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Presented by Blackstone: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Victoria Guida 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.
| | | Barr seems headed for Fed — President Joe Biden’s nominee for the Federal Reserve’s top job overseeing banks, Michael Barr, seems like he’s in a pretty good place for confirmation after his hearing Thursday. Senators asked probing questions, but their tone seemed to suggest that they think he’ll get the job. Barr said capital and liquidity levels are “quite strong,” but he wants to more closely assess all the relevant rules, including the supplementary leverage ratio (a once-obscure backup capital rule that has become of particular interest to bond investors). The Fed’s authority around climate change is “important but quite limited,” while the issue itself is “very long-term” but regulators need to be actively trying to understand the risks surrounding it today. Meanwhile, don’t forget inflation (he’s aiming to be a member of the Fed board after all). “Inflation is running far too high, affecting communities all across our country,” he said. “I would be strongly committed to bringing down inflation to the Federal Reserve’s target, consistent with the Federal Reserve’s dual mandate of maximum employment and price stability.” The tone at the hearing was markedly less confrontational than President Joe Biden's previous nominee, Sarah Bloom Raskin, faced from the Banking Committee, particularly from Republicans. Raskin ultimately withdrew after being opposed by Sen. Joe Manchin (D-W.Va.).
| | | | 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. | | | | | Senate Banking Chair Sherrod Brown wasn’t at the hearing. His office told MM that it’s because he wasn’t feeling well and went to George Washington University Hospital at the recommendation of the Senate’s attending physician, and had “a series of standard precautionary tests.” “Senator Brown is resting at home and intends to be back in the Senate voting next week, and his offices remain open to serve Ohioans,” his acting chief of staff, Trudy Perkins, said in a statement. G-7 countries reach agreement — G-7 nations agreed on Thursday to provide a total of $18.4 billion to cover Ukraine’s short-term financing needs, our European colleagues report, citing an official who saw the draft communiqué. “‘We are currently collecting the various commitments for direct liquidity support,’ German Finance Minister Christian Lindner said at a meeting of finance ministers and central bankers near Bonn hosted by Germany. Germany, as G-7 president, will contribute €1 billion, Linder said.” The NYT reports that Treasury Department officials have been pushing other countries to offer grants rather than loans to Ukraine “and are pushing for any loan terms to be as favorable as possible.” Watch for more formal agreement on Ukraine aid out of the coming announcements. The pivot to Asia lives — Elsewhere, President Joe Biden is making his first trip to Asia, with visits to South Korea and Japan, as it faces down another looming international challenge: China. Our Jonathan Lemire and Alex Thompson report : “Biden will spend a whirlwind few days meeting with two of the United States’ staunchest allies in the region, both of whom have pushed for more American involvement in Asia as a bulwark against possible Chinese aggression. The president’s visit also comes at a time when North Korea has ramped up its weapons testing and could, U.S. officials said, undertake additional provocations coinciding with Biden’s travel, from firing missiles to testing a nuclear bomb.” Meanwhile, Russia’s invasion of Ukraine has increased fears that Beijing could ratchet up pressure on Taiwan. “The message we’re trying to send on this trip is what the world can look like if the democracies and open societies of the world can stand together to shape the rules of the road,” said Jake Sullivan, the president’s national security adviser. “It will send a powerful message, and we think that message will be heard everywhere. We think it will be heard in Beijing.” HAPPY FRIDAY — Stay cool — looks like it’s gonna be a hot weekend in D.C.! Kate Davidson is back on Monday — send tips to kdavidson@politico.com or @KateDavidson, or aweaver@politico.com or@aubreeeweaver. And you can always reach me at vguida@politico.com.
| | A message from Blackstone: Blackstone's investment approach is focused on the future. We identify companies that are shaping a stronger economy and help them accelerate their growth. We can deliver for our investors by strengthening the communities in which we live and work. Learn more. | | | | | | INVESTORS PROTEST EXEC PAY AT JPM, INTEL, COCA-COLA — WSJ’s Theo Francis: “Investors have rebuked two dozen major U.S. companies over their executive-pay packages in nonbinding shareholder votes, sometimes by wide margins or for the second straight year. JPMorgan Chase & Co. and Intel Corp. investors owning roughly two-thirds of shares didn’t support pay plans at recent annual meetings. Coca-Cola Co. barely won majority support with 50.5% of the vote this year. “Historically, it is unusual for companies to get less than 90% support on these votes, and corporate-governance analysts consider less than 70% support to reflect significant investor dissatisfaction.” VOTER ANXIETIES MOTIVATE STRUGGLING DEMS — Our Nicholas Wu, Jordain Carney and Sarah Ferris: “House Democrats are playing whack-a-mole with national crises, hoping the show of proactivity will save them from catastrophe in November. “Democrats devoted this week to legislation to address spiking gas prices, the baby formula shortage and domestic extremism before they cleared out of Washington for a two-week recess — racing to convince frustrated voters they can tackle the most glaring problems.” IS A BEAR MARKET ON THE HORIZON? — AP’s Stan Choe and Alex Veiga: “Investors on Wall Street need a place to hide. The stock market’s skid this year has pulled the S&P 500 close to what’s known as a bear market. Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers. “The last bear market happened just two years ago, but this would still be a first for those investors that got their start trading on their phones during the pandemic. For years, thanks in large part to extraordinary actions by the Federal Reserve, stocks often seemed to go in only one direction: up. Now, the familiar rallying cry to ‘buy the dip’ after every market wobble is giving way to fear that the dip is turning into a crater.” FED TO PLOW AHEAD ON HALF-POINT HIKES — Bloomberg’s Steve Matthews: “Don’t count on Federal Reserve Chair Jerome Powell to ride to the rescue of a faltering stock market — at least not yet. Kansas City Fed President Esther George said Thursday that the market rout was no surprise in light of the central bank’s repeated caution that it will continue raising interest rates to cool the hottest inflation in decades. While she acknowledged equities were having a ‘rough’ week, her remarks in a CNBC interview did nothing to soften the tone set by Powell on Tuesday, who warned that officials seek ‘clear and convincing’ evidence that price pressures are retreating. That’s not encouraging for investors betting on the imminent exercise of a ‘Fed put’ — in which the central bank alters policy to prop up equity markets after a sharp decline.”
| | | | DON'T MISS 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. | | | | | U.S. ENFORCER WARNS OF CRACKDOWN ON BUYOUTS — FT’s Stefania Palma and James Fontanella-Khan: “The top antitrust enforcer in the US has warned that the Department of Justice will take a tougher stance on private equity firms rolling up large parts of the American economy, as it targets buyout groups that have skirted the watchdog’s scrutiny. “‘Sometimes [the motive of a private equity firm is] designed to hollow out or roll up an industry and essentially cash out,’ Jonathan Kanter, head of the DoJ’s antitrust unit said in an interview with the Financial Times. ‘That business model is often very much at odds with the law and very much at odds with the competition we’re trying to protect.’” A MOMENT OF SILENCE — John Ryan, head of the Conference of State Bank Supervisors, died unexpectedly earlier this week. Since then, the tributes to him have poured in, remembering his humility and passion for his work. Here are some snippets. National Credit Union Administration Chair Todd Harper: “The world of banking supervisors lost a real advocate, true friend, and outstanding leader. My heart goes out to his family and colleagues.” Acting Comptroller of the Currency Michael Hsu: “I had the honor of working with John and enjoyed our lively conversations. I also appreciated his openness to exploring ways for the OCC and CSBS to collaborate to raise the bar on bank regulation to benefit the nation’s financial system.” Acting FDIC Chair Marty Gruenberg: “For more than a decade, John led the CSBS with skill and vision. He was a close friend and trusted partner in our shared mission to ensure the safety and soundness of the banking system.”
| | | | A message from Blackstone:   | | | | | | FAKE JOB INTERVIEWS AT WELLS FARGO — NYT’s Emily Flitter: “Mr. Bruno is one of seven current and former Wells Fargo employees who said that they were instructed by their direct bosses or human resources managers in the bank’s wealth management unit to interview ‘diverse’ candidates — even though the decision had already been made to give the job to another candidate. Five others said they were aware of the practice, or helped to arrange it. “The interviews, they said, seemed to be more about helping Wells Fargo record its diversity efforts on paper — partly in anticipation of possible regulatory audits — rather than hiring more women or people of color. All but three spoke on the condition of anonymity because they were afraid of losing their jobs at Wells Fargo or their new employers.” WALL STREET WAVERS — AP’s Damian J. Troise and Alex Veiga: “Stocks ended another volatile day lower on Wall Street Thursday, bringing the market closer to its first bear market since the beginning of the pandemic. The S&P 500, the benchmark for many index funds, fell 0.6 percent. It’s now down 18.7 percent from the record high it set early this year, nearly at the 20 percent threshold that defines a bear market. Investors are worrying that the soaring inflation that’s hurting people shopping for groceries and filling their cars up is also walloping profits at U.S. companies. Target fell again, a day after losing a quarter of its value on a surprisingly large drop in earnings.” STOCK MARKET IS TOP-HEAVY, BUT DRAMA IS WIDESPREAD — WSJ’s Karen Langley: “Eight companies are to blame for nearly half the stock market’s decline this year—and the pain doesn’t end there. Apple Inc., Microsoft Corp., Amazon. com Inc., Tesla Inc. and the parent companies of Google and Facebook swelled to be so big in recent years that they accounted for 25 percent of the S&P 500 heading into 2022. “The benchmark U.S. stock index is weighted by market value, which means the biggest companies have the most influence. Just recently, those companies were powering the stock market ever higher. Now that they are faltering, the broader market is too. Together with Nvidia Corp. and Netflix Inc., they are responsible for 49.6 percent of the benchmark’s 2022 losses through Tuesday on a total-return basis, according to S&P Dow Jones Indices.” YELLEN REJECTS IDEA OF FED RAISING INFLATION TARGET — Bloomberg’s Christopher Condon: “Treasury Secretary Janet Yellen rejected any idea that the Federal Reserve and its counterparts should boost their inflation targets given the importance of stable price expectations at a time when living costs are surging. ‘I don’t immediately see that as a reason to change,’ the inflation target, Yellen told reporters Thursday in Bonn, Germany, referring to the potential for deglobalization to boost the trend rate of price increases. ‘The challenge is to meet the inflation targets that have been established.’” TWO MAJOR BANKS EXPECT MORE PAIN FOR EQUITIES — Reuters’ Saikat Chatterjee: “Two major banks expect more pain for the U.S. stock markets after benchmark indexes posted on Wednesday their worst one-day losses in two years. In a report published on Thursday, Barclays strategists said margins for U.S. companies and their forward earnings were under pressure due to a combination of factors, ranging from severity of China's COVID lockdowns to the war in Ukraine and the U.S. Federal Reserve's hawkish stance. ‘Given the numerous negative near-term catalysts for the SPX we believe that the risks remain firmly stacked to the downside,’ they said in a note, referring to the S&P 500.”
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