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Nov. 30, 2020, 2:38 p.m. EST

‘Wall Street is thrilled’: Analysts react to Yellen as Biden’s pick for Treasury secretary

President-elect’s picks for economic team are mostly ‘not aligned with progressives’ except for Tanden at OMB, says one Washington watcher

By Victor Reklaitis, MarketWatch


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Former Federal Reserve Board Chairwoman Janet Yellen has been nominated to be the first female U.S. Treasury Secretary, a selection generally embraced by Wall Street.

Economists and other analysts have been sounding off following news that President-elect Joe Biden has selected former Federal Reserve Chairwoman Janet Yellen to lead the Treasury Department.

Biden’s transition team officially announced Yellen as the Treasury pick on Monday, along with other selections for his economic team, after multiple news outlets reported on Nov. 23 that Biden planned to nominate her. If confirmed by the U.S. Senate, she would become the first woman to serve as Treasury secretary.

Other picks include Neera Tanden, head of the left-leaning Center for American Progress, for director of the Office of Management and Budget; Cecilia Rouse, a Princeton University labor economist, for chairwoman of the Council of Economic Advisers; Wally Adeyemo, who served in the Obama administration, for deputy Treasury secretary; and Jared Bernstein and Heather Boushey as members of the CEA. Reports also said Brian Deese has been selected as a top economic adviser , but that move wasn’t announced on Monday.

The economic team is expected to prioritize the COVID-19 pandemic. Boushey offered the following assessment in a tweet last week : “Until COVID is controlled, we can’t return to business as usual — one vs. the other is a false tradeoff.”

Below are some reactions, which have come as the main U.S. stock gauges (S&P:SPX)   (DOW:DJIA)   (AMERICAN:COMP)  rose last week, moving up toward session highs as the headlines about Yellen hit on Nov. 23. Equities were losing ground on Monday, but are still on track for big November gains.

• “There is ... in the analysis a widely held belief Yellen is not partisan. ... But Yellen ran into her own political controversy early in her tenure as Fed chair when it was revealed she had met with and taken phone calls from Democrats on the Senate Banking and House Financial Services Committees on dozens of occasions while limiting interactions with Republican members to fewer than a handful of calls. ... All that said, Wall Street is thrilled with the Yellen appointment. ‘If Joe Biden is going to be President, Yellen is pretty much the best appointment we could ask for,’ according to a friend who runs compliance at one of the biggest-five U.S. banks.” — Chris Low, chief economist at FHN Financial

• “The appointments are mostly consistent with Mr. Biden’s previous personnel announcements — people who are left of center but not aligned with the progressives. Tanden might be the outlier as she has run a liberal think tank in Washington and has good relations with progressives. On the flip side, she has generally poor relations with Republicans, which could be a problem for her confirmation.” — Brian Gardner, chief Washington policy strategist at Stifel

• “We expect her to easily win Senate confirmation. To us, Yellen is likely to support restarting 13(3) loan programs like Main Street and the Muni facility. She also could support help for housing. We see her economic background giving her more credibility to negotiate a stimulus package.” — Jaret Seiberg, analyst at Cowen Washington Research Group

• “[Yellen] is well within the orthodoxy of the economics community, and I suspect that fact along with her familiarity will lead to a largely positive response from financial markets. More broadly, from what we have seen so far, Biden appears to be mainly choosing old Democratic hands to fill his most vital Cabinet and White House posts, people from the Obama (and in some cases, even the Clinton) years. Progressives had hoped to wield major influence in the next administration, but if Biden’s personnel choices so far are any indication, he intends to govern more from what constitutes the middle of the Democratic Party today than to push the envelope far to the left.” — Stephen Stanley, chief economist at Amherst Pierpont

From MarketWatch’s archives (December 2018): Yellen is worried about the next financial crisis

And see: Biden chooses Blinken for secretary of state, Kerry as climate envoy

• “There’s a lot to be excited about, but here’s a big one: As a former Fed chair, she has great relationships across the globe. She can start repairing the damage in economic diplomacy from the past four years.” — Michael R. Strain, director of economic policy studies at the American Enterprise Institute, in a tweet

• “Ms. Yellen’s vast experience as a labor economist will be invaluable as the new administration and the Fed attempt to help the labor market regain its pre-pandemic footing. ... Overall, Ms. Yellen will be a welcome addition to the administration at a time when the economy continues to be adversely affected by COVID-19 and needs ongoing support from both monetary and fiscal policy.” — Rubeela Farooqi, chief U.S. economist at High Frequency Economics

Related: Mnuchin pulls plug on some coronavirus emergency lending programs

• “Investors should embrace former Fed Chair Yellen as the next secretary of the Treasury. If nothing else, her stock track record is very good: the S&P 500 compounded at 13 percent [per] year on a price basis during her tenure, even as she raised rates. Our only concern is that as a trained economist and former central banker, Yellen is not the sort of individual who will champion novel disruptive technologies like a U.S. central bank digital currency. China’s lead on this count will therefore continue to grow, with unforeseeable consequences for the greenback.” — Nicholas Colas, co-founder of DataTrek Research

• “The market responded positively to the news of Yellen’s nomination. This reflects the market’s familiarity with Yellen as Fed chair from 2014 to 2018. ... We conclude by viewing Yellen’s nomination as a moderate selection, which should mitigate the risk of any material progressive rules or regulations that would be disruptive to the banking and financial services sectors.” — Edwin Groshans, analyst at Height Capital Markets

• “In the end, most critical will be whether the policies promised by Biden do create jobs throughout the country. The ultimate judgement of Yellen’s tenure at Treasury will link to her negotiating – on a global stage – a fair value for the dollar and fair trade.” — Steven Blitz, chief U.S. economist at TS Lombard

• “Yellen is an excellent choice for Treasury secretary. She was my boss when I was a senior economist for international at the Council of Economic Advisors in 1998-99. The most wise boss ever!” — Nouriel Roubini, New York University economics professor often called “Dr. Doom,” in a tweet

Read more: Yellen, pushed aside by Trump, returns to center stage of economic policy

• “Great to see there will be an experienced hand at @USTreasury. Every Treasury secretary has a learning curve (even former Fed chairs) but this is an excellent selection.” — Tony Fratto, founder of Hamilton Place Strategies and a former spokesman in the George W. Bush White House, in a tweet

This report was first published on Nov. 23 and has been updated.

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