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China relationship worsens — The U.S. trade war with China got a ton of ink under former President Donald Trump. But relations are not exactly improving under President Joe Biden, whose administration is fairly quietly keeping up a very tough line and receiving an equally cold response from Beijing.
Via our Stuart Lau on just completed talks in the port city of Tianjin: “China shows no sign of toning down the harsh rhetoric with the U.S. during the visit of Deputy Secretary of State Wendy Sherman, who .. held ‘frank and open’ talks with Foreign Minister Wang Yi and one of his deputies …
“Underscoring an increasingly adversarial relationship between the world’s two richest superpowers, Chinese officials accused the U.S. of ‘coercive diplomacy’ … They also presented Sherman with two lists of action — the lists included revoking sanctions on Communist Party officials, lifting visa bans for students, making life easier for state-affiliated journalists … in the hope that Washington, D.C., will follow through.”
Via Reuters: “With no indication of a U.S.-China leaders’ summit in the works, nor any outcomes announced from high-level diplomatic talks … relations between Beijing and Washington appear to be at a standstill …
“[T]he combative statements that emerged from the meeting … mirrored the tone set in Alaska in March, when the first senior-level diplomatic talks under … Biden were overshadowed by rare public vitriol from both sides.”
And bipartisan infrastructure talks remain a mess — Still likely that some kind of deal gets done but talks to get a bipartisan infrastructure package worth around $600 billion in new money remained an omnishambles Monday, via our Marianne LeVine and Burgess Everett:
“Senators capped off a day of trading blame and stalled efforts on their bipartisan infrastructure proposal with a Monday meeting that quickly broke up, signaling a tough path forward as negotiators missed yet another self-imposed deadline.
“The core 10 senators huddled in the office of Sen. Rob Portman (R-Ohio) … hoping to get past a rough weekend of fruitless talks. … Portman said he was still optimistic about a deal despite rejected offers, finger pointing and impasses.”
Senate Banking has a hearing at 10:00 a.m. on “Cryptocurrencies: What are they good for?” … House Financial Services subcommittee has a hearing at 10:00 a.m. on central bank digital currencies … Consumer Confidence at 10:00 a.m. expected to dip to 124.3 from 127.3
DEMS PREP MINIBUS PACKAGE – Via our Jennifer Scholtes: “The House Rules Committee accepted 229 amendments Monday night for floor debate as Democrats prepare to pass a minibus spending package of at least seven fiscal 2022 bills.
“Out of more than 770 amendments submitted, the panel approved fewer than a third for floor action. Read the full list of amendments. … The House will start debating the funding package Tuesday afternoon, with final passage expected later this week. … Government funding expires in less than 10 weeks.”
WHITE HOUSE WEIGHS MASK MANDATES — Our Erin Banco, Adam Cancryn, and Anita Kumar: “Top Biden administration officials are weighing whether to recommend that states and communities with low vaccination rates reimpose mask mandates, particularly indoors, as part of discussions on how the administration can do more to slow the spread of the Delta variant.
“White House and health agency officials debated the option at a Sunday meeting that took place amid a surge of Covid-19 cases and hospitalizations in the South and Midwest, according to four individuals with knowledge of the matter, and that reflected an increasing sense of urgency inside the White House and across health agencies about the more contagious variant and its ability to alter the course of the pandemic.”
FED PREP — Mohamed A. El-Erian on Bloomberg Opinion on Wednesday’s announcement: “Fed officials will need to decide on the extent to which this new Covid cloud undermines what had been encouraging and often-repeated upward revisions in their growth projections.
“The focus will be on the service sector and involves both demand and supply dimensions: namely, the extent to which consumers may hold back their recovering engagement in travel, leisure and hospitality in particular; and the extent to which labor force participation remains below what is desirable.”
THE FED’S BUBBLE TROUBLE — Our Victoria Guida: “[H]ouse prices are surging, stocks have continued their stratospheric rise, and banks have more cash than they know what to do with. Yet the Fed is still pumping billions into the economy. Why?
“That’s what a growing number of lawmakers, investors and even some Fed officials themselves are demanding to know. They are warning that the central bank’s vast purchases of government bonds and mortgage-backed securities are feeding financial bubbles in the housing, stock and even cryptocurrency markets, and stoking higher consumer prices, with little apparent benefit to ordinary Americans.”
STOCKS EDGE HIGHER IN MUTED TRADING — AP’s Damian J. Troise and Alex Veiga: “Stocks edged higher on Wall Street in muted trading Monday, placing the market on track for more gains after indexes hit record highs last week.
“The S&P 500 index rose 0.2 percent as of 3:37 p.m. and was on pace to eclipse the record it set on Friday. The Dow Jones Industrial Average rose 70 points, or 0.2 percent, to 35,127, also within striking distance of a new high. The Nasdaq was essentially flat.”
WALL STREET ENFORCEMENT TO GET TOUGHER UNDER SEC’S NEW TOP COP — Reuters’ Chris Prentice: “When former New Jersey Attorney General Gurbir Grewal starts work at the U.S. Securities and Exchange Commission (SEC) on Monday, he will be the agency’s first incoming enforcement director without recent ties to corporate America since 2005.
“For two decades, the Wall Street watchdog has largely drawn its top enforcement cops from the white-collar defense attorneys bar, which critics say creates conflicts of interest that deter officials from properly punishing misconduct.”
BITCOIN JUMPS TO SIX-WEEK HIGH — WSJ’s Elaine Yu and Caitlin Ostroff: “The price of bitcoin jumped to a six-week high Monday, with some investors attributing the rally to short positions being liquidated and speculation that Amazon.com Inc. may be venturing into digital currencies.
“Bitcoin soared as high as $39,544.29, according to CoinDesk, reaching its highest level since mid-June. It is up 18 percent from its 5 p.m. ET level Friday, after briefly rising more than 20 percent earlier Monday morning. Rival currency Ether jumped more than 14 percent.”
INFLATION HAS ARRIVED, BUT WASHINGTON ISN’T RACING TO LIMIT PRICE POPS — NYT’s Jeanna Smialek: “Inflation has long been the boogeyman haunting the nightmares of economic policymakers from both parties — and controlling it has been a top economic priority. But as the economy reopens from pandemic shutdowns and prices spike, it is becoming clear just how much that conventional wisdom has shifted in recent years.
“After three decades of relative price stability and a long stretch of weak price gains, many economists and lawmakers had in recent years come to believe that trying too hard to avoid overheating the economy created its own risk by prematurely cooling growth and leaving workers on the sidelines.”
And inflation fears are shaping people’s views of the Biden economy — AP’s Josh Boak and Hannah Fingerhut: “President Joe Biden is banking on the idea of making life more affordable for middle-class families — and that’s where the recent bout of inflation poses both a political and an economic risk.
“The U.S. economy may be poised for the fastest growth since 1984, but many Americans are not feeling all that confident about the economy, according to a new poll from The Associated Press-NORC Center for Public Affairs Research. Republican lawmakers have attacked the Biden administration over inflation as the country reopened from the coronavirus pandemic, and feelings about the economy are settling along partisan lines.”
U.S. LISTED CHINESE COMPANIES MUST DISCLOSE GOVERNMENT INTERFERENCE RISKS — Reuters’ Katanga Johnson: “Chinese companies listed on U.S. stock exchanges must disclose the risks of the Chinese government interfering in their businesses as part of their regular reporting obligations, a top U.S. Securities and Exchange Commission official said on Monday.
“Democratic commissioner Allison Lee’s comments are the first by an SEC official since Chinese regulators launched a massive cyber probe of ride-hailing giant Didi Global last week, just days after its $4.4 billion New York listing, wiping 25 percent off its share price.”
DURBIN SAYS HE HAS FAVORABLE VIEW OF POWELL AS FED CHAIR — Bloomberg’s Laura Litvan and Steven T. Dennis: “Senator Dick Durbin of Illinois, the No. 2 Democratic leader, said he has a favorable view of Federal Reserve Chairman Jerome Powell, potentially giving the central bank chief a powerful ally in his corner before his term as chair expires in February. ‘I have a good impression of what he’s done and who he is, and that hasn’t changed,’ Durbin told Bloomberg News when asked whether he thinks President Joe Biden should renominate Powell.”
BARCLAYS OVERTAKES CREDIT SUISSE IN INVESTMENT BANKING — WSJ’s Simon Clark: “Barclays PLC recently overtook Credit Suisse Group AG in investment banking revenue, a sign that the U.K. bank’s long, frustrated push to be a major player is making progress thanks in part to the troubles of its Swiss rival.
“The London-based bank vaulted past its Zurich-based counterpart to be the largest investment bank outside the U.S. in the second quarter of this year with $1.26 billion of investment banking revenue, representing a 4.1 percent market share, according to Dealogic. JPMorgan Chase & Co. was the top investment bank during the quarter with $3.15 billion of revenue, a 10.1 percent market share.”