General
Trump and Warren Find Common Ground on Economic Populism
Sahil Kapur, Bloomberg
Senator Elizabeth Warren presents herself as the antithesis of President Donald Trump, yet they share a populist economic vision as they seek to channel the grievances of working-class Americans who have been left behind by globalization. The Democrat and the Republican have called for wielding the power of the state to protect American industries from foreign competition with actions like tariffs against trading partners and interventions to curb the value of the dollar.
How Washington Learned to Love Debt and Deficits
Kate Davidson and Jon Hilsenrath, The Wall Street Journal
William Hoagland has engaged in nearly every Washington budget-deficit battle for four decades. A longtime analyst and onetime senior Republican congressional budget aide, he brought a sensibility learned growing up on an Indiana farm: You’ve got to balance the books over time.
Trump Could Retaliate if Xi Balks at Trade Meeting, Kudlow Says
William Mauldin, The Wall Street Journal
President Trump could take further action against China if President Xi Jinping doesn’t agree to a meeting at the Group of 20 summit of leading economies in Japan later this month, the White House’s top economic adviser said Thursday. “President Trump has indicated his strong desire for a meeting, but the meeting is not yet arranged formally,” Larry Kudlow said at the Peterson Institute for International Economics, a Washington think tank.
Hong Kong risks losing trade privileges under proposed US law
Demetri Sevastopulo et al, Financial Times
Senior US lawmakers have introduced legislation aimed at pressuring Hong Kong to shelve an extradition bill that critics say would further erode the autonomy that the former British colony was guaranteed on its handover to mainland China. The move, which increases pressure on the territory’s government to suspend the bill, came as a senior adviser to Hong Kong’s leader, Carrie Lam, suggested the bill could be delayed and activists in the territory called for another mass demonstration on Sunday.
House expected to approve back pay for federal contractors from January shutdown
Jeff Stein, The Washington Post
The House of Representatives is expected to approve back pay this month for hundreds of thousands of federal contractors who went unpaid during the 35-day government shutdown during December and January, according to Democratic lawmakers. On Tuesday, the House Appropriations Committee announced that an upcoming government spending package will include back pay for an estimated 580,000 federal contractors, whose ranks include some of the lowest-paid workers, such as janitors, security guards and cooks.
Wal-Mart and Hundreds of Other Companies Call on Trump to Drop China Tariffs
Mark Niquette, Bloomberg
Wal-Mart Inc., Target Corp., Macy’s Inc. and hundreds of other companies and associations made a plea to President Donald Trump not to impose additional tariffs on Chinese goods, and to return to the negotiating table to strike a trade deal with Beijing. More than 500 companies and 140 groups representing manufacturers, retailers, oil and gas firms and other industries signed a letter addressed to Trump on Thursday from “Tariffs Hurt the Heartland,” an umbrella group of trade associations that’s pushing back against Trump’s trade war.
Trump Tariffs Are Short-Term Pain Without Long-Term Gain, Economists Say
Harriet Torry, The Wall Street Journal
Most economic forecasters are pessimistic that the Trump administration’s trade-tariff policy will reap long-term benefits for the economy, according to The Wall Street Journal’s latest monthly survey of economists. Nearly 73% of economists in the latest survey said they don’t expect any long-term gains from the Trump administration’s trade-tariff policy will be enough to offset short-term damage to the U.S. economy.
Fed publishes report on what bankers want from CRA reform
Kate Berry, American Banker
The Federal Reserve Board published feedback Thursday from more than 400 bankers and community groups that will influence how regulators make changes to the Community Reinvestment Act. The Fed’s 24-page summary delves into the major concerns about reforming CRA, including updating assessment boundaries, evaluating how banks are tested, and clarifying which activities are eligible for CRA credit.
Bonds Extend Rally With Gold as Stocks Retreat: Markets Wrap
Namitha Jagadeesh, Bloomberg
Global bonds rallied on bets that interest rates will fall as trade frictions jeopardize global economic growth, while U.S. equity futures slid with European stocks following a mixed session in Asia. Oil edged lower after Thursday’s surge on the heels of a suspected attack on tankers in the Gulf.
Banking
A Truist Story About the Perils of Combining Company Names
Liz Hoffman and Rachel Louise Ensign, The Wall Street Journal
What is Truist? It isn’t the name of an artificial sweetener or a misspelled word in Shakespearean English, as some on the internet have posited.
Goldman Offers Incentives to Keep Marcus Clients Away From Court
Sridhar Natarajan, Bloomberg
Goldman Sachs Group Inc. is offering customers of its consumer-finance business enticements to keep their grievances out of the courts. Marcus, the Goldman product that offers savings accounts and makes personal loans, will cover certain expenses for its customers who elect arbitration — the preferred tool of large banks to solve disputes.
UBS Economist’s ‘Chinese Pig’ Comment Hits a Nerve
Shen Hong and Mike Bird, The Wall Street Journal
An errant comment from a London-based economist at UBS UBS -0.43% Group AG has sparked furor among Chinese securities professionals, even after the economist apologized and said he didn’t intend to offend anyone with his remarks. Paul Donovan, chief economist at UBS Global Wealth Management, in a podcast earlier this week discussed rising consumer prices in China and attributed part of the increase to sick pigs, referring to the impact of African swine fever on pork prices in the country.
HSBC Carves Special Role as Banker to Saudis
Rory Jones and Margot Patrick, The Wall Street Journal
When Saudi Arabia wanted to demonstrate it was open again for global investors after the killing of journalist Jamal Khashoggi, officials turned to a longtime banker to the kingdom: HSBC Holdings PLC. In April, the British bank helped arrange a $12 billion bond deal for Saudi Aramco, the kingdom’s crown-jewel oil company, attracting $100 billion in orders and cooling talk of any investor boycott over human rights.
House stymies banks’ push for rent-free space on military bases
Melissa Angell, American Banker
Banks have lost a battle in the House that would have granted them access to no-cost land leases on military installations. The House Armed Services Committee passed the National Defense Authorization Act for the 2020 fiscal year with a vote of 33-24.
Financial Products and Investments
Top Wall Street Executive, Accused of Sexual Harassment, Departs TCW
Kate Kelly, The New York Times
Jess Ravich, one of the most senior Wall Street executives to have been publicly accused of sexual harassment, has departed TCW, the giant bond-fund manager where he was one of the top officials, according to a TCW spokesman. Mr. Ravich, as head of the firm’s alternative-products group, oversaw TCW’s investments in areas like lending to companies and commercial real estate.
Amazon seeks to revive its faltering loans business
Nicholas Megaw, Financial Times
Making loans to the small businesses selling through its website seemed like a straightforward win for Amazon. After all, the US tech giant has granular trading data to help it assess the credit worthiness of the millions of independent sellers on its site.
Warren and Clyburn team up on effort to cancel student loan debts for 95 percent of borrowers
Niels Lesniewski, Roll Call
Sen. Elizabeth Warren will be joining House Majority Whip James E. Clyburn in an aggressive effort to cancel student loan debt. “For far too many students and families, the cost of higher education has meant daunting debt and a lifetime of student loan repayments,” Clyburn, a South Carolina Democrat, said.
Slack’s Direct Listing Leaves Wall Street Fighting for Fees
Sonali Basak et al, Bloomberg Businessweek
Wall Street had good reason to be anxious last year when music streaming company Spotify Technology SA did a so-called direct listing, putting shares on the market without opting for a traditional initial public offering. Underwriting and advising on IPOs are among the biggest fee generators for the biggest banks, and it suddenly looked like companies had a new, cheaper alternative. Now another hot tech company, Slack Technologies Inc., is giving a direct listing a try on June 20.
Housing and GSEs
Fannie, Freddie government guarantee should be limited: U.S. housing finance chief
Katanga Johnson, Reuters
The head of the U.S. Federal Housing Finance Agency (FHFA) said on Thursday that Congress should create a “limited” explicit guarantee for government-sponsored enterprises Fannie Mae and Freddie Mac. “The explicit guarantee should be limited, clearly defined, and paid for,” Mark Calabria told an audience in Washington.
HUD: DACA recipients ineligible for U.S.-backed mortgages
Katy O’Donnell, Politico
Beneficiaries of the Deferred Action for Childhood Arrivals program are ineligible for mortgages backed by the Federal Housing Administration, a top Housing and Urban Development official said, ending months of confusion about the policy for immigrants who were brought here as children. “Determination of citizenship and immigration status is not the responsibility of HUD, and the Department relies on other government agencies for this information,” wrote Len Wolfson, HUD assistant secretary for congressional and intergovernmental relations, in a letter on Tuesday to Rep. Pete Aguilar (D-Calif.).
Amazon’s HQ2 prompts housing price spikes in Northern Virginia, Washington Post analysis shows
Taylor Telford et al., The Washington Post
Amazon is far from arriving in Northern Virginia, but the prospect already is causing housing prices to jump, according to real estate experts and local records analyzed by The Washington Post. In May, the average home price in Arlington County — the future of home of Amazon’s second headquarters known as HQ2 — was $713,000, up about 7 percent from a year ago.
Taxes
Senate passes bipartisan IRS modernization bill
Naomi Jagoda, The Hill
The Senate on Thursday passed a bipartisan bill to make improvements to the IRS, after the House passed the measure earlier this week. The bill, known as the Taxpayer First Act, passed the Senate by voice vote. It now heads to President Trump’s desk for a signature.
Does Amazon Really Pay No Taxes? Here’s the Complicated Answer
Richard Rubin, The Wall Street Journal
Democratic presidential candidates have seized on reports that Amazon.com Inc. paid no 2018 federal taxes as they press for changes in the tax system. A closer look at the internet giant’s tax disclosures over several years paints a more complicated picture: Amazon has paid income taxes somewhere, albeit at a low rate, likely helped by deductions and incentives related to investment, research and employee compensation.
Top Finance Democrat offers bill to end tax breaks for private prison companies
Naomi Jagoda, The Hill
Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, on Thursday introduced legislation to end tax breaks for private prison companies. Wyden described the bill as a response to President Trump’s immigration policies.
Financial Technology
Monzo takes a step into the US digital banking fray
Laura Noonan and Nicholas Megaw, Financial Times
UK digital bank Monzo has fired the starting gun on its expansion in the US, joining a crowded digital banking market where customers have so far been largely unmoved by online-only banks’ attempts to woo them. One of the UK’s biggest digital-only banks, Monzo said it would soon begin signing up customers for its US platform through in-person events in big cities.
Hottest Crypto Is Up 330% This Year and Its Name Isn’t Bitcoin
Vildana Hajric and Olga Kharif, Bloomberg
This year’s top-performing cryptocurrency is up more than threefold and you’ve likely never heard of it. Litecoin, which has gained more than 330% since the beginning of the year, is outpacing all its crypto peers, including Ether and XRP, as well as the best-known and largest token Bitcoin.
Opinions, Editorials and Perspectives
Why Andrew Yang Matters
David Leonhardt, The New York Times
In the 2008 Democratic presidential primary, the three leading candidates — Hillary Clinton, John Edwards and Barack Obama — spent months fighting over health care policy. That long debate helped to educate voters.
Faster Growth Is Paying Off for Low-Skilled Workers
Andy Puzder, The Wall Street Journal
With the Democratic presidential campaign under way, get ready to hear a lot about economic inequality. Sen. Elizabeth Warren, who’s surging in the polls, has complained about “a rigged system that props up the rich and the powerful and kicks dirt on everyone else.”
Research Reports
How the Wealth Was Won: Factors Shares as Market Fundamentals
Daniel L. Greenwald, The National Bureau of Economic Research
We provide novel evidence on the driving forces behind the sharp increase in equity values over the post-war era. From the beginning of 1989 to the end of 2017, 23 trillion dollars of real equity wealth was created by the nonfinancial corporate sector.
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