Subject: POLITICO's Morning Money: Join me for some red hot Fed speak — Trump ticks off the Brits — What would Brexit do to the U.K.? — Inflation watch
From: Morning Money <[email-masked]>
To: <[email-masked]>
Date: Tue, 17 May 2016 06:03:33 -0600

By Ben White | 05/17/2016 08:00 AM EDT

JOIN ME FOR SOME RED HOT FED SPEAK! - Hope to see many DC people for lunch at the W Hotel today and a conversation with Atlanta Fed President Dennis Lockhart and San Francisco Fed President John C. Williams. We'll talk about the likelihood of a rate hike in June (or later this year), the state of the U.S. economy, Brexit, the 2016 campaign (including Donald Trump's comments about Janet Yellen and the Fed "printing money" to stave off default), TBTF and plenty more. 

Got a question for the Fed chiefs? Tweet it to me hashtagged #MorningMoney. 

Doors open at noon. RSVP: http://go.politicoemail.com/?qs=f743b552c295e06cbcde1a3ad2f7528b11279d3b278cbe1e5740237b688f05e8 Livestream: http://go.politicoemail.com/?qs=f743b552c295e06c3e4d36648e5aacd8651fb219dbadf2caefeaf4baf9468c51

TRUMP TICKS OFF THE BRITS - It now appears a President Trump could be the first Commander in Chief to start out with warm relations with Russia and a cold war with our second oldest allies, the British. FT's Jim Pickard: "Donald Trump insisted he was neither 'stupid' nor 'divisive' as he predicted an uneasy relationship with David Cameron if he becomes US president. ... 

Earlier in the race to become Republican candidate - and shortly after the Paris terrorist attacks - Mr Trump threatened to ban all Muslims from entering the US, though he has since backtracked, calling the idea only a 'suggestion'. ... The original comments prompted a backlash from a multitude of British politicians, including Mr. Cameron, who said the words were 'stupid, divisive and wrong'" http://go.politicoemail.com/?qs=f743b552c295e06ce7c2a71c0639f7541bd76b543de6c7506786ff6ac4679bb1

WHAT WOULD BREXIT DO TO THE U.K.? - Political Alpha: ""In the event of a Brexit, the Bank will be faced with an unfortunate dilemma: lower growth and yet higher inflation. If Brexit occurs, expect rates to be cut, liquidity injections, and yet - in spite of the Bank's best efforts - output to fall and inflation to rise, potentially creating the need for a rate hike sometime in 2017. Despite Governor Carney's attempts to downplay this possibility, this would constitute a 'perfect storm.'" 

INFLATION WATCH - Pantheon's Ian Shepherdson on today's CPI: "The year-over-year rate of core CPI inflation rose steadily from a low of 1.6 percent in January 2015 to 2.3 percent in February this year. At that point, the three-month annualized rate had reached a startling 3.0 percent. You could be forgiven, therefore, for thinking that the dip in core inflation back to 2.2 percent in March was an inevitable correction ... 

"With upward pressure now evident in each major element of core CPI inflation - rents, non-rent services, and goods - we were quite surprised to see such a soft number in March. Prudence suggests, therefore, that we look for a 0.3 percent rebound in April, lifting the year-over-year rate back to 2.3 percent."

MORE ON COLLYER - Via a former Senate lawyer: "Those attacking Judge Collyer should take a minute to actually read her decisions as they might find that they agree with her legal principles. In the case of the Burwell decision, if she had ruled the other way and found that the President no longer needs Congressionally appropriated funds to spend money, then there would be effectively no checks, other than impeachment, on the President. ... 

"In the case of the MetLife decision, Collyer merely ruled that agencies need to follow their own rules. Nothing radical there. If you want to abandon that principle, then we might as well toss well-established procedures such as Miranda warnings and Rules of Evidence out the window. Rather than be so outcome-determinative, critics of Collyer would benefit from recognizing the long-term principles at stake." 

IS 2016 KILLING WALL STREET? - NYT's Andrew Ross Sorkin: "Mergers and acquisitions activity is down. Initial public offerings are practically dead. Companies are cutting spending. The stock market is increasingly volatile. Gross domestic product is stalling. What explains it all? Perhaps Hillary Clinton and Donald Trump.

"A growing body of research shows that during presidential election years - particularly ones like this when there is such uncertainty about the nation's future - industry becomes almost paralyzed. A look at the last several dozen election cycles shows that during the final year of a presidential term, big corporate investments are routinely postponed, and big deals are put on the back burner" http://go.politicoemail.com/?qs=f743b552c295e06c1cef5c7e254058358acbde65efd1182feeeaff815e960fad

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

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES - Colin Wilhelm interviews Consumer Bankers Association President and CEO Richard Hunt -- 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 - Lockhart and Williams at the W Hotel in DC at noon ... Treasury Secretary Lew will give the commencement address at The Jewish Theological Seminary in New York this morning ... In the evening, Deputy Secretary Raskin will be in Tokyo to discuss financial technology and cybersecurity with local business leaders ... House Financial Services subcommittee at 10:00 a.m. will hold a hearing on the Fed paying interest on reserves ... Senate Finance has a hearing at 10:00am on the corporate and individual tax systems ... House Financial Services at 2:00 p.m. has a hearing on capital formation bills ... Consumer prices at 8:30 a.m. expected to rise 0.3 percent headline and 0.2
 percent core ... Industrial Production at 9:15 a.m. expected to rise 0.3 percent .. 

ALSO TODAY HOUSE OGR TO TAKE UP "AUDIT THE FED" BILL - Per release: "The House Oversight and Government Reform Committee ... announced it will consider Congressman Thomas Massie's H.R. 24, the Federal Reserve Transparency Act of 2015, also known as 'Audit the Fed,' in a markup session on Tuesday, May 17"

JPM IN N'AWLINS - Public Citizen's Bart Naylor reports from New Orleans: "I'm at JPM Shareholder meeting asking an existential question - should the bank study a breakup. And 4 other resolutions, including such basic questions as whether the Shareholder-elected chair can be confident that CEO who is chair will be dispassionately indifferent to himself. All this on Bourbon St, New Orleans, the avenue of intoxication, site of meeting. It should be a dizzying discussion" 

CUBAN RIPS TRUMP - POLITICO's Nolan D. McCaskill: "The skill set that makes a businessman successful are 'absolutely' the same qualities that would carry over into the White House, according to Dallas Mavericks owner Mark Cuban, who questioned Donald Trump's business chops Monday. 'Absolutely. You have to be knowledgeable. You have to be prepared. You have to be willing to learn. You have to have a thirst for knowledge,' Cuban told MSNBC's Steve Kornacki. 'So that skill set - what makes a great businessperson - definitely would fit as a president. The question is, is Donald that kind of businessperson? I don't think he is.'

"The NBA owner said he personally likes Trump, calling him 'amazing' and a real-estate savant. 'But he hasn't really demonstrated that ability in other business ventures. He puts his name on products that make no sense,' Cuban said. 'You know, the products he puts his name on suggest that he just needed the money: you know, steaks, suits, water, university, you name it. There's no rhyme or reason there.'" http://go.politicoemail.com/?qs=f743b552c295e06c66a94f49bbfe725fb96daa49d55469dcbeadfd80edf8b909

TREASURY/SEC WORKING ON MARKET ISSUES - Per release: "The U.S. Department of the Treasury and the Securities and Exchange Commission ... announced that they are working together to explore efficient and effective means of collecting U.S. Treasury cash market transaction information. As part of those efforts, the agencies are requesting that the Financial Industry Regulatory Authority (FINRA) consider a proposal to require its member brokers and dealers to report Treasury cash market transactions to a centralized repository" 

BERKSHIRE GOES BIG ON APPLE - WSJ's Anupreeta Das: "Warren Buffett's Berkshire Hathaway Inc. disclosed Monday that it had made a $1 billion bet on Apple Inc. stock earlier this year, boosting the iPhone maker's market value by more than $18 billion. But to the cottage industry that fervently follows the world's most famous investor, it just didn't seem like a move Mr. Buffett would make. It wasn't, as it turns out. 

"Instead, it was among the largest investments yet by the two former hedge-fund managers that Mr. Buffett brought on board as potential successors to run his company's $129 billion stock portfolio. Mr. Buffett has long voiced his aversion to investing in technology companies. Four years ago, he specifically ruled out investing in Apple. But Todd Combs, who joined Berkshire in 2011, and Ted Weschler, who arrived a year later, have shown a willingness to wade into corners of the market that Mr. Buffett won't" http://go.politicoemail.com/?qs=f743b552c295e06ce2d653e95729246937da715789964c09fb45523a2d781c35

U.S. COMPANIES GO BICK ON BUYBACKS - FT's Nicole Bullock: "US companies stepped up to support their shares during the market tumult at the start of the year, making the first quarter potentially one of the best ever for share buybacks. Based on preliminary data, share repurchases are 20 per cent higher in the first three months of the year versus the fourth quarter and 31 per cent above the year-ago period ... Among the biggest buyers of their own shares were Apple, General Electric, McDonald's and Boeing, while ExxonMobil has significantly cut back on its share repurchases after falling oil prices have hit the energy industry ... 

"Companies have been big buyers of their own stock for the past few years, helping to boost earnings per share as revenue growth proved fleeting in the tepid post-crisis economic recovery, and appeasing activist investors who have pushed for better returns. Coming into 2016, rising rates were expected to curtail share repurchases as it would become more expensive to borro to fund them, and better uses would be found for cash. However, the downturn in the market and expectations for fewer rate rises have attracted companies" http://go.politicoemail.com/?qs=f743b552c295e06cb48ef07fb233864c3437abfee437658b7f16c758816ad5e0

BILL CLINTON, CHIEF ECONOMIC OFFICER? - NYT's Amy Chozick: "In an election year when Bill Clinton's policies and personal indiscretions have faced intense scrutiny, Hillary Clinton is beginning to shape the role her husband would play in her administration, zeroing in on economic growth and job creation as crucial missions for the former president. ... Mrs. Clinton told voters in Kentucky on Sunday that Mr. Clinton would be 'in charge of revitalizing the economy, because, you know, he knows how to do it,' especially 'in places like coal country and inner cities.' ... 

"Earlier this month, she told West Virginians that her husband has 'got to come out of retirement and be in charge' of creating jobs. She has not provided details about how a former president would fit into a policy-making role in his wife's administration, a position never before seen in American politics. ... Aides said Mr. Clinton's role would be narrowly defined to focus on hard-hit areas of the country, such as the Rust Belt, and they rejected any implication that Mrs. Clinton would outsource a central part of her administration to her spouse" http://go.politicoemail.com/?qs=f743b552c295e06c6dff85af9d366894ad2a335d7859ed8275ca1de834216c38

OIL HOLDS GAINS - Reuters: "Crude oil futures held near six-month highs in early Asian trading as the market focused on supply disruptions that prompted long-time bear Goldman Sachs to issue a bullish assessment on near-term prices. Crude futures have rallied for most of the past two weeks from a combination of Nigerian, Venezuelan and other outages, declining U.S. production and virtually frozen inflows of Canadian crude after wildfires in Alberta's oil sands region. ... 

"The supply disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of another oil price crash to as low as $20 per barrel. A further bullish note was sounded by the U.S. Energy Information Administration (EIA) on Monday, when it said shale oil output is expected to drop in June for the eighth consecutive month" http://go.politicoemail.com/?qs=f743b552c295e06c50efc0832c8dec3580eb8f560cbe41ff675281a4ebc53e2c

SAUDI TREASURY HOLDINGS REVEALED - Bloomberg: "One of the great mysteries of the $13.4 trillion Treasuries market has been solved after more than 41 years. The Treasury Department on Monday released a breakdown of Saudi Arabia's holdings of U.S. debt, ending a longstanding policy of keeping the figures secret. The stockpile of the world's biggest oil exporter stood at $116.8 billion as of March, up from $82.7 billion two years earlier, according to data disclosed in response to a Freedom-of-Information Act request filed by Bloomberg News. 

"The sum ranks the kingdom among the top dozen foreign nations in terms of holdings of U.S. debt, and compares with China's $1.2 trillion trove, and $1.1 trillion for Japan. The U.S. had kept the monarchy's holdings under wraps since 1974, an unusual blackout born out of the aftermath of the Arab oil embargo, when a surge in crude prices left the American economy reeling and the U.S. struggling to lure petrodollars" http://go.politicoemail.com/?qs=f743b552c295e06cd1fbaa0191dd8130641211daf900b9e3b2ae49f4581f07e9

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