or truck is up 44% this year.

Auto, Retail Shortgages Could Ease

It can be hard to imagine inflation will come down given the current environment, but even small improvements in the supply chain could have a big impact. The automobile industry has a lot of half-built vehicles waiting for semiconductors and other components to be added. Some vehicle manufacturers have been stockpiling components to prevent future shortages which could make demand appear stronger than it is. Once those parts are installed, vehicle makers could end up with excess supply.

Meanwhile, retailers have been urging consumers to start their holiday shopping early, but also announced last week that they have enough inventory to meet Black Friday demand. If consumers are already done with their holiday shopping, it could lead to excess inventory at stores like Walmart (WMT), Target (TGT), and TJMaxx (TJX).

Fewer COVID-19 Cases Could Lead to Lower Prices

Inflation may also ease next year if the number of COVID-19 cases continue to decline and the risk from the disease wanes. Vaccine boosters and antiviral pills may help achieve this. Less risk from the virus could prompt consumers to spend more on services and less on goods.

At the same time, lower COVID-19 cases would ease supply-chain delays in key manufacturing hubs around the world. Though there is still much uncertainty surrounding inflation, it could get back to the Fed’s 2% target more quickly if COVID-19 concerns ease and supply chain problems improve.