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.
Crypto fight remains foggy — The bipartisan infrastructure bill looked set for late Monday/early Tuesday passage as of late Sunday evening. But those most interested in the crypto provisions remain somewhat confused over what any final provision may look like:
Compass Point’s Isaac Boltansky: “[T]hings on the crypto reporting front were about as clear as mud. At this point, this particular battle could take any number of turns … but … the 2023 effective date gives the industry time to push for changes …
“Senator Portman‘s floor statement arguing that this provision has a narrow scope will be referenced repeatedly, both as the legislative effort continues and once this eventually moves to the administrative realm”
But infra bill nearly done — Via our Burgess Everett and Marianne LeVine: “Biden’s bipartisan infrastructure deal cleared its final serious Senate hurdle Sunday night, putting the legislation on a glide path to passage as soon as late Monday.
“In a 68-29 vote, the Senate closed down debate on a bill that spends $550 billion in new money on the nation’s physical infrastructure. Sunday’s vote came after senators spent the weekend haggling over amendments and time agreements to consider them.
Happy days here again? — Very solid July jobs report Friday eased SOME concern over the Delta variant impact But the survey week came early in Delta so hard to know for sure. But the drop in the jobless rate and the breadth of hiring were both quite good.
Via Goldman Sachs: “We expect monthly job gains to remain strong for the rest of the year. Labor demand remains very hot, further reopening and the expiration of federal unemployment benefits should boost hiring in virus-sensitive and low-paid service industries …
“We have nudged our unemployment rate forecast down to 4.1% at end-2021 and 3.5% at end-2022, the 50-year low reached last cycle that appears to be the maximum employment threshold that the Fed leadership has in mind.”
Chris Rupkey chief economist at fwd:Bonds: “There are literally jobs for everyone available across the country and workers are not hesitating. …
“There is no sign of an economic slowdown from the rise of the Delta variant with two thirds of the 380 thousand jobs gained in Leisure and hospitality employment coming from the 253 thousand new hires made by bars and restaurants. “
GOOD MONDAY MORNING — Way to go Team USA on winning both the gold medal and total medal count in Tokyo. Email me on [email protected] and follow me on Twitter @morningmoneyben . Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
Senate expected to clear the infrastructure bill and then set up the budget bill that will carry the up to $3.5 trillion Democrats-only reconciliation bill that House Dems say must be moving forward to clear the smaller bipartisan measure …
FACUI URGES MORE TESTING — Our Shayna Greene: “Anthony Fauci urged on Sunday that more coronavirus testing be done among vaccinated people to learn more about breakthrough cases. … Fauci explained that early on in the pandemic, the protocol was to test people who had been in contact with others who were infected with Covid-19 or symptomatic. Now, he said, ‘It’s very clear you have to go beyond that.’
“With the Delta coronavirus variant on the rise, people are concerned that they are at risk even after becoming fully vaccinated. Some people are still hesitant to get vaccinated until the Food and Drug Administration grants full approval, which Fauci hopes will happen yet this month.”
WALL STREET BATTLES FOR YOUNG TALENT — Bloomberg’s Mary Biekert: “All across Wall Street, one price keeps going up: the one for young talent. Big banks can’t hire junior staff fast enough — not even at the new going rate of $100,000 a year. Chalk it up to the pandemic. Or the notoriously long hours. Or youthful realizations that maybe banking isn’t all it’s cracked up to be.
“All of those reasons — and others, too — have conspired to make 2021 one of the toughest years for Wall Street recruiting in recent memory. For now, at least, the war for talent keeps escalating. …
S&P 500 EARNINGS BEATS FALL FLAT — Bloomberg’s Jeran Wittenstein: “Investors have greeted a stellar second quarter earnings season for U.S. companies — with a yawn. A large swath of S&P 500 companies surpassed Wall Street profit estimates, but their shares barely budged. It’s the second consecutive quarter of a lackluster response to earnings beats, fueling the case that U.S. stocks are due for a pullback after an 18 percent rally this year.”
CASH IS FLOODING INTO SHORT-TERM MARKETS LIKE NEVER BEFORE — WSJ’s Julia-Ambra Verlaine: “An unusual surge of short-term lending by cash-rich companies is raising concerns on Wall Street that a period of unrest may lie ahead. Investors such as money-market funds and banks are parking over $1 trillion in spare cash overnight at the Federal Reserve. That is the most on record since the Fed opened its facility for these reverse repurchase agreements in 2013.
“The scale of the moves has some analysts warning that the markets for short-term funding are vulnerable to disruption. The cause for this summer’s rush into the Fed’s reverse repo facility appears to be the central bank’s decision in June to nudge up the amount of interest it pays, from 0 percent to 0.05 percent—though usage had already been rising in the spring.”
SEC APPROVES NASDAQ PROPOSAL TO REQUIRE CORPORATE BOARD DIVERSITY — Reuters’ Jessica Dinapoli: “The U.S. Securities and Exchange Commission approved a proposal from stock exchange operator Nasdaq Inc that requires its listed companies to have diverse boards, or explain why they do not.
“The proposal requires that companies have two diverse directors, including one who identifies as female and another as an underrepresented minority or LGBTQ+, or explain why they do not. Companies also have to publicly disclose the diversity of their boards. ‘These rules will allow investors to gain a better understanding of Nasdaq-listed companies’ approach to board diversity,’ said SEC Chair Gary Gensler in a prepared statement.”
RECORD PACE FOR CORPORATE EARNINGS KEEPS STOCKS BUOYANT — WSJ’s Karen Langley: “A solid corporate earnings season has bolstered the case for stocks. Recent developments have had many investors expecting rockier trading in the coming months, following an 18 percent advance in 2021 that has taken the S&P 500 to 44 record closes.
“The rapidly spreading Delta variant of the coronavirus has cast a cloud over the economic outlook, and rising prices have sparked debate over whether sustained inflation will hamper the recovery. China’s crackdown on corporations, meanwhile, has analysts considering the possibility of a drag on U.S. markets.”
SEC BRINGS ITS FIRST DEFI CASE OVER UNREGISTERED TOKEN SALES — Bloomberg’s Matt Robinson: “The U.S. Securities and Exchange Commission brought its first case tied to the booming decentralized finance market, alleging a company sold digital tokens that should have been registered with the Wall Street regulator.
“The SEC sued Cayman Islands-based Blockchain Credit Partners and two of its top executives for illicitly offering securities through its DeFi Money Market platform from February 2020 to February 2021, according to a Friday statement. The company sold more than $30 million worth of two types of tokens that the SEC considered to be securities, which must be registered with the agency.”
RISING RENTS POSE RISKS TO FED’S INFLATION OUTLOOK — WSJ’s Nick Timiraos: “The biggest wildcard for U.S. inflation over the next year doesn’t come from used cars or airline fares. Instead, it is housing. Officials at the Federal Reserve and the White House have highlighted what many forecasters expect will be the temporary nature of elevated price readings stemming from the reopening of the economy following pandemic-related restrictions
“But the degree to which 12-month inflation readings fall back to the central bank’s 2 percent goal could rest on the behavior of rents and home prices. In recent months, housing-cost trends point to more persistent, rather than transitory, upward price pressures in the coming years.”
TRANSITIONS – Per email from Todd Phillips: “I’m leaving the FDIC and will soon be the Director of Financial Regulation and Corporate Governance at the Center for American Progress.
