By Ben White and Aubree Eliza Weaver | 04/20/2017 08:00 AM EDT
FIRST 100 DAYS MADNESS - The White House obsession with the "First 100 Days" marker coming up next week is starting to look ... problematic. Multiple reports continue to circulate of the White House looking to jam a health care bill through next week. This seems impossible, likely to create another embarrassment and get in the way of the potentially difficult job of keeping the government open past Friday. Never mind that any bill jammed through this way could exact a big political price down the road.
There is also fresh talk of the White House looking to score big wins in any continuing resolution on border wall funding and other agenda items (more on which below). These efforts will draw swift opposition from Democrats and could lead to a shutdown, which will get blamed on the White House and Congressional Republicans and turn the 100th day into a nightmare.
Stepping away from the arbitrary 100 days marker could cost the White House an unfavorable news cycle or two. But that's about it. Who remembers all those first 100 days stories? And setting up unrealistic deadlines has already cost the Trump White House on labeling China a currency manipulator "on day one" and getting fundamental tax reform done by August. Sometimes the long game is better.
HOENIG SUGGESTS A BARGAIN - POLITICO's Victoria Guida: "FDIC Vice Chairman Tom Hoenig on Wednesday said he would be 'very supportive' of getting rid of so-called orderly liquidation authority - which allows his agency to take over a failing megabank and unwind it - but only if banks raised considerably more capital and adopted his plan to restructure banks. Under that plan, a bank would be required to partition various activities into affiliates that would be separately capitalized and managed from the insured operations of the company.
'I'm pretty convinced, given the capital levels of the industry today, that you would have a difficult time without having a systemic crisis should any one of these largest [banks] fail,' he said at the Levy Economics Institute conference. 'However, if we deal with that, if we get the capital numbers up to where they can absorb the shock of one failure or, God forbid, two, then you can, with the proposal I have separating [activities] out, you can have a bankruptcy.'"
Side note: Though this statement by Hoenig isn't totally surprising, it is notable that he endorsed scrapping this authority under any circumstance, given that Trump could very well consider him for FDIC chairman.
WHITE HOUSE GOING BIGLY ON SHUTDOWN? - POLITICO's Josh Dawsey and Jake Sherman: "The White House, under internal pressure to show legislative achievements ahead of the 100-day mark, is gearing up for a government shutdown fight to secure money for a border wall, more immigration enforcement officers and a bigger military, according to White House and congressional sources ...
"It is a risky gambit. With almost uniform Democratic opposition to nearly all of the Trump administration's spending proposals, the fight could lead to a government shutdown next Friday - the day government spending expires, and right before the 100th day of Donald Trump's presidency. Officials could also strike a one-week compromise, giving them more time for a broader agreement" Read more.
MORE ON QUARLES - Better Markets' Dennis Kelleher emails on Wednesday's MM item: "Quarles was and remains dead right in his view that the US 'will remain below our potential output for a decade longer' due to the economic catastrophe caused by the 2008 financial crash"
And here's Quarles supporting a single E.U.-U.S. common market: "Creation of a single market between the U.S. and the EU could reduce transaction costs by 60 percent, increase trading volume (and thus the efficiency of asset re-allocation) by 50 percent, and reduce the cost of equity capital by roughly nine percent" Read more.
HEY NEW YORK DAILY NEWS: Stop stealing my tweets!
DRIVING THE DAY - President Trump meets with Prime Minister Paolo Gentiloni of Italy and will hold a joint press conference with him ... Trump is also expected to sign an executive order targeting steel imports ... Philly Fed survey at 8:30 a.m. expected to dip to 25.5 from 32.8 ... Index of leading indicators at 10:00 a.m. expected to rise 0.2 percent.
POLITICO Event - Rebuilding America: A New Infrastructure Agenda - Join POLITICO for a discussion on the prospects for a major national infrastructure push from the new administration and Congress. Speakers include: Sen. Deb Fischer (R-Neb.), Sen. Amy Klobuchar (D-Minn.), Building America's Future President Marcia Hale, Club for Growth President David McIntosh, and Chamber of Commerce ED Transportation Infrastructure Ed Mortimer. Monday, April 24 - 5:30pm - The Newseum. RSVP: here.
MORGAN STANLEY HAPPY WITH MODEST RATE CUT - POLITICO's Colin Wilhelm and Victoria Guida: "Morgan Stanley CEO James Gorman said today that his company would be happy with corporate tax reform that cut rates at least under 30 percent, a more modest goal than had been discussed by Republican policymakers.
"'I suspect it will be a little more modest [than some of the proposals out there],' but anything below 30 percent, 'which appears likely, would be positive,' Gorman said on Morgan Stanley's quarterly earnings call."
MORE ON SCHWARZMAN AND TRUMP - Via IBT: "Our new investigative report reviews hundreds of pages of lobbying documents, SEC filings and campaign finance reports to document how Blackstone CEO Steve Schwarzman is shaping White House policy on a raft of issues that affect Blackstone's business.
"The story specifically looks at issues like the fiduciary rule, Dodd-Frank, infrastructure policy and offshore drilling, showing links between the Trump policies Schwarzman has worked on and Blackstone's statements and recent investment moves." Read more.
E.O. COMING ON STEEL - POLITICO's Doug Palmer and Adam Behsudi: "President Donald Trump is expected to sign an executive order as early as Thursday directing the Commerce Department to investigate whether steel imports into the U.S. should be blocked on national security grounds, according to sources familiar with the plan.
"A number of steel industry executives have been invited to the White House for an event with Commerce Secretary Wilbur Ross. Representatives from ArcelorMittal, Nucor, U.S. Steel, AK Steel and Timken are expected, along with the president of the United Steelworkers union' China's excess capacity to produce steel is seen as a long-term threat to the U.S. steel industry's viability, but it's unclear if the order will single out any country or be global in scope" Read more.
OCC AWARE OF WELLS PRACTICES IN 2010 - POLITICO's Victoria Guida: "The Office of the Comptroller of the Currency was aware of sales practice abuses at Wells Fargo as far back as 2010 but didn't take definitive action, the agency said today in a report about its supervision of the bank. Much like the bank itself, the agency found that it did not focus on the underlying causes of the fake account openings.
"'Following a January 13, 2010, meeting with senior bank management in which the high number of complaints were discussed, [the investigation] found no evidence that examiners required the bank to provide an analysis of the risks and controls,' according to the report. The OCC didn't investigate further 'to identify the root cause and the appropriate supervisory actions needed,' it said." Read more.
RICKETTS OUT FOR COMMERCE SPOT - Via POLITICO: "Trump's choice for deputy commerce secretary, Todd Ricketts, has withdrawn from consideration ... The decision by Ricketts, a Chicago Cubs co-owner and TD Ameritrade board member, to withdraw his name was due to difficulties untangling his financial holdings to satisfy ethics rules."
BRIEF EMAIL from a top D.C. corporate lobbyist on Ricketts pulling out: "Not good."
WAGE WORRIES SINK STOCKS - AP's Marley Jay: "U.S. stocks gave up a promising start and finished mostly lower Wednesday as investors continued to worry about lagging wages and energy companies dropped with the price of oil.
"Stocks climbed early on as a solid quarter from Morgan Stanley revived optimism about banks, and strong results from auto and industrial parts distributor Genuine Parts sent car makers and suppliers higher. The gains began to fade around noon as oil prices and energy companies sagged. The losses accelerated after the mid-afternoon release of the Federal Reserve's 'Beige Book' survey of economic conditions." Read more.
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HENSARLING REVEALS DODD-FRANK REPLACEMENT PLAN - Reuters' Pete Schroeder: "The head of the U.S. House of Representatives' banking panel has unveiled the Republicans' most ambitious plan so far to loosen financial regulations, a 600-page bill to replace the Dodd-Frank financial reform law. Representative Jeb Hensarling, who chairs the House Financial Services Committee, also set an April 26 hearing to discuss replacing the 2010 law.
"Hensarling's ambitious approach, which would eliminate huge portions of Dodd-Frank, faces an uncertain political future beyond the House. At least eight Democrats would need to support a financial reform bill in the Senate for it to pass, and the major changes proposed by Hensarling are not expected by industry experts to garner that type of support." Read more.
AMEX BEATS EXPECTATONS - Reuters' Pallavi Dewan and Nikhil Subba: "American Express Co's first-quarter profit fell less than expected as its card members spent more and the company expressed more confidence over its full-year results, amid fierce competition in the industry.
"AmEx's shares rose 2.5 percent after the bell on Wednesday as the results and guidance indicated the company was starting to mitigate some of the impact of losing key partnerships last year, especially one with Costco Wholesale Corp. Some of that impact was also blunted by AmEx spending heavily on marketing as well as on premium rewards to retain existing customers and woo new ones." Read more.
ASIA STOCKS A MIXED BAG, KIWI ON THE RISE - Bloomberg's Adam Haigh: "Asian stock markets were mixed as oil recovered some of its slump. The kiwi dollar surged as inflation in New Zealand accelerated more than forecast. Equities in Japan rose on strong export figures, Australian equities also climbed and South Korean shares were flat.
"Futures on the S&P 500 Index ticked higher after a rout in crude dragged U.S. shares lower, as the plunge in oil eased in early trading Thursday. The Aussie dollar held on to a two-day drop. The kiwi climbed after New Zealand inflation reached the central bank's target for the first time in more than five years." Read more.
INVESTORS SEE BREAK FROM OIL PRICE SWINGS - WSJ's Timothy Puko and Alison Sider: "The wild price swings that characterized the oil market for much of the past two years have faded in 2017, a welcome development for stock and bond investors whose holdings tend to suffer when crude turns volatile.
"U.S. oil prices traded in a range of $50.82 to $54.45 a barrel for most of the past four months. No 60-day trading range has been that tight in nearly 14 years. Two opposing forces have trapped oil prices in that narrow band: Production cuts by the major producing nations have limited price declines while growing U.S. supply has held rallies in check." Read more.
WHAT DOES GORMAN WANT? - Bloomberg's Hugh Son: "After reporting first-quarter results that beat analysts' expectations, Morgan Stanley Chief Executive Officer James Gorman offered a laundry list of suggestions for revising U.S. financial regulations. Some rules are 'ripe for real change,' Gorman, 58, told analysts Wednesday in a conference call.
"'Make the Federal Reserve stress tests and living will reviews biennial rather than annual, so banks and regulators have more time to digest changes. ... 'It is an enormous task,' Gorman said. 'In our case, it's something like 25,000 pages I think we submit on an annual basis and it takes an enormous effort by our regulators to digest that. For an exercise of this rigor and substance, I think there would just be more value added in having people digest it for a year and have really proper thoughtful responses.'" Read more.
BLACKROCK ASSETS UNDER MANAGEMENT HITS $5.4T - FT's Stephen Foley: "A record amount of money flowed into BlackRock's exchange traded funds business iShares in the first quarter, but revenues fell short of expectations, as the industry undergoes a price war. The world's largest asset manager, with $5.42tn under management at the end of March, cut fees on many of its iShares ETFs last October, and said that inflows had allowed it to recover about half the foregone revenue so far.
"BlackRock also suffered a decline in revenue at its advisory business and missed expectations for performance fee income. A one-off tax benefit helped it beat Wall Street's forecasts for earnings. Quarterly net income was $862m, up from $657m a year ago." Read more.
IBM SHARES SLIDE - FT's Adam Samson and Joe Rennison: "IBM shares skidded by the most in almost a year on Wednesday after it posted its 20th straight quarter of sales declines. Big Blue's stock dropped 4.9 per cent to close at $161.69 in New York. The technology group said its revenues slipped 3 per cent year on year to $18.2bn in the first quarter, missing analyst estimates of a slimmer fall to $18.4bn.
"Gross profit margin, an important gauge of profitability, fell to 42.8 per cent from 46.5 per cent in the first quarter of 2016. Chief executive Ginni Rometty has been working to revive the more than century-old company's sales with a focus on forward-looking 'strategic imperatives,' like cloud, and the Watson artificial intelligence system that IBM hopes will disrupt fields as far-ranging as healthcare and marketing." Read more.
IMF SAYS VOLCKER RULE HARD TO ENFORCE - Bloomberg's Andrew Mayeda: "A U.S. regulation designed to prevent banks from making speculative bets is difficult to enforce and may drain liquidity from the country's banking system, according to the International Monetary Fund's top financial-risk official.
"While the IMF has cautioned the U.S. against weakening its banking restrictions, it's fair for regulators to revisit the merits of the Volcker Rule, said Tobias Adrian, director of the International Monetary Fund's monetary and capital-markets department. Read more.
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