| | | | |  | | By Sam Sutton | Presented by Structured Finance Association | 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.
| | | | BEVERLY HILLS, California — Escalating geopolitical tensions across the globe are a major source of uncertainty. Investors hate uncertainty. The solution, according to former Secretary of State Mike Pompeo, is for the U.S. to be a source of some of that uncertainty. Take former President Donald Trump’s decision to authorize the killing of Iranian paramilitary leader Qassem Soleimani in early 2020. Other administrations had considered taking a similar step but held off. Joe Biden and Kamala Harris both warned that it could inflame tensions in the Middle East, potentially kicking off the sort of conflict that causes oil prices to climb and stocks to slump. Pompeo, addressing a packed ballroom of wealth managers on Tuesday, says it had the opposite effect. In the former Trump official’s telling, it was a deterrent to foreign leaders like North Korean leader Kim Jong Un, Chinese President Xi Jinping and Venezuelan ruler Nicolás Maduro. They “all took note. I have to be a little careful — because this gets into the classified space — but you should know the whole world said one of two things; ‘Those guys are mean,’ or ‘They're crazy,’ or some combination thereof,’” Pompeo said. “They knew we were different.” The wealth managers and investment advisers in town for the CAIS Summit at the Beverly Hilton ate it up. Some leaders on Wall Street believe that Trump’s bombast and unpredictability could actually hasten the conclusion of destabilizing conflicts in Ukraine and the Middle East, and the former president has sought to make that a selling point both on the campaign trail and in fundraising. Pompeo, who told the audience that he would serve in a second Trump administration if asked, made the case that Trump’s willingness to flex U.S. power was an effective method for keeping foreign adversaries at bay. The Biden administration has spent too much time explaining the lines they won’t cross to avoid escalation, he said. “You can say we were just lucky as crap or you can say the bad guys feared us,” Pompeo later added. “Those are really the two options.” Of course, analysts have also identified the potential upheaval of U.S. foreign policy as a tail risk in a second Trump administration. Former President Barack Obama’s Defense Secretary Leon Panetta , who was interviewed alongside Pompeo at the summit, warned that a Trump victory would usher in chaos and weaken global alliances. And to the extent the killing of Soleimani was a deterrent, it wasn’t without consequence. Iran’s Revolutionary Guard has said the Oct. 7, 2023, attacks in Israel were a response to the commander’s death — something Hamas has denied — and U.S. officials are increasingly worried that Iran might attempt to kill Trump, Pompeo or other senior U.S. officials involved with the order. Pompeo said he wasn’t fazed. “They're still trying to kill me,” he told the crowd. But given the level of security he requires, “Brother, you’re in the safest place in all of L.A. right now.” IT’S WEDNESDAY — I’m in L.A. for another day and a half. Hit me up if you’re around and if you’ve got tips, let me know at ssutton@politico.com.
| | | | A message from Structured Finance Association: Invested in Your Future: The Structured Finance Association represents the market where loans to consumers of all stripes are bundled together into a bond to lower financing costs and reduce the risk of default. We also bring together every market participant, from banks to issuers to investors, to build consensus on the safest and most efficient way to finance America’s real economy. Learn more at www.structuredfinance.org. | | | | | | Import and export prices for September will be released at 8:30 a.m. … The Committee for a Responsible Federal Budget has an event on the fiscal impact of the Harris and Trump economic plans at 1 p.m. … Harris will be interviewed by Bret Baier on Fox News at 6 p.m. Speaking of Trump and foreign policy — The former president spent a chunk of his Bloomberg interview in front of the Economic Club of Chicago deflecting questions about his reported contact with Russian leader Vladimir Putin. “I don't comment on that. But I will tell you that if I did, it's a smart thing,” the former president told Bloomberg’s editor-in-chief, John Micklethwait, our Shia Kapos reports from the Fairmont Hotel. “If I'm friendly with people, if I have a relationship with people, that's a good thing.” — Trump also pushed back on analysis that says his plans to levy sizable tariffs on imports could cause inflation to climb and growth to slow. "It must be hard for you to spend 25 years talking about tariffs as negative and then have somebody explain to you that you're totally wrong," Trump sniped at Micklethwait. (The European Union is preparing to retaliate if Trump is elected and raises tariffs, Bloomberg’s Alberto Nardelli and Samy Adghirni reported on Tuesday.) — He also commented on the role of the Federal Reserve chair. “I think it’s the greatest job in government,” he said. “You show up to the office once a month and you say, ‘let’s say flip a coin’ and everybody talks about you like you’re a god.” The people’s work — From Jennifer Scholtes and Caitlin Emma: “The nation’s loan program for disaster survivors has fully exhausted its funding, the Biden administration announced Tuesday. And lawmakers, the only ones who can greenlight more funding, are slated to be out until after Election Day.” That crypto voter everyone’s talking about — Crypto Super PACs are spending millions on advertising in key congressional races in a bid to elect industry-friendly lawmakers. None of their ads mention crypto, Jessica Piper and Jasper Goodman report.
| | Will she keep citing Goldman Sachs? — Economists surveyed by Bloomberg gave Harris an edge over Trump in their assessments of how the economy would fare with their respective agendas. While inflation is expected to climb at an annual rate of 2.2 percent under either administration, 62 percent of the surveyed economists said they expect Harris’s agenda to be more favorable for economic growth in the long run. What recession? — The Peterson Institute for International Economics is projecting that the global economy will grow by 3.2 percent through the end of this year and in 2025. Cooling inflation, stronger real incomes and lower borrowing costs “should support widespread economic growth.” — But, but, but: “This baseline forecast assumes that current US policy prevails with only modest changes. That could change after the elections, affecting the US and other economies around the world.” Delphi — Apollo Global Management CEO Marc Rowan told the CAIS Summit crowd that the U.S. economy is not at risk of a recession. The trillions of dollars the government has committed to new infrastructure, semiconductor manufacturing, electronic vehicles and renewables hasn’t been fully invested. Foreign direct investment has continued to flow into the country, and there’s a chance defense spending could also accelerate. “Every one of those things is massively positive for U.S. employment. There is simply no setup right now for a classic recession,” he said.
| | | | A message from Structured Finance Association:   | | | | | Speaking of Goldman — Goldman Sachs, Bank of America and Citi all posted strong earnings in the third quarter as dealmaking and trading accelerated, The WSJ’s AnnaMaria Andriotis reports. The favorable returns were largely due to investment banking revenues. “We see significant pent-up demand from our clients,” Goldman CEO David Solomon said on a conference call. “The beginning of the rate cut cycle has renewed optimism for a soft landing, which should spur increased economic activity.” Whiplash in DJT — Shares in Trump Media & Technology Group — the company behind Truth Social — opened trading higher Tuesday, extending a weeks-long climb, Declan Harty reports. But the stock suddenly plunged in the afternoon before ending the day down 9.7 percent. Majority owned by the former president, Trump Media is no stranger to volatility . The stock often moves on developments in the race for the White House. And political bettors have been dialing up their wagers that Trump is likely to win next month. In the meantime, though, don’t expect the wild moves to die down. “The market is expecting exceptional amounts of volatility between now and the election,” Interactive Brokers Chief Strategist Steve Sosnick told Declan. “It’s pricing in the possibility — if not the likelihood — of double-digit moves in the stock.”
| | Meet Michelle Bowman — Fed Gov. Michelle Bowman has been building a public profile that could set her up for a more prominent role at the central bank if Trump wins a second term, The NYT’s Jeanna Smialek reports . She could be in line for vice chair for banking supervision, a role currently held by Biden appointee Michael Barr. Kohn makes the case — Former Fed Vice Chair Donald Kohn for The NYT: “The threat of substantive presidential input to monetary policy would undermine the public’s trust that the Fed will do what it judges to be in the best long-term interest of the economy and the American people. That could lead to higher interest rates as investors price in faster price increases and more uncertainty.”
| | | Settlement — Katy O’Donnell reports: “Fairway Independent Mortgage Corp. has agreed to pay $1.9 million to settle charges that it discriminated against loan applicants and redlined majority-Black areas around Birmingham, Alabama, under the terms of a proposed consent order with the CFPB and the Department of Justice.”
| | | | A message from Structured Finance Association: Pooling loans together into bonds creates a safer financial system for everyone. This process, called securitization, allows banks to sell loans and to make new loans at prevailing market rates. We took that same logic to form the Structured Finance Association. Our members represent every aspect of the industry – over 370 accounting firms, broker-dealers, financial intermediaries, investors, issuers, insurers, and rating agencies, among others. We are the unified voice of securitization in Washington on Capitol Hill, in federal agencies and in the courts. Our goal? Bonding together to safely enable greater credit access to small businesses, consumers, and investors. Find out more at www.structuredfinance.org. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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