The Finance 202: Republicans sank Judy Shelton’s Fed nod. Time is running out to revive it.

One of those absent, Sen. Lamar Alexander (R-Tenn.), has declared his opposition, joining Sens. Mitt Romney (R-Utah) and Susan Collins (R-Maine), who voted against Shelton on Tuesday. The other two absent Republicans, Sens. Rick Scott (Fla.) and Charles E. Grassley (Iowa), are self-quarantining because of coronavirus exposures, and Grassley announced Tuesday evening that he tested positive for the virus.

Shelton has earned skepticism from Republican senators and conservative thinkers for a long history of fringe views, including advocating a return to the gold standard, questioning the need for the central bank and criticizing its independence. And she has drawn criticism for changing her mind on key matters in an apparent attempt to curry favor with President Trump. 

National Review, coming out Tuesday in opposition to her confirmation, said there are two reasons to vote against her: “The first is her long record, and the second is her recent sprint away from it.”

The Senate is scheduled to recess at the end of the week and will not return until after Thanksgiving. At that point, Democrat Mark Kelly is set to replace Sen. Martha McSally (R-Ariz.), putting Shelton’s confirmation out of reach if the three Republicans opposing her do not change their minds.

McSally told fellow Senate Republicans during a closed-door lunch Tuesday this will be her last week in the Senate, my colleagues Seung Min Kim and Rachel Siegel report.

“Underscoring how critical every Republican vote will be in the waning weeks of this year, McConnell urged senators during a private party lunch Tuesday to be careful and healthy so the GOP-controlled majority can finish work that remains to be done, such as confirming nominees to the circuit courts, according to three people directly familiar with his closed-door remarks,” they report.

“McConnell stressed that there is no margin for error and noted that keeping all the players on the field — meaning Republican senators — was becoming challenging.” 

Shelton would have been the first Fed appointment in history confirmed during a lame-duck session of Congress, Peter Conti-Brown of the Wharton School at the University of Pennsylvania told the Atlantic’s David Frum.

The margin that sank her was history-making, too. Vice President-elect and current Sen. Kamala D. Harris (D-Calif.), the first woman and first person of color ever elected to that office, returned to the Senate to provide Democrats another vote in opposition. And in missing the vote, Grassley snapped an unbroken 27-year streak of participating in 8,927 consecutive roll call votes, Roll Call reports.

The contention over her nomination also represents a break from tradition. “Party-line votes for Fed board positions haven’t occurred before, reflecting the institution’s apolitical nature,” the Wall Street Journal’s Nick Timiraos reports. “If confirmed, Ms. Shelton would have received fewer votes than any governor since at least 1980.”

The controversial nominee’s path to confirmation appeared to lack sufficient Republican support as recently as September. As we wrote here last week, GOP senators were concerned that if they confirmed her and Trump won reelection, he would seek to elevate her to Fed chair when Jerome H. Powell’s term atop the central bank ends in February 2022.

Trump’s loss removed that threat and breathed new life into Shelton’s bid, which Sen. Lisa Murkowski (R-Alaska) endorsed last week. While it no doubt would be small consolation to Trump on his way out the door, her successful confirmation would solidify his imprint on the institution: He has already tapped five of the members of the seven-seat Fed board for their roles and has another — the more broadly supported St. Louis Fed economist Christopher Waller — waiting in the wings.

Instead, barring a reversal, Shelton is primed to join four other Trump picks for the Fed that encountered otherwise uncharacteristic resistance from Republican senators. Just last year, “two of Trump’s picks, Stephen Moore and Herman Cain, withdrew their bids after intense scrutiny for their past remarks and views about women jeopardized their chances at confirmation,” my colleagues note.

And if Shelton is defeated, Capital Alpha’s Ian Katz writes, “it would give Joe Biden and the Democrats a Fed governor seat that they probably weren’t expecting just a few days ago. It would open up a slot among all the Democrats vying for top positions at places like Treasury, the OCC and the FDIC.” 

Shares dipped a little after near-record gains: “The Dow Jones Industrial Average dropped 167.09 points, or 0.6 percent, to close at 29,783.35. The S&P 500 dipped 0.5 percent to 3,609.53, while the Nasdaq Composite fell 0.2 percent to 11,899.34,” CNBC’s Fred Imbert reports.

“Shares of pharmacy owner CVS Health and Dow-member Walgreens Boots Alliance dropped after Amazon launched a pharmacy business, which allows free delivery of medications for Prime members. Walgreens shares dropped 9.6 percent and CVS lost 8.6 percent. Amazon shares gained 0.2 percent.” (Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

Fund managers are at their most bullish in nearly three years. A Bank of America strategists say their survey results are a cause to sell. “November has brought a spate of good news for stock bulls, but Bank of America fears the market might now be too cheerful for its own good,” Business Insider’s Ben Winck writes. 

“The bank’s latest fund-manager survey found that investor optimism surged this month to its highest point since January 2018. Managers’ allocations to stocks reached a net 46% overweight, inching closer to the 50% threshold that indicates sentiments are ‘extremely bullish,’ Bank of America said on Tuesday… Rising exposure to riskier assets signals that investors are more convinced than ever that the US recovery is on track, but Bank of America’s strategists advised clients to avoid blindly entering a crowded trade.”

The company says it will file for emergency use authorization in days. “The experimental vaccine had already shown promise in an early analysis announced last week, but the trial sped to completion faster than anticipated because of the spike in coronavirus cases in the United States,” Antonia Noori Farzan reports. 

“The Food and Drug Administration has also authorized the first rapid coronavirus test that can be taken at home and can deliver results within minutes, potentially allowing people to skip long lines at testing sites. The single-use test kit from Lucira Health relies on nucleic acid amplification technology, which is considered more accurate than antigen tests.”

What you need to know about the vaccines: My colleagues have answers to all of your questions about what lies ahead.

The Fed chair said it’s too soon to speculate what vaccines will mean for the economy: “‘With the virus now spreading at a fast rate, the next few months may be very challenging,’” Powell said during a virtual question-and-answer session, WSJ’s Nick Timiraos reports.

“While recent news about successful vaccine trials was ‘certainly good news, particularly in the medium term, in the near term there are significant challenges and uncertainties,’ Powell added. … Separately, Powell obliquely addressed the fate of a suite of emergency lending programs established jointly with the Treasury Department after the pandemic convulsed financial markets this spring.” He hinted that it would be too soon to wind down those programs.

• At least 11,358,000 cases have been reported; at least 247,000 have died. 
• More GOP governors adopt mask mandates: “The mask mandates arrived as the nation faced a preview of what a deadly winter might bring, with deaths climbing and case counts skyrocketing. At least 159,000 new cases were reported Tuesday, and more than 77,000 people remain hospitalized,” Isaac Stanley-Becker reports.
• Ohio imposes 21-day curfew: “The curfew will run from 10 p.m. to 5 a.m. each day for 21 days, Gov. Mike DeWine (R) announced in one of his regularly scheduled briefings,” Bloomberg News’s Kevin Miller reports.

• Homebuilder confidence hits another record: “The gauge of builder sentiment rose to 90, the highest in data going back to 1985 and up from 85 in October, according to the National Association of Home Builders/Wells Fargo Market index … It was third straight month of record-high readings and beat the median forecast of 85 in a Bloomberg survey of economists,” Bloomberg’s Prashant Gopal reports.
• Retail sales lose speed: “While other data on showed production at factories accelerating last month, output remained well below its pre-pandemic level and the uncontrolled coronavirus outbreak could disrupt production,” Reuters’s Lucia Mutikani reports.
• The restaurant recovery is in trouble, too. Via Pantheon Economics chief economist Ian Shepherdson:

• Walmart forecasts promising holiday shopping season: “The surge in demand for essentials seen at the peak of the coronavirus lockdowns has carried into the second half of the year, with consumers relying on its same-day delivery and store pick-up services to buy everything from groceries to sporting goods,” Reuters’s Melissa Fares and Aishwarya Venugopal report. “This helped its U.S. e-commerce sales grow 79 percent with strong results across all channels and helped boost same-store sales and profit margins.”

Cases are rising and more economic pain is looming: “Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi have not spoken with Senate Majority Leader Mitch McConnell about another relief bill since the Nov. 3 election, congressional leaders said this week,” CNBC’s Jacob Pramuk reports.

“They appear stuck in their pre-election stances, when Democrats pushed for a package that costs at least $2.2 trillion and Republicans sought a roughly $500 billion bill. In a letter to McConnell on Tuesday, Schumer and Pelosi asked the Kentucky Republican to ‘join us at the negotiating table this week.’ McConnell said the Democratic congressional leaders and President-elect Joe Biden seem to support ‘$2.5 trillion or nothing’ in a relief bill. McConnell said he is open to a bill valued at about $500 billion …”

The Business Roundtable pledges to push for more stimulus under Biden: “Joshua Bolten, the CEO of the advocacy and lobbying group, told reporters that it will start pushing policymakers on a slew of initiatives, including another coronavirus relief bill to help small businesses, the removal of tariffs, and police reforms,” CNBC’s Brian Schwartz reports.

“On trade, Bolten specifically mentioned that they believe Biden should begin cutting back on the tariffs that have been implemented by the Trump administration on foreign goods. He did note, though, that even if the administration removes trade barriers, there are still hurdles to overcome when it comes to trade deals with China.”

• BRT is talking to Biden’s team, Bolten said: “At least one lobbyist working with the Business Roundtable has previous ties to Biden. Eric Rosen, a lobbyist at the firm Invariant, has Business Roundtable as a client and was once a Judiciary Committee counsel to Biden when he was part of the powerful Senate committee.”

The president-elect is being more open about the dangers of a delayed transition: “Biden named top aides who will work in his White House, rewarding loyal supporters and longtime advisers as he builds his administration-in-waiting while keeping a spotlight on the Trump administration’s refusal to assist his transition into office,” Sean Sullivan reports.

“The moves reflected Biden’s two-pronged strategy for navigating the difficulties surrounding his ascent to the presidency: While he is stepping up attempts to show how [Trump’s] unwillingness to cooperate with his team could harm Americans, Biden is also signaling that the roadblocks are not stopping his endeavor to assemble a government prepared to address the crises gripping the nation.”

The senior staff announcements:

• Longtime advisers Mike Donilon and Steve Ricchetti will step in as senior adviser and counselor to the president, respectively.
• Biden campaign manager Jen O’Malley Dillon will be deputy chief of staff.
• The Biden campaign’s general counsel, Dana Remus, will be White House counsel.
• Rep. Cedric L. Richmond (D-La.) will become a senior adviser to the president and director of the White House Office of Public Engagement.
• Deputy campaign manager Julie Chávez Rodríguez will become director of the White House Office of Intergovernmental Affairs.
• Annie Tomasini will become director of Oval Office operations.

• Possible Biden appointee retires from money-managing job: Teachers Insurance and Annuity Association of America said that Roger Ferguson will retire in March. “Ferguson, one of Wall Street’s most-prominent Black executives, ran TIAA for a dozen years, leading the firm through the 2008-09 financial crisis and broadening its reach through multibillion-dollar acquisitions,” the WSJ’s Justin Baer reports.
• Biden’s diversity policies may line up with corporate America’s: “Outrage over the killing of George Floyd and the disproportionately high death rate of Black Americans from covid-19 have led many companies to expand programs to promote workplace fairness, drawing opposition from the Trump administration. Biden is expected to quickly dispense with some Trump policies, said James Plunkett, the former director for labor law policy at the U.S. Chamber of Commerce,” Bloomberg News’s Jeff Green and Paige Smith report.

The company is aiming to go public as soon as Q1 of 2021: “The trading platform that’s proved popular with novice investors, has asked banks to pitch for roles in an initial public offering,” Bloomberg News’s Crystal Tse and Scott Deveau report.

“The company raised an additional $460 million in a series G funding round, lifting its valuation to $11.7 billion, the company said in September. Robinhood has 13 million accounts on its platform, which allows for trading in options, gold and cryptocurrencies as well as equities and funds.”

Americans shun adding more credit card debt: “Household debt overall rose by $87 billion, or 0.6 percent, to $14.35 trillion in the third quarter compared with the second quarter, the New York Fed said. But credit-card balances declined by $10 billion to $810 billion. That followed a $76 billion decline in the second quarter, the steepest drop in data going back to 1999,” the WSJ’s David Harrison reports.

“That drop reflects both lower levels of spending due to the pandemic as well as an effort by consumers to use extra cash to pay down debt, according to the New York Fed.”

EX-GM board member, union leader sentenced to prison: “Former United Auto Workers Vice President Joseph Ashton was sentenced to 30 months in prison for accepting kickbacks as part of a wide-ranging federal corruption probe into the union,” Reuters’s Ben Klayman reports.

Jay Clayton’s caution comes after pharma execs have unloaded millions of shares: “Clayton called for a ‘cooling-off period’ for so-called 10b5-1 plans, which allow company executives to sell stock at a predetermined time—even if they are in possession of important nonpublic information—without exposing themselves to insider-trading charges,” the WSJ’s Paul Kiernan reports.

“The system has come under scrutiny in recent weeks as executives at Pfizer Inc., Moderna Inc. and other drug companies have sold millions of dollars in shares around the same time their firms have announced key results of vaccine trials.”

Trump nominates Brian Brooks to serve as Comptroller of the Currency. The nod for the five-year term comes six months after the president named Brooks to serve in the role temporarily, HousingWire notes. 

“The timing is disappointing as he may have been confirmed if this was done in the spring,” Cowen Washington Research Group’s Jaret Seiberg writes in a note. “As it is, we don’t see how the Senate could act before its session ends. Problem is this fight inflames partisan tensions, which makes work on a COVID-19 stimulus even harder.”

From CNBC’s Carl Quintanilla: 

• The Labor Department reports the latest weekly jobless claims
• A House Financial Services subcommittee holds a hearing on the insurance industry and the pandemic
• Macy’s, Williams-Sonoma and Intuit are among the notable companies reporting their earnings