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Why the economy isn’t lifting Trump — I write with Victoria Guida this morning about how the economy and markets are showing remarkable resilience after dire predictions of a sharp slowdown this year. That should be helping lift President Donald Trump’s re-election chances. But he can’t escape the Mueller report tractor beam and or shake his penchant for focusing on Twitter tirades and attacking his enemies.
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Money quote from Brendan Buck, who served as a top aide to former House Speaker Paul Ryan: “The economy is an important issue for him because it’s the one issue that allows him to break out of his base. … And there aren’t a lot of those for him. He’s got solid support in the upper 30s and lower 40s but you have to have something to push you over the top and if the economy isn’t it for him, I don’t know what is.”
Here comes Q1 GDP — Expectations are for growth of 2.3 percent but many analysts expect a higher number closer to 2.6 percent thanks to a strong contribution from net foreign trade.
But RSM’s Joe Bruselas warns MM: “If you are someone who works in politics you are going to want to scream about the top line on first quarter growth and privately worry that it may not look so good when the next quarter comes around
“Volatile inventory and trade numbers and a one-time boost to public construction from the 2018 fiscal year budget agreement will boost the first quarter number. None of those three are sustainable.”
GOOD FRIDAY MORNING — Hope to catch some of you in L.A. next week. Your regular M.M. host while I’m there will be the great Victoria Guida. Email her on vguida@politico.com and follow her on Twitter @vtg2. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. And don’t forget to sign up for Morning Money at Milken!
President Trump speaks to the NRA in Indianapolis at 12:30 local time … Joe Biden appears on “The View” … First estimate of Q1 GDP at 8:30 a.m. expected to show 2.3 percent growth and inflation at 1.3 percent … University of Michigan consumer sentiment at 10:00 a.m. expected to dip to 97.0 from 98.4 in March.
MORE GDP PREP — Pantheon’s Ian Shepherdson expects 2.6%: “In the 10th year of an economic expansion, and especially given the fading push from fiscal easing, a 2.6% growth rate is very respectable. … Most of the first quarter distortion reverses in the second, but small boosts are visible in the third and fourth quarters too.”
BIG BANK MERGER FACES DEM SCRUTINY — Our Victoria Guida in Charlotte, N.C.: “The biggest proposed bank merger since the 2008 financial crisis is drawing flak from Sen. Elizabeth Warren and other key Democrats, who warn that it could create another institution so large that its failure would threaten the economy.
“The potential deal between BB&T and SunTrust, which would create the nation’s sixth-largest retail bank, has also sparked fears about branch closings and whether the marriage will reduce consumers’ access to credit, concerns that were voiced on Thursday at a public hearing in Charlotte.” Read more.
GOLDMAN AND 1MDB — The Better Markets report we previewed yesterday is here.
And not everyone is thrilled with it. From an MM reader not at Goldman Sachs: “I read the ‘big new report’ from Better Markets on Goldman teased in MM. It’s not new, and it’s not a report; it’s a collection of news stories and a lot of bluster.”
MORGAN STANLEY TO PAY $150M OVER MBS — Our Patrick Temple-West: “Morgan Stanley will pay California $150 million to settle allegations that the company hid risks concerning mortgage-backed securities sold to the state’s pension funds.
“From 2003 to 2007, Morgan Stanley was aware of misrepresentations it made and failed to correct its statements when selling the securities to CalPERS and CalSTRS, California Attorney General Xavier Becerra said.” Read more.
HUD WILL DELAY DOWN PAYMENT ASSISTANCE MOVE — Our Zachary Warmbrodt: “The Department of Housing and Urban Development will delay plans to rein in government entities that offer down payment assistance for mortgages backed by the Federal Housing Administration, following litigation challenging the policy.
“HUD agreed to a 90-day stay postponing the changes announced last week, according to a court filing. HUD is delaying the plan after being sued by the Cedar Band of Paiutes, which said the new policy unlawfully targeted American Indian tribes and bands by prohibiting them from participating in home purchasing assistance programs.” Read more.
ICYMI — Bloomberg’s Katia Porzecanski and Max Abelson on Cantor Fitzgerald’s Lee Stowell, who says she was bullied and harassed and wants her day in court. Read more.
CUOMO ALL IN FOR BIDEN — CNBC’s Brian Schwartz: “New York Gov. Andrew Cuomo, who has raised billions of dollars during his campaigns over the years, has indicated to associates in recent days that he will be opening his vast and powerful fundraising network exclusively to Joe Biden, according to people with direct knowledge of the matter.” Read more.
GET TO KNOW JOE — Our John F. Harris: “There are ample reasons to doubt whether 2020 will at long last reward Biden with the prize he has craved for decades. But, after months of waiting, it’s now clear that no rival on the long roster of Democratic contenders will make history without first surmounting the one whose singular combination of achievements and setbacks has already invested him with historic stature.” Read more.
S&P 500 DIPS LOWER — Reuters’ Sinead Carew: “The S&P 500 closed just barely lower on Thursday, as a dive in industrial stocks and concerns about slowing global growth eclipsed gains in Facebook and Microsoft.” Read more.
IT’S NOT JUST RECORD-HIGH STOCKS FEELING THE FED EFFECT — AP’s Stan Choe: “It’s not just the stock market at a record high that’s feeling the Fed effect. Jewelry shoppers, home buyers, retirees and many others are feeling the ramifications of the Federal Reserve’s decision earlier this year to halt raising interest rates, at least temporarily.” Read more.
BIG TECH STOCK MARKET MAKING A COMEBACK? — NYT’s Stephen Grocer: “Apple got there first, then Amazon, and on Thursday, Microsoft became the third American company to reach a market valuation of $1 trillion. It was a brief achievement (Microsoft was valued at about $990 billion by the end of the day), but it underscores the remarkable recovery in technology stocks since their precipitous decline late last year.” Read more.
CENTRAL BANKS NERVOUS ABOUT TIGHTENING POLICY — Bloomberg’s Michelle Jamrisko: “Three months since the Fed … put U.S. interest rates on a prolonged pause, more and more central bankers around the world are getting nervous about tightening monetary policy.
“Policy makers across Asia, Europe and North America shifted their tones, with Sweden and Canada among them. The caution came in a week of fresh pessimism on the global outlook as trade and electoral uncertainties linger.” Read more.
ICYMI: NOW HIRING EXECS TO STAFF FAILED BANKS — WSJ’s Rachel Louise Ensign: “The Federal Deposit Insurance Corp. is assembling a stable of executives who could be installed in top jobs at failed banks, taking advantage of a calm spell in the business to better prepare for the next downturn. The regulator has interviewed dozens of bankers over the past two years or so in search of people qualified to serve as board members or executives at banks seized by the agency in the future, FDIC officials said.” Read more.
WORLD TRADE VOLUMES PLUNGING — Bloomberg’s Fergal O’Brien: “The global trade funk is dragging on, with new data on Thursday showing volumes are falling at the fastest pace since the depths of the financial crisis. Calculations by Bloomberg based on the Dutch statistics office’s trade monitor show a 1.9 percent drop in the three months through February compared with the previous three months. That marks the steepest drop since the period through May 2009.” Read more.
DIMON, DALIO WORRY ABOUT FUTURE OF CAPITALISM — WSJ’s Greg Ip: “James Dimon and Ray Dalio are among the most successful capitalists in the U.S. today. So when they worry aloud about the future of capitalism, it’s worth listening. ‘I believe that all good things taken to an extreme become self-destructive and that everything must evolve or die.
“This is now true for capitalism,’ Mr. Dalio, founder of hedge-fund manager Bridgewater Associates, writes on LinkedIn. Mr. Dimon, chief executive of JPMorgan Chase & Co., writes in his annual letter to shareholders: ‘In many ways and without ill intent, many companies were able to avoid — almost literally drive by — many of society’s problems.’” Read more.
GLENCORE UNDER INVESTIGATION — Bloomberg’s Jack Farchy and Elena Mazneva: “Glencore Plc said it’s under investigation by the U.S. Commodity Futures Trading Commission for possible corrupt practices, the latest legal headache for the world’s biggest commodity trader.
“The probe comes after the London-listed company was subpoenaed last year by the U.S. Justice department for documents relating to its dealings in Nigeria, the Democratic Republic of Congo and Venezuela since 2007.” Read more.
Source: https://hashtaghighways.com/2019/04/28/why-the-economy-isnt-lifting-trump/
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