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Presented by SimpliSafe: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White and Aubree Eliza Weaver | Presented by SimpliSafe | Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our s 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. | | | Fed in disarray! — Markets cheered minutes from the June FOMC meeting, assuming they generally meant that asset purchases won’t slow anytime soon and rate increases remain a fairly distant worry. But it’s growing increasingly clear that there is not much agreement within the central bank over when the asset purchase “taper” should begin. Or how much long-term inflation risk exists in the economy. Or really much of anything. To be sure, what really matters is the opinion of Fed Chair Jay Powell. And he’s firmly in the dovish camp. But the increasing divergence in views reflects broader concern in the economic community about the wisdom of current Fed policies and uncertainty over whether inflation will become entrenched or the ideal scenario – for the Fed and the Biden White House – will play out. That scenario includes a big increase in labor supply by October and a swift end to supply chain issues plaguing multiple industries. HFE’s Rubeela Farooqi on the Fed : “[O]fficials were not in agreement on changing the way asset purchases are tapered. On the labor market, Fed officials acknowledged ongoing improvement in recent months but noted that the recovery remains uneven, and conditions are far from the Fed’s goals” Clear as mud – Our Victoria Guida: “[I]t’s still unclear how quickly the Fed will move to taper its purchases of U.S. government debt and mortgage-backed securities, a move that could come as early as this year. … “The economic outlook is still unusually uncertain as the U.S. works to emerge fully from the coronavirus pandemic, leading several Fed officials to emphasize that the central bank shouldn’t rush to a decision on plans for its asset purchases. Still, the Fed wants to be ready when the time is right to begin weaning the economy off its support.” Time to totally rethink China — Cumberland’s David Kotok emails: “Investors have to rethink the entire China structure. ‘One country, two systems’ is dead. [Alibaba] is not a one-off. Neither is Didi. Everything China touches must be viewed with suspicion.” GOOD THURSDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. | | | | A message from SimpliSafe: Most security companies send a technician to your home. SimpliSafe doesn’t. Order online. Set it up in 30 minutes. After that, you’re protected 24/7. Learn more. | | | | | | Jobless claims at 8:30 a.m. expected to dip to 350K from 364K HEALTH CARE WARS AHEAD — Via Beacon Policy Advisers: “Although the primary focus thus far of the Biden administration and congressional Democrats’ budget reconciliation process has been on hard infrastructure and clean energy spending, investors with an interest in healthcare should take note that after the upcoming August congressional recess, healthcare policy is poised to share center stage. “We expect all out brawls over significant healthcare reforms that could include prescription drug pricing reforms, an expansion of Medicare benefits, making recent Affordable Care Act enhancements permanent … increasing funding for home health, and expanding federally-supported insurance coverage to people in non-Medicaid expansion states. With all of these issues in play, health policy could even eclipse hard infrastructure as the epicenter of internal Democratic debate” WHITE HOUSE INFRASTRUCTURE DEAL HEADED TO SENATE — Our Laura Barrón-López and Burgess Everett: “The White House’s long sought-after bipartisan infrastructure deal could hit the Senate floor as early as the week of July 19, according to multiple House and Senate Democratic sources with knowledge of the conversations. “White House legislative affairs director Louisa Terrell and deputy legislative affairs director Shuwanza Goff told Hill Democrats on a call Wednesday that the administration is working alongside the Senate to have the bipartisan infrastructure bill ready for floor consideration as early as the next two weeks … But some Democrats cautioned that the bill’s substance remains fluid and that leaders and the White House are navigating a delicate situation as they try to appease Democrats eager for a big Democrat-only reconciliation package.” | | | | SUBSCRIBE TO WOMEN RULE : The Women Rule newsletter explores how women, in Washington and beyond, shape the world, and how the news — from the pandemic to the latest laws coming out of statehouses — impacts women. With expert policy analysis, incisive interviews and revelatory recommendations on what to read and whom to watch, this is a must-read for executives, professionals and rising leaders to understand how what happens today affects the future for women and girls. Subscribe to the Women Rule newsletter today. | | | | | | | | S&P 500, NASDAQ POST RECORD CLOSING HIGHS — Reuters’ Caroline Valetkevitch: “U.S. stocks ended higher on Wednesday and the S&P 500 and Nasdaq notched record closing highs after minutes from the last Federal Reserve meeting indicated officials may not be ready yet to move on tightening policy. … The S&P 500 posted 71 new 52-week highs and no new lows; the Nasdaq Composite recorded 84 new highs and 121 new lows.” SMALL STOCKS SEEK TO EXTEND WINNING STREAK — WSJ’s Karen Langley: “Small-cap stocks have been on a tear since last fall, and some investors expect them to keep booming. “The Russell 2000 index of small-cap stocks ended June with its ninth consecutive month of gains, its longest monthly winning streak since at least December 1986, according to Dow Jones Market Data. The index has advanced 49 percent since the end of September 2020, when promising Covid-19 vaccine trials inspired confidence that the economic future was bright.” AS MEME STOCK MOMENTUM FADES, AMC, GAMESTOP FALL — Reuters’ Sinéad Carew: “Shares in so-called meme stocks with a following among retail investors lost ground on Wednesday, with AMC Entertainment shares down 8.1 percent, on track for their fourth straight day of declines, and GameStop Corp falling 4.9 percent. AMC, which fell almost 12 percent in the previous three sessions, hit a record high of $72.62 in early June as members of social media platforms including Twitter and Reddit's WallStreetBets urged each other to buy the stock.” | | | |   | | | | | | TREASURY YIELDS EXTEND STEEP DECLINE — WSJ’s Hardika Singh and Sam Goldfarb: “Yields on U.S. government bonds reached fresh multimonth lows on Wednesday, reflecting investors’ anxiety about the economic outlook and new concerns about the highly contagious Delta variant of Covid-19. The yield on the benchmark 10-year U.S. Treasury note settled at 1.321 percent, its lowest close since Feb. 18, compared with 1.369 percent on Tuesday.” FED WAS DIVIDED OVER INFLATION, BOND-BUYING — NYT’s Jeanna Smialek: “Federal Reserve officials continued to call a recent rise in inflation ‘transitory’ even as it made many of them wary, minutes from their June meeting showed, and they debated details as they began to draw up a plan for moving monetary policy away from its emergency setting. “The details of the conversations — which underlined growing divisions within the central bank at a moment of intense uncertainty for the economy — were outlined in minutes of the June 15-16 meeting, which were released on Wednesday. The June discussion took place before the recent rise of the Delta variant reinforced that coronavirus outbreaks remain a front-and-center risk to the global economy, and also before a recent jump in oil prices.” Officials also discussed a potential reduction in stimulus — AP’s Christopher Rugaber: “Federal Reserve officials started discussing at their meeting last month the timing and mechanics of reducing their huge monthly bond purchases, which are used to keep longer-term interest rates in check. … A few policymakers ‘mentioned that they expected the conditions for beginning to reduce’ bond purchases would ‘be met somewhat earlier than they had anticipated ... in light of incoming data,’ the minutes said.” BIDEN EYES IMPRINT ON FED BOARD AS DECISION ON POWELL APPROACHES — Bloomberg’s Saleha Mohsin, Jennifer Jacobs and Craig Torres: “As the White House weighs the potential renomination of Jerome Powell as chair of the Federal Reserve, officials are discussing the use of openings on the board to reshape the central bank to closer align with administration priorities such as inequality and tighter banking regulations, according to people familiar with the matter. “President Joe Biden currently has one vacant Fed governor seat to fill, and could potentially replace three more top central bank officials in the coming year, depending on how much he wants to revamp the Fed’s leadership. Powell and Fed vice chairs Richard Clarida and Randal Quarles all have terms that will expire in coming months.” IMF WARNS HIGHER INFLATION AMONG RISK FACING ECONOMIC RECOVERY — NYT’s Eshe Nelson: “Rising inflation, particularly in the United States, is among the risks facing the global economy amid a ‘worsening two-track recovery,’ the International Monetary Fund warned on Wednesday. ‘“There is a risk of a more sustained rise in inflation or inflation expectations, which could potentially require an earlier-than-expected tightening of U.S. monetary policy,’ Kristalina Georgieva, the I.M.F. managing director, wrote in a blog post.” ROBINHOOD’S DEBUT CLOUDED BY SEC SCRUTINY — WSJ’s Alexander Osipovich: “Robinhood Markets Inc. is on a collision course with regulators over a controversial practice that generates most of its revenue, as the online brokerage gears up for a highly anticipated initial public offering. In its IPO filing, released Thursday, Robinhood disclosed that 81 percent of its first-quarter revenue came from sending its customers’ stock, options and cryptocurrency orders to high-speed trading firms—a practice known as payment for order flow.” SEC MAY REQUIRE FUND MANAGERS TO DISCLOSE DATA ON STAFF DIVERSITY — Bloomberg’s Alan Mirabella: “U.S. Securities and Exchange Commission Chair Gary Gensler said the agency is examining whether to require asset managers to bolster disclosure of workforce and management diversity. ‘I have asked SEC staff to consider ways that we can enhance such transparency,’ Gensler said Wednesday at an SEC event. That could include requiring disclosure of ‘aggregated demographic information about an adviser’s employees and owners,’ he said.”
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| | | STAFFING UP — Ryan Zamarripa is now a special assistant to the U.S. Trade Representative. He most recently was associate director of economic policy at the Center for American Progress … TRANSITIONS — Sheerin Salimi is now global corporate narrative communications director at Nike. She most recently was director of global brand, sponsorship, and product communications at Visa.
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