Morning Consult Finance: Fed Monetary Policy Meeting Expected to Lead to 0.75-Point Rate Hike
 

Finance

Essential financial news & intel to start your day.
September 20, 2022
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Today’s Top News

  • As the Federal Open Market Committee begins its two-day meeting today, market watchers are expecting the Federal Reserve to announce a third 75-basis-point interest rate hike tomorrow, though some analysts speculate that a 100-basis-point increase is not off the table. (The Wall Street Journal)
  • Federated Hermes, a U.S. asset manager that oversees more than $632 billion globally, has pulled its sponsorship of the State Financial Officers Foundation after several European pension fund clients objected to the Republican-led group’s opposition to climate change policies. AkademikerPension, a Danish pension fund that is a Federated Hermes client, also asked that the asset manager review all of its other memberships and sponsorships to ensure that those groups back the goals of the Paris climate agreement. (Financial Times)
  • The House Ways and Means Committee will consider a bill to cut a “windfall elimination provision” from the current Social Security law, which sponsors say limited benefits for 2 million people. The bill, sponsored by Rep. Rodney Davis (R-Ill.) and co-sponsored by Rep. Abigail Spanberger (D-Va.), has wide backing among lawmakers and industry groups. (Roll Call)
 

Chart Review

Visualizing U.S. Interest Rates Since 2020

Jan Varsava, Visual Capitalist

 
 

What Else You Need to Know

General
 

Inside preparations to challenge Biden’s student loan forgiveness

Sophia Cai, Axios

Conservative groups have launched a national search for prospective plaintiffs to challenge the Biden administration’s federal student loan forgiveness order in court.

 

Bill to split spousal student loans heads to House floor

Camdyn Bruce, The Hill

The House Rules Committee on Monday advanced a bill allowing borrowers to sever spousal student loans, potentially making hundreds of additional Americans eligible for loan forgiveness.

 

Port Labor Talks Stall as Worker Disruptions Grow

Paul Berger, The Wall Street Journal

Shipping industry officials worry that chances of supply-chain disruptions are increasing as contract talks bog down without resolution.

 
Fiscal Policy
 

IRS Extends Tax Relief to Hurricane Fiona Victims in Puerto Rico

Bloomberg Tax

Certain taxpayers affected by Hurricane Fiona in Puerto Rico now have until Feb. 15 to file some individual and business tax returns as well as make some tax payments, the IRS said Monday.

 
Economy and Monetary Policy
 

The Fed Is Getting Even Tougher on Inflation. Here’s What To Watch First.

Christopher Leonard, Politico

In August, central bankers and economic pundits from around the world descended on Jackson, Wyo., to hear the keynote speech at the Federal Reserve’s annual symposium. In the days afterward, the world’s smartest economic brains were all focused on trying to interpret the most important word from the speech: “pain.”

 

Robert Shiller: Fed risks ‘disgrace’ if it doesn’t control inflation

Julia Horowitz, CNN

Central banks are faced with the unenviable task of trying to put a lid on decades-high inflation without triggering harsh recessions that could unleash misery around the world. But Robert Shiller, a Nobel Prize-winning economist at Yale University, thinks they have no choice but to hold the line.

 

Fed dataflow: Summer data trove gave little clarity

Howard Schneider, Reuters

Federal Reserve officials convene on Tuesday for their next policy meeting after an unusually long eight-week break since their last gathering, and a larger-than-normal amount of U.S. economic data to review.

 

Jerome Powell’s Inflation Whisperer: Paul Volcker

Nick Timiraos, The Wall Street Journal

The Federal Reserve’s annual August retreat in Jackson Hole, Wyo., was imminent, and markets were rallying on expectations the central bank might slow its pace of interest rate increases.

 

Climbing Housing Costs Could Prop Up Inflation for a While

David Harrison, The Wall Street Journal

Rents and other shelter costs are emerging as a major driver of overall consumer inflation, keeping it high at a time when many other sources are starting to ease. Economists expect housing inflation to strengthen further before cooling off in the coming months, but are unsure of when relief will appear.

 
Banking
 

Morgan Stanley to pay $35 million to settle SEC charges it mishandled customer data

Pete Schroeder, Reuters

A Morgan Stanley unit has agreed to pay $35 million to settle Securities and Exchange Commission charges it repeatedly failed to safeguard personal information for millions of customers, the regulator said Tuesday.

 

New York regulator warns banks not to sacrifice equity in climate fight

Polo Rocha, American Banker

Adrienne Harris, superintendent of the New York State Department of Financial Services, previewed the agency’s upcoming climate guidance in an interview with American Banker. Banks “cannot sacrifice” their fair lending and equity obligations “in order to mitigate climate risk,” she said.

 
Financial Products and Investments
 

Calpers admits ignoring private equity boom cost up to $18bn of gains

Josephine Cumbo, Financial Times

Biggest US public pension plan missed out on almost a decade of returns by being too conservative.

 

Chamath Palihapitiya is shuttering two tech SPACs

Dan Primack, Axios

Venture capitalist Chamath Palihapitiya has decided to wind down a pair of tech-focused blank check acquisition companies after failing to find adequate merger targets. Palihapitiya says the decision reflects how many privately held tech companies have yet to reset their valuations, despite the massive fall in public tech stock valuations.

 

An Anti-E.S.G. Activist Takes on Apple and Disney

The New York Times

Vivek Ramaswamy, a prominent critic of investing that factors in climate and social considerations, wants to use shareholder pressure to refocus companies on profits.

 

CFPB plans rule next year to toughen caps on credit card late fees

Kate Berry, American Banker

The Consumer Financial Protection Bureau plans to issue a rule next year to address whether credit card late fees are set at reasonable levels and if they should continue to be pegged to inflation.

 

‘Green’ funds warned of hazardous grey areas

Laura Noonan, Financial Times

‘There’s so much in flux right now in terms of rules that everybody is probably a bit vulnerable.’

 

World Will Get More Millionaires After 2022’s Wealth Destruction

Yoojung Lee, Bloomberg

The number of millionaires globally will grow by 40% in the next five years, even as rising rates and Russia’s war in Ukraine are sinking asset classes and private fortunes this year.

 
Housing and GSEs
 

In a Slowing Housing Market, Sellers Ask: Why List a Home When You Can Collect Rent?

Nicole Friedman and Will Parker, The Wall Street Journal
U.S. home sellers increasingly opt to hold on to their houses amid a soaring home-rental market.

 

U.S. home builder sentiment falls for ninth straight month in September

Lucia Mutikani, Reuters

Confidence among U.S. single-family homebuilders fell for the ninth straight month in September as soaring mortgage rates and persistently high prices for building materials made new housing less affordable for many first-time buyers.

 

Ginnie Mae forbearance rate increases in August

Flávia Furlan Nunes, HousingWire

Servicers’ forbearance rate declined in August, excepting for Ginnie Mae loans, the Mortgage Bankers Association (MBA) reported Monday. The trade group expects pressure in the coming months if the unemployment rate increases.

 

Here’s How Much a New Monthly Mortgage Payment Has Surged in 10 US Metros

Joe Weisenthal, Bloomberg

Mortgage rates in the US have soared alongside Federal Reserve rate hikes. According to Bankrate, the average 30-year mortgage now stands above 6.3%, the highest since 2008.

 

Home-Flipper Opendoor Hit With Losses in Echo of Zillow Collapse

Patrick Clark and Elizabeth Kane, Bloomberg

Company lost money on 42% of its August resales after it failed to anticipate slide in housing demand.

 
Financial Technology
 

US Treasury Wants Public to Comment on Crypto’s Role in Illicit Finance

Nikhilesh De, CoinDesk

The Treasury Department listed a number of questions, asking the general public to weigh in on how it’s approaching cryptocurrencies and their possible role in illegal activities.

 

Crypto Firm Fights SEC by Claiming Its Investors Lack Rights

Chris Dolmetsch, Bloomberg

Cryptocurrency firm Ripple Labs Inc. sought to defeat a Securities and Exchange Commission suit by claiming that its XRP token isn’t a security subject to the regulator’s authority.

 

Alameda to Repay $200 Million in Crypto to Bankrupt Voyager

Suvashree Ghosh, Bloomberg

Crypto billionaire Sam Bankman-Fried’s Alameda Research will return about $200 million worth of Bitcoin and Ether it had borrowed from insolvent Voyager Digital Ltd., according to a court filing from Voyager.

 

Sparkster Settles With SEC, Agrees to Pay Back $35M to ‘Harmed Investors’ of 2018 ICO

Cheyenne Ligon, CoinDesk

Cayman Islands-based software company Sparkster and its CEO, Sajjad Daya, have agreed to a settlement with the U.S. Securities and Exchange Commission (SEC) over charges stemming from the company’s unregistered 2018 initial coin offering (ICO).

 

Treasury and Justice reports tackle crypto crime

Crystal Kim, Axios

The Treasury and Justice departments intend to act as nail and hammer to the dark side of the crypto industry — one working to identify cyber criminals and their exploits and the other, prosecuting and bringing those baddies to account.

 

SEC Suit Hints at Case for US Jurisdiction Over Ethereum Network

Suvashree Ghosh, Bloomberg

The saga over cryptocurrency regulation took another twist courtesy of a comment buried in a Securities and Exchange Commission lawsuit that hints at a case for US jurisdiction over the Ethereum blockchain. The suit lodged Monday is against the founder of a crypto investment research firm over allegedly undisclosed incentives linked to an initial coin offering. It also detailed the movement of Ether tokens in relation to the case.

 

Crypto gets top billing at SkyBridge SALT event amid market “winter”

Kia Kokalitcheva, Axios

We’re in a crypto “winter,” but you wouldn’t know it by attending the annual SALT conference in New York City this week, sponsored by hedge fund SkyBridge.

 

Crypto market maker Wintermute loses $160 million in DeFi hack

Manish Singh, TechCrunch

Wintermute, a leading crypto market maker, has lost about $160 million in a hack, a top executive said Tuesday, becoming the latest firm in the industry to suffer a breach.

 
Opinions, Editorials and Perspectives
 

The Fed Can’t Reduce Inflation by Winging It

Andrew T. Levin and Mickey D. Levy, The Wall Street Journal

The Labor Department last week confirmed something you already knew: Inflation is far too high. You still may be wondering what the Federal Reserve’s plan is for bringing it down. You’re not alone. The Fed doesn’t seem to know either.

 

Rate-Hike Fears Are Hitting People Where They Live

John Authers, Bloomberg

Wednesday’s meeting of the Federal Open Market Committee is dominating all discussions. That’s inevitable. But if there’s one area where the Fed’s monetary policy could wreak changes, and where many Americans fear that it will, it is on housing.

 
Morning Consult