The Day at a Glance | January 15 2021

The Top

· Now is not the time to discuss withdrawing stimuli: Powell.

· Retail sales contracted more than expected in the US during December (-0.7% vs 0.2% e.).

· China would pass the US as the largest economy in the world in 2028, according to new forecasts that include the pandemic`s effects.

· Global COVID-19 deaths reach 2 million.

Economic environment

Fiscal and monetary stimuli will be maintained in 2021, according to President elect Joe Biden`s plans and Chair of the FED Jerome Powell. Joe Biden presented a new fiscal stimulus proposal last night in the United States. The package would require Congress to approve 1.9 trillion dollars to carry out direct payments of up to 1,400 dollars per person and maintain 400 weekly dollars in extraordinary unemployment aid until September. Furthermore, the package proposes funds for COVID-19 tests, the distribution of vaccines and aid to state and local governments. Some controversial propositions are also part of the proposal, such as increasing minimum wage to 15 dollars an hour; even though this type of proposal will require Republican approval as it needs two thirds of the Senate to vote in favor of it. Republican Senators like Marco Rubio of Florida and Jason Smith of Missouri have criticized the proposal and have asked to reduce it. Biden called to act soon in midst of one of the worst crises that have affected the country. Biden`s proposal will be complemented within the next few weeks with a infrastructure and energy spending plan, his campaign`s main economic proposal. The market`s concerns are focused on how both plans will be funded. On the other hand, Chair of the FED Jerome Powell assured in a Princeton University event that this is not the time to discuss withdrawing monetary stimulus and reiterated that the current monetary policy will remain ultra-expansive; it would be a mistake to withdraw stimuli too soon, he said. The statement goes against public speeches made by other members of the FED and seeks to increase confidence in the central bank, which is not considering pulling out stimuli in 2021.