Morning Consult Finance: Warren’s Rise in Polls Worries Finance Industry

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  • According to more than two dozen interviews with finance executives and analysts, the industry is most worried about Sen. Elizabeth Warren of Massachusetts among the Democratic presidential candidates. The industry is donating money to Warren’s political rivals and raising concerns in open letters and conference calls, especially as Warren gains momentum in the polls and after she released a funding program for her “Medicare for all” proposal that would add taxes on billionaires, tax financial transactions including stock trades and annual capital gains taxes for the wealthiest households. (The New York Times
  • China is open to sending its president, Xi Jinping, to the United States to sign a “phase one” trade deal even if it’s not part of a state visit, according to people familiar with the matter. Before a meeting with a Chinese delegation in Bangkok, U.S. Commerce Secretary Wilbur Ross said the United States and China are “very far along” in negotiations over a preliminary trade deal with China, which President Donald Trump has said would be signed somewhere in the United States. (Bloomberg
  • The Office of the Comptroller of the Currency closed the City National Bank of New Jersey, the third bank closing in a week. The bank, which held about $120.6 million in assets and $111.2 million in deposits on Sept. 30, was sold to Industrial Bank in Washington, D.C. (American Banker

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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
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Are We in a Recession? Experts Agree: Ask Claudia Sahm
Kate Davidson, The Wall Street Journal

Two of the biggest challenges of fighting a recession are knowing when you’re in one and deciding what to do next. When economic data weaken, it’s impossible to know in real time whether it’s a blip or something more prolonged.

Trump’s Re-Election Likely If Economy Stays on Course
Katia Dmitrieva, Bloomberg

An enduring U.S. expansion puts President Donald Trump on course to win re-election in 2020, according to economic models with a track record of predicting who wins the White House.

Fed Risks More Trump Anger With Message That Rates Are on Hold
Rich Miller, Bloomberg

Federal Reserve policy makers are satisfied with the stance of monetary policy even if President Donald Trump isn’t. In a series of appearances last week, central bank officials hammered home the message that policy is on hold after three cuts in interest rates this year.

Top Fed Officials Signal Comfort With Decision to Pause Rate Cuts
Nick Timiraos, The Wall Street Journal

Top Federal Reserve officials underscored the central bank’s expectation that it could pause from further rate cuts as it assesses the economy in the coming weeks during remarks on Friday. The Fed delivered its third consecutive quarter-percentage-point rate cut this week at its policy meeting, lowering its benchmark to a range between 1.5% and 1.75%, and signaled a pause.

Democrats Cool on Wall Street Donors, and the Feeling Is Mutual
Joshua Green and Bill Allison, Bloomberg Businessweek

Wealthy donors have long played a central role in Democratic presidential politics: filling campaign coffers, jockeying for influence, and dispensing often unwanted advice to candidates and their staffs. But that system may be in jeopardy.

Trump economic adviser says he’s ‘cautiously optimistic’ about trade deal with China
Tal Axelrod, The Hill

Stephen Moore, an economic adviser to President Trump, said he’s “cautiously optimistic” that the U.S. and China will sign the first phase of a trade deal. “I would describe what we have with China right now as a truce. I don’t think it’s a real long-term resolution, and China is still highly problematic in terms of their abusive trade practices and their theft of our intellectual property and their forced technology transfers.

Top White House adviser: ‘No conversation’ about getting rid of Fed chairman
Brett Samuels, The Hill

Top White House economic adviser Larry Kudlow on Friday said that there has been no discussion of getting rid of Federal Reserve Chairman Jerome Powell despite President Trump’s persistent criticism of his leadership of the central bank. “There is no conversation to get rid of him whatsoever. Whatsoever. So let me just put an exclamation point there,” Kudlow told reporters on the White House driveway.

Pressure grows on administration to fill Fed, FDIC seats
Neil Haggerty, American Banker

The Federal Reserve has become one of President Trump’s favorite targets. He frequently taunts Fed Chairman Jerome Powell, and recently even suggested that the U.S. central bank is a bigger threat to the economy than China. But at the same time, the administration has struggled with filling two vacant seats on the seven-member Fed board, leaving many in Washington perplexed over why the process has stalled. 

Stocks Climb on Trade Optimism; Treasuries Slip: Markets Wrap
Todd White, Bloomberg

U.S. equity futures advanced along with stocks worldwide while bonds slipped on optimism China and America are moving closer to an interim trade deal. The dollar edged higher.


Regulators press Deutsche Bank boss to drop dual roles
Olaf Storbeck and Stephen Morris, Financial Times

ECB and BaFin fear radical restructuring could suffer unless Christian Sewing acts.

Prosecutors ask for delays in civil cases against JP Morgan until metals criminal case resolved
Dawn Giel, CNBC

Federal prosecutors have asked for two civil cases against J.P. Morgan Chase be put on hold until they have finished a related criminal prosecution involving current and former precious metals traders at the nation’s largest bank. The Justice Department has asked for the stay on civil proceedings to be extended on both civil cases pending in federal court in New York City through the conclusion of a related ongoing criminal case into precious metals activity at J.P. Morgan Chase.

Financial Products and Investments

Mark Vandevelde, Financial Times

Decision by Apollo, Blackstone and others to switch from partnership to corporation status pays off.

Why No-Cost ETFs Aren’t No Cost
Ari I. Weinberg, The Wall Street Journal

Online brokerages are dangling a new temptation in front of investors: the near-obliteration of trading commissions. That’s right, buy or sell any stock or exchange-traded fund and pay nothing!

Housing and GSEs

Apple Commits $2.5 Billion to Fight California Housing Crisis
Patrick Thomas, The Wall Street Journal

Apple Inc. will commit $2.5 billion toward affordable housing in California, amid concerns that Silicon Valley’s successes have pushed people out of the area. The company said Monday it would invest $1 billion in an affordable housing investment fund that will help the state develop and build additional low- to moderate-income housing.

The homebuyers are coming. The homebuyers are coming
Julia Falcon, HousingWire

A flood of first-time homebuyers is about to hit the market over the next three years, according to newly released analysis from TransUnion. TransUnion is currently projecting that at least 8.3 million first-time homebuyers will enter the mortgage market between 2020 and 2022.


Elizabeth Warren’s Medicare for All Would Leave Mark on U.S. Economy
Richard Rubin, The Wall Street Journal

Sen. Elizabeth Warren’s new Medicare for All plan would leave a sizable imprint on the U.S. economy, altering consumer spending and business investment while upending the health-care sector. Nearly $20 trillion in new taxes over the next decade on corporations, investors and wealthy individuals would damp business profits. 

Warren Health Plan Tightens Democrats’ Embrace of Tax Increases
Jim Tankersley, The New York Times

Three years after President Trump rode a wave of populist anger into office, some of his top Democratic challengers are calling for a fundamental reordering of American capitalism, arguing that voters will embrace bold plans to reverse decades of rising inequality by raising taxes on corporations and the rich. The $20.5 trillion proposal for “Medicare for all” released by Senator Elizabeth Warren of Massachusetts on Friday is the most prominent example of how a party that once bet on centrist economic policies to win elections is moving toward far more ambitious efforts to redistribute wealth and expand the government’s role in the economy.

Financial Technology

Large Bitcoin Player Manipulated Price Sharply Higher, Study Says
Paul Vigna, The Wall Street Journal

A single large player manipulated the price of bitcoin as it ran up to a peak of nearly $20,000 two years ago, a new study concludes. The study reviewed the period between March 2017 and March 2018, when the price of bitcoin soared and its total market value rose to $326 billion.

The fight against financial advertisers using Facebook for digital redlining
John Detrixhe and Jeremy B. Merrill, Quartz

Imagine you’re walking down your city’s main street. If you’re 35 years old, there are cafes, shops, and banks. But if you’re 56 years old, the banks are missing.

Opinions, Editorials and Perspectives

Warren Has a (Fantasy) Plan
The Editorial Board, The Wall Street Journal

Now we know why Elizabeth Warren took so long to release the financing details of her Medicare-for-All plan. The 20 pages of explanation she released Friday reveal that she is counting on ideas for cost-savings and new revenue that are a fiscal and health-care fantasy.

Research Reports

Don’t Take Their Word For It: The Misclassification of Bond Mutual Funds
Huaizhi Chen et al., The National Bureau of Economic Research

We provide evidence that mutual fund managers misclassify their holdings, and that these misclassifications have a real and significant impact on investor capital flows. In particular, we provide the first systematic study of bond funds’ reported asset profiles to Morningstar against their actual portfolios. 

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