THE TICKER

Pete Buttigieg already established himself as Wall Street’s favorite contender in the 2020 Democratic presidential field. But the South Bend, Ind., mayor is poised to see his fundraising from the financial services industry improve as the primary campaign enters a critical stretch.

That’s in part because Wall Street loves a winner, and Buttigieg — who is kicking off a two-day swing through New York City that includes three fundraisers — has been climbing in the polls and leads the pack both in Iowa and New Hampshire.

And he is also set to benefit from the lifting of a legal barrier that has limited some of his Wall Street contributions. Once Buttigieg leaves the mayoral office Jan. 1, he can start collecting from bankers now barred by a federal pay-to-play prohibition against giving to state and local leaders who could decide which banks underwrite their bond offerings or manage public employee pensions.

The developments come as Buttigieg folded to building pressure to make his fundraising apparatus more transparent. After trading barbs with Sen. Elizabeth Warren (D-Mass.) on the matter, Buttigieg’s campaign announced it would open up his fundraisers to reporters and disclose who is bundling money for his bid.

Per my colleague Amy B Wang, "The back-and-forth between Buttigieg and Warren highlights the heightened sensitivity in today’s Democratic Party to any perceived ties between a candidate and big business or wealthy individuals, a mood that has prompted various candidates to eschew big donors and distance themselves from Wall Street."

Buttigieg campaign manager Mike Schmuhl said in a statement that the candidate’s fundraising events will be open to the media starting today, “and a list of people raising money for the campaign will be released within the week … There are important differences in this race among Democratic candidates... but transparency shouldn't be one of them.” 

The campaign also announced it has been cleared by McKinsey & Co., the consulting firm, to release the names of Buttigieg's clients during his three-year stint there. 

Buttigieg committed in April to maintaining a public list of his bundlers but has failed to update it. The most recent version of that roster, which the campaign calls its “national investors circle,” includes one New York financier: Hedge fund manager Orin Kramer.

But the candidate’s direct contributors reveal a much deeper well of support for him on Wall Street. As we wrote here last month: “It includes: William Ackman, billionaire founder of Pershing Square Capital; Roger C. Altman, a former deputy treasury secretary and founder and senior chairman of the investment banking firm Evercore; Richard M. Cashin, founder of private equity firm One Equity Partners; Jonathan Gray, the billionaire president of Blackstone Group; billionaire hedge fund manager Marc Lasry, CEO of Avenue Capital Group; billionaire investor Daniel Ziff; Allen & Company investment banker Stanley S. Shuman; and Robert Wolf, a Wall Street fundraiser for Obama and founder of investment advisory firm 32 Advisors.”

And hedge fund billionaire Paul Tudor Jones, who has predicted the stock market will tank if Warren wins, has called Buttigieg “my man.” A review by Forbes found Buttigieg has drawn contributions from 39 billionaires, the third-highest total of active candidates.

Buttigieg’s fundraising from Wall Street’s top bank officials is hardly lagging. He’s drawn more than 300 contributions from employees of the top five firms. By contrast, former vice president Joe Biden, another industry favorite, has pulled in roughly 100 donations from employees of the same banks, according to federal campaign records.

But there’s room to improve. South Bend is only the fourth largest city in Indiana, so the business it offers big Wall Street firms is relatively small potatoes.  Yet “most firms would look at the state of Indiana as a whole: If they’re doing any business advising state or local funds in Indiana, they’d have a blackout” on senior executives contributing to state and local elected officials “subject to prior approval,” says Bryson Morgan, a campaign finance lawyer at Caplin & Drysdale.

Buttigieg will be enjoying unfettered fundraising access to financiers just as several of his competitors have to quit the trail to act as jurors in President Trump’s Senate impeachment trial.

MARKET MOVERS

Stocks pull back. CNBC's Fred Imbert: "Stocks fell for the first time in four sessions on Monday as investors took a pause after a sharp rally in the previous session. The Dow Jones Industrial Average closed 105.46 points lower, or 0.4% at 27,909.60. The S&P 500 pulled back 0.3% to 3,135.96 and the Nasdaq Composite slid 0.4% [to] 8,621.83. Apple fell 1.4% to lead the Dow lower. The losses ended a three-day winning streak on Wall Street and came after the major averages rose to near-record highs late last week, boosted a U.S. jobs report that easily topped analyst expectations."

Wall Street's fear gauge is jumping. Bloomberg News's Joanna Ossinger: "At this point, most investors probably just want the year to be over to book their gains -- especially now that the Cboe Volatility Index is behaving in a way that’s preceded stock losses in the past. The VIX, also known as Wall Street’s 'fear gauge,' jumped 16% on Monday to 15.86, while the S&P 500 Index retreated just 0.3% and is still less than a percent away from its record high."

Investors may already be hedging against the presidential race outcome. CNBC's Patti Domm: "Stock investors are hedging in a big way against something scary coming at them this time next year and it could be related to the outcome of the presidential election. The price of buying downside puts, meaning a negative bet on the S&P 500 is at a historical level compared to the price for upside calls, or an opposite bet in the option markets for higher prices, according to Julian Emanuel, head of equity and derivatives strategy at BTIG. By this time next year, the Nov. 3 election will have been over for a little over a month."

Jerome Powell engineered a humbling about-face in U.S. interest-rate policy in 2019, steering a group of reluctant colleagues at the Federal Reserve toward rate cuts to ensure a cooling U.S. economy didn’t slip into recession.
WSJ

TRUMP TRACKER

TRADE FLY-AROUND:

— The cusp of a USMCA deal: “The White House and House Democrats are on the cusp of finalizing a new trade deal for North America, a major achievement for [Trump] and House Speaker Nancy Pelosi that comes even as Democrats prepare to impeach the president,” my colleagues Erica Werner, David J. Lynch and Seung Min Kim report.

“Trump told reporters that ‘we’re doing very well’ in the negotiations, ‘hearing from unions and others that it’s looking good.’ ”

  • Lighthizer and Kushner are headed to Mexico: “In a sign that an agreement was imminent, U.S. Trade Representative Robert E. Lighthizer and Trump son-in-law and senior adviser Jared Kushner are expected to be in Mexico on [today] to help secure the pact.”
  • Key union is scheduled to talk about the pact: “One point that is likely to bolster support among Democrats: Top officials at the AFL-CIO planned to meet to discuss the near-agreement ... union president Richard Trumka said. Support from the AFL-CIO, which opposes the existing NAFTA and blames it for destroying millions of good-paying manufacturing jobs, would likely ensure backing from a majority of House Democrats when the deal is brought up for a vote.”

Ag secretary sees Dec. 15 tariff delay. Bloomberg News's Isis Almeida and Shawn Donnan: "The U.S. is unlikely to impose extra tariffs on a new $160 billion swath of Chinese goods including toys and smartphones come Sunday, Agriculture Secretary Sonny Perdue said... 'We have a deadline coming up on the Dec. 15 for another tranche of tariffs, I do not believe those will be implemented and I think we may see some backing away,' Purdue said at a conference in Indianapolis, Indiana Monday."

Congress wants to ban Chinese buses, rail cars: “Congress is taking aim at China in a must-pass defense-policy bill, even as the Trump administration seeks to negotiate an interim trade pact with Beijing,” the Wall Street Journal’s Lindsay Wise and Katy Stech Ferek report.

“House and Senate Republicans and Democrats have reached agreement on language in the National Defense Authorization Act that would bar the use of federal funds to buy Chinese buses and rail cars, congressional aides familiar with the matter told [the WSJ], adding that the ban excludes pre-existing contracts. The legislation would affect the U.S. subsidiaries of two Chinese companies. One is China’s state-owned CRRC Corp., which has been making significant inroads into the U.S. market for rail cars, estimated at $18 billion annually. The other is BYD Co., a Chinese company that sells electric buses for the U.S. market through unit BYD Motors LLC.”

POCKET CHANGE

— Volcker remembered for leading U.S. out of economic malaise: “Paul A. Volcker, a hard-headed economic statesman who as chairman of the Federal Reserve from 1979 to 1987 shocked the U.S. economy out of a cycle of inflation and malaise and so set the stage for a generation of prosperity, died Dec. 8 at his home in Manhattan. He was 92,” Neil Irwin writes in The Post’s obit. “The cause was complications from prostate cancer, said his daughter, Janice Zima.”

“With influence that spanned five decades and seven presidents, Mr. Volcker left as deep an imprint on the U.S. economy and financial system as has anyone of his generation. As a senior Treasury official in the 1960s and early ’70s, he advised President Richard M. Nixon on taking the United States off the gold standard. At the Fed, he was arguably the second-most-powerful person in the country.”

His early advice to Obama gave him credibility as a candidate: “He later counseled President Obama on his response to the 2008 financial crisis and proposed a key restriction on speculative activity by banks that would become known as the ‘Volcker Rule.’ ” 

Obama said in a statement that Volcker “wielded his uncommon understanding of the American economy to make sure that families’ hard work was rewarded and secured.”

Fellow Fed chairs: Ben Bernanke said Volcker “came to represent independence. He personified the idea of doing something politically unpopular, but economically necessary.” 

— Explosion of tech jobs concentrated in five metro areas: “The explosion of top-tier tech jobs has clustered in a handful of coastal hubs, expanding the wealth and innovation differential that’s draining talent from the rest of the nation, new research shows,” my colleague Taylor Telford reports.

“Just five metro areas — Boston, San Diego, San Francisco, San Jose and Seattle — snapped up 90 percent of the 256,063 tech jobs created from 2005 to 2017, according to a joint report released from the Brookings Institution and the Information Technology and Innovation Foundation. The remaining 10 percent was divvied up among 377 urban areas.”

— Factories demand white-collar education for blue-collar jobs: “College-educated workers are taking over the American factory floor,” the WSJ’s Austen Hufford reports.

“New manufacturing jobs that require more advanced skills are driving up the education level of factory workers who in past generations could get by without higher education, an analysis of federal data by [the WSJ] found. Within the next three years, American manufacturers are, for the first time, on track to employ more college graduates than workers with a high-school education or less, part of a shift toward automation that has increased factory output, opened the door to more women and reduced prospects for lower-skilled workers.”

— Drugmakers push into cancer treatment: “Two of the world’s biggest drugmakers struck multibillion-dollar deals … aimed at bolstering their lineups in the fiercely competitive cancer-drugs market,” the WSJ’s Jared S. Hopkins and Denise Roland report.

“Merck & Co. said it would acquire ArQule Inc. for about $2.7 billion, paying a 107 percent premium in a bid to diversify its cancer treatments beyond top-selling drug Keytruda. Meanwhile, Sanofi SA said it would spend $2.5 billion, a 172 percent premium, to acquire Synthorx Inc. in the French drugmaker’s own effort to catch up with oncology rivals.”

— Amazon accuses Trump of using Pentagon for personal gain: “[Trump’s] ‘repeated public and behind-the-scenes attacks’ against Amazon led the Pentagon to choose a lesser bid from Microsoft for a massive cloud computing contract that officials have labeled a crucial national security priority, Amazon alleged in a complaint made public,” my colleagues Aaron Gregg and Jay Greene report.

“The e-commerce giant’s protest of the $10 billion, 10-year contract alleges that Trump’s stated efforts to ‘screw Amazon’ led the agency to opt for a proposal from Microsoft with ‘clear failures.’ Amazon pointed to alleged errors and an 11th-hour policy change as evidence that the Defense Department failed to follow the rules. And it said Trump’s alleged meddling with defense spending for personal gain threatens the integrity of the government procurement system itself … Amazon founder Jeff Bezos also owns The Washington Post.”

— Honda CEO sounds alarm: “At a two-day gathering for Honda’s suppliers in March, Chief Executive Takahiro Hachigo sounded the alarm,” Reuters’s Norihiko Shirouzu and Naomi Tajitsu report.

“At the Hotel Higashinihon in Utsunomiya, Hachigo told them the Japanese automaker was facing a crisis after a string of costly recalls and other quality blunders and it needed to plot a new course, according to two people who attended the meeting. Since then, Hachigo has been quietly working on reforms to centralize decision-making by bringing Honda’s standalone research & development (R&D) division in-house and cutting some senior management roles, according to three Honda insiders.”

— Morgan Stanley cutting jobs: “Morgan Stanley is cutting about 2 percent of its workforce globally due to an uncertain global economic outlook, according to a source familiar with the matter,” Reuters’s Elizabeth Dilts Marshall and Bharath Manjesh report.

“Most of the employees impacted by the job cuts, which hit businesses across the bank, have been informed. Spared from the job cuts are financial advisers in Morgan Stanley wealth management.”

MONEY ON THE HILL

— Space Force for paid leave for federal workers deal looks more likely: "Key congressional lawmakers announced their support for a defense bill that would create both the Space Force and paid parental leave for more than 2 million federal workers, as signs of Republican opposition to the measure appeared to fade," my colleague Jeff Stein reports.

"House and Senate negotiators in both parties said they would back the bill granting $658 billion to the Department of Defense and other defense programs, a measure that includes dozens of national security provisions prioritized by the armed services ... In a major deal struck late last week, the White House and congressional Democrats agreed to create the Space Force as the sixth branch of the U.S. military in exchange for new parental-leave benefits for the federal workforce as part of the must-pass defense package. If approved, it would be the biggest victory for federal employees in nearly 30 years."

THE REGULATORS

SEC settles with Collins. WSJ's Kimberly Chin: "The Securities and Exchange Commission has reached a settlement with former U.S. Rep. Christopher Collins, in connection with an insider-trading case involving his son and an Australian biotechnology company. Mr. Collins has agreed to be permanently barred from acting as an officer or director of any public company, the SEC said Monday. His son, Cameron Collins, and Stephen Zarsky have agreed to pay back the losses they had avoided in an insider-trading scheme, totaling more than $700,000."

DAYBOOK

Today:

  • The Fed begins its two-day meeting to determine whether or not to keep interest rates at their current level
  • The Senate Banking Committee holds a hearing on oversight of the SEC, Chairman Jay Clayton is set to testify
  • AutoZone, GameStop and Dave & Busters are among the notable companies to report their earnings, per Kiplinger

Wednesday:

  • American Eagle, Lululemon, United Natural Foods and Vera Bradley are among the notable companies to report their earnings, per Kiplinger

Thursday:

  • Costco, Adobe and Oracle are among the notable companies to report their earnings, per Kiplinger

Friday:

  • The Commerce Department releases the latest retail sales numbers

THE FUNNIES

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