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 . Top CEOs aren’t quite saying there are storm clouds forming over the economy. But it’s getting colder, the skies have gone gray and the ranks of those willing to venture outside are dwindling. Federal Reserve Chair Jerome Powell’s attempt to beat back rising costs without obliterating the labor market has made for confusing times; good news is often bad, bad news is often good and financial institutions and big businesses are stuck in the middle trying to figure out how to plan for what’s next. The Business Roundtable’s fourth quarter survey released Monday painted a clear picture of just how “bleh” corporate America’s feeling going into 2023. Sure, most of the executives surveyed don’t think we’re headed for a recession. And yes, more companies than not plan to hire workers and invest next year. But the outlook — or, as our colleague Victoria Guida once artfully put it, “ the vibe ” — is getting more sour. And there’s a growing sense of anxiety over how Washington will handle the economic forces that might compel the Fed to send rates through the roof. “The Fed has been pumping the brakes to rein in inflation, and the survey results are unsurprising in that context,” said Business Roundtable CEO Joshua Bolten in a statement. Congress and the White House, he said, need to do more to support “pro-growth” policies to strengthen the economy. The tricky thing, of course, is that economic growth is part of the problem. A report from the Institute for Supply Management found that service businesses in sectors like health care and retail remain white hot. Factory orders are up . Wages are still climbing as businesses compete for a dwindling number of unemployed workers. Even as Powell and other Fed officials signal that they plan to raise interest rates in smaller increments in the near term, a resilient labor market and steady demand for goods and services could require a more aggressive approach. That should slow down the economy. And that explains why CEOs are increasingly pessimistic, even if they check “yes” next to the box indicating they plan to increase their employee headcount next year. Which brings us to Wall Street. One place where rising rates are hitting hard and fast is in the world mergers and acquisitions. Corporate deal making is slowing. Banks are having a hard time selling off the debt they’ve packaged to finance the deals that have closed. And Wall Street’s rank and file are about to start feeling the pinch. Goldman Sachs is warning traders that their bonuses might not have as much pop as last year. JPMorgan, Bank of America and Citi reportedly plan to slash their incentive compensation pools by around 30 percent. And over at Morgan Stanley, CEO James Gorman said last week that he plans to make cuts to the bank’s workforce “all over the globe.” "Some people are going to be let go," Gorman said. “In most businesses, that's what you do after many years of growth." IT’S TUESDAY — While Zach rocked out to Def Leppard, Sam’s go-to music in 2022 was heavy-duty normcore. The Beatles, Springsteen, Sturgill Simpson ; basically the “I like Hiking and IPAs” of playlists. MM hopes your tastes are a bit more interesting. Please send tips to ssutton@politico.com and zwarmbrodt@politico.com .
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