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| | | Biden takes on gas prices — President Joe Biden stepped up his fight against soaring oil prices Thursday, calling it "a crisis with prices at the pump." The immediate response was promising: U.S. crude oil futures shed more than $7 to fall to about $100 a barrel, well below the recent high near $124 early this month. The question is how well it will work longer term. Our Ben Lefebvre reports: "With retail gasoline prices hovering above $4.20 a gallon nationally, Biden announced a massive release of 180 million barrels of crude oil from the Strategic Petroleum Reserves — a million barrels a day for six months — to ease the market tightness that was worsened with Russia's invasion of Ukraine. The release is the third in the past five months and would be by far the largest amount ever injected by the U.S. government into the market, amounting to about 5 percent of daily demand." Market watchers were particularly interested in how the measure might affect oil companies' willingness to ramp up production — a key element to easing supply problems further out. Administration officials made clear that the Department of Energy will buy more oil to restock U.S. government reserves at some point when prices are lower. That suggests some promise of price stability for producers, which could be enough of a reassurance for them to increase their output, a point highlighted by the administration itself: "That can also incentivize the additional production we need this year," a senior official told reporters. But they didn't say how they would do it or when. They might have to provide more detail to get the response they want, said Evercore ISI's Tobin Marcus. "They have kind of half did and half didn't do that by indicating that it's going to be refilled in future years, but not in a way that's designed to maximize the impact for oil production," he said. Skanda Amarnath's advocacy group Employ America has been one of the voices advocating that the Biden administration take this approach: use reserves and then the promise of future purchases to boost domestic production over the next year or two. He said Thursday's announcement showed they were "moving in the right direction." But he also said they could do more, beyond providing more detail about their intentions to restock emergency reserves. For example, his group has called for the Treasury Department to offer financing to oil companies (something that likely wouldn't be welcomed by climate advocates). Doing so "could help break the equilibrium of underinvestment on the supply side, meaningfully address energy prices in the short and medium term, and net a return for the federal government, all within a structure that facilitates the transition to a greener, more secure and more sustainable economy," according to a paper from Employ America. Some commentators are skeptical that Biden's announcement will have a useful impact on inflation. Jim Bianco, who heads a financial analysis firm, said SPR releases aren't especially effective at fine-tuning oil prices. That's because when the government refills its reserves, it will ultimately boost prices. "You're setting up the case for higher prices in 2023 because we're going to be taking that much oil off the market to refill the SPR," he said. Inflation is already gearing up to be ugly in March, he said, pointing to September 2005, when Hurricane Katrina caused a surge in oil prices that led to one of the highest monthly inflation numbers on record. This time could be worse, bringing annual inflation as high as 8.6 percent, he added. "It might help at the margin, but if the administration's worried about the November election, I don't think if they push and pull and got 8.6 down to 7.2, that's somehow going to make everybody feel better," he said. As an aside, a chart from the Committee for a Responsible Federal Budget shows that the Personal Consumption Expenditure index, the inflation measure more closely watched by the Fed, would be at 6.8 percent this year if it continues where it's been for the past three months. (For comparison, that measure rose 5.8 percent last year).
| | | | SUBSCRIBE TO NATIONAL SECURITY DAILY : Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today. | | | | | Oh, don't forget! It's Jobs Day. The consensus forecast is a strong report of 490,000 net jobs added, but Goldman Sachs is predicting it could be as much as 575,000. "Dining activity rebounded further in March, and most Big Data indicators are consistent with strong job gains," GS researchers said in a note. "Additionally, we believe fierce competition for workers incentivized firms to pull forward recruiting activities earlier in the spring hiring season. We also note that short-term unemployment only partially reversed its Omicron spike with the February report, implying scope for additional rehiring in March." IT'S FRIDAY — Who's ready for the Final Four? Kudos if your bracket is still even remotely intact. Kate Davidson will be back in your inbox on Monday! Send any tips to her at kdavidson@politico.com or @KateDavidson, and to Aubree Eliza Weaver at aweaver@politico.com or @AubreeEWeaver. And you can always reach me at vguida@politico.com.
| | A message from Sallie Mae®: When does a private student lender become more like an education solutions provider? When they help students search for scholarships and provide free resources like college savings calculators. When they help students make informed decisions by providing all loan and repayment choices before they commit. That's the difference between lending and responsible private student lending. And these are the reasons why Sallie Mae makes sense for students and parents. | | | | | | MORTGAGE RATES REACH HIGHEST SINCE LATE 2018 — Bloomberg's Jo Constantz: "Mortgage rates in the U.S. continued their steep ascent, reaching a level not seen since December 2018. The average for a 30-year loan was 4.67 percent, up from 4.42 percent last week, Freddie Mac said in a statement Thursday. Rates are up more than a percentage point and a half since the start of the year, the largest three-month increase since 1987. Higher borrowing costs have stretched the budgets of prospective homebuyers and, along with soaring prices, shut some out of the market altogether." FED'S FAVE INFLATION GAUGE ROSE 6.4 PERCENT IN FEBRUARY — NYT's Jeanna Smialek: "Inflation continued to run at the fastest pace in 40 years in February, fresh data released on Thursday showed, at a moment when war in Ukraine and continued supply chain disruptions tied to the coronavirus promise to keep prices rising. "Prices, as measured by the Personal Consumption Expenditures Index, rose by 6.4 percent in the year through February, the fastest inflation rate since 1982 and faster than the 6.1 percent increase in the year through January. They climbed 5.4 percent after stripping out food and fuel costs, which can be volatile, the data showed. That pace was also faster than the prior month's reading, which was 5.2 percent." DOVES FADE FROM VIEW — Reuters' Ann Saphir and Howard Schneider: "In mid-March, U.S. central bankers raised interest rates for the first time since 2018 and published projections signaling a far more aggressive posture toward too-high inflation. "Since emerging from their meeting-period blackout, their public commentary has taken if anything an even stronger tone. The two-week-old forecasts - with the median anticipating rates rising to about 1.9 percent by year's end - seem a dovish shadow of what might now be. The palpable shift in officials' attitudes over a remarkably short period may prove highly consequential for how the remainder of the year plays out for their policymaking." FED'S RATE HIKES THREATEN ITS GOAL OF NARROWING RACIAL GAPS — AP's Christopher Rugaber: "America's hiring boom of the past year has narrowed racial disparities in unemployment. Yet the Federal Reserve's ongoing interest rate hikes — shaping up to be the steepest in 15 years — threaten to reverse that progress. The Fed's rate hikes will mean higher borrowing rates that could hobble the job market and undercut a goal the Fed unveiled two years ago: To keep rates ultra-low for as long as possible, to help less advantaged workers, who often don't benefit much from job growth until late in an economic expansion." MUNI BONDS SEE WORST QUARTER IN DECADES — Bloomberg's Amanda Albright: "The municipal-bond market is ending its worst quarter in about 40 years with a 6.4 percent loss, a dramatic pullback for an asset class that investors favor for its stability. The loss so far this year is in line with bonds globally as central banks increase interest rates to combat the fastest inflation in decades. The municipal market is still underperforming U.S. Treasuries, heightening investor concern. …"
| | | | A message from Sallie Mae®:   | | | | | | A roundup of news on digital assets, courtesy of our Sam Sutton: SAYING THE QUIET PART LOUD – SEC Chair Gary Gensler hasn't made many friends in the crypto industry since taking the helm of the securities regulator last year. Perhaps then it's no surprise that top crypto businesses are pushing lawmakers to create a regulatory framework that would give primacy to the Commodity Futures Trading Commission. "The exchanges are coming to a conclusion that the last thing they want is to be regulated by the SEC," Patrick McCarty, who teaches a class on crypto at Georgetown University's law school, told Bloomberg's Robert Schmidt and Allyson Versprille. The crypto exchange FTX, led by 30-year-old billionaire and political megadonor Sam Bankman-Fried, has been leading the charge to convince lawmakers that the much-smaller CFTC should take the lead on overseeing crypto's spot markets. Notably, the company's top ranks include general counsel Ryne Miller, a former legal counsel to then-CFTC Chair Gensler, as well as former CFTC acting Chair Mark Wetjen, who now heads its public affairs and regulatory strategy. FTX might get its wish. Bipartisan legislation being written by Sens.Kirsten Gillibrand (D-N.Y.) andCynthia Lummis (R-Wyo.) would likelygive the derivatives and commodities regulator more authority over crypto spot markets – which would include trading of popular assets like Bitcoin and Ether. CFTC Chair Rostin Behnam has repeatedly asserted that his agency is well-positioned to oversee digital markets and doubled down on that claim – and the need for more funding – during a House Agriculture Committee Hearing on Thursday. "In terms of the value of two core digital assets, Bitcoin and Ether, that is roughly in the 55 to 60 percent range" of the total market cap for digital assets, he said, adding that he considers both to be commodities. "This is really a balancing act and something that we need – I think collectively – is support and guidance from Congress." SPEAKING OF BEHNAM AND FTX — Behnam also fielded several questions from lawmakers about the exchange's controversial request to receive CFTC approval to to clear crypto margin trades on a 24/7 basis without having to go through a brokerage. House Agriculture Chair David Scott (D-Ga.) dismissed the plan, saying he was worried it might give rise to " an untested and unproven system that could very well make our derivatives regulatory system riskierand our customer protections much weaker." Behnam responded by saying the proposal merited exploration — and could represent a major innovation for crypto and derivatives markets.
| | | | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | | | | BANKS SHIFT FORECASTS TO BIG RATE INCREASES — WSJ's Michael S. Derby: "After key Federal Reserve officials opened the door to raising interest rates by more than the customary quarter-percentage point, several of Wall Street's biggest banks now believe the increases will come in jumbo increments. Major banks in recent days have predicted some combination of half-percentage point rate rises by the Fed throughout the year. The Fed usually moves its federal-funds rate target by quarter-percentage point increments, but faced with surging inflation bringing the worst price pressures in 40 years, economists believe aggressive action by the central bank is now likely." STOCKS SLIP — AP's Damian J. Troise and Alex Veiga: "Stocks edged lower in afternoon trading on Wall Street Thursday and oil prices fell as President Joe Biden ordered the release of up to 1 million barrels of oil per day from the nation's strategic petroleum reserve… "'This is a little give back today just from the big run that we had, but we're hanging in here pretty well,' said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. About 60 percent of stocks in the benchmark S&P 500 were down, and much of the movement seemed like a 'consolidation' for investors, Wren said. Major indexes fell on Wednesday to end a four-day winning streak." WALL STREET STAGED A COMEBACK IN MARCH — NYT's Coral Murphy Marcos: "Inflation accelerated, Russia's invasion of Ukraine grew more intense, the Federal Reserve started to cool down the economy and some investors began to wonder if a recession was looming. In the stock market, though, March turned out to be a good month. The S&P 500 is up nearly 5 percent for the month, a dramatic snap back after the index had plunged to start the year. The turnaround means that the S&P 500 has clawed back more than half of its losses at the lowest point of 2022, when it was down 12.5 percent."
| | A message from Sallie Mae®: What makes Sallie Mae different from other private student lenders and federal student lending? We help students search for scholarships and provide free resources like college savings calculators and comparison tools. We help students make informed decisions by providing all loan and repayment choices to them before they commit. And last year, less than 2% of our loans defaulted. These are the differences between lending and responsible private student lending. And these are the reasons why Sallie Mae makes sense for students and parents. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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