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Presented by U.S. Bank: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Kate Davidson and Aubree Eliza Weaver | Presented by U.S. Bank | 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. White House officials on Monday touted the new Indo-Pacific Economic Framework, announced with a dozen other countries in the region, as a new kind of trade agreement meant to counter China’s influence as an economic and national security rival. But it’s a long way from the kind of concrete, detailed plan likely to result in a meaningful deal, analysts and trade experts tell MM. “It’s highly positive that the Administration is seeking to strengthen its engagement in the Indo-Pacific,” said Mark Sobel, a former Obama Treasury official and U.S. chairman of the Official Monetary and Financial Institutions Forum. “But it’s doubtful that the proposed framework can compensate in the minds of these countries for the U.S. abandonment of TPP, a lukewarm U.S. attitude toward trade liberalization, fears about a Trumpian comeback and the strong pull of the Chinese economy in the region.” The announcement comes as policymakers and business leaders — including those gathered in Davos this week for the World Economic Forum — predict a shift away from globalization, and toward a new future focused on strategic trade agreements that emphasize resilience over efficiency, for example, and pit ”East” against “West.” “There is a real possibility that globalization will go into reverse to some extent,” Fed Chair Jay Powell said last week. Globalization brought costs and benefits, and it’s too soon to know whether a reversal would add to inflation pressures, he said. In their announcement, administration officials said the framework is intentionally designed to look beyond the typical parameters of a trade agreement and address other barriers that drive up costs, such as fractured supply chains and outdated infrastructure, as well as emerging economic challenges, such as the transition to a digital and clean energy economy, our Steven Overly reports.
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President Joe Biden speaks during a news conference with Japanese Prime Minister Fumio Kishida at Akasaka Palace, Monday, May 23, 2022, in Tokyo. | Evan Vucci/AP Photo | Who’s on board: India, Vietnam, Indonesia, Thailand, Brunei and the Philippines have agreed to take part in the framework negotiations after expressing some hesitation. They will join Japan, South Korea, Australia, New Zealand, Singapore and Malaysia, which were among the first countries the Biden administration started engaging last year. But it’s not a deal in any sense of the word, says Mary Lovely, a nonresident senior fellow at the Peterson Institute and a Syracuse University economics professor who characterized it as an offer to coordinate. She also said it’s not clear what the U.S. expects to get out of any agreement. That so many countries were willing to sign on with so few details or commitments “is just a sign that the U.S. is very important in the region, the region clearly wants a counterweight to China and clearly large parts of the region still depend on U.S. security.” The agreement also reflects the Biden administration’s focus on what it sees as the ills of globalization, Lovely said, and offers an alternative that at the same time aims to contain China. “It’s really something quite different and it reflects this two-pronged approach of the Biden administration,” she said. “Having said that, it’s not at all clear that it will come to anything.” Room for improvement : Heidi Crebo-Rediker, a partner at International Capital Strategies and former chief economist at the Obama State Department, said the framework is intended to fill a “gaping hole” in the Indo-Pacific region where the U.S. has established a strong national security partnership, but lagged when it comes to economic cooperation. But it will be difficult to convince other countries to get on board without putting more incentives on the table, such as market access provisions. “While I think it’s a receptive audience in the Indo-Pacific, we have to be very aware that the world has moved on in the past five years, and that time is not on our side,” she said. IT’S TUESDAY — Looking for an excuse to procrastinate? We recommend this fascinating piece on Wharton economics professor emeritus Anita Summers — a.k.a. Larry Summers’ mom — who started the first public policy program at a business school in the country. (h/t David Wessel) Have tips, story ideas or suggestions for famous economists we should profile? Send them our way: kdavidson@politico.com, @katedavidson, or aweaver@politico.com, @aubreeeweaver.
| | A message from U.S. Bank: U.S. Bank has given students hundreds of thousands of dollars in scholarships. Minnesota high schooler Addison Gray received hers—to study nursing—as her father battled COVID-19. “Seeing the way those nurses cared for him, it definitely reinforced going to school to help more people,” she said. Because at U.S. Bank, we’re small enough to care, and big enough to make a difference. Learn more. | | | | | | New home sales data released at 8:30 a.m. … Federal Reserve Chair Jay Powell delivers welcoming remarks at the National Center for American Indian Enterprise Development 2022 Reservation Economic Summit at 12:20 p.m. FOUR DOWN, ONE TO GO — Powell and President Joe Biden’s other Fed nominees were sworn in Monday, giving the central bank two new governors (Lisa Cook and Philip Jefferson), two PhD economists who are also the fourth and fifth Black people to ever serve on its board. Powell is now firmly in the driver’s seat for another four years, which will be a crucial time for bringing down inflation, and Lael Brainard has been promoted to his No. 2. The president’s choice for the Fed’s top regulatory job, Michael Barr, is the last pending nominee, and if he is confirmed, the central bank will have a full board for the first time since 2013. Meanwhile, Sen. Pat Toomey said he expects Barr will be confirmed as the Fed’s top bank regulator, although he is still undecided on whether to support the nomination, Reuters’ Dan Burns reported: “Asked by Reuters on the sidelines of the World Economic Forum in Davos, Switzerland, about Barr's prospects for confirmation, Toomey, the ranking member of the Senate Banking Committee, said: ‘I think it does look like he's likely to be confirmed.’ “The comments from Toomey, who led an effort to sink President Joe Biden's first nomination for the post, Sarah Bloom Raskin, are significant because it suggests Republicans will not mount a similar effort to challenge the nomination of Barr, who was a senior Treasury Department official under President Barack Obama.” DAVOS DISPATCH — Ukrainian President Volodymyr Zelenskyy may have appeared on screen at the World Economic Forum on Monday, but he proved that he’s a better communicator than most of the CEOs in town, our Ryan Heath writes from Davos. “ In a now familiar pattern, Zelenskyy honed his message to his audience, appealing to businesses to pull out of Russia and urging countries and companies to open their checkbooks and start planning for a reconstruction program for Ukraine,” Ryan says, adding that Zelenskyy didn’t pull any punches. “He accused the West of costing ‘tens of thousands of lives’ by not sanctioning Russia earlier. He also called for an immediate oil ban and all Russian banks to be sanctioned.” The message to CEOs in Davos: “Your brands should not be associated with war crimes,” and “our national economy has to remain operative.” MM sidebar: The Biden administration has also urged U.S. financial executives to support Ukraine’s eventual rebuilding effort and consider investments that would one day help the war-torn economy get back on track. But we hear that the message, delivered in several private meetings by Deputy Treasury Secretary Wally Adeyemo, has irked some in the financial sector, who see Treasury asking for help from the private sector at the same time other administration officials are inundating them with new regulations. (Looking at you, Gary Gensler.) JPMORGAN SAYS U.S. CONSUMERS ARE DOING JUST FINE — WSJ’s David Benoit: “Recession fears have markets in a panic, but the leaders of America’s biggest bank said U.S. consumers appear to be in good financial health . JPMorgan Chase & Co. expects credit losses to remain abnormally low through much of 2023, because customers haven’t yet drained cash balances that grew fatter during the pandemic, executives said at the bank’s investor day on Monday. ‘Big picture, the near-term credit outlook, especially for the U.S. consumer, remains strong,’ said Chief Financial Officer Jeremy Barnum.” And CEO Jamie Dimon said the U.S. economy remains strong , and potential obstacles to growth are not set in stone, Bloomberg’s Hannah Levitt reported: “‘Strong economy, big storm clouds, the JPMorgan Chase & Co. chief executive officer said at the firm’s investor day Monday. ‘I’m calling it storm clouds because they’re storm clouds. They may dissipate.’”
| | | | 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. | | | | | | | | FIRST IN MM: BINANCE STAFFS UP — Our Sam Sutton writes: "Binance’s U.S. platform is building up its Washington presence. The crypto exchange has hired former Ally Bank and Morgan Stanley government affairs pro Josh Wilsusen to lead its public policy efforts around the Hill. 'Josh is a veteran of Capitol Hill and his deep financial services expertise will be invaluable as Binance.US develops its own voice in Washington and plays an active role in the crypto policy dialogue,' Binance.US CEO Brian Shroder said in a statement." CRYPTO, WALL STREET BATTLE FOR INFLUENCE AT CFTC — Also from Sam: “A crypto trading platform’s bid to let day traders place leveraged bets on digital assets has turned a small federal agency into a lobbying battleground, pitting the startup against old-school financial exchanges that see it as a major threat. “FTX, a global crypto exchange led by 30-year-old billionaire and political megadonor Sam Bankman-Fried, has engaged in a full-court press convincing the Commodity Futures Trading Commission to sign off on its plan to let investors use borrowed money to trade crypto around the clock. If successful, it could clear a path for FTX to build an empire where individual investors could use leverage to bet on everything from bitcoin to corn futures contracts.” CAWTHORN CRYPTO PROBE — The House Ethics Committee has launched an investigation into Rep. Madison Cawthorn (R-N.C.) over his alleged inappropriate relationship with a staffer and accusations that he “improperly promoted” a cryptocurrency in which he had an undisclosed financial interest, our Nicholas Wu reports.
| | | | A message from U.S. Bank:   | | | | | | AMERICANS ARE FEELING BETTER ABOUT THEIR FINANCES — Our Victoria Guida: “Massive congressional assistance spearheaded by Joe Biden early in his presidency has emerged as a flashpoint in the debate over the cause of price surges across the economy. But a new annual survey by the Federal Reserve shows the upside of that aid. More than three-quarters of Americans felt positive about their financial situation late last year, the highest level since the Fed began conducting the well-being survey in 2013, even as many of them were sour in their assessment of the national economy.” FED’S BOSTIC SUGGESTS PAUSING RATE HIKES IN SEPTEMBER TO ASSESS IMPACT — Reuters’ Howard Schneider: “It "might make sense" for the Federal Reserve to pause further interest rate hikes following expected half-point rate increases over the next two months as the central bank assesses the impact on inflation and the economy, Atlanta Fed President Raphael Bostic said on Monday. “‘After you get through the summer...I think a lot of it will depend on the ground dynamics that we are starting to see’ both of the inflation the Fed is trying to contain and the impact of higher interest rates on the economy, Bostic said in comments to the Rotary Club of Atlanta.
| | | Coy Garrison is joining Steptoe & Johnson as a partner in its blockchain and cryptocurrency and financial services practices in Washington, starting Monday. Garrison worked most recently as counsel to Commissioner Hester Peirce at the Securities and Exchange Commission.
| | | STOCKS GAIN GROUND AFTER 7 STRAIGHT WEEKS OF LOSSES — AP’s Damian J. Troise and Alex Veiga: “Stocks closed higher on Wall Street Monday following seven weeks of declines that nearly ended the bull market that began in March 2020. The S&P 500 rose 1.9 percent, the Dow Jones Industrial Average rose 2 percent and the Nasdaq rose 1.6 percent.” JPMORGAN FUELS RALLY IN BANKS, STOCK MARKET — Bloomberg’s Matt Turner: “JPMorgan Chase & Co. jumped by the most in 18 months on Monday after chief executive officer Jamie Dimon gave the country’s largest bank, and the US stock market, a boost with upbeat comments about the state of the economy.” COMPANIES BUYING BACK STOCK ENJOY A DISCOUNT — WSJ’s Nina Trentmann: “Companies that repurchase their shares are getting more bang for their buck as market declines depress stock prices, helping to boost buyback activity, which is expected to hit a record $1 trillion this year.”
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