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Presented by Canadian Pacific: 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. | | | So is Jay Powell getting a second term or what? — At some point this fall, the West Wing will have to decide whether to renominate Jerome Powell for another term as Chair of the Federal Reserve. He’s an older white guy, nominally a Republican and the nominee of a GOP president (who subsequently came to mostly hate him.) There will be some pressure from the left to move on and pick a woman and/or person of color to lead the world’s most important financial institution. But the left kind of likes just how massively dovish Powell remains despite faster economic growth and strong jobs numbers. The White House could choose to renominate Powell and dump Fed Vice Chair for Supervision Randy Quarles to appease the left, installing someone more friendly to stricter bank regulation while keeping a chair that Wall Street loves. The early money is on this happening though there are plenty of strong potential candidates for the Fed Chair slot including former Fed Board member Sarah Bloom Raskin and current board member Lael Brainard (though she has her issues with the left.) It would be SUPER hard to dump the Fed Chair early next year if markets and the economy are both humming. MM asked top White House aide Jared Bernstein about Powell at our event. Bernstein has previously said very positive things about Powell. But he declined to issue much of an endorsement : “I’m not going to get into that. Neither yes nor no at this point,” he told me. “It’s a process that hasn’t — that we have to go through before we even start talking about it.” MM can confirm that this seems largely true. Senior White House officials don’t seem to have any idea of whether Biden will re-nominate Powell for a second term as chair. Kind of like they are dealing with other stuff at the moment, maybe? Just a guess. GOOD WEDNESDAY MORNING — Thanks to all who tuned for the small business event! And way to go Bronx on last night’s Yankees-Astros tilt. Electric stuff. 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 Canadian Pacific: COMPETITION MATTERS. SERVICE MATTERS. EXPERIENCE MATTERS. TRUST MATTERS. CP and KCS are better together. See important information at www.futureforfreight.com. | | | | | | President Biden at 2 p.m. “delivers remarks on the administration's implementation of the American Rescue Plan” in the State Dining Room … ADP private sector payrolls at 8:15 a.m. expected to show a gain of 860K, up from 517K in March … ISM Services Index at 10:00 a.m. expected to rise to 64.2 from 63.7 … GET READY FOR A FAT JOBS NUMBER — StanChart’s Steven Englander: “We expect the US April non-farm payroll report … to show an increase of 1.5mn versus the consensus of c.1mn, and the number could well be higher … “Our judgment is that it would take 2mn jobs for investors to think that the Fed might reconsider its view that the tapering discussion is premature. We think investors will see anything below 1.5mn as a continuation of strong data, but not enough to shift the Fed. Between 1.5 and 2mn there is likely to be uncertainty on Fed perceptions.” TRANSITION SCOOP — Per a little birdie: “Moody's will soon announce that they have hired Twaun Samuel, House Financial Services Committee Chairwoman Maxine Waters’ former chief of staff, to be a Senior Vice President - Government and Public Affairs. We expect a formal announcement as early as [today]” YELLEN FREAKS EVERYONE OUT WITH RATE COMMENTS — Our Victoria Guida: “Treasury Secretary Janet Yellen … said the federal government might spend enough money under … Biden’s agenda to spur higher interest rates but argued their proposed long-term investments are worth it. “In a pre-recorded interview aired at an event hosted by The Atlantic, Yellen said the costs of Biden’s plans for infrastructure and social programs will be spread out over the course of the next decade … Still, ‘it may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,’ she said, a term that refers to when demand for goods and services outpaces supply to the extent that prices begin to rise more quickly.” (See below for the walk-back.) | | | |   | | | | | | TECH SHARES SINK BROADER MARKET — AP’s Damian J. Troise and Alex Veiga: “Stocks are closing lower on Wall Street Tuesday, dragged down by big technology companies like Apple and Microsoft. The declines marked the sixth straight losing day for technology stocks. Investors continue to focus on corporate earnings and gauge the economic recovery’s progress. “Earnings and most economic indicators have been signaling a steady recovery, but investors remain concerned about the lingering threat from COVID-19, inflation and other factors that could crimp progress. The S&P 500 index fell 0.7 percent and the tech-heavy Nasdaq slipped 1.9 percent, while the Dow eked out a small gain. The price of oil rose while bond yields slipped slightly.” SPAC RETURNS TRAIL S7P 500 — Reuters’ Noel Randewich: “As retail investors pump less money into blank-check companies, returns on those stocks are badly underperforming versus the S&P 500. Reuters found that over 100 special-purpose acquisition companies, or SPACs, that announced mergers this year on average have gained under 2 percent from the price they traded at when they first listed on the stock exchange. “Most of those SPACs began trading on the stock market last year, and the group's median performance has trailed the S&P 500 by 15 percentage points, according to the Reuters analysis of data from Refinitiv and research firm SPAC Research.” | | | | SUBSCRIBE TO "THE RECAST" TODAY: Power is shifting in Washington and in communities across the country. More people are demanding a seat at the table, insisting that 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 in 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. | | | | | | | | YELLEN DOWNPLAYS INTEREST RATE REMARKS — WSJ’s Kate Davidson: “Yellen played down comments suggesting the Biden administration’s spending plans might prompt the Federal Reserve to lift interest rates, saying ‘that’s not something I’m predicting or recommending.’ ‘I don’t think there’s going to be an inflationary problem, but if there is the Fed can be counted on to address it,’ she said Tuesday in an interview at The Wall Street Journal’s CEO Council Summit.” STILL NO RECESSION END DATE AS ECONOMY HUMS ALONG — Reuters’ Howard Schneider: “The U.S. economy is growing at its fastest rate since the early 1980s while household bank accounts are bulging with cash doled out by the federal government to blunt the impact of the coronavirus pandemic. Over 900,000 jobs were added in March and a Reuters poll of economists expects just under one million more for April, although some forecasters expect double that gain. “Is the United States still in recession? Common sense and a lot of data say no, but the Business Cycle Dating Committee, a panel organized by the National Bureau of Economic Research that acts as the official arbiter of U.S. recessions, has not yet pinned down an end date for the contraction it said started after February 2020, around the onset of the pandemic.” | | | | 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. | | | | | TRADE DEFICIT HIT RECORD $74.4B IN MARCH — AP’s Martin Crutsinger: “The U.S. trade deficit surged to a record $74.4 billion in March as an improving U.S. economy drove purchases of imported foreign goods. The deficit, the gap between what America buys from abroad and what it sells to other countries, was 5.6 percent greater than the February gap of $70.5 billion, the Commerce Department reported Tuesday.” CONSUMER LENDERS FACE A NEW CHALLENGE: EACH OTHER — WSJ’s Telis Demos: “Things are very good for consumer lenders right now. Maybe too good. Shares of lenders including credit-card, auto, student and personal loan makers have soared this year, thanks to strong credit performance and a belief that rates will tick higher. “For many of these stocks it isn’t hard to envision further gains as part of a broad recovery in consumer spending and credit demand. Firms such as Ally Financial, Capital One Financial, LendingClub and SLM all are up more than 40 percent so far this year, or roughly double the gain for S&P 500 financials overall.” CFPB: BLACK, HISPANIC HOMEOWNERS STRUGGLING MORE THAN WHITE BORROWERS — Reuters’ Katanga Johnson: “Black and Hispanic U.S. mortgage borrowers are much more likely to be delinquent or in a ‘forbearance’ program than white borrowers, highlighting how the Covid-19 crisis is exacerbating systemic racial disparities, according to new data from the Consumer Financial Protection Bureau. “In a pair of new reports published Tuesday analyzing 2020 mortgage complaints, the agency found that 33 percent of homeowners in mortgage holidays or ‘forbearance’ programs and 27 percent of delinquent borrowers, identify as Black or Hispanic, while only 18 percent of the total population of mortgage borrowers identify as Black or Hispanic.” And in case you missed it, Bloomberg has a great feature tracking the economic recovery in minority communities across the country. | | A message from Canadian Pacific: CP and KCS are better together.
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