Biden job approval rating drops to 50% in Gallup poll, his lowest to date, though he remains in positive territory

Joe Biden
President Joe Biden boards Air Force One before departing from Tulsa International Airport in Tulsa, Oklahoma, on June 1, 2021.

  • President Joe Biden’s job approval rating has dropped to 50%, a new low.
  • However, some erosion was expected and Biden still has a positive favorability rating.
  • Biden’s first-quarter job approval rating averaged 56%, while his second-quarter average was 53.3%.
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President Joe Biden’s job approval rating has dropped to 50%, a new low, down from 56%, according to the most recent Gallup opinion poll.

The drop of 6 percentage points from the June poll to the latest poll was reflected in the latest survey of 1,007 adults taken between July 6 and July 21.

In the most recent poll, 45% of respondents disapproved of Biden’s job performance, while 5% did not express an opinion.

Biden’s approval decline comes as the nation seems to have hit a wall in increasing vaccination rates, along with the growing unease about the spread of the COVID-19 Delta variant and concerns about inflation.

In Washington, the Senate has made enormous progress on a roughly $1 trillion bipartisan infrastructure bill, but the legislation has not cleared the chamber yet, and Democrats also hope to push through a separate party-line $3.5 trillion infrastructure bill through the budget reconciliation process.

While Biden still enjoys overwhelming support among Democrats, at 90% approval, his approval rating among Independents dropped to 48% in the latest poll, the first time it has dropped below 50% with the latter group since taking office in January.

Read more: Inside the push to get Trump back on social media now that his favorite sites have banned him

Biden’s support among Republicans sat at 12%.

Despite the decline in support, Biden still remains in positive territory, and “it’s common for presidents to see about a 3-point decrease in their average job approval ratings between their first and second quarters,” according to a Gallup report.

Biden’s first quarter job approval rating averaged 56%.

His second quarter average approval rating was 53.3%, which is higher than both former President Bill Clinton (44%) and former President Donald Trump (38.8%), per Gallup data.

However, the president’s second quarter average was below that of former President Barack Obama (62%) and former President George W. Bush (55.8%).

From the 1950s to the 1980s, presidents often boasted higher approval ratings than what currently exists today, the result of less stringent political polarization – former Presidents Dwight D. Eisenhower and John F. Kennedy both averaged approval ratings exceeding 70% during their second quarters, according to Gallup.

Biden posted his highest Gallup job approval rating to date with 57% support in late January and early February, as well as in April.

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Treasury Secretary Janet Yellen warns of ‘absolutely catastrophic’ hit to economic recovery this summer if US can’t pay its bills on time

janet yellen fed
  • On Wednesday Secretary Yellen asked Congress to extend a July deadline to pay back some of the federal debt.
  • Without an extension, she warned of a “catastrophic” default that could hurt economic recovery.
  • Some in the GOP have signaled they want spending cuts in exchange for increasing the debt ceiling.
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Treasury Secretary Janet Yellen urged Congress on Wednesday to extend a July 31 deadline to pay down a portion of the federal government’s $28 trillion in debt to investors and foreign governments.

Without the extension, she warned of an “absolutely catastrophic” default that would imperil the nation’s economic recovery from the pandemic.

“I think defaulting on the national debt should be regarded as unthinkable,” she told the Senate Appropriations Committee, calling it “utterly unprecedented in American history for the US government to default on its legal obligations.”

Though borrowing is a routine cycle the federal government uses to keep the country running through the sale of bonds, it’s reaching its “debt ceiling” on July 31 and needs to service its debt before it can borrow more. The Treasury has some ability to keep payments flowing beyond that date, but Yellen said it could exhaust those measures sometime in August during the month-long Congressional recess. Increasing the debt ceiling does not mean additional federal spending.

If the federal government defaults, Yellen said it could jumpstart a chain reaction of cash shortages starting with US bond holders, which include individuals, businesses, and foreign governments.

“I believe it would precipitate a financial crisis,” Yellen said. “It would threaten the jobs and savings of Americans and at a time we’re recovering from the COVID pandemic.”

Congress last suspended the borrowing limit in July 2019 for two years under President Donald Trump. Yellen also emphasized the pandemic is causing uncertainty around the Treasury’s emergency powers to step in with emergency payments if it became necessary.

Some Republicans have signaled they will press for spending cuts in exchange for signing onto a debt ceiling increase, despite supporting a surge of red ink under Trump. Among many Democrats, memories of a 2011 brawl between House Republicans and President Barack Obama on the debt ceiling are still fresh, as it sent stocks tumbling and caused the first downgrade to US credit.

“This is a page from the Obama-era economic sabotage playbook, and I’m not going to let Republicans play games with the economy for their political benefit,” Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, told Insider in April.

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Investing legend Bill Gross says the Fed risks sinking the dollar if it persists with its ultra-easy policies

bill gross sunglasses
Bill Gross.

  • The world’s reserve currency could sink under the Fed’s current policies, Bill Gross said in the FT.
  • He disputed Jerome Powell’s decision to keep interest rates low until the pandemic is under control.
  • Inflation will force the Fed to move away from its ultra-easy policies sooner than expected, he said.
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Billionaire investor Bill Gross wrote in a Financial Times op-ed on Tuesday that the Federal Reserve could risk sinking the dollar if it continues to support accommodative monetary policies for too long.

“I suspect that $5 trillion spending programmes and the Fed’s current package of near zero per cent short-term rates and $120 billio n of monthly bond buying will move growth, inflation and financial markets far beyond reasonable targets that ultimately will jeopardize post-Covid-19 normals,” he wrote.

Gross, who has since retired since co-founding investment firm Pimco and moving Janus Henderson Investors, argued the threat of inflation will force the US central bank to change tack and move away from its policies sooner than it expects.

“The Fed cannot for long continue to maintain current policy rates and expand its own balance sheet and therefore private bank reserves at a $120 billion monthly pace,” he said.

Enormous amounts of money, as a result of quantitative easing, pumped into the economy over the past year to help sustain the fallout from COVID-19 led to an increase in the amount of cash in circulation. This circumstance inevitably leads to inflation and decreases the value of the currency, thereby devaluing investor savings.

Gross called out Fed Chairman Jerome Powell for transitioning from a more conservative stance to one that has “unleashed the potential for chaotic future economic and market outcomes.”

The one-time “bond king” disputed Powell’s decision to keep interest rates low until the pandemic is more controlled and employment returns to normal. Unemployment may never return to 4% given the revolutionary changes in the work-from-home environment, in Gross’ view.

“And how long can the Treasury continue to require near-costless Fed financing for $2 trillion, $3 trillion and $4 trillion deficits without sinking the dollar? In a historical gold-standard world, Fort Knox would have been emptied long ago, implying the bankruptcy of the world’s reserve currency,” he said.

Gross also suggested that several cryptocurrencies and the boom in special-purpose acquisition companies have been a result of having an accommodative Fed.

“Cash has been trash for years, but soon it may be the only haven for investors sated beyond reasonable expectations of perpetually low yields and supportive bond kings and queens,” he said.

Read More: A senior crypto trader at a $500 million digital asset manager shares his favorite trading strategies to generate ‘riskless profits’ – and the 3 sectors of the nascent market that he is most bullish on

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Global stocks edge higher after Fed officials say inflation will be temporary, while bitcoin tops $40,000

Stock Market Traders

Global stocks rose on Wednesday, after dovish remarks made by Federal Reserve officials helped soothe some of the investor concern about rising inflation.

Futures on the Dow Jones, S&P 500, and Nasdaq rose 0.3%, suggesting a modestly higher start to trading later in the day.

Fed Vice Chair Richard Clarida said on Tuesday it would be possible to discuss scaling back the pace of asset purchases, and that pricing pressure will prove to be “largely transitory.”

He also said macro data is likely to remain volatile, citing the most recent jobs report that “really highlights a fair amount of near-term uncertainty about the labor market.”

San Francisco Fed Bank President Mary Daly told CNBC on Tuesday economic progress looks encouraging, but it isn’t yet time to change policy. “What we’ve seen is some really bright spots, some very encouraging news,” she said. “It gives me hope, and I am bullish for the future. But it’s too early to say that the job is done.”

Bitcoin rose above $40,000, as the cryptocurrency market regained some ground after last week’s broad sell-off. Ethereum’s ether rose 8% to $2,843 and dogecoin rose 2% to 35 cents.

After recording their first weekly advance in five weeks, US tech shares were outperforming again. But UBS doesn’t expect the shift back toward those pricier areas of the market to last, as the environment will continue to favor other sectors.

Read More: Warren Buffett is hoarding $80 billion of cash, cleaning up his stock portfolio, and declining to bash bitcoin. Veteran investor Thomas Russo says why that strategy will ultimately pay off.

“While bouts of Treasury market volatility may occasionally revive pandemic-era mega-cap outperformance, we believe economic reopening and rising inflation remain the most potent near-term drivers for global financial markets,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said. “We think the reflation trade has further to run, favoring sectors such as financials and energy.”

Elsewhere in Europe, the UK government issued some revisions to its own guidance for eight areas in the country where the variant first detected in India is spreading the fastest. People are being encouraged to meet outdoors where possible, rather than indoors. France and Germany are considering imposing tighter restrictions on those travelling to and from Britain.

Investors may be warily awaiting more news on this new variant of COVID-19, and what that might mean for the UK’s plans to ease lockdown conditions, according to Connor Campbell, a financial analyst at SpreadEx.

But European markets took their lead from the US and edged higher. London’s FTSE 100 rose 0.2%, broadly in line with the rest of the region, as the Euro Stoxx 50 rose 0.2%, and Germany’s DAX rose 0.1%.

Asian markets too posted gains after the Fed’s comments on inflation. China’s Shanghai Composite rose 0.3%, Japan’s Nikkei rose 0.3%, and Hong Kong’s Hang Seng rose 0.7%.

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Mohamed El-Erian says the supply bottlenecks causing inflation aren’t going away anytime soon

Mohamed El-Erian
  • Mohamed El-Erian said supply bottlenecks will continue in the near term in a CNBC interview on Monday.
  • The chief economic advisor at Allianz criticized the Fed for its lack of “humility” and “open-mindedness.”
  • “These bottlenecks that have to do with raw materials, other inputs, and labor are not going away anytime soon,” El-Erian said.
  • See more stories on Insider’s business page.

Mohamed El-Erian, the chief economic advisor for Allianz and president of Queen’s College, Cambridge, sat down with CNBC on Monday to talk markets and the topic of inflation quickly came up.

El-Erian said that he believes supply bottlenecks causing inflation will persist.

“I’m of the view that these supply disruptions, these bottlenecks that have to do with raw materials, other inputs, and labor are not going away anytime soon,” El-Erian said.

The chief economic advisor for Allianz added that based on conversations he is having with CEOs, there is considerable input pressure from rising commodity prices on corporations that are going to be passed onto the consumer in the form of higher prices.

“The thing I’m hearing most commonly from companies’ CEOs is: we’re having problems securing inputs, and we’re looking to increase prices and wages,” El-Erian said.

In El-Erian’s view, over the short-term, the Fed won’t change its position that inflation is transitory because they have stated they need “unambiguous evidence” of inflation before tapering asset purchases or increasing interest rates.

El-Erian argued the Fed’s conviction that inflation is transitory comes despite evidence from every corner of the market.

He also noted that the University of Michigan’s index of consumer sentiment released last Friday showed a sharp increase in consumers’ expected inflation rate for the next year in May(4.6% compared with 3.4% in April).

The Consumer Price Index posted its largest most month-over-month jump since 2009 in April as well, while “core” inflation jumped the most since 1982.

Further, El-Erian pointed out that the Bank of Canada and the Bank of England have already started to discuss addressing inflation via tapering quantitative easing policies, and said he worries the fed might be “late” to action.

When asked what would happen if the Fed is “late,” El Erian said, “the market may start getting nervous, and then the Fed will have to slam on the breaks. The last thing we need is the Fed slamming on the breaks because experience shows when that happens, we end up with a recession.”

El-Erian went on to criticize the Fed for its lack of humility and open-mindedness in crafting policy.

“Why is it that you can dismiss all this evidence both from the top-down and bottom-up and hold onto a conviction? You should be more open-minded have a bit more humility about the fact that we don’t understand well supply bottlenecks,” El-Erian said.

“Economists typically lag when it comes to supply bottlenecks,” he added.

Read more: Goldman Sachs says these 23 stocks have strong pricing power and rock-solid margins that could protect against soaring inflation

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Why the horrid April jobs report was actually great news for stocks

NYSE trader
  • The April jobs report badly missed estimates on Friday, but the stock market promptly hit record highs anyway.
  • That’s because the market is now in a phase where bad economic news is good news for equities.
  • The biggest fear for investors is an inflation spike that prompts the Federal Reserve to tightening monetary policy sooner than expected. The weak jobs report soothed those worries.
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Bad economic news is now good news for the stock market, as Friday’s horrid April jobs report translated into record highs for the S&P 500 and a spike in tech shares.

April saw an addition of 266,000 jobs, well below the estimated forecast of 1 million. Unemployment rose to 6.1% from 6.0%, bucking expectations for a decline. It was the worst miss since 1998.

But instead of an instant drop in stocks following the April jobs report, the tech-heavy Nasdaq 100 soared more than 1%. And while the more economically sensitive Dow Jones industrial average initially sold off, it quickly reversed into positive territory.

The centerpiece of this apparent disconnect is inflation, which is the biggest risk facing stocks right now, according to a recent Bank of America survey. The worry is that significant rise in inflation will prompt the Federal Reserve to tighten its easy monetary policy, which has long driven bullish sentiment in stocks.

But the significant labor-market weakness indicated by the April jobs report has investors shrugging off inflationary concerns for now. In fact, investors seem to have been emboldened to pile further into tech stocks, which carry the highest and most daunting valuations in the market.

This same dynamic was on full display earlier this week – albeit in inverse fashion – after Janet Yellen’s comments about interest rates needing to eventually rise caused a similarly sharp sell-off in tech stocks.

Going forward, now that the economy doesn’t appear as red-hot as many have thought, inflation expectations decline further. That could, in turn, give the Fed more breathing room to continue its monthly bond purchases of $120 billion and keep interest rates near 0%.

April’s jobs report gives credence to Fed Chairman Jerome Powell’s committment to not even talk about talking about tapering its monthly bond purchases or raising interest rates. Instead, Powell would like to see a string of reports that solidify the idea that inflation is consistently running above its average target of 2% and the economy is near full employment.

Read more: ‘If lumber crashes, stocks might be next’: An award-winning portfolio manager who’s tracked lumber prices for years breaks down why futures hitting a record high of $1,600 is an ominous sign – and shares what investors can do ahead of the eventual crash

There are varying explanations for why more Americans are not rushing back into the job market. The president of the US Chamber of Commerce called for the end of the $300 supplemental unemployment insurance on Friday, arguing that government stimulus programs have disincentivized employees to return to work.

But Fundstrat’s Tom Lee thinks instead, Americans are afraid to get back to work given that the COVID-19 pandemic has yet to be eradicated.

“Many people are still unwilling to ‘risk their lives’ to get a job given COVID-19 fears,” Lee said on Friday.

Whatever it may be, if the weak jobs reports continue, it could result in a jump in wage inflation as businesses are forced to pay top-dollar for workers.

But for now, as evidenced by Friday’s move in the stock market, bad news is good news.

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The stock market’s inflation fears are overblown as explosive economic growth is primed to create a perfect ‘mix’ for more gains, says a Wall Street chief strategist

Traders and financial professionals work on the floor of the New York Stock Exchange
Traders and financial professionals work on the floor of the New York Stock Exchange

  • James Paulsen, Chief Investment Strategist of The Leuthold Group says stock investors shouldn’t fear inflation.
  • Paulsen told investors in a letter that inflation is only a concern for stocks when real economic growth is weak.
  • The strategist said what matters is not either “inflation” or “growth,” but the “mix” of the two.
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The stock market’s inflation fears may be overblown if explosive economic growth comes to fruition to create a perfect “mix” for more gains, according to James Paulsen, Chief Investment Strategist of The Leuthold Group.

In a letter to investors on Friday, Paulsen said that although inflation may be on the rise,  that hasn’t always meant poor returns for the stock market as long as real economic growth is strong.

And with the post-pandemic reopening in sight, many analysts are arguing real economic growth will be impressive in the second half of the year.

In fact, a monthly Bloomberg survey of economists showed annual GDP expectations nearly double to 5.5% from what experts were predicting just two months ago.

In his letter, Paulsen highlighted the two components that have made up nominal GDP since 1950: annual real GDP growth and annual inflation growth.

The strategist illustrated how a perfect “mix” of these components has led to significant stock market gains in the past. He also said that even when inflation rates are high, the stock market has been able to deliver strong returns as long as real economic growth remains strong.

“Regardless of the inflation environment, if real growth is Low, High, or Super High, negative annual market returns are not that prevalent,” Paulsen said.

According to Paulsen, it’s only when real growth slips to the “super low” level that returns begin to fall.

Contrary to popular belief, inflation isn’t always a bad thing for equity markets. According to Paulsen, when real economic growth is “super-high” inflation has “simply not been important.”

Instead, what’s important is the “mix” of annual inflation growth and real GDP growth. 

The strategist said fears of inflation wreaking havoc on the stock market are not “acute,” “because real economic growth is poised to be spectacular, creating a Mix that has historically been supportive for stocks.”

Paulsen did warn that if real economic growth falters going into 2022 and inflation remains high, that could be a recipe “far less hospitable for stock investors.”

“It’s not just inflation; it’s the mix,” Paulsen concluded.

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Markets have had their ‘Santa Claus rally’ but a strong economy could drive stocks even higher, veteran Wall Street bull Ed Yardeni says

Ed Yardeni
  • Stock markets had an early “Santa Claus rally” in November, but veteran bull Ed Yardeni believes there’s more to come next year.
  • “November was one of the best months ever for the market,” the Yardeni Research boss told CNBC. “It broadened quite dramatically the small-cap and mid-cap stocks. It was just a great, great month for the market.”
  • The disappointing November jobs report shouldn’t worry investors, according to him, because it suggests the first quarter will avoid a double-dip recession.
  • Coordinated global monetary policy will continue to enable a bullish backdrop for stocks, he said.
  • Visit Business Insider’s homepage for more stories.

Stock markets may have massively outperformed in November, but expansionary monetary policy could drive them even higher next year, longstanding bull Ed Yardeni told CNBC.

“The market already had its Santa Claus rally,” he said on CNBC’s “Trading Nation.”

“But it just keeps going up anyways, and no matter how much you try to look at it fundamentally, I think the fact is there is so much liquidity with interest rates so low driving the market higher.”

The benchmark S&P 500 index ended November up 11.8%, notching its best monthly performance in 33 years. Its gains reflected optimism around COVID-19 vaccine development and a resolution to US presidential election uncertainty.

“November was one of the best months ever for the market,” Yardeni said. “It broadened quite dramatically the small-cap and mid-cap stocks. It was just a great, great month for the market.”

However, a record number of coronavirus cases in the US and the disappointing jobs report for November is fuelling concerns over the pace of economic recovery. US employers added only 245,000 jobs in November, far lower than the 460,000 expected.

Yardeni, however, believes a ‘V’-shaped recovery is in progress.

Read More: Goldman Sachs says buy these 19 beaten-down stocks on its ‘holiday shopping list’ that are poised to break out in the 1st quarter of 2021

“I really wasn’t that disappointed,” he said of the jobs figure. “Government had a drop of almost 100,000 [payrolls] because census workers just had part-time jobs. Excluding that, we were up over 300,000. Wages were up, and the workweek held up pretty well.”

Not only does he believe the US economy will bounce back sharper by spring next year, but that global monetary policy will enable a bullish backdrop for stocks.

“You’ve got the major central banks just pouring liquidity,” he noted. “I’m not just watching the Federal Reserve balance sheet every week. I watch the ECB, and the Bank of Japan. They’re all continuing to expand their balance sheets.”

Aside from his optimism for the stock market, he recognized the need for further federal aid for individuals and businesses that endured the worst of their fears this year.

“There are a lot of people who have been left behind,” he said. “Either they lost their jobs and now are being threatened with possibly losing their unemployment insurance. And then, of course, there are a lot of businesses who barely survived the first and second waves of this pandemic.”

Read More: Billionaire investor Ray Dalio breaks down how US debt and money-printing binges have formed a ‘classic toxic mix’ that could set it on a downward spiral towards revolution and civil war

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