Davos vs. the real world

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Quick Fix

The Davos view vs. reality — President Trump got mostly kid-gloves treatment among the corporate elite at Davos. And that’s hardly a surprise. Corporate taxes are lower, stock markets keep rocking and the truth is much of the power-elite want a second Trump term, especially if the Democratic nominee winds up being Bernie Sanders or Elizabeth Warren.

But the economic reality on the ground remains less rosy for Trump as he looks to survive through a week or two more of impeachment and move on with his year. As Rana Foroohar notes in the FT post-Davos: “[T] idea that we are in an ‘economic boom’ is an illusion.

“Last quarter’s growth was just 2.1 per cent, less than the 2.4 per cent average of President Barack Obama’s second term, tax cuts … have led to a $1tn deficit, the largest in peacetime history. Investment, meanwhile, began to decline in 2019.”

Better news for Trump — His economic ratings are still pretty good: Via latest Fox News Poll — “The poll, released Sunday, finds 55 percent give the economy positive ratings … It’s been 19 years since this many felt as positively (59 percent in January 2001). … Moreover, the bulk of voters credit Trump for the economy.”

Dem nod up for grab — Via our Zach Montellaro: “The Democratic primary remains up for grabs. A cascade of polls released over the weekend have Bernie Sanders challenging Joe Biden’s frontrunner status, surpassing Biden in key early states as the national horse race tightens up.”

GOOD MONDAY MORNING — Such heartbreaking news about Kobe Bryant, his daughter and several others dying on Sunday in a helicopter crash. Our hearts go out to everyone close to them and the sporting world more broadly. A crushing blow.

Email me at [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver at [email protected] and follow her on Twitter @AubreeEWeaver.

Driving the Day

DRIVING THE WEEK — President Trump’s legal team will pick up their defense presentation this week with the battle over witnesses continuing and making getting more complex post John Bolton-revelations … CBO has a briefing Tuesday at 3:00 p.m. on annual Budget and Economic Outlook.

The Hamilton Project at Brookings will host a forum on Tuesday holds a forum on “Tackling the Tax Code: Efficient and Equitable Ways to Raise Revenue,” which will feature a panel discussion with former U.S. Treasury Secretaries Robert E. Rubin, Larry Summers, and Timothy Geithner, moderated by former U.S. Commerce Secretary Penny Pritzker.

House budget committee has a hearing Weds at 10:00 a.m. on “The Congressional Budget Office’s Budget and Economic Outlook.” … House Financial Services has a hearing at 10:00 a.m. Monday “The Community Reinvestment Act” and the OCC proposal … FOMC issues rates decision at 2:00 p.m. with Powell presser at 2:30 p.m. No rate change expected …

Case-Shiller Home Prices at 9:00 a.m. Tuesday expected to rise 0.6 percent … Consumer Confidence at 10:00 a.m. expected to rise to 128 from 126.5 … First read on Q4 GDP on Thursday at 8:30 a.m. expected to show a gain of 2.2 percent …

NEW CREDIT REPORTING PACKAGE ANALYSIS — The House Rules Committee will meet this evening to prep a six-bill credit reporting package for floor consideration later in the week. Legislative Compass subscribers can read our POLITICO Pro Bill Analysis report on the bundle.

CHINA VIRUS SPREADS — Via Reuters: “Five people in the United States, all of whom recently traveled from Wuhan, China, have been diagnosed with the new coronavirus, officials of the federal Centers for Disease Control and Prevention said on Sunday.

“Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, said … to expect more cases to be reported in the United States in coming days. Messonnier described the risk to health in the United States as ‘low at this time’ because all of the patients traveled from Wuhan. She said there is no evidence in the United States of the disease spreading to other people.”

IMPEACHMENT TIMING UPDATE … QUICK END? — Our Burgess Everett and John Bresnahan: “The Republican strategy — which is still fluid — could mean senators have limited time between key procedural votes and the final vote on whether to convict the president of abuse of power and obstruction of Congress.

“And with the odds growing against additional witnesses being called, Senate Majority Leader Mitch McConnell will face critical decisions on how fast he can bring the proceedings to an end. ... "[Sen. John] Barrasso suggested that an acquittal vote could take place as soon as Friday.”

Markets

MOMENTUM INDICATORS HELP PRESERVE STOCK MARKET RALLY — WSJ’s Amrith Ramkumar: “Indicators of market momentum are coalescing with improving economic data to support the recent stock-market rally, creating a promising backdrop that some investors expect to help major indexes rebound from last week’s declines.

“Concerns about an outbreak of the new coronavirus in China sent the S&P 500 down nearly 1 percent Friday. But recent actions by central banks around the world to stabilize growth with lower borrowing costs and an initial U.S.-China trade accord are driving a steady advance that has been hard to bet against.”

And markets around the world are feeling the effects of the Wuhan coronavirus — AP’s Stan Choe: “Stocks around the world fell this week on worries that a new type of virus in China may ultimately hit profits for companies from Wuhan to Washington.”

Fly Around

BLOOMBERG HEADS TO FLORDA — Our Sally Goldenberg: “Mike Bloomberg made a direct appeal to Florida’s active Jewish voting base on Sunday, seeking to differentiate himself from both Bernie Sanders and President Donald Trump on the delicate issue of Mideast politics.

“‘Now, I know I’m not the only Jewish candidate in the race. But I am the only one who doesn’t want to turn America into a kibbutz,’ he quipped in a thinly-veiled jab at Sanders”

CHINA VIRUS UPDATE — Mohamed A. El-Erian on Bloomberg Opinion: “Especially when compared with earlier similar outbreaks, including the SARS crisis 17 years ago, the Chinese government has moved quickly and forcefully to limit and counter the contagion.”

SANDERS GOES AFTER JPMORGAN CEO IN NEW AD — Bloomberg’s Todd Shields: Bernie Sanders goes after Jamie Dimon in a new campaign ad, labeling the JPMorgan Chase & Co. chief executive officer ‘the biggest corporate socialist in America today.

“The jab continues criticism by the Vermont senator and presidential candidate after Dimon knocked socialism in an op-ed published last week in Time magazine as part of its coverage of the World Economic Forum in Davos, Switzerland.”

FED OFFICIALS WEIGH NEW TOOL TO FIGHT RECESSION — WSJ’s Nick Timiraos: “As part of their contingency planning for the next recession, Federal Reserve officials are looking at a stimulus scheme the U.S. last used during and after World War II.

“From 1942 until 1951, the Fed capped yields on Treasury securities — first on short-term bills and later on longer-term bonds — to help finance war spending and the recovery. More recently, the Bank of Japan employed something known as yield-curve control, holding rates on 10-year government bonds at zero by committing to buy those securities at whatever price is needed. Bond yields and prices move inversely.”

MNUCHIN OPTIMISTIC ABOUT TRADE DEAL WITH U.K. — Reuters’ Elizabeth Howcroft and William Schomberg: “U.S. Treasury Secretary Steven Mnuchin said that he was optimistic the United States and Britain, soon to be out of the European Union, would strike a trade deal this year and that he had discussed it with Britain’s finance minister on Saturday.

Trump is keen for progress on trade talks before November’s presidential election, while in Britain the prospect of a deal has been touted by Brexit supporters as a way to offset the impact of leaving the EU and to exert leverage over the bloc in trade talks between London and Brussels.”

EXPECT FED TO HOLD RATES STEADY — Bloomberg’s Craig Torres: “Inside the Fed, it’s steady-as-she-goes. Investors see this week’s meeting as an easy call, with officials set to vote for leaving their policy rate unchanged for now. Outside, the conversation is quite different. Former policy makers and veteran Fed-watchers are increasingly preoccupied with what the central bank will be able to do, and the tools it will need, when the next downturn arrives.”

BANKS BUILD NEW TOOLS TO SHIFT SHORT-TERM BORROWING — WSJ’s Julia-Ambra Verlaine: “Investors are starting to trade complex derivatives tied to the Federal Reserve’s preferred replacement for the London interbank offered rate, a sign the financial industry is coalescing around a new benchmark for short-term interest rates.

“Banks and exchanges are expanding a market for secondary financial products tied to this rate — the secured overnight financing rate, or SOFR — easing worries that lenders and other financial institutions remain underprepared for the shift.”