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Presented by Altria: 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. | | | More crypto trouble — MM has banged on forever about massive asset inflation and the likelihood that many over-valued assets (from crypto to meme stocks and real estate) would eventually sink back to reality. The risk is all of it happening at once, which at this point doesn’t seem to be happening (quite thankfully). But Bitcoin and other digital assets are having some issues and there is likely more to come. Not that some of these assets aren’t valuable with strong long-term prospects. But the massive tide of free money has created many speculative pockets in markets that are going to deflate as the economy improves and central banks start to pump the brakes (more on that below.) Via Reuters: “Bitcoin and other digital assets languished in Asia on Thursday, recovering marginally from four-month lows but weighed down by concerns over tighter regulation in China and unease over massive leveraged positions in the cryptocurrency world. “Bitcoin, the biggest and most popular cryptocurrency, rose slightly to $38,072 after plunging 14% on Wednesday to its lowest since late January. … Wednesday's declines … were their biggest daily percentage moves in more than a year as investors rushed to exit trades that until recently were heartily outperforming traditional markets such as stocks and bonds.” Frantic selling — Crypto went through wild gyrations on Wednesday and into Thursday, something that is likely to continue in the coming months as economies and markets adapt to a post-Covid world in which the real economy re-establishes itself and armchair, hashtag investors wane as a dominant force. Via Bloomberg: “Frantic selling sparked outages on some of the biggest exchanges, from Coinbase Global Inc. to Binance. #Cryptotrading was trending on Twitter, where critics and fans alike were in a tither over the rout. “Tesla CEO Musk touched off the wild moves last week. Bitcoin plunged when he announced the carmaker wouldn’t take it as a payment, but then reversed when he said the company had no plans to sell its corporate crypto holdings. He seemed to imply in a tweet Wednesday that Tesla is not selling into the rout.” GOOD THURSDAY MORNING — Congrats to Corey Kluber on an incredibly exciting no hitter last night vs the Rangers. So close to a perfect game. No hitters may be slightly old hat in this dead ball season. But was still super sweet for this old Yankee fan. 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 Altria: Moving beyond smoking. Altria’s companies are leading the way in moving adult smokers away from cigarettes – by taking action to transition millions toward less harmful choices. We are investing in a diverse mix of businesses to broaden options beyond traditional, combustible cigarettes. See how we’re moving. | | | | | | President Biden this afternoon will sign the Covid-19 Hate Crimes Act into law in the East Room … Senate Banking has a hearing at 10:00 a.m. on “21st Century Communities: Expanding Opportunity Through Infrastructure Investments” featuring HUD Secretary Marcia L. Fudge and Transportation Secretary Pete Buttigieg … Jobless claims at 8:30 a.m. expected to tick up a bit to decline a bit more to 450K from 473K … THE BIG IDEA: IS THE FED WAY BEHIND? — Mohamed A. El-Erian on Bloomberg Opinion: “A once-unthinkable notion is becoming possible: The [ECB] may start talking about ratcheting back easy-money policies before the [Fed] … Even more curious is that this would not be the result of the usual policy drivers relating to inflation, growth, financial stability and fiscal policy. “Rather, it would reflect a Fed-specific duality happening now: Not only does the U.S. central bank appear to be to lagging behind developments on the ground and the emerging consensus among some other central banks, but it’s also being held hostage to a monetary framework that, while designed to capture structural change, risks being ill-suited for the Covid-disrupted world.” LEFT WORRIES ABOUT CHINA STANCE — Our Gavin Bade: “Biden and congressional leaders are eager to take a hard stance on China. But some left-leaning Democrats and activists are lobbying for a softer touch, worried new anti-China policies will inflame racism against Asian Americans and lead to an unending conflict with Beijing akin to a new Cold War. “More than 60 activist groups and at least four prominent lawmakers are stepping up their criticisms as the Senate pushes through this week a package of anti-China bills that enjoy backing from members of both parties and the White House. Any coordinated opposition could gum up the ongoing amendment process on the Senate floor, or throw a wrench in future efforts to reconcile the measure with the House’s slower-moving initiatives against China.” BROWN PRESSES OCC — Our Victoria Guida: “Senate Banking Chair Sherrod Brown … urged the Biden administration’s new bank cop to halt regulatory moves that make it easier for cryptocurrency companies to operate nationally, signaling a new Washington crackdown on Bitcoin and other digital assets. “In a letter to the Office of the Comptroller of the Currency , which regulates national banks, the Ohio Democrat warned against granting federal charters to companies trying to expand access to ‘risky and unproven’ digital assets and technologies. He asked acting Comptroller Michael Hsu, appointed by Treasury Secretary Janet Yellen last week, to reconsider recent decisions to let three crypto firms — Paxos, Protego and Anchorage — become national trust banks.” MOST TRUSTED IN FINANCE — Via Morning Consult this a.m.: Per daily brand intelligence tracking of over 200,000 Americans, in addition to a 4,400 person survey on the topic: “While consumers air on the side of trusting banks, payment providers dominate the list of most trusted financial services brands. Visa, MasterCard, PayPal are in the top three slots, and Chase was the only banking brand to make the top 15 list.” | | | |   | | | | | | WALL STREET REMAINS LOWER — Reuters’ Noel Randewich and Echo Wang: “Wall Street's main indexes remained lower on Wednesday after minutes from an April Federal Reserve meeting showed participants agreed the U.S. economy remained far from the central bank's goals, with some eyeing a future discussion of tapering its bond buying program. "The S&P 500 added to losses after the release revealed a number of Fed policymakers thought that if the economy continued rapid progress, it would become appropriate "at some point" in upcoming meetings to begin discussing a tapering of the Fed's monthly purchases of government bonds, a policy designed to keep long-term interest rates low.” BITCOIN FALLS AS MUCH AS 30 PERCENT — WSJ’s Paul Vigna, Alexander Osipovich and Anna Hirtenstein: “Bitcoin, the volatile digital currency that briefly became a trillion-dollar market, plunged Wednesday as its monthlong slide morphed into a frenzied selloff. Cryptocurrencies have surged over the past year on a wave of speculative excitement, spurred by famous backers as varied as Elon Musk, Paul Tudor Jones and Snoop Dogg.” But why has the price of Bitcoin been falling? — AP: “On Wednesday, a statement posted on the Chinese Banking Association’s website said financial institutions should “resolutely refrain” from providing services using digital currencies because of their volatility. “Virtually every cryptocurrency fell after the industry group’s statement. As of 4:15 p.m. eastern time Wednesday, Bitcoin was down more than 7 percent at around $40,310 per coin. Most cryptocurrencies lost between 7 percent and 22 percent of their value and shares of Coinbase dropped 5.4 percent.” | | | | SUBSCRIBE TO WEST WING PLAYBOOK: Add West Wing Playbook to keep up with the power players, latest policy developments and intriguing whispers percolating inside the West Wing and across the highest levels of the Cabinet. For buzzy nuggets and details you won't find anywhere else, subscribe today. | | | | | | | | FED SIGNALS EVENTUAL SHIFT FROM EASY-MONEY PANDEMIC POLICIES — WSJ’s Paul Kiernan and Michael S. Derby: “The Federal Reserve has begun to telegraph an eventual shift away from the easy-money policies implemented during the pandemic as evidence builds of a robust economic recovery and mounting inflation.” Fed officials also cautioned about inflation pressures in April — AP’s Martin Crutsinger: “The U.S. economy’s faster-than-expected awakening from its pandemic-induced slumber had some Federal Reserve officials last month discussing whether it might be time to start planning for easing back on one of the central bank’s levers for keeping interest rates low. “The discussions, revealed in the minutes of the Fed’s April meeting released Wednesday, marked the first time the central bank has even hinted that the time could be approaching to consider reducing the Fed’s $120 billion monthly bond purchases. The purchases have the effect of putting downward pressure on long-term interest rates.” CITI ECONOMIC SURPRISE INDEX COULD CLOSE NEGATIVE FOR FIRST TIME IN NEARLY A YEAR — Bloomberg’s Joe Weisenthal: “Citi’s Economic Surprise Index — which measures the degree to which economic data is either beating or missing expectations — is at its lowest level in nearly a year. And if we have a few more disappointments, it could go negative. The last time it was this low was early June of last year. “When you think about the incredible stock-market rally that we’ve seen since last spring, you could argue that one of the drivers has been perennial underestimation of the recovery. Very few people believed things would rebound so fast. And everyone has always been waiting for some other shoe to drop.” BANKS ALWAYS BACKED FOSSIL FUELS OVER GREEN PROJECTS (UNTIL THIS YEAR) — Bloomberg’s Tom Quinson and Mathieu Benhamou: “In more than five years since the world agreed to limit warming temperatures, banks have poured more than $3.6 trillion into fossil fuel — almost three times more than total bonds and loans backing green projects, according to Bloomberg data. Now this enduring disparity favoring oil, gas and coal producers might finally be at an end. | | | | A message from Altria: Moving beyond smoking. Altria’s companies are leading the way in moving adult smokers away from cigarettes. Today, we are taking action to transition millions toward less harmful choices.
From cigarettes to innovative alternatives. By investing in a diverse mix of businesses, Altria is working to further broaden options. Our companies are encouraging adult smokers to transition to a range of choices that go beyond traditional, combustible cigarettes.
From tobacco company to tobacco harm reduction company. And while Altria is moving forward to reduce harm, we are not moving alone. We are working closely with FDA and other regulatory bodies, and will work strictly under their framework.
See how we’re moving. | | | | | | NEW ON THE BOOKSHELVES — Please do check out the great @zacharykarabell’s new book “Inside Money: Brown Brothers Harriman and the American Way of Power,” a fascinating look at one of the most storied and controversial houses on Wall Street. NEW FROM CBA — CBA today along with IFA, NAWBO, and USHCC are launching a new initiative — the Small Business Spotlight — “to showcase how banks and small businesses worked together to save jobs, support their communities, and drive America’s economic recovery throughout the course of this pandemic.” TRANSITIONS — Per Talking BizNews: “The Financial Times has hired Joshua Franklin as its U.S. banking editor. He started this week. He previously was at Reuters covering mergers and acquisitions, initial public offerings and corporate finance since May 2019.” [This was MM’s old job!] | | | | 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. | | | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
