Was this email forwarded to you? Sign up here. (Today's Smart Brevity: 1,095 words, ~ 4 minutes.)
Illustration: Lazaro Gamio/Axios
The announcement Wednesday of Kristalina Georgieva as IMF managing director cements a clear changing of the guard at the world's most important economic institutions.
Why it matters: "Economists tend to have a certain view of how the economy works," Mark Zandi, chief economist at Moody's Analytics, tells Axios. "It’s more difficult to move monetary policy in a significant way because economists have a set framework of how they think about things."
Georgieva is a well-respected economist with significant experience, but the first ever IMF managing director from an emerging country is a night-and-day change from outgoing director Lagarde and the prototypical leaders of the fund.
Our thought bubble, per Axios' chief financial correspondent Felix Salmon: "Georgieva was also born in post-war Bulgaria, grew up behind the Iron Curtain, and was European Commissioner for Humanitarian Aid and Crisis Management. She’s very different from the French financial technocrats we’re used to."
The intrigue: The economic world's new leaders arrive as politicians like U.S. real estate mogul and reality TV star Donald Trump, Ukrainian comedian Volodymyr Zelensky and formerly fringe politicians like Mexico's Andrés Manuel López Obrador and Brazil's Jair Bolsonaro have become leaders of some of the world's most important democracies.
The bottom line: These atypical appointees are taking over the world's top institutions at a time of unprecedented global uncertainty and change.
It's still early days in a possible impeachment process, but "it would be complacent to think that the impeachment process just adds another ring to the circus," cross-asset strategists at JPMorgan warn in a note to clients.
What they're saying: They point out 4 important variables about the expected impeachment drama in Washington...
Be smart: Analysts at BMO Capital Markets point out that the Fed was "in the midst of a 75 bp fine-tuning series of rate cuts" during former President Bill Clinton's impeachment scandal and "should probably get more credit for the positive growth sentiment than the risk of a presidential ousting."
Despite tens of billions of dollars of cash infusions every day for more than a week, things are getting worse, not better, in the systemically important repo market that banks use to access cash.
Why it matters: The dysfunctional market signals "that something’s very wrong with the financial system," former Minneapolis Fed president Narayana Kocherlakota wrote in an op-ed for Bloomberg.
What's happening: The market is designed to operate so that banks with collateral like U.S. Treasury bonds can quickly trade those for cash, but a decreasing level of liquidity has banks "scraping the bottom" and relying on the Fed's infusions to conduct everyday business, strategists tell Axios.
What we're hearing: "Nobody knows right now whether this will blow over or not," Danielle DiMartino Booth, CEO of Quill Intelligence and a former adviser to the Dallas Fed, tells Axios.
Threat level: The injections are prompting suspicion the Fed is instituting a clandestine new phase of quantitative easing to boost asset prices and help stimulate the economy, but that's not the case, according to market strategists.
The big picture: The unexpectedly large budget deficits of the Trump administration, combined with the Fed's attempt to unwind its previously $5 trillion balance sheet, have caused a backup in the market. The Fed is now having to supply cash to fix the plumbing in a process that looks eerily similar to QE.
The bottom line: "What the Fed is trying to do is make sure we don’t have episodes like this in the future," said Ian Lyngen, the head U.S. rates strategist at BMO Capital Markets, a primary dealer that does business directly with the Fed.
While everyone was laser-focused on the Affordable Care Act for the past decade, the backbone of the American health care system was gradually deteriorating, Axios' Caitlin Owens and Bob Herman write.
Between the lines: Employer insurance has become increasingly unaffordable over the last decade, contributing to today's political debates over surprise medical bills, drug prices and Medicare for All.
Driving the news: The average cost of family health insurance offered by companies climbed 5% this year, exceeding $20,000 for the first time, according to the newest annual survey of employer health benefits from the Kaiser Family Foundation.
The intrigue: Workers aren't just paying more in monthly premiums. Employers continue to raise the average deductibles, which means more workers are paying for more of their care out of pocket later into the year.