Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Aïda Amer/Axios

Treasury Secretary nominee and former Fed chair Janet Yellen's confirmation hearing before the Senate Finance Committee on Tuesday showed markets just what they can expect from the administration of President-elect Joe Biden: more of what they got under President Trump — at least for now.

What it means: Investors and big companies reaped the benefits of ultralow U.S. interest rates and low taxes for most of Trump's term as well as significant increases in government spending, even before the coronavirus pandemic.

  • Last week Fed chair Jerome Powell reassured markets in remarks to Princeton's Bendheim Center for Finance that the Fed isn't even thinking about thinking about thinking about raising rates.
  • And Yellen's testimony provided reassurances that the rest of the bullish environment for risk assets will remain in place.

Key statements: “The focus right now is on providing relief and on helping families keep a roof over their heads and food on the table, and not on raising taxes,” Yellen said.

  • “Neither the president-elect nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big."
  • “Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states keep firefighters and teachers on the job.”
  • “To avoid doing what we need to do now to address the pandemic and the economic damage that it’s causing would likely leave us in a worse place economically and with respect to our debt situation than doing what’s necessary.”

How it works: Rock bottom interest rates mean companies can issue debt for virtually nothing (or even less in the age of negative-yielding corporate bonds) and can therefore borrow their way out of slow- or no-growth periods.

  • Low rates also increase the amount of money in the economy — an environment that's been supercharged thanks to the Fed's quantitative easing and corporate bond-buying programs.
  • Adding trillions in deficit spending from the federal government further increases the money supply and makes it harder for big companies to fail, regardless of their ability to sell their products or generate a profit.

The bottom line: Fears of runaway inflation, inefficient markets and excess debt derailing the economy had kept policymakers from attempting such a cocktail in years past.

  • But with inflation unable to hold above 2% for more than a decade and an economy incapable of supporting itself without massive intervention, stock traders have cast off such concerns.

Go deeper

Felix Salmon, author of Capital
Jan 28, 2021 - Economy & Business

Reddit traders' real-world positive consequences

Expand chart
Data: YCharts; Chart: Axios Visuals

Thanks to Reddit, AMC Entertainment has managed to take $700 million of debt off its balance sheet, as well as raising $506 million of fresh cash in the stock market.

Driving the news: The movie-theater chain and hot meme stonk of the moment converted $100 million of junior debt into equity on Monday, while also raising fresh equity capital. Then, on Thursday, it announced that $600 million of senior debt had also been converted into equity, at a price of $13.51 per share.

Updated Jan 28, 2021 - Economy & Business

2020 was the economy's worst year since 1946

Source: FRED; Billions of chained 2012 dollars; Chart: Axios Visuals

One of the last major economic report cards of the Trump era lends perspective to the historic damage caused by the pandemic, which continued to weigh on growth in the final quarter of 2020.

By the numbers: The U.S. economy grew at a 4% annualized pace in the fourth quarter, a sharp slowdown in growth compared to the prior quarter. For the full year, the economy shrank by 3.5% — the first annual contraction since the financial crisis and the worst decline since 1946.

Biden explains justification for Syria strike in letter to Congress

Photo: Chris Kleponis/CNP/Bloomberg via Getty Images

President Biden told congressional leadership in a letter Saturday that this week's airstrike against facilities in Syria linked to Iranian-backed militia groups was consistent with the U.S. right to self-defense.

Why it matters: Some Democrats, including Sens. Tim Kaine (D-Va.) and Chris Murphy (D-Conn.) and Rep. Ro Khanna (D-Calif.), have criticized the Biden administration for the strike and demanded a briefing.