News: Biden's very good, not great economy — Huge eviction moratorium fight

Friday, July 30, 2021

Biden's very good, not great economy — Huge eviction moratorium fight — R.I.P. Carl Levin

Jul 30, 2021

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Quick Fix

The very good, not great Biden economy — Let's be fair. President Joe Biden got a really strong initial second quarter growth estimate at 6.5 percent, annualized. The full year looks to be close to 7 percent and the economy is now slightly bigger than it was before the Covid freeze (though not where it would be absent the pandemic). These are Reaganesque, 1980s boom kind of numbers.

And yet… it came in a full 2 percent below Wall Street expectations, a performance that underscores the forces dragging on growth. And the April-June expansion — which mirrored the lower-than-expected job-creation numbers in recent months — could be the high point for Biden, whose presidency is riding on a robust economic rebound.

WHITE HOUSE KNOWS THE DELTA STAKES — Per a person familiar with White House thinking: "We've known since this thing started going around the globe in late 2019 that the most important thing was getting Covid fully under control … If you don't, you risk further mutations and going back to square one. It's everything. It's the whole ballgame."

White House officials say that while they are concerned with the Delta variant, inflation and labor market issues, they remain confident in the overall direction of the economy.

David Kamin, deputy director of the White House National Economic Council: "We now have tools that we did not have before to address the new variant both in terms of health and economic effects …

Kamin added that the "pandemic combined with supply chain bottlenecks have created some real challenges. But we are obviously focused on doing everything we can to resolve them while making investments to address long-standing weaknesses in the economy."

No need to freak out – Goldman's Jan Hatzius in a client note: "The three pillars underlying our view that vaccinations will further drive a strong global recovery remain intact. First, we expect the world to produce 13bn vaccine doses this year, all providing solid protection against severe disease.

"Second, rising immunity leads to substantial easing in our GS Effective Lockdown Index … [H]owever, we expect the remaining part of the service sector recovery to be less rapid than the early stages."

GOOD FRIDAY MORNING — Felt like a monster week. Get some rest. 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:

Helping prevent youth access. Kids shouldn't use any tobacco products. While underage use of traditional tobacco products is at historic lows, more must be done to address underage vaping. That's why Altria strongly supported legislation to raise the minimum age for all tobacco products to 21. See how we're moving.

Driving the day

R.I.P. CARL LEVIN — The Michigan senator was a relentless corporate investigator who could actually freak out cocky top Wall Street executives. Also just a tremendously nice guy.

Via CBS in 2010 : "Levin (D-Mich.) channeled his frustrations with Goldman Sachs witnesses at a Senate Permanent Subcommittee on Investigations hearing today by repeatedly invoking an e-mail containing the phrase 'shitty deal' over a ten minute period.

""Levin was questioning Daniel Sparks on whether Goldman Sachs was pushing investments it knew were bad for clients. He referenced an e-mail sent to Sparks from his superior on a deal called Timberwolf."

EVICTION MORATORIUM FIGHT — Inbox via a D.C. source noting House Leadership sent around a whip notice about maybe voting on an eviction moratorium extension through December 31st.

Via our Katy O'Donnell: "House Democratic leadership on Thursday struggled to build support for a five-month extension of the nationwide eviction moratorium that's set to lapse this weekend after running into opposition from more than a dozen Democratic lawmakers …

"With the ban set to expire Saturday and millions of Americans at risk of losing their homes, House Majority Leader Steny Hoyer (D-Md.) confirmed that Democrats in favor of extending the moratorium were still working to lock down backing for a possible last-minute vote Friday."

GOP REACT ON THE ECONOMY — Ways and Means ranking member Kevin Brady "Biden fell short of his own favored economic forecast, Moody's, which predicted 6.4 percent growth and 9.6 percent growth for the first and second quarters of 2021 …

"[I]n reality, actual GDP growth for these quarters was 6.3 percent and 6.5 percent. We only reached the target for the first quarter three months later.

HWANG'S BIG MONEY — CNBC's Brian Schwartz: "A charity founded by Bill Hwang, a longtime financial executive under scrutiny for a round of trades that sent the market into a tailspin, saw its assets soar by more than $100 million just two years prior to the meltdown on Wall Street.

"The new 990 tax returns of Hwang's Grace and Mercy Foundation from 2019, which have gone unreported since they were only made public recently by the Internal Revenue Service, give the most current glimpse into Hwang's financial resources."

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

Markets

WALL STREET PUSHES BROADLY HIGHER AFTER TWO DAYS OF LOSSES — AP's Damian J. Troise and Alex Veiga: "Stocks on Wall Street bounced back from a two-day slide Thursday, placing the S&P 500 on pace for its second straight weekly gain. The S&P 500 index rose 0.4 percent, powered by broad gains.

"About 77 percent of the stocks in the benchmark index closed higher. Technology stocks and banks made some of the biggest gains, along with a wide range of retailers and other consumer-oriented companies. Only communication services stocks and real estate companies fell. The modest rally came as the latest government data showed continued economic growth and investors reviewed another batch of mostly positive corporate earnings reports."

ROBINHOOD FALLS IN PUBLIC MARKET DEBUT — CNBC's Maggie Fitzgerald: "Shares of Robinhood closed down more than 8 percent in its Nasdaq debut, after pricing near the low end of its IPO range. The online brokerage started trading at $38 per share, the low end of its range, valuing the company at roughly $32 billion. After dropping as much as 10 percent and ending the session at $34.82, Robinhood's market capitalization was about $29 billion."

SOME TREASURY BILLS LIKELY TO BE SHUNNED AS DEBT CEILING COMES BACK INTO FORCE — Reuters' Karen Brettell: "U.S. Treasury bills maturing this fall could face liquidity problems tied to a potential government cash crunch, which could happen if politicians delay or fail to renew the United States' borrowing authority after the debt ceiling returns at the end of the week.

"The Treasury has been cutting bill issuance before its two-year debt ceiling suspension is due to expire on July 31. The government is expected to be able to get by until October or longer by using extraordinary measures, which may include suspending some investments and security issuance."

A message from Altria:

Kids shouldn't use any tobacco products. Today, underage use of traditional tobacco products is at historic and generational lows, but more must be done to address underage vaping rates.

Raising legal age restricts access. In addition to our longstanding efforts to keep tobacco out of kids' hands, we strongly supported legislation to raise the minimum age of purchase for all tobacco products to 21, nationwide. And we are offering retailers incentives for using age verification technology that can make sure retail remains a trusted place to responsibly sell tobacco products.

Continuing our commitment to responsibility. Operating responsibly is our number one priority. We are committed to continue our work with multiple stakeholders to drive down underage use and maintain the opportunity in potential harm reduction that non-combustible tobacco products hold for adult smokers 21+.

See how we're moving.

Fly Around

ECONOMY RECOVERS PANDEMIC LOSSES, BUT FACES NEW TEST — NYT's Ben Casselman: "Vaccinations and federal aid helped lift the U.S. economy out of its pandemic-induced hole in the spring. The next test will be whether that momentum can continue as coronavirus cases rise, masks return and government help wanes

COVID RECOVERY DRIVES CREDIT RATING UPGRADES TO RECORD HIGH — Reuters' Marc Jones: "The strong economic recovery in the United States has led to a record number of corporate credit rating upgrades this year, figures from S&P Global showed on Thursday. "

SENATE BILL AIMS TO CREATE NATIONAL DATABASE OF RESTRICTIVE PROPERTY COVENANTS — NYT's Joshua Jamerson: "A new bill backed by a slate of Senate Democrats would allocate competitive grants to colleges and universities to analyze, digitize and map historic housing discrimination records, creating the first national database of its kind.

"The focus of the effort is to research covenants attached to housing deeds, which emerged nationwide around the early 20th century, that made it harder for Black people in many cities to own property."

CRYPTO SURPRISE RATTLES INDUSTRY IN RARE BIPARTISAN TAX PLAN — Bloomberg's Laura Davison, Joe Light and Allyson Versprille: "A Senate proposal to ramp up IRS surveillance over cryptocurrency transactions has the industry and investors questioning the plan's viability and its promise of generating $28 billion in tax revenue.

"Cryptocurrency exchanges, investors and their advisers were caught off guard Wednesday when a bipartisan Senate infrastructure agreement was released that included a large-scale increase in the requirements for crypto brokers and investors to report their transactions to the Internal Revenue Service. "

REPORT: CREDIT SUISSE FAILED TO ACT ON ARCHEGOS RISKS — WSJ's Margot Patrick: "Credit Suisse Group AG knew Archegos Capital Management was a massive risk and didn't take actions to fix it, according to an investigation the bank commissioned into the collapse of the family investment firm.

"The report released Thursday, prepared by a law firm for Credit Suisse, detailed how the bank for years granted Archegos special dispensation to avoid rules meant to protect the bank. It also ignored staff warnings before the family investment firm's collapse."