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In a letter sent Thursday to Fed Chairman Jerome Powell, Mnuchin asked the central bank to return about $ 455 billion in unspent funds for programs that expire on Dec. 31. He added that Congress could use the money for other purposes.
The Fed’s programs “have clearly achieved their objective,” Mnuchin wrote. “Markets responded positively, spreads tightened and banks continued to make loans.”
The central bank immediately criticized the decision. The Fed, which generally avoids commenting on sensitive political issues, responded in a statement saying that it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to fulfill its important role in supporting our still strained and vulnerable” . economy.”
Powell said earlier this week that it was too early to close the loan programs. “When the time is right, and I don’t think it is yet or very soon, we will put those tools away,” he said Tuesday.
The companies agree. The powerful US Chamber of Commerce said in a statement that the action “closes the door to important liquidity options for companies at a time when they need them most,” adding that it “unnecessarily ties the hands of the incoming administration.” .
Investors are also nervous. S&P 500 and Dow futures declined slightly on Friday morning.
The Big Picture: Powell has made clear that the risk during the pandemic is doing too little to support a struggling economy, not doing too much. And as the coronavirus re-emerges in the United States, forcing states to enact a wave of new mandates and mask restrictions, the timing of the Trump administration’s decision is worrying.
“The Combination of Increased Covid-19 Infections and Lack of Additional Fiscal Stimulus After the CARES Act [in March] now it may be finding its way into the economic data, “Marey said.
It’s a risky time to insulate American businesses from the help some may need soon.
Small stocks are having a moment
Advances in vaccines announced this month by Pfizer and Moderna triggered a fierce turnover on Wall Street away from Big Tech and stay-at-home winners like Zoom, Teladoc and Netflix.
Instead, investors are pouring money into the Russell 2000, an index of small-cap stocks whose values are largely tied to the health of the American economy. The Russell 2000 has soared 16% so far this month.
If held, it would be the index’s best monthly gain since at least 2001, according to Refinitiv data.
“This move is incredible,” said Ryan Detrick, chief market strategist at LPL Financial. “There is a rush for small-cap companies because they are huge beneficiaries of the economy getting back on track next year.”
Breaking it down: the median market valuation on the Russell 2000 is just $ 660 million. Its most important constituents include Penn National Gaming, Sunrun, Deckers Outdoor, and Caesars Entertainment. None are worth more than $ 14 billion.
Last week, the Russell 2000 Index hit an all-time high, its first all-time high since 2018. Typically, it takes four to five years for small caps to reach all-time highs after a recession, according to Nicholas Colas, co-founder of DataTrek. Research.
“Small-cap companies literally went nowhere for two years,” Detrick said. “They were left in the dust. Now they are the last trade to catch up.”
Roblox is cashing in on the pandemic gaming boom
Roblox, the popular teen gaming platform, has skyrocketed during the pandemic. Now, he’s going public, and by opening his books he reveals just how great the past year has been for those in the video game space.
The company reported revenue of nearly $ 589 million during the nine months ending in September, reports my CNN Business colleague Shannon Liao. That’s a 68% increase over the same period last year.
If you’ve never heard of Roblox, it may be because you’re not a preteen or a parent of one. The entire platform is made up of user-generated games, many of them created by children, teens, and young adults who have made millions of dollars through the platform.
An average of 36.2 million users log into the platform each day, according to the company’s prospectus.
That said: Like many startups taking advantage of public markets these days, the company is unprofitable, reporting a net loss of $ 203 million in the nine months ending in September. And he warned in his IPO paperwork that the usage and revenue boom might not last.
“We do not expect these activity levels to be sustained, and in future periods we expect our revenue growth rates to decline,” Roblox said in its presentation.
Until next time
Coming next week: Brexit talks were suspended after a member of the European Union negotiating team tested positive for Covid-19. With the clock still ticking, can the parties come to an agreement?
