• The Financial Stability Oversight Council highlighted mortgage companies as a potential risk to the U.S. financial system for the first time, as well as pointing to high borrowing by nonfinancial companies and the growth of cryptocurrencies, while ranking overall risk as moderate. Mortgage companies have grown rapidly since the 2008 financial crisis as regulation has curbed mortgage lending among banks. (The Wall Street Journal)

• FSOC called on federal regulators to analyze and collect data on what made repo rates spike in September. The report also identified disruptions to the short-term lending market as a potential risk to the country’s financial system. (Bloomberg)

• Gary Cohn, who formerly served as President Donald Trump’s top economic adviser, said Trump’s steel and aluminum tariffs are holding back investments from companies, along with uncertainty over the 2020 presidential election. Cohn said that if he were a company executive, “I wouldn’t be doing big cap ex right now.” (Politico) 

Wall Street power player makes her political debut
Gregory Meyer et al., Financial Times

Kelly Loeffler swaps exchange group ICE for the US Senate, over Trump’s objections.

The U.S. Furniture Industry Is Back—but There Aren’t Enough Workers
Ruth Simon, The Wall Street Journal

Here’s the good news: There are now more reasons to make furniture in the U.S. than at any point since the financial crisis. Crate & Barrel and Williams-Sonoma Inc. are expanding manufacturing in the U.S., and the factories of longtime furniture makers are humming.

Bull market gains pass by two-thirds of Americans
Lauren Fedor and Billy Ehrenberg-Shannon, Financial Times

FT-Peterson poll casts doubt on whether rise in equities will aid Trump’s re-election bid.

U.S. Futures, Stocks Advance as Bonds Edge Lower: Markets Wrap
Adam Haigh and Todd White, Bloomberg

U.S. equity-index futures rose with European and Asian stocks on Thursday as investors weighed the prospects of America removing a scheduled tariff hike on Chinese imports in 10 days. The dollar edged lower.

Regional Banks Face Bumpy Road Away From Libor
Daniel Kruger and Allison Prang, The Wall Street Journal

Regional banks are struggling to move away from the troubled London interbank offered rate, saying alternatives to the key benchmark for variable-rate debt could hurt their ability to make new loans. Those banks, including PNC Financial Services Group, PNC 1.08% Regions Financial Corp. RF 1.60% and U.S. Bancorp, say they are concerned the new secured overnight financing rate, or SOFR, could notch outsize drops at times of economic stress. 

House Democrats implore regulators to get in sync on CRA
Neil Haggerty, American Banker

House Democrats on Wednesday criticized the apparent decision by two federal banking regulators to move forward with a proposal to revamp the Community Reinvestment Act without the Federal Reserve. The Office of the Comptroller of the Currency is widely expected to release a CRA proposal as early as next week, and Federal Deposit Insurance Corp. Chairman Jelena McWilliams has signaled her agency’s willingness to support the plan with conditions.

One in five consumer credit reports contains an error
Lucy Warwick-Ching, Financial Times

Survey reveals widespread confusion about the information is recorded in reports and how it is used.

Trump taps consultant who urged food ban on homeless to lead council
Katy O’Donnell, Politico 

The Trump administration has tapped Robert Marbut, a consultant who has urged cities to stop feeding the homeless, to lead the agency that coordinates the government’s response to the crisis, drawing a rebuke from a top housing advocate. The administration last month pushed out Matthew Doherty, an Obama appointee, as executive director of the U.S. Interagency Council on Homelessness. 

Next year will be hard on the housing market, especially in these big cities
Diana Olick, CNBC

Home sales will drop, the housing shortage could become the worst in U.S. history, and home values will shrink in some cities. That’s the 2020 forecast from realtor.com, which holds one of the largest databases of housing statistics available.

Could Tax Increases Speed Up the Economy? Democrats Say Yes
Jim Tankersley, The New York Times

Elizabeth Warren is leading a liberal rebellion against a long-held economic view that large tax increases slow economic growth, trying to upend Democratic policymaking in the way supply-side conservatives changed Republican orthodoxy four decades ago. Generations of economists, across much of the ideological spectrum, have long held that higher taxes reduce investment, slowing economic growth.

Trump’s Tax Cuts Push U.S. Burden Lower in World
Richard Rubin, The Wall Street Journal

President Trump’s 2017 tax cuts reduced the U.S. tax burden to one of the lowest among major world economies, according to a Thursday report by an intergovernmental organization. U.S. tax burdens dropped by the largest amount among those countries in 2018, and the U.S. now has lower taxes than all but three countries in the Organization for Economic Cooperation and Development, the report said.

Treasury Secretary Raises Concerns Over Global Tax Talks
Richard Rubin and Paul Hannon, The Wall Street Journal

The U.S. has “serious concerns” with proposals being discussed in the global rewrite of corporate tax rules, Treasury Secretary Steven Mnuchin said, as he introduced a new idea that could complicate a deal over adapting the tax system for the digital economy. In a letter to the Organization for Economic Cooperation and Development, Mr. Mnuchin cited concerns raised by U.S. businesses. 

House Democrats to move on temporary ‘SALT’ cap increase
Doug Sword, Roll Call

The House Ways and Means Committee could take up legislation as early as next week that would increase a limit on state and local tax deductions that has riled Democrats from high-cost regions, according to a senior panel member. The “SALT” bill, which has not yet been released, is still in flux, but the $10,000 deduction limit set by the Republican-backed tax code overhaul would be raised to an as-yet undetermined level for three years, according to Rep. Bill Pascrell Jr.

Lawmakers introduce bipartisan bill to allow new parents to advance tax credits
Naomi Jagoda, The Hill

A bipartisan group of House and Senate members on Wednesday introduced legislation that would allow new parents to pull forward child tax credits to finance a leave from work or pay for child-related expenses. The bill was introduced in the Senate by Sens. Bill Cassidy (R-La.) and Kyrsten Sinema (D-Ariz.), and in the House by Reps. Colin Allred (D-Texas) and Elise Stefanik (R-N.Y.). It comes amid a growing interest from lawmakers on both sides of the aisle in creating a federal paid family leave program.

David Marcus, Facebook’s Libra Defender
Kurt Wagner, Bloomberg Businessweek 

David Marcus removed his tie, undid the top two buttons on his shirt, and ordered a bourbon. It had been a long week. 

Reaching 10 million users is a ‘testament’ to our mission to democratize investing, Robinhood co-CEO says
Tyler Clifford, CNBC

Robinhood grew its user base tenfold in about three years by bringing in younger generations to the finance world, co-CEO of the mobile stock trading app, Vladimir Tenev, told CNBC’s Jim Cramer on Wednesday. The start-up earlier that day announced that it has registered more than 10 million accounts to its platform, up from 1 million in 2016.

A Message from The Clearing House:

Recently, The Clearing House conducted a survey to dive deeper into consumer perceptions about how financial apps access, collect, use, store and share their data. The survey poll included nearly 4,000 U.S. banking consumers who have accounts, loans, and mortgages with a financial services provider. See findings.

How jittery investors would respond if Trump doesn’t reach a trade deal with China
Nicholas Sargen, The Hill

President Trump’s off-the-cuff remark yesterday that a trade deal with China could be delayed until after the U.S. elections in 2020 spawned a large stock market sell-off. While markets have since recouped some of the losses amid hopes that a deal will be reached, the reaction to Trump’s statement raises the specter of what might happen if there is an impasse.

Business Cycles and Currency Returns
Riccardo Colacito et al., The National Bureau of Economic Research

We find a strong link between currency excess returns and the relative strength of the business cycle. Buying currencies of strong economies and selling currencies of weak economies generates high returns both in the cross section and time series of countries.