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Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White 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 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. | | | Covid strikes back — Pardon this interruption to the “everything is awesome” narrative. Because Covid-19 is surging again, leaving the CDC director with a sense of “impending doom” regarding a fourth wave in the pandemic. Debbie Lai, chief operating officer of Covid Act Now, told POLITICO Nightly’s Renuka Rayasam that the country’s Covid trajectory is deteriorating: “There may be a fourth surge underway, with cases now growing in two-thirds of states versus half before the weekend.” The numbers: New cases jumped by 11 percent over the past week to a seven-day average of about 60,000 daily cases, according to an interagency memo dated March 29 and obtained by POLITICO. The White House is talking up increased eligibility for vaccines . But eligibility means nothing if you cannot actually GET the vaccine (as MM cannot in NJ). Maybe we avoid the worst of this wave and get vaccination levels up very fast. But if we don’t, the giant rally in stocks and ebullient hopes for the economy are in serious trouble. MM quizzed some close economy and market watchers on their feelings about the latest Covid surge and what it means. RBAdvisors’ Richard Bernstein emails : “For the stock market, off-the-charts monetary and fiscal stimulus probably overwhelm an increase in cases and the bull market remains intact. However, if the vaccines prove impotent, then I think no amount of stimulus would be able to stave off a significant bear market.” RSM’s Joe Brusuelas : “If one looks at the alternative data on say restaurant reservations or TSA activity one gets the idea that the train has left the station. The only difference is how fast will the train travel amidst a fourth wave that’s unavoidable. … Given the pace of vaccinations around the economy I’d say the risks of derailing the recovery have diminished despite a resumption in infections in some states.” Cumberland’s David Kotok: “Covid risk is big as we already learned the hard way. Cannot cure economy until public health crisis is over.” Pantheon’s Ian Shepherdson in a client note: “The clear and unambiguous upturn in U.S. Covid cases threatens to delay, but not to cancel, the economic recovery which is now underway and gathering steam. “New Jersey has paused its previously-planned steps towards full reopening, and other northern states might follow, but we would be surprised to see widespread reversals of previous relaxation. The B117 variant likely is now dominant in the U.S., and will soon account for almost all new infections, but that does not mean the U.S. is fated to see cases rocket as they did in Europe late last year” GOOD TUESDAY MORNING — Apologies for starting your day with a downer. We want this thing done as much as anyone. 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. | | | | JOIN THE CONVERSATION, SUBSCRIBE TO “THE RECAST” Power dynamics are shifting in Washington, and more people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. “The Recast” is a new twice-weekly newsletter that breaks down how race and identity are recasting politics, policy and power in America. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear from new voices that challenge business as usual. Don’t miss out on our latest newsletter, SUBSCRIBE NOW. Thank you to our sponsor, Intel. | | | | | | | | President Biden at 2 p.m. signs the PPP Extension Act of 2021 into law … Treasury Secretary Janet L. Yellen “will deliver remarks at the United States Hispanic Chamber of Commerce 2021 Virtual Legislative Summit” … Deputy Treasury Secretary Wally Adeyemo “will participate in a virtual session with eight racial and economic justice leaders” … Consumer Confidence at 10:00 a.m. expected to rise to 96.2 from 88.9 … SCHUMER TALS UP MULTIPLE RECONCILLIATION BILLS — Our Caitlin Emma: “Senate Majority Leader Chuck Schumer hopes to make the most of budget reconciliation this year by revisiting the same process Democrats used to pass … Biden’s $1.9 trillion coronavirus relief package, an aide to Schumer confirmed … “If the majority leader is successful, Democrats would be able to use the powerful budget tool at least three times this year. … Democrats could use [reconciliation] to avoid the legislative filibuster and pass the infrastructure and jobs package Biden plans to unveil Wednesday in Pittsburgh … It is unclear if the Senate parliamentarian will allow Schumer’s request. If the request is denied, Democrats can use the fiscal 2022 budget resolution to unlock reconciliation for Biden’s next major legislative push.” EVICTION MORATORIUM EXTENDED — Our Katy O'Donnell: “The Centers for Disease Control and Prevention said … that the federal eviction moratorium has been extended through June 30, a move that will protect millions of tenants who have struggled to make their rent payments during the coronavirus crisis. “Shortly after the CDC announcement, two key financial regulators warned that they will be ‘monitoring and investigating’ eviction practices in light of the newly extended ban, pointing to ‘reports that major multistate landlords are forcing people out of their homes.’” BIDEN PRESSURED ON SALT DEDUCTION — CNBC’s Brian Schwartz: “Leaders of the finance industry and other businesses in New York are pushing… Biden and … Schumer … to bring back the full state and local tax deduction, according to people familiar with the matter. “Schumer, who is up for reelection in 2022, has heard from business leaders across New York on multiple calls in recent weeks, these people added. Some of these people have also held talks with advisors to Biden. Schumer, these people noted, signaled as recently as Friday that he plans to bring up the return of the full deduction when negotiations begin over reforming the tax code as a means to pay for Biden’s next initiatives, including rebuilding the nation’s infrastructure.” | | | LATE FADE PUSHES S&P LIGHTLY BELOW RECORD HIGH — AP’s Stan Choe, Damian J. Troise and Alex Veiga: “Stocks didn’t manage to hold on to the meager gains they made on Wall Street Monday, pulling the S&P 500 slightly below the record high it set late last week. The benchmark index slipped 0.1 percent. “Losses for big banks offset gains elsewhere in the market amid some worries over how much banks would suffer following soured trades made by a major U.S. hedge fund. Gains for Facebook and other technology heavyweights helped limit the losses. Treasury yields rose. The yield on the benchmark 10-year Treasury note climbed to 1.71 percent. Crude oil prices ended higher.” STOCKS FAVORED IN ‘REOPENING TRADE’ HIT TURBULENCE — WSJ’s Michael Wursthorn: “Spring hasn’t been kind to stock-market highfliers. The sectors that benefited most from the pandemic-inspired shift to working from home have fallen hard since late January, as rising interest rates pushed investors into investments promising surer returns. Hot technology firms and blank-check merger companies have tumbled from their highs, pushing the Nasdaq Composite Index down 8 percent from its latest record close last month.” MORGAN STANLEY SAID TO PRICE $500M ROCKET COS BLOCK TRADE — Bloomberg’s Crystal Tse, Drew Singer and Gillian Tan: “A wave of block trades continued on Monday with a large stake in Rocket Cos Inc. sold through Morgan Stanley, according to people familiar with the matter. About 20 million shares were sold earlier during Monday’s session at $25.25 each, one of the people said. Shares in the parent of Quicken Loans, the largest retail non-bank lender, erased gains to traded little changed in the afternoon.” | | | | THE LATEST FROM INSIDE THE WEST WING : A lot happened in the first two months of the Biden presidency. From a growing crisis at the border to increased mass shootings across the country while navigating the pandemic and ongoing economic challenges. Add Transition Playbook to your daily reads to find out what actions are on the table and the internal state of play inside the West Wing and across the administration. Track the people, policies and emerging power centers of the Biden administration. Don’t miss out. Subscribe today. | | | | | | | | FED WILL NOT KEEP INTEREST RATES LOW FOR GOVERNMENT’S BENEFIT, WALLER SAYS — Reuters’ Howard Schneider: “The Federal Reserve won’t bend its interest rate or bond-buying policies to help finance the federal government’s rising deficits, Christopher Waller said on Monday in his debut speech as a member of the U.S. central bank’s board of governors.” TOOMEY WANTS SAN FRANCISCO FED DOCS ON CLIMATE, SOCIAL WORK — WSJ’s Michael S. Derby: “A Republican senator, concerned that the U.S. central bank is moving beyond its congressional mandate, is asking the Federal Reserve Bank of San Francisco for documents on its growing focus on climate and social issues. In a letter to the regional Fed bank, Sen. Pat Toomey , (R-Pa.) said he is concerned that the new research focus of the bank risks destabilizing the central bank’s nonpolitical profile, which could affect its independence.” GLOBAL BANKS WARN OF POSSIBLE LOSSES FROM HEDGE FUND DEFAULT — AP: “Swiss bank Credit Suisse said Monday it may have suffered a ‘highly significant’ loss from a default by a U.S.-based hedge fund on margin calls that it and other banks made last week, while Japan’s Nomura said it could face a loss of $2 billion due to an event with a U.S. client. "Credit Suisse didn’t identify the ‘significant’ hedge fund or the other banks affected, or give other details of what happened. News reports identified the hedge fund as New York-based Archegos Capital Management.” COVID WAS SUPPOSED TO DRIVE BANKRUPTICES HIGHER, BUT THAT’S NOT WHAT HAPPENED — WSJ’s Soma Biswas and Harriet Torry: “The number of people seeking bankruptcy fell sharply during the pandemic as government aid propped up income and staved off housing and student-loan obligations. “Bankruptcy filings by consumers under chapter 7 were down 22 percent last year compared with 2019, while individual filings under chapter 13 fell 46 percent, according to Epiq data. After holding above 50,000 filings a month in 2019 and in the first quarter of 2020, bankruptcy filings have remained below 40,000 a month since last March when the pandemic hit. By contrast, commercial bankruptcy filings rose 29 percent, with more than 7,100 businesses seeking chapter 11 protection last year, according to Epiq.” TRANSITIONS — Sean Memon, former chief of staff to the chair of the U.S. Securities and Exchange Commission, has joined the D. E. Shaw group as a senior vice president in the firm’s Legal & Compliance department, where he will serve as chief of staff. | | | | Follow us on Twitter | | | | Follow us | | | | |  |
