☕️ With great power...

How should the Fed address racial inequality? January 18, 2021 [View Online]( | [Sign Up]( [Daily Brew]( TOGETHER WITH [Policygenius]( Good morning. US financial markets are closed today to honor the life of Dr. Martin Luther King Jr. And we are celebrating Dr. King’s legacy with a top story exploring the Federal Reserve’s recent shift to take a more active role in combating racial economic inequality. Hope you have a reflective day. MARKETS YTD PERFORMANCE NASDAQ 12,998.50 + 0.86% S&P 3,768.25 + 0.32% DOW 30,814.26 + 0.68% GOLD 1,827.70 - 3.89% 10-YR 1.090% + 17.10 bps OIL 52.04 + 7.48% *As of market close - Covid-19 update: US hospitalizations are finally trending downward. However, the new, highly contagious variants “[may change everything](,” per former FDA commissioner Scott Gottlieb. They could represent 30% of all cases in 5–6 weeks, he said, up from - Markets: When the major indexes resume trading tomorrow, they’ll try to build on minimal gains for 2021 thus far (see above). INEQUALITY [The Fed Tiptoes Into Race]( [Jerome Powell sitting at a desk looking concerned ] Alex Wong/Getty Images For the Federal Reserve, 2020 was a YOLO year. In response to the coronavirus crisis, the central bank quickly dropped interest rates to near-zero and, in unprecedented fashion, provided up to $2.3 trillion of financing to support businesses and markets. It also confronted issues of racial inequality far more than it had since its founding in 1913. The killing of George Floyd last spring spurred calls for the Fed, the most powerful economic policymaking body in the world, to reflect on the ways its own actions have reinforced racial inequality—and use its influence to help address it. The backstory Historically, the Fed has acted like a football player under Bill Belichick—it just tried to do its job. And that job, as mandated by Congress, is very clear: to 1) keep prices stable and 2) achieve maximum employment. But by pursuing those goals like a horse with blinders, critics say, the Fed ignored racial economic inequality and perhaps [made it worse](. - One example: In the 1950s and 1970s, the Fed raised the cost of borrowing to slow down inflation growth (and fulfill job #1). According to Howard University economics professor Williams Spriggs, that tightening of credit disproportionately harmed Black Americans and inflated Black unemployment relative to the national average.   The nowstory The Fed is swapping its “do your job” approach in favor of a “with great power comes great responsibility” approach. In the fall, the Fed kicked off a series of events that explored the [central bank’s role]( in racial economic inequality. - First came the reckoning. The Fed “absolutely has to know, be passionate about, be interested in not just the wealthiest or the median, but all the people," said Ursula Burns, the former CEO of Xerox and the first Black female CEO of a Fortune 500 company.  - Then came the pledge to do better. “We need to step forward and be present in this conversation and own that we have a role to play,” said Atlanta Fed President Raphael Bostic, the first Black person to lead a regional Fed bank. Not everyone thinks the Fed should step outside its traditional job description. As Minneapolis Fed President Neel Kashkari pointed out, some people will say it’s Congress’s role, not the Fed’s, to tackle issues of racial inequality. The WSJ editorial board [argued]( a greater focus on race would lead to “ultraloose” monetary policy (inviting more inflation). Looking ahead…the Fed’s greater attention to racial inequality is now being written into actual policies. Following a 20-month review, the Fed released new guidelines stating that maximum employment is a “broad-based and inclusive goal.” That’s central bank-speak for signaling it’ll consider the unemployment rate among minorities when making decisions.  + Optional homework: A Brew [deep dive]( into the diversity of the Fed’s leadership. �  �  �  mailto:?subject=Check%20out%20this%20story%20from%20Morning%20Brew%21&body=The%20Federal%20Reserve%20Tiptoes%20Into%20Race%3A%20https%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fstories%2F2021%2F01%2F17%2Ffed-tiptoes-race%0A%0AWant%20more%20great%20content%3F%20Subscribe%20to%20Daily%20Brew%20%E2%80%94%20Delivering%20the%20latest%20business%20news%20from%20Wall%20St.%20to%20Silicon%20Valley%2C%20daily.%0Ahttps%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fr%2F%3Fkid%3Da905682a%26utm_source%3Demail_share%0A GOVERNMENT [Biden to Hit the Ground Executive Ordering]( [Joe Biden] [Gage Skidmore]( from Surprise, AZ, United States of America, [Joe Biden (49554623208)](, [CC BY-SA 2.0]( On Saturday, President-elect Joe Biden’s chief of staff, Ron Klain, [outlined]( Biden’s plans for his first few days in office. The primary theme: Donald who? The measures Biden plans to enact are [geared toward]( undoing some of President Trump’s most controversial policies. That includes 1) scrapping the travel ban on majority-Muslim countries 2) rejoining the Paris Agreement and 3) establishing a path to citizenship for 11 million undocumented immigrants. Biden also plans to cancel the Keystone XL pipeline permit on his first day, CBC News [reported]( yesterday. The second theme: addressing the pandemic. To that end, Biden plans to 1) issue a mask mandate for all interstate travel and on federal property and 2) push for a meaty new round of stimulus. - Last week, he outlined plans for a $1.9 trillion stimulus bill. But remember, Congress controls the governmental purse strings, so Biden and his entourage will have to work with folks on Capitol Hill, including members of the opposing Republican Party. Zoom out: The average fingernail among Biden staffers probably isn’t in great shape. The administration [will take office]( amid a triple threat of economic, public health, and social crises. �  �  �  mailto:?subject=Check%20out%20this%20story%20from%20Morning%20Brew%21&body=Biden%20Staff%20Reveals%20Plans%20for%20First%2010%20Days%3A%20https%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fstories%2F2021%2F01%2F17%2Fbiden-staff-reveals-plans-first-10-days%0A%0AWant%20more%20great%20content%3F%20Subscribe%20to%20Daily%20Brew%20%E2%80%94%20Delivering%20the%20latest%20business%20news%20from%20Wall%20St.%20to%20Silicon%20Valley%2C%20daily.%0Ahttps%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fr%2F%3Fkid%3Da905682a%26utm_source%3Demail_share%0A AUTO [Paris and Milan Have That New Car Company Smell]( [Stellantis logo] Stellantis Fiat Chrysler and PSA Group, the maker of Peugeot and Citröen cars, [completed]( their merger on Saturday, creating a brand new car company. The combo was [first announced]( in October 2019, but Covid slowed down the i-dotting and t-crossing. - It will begin trading in Milan and Paris today, and in New York tomorrow. The new automaker’s name: Stellantis. The game: combining the two legacy automakers’ resources to compete in a brave new electric world. Stellantis will be the world’s [third-largest automaker]( by sales, per the latest available data, worth over $51 billion as of Friday’s close. - Current PSA CEO Carlos Tavares will attempt to steer the great ship Stellantis through squalls including underperforming factories, a sputtering Chinese presence, and overcapacity. Bottom line: Stellantis enters the world with massive scale, which is key in the low-margin auto biz. But it will also need to invest billions to compete in the EV market, now a crowded field with both startups and legacy players hitting the accelerator. �  �  �  mailto:?subject=Check%20out%20this%20story%20from%20Morning%20Brew%21&body=Fiat%20Chrysler%20and%20PSA%20Group%20Complete%20Their%20Merger%2C%20Finally%3A%20https%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fstories%2F2021%2F01%2F17%2Ffiat-chrysler-psa-group-complete-merger-finally%0A%0AWant%20more%20great%20content%3F%20Subscribe%20to%20Daily%20Brew%20%E2%80%94%20Delivering%20the%20latest%20business%20news%20from%20Wall%20St.%20to%20Silicon%20Valley%2C%20daily.%0Ahttps%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fr%2F%3Fkid%3Da905682a%26utm_source%3Demail_share%0A SPONSORED BY POLICYGENIUS [Live Laugh Life Insurance](#) We’re covering our home in “Live Laugh Life Insurance” swag. Embroidered pillows adorn our couches. We hung rustic wooden signs all over our walls, “Live Laugh Life Insurance” written on each of them in pristine cursive. We’re giddy about life—and life insurance—because we just used [Policygenius]( for the first time. Policygenius [compares life insurance prices for you](, pulling quotes from the market’s top 30 shops and making it easy to find your cheapest option. You could save $1,300 or more per year by comparing life insurance policies with [Policygenius](. With all that extra money, you’ll be able to fill your cabinets with “Live Laugh Life Insurance” coffee mugs—just like we did. Premiums are at record lows, so now’s the time to get covered. [Start with Policygenius today](. SOCIAL MEDIA [Twitter Banned Trump. Now What?]( [Locked phone] Francis Scialabba Recent decisions by social media companies to ban or temporarily block President Trump’s accounts have sent Maui-size waves rippling across the world. Here’s the latest: How Twitter made the decision: Thanks to this [play-by-play]( in the NYT, we know that CEO Jack Dorsey was on an island in French Polynesia “working remotely” (sure…) when he got a call from the company’s top lawyer and safety expert saying execs had decided to lock the president’s account following the attack on the Capitol. After initially hesitating, Dorsey later concluded that Trump crossed the line that meant a permanent suspension. Less fake news? After social media sites suspended President Trump’s accounts, online misinformation about US election fraud [dropped]( as much as 73% (from 2.5 million mentions to 688,000), according to research by analytics firm Zignal Labs. Backlash: The decision by social media companies to simultaneously “deplatform” Trump has [raised questions]( over their power to police online speech. Last week, leaders in Mexico and Poland said they’d favor [new regulations]( that would ensure what happened to Trump can’t happen to them. �  �  �  mailto:?subject=Check%20out%20this%20story%20from%20Morning%20Brew%21&body=Twitter%20Bans%20Trump%3A%20The%20Aftermath%3A%20https%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fstories%2F2021%2F01%2F17%2Ftwitter-bans-trump-aftermath%0A%0AWant%20more%20great%20content%3F%20Subscribe%20to%20Daily%20Brew%20%E2%80%94%20Delivering%20the%20latest%20business%20news%20from%20Wall%20St.%20to%20Silicon%20Valley%2C%20daily.%0Ahttps%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fr%2F%3Fkid%3Da905682a%26utm_source%3Demail_share%0A CALENDAR [The Week Ahead: “Fortress Washington”]( [Capitol Hill ] Al Drago/Getty Images Inauguration: On Wednesday, Joe Biden will be sworn in as the 46th US president. It’ll be a very different type of inauguration—the nation’s capital has effectively shut down in response to more threats of violence. Storefronts are boarded up and 25,000 National Guardsmen in total are arriving by Wednesday to secure the city. - In lighter news, Lady Gaga, J.Lo, and Bruce Springsteen will [perform]( over the course of the day. Earnings: This week’s slate features banks (Bank of America and Goldman Sachs), tech (Intel and IBM), and your favorite streaming giant (Netflix). Everything else: - Janet Yellen’s confirmation hearing for Treasury Secretary is set for Tuesday. - A UN treaty banning nuclear weapons [goes into effect]( on Friday. However, the five permanent members of the UN Security Council (the US, Russia, Britain, China, and France) haven’t signed it. - Dolly Parton turns 75 tomorrow. �  �  �  mailto:?subject=Check%20out%20this%20story%20from%20Morning%20Brew%21&body=The%20Week%20Ahead%3A%20%E2%80%9CFortress%20Washington%E2%80%9D%3A%20https%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fstories%2F2021%2F01%2F17%2Fweek-ahead-fortress-washington%0A%0AWant%20more%20great%20content%3F%20Subscribe%20to%20Daily%20Brew%20%E2%80%94%20Delivering%20the%20latest%20business%20news%20from%20Wall%20St.%20to%20Silicon%20Valley%2C%20daily.%0Ahttps%3A%2F%2Fwww.morningbrew.com%2Fdaily%2Fr%2F%3Fkid%3Da905682a%26utm_source%3Demail_share%0A PODCAST [Winklevoss Twins: ‘Bitcoin Is Inevitable’](#) [bitcoin bull] Francis Scialabba You know bitcoin as the crypto that ate the internet in 2017 before...plummeting. But its latest rally, which rendezvoused above $40,000, shows it has more room to run. At least according to Tyler and Cameron Winklevoss, the billionaire twins behind crypto exchange Gemini and the spiciest scenes in The Social Network. Their prediction? Bitcoin to $500,000. Today on Business Casual, the Winklevii explain their prediction and argue that widespread adoption of bitcoin will lift our economy out of its analog past and into a modern, digital future where inflation, wealth gaps, and currency constraints all shrink...at least in theory. - They’d like widespread adoption to start with their new [Gemini crypto rewards credit card](. Because according to the Winklevii, bitcoin > airline miles just as much as Twitter > F*cebook. There’s so much more in the pod. Listen now: [Apple]( / [Spotify]( / [everywhere else]( WHAT ELSE IS BREWING - [China’s]( GDP in the fourth quarter grew 6.5% from a year ago, and its GDP for the entirety of 2020 rose 2.3%. It’s the only major economy to grow last year.   - [GitHub](, the Microsoft-owned code hosting platform, said it erred when firing a Jewish employee following comments he made over rioters at the Capitol. Its head of HR resigned. - [Phil Spector](, influential music producer and convicted murderer, died at 81. - [Alexey Navalny](, the Russian opposition leader, was detained after he returned to his home country Sunday. Navalny has recovered from being poisoned by a Soviet-era nerve agent. - [Nestlé]( is recalling more than 762,000 pounds of pepperoni Hot Pockets because they might be contaminated with “extraneous materials, specifically pieces of glass and hard plastic.” BREW'S BETS Get it delivered. [Thrive Market]( is the online, membership-based grocer stocked with all the organic groceries, clean beauty products, and non-toxic home supplies you need to live a healthier lifestyle. [Join today and get 25% off your first order and a free gift](.* Bone up on this investment. Cytonics is poised to disrupt a $180B untapped market for arthritis treatments. Available therapies only address the symptoms of the disease, but [Cytonics’s]( first-in-class drug targets arthritis at the molecular level. [Invest here to join their online public offering](.* Dive back into the week: - Shallow dive: Eating fish is a [whale of a time]( - Medium dive: This Japanese guy rents himself out “[to do nothing](” - Deep dive: [Industry]( on HBO - Cannonball: The attack on the Capitol, [as seen through Parler]( *This is sponsored advertising content GAMES [Naming Conventions](#) This chart from [Baby Name Wizard]( shows the dramatic rise in popularity of a particular boy's name...that also happens to be a trendy vegetable. What's the name?  Baby Name Wizard  SHARE THE BREW You only need 5 more referrals to receive Morning Brew stickers. If there’s one thing we know about laptops, it’s that they hate being naked. Get your comp some fresh Morning Brew stickers. [Click here to get free swag.]( Hit the button below to learn more and access your rewards hub. [Click to Share]( Or copy & paste your referral link to others: [morningbrew.com/daily/r/?kid=a905682a]( ANSWER Kale             Written by [Neal Freyman]( and [Eliza Carter]( Was this email forwarded to you? Sign up [here](. WANT MORE BREW?  Retail newsletter → [Retail Brew](  Tech newsletter → [Emerging Tech Brew](  Marketing newsletter → [Marketing Brew](  Recommendations newsletter → [Sidekick](  Business podcast → [Business Casual]( [ADVERTISE]( // [CAREERS]( // [SHOP]( Update your email preferences or unsubscribe [here](. View our privacy policy [here](. Copyright ©2020 Morning Brew. All rights reserved. 40 Exchange Pl., Suite #300, New York, NY 10005