| | | | |  | | By Sam Sutton | | Presented by |  | | | 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.
| | The Democratic Congressional Campaign Committee spent nearly $700,000 this year for texting and tech infrastructure provided by Hustle, a San Francisco-based firm that provides outreach services for progressive causes. Hustle also happens to be owned and operated by one of Donald Trump’s biggest supporters in Silicon Valley. Hustle CEO Chamath Palihapitiya, a major Silicon Valley investor, venture capitalist and co-host of the popular “All-In Podcast,” co-led a San Francisco fundraiser that generated a $12 million haul for the former president in June. Palihapitiya donated the max to Trump’s campaign and $300,000 to the Trump 47 Committee, according to FEC filings. The DCCC’s work with Hustle was a source of grumbling among Democrats in tech circles around the time Palihapitiya and his podcast co-host, venture capitalist David Sacks, announced their plans to host the Trump fundraiser. (h/t Teddy Schleifer). But the company’s work with both the DCCC — it’s one of the committee’s largest vendor contracts — and party organizations continued after the fundraiser, including a $20,000 software contract connected to the Democratic National Convention in Chicago. “When it comes to stuff that actually has to do with tactically executing an effective campaign, [organizations are] usually pretty intentional about only hiring people who they believe also want them to win,” said one former DCCC senior staffer who was granted anonymity to speak frankly about how the organization has selected its vendors in the past. In an email, DCCC spokesperson Viet Shelton said the team at Hustle “has a record of working for pro-worker, pro-choice, and pro-equality organizations. They provide a single, narrowly focused volunteer tool as part of our larger, comprehensive, multi-prong voter outreach efforts to help us win the majority.” Any heartburn that Democrats feel from contracting with a Palihapitiya-led firm underscores the hurdles the party faces in Silicon Valley after its advantage among tech financiers eroded. It also highlights the challenges that emerge when private companies that provide valuable campaign infrastructure become financial assets. (Last year’s layoffs at the private equity-owned NGP VAN, which provides tech for Democratic causes, sparked an uproar.) In a statement to POLITICO, Hustle emphasized that it had consistently “maintained the highest standards in data privacy and security, uptime, support and delivery rates in our industry” and that it remained “dedicated to offering these capabilities to all of our customers equally." Palihapitiya was a major donor to Democrats and left-leaning causes and a vocal Trump critic around the time he acquired Hustle through his firm Social Capital in 2020. The former Facebook executive — who raised billions during the SPAC craze — began to pivot politically in recent years, often bristling at the Biden administration, Democrats and, more generally, “woke” policies. He appointed himself as CEO of Hustle late last year. In “Silicon Valley, it's not so much a split between blue and red, Republicans and Democrats. It's a split between Democrat and libertarians,” said Sacramento-based Democratic strategist Nathan Barankin, who served as Vice President Kamala Harris’s chief of staff in the Senate. “The attraction to Trump is libertarian-based, not partisan-based, from Silicon Valley,” Barankin told MM. In the past, those libertarian priorities overlapped with those of partisan Democrats. That hasn’t been the case with President Joe Biden in the White House. Given her background in Bay Area politics, Harris’s elevation to the top of the ticket has boosted the party’s appeal among Silicon Valley donors who had kept their wallets closed through the first half of the year. “There are diehards who are like: It doesn't matter what time you sinned, your sin is unforgivable,” Barankin said. But most see “this particular campaign in two time frames, pre-and-post Kamala.” IT’S TUESDAY — Consider this your reminder that Morning Money is San Francisco 49er territory. Email Sam at ssutton@politico.com.
| | | | A message from the Georgetown Psaros Center for Financial Markets and Policy: Join the Psaros Center for Financial Markets and Policy on Georgetown University’s campus September 17 for the annual Financial Markets Quality (FMQ) Conference to hear from esteemed industry professionals and policymakers. These leaders will discuss a range of topics affecting the future of finance and policy such as financial regulation, innovation in ETFs, crypto, and market structure. Learn more and see the full FMQ schedule by visiting the Georgetown Psaros Center website. | | | | | Tuesday … The ISM Manufacturing Index will be released at 10 a.m. …. Wednesday … Michael Schmidt, the director of the CHIPS Program Office, and Laurie Locasio, the director of the National Institute of Standards and Technology, will hold a virtual discussion on outstanding work on the CHIPS and Science Act at 9 a.m. … Job openings data for July will be released at 10 a.m. … The Fed’s Beige Book will be out at 2 p.m. … Thursday … The second estimate for U.S. productivity in the second quarter will be released at 8:30 a.m. … The Securities and Exchange Commission has a closed meeting at 2 p.m. … Friday … The August jobs report will be out at 8:30 a.m. … New York Fed President John Williams will speak at a Council on Foreign Relations event at 8:45 a.m. … Fed Gov. Chris Waller will speak in a virtual discussion hosted by the University of Notre Dame at 11 a.m. … “Have a good time with your Bitcoin” — The Trump family’s forthcoming foray into crypto has attracted the scrutiny of ethics watchdogs, Jasper Goodman reports. As the former president vows to enact industry-friendly policies if elected, sons Eric Trump and Donald Trump Jr. are preparing a new cryptocurrency venture called World Liberty Financial. Trump has already boosted the project on social media. “To promise crypto-friendly policies and have your family engage in the same business is, I think, conflict of interest 101,” said Ishan Mehta, director for media and democracy at the government transparency nonprofit Common Cause, told Jasper. Tick, tick, boom — Wall Street investors and policymakers are bracing as a growing number of commercial real estate properties are sold for a loss, Katy O’Donnell reports. Pandemic work-from-home policies, followed by a period of high interest rates, crushed the value of office properties. If you want to get a sense of the risk that could pose to the economy, keep an eye on regional bank balance sheets. The wave of debt coming due “puts extreme pressure on U.S. regional banks that are weighed down by loans for commercial buildings that are worth a fraction of their initial price, making them vulnerable to bankruptcy,” Rep. Mike Carey (R-Ohio) told Katy. Trump’s tariffs — Trump’s plan to impose across-the-board tariffs could cause gas prices to spike, Ben Lefebvre reports. Many U.S. refineries were constructed to process grades of crude oil that aren’t available domestically. If tariffs hit crude imports, the price hikes would be passed along to drivers at the pump, according to analysts. — Does Trump have the legal authority to do so? Many experts believe he does, Doug Palmer reports. The International Emergency Economic Powers Act gives the president sweeping authority to control economic transactions after declaring an emergency. No to Nippon — Harris used an appearance in Pittsburgh to come out against Nippon Steel’s planned acquisition of United States Steel Corp., Holly Otterbein and Eli Stokols report.
| | Inflation slows, challenges remain — The Federal Reserve’s preferred inflation gauge showed that price growth continued to decelerate for key sectors of the economy in July. That was expected, and Fed Chair Jerome Powell has already signaled that lower rates are imminent. Friday’s personal consumption expenditures index report offered further evidence that the new front in the Fed’s efforts to keep the economy healthy is the labor market, Victoria Guida and I report. “We've gone from a data point inflation obsession to a data point labor market obsession. Both are unhealthy,” Gregory Daco, chief economist at EY-Parthenon, told MM after the PCE report came out. Moving forward, “every employment report now is going to get an outsized focused, excessive focus, whether it's the monthly payrolls or the weekly claims.” The Labor Department will provide an update on nonfarm payrolls, the unemployment rate and wage growth this Friday. The tale of the tape for the policymakers — both at the Fed and those on the campaign trail — will be how and when a softer labor market begins to affect consumer spending. While spending improved in July, the savings rate as a percentage of disposable income slid below 3 percent, according to the report. For context, the savings rate was about 7 percent at the end of 2019. Consumers are having “to dip into their savings to finance their outlays,” Daco said. “That's simply not sustainable.”
| | | | A message from the Georgetown Psaros Center for Financial Markets and Policy:   | | | | | It’s not all gloom and doom — Most Americans still believe the economy is “getting worse,” per the latest Gallup survey. But the percentage who say it’s “getting better” improved seven percentage points last month to 31 percent. That’s only happened three times since 2021. — Democrats are increasingly bullish on the economy since Biden stepped down from the ticket, according to Gallup. A Wall Street Journal survey reported a similar spike, with Democrats recording “a 13-point jump in the share that said the country was headed in the right direction when compared with early July,” reports The WSJ’s Sabrina Siddiqui. Two things that could cause inflation to spike — As concerns mount over what automation will mean for workers, the International Longshoremen’s Association could strike at more than a dozen ports in the U.S. this fall, The NYT’s Peter Eavis reports. — Meanwhile, in the housing market, construction of new multi-family housing has cratered, The WSJ’s Will Parker reports. Investors are betting rents will climb as a result. Labor Day celebrations — The Institute for Policy Studies released its annual report on CEO compensation at the 100 S&P 500 corporations with the lowest median worker pay. IPS found that the worker-to-CEO pay ratio shrank from 603-to-one in 2022 to 538-to-one in 2023. Median pay for workers at those companies climbed by 9 percent to $34,522 last year. CEO pay at those companies dipped by around 4 percent to $14.7 million.
| | Morning Money was on hiatus last week, but POLITICO’s financial services team kept busy: Hurry up — The SEC voted 3-2 to finalize rule changes that will require funds to disclose their holdings on a monthly, rather than quarterly, basis starting in 2025. Chair Gary Gensler said the rules would aid the agency’s response “during times of stress or fast-moving events,” Declan Harty reports. Investment Company Institute CEO Eric Pan – whose industry group represents mutual funds, exchange-traded funds and other regulated investment funds — says they “will open fund managers to a greater risk of predatory trading that will harm fund shareholders, without any corresponding benefit.” Kalshified — Declan also reported that prediction market operator Kalshi received approval from the Commodity Futures Trading Commission to launch a clearinghouse. The group is already licensed as a derivatives exchange. Toxic — The Federal Deposit Insurance Corp.’s board is divided along partisan lines over how the agency should investigate the myriad misconduct allegations that were made against Chair Martin Gruenberg and other senior agency officials over the last year, Michael Stratford reports. Gruenberg and two other Democrats on the FDIC’s board last week approved a plan for how those investigations should proceed, but Republican board member Jonathan McKernan blasted the move as a “convoluted and complicated process.” — Gruenberg is tentatively slated to testify before House Financial Services on Sept. 19, Eleanor Mueller scooped.
| | Sabrina Bergen has joined the Conference of State Bank Supervisors as chief of staff for policy and supervision. She was previously a senior vice president in the office of strategic engagement at the American Bankers Association. CSBS has also brought on Max Martin, formerly of PenFed Credit Union, as its chief learning officer and senior vice president. Sebastien Monnet was promoted to senior vice president and deputy chief learning officer. Ebony Sunala Johnson has joined Block Inc. as its new head of regulatory affairs. She previously led consumer regulatory and public affairs at Truist, and has also worked at the CFPB. Block has also hired Tealanie Baldwin from Capital One as its consumer finance policy lead, and Collins Udekigbo from Equifax as its Eastern US policy lead.
| | | | A message from the Georgetown Psaros Center for Financial Markets and Policy: Don’t miss the annual Financial Markets Quality (FMQ) Conference on September 17, hosted by the Psaros Center for Financial Markets and Policy on Georgetown University’s campus. This year’s conference theme is Future of Financial Markets: Innovation and Uncertainty. Attendees will hear from key experts and leaders at the intersection of finance and policy as they discuss timely issues and the future of finance and policy.
FMQ 2024 is an unparalleled opportunity to gain perspectives from leaders shaping global financial practice and policy. Hear from our keynote speakers and panelists on topics including market structure, innovation in ETFs, financial market regulation, and cryptocurrency.
You will network, collaborate, and gain actionable knowledge on everything from regulatory trends to technological advancements. Secure your place at FMQ 2024 to be at the forefront of what’s next for financial markets. Register now to reserve your spot. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
