Mark Gongloff is off the newsletter this morning so today's 7.5 Things are brought to you by Jillian Berman.
Thing One: Fiscal Cliff Now A Thing People Care About: The Fiscal Cliff Threat is looming and the politicians that caused it may actually be starting to take notice. Republican Senators Bob Corker and Olympia Snowe at least made it seem like they were serious about getting a deal done, with Snowe even saying the issue could “trigger a global financial crisis,” according to The New York Times. Democratic Senator Chuck Schumer also acted like he might consider playing nice with Republican House Speaker John Boehner on the issue, according to the Financial Times, though we won’t hold our breath.
The urgency is ironic, given that it was Congress’ partisan brinksmanship that got us into this mess in the first place.
And it really seems to be a mess. The Congressional Budget Office offered a doomsday scenario report Thursday afternoon, saying that the combination of trillions of dollars in tax increases and spending cuts could plunge the economy back into recession.
Compounding the issue, is the possibility that the U.S. will run out of time to raise the debt limit before it runs out of room to borrow money, according to the NYT. The combination of the looming fiscal cliff and the uncertainty of the debt ceiling -- which will be part of the fiscal cliff negotiations -- could send financial markets into a panic, as they’re often liable to do over, well, almost anything.
Thing Two: Sandy Fallout Continues: Hurricane Sandy may have stopped causing bad weather more than a week ago, but the fallout still isn’t over. At least two dozen cities hit hard by the storm in the tri-state region are facing the possibility of higher borrowing costs, according to the Wall Street Journal, as investors grow concerned about the cities’ reliance on short-term debt. Another consequence of the storm that still hasn’t resolved itself: The gas shortage. New York City mayor Michael Bloomberg announced a gas rationing system Thursday. The struggle to get gas in the wake of the storm exposed Big Oil’s lack of preparation for a situation like this, Reuters notes, despite the industry's government subsidies and tax breaks.
At least there’s a small piece of good news. Homeowners will likely get more help from insurers thanks to the storm’s technical classification as a post-tropical cyclone instead of a hurricane, according to the Financial Times. Still, insurers are challenging the ruling.
Thing Three: Dodd-Frank Not Totally Safe: With Romney’s loss, the Dodd-Frank financial reforms won’t be killed in one fail swoop, but that doesn’t mean they’ll survive completely intact under Obama. With the Obama Administration and many Democrats no longer worried about an election, lawmakers may be more willing to agree to trim the law in ways that are politically unpopular, according the Wall Street Journal.
With their savior, Romney, out for good, the finance industry may pursue a route other than legislation: Litigation. The WSJ notes that Wall Street has had some success challenging provisions in court and they may double down on the strategy.
But not to worry, the Wall Street reformers got a savior of their own Tuesday. Elizabeth Warren was elected to the Senate. Warren, who dreamt up the Consumer Financial Protection Bureau and then was rejected by the Senate to become its head, is expected to seek a seat on the Senate Banking Committee, giving her a direct role in shaping implementation of Dodd-Frank.
Thing Four: Going Rogue Is In Vogue: Matthew Marshall Taylor, a former Goldman Sachs trader allegedly defrauded the bank of $118 million in late 2007 and hid a futures position worth more than $8 billion, the Financial Times reports. The complaint, filed by the Commodity Futures Trading Commission, doesn’t identify Goldman as Taylor’s employer at the time, but a bank spokeswoman told Reuters that he was fired after his alleged conduct had been discovered. Taylor is just the latest rogue trader to end up in court; a former trader at Society Generale was recently sentenced to three years in prison and ordered to pay a $7 billion fine over fraud allegations. And former UBS trader Former Kweku Adoboli is standing trial for allegedly losing the bank $3.2 billion.
Thing Five: Eurozone Crisis Still Going On: The Eurozone crisis continues to rear its ugly head. Leaders in the region can’t seem to agree on the best way to deal with Greece’s debt, bringing the country dangerously close to not being able to pay back $5 billion that’s due next week, according to the Financial Times. It’s unlikely that European leaders will give Greece the money it needs until late November because they are waiting on a report on how the country complied with the terms of its most recent bailout, according to Bloomberg.
Thing Six: It Pays To Blow The Whistle: A whistleblower group is about to get more than $1 million for their troubles, the Wall Street Journal reports. The Bank of New York Mellon is settling with the state of Virginia over claims it charged hidden fees on transactions to Virginia’s employee pension fund, and as part of the agreement the whistleblowers are set to get paid big time. The group includes one man who spent two years as a secret informant on BNY’s Pittsburgh trading desk.
Thing Seven: McDonald's Not Lovin' It: McDonald’s had a major McFail yesterday. The company’s monthly sales dropped for the first time in nearly a decade. The chain may be having trouble competing with rivals like Taco Bell and Burger King, which have redone their menus to lure customers.
Thing Seven And A Half: Sasha Obama's Good Advice: Kids just do the dardenst things. On Tuesday night as President Obama was waving to supporters, his youngest daughter Sasha quietly reminded him to turn around and show some love to the other side of the stage. The elder Obama did it to huge rounds of applause and cheers.
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Calendar Du Jour:
8:30 a.m. ET: Import and Export Prices for October
9:55 a.m. ET: University of Michigan Consumer Sentiment for November
10:00 a.m. ET: Wholesale Inventories for September
Before Market Open: J.C. Penney
Heard On The Tweets:
90% of all "this is why Romney lost" Tweets can be answered with phrase "correlation is not causation"
— Ben White (@morningmoneyben) November 8, 2012
Obama should send a thank you note to the Tea Party.
— Kumail Nanjiani (@kumailn) November 8, 2012
Ashley Judd considering a senate run in 2014, she'd be the first member of congress to have done full frontal nudity, on purpose.
— Downtown Josh Brown (@ReformedBroker) November 8, 2012
— Kevin Roose (@kevinroose) November 8, 2012
-- Calendar and tweets rounded up by Alexis Kleinman