Subject: POLITICO's Morning Money: The Fed set to hike in June? — ITC positive on TPP — Bezos fires back at Trump — Egypt Air flight goes missing
From: Morning Money <[email-masked]>
To: <[email-masked]>
Date: Thu, 19 May 2016 06:22:07 -0600

By Ben White | 05/19/2016 08:00 AM EDT

THE FED SET TO HIKE IN JUNE? - How quickly the CW has changed! We've gone from "no way the Fed hikes in June before the Brexit vote" to "yeah they are going to move in June." Our event with Atlanta Fed President Lockhart and San Francisco Fed President Williams helped move things in that direction. And minutes from the last meeting only served to increase the odds. 

IHS's Sara Johnson and Ozlem Yaylaci: "Most participants judged that if incoming data show improvements on the labor market and inflation fronts, it would be appropriate to increase the target federal funds rate in June. ... After the FOMC minutes were released, futures markets assigned 34 percent probability of a hike in June" 

Pantheon's Ian Shepherdson: "The recent data have indeed pointed clearly to
much stronger growth in the second quarter - and many at the Fed clearly don't believe growth was anything like as weak as the official data in Q1 - so the risk of a hike in June is higher than the 28 percent implied by futures at the time of writing. 

"It's not a slam-dunk, though. The risk of a Brexit vote just eight days after the FOMC meeting - cited by 'some' members as a threat - points to caution on the part of the Fed. 

MUFG's Chris Rupkey: "Net, net, it looks like June's the one. What a great kickoff for the summer and the bond market sorely needs a rate hike as activity is moribund and everyone has virtually stopped speculating on higher interest rates ... ever. The bottom line is if growth bounces back in the second quarter, then it would likely be appropriate ... to ... raise ... rates ... in ... JUNE." 

Mohamed A. El-Erian: "Echoing the recent statement of three Fed regional presidents, the minutes indicated that members of the Federal Open Market Committee were worried that markets were underestimating the possibility of an early rate hike. Fed officials sought to correct this misconception, including by spelling out developments that could warrant an increase as early as June" http://go.politicoemail.com/?qs=5ae1959964a9f54d6046fa6746c5ceda863d75cead6c084505461de67485329f

ITC POSITIVE ON TPP - The U.S. International Trade Commission released its much-anticipated report on the Trans-Pacific Partnership's impact on the U.S. economy. The agency found the trade deal would be modestly increase U.S. growth: "The model estimated that TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy. 

"By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23 percent) higher than the baseline projections, real GDP would be $42.7 billion (0.15 percent) higher, and employment would be 0.07 percent higher (128,000 full-time equivalents). U.S. exports and U.S. imports would be $27.2 billion (1.0 percent) and $48.9 billion (1.1 percent) higher, respectively, relative to baseline projections" http://go.politicoemail.com/?qs=c41dfd79ca758cf335b3f922292b51dab037ef08244d8c962591fe8a33d371c6

House Ways and Means Chairman Kevin Brady (R-Tex.) on the ITC report: "In particular, I note the ITC's finding that implementing TPP would grow our economy, increase net exports and create jobs. Many TPP chapters have the potential to expand markets for U.S.-made goods and services and establish evenhanded rules to allow Americans to compete.

"At the same time, the agreement is not perfect. We will also continue to work with the Administration to resolve Members' outstanding concerns about this agreement. Again, it's the substance of TPP that will drive the timing and process in Congress, not the other way around." 

Robert Zoellick, USTR under President George W. Bush, in a WSJ op-ed: "In an uncertain world, America's future security depends on both upgrading military capabilities and expanding economic opportunities. The [TPP] .. draws together these two strands of strategy. ... 

"If the U.S. abandons TPP, our Asian allies and partners will perceive America as yielding to China, and they will accommodate accordingly. Equally important, the economic principles and market openings implemented through TPP will help economic reformers across the region" http://go.politicoemail.com/?qs=76bc99c7fc7c8ff544abb6ed89d76c786a23dab988e87a990d79ec93fcabc696

BEZOS FIRES BACK AT TRUMP - WP's Paul Farhi: "Amazon.com founder and Washington Post owner Jeffrey P. Bezos fired back at ... Donald Trump, saying on Wednesday that Trump's criticism of Bezos's ownership of the newspaper and the threats issued against Amazon are 'not an appropriate way for a presidential candidate to behave.' 

"In an appearance at a Post-sponsored technology conference called Transformers at the paper's headquarters, Bezos also said that 'a company like Amazon deserves to be scrutinized and criticized. I have no worries about that.'" http://go.politicoemail.com/?qs=cad834d16a68ebfab6937ab900345ef0982272efbae4ff3baaa9bc5374579a08

EGYPT AIR FLIGHT GOES MISSING - Reuters: "National carrier EgyptAir said a plane carrying 69 passengers and crew on a flight from Paris to Cairo had gone missing on Thursday, disappearing from radar over the Mediterranean Sea. ... Tweets by EgyptAir said the plane, which was traveling at an altitude of 37,000 feet (11,280 meters), disappeared soon after entering Egyptian airspace. 

"The Airbus A320 aircraft was carrying 59 passengers and 10 crew, it said. According to flightradar24.com, the plane's last known position was above the Mediterranean Sea" http://go.politicoemail.com/?qs=05ca2d9290b8c78967fa9e0fc038708dfddee59a343a258e99aa10ed8314edcb

GOOD THURSDAY MORNING - Email me on [email-masked] and follow me on Twitter @morningmoneyben. 

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES - Patrick Temple-West on Sen. Pat Toomey trying to ease financial rules for Pennsylvania beneficiaries - and to get Morning Money every day before 6 a.m. - please contact Pro Services at (703) 341-4600 or [email-masked]. 

DRIVING THE DAY - Treasury Secretary Jack Lew and Deputy Secretary Raskin will be in Sendai, Japan for a meeting of the G-7 Finance Ministers and Central Bank Governors ... Senate Banking has a hearing at 10:00 a.m. on "Improving Communities' and Businesses' Access to Capital and Economic Development" ... Index of Leading Economic Indicators at 10:00 a.m. expected to rise 0.4 percent ... 

MORE ON TRUMP'S WALL STREET COMMENTS - Guggenheim's Jaret Seiberg: "Presumptive GOP presidential nominee Donald Trump told Reuters that he plans to release a plan to replace Dodd-Frank within two weeks. ... We urge caution in reacting to Trump's comment as we believe the odds favor Trump's solution being even more onerous for large financial firms than the status quo. 

"It is very difficult politically to see Trump supporting anything that could be portrayed as easing oversight on the biggest banks. His constituency is still too angry over the financial crisis. So he can call for simpler rules - which might be more onerous - but cannot push to simply repeal the enhanced oversight requirements for the biggest financial firms. Higher capital requirements or actual break ups are among the most likely options for Trump." 

BIG BANKS GO EASIER ON DODD-FRANK - BreakingViews' Gina Chon: "Wall Street is putting its old Washington ways on ice. Big banks are infamous for lobbying against financial reform. Lately, though, they have cut back. Now they are pushing Representative Jeb Hensarling, a prominent congressional Republican, to drop a bill to repeal the Dodd-Frank Act. ... The latest efforts to upend the 2010 law ought to appeal to the likes of JPMorgan Chase, Bank of America and Goldman Sachs. 

"They have, after all, complained about things as diverse as capital charges, mortgage reform and how watchdogs handle annual stress tests. ... Wall Street lobbyists, though, are not offering support. ... The banks understand the changing mood. Bosses like JPMorgan's Jamie Dimon have been less overt in their criticism of regulations in the past few years. Spending on lobbying by the securities and investment industry fell 8 percent, to $97 million, between 2011 and 2015" http://go.politicoemail.com/?qs=2211f4b2636f9933367a7f3739e15cf5700392365335589ed6746a4ca6d0818c

HEDGE FUNDS SET UP NEW LOBBY GROUP - Reuters' Michael Flaherty: "A group of hedge funds have formed a new lobbying arm to promote the benefits of shareholder activism across the U.S. economy, as U.S. politicians turn up the heat on activist investors. The Council for Investor Rights and Corporate Accountability (CIRCA) announced its formation on Wednesday, saying it is committed to promoting the actions of shareholder activists ... 

"The Washington D.C.-based trade association said it is backed by a consortium of activist firms, but does not name them in the press release. According to a person with direct knowledge of the matter, the group's backers are: William Ackman of Pershing Square, Carl Icahn, Daniel Loeb of Third Point, Paul Singer of Elliott Associates and Barry Rosenstein of Jana Partners." http://go.politicoemail.com/?qs=8b425f2324a567c7d39cf255e66b7d003155b8224137efdfd8e3e2c27ee95408

BAYER EYES MONSANTO - Reuters: "Monsanto, the world's biggest seed company, said on Wednesday it had received an unsolicited proposal to be acquired by German drug and chemicals maker Bayer AG, as high inventories and low prices for agricultural commodities spur a drive to consolidate the sector. ... 

"Monsanto currently has a market capitalization of $42 billion. It didn't disclose terms of the approach, but an acquisition would likely be bigger in value than a deal struck by ChemChina in February to buy Swiss agrochemicals and seeds company Syngenta AG for $43 billion - a target Monsanto itself pursued last year. Monsanto's board is reviewing the proposal, which is subject to due diligence, regulatory approvals and other conditions, the company said in a statement. There is no assurance that any transaction will take place" http://go.politicoemail.com/?qs=1b455f7af868be8d58d4783134f634e38f7b584a4e469d1b236e93749ebf1161

TRUMP FILES YUUUGE DISCLOSURE - POLITICO's Shane Goldmacher: "Trump sold the Miss Universe Pageant last year for more than he has spent of his own riches to win the Republican nomination for president. That and many other details can be found in his second annual financial disclosure ... Though Trump boasted Tuesday that his income was more than $557 million and that had he a net worth above $10 billion, the Federal Election Commission forms are not specific enough to assess Trump's true net worth.

"Many of his assets and liabilities are simply too large - reaching far above the top disclosure threshold on the filing - for their value to be captured in the report. Trump, for instance, reported at least $315 million in liabilities on the form, many of which are loans and mortgages on his properties. ... He had five liabilities that topped $50 million each, including a loan for the Old Post Office in Washington D.C., which Trump is renovating to turn into a hotel." http://go.politicoemail.com/?qs=0c76a5b243bc9fbddfef94ab471438a3199652d076d120dc6d6cd0733ca7aa28

INVESTED IN COMPANIES HE BASHED - Bloomberg: "Trump has been tough on American companies that have moved jobs to other countries. That hasn't stopped the presumptive Republican presidential nominee from investing in them. Trump has denounced units of United Technologies Corp., Ford Motor Co. and Mondelez International Inc. on the campaign trail - and has received income of as much as $75,000 from bonds issued by all three since January 2015, according to his latest financial disclosure form released Tuesday. 

"He also has invested in Apple Inc.'s stock and bonds even though in February he called for a boycott of the company for refusing to help the Federal Bureau of Investigation unlock an iPhone used by a terrorist in San Bernardino, California." http://go.politicoemail.com/?qs=806118d5a62cbf069d3cf554f9ff3e8a05c00c94d8dd0dd5e52e372b01c8dea8

READY CASH DECLINES - WSJ: "Mr. Trump's ready cash may have declined, according to the form ... He has between about $61 million and $173 million in stocks, bonds, cash and other relatively liquid holdings. Last July, he reported he had between $78 million and $232 million in such assets. 

"This decline might help explain why Mr. Trump decided to start raising large campaign donations after emphasizing throughout the primary season that he was self-financing and, therefore, he said, not beholden to special interests like other candidates" http://go.politicoemail.com/?qs=3865c89d9cc37898ae52b4239776f5bc04ac5504572b32fb5daa1225341e076b

SANDERS DOESN'T CARE ABOUT DAMAGING CLINTON - NYT's Patrick Healy, Yamiche Alcindor and Jeremy W. Peters: "Defiant and determined to transform the Democratic Party, Senator Bernie Sanders is opening a two-month phase of his presidential campaign aimed at inflicting a heavy blow on Hillary Clinton in California and amassing enough leverage to advance his agenda at the convention in July - or even wrest the nomination from her.

"Advisers to Mr. Sanders said on Wednesday that he was newly resolved to remain in the race, seeing an aggressive campaign as his only chance to pressure Democrats into making fundamental changes to how presidential primaries and debates are held in the future. They said he also held out hope of capitalizing on any late stumbles by Mrs. Clinton or any damage to her candidacy, whether by scandal or by ... Trump" http://go.politicoemail.com/?qs=855c1ecb5c8d0cc6e6227d446143033f29c264bda204c4888d17b32de0e3507b

BUSINESS TURNING TO CLINTON? - FT's Barney Jopson: "Lobby groups representing nearly 100,000 US companies would prefer Hillary Clinton in the White House over Donald Trump by a ratio of two to one, in a striking sign of how the Republican businessman is straining ties between the party and its traditional allies. In the most comprehensive survey to date of business views on the US election, half of the trade groups who responded to the FT said they would break from the traditional party of business to back Mrs Clinton 

"Only a quarter of respondents preferred Mr Trump, who has run a caustic campaign marked by populist attacks on business. But support for Mrs Clinton was often lukewarm, sparked more by alarm over the presumptive Republican nominee than enthusiasm for her. Bill Reinsch, who represented companies ranging from Cisco to General Electric to Procter & Gamble as head of the National Foreign Trade Council, said Mrs Clinton would be best for his member companies, but he picked her with little enthusiasm as the "less bad" choice" http://go.politicoemail.com/?qs=3807e647c318221a4f09e9a2f074528021a429cc810efccf72decd96eac559ee

ALSO FOR YOUR RADAR - 

WHAT TRUMP COULD BE HIDING - Howard Gutman in POLITICO Magazine: "Trump has been waffling recently on whether he'll release his tax returns, which has prompted much speculation about what he might be hiding in them. People have mentioned potential crooked real estate deals, an embarrassingly low tax rate and foreign investments. But their searches will lead nowhere. If you want to discover fraud, don't bother plumbing the depths of his real estate deals. The thousands of pages of mumbo jumbo associated with one hotel deal or another probably don't reveal anything. ... 

"And you cannot embarrass Trump by pointing to his likely next-to-zero tax rate.. ... That's because, to expose a wrong-hearted real estate developer as a tax cheat, it is often more important to focus not on what the developer reports on his returns, but on what he leaves off. You see, the goal of tax cheats is usually not to save money for some corporation, but to avoid using their own shekels to pay for personal expenses" http://go.politicoemail.com/?qs=d697253b4e8c4f362e2f235ba77d0c583330027e47564fb15055510fe6240e2e

US-EU TALK CROSS-BORDER INSURANCE - SNL's Elizabeth Festa: "The U.S. and the European Union are resuming negotiations on a first-of-its-kind bilateral agreement on cross-border insurance issues in Washington, D.C., this month, talks which come at a critical time, according to industry sources. [ ... ] A covered agreement could pre-empt some state insurance laws under the statute created for these agreements in the 2010 Dodd-Frank Act."http://bit.ly/1rVekft

RYAN/TREASURY REACH PEURTO RICO DEAL - POLITICO's Rachel Bade and Colin Wilhelm: "Speaker Paul Ryan has reached a tentative deal with the Treasury Department on a rescue package to ease Puerto Rico's debt crisis, according to House Natural Resources Chairman Rob Bishop (R- Utah) ... 'We are moving forward - there is a deal,' the Utah Republican said Wednesday afternoon ... [T]he tentative agreement represents a breakthrough on an issue that has been stuck in congressional limbo for months. 

"Ryan (R-Wis.) said last year that helping Puerto Rico restructure its multi-billion-dollar debt would be a top priority for the first quarter of 2016. But conservatives balked at Bishop's initial proposal, following a series of ads that labeled the measure a "bailout." Democrats also refused to support that earlier deal because of a minimum wage decrease included in the measure. ... Even with this new draft, Ryan's work on the measure is far from over, however. Conservatives are still getting an earful from bondholders who want to see the bill fail" http://go.politicoemail.com/?qs=cfc1fc597df10b0f4fd12f5343bbdaf336e2cb7dde14514dd3fc3e1a9de24b0a

DAILY FUNNIES - From Above Average - the digital platform of Broadway Video (the makers of SNL, The Tonight Show, 30 Rock, & more), a parody horror trailer for a movie called "The Bothering" - a horror film all about alumni being relentlessly pursued by their alma maters for donations:http://bit.ly/1OMpygx

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