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Senate Banking Chair urges halt to deregulation until Biden picks nominees

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Chairman Sherrod Brown (D-OH) questions Treasury Secretary Janet Yellen and Federal Reserve Chairman Powell during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the Hart Senate Office Building in Washington, DC, September 28, 2021.

Kevin Dietsch | Pool | Reuters

The Senate’s top Democrat in charge of bank oversight wants Federal Reserve Chairman Jerome Powell to pause any financial deregulation until President Joe Biden nominates new members to the central bank.

Sen. Sherrod Brown, chair of the Senate Banking Committee, urged Powell to stop rolling back industry regulations until the president has a chance to select a replacement for outgoing Fed Vice Chair for Supervision Randal Quarles.

“When Vice Chair Quarles was confirmed to his position, banking lobbyists cheered. Not only did he immediately set out a plan to shift post-crisis rules to benefitting industry interests over protecting working families, he dutifully continued his deregulatory efforts even as the economy was shaken by a global pandemic,” Brown wrote in a letter dated Oct. 13.

“A new direction for financial regulation must be determined by whomever the President chooses, and Congress confirms, to critical leadership positions on the Board,” the Ohio Democrat added.

Quarles’ tenure as the Fed’s top bank regulator ends Wednesday and opens yet another high-profile position at the central bank for the White House to fill in the coming months. His position will go unfilled until Biden nominates, and the Senate confirms, a new candidate to oversee the nation’s lenders.

“In light of the expiration of the Vice Chair’s term, he will no longer chair the committee on supervision and regulation,” a Fed spokesperson told CNBC. “That committee will meet as necessary on an unchaired basis. Matters within the committee’s responsibility will proceed to the full board only where there is broad consensus among the committee members.”

Quarles’ separate term as a governor on the Fed’s board runs for another 10 years.

Many Democrats see Quarles’ departure from the vice chair role as a chance to better police merger applications, capital requirements and other regulatory issues facing banks.

Sen. Elizabeth Warren, a Massachusetts Democrat and fellow Banking Committee member, lambasted Quarles in May for what she and other Democrats considered his dangerous and relaxed approach to financial oversight.

“Instead of protecting the system, you spent your time at the Fed cutting holes in the safety net wherever you could,” she said at the time. “Your term as Chair is up in five months. And our financial system will be safer when you are gone.”

Quarles was the first person to fill the supervisory role, a position created by the 2010 Dodd-Frank legislation that redesigned financial sector oversight in the aftermath of the Great Recession. The position had gone unfilled until 2017, when former President Donald Trump nominated him to be one of Powell’s deputies.

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Quarles’ vacancy comes a few months before Fed Vice Chairman Richard Clarida’s term ends in January and Powell’s term as chair expires in February. Combined with an existing vacancy on the seven-member Fed board, Biden will have several opportunities to shuffle leadership at the nation’s central bank.

The White House has not offered comment on when it plans to announce its nominees, though deputy press secretary Karine Jean-Pierre said last week that Biden “does have confidence in Powell at this time.”

Powell is still favored by lawmakers on both sides of the political aisle for a second term and would likely face an easy reconfirmation vote in the Senate. He enjoys bipartisan support thanks in large part to the Fed’s speedy work to secure the U.S. economy during the Covid-19 crisis and ensure businesses had ready access to liquidity.

Trump nominated Powell to lead the Fed in 2017, years after former President Barack Obama first tapped him to serve on the central bank’s board. His renomination is supported by virtually every Republican.

That has not dissuaded some progressive Democrats from pressing Biden to choose a nominee they see as tougher on banks and more focused on issues like climate change and income inequality.

Progressive Reps. Alexandria Ocasio-Cortez, Rashida Tlaib, Ayanna Pressley, Mondaire Jones and Jesus “Chuy” Garcia made their case in late August.

“To move forward with a whole of government approach that eliminates climate risk while making our financial system safer, we need a Chair who is committed to these objectives,” the quintet wrote. “We urge President Biden to re-imagine a Federal Reserve focused on eliminating climate risk and advancing racial and economic justice.”

Wall Street widely expects the White House to tap Fed Governor Lael Brainard for a promotion. She is a strong contender to fill Quarles’ position if she’s not asked serve as a replacement to Powell if Biden decides to replace the Fed chief.

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Snap earnings Q3 2021

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In this screengrab, CEO of Snap Inc. Evan Spiegel takes the stage at the virtual Snap Partner Summit 2021 on May 20, 2021 in Los Angeles.

Snap Partner Summit 2021 – Snap Inc | Getty Images

Snap stock fell 22% after reporting its third-quarter earnings on Thursday. The company’s revenue missed Wall Street expectations after its advertising business was disrupted by privacy changes Apple introduced earlier this year.

Here’s what Snap reported versus Wall Street’s estimates:

  • Adjusted earnings per share: 17 cents vs. 8 cents by Refinitiv
  • Revenue: $1.07 billion vs. $1.10 billion forecast by Refinitiv
  • Global daily active users (DAUs): 306 million vs. 301.8 million per StreetAccount
  • Average revenue per user (ARPU): $3.49 vs. $3.67 per StreetAccount

Snap CEO Evan Spiegel praised Apple’s consumer-friendly changes on CNBC in February, when he also warned they posed a risk to Q4 earnings, but said on Thursday the iPhone’s privacy settings impacted Snap’s advertising business more than anticipated.

“While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS,” Spiegel said in his prepared remarks.

Shares of social media rivals Facebook and Twitter were each down nearly 7% in after-hours trading following the release of Snap’s third quarter earnings, showing investors may fear similar impact on their financial results.

Spiegel also warned that global supply chain interruptions and labor shortages reduces the “short-term appetite to generate additional customer demand through advertising.”

Snap CFO Derek Andersen warned that between Apple’s privacy changes, supply chain interruptions and labor shortages, the company expects its fourth-quarter revenue to come in between $1.16 billion and $1.20 billion. That’s short of the $1.36 billion in revenue that analysts were expecting for the fourth quarter, according to Refinitiv.

“Unfortunately, these changes are occurring during a season when our advertising partners would normally expect their supply chains to be operating at peak capacity, and at a time when we would otherwise expect peak advertising demand to drive peak contestation, and therefore peak pricing, in our auction,” Andersen said in his prepared remarks.

Snap’s net loss narrowed 64% to $72 million, from a loss of $200 million a year ago.

“While it is difficult to predict the trajectory of these challenges, the growth of our audience, the adoption of our new products and platforms by our community, and the underlying efficacy of our advertising products for performance advertisers gives us confidence in the future of our business and our ability to navigate this environment as we continue to invest in our long-term vision,” Spiegel said.

Snap reported 306 million daily active users, up more than 4% from the 293 million the company reported in April. That figure is up nearly 23% compared with the 249 million daily users the company reported a year prior.

The company expects to reach between 316 million and 318 million DAUs in the fourth quarter, the company said in its prepared remarks. That came in ahead of the 311.8 million daily active users analysts were expecting for the fourth quarter, according to StreetAccount.

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Stock futures dip slightly after S&P 500 hits new record close

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A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, October 6, 2021.

Brendan McDermid | Reuters

Stock futures dipped slightly in overnight trading Thursday after the S&P 500 reached new highs.

Futures on the Dow Jones Industrial Average shed 15 points. S&P 500 futures dipped 0.3% and Nasdaq 100 futures fell 0.7%.

In Thursday’s regular session, the S&P 500 notched both a fresh intraday high and new record close. The broad index rose 0.3% for its seventh consecutive positive session. The Nasdaq Composite rose 0.6%, while the Dow shed 6.26 points, or 0.02%.

Investors digested a slew of corporate earnings reports. Tesla shares closed 3% higher Thursday, providing support to the S&P 500 and Nadaq Composite.

Companies are posting strong profits so far this third-quarter reporting season despite supply chain and inflation headwinds. Out of 101 S&P 500 members that have reported financial results, 82.6% have topped earnings expectations, according to FactSet as of Thursday after the bell.

“In a quarter where we thought things would slow down and there was concern about what profit margins were going to look like, these companies are still doing well,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments.

Strong jobs data also added to the positive market sentiment. Initial jobless claims fell to a new pandemic low of 290,000 last week, the Labor Department reported Thursday — down 6,000 from the previous week and lower than the 300,000 expected from economists surveyed by Dow Jones.

All three major averages are on track to close the week higher for three-straight weeks of gains. On the month, all three indexes are up at least 5%.

Investors await earnings reports Friday from companies including American Express, Honeywell, Schlumberger and Cleveland-Cliffs.

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CDC panel unanimously endorses Moderna and J&J Covid boosters, sending to director for final approval

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An influential Centers for Disease Control and Prevention advisory committee on Thursday unanimously recommended boosters of Moderna and Johnson & Johnson‘s Covid-19 vaccines, sending it to CDC Director Dr. Rochelle Walensky for final approval.

The agency’s Advisory Committee on Immunization Practices meeting recommended the Moderna booster for elderly people and at-risk adults six months after they complete their primary series of shots, bringing it in line with the distribution plan for Pfizer and BioNTech’s booster. It also endorsed J&J boosters for everyone 18 and older who received the initial shot at least two months ago.

More than 39 million Moderna recipients and nearly 13 million J&J recipients may be eligible for a booster dose as early as Friday, according to a slide presented by the CDC during the meeting.

Booster shots have been a contentious topic for scientists — in and outside the government — especially as many people in the U.S. and other parts of the world have yet to receive even one dose of a vaccine. The World Health Organization has pleaded with wealthy countries to hold off on distributing boosters, and some scientists say they aren’t convinced most Americans need them right now.

Before the vote, some members said they were concerned about the lack of data on boosters, while others asked the agency if they could simplify the messaging on who is eligible to get the extra doses.

“These recommendations are in some ways asking the individual to decide on their underlying risk and medical condition, because the reality is they’re not consulting with their physicians in all cases; they’re just going out and getting booster doses,” said member Dr. Jason Goldman.

“And I worry that if it’s too prescriptive or if it’s too wordy, we are either going to miss the ability to give people boosters who really should be getting it, or people are just doing it anyway and not necessarily having the support of the language to do it,” he added.

The Biden administration hopes giving the U.S. population additional doses will ensure long-term and durable protection against severe disease, hospitalization and death as the fast-moving delta variant continues to spread and change. A newly-discovered mutation of delta is being investigated in the U.K. amid worries that it could make the virus even more transmissible and undermine Covid-19 vaccines further.

Walensky addressed the committee before the vote Thursday, thanking them for their work and noting that the data around the virus and vaccines is constantly evolving.

“None of us individually can exactly predict what may happen next, and none of us individually can know exactly what to do,” she told the panel. “Please know that I am here listening and eager to learn from your perspective.”

Moderna recipients can get a booster at half the dosage of the original two shots.

The effectiveness of the two-dose vaccine against infection wanes over time, according to data the CDC posted before the committee’s meeting. Some studies show small declines in protection against hospitalization too, mainly for those over the age of 65, the data showed.

The CDC said the data has shortcomings, noting that some recipients may have been engaging in riskier activities after getting vaccinated.

CDC official Dr. Tom Shimabukuro presented data that showed there is an increased risk of rare inflammatory heart conditions, myocarditis and pericarditis, following vaccination with the Moderna or Pfizer vaccine, particularly following the second dose.

The rate of the rare heart conditions within seven days of vaccination was 10 cases per million doses, Shimabukuro said, citing a study of U.S. military members. It often occurred in young men and usually after the second dose, he said. Most patients reported feeling fully recovered within six weeks.

The surveillance is “ongoing,” he said.

Dr. Macaya Douoguih, head of clinical development and medical affairs for J&J’s vaccines division Janssen, said there is no data to suggest people are at increased risk of a rare, but serious, blood clot condition after receiving a second dose. She presented data from the U.K. on second doses of AstraZeneca’s vaccine, which uses a similar platform to J&J’s.

However, one expert on the committee noted that U.K. authorities began to curb the use of AstraZeneca’s vaccine in young women earlier this year because of the risk of rare blood clots, meaning it may be difficult to determine the impact of a second J&J dose based on that data.

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