“Janet Yellen made the case for another sweeping economic aid package at her hearing to be the next U.S. Treasury secretary Tuesday, pushing back against Republican skepticism of the need for more deficit spending to bolster the recovery,” WSJ writes.
Why It Matters: If fiscal support is inadequate, or even delayed further, Yellen warned, it could harm the U.S.’s march toward economic recovery, resulting in long-term economic damage, permanent job losses and business closures that could restrict growth for years to come.
Yellen’s Top Task: If confirmed by the Senate, which is expected, she will become “the administration’s top economic-policy spokesperson responsible for selling President-elect Joe Biden’s $1.9 trillion proposal, which includes another round of stimulus payments, extended jobless benefits, grants for small businesses and a nationwide vaccination program.”
- After that, Yellen will focus on long-term investments in infrastructure and workforce training to improve the U.S. economy’s competitiveness and productivity.
However, it won’t be an easy road. Some Republicans have already pushed back on Yellen’s call for further spending. Congress has already authorized trillions of dollars in fiscal stimulus, including December’s $908 billion package, and “they questioned her about the limits and risks of additional government borrowing and the wisdom of tax increases while the economy remains weak.”
From what I’m hearing, one of the more crowded trades among hedge funds is the “short dollar” trade, which involves making investments that benefit from the US Dollar weakening in value, relative to real assets or other currencies.
Undoubtedly many expect the US Dollar to weaken because of all the existing and upcoming stimulus that will artificially create dollars.
Other popular trades look like they are investments in Bitcoin and Big Tech stocks.