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Trump goes primetime — President Trump pressed his case for a border wall in a nine minute Oval Office address in which he spoke of a “crisis of the soul” at the southern border and made a series of factually inaccurate or misleading statements.
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House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer offered the Democratic response in which they rejected Trump’s request for $5.7 billion in border wall funding. The dueling addresses, both of which were pretty low energy, are not likely to change the shutdown dynamics. The White House wants a bump in public support for a wall but it would be surprising if that materializes.
Republicans on the Hill realize that once workers start missing paychecks the shutdown will become even more untenable. So they are increasingly supportive of Trump declaring a national emergency at the border, though that would come with significant legal issues.
The good news on jobs – “Those who thought that the job market was at full capacity a year or more ago, and a lot of prominent people thought that, I think the evidence is they were wrong,” Jared Bernstein, former chief economist to Vice President Joe Biden, said on the latest edition of the POLITICO Money podcast.
What happened to Nellie Liang? — MM is told that Nellie Liang told the White House she didn’t want to move forward with her Fed nomination because it was completely unclear when she might get a vote and in the meantime she could not push forward with other work including research and speaking engagements. More on Liang below.
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GOOD WEDNESDAY MORNING — Greetings from Park City, Utah where MM is sadly working, not skiing. Email me at firstname.lastname@example.org and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at email@example.com and follow her on Twitter @AubreeEWeaver.
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Katy O’Donnell on mortgage lenders and financial institutions’ efforts to help federal employees pay their bills amid the ongoing government shutdown. To get Morning Money every day before 6 a.m., please contact Pro Services at (703) 341-4600 or firstname.lastname@example.org.
Trump attends a Senate GOP lunch on the HIll … Congressional leadership heads back to the White House at 3:00 p.m. for another round of shutdown talks as TSA agents threaten to quit if they don’t get paid on Friday … FOMC minutes at 2:00 p.m.
MORE ON NELLIE LIANG — The biggest underlying problem, MM hears, is that the Fed still has frosty relationships with Senate Republicans who are suspect of pretty much anyone who comes out of the institution, as Liang does. The open Fed seats are not an especially high priority right now. The administration is more focused on getting Mark Calabria confirmed as the next FHFA director.
Counter-intuitive take on Liang — Via Cowen’s Jaret Seiberg: “Liang is a systemic risk expert whom we believe would have supported the Fed’s deregulatory approach. Risk now is [Trump] picks an interest rate dove who may be even tougher on big banks
More from the pod — We also spoke with Pat St. Claire, a journalist in Atlanta, who is among those who had given up on finding a full-time job after getting laid off by CNN in 2013. “It was really discouraging, quite honestly,” St. Claire said. “I was applying to maybe two jobs a week or so, maybe two or three jobs, because I would really take my time and try to craft letters, and nothing, I got no bites at all.”
Bernstein on Biden — Jared Bernstein on his former boss: “I think any cognizant, plugged-in reader of the newspaper would recognize that he’s definitely leaning in. I think it’s a decision he hasn’t quite made yet.”
“A lot of Democrats are asking themselves, ‘Who can beat Trump?’” And a lot of people think that Biden can do that. … A lot of people come up to me and say, ‘Can you please tell Joe Biden to run for president?’ And they don’t say that about anybody else.”
Chamber warns on shutdown — Fairly significant moment on Tuesday when the U.S. Chamber of Commerce warned that the shutdown is “is harming the American people, the business community, and the economy.”
And the hurt is growing— Our Caitlin Emma leads the roundup of all the ways the shutdown is screwing stuff up: “With the partial government shutdown lurching into its third week, thousands of federal employees are applying for unemployment benefits and the Trump administration is scrambling.
“Acting White House budget director Russ Vought said Monday that tax refunds won’t be delayed — heading off the Treasury Department, which had been trying to figure out if that’s even legally possible. But a Department of Homeland Security spokesperson confirmed that Tuesday is the last day to process federal paychecks — essentially guaranteeing no pay for employees there on Friday without an immediate spending deal.”
China talks progress — Remember when we said Trump was eager to get a China deal to calm rocky markets? And that he was likely to tweet positive things about talks going on this week in Beijing? Well, here he was, right on schedule on Tuesday: “Talks with China are going very well!”
The Dow, S&P and Nasdaq all closed up another 1 percent or so on Tuesday. These things are directly connected and they continue to point to some kind of agreement with China before April 1, no matter what the hawks say.
SHUTDOWN HITS HOUSING MARKET — Our Katy O’Donnell: “The government shutdown is rattling the housing market, according to two new industry reports. The roughly 800,000 unpaid federal employees owe $438 million in mortgage or rent payments this month, according to a report from Zillow” More for Pros.
FOOD STAMPS WILL CONTINUE — Our Helena Bottemiller Evich: “Trump administration officials said Tuesday that the Agriculture Department will be able to pay out food stamp benefits for the entire month of February — tamping down fears that the partial government shutdown could have resulted in rationing or halting of benefits.”
SEC FACES ‘GAG ORDER’ LAWSUIT — Via Patrick Temple-West: The conservative-leaning Institute for Justice will represent the Cato Institute in a lawsuit to be filed Wednesday that challenges the constitutionality of the SEC’s gag-order policy, which has been criticized for preventing people from talking about their enforcement settlements with the agency.
STOCKS RISE AGAIN — AP’s Marley Jay: “Stocks climbed for the third day in a row Tuesday as the latest round of trade talks between Washington and Beijing continued. It’s the longest winning streak for U.S. indexes since late November. …
“An agreement between the two biggest economic powers in the world could remove a major obstacle to global economic growth, and many of the biggest gains Tuesday went to companies that usually do better in times of faster growth, including internet, technology and industrial stocks. Oil prices also kept rallying.” Read more.
And Wall Street has Apple, Facebook to thank — Reuters’ Noel Randewich: “The S&P 500 jumped to a three-week high on Tuesday, led by Apple, Amazon, Facebook and industrial shares on bets that the United States and China would strike a deal to end their trade war.” Read more.
How do American stocks tie to the rest of the world? — WSJ’s James Mackintosh: “The volatility crash of February 2018 hit the U.S. and other developed markets equally, too. But from mid-May until the September peak American exceptionalism kicked in: the S&P jumped 7.3 percent to a new high, while the rest fell 3.2 percent. The U.S. economy was boosted by tax cuts while Europe fought over Italy, car makers in Germany and Japan struggled and China suffered from the trade fight.” Read more.
WORLD BANK CUTS GROWTH FORECASTS — AP’s Paul Wiseman: “The World Bank is downgrading its outlook for the global economy this year, citing rising trade tension, weakening manufacturing activity and growing financial stress in emerging-market countries.
“In a report titled ‘Darkening Skies,’ the anti-poverty agency said Tuesday that it expects the world economy to grow 2.9 percent in 2019, down from the 3 percent it forecast back in June. It would be the second straight year of slowing growth: The global economy expanded 3 percent last year and 3.1 percent in 2017.” Read more.
AMEX SUSPENDS A DIRECTOR — WSJ’s AnnaMaria Andriotis: “American Express Co. suspended a director in its foreign-exchange department as part of its ongoing investigation into pricing practices in the division, according to people familiar with the matter. Foreign-exchange employees were informed last month on a company call that the director, Taylor Simonin, was suspended, the people said.” Read more.
DEUTSCHE BANK TO SLASH BONUS POOL — Bloomberg’s Steven Arons: “Deutsche Bank AG’s management board plans to cut the bonus pool by around 10 percent as the German lender juggles cost pressures while trying to retain key employees, according to people familiar with the matter.” Read more.
TRANSITIONS — Andrew Busch has left the CFTC where he was the chief market intelligence officer. He will have a consulting/speaking/research business on the global economic landscape, challenges for future growth and how tech is shaping the economy and the markets.
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