Sen. Bernie Sanders is riding high in early-state polling on his promise to bring revolutionary change that topples the concentration of corporate power on Wall Street and beyond.
Just ten days before the Democratic presidential primary officially kicks off in Iowa, financiers are shrugging off the threat posed by the democratic socialist from Vermont.
“Nobody believes Sanders can win the presidency,” says Jason Rosenstock, a financial services industry lobbyist with Thorn Run Partners. “In fairness, people said the same thing about Trump.”
The industry’s ho-hum reaction to Sanders’s durability in the race’s top tier contrasts sharply with their freakout over Sen. Elizabeth Warren’s rise in the polls last fall.
The two are pitching similar economic programs — including a wealth tax, tougher anti-trust enforcement, repealing President Trump’s corporate tax cut and breaking up the big banks — as they angle to carry the party’s liberal banner. Yet Wall Streeters doubt Sanders can clear the hurdles standing between him and the White House and then go on to implement his agenda. They showed no such skepticism toward Warren (D-Mass.) before she tripped over her universal health-care plan in October and slid in the public standing. Indeed, Warren’s policy proposals targeting specific industries prompted stocks in those sectors to fall.
Analysts who digest Washington developments for Wall Street say Sanders may not spark the same level of concern even if he sweeps the first three primary contests — in Iowa, New Hampshire, and Nevada — an outcome current polling suggests is a real possibility.
Indeed, while former vice president Joe Biden leads the Democratic field in the online betting market PredictIt, Sanders is running as a strong second, with Warren fourth behind former New York mayor Mike Bloomberg:
But industry insiders think Sanders could win early and still face three major challenges. If he builds steam in early contests, they see the Democratic establishment rallying around a more moderate rival to deny him the nomination. If he wins the nomination anyway, they predict Sanders would lose to Trump, who would savage him as a socialist and point to the economy’s relative strength. If Sanders still captured the presidency, they think he would prove less adept than Warren would in making good on his sweeping campaign proposals.
“If you don’t believe he can do any one of those three things, the market not reacting makes sense,” says Edward Mills, a Washington policy analyst for Raymond James. “And there is a strong belief among a number of investors I speak to that if he were to be the nominee, Trump would easily defeat him.”
Warren, on the other hand, “is viewed as a more viable general election candidate, regardless of whether that’s supported by polling data,” says Jaret Seiberg, an analyst with Cowen Washington Research Group. “The perception is that Warren can beat Trump but Sanders cannot.”
As a result, Washington analysts say their Wall Street clients haven’t demanded research on the implications of Sanders’s policy prescriptions — analyses they produced in droves on Warren’s plans. Stephen Myrow of Beacon Policy Advisors fielded his first inquiry on Sanders’s chances Thursday. He said the industry knows Sanders as a “bomb thrower.” But they have felt the practical implications of Warren’s focus, from her success standing up the Consumer Financial Protection Bureau before she reached office to her public filleting of finance chiefs appearing before the Senate Banking Committee.
“There’s a difference between his broad ideological stances and Sen. Warren’s incredibly detailed policy proposals,” says Compass Point’s Isaac Boltansky.
Seiberg agrees. “The candidates other than Warren have been an inch deep on economic policy, so there isn’t much to analyze,” he says. “There are slight differences in how they talk about a financial transaction tax, slight differences in how they talk about the banks. Warren is a mile deep on all those subjects because she’s the one with detailed white papers. You can actually analyze them.”
— Coronavirus death toll climbs to 26. The Post's Anna Fifield reports from Beijing: "A young, healthy man from Wuhan and a person living 1,500 miles from the epicenter of the coronavirus are among the latest victims of the outbreak, which has incited fear and anger across China as the important Spring Festival gets underway.
"Reports of eight new deaths from the pneumonia-like virus, taking the total to 26, came as authorities enforced a lockdown across large parts of the province of Hubei, population 59 million. But they also came as the medical system clearly struggled to cope with the outbreak, with reports of crowded hospitals, stressed doctors and dwindling supplies."
Markets continue their swoon. The Post's David Lynch: "Wall Street stumbled Thursday amid fears that efforts to curtail a lethal virus in China could further disrupt the global economy. The Dow Jones industrial average fell nearly 200 points before recovering to close at 29,160.09, down 26 points for the day, following China’s decision to expand its quarantine beyond Wuhan, where the virus first appeared. Oil prices also dipped again as traders anticipated global slowing.
"The unprecedented lockdown of a provincial capital of 11 million people and several other cities showed Chinese authorities are belatedly ramping up efforts to head off a potential pandemic."
— Goldman will focus on board diversity before IPOs: "Goldman Sachs chief executive David Solomon said that the bank, one of the largest underwriters of initial public offerings, would not take companies public in the United States and Europe if they do not have at least one diverse board director, the latest move to push companies to increase the number of women and people of color in corporate boardrooms," my colleague Jena McGregor reports.
"Speaking on CNBC, Solomon said the bank would implement the policy starting this summer, and would have a 'focus on women.' It plans to increase the number to two by 2021, he said. ... Goldman Sachs’s 11-member board includes four women. Its lead director, Adebayo O. Ogunlesi, is black. Lakshmi Mittal, the Indian-born chief executive of ArcelorMittal, is also on the board."
— Trump hails China deal, but the reality is more complicated: Trump’s "trade truce with Beijing included a pledge to buy billions of dollars of U.S. foodstuffs over the next two years, reopening one of the most important export markets for America’s farm belt," Bloomberg News's Alfred Cang, Javier Blas and Isis Almeida report.
"The euphoria is fading fast. The dispute with Washington exposed Beijing’s vulnerability when it comes to food imports — especially the soybeans needed to feed its massive herd of livestock — and the Communist Party leadership will now do all it can to wean itself off the U.S. ... For U.S. farmers, the trade deal means a potentially short-lived benefit as China seeks to make good on its two-year promise. But long term, as America’s biggest customer goes elsewhere — creating a huge opportunity for rival agriculture giants like Brazil, Argentina and Russia — that could have political repercussions for Trump-supporting rural communities."
IMPEACHMENT MINUTE: A speed read on the latest from the congressional impeachment process.
"Democrats detail abuse-of-power charge against Trump as Republicans complain of repetitive arguments." By The Post's Seung Min Kim, John Wagner and Karoun Demirjian
"Trump, Democrats keep their distance as GOP moderates face crucial impeachment votes." By The Post's Mike DeBonis and Josh Dawsey
"In marathon impeachment trial, senators walk to stay focused or pass the time with a fidget spinner." By The Post's Paul Kane
— Former Wells Fargo CEO barred from banking: "Banking regulators pursuing what they describe as 'systemic' misconduct in sales practices at Wells Fargo have reached an agreement with former chief executive John Stumpf that bars him from the banking industry and fines him $17.5 million," my colleague Peter Whoriskey reports.
"The regulators continue to pursue civil charges, fines and prohibitions against five other bank executives for an array of oversight failures and deceptive methods at the bank. The misconduct affected millions of bank customers from 2002 to 2016, according to a statement by the Office of the Comptroller of the Currency, which sought the charges. The regulators have found, among other things, millions of accounts opened for customers without their knowledge."
— Jamie Dimon rakes in $31.5 million. Bloomberg News's Michelle Davis and Anders Melin: "JPMorgan Chase & Co. awarded Chief Executive Officer Jamie Dimon $31.5 million in total compensation for his work in 2019, a 1.6% jump after his bank posted record profit for the second year in a row. The pay package includes $25 million of restricted stock tied to performance, an annual base salary of $1.5 million and a $5 million cash bonus, the New York-based bank said Thursday in a regulatory filing. Dimon has run the company since the end of 2005 and is the last of the CEOs that steered banks through the financial crisis."
— New Khashoggi documentary could make waves on Wall Street: "The Oscar-winning director Bryan Fogel, who previously investigated Russian doping with the film 'Icarus,' will unveil a documentary [today] about [Washington Post contributor Jamal] Khashoggi, called 'The Dissident,' at the Sundance Film Festival," my colleague Steven Zeitchik reports of his viewing of the film.
"Layered with news, drama and moral excoriation, the film not only examines one of the most shocking events in modern Middle East-U.S. relations, but it is also likely to shine an uncomfortable spotlight on both Saudi Arabia and the profit-minded American companies that do business with it. ... In a blistering final section, 'The Dissident' also takes to task the American companies that continue to work with Saudi Arabia, highlighting the role of Western business interests in empowering" Crown Prince Mohammed bin Salman.
- Fogel takes aim at temporary outrage: "The fallout from Khashoggi’s killing was intense. Many companies pulled out of a Saudi-hosted economic forum scheduled for late that fall, and the Hollywood firm Endeavor, the holding company that controls a large talent agency as well as the mixed martial arts promoter UFC and other entities, returned a $400 million Saudi investment. But the backlash was also brief. Many companies that did not attend Mohammed’s forum in 2018 returned in force in 2019. 'I saw how little has really changed after Khashoggi,' Fogel said. 'And it’s angered me.' "
- The credits include a list of companies still working with the Kingdom: "In the version The Washington Post viewed, the company names had not been finalized."
— Amazon continues fight over JEDI: "Amazon Web Services is seeking to force the Pentagon to halt work on a massive cloud-computing contract recently awarded to its biggest competitor, Microsoft, as it pursues allegations that [Trump] improperly meddled with defense funds to act on a grudge against Amazon founder Jeff Bezos," my colleague Aaron Gregg reports.
"The sealed motion was filed Wednesday as part of a bid protest at the U.S. Court of Federal Claims, which handles disputes over federal contracts. In a statement, Amazon spokesman Drew Herdener said it is 'common practice' to halt contract performance during a bid protest and emphasized that his company supports the Defense Department’s technology initiatives. ... Defense officials have said in recent weeks that they plan to move forward with the JEDI project despite the bid protest. They have said that the award followed all laws and regulations and have insisted the decision-making process that led to Microsoft’s win was walled off from presidential influence." (Bezos owns The Washington Post)
— Tesla is now No. 2: "Tesla Inc has overtaken Germany’s Volkswagen as the world’s second most valuable carmaker behind Japan’s Toyota, as the meteoric rise in the U.S. electric vehicle maker’s shares reshuffles the global market," Josephine Mason of Reuters reports.
"Tesla’s stock has more than doubled in value in the last three months, with its market capitalization piercing $100 billion on Wednesday, a first for a listed U.S. automaker. During the rally, its value has leapfrogged more established global rivals: Honda, BMW, General Motors and Daimler. On Wednesday, it eclipsed VW’s $99.4 billion value."
— FICO changes could mean lower credit scores: "About 40 million consumers who have fallen behind on their bills or have rising debt levels could see their credit scores fall significantly under changes being made to FICO," my colleague Renae Merle reports.
"Fair Isaac, which produces the widely used credit score, said the severity of the downward shift for those with the lowest credit scores, 600 or below, would depend on how recently the consumer had fallen behind and by how much. About 40 million consumers who already have high credit scores, at least 680, could see it rise even further. 'Consumers that have been managing their credit well … paying bills on time, keeping their balances in check are likely going to see a gain in score,' Dave Shellenberger, vice president of product management scores, said in a statement."
— Union participation still low: "In a year when teachers and autoworkers mounted lengthy strikes, participation in labor unions in 2019 continued their decades-long decline," my colleague Eli Rosenberg reports.
"Union membership in the American workforce was down to 10.3 percent from 10.5 percent in 2018, according to statistics released by the Bureau of Labor Statistics. The continued slide shows how energy and momentum around the labor movement is not translating into equivalent growth for unions, whose memberships have fallen sharply as a percentage of the U.S. workforce over the past roughly 40 years. In 1983, unions represented about 1 in 5 workers; now it’s 1 in 10 workers."
MONEY ON THE HILL
— Bloomberg getting under Trump's skin: "The former New York mayor has attracted the obsessive attention of [President Trump], who is annoyed by Bloomberg’s constant ads targeting him, concerned about the billionaire’s outsize spending, focused on his growing numbers in the polls and seemingly fixated on his TV appearances," my colleagues Josh Dawsey and Michael Scherer report.
"The president has repeatedly attacked Bloomberg on Twitter, calling him 'Mini Mike' to insult his small stature, and has frequently focused on him in conversations with campaign advisers and White House officials. ... Trump’s advisers have repeatedly encouraged the president to focus on other opponents instead. Campaign manager Brad Parscale and senior adviser Jared Kushner have warned against giving Bloomberg more attention and do not see him as the threat that Trump does, aides said. There is no plan for the campaign to target him with advertisements at this point, advisers said."
- American Express is among the notable companies reporting their earnings.
From The Post's Tom Toles: