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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 | PROGRAMMING NOTE: Morning Money will not publish from Monday Aug. 30-Monday Sept. 6. We'll be back on our normal schedule on Tuesday Sept. 7. 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. | | | Brainard for Treasury? — MM has been neck deep in trying to figure out the future of the Fed Chair job with the needle still slightly tilted toward President Joe Biden renominating Jay Powell for a second term. That is NOT at all a lock. If inflation continues to spike and the “transitory” call from the central bank chief turns out to be wrong, Powell is likely to take the fall for it. Because someone other than Biden will have to. But if Powell turns out to be correct and inflation eases, the White House could decide to keep him in the job. One big question is why Treasury Secretary Janet Yellen, who lost her Fed Chair job to Powell under President Donald Trump, would be pushing a Powell renomination. One theory MM heard several times on Tuesday: Because Yellen may want to eventually turn the Treasury Secretary job over to Fed Governor Lael Brainard, who would otherwise be the leading pick to take over for Powell at the central bank. This is purely palace intrigue gossip at this point. No one inside Treasury, the Fed or the White House has suggested that Brainard, a former senior Treasury official, could wind up as Yellen’s successor. But close watchers of the process suggest this could be a reason Yellen isn’t pushing for Brainard to take over for Powell. Speaking of Powell and Yellen – Close observers noted this graf from Bloomberg suggesting Powell did to at least some degree lobby Trump for the job even though people close to Powell say he didn’t. “As a Fed governor when ... Trump was elected, he saw the opportunity for a Republican president to name a new chairman. Early in 2017, Powell reached out to then-Treasury Secretary Steven Mnuchin to get to know him, according to people familiar with the matter. "The pair hit it off, and Bloomberg News reported at the time that Mnuchin [on Powell’s behalf] lobbied Trump intensely to choose Powell instead of renominating Yellen as chair.” .... MM also reported at the time that Mnuchin was a big advocate for Powell over Yellen. GOOD WEDNESDAY 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. | | | | INTRODUCING OTTAWA PLAYBOOK : Join the growing community of Politicos — from lawmakers and leaders to pollsters, staffers, strategists and lobbyists — working to shape Canada’s future. Every day, our reporting team pulls back the curtain to shed light on what’s really driving the agenda on Parliament Hill, the true players who are shaping politics and policy across Canada, and the impact it all has on the world. Don’t miss out on your daily look inside Canadian politics and power. Subscribe to Ottawa Playbook today. | | | | | | | | HOUSE MOVES AHEAD ON GIANT SPENDING BILL — Our Heather Caygle, Sarah Ferris, Nicholas Wu, and Anthony Adragna: “The House passed a $3.5 trillion budget framework Tuesday, capping off several days of furious negotiating and ending a weekslong stalemate between Speaker Nancy Pelosi and a band of Democratic centrists who threatened to upend President Biden’s domestic agenda. “The House vote Tuesday afternoon clears the way for Democrats to pursue a massive social spending package that could pass both chambers without Republican support and sets a Sept. 27 House vote on the Senate-passed infrastructure bill. All Democrats, including the roughly dozen moderates who threatened to tank the party-line spending plan, voted in favor — a show of party unity that leadership strove for after tensions between the caucus’ dueling factions dominated the public conversation for weeks.” HOW IT HAPPENED — Sarah Ferris and Heather Caygle: “Josh Gottheimer had been in the political wilderness for 10 days before he was finally summoned by Speaker Nancy Pelosi to cut a deal. The de facto leader of a rebellious group of party moderates had signaled for weeks that he had the votes to upend Pelosi’s carefully laid legislative plans and wasn’t going to go quietly this time. “Gottheimer and eight allies indicated, privately and then very publicly, that they wanted an immediate vote on the Senate’s infrastructure bill and would tank the budget if they didn’t get their way. On Tuesday, Gottheimer and his group pulled off what just days ago seemed unimaginable — Pelosi praised them for their “enthusiasm” in a public statement while announcing her commitment to pass the infrastructure bill by Sept. 27.” CRYPTO PROVISIONS REMAIN — Our Kellie Mejdrich: “House Democrats on Tuesday blocked attempts to scale back digital currency tax rules tucked into … Biden's infrastructure plan, in a new setback for crypto industry advocates fighting the proposal. “The House closed the door to infrastructure bill changes despite calls from Democrats and Republicans to pare back the cryptocurrency tax proposal that the Senate passed as part of the legislation earlier this month. At issue in the fight are proposed requirements that would force cryptocurrency exchanges and other firms to report transaction information to the Internal Revenue Service, similar to rules in place for stock brokers.” Cowen’s Jaret Seiberg : “This is what we have been expecting. As we have argued for weeks, House Democratic leaders understand that they have to either accept or reject the Senate's version of the infrastructure bill. There is no realistic option to amend the measure and send it back to the Senate for another vote.” | | | STOCKS RISE — WSJ’s Will Horner and Karen Langley: “The S&P 500 on Tuesday notched its 50th record close of 2021 as economically-sensitive stocks lifted the market. Shares of banks, oil producers and companies in the travel industry helped power the stock-market rally. “The broad U.S. equity index rose 6.70 points, or 0.1 percent, to 4486.23, its ninth record this month. The Dow Jones Industrial Average added 30.55 points, or 0.1 percent, to 35366.26. The tech-heavy Nasdaq Composite gained 77.15 points, or 0.5 percent, to 15019.80, its first close above 15000.” And Wells Fargo expects S&P 500 to rise another 8 percent this year — Reuters: “A stellar U.S. corporate earnings season is expected to lift the S&P 500 by another 8 percent through the end of the year, analysts at Wells Fargo said on Tuesday, implying a near 28 percent jump for the benchmark equities index in 2021. "In raising his price target for the index to 4,825 points, Wells Fargo analyst Christopher Harvey said S&P 500 firms had so far seen their earnings per share forecasts raised by 21 percent ‘and the trend shows no sign of abating.’” MEME STOCKS POST BEST DAY IN MONTHS AS GAMESTOP RALLIES — CNBC’s Yun Li: “Meme stock king GameStop rallied 27 percent on Tuesday as some retail investors came back in full force despite an otherwise quiet market. The video game retailer surged as much as 36.5 percent to $225 apiece in heavy trading volume. More than 14 million shares changed hands, seven times more than its 30-day average, according to FactSet. Other meme stocks also popped.” | | | | 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 . | | | | | | | | POWELL’S CHARM OFFENSIVE IN CONGRESS POSITIONS HIM TO KEEP JOB — Bloomberg’s Christopher Condon, Steven T. Dennis and Saleha Mohsin: “Federal Reserve Chair Jerome Powell has built a reputation as a skilled advocate for the U.S. central bank, thanks to strong personal ties forged with Congress that will help if he’s nominated for a second term. Powell has worked Congress during his three years at the helm like no Fed chair since Alan Greenspan. But where Greenspan was a regular of the cocktail party circuit, Powell has taken a more workmanlike approach. “Since he took the helm of the Fed in February 2018, through June of this year, he’s held at least 350 meetings, dinners or phone calls with members of Congress, according to his monthly calendars. That’s almost nine per month, and many of those included more than one lawmaker.” SEC TO SCRUTINIZE FIRMS’ DIGITAL-ENGAGEMENT PRACTICES — Reuters’ Katanga Johnson and Chris Prentice: “The U.S. Securities and Exchange Commission will seek input on whether digital customer engagement innovations used by financial firms should be governed by existing rules or may need new ones, commission chair Gary Gensler told Reuters. “While the SEC's thinking on the subject is at an ‘early stage,’ its rules may need updating to account for an artificial intelligence-led revolution in predictive analytics, differential marketing and behavioral prompts designed to optimize customer engagement, he said.” The SEC will also demand all China firms say more about investor risks — Bloomberg’s Benjamin Bain and Robert Schmidt: “The Securities and Exchange Commission will demand that the more than 250 Chinese companies trading in U.S. markets better inform investors about political and regulatory risks, expanding a dictate that it recently imposed for firms seeking initial public offerings. “SEC Chair Gary Gensler said in a Tuesday interview that he envisions the enhanced disclosures being included in corporations’ annual reports beginning early next year. The new details would likely include information about the businesses’ shell-company structures, he added. Investors need ‘full and fair disclosure,’ Gensler said. ‘Are the disclosures really fit for the times about the regulatory risks, the various political risks?’” | | | | Follow us on Twitter | | | | Follow us | | | | |  |
