Editor’s Note: This edition of Morning Money is published weekdays at 8 a.m. POLITICO Pro Financial Services subscribers hold exclusive early access to the newsletter each morning at 5:15 a.m. Learn more about POLITICO Pro’s comprehensive policy intelligence coverage, policy tools and services at politicopro.com.
PROGRAMMING NOTE: Morning Money will not publish on Thursday, July 4 and Friday, July 5. Morning Money will resume on Monday, July 8. Please continue to follow finance news at politico.com.
Story Continued Below
China timeout — Markets should embrace President Trump’s decision to hold off for now on the next round of tariffs on $300 billion in Chinese imports. Trump got no deal with Chinese President Xi Jinping but at least nudged talks back on track taking one big recessionary risk off the table for now. But the temporary détente was probably not enough to change the odds on a rate cut next month, also good for markets.
Still, in order to get any real political benefit – and reverse his slide among red state farmers slammed by retaliatory tariffs – Trump still has to strike a comprehensive deal with China. And nothing that happened in Osaka makes that any easier. Trump also backed off on banning high-tech sales to Huawei, angering China hawks like Sen. Marco Rubio (R-Fla.).
NEC Director Larry Kudlow on the deal on “Fox News Sunday”: “No promises, no deal made, there’s no … [T]his is about the quality of the deal there’s no time table, there’s no rush.”
Biden not quite tanking — Latest POLITICO/Morning Consult poll shows some post-debate slippage for former VP Joe Biden, dropping to 33% from 38%. Sen. Kamala Harris (D-Calif.) surged 6 points to a tie for third at 12% along with Sen. Elizabeth Warren (D-Mass.).
Sen. Bernie Sanders (D-Vt.) remains in second at 19%. This suggests that the Miami event was not as disastrous for the VP as some pundits suggested. But he’s moving the wrong way and needs a far stronger second debate performance.
GOOD MONDAY MORNING — Welcome to July and a holiday-shortened week. We will be with you through Wednesday morning then retreating to the Jersey shore. Email me at bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at aweaver@politico.com and follow her on Twitter @AubreeEWeaver.
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Victoria Guida on banks’ stress tests success and fears about the timing of the deregulation. To get Morning Money every day before 6 a.m., please contact Pro Services at (703) 341-4600 or info@politicopro.com.
ASIA RISES AFTER TRUMP/XI MEETING — Reuters: “Stocks rallied and bonds retreated in Asia on Monday as a thaw in the Sino-U.S. trade dispute tempered risks to the global economy, leading investors to pare wagers on aggressive policy easing by the major central banks.
“The dollar gained on the safe-haven yen as Treasury yields jumped and futures reined in bets for a half-point rate cut from the U.S. Federal Reserve this month.”
Dow futures also rose strongly, up close to 200 points in early trading Sunday night.
KUDLOW RIPS DEM CANDIDATES — Our Connor O’Brien: “Top White House economic adviser Larry Kudlow slammed Democratic presidential candidates’ economic policies Sunday, arguing they would do ‘great damage’ to the economy.
‘I don’t understand what planet they’re describing,’ Kudlow, director of the National Economic Council, said in an interview on ‘Fox News Sunday.’ ‘The United States economy is booming.’ … ‘I will make this warning: Some of the policies that I’ve heard in some of these early debates, in my judgment, would do great, great damage to this prosperity and jobs and income and wage cycle that we are experiencing’”
TRUMP VISITS NORTH KOREA — Our Anita Kumar: “Trump on Sunday took a step no other sitting American president had before, crossing into North Korea with its leader, Kim Jong Un — a theatrical gesture meant to kick start stalled nuclear negotiations between the two countries.
“And, after meeting privately for nearly an hours, the two leaders pledged to do just that. ‘This was a great day,’ Trump told reporters. ‘It will be even more historic if something comes out [of it].” It was a made-for-TV moment for the reality show-groomed president that unfolded at the demilitarized zone between North and South Korea.”
WELLS FARGO EXEC HOSTING HARRIS FUNDRAISER — HuffPo’s Kevin Robillard: “A former Wells Fargo executive who defended the bank during its massive fake accounts scandal is hosting a fundraiser for Democratic California Sen. Kamala Harris’ presidential campaign on Saturday …
“The former executive, Miguel Bustos, worked from 2013 to 2017 as Wells Fargo’s senior vice president of government and community relations, where he oversaw lobbying and community outreach efforts in six western states: California, Oregon, Washington, Alaska, Montana and Utah.”
TRADE WAR CEASEFIRE DOESN’T BRIDGE DIFFERENCES — AP’s Paul Wiseman and Kelvin Chan: “Once again, … Trump and Xi Jinping have hit the reset button in trade talks between the world’s two biggest economies, at least delaying an escalation in tension between the U.S. and China that had financial markets on edge and cast a cloud over the global economy.
“But when U.S. and Chinese negotiators sit down to work out details, the same difficult task remains: getting China to convince the United States that it will curb its aggressive push to challenge American technological dominance — and then to live up to its promises.
What would a truce mean for the global economy? — NYT’s Keith Bradsher: “Yet the outlines of the tentative peace accord … Trump reached on Saturday with his Chinese counterpart, Xi Jinping, could further cement a broad reshuffling of the global economic order that undermines China’s decades-long role as the world’s factory floor. …
“Even a fragile truce could have lingering implications. The United States would keep in place broad tariffs on Chinese goods for months or perhaps years to come. Global companies would almost certainly respond by continuing to shift at least the final stages of their supply chains out of China.”
FED OFFICIALS DON’T EXPECT TRADE TRUCE TO BOOST OUTLOOK — WSJ’s Nick Timiraos: “Almost half of Fed officials in June projected rates would be lower by year’s end. But policy makers didn’t cut them at their June meeting, in part to see if trade uncertainties might abate if the Trump-Xi talks produced any breakthroughs.
“Now that the leaders’ discussions have come and gone without resolution, Fed officials face thorny questions as they judge whether to provide new stimulus to support growth. Central bank officials must weigh how much trade uncertainty has already weighed on spending and investment decisions, and how continued uncertainty could affect this picture.”
The rally has made Nasdaq bulls king for a day — Bloomberg’s Vildana Hajric and Elena Popina: “The largest first-half rise in U.S. stocks since the dot-com craze was poised to get bigger as futures traders breathed relief over signs of truce in the China trade war, at least for a day.
“Tech stocks led the climb. Rallying all month on confidence the Federal Reserve stands ready to stanch losses, contracts on the S&P 500 rose 1 percent to 2,974 as of 6:32 p.m. in New York. Futures on the Nasdaq 100 jumped 1.5 percent to 7,810.75, pushing their June gain past 8 percent, an advance that approaches the second-biggest in two years.”
And investors are seeking shelter in dependable dividends — Reuters’ Helen Reid: “Defensive equity strategies focused on high payouts and steady earnings have gained in popularity this year as investors flock to safety, worried the biggest stock market rally in decades is about to come crashing down. Investors have piled into defensive sectors, which generate higher dividends and have steady revenue streams, for the first time in two years, viewing them as the safest bet as global growth slows and trade tensions rise, data shows.”
AFTER TECH’S WILD QUARTER, INVESTORS BRACE FOR TURBULENCE — WSJ’s Julia Donheiser: “Halfway into the year, technology stocks are still climbing faster than the broader market — but it has been a bumpy ride. Shifts in trade policy and interest-rate projections pushed the S&P 500’s information-technology sector down nearly 9 percent in May before it rose roughly the same amount in June to cap off the second quarter with its best month in three years. As stocks regain momentum, investors are favoring fast-growing companies — many of which are expanding operations in hot areas like cloud computing and artificial intelligence.”
GOLDMAN GETS RIC BURNS DOC — Vanity Fair’s William Cohan: “Goldman is an inescapable American institution, a part of history, and now, like the Civil War and New York City and baseball, on the occasion of its 150th birthday, it has its own multipart documentary series directed by someone named Burns.
“Unlike those other institutions, though, it paid for the documentary itself, for what has to be an eight-figure sum (it declined to say how much it spent), given the luscious production values. Among its other gifts, Goldman has always had a near-obsession for selling itself, its intelligence, its civic-mindedness. Goldman Sachs at 150 is the most expansive expression yet of this impulse.”
