Morning Consult Finance: U.S. Said to Consider Removing Tariffs on $112 Billion Worth of Chinese Goods

Top Stories

  • To help secure a partial trade deal with China, the Trump administration is considering removing a 15 percent tariff on $112 billion of Chinese goods that was imposed in September, according to five people briefed on the discussion. In return, Washington would expect a concession from the Chinese, such as strengthened protection of intellectual property, more certainty for agricultural sales and a U.S. signing ceremony. (Financial Times
  • A group of academics and former executives from credit ratings firms told the Securities and Exchange Commission at a hearing that it should end the “issuer pay” business model, in which the seller of bonds also pays firms for their ratings. The group said the system, which one law professor called “fundamentally broken,” incentivizes ratings firms to issue higher grades than they would otherwise. (The Wall Street Journal)
  • Goldman Sachs Group Inc. now offers 20 weeks of paid parental leave, compared to the 16-week standard at other Wall Street firms. The expanded benefit applies to all parents, no matter their gender, and to both primary and secondary caregivers. (Bloomberg)

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Events Calendar (All Times Local)

Georgetown Center for Financial Markets & Policy Conference
The New York Times DealBook conference
CFPB Symposium: Section 1071 of the Dodd-Frank Act 9:30 am
Meeting of CFTC’s Energy and Environmental Markets Advisory Committee 10:00 am
Senate Banking Committee hearing: “Examining Bipartisan Bills to Promote Affordable Housing Access and Safety” 10:00 am
San Francisco Fed conference: The Economics of Climate Change
View full calendar

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Unemployment is climbing in key swing states, including Michigan and Wisconsin
Andrew Van Dam and Heather Long, The Washington Post

There’s been a steady increase of people coming to the St. Vincent de Paul Society’s food pantry in Marinette, Wis., a small city of about 10,000 just across the border from Michigan’s Upper Peninsula. In the past year or so, a slew of major employers — Shopko, Kmart, Younkers — have closed. J.C. Penney left the year before. After each business shuttered, visits to the food pantry ticked up.

Companies Cut Back, but Consumers Party On, Driving the Economy
Patricia Cohen, The New York Times

“YOLO,” Danielle Walker said, explaining why she had just spent a chunk of her biweekly $900 paycheck on an adorable outfit — quilted navy vest, cranberry plaid riding pants and knit sweater — from the “equestrian shop” at Janie and Jack, the children’s clothing store in the Mall of America where she works. “You only live once” also appears to be the motto of many of her customers.

Fed’s Mary Daly Says Three Rate Cuts in 2019 Were Appropriate
Michael S. Derby, The Wall Street Journal

Federal Reserve Bank of San Francisco President Mary Daly said Monday the central bank did the right thing to lower short-term rates three times this year, adding that she doesn’t see a need to lower rates further. “I was very supportive of the three rate cuts we took” this year, Ms. Daly told reporters after giving remarks at an event held at New York University.

US price-fixing prosecutions at record low for third straight year
Kadhim Shubber, Financial Times

Criminal prosecutions for price-fixing under Donald Trump have remained at historic lows for a third consecutive year, a drop-off in enforcement against big business cartels not seen since the 1970s. The Department of Justice announced 25 new cases alleging criminal violations of US antitrust laws in fiscal year 2019, according to a tally of public filings by the Financial Times.

New York Fed Official Says Market Interventions Have Restored Calm
Michael S. Derby, The Wall Street Journal

The New York Fed’s efforts to calm short-term markets and keep them placid is working well, a top central bank staffer said Monday. Lorie Logan, who is the acting leader of the Markets Desk at the New York Fed and oversees how the central bank implements changes in monetary policy, was commenting on the central bank’s substantial interventions into short-term markets, which have been continuing since the middle of September.

U.S. Futures Gain With Stocks; Treasuries Retreat: Markets Wrap
Yakob Peterseil, Bloomberg

U.S. equity futures climbed and European stocks edged higher as investors took confidence from signs that America and China are inching toward a trade deal. Treasuries fell, while the yuan strengthened past 7 for the first time since August.


Goldman Sachs’s Investor Day Won’t Be ‘Big Reveal,’ CEO Solomon Says
Steven Arons and Matthew Miller, Bloomberg

Goldman Sachs Group Inc. Chief Executive Officer David Solomon said investors should expect more details on existing initiatives at the bank’s inaugural investor day in January, but not a wholesale new strategy.

Bank of America to hike minimum wage for all employees to $20 per hour a year ahead of schedule
Fred Imbert, CNBC

Bank of America decided to move up an increase in the company’s minimum to early 2020 from 2021. The company announced Monday that its workers will earn a minimum of $20 per hour starting by the end of next year’s first quarter.

Financial Products and Investments

Goldman Sachs leads $50 million investment in millennial credit card start-up Deserve
Hugh Son, CNBC

Goldman Sachs is betting on a Silicon Valley start-up that’s seeking to modernize the systems underpinning the credit card industry. The bank is lead investor in a $50 million round in Deserve, a firm that offers credit cards directly to nontraditional consumers with little credit history and other deficiencies using a cloud-based platform to determine their creditworthiness.

How Serious Is Climate Change Risk? Just Ask a Banker
Danielle Moran, Bloomberg Businessweek

The underwriters of municipal bonds are disclosing more about cities’ exposure to higher temperatures and rising seas.

Housing and GSEs

What CFPB’s day in court will mean for FHFA
Hannah Lang, American Banker

As the courts increasingly focus on leadership structures at independent agencies, the Consumer Financial Protection Bureau and Federal Housing Finance Agency are often mentioned in the same breath. But with the Supreme Court agreeing to hear a CFPB-specific case, some observers caution that its outcome might not have an immediate effect on the FHFA.


IRS Auditors are Watching Companies That Owe Offshore Profit Tax
Laura Davison, Bloomberg

The Internal Revenue Service has a message for companies that owe taxes on overseas profits: Auditors are closely watching. The IRS included repatriation tax payments — the levies companies owe on their accumulated offshore earnings, according to the 2017 tax law — as an area of focus for the agency’s auditors, according to a list on their website updated Monday.

Expect the taxman of the future to take your money in real time
Chris Giles, Financial Times

Wages are stagnant, but individual tax accounts could revolutionise collection and reduce evasion.

Financial Technology

Why banking apps and startups suddenly all have human first names
Meredith Haggerty, Vox

When you need some money to make it to your next paycheck, you can always call on Dave. If you need budgeting help, reach out to Brigit. And for a personal loan to get you out of credit card debt, try Marcus.

Opinions, Editorials and Perspectives

Why we are suing the SEC
Gary Retelny, Financial Times

The ISS’s legal action against its regulator aims to block rule changes for proxy advisers.

The Truth About Income Inequality
Phil Gramm and John F. Early, The Wall Street Journal

Never in American history has the debate over income inequality so dominated the public square, with Democratic presidential candidates and congressional leaders calling for massive tax increases and federal expenditures to redistribute the nation’s income. Unfortunately, official measures of income inequality, the numbers being debated, are profoundly distorted by what the Census Bureau chooses to count as household income.

Attack of the Wall Street Snowflakes
Paul Krugman, The New York Times

Given all the recent focus on health policy, you might think that the medical-industrial complex would be heavily involved in the Democratic primary race, going all-out to block Elizabeth Warren. And a coalition of drug companies, insurers and hospitals is indeed running ads attacking “Medicare for all.”

Research Reports

Average Inflation Targeting Would Be a Weak Tool for the Fed to Deal with Recession and Chronic Low Inflation
David Reifschneider and David Wilcox, PIIE

The Federal Reserve faces two important monetary policy challenges: First, since the Great Recession it has struggled to move inflation convincingly up to the 2 percent target level. Second, during the next recession it will struggle to deliver enough support to the economy unless the recession is unusually mild. As a result, the search is on for alternative policy frameworks that might allow the Fed to achieve its monetary policy objectives more effectively. Among the alternatives is average inflation targeting (AIT).

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