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Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White and Aubree Eliza Weaver | 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. | | | Things fall apart — We generally try to keep it upbeat at Morning Money. But it’s increasingly hard to do in the face of global environmental catastrophe that is only getting worse. First came devastating flooding in western Germany and parts of Belgium. This morning brings news of flooding on a biblical scale in China, the likes of which have not been seen in 1,000 years. Via Reuters: “Large swathes of China's central Henan province were under water on Wednesday, with at least a dozen people dead in its capital Zhengzhou after the city was drenched by what weather watchers said was the heaviest rain in 1,000 years. “With more rain forecast across Henan for the next three days, the government of Zhengzhou, a city of over 12 million on the banks of the Yellow River, said 12 people were reported to have died in a flooded subway line, while more than 500 were pulled to safety." This follows flooding in New York that also inundated subways. And the condo collapse in Florida. And absurd record temperatures slamming the Pacific northwest. Wall Street rebounded on Tuesday from its Delta variant slide. But the very rapid escalation of climate disasters puts every bit of recent market gains at risk. Maybe it wasn’t Delta? — The Bahnsen Group’s David Bahnsen emails on the market slide: “I just don’t believe the primary cause of [Monday's] sell-off can be attributed to Delta. While 9 extra people in ICU in Los Angeles County is nine more than I would like to see, it isn’t systemic, it won’t become systemic, and the market has not once since June of 2020 responded to the news cycle of COVID. “The unwind of the reflation trade (bond shorts getting their faces ripped off and equity positioning overly exposed to commodity/materials/inflation play) is the most logical explanation for the Monday risk-off. If fears of Delta economic compression were coming, it seems to me the market would be lower than where it was three weeks ago when Delta began” GOOD WEDNESDAY MORNING — Congrats to Giannis and the Bucks on a dazzling NBA title win and on shutting up all the talking heads who called it over with the Suns up 2-0. 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. | | | | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | | | | President Biden heads to Cincinnati for an event at 5:40 p.m. to tout his infrastructure and broader spending plans and to take part in a CNN townhall at 8:00 p.m. … House Financial Services subcommittees hold hearings at 10:00 a.m. on “Banking the Unbanked: Exploring Private and Public Efforts to Expand Access to the Financial System” and at 2:00 p.m. on the bond rating agencies … BIDEN TAPS A TRUST BUSTER — Our Leah Nylen and Emily Birnbaum: “It took seven months, but progressives got exactly what they asked for: Wu & Khan & Kanter. … Biden said … that he had selected Jonathan Kanter to serve as the Justice Department’s assistant attorney general for antitrust, the final piece of the trifecta that progressives have championed to reinvigorate antitrust enforcement after the alleged failures of the Obama years. “In March, Biden installed Tim Wu at the White House, a move that raised cautious optimism among anti-monopoly advocates that Biden, long-viewed as a centrist from corporate-friendly Delaware, might take the issue of corporate power more seriously than his Democratic predecessor. The March nomination of Lina Khan to the Federal Trade Commission heartened them more.” NEW JERSEY BLOCKS CRYPTO OPERATOR — Our Kellie Mejdrich: “New Jersey is restricting the operations of crypto financial services provider BlockFi, with state officials alleging that the firm has been offering unregulated interest-bearing accounts. “The New Jersey Bureau of Securities issued a cease and desist order demanding that BlockFi stop offering the accounts, which it said amounted to unregistered securities that have raised at least $14.7 billion worldwide. … The dispute is the latest example of friction between government regulators and cryptocurrency startups as federal and state officials develop rules for digital finance.” | | | STOCKS REBOUND A DAY AFTER ROUT PROMPTED BY DELTA FEARS — NYT’s Eshe Nelson and Coral Murphy Marcos: “Stocks snapped back on Tuesday, rebounding from Wall Street’s worst day in months in a dramatic swing highlighting a divide among investors over the threat of the Delta variant to global growth. “The quickening spread of the coronavirus and the uncertain path of monetary policy have been a reminder that the economic recovery from the pandemic remains rocky, and introduced a bout of volatility into financial markets this week. The S&P 500’s 1.5 percent jump on Tuesday was its biggest daily gain since March. The index’s 1.6 percent drop on Monday was its sharpest decline since mid-May.” Moderna dominated Wall Street trading ahead of its S&P 500 debut — Reuters’ Noel Randewich: “Moderna’s stock dropped 2 percent in a volatile session on Tuesday, with the COVID-19 vaccine maker the most heavily traded company on Wall Street ahead of its debut in the S&P 500 on Wednesday. “Over $34 billion worth of the company's shares were exchanged, 17 times more than Moderna's $2 billion average over the past six months, according to Refinitiv data. About $10 billion worth of those trades happened in the final seconds of the session.” NASDAQ TO SPIN OUT MARKET FOR PRE-IPO SHARES IN DEAL WITH BANKS — WSJ’s Alexander Osipovich: “Nasdaq Inc. is teaming up with a group of banks including Goldman Sachs Group Inc. and Morgan Stanley to spin out its marketplace for shares of private companies. "The deal could help drive more transactions to Nasdaq Private Market, the New York-based exchange operator’s trading platform for shares of companies that haven’t yet had an initial public offering. Trading in pre-IPO shares has heated up in recent years as startups have waited longer to go public. Employees of such companies often seek to cash out of their shares, while investors may want to get in on a fast-growing technology startup.” TREASURY RALLY PAUSES AFTER YIELDS TAKE A HAMMERING — Bloomberg’s Benjamin Purvis and Elizabeth Stanton: “Treasuries are finally taking a break following a relentless rally that dragged the 10-year yield down to levels last seen in February. "The benchmark rate plunged more than 10 basis points Monday on the back of worries about the delta variant’s economic impact, and kept spiraling early Tuesday. But it then rebounded and posted its first daily gain in a week, closing at 1.22 percent. The shift came as stocks also rose, with investors stepping in to buy following Monday’s dramatic equity selloff.” | | | | Be a Policy Pro. POLITICO Pro has a free policy resource center filled with our best practices on building relationships with state and federal representatives, demonstrating ROI, and influencing policy through digital storytelling. Read our free guides today . | | | | | | | | 35 METRICS TO TELL YOU HOW MUCH TO WORRY ABOUT INFLATION — Bloomberg’s John Authers: “Inflation is a complex phenomenon that grows from many places. These 35 key measures offer up a more nuanced picture of how markets are positioned, what the official data say and what consumers and businesses are discounting. Numbers are current as of Monday, July 19 and will be updated weekly. “Flashing alarmingly bright are the official data, as well as surveys of businesses and consumers. The latest survey by the National Federation of Independent Business, of prices paid by small companies, is at a level it last reached all the way back in the first quarter of 1981. Yet showing no concern at all are market indicators and Bloomberg’s surveys of expert economists’ predictions. Both are below their averages for the last decade.” IMF URGES COUNTRIES TO SHIFT FROM ECONOMIC RESCUE TO REFORMS — Reuters’ David Lawder: “The International Monetary Fund's No. 2 official on Tuesday called on countries to pivot from saving their economies from collapse to reviving growth-oriented policy reforms to boost their recovery prospects and make them more sustainable. "IMF First Deputy Managing Director Geoffrey Okamoto said in a blog posting on the IMF website that the Covid-19 pandemic delayed and reversed some pro-growth reforms and restoring these can help make up for output lost during the pandemic.” LOW-INCOME LENDING RULES SET FOR BROAD OVERHAUL — WSJ’s Andrew Ackerman: “Top U.S. banking regulators on Tuesday said they would work jointly to modernize rules governing how banks lend hundreds of billions of dollars annually in lower-income communities. “Officials also said they would move to scrap a Trump-era overhaul of the rules that had divided regulators and industry officials. At a time when many banking services have moved online, regulators have been trying to forge a consensus for updating rules from a law enacted more than 40 years ago when banking largely took place at physical branches.” | | | | Follow us on Twitter | | | | Follow us | | | | |  |
