Morning Consult Finance: PayPal Withdraws From Facebook’s Libra Digital Coin Project


Top Stories

  • PayPal Holdings Inc. announced that it will no longer participate in the coalition for Facebook Inc.’s Libra cryptocurrency project, which has faced scrutiny from U.S. and European regulators. PayPal’s decision comes amid reports that other partners who originally backed Libra have been re-evaluating their involvement with the project. (The Wall Street Journal)
  • HSBC plans to cut up to 10,000 jobs in an effort to bring down costs, according to two people briefed on the plan, which comes after the bank announced its intent to eliminate 4,700 positions it considered redundant. HSBC cited low interest rates, trade battles and Brexit uncertainty as reasons for the previous round of job cuts. (Financial Times)
  • Chinese Vice Premier Liu He told visiting dignitaries to Beijing in recent weeks that he plans to present an offer to U.S. officials during trade talks in Washington this week that does not include commitments to reforming industrial policy or government subsidies, according to a person familiar with the discussions. Analysts say China has increased leverage in trade talks as President Donald Trump faces an impeachment inquiry and businesses link the slowing global economy to Trump’s trade wars, though sources close to the administration say the impeachment inquiry is not impacting trade talks. (Bloomberg)

Chart Review

Events Calendar (All Times Local)

10/07/2019
Brookings event: “Student loans: A look at the evidence” 10:00 am
CSIS event titled “More than a Wallet: The Role of the Private Sector in Development” 10:00 am
10/08/2019
PIIE event: “Global Economic Prospects: Fall 2019” 12:15 pm
10/09/2019
SEC’s National Veteran Small Business Coalition monthly meeting 7:15 pm
10/10/2019
Yahoo Finance All Markets Summit
Bloomberg Live event titled “The Future of Investing: Focus on Corporate Governance” 9:00 am
Urban Institute event titled “From Concept to Action: Aligning Opportunity Zones and Mission Capital” 2:00 pm
AEI event titled “Monetary policy in the 21st century: An Allan Meltzer perspective” 3:00 pm
View full calendar

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General

Treasury inspector general to review handling of Trump’s tax returns
Jeff Stein and Tom Hamburger, The Washington Post

The Treasury Department’s acting inspector general has opened a review into whether the Trump administration acted improperly during its ongoing fight with House Democrats over releasing President Trump’s tax returns.

Sanders unveils plan to stop corporate donations to Dem convention
Holly Otterbein, Politico

Bernie Sanders, a longtime critic of the nation’s campaign finance system, is releasing a plan Monday aimed at ending the influence of corporate cash in politics, including at the 2020 Democratic National Convention.

Is the U.S. Slowing or Stalling? That’s the Question After the Jobs Report
Katia Dmitrieva and Reade Pickert, Bloomberg

Crawling or stalling? That’s the question hanging over the U.S. economy amid fresh evidence the once-hot labor market is losing steam.

Fed to Keep Pumping Liquidity Into Repo Market Through October
Alex Harris, Bloomberg

The Federal Reserve announced that it will extend through October the ad hoc liquidity lifeline that it’s been offering to U.S. funding markets since a spike in rates in the middle of last month.

Powell Says Economy Faces Some Risks But Is Still in Good Place
Rich Miller, Bloomberg

The U.S. economy is in a good place though it faces some risks, Federal Reserve Chairman Jerome Powell said Friday in a brief speech that didn’t go into detail on the outlook for growth or interest rates.

An economic crisis in your teens can alter your behavior for life, economists find
Andrew Van Dam, The Washington Post

The line wasn’t supposed to dip downward like that.

SEC green light prompts rush into marijuana ETFs
David Tuckwell, Financial Times

Small issuers grab early mover advantage while others worry over legal risks.

Where the U.S.-Japan trade deal falls short of Trans-Pacific pact abandoned by Trump
David Lawder, Reuters

U.S. President Donald Trump has called his new trade deal with Japan a “phenomenal” victory for U.S. farmers.

U.S. Futures Drop With Yuan as Trade Roils Outlook: Markets Wrap
Todd White, Bloomberg

Futures on U.S. equity indexes dropped and the yuan slipped on Monday on fears China may be increasingly reluctant to accept a broad trade deal with the Trump administration. European stocks turned higher and Treasuries were steady.

Banking

Morgan Stanley to Woo Startups at Own Direct-Listing Event
Lananh Nguyen and Crystal Tse, Bloomberg

Silicon Valley investors are touting direct listings to startups as a way to sidestep Wall Street banks and the IPO process. Morgan Stanley wants to make sure it stays in the mix.

Deutsche Bank in strategy shift to address tech woes
Patricia Uhlig, Reuters

Deutsche Bank is creating a new technology division in a strategy shift designed to reduce complexity and lower costs while transforming systems that have held back the bank for years.

Senate pot banking bill may add weapon to fight money launderers
Neil Haggerty, American Banker

The head of the Senate Banking Committee plans to use a bill passed by the House as the foundation for marijuana banking reforms, but also may add language to combat money-laundering risks, according to sources.

Financial Products and Investments

Invesco cuts 1,300 jobs as it grapples with passive challenge
Richard Henderson, Financial Times

Asset manager has laid off 12% of combined workforce after Oppenheimer deal.

Big investors fail to pressure companies over fossil-fuel lobbying
Siobhan Riding, Financial Times

Little support for disclosure resolutions that call on groups to divulge payments.

Housing and GSEs

Fannie and Freddie get to keep their earnings. Now what?
Hannah Lang, American Banker

The recent announcement that Fannie Mae and Freddie Mac will be allowed to keep profits for the first time since 2012 was seen as a crucial early step in reforming the mortgage giants. But the news immediately shifted focus to a bigger question about their financial standing.

Taxes

U.S. airlines grapple with ‘unfair tax’ that adds to aircraft supply disruption
David Shepardson and Tracy Rucinski, Reuters

U.S. airlines are scrambling to digest a new 10% tariff on European-made Airbus planes that threaten additional havoc in a market already reeling from frozen deliveries of Boeing Co’s 737 MAX.

Financial Technology

Facebook questioned by Brussels over Libra risks
Sam Fleming and Mehreen Khan, Financial Times

European Commission worried by digital coin project’s possible impact on financial stability.

Facebook Skeptics Now Have Derivatives to Bet on Libra Delays
Alastair Marsh, Bloomberg

Facebook Inc.’s proposed cryptocurrency has faced such overwhelming scorn since it was announced in June that an exchange is facilitating bets on whether the social-media company can come close to meeting its target launch date.

The Ties That Bind Facebook’s Libra
Elise Thomas, Wired

In June, Facebook revealed plans for Libra, a cryptocurrency it hopes will shake up the global payments industry. Facebook says it won’t control Libra, and that key decisions will be in the hands of the Libra Association, a group registered in Switzerland with as many as 100 members, each with equal voting power.

Opinions, Editorials and Perspectives

Trump may be on shaky ground. But his economy appears rock-solid.
Henry Olsen, The Washington Post

President Trump is on the rocks over the Ukraine-gate scandal. But Friday’s jobs numbers show the economy is not.

Research Reports

Global Dimensions of US Monetary Policy
Maurice Obstfeld, Peterson Institute for International Economics

This paper is a partial exploration of mechanisms through which global factors influence the tradeoffs that US monetary policy faces. It considers three main channels.

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