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Tag: sours

  • ‘Really weak option’: Wall Street sours on DeSantis as Trump challenger

    ‘Really weak option’: Wall Street sours on DeSantis as Trump challenger

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    ron desantis 37851

    “People will change horses,” said Dave Carney, a veteran Republican strategist for both former Bush presidents. “You may get really excited about somebody and then all of a sudden realize, ‘Eh, not really my cup of tea.’”

    Where Wall Street puts its money matters because financial industry executives are among the biggest donors in presidential elections. And while bankers and asset managers generally favor lower taxes and lighter-touch regulation, they also value stability and experience — and they spread their money around to candidates of both parties, meaning they’re very much in play in each cycle.

    On paper, that should give DeSantis an advantage. People close to Wall Street donors said his national profile and powerhouse fundraising operation that has included support from hedge fund titans like Ken Griffin and Jeff Yass had positioned him as most able to survive a primary with former President Donald Trump.

    DeSantis’ gubernatorial reelection campaign is still loaded with cash, giving him big advantages over possible competitors. But many now say he no longer seems so formidable — at least on Wall Street.

    His escalation of a feud with the Walt Disney Co. over its opposition to what critics called the “don’t say gay” law has made for a rocky rollout to an expected presidential campaign announcement in the coming weeks. On April 26, the company announced it was suing DeSantis, saying he violated its First Amendment rights — which will force him to do battle with one of his state’s largest employers in federal court.

    It was “‘wait and see,’ and this is why,” said an adviser to one top GOP donor in New York, who like others interviewed for this story was granted anonymity to avoid alienating candidates. “We’re not the only ones who are happy with our decision to wait and see.”

    With Trump surging in the polls following his indictment on criminal charges stemming from alleged hush money payments, one executive at a New York bank said confidence in DeSantis’s ability to win is flagging.

    “DeSantis is certainly a better option than Trump at this point,” the executive said. “But he’s a really weak option.”

    The executive said many are growing resigned to the possibility of a general election rematch between Trump and President Joe Biden.

    “What we probably wind up with is a choice between a guy who is very old and wants to raise our taxes and reregulate everything, and a guy who could be running from prison,” the executive said.

    In the meantime, any hesitation about DeSantis’s viability could be good news for Republicans who have tried to carve out space as business-friendly alternatives to Trump. Former South Carolina Gov. Nikki Haley and Sen. Tim Scott — another South Carolina Republican who has launched an exploratory committee — have started lining their war chests with checks from major investors, according to campaign filings released in April.

    During the first quarter, Haley raised about $8.3 million across her campaign, joint fundraising committee and leadership PAC. Scott, the ranking member on the Senate Banking Committee, raised $1.6 million and had $21.9 million on hand through his Senate committee, according to POLITICO’s analysis of his FEC filings. Those funds can easily be transferred to a presidential committee should he formally announce.

    Scott is a fixture in New York, turning up for meetings at various big banks, and is beginning to draw backers at firms like Goldman Sachs. Bankers say they appreciate both his personal narrative — rising from humble beginnings — and his positive message about the power of American capitalism.

    Still, Scott and Haley’s fundraising totals remain modest compared to those of DeSantis-aligned groups — one state-level committee, Friends of Ron DeSantis, has more than $85 million on hand.

    For many Republicans on Wall Street, “there’s a lot of concern about whether Trump will consolidate support in the polls,” said Ken Spain, a partner at Narrative Strategies who advises investment firms. “Then the concern becomes: Does that freeze money in the investor class? Do people sit on the sidelines if they think the chance of defeating Trump in a primary is diminishing?”

    Rep. Patrick McHenry (R-N.C.), who leads the House Financial Services Committee, said in an interview at the Milken Institute Global Conference in Beverly Hills this week that the Trump campaign’s tactics over the next two months will be “well-organized, calculated, surgical.”

    “This reminds me a lot of ’16 where everybody’s trying to figure out alternatives to Trump,” he said.

    Those dynamics won’t make things any easier for DeSantis, who’s been catching flak over everything from the Disney fracas — a “self-inflicted wound,” one financial industry power broker said — to his arms-length relationship with key donors and GOP allies in Florida.

    “I call my donors. I call my supporters. And that’s been an issue that people have complained about with him,” said Miami Mayor Francis Suarez, a Republican who has flirted with a 2024 bid.

    But Scott, Haley, former Vice President Mike Pence and other potential GOP nominees face their own challenges. While DeSantis has shown he can win big in a swing state, other nominees have won in Republican strongholds. Many also lack national name recognition that would put them within striking distance of Trump or DeSantis.

    “Scott is pretty fantastic, and if he can perform the way I think he can he has a real chance,” said one senior banker who is trying to organize support for him. “But it’s obviously a big hill to climb.”

    DeSantis allies are taking comfort in the difficulties other candidates could have in breaking through. While there’s “some hesitancy from the Wall Street Journal class,” the Florida governor’s resources should be enough to sustain any surge from non-Trump competitors, said Jason Thomas, a Republican strategist who runs a pro-DeSantis Super PAC.

    Even though DeSantis has shown a willingness to wage public battles against big businesses — hardly typical of what Thomas labeled a Country Club Republican platform — Thomas said he expects financial services donors to “eventually come home when DeSantis recaptures his first-place position in the nomination process or is the nominee.”

    The first executive at the large New York bank said Wall Street would love a candidate like former House Speaker Paul Ryan “or a younger Mitt Romney.”

    But they acknowledged that Trump would likely obliterate any candidate from the increasingly small centrist segment of the GOP.

    “We all saw what happened to Jeb Bush, who everybody up here loved,” the executive said of Wall Street donors who flocked to the former Florida governor’s 2016 campaign. “He got crushed and crushed quickly, and that would just happen again.”

    DeSantis could face another problem even if he does win substantial financial industry backing: Executives say they worry that raising money or donating to his campaign would give Trump the chance to brandish him as a Wall Street lackey.

    “We know everyone hates us and that nobody running for president wants to be seen as the ‘Wall Street candidate,’” the first executive said. “So you’ll probably see a lot of people just sitting this one out.”

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    #weak #option #Wall #Street #sours #DeSantis #Trump #challenger
    ( With inputs from : www.politico.com )

  • Wall Street bets Powell will flinch on rate hikes once job market sours

    Wall Street bets Powell will flinch on rate hikes once job market sours

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    The market’s expectation that the central bank will ease up is partly driven by the presence of new faces on the Fed’s seven-member board in Washington. In addition to reappointing Powell, President Joe Biden named three new members and promoted Lael Brainard, who in past years advocated for going slow on rate hikes, to Powell’s No. 2.

    Other new Fed officials outside Washington are economists who have long pushed for broad and inclusive employment. Among them: Austan Goolsbee, a onetime chief economist to former President Barack Obama who recently became head of the Chicago Fed and joined his first central bank policy meeting this week.

    “There’s a pretty strong view that they will ease sooner than they say they will,” said former Kansas City Fed President Thomas Hoenig, whose tenure included the 2008 financial crisis when the economy was losing more than 700,000 jobs a month. “The pressure would be to say, ‘Well, we’re just about there, we can ease back.’”

    Fed officials on Wednesday are expected to hike rates by another quarter of a percentage point, nearing the central bank’s target of 5 percent for its main borrowing rate. The aim is to get inflation down to 2 percent — less than half of where it is now.

    The Fed wants to ensure that it keeps rates high long enough to bring inflation fully to heel, fearing a repeat of the 1970s and ‘80s when the central bank backed off, only to see price spikes return.

    But investors are pricing in a greater than 75 percent chance that interest rates will be lower in December than in June, according to CME FedWatch. They aren’t convinced that the Fed will keep its key rate at a punishingly high level for long, particularly if inflation keeps falling and unemployment begins to spike.

    Inflation has dropped for six straight months, fanning hopes that the surge in prices is on its way to ending. Quarterly data on companies’ labor costs released Tuesday shows that wage growth, a driver of inflation, also continues to tick down.

    Yet even though consumer price increases have cooled, Fed officials are maintaining their tough talk with the idea of leaving borrowing costs high enough to keep inflation on its downward trend. They say wage growth will need to slow even further. And Fed policymakers have publicly been in lockstep on how fighting inflation is their most important priority.

    That tone could shift if economic indicators allow some members of the rate-setting committee to make the case that inflation is easing even without a significant rise in joblessness from 3.5 percent now. The Department of Labor on Friday will report January’s employment numbers, and they’re expected to show a slower, but still steady increase in job creation.

    “There is a growing contingent on the committee who will grow very uncomfortable in the second half of the year not cutting [rates] as unemployment rises,” said Derek Tang, an economist at LH Meyer Monetary Policy Analytics, a research firm chaired by former Fed Governor Larry Meyer. “By their own account, they think [the unemployment rate is] going to rise into the 4s. This is all in the service of trying to bring inflation down, but when the rubber meets the road, things might feel a bit different.”

    Brainard, the Fed’s vice chair, recently pointed to high profit margins that might give companies room to hold onto workers, particularly as supply chains continue to improve and help them save some costs. That means inflation could ease further without as much of a hit to the job market, she said.

    Meanwhile, getting inflation back to 2 percent in the short term might not even be feasible, depending on what’s causing it.

    Officials like Goolsbee say that if the Fed tries to counteract inflation that’s caused by supply problems, rather than by overspending, that could run the risk of a recession without actually cooling prices — what’s often termed “stagflation.” That makes the risks facing the central bank more complicated, he told CNBC last year, before he joined the central bank.

    “The Fed has got to balance out some things it doesn’t normally need to balance out,” Goolsbee said at the time.

    Other prominent regional Fed presidents, who have rotated out of a voting seat this year but are still part of the debate at rate-setting meetings, might also make the case for a gentler approach to the economy, such as Boston Fed chief Susan Collins. In 2019, Collins, then a professor at the University of Michigan, supported raising the central bank’s inflation target slightly above 2 percent to give more room for the job market to recover during downturns.

    Still, the ultimate stance of the committee will depend on how the economy actually evolves. Even Fed officials such as Brainard or San Francisco Fed President Mary Daly, who are historically considered to be “doves” — in central bank parlance, more worried about harm to the labor market than the risk of inflation — have been resolute in the face of price spikes.

    Policymakers across the board have said they don’t expect to cut rates this year because they will need to stay at a high level for a while to ensure that high inflation doesn’t become embedded in the economy. That could lead the Fed to keep the brakes on much longer than markets expect.

    Tim Duy, chief U.S. economist at SGH Macro Advisors, noted that more dovish officials haven’t shifted their rhetoric yet, “even given the extent to which data has turned in their direction.”

    And some officials have pushed for the central bank to be even more aggressive in the face of rising prices, including Minneapolis Fed President Neel Kashkari and St. Louis Fed President James Bullard. Kashkari, who before the pandemic was an outlier in advocating for particularly low rates, has during this bout of inflation pressed for raising rates higher than officials’ median forecast. He has a vote on rates this year, as does Goolsbee.

    “I’m just wary about assuming anybody’s priors anymore,” Duy said.

    Meanwhile, the direction of debate could also shift considerably if Brainard leaves; she’s currently a contender to replace Brian Deese as head of the White House National Economic Council, according to people familiar with the matter.

    “Given the working relationship that she and Powell have had over several years, I think she really plays an important part in the thought leadership and the direction things are moving,” said Claudia Sahm, a former senior economist at the Fed.

    Still, even given Brainard’s worker focus, she will be pragmatic about how much progress is being made against inflation, Sahm said. “Maybe later in the year it will matter, but for now, dove, hawk, moderate — they’re going after inflation.”

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    #Wall #Street #bets #Powell #flinch #rate #hikes #job #market #sours
    ( With inputs from : www.politico.com )