| | | | | |  | | By Ben White and Aubree Eliza Weaver | Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our subscribers 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. | | | Yellen for Powell? — Treasury Secretary Janet Yellen has indicated to senior White House officials that she believes Federal Reserve Chair Jerome Powell deserves renomination to a second term, two people familiar with the matter told MM over the weekend. The sources cautioned that Yellen's comments did not necessarily amount to an official endorsement of Powell. But they said the Treasury secretary, who served as Fed Chair before Powell, has told senior White House officials she believes Powell is doing an excellent job and does not see a need to replace him when his term expires early next year. Bloomberg News first reported that Yellen had endorsed Powell for another term. A Treasury spokesperson declined to comment. The White House also declined to comment. President Joe Biden is expected to make a decision on Powell sometime this fall. He is under some pressure from progressives to move on from Powell, A Republican nominated by former President Donald Trump to replace Yellen. The White House is looking at multiple potential candidates . But should Biden choose to replace Powell, the front-runner remains Lael Brainard, a current Fed governor who served in senior roles at Treasury during the Obama administration. Yellen's backing would be a strong boost to Powell given the Treasury secretary's history in the job, credentials with progressive Democrats and seniority in the administration. React — Better Markets' Dennis Kelleher emails: "Yellen's reported support for Powell is odd in light of his unprecedented and aggressive lobbying for Trump to baselessly fire her; his working with Mnuchin after Biden was elected to deprive the new administration of CARES Act funds; his flip-flopping from supporting financial regulation/supervision during Obama to opposing it during Trump; his refusal to recognize the systemic/safety and soundness threat of the climate crisis; etc." Revolving Door's Jeff Hauser emails : "Not surprising. Yellen has been a very risk averse, macro-economy focused Treasury Secretary, while we believe her Department should be operating more aggressively on distinct, parallel tracks which of course includes macro but is not artificially limited to such concerns. … "So yeah, we think Yellen is being risk averse status quo friendly, and depending on whether you focus solely on labor market trends or also care significantly about the trajectory of wealth and racial equality or the climate, that may or may not make sense to you." GOOD MONDAY MORNING — Nice to be back with you after a brief break that ended with a massive soaking from (former) Tropical Storm Henri. 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. | | | | INTRODUCING OTTAWA PLAYBOOK : Join the growing community of Politicos — from lawmakers and leaders to pollsters, staffers, strategists and lobbyists — working to shape Canada's future. Every day, our reporting team pulls back the curtain to shed light on what's really driving the agenda on Parliament Hill, the true players who are shaping politics and policy across Canada, and the impact it all has on the world. Don't miss out on your daily look inside Canadian politics and power. Subscribe to Ottawa Playbook today. | | | | | | | | The House comes back and Speaker Nancy Pelosi will try to keep moderates and progressives in her party in line to move ahead with both the bi-partisan infrastructure bill and the much larger $3.5 trillion budget resolution … Biden will continue to deal with fallout from the ugly exit from Afghanistan that along with the Covid surge is dinging his approval ratings (more below) … Biden has a virtual meeting with G-7 leaders on Tuesday to talk about Afghanistan … Biden on Thursday welcomes Israeli Prime Minister Naftali Bennett. BIDEN TAKE A DIP IN POLLS — Our Steven Shepard: "Biden's honeymoon with the American people is over. As many Americans disapprove of Biden's job performance as approve, according to two new polls out Sunday — a precipitous decline for the new president after he spent his first half-year in the White House with high job ratings. "Half of Americans, 50 percent, approve of the way Biden is handling his job as president in the CBS News poll — but the same number, 50 percent, disapprove of Biden. In the NBC News poll, Biden's approval rating is 49 percent, compared to 48 percent disapproval." THE DAMAGE — "Both polls show declines in views of Biden, whose presidency has been besieged by twin crises in recent weeks: a resurgence of the coronavirus domestically, and the rocky withdrawal of U.S. military personnel and other Americans from Afghanistan ahead of Biden's looming deadline. Biden's approval rating slid 8 points in the CBS poll since July, and it's down 4 points since the last NBC News survey, in April." ARE WE AT PEAK DELTA? — Pantheon's Ian Shepherdson: "We're going to stick our neck out today and argue that peak Delta is quite close, both in terms of the daily case numbers and the impact on markets. "We aren't epidemiologists, but we have some facility with statistics and we have been tracking the Covid data in the U.S. and the rest of the world very closely for the past 18 months. "And what we're seeing in the U.S. data is encouraging, at least from a second-difference perspective. The number of cases nationally is still rising, but the rate of increase has slowed sharply … Extrapolation carries risks, but we think the rate of growth is on track to hit zero by the end of the month" | | | WHAT WE STILL DON'T KNOW ABOUT THE FED'S BUYING SPREE — WSJ's James Mackintosh: "Three vital issues for investors remain uncertain as the Federal Reserve moves toward tapering its bond buying. Will this quantitative tightening mean Treasury yields go up or down? Will stocks do better with rising or falling bond yields? "And, a linked issue, is the stock-bond relationship that has held for the past three decades going into reverse? Few people share my first uncertainty, because it seems so obvious that if the Fed buys fewer Treasurys, the price will drop and hence the yield rise. It is basic supply and demand, goes the response: Duh." INVESTORS STICK TO STOCKS, BUT GEAR UP FOR A BUMPIER RIDE — Reuter's Saqib Ahmed: "Investors are preparing for a rockier ride ahead for markets, as worries over slowing growth, a looming rollback of the Federal Reserve's easy money policies and a global COVID-19 resurgence threaten a rally that has seen the S&P 500 double from last year's lows. "Signs of caution abound, even as U.S. stocks hover near record highs. Goldman Sachs economists recently lowered their tracking estimate of U.S. economic growth in the third quarter to 5.5 percent from 9 percent due to the impact of the Delta variant, while fund managers surveyed by BofA Global Research said they boosted cash overweights to the highest level since October 2020 while adding to positions in defensive sectors such as healthcare and utilities." | | | ICYMI: FED MOVES JACKSON HOLE MEETING ONLINE — Reuters' Ann Saphir and Howard Schneider: "The Federal Reserve Bank of Kansas City said on Friday its annual economic symposium in Jackson Hole, Wyoming, will take place on Aug. 27 virtually and not in person as planned, the clearest sign yet of the impact of the COVID-19 Delta variant on the Fed's plans. "'While we are disappointed that health conditions will prevent us from being able to gather in person at the Jackson Lake Lodge this year as we had planned, the safety of our guests and the Teton County community is our priority,' said Kansas City Fed President Esther George in a statement, citing the recently elevated COVID-19 health risk level in Teton County." GOLDMAN, BOFA SEE LOST DECADE OVER FOR EMERGING MARKETS — Bloomberg's Farah Elbahrawy, Ben Bartenstein and Srinivasan Sivabalan: "Elevated commodity prices and expectations for earnings growth are igniting bullish bets on emerging-market equities after more than a decade of underperformance that left them approaching a 20-year low against developed-nation stocks. "Goldman Sachs Group Inc., Bank of America Corp. and Lazard Asset Management expect a boost for developing equities as investors capitalize on cheap valuations once vaccine rollouts pick up, helping the global economy to recover from the pandemic. South Africa, Russia and Brazil are among markets set to benefit, even as China's regulatory crackdown continues to weigh on Asian equities." BANKS, MONEY-TRANSFER FIRMS TREAD CAREFULLY IN AFGHANISTAN — WSJ's Ian Talley and Orla McCaffrey: "Two major U.S. money-transfer services have suspended payments into Afghanistan, and American banks are more closely scrutinizing transactions with Afghan counterparts, as they await clarity on whether U.S. sanctions on the Taliban apply across the nation now that the Islamist group is in control. "The result could deepen the country's financial crisis in the near term and, if sanctions apply more broadly to any business dealings with the Taliban-controlled nation, Afghanistan could join North Korea and Iran as pariahs in the international financial system." | | | WEEKEND WEDDING — Michelle Rizzi, a producer at marketing agency Collectively, and Sam Giber, a partner at venture capital fund Blisce, were married at The Inn at Rancho Santa Fe in San Diego. The couple will reside in NYC. TRANSITIONS — Jae Jang is now Policy Advisor to Rep. French Hill (R-Ark.) to help with his work on the Financial Services Committee and as the top Republican on the Housing and Insurance subcommittee. He was most recently Assistant Vice President at Rich Feuer Anderson, a bipartisan government affairs firm. | | | | Be a Policy Pro. 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