Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. 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!

Denver news in your inbox

Catch up on 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!

Des Moines news in your inbox

Catch up on 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!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

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!

Judy Shelton testifies before the Senate Banking Comittee in February. Photo: Sarah Silbiger/Getty Images

Judy Shelton looks to be within striking distance of getting a seat on the Federal Reserve Board.

Why it matters: Her political background is unprecedented for a Fed candidate, and threatens the central bank's critical apolitical stance.

Our thought bubble, per Axios’ Felix Salmon: Of all the tools in the Fed’s arsenal, its independence from political influence is the most powerful and most important.

Driving the news: The former Trump campaign advisor is likely to cinch a position as one of the crucial decision-makers at one of the most powerful economic institutions in the world.

  • A full Senate vote on Shelton’s nomination is expected to happen as soon as next week.
  • Sen. Lisa Murkowski (R-Alaska) revealed she would support Shelton’s candidacy on Thursday — all but guaranteeing Shelton for now has the votes to be confirmed for the Fed governor post.

Where it stands: Shelton’s economic stance is unclear to Fed watchers, as she’s flip-flopped between unconventional views before her candidacy to post-election statements in line with President Trump.

  • "The hallmark of the Powell Fed is flexibly policymaking, but Shelton has taken that flexibility to a whole new level over the course of her career. It doesn't inspire confidence," Lou Crandall, a decadeslong Fed watcher and chief economist at Wrightson ICAP, tells Axios.

Case in point: Shelton long supported a return to the gold standard. But she said at a hearing earlier this year that she "would not advocate going back to a prior historical monetary arrangement."

  • She questioned the importance of the Fed's political independence in an op-ed last year. But at the onset of her congressional hearing, she nodded at the Fed’s "political independence and operational autonomy."
  • She criticized the Fed for cutting interest rates to near zero in the depths of the financial crisis. But then advocated for a steep rate cut last year — at the same time Trump was calling on Powell to slash rates.

The latest: Shelton‘s fate at the Fed went from possibly doomed when she was first nominated in January to a near lock.

  • Senators on both sides of the aisle were initially skeptical about Shelton. Senate Banking Committee Republicans voiced concern about her non-mainstream views and questioned her ability to uphold the Fed’s political independence, the Washington Post reported at the time.
  • But ultimately in July 2020, all the Republicans on the panel voted to advance Shelton to a full Senate vote.
  • Christopher Waller, a director of research at the St. Louis Fed and the far less controversial candidate nominated by Trump, picked up some Democratic votes. No word yet on a full Senate vote on Waller’s nomination.

The big picture: Earlier this year, concerns about Shelton's candidacy snowballed into fears that, given the right sequence of events, Trump could eventually appoint her to succeed Fed chair Jerome Powell. (That's not likely now since Joe Biden won the 2020 election.)

  • Her seat — which would expire in 2024 — may have little impact among the Fed’s 12-member (if you include Waller’s potential confirmation) voting panel.
  • "Anything she wanted to do outside of convention would be voted down," says Brandon Barford, a partner at research firm Beacon Policy Advisors and former Senate Banking Committee staffer.

The bottom line: Former Treasury official Tony Fratto tweeted, “It’s not just a question of what damage she could do (not much) it’s that it is a discredit to both the Senate AND the Fed. It screams, Nothing at all is serious. Not us. Not you. Not them.”

Go deeper

Dion Rabouin, author of Markets
20 hours ago - Economy & Business

San Francisco Fed chief says Fed must do better on inequality

San Francisco Fed president Mary Daly. Photo: Nick Otto/Washington Post via Getty Images

While the Fed chair has downplayed and even denied the central bank's role in ratcheting up income inequality and the K-shaped recovery, other Fed members are taking responsibility and calling for change.

What happened: San Francisco Fed president Mary Daly took the subject head-on in a speech earlier this week, saying the Fed "will need to do more to ensure that the benefits of low interest rates and rising asset valuations can spread widely throughout the economy."

Dion Rabouin, author of Markets
Updated Dec 3, 2020 - Economy & Business

Our make-believe economy is here to stay

Illustration: Eniola Odetunde/Axios

The Federal Reserve and global central banks are remaking the world's economy in an effort to save it, but have created something of a monster.

Why it matters: The Fed-driven economy relies on the creation of trillions of dollars — literally out of thin air — that are used to purchase bonds and push money into a pandemic-ravaged economy that has long been dependent on free cash and is only growing more addicted.

Dan Primack, author of Pro Rata
9 hours ago - Technology

TikTok gets more time (again)

Illustration: Aïda Amer/Axios

The White House is again giving TikTok's Chinese parent company more to satisfy national security concerns, rather than initiating legal action, a source familiar with the situation tells Axios.

The state of play: China's ByteDance had until Friday to resolve issues raised by the Committee on Foreign Investment in the U.S. (CFIUS), which is chaired by Treasury secretary Steve Mnuchin. This was the company's third deadline, with CFIUS having provided two earlier extensions.