Here comes the Fed – Politico

wpDataChart with provided ID not found!
Impact team
Written by Impact team

Here comes the Fed  Politico

Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services’ morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.

Here comes the Fed — The Federal Reserve issues its latest policy statement at 2:00 p.m. followed by a press conference with Chair Jerome Powell at 2:30 p.m. Not likely to be any policy changes, though both the statement and Powell could discuss the Fed’s plans to allow inflation to float above 2 percent to achieve full employment.


That could happen next year in either the early days of a Joe Biden administration or the start of President Donald Trump’s second term. It may seem like a wonky, weird thing. But it’s a big change for the Fed and could prove critical in the recovery period from the Covid-19 pandemic.

Powell is also likely to lean on Congress to figure out a way to get new fiscal stimulus into the system as soon as possible, something that does not appear to be happening. In fact, White House officials privately say they hold out almost no hope for a stimulus deal before the election.

Via Pantheon’s Ian Shepherdson: “If the Fed doesn’t use this meeting to beef-up its forward guidance, markets’ focus will be on the wording of the statement, which we expect will acknowledge the slowing momentum evident in much of recent data, both official and unofficial. But it will not suggest that growth has stalled.”

Pressure on Dems on stimulus? — The lack of new stimulus is bad for the economy and thus largely bad for the incumbent president (which makes the lack of urgency on Trump’s part quite puzzling). But some Democrats are nervous now as well, per our Heather Caygle, Sarah Ferris, and John Bresnahan.

“Speaker Nancy Pelosi faces growing calls from within her own ranks — including from some of her most vulnerable members — to take quick action on a coronavirus relief bill even if there’s no agreement with Republicans or the White House over the issue.

“But Pelosi, supported by her leadership team and most committee chairs, is refusing to back down from her demands for a bipartisan $2.2 trillion-plus stimulus package to boost the U.S. economy, which Republicans have repeatedly dismissed.”

GOOD WEDNESDAY MORNING — Wednesday? Really? That’s it? Sigh. Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.

House Financial Services has a hearing at noon on “Prioritizing Fannie’s and Freddie’s Capital over America’s Homeowners and Renters? A Review of the Federal Housing Finance Agency’s Response to the COVID-19 Pandemic” … Senate Budget Committee has hearing at 2:30 p.m. on federal housing assistance programs … Fed announcement at 2:00 p.m. and Powell press conference at 2:30 p.m.

COVID-19 AT JPM — Bloomberg’s Michelle F Davis and Katherine Burton: “JPMorgan Chase & Co. sent some of its Manhattan workers home this week after an employee in equities trading tested positive for Covid-19, according to a person with knowledge of the matter.

“News of the infection, on the fifth floor of the company’s 383 Madison Ave. building, was communicated to employees on Sept. 13 … That was less than a week after more workers began returning to offices following the Labor Day holiday, and just days after the biggest U.S. bank told senior traders they’d be required to return by Sept. 21.”

FIRST LOOK: MORE STATE AID THAN YOU THINK? — Via a new post up this morning from the Committee for a Responsible Federal Budget: “Most state and local governments are experiencing substantial revenue loss and new spending needs as a result of the COVID-19 pandemic and economic crisis. While estimates differ on the magnitude of state and local needs, federal funding from recent Covid-relief legislation may help defray some of these losses.

“Using our COVID Money Tracker tool, we estimate the federal government has allocated almost $360 billion toward state and local aid; this is significantly larger than our prior estimate of roughly $240 billion because it incorporates updated Medicaid estimates from the Congressional Budget Office (CBO).

CONSUMER SENTIMENT SLOWDOWN — Via Morning Consult’s consumer confidence dashboard, updated this morning: “Momentum in the recovery in consumer confidence slowed in September. Morning Consult’s daily U.S. Index of Consumer Sentiment (ICS) equaled 90.96 as of Tuesday, up 0.18 points from the prior week. For context, weekly increases in the ICS have not fallen below 0.2 points since Aug. 8.

“The speed of the recovery in confidence plateaued. The 30-day percentage change in the ICS peaked at 5.2% on Sept. 10. Since then, growth has steadily fallen, indicating that the speed of the recovery in confidence is slowing.”

TRUMP LOOKS TO JAM THROUGH POLICY CHANGES — Our Meridith McGraw: “Trump is cramming months of policy moves into the dwindling weeks before the fall election, with an eye towards boosting his faltering standing with critical voting blocs.

“In recent weeks, Trump has made pronouncements that ran the gamut from stoking the culture wars to pacifying a specific voting demographic. He banned federal agencies from holding racial sensitivity trainings — an issue riling up Fox News guests. He named Wilmington, N.C., the first World War II heritage city — a ceremonial move that allowed him to travel to the swing state.”

CORPORATE AMERICA SEES BUSINESS TAX HIKES NO MATTER WHAT — Our Aaron Lorenzo: “Executives expect business taxes to climb regardless of which party controls the White House and Congress after the elections in November, according to a survey conducted by PwC.

“The poll found that 70 percent of respondents believe that business tax rates will be on the rise. Half that share, 35 percent, are sure of higher taxes … The reason? To pay for relief from the coronavirus pandemic, including federal spending and tax deferrals, the survey results said.”

WHY DID STOCK MARKETS REBOUND FROM COVID IN RECORD TIME? — WSJ’s Gunjan Banerji: “The Dow’s … wild round trip is nearly complete. The venerable stock index, despite a recent hiccup, has nearly recovered all the losses suffered during the coronavirus pandemic, an epic journey during one of the most catastrophic economic collapses in U.S. history.

“The Dow and the benchmark S&P500 plunged about 35 percent within six weeks this spring — the fastest-ever fall from record levels into a bear market — as the economy shut down and the virus spread across the country. Since then, U.S. stocks have been on a winning streak that is unprecedented in the modern era of financial markets.”

REDDIT’S STOCK THREADS BECOME A ‘MUST-READ’ ON WALL STREET — Bloomberg’s Sarah Ponczek: “Are you young, newly rich from stock trading and ready to take the plunge in options? Wall Street is following your every move.

“With the sway of stay-at-home traders growing and starting to eclipse other influences on equities, figuring out who is doing what among amateur stock dabblers has become a critical mission for big investors. They’re canvassing Reddit threads like r/wallstreetbets and picks at retail brokerages, plugging data into programs and trying to gain an edge.”

CITIGROUP GIVES WALL STREET A SOBERING MESSAGE — WSJ’s Telis Demos: “Incoming Chief Executive Jane Fraser’s historic appointment last week shed a light on Citigroup’s upside potential. But investors hoping that might spark a rebound were greeted instead by news Monday that ‘the next phase’ of the bank’s investment will be ‘strengthening’ and ‘transforming’ its risk and control environment—and a subsequent 8 percent correction in the shares over Monday and early Tuesday.”

THUNE: SHELTON DOESN’T YET HAVE SENATE SUPPORT — Reuters: “Judy Shelton, U.S. President Donald Trump’s controversial pick to serve on the Federal Reserve’s interest-rate-setting panel, does not currently have the votes to win confirmation in the U.S. Senate, Republican Senator John Thune said Tuesday. Thune is the Senate’s majority whip, whose job is to keep track of how fellow Republicans will vote on any given issue.

“‘We’re still working it,’ Thune told reporters at the U.S. Capitol, when asked if Shelton has the votes needed. ‘She’s a priority for the White House. It’s the Federal Reserve. It’s important. So, obviously, we want to get it done. But we’re not going to bring it up until we have the votes to confirm her.’”

ECONOMISTS DEEPLY DIVIDED ON COUNTRY’S FUTURE — Reuters’ Howard Schneider: “A year from now the United States may have emerged from the economic hole dug during the pandemic with growth smartly above its previous trend and output largely recovered.

“Or it may be struggling to patch a remaining $2 trillion gash to gross domestic product, with growth stuck in low gear, an ongoing health crisis, and chronic joblessness. The guessing game that U.S. economic forecasting has become has produced a massive split in predictions as economists from the Federal Reserve to the top Wall Street firms take a stab at unknowables like the path of the pandemic and the ability of a fractured Congress to compromise on spending.”

POVERTY HIT A RECORD LOW PRE-PANDEMIC — NYT’s Jeanna Smialek, Sarah Kliff and Alan Rappeport: “A record-low share of Americans were living in poverty, incomes were climbing, and health insurance coverage was little changed in 2019, a government report released on Tuesday showed — though the circumstances of many have deteriorated as pandemic lockdowns and industry disruptions have thrown millions out of work.”

FED’S LIFELINE TO MAIN STREET FLOPS — Bloomberg’s Lisa Lee, Catarina Saraiva and Michelle F. Davis: “It was billed as a lifeline for America’s middle-market companies seeking cash to get through the pandemic. Yet more than two months since its launch, the Federal Reserve’s Main Street Lending Program isn’t living up to expectations as few banks are willing to provide the loans.”

TRANSITIONS — Via the Consumer Bankers Association: “Christine Channels, Head of Community Banking & Client Protection at Bank of America, will be CBA’s Chair for the next fiscal year and Michelle Lee, Executive Vice President, Head of Eastern Region, Consumer Banking at Wells Fargo, will serve as Chair-Elect.” …

Brett Doyle is now senior adviser for Sen. Pat Toomey (R-Pa.) on the Congressional Oversight Commission, which is overseeing how Treasury and the Fed has used taxpayer money to stabilize the economy because of the pandemic. He previously was associate administrator for public engagement and environmental education at the EPA and is also a USTR alum.

Source: politico.com

Leave a Comment