Fragile EConomy MBrew 4/19

Now that’s what we call a PR audible. One day before facing a Capitol Hill hearing, Bank of America (-1.03%) CEO Brian Moynihan said BofA plans to raise its minimum wage to $20 an hour from $15 over the next two years. That’ll make BofA’s minimum wage workers the highest-paid among any of the country’s big banks. Two possible explanations for the hike It’s a tight labor market. Workers are getting their biggest raises since the Great Recession because there are too many openings and not enough people to fill them. And it offers some cushioning heading into today’s hearing, which will probe Midtown Manhattan’s white glove crowd in an era of record profits. Nothing says “corporate responsibility” like bigger paychecks for bank tellers, BofA hopes. About that hearing It’s the first time in a decade the CEOs of the largest U.S. banks will testify as a group in front of Congress, and it's the first time ever they'll testify without Patagonia vests.  Described as “riveting political theater,” this House Financial Services Committee hearing should hold you over until the new Avengers arrives. Even the name is epic...ly long: "Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 Years After the Financial Crisis." The guest list: CEOs of Citigroup, JPMorgan, Goldman Sachs, Morgan Stanley, BofA, State Street, BNY Mellon, and as many as 60 lawmakers. (MIA? Wells Fargo.) Both questioners and questionees are eager to display new attitudes. For lawmakers...Now that Democrats control the House, they’ll be flexing their muscles to make sure banks are being held accountable 10 years after the crisis. For the c-suiters...Minimum wage hikes are just the start—they want to show Congress all the ways they’ve reformed themselves in the past decade. Wells Fargo’s Mike Mayo, who’s essentially the Michael Jordan of big bank analysts, wraps it up: “If the top levels of the financial industry were tone-deaf around the financial crisis, this is the opposite.”

 NOTICE: All estimates larger than 3.6% are Asia & Emerging/Developing Countries

In its big picture overview of the world economy, the International Monetary Fund (IMF) concluded that we are in a “delicate moment.” It lowered its projections to 3.3% growth for 2019, which would be the lowest growth rate since 2009. But the IMF does expect a boost heading into 2020 if we keep things This Side Up.

We’re calling it a “bend, don’t break” economy.

• Bend: U.S.-China trade tensions, macroeconomic issues in Argentina and Turkey, auto sector disruption in Germany, and credit tightening in China.
• Don’t break: Central banks around the world have paused rate hikes, a U.S.-China trade agreement is taking shape, and struggling emerging markets are poised for a rebound.

Zoom out: If you’re in D.C. this week, watch out for all the finance ministers and central bankers getting rowdy on U Street. They’re in town for the spring meetings of the IMF and the World Bank.