Trump's Pence problem Presented by U.S. Bank

TRUMP’S PENCE PROBLEM — POLITICO’s Matthew Nussbaum and Ben White: “Donald Trump looks at the economy and sees a ‘crippled’ America, a nation ravaged by incompetent leaders who’ve betrayed the working class — especially in the rust belt, ground zero for the loss of manufacturing jobs. But one of those rust belt governors, Indiana’s Mike Pence, has spent years touting his state’s economy, noting a drop in unemployment, an increase in factory jobs and a growing workforce.

“They can’t both be right, and now that they’re sharing a presidential ticket and looking to communicate a coherent economic message, Trump and Pence are going to have to reconcile the contradiction. It’s a difficult needle to thread, because if Trump wants to claim that Indiana is a Pence-inspired bright spot in an Obama-blighted nation, he’ll have to explain Indiana’s economic climate is strikingly similar to the rest of the U.S.”

MORE THAN JUST INDIANA — “Indeed, much of what Pence — and more recently Trump — tout about Indiana’s economic strength is supported by economic data, but those same sources point to similar positive trends nationwide. And Trump was not always so high on the Hoosier State’s prospects, particularly when he was campaigning there during the GOP primary.

“[T]he story in Indiana is similar across much of the country, complicating the Republican ticket’s message that the economy is a mess and getting worse. Joblessness is half what it was at the height of recession and wages, after languishing for much of the recovery, are starting to rise more quickly. Wages grew at a 2.6 percent pace in June, the fastest rate in six years as the economy approaches full employment” http://politi.co/2aam5es

PHILLY LEDE OF THE DAY — POLITICO’s Kyle Cheney: “After a day and a half of discord and resistance by Bernie Sanders backers, the Democratic National Convention finally became what its organizers intended: the Hillary Clinton show.” http://politi.co/2at3k3O

APPLE EARNINGS FALL — WSJ’s Daisuke Wakabayashi: “Apple Inc. said its quarterly profit fell 27 percent as the company grappled with the first prolonged slump in iPhone sales since the product was introduced in 2007. Revenue fell for a second straight quarter, along with sales of its flagship smartphone, which is awaiting an expected refresh in September.

“While the company reported strong sales of the smaller iPhone SE launched in March, overall its current models have failed to meet the booming sales of its first batch of large-screen iPhones, sapped in part by cooling demand in China and U.S. customers holding on to handsets for longer because of changes in carrier contracts. The results, and Apple’s expectations for the current quarter ending September, were better than what Wall Street feared, and the stock rose more than 6 percent in after-hours trading” http://on.wsj.com/2ag3A36

CLINTON MAKES THE CASE FOR CLINTON — POLITICO’s Nick Gass: “Bill Clinton delivered a forceful and deeply personal testimony on behalf of Hillary Clinton on Tuesday night .. Boasting about her accomplishments over the course of her decades in public life, Clinton declared, ‘she did all of this while being a full-time worker, a mother, and enjoying our life.’ ‘Why? Well, she is insatiably curious, she’s a natural leader, she’s a good organizer, and the best darn change-maker I have ever met in my entire life,’ Clinton said, as attendees raised signs and cheered.

“‘So look, this is a really important point for you to take out of this convention,’ he continued, ‘If you believe in making change from the bottom-up, if you believe the measure of change is making people’s lives better, you know it is hard and some people think it is boring. Speeches like this are fun. Actually doing the work is hard.’ …

DINGING TRUMP — “Pointing to her work with the disadvantaged and disabled, Clinton took a dig at Donald Trump. ‘She never made fun of people with disabilities. She tried to empower them based on their abilities. Meanwhile, I was still trying to get her to marry me,’ he said. ‘The second time I tried a different tack, I said, 'I really want you to marry me, but you shouldn't do it.'’”

SEE YOU THIS MORNING! — Join Steve Shepherd and I for a pair of great POLITICO Caucus panels on the economy and 2016. I’ve got fmr CEA Chair Alan Krueger, fmr Treasury Sec. Lawrence Summers & CAP CEO Neera Tanden. And Steve takes on Rep. Debbie Dingell (D-MI), Sen. Mark Warner (D-VA), & Pittsburgh Mayor Bill Peduto. Wednesday, 11am at the POLITICO Hub in Philly. http://politi.co/2a0QQNU Livestream: www.POLITICO.com/live Send me questions hashtagged #PoliticoCaucus

SANDERS ON THE PLATFORM — In Tuesday’s MM we suggested Bernie Sanders’ comments on TPP and bank regulations went beyond what is actually in the Democratic Platform. Many of you seemed to agree.

Per a former Obama administration staffer: “I think Sanders did the same thing on TPP as Glass-Steagall/breaking up banks. He’s elevating them to convention promises — even if he could not get them in the platform. It's sort of an ‘if you build it, they will come’ addition to the platform. He is daring HRC and moderate Ds in Congress to break that promise and risk splitting off his supporters. Bernie did not ride a bicycle to Philly.”

Jonathan Shafter emails: “I agree with your reading of Glass-S in the Democratic platform. But more importantly, does anyone on a serious political or policy role think that the party platform matters in September much less 2017? It's like student government - an exercise of form over function."

Public Citizen’s Bart Naylor: “One can deconstruct, examine nuance, quibble over parsing, but one dark presence now stands in brutal floodlights. America hates what Wall Street did to us in ‘08, and the sociopaths still seem intent on doing it again.”

MORE ON BANK BASHING — Cumberland Advisors’ David Kotok: “One consistent theme is bashing banks. We saw it last night. We saw it last week. We have seen it all year. Markets still are not taking the bank-bashing risk seriously enough. Likewise, markets haven't fully focused on impacts of Basel 3. But the clock runs and dates are set in stone for Basel. And for money market fund changes and elections.

“Then the political rhetoric will give way to governance or lack thereof as a deadlocked Congress and a new president get to the real task of making and implementing law — or fail to do so. This is the year of politics. Entertaining? Yes. Serious business for the nation and the world? Yes. Predictable? Not yet.”

RENDELL: TRUMP CONNECTS ON TRADE — POLITICO’s Doug Palmer: “Trump's attacks on trade agreements and promises to uphold ‘law and order’ are attractive to many Pennsylvania voters, putting the state's 20 electoral votes in play in the presidential election, former Pennsylvania Gov. Ed Rendell (2003-2011) said Tuesday. ‘It resonates. There's no question about it,’ Rendell, a Democrat, said during an interview with POLITICO Playbook hosts Mike Allen and Anna Palmer.

“Rendell said the amazing thing to him is Trump's practice of outsourcing jobs to manufacture his brand name products ‘doesn't seem to matter’ to many older white voters drawn to his message. ‘The toughest task is to get those voters to listen,’ Rendell said, adding that even attempts to tie Trump to unpopular policies of the Republican party have not been particularly effective in changing minds.” http://politi.co/29Xy7q5

KELLEHER REACT — Main Street Growth Project’s Kyle Hauptman: “I find it gratifying that even Better Markets admits that Dodd-Frank failed at ending TBTF. Note the use of present tense in the op-ed: ‘JPMorgan Chase, Citigroup, Bank of America and Goldman Sachs.

“Those are four of the nation’s most dangerous taxpayer-backed too-big-to-fail banks’ - To which I’d add two points: Bankruptcy reform would help restore true market discipline, and any serious TBTF discussion has to include Fannie & Freddie.”

GOOD WEDNESDAY MORNING — Hope to see you in Philly this morning! Email me on [email protected] and follow me on Twitter @morningmoneyben

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Patrick Temple-West on CFTC Commissioner Chris Giancarlo hearing farmers’ concerns that algorithmic trading is fueling volatility in commodity prices -- and to get Morning Money every day before 6 a.m. -- please contact Pro Services at (703) 341-4600 or [email protected].

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.

HOT THIS AM: WILL CLINTON FLIP ON TPP? — POLITICO’s Annie Karni: “Virginia Gov. Terry McAuliffe, longtime best friend to the Clintons, said Tuesday that he believes Hillary Clinton will support the TPP trade deal if elected president, with some tweaks. ‘I worry that if we don’t do TPP, at some point China’s going to break the rules — but Hillary understands this,’ he said in an interview after his speech on the main stage at the Democratic National Convention.

‘“Once the election’s over, and we sit down on trade, people understand a couple things we want to fix on it but going forward we got to build a global economy.’ Pressed on whether Clinton would turn around and support the trade deal she opposed during the heat of the primary fight against Bernie Sanders, McAuliffe said: ‘Yes. Listen, she was in support of it. There were specific things in it she wants fixed.’” http://politi.co/2ap9fWt

IS TRUMP’S BOUNCE REAL? — POLITICO’s Steven Shepard and Nick Gass: “Is the Donald Trump convention bounce for real? Trump certainly thinks so. … But polls conducted in the wake of last week’s Republican convention render a split verdict on the question of whether he got any bounce at all: Some show Trump vaulting over Hillary Clinton and into the lead. Others show no change whatsoever, with Trump and Clinton still locked in a neck-and-neck race.

“The reality lies somewhere in the middle: Trump likely didn’t get the 5-or-6-point bounce suggested by CNN/ORC International or Morning Consult. Nor is Trump’s support stagnant coming out of his convention, as an NBC News/SurveyMonkey poll out Tuesday suggests. On balance, the immediate evidence points to a small bounce for the GOP presidential nominee — not the massive burst of momentum about which Trump is boasting” http://politi.co/2akJY

GOLDMAN/FED PUSHBACK — From an industry source (no, not from Goldman): “Let me see if I have this right: A Federal Reserve Bank of New York employee leaks confidential information to another former Federal Reserve Bank of New York employee, his former boss who has just started work at Goldman and is trying to get ahead.

“Compliance at Goldman finds out, fires him, fires his supervisor for failing to discover it, and notifies the Federal Reserve Bank of New York. And the conclusion is that there is a culture problem…at Goldman. So, New York State makes Goldman pay $50 million. And now the Federal Reserve Board, which oversees the Federal Reserve Banks, has decided to launch its own investigation — of Goldman.”

WHY NO NEW BANKS? — InsideSource’s Carter Dougherty: “It’s a question that vexes regulators, and is bound to become a talking point of financial reformers and lobbyists alike in the next Congress: Why have so few new banks been chartered in the United States in recent years?

“No one disputes the numbers. In the last 5 years, exactly 10 new banks have weathered the regulatory approval process to be able to open their doors … By contrast, in the 7 years before the financial crisis, 1200 new banks received their charters. No one disputes, either, that new banks are a good thing. When banks consolidate, as they have in recent years, gaps emerge in the services offered to smaller, mostly local businesses, and new banks have typically popped up to fill them” http://bit.ly/2a6G7BL

FEAR AND LOATHING AT BRIDGEWATER — NYT’s Alexandra Stevenson and Matthew Goldstein: “Ray Dalio, the billionaire founder of the world’s largest hedge fund, Bridgewater Associates, likes to say that one of his firm’s core operating principles is ‘radical transparency’ when it comes to airing employee grievances and concerns. But one employee said in a complaint earlier this year that the hedge fund was like a ‘cauldron of fear and intimidation.’

“The employee’s complaint with the Connecticut Commission on Human Rights and Opportunities … describes an atmosphere of constant surveillance by video and recordings of all meetings — and the presence of patrolling security guards — that silence employees who do not fit the Bridgewater mold. … Secrecy at Bridgewater is so tight that in some units employees are required to lock up their personal cellphones each morning when they arrive at work” http://nyti.ms/29YAE3q

INVESTORS NOT BUYING FED PLANS — WSJ’s Ira Iosebashvili and Chelsey Dulaney: “As Federal Reserve officials signal potential interest-rate increases are possible this year, some investors aren’t convinced. Both this summer and last, officials were suggesting a rate rise by December, a change that typically leads the dollar higher. But a year ago, money managers held about $30 billion in bullish dollar bets …

“Data show only $11.3 billion in bullish dollar positions as of last week. While no two scenarios are the same and some investors anticipated more aggressive tightening a year ago than today, the data suggest traders aren’t as confident of a Fed rate increase and a dollar rally. ‘The market is deeply skeptical, both about where rates will end up and the pace at which they get there,’ said Alan Ruskin, global head of G-10 foreign-exchange strategy at Deutsche Bank.’” http://on.wsj.com/2akLeS7

LOOKS LIKE IT WAS THE RUSSIANS — NYT’s David E. Sanger and Eric Schmidt: “American intelligence agencies have told the White House they now have ‘high confidence’ that the Russian government was behind the theft of emails and documents from the [DNC] … But intelligence officials have cautioned that they are uncertain whether the electronic break-in at the committee’s computer systems was intended as fairly routine cyberespionage — of the kind the United States also conducts around the world — or as part of an effort to manipulate the 2016 presidential election.

“The emails were released by WikiLeaks, whose founder, Julian Assange, has made it clear that he hoped to harm Hillary Clinton’s chances of winning the presidency. It is unclear how the documents made their way to the group. But a large sampling was published before the WikiLeaks release by several news organizations and someone who called himself ‘Guccifer 2.0,’ who investigators now believe was an agent of the G.R.U., Russia’s military intelligence service” http://nyti.ms/2a6GUCI

TWITTER SHOCKS WALL STREET — FT’s Richard Waters: “Twitter hocked Wall Street on Tuesday with a projection that its advertising business may grind to a halt, or even decline, in the third quarter of this year, casting a cloud over what had been seen as the least troubled part of its operations. The news, which the company blamed on pricing pressures and the rise of online video advertising, wiped more than 10 per cent from its share price in after-market trading, ahead of a scheduled analysts’ call to discuss the numbers.

“The service for broadcasting short messages said that it expected its revenues to reach only $590m-$610m in the third quarter, far lower than the consensus forecast among analysts of $678m. By comparison, the $602m in revenues it reported for the second quarter was only slightly below expectations of $606m, and represented growth of 20 per cent from the year before” http://on.ft.com/2akMlkU

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