• As senators look to reach an agreement on the $579 billion infrastructure package this week ahead of a scheduled five-week break that’s supposed to start Aug. 9, the White House and Senate Democrats sent an offer last night in an attempt to close some ground between the two parties, a Democrat familiar with the talks said. Democratic and Republican aides pointed to disputes over how to divide money over roads and transit and the allocation of broadband internet funds and how to repurpose coronavirus economic relief money. (Bloomberg) 
• White House officials are tracking the United Kingdom’s economic reopening, where the country has a higher vaccination rate than the United States, as concerns grow in the United States about the delta variant’s potential impact on the economy, including speeding retirements among older workers and preventing parents from re-entering the labor market, three people familiar with discussions said. So far, Biden officials are encouraged by the relatively low hospitalization and mortality rates in the United Kingdom even as the number of cases has risen. (The Washington Post) 
• The cryptocurrency exchanges FTX and Binance Holdings Ltd. said separately that they would sharply limit the amount of leverage retail investors could use when betting on the price of cryptocurrency. Amateur investors in the United States are not supposed to be allowed to make these risky trades, but some have found ways to do so on the exchanges. (The New York Times)    

Wall Street doubles down on lending ‘cheap money’ to the rich

Financial Times

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How Unemployment Insurance Fraud Exploded During the Pandemic

Cezary Podkul, ProPublica

A Bronx man allegedly received $1.5 million in just ten months. A California real estate broker raked in more than $500,000 within half a year. 

Bernie Sanders Embraces Deal Maker Role in Biden’s Antipoverty Push

Eliza Collins, The Wall Street Journal

Sen. Bernie Sanders has morphed this year from antiestablishment outsider to White House deal maker, working closely with onetime political rival President Biden to advance a multitrillion-dollar economic agenda. The self-described Democratic socialist has tempered some of his progressive policy demands to team with the Biden administration on Democrats’ sprawling antipoverty and climate plan. 

Pelosi Says Infrastructure Won’t Get Vote Without Larger Plan

Steven T. Dennis, Bloomberg

Speaker Nancy Pelosi isn’t backing off her plan to hold up a bipartisan infrastructure package until the Senate delivers a larger, Democratic-only plan expected later this year, prompting a rebuke from Senate Republicans. Pelosi said Sunday on ABC’s “This Week” she was “enthusiastic” about the $579 billion bipartisan package and hopes the Senate passes it.

U.S. Treasury Secretary Yellen warns Congress on debt limit

Doina Chiacu, Reuters

U.S. Treasury Secretary Janet Yellen urged lawmakers on Friday to increase or suspend the nation’s debt limit as soon as possible and warned that if Congress does not act by Aug. 2 the Treasury Department would need to take “extraordinary measures” to prevent a U.S. default. In a letter to House of Representatives Speaker Nancy Pelosi, Yellen said that Oct. 1, the first day of the next fiscal year, could be a critical date for the U.S. ability to pay its obligations without debt limit legislation due to large federal outlays scheduled for then.

Debt-Limit Deadline Leaves Democrats Weighing Options for Fix

Steven T. Dennis, Bloomberg

Democrats who control Congress are expressing confidence they can raise the federal debt limit in time to avoid a default this fall, but exactly how and when they’ll act isn’t yet clear. They have a rough deadline: the Congressional Budget Office last week said it expects so-called extraordinary measures available to the Treasury Department, like temporarily withholding special bonds from federal retirement accounts, will give Congress until October or November to act before the government runs out of money.

Child Tax Credit Payments Have Begun. Should You Opt Out?

Tara Siegel Bernard, The New York Times

Millions of families with children have probably noticed that their bank accounts looked a little more flush this month because they received an extra injection of cash from the government — up to $300 for each child. The Biden administration sent out letters to families alerting them about the payments, which are part of an expanded child tax credit that aims to support Americans as they continue to ride out the pandemic.

For Republicans, Deep Wounds Fuel Resistance to Bolstering the I.R.S.

Alan Rappeport, The New York Times

A plan by Democrats to pay for infrastructure investments by beefing up the Internal Revenue Service to catch tax evaders has resurfaced old resentments for Republicans, whose distrust of the agency has simmered for years, erasing hopes of a bipartisan legislative accord built on narrowing the so-called tax gap. Republican senators backed away this week from a provision to toughen tax enforcement at the I.R.S., gutting a crucial source of financing for an infrastructure package that would devote about $600 billion to roads, bridges, broadband and other public goods.

‘No justification’: Fed pressed to stop pumping cash into booming markets

Victoria Guida, Politico

Shortly after the pandemic struck last year, the Federal Reserve began buying billions of dollars in government debt every month to drive down borrowing costs and keep the economy from collapsing. Today, house prices are surging, stocks have continued their stratospheric rise, and banks have more cash than they know what to do with. 

U.S. Population Growth, an Economic Driver, Grinds to a Halt

Janet Adamy and Anthony DeBarros, The Wall Street Journal

America’s weak population growth, already held back by a decadelong fertility slump, is dropping closer to zero because of the Covid-19 pandemic. In half of all states last year, more people died than were born, up from five states in 2019. Early estimates show the total U.S. population grew 0.35% for the year ended July 1, 2020, the lowest ever documented, and growth is expected to remain near flat this year.

White House Shifts Messaging on Inflation as Republicans Attack

Nancy Cook, Bloomberg

The White House is shifting the way it talks about inflation, as polls show increasing voter concern and Republicans try to use rising prices to kill off President Joe Biden’s sweeping plans to spend trillions of dollars on social programs and infrastructure projects. Out: wonky words like “transitory” and complicated statistical explanations for price indicators.

Hawks vs doves: US Federal Reserve divided over when to dial back economic support

Colby Smith, Financial Times

Debate over when to start ‘tapering’ $120bn of asset purchases will intensify this week.

A Key Gauge of Future Inflation Is Easing

Gwynn Guilford, The Wall Street Journal

One of the most important signals of future inflation has begun to ease in the past month, a development that should reassure the Federal Reserve in its prediction that the recent inflation surge will prove largely temporary. That signal is so-called inflation expectations: what businesses, consumers, workers and investors expect inflation to be over the next one to 10 years.

How the Fed’s fine intentions feed US wealth inequality

Joe Rennison, Financial Times

Stimulus has fired up price of assets held by top earners, says UBS.

Rookie Bankers Sour on Wall Street’s Pitch of Big Pay and Long Hours

Kate Kelly and Lananh Nguyen, The New York Times

When Vince Iyoriobhe joined Bank of America’s investment banking division as a rookie analyst in 2017, he planned to stick around just long enough to get the experience needed to pursue his dream career in another corner of finance entirely — private equity. “I knew banking was going to be tough,” Mr. Iyoriobhe, 26, said.

Banks Are Giving the Ultra-Rich Cheap Loans to Fund Their Lifestyle

Devon Pendleton and Benjamin Stupples, Bloomberg

Billionaire hedge fund manager Alan Howard paid $59 million for a Manhattan townhouse in March. Just two months later he obtained a $30 million mortgage from Citigroup Inc.

Wall Street Interns Return to Office, and Nightlife, After a Year of Zoom Meetings

Eric Krebs et al., Bloomberg

Fourteen-hour workdays followed by late-night dancing at Phebe’s Tavern and Grill, the notorious intern bar. Coffee with the boss on JPMorgan Chase & Co.’s ground floor. Impromptu rooftop gatherings with colleagues. 

UBS warned of ‘grave reputational risk’ in PNG loan probe

Jamie Smyth, Financial Times

Bank and Norton Rose slammed by inquiry over deal that incurred $432m loss for Pacific nation.

Fidelity International threatens tough stance on climate and gender

Attracta Mooney, Financial Times

Global asset manager which oversees $787bn to vote against company directors falling behind on issues.

FICO Score’s Hold on the Credit Market Is Slipping

AnnaMaria Andriotis, The Wall Street Journal

For decades, nearly every consumer credit decision revolved around a three-digit number—the FICO credit score. That is changing.

Why Fannie Mae Doesn’t Want Home Appraisers Calling Neighborhoods ‘Desirable’

Brentin Mock, Bloomberg

“Show, don’t tell,” has always been a guiding rule for writers. Now it’s also the advice being given to home appraisers as the industry comes to terms with its own biases.  

Phoenix Homes on Track to Break Record This Week as Housing Market Booms

Nicole Friedman, The Wall Street Journal

Once a poster child for the foreclosure crisis, Phoenix’s housing market is booming again, boosted by robust population growth and relative affordability. Phoenix was a hot market before the pandemic, and it has been a major beneficiary of new remote-work policies, as workers in expensive cities decided to move for cheaper housing.

Investors Are Buying American

Sebastian Pellejero, The Wall Street Journal

Investors around the globe are pouring money into U.S. financial assets, a sign of confidence that the world’s largest economy remains poised to pull through the Covid-19 pandemic better than many others. Investors world-wide have funneled more than $900 billion into U.S.-domiciled mutual and exchange-traded funds, on a net basis, during the first half of the year, according to data compiled by Refinitiv Lipper.

Bitcoin Surges Near $40,000 on Amazon’s Crypto Hiring Plans

Joanna Ossiinger, Bloomberg

Bitcoin surged near $40,000 as a crypto-related job ad from Amazon.com Inc. stoked speculation about the company’s involvement in the industry. The job posting, which was reported by CoinDesk last week, said the Amazon is looking for an executive to develop the company’s “digital currency and blockchain strategy.”

Hedge funds back away from Binance after regulatory assault

Laurence Fletcher et al., Financial Times

Several specialist funds cut exposure to crypto exchange after flurry of warnings from watchdogs.

Early Crypto Mogul Says China Crackdown May Lead to Outright Ban

Bloomberg

China’s crackdown on cryptocurrencies will probably intensify and may even lead to an outright ban on holding the tokens, according to Bobby Lee, one of the country’s first Bitcoin moguls. Lee knows what it’s like to be on the wrong side of Beijing: He sold BTC China, the nation’s first Bitcoin exchange and at one point the second biggest worldwide, in the aftermath of a crackdown in 2017.

A tax loophole is helping bitcoin holders save tons of cash by avoiding federal taxes

MacKenzie Sigalos, CNBC

The crypto market is down 46% from its all-time high in May, but shrewd investors are celebrating the dip in prices. Because the IRS classifies digital currencies like bitcoin as property, losses on crypto holdings are treated much differently than losses on stocks and mutual funds, according to Onramp Invest CEO Tyrone Ross. 

Ransomware Is a Scourge, But Eliminating Cryptocurrencies Won’t Make It Go Away

Phillip Martin (chief security officer of Coinbase), Morning Consult

The recent high-profile ransomware attacks on Colonial Pipeline and food processing giant JBS have led to knee-jerk calls to ban cryptocurrencies because the attackers demanded to be paid in Bitcoin. But would ransomware end if cryptocurrency went away tomorrow?

No, Inflation Isn’t Good for Workers

Judy Shelton, The Wall Street Journal

An odd notion seems to have taken hold in Washington: that the Federal Reserve’s easy monetary policy is good for workers. Near-zero interest rates are being hailed as the key to higher wages—even as consumer prices are increasing at the fastest pace since 2008. But nominal wage gains are an illusion when inflation wipes out real gains.