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Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Kate Davidson 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 5:15 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. A brutal war in Eastern Europe. Soaring energy prices. Growing food shortages. Supply chain disruptions. Debt overhang. A lingering pandemic. Global economic policymakers face a daunting agenda as they gather in Washington this week for the International Monetary Fund and World Bank spring meetings — to say nothing of the fraught political tension among some of the world’s biggest economies. “There are some big issues on the table,” said Mark Sobel, U.S. chairman of the Official Monetary and Financial Institutions Forum and a former Treasury official who represented the U.S. on the IMF executive board from 2015 through April 2018. “The G20 could be a total mess.” The politics — Will Russia show up at the G20 finance ministers and central bank governors meeting? (Probably, at least virtually .) Will the U.S. skip out if Russia attends? (Treasury Secretary Janet Yellen has said as much.) Will the other Group of Seven countries follow? (Unclear.)
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Treasury Secretary Janet Yellen has said the U.S. will skip some G20 gatherings if Russia is allowed to participate. | Jacquelyn Martin/AP | What will also garner a lot of attention this week: Ukraine is sending its prime minister, Denys Shmyhal, along with other top Ukrainian officials to Washington for the meetings, Reuters reported. The Group of Seven countries will probably focus on the prospect for further sanctions targeted at the Kremlin as well as aid for Ukraine, Sobel said. Another question: What happens with the G20 communique? The document, while largely symbolic, is valuable because it requires countries to clearly articulate their positions on a range of issues, and allows members to hold each other to those positions. With some G20 members unwilling to condemn Russia’s actions in Ukraine, a joint statement may prove impossible to negotiate. In that case, Indonesia – which chairs the G20 this year — may just release a statement summarizing the discussion instead. The economics — The IMF will release its updated outlook for the global economy on Tuesday. The forecast (not surprisingly) is expected to be marked down significantly, in line with major Wall Street banks that have projected a slowdown in global growth following Russia’s invasion of Ukraine and persistently elevated prices. “The whole world is trying to grapple with higher inflation,” said Geoffrey Okamoto, the former first deputy managing director of the IMF and a former Trump Treasury Department official. “But flowing from that are energy sector issues, food price issues, supply chain disruptions, and then the knock-on effects that that has for an already problematic debt-distress issue in emerging market countries.” The operational issues — While the war, sanctions and inflation will dominate headlines, Sobel and Okamoto said policy makers will have to discuss a lingering problem among some of the poorest nations: debt. About 60 percent of low-income countries are at high risk of or already grappling with debt distress, according to the IMF, despite pandemic-era debt relief programs. The G20 developed a Common Framework program to help facilitate debt restructuring, but only three countries — Chad, Zambia and Ethiopia — have sought help, and each has faced significant delays. “Basically, it’s gone nowhere,” Sobel said. The IMF “has been putting out blogs about how we need greater cooperation, but the issue is Chinese and private-sector foot-dragging. I think the Fund just needs to step up. … I’d like to see speaking out result in some changes.” One suggestion: The G20 could establish a firm timeline for moving countries through the Common Framework process, which would require creditors to deliver their restructuring commitments to the World Bank and IMF within a certain number of months. Can tangible results be delivered at this week’s meeting? Okamoto said he’s not counting on it. “Fundamentally this is not an issue that will be resolved, at its core, by finance ministries, especially in China,” he said. “This is something that requires political intervention to resolve.” IT’S MONDAY — Your MM host is back from vacation and missed an entire Fed nomination news cycle! (Not that she’s complaining.) What else did I miss? Let me know: kdavidson@politico.com or @katedavidson. And send your tips, feedback and ideas as well to aweaver@politico.com or @aubreeeweaver.
| | | | DON'T MISS ANYTHING FROM THE 2022 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is excited to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage and insights from the 25th annual Global Conference. This year's event, May 1-4, brings together more than 3,000 of the world’s most influential leaders, including 700+ speakers representing more than 80 countries. "Celebrating the Power of Connection" is this year's theme, setting the stage to connect influencers with the resources to change the world with leading experts and thinkers whose insight and creativity can implement that change. Whether you're attending in person or following along from somewhere else in the world, keep up with this year's conference with POLITICO’s special edition “Global Insider” so you don't miss a beat. Subscribe today. | | | | | | | | TODAY — International Monetary Fund and World Bank Spring Meetings begin in Washington … Deputy Treasury Secretary Wally Adeyemo delivers virtual remarks at a Peterson Institute for International Economics conference at 2 p.m. THIS WEEK — March housing starts data Tuesday … March existing home sales data Wednesday … Chicago Fed President Charles Evans speaks Wednesday … Fed Beige Book released Wednesday … Bank of England Governor Andrew Bailey and European Commissioner for Economy Paolo Gentiloni speak at the Peterson Institute Thursday … Fed Chair Jerome Powell delivers welcoming remarks at a briefing on inflation and recession risks hosted by the Volcker Alliance and Penn Institute for Urban Research Thursday … European Central Bank President Christine Lagarde speaks at the Peterson Institute Friday. SPRING MEETINGS KICK OFF — Mark your calendars with these meeting highlights: —Monday: IMF Managing Director Kristalina Georgieva participates in a discussion with Nobel Prize winner Malala Yousafzai on breaking barriers at 12 p.m. —Tuesday : IMF releases its World Economic Outlook at 9 a.m.; Global Financial Stability report press briefing at 10:30 a.m.; Georgieva and World Bank President David Malpass speak at 11:30 a.m. on responding to global shocks and managing uncertainty; Georgieva and Agustin Carstens, general manager at the Bank for International Settlements, participate in a discussion on "New Forms of Digital Money" at 12 p.m. —Wednesday: Georgieva holds a press briefing at 8:30 a.m.; World Bank President David Malpass holds a press conference at 9:15 a.m. —Thursday: Yellen is expected to hold a press conference at 11 a.m.; Powell speaks on a panel on the global economy with Georgieva and Lagarde at 1 p.m. SCWHARZMAN, GRIFFIN POURED MILLIONS INTO GOP SUPER PACS — Republican donors including private equity exec Stephen Schwarzman and hedge funder Ken Griffin poured millions more into major GOP super PACs in the first three months of 2022, our Zach Montellaro reported, according to new campaign finance filings. From Zach: “The Senate Leadership Fund, controlled by allies of Senate Minority Leader Mitch McConnell, brought in $27 million in the quarter ... The group got a $10 million check from Schwarzman and $5 million from Griffin. Perhaps the most interesting donation was the $2 million contribution from Rupert Murdoch, the Fox Corporation honcho.” —Republicans’ flagship House super PAC, Congressional Leadership Fund, brought in nearly $38 million, including $10 million from Schwarzman, $7.5 million from Griffin, and several other seven-figure checks. —Crypto gets in on the game: Protect Our Future, the effort supported by Sam Bankman-Fried, the billionaire CEO of the cryptocurrency exchange FTX, has already spent millions in Democratic primaries across the country. New filings from that group reveal that a majority of that group’s early funding comes from Prime Trust LLC, a Nevada-based crypto company, which kicked in $14 million. TAX REFUND WHIPLASH — Our Brian Faler reports on how legislation Democrats pushed through more than a year ago in response to the pandemic is now scrambling millions of Americans’ returns, which are due by midnight Monday. From Brian: “Average refunds this year are up a whopping 10 percent. And for some low-income people, doing their taxes could feel like winning the lottery. Some are seeing five-figure payments that rival their entire annual income. At the same time, the share of taxpayers getting paid at tax time is down.”
| | | | INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED: Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today. | | | | | | | | WARREN BACKS BARR — Our Victoria Guida: “Sen. Elizabeth Warren (D-Mass.) on Friday announced her support for Michael Barr, President Joe Biden’s pick for the Federal Reserve’s top job overseeing banks, boosting his chances of getting confirmed in a divided Senate. “Warren said the position, Fed vice chair for supervision, ‘is a powerfully important financial regulator, responsible for holding the biggest banks accountable and preventing the next financial crisis.’” MM sidebar: Barr’s nomination underscores how much the landscape has shifted since early last year, when progressives scoffed at Barr’s potential nomination to be comptroller of the currency, deeming him too moderate. Fourteen months and two failed financial nominations later, one progressive source told Victoria: “He’s clearly better than no vice chair for supervision.” This person added that many advocacy groups on the left would likely remain quiet rather than oppose his nomination. Required reading — What’s on Barr’s plate? Cravath, Swain & Moore is out this morning with a handy cheat sheet on the mid-year outlook for the Biden finreg agenda. Also, the New Yorker's Jane Mayer takes a closer look at the American Accountability Foundation, the conservative opposition research firm that took credit for tanking Biden financial nominees Sarah Bloom Raskin and Saule Omarova. Mayer also cites MM’s reporting last month on AAF’s effort to target Fed nominee Lisa Cook. POWELL MAY BE ABOUT TO SEAL DEAL ON HALF-POINT HIKE — Bloomberg’s Alister Bull: “Jerome Powell may reinforce bets that the Federal Reserve will raise interest rates by a half point next month when he makes final public remarks before the U.S. central bank’s pre-meeting quiet period. The Fed chair will speak at an event on Thursday and later that day later take part in a panel hosted by the International Monetary Fund, along with European Central Bank President Christine Lagarde and other policy makers.”
| | | A RUSSIAN DEFAULT IS LOOMING AND A BITTER FIGHT IS LIKELY TO FOLLOW — NYT’s Alan Rappeport: “Russia is ambling toward a major default on its foreign debt , a grim milestone that it has not seen since the Bolshevik Revolution more than a century ago and one that raises the prospect of years of legal wrangling and a global hunt by bondholders for Russian assets. “The looming default is the result of sanctions that have immobilized about half of Russia’s $640 billion of foreign currency reserves, straining the country’s ability to make bond repayments in the currency the debt was issued in — dollars. Girding for a default, Russia has already pre-emptively dismissed it as an ‘artificial’ result of sanctions imposed by the United States and its allies, and it has threatened to contest such an outcome in court.”
| | | CREDIT CARD SPENDING BELIES CONSUMERS’ GLUM VIEW OF ECONOMY — WSJ’s Charley Grant and David Benoit: “Pessimism about the economy has been on the rise due to surging inflation and falling household income since pandemic-related stimulus programs expired. But the latest round of bank earnings shows that apprehension hasn’t kept Americans from reaching for their credit cards. “First-quarter spending was up 23 percent on Citigroup Inc. credit cards, compared with a year ago. Spending rose 29 percent on JPMorgan Chase & Co. cards and 33 percent on Wells Fargo & Co. cards. Bank of America Corp., another big card issuer, is scheduled to report first-quarter results Monday.” Investors are on the hunt for companies with the magic words during any spell of inflation: pricing power. — WSJ’s Karen Langley China is expected to report a sharp deterioration in economic activity in March as COVID-19 outbreaks and lockdowns hit consumers and factories, although first-quarter growth may have perked up due to a strong start early in the year. — Reuters’ Kevin Lao Traders of U.S. government debt were dealt a stern reminder last week not to sleep on a market that’s been headed in one direction for a long time. — Bloomberg’s Liz McCormick and Michael Mackenzie | | | | Follow us on Twitter | | | | Follow us | | | | |  |
