Public-policy makers are having tremendous influence on financial markets in 2022. Whether it’s Jerome Powell’s Federal Reserve, which kept injecting fresh dollars into a booming economy, or Vladimir Putin’s decision to wage war in Ukraine, the the role governments and public institutions play in these markets is large. Here are the 17 policy makers on this year’s MarketWatch 50 list of the most influential people in markets.
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Since taking office on Jan. 20, 2021, President Joe Biden has enacted major economic legislation that expanded COVID testing and the child tax credit; signed a $1 trillion bill to upgrade U.S. roads, bridges and other infrastructure; and approved more than $52 billion for U.S. companies that make computer chips, in a bid to compete with China. While Biden has notched accomplishments since winning the White House over Donald Trump in November 2020, Biden and his Democratic Party now face a persistent challenge from historically high inflation. Biden in August signed into law a $750 billion healthcare, tax and climate bill dubbed the Inflation Reduction Act, though critics say the measure won’t reduce inflation by a great deal. Biden has tried to mitigate inflation by releasing tens of millions of oil barrels from the Strategic Petroleum Reserve, while also making moves that could contribute to higher prices, like canceling a significant amount of student debt. Voters’ anger over high prices for food, rent and cars may have played a pivotal role if Republicans ultimately win one or both chambers of Congress, which would result in roadblocks for Biden’s agenda in the second half of his term.
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A member of Fed Chairman Jerome Powell’s inner circle, Lael Brainard had long been known for her dovish stance on interest-rate policy. But that changed suddenly in the spring when Brainard shook up markets by showing grave concerns about rising prices. Inflation was “much too high,” she said, and the Fed would start reducing its giant $9 trillion balance sheet “at a rapid pace.” Her remarks sent 2- and 10-year Treasury yields to three-year highs and showed the world that policy makers at the U.S. central bank were finally on the same page when it came to fighting inflation. At the end of September, Brainard discounted the likelihood that the Fed would dial back on its tough new medicine anytime soon, cementing market expectations for interest rates that will be “higher for longer.” She has also urged that crypto be regulated for its own best interests.
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In his first year at the helm of the Consumer Financial Protection Bureau, Rohit Chopra has made clear that he’ll use every tool at his disposal to make the federal agency a consequential player in the financial-services market. He is focusing on competition and consumer protection, and using his regulatory authority to examine nonbank fintech firms, which are quickly reshaping the financial system. The former FTC commissioner is probing Big Tech’s entry into consumer payments and shifting the CFPB’s enforcement efforts away from smaller firms and toward major market players. Industry is bowing to the pressure. Several major banks scaled back or eliminated overdraft fees after he trained the bureau’s spotlight on what he calls “junk fees.” Chopra, 40, is also a member of the Financial Stability Oversight Council and the FDIC board, where he won a power struggle that ended in the resignation of the Trump-appointed chair and a green light for a bank-merger policy review that may make M&A among larger banks more difficult.
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Gary Gensler has laid out an ambitious rulemaking agenda that could fundamentally reform the way stocks, bonds and derivatives are bought and sold in America. In June, he announced his intention to pursue new rules that would require retail brokers to conduct order-by-order auctions among market makers and exchanges, a rule that could upend the very lucrative wholesale industry and potentially revitalize securities exchanges like the NYSE. The SEC chairman has also made enemies in the digital-asset industry by declaring that the “vast majority” of cryptocurrency tokens are securities being issued and traded in violation of federal law, and by refusing calls from the industry to craft tailored rules for crypto assets. Perhaps most controversial was Gensler’s March proposal that would enhance and standardize climate-change risk disclosures, a move that critics say is an attempt to shame public companies into reducing carbon emissions.
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In 2022, Xi Jinping further extended his control of the world’s second largest economy. His official title is president, but he is also known as the “emperor of everything.” This year he has continued to stubbornly pursue a zero-COVID policy for China even with most major economies fully opened up. The policy has reverberated in global markets, slowing China’s economy and pushing back on rising global energy prices. Xi also kept pursuing a moderated version of the regulatory crackdown on China’s tech sector that has wiped out billions of dollars in value since 2020 and only recently showed any sign of easing. Xi has voiced support for Russia in the war in Ukraine, while remaining in line with Western sanctions. His appointment of loyalists to top leadership positions in October sparked a selloff in China’s markets and extends the process of deglobalization — a trend that is inflationary because it boosts corporate operating costs.
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Lina Khan, 33, became a star while still in law school by arguing that antitrust enforcers should go after the big technology companies, especially Amazon, even if their behavior wasn’t necessarily leading to higher prices for consumers. Now, as chair of the FTC, Khan is putting those ideas into action. In recent months, the FTC has sunk planned mergers from chip manufacturer Nvidia
and aerospace manufacturer Lockheed Martin
and in July the Democratic majority on the committee voted against the advice of career staff to sue to block Meta’s
planned acquisition of Within Unlimited. In 2022, Khan also intimidated corporate dealmakers with the idea of post-acquisition challenges and by forcing changes on private-equity transactions. She has also suggested reviving long-dormant rulemaking powers to stop companies from using noncompete agreements and instituting sweeping privacy rules that could have a massive impact on companies in the S&P 500
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Christine Lagarde was slow to realize the severity of rising inflation as head of the ECB. She didn’t start setting a course to end eight years of bond buying and negative interest rates until June, weeks after the Federal Reserve and Bank of England took that step. Once she did move, the euro collapsed by 20% and fell below the U.S. dollar
for the first time in 20 years. Lagarde has tried to wind down quantitative-easing asset purchases and raise interest rates while averting a bond-market crisis and sovereign-debt defaults in Europe’s southern countries. Her job has been made complicated by the Russian invasion of Ukraine and rising energy prices, since Europe is dependent on natural gas imported from Russia. The challenge has gotten even tougher with inflation in the eurozone topping 10% in September for the first time since the euro was created more than two decades ago.
A moderate Democrat often at odds with his party on major economic issues, Sen. Joe Manchin of West Virginia has determined the fate of President Biden’s agenda in the evenly divided Senate. Manchin’s opposition to “Build Back Better” scuttled the chances for the social-spending and climate legislation in late 2021 — but also may have prevented inflation from getting even worse in 2022. This year, Manchin saved the Democratic agenda by supporting a law Biden signed in August that still has wide-ranging market impacts, from greenhouse-gas reduction to taxing stock buybacks and pushing down prescription-drug prices.
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After settling with Pinterest
over her race- and gender-discrimination allegations, Ifeoma Ozoma set her sights on making sure other employees who go through similar experiences can talk about them without fear of violating their nondisclosure agreements. The former public-policy manager was key to a first-in-the-nation California law rendering NDAs useless in cases of workplace abuse and its expanding provisions that went into effect this year (followed by a similar law in Washington state). Ozoma has pushed the issue much further in 2022, working with a coalition of shareholders to persuade tech companies like Microsoft
and Google parent Alphabet
to extend the protections of the California law to the rest of their workforce across the country. By essentially negating NDAs in cases of harassment or abuse at the workplace, her efforts will reverberate across industries for years to come because companies and executives will have fewer ways to hide cases of wrongdoing.
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Jerome Powell has had to guide the U.S. central bank through the upheaval spawned by the pandemic, and it’s been a rough ride. Some say Powell, who is not a trained economist, will go down in history books for all the wrong reasons. Chief among them was his stubborn refusal to let go of the “transitory” storyline as U.S. inflation surged to its highest levels in 40 years. He refused to change U.S. monetary policy for months because he thought the rise in prices would be temporary. Mohamed El-Erian, chief economic adviser for Allianz, called it “probably the worst inflation call in Fed history.” Economist Stephen S. Roach drew comparisons to Arthur Burns, who ruled the Fed with an iron fist from 1970 to 1978 but failed to prevent the worst bout of “stagflation” in U.S. history. How Powell is ultimately remembered will depend on whether he’s able to tame inflation without driving the U.S. into a deep recession. Sinking stock markets and soaring interest rates suggest investors and traders have lost some of their faith in Powell.
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Vladimir Putin’s decision in February to invade Ukraine shook global markets. The Russian president’s move to wage war fueled inflation by helping to push oil prices above $100 a barrel for portions of the year. Rising energy prices and Western sanctions on Russia put particular pressure on European economies that are dependent on Russian oil and gas. Putin has pulled back energy supplies from Europe to help drive up prices, undercutting Germany’s growth model and hammering the euro. The war disrupted wheat exports in a region that produces a quarter of the world’s supply, causing food prices to temporarily spike, further contributing to the global inflation picture that central banks tried to combat. Putin’s war also tilted the world economy away from globalization, a potential far-reaching impact for markets. His threat to use tactical nuclear weapons is, among other things, now a serious market risk.
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Sen. Kyrsten Sinema of Arizona nearly sank her fellow Democrats’ Inflation Reduction Act — before she saved it. The $750 billion healthcare, tax and climate bill passed the Senate with her support in August, but only after a provision that would have closed the so-called carried-interest loophole that benefits private-equity managers was dropped. As a result, Sinema’s influence over private-market investing will reverberate for years. Like fellow maverick Democrat Joe Manchin, Sinema has posed a major roadblock in the evenly divided Senate for President Joe Biden’s agenda. But with Sinema’s support, the IRA — which also includes a 1% tax on corporate share buybacks and a minimum corporate tax rate of 15% on large companies — cleared the Senate and was signed into law by Biden on Aug. 16.
Fired by Amazon
after organizing a protest over coronavirus-related working conditions at the beginning of the pandemic, Chris Smalls returned to lead his former warehouse in Staten Island to become the first Amazon warehouse to vote to unionize. Dismissed as not smart or “articulate” by an Amazon exec in a leaked memo, Smalls is now president of the newly formed Amazon Labor Union, which is trying to organize other Amazon warehouses and has become one of the most prominent names in a burgeoning labor movement. Smalls has testified before lawmakers on Capitol Hill, met President Joe Biden, and is traveling around the nation to talk with other labor leaders as companies like Amazon and Starbucks
continue to face pressure from their workers and shareholders. Just one year into his job, Amazon CEO Andy Jassy has had to deal with constant questions about Amazon’s labor issues. (At Starbucks, the chief operating officer who was responsible for the company’s response to unionization efforts left the company.)
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Back in early 2021, when virtually everyone considered U.S. inflation to be transitory, Larry Summers was pounding the table with out-of-consensus warnings: that President Biden’s $1.9 trillion COVID-19 relief plan would “set off inflationary pressures of a kind we have not seen in a generation,” and that the Federal Reserve was exhibiting “dangerous complacency” about the risk of rising prices. Slowly in 2022, markets came around to Summers’s view as his warnings came to fruition. The U.S. inflation rate soared to as high as 9.1% in the 12 months ended in June 2022, the fastest pace in four decades. As a result, the U.S. central bank changed its policy to confront inflation, and the delayed response risked tipping the world’s largest economy into recession. A former U.S. Treasury secretary and White House economic adviser, Summers has been talking to Biden in 2022 and sharing his thoughts on economic policy widely and pushing for a strong Fed response to inflation, including an unpopular call for a surge in unemployment to curb rising prices.
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Liz Truss spent just 44 days as British prime minister, but her impact on markets has been felt sharply. As recently as two years ago, Truss was best known in the U.K. for an awkward promotion of cheese at a political conference. But Truss steadily ascended the ranks in the Conservative Party to become foreign secretary in Boris Johnson’s government, and then won a battle to become prime minister in September 2022 after the scandal-racked Johnson quit. Thrust into the global spotlight upon Queen Elizabeth II’s death two days into her premiership, Truss and new Chancellor Kwasi Kwarteng faced harsh financial-market scrutiny after their so-called minibudget resulted in the British pound’s tumbling to a record low
and U.K. bonds
falling so sharply that the Bank of England had to intervene. Faced with criticism from the U.K. central bank, the International Monetary Fund and her own political party, Truss scraped her tax-cutting plans and resigned in October. Her short tenure serves as a blueprint for the kinds of country-specific issues lurking under the surface of these financial markets, and the tensions between governments and central banks that currently exist.
Janet Yellen has been a trailblazer as the first female Fed chairwoman and now first female Treasury secretary. Earlier this year, Yellen admitted she failed to foresee the surge in inflation. “I think I was wrong then about the path that inflation would take,” Yellen said in May of her previous insistence that rising prices were a short-term consequence of pandemic shocks. Yellen has denied talk that she plans to leave the Biden administration before the next presidential election. Few officials in the U.S. have her breadth of experience managing the economy or her close contacts with global leaders as the rest of the world enters a perilous post-pandemic era. But first things first: “I think it is critical to bring down inflation,” Yellen said in a recent NPR interview.
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Not long ago, it might have seemed inconceivable that a comic–turned–leader of Ukraine could have a big impact on global markets. But in 2022 markets hung on Volodymyr Zelensky’s every word as traders followed developments in Russia’s invasion of Ukraine. It didn’t go the way Moscow hoped. On March 28, for example, when Russia gave the first indication that it might be willing to accept less than total control of Ukraine, financial markets cheered. Ironically, progress on the Ukraine front allowed U.S. investors to turn their attention back home the next day as central bankers’ efforts to respond to rampant inflation led to the first inversion of the closely followed 2s/10s Treasury spread since Aug. 30, 2019. Zelensky has shocked the world with charismatic leadership that rallied Western support and Ukraine’s robust fall counteroffensive in its south and east. Ukraine’s battlefield success has had massive implications in energy and food markets, and beyond.