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Trump v. Powell, Round 100 — It is true, as Bloomberg first reported, that the White House legal team in February researched whether President Trump could demote Fed Chair Jerome Powell and reduce him to just another governor. MM can also report that the White House team found that they could not, in fact, do any such thing. White House officials hoped Trump would let the matter drop. He has not.
Asked on Tuesday whether he still wanted to demote Powell, Trump said: “Let’s see what he does,” adding that he wants a “level playing field” from the Fed. As with many topics, once Trump fixates on something he will never let it go, even if people like NEC Director Larry Kudlow tell reporters that it’s not on the agenda at the moment.
What Powell will do — Some inside the administration think the Fed could move as soon as this afternoon to cut rates by a quarter point as a kind of recession insurance and acknowledgment that they went too far with hikes last year. But few analysts expect that to happen. Instead, they expect no change in rates at 2:00 p.m. but a dovish shift in language (more below).
No power over Powell — Cumberland chief monetary economist Robert Eisenbeis tells MM: “He has no authority here. He has no power to fire or demote Powell. Even if he somehow demoted him, Powell could still be head of the FOMC if the members elect him.”
GOOD WEDNESDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Katy O’Donnell on a new report that shows low-income Americans are being squeezed out of the rental housing market. To get Morning Money every day before 6 a.m., please contact Pro Services at (703) 341-4600 or info@politicopro.com.
Trump remains in Florida for fundraising events … Fed at 2 p.m. expected to leave rates unchanged but lean into idea that it will cut if it’s “appropriate” while dropping the “patient” language … Powell presser at 2:30 p.m. expected to include new ways for him to try and not slap back at Trump …
WH and Hill officials expected to talking about looming fiscal deadlines at 2:30 p.m. … House GOP leadership has a press conference at 10 a.m. …
USTR Robert Lighthizer is back on the Hill, this time before House Ways and Means at 9:30 a.m. … House Budget Committee has a hearing at 10 a.m. on poverty in America … House Financial Services subcommittee hold hearings at 10 a.m. on the economy and 2 p.m. securities laws …
EX-IM DEAL REACHED — Our Zach Warmbrodt: “House Financial Services Chairwoman Maxine Waters and the panel’s top Republican, Patrick McHenry, have reached agreement on a plan to reauthorize and revamp the Export-Import Bank, sources familiar with the matter said.
“According to a committee summary seen by POLITICO, the upcoming bill would renew the bank for seven years and rename it the ‘United States Export Finance Agency.’ The proposal would raise the bank’s portfolio cap to $175 billion from $135 billion and rewrite quorum rules that have hindered the agency from approving large transactions when the Senate refuses to confirm nominees to its board”
TRUMP AND XI TO MEET — Our Caitlin Oprysko: “Trump on Tuesday announced firmed-up plans to meet with Chinese President Xi Jinping at the G-20 summit at the end of this month as the countries potentially head toward further escalation of their trade war…
“He added that teams from Washington and Beijing would ‘begin talks prior to our meeting.’ Chinese state media also confirmed Tuesday that the two leaders would meet on the sidelines of the G-20.”
FED PREP — Pantheon’s Ian Shepherdson: “The Fed will leave rates unchanged today. The case for easing is very weak, unless policymakers collectively are prepared to bet that the trade war with China is going to intensify dramatically.”
CATS DISSES BIDEN — CNBC’s Brian Schwartz: “Democratic front runner Joe Biden on Monday appealed to a billionaire Republican donor for fundraising help in his presidential campaign. But the financier, Trump-supporting New York supermarket magnate John Catsimatidis, declined.”
MORE BIDEN ON WALL STREET — Per pool report: “Former Vice President Joe Biden attended his third fundraiser of the day at the Carlyle Hotel on the Upper East Side. He arrived at a 2nd floor reception room at 6:17 p.m. where about 100 people mingled and sampled wine and Hors d’oeuvres.
Mr. Biden was introduced by Eric Mindich, the chief executive officer and founder of Eton Park Capital Management. … Guests spotted by the pool included: Roger Altman … Steve Rattner … Robert Rubin … Stephen Scherr … H. Rodgin Cohen … Jane D. Hartley …”
LIKELY TO CATCH SOME BUZZ — Biden to the wealthy crows: “[W]e may not want to demonize anybody who has made money. The truth of the matter is, you all, you all know, you all know in your gut what has to be done. We can disagree in the margins but the truth of the matter is it’s all within our wheelhouse and nobody has to be punished. No one’s standard of living will change, nothing would fundamentally change.”
WATERS WANTS FACEBOOK TO TESTIFY ON CURRENCY — Our Zachary Warmbrodt: “House Financial Services Chairwoman Maxine Waters on Tuesday called on Facebook executives to testify before her committee and urged the social media giant to hold off on plans to develop a new digital currency that’s drawing increasing scrutiny from Congress.
“In a statement, the California Democrat said Facebook was ‘continuing its unchecked expansion and extending its reach into the lives of its users’ with the announcement of its new ‘Libra’ cryptocurrency. The company, she said, ‘has repeatedly shown a disregard for the protection and careful use’ of its users’ data.”
EUROPE TAKING A LOOK AS WELL — Our John Rega: “Facebook faces global scrutiny across a swath of areas for its Libra cryptocurrency, which the social media behemoth unveiled on Tuesday, according to a Mark Carney, the Bank of England governor.
WALL STREET NEARS RECORD — Reuters’ Noel Randewich: “Wall Street surged on Tuesday and the S&P 500 approached a record high after Washington rekindled trade talks with Beijing, boosting sentiment along with growing investor confidence that the Fed will cut interest rates this year.”
GLOBAL ECONOMIC GROWTH ALREADY SLOWING — NYT’s Jeanna Smialek, Jim Tankersley and Jack Ewing: “Trump’s trade war is chilling business investment, confidence and trade flows across the world, a development that foreign leaders and business executives say is worsening a global economic slowdown that was already underway.”
ALL THE THINGS TRUMP HAS SAID ABOUT POWELL — Bloomberg’s Christopher Condon: “Federal Reserve Chairman Jerome Powell has been publicly criticized by … Trump over the central bank’s interest-rate increases in 2018 and continued shrinking of its balance sheet. Trump has said the steps will stifle the economy’s growth. Powell has avoided direct comment but has repeatedly stressed the importance of the Fed’s independence from political pressure and its commitment to transparency and accountability to Congress.”
TRUMP ACCUSES EUROPE OF BOLSTERING ECONOMY AT AMERICA’S EXPENSE— NYT’s Jeanna Smialek and Jack Ewing: “To President Trump, economics has always been a zero-sum game: If another country is winning, the United States must be losing. That view became clear on Tuesday, when Mr. Trump accused the European Central Bank of trying to prop up Europe’s economy and weaken its currency to gain a competitive edge over the United States.
“Mr. Trump directed his criticism at Mario Draghi, the bank’s president, who said in a speech on Tuesday that ‘additional stimulus will be required’ to help Europe withstand the economic challenges it faced, including mounting protectionist threats stemming from Mr. Trump’s trade war.”
FED CONTINUES TO DEBATE RATE CUTS — WSJ’s Nick Timiraos: “Federal Reserve officials finish their two-day meeting Wednesday recognizing they may need to cut interest rates should the economic outlook darken. The question is whether that moment has arrived or if they need more information before deciding. Recent economic data paint a mixed picture, with consumer spending still solid, but with manufacturing, inflation and global growth having slowed even before the recent escalation in trade tensions.”
LIGHTHIZER PROMISES USMCA CHANGES — Our Megan Cassella: “The top U.S. trade official pledged to work with congressional Democrats to bolster enforcement provisions in the new North American trade agreement, a step that could generate support on both sides of the aisle for the new deal.
“U.S. Trade Representative Robert Lighthizer told members of the Senate Finance Committee on Tuesday that although he feels the enforcement mechanisms as written would keep Canada and Mexico in line with the agreement’s standards, he will also work with lawmakers ‘to the extent they want to plus it up.’”
SPOTTED: KKR’s David Petraeus and Carlyle Group’s David Rubenstein getting honorary degrees Monday night at the annual benefit dinner for the American University of Afghanistan at the Four Seasons in D.C.
DEALING WITH POPULIST — Victoria Esser and Graeme Trayner in Fast Company: “CEOs Need to Grapple with the Populist Backlash to Corporate Power”: “Absent strong action on pressing issues such as income inequality, corporate America will cede the floor to those with far-reaching ideas, which will alarm many corporate leaders, whether it’s higher tariffs, restrictive immigration laws, or worker representation on boards—all examples that have already been implemented or are being discussed by policy-makers on both sides of the aisle.”
