Wall Street shorts the GOP convention Presented by U.S. Bank

WALL STREET SHORTS THE GOP CONVENTION — POLITICO’s Ben White: “Wall Street executives are hitting the sell button on the GOP convention in Cleveland next week. … Bankers typically use the quadrennial Republican Party gathering to schmooze clients, host parties and flaunt their connections to the nominee and other senior officials.

“In 2012, they flooded Tampa Bay to celebrate one of the industry’s favorite sons, Mitt Romney, getting the nomination. … But with real estate mogul Donald Trump running on an anti-trade, populist platform — while sporting sky-high unpopularity ratings — many bankers and traders want nothing to do with the convention this year. …

“‘With Trump you have what is a fairly divisive campaign and you have the potential of unnecessarily offending a whole bunch of people if you show up there in a prominent way,’ said Matt McDonald, a partner at consulting firm Hamilton Place Strategies which does business with some of the nation’s biggest banks. ‘On top of that a lot of the people that you might want to get in front of for one reason or another are not going to be there.’

FEW BIG NAMES — “So far, no major Wall Street CEOs have said they plan to attend the convention. JPMorganChase, which played a sponsorship role in 2012, declined to do so this year. Goldman Sachs will also be largely absent, as will Morgan Stanley and Bank of America. Citigroup plans only a low-key presence. … And unlike in 2012, when rank-and-file Wall Streeters were all over Tampa, many bankers and lobbyists who typically make the rounds will be taking a pass.

“‘I’m just going to skip it because frankly I don’t see the point in going,’ said a senior lobbyist for one of the largest banks in the nation. ‘Usually there is pressure to at least show up but with Trump you get a pass. No one is going to care if you don’t go.’

“At Goldman, typically one of the most politically engaged banks on Wall Street, there may be almost no one at all going to Cleveland. “I asked around and couldn’t find a single person who planned to be there,” said one Goldman executive who declined to be quoted by name.

“‘Most people who want to see someone from the Trump campaign can do it some other place at some other time. And the potential is there for Cleveland to be a complete shit show.’” http://politi.co/29OZLDP

FARRAGE WILL BE THERE! — POLITICO’s Tyler Pager: “Brexit leader Nigel Farage will attend the Republican National Convention next week and share lessons about the United Kingdom’s decision to leave the European Union, he told USA TODAY on Tuesday. ‘Having criticized President Obama for getting involved in British politics, I am not about to endorse anybody,’ Farage said. ‘But I do know a lot of people in the Republican Party, and I'll be interested to hear what Donald Trump has to say in his big speech.’”

MORGAN STANLEY ON 2016 — Morgan Stanley analysts in a research report: “The US election is the latest political risk to markets, with the potential for serious fundamental consequences from campaign proposals. However, evidence points to a divided government & policy incrementalism, rather than sweeping near-term change … Policy incrementalism, not transformation, is the most likely election outcome.

“Using a mix of polling data, 3rd party models, betting market probabilities, and academic studies, we develop and rank likely election outcomes based on 3 key principles: 1) Republicans should maintain House control; 2) The electoral map is not being remade, and favors Democrats; 3) Policy transformation is hard. Currently, Clinton White House outcomes are heavily favored”

GOOD WEDNESDAY MORNING — Sweet 4-2 win for the AL in the MLB All Star Game. Gonna be nice for the Yankees to have home field in the World Series (LOL). Email me at [email protected] and follow me on Twitter @morningmoneyben.

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Zachary Warmbrodt on Dan Tarullo and shadow banking risks-- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 or [email protected].

DRIVING THE DAY — Could it be Trump VP day? Newt Gingrich back in the frame following suspension of his contributor gig with Fox News … President Obama convenes a White House meeting on law enforcement and police shootings … Treasury Secretary Jack Lew is in London to meet with UK Chancellor of the Exchequer George Osborne. In the afternoon, Lew will meet with Bank of England Governor Mark Carney and later with business leaders. In the afternoon, Lew travels to Brussels for meetings with EU officials. In the evening, Lew travels to Berlin … House Ag has a hearing at 10:00 a.m. on "Examining the CFTC's (Commodity Futures Trading Commission) Proposed Rule: Regulation Automated Trading” … House Financial Services has a hearing at 10:00 a.m. on “HUD Accountability” … House Financial Services has a markup at 2 p.m. on H.R.5729 , an Iran sanctions bill and other measures … Import Prices at 8:30 a.m. expected to rise 0.5 percent … Federal Reserve Beige at 2:00 p.m.

DOW HITS RECORD — WSJ’s Okane Otani and Christopher Whittall: “The Dow industrials charged to a record Tuesday, surpassing their May 2015 milestone and ending the longest stretch without a record since the period from October 2007 to March 2013. The Dow Jones Industrial Average rose 120.74 points, or 0.7 percent, to 18347.67 to climb past its previous closing record of 18312.39 set May 19, 2015. To get there, the Dow had to overcome two corrections — defined as a fall of at least 10 percent from a recent peak — since its last high.

“Those two downturns, last summer and early this year, came as investors worried about slowing global growth and the possibility of a U.S. recession. Investors have cast aside those concerns, after a jolt from the U.K.’s vote to leave the European Union, and have started to buy their way back into riskier sectors” http://goo.gl/0IMVYw

RISK ON! — FT’s Dave Shellock: “A steady improvement in risk appetite propelled US stocks to record highs for the second day in a row as bulls took heart from an easing of Brexit concerns, a more confident view of the global economy and the prospect of continued central bank accommodation. US, German and UK government bond prices continued to retreat, the yen fell to its lowest level against the dollar for more than two weeks and gold was heading for its lowest close since the start of the month. Sterling approached the $1.33 level against the dollar for the first time since July 4.” http://goo.gl/mg6cnU

GOP APPROVES DRAFT PLATFORM — POLITICO’s Kyle Cheney: “Republican delegates have approved a draft of the new GOP platform, signing off on a document that would embrace several of Trump’s economic proposals but preserves the party’s previous stance against same-sex marriage and on other socially conservative issues.

“The Convention Platform Committee’s plan … embraces presumptive … Trump’s skeptical view of foreign trade agreements, calling for a slowdown in any new multinational deals and eliminating the party’s once enthusiastic support for [TPP] .. The draft also backs the construction of a wall along the southern border with Mexico” http://goo.gl/tUYChn

DONOR OFFERS $5M FOR TRUMP TAXES — POLITICO’s Louis Nelson: “An anonymous donor has promised to give $5 million to a veterans charity of … Trump’s choosing if the presumptive Republican presidential nominee releases his tax returns, political operative and Clinton backer David Brock plans to announce Wednesday. The Manhattan billionaire has long refused to release his tax returns …

“A release previewing a conference call with Brock scheduled for Wednesday says the $5 million challenge ‘represents an opportunity to fill in some of the unknowns about Trump including how much he has made off of potentially fraudulent ventures and how much he’s actually paid in taxes.’”

WARREN TO SPEAK ON FIRST NIGHT IN PHILLY — NYT’s Amy Chozick and Jonathan Martin: “In an apparent sign that Senator Elizabeth Warren will not be named Hillary Clinton’s running mate, Ms. Warren was invited by Mrs. Clinton’s campaign on Tuesday to deliver a prime-time address on the first night of the Democratic convention this month — a marquee speaking slot but one that is earlier than vice-presidential picks typically appear.

“Such nominees usually speak later in the convention week to build anticipation for the top of the ticket. Two Democrats briefed on the invitation to Mrs. Warren, however, cautioned that Mrs. Clinton had not yet made a decision about a running mate and that asking Ms. Warren to take the stage on the first night did not preclude her from being tapped as the vice-presidential nominee” http://goo.gl/ARNKsS

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.

SOUTH CHINA SEA HEATS UP — Reuters: “An international tribunal's ruling denying China's claims in the South China Sea will ‘intensify conflict and even confrontation,’ Beijing's ambassador to the United States said on Tuesday. The ambassador, Cui Tiankai, also told an international forum in Washington that Beijing remains committed to negotiations with other parties in disputes over the vital trade route.

“In a case that was seen as a test of China's rising power and its economic and strategic rivalry with the United States, the Permanent Court of Arbitration in The Hague ruled China had breached the Philippines' sovereign rights by endangering its ships and fishing and oil projects in the energy-rich region” http://goo.gl/n1OOwv

DON’T KILL DODD FRANK — Reuters BreakingViews’ Rob Cox: “The presumptive GOP nominee calls the banking reform act ‘a very negative force,’ and has taken a shine to Jeb Hensarling, the Texas Republican Chairman of the House Financial Services Committee, whose views are shaping the party platform on finance. But Trump’s assertion is more difficult to make against the realities of the banking industry.” http://goo.gl/Ejs9Gl

LEW TO EUROPE: DO BREXIT THE EASY WAY — POLITICO’s Joseph J. Schatz: “U.S. Treasury Secretary Jack Lew has a plea for European and British leaders this week: Do Brexit the easy way, not the hard way. Lew and other U.S. officials don’t seem overly concerned about the short-term economic risks of last month’s landmark British vote to leave the EU, including in the United States. …

“But in visits to Paris, London, Brussels and Berlin this week, Lew is urging his European counterparts to keep the Brits close — and vice versa — as they negotiate the parameters of the U.K.’s post-Brexit economic ties with the European Union. Anything else wouldn’t just be bad for Europe, he’s implying, it would be bad for the United States.” http://goo.gl/gqfH97

FIRING BACK ON WARREN — CBA President and CEO Richard Hunt emails on the “no bankers” language in the Dem platform: “By Senator Warren’s logic, we should expect the Democratic Party to start calling for the exclusion of doctors at the Food and Drug Administration, scientists at the Environmental Protection Agency, and politicians in Congress …

“Conflict of interest allegations apply just as easily to each of these professionals as anyone in the financial services sector. The reality is we should be asking the finest professionals in every sector — those with merit, substance, and expertise — to be serving in government.”

ICYMI (AND WE DID) — Via the HFSC: “The House Financial Services Committee … released a staff report of its investigation into the U.S. Department of Justice’s decision not to prosecute HSBC or any of its executives or employees for serious violations of U.S. anti-money laundering laws and related offenses. …

“Senior DOJ leadership, including then-Attorney General Eric Holder, overruled an internal recommendation by DOJ’s Asset Forfeiture and Money Laundering Section to prosecute HSBC because of DOJ leadership’s concern that prosecuting the bank would have serious adverse consequences on the financial system.

Public Citizen react: “This explosive report, which Public Citizen is still reviewing, raises questions that are so serious it may deserve a full congressional investigation. Failure to prosecute any of the likely criminals eliminates the necessary deterrence to clear Wall Street of the ubiquitous thugs in the future.”

DEBT HORIZON GETS WORSE — CAP Action Fund’s Harry Stein: “The [CBO] budget outlook projects that the national debt will grow at a faster rate than the CBO projected in last year’s outlook, and some Republicans have already seized the news to attack programs that support low- and middle-income Americans. … But the higher debt projections in this year’s outlook are not surprising — they are the predictable consequence of tax cuts that Congress passed last year” http://goo.gl/k6F1Jt

FULL CBO REPORT: https://goo.gl/h8NpgY

REACT — Per Peterson Foundation release: “CBO’s latest report confirms that America’s economic future is threatened by its fiscal outlook. Deficits have already begun to grow again, and they will once again reach more than $1 trillion per year by 2022. Even worse, our long-term fiscal path remains dangerously unsustainable, as our debt is projected to reach a staggering 141 percent of GDP over the next 30 years”

ALSO FOR YOUR RADAR —

CLINTON DOMINATES THE AIRWAVES — NBC’s Mark Murray: “Hillary Clinton and her allies continue to outspend Donald Trump and his backers over the airwaves by a 15-to-1 margin, according to ad-spending data from SMG Delta. Team Clinton has spent $57 million on ads so far in the general election — $25 million coming from the campaign and another $32 million from pro-Clinton Super PACs.

“By comparison, Team Trump has aired $3.6 million in ads, with all of the spending from two outside groups, the National Rifle Association ($2.3 million) and Rebuilding America Now ($1.3 million). The Trump campaign has yet to spend a single cent on ads so far in the general election.” http://goo.gl/wCHOXu

JPM GIVES LOWER PAID EMPLOYEES A RAISE — FT’s Ben McLannahan in New York: “JPMorganChase has promised to lift basic hourly pay for 18,000 of its lowest paid US workers by at least a fifth by 2019. The bank’s move is in line with a nationwide movement known as ‘Fight for $15’, which calls for a raise to $15 an hour for the 42 per cent of the American workforce that earns less.

“The cities of San Francisco, Seattle and Los Angeles have enacted gradual increases of their minimum wages to that level, while in New York state, governor Andrew Cuomo is seeking legislative support to raise the wage there to $15 by July 2021 … ‘A pay increase is the right thing to do,’ wrote Jamie Dimon, chairman and chief executive of JPMorgan, in an opinion … ‘Wages for many Americans have gone nowhere for too long. Many employees who will receive this increase work as bank tellers and customer service representatives” http://goo.gl/kplRUc

ADULTS: STOP PLAYING POKEMON GO — WSJ’s Sarah E. Needleman: “The hit mobile app ‘Pokémon Go’ is giving millions of people their first taste of futuristic augmented-reality technology. It is also raising questions about whether the game’s location and mapping features are luring players into danger. …

“The placements raise questions about whether players could get hurt searching unsafe areas — a dark alley or along a river, for example — particularly while staring at a smartphone screen. It is also a reminder of how fast-developing technologies like augmented reality can be handed to people with little precedent or guidance on how to use them in everyday life.” http://goo.gl/8cvEZJ

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