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| | BEVERLY HILLS, California — The Wall Street mood shift is real. Despite stubborn inflation and higher-for-longer interest rates, top financiers at the annual Milken Institute Global Conference are talking about the U.S. economy with a degree of confidence and enthusiasm that wasn’t present at last year’s gathering. Last May, uncertainty was a big theme as the U.S. struggled with bank failures and a looming debt-limit conflict. This week, finance leaders are pointing to U.S. economic resilience as a driver of global growth and an increasingly attractive prospect for investors. IMF Managing Director Kristalina Georgieva kicked off the conference by making the case that those in the room have reason to be happy with the performance of the U.S., thanks to business dynamism, a “remarkably” strong labor market and its “tremendous advantage” as an energy exporter. “The economic activity that’s underpinning all this is quite profound,” Carlyle Group CEO Harvey Schwartz told the conference. “The vast majority of investors, my clients around the world, when I ask them about the U.S., they would say I’m over-allocated to the U.S., but I’m going to allocate more capital to the U.S.” Are investors a little too excited? Executives are downplaying concerns about a potential U.S. stock market correction amid all the exuberance. Citigroup CEO Jane Fraser said she’s “in the fairly optimistic category” unless there’s some kind of shock in the system. “Certainly valuations are quite high on many of the metrics. Technology is a very high percentage in terms of valuation,” she said. “But there’s a potential for a win-win for equities here in the near term. If growth is stronger, equity valuations benefit. If rates come down, equity valuations benefit.” Inflation is the big macroeconomic concern, but leaders at Milken showed some hints of optimism. New York Fed Chair John Williams said Friday’s jobs report for April, which showed a greater slowdown in hiring growth than expected, is consistent with what the central bank sees as “bringing balance back to the economy.” Georgieva also expects that U.S. inflation will be under control this year and that the Fed will start to ease borrowing costs. The timing for the Fed’s first cut, something that markets now expect in September at the earliest, is becoming a political concern. Citadel CEO Ken Griffin praised the Fed for being patient but said he hopes the central bank doesn’t cut right before the election. “I do not want the Fed to be seen as political,” he said. (Fed Chair Jerome Powell has repeatedly said monetary policy is in no way driven by concerns about elections.)
| | | | A message from the Electronic Payments Coalition: WORKING-CLASS AMERICANS DEPEND ON CREDIT CARD REWARDS: A new study finds credit card rewards like cashback empower low-income families to pay for the rising price of everyday essentials—like groceries and gas. So why are DC politicians partnering with corporate mega-stores to end those hard-earned rewards programs that Americans rely on? The Durbin-Marshall Credit Card Bill takes billions from American families, lining corporate pockets instead. Tell DC politicians to OPPOSE the Durbin-Marshall Credit Card Bill. | | | Griffin, a Republican megadonor who has stopped short of endorsing former President Donald Trump, isn’t thrilled with the options in the presidential race. But Griffin said, “The good news on the Trump side is the names being thrown about for his cabinet are really good people.” “I feel much better about the narrative that Trump would have a hard time attracting good people,” he said. “I’ve seen a list of people that are interested in various roles. These are really good people.” The biggest dark cloud over the upbeat talk was the widening U.S. fiscal deficit. Griffin said when an inevitable economic downturn comes, that’s when the country’s fiscal challenges will be “front and center.” He said China’s shrinking position in U.S. Treasurys is an early sign of “global anxiety” about federal spending. “When you are a beautiful country with a growing population, you can be generous,” Georgieva said. “When you are an aging country, then you need to be very careful how much and for what you spend.” State Street CEO Ron O’Hanley predicted that the U.S. “gets its handle around its deficit situation, because if it doesn’t we’re going to have a real problem in five years time.” IT’S TUESDAY — Stay tuned to MM for coverage of this week’s Milken conference by Zach, and subscribe to Global Playbook for even more news from the event. Send tips to Zach at zwarmbrodt@politico.com, and reach Victoria at vguida@politico.com.
| | | | THE GOLD STANDARD OF FINANCIAL SERVICES POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like financial services, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists.
Our newsroom is deeper, more experienced, and better sourced than any other. Our financial services reporting team—including Zach Warmbrodt, Victoria Guida and Declan Harty—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of financial policy and the financial services industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY. | | | | | | | | | Minneapolis Fed President Neel Kashkari, former House Speaker Kevin McCarthy, and Treasury Assistant Secretary for Financial Markets Josh Frost speak at Milken … House Financial Services holds a hearing on SEC enforcement actions at 10 a.m. … FDIC toxic workplace report due out — Our Michael Stratford reports that the report of an outside law firm that investigated allegations of sexual harassment and other workplace misconduct at the Federal Deposit Insurance Corp. is expected to be released later today, according to a person familiar with the plan. A bipartisan special committee of the FDIC’s board last year hired Cleary Gottlieb Steen & Hamilton to conduct an independent review in response to a series of reports in The Wall Street Journal that described pervasive sexual harassment and workplace misconduct that stretched for years at the agency. The FDIC previously said that more than 350 people had come forward to speak with the outside investigators. The FDIC’s inspector general and the House Financial Services Committee are separately conducting their own inquiries into the agency’s workplace culture. Biden’s billions — President Joe Biden is trying to secure an FDR-style legacy with $1.6 trillion in spending and tax breaks embodied in his climate, infrastructure, chips and pandemic-relief laws. But a POLITICO analysis finds he’s running short on time — with huge chunks of the money still in waiting as he faces a rematch with Trump. Pros can read it here. Exec pay proposal in suspended animation — Federal banking regulators on Monday announced an effort to revive a rule to rein in Wall Street executives’ compensation, but the proposal can’t move ahead because two key agencies aren’t on board, Michael reports. Regulators previously proposed an executive compensation rule in 2011 and 2016 but neither was ultimately finalized. The proposal unveiled on Monday is a re-preproposal of the 2016 plan. Neither the Federal Reserve nor the Securities and Exchange Commission signed on. A Fed spokesperson tells MM that the central bank is committed to continuing work on a joint rule, but also made clear the central bank is not on board with using the 2016 proposal: “Any rule should be considered following updated analysis so that it reflects current banking conditions and practices.” “Executives who are responsible for a failed bank should not profit from that failure, and bank executives’ pay should appropriately take into account risk,” the spokesperson said. “The Federal Reserve published formal guidance in 2010 outlining our supervisory expectations for incentive compensation programs that appropriately balance risk and reward and promote overall bank safety and soundness. That guidance has been effective.” MM has previously reported on the Fed’s perspective on this. As for the SEC, a spokesperson told MM that the agency doesn’t provide updates on the timing of regulatory actions, but executive compensation rules are on its agenda.
| | | | POLITICO IS BACK AT THE 2024 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO will again be your eyes and ears at the 27th Annual Milken Institute Global Conference in Los Angeles from May 5-8 with exclusive, daily, reporting in our Global Playbook newsletter. Suzanne Lynch will be on the ground covering the biggest moments, behind-the-scenes buzz and on-stage insights from global leaders in health, finance, tech, philanthropy and beyond. Get a front-row seat to where the most interesting minds and top global leaders confront the world’s most pressing and complex challenges — subscribe today. | | | | | | | | | Harris, Schumer and stablecoins — At the Milken conference, New York Department of Financial Services Superintendent Adrienne Harris praised her state’s congressional delegation, including Majority Leader Chuck Schumer, for helping advance stablecoin bill discussions. Harris discussed it on a panel where she was asked about this POLITICO story about her role in bringing Schumer on board. “Sen. Schumer, Minority Leader [Hakeem] Jeffries, I mean everybody, has been just wonderful partners in letting us sort of come to Congress, help with bills, provide technical expertise, as we make the case that states should really be a part of this regulatory equation,” she said. “Because we are more nimble, we’re closer to the ground, we have sort of an economic development stake in the equation as well.” First in MM: New crypto polling — A Harris Poll survey commissioned by the digital asset firm DCG found that more than 20 percent of voters in key battleground states see crypto as a major issue in the election. The survey covered more than 1,200 voters from Michigan, Ohio, Montana, Pennsylvania, Nevada and Arizona. Around 48 percent of voters don’t trust candidates who interfere with crypto, according to the poll. DCG released the findings as the crypto industry spends millions to nudge candidates in this election. In conjunction, DCG is organizing a two-day Washington fly-in with discussions between DCG, its portfolio companies and congressional leadership.
| | | | A message from the Electronic Payments Coalition:   | | | | | Economic growth boosts entitlement programs — Stronger-than-expected economic growth helped boost the financial health of Social Security and Medicare over the past year, though the safety-net programs will still face a funding crisis in about a decade, according to the government’s latest projections, Michael reports. Rankings: Florida best state for the economy — U.S. News is out this morning with its annual rankings for best states, with Utah getting the top spot overall and Florida nabbing the No. 1 slot for the economy. The criteria on the economic front include business creation rate, tax burden, labor force participation, net migration and GDP growth. See the full rankings here. NY Fed survey: Americans bracing for higher housing costs — A New York Fed survey found people expect both rents and home prices to go up in the near term and are bracing for mortgage rates to stay high for a while, Reuters reports. People moves—– Alexandra Victor May is joining Treasury as deputy assistant secretary in the Office of Legislative Affairs. She was previously economic policy director for Sen. Dick Durbin. … Abby Truhart is joining Porterfield, Fettig & Sears as vice president. She previously served as vice president of congressional relations at the American Bankers Association and as senior director of advocacy for the Credit Union National Association.
| | | | A message from the Electronic Payments Coalition: NEW STUDY DEBUNKS MYTH CREDIT CARDS REWARDS ARE ONLY FOR THE RICH: Politicians in DC are teaming up with corporate mega-stores to push a false narrative only the rich benefit from credit card rewards. New research disproves this, showing rewards have a significantly larger financial benefit for low- and middle-income Americans. These rewards, especially cashback, help working class families pay for everyday essentials--equivalent to a 17 cent per gallon gas price reduction. Yet, politicians are trying to pass a new law that would end rewards programs that Americans rely on, favoring corporations over people. The card mandates included in the Durbin-Marshall Credit Card Bill would weaken security measures, disrupt rewards, and burden households already grappling with rising costs. With food and rent prices soaring, stripping cashback rewards from hardworking American families would be devastating. Learn more here. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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