| | | | |  | | By Zachary Warmbrodt and Victoria Guida | | | 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.
| | DAVOS, Switzerland — One takeaway from this year’s World Economic Forum meeting: The heads of the world’s leading companies don’t really know what Donald Trump would do if he’s reelected president. A new Trump administration is a frightening proposition for many of the global elite, to be sure. But for some who have chafed at President Joe Biden’s regulatory and foreign policy moves, a shift is enticing even if its exact contours are TBD. Others just say they’ll operate through whatever the American people decide in November. While Trump has a first-term record and has sketched out policies for his second, it’s unclear to what extent Trump 2.0 would balance a populist agenda with more mainstream Republican ideology. A huge question mark along those lines is how he would populate his Cabinet. Zach spoke with more than a dozen business leaders about their thoughts on the upcoming U.S. election. Some were granted anonymity to discuss a sensitive political topic. A few of the highlights: Asked how he’s bracing for an election swing, Bank of America CEO Brian Moynihan in an interview stressed a long-term perspective, noting that his bank — the second largest in the U.S. — dates back to 1784. “There have been some interesting elections in that time,” he said. “We just have to be ready.” “By the way, there’s an election going on all over the world that could affect the world economies and banks,” he added. “It’s a factor, but it’s not something that you chase saying it will be good here and not there. Companies are way past the life of political participants by term limits and everything else. So you have to be able to operate. We try to help every administration through good advice.” But another executive described “a lot of hand-wringing about what a Trump presidency would mean.” “There are certainly people who believe that the Democrats have gone too far in different areas of regulation,” the executive said. “But also, people are very fearful of the anti-democratic notions that would come along here, the disruption that would come out, what that would mean for American business. What would happen on the foreign policy side, where presidents can do stuff much more quickly? What happens if Trump pulls out of NATO? What happens if he increases tensions with China through more economic tariffs?”
| | | | JOIN 1/31 FOR A TALK ON THE RACE TO SOLVE ALZHEIMER’S: Breakthrough drugs and treatments are giving new hope for slowing neurodegenerative diseases like Alzheimer’s disease and ALS. But if that progress slows, the societal and economic cost to the U.S. could be high. Join POLITICO, alongside lawmakers, official and experts, on Jan. 31 to discuss a path forward for better collaboration among health systems, industry and government. REGISTER HERE. | | | | | | Another executive described a personal sense of fear. The person said CEOs hate uncertainty, which Trump had a record of bringing in heavy doses as president. Another business leader said markets need stability in government institutions, which could be under stress. But one executive said it’s “not like it’s necessarily a freakout moment.” Despite concerns about Trump ratcheting up geopolitical tensions, there’s also a view that Biden’s team has “a tendency to step into every international minefield.” “There’s a bit of disenchantment with the Biden administration as well,” the person said. “People perceive change as potentially constructive in some dimensions.” IT’S FRIDAY — And almost exactly one year until Inauguration Day. What’s your best election prediction? Let us know, and send tips and story ideas: zwarmbrodt@politico.com and vguida@politico.com.
| | | | A message from MFA: Managed Funds Association — now MFA — unveiled the next evolution of its brand, which recognizes its global leadership role in the alternative asset management industry. MFA’s mission remains unchanged — advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries, including pensions, foundations, and endowments. MFA helps its members get connected, stay informed, and shape the future of alternative asset management. Learn more at MFAalts.org. | | | | | The American Bar Association’s Banking Law Committee holds the second day of its annual meeting, featuring CSBS President Brandon Milhorn at 12:15 p.m. … Federal Reserve Vice Chair for Supervision Michael Barr and FDIC Chair Martin Gruenberg speak on bank regulation at National Fair Housing Alliance event at 1 p.m. … Government shutdown avoided again — The House cleared a stopgap spending bill on Thursday afternoon that officially keeps federal agencies funded through early March, sending the measure to President Joe Biden’s desk, our Caitlin Emma reports. Low-income Americans are feeling the rate pinch — The U.S. economy has held up well in the face of high borrowing costs, but people with lower incomes aren’t faring quite as well. According to a new report from the New York Fed, only 24 percent of low- and moderate-income homeowners refinanced their mortgages between 2020-2021 when rates were ultra-low, compared to 42 percent of homeowners in high-income areas. And for those who rent, 57 percent spend more than 30 percent of their monthly pay on housing. As of the third quarter of last year, early delinquencies by lower-income Americans on credit card and auto loans are also higher than they were before the pandemic. But some housing relief might be on the way — The economic research team at housing giant Fannie Mae expects mortgage rates to end the year below 6 percent, boosting refis, which are already rising. “Lower rates are also likely to help ‘thaw’ the existing home sales market currently affected by the so-called ‘lock-in effect,’” Fannie said in a press release. “However, a full recovery to the pre-pandemic sales rate is expected to take years, as housing affordability remains stretched extremely thin by historical standards relative to household incomes.”
| | | | YOUR GUIDE TO EMPIRE STATE POLITICS: From the newsroom that doesn’t sleep, POLITICO's New York Playbook is the ultimate guide for power players navigating the intricate landscape of Empire State politics. Stay ahead of the curve with the latest and most important stories from Albany, New York City and around the state, with in-depth, original reporting to stay ahead of policy trends and political developments. Subscribe now to keep up with the daily hustle and bustle of NY politics. | | | | | Notable Quotable — Job site ZipRecruiter put out its annual report on the outlook for the labor market, and talked about the effect that artificial intelligence is having: “AI-related job openings on ZipRecruiter have grown rapidly over the past decade. There is some evidence that the companies hiring AI talent have reduced hiring in non-AI positions, but employment levels in those companies have not changed overall, according to recent research. That is likely because AI is currently able to replace some job tasks, but not entire jobs.” OCC chief calls for new targeted liquidity rule — Acting Comptroller of the Currency Michael Hsu on Thursday argued in favor of a targeted liquidity rule to address vulnerabilities in the banking system exposed by the collapse of multiple regional lenders last year, Victoria reports. Under Hsu's approach, banks would be encouraged to pre-position collateral so they can lend quickly from the Federal Reserve’s discount window during stress and receive regulatory credit for doing so. But he said this credit should cover only a short window of time. Speaking of the discount window — U.S. regulators are preparing a proposal that would require banks to tap the Federal Reserve’s discount window at least once a year to reduce the stigma, Bloomberg’s Katanga Johnson scoops.
| | | | A message from MFA:   | | | | | Hunt dumps on Trump tariff idea — Britain’s top finance minister Jeremy Hunt criticized Trump’s hit out at the Republican party frontrunner’s proposal for a universal tariff on all goods imported into the U.S., Zach and Andrew McDonald report. “I don’t support protectionist measures. I think they harm the people who introduce them as much as the people they are aimed at,” Hunt told POLITICO. Trump dumps on CBDC — Trump said that if elected he would not allow the Federal Reserve to create a digital dollar, Victoria reports, in a potential blow to proponents who say such a move would make the payment system more efficient. “Tonight, I am also making another promise to protect Americans from government tyranny,” the former president said Wednesday in New Hampshire before the state’s primary election next week. “As your president, I will never allow the creation of a central bank digital currency.” Checking in on the Fed balance sheet — Focus on the reserve supply is growing now that balances are dwindling in the Fed’s overnight reverse repo facility, Reuters reports. Deutsche Bank U.S. rates strategist Steven Zeng estimates that RRP balances will fall to zero by June. Robinhood settles ‘gamification’ case — Robinhood has agreed to pay $7.5 million to resolve a long-running case brought by Massachusetts regulators over the online brokerage's alleged "gamification" of trading, our Declan Harty reports. Secretary of the Commonwealth Bill Galvin's office argued in late 2020 that the company was aggressively courting novice investors onto its popular trading platform while keeping them trading with video game-like features, according to the complaint.
| | | | A message from MFA: MFA has more than 175 member fund managers, including traditional hedge funds, credit funds, and crossover funds, that collectively manage over $3.2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.
With offices in Washington, DC, New York, Brussels, and London, MFA is the leading voice on public policy issues affecting the alternative asset management industry. Visit MFAalts.org to learn how MFA helps its members get connected, stay informed, and shape the future of alternative asset management. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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