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Presented by Sallie Mae®: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White and Aubree Eliza Weaver | Presented by Sallie Mae® | 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. | | | West Wing mind meld — MM spoke with a senior administration official about the outlook for inflation given the amount of stimulus pumping into the system and the potential for much more if the “American Jobs Plan” makes in into law in some form. The official suggested that all of the White House’s economic forecasts call for short-term inflation hikes driven mostly by base effects from the low numbers of last year. That’s fair enough. The year-over-year comparisons will be of very limited value. But the official also noted that — like the Fed – the White House remains very cognizant of the risk that transient factors including a spike in demand and limited supply could morph into more sustained inflationary pressure. To be clear, both the Fed and the White House would welcome slightly higher inflation given the depressed levels of recent years. And they both have their eyes on investor expectations for future inflation, which represents much of the ball game. But the critical thing is while the White House wants to flood the zone with fiscal support and economy-reshaping fiscal policy, they are acutely aware that the economy could take off in surprising ways in the second half of the year and they have to keep an eye on the gas pedal in case they need to pull the foot of it and perhaps even tap the brakes. First quarter growth preview — Speaking of heating up… via Pantheon’s Ian Shepherdson: “The wave of data over the past couple weeks means we can be reasonably confident now that first quarter GDP growth was around 6 percent … “Since the pandemic began, most of the variation in GDP growth has been due to the wild swings in domestic final demand—mostly consumption—with inventories and trade playing bit-part roles. This will remain the case until GDP growth returns to something like its long-term trend, which probably won't be until the first half of next year, once most of the pent-up demand which has accumulated during the Covid crisis has unwound.” GOOD TUESDAY MORNING — Happy Tuesday! 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. | | A message from Sallie Mae®: You shouldn’t need a college degree to figure out how to pay for college. Sallie Mae is here to help. We do more than provide families with responsible private student loans, we help them make sense of the entire planning and paying for college process. And if they need to borrow, we work with our customers to manage their loans successfully and achieve financial independence after school. Learn more here. | | | | | | President Biden meets with leadership of the Congressional Hispanic Caucus in the Oval Office and then takes part in a virtual tour of the Proterra electric battery facility in South Carolina PROGRESSIVES WARN BIDEN ON STIMULUS — Our Burgess Everett and Marianne LeVine: “Biden’s entreaties to Republicans on his infrastructure bill are picking up steam. But progressives are warning the president not to get too attached to his GOP friends. … “Liberals are wary that the GOP may be trying to prolong infrastructure talks for weeks or even months, potentially setting back Democrats’ ambitious agenda as Biden goes back and forth with the opposition party over how big to go and when. But several prominent progressives also want to keep giving Biden room to try with Republicans -- up to a still-undetermined point. "At the moment, the two sides seem very far apart: Biden’s initial infrastructure spending pitch was more than $2 trillion, with a second part of the plan still in development. And several Democrats said Monday they seriously doubt that discussions with the GOP will produce anything at all.” LAWMAKERS URGE SBA TO RESTART VENUE RESCUE — Via our Zachary Warmbrodt: “More than 160 members of the House and Senate told the SBA in a new letter that it was critical to ‘immediately’ reopen a $16 billion grant program for live performance venues, after the agency scuttled the launch earlier this month because of severe technical problems. “The bipartisan letter led by Sens. John Cornyn and Amy Klobuchar was signed by dozens of lawmakers including Senate Majority Leader Chuck Schumer. The SBA says it plans to begin taking applications again this week.” | | | | STEP INSIDE THE WEST WING : The Biden administration is quickly approaching 100 days in office — has it delivered on its early promises? What tactics and strategies are being debated in West Wing offices? What’s really being talked about behind the scenes in negotiations with Congress on the infrastructure plan? Add Transition Playbook to your daily reads for details that you won’t find anywhere else that reveal what’s really happening inside the West Wing and across the executive branch. Track the people, policies and power centers of the Biden administration. Subscribe today . | | | | | GENSLER CONFIRMS HIRES — Our Kellie Mejdrich: “SEC Chair Gary Gensler… named his first senior hires , including individuals with deep ties to Capitol Hill and the corporate climate risk disclosure movement. Gensler's team will include: Chief of staff Prashant Yerramalli, who was previously chief of staff under former Acting Chair Allison Herren Lee “Policy director Heather Slavkin Corzo, who advocated for greater corporate climate disclosure as director of capital markets policy at the AFL-CIO and as head of U.S. policy at the Principles for Responsible Investment” … YELLEN TAKES HEAT — Also via Zach: “Treasury Secretary Janet Yellen … faced intense criticism from the left after naming a former private equity investor to be the department's first-ever climate counselor, a high-profile position that will be key to the agency's sweeping efforts to combat climate change. “Yellen's pick, John Morton, is returning to government after most recently serving as a partner at the climate-focused investment firm Pollination. He earlier worked in the Obama White House as senior director for energy and climate change at the National Security Council, and as a private equity investor with Global Environment Fund.” DEMS WANT BANK MERGER CRACKDOWNS — Our Leah Nylen: “The last time the Justice Department challenged a bank merger was in 1985, around the time that compact discs and New Coke debuted. “In the 36 years since, the U.S. has shed roughly 10,000 banks — some from bank failures, but most through acquisitions that regulators and antitrust prosecutors at the Justice Department have blessed. … Now, as Democrats in Congress push for an antitrust overhaul to restrain corporate power in tech, health care and agriculture, progressive lawmakers and economists also want the Biden administration to crack down on mergers in the banking sector. PRODUCTION BOTTLENECKS AHEAD — Our Victoria Guida: “With the economy set to boom this year and government aid inflating bank accounts, American businesses and consumers are ready to splurge. That is, if they can find enough of what they want to buy. “Production and shipping bottlenecks have cropped up around the world, a result of the coronavirus pandemic; severe weather events like the winter storm in Texas; a shortage of computer chips serious enough to spur … Biden to summon CEOs to the White House; and even that ship that got stuck for days in the Suez Canal. Federal Reserve surveys show that delivery times are more delayed than at any time since 1951.” | | | | SUBSCRIBE TO “THE RECAST” TO JOIN AN IMPORTANT CONVERSATION : Power dynamics are changing in Washington and across the country. More people are demanding a seat at the table, insisting that all politics is personal and not all policy is equitable. Our twice-weekly newsletter “The Recast” breaks down how race and identity shape politics and policy in America, and we are recasting how we report on it. Get fresh insights, scoops and dispatches on this crucial intersection from across the country and hear critical new voices that challenge business as usual. Don’t miss out, SUBSCRIBE . Thank you to our sponsor, Intel. | | | | | | | | STOCKS CLOSE LOWER— AP’s Damian J. Troise and Alex Veiga: “Technology companies helped drag U.S. stocks broadly lower Monday, pulling the indexes below the record highs they reached last week. “The S&P 500 dropped 0.5 percent, shedding more than a third of its gain from last week. Tech stocks were the biggest weight on the market, but the losses were shared broadly by a mix of banks, energy companies and others that rely on direct consumer spending. Chipmaker Intel fell 1.7 percent, Capital One lost 0.9 percent and Valero Energy slid 2.3 percent. Only real estate stocks eked out a gain.” EARNINGS SEASON IS GREAT BUT INVESTORS ARE ALREADY LOOKING PAST IT — WSJ’s Jon Sindreu: “It is shaping up to be a stellar earnings season for stocks, particularly cyclical ones like banks and retailers. The problem is that the market may already be moving on. Because the U.S. economy is emerging from the Covid-19 crisis, most analysts thought first-quarter numbers would be good. So far, they have been much better than good: By the end of Friday, S&P 500 companies that had already reported had beaten profit expectations by a combined 30 percent, according to FactSet, compared with a five-year average of 7 percent.” BIGGEST U.S. BANKS PILE INTO CASH, SECURITIES — Bloomberg’s Shahien Nasiripour: “The four largest U.S. banks gathered $919 billion in additional deposits last year, money that they either parked in cash or used to increase their holdings of securities, new data show. “Deposits at JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. collectively grew by 15 percent to $6.9 trillion as of March 31, the banks reported last week. Their combined loan holdings fell 10 percent to $3.44 trillion. Trading assets and other securities increased 24 percent to $3.67 trillion. Cash surged by 56 percent to $1.65 trillion.” LIBOR-REPLACEMENT COMPETITOR GAINS STRENGTH FROM NEW OFFERINGS — WSJ’s Julia-Ambra Verlaine: “Financial industry pioneer Richard Sandor is ramping up his efforts to compete in the race to replace the London interbank offered rate, which helps set borrowing costs on everything from mortgages to business loans. "Mr. Sandor — who helped create interest-rate futures in the 1970s and launched his own replacement for the scandal-marred short-term interest-rate benchmark in 2019 — is expanding offerings to include one-month and three-month borrowing rates. Ameribor is set on the American Financial Exchange, which was founded by Mr. Sandor and is where banks lend to each other through mutual lines of credit. Some small and medium-size lenders favor Ameribor because it changes with their funding costs.” | | | |   | | | | | | GENSLER OUTLINES THREE PRIORITIES ON HIS FIRST DAY AS HEAD OF THE SEC — NYT’s Ephrat Livni: “Gary Gensler, the new chair of the Securities and Exchange Commission, was sworn in on Saturday. That makes Monday the first day on the job for the former M.I.T. professor, commodities regulator and Goldman Sachs banker. “‘Every day I will be animated by our mission: protecting investors, facilitating capital formation, and promoting fair, orderly, and efficient markets,’ Mr. Gensler said in a statement. He didn’t offer specifics, but the S.E.C.’s recent activities suggest three major priorities.” FEARING FORECLOSURE CRISIS, CFPB CRACKS DOWN ON MORTGAGE SERVICERS — Reuters’ Koh Gui Qing, Katanga Johnson and Chris Prentice: “The U.S. consumer watchdog is scrutinizing mortgage servicers’ compliance with pandemic relief programs amid concerns struggling homeowners are not getting the help they need to avoid foreclosures, or are being discriminated against, said a dozen people with knowledge of the regulatory effort. “The Consumer Financial Protection Bureau (CFPB) crackdown by its policy, supervision and enforcement divisions could result in stiff penalties for those mortgage servicers found to have hurt borrowers, the regulatory officials, lawyers and industry executives said.” | | A message from Sallie Mae®: We know our current student loan financing system isn’t working for all students and families. Sallie Mae is committed to being part of the solution. 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