Why Wall Street prefers Warren to Sanders Presented by U.S. Bank

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Quick Fix

Why Wall Street would take Warren over Bernie — Look for my story a little later this morning on Elizabeth Warren’s latest Wall Street reform plan and why many bankers and hedge fund managers have kind of made their peace with her. Not that they want her to win the nomination but she’s mostly a known quantity while Sen. Bernie Sanders (I-Vt.) remains a total wild card threat.

A taste, from venture investor and former Obama adviser Robert Wolf. “She’s preferable for many reasons. She’s been very clear that she believes in fair capitalism. And the idea of promoting socialism I don’t think is a winning strategy if the goal is to beat President Trump.”

One former top bank executive: “Wall Street is very good at accommodating itself to reality and if the reality is the party is going to be super-progressive, they may not like Warren but she’s a better form of poison than Bernie.”

Kudlow stings China — Via tweet thread from Sinclair’s James Rosen, NEC Director Larry Kudlow said of China “They’re not the Soviet Union; but this kind of government control, statism, never works for long.” He also said the prospect that China could collapse like the Soviet Union did has “always been an undercurrent in’ the talks to resolve the trade war.”

That’s remarkably tough talk and likely to anger the Chinese side. Not the kind of stuff that suggests a near term prospect for a deal.

A message from U.S. Bank Banks must do more and better to reverse systemic inequality. At U.S. Bank, that starts by committing $116 million to address social and economic inequities and elevating Black voices and Black-owned businesses. Because we’re small enough to care – and big enough to make a difference. Learn more.

GOOD THURSDAY MORNING — Email me at [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at [email protected] and follow her on Twitter @AubreeEWeaver.

Driving the Day

President Trump meets with the Prime Minster of the Netherlands … Senate Banking at 10:00 a.m. has a hearing on “Export Control Reform Implementation: Outside Perspectives” … Index of leading indicators at 10:00 a.m. expected to rise 0.2%

NEW ON THE PODS — Critics say the U.S. is being outspent, out-researched, and outpaced in the race to develop artificial intelligence. What will happen if AI is dominated by authoritarian regimes? “We don't want to develop A.I. at the expense of our values,” White House AI point person Lynne Parker said in the latest episode of the Global Translations podcast.

“The policy challenge is to make sure we get it right, to make sure we find that right balance so that we are using A.I. in ways that we all agree are appropriate.” Get the show wherever you listen to podcasts.

NEW ON DODD-FRANK — Via a new Center for American Progress report this morning: “CAP’s proposal would use an automatic SIFI designation threshold to ensure that the riskiest insurance companies, hedge funds, asset management firms, and other shadow banking entities face strong regulation and oversight”

PROFILES IN DARKNESS — Our Matthew Choi: “In 2016, it was “lock her up." In 2019, it's ‘send her back.’ President Donald Trump doubled down on the go-back-to-where-you-came-from trope during a Wednesday rally in Greenville, N.C., The rally was a campaign distillation of the racist tweets he had sent Sunday.”

NY/NJ SUE OVER SALT — Our Nick Niedzwiadek and Katherine Landergan: “New Jersey and New York, along with Connecticut, sued the Trump administration … challenging Internal Revenue Service rules that outlaw certain workarounds to the cap on state and local tax deductions.”

FACEBOOK REBUFFS WATERS — Our Zachary Warmbrodt: “A top Facebook executive … refused demands by Rep. Maxine Waters and other Democrats to delay work on the company's new digital currency despite growing concern about risks it will pose to the global economy.

“Waters, a California Democrat who chairs the House Financial Services Committee, pressed executive David Marcus at a hearing to stop ‘dancing around this question’ and commit to a moratorium on the so-called Libra project until Congress enacts new safeguards. … One lawmaker even said Libra could be more of a threat to the U.S. than the Sept. 11 terrorist attacks.”

Fly Around

WIDE OPEN RACE FOR IMF — Our Bjarke Smith-Meyer: “The race for the International Monetary Fund blew wide open after Jeroen Dijsselbloem fell out of favor for the top job on Wednesday night, officials told POLITICO.

“Dijsselbloem, the former Eurogroup president and Dutch finance minister, was seen as a favorite to succeed Christine … But the Dutchman’s chances took a hit in informal talks in the French town of Chantilly, on the sidelines of a meeting of finance ministers and central bankers from the G7 countries.”

NETFLIX REPORTS DROP IN U.S. USERS — WSJ’s Joe Flint and Patrick Thomas: “For the first time in nearly a decade, the number of people subscribing to Netflix Inc. in the U.S. declined, an underwhelming performance for the streaming giant that comes as a slew of rivals are about to enter the field.

“The Los Gatos, Calif.-based company said it had 130,000 fewer domestic subscribers at the end of the second quarter compared with the end of the first, sending Netflix shares sliding more than 11% in after-hours trading Wednesday. The stock is still up by double digits this year.”

SENATE PASSES TAX TREATIES — Our Aaron Lorenzo: “The Senate … passed three more updated tax treaties, between the U.S. and Switzerland, Japan and Luxembourg, breaking years of holds that kept them bottled up. The treaties with Switzerland and Japan passed 95-2, and the one with Luxembourg 93-3. A similar treaty with Spain passed 94-2 late Tuesday.”

ROSS UNCERTAIN ON CHINA — Our Doug Palmer: “The outlook for full resumption of trade talks with China remains unclear, Commerce Secretary Wilbur Ross said … In an interview with Fox Business Network, Ross said one big question is whether Beijing will agree to return to the point in the negotiations before it began backsliding on some previous commitments.

“‘The fundamental question now though is will they go back to the point where we were before they changed their mind and backtracked on some of the understandings that had been reached,’ Ross said. ‘That's the important issue right now.’”

KUSHNER WEIGHS IN ON 2020 FUNDRAISING — CNBC Brian Schwartz: “Trump's son-in-law Jared Kushner, who is also a senior White House advisor, is regularly giving counsel to 2020 Trump campaign leaders on how to appeal to online donors and where to spend their money.

“As recently as Thursday, Kushner met with campaign leadership, including campaign chief Brad Parscale, along with Republican National Committee Chair Ronna McDaniel. Kushner and Parscale regularly hold strategy sessions on how to improve messaging about Trump's accomplishments to small-dollar donors”

For Your Radar

BUDGET DEAL GETS CLOSER — Our John Bresnahan: “White House officials and congressional leaders are drawing closer to a two-year budget agreement that also raises the debt ceiling, although both sides caution that some serious obstacles remain to a deal. Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) emerged from a 45-minute meeting on Wednesday optimistic they can reach an agreement this week.”

HOUSE VOTES TO HOLD ROSS/BARR IN CONTEMPT — Our Andrew Desiderio: “The House voted on Wednesday to ask the Justice Department to prosecute Attorney General William Barr and Commerce Secretary Wilbur Ross for defying congressional subpoenas, an escalation in House Democrats’ ongoing oversight battle with the Trump administration.

“The vote to hold Barr and Ross in criminal contempt of Congress is largely symbolic, as … Trump’s DOJ will not act on the request. But it reflects House Democrats’ frustration over the administration’s defiance of the House Oversight and Reform Committee’s subpoenas seeking information about failed efforts to add a citizenship question to the 2020 census.”

SECOND DEBATE SET — Our Zach Montellaro: “The field is set for the second round of Democratic primary debates — and a number of candidates will go onstage knowing it could be their last.

“Twenty candidates have qualified for two nights of debates in Detroit on July 30-31, according to a POLITICO analysis — including Montana Gov. Steve Bullock, who missed the first debates in June but vaulted onto the stage after Rep. Eric Swalwell’s campaign ended.”

RULE MAKING BY ENFORCEMENT? — Investment News’ Mark Schoeff Jr.: “As the Securities and Exchange Commission conducts investigations for the second round of its crackdown on inadequate mutual fund payment disclosures, critics are asserting the agency is engaging in rulemaking by enforcement.

“Earlier this year, the SEC announced a $125 million settlement with 79 firms that had not told clients they received 12b-1 fees for recommending certain funds. The SEC found the firms promoted the high-fee share classes when less-expensive share classes were available in the same fund. The firms self-reported and avoided fines in an initiative the agency launched last year.”

A message from U.S. Bank: It’s time for banks to acknowledge the racial wealth gap and work to reduce it. Our headquarters market of Minneapolis was the epicenter of recent social justice activism, forcing us all to reckon with the glaring disparities caused by systemic racism. At U.S. Bank, we’re making an immediate impact by advancing Black leaders in our organization, developing meaningful business relationships with Black-owned businesses and customers, and denouncing systemic racism. To reinforce our commitment, we are making an initial investment of $116 million to address social and economic inequities, and our senior management team has elevated our diversity office to the corporate Managing Committee. Chipping away at systemic racism is not the job of one person, one company, or one industry. But that is how it starts, with each of us. One by one, each of us becomes all of us. Learn more.

Follow us on Twitter Mark McQuillian @mcqdc



Ben White @morningmoneyben



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