Mountain hikes, rate hikes and Burning Man: Life in Jackson Hole

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Aug 25, 2023 View in browser   By Victoria Guida and Sam Sutton Programming Note: Morning Money will not be publishing from Aug. 28 through Sept. 4. We’ll be back to our normal schedule on Tuesday, Sept. 5. 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. QUICK FIX JACKSON HOLE, Wyo. — Federal Reserve Chair Jerome Powell might be the center of attention this morning at the central bank’s exclusive monetary policy conference in the mountains, but Thursday was mostly about soaking up the rays and going hiking in picturesque Grand Teton National Park. The annual Jackson Hole gathering is an amusing combination of high-ranking officials and chill vibes. It’s where you might see men in suits huddling over the long-term path of interest rates or Minneapolis Fed President Neel Kashkari’s 4-and-a-half-year-old daughter, Uly, singing “Let It Go” with a light-up mic. And then there were the Irish guys in fur coats who were on their way to the “Burning Man” concert, reporters at Reuters told MM. Since this is still nerd central, there was also time for informal policy chats at Jackson Lake Lodge. The conversations focused on how far the Fed might go in reverse to cut rates once its inflation fight is over — or what it might mean if rates remain significantly above zero for the foreseeable future. Those questions are top of mind for the conference’s very global attendee list, which includes officials from throughout Europe and from countries like South Korea, New Zealand, Japan, Colombia, Thailand and Israel. But the local surroundings also have relevance to monetary policy, from issues like labor supply to concerns about rising rents. “In a lot of places, like Jackson, it’s too expensive to live here,” said Nela Richardson, chief economist at ADP. “So they can’t get people in certain capacities like waitstaff.” More generally, Richardson warned that the lack of housing affordability nationwide might keep inflation higher, and therefore interest rates as well. “It is the juggernaut that keeps inflation elevated,” she told MM. “Even if [inflation] comes down, you have to be watchful because it’s not just whether it comes down, it’s, how likely it will be to go back up.” She called for a stronger housing policy at the federal level to combat supply problems. Richardson, who previously worked at Redfin and at Freddie Mac, noted that Fed policy historically works particularly through the housing market because it’s more sensitive to shifts in rates than most other industries. “It’s not doing that anymore,” she said. “The housing market isn’t playing its part.” Julia Coronado, president of MacroPolicy Perspectives, was less convinced, pointing to a lot of apartment building construction in the pipeline that will come online and help bring down rents. “It seems like we probably have another leg of adjustment,” she said. Those are the kinds of questions that Powell will have to wrestle with when he addresses the world today. IT’S FRIDAY — What should I do if I see a bear? Send tips, gossip and suggestions to Victoria at vguida@politico.com and Sam at ssutton@politico.com.   A NEW PODCAST FROM POLITICO: Our new POLITICO Tech podcast is your daily download on the disruption that technology is bringing to politics and policy around the world. From AI and the metaverse to disinformation and cybersecurity, POLITICO Tech explores how today’s technology is shaping our world — and driving the policy decisions, innovations and industries that will matter tomorrow. SUBSCRIBE AND START LISTENING TODAY.     Driving the Day The Commodity Futures Trading Commission has a closed meeting on enforcement matters at 9 a.m. … The University of Michigan’s consumer sentiment survey for August will be out at 10 a.m. … Powell takes the podium at 10:05 a.m. … Senate Commerce has a subcommittee field hearing in Las Vegas about economic impacts of the U.S. sports and entertainment industries at 2 p.m. Are we close? — Bloomberg’s Jonnelle Marte: “Two Federal Reserve officials signaled policymakers may be close to being done with interest-rate increases, but one of them held back from ruling out further hikes until inflation is more clearly on a downward path ‘We may need additional increments, and we may be very near a place where we can hold for a substantial amount of time,’ Boston Fed President Susan Collins said.” — If you want to know how strong the consumer sector has held up against higher rates, head to the new Caesars casino in Danville, Va., according to Reuters’s Howard Schneider. Even though the temporary facility resembles an airplane hangar with limited food and beverage options, it “still saw 400,000 visitors lay out more than $50 million in bets since opening in the middle of May, beating its owners' expectations,” he writes. It’s “another example of U.S. consumer spending that so far refuses to cave in the face of the Federal Reserve's aggressive interest rate hikes.” — Meanwhile, in Europe, our Carlo Boffa reports that the latest S&P Global composite purchasing managers index shows that business activity is falling. “The services sector faltering as manufacturing showed tentative signs of bottoming out after a long lull.” It’s not a security — Big banks and merger specialists scored a major court victory on Thursday when the Second Circuit U.S. Court of Appeals ruled that a leveraged loan led by JPMorgan Chase is not, in fact, an investment security, Bloomberg’s Bob Van Voris and Scott Carpenter reported. Banking trades have closely tracked the lawsuit for years. In a 2019 amicus brief, the Bank Policy Institute and the Loan Syndications and Trading Association argued that the syndicated loan market is already “regulated, but under an entirely different regime.” When the court asked the SEC to weigh in, the agency declined to do so. Regulatory Corner Everyone’s finalizing — Our Nick Niedzwiadek: “The National Labor Relations Board on Thursday finalized its rollback of its Trump-era overhaul to union election procedures, following legal challenges that prevented parts of the rule from ever taking effect.” — There might be labor challenges when it comes to de-risking the U.S. economy, write The WSJ’s Yuka Hayashi and Yang Jie: “A labor tussle at a semiconductor-plant construction site in Arizona points to one of the thornier challenges facing the U.S. as it moves to revive domestic chip manufacturing: ensuring there are enough skilled workers to meet new demands.” In the markets Three months after the First Horizon deal was nixed — TD Bank disclosed in a regulatory filing that it was “cooperating” with a Department of Justice investigation into its anti-money laundering compliance program. “While the ultimate outcomes of these inquiries and investigations are unknown at this time, the Bank anticipates monetary and/or non-monetary penalties to be imposed,” according to the filing. Sign o’ the Times — The WSJ’s Alexander Saeedy and Jodi Xu Klein: “A group of Wall Street firms that lent hundreds of millions of dollars to WeWork is exploring the possibility of a bankruptcy filing that could help the company exit from expensive office leases.” Sign o’ the Times Pt. II — With mortgage rates now at 7.23 percent — higher than any point in the last two decades — “Zillow Group Inc. is offering mortgages with just a 1% down payment,” writes Bloomberg’s Hari Govind. Zillow is testing the pilot program in Arizona.   DON’T MISS POLITICO’S TECH & AI SUMMIT: America’s ability to lead and champion emerging innovations in technology like generative AI will shape our industries, manufacturing base and future economy. Do we have the right policies in place to secure that future? How will the U.S. retain its status as the global tech leader? Join POLITICO on Sept. 27 for our Tech & AI Summit to hear what the public and private sectors need to do to sharpen our competitive edge amidst rising global competitors and rapidly evolving disruptive technologies. REGISTER HERE.     Jobs Report Juana Del Pilar Silverio is now chief of staff for the office of administration at the Department of Housing and Urban Development. She is a former special assistant and counsel to U.S. Commission on Civil Rights Chair Norma Cantú. — Daniel Lippman   Follow us on Twitter Mark McQuillan @mcqdc Zachary Warmbrodt @Zachary Victoria Guida @vtg2 Declan Harty @ @declanharty Eleanor Mueller @eleanor_mueller Katy O'Donnell @katyodonnell_ Sam Sutton @samjsutton   Follow us

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