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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.
| | | Powell wants to make America great again — Pretty remarkable comments from Fed Chair Jerome Powell at the IMF, citing the homeless he drives by on his commute as a rationale for keeping central bank policy as easy as possible even as Congress and the Biden administration pump trillions of dollars into the economy and markets worry about inflation. Powell cited a DC tent city he sees on his commute in his remarks, something you might not necessarily expect to hear from a fairly conservative Fed chair nominated by a GOP president. “So we just need to keep reminding ourselves that even though some parts of the economy are just doing great, there’s a very large group of people who are not,” Powell said. “I really want to finish the job and get back to a great economy.” The freshly woke Powell makes a difference because he – along with former Fed Chair and current Treasury Secretary Janet Yellen – are in lockstep pressing for more federal intervention in the economy and imploring developed nations to spend more and ramp up their Covid-19 vaccination efforts. They are both all-in on flooding the zone with cash and dismissing any fears that we are in bubble-zones on multiple fronts including the stock market (hitting fresh highs) and the housing market (blistering hot in many areas) and crazy stuff like non-fungible tokens selling for absurd and completely unsustainable sums. You’ve also got CEOs like JPMorganChase’s Jamie Dimon suggesting the U.S. could emerge from the pandemic into a “goldilocks” economy . Happy talk like this often ends poorly. And while the U.S. might be sloping upwards other parts of the world like Europe and Brazil are faring much less well. And the U.S., while largely driven by domestic consumption, does not exist in an international vacuum. It also matters because Powell’s tenure as chair ends in 2022 unless Biden re-nominates him. Powell on Thursday said he’s not thinking about any of that . But that’s nonsense because of course he is. Any Fed chair is thinking about their future and where they stand with their (sort of) boss. Powell getting woke certainly won’t hurt his chances of renomination. GOOD FRIDAY MORNING — Your regular MM host is taking a week off next week but you will be in good hands as ever. We’ll be back next Monday. 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 AN IMPORTANT CONVERSATION, SUBSCRIBE TO "THE RECAST" NEWSLETTER: Power dynamics are shifting in Washington and across the country, 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 our 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 important new voices that challenge business as usual. Don't miss out, SUBSCRIBE . Thank you to our sponsor, Intel. | | | | | NEW FUTURES CONTRACT: LITHIUM — WSJ’s Joe Wallace: “Commodities exchange operator CME Group Inc. plans to launch a futures contract for lithium, seeking to capitalize on growing demand for a metal that helps to power electric vehicles. “The contract will be for lithium hydroxide delivered to China, South Korea and Japan, where most batteries globally are produced … If the futures contract is approved by regulators, it will begin trading on May 3. Allowing lithium to trade freely on an exchange could help shed more light on historically opaque prices for the metal, a key ingredient in rechargeable batteries for smartphones, laptops and electric vehicles” WHITE HOUSE LOOKS TO REVAMP GLOBAL TAX SYSTEM — Our Mark Scott and Aaron Lorenzo with Bjarke Smith-Meyer: “In a major overhaul of the global tax system, … Biden wants the world’s 100 largest companies — those with revenues of at least $20 billion — to pay into countries’ coffers wherever they sell their goods or services, according to proposals sent to more than 130 governments involved in ongoing tax talks. “Washington’s pitch aims to redirect years of fraught negotiations that have centered on finding ways for countries to increase taxes on Big Tech companies including Google and Facebook. U.S. officials have pushed back against those plans, and want any root-and-branch overhaul to include both digital and non-digital firms after the U.S. claimed the current plans unfairly target its homegrown companies.” POWELL SEES RETURN TO NORMAL “FAIRLY SOON” — Our Victoria Guida: “Federal Reserve Chair Jerome Powell … said the pace of vaccinations in the U.S. could soon mean a return to normal for the economy. Speaking at the spring meetings of the International Monetary Fund and the World Bank, Powell said the U.S. is ‘on track to allow a full reopening of the economy fairly soon’ with more than 100 million people at least partially vaccinated. “The IMF upgraded its forecast for the U.S. economy this week, projecting it would grow at a rate of 6.4 percent in 2021, up from its January prediction of 5.1 percent, based on progress made on the vaccine front along with another round of government aid. Job growth has showed signs of picking up, with over 916,000 Americans returning to work in March.” NEW YORK BUSINESS LEADERS GET READY TO LEAVE — CNBC’s Brian Schwartz:
“New York’s top business leaders are gearing up for a potential mass exodus as Gov. Andrew Cuomo and state lawmakers prepare to raise their taxes. With the state budget set to increase the personal income tax on the wealthiest New Yorkers as well as hiking corporate taxes, some executives who fled the city for Florida temporarily due to coronavirus pandemic lockdowns are considering permanent relocation, according to business leaders briefed on the matter. “Wealthy business leaders who have historically resisted moving at least some of their resources to Florida or other less-taxed states explained to CNBC that they are now seriously reconsidering as working from home becomes the norm, allowing more flexibility.” MORE TROUBLE AT THE SBA — Our Zachary Warmbrodt: “The Small Business Administration … scrapped the planned launch of a $16 billion grant program for struggling live performance venues after the application system suffered severe technical problems. The SBA had planned to begin taking requests for the aid Thursday but decided to shut down the application portal around 4:15 p.m. … “The SBA cited ‘technical issues’ that arose despite multiple successful tests of the application process. The SBA worked with vendors assisting with the program to address the issues but opted to shut it down ‘to ensure fair and equal access once reopened’ because the grants are issued on a first come, first served basis.” | | | S&P CLOSES AT RECORD — Reuters’ Chuck Mikolajczak: “The S&P 500 closed at a record high on Thursday, as U.S. Treasury yields fell following softer-than-anticipated labor market data, boosting technology and other growth stocks. Weekly initial jobless claims data showed a second straight rise, conflicting with the recent payrolls report, and buttressed the Federal Reserve’s dovish policy stance to keep interest rates lower for a substantial period.” AS INVESTORS SWITCH TO ETFS, SO DO MANAGERS — NYT’s Conrad de Aenlle: “One of the most persistent investment trends is the migration of money out of stock mutual funds and into exchange-traded funds, which are easier to trade, have lower operating expenses and often have favorable tax treatment. Over the last 10 years, a net $900 billion has flowed out of stock mutual funds and $1.8 trillion has flowed into stock E.T.F.s, according to Morningstar.” | | | MANDATORY DISCLOSURE — Our Lorraine Woellert: Biden will issue an executive order “that will require disclosure” by companies of risks related to climate change. U.S. climate envoy John Kerry spilled the beans during this week’s IMF meetings and Bloomberg got a glimpse of the plan. National Economic Council director Brian Deese and National Climate Advisor Gina McCarthy will lead the strategy in coordination with Treasury and the Office of Management and Budget. Members of the Financial Stability Oversight Council would share climate-related financial-risk data. We’re short on details, but will keep you posted. CREDIT SUISSE IGNORED WARNINGS BEFORE ARCHEGOS, GREENSILL IMPLODED — WSJ’s Margot Patrick, Julie Steinberg, Juliet Chung and Duncan Mavin: “Credit Suisse Group AG’s double-barreled financial crisis shares a common theme: a bank that looked the other way when warning signs argued for pulling back on lucrative corners of its business. “The Swiss bank with a big Wall Street presence was caught off guard starting in late February when $10 billion in complicated investment funds it ran with financing firm Greensill Capital unraveled, despite years of internal warnings about the relationship.” POWELL CALLS FOR FASTER GLOBAL VACCINATION — WSJ’s Paul Kiernan: “The sluggish progress of Covid-19 vaccination outside the U.S. is a key threat to the economic outlook, Federal Reserve Chairman Jerome Powell said Thursday, echoing calls to address the widening disparity between rich and poor nations.” SEC SEEKS CLEARER DISCLOSURES TO INVESTORS OF SPAC DEALS — WSJ’s Dave Michaels: “Companies that go public by merging with blank-check companies, also known as special-purpose acquisition vehicles, aren’t free to tout misleading or questionable projections of growth, a senior regulator said Thursday. IMF PANEL ENDORSES $650B INCREASE IN RESOURCES — AP’s Martin Crutsinger: “The International Monetary Fund on Thursday authorized a $650 billion expansion of the 190-nation lending institution’s resources with the aim of providing more support for vulnerable countries as they battle the coronavirus pandemic. “IMF Managing Director Kristalina Georgieva said the $650 billion increase in reserves is the largest in IMF history. The move will provide badly needed reserves for poor countries struggling with deep recessions caused by the pandemic and the need to obtain and administer millions of doses of vaccines, she said.”
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| | | INSIDE THE GAMESTOP PHENOM — Alice Lloyd in American Consequences: “Everyone wants a handle on the short squeeze movement, a new chapter in the so-called gamification of trading. The effectively organized (but motley-in-spirit) mob manipulation of a sentimentally meaningful ‘meme stock’ — storefront game retailer GameStop, beloved by all who grew up on video games — grabbed the world’s attention in late January.” NEW ESG TARGET FROM BANK OF AMERICA — Per release: “Bank of America sets sustainable finance target of $1.5 trillion by 2030: Beyond a $1 trillion target for climate-related finance (up from $300 billion target set in 2019), the balance of the commitment is focused on social inclusive development, scaling capital to advance community development, affordable housing, healthcare, and education, in addition to racial and gender equality.”
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