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Presented by ExxonMobil: 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 |  | | 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. | | | Powell on the clock on inflation — Fed Chair Jerome Powell speaks at a WSJ economy event at 12:05 p.m. and he’s likely to face renewed questions about inflation threats as gas and other prices rise, bond yields spike and Congress gets closer to sending the $1.9 trillion Covid stimulus bill to President Biden’s desk. Markets also remain highly volatile with the Nasdaq tanking nearly 3 percent on Wednesday. And the inflation threat is no longer entirely theoretical . Via Pantheon’s Ian Shepherdson: “The startling jump in the ISM services price index is the main story from the survey … The prices index has been a decent guide to the path of core PCE inflation since the dust settled after the crash of 2008, and … the February reading appears to be consistent with inflation rising above 2.5% over the next few months. “This is the first credible direct indicator we know which suggests that inflation will rise above the rate implied by the huge base effects which will kick-in on the anniversary of the pandemic. … The stage is set, therefore, for a real and relatively early test of the idea that the initial reopening of the economy will trigger a burst of actual inflation, not just a base-effect illusion.” Stan Chart’s Steven Englander : “The key event for the market this week would usually be the US non-farm payroll report but focus is instead centred on Fed Chair Powell’s speech on 4 March. “We doubt that he will signal near-term Fed policy action … Given current yield levels and financial conditions, it is difficult to justify such a move without appearing to be driven solely by market developments. However, we see scope for Powell to flag potential for a Fed policy response if it starts to consider rising long-term yields a threat to the recovery.” No choice on OMB yet — White House press secretary Jen Psaki said not to expect a replacement nominee for Neera Tanden at OMB this week. And sources MM talked to on Wednesday also said the White House does not seem to have made up its mind on the post.
House Democrats have fully thrown their support behind Shalanda Young and she remains the clear front-runner. But Gene Sperling remains in the mix and the lack of a quick pivot to Young, the nominee for the deputy OMB slot, suggests nobody is a lock at this point. Tanden, meanwhile, is likely to take a spot in the administration but it remains unclear which one, given top jobs like head of the Domestic Policy Council are either already taken or soon will be. Tanden likely would not take a deputy job at an agency like HHS and there aren’t a lot of senior West Wing advisor offices left. Or any really. 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 ExxonMobil: As part of our ongoing commitment to help mitigate the risks of climate change, we plan to further reduce emissions in our operations by 2025. Our plans are expected to reduce our absolute upstream greenhouse gas emissions by an estimated 30%, compared to 2016 levels. Learn more about the details of our plan to reduce our emissions. | | | | | | Powell speaks at the WSJ evet at 12:05 p.m. … Senate Banking has a remote hearing at 10:15 a.m. on “Wall Street vs. Workers: How the Financial System Hurts Workers and Widens the Racial Wealth Gap” … Initial jobless claims at 8:30 a.m. expected to rise to 755K from 730K … ECONOMY EXPECTED TO IMPROVE BUT INFLATION FEARS RISE — Per new AICPA economic outlook survey out this a.m.: “U.S. business executives are taking a more optimistic view of the U.S. economy for the coming year … There’s a downside, however, to the prospect of a more open-throttle economy: a greater risk of inflation. Business executives’ concerns about inflation grew from 24 percent to 44 percent, quarter over quarter, the highest level it’s risen to since the end of 2018. “While the percentage of business executives who expressed optimism about the U.S. economy rose from 37 percent to 47 percent this quarter, that still means the majority remain pessimistic or neutral. More than three-quarters (76 percent) of survey takers say the pandemic has had a negative impact on their organization, with one-in-five describing that impact as significant.” | | | | DON'T MISS "THE RECAST": Power dynamics are changing. "Influence" is changing. More people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. "The Recast" is our new, twice-weekly newsletter that breaks down how race and identity are recasting politics, policy, and power in America. And POLITICO is recasting how we report on this crucial intersection, bringing you fresh insights, scoops and dispatches from across the country, and new voices that challenge "business as usual." Don't miss out on this important new newsletter, SUBSCRIBE NOW. Thank you to our sponsor, Intel. | | | | | JOBS DAY PREVIEW — RSM’s Joe Brusuelas: “We expect a total increase in employment of 105,000 jobs for February with the unemployment rate holding steady at 6.3% when the Labor Department releases its monthly data on Friday. “The primary narrative for the month will be the contrast between the true level of unemployment in the economy and the official data. Our estimate of the unemployment rate that accounts for the effects of the pandemic holds at 7.3%, but once we adjust that figure for those who have left the workforce, it is at 10.2%.” CUOMO SAYS HE WON’T RESIGN — Our Shannon Young and Michelle Bocanegra: “An emotional Gov. Andrew Cuomo said … that he would not step down in the face of multiple accusations of sexual harassment. ‘I am not going to resign,’ Cuomo said in his first public appearance since the accusations surfaced last week. The bulk of his briefing was devoted to an update on Covid-19 in the state. “Reporters who questioned him via Zoom did not ask if he still plans to run for a fourth term next year. Cuomo, a Democrat, is facing growing calls for his resignation after former staffer Lindsey Boylan detailed allegations of sexual harassment against him last Wednesday. Two more women — former aide Charlotte Bennett and Anna Ruch, who met Cuomo for the first time at a wedding — have since accused the governor of making unwanted advances.” | | | | FIND OUT THE LATEST WHISPERS FROM THE WEST WING : What's happening inside the West Wing, and what are the real conversations taking place behind-the-scenes in the halls of power? Who really has the ear of the president? What's going to happen across the executive branch next, and why? Transition Playbook chronicles the people, policies and emerging power centers of the Biden administration. Don't miss out. Subscribe today. | | | | | | | | TECHNOLOGY STOCKS LEAD INDEXES LOWER — AP’s Damian J. Troise and Alex Veiga: “Stocks closed lower Wednesday as another rise in bond yields fueled concerns on Wall Street that higher inflation is on the way as the economy picks up. The S&P 500 dropped 1.3 percent, shedding an early gain. "The pullback is the benchmark index’s second straight loss after clocking its best day in nine months on Monday. Technology companies bore the brunt of the selling, pulling the S&P 500′s tech sector down 2.5 percent. Microsoft and Apple both fell more than 2 percent.” WHY INVESTORS ARE TROUBLED BY SIGNS OF GROWTH — NYT’s Matt Phillips: “Investors had no trouble gliding past the death and economic devastation wrought by the pandemic last year to drive the market to record highs. An increasingly healthy economy is what’s making them panic. In recent days, the S&P 500 stock index has wobbled, suffering its worst weekly performance in a month last week, before rising on Monday, only to dip again on Tuesday and in early trading Wednesday. “The bond market, too, is showing anxiety, with yields rising sharply as returns in the market for Treasury bonds have fallen roughly 3 percent this year.” ROCKET STOCK IS THE NEW MEME TRADE — WSJ’s Orla McCaffrey: “The individual investors that powered GameStop Corp.’s meteoric rise have a new target: Rocket Cos., the parent company of Quicken Loans. Shares of the mortgage lender surged 71 percent to $41.60 on Tuesday and nearly 377 million shares traded hands, more than a 10-fold increase from the previous day. Its trading was halted several times Tuesday afternoon because of its volatility. Rocket shares were down nearly 20 percent in early trading Wednesday.” | | | |   | | | | | | ECONOMY OFF TO A MODEST START IN 2021 — Reuters’ Howard Schneider and Jonnelle Marte: “The U.S. economic recovery continued at a modest pace over the first weeks of this year, with businesses optimistic about the months to come and demand for housing ‘robust,’ but the job market showing only slow improvement, the Federal Reserve reported on Wednesday. … “The Fed is due to hold its next policy meeting in two weeks, amid an increasing sense that the risks from the pandemic will subside, and the economy start to register strong growth. The boost in the economic outlook, driven by the expanding U.S. Covid-19 vaccination program and the potential for a $1.9 trillion federal spending package, has led to market speculation the Fed may be forced to scale back its support for the economy sooner than expected.” And businesses are optimistic about the economy, due to vaccines and hiring — WSJ’s Hannah Lang: “Most businesses are optimistic about the economic recovery this year as coronavirus vaccines are more widely distributed and hiring picked up slowly across the country, a Federal Reserve report said Wednesday. “The Fed’s periodic compilation of anecdotes from business contacts, known as the Beige Book, said the U.S. economy continued to grow modestly in the first several weeks of 2021, though some industries, such as leisure and hospitality, continued ‘to be restrained by ongoing Covid-19 restrictions.’” $21T TREASURIES MYSTERY IS CONFUSING GLOBAL MARKETS — Bloomberg’s Liz McCormick, Tracy Alloway and Stephen Spratt: “Bond traders have been saying for years that liquidity is there in the world’s biggest bond market, except when you really need it. Last week’s startling gyrations in U.S. Treasury yields may offer fresh backing for that mantra, and prompt another bout of soul-searching in a $21 trillion market that forms the bedrock of global finance. “While stocks are prone to sudden swings, such episodes are supposed to be few and far between in a government-debt market that sets the benchmark risk-free rate for much of the world.” PANDEMIC PUTS 1 IN 3 NONPROFITS IN FINANCIAL JEOPARDY — AP’s Glenn Gamboa: “More than one-third of U.S. nonprofits are in jeopardy of closing within two years because of the financial harm inflicted by the viral pandemic, according to a study being released Wednesday by the philanthropy research group Candid and the Center for Disaster Philanthropy.” | | | | A message from ExxonMobil: We’ve announced plans to reduce the intensity of our emissions, which we expect to reduce our absolute upstream greenhouse gas emissions by an estimated 30%, compared to 2016 levels. Similarly, absolute flaring and methane emissions are expected to decrease by 40-50%. Through continued application of operational efficiencies and deployment of lower-emission technologies, such as carbon capture, our plans drive meaningful near-term emission reductions and are consistent with the goals of the Paris Agreement. Learn more about the details of our plan to reduce our emissions. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
