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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. | | | Giant budget bill still in doubt — Most of Wall Street figures there is little need to worry about a quick reduction in fiscal stimulus next year, assuming Democrats will eventually slam through a $3.5 trillion package that will also include a debt limit increase (which will be needed by October). But with talks toward a smaller-bipartisan infrastructure deal stalled, nothing about the coming fall fiscal fight looks to be easy. Via our Marianne LeVine, Sarah Ferris, and Heather Caygle: “With bipartisan infrastructure talks trapped in limbo, progressives are already hustling to protect — or even grow — their massive social spending proposal. … “Not every Democrat agrees: Some centrists are flatly rejecting the idea of adding even a single more dollar to the party’s already-hefty plan that's on tap to pass without GOP votes … Sen. Tim Kaine (D-Va.), a member of the Budget Committee, said in an interview Wednesday that he remains optimistic about the bipartisan talks, but added that, ‘if for some reason the bipartisan version doesn’t work out, then we ought to be looking at a reconciliation bill that’s at $4.1 trillion.’” Real talk: $4.1 trillion is a massive number given current federal debt and deficits and would be a seriously tough one for moderates to swallow. Much easier for them if a chunk of the spending passes in a bipartisan way. Where Covid is surging — Via our Alice Miranda Ollstein and Dan Goldberg: “The Delta strain of the coronavirus is racing across the country, driving a surge of new cases and hospitalizations. “But local and state officials this time have fewer options to slow the spread. In Texas, where Covid hospitalizations are up 30 percent and deaths up 10 percent over the past week, Gov. Greg Abbott recently barred counties, cities and school districts from requiring masks. Montana did the same for vaccine and mask mandates, while letting local officials overrule health department orders.” 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. | | | | 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 this afternoon “will meet with union and business leaders to discuss the strong support and urgent need for the Bipartisan Infrastructure Framework” … Jobless claims at 8:30 a.m. expected to dip to 350K from 360K … WILL WOMEN RETURN TO THE WORKFORCE? — Our Megan Cassella: “Nearly 1.8 million women have dropped out of the labor force amid the pandemic and are now grappling with whether and how to return to work in a vastly different landscape — one where some jobs have disappeared, others are vulnerable to automation, and nearly all involve some level of health risk. …. “Returning to work after so many months at home also means, for many mothers, finding a new form of child care and giving up the additional time spent with families and kids that the pandemic provided. Taking into account how the labor force was growing pre-pandemic, 2.3 million fewer women are working now than would have been without the disruption.” BIPARTISAN TALKS IN LIMBO — Our Burgess Everett and Marianne LeVine: “Senate Republicans blocked moving forward on a bipartisan infrastructure bill that’s still being negotiated … Surprisingly, members of the group insist they're unbothered. “The vote amounted to a setback to a key priority of … Biden, although members of both parties expect at least one more try in the coming days. GOP centrists say they may be willing to provide the votes as early as Monday, when they think discussions will conclude over a bill expected to provide nearly $600 billion.” CBO ON THE X-DATE — Our Caitlin Emma: “The Treasury Department will run out of money in October or November unless Congress acts to raise or suspend the debt ceiling in the coming weeks, the Congressional Budget Office said on Wednesday. “If that happens, the government will struggle to pay its bills in full and on time, while risking default on its debt obligations, the independent budget agency said in an update. … The debt ceiling is currently suspended through July 31 of this year. Treasury will then take a number of actions to buy more time while Congress figures out a solution, but federal officials have warned that those measures may run out sooner than expected.” | | | STOCKS CLIMB AS MORE COMPANY EARNINGS ROLL IN — AP’s Alex Veiga: “Stocks closed higher again on Wall Street, extending their gains following a sharp drop at the beginning of the week. Investors turned their attention to company earnings, which have started to roll in steadily. “The S&P 500 rose 0.8 percent. Small-company stocks outpaced the rest of the market again, rising 1.8 percent. Coca-Cola rose 1.3 percent after the company raised its full-year forecast and reported better-than-expected results. Chipotle Mexican Grill jumped 11.5 percent after the company also reported much better than expected results after the closing bell Tuesday.” STUDY: POWELL’S EMOTIONAL TONE CAN DRIVE MARKETS — Reuters’ Howard Schneider: “Jerome Powell took over as head of the Federal Reserve in 2018 pledging a plain-spoken, language-of-the-people approach to talking about monetary policy. "It turns out that's a bit of a downer: New research using artificial intelligence and voice analytics rates Powell as the most negative of the last three chairs of the U.S. central bank, with his predecessor Janet Yellen the best able to maintain a neutral tone at her news conferences and Ben Bernanke before that a comparative cheerleader. INVESTORS LOOK TO CORPORATE CASH HOARD TO BUOY STOCKS — Reuters’ Lewis Krauskopf: “Investors are looking to a mounting pile of cash at U.S. companies to provide support for the stock market in coming months, as executives announce plans to increase share buybacks, boost dividends or pour money back into their businesses. "Cash on the balance sheets of S&P 500 companies has swelled to a record $1.9 trillion, compared to $1.5 trillion before the pandemic crisis in early 2020, according to Keith Lerner, chief market strategist at Truist Advisory Services.” DOLLAR GETS A BOOST FROM GLOBAL FEAR — WSJ’s Paul J. Davies: “The dollar is closing in on its highest levels for the year against other major currencies, propelled by investors’ worries about global growth rather than cheer over U.S. prospects. The ICE U.S. Dollar Index, which measures the greenback against the currencies of major trading partners, rose above 93 on Wednesday morning, according to FactSet. It has only closed | | | | 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 . | | | | | | | | DELTA VARIANT NOT EXPECT TO DENT ROBUST U.S. RECOVERY — WSJ’s Eric Morath and Amara Omeokwe: “The highly contagious Delta variant of Covid-19 doesn’t pose an immediate risk to the strength of the U.S. economic recovery, with analysts expecting a robust expansion to continue in the second half of the year. "Many economists are maintaining forecasts for solid economic growth due to expectations of steady hiring and continued spending, driven by accumulated savings and Americans’ desire to travel and socialize more than a year into the pandemic.” But inflation might — WSJ’s Greg Ip: “There are two kinds of inflation. One results from demand growing faster than the economy’s productive capacity, causing the economy to overheat. Call that good inflation, because it is usually linked to a stronger economy. By contrast, bad inflation results from constricted supply which curtails output, driving up prices and eroding incomes, leading to a weaker economy. “Much of the debate over inflation is whether the good sort — i.e., overheating — is about to happen. But investors are signaling that the bad sort is the bigger risk to the economy.” POWELL HAS BROAD SUPPORT AMONG TOP BIDEN AIDES FOR A NEW FED TERM — Bloomberg’s Saleha Mohsin, Nancy Cook and Jennifer Jacobs: “Federal Reserve Chair Jerome Powell enjoys broad support for his renomination among top White House advisers, though the decision is expected later this year and hasn’t yet been put in front of President Joe Biden, according to people familiar with the matter. "But Biden officials are keeping an open mind about how the administration can put its stamp on the central bank through personnel choices, including the chair, the people said. In addition to Powell, Randal Quarles’s term as vice chair for supervision — an important regulatory post — will expire in October, and the board term for Governor Richard Clarida expires in January.” GENSLER SAYS SEC TO RESTART SWAPS REGULATION EFFORT — Reuters’ Pete Schroeder: “The U.S. Securities and Exchange Commission is likely to embark on a renewed effort to write "long overdue" rules for the registration and regulation of security-based swap execution facilities, Chair Gary Gensler said on Wednesday. “In a prepared speech, Gensler said he wanted the SEC to harmonize such derivatives rules with similar ones already in place at the Commodity Futures Trading Commission. He also emphasized that any crypto token or similar product priced off the value of securities must adhere to securities laws, even when offered on a decentralized platform.” | | | | Follow us on Twitter | | | | Follow us | | | | |  |
