Morning Consult Finance: China to Ask WTO to Back Sanctions on United States


Top Stories

  • China plans to ask the World Trade Organization to impose sanctions on the United States for failing to comply with a ruling regarding its dumping duties, according to an agenda for the Sept. 21 meeting. The U.S. method for calculating the amount of Chinese exports priced to undercut American-made products has been repeatedly ruled to be illegal by the WTO. (Reuters)
  • House Republicans released legislation that would make permanent individual tax cuts set to expire at the end of 2025. The so-called “tax reform 2.0” is seen as a largely symbolic effort given that it is unlikely to pass the Senate and includes a measure to cap state and local tax deductions that could make it difficult to defend for GOP incumbents in high-tax states. (Bloomberg)
  • White House Council of Economic Advisers Chairman Kevin Hassett said that President Donald Trump was incorrect when he tweeted that it was the first time in more than a century that the gross domestic product growth rate was higher than the unemployment rate. Hassett noted that it was the highest in a decade and said the mistake was probably the result of someone “adding a zero to that” when conveying the information to the president. (The Wall Street Journal)

Chart Review

Events Calendar (All Times Local)

Tuesday
Brookings event on responding to the global financial crisis 10 a.m.
NAFCU Congressional Caucus 3 p.m.
Wednesday
NAFCU Congressional Caucus 7:15 a.m.
Cato fintech regulation summit 8:30 a.m.
Brookings event on responding to the global financial crisis 10 a.m.
CSIS event on blockchain 10 a.m.
Aspen Institute event on financial health of independent workers 2:30 p.m.
Thursday
NAFCU Congressional Caucus 7:15 a.m.
SEC Investor Advisory Committee meeting 9 a.m.
CEPR event on building a high-wage America 9:30 a.m.
Senate Banking Committee hearing on the Implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act 10 a.m.
Senate Budget Committee hearing on CBO transparency 10:30 a.m.
Aspen Institute event on AI and the consumer debt market 4 p.m.
Economic Club Milestone Celebration Event feat. Jeff Bezos 5:15 p.m.
Friday
NAFCU Congressional Caucus 7:15 a.m.
AEI conference on the 10th anniversary of the financial crisis 10 a.m.

New Poll: Consumers React to Nike’s New Ad Featuring Colin Kaepernick

Real-time brand tracking data reveals a sharp drop in favorability and purchasing consideration.

General

Former CFPB advisory board members criticize new structure of panel
Rachel Witkowski, American Banker

Consumer advocates and academics recently removed from a panel that advises the Consumer Financial Protection Bureau on consumer issues said Monday they were “disappointed” that the board will be reconstituted with fewer members. Seven former members of the CFPB’s Consumer Advisory Board issued a statement challenging acting CFPB Director Mick Mulvaney’s recent announcement of a smaller board with shorter terms.

US, Canada will meet Tuesday, earlier than expected on NAFTA
Vicki Needham, The Hill

The U.S. and Canada will resume high-level talks on Tuesday, which is earlier than expected, on the North American Free Trade Agreement (NAFTA). Canadian Foreign Minister and U.S. Trade Representative Robert Lighthizer will meet to try to hammer out the final complex details of a North American agreement with the aim of including all three countries in the 24-year-old deal, according to news reports.

A decade after the crisis, the SEC still hasn’t passed executive compensation rules
Francine McKenna, MarketWatch

Almost everyone got on board the reform train after the 2008 financial crisis. However, big business, and in particular the biggest banks, slammed the brakes on reforms that threatened to separate senior executives from their money that critics said incentivized excessive risk taking before the crisis.

Some companies still don’t have any female directors. California wants to fine them.
Jena McGregor, The Washington Post

To fix the stubbornly low numbers of women serving on corporate boards, investors have tried to pressure companies to add more female directors. Lawmakers have pushed to make boards report their diversity statistics and have passed resolutions urging companies to add more female directors voluntarily.

Hurricanes Have Failed to Spur Flood Insurance Reform Bill
Ari Natter, Bloomberg

U.S. taxpayers who spent billions of dollars after a trifecta of hurricanes last year are poised to do so again after a fix to the nation’s troubled flood insurance program remains stalled in Congress — and as a dangerous new storm barrels toward the southern Atlantic coast. The program, administered through the Federal Emergency Management Agency, is the primary source of flood insurance in the U.S., with about 5 million policy holders across the country.

House, Senate Reach Partial Funding Deal to Help Avert Shutdown
Erik Wasson, Bloomberg

Republicans and Democrats in Congress said Monday they’ve reached a deal on the first of a series of government spending packages intended to avert a federal shutdown in October. The $147 billion package would fund the departments of Energy and Veterans Affairs, the Army Corps of Engineers, military construction projects and the legislative branch.

Stocks Slip as Trade Mood Sours; Dollar Stronger: Markets Wrap
Eddie van der Walt, Bloomberg

U.S. equity futures fell with European shares after a mixed session in Asia, as fears returned over trade relations among the world’s two biggest economies. The dollar advanced, with the pound and euro barely holding Monday’s gains.

Banking

Finra fines Citigroup $100,000 for overcharging clients
Jeff Benjamin, InvestmentNews

Citigroup Global Markets Inc. has been fined $100,000 by the Financial Industry Regulatory Authority Inc. for failing to properly supervise the sale of mutual funds to certain retirement plan and charitable organization customers. According to Finra, between January 2011 and September 2016, customers who were eligible to purchase no-load mutual fund shares were instead sold funds with sales loads and higher ongoing expenses.

ING CFO Timmermans to Step Down After Money-Laundering Fine
Ross Larsen and Ruben Munsterman, Bloomberg

ING Groep NV, under fire after paying one of the biggest fines ever given to a Dutch lender, ousted Chief Financial Officer Koos Timmermans, who had once been responsible for the division caught up in a money-laundering probe.

Banks’ Sharing of Financial Crime Data Raises Questions on Ethics
Mara Lemos Stein, The Wall Street Journal

Banks, regulators and law-enforcement agencies are sharing more intelligence through voluntary networks to deter money laundering and terrorism financing. As the practice spreads, so do the risks of data mishandling, observers said.

OCC proposes giving some thrifts same rights as national banks
Neil Haggerty, American Banker

The Office of the Comptroller of the Currency issued a proposal Monday to allow federal savings associations with assets below $20 billion to operate more like national banks. The plan would give thrifts the option to enjoy the same rights and privileges available to national banks, while also being subject to the same restrictions, penalties and limitations.

Financial Products and Investments

Hedge fund Citadel replaces head of crude trading: sources
Devika Krishna Kumar and Ron Bousso, Reuters

Citadel, one of the world’s largest hedge fund managers, is replacing its head of crude oil trading, according to two sources familiar with the matter, after what one of the sources said were disappointing returns under his leadership. Chicago-based Michael Forsyth, who had been at the company 11 years, left last week along with members of his team Jason Stanley and Peter Debaz, the sources said.

BlueOrchard Fund Now Has the Only Money Making Strategy in EMs
Alexandra Stratton, Bloomberg

Sebastien Juhen’s simple investment strategy, inspired by a two-year bike ride across the Americas, is paying dividends for investors at a time when almost everything else in emerging markets is in freefall. Eschewing the derivatives favored by others, the money manager who runs BlueOrchard’s $1.6 billion Microfinance Fund has eked out a 2.5 percent return this year.

Housing and GSEs

Mortgage delinquencies fall to 12-year low: Black Knight
Paul Centopani, National Mortgage News

The mortgage delinquency rate dropped to its lowest level in 12 years despite foreclosure starts and active foreclosures both increasing in July, according to Black Knight. Mortgage delinquencies fell by 3.35% in July from June, and now sit at 3.61%

Taxes

Janet Yellen calls for US carbon tax
Ed Crooks, Financial Times

Janet Yellen has spoken out in support of a carbon tax as the most effective and efficient way to reduce US greenhouse gas emissions. Ms Yellen, who chaired the US Federal Reserve until February, has joined the Climate Leadership Council, a bipartisan group pushing for the US to address the threat of global warming by introducing a carbon tax, with revenues returned to the public in dividend payments.

Financial Technology

Citigroup Planning Crypto Trading by Issuing Receipts
Sridhar Natarajan, Bloomberg

Citigroup Inc. is developing a new mechanism for trading cryptocurrencies such as Bitcoin that would put it at the forefront of Wall Street’s efforts to let clients bet on the largely unregulated market, according to a person with knowledge of the plans. The bank plans to act as an agent issuing so-called digital asset receipts, or DARs, to enable trading by proxy without direct ownership of the underlying coins, said the person, who asked not to be identified because the information isn’t public.

Visa-Backed Blockchain Firm Embraces Stellar Cryptocurrency Via Merger
Michael del Castillo, Forbes

The for-profit subsidiary of the Stellar Development Foundation has purchased Chain, a venture backed blockchain startup with some of the biggest names in enterprise adoption among its customers. As part of the all-cash deal for an undisclosed amount, San Francisco-based Chain’s existing investors, including Visa, Nasdaq and Citi Ventures, will all receive a return on their investment, according to Chain co-founder Adam Ludwin.

Opinions, Editorials and Perspectives

Families With Low Credit Scores Deserve Help from Washington
Dion Harrison, Morning Consult

Over the past month, millions of American families have been celebrating as they send their kids off to college for the first time. This moment brings hard financial questions, uncertainty, and challenges for all families with college-bound children, but especially for nonprime Americans, or the 160 million Americans with limited access to credit and credit scores below 700.

Ford to Trump: That’s Not How It Works
Brooke Sutherland, Bloomberg

How many company warnings will it take to convince President Donald Trump that his trade war is backfiring? In the months since Trump ratcheted up trade tensions with both China and erstwhile U.S. allies such as Canada and Europe, there’s been no stampede of manufacturers back to America’s shores.

A Return to Normalcy Will Be the Fed’s Biggest Test
Alan S. Binder, The Wall Street Journal

In his keynote last month at the annual central-banking conference near Jackson Hole, Wyo., Federal Reserve Chairman Jerome Powell aimed to say something intelligent but not newsworthy. He succeeded: When stock prices move only about 0.5% in reaction to a Fed chairman’s speech, you know he has left traders napping.

From Trump to Trade, the Financial Crisis Still Resonates 10 Years Later
Andrew Ross Sorkin, The New York Times

This week is the 10th anniversary of the inflection point of the financial crisis: the collapse of Lehman Brothers, the biggest bankruptcy in history. To some, it feels like a long time ago.

Research Reports

Securities Litigation Report 2018
Lex Machina

Lex Machina’s 2018 Securities Litigation Report examines the latest trends and insights from litigation brought under the Securities Act of 1933, the Securities Exchange Act of 1934, and other federal securities laws. This report compares data across two 18 month periods, (1) July 1, 2015 through December 31, 2016, and (2) January 1, 2017 through June 30, 2018. These time periods are separated by the nomination of Jay Clayton as SEC Chairman in January 2017.