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Presented by the Independent Community Bankers of America: 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 |  | | | 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. | | | Biden’s great big week — This week features both President Joe Biden’s 100th day in office (Friday) and his fist joint address to Congress (Wednesday). Don’t call it a State of the Union because it technically isn’t. And it’s delayed because the president didn’t want to do it before his first Covid stimulus bill passed. Now he’s got to make the case for his second giant spending bill, the $2 trillion-plus American Jobs Plan. The package is generally popular but there’s little chance the White House can push through all the tax hikes they want including the big capital gains boost without losing moderates like Sen. Joe Manchin (D-W.Va.). And they are not going to get GOP support for any tax hikes at all so reconciliation remains the only route. Much of the spending bill is popular but Biden has a pretty big sales job to do on Wednesday. Via Compass Point’s Isaac Boltansky: “It will take months and a considerable amount of political skill to bridge the gap between rhetoric and reality, but we continue to believe that the odds favor an infrastructure/tax package reaching the president’s desk later this year … “We fully admit that the legislative strategy is about as clear as mud at this point in time, but at the highest level we expect another few weeks of unsuccessful bipartisan overtures” On a possible cap gains hike: “It is far too early to say anything with certainty, but our view is that if a deal gets done it will set the effective date for the higher capital gains rate as January 1, 2022.” Asia rises — Via Reuters: “Asian stocks climbed to six-week highs on Monday amid signs the world economic recovery was still well on track, though rising COVID-19 cases in the region weighed on sentiment, pushing oil prices lower. … “First-quarter U.S. gross domestic product data due later in the week is likely to show activity probably returned to pre-pandemic levels … That said, some economists say the market could hit a soft patch in coming months reflecting concerns ranging from rising COVID-19 cases and worries that most of the benefits from massive fiscal stimulus have already been priced in.” GOOD MONDAY MORNING — MM hadn’t seen many of the movies featured in last night’s Oscar’s. But how great was Questlove? 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 the Independent Community Bankers of America: Community banker congressional meetings this week: Accounting for roughly 60 percent of Paycheck Protection Program lending from nearly 50,000 locations serving every congressional district, community banks have been financial first responders during the coronavirus pandemic. As part of this week’s ICBA Capital Summit, community bankers are meeting with members of Congress and offering bipartisan legislative solutions to continue moving our nation forward. Read ICBA’s bipartisan agenda. | | | | | | The Independent Community Bankers of America starting on Tuesday holds its annual Capital Summit featuring Senate Banking Chair Sherrod Brown and Manchin … The Fed issues a new statement on Wednesday that is not expected to include any changes. Chair Jay Powell is also likely to hold firm to full stimulus mode in his press conference with references to transitory inflation pressure … Biden addresses Congress on Wednesday evening with a focus on Covid and his infrastructure plan as well social justice and the environment … MANCHIN AND CAPITO LIKE GOP INFRASTRUCTURE PLAN — Our Allie Bice: “West Virginian Sens. Joe Manchin (D) and Shelley Moore Capito (R) on Sunday both voiced their support for Republicans' nearly $600 billion infrastructure counteroffer to Biden’s $2.2 trillion plan. Republicans last week unveiled the proposal, which is about a quarter the size of Biden’s plan, and several Democrats have spoken out against it. But Manchin told CNN’s Dana Bash … that the Republican plan is ‘a good start. It really is, and I'm glad they did it.’ Manchin also said he supported the effort to work on ‘traditional infrastructure,’ separately from other issues.” MM SIDEBAR — This is Manchin code for “lower the price tag and strip out a bunch of extraneous stuff.” FED PREP — Mohamed A. El-Erian on Bloomberg Opinion: “I suspect that Federal Reserve officials are not the only ones looking for an uneventful policy meeting this week. “The majority of market participants are also expecting an undramatic event that will include an upgrade of the economic outlook, a reiteration of uncertainties and the signaling of nothing new on policies. Unfortunately, it’s an outcome that kicks the policy can further down the road when the central bank should be thinking now about scaling back its extraordinary measures.” YOU ARE (PROBABLY) GETTING A TAX CUT! — Our Brian Faler: “Everyone knows that Democrats want to raise taxes on the rich, but what hasn’t gotten nearly as much notice is how much they’ve cut them for most everyone else — substantially more than Republicans did in the first year of their 2017 tax overhaul. “New estimates by Congress’s official forecasters show Democrats’ tax cuts — included in their March stimulus package — will drive down tax rates on low- and middle-income people so much this year that those earning less than $75,000, on average, will owe nothing in federal income taxes. Those making between $75,000 and $100,000 will pay a scant 1.8 percent average tax rate this year, the nonpartisan Joint Committee on Taxation predicts.” | | | |   | | | | | | AFTER BLAZING RALLY, SOME WARN OF TOUGHER MARKET AHEAD — Reuters’ Lewis Krauskopf and Saqib Ahmed: “Some of Wall Street’s biggest names are predicting a pause in a rally that has taken the S&P 500 to fresh records this year, leaving investors trying to determine whether to lock in some of the breathtaking gains or stay the course. “Among the most recent has been Goldman Sachs, whose analysts on Wednesday said an expected second-quarter peak in U.S. growth could be tied to weaker stock returns. Morgan Stanley earlier this week warned stocks would soon face headwinds. Deutsche Bank this month called for a pullback of as much as 10 percent in the S&P 500 as growth decelerates, and BofA Global Research backed a year-end target for the index about 8 percent below current levels. TESLA, APPLE, AMAZON HEADLINE HEAVY EARNINGS WEEK — WSJ’s Allison Prang: “More than a third of the S&P 500 are expected to report their quarterly results in the coming week, including Apple Inc. and Tesla Inc., as companies detail how the reopening world is affecting their businesses. “Tech giants will dominate the coming earnings calendar. In addition to Apple and Tesla, other big names providing quarterly updates include Microsoft Corp., Google parent Alphabet Inc. and Amazon. com Inc. In total, 181 companies in the S&P 500 will report results this coming week, according to FactSet, following the 25 percent that have already logged results through Friday.” WELLS FARGO: 10-YEAR TREASURY YIELDS WILL BREAK OUT OF SLUMP -- CNBC’s Stephanie Landsman: “The 10-year Treasury Note yield may be on the verge of breaking out of its slump. After stabilizing over the past several weeks, Wells Fargo Securities’ Michael Schumacher predicts the current risk backdrop will re-energize yields in the coming weeks. He lists the Federal Reserve’s high level of comfortableness surrounding rising inflation, the massive amount of fiscal and monetary stimulus in the pipeline and the economic data’s strength.” | | A message from the Independent Community Bankers of America: Community bankers and ICBA offer bipartisan solutions: At a time of historic challenge and opportunity, community bankers this week are meeting with members of Congress as part of the ICBA Capital Summit.
Congress is closely divided, but it need not be gridlocked. While saving an estimated 33.7 million jobs through the first round of Paycheck Protection Program lending and serving every congressional district with their more than 700,000 employees, community banks have a track record of working with both parties to craft pragmatic solutions.
During this week’s ICBA meetings, community bankers will discuss bipartisan policy reforms to help continue the economic recovery in urban, suburban, and rural communities nationwide. Read ICBA’s bipartisan agenda. | | | | | | BEHOLD THE ECONOMY’S RECOVERY AS FED STAYS COURSE — Bloomberg’s Vice Golle and Alister Bull: “News of the U.S. economy’s accelerating pace of recovery may prove a highlight this coming week, with data likely to show output approaching its pre-pandemic level just as the Federal Reserve delivers its third policy decision of the year. “Gross domestic product probably increased at a 6.9 percent annualized pace from January through March after a more moderate 4.3 percent rate in the previous quarter. Other reports may show stronger orders for durable goods, a pickup in consumer confidence and robust personal spending.” THE FED’S NEXT TEST IS BREAKING THE ICE OVER POLICY SHIFT — WSJ’s Paul Kiernan: “As the economic recovery evolves from forecast to reality, the Federal Reserve will face a question that has vexed it in the past: how to signal its eventual tightening of the money spigot. "The process of ending the Fed’s giant bond-buying program, and subsequently raising interest rates, will take years unless inflation unexpectedly surges. Its first step down that road will be to start talking about it in the coming months or weeks—Chairman Jerome Powell’s next big test with financial markets.” | | | | JOIN AN IMPORTANT CONVERSATION, SUBSCRIBE TO "THE RECAST": Power is shifting 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. “The Recast” is a twice-weekly newsletter that explores the changing power dynamics in Washington and breaks down how race and identity are recasting politics and policy across America. 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. | | | | | SPAC INSIDERS CAN MAKE MILLIONS EVEN WHEN INVESTORS SEE LOSSES — WSJ’s Amrith Ramkumar: “Investors who bought into a special-purpose acquisition company that took a healthcare-services company public last year in an $11 billion deal have suffered steep losses. Promoters of the SPAC still stand to make millions. “The paper gains for insiders, even as shares of MultiPlan Corp. fall, result from the unique incentives given to SPAC creators, also known as sponsors. They are allowed to buy 20 percent of the company at a deep discount, a stake that is then transferred into the firm the SPAC takes public. Those extremely cheap shares let the creators make, on average, several times their initial investment. They also let the SPAC backers make money even if the company they take public struggles and later investors lose money, a source of criticism for the process.” GOLDMAN EXPECTS U.K. ECONOMY TO GROW FASTER THE U.S. THIS YEAR — Reuters: “Britain looks set to see faster economic growth than the United States this year as the country races ahead with its vaccination programme after its slump in 2020, Goldman Sachs said on Sunday. The bank said in a note to clients that it now expects British gross domestic product to grow by a ‘striking’ 7.8 percent this year, ‘above our expectations for the U.S.’” | | | | DON'T MISS OUT ON OUR NEW PLAYBOOK DEEP DIVE PODCAST: Washington is full of whispers, colorful characters and little-known back stories that even D.C. insiders might not know. Playbook Deep Dive is a new, weekly podcast that pulls back the curtain on the stories behind the power. From Congress and the White House to bar stools and backrooms, POLITICO's top reporters and Playbook authors bring you the most compelling and confounding stories that explain what’s really going on in Washington. SUBSCRIBE NOW. | | | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
