Rush for Easter break with Jackson confirmation, Russia trade and Fed watch

Congress has left for the Easter/Passover break; but not before the Senate took the historic action of confirming Ketanji Brown Jackson to be the first Black woman to sit on the Supreme Court.  The final vote was anticlimactic as several weeks ago swing Democratic Senator Joe Manchin had announced his support for Judge Jackson, and in recent days Republicans Collins, Romney and Murkowski announced their support.  The final vote was 53 to 47.

In a rare moment of genuine bipartisanship the House and Senate passed resolution stripping Russia of the trade advantages gained by being granted Most Favored Nation (MFN) or Normal Trade Relations (NTR) in bilateral trade.  The House vote was 420 to 3 and the Senate vote was 100 to 0.  The three NO votes in the House were cast by Marjorie Taylor Greene (R,GA), Thomas Massie (R, KY) and Matt Gaetz (R, FL).

In a Congress that is deeply divided on nearly every issue Vladimir Putin has done the impossible by getting a substantive bill through the Senate on a vote of 100 to 0!  The vote demonstrates the broad support the Biden Administration’s Ukraine policy has in the Congress, and that nearly all Republicans are walking away from former President Trump’s embrace of President Putin. 

The week also saw more officials of the Federal Reserve speak out about the need to deal with inflation with more aggressive rate action at the May meeting of the FOMC.  This is consistent with a theme I have struck that Chair Jay Powell wants to telegraph rate actions, allow markets to react, and avoid surprises.  Two of the most significant signals came from the release of the minutes of the March FOMC meeting and a statement by Fed Governor Lael Brainard.  The minutes indicated that there was considerable support for hiking by 50bps instead of 25bps but uncertainty created by the war in Ukraine led to restraint.  The statement by Governor Brainard is important as she has become an ally of the Chair and would be unlikely to speak out if she believed it was not the direction the majority of the Board wants to go.  The next meeting of the FOMC is May 4/5 and the groundwork seems to be underway for a 50bps increase.

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