Top Stories

  • President Donald Trump could issue several executive orders addressing the economic crisis caused by the coronavirus pandemic as soon as today, according to senior administration officials, after the White House and Democratic lawmakers failed to reach a deal last night on a new coronavirus aid package. Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows have offered a resumption of federal jobless benefits for four months at $400 per week — $200 less than the unemployment payments that expired last week — and $200 billion to state and local governments, according to sources familiar with the talks, but Democrats contend that the proposals don’t do enough to mitigate the pandemic’s economic devastation. (Politico)
  • Capital One Financial Corp. will pay $80 million to settle claims from the Office of the Comptroller of the Currency that its improper cybersecurity protocols resulted in a 2019 hack that exposed the personal information of more than 100 million customers, including the theft of 80,000 bank account numbers and 40,000 Social Security numbers. A separate regulatory filing from the Federal Reserve called for Capital One to deliver a plan to strengthen its security measures in the next three months. (The New York Times)
  • A new Trump administration plan would force Chinese companies that trade on the New York Stock Exchange and Nasdaq Stock Market to abandon their listings by 2022 unless their auditors share their work papers with the Public Company Accounting Oversight Board, a nonprofit audit regulator overseen by the federal government. Chinese companies that haven’t yet gone public but plan a listing on one of the U.S. exchanges would have to comply with the rules before pursuing an initial public offering, and would not be afforded the same 2022 deadline to meet those requirements, according to senior Treasury Department and Securities and Exchange Commission officials. (The Wall Street Journal)
  • The Labor Department’s July jobs report, set to be released today, is projected to show a major slowdown in growth, with a forecasted uptick in nonfarm payrolls of 1.48 million — following 7.5 million combined jobs added in May and June — and an unemployment rate falling to 10.5 percent from 11.1 percent last month. (Bloomberg)

Chart Review

Events Calendar (All Times Local)

08/07/2020
BLS Employment Situation 8:30 am
08/12/2020
WHF/WHFF Partner Series: The “Patch” is Expiring: What Comes Next for Qualified Mortgage Loans? 12:00 pm
WHF Public Policy Event: The 2020 Transformation: The Path Forward for the Banking Industry 12:00 pm
View full calendar

Watch On-Demand – Most Loved Brands: What Drives Brand Love In A Year Like No Other

Recently, Morning Consult held a webinar breaking down the results in this year’s edition of Most Loved Brands.

Watch the webinar on-demand to learn which brands topped the list, what factors tend to drive brand love and how brands can excel in the COVID-19 era.

General

Trump to Reimpose Aluminum Tariffs on Canada
Josh Zumbrun, The Wall Street Journal

The White House said certain types of aluminum were surging into the U.S., depressing the U.S. industry. The administration justified the tariffs, which will be set at 10%, using a national security provision and argued that a depressed U.S. aluminum industry threatens U.S. national security.

Fed, Treasury feel heat from lawmakers on ‘Main Street’ design
Victoria Guida, Politico

House Coronavirus Crisis Subcommittee Chair Jim Clyburn on Thursday pressed the Federal Reserve and Treasury Department on why they didn’t include job retention requirements in an emergency lending program for midsized businesses or make it more accessible to smaller firms.

Why Black Workers Will Hurt the Most if Congress Doesn’t Extend Jobless Benefits
Emily Badger et al., The New York Times

When Congress expanded unemployment insurance this year to meet the staggering economic toll of the pandemic, it had one less-noticed effect: It made America’s fractured jobless benefits system more fair.

Wall Street’s Top Ranks Look Nothing Like the Nation They Serve
Max Abelson et al., Bloomberg

Wall Street has been criticized for being an old boys’ club. But a look inside the U.S. finance industry and the offices of fund managers across the country shows it’s even more exclusive than that. Black men and women, who make up more than one-seventh of the U.S. population, are badly underrepresented in Wall Street’s corner offices and across the top levels of investment companies. In the following pages, we shine a light on some of the areas where inequality endures, including executive suites and business schools. What we find is a system in need of greater diversity.

1.2 million seek jobless aid after $600 federal check ends
Paul Wiseman, The Associated Press

Nearly 1.2 million laid-off Americans applied for state unemployment benefits last week, evidence that the coronavirus keeps forcing companies to slash jobs just as a critical $600 weekly federal jobless payment has expired.

Federal Reserve data show little appetite so far for its $600 billion Main Street lending program
Rachel Siegel, The Washington Post

The Federal Reserve’s $600 billion Main Street lending facility had covered less than $77 million in loans to only eight companies near the end of July, further revealing how little reach the program has had, even as millions of businesses vie for survival.

Cleveland Fed president says ‘downside’ economic risks rising, calls for more aid
Marty Johnson, The Hill

Loretta Mester, president of the Federal Reserve Bank of Cleveland, asked for more assistance from Congress as negotiators seek to complete a deal on a new coronavirus relief package.

Americans have less debt for the first time in six years
Anneken Tappe, CNN Business

Americans have less debt for the first time in six years, as they spent less money during the pandemic lockdown, new data from the Federal Reserve Bank of New York shows.

Trump’s dream of a ‘V’ recovery is hanging in the balance of stimulus talks
Jeff Cox, CNBC

As the White House has continued to push a narrative of a sharp recovery after a history-making recession, the economic data in large part has not been cooperating.

Kicking Out Chinese Stocks and WeChat Is Another Nail in the Coffin of U.S.-China Links
Mike Bird, The Wall Street Journal

The White House shot with both barrels at Sino-U.S. financial links Thursday, firing off a plan that could force Chinese companies to give up U.S. listings and executive orders restricting transactions related to ByteDance and Tencent Holdings, two major Chinese tech companies.

More Farmers Declare Bankruptcy Despite Record Levels of Federal Aid
Jesse Newman, The Wall Street Journal

About 580 farmers filed for chapter 12 bankruptcy protection in the 12-month period ended June 30, according to federal data. That was 8% more than a year earlier, though bankruptcies slowed slightly in the first half of 2020 partly because of an infusion of federal aid and hurdles to filing during the pandemic, according to agricultural economists and attorneys.

Auto-Lending Binge Threatens to Unwind When Stimulus Measures Ease
Jean Eaglesham and Ken Brown, The Wall Street Journal

A decadelong boom in auto lending threatens to unravel as payment deferrals end while unemployment remains high and stimulus measures fade.

U.S. Futures Slip on Tech Tension; Dollar Rises: Markets Wrap
Robert Brand, Bloomberg

U.S. equity-index futures declined with stocks after President Donald Trump’s latest attack on Chinese tech companies stoked tensions with Beijing. Treasuries and the dollar rose.

Banking

Goldman Sachs Restates Earnings After $3.9 Billion Malaysia Settlement
Liz Hoffman, The Wall Street Journal

Goldman Sachs Group Inc. restated its second-quarter earnings lower Friday after reaching a $3.9 billion settlement with the government of Malaysia to resolve a long-running investigation into its work for a corrupt investment fund.

Consumer Lender Pays $21.7 Million Over Mexico Bribery Claims
Dylan Tokar, The Wall Street Journal

World Acceptance Corp. agreed to pay $21.7 million to resolve claims that a former subsidiary in Mexico paid millions in bribes to that country’s government and union officials, the U.S. Securities and Exchange Commission said. The Greenville, S.C.-based consumer lender on Thursday entered into an administrative settlement with the SEC over the alleged violations of the U.S. Foreign Corrupt Practices Act.

Financial Products and Investments

Trump-appointed tech fund chief linked to multilevel marketing companies
Daniel Lippman, Politico

The man the Trump administration is trying to install as acting CEO of the government-funded Open Technology Fund, James Miles, was linked to two multilevel marketing companies that drew legal scrutiny from multiple state attorneys general.

Billionaire Daniel Loeb’s Third Point Re to Merge With Sirius Group
Stella Yifan Xie, The Wall Street Journal

Third Point Re insurance Ltd., backed by U.S. hedge-fund manager Daniel Loeb, said it would merge with Sirius International Insurance Group Ltd., whose majority shareholder in China has been under financial pressure.

Housing and GSEs

Mortgage rates pulled down to lowest levels in history
Kathy Orton, The Washington Post

The 30-year fixed mortgage rate, the most popular home loan product, sank to its lowest level on record. It fell to 2.88 percent with an average 0.8 point, according to the latest data released Thursday by Freddie Mac. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 2.99 percent a week ago and 3.6 percent a year ago. Since November 2018, when it was 4.94 percent, it has fallen more than two percentage points.

Trump is calling for another moratorium on evictions. Landlords are pushing back.
Renae Merle, The Washington Post

Reinstating a federal moratorium is a short-term fix to a long-term problem, landlords say. The industry is already struggling to navigate the complex set of overlapping state and local eviction bans, they say. When the bans eventually end, millions of renters will owe months of back rent they can’t afford, delaying their eventual eviction while leaving landlords to swallow the shortfall, they say.

ICE mortgage deal is largest in its 20-year history
Philip Stafford et al., Financial Times

Acquisition of Ellie Mae for $11bn moves NYSE-owner deeper into home loan technology.

Quicken Loans parent soars 19.5 percent after pricing IPO well below targets
Jacob Bogage, The Washington Post

Rocket Cos., the parent of Quicken Loans, jumped nearly 20 percent Thursday after the lender scaled back its public offering in the face of economic crosscurrents and despite the relative strength of the housing market.

Taxes

Sanders offers bill to tax billionaires’ wealth gains during pandemic
Naomi Jagoda, The Hill

Sen. Bernie Sanders (I-Vt.) on Thursday introduced legislation to impose a 60-percent tax on billionaires’ wealth gains from March 18 through the end of the year, and to use the revenue raised by the tax to direct Medicare to pay all Americans’ out-of-pocket health-care expenses for a 1-year period.

Financial Technology

Fed’s Brainard lays out central bank’s instant payment framework
Pete Schroeder, Reuters

Federal Reserve Governor Lael Brainard laid out the framework for the central bank’s instant payments system on Thursday, saying the Fed’s plans call for getting the system online as fast as possible.

The Robinhood Craze Is Now Moving Stocks Everywhere
Bloomberg

Dirt cheap, automated on apps and championed by newbie traders who brandish their broker balances on Twitter, the stuck-at-home trading phenomenon, born in the USA, has become a global craze.

Opinions, Editorials and Perspectives

So Much for Trump’s Trade Promise
The Editorial Board, The Wall Street Journal

With his re-election on the ropes, President Trump has returned to his favorite household remedy: tariffs. On Thursday Mr. Trump said he is reimposing a 10% tariff on Canadian aluminum, which had been lifted ahead of last year’s United States-Mexico-Canada Agreement (USMCA).

Research Reports

Consumption Effects of Unemployment Insurance during the COVID-19 Pandemic
JPMorgan Chase & Co.

During the pandemic, While aggregate spending of the employed was down by 10 percent during the initial months of the pandemic, the spending of unemployment benefit recipients increased 10 percent, a pattern which is likely explained by the $600 federal weekly benefit supplement.

Morning Consult