| | | | |  | | By Sam Sutton | Presented by Citi | 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 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.
| | The pundits weren’t the only ones who thought Kamala Harris walked away with a victory in the presidential debate. A handful of market signifiers pointed to diminished confidence in a Donald Trump victory. Shares of the parent company of his social media network, Truth Social, tumbled after the debate. Bitcoin — a currency that the former president has championed — sank overnight. Harris’s odds improved in political betting markets. Even billionaire Howard Lutnick, the CEO of the investment bank Cantor Fitzgerald and the co-chair of Trump’s transition team, conceded that Harris “outperformed her expectations, she did a nice job” during an appearance on Bloomberg on Wednesday morning. (He went on to say that Trump “hit every point.”) What’s more relevant to financiers and investors is that she’s charting a more moderate course than many private sector leaders had assumed when she became a late-inning substitute atop the Democratic ticket, said Eurasia Group President Ian Bremmer, who regularly consults top business leaders on political risks. There isn’t much distance between her positions and those of Joe Biden and — while there are plenty of concerns about Biden administration policies in financial services, particularly around regulation — she is “doing her damnedest to let those people know” that she’s willing to move to the center on issues like taxation and immigration. “It's helping to create some funders for her [campaign] that she otherwise wouldn't have gotten,” Bremmer told MM. “I think that does matter at the margins.” Just as importantly, she also hit Trump repeatedly for failing to adhere to the rule of law. Those attacks have not been particularly effective with the broader electorate — and many top Republican donors set those concerns aside earlier in the race — but they still linger for Wall Street centrists who remain put off by his efforts to overturn the 2020 election. “It's what worries [business leaders] most about a Trump administration … They are concerned about what might happen if you overly politicize the DOJ, the FBI, the IRS,” Bremmer said. “They need that level of systemic rule of law that is seen to operate and believed in by Americans and others around the world to have an effective, frictionless investment environment, work environment and business environment.” IT’S THURSDAY — If you have tips or suggestions, send them my way ssutton@politico.com.
| | Senate Banking holds a hearing on payment fraud at 10 a.m. … Senate Finance holds a hearing on tax reform at 10 a.m. … House Financial Services ranking member Maxine Waters (D-Calif.) speaks at the Congressional Black Caucus’ annual conference at 12 and 3 p.m. … The Hudson Institute holds a hearing on the federal debt at 12 p.m. … House Financial Services Chair Patrick McHenry (R-N.C.) speaks at the Cato Institute’s conference on financial privacy at 2 p.m. What Trump’s reading — Trump doesn’t want Federal Reserve Chair Jerome Powell to cut interest rates before the election. But when the Federal Open Market Committee meets next week — its last meeting before Nov. 5 — plenty of Republicans on the Hill are saying the Fed should move ahead ASAP, Jasper Goodman and Eleanor Mueller report. “It is time for a rate cut,” said Sen. John Kennedy of Louisiana. “This economy — particularly the labor market — is softening very, very, very quickly.” — More from Jasper and Eleanor: “The disconnect between Trump and fellow Republicans on the Fed reveals uncoordinated messaging on the state of the economy. The forces compelling the Fed to cut are signs that the economy is softening under President Joe Biden, which is how GOP lawmakers are choosing to frame the issue as they back the decision to lower rates.” First in MM: No Gruenberg — Federal Deposit Insurance Corp. Chair Martin Gruenberg won’t be appearing at a House Financial Services hearing on the agency’s progress in implementing reforms to repair its allegedly toxic workplace. Gruenberg, who has already said he would resign once a successor is confirmed, was among the senior leaders at the agency implicated in the scandal. He had been tentatively scheduled to appear in front of the committee on Sept. 19. “Your refusal to appear is unacceptable,” House Financial Services Chair Patrick McHenry (R-N.C.) said in a letter shared with MM. “The Committee and the American people deserve an explanation as to why you are pushing a harmful, progressive agenda when serious cultural issues still plague the FDIC.” The FDIC declined to comment. Stop on the stopgap — House Speaker Mike Johnson of Louisiana was forced to pull a stopgap government funding bill on Wednesday amid crumbling GOP support. A shutdown at the end of the month remains unlikely, per POLITICO’s Caitlin Emma and Olivia Beavers, but it reflects the challenges Johnson has repeatedly faced with a narrow and fractured majority. "We are going to continue to work on this. The whip is going to do the hard work to build consensus and work on the weekend on that," Johnson said, adding that they are having "family conversations" about it.
| | A message from Citi: The global healthcare system is in need of a checkup. Life expectancy in many western countries has stalled over the past 15 years, while healthcare costs are rising to potentially unsustainable levels. The new Citi GPS Report, Future of Healthcare, sheds light on key strategies that could revolutionize our healthcare system – such as restructuring healthcare delivery and harnessing data-integrated digital technology. Learn more here. | | | | | Tim Scott’s housing plan — Sen. Tim Scott (R-S.C.) introduced a bill that would make major structural changes to federal housing programs in an attempt to bring down costs, Katy O’Donnell reports. The proposed changes include eliminating caps on a program that converts public housing units to Section 8 project-based assistance. First in MM: House Republicans probe GSIB capital surcharge — A dozen House Republicans on Wednesday sent a letter to Powell requesting more information about the central bank's role in greenlighting lower capital surcharges on European global systematically important banks, Eleanor reports. "Given the opaque nature of Federal Reserve interactions with global governance bodies such as the [Basel Committee on Banking Supervision] and [Financial Stability Board], including the Federal Reserve’s concession within BCBS deliberations to lower capital for some large European banks without the required public consultation, please provide responses," the lawmakers, led by Rep. Andy Barr (R-Ky.), wrote. They asked for more information on the Fed's reasoning, including why the central bank signed off on the cuts and why it did not call for more transparency. "We have received the letter and plan to respond," a Fed spokesperson said in a statement. Dimon on the Hill — POLITICO’s Gavin Bade spotted JPMorgan Chase CEO Jamie Dimon walking into a meeting room off the Senate floor on Wednesday. He was told by a staffer that it was for a private meeting with the Community Development Finance Caucus, led by Sens. Mark Warner (D-Va) and Mike Crapo (R-Idaho). Deputy Commerce Secretary Don Graves and Deputy Treasury Secretary Wally Adeyemo were also spotted entering the meeting.
| | | | A message from Citi:   | | | | | Inflation, inflation, inflation — The Labor Department reported on Wednesday morning that the Consumer Price Index showed that prices climbed at an annual rate of 2.5 percent in August. As White House National Economic Adviser Lael Brainard noted, that’s “close to the level the month before the pandemic started.” The headline number affirms that the Fed will cut rates at its meeting next week. But “core” inflation — which excludes food and energy costs — was higher than what economists had projected. And housing costs are accelerated much more quickly than anyone at the Fed would like. That sapped market expectations that the Fed would slash interest rates by 50 basis points — half a percentage point — which would be more aggressive than its typical move. “The hawks on the committee will likely seize on today’s CPI report as evidence that the last mile of inflation needs to be handled with care and caution – a formidable reason to default to a 25 basis points reduction,” Seema Shah, chief global strategist at Principal Asset Management, wrote in a research note shortly after the CPI report was released. ECB Cuts — The European Central Bank is also projected to announce a quarter-point cut, POLITICO’s Carlo Boffa reports. “Anything other than a cut will be a big shock,” said Andrzej Szczepaniak, an economist at Nomura in London. That news will be out at 8:15 a.m., shortly after this newsletter is published. Live long and prosper? — A new survey from BlackRock found that more than a quarter of registered voters do not have any readily available savings. And more than three-quarters — 78 percent — are concerned that they lack the funds to take care of long-term expenses, including nursing homes, through their retirements.
| | A message from Citi: Globally, the average person born today will live almost 30 years longer than someone born in 1950, perhaps one of humanity’s most astonishing achievements. But the global healthcare system’s vital signs have deteriorated recently – and in many western countries, life expectancy has stalled over the past 15 years.
A rapidly aging population is already driving healthcare system costs to potentially unsustainable levels, and in many advanced economies the cost of healthcare as a proportion of GDP has more than doubled in the past 30 years.
The new Citi GPS Report, Future of Healthcare, sheds light on key strategies that could revolutionize our healthcare system – such as reorganizing how healthcare is delivered, leveraging data-integrated digital technology, and addressing medical issues more proactively.
Learn more here. | | | | | Bostic’s blues — Federal Reserve Bank of Atlanta President Raphael Bostic violated ethics rules that prohibit securities trading during the blackout periods before meetings where the Fed sets interest rates, the central bank’s inspector general reported on Wednesday. While the IG acknowledged that Bostic did not trade on confidential FOMC information — or have any conflicts of interest — his failure to monitor his third-party managed accounts created an “appearance of acting on confidential FOMC information” under the blackout rule. It also created an appearance of conflict “that might cause a reasonable person to question Dr. Bostic’s impartiality” under the Atlanta Fed’s code of conduct. | | | | Follow us on Twitter | | | | Follow us | | | | |
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