No shutdown

From: POLITICO's Morning Money - Thursday Sep 30,2021 12:03 pm

Sep 30, 2021

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Quick Fix

No shutdown — MM has told you for a while that there would not be a federal government shutdown when funding runs out at midnight this evening. And there will not be. The Senate is expected to pass a bill this morning extending funding until Dec. 3, which will then go to the House and to President Joe Biden’s desk.

The measure does nothing to raise the debt limit or advance Biden’s $4 trillion-plus spending plans (bipartisan infrastructure plus $3.5 trillion reconciliation) but it knocks off one irritant to Wall Street. The path to getting some or all of the rest of it done remains completely muddy amidst the war between Democratic progressives and moderates like Sens. Kyrsten Sinema of Arizona and Joe Manchin of West Virginia.

MM has no idea how or if the White House can get those two Democrats on board in the Senate to pass the bulk of the White House agenda. But we continue to believe Dems will move to raise the debt limit in the next month and Republicans will ultimately not attempt to filibuster and block them as to do so would be quite insane, economically and politically.

Biden’s political fade — If it feels like the White House is mired in a slump over its domestic agenda that’s because it is. And it’s showing up in the president’s poll numbers. People don’t really strongly dislike the guy. They just like him less and less.

Via our Steven Shephard: “A sizable share of Americans are souring on … Biden as president — but they don’t completely hate him, either. Where they land on that question over the next year could decide the 2022 midterm elections.

“More Americans disapprove of how Biden is handling his role as president than approve. But a decisive number of those disapprovers say their opinion of Biden is soft, meaning they only rate his performance only ‘somewhat’ negatively — not ‘strongly.’ In new POLITICO/Morning Consult and Pew Research Center polls over the past week, those who mildly disapproved of Biden added up to about a quarter of his total disapproval.”

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.

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Driving the Day

Senate expected to pass a government funding CR and send it on to the House. Senate also expected to vote on Biden nominees including Rohit Chopra for CFPB Director …

Treasury Secretary Janet L. Yellen and Federal Reserve Board Chair Jerome Powell testify at 10:00 a.m. before House Financial Services hearing on “Oversight of the Treasury Department's and Federal Reserve's Pandemic Response”

MANCHIN RULES THE DEM WORLD — Our Burgess Everett: “Joe Manchin released a statement … panning his colleagues’ spending plans as ‘fiscal insanity.’ Then he started to lay out how he wants to work on President Joe Biden’s family plan.

“As all of Washington hangs on his every word, Manchin said he did want to clinch a reconciliation bill even as some progressives fear he’s trying to kill the whole thing. But rather than approach the effort as the multi-trillion-dollar social spending and climate change bill envisioned by his colleagues, Manchin said Democrats needed to start with gutting the 2017 Trump tax cuts and go from there.”

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 West Wing Playbook, 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.

Markets

WALL STREET CLOSES HIGHER AMID INFLATION WORRIES — Reuters’ Stephen Culp: “Wall Street ended firmer on Wednesday in a partial rebound from the previous day's broad sell-off, with remarks from U.S. Federal Reserve Chairman Jerome Powell and the ongoing debt ceiling debate keeping a lid on gains.

“The S&P 500 index and the Dow Jones Industrial Average advanced, but the Nadsdaq Composite closed lower as Treasury yields halted their ascent. Defensive sectors took the lead as investors sought stability in the volatile market. Still, all three remain on course to post monthly declines, with the bellwether S&P 500 snapping a seven-month winning streak.”

DALY SAYS TRADING CONTROVERSY SHOWS NEED FOR RULE CHANGES — Bloomberg’s Catarina Saraiva: “The 2020 trading activity that led to the resignation earlier this week of two Federal Reserve bank presidents is disappointing and shows that the central bank’s rules around financial-market activity need to be changed, San Francisco Fed President Mary Daly said. ‘There’s this collective sense of disappointment that this is a distraction from that type of thing,’ Daly said in a call with reporters Wednesday, referencing the Fed’s work to get the U.S. economy through the pandemic.”

SEC PROPOSAL SEEKS TRANSPARENCY IN HOW MONEY MANAGERS WIELD VOTING POWER — WSJ’s Darn Lim and Paul Kiernan: “The Securities and Exchange Commission proposed a rule that would require money managers to disclose more information on how they use their voting power. When investors buy a mutual fund and exchange-traded fund from an asset manager, the money manager votes on shareholder proposals on behalf of the investors. Shareholder votes extend from issues from executive compensation to a company’s efforts to address climate change.

“The Wednesday proposal targets funds that manage trillions of dollars of money for investors. It follows a yearslong concern among some SEC officials that current disclosures make it difficult for individual investors to see how asset managers cast shareholder votes on their behalf.”

SEN. LUMMIS WARNS STABLECOINS NEED TO BE BACKED BY CASH — Bloomberg’s Akayla Gardner: “Stablecoins should be backed by cash and may need to be issued by banks, according to U.S. Senator Cynthia Lummis, who has become one of Capitol Hill’s most ardent supporters of cryptocurrencies.

"‘It may be the case that stablecoins should only be issued by depository institutions or through money-market funds or similar vehicles,’ said Lummis, a Republican from Wyoming, in a speech Wednesday on the Senate floor. ‘Stablecoins must be 100 percent backed by cash and cash equivalents, and this should be audited regularly.’”

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Fly Around

POWELLS DEFENDS FED POLICIES — AP’s Christopher Rugaber: “Federal Reserve Chair Jerome Powell on Wednesday defended the ultra-low interest rate policies he has pursued since the pandemic decimated the economy more than 18 months ago. But he acknowledged inflation has stayed higher for longer than he expected. At a panel sponsored by the European Central Bank, Powell was asked if the Fed is ‘overdoing it’ with its policy of cutting its short-term interest rate to nearly zero and purchasing $120 billion a month in bonds to lower longer-term rates.”

And he said that the “tension” between jobs and inflation is the Fed’s chief concern — Reuters’ Howard Schneider: “Resolving "tension" between high inflation and still-elevated unemployment is the most urgent issue facing the Federal Reserve right now, Fed Chair Jerome Powell said Wednesday, acknowledging the central bank's two goals are in potential conflict.

“‘This is not the situation that we have faced for a very long time and it is one in which there is a tension between our two objectives...Inflation is high and well above target and yet there appears to be slack in the labor market,’ Powell said at a European Central Bank forum, an apparent reference to the 1970s bout of U.S. ‘stagflation’ that combined high unemployment and fast-rising prices.”

But Powell’s Fed renomination may also be a challenge — AP’s Christopher Rugaber: “Resistance to the potential renomination of Federal Reserve Chair Jerome Powell intensified this week, with Sen. Elizabeth Warren becoming the first senator to publicly oppose him and many progressive groups pushing for some alternative leader at the Fed. Powell receives generally high marks from economists and Wall Street for his actions in steering the economy through the pandemic recession.

“But he has come under fire from some progressive groups around issues that are traditionally not major points of contention when the Fed’s leadership is considered, such as financial regulation, or have never come up before, such as climate change.”

WORLD’S TOP CENTRAL BANKERS SEE SUPPLY CHAIN PROBLEMS PROLONGING INFLATION — NYT’s Jeanna Smialek and Eshe Nelson: “The world’s top central bankers acknowledged that inflation, which has spiked higher across many advanced economies this year, could remain elevated for some time — and that though they still expect it to fade as pandemic-related supply disruptions calm, they are carefully watching to make sure that hot price pressures do not become more permanent.

"Jerome H. Powell, the Federal Reserve chair, spoke Wednesday on a panel alongside Christine Lagarde, president of the European Central Bank; Andrew Bailey, governor of the Bank of England; and Haruhiko Kuroda, head of the Bank of Japan.”

Transitions — Eric Morrissette is the new head of legislative affairs at the Commerce Department. He was most recently deputy chief of staff for Sen. Amy Klobuchar (D-Minn.) after two years as senior adviser to Rep. Emanuel Cleaver (D-Mo.) … Obama alum Nick Mizaur is now Vice President for Global Public Policy and External Affairs at BlackRock

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