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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 Sam Sutton | 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 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.
| | Two things have been true over the last few weeks.
- There is a growing sense on Wall Street and around Washington that inflation can fall close to the Federal Reserve's 2 percent target without the economy slipping into a recession.
- There is a growing collection of largely unrelated threats that could combine to muck things up.
For Washington, a government shutdown is what’s most top of mind. As Jasper Goodman explained on Thursday, markets are likely to shrug off the effects unless things stay very bad for very long (certainly a possibility). Those shoulders will stay hunched if a lengthy shutdown is layered with any deleterious effects from the United Auto Workers strike, rising oil and gas costs, the resumption of student loan payments, a child care funding cliff as well as — of course — tightening credit conditions and higher borrowing costs. Would the cumulative effects of these factors lead to an economic slump? No, not necessarily. But it’s hard to tapdance through the rain without getting a little wet. And while Washington policymakers have few tools to fight off certain threats, they do have a role to play. “The good news is that the economy is internally robust,” said Mohamed El-Erian, president of Queens' College, Cambridge and chief economic adviser at Allianz, who thinks skeptics have been “sidelined” in the growing economy. “The bad news is it can be derailed by mistakes, from a politically-driven shutdown to another Federal Reserve policy error.” Your host — along with Zach, Jasper and Eleanor Mueller — has a story this morning that dives into the political and economic consequences if Washington power brokers misread those risks. Could that happen? “Confidence in Washington has been as low as I've ever seen it,” Jeffrey Buchbinder, the chief equity strategist for the investment management firm LPL Financial, told MM. “And it's been low for as long as I've been in this business.” IT’S FRIDAY — Who knows? Maybe D.C. will come out of this looking like Gene Kelly and Debbie Reynolds. Your host would settle for Donald O’Connor. Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com
| | A message from Sallie Mae®: Students and families borrow nearly $100 billion in federal student loans each year but that should never be the first option. We need to connect more students to scholarships and grants and simplify financial aid offers to limit overborrowing and help families make informed decisions about paying for college. Learn more about common sense reforms to the federal higher education financing system. | | | | | Fed Gov. Lisa Cook delivers keynote remarks at the National Bureau of Economic Research's Fall 2023 Economics of Artificial Intelligence Conference at 8:50 a.m. .… Boston Fed President Susan Collins speaks at 10 a.m. … Minneapolis Fed President Neel Kashkari speaks at 1 p.m. … San Francisco Fed President Mary Daly speaks at 1 p.m. Swell — Our Katherine Tully-McManus has a story about Speaker Kevin McCarthy’s entrapment in a “vicious cycle. Every day this week, he has unveiled a new strategy to move forward on funding the government. And every day, he has been thwarted by a small but powerful group of opponents in his own party.” — On Thursday, GOP hardliners blocked McCarthy from bringing the party’s defense bill to the floor, Sarah Ferris and Jordain Carney report. — Caitlin Emma reports that The Office of Management and Budget plans to tell federal agencies on Friday to update their shutdown contingency plans if they haven’t already, an OMB official tells us. That directive from the White House budget office is a pretty standard exercise about a week before federal cash is set to expire, whether or not it looks like Congress is poised to stave off a funding lapse. Updated agency plans will be posted here.
| | | | GO INSIDE THE CAPITOL DOME: From the outset, POLITICO has been your eyes and ears on Capitol Hill, providing the most thorough Congress coverage — from political characters and emerging leaders to leadership squabbles and policy nuggets during committee markups and hearings. We're stepping up our game to ensure you’re fully informed on every key detail inside the Capitol Dome, all day, every day. Start your day with Playbook AM, refuel at midday with our Playbook PM halftime report and enrich your evening discussions with Huddle. Plus, stay updated with real-time buzz all day through our brand new Inside Congress Live feature. Learn more and subscribe here. | | | | | GOP fractured on SAFE Banking — Eleanor and Natalie Fertig: “Republican supporters of bipartisan cannabis banking legislation are scrambling to shore up GOP backing after a key House conservative blasted the bill. At the heart of the conflict is a section of the legislation that would restrict the ability of regulators to force banks to close customer accounts for reasons of reputational risk.” Another run — Bloomberg’s Jonathan Tamari: “David McCormick, former CEO of the hedge fund Bridgewater Associates, launched a US Senate bid in Pennsylvania Thursday, thrilling national Republicans who see him as their best chance to flip a crucial swing seat.” — A large roster of Wall Street elites were at a Hamptons party for McCormick hosted by fashion designer Tory Burch last month, CNBC’s Brian Schwartz reports. McCormick, who’s expected to announce a bid for the GOP nomination to take on Sen. Bob Casey (D-Pa.), was celebrated by a guest list that included Goldman Sachs CEO David Solomon as well as bank alums Lloyd Blankfein, Steven Mnuchin and Gary Cohn, according to Schwartz.
| | | | A message from Sallie Mae®:   | | | | | “Higher for longer” — Reuters’s Karen Brettell: “Benchmark 10-year U.S. Treasury yields rose to 16-year highs on Thursday, a day after the Federal Reserve surprised investors by flagging the potential for an additional rate hike, and an expectation for fewer cuts next year.” — Bloomberg’s Jess Menton: “Stocks had been able to withstand higher rates for months as investors plowed cash into big technology firms. But the latest move in Treasuries, sparked by the Federal Reserve’s signal that policy rates will remain elevated well into next year, has forced a reconsideration of investment theses across Wall Street.” — The WSJ’s Gina Heeb: “Higher-for-longer rates are starting to exact a toll on households that need to borrow now, especially for major purchases such as homes and cars. Those who have to rely on credit-card debt, where rates rise along with the market interest rates, are also feeling the bite.”
| | | | HAPPENING 9/28 — INSIDE THE CANCER MOONSHOT: Join POLITICO on Thursday, Sept. 28 for an in-depth discussion on the future of cancer treatment and innovation. Hear from experts including scientists, government officials and industry leaders as we explore the critical roles played by private industry, nonprofits, the National Cancer Institute and the new Advanced Research Projects Agency for Health in achieving the Biden administration's goal of cutting the cancer death rate in half over the next 25 years. Don't miss this opportunity to dive into the progress of cancer treatments and learn about the challenges patients encounter in accessing care. REGISTER HERE. | | | | | | | | | Khan takes on PE — Our Josh Sisco: The FTC’s lawsuit against U.S. Anesthesia Partners, one of the largest anesthesiology providers in the country, and its backer Welsh, Carson, Anderson & Stowe “is a warning shot to the private equity industry, which often seeks to consolidate fragmented industry sectors through a series of acquisitions known as roll-ups.” Medical debt — Our Katy O’Donnell: “The Consumer Financial Protection Bureau is developing a rule to bar credit reporting companies from including medical debt in consumer reports, the White House announced Thursday.” Su Stays — Our Nick Niedzwiadek “The Biden administration is not violating any federal law by allowing acting Labor Secretary Julie Su to serve indefinitely despite her stalled Senate nomination, according to a Government Accountability Office report issued Thursday.”
| | A message from Sallie Mae®: The federal higher education system does too much for too many and not enough for those who need the most assistance. Some federal lending programs allow students and families to borrow virtually unlimited amounts to pay for higher education, a policy that has driven up both student loan debt and the cost of tuition. In fact, federal debt for graduate students has reached an all-time high, according to the U.S. Department of Education. Read more about solutions for limiting overborrowing and reducing federal student debt. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
