| | | | |  | | By Sam Sutton | | | 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.
| | There have been plenty of signs that the strong labor market of President Joe Biden’s first three years in office is starting to slow down. Today’s monthly report from the Labor Department will confirm if that trend continued in November. Economists project the Labor Department to report that the U.S. added 190,000 jobs — off the eye-popping 258,000 averaged in the 12 months through October — and that the unemployment rate stayed flat at 3.9 percent. But even if Biden gets an early Christmas present with a surprise to the upside, it doesn’t mean Wall Street will set aside the narrative that the jobs market has started to normalize. “I often find that it’s one of the least trustworthy government reports out there because of the magnitude of revision,” Jason Pride, the chief of investment strategy and research at the wealth management firm Glenmede, told MM. “Every time we comment on it, I'm always kind of wondering if – in the next month – if we’re going to have to reverse exactly what we said.” Jobs reports are revised twice after the initial estimates are published on the first Friday of each month. Through August, this year’s revisions have trimmed an average of roughly 37,000 jobs from those initial estimates. That’s meaningful when you consider how much emphasis Federal Reserve Chair Jerome Powell has placed on the job market in his push to bring down inflation. When the demand for labor exceeds supply, wage growth accelerates. That’s good for workers, but it can prompt businesses to raise prices so they can cover the cost of paying or retaining their employees. Last week, Powell said the jobs market was “very strong” but that it’s “returning to a better balance between the demand for and supply of workers.” This week’s report on job openings in October was interpreted as a sign that the market is starting to normalize.
| | | | Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of new episodes – click here. | | | | | Erica Groshen, a senior economics adviser at Cornell University and former Bureau of Labor Statistics commissioner, said in an interview that the consistent downward revisions often reflect that “you’re heading into a real downturn.” Still, the revisions to the initial estimate could be a reflection of declining response rates to surveys the Labor Department uses to compile the jobs report. As long as unemployment doesn’t spike and wages continue to climb, White House officials have told MM that a slowdown in monthly job tallies won’t have much bearing on how Americans experience the real economy. Martha Gimbel, a former senior adviser to Biden’s Council of Economic Advisers now at Yale Law School, observed in a research note that a “‘slowing’ economy is not the same as a ‘stalling’ economy.” And despite the downward revisions, a stall doesn’t appear to be imminent. “Part of the problem that we're dealing with in this is that everyone wants the economy to just snap back to normal with no transition period. And that's just not going to happen,” Gimbel told MM. “We all have to be patient; we all have to sit through this period of real weirdness and real transition in the economy.” The Labor Department did not respond to a request for comment. IT’S FRIDAY — Happy Hanukkah! As always, send tips and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com.
| | A message from the Financial Services Forum: The nation’s largest banks are essential in today’s economy, providing loans to consumers and small businesses, and helping U.S. companies compete. Fed Chairman Powell said it best: “The large banks in the US are very strong, well-capitalized, with a lot of liquidity, and they've been a source of strength during the last few events.” However, a recent proposal would hinder banks’ ability to lend in an already uncertain economy. Don’t undermine a strong financial system. | | | | | The Labor Department releases jobs data for November at 8:30 a.m. … Another consideration — A soft jobs number would also provide a boost to bond traders who have bet that the Fed will cut rates by 1.25 percentage points or more next year, Bloomberg reports. “Better than Trump” — Axios’s Mike Allen and Jim VandeHei report on who has made former President Donald Trump’s shortlist for cabinet positions should he defeat Biden in 2024. One surprise: JPMorgan Chase CEO Jamie Dimon. — Meanwhile, BlackRock’s Larry Fink took to LinkedIn after his firm became a punching bag during the fourth GOP debate. “Despite multiple claims in the debate to the contrary, I haven’t endorsed any candidate for president this year. I’ve met with at least five of the candidates in this campaign cycle. I meet with policymakers all the time to understand the implications for our clients. That’s my job.” Calling “buy” in a crowded theater — Elon Musk has asked the Supreme Court to invalidate an agreement with the SEC that requires advance screening of his Tesla-related posts on X, formerly Twitter, Bloomberg reports. Not so OpenAI — Helen Toner, a former OpenAI board member who heads strategy for a Washington think tank, told the WSJ’s Meghan Bobrowsky and Deepa Seetharaman “that safety wasn’t the reason the board wanted to fire Altman. Rather, it was a lack of trust.” — AI stocks powered a Nasdaq surge on Thursday after Google launched its new AI model, Gemini, Reuters reports. China sell-off — The WSJ’s Lingling Wei: “One of Washington’s biggest China critics traveled to New York in mid-September to meet with some of Wall Street’s best-known financiers. His mission was to persuade them to stop investing in China. Wisconsin Republican Mike Gallagher, who chairs a House committee on China, was surprised to find they didn’t need much coaxing. They told him they already were ratcheting back their investments there.”
| | | | A message from the Financial Services Forum:   | | | | | FIRST IN MM: Sens. J.D. Vance (R-Ohio) and Elizabeth Warren (D-Mass.) sent a letter this morning to FDIC Chair Marty Gruenberg raising concerns over the agency's sale of First Republic Bank to JPMorgan Chase earlier this year, Eleanor reports. "Not only did the seizure and sale of First Republic result in a $13 billion loss to the FDIC’s Deposit Insurance Fund ... federal regulators also utilized a legal loophole to ignore viable bids" from "substantially smaller banks" like PNC, the lawmakers wrote. They allege that Gruenberg indicated a $20 billion spread between bids to Vance — but that they've since learned it may have been closer to $1 billion, a margin that could mean the smaller banks' bids may have been just as competitive. The FDIC declined comment. New CDFI app — Your host had an exclusive on Treasury’s updated standards for Community Development Financial Institutions, which Deputy Assistant Secretary for Community and Economic Development Noel Andrés Poyo said were designed to accommodate a spectrum of lenders. — Andrew Kushner, senior policy counsel at the Center for Responsible Lending, said the new standards will “stop the CDFI imprimatur from going to institutions that regularly offer predatory loans at interest rates above 36 percent APR or to institutions that issue mortgages without checking applicants’ ability to repay.”
| | | | JOIN WOMEN RULE ON 12/12: For centuries, women were left out of the rooms that shaped policy, built companies and led countries. Now, society needs the creativity and entrepreneurship of women more than ever. How can we make sure that women are given the space and opportunity to shape the world’s future for the better? Join POLITICO's Women Rule on Dec. 12 for Leading with Purpose: How Women Are Reinventing the World to explore this and more. REGISTER HERE. | | | | | | | | Speaking of the FDIC — Senate Banking’s top Republican Sen. Tim Scott of South Carolina led a letter from GOP members calling for Gruenberg’s resignation in the wake of reports of harassment and discrimination at the agency, Eleanor Mueller reports. McHenry’s gambit — Financial services provisions, including language targeting fentanyl trafficking, foreign farmland ownership, artificial intelligence in banking, or anti-money laundering in crypto, were nixed from the annual defense bill after House Financial Services Chair Patrick McHenry (R-N.C.) held up the process, Eleanor reports. Student loans — House Republicans along with Democratic Reps. Jared Golden of Maine and Marie Gluesenkamp Pérez of Washington voted to nix Biden’s student loan repayment program on Thursday, our Michael Stratford reports.
| | A message from the Financial Services Forum: The nation’s largest banks are essential in today’s economy, providing loans to consumers and small businesses, supporting underserved communities, and helping U.S. companies compete.
In June 2023, Fed Chairman Powell said it best: “The large banks in the US are very strong, well-capitalized, with a lot of liquidity, and they've been a source of strength during the last few events.”
Despite this strength, a recent Fed proposal would impose unnecessary new capital requirements that would drive up costs for American families and hinder large banks' ability to lend in an already uncertain economy.
Let’s ensure our nation’s largest banks can continue to be a driving force behind economic recovery and prosperity in America. Don’t undermine a strong financial system. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
