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The latest in financial news: Congress works on a Continued Resolution for current spending, JP Morgan uses their new JPM Coin, and Chairman Powell gives opening remarks for a forum on the global economy.

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House Working on a Continued Resolution

House Republicans have unveiled a "two-step" continuing resolution (CR) plan to fund the federal government, giving Congress just under a week to pass legislation that would avoid a shutdown. House Speaker Mike Johnson proposed a "laddered" CR, which would extend some appropriation bills to Jan. 19 and others into Feb. 2. The bill aims to stop the holiday-season omnibus tradition of massive, loaded-up spending bills introduced right before the Christmas recess. Congress has until Nov. 17 to pass a funding measure that would avoid shutting down the federal government. The laddered approach may face more pushback from Democratic House members than a standard CR and may also face pushback in the Senate as it may be viewed as "overly-complex." Conservative Republicans are likely to reject a CR that doesn't include significant reductions in spending, while anything with deep spending cuts would be a nonstarter with Democrats who control the Senate.

Here it is again, the US government is continuing talks about their current spending. This shouldn’t come as no surprise to investors as Congress had passed a bill to just continue current funding with little changes to the spending plan. Investors should watch Congress’ actions as they can affect US treasury bonds. As the Federal Reserve keeps higher interest rates to move inflation rates down to 2%, it is causing the amount of money that the US government to repay in bonds to increase. There will eventually come a point where the US government won’t be able to repay the bonds without printing excess money. As we saw during COVID-19 when the government printed a lot of money, it shot inflation up. This has put the US into a situation where they are stuck between a rock and a hard place.

JP Morgan Begins Implementing JPM Coin

JPMorgan has officially launched programmable payment functionality on its institutional blockchain platform, JPM Coin. The programmable payment feature enables real-time, dynamic treasury operations with a groundbreaking "If-This-Then-That" interface. This interface enables institutional users to establish a broader range of rules than traditional conditional payments, fostering increased efficiency and responsiveness in financial management. Siemens AG is the first institutional client to utilize JPM Coin's programmable payment functionality. According to Bloomberg, FedEx and Cargill are also expected to start using the solution before the end of the year.

This highlights the power of using blockchain technology. This is a big example of a business using blockchain technology and incorporating it into their business. As more and more companies look to incorporate blockchain, this will cause a greater acceptance of the technology and improve confidence in cryptocurrency.

Chairman Powell's Opening Remarks At "Monetary Policy Challenges in a Global Economy"

This week, Chairman Powell has given his opening remarks for the Monetary Policy Challenges in A Global Economy and we wanted to discuss some of the highlights from his speech. During his speech, Chairman Powell began by addressing that the inflation rate is still above its goal of 2%. He talked about how the Federal Open Market Committee (FOMC) strives to achieve that 2% inflation rate and that they will tighten policy without hesitation to lower the inflation rate. Chairman Powell and other members are basing their decisions are the latest information and that it can change from meeting to meeting. He also addressed that the US had good growth in the past quarter, but he is expecting modest growth for the US GDP in the upcoming quarter.

He then addressed three different questions “that have arisen from the receding but still elevated inflation we are experiencing today”. The first question he addressed was about the initial causes of this inflation. He noted that the causes seemed to be during the COVID-19 pandemic resulting in supply chain disruptions and a decline in the labor workforce due to health concerns. The second question he addressed was what they had learned about financial policy and how it should change to supply chain issues. He discussed how prices and employment rates are inversely related. They typically move in opposite directions when a supply chain issue happens. So as supply chain issues happen, the price of goods increases while employment decreases, which is what we saw during COVID-19. Then he addressed how monetary policy has a positive relation, where one increases the other should increase too. Chairman Powell talked about how the combination of both factors caused prices to increase rapidly, especially in food and energy. The third question he addressed was what monetary policy would look like after the Federal Reserve achieved its 2% inflation rate. He said that they had changed their monetary policy in 2020 and that they would be looking at past performance in late 2024 as part of their 5-year review.

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