This morning’s “Morning Money” tipsheet from Politico featured comments from Thorn Run’s Jason Rosenstock on the notion that this primary season showed both a far-leftward and anti-establishment stance by Democrats. Rosenstock astutely notes that while newspapers and other media outlets are determined to put forward the belief that this primary season is showing a far-leftward movement in the Democratic party, “a simple examination of the facts shows that it is not the case.” He also notes that the Democratic Congressional Campaign Committee, the so-called establishment, backed candidates that won 95% of the time. “Further, the moderate Democrat was successful about 87% of the time, while the ultra-progressive left-wing groups only had about a 30% win rate in the primaries,” said Rosenstock. “While the current make-up of the Democratic party in the House favors the progressives, it seems pretty clear that any future Democratic majority will be built on a foundation of moderates, and that this should temper the agenda of the Democrats in 2019.”
The post in its entirety can be read below.
TRUMP’S TRADE WARS BITE THE GOP IN THE MIDTERMS — MM writes at some length here on the impact that President Trump’s aggressive trade fights are having on Republicans in competitive 2018 races:
“Trump’s trade battles are already triggering economic warnings — a danger for Republicans just ahead of the midterm elections. As fresh U.S. tariffs on $200 billion in Chinese imports take effect Monday, surveys show consumers growing increasingly worried about higher prices this fall. Giant retailers such as Walmart are warning of price increases for everyday goods. And smaller businesses in swing states and districts from Washington State to Iowa to Tennessee are complaining bitterly about big hits to their exports.
“The economic fallout from Trump’s skirmishes with China, Canada, Mexico and the European Union risk making an already tough cycle for Republicans even more brutal, giving Democrats a chance to peel away voters linked to influential industries — like Washington state cherry farmers and Tennessee bourbon makers — who have long supported business-friendly Republicans.
STUDYING THE POLLING IMPACT — Here’s what trade lawyer and free-market Cato Institute scholar Scott Lincicome, who is studying the impact of tariffs on public opinion, told me: “Where you have real-world effects of the trade war, you see people’s opinions sour dramatically. You look at places like Washington state where people are dependent on exporting cherries and apples, or rust belt states that border Canada, or Tennessee with auto and bourbon makers and you are going to see close races where this is actually a decisive issue.”
IMPACT ON TRUMP VOTERS — Via Kyle Handley, assistant professor of business economics and public policy at the University of Michigan’s Ross School of Business on the latest tariffs on Chinese imports: “If you are kind of in the middle- or lower-income groups, you are buying a lot of what economists call ‘tradable’ goods and you’ll be hit a lot harder. This is basically the Trump voter who is going to see the biggest hit to their total spending.”
ON THE GROUND — The story also looks at the impact of tariffs in races in places like Washington state’s 8th district, which Democrats have never won, and where retaliatory tariffs are hitting apple and cherry farmers. Katie Rodihan, communications director for Democratic nominee Dr. Kim Schrier: “It’s just a huge issue here and we are really feeling this heavily; nearly everything that Washington exports faces a 5 to 25 percent tariff.”
NEW AT THE NEC — Via POLITICO’s Nancy Cook: Rebekah Goshorn Jurata just joined the White House this past Monday (9/17) as the special assistant to the president for financial policy at the National Economic Council. Previously, she’s worked at the Treasury Department under David Malpass as the Deputy Assistant Secretary for International Financial Markets. She is taking over the role left vacant when Andrew Olmem was promoted to become the acting deputy director for domestic policy of the NEC. Olmem is now officially the deputy director, no longer in an acting role (though perhaps he is a fine actor, MM doesn’t know).
FORD HEARING APPEARED SET… POLITICO’s Nolan D. McCaskill and Elana Schor: “Christine Blasey Ford is readying for public testimony on Thursday morning about her sexual assault allegation against Brett Kavanaugh, although several central elements of the hearing remain unresolved in talks with the Senate Judiciary Committee, her attorneys said on Sunday.
“Ford’s lawyers and the bipartisan staff on the Judiciary panel held a second call in two days on Sunday as they continued to hash out details of a hearing later this week that promises to have seismic consequences for Kavanaugh’s Supreme Court nomination, as well as the turbulent electoral landscape weeks away from the November midterms. The call lasted about an hour, according to a source familiar with the conversation, and resulted in a timing confirmation for 10 a.m. Thursday.” Read more.
Well, it did until The New Yorker on Sunday night posted a story alleging another incidence of sexual misconduct by Kavanaugh, which he denied. Attorney Michael Avenatti tweeted and told POLITICO that he has other damaging information about Kavanaugh.
Senate Judiciary Committee ranking Democrat Dianne Feinstein late Sunday called for an “immediate postponement” of any further consideration of Kavanaugh, with Republicans shell-shocked and reeling. Meanwhile, odds of Kavanaugh’s confirmation are plunging on political betting site PredictIt.
HOUSE WANTS TO GET OUT OF TOWN FRIDAY — POLITICO’s John Bresnahan and Rachael Bade: “With the Supreme Court drama dominating the headlines, House Republican leaders are quietly preparing to adjourn at the end of this week until after the midterm elections, giving rank-and-file GOP lawmakers nearly 40 days at home to try to save their endangered majority.
“That is if … Trump doesn’t do something to derail their plans. House Majority Leader Kevin McCarthy (R-Calif.) has made no official announcement on the schedule yet, but key Republican lawmakers and aides say they expect that this will be the last week the House is in session before Election Day. … The Senate, on the other hand, may stay in session for several more weeks. Senate Majority Leader Mitch McConnell (R-Ky.) has vowed to push through Brett Kavanaugh’s confirmation to the Supreme Court” Read more.
TOUGH POLL FOR GOP — Democrats now have a 12 point advantage in the generic ballot question, according to the latest NBC/WSJ poll, though GOP enthusiasm for the election has increased.
TARIFF REACT — Via “Tariffs Hurt the Heartland”: “This latest wave of tariffs is a tax on everyday items that American families buy including food, furniture, travel goods, home improvement supplies, personal care products and more. The retaliatory tariffs also being imposed today will harm made-in-America exports including goods produced by our farms and factories.”
FIRST LOOK: ARE THE DEMS REALLY MOVING FAR LEFT? — Thorn Run Partners’ Jason Rosenstock in a note out this a.m.: “While newspapers and clickbait websites want to push a narrative that this primary season showed both a far-leftward and anti-establishment lurch by Democrats, a simple examination of the facts shows that is not the case. … [T]he reality is that the DCCC (i.e., the establishment) endorsed candidate won 95% of the time.
“Further, the moderate Democrat (i.e., the New Democratic backed candidate) was successful about 87% of the time, while the ultra-progressive left-wing groups only had about a 30% win rate in the primaries. While the current make-up of the Democratic party in the House favors the progressives, it seems pretty clear that any future Democratic majority will be built on a foundation of moderates, and that this should temper the agenda of the Democrats in 2019.”
GOOD MONDAY MORNING — Congrats to Tiger Woods on his 80th career PGA tour win and first in five years, giving hope to all us aging Gen Xers with aching backs. Email me on email@example.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on firstname.lastname@example.org and follow her on Twitter @AubreeEWeaver.
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DRIVING THE WEEK — Promises to be an insane week in DC with the new allegations against Kavanaugh and the hearing scheduled for Thursday but not certain to happen then, or ever. Oh and the House wants to leave town and avoid any kind of Trump-induced shutdown. New York will be gridlock city with Trump in town for the UN General Assembly meeting …
Trump on Monday delivers remarks at the "Global Call to Action on the World Drug Problem" event at UNGA and hosts a reception for heads of state … He addresses the full UNGA on Tuesday … Business Roundtable on Monday at 11:45 a.m. hosts a call on the third quarter outlook …
House Financial Services subcommittees hold hearings Tuesday at 4:00 p.m. on HUD and Wednesday at 10:00 a.m. on the SEC’s Division of Investment Management and Wednesday at 2:00 p.m. on sanctions … Joint Economic Committee has a hearing at 10:45 a.m. Wednesday on earnings and living standards … The Federal Reserve on Wednesday at 2:00 p.m. is expected to hike rates by a quarter point to 2.125 percent. Chair Jay Powell holds a presser at 2:30 p.m.
FED PREP — Mohamed A. El-Erian on Bloomberg Opinion: “The Federal Reserve meeting this week will be less noteworthy for what the central bank does than for what it says about the future path of rates. With the traditionally most dovish voices on the Open Market Committee now sounding notably more hawkish, policy makers are likely to try harder to nudge market expectations up to price a steeper path of rate hikes.” Read more.
KUSHNER WOOS NY WEALTHY — POLITICO’s Alex Isenstadt: “Jared Kushner huddled behind closed doors with some of the Republican Party’s most powerful donors at a Midtown Manhattan hotel earlier this month. The mission: Convince them that the Trump White House isn’t a mess.
“While the administration raced to extinguish that day’s firestorm — Trump’s denial of Hurricane Maria’s 3,000-person death toll — Kushner insisted that the circus-like perception is wrong. Real work is getting done. There are serious people in the White House who are following an actual process, he said, and low-performing staffers had been replaced.” Read more.
BULL MARKET CHARGES ON — WSJ’s Akane Otani and James Benedict: “Stocks notched new highs last week. The feat was particularly notable because one of the recent drivers of market gains, the technology sector, has faltered. Potentially greater regulatory scrutiny of the tech industry put the S&P 500 technology sector on course for its worst month since March. Yet the resurgence of non-tech sectors, like industrials and health care, has proved the bull market has more room to run, investors say.
“Shares of industrial companies have rebounded in September as investors bet on a strong economy offsetting uncertainty over global trade policies, helping the Dow Jones Industrial Average set a record for the first time since January. But technology-driven companies remain the biggest drivers of the stock rally this year. Amazon.com Inc. and Apple Inc. account for a big chunk of the S&P 500’s year-to-date gains, followed closely by Microsoft Corp. and Netflix Inc.” Read more.
VOLUME SPIKES ON SECTOR RESHUFFLE — Reuters’ Chuck Mikolajczak and Caroline Valetkevitch: “An overhaul of Wall Street’s technology and media sectors coincided with the quarterly expiration of futures and options bringing a burst of volume to trading late on Friday that could continue in the days that follow.
“After the close on Friday, S&P Dow Jones Indices was poised to reorganize several of its sectors and relaunch its telecommunications index as a new communication services sector. About 10.87 billion shares changed hands on U.S. exchanges on Friday, the highest volume since Feb. 9 and one of the highest-volume sessions of the year, according to Thomson Reuters. A big chunk of the volume came in the last 15 minutes of the session.” Read more.
GLOBAL ECONOMY IS VULNERABLE AND CENTRAL BANKS AREN’T READY — Bloomberg’s Fergal O’Brien and Marcus Bensasson: “The global economy is looking shaky and the economics chief at the Bank for International Settlements says central banks may be powerless if it all goes awry.
“Claudio Borio, a long-time critic of loose monetary policy, used the BIS’s latest Quarterly Review to highlight again that central bankers were overburdened after the global financial crisis. He said side effects are inevitable, including market turmoil such as that seen in emerging markets in response to Federal Reserve tightening and dollar appreciation. Given their depleted firepower, it also means that policy makers are unprepared for the next downturn.” Read more.
SHARE BUYBACKS LIFT CORPORATE EARNINGS — WSJ’s Michael Rapoport and Theo Francis: “Last December’s tax overhaul is boosting corporate profits in more ways than one. The legislation lowered companies’ tax bills, improving their earnings. But the change has also helped them fund record stock buybacks—a move that makes their results appear even better, by boosting the per-share earnings they highlight for investors.
“S&P 500 companies bought back a record $189 billion of their own shares in the first quarter, and a similar number—if not more—is expected for the second quarter, according to S&P Dow Jones Indices. By contrast, S&P 500 buybacks totaled no more than $137 billion in any of the six quarters before the tax overhaul.” Read more.
APP-ONLY BANKS ON THE RISE IN EUROPE — NYT’s Adam Satariano: “So-called fintech companies have sought to take on the world’s biggest banks for years, but only recently have companies like Monzo begun to build a critical mass. Millions of customers across Europe, most in their 20s or 30s, have signed up over the past two years. And thanks to favorable regulations in the region and an influx of venture capital, that shift is accelerating.
“Here in Britain, officials have been concerned about the power of large banks in the wake of the 2008 financial crisis, and they see the start-ups as weakening the hold of traditional lenders. The authorities have adopted policies such as a ‘regulatory sandbox,’ allowing what are known as challenger banks to test new financial products and get feedback from regulators before proposing them to customers. In contrast, while some policymakers in the United States are trying to make it easier to open new banks, progress has been slow. States do not want to cede oversight, and without a license, American financial start-ups must set up partnerships with traditional banks to hold deposits.” Read more.
WELLS FARGO CEO PREPARED TO STICK AROUND — Bloomberg’s Hannah Levitt: “Wells Fargo & Co. Chief Executive Officer Tim Sloan said he’s prepared to keep running the company for much of the next decade, as he shifts from two years of navigating crises to focusing on improving shareholder returns.
“‘There’s growth opportunities everywhere,’ Sloan, 58, said in an interview Friday, commenting just two days after the bank’s chairman batted back Wall Street whispers that the board is looking to replace him. ‘I’ll stay in this role as long as the board believes that I’m the right person for the role — and they do, and I think I am,’ he said. That means he could stay until the firm’s retirement age of 65. Still, he emphasized, his last day will ultimately depend on whether directors remain satisfied with his work. ‘It could be as long as tomorrow,’ he mused. ‘So somewhere between tomorrow and seven years.’” Read more.