On The Money: S&P hits record as stocks rally on Fed cut hopes | Facebook’s new cryptocurrency raises red flags for critics | Internal IRS watchdog rips agency’s taxpayer service | Apple seeks tariff relief

Happy Thursday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–S&P sets new record as stocks rally on Fed cut hopes: Stocks rallied Thursday and drove the S&P 500 index to a new record high as investors cheered the increasing odds of a Federal Reserve rate cut.

The S&P 500 rose 0.95 percent Thursday, up 27.7 points to a record close of 2,954.

The Dow Jones Industrial Average rose 0.94 percent to close with a gain of 249 points while the Nasdaq composite rose 64 points for a gain of 0.80 percent.

The rally comes a day after the Fed opened the door to cutting interest rates amid rising trade tensions, fading global economic growth and persistently low inflation. I’ll explain how we got here.

 

LEADING THE DAY

Facebook’s new cryptocurrency raises red flags for critics: Facebook is facing fresh scrutiny from lawmakers and consumer advocates over its plans to launch a new cryptocurrency, a project that could fundamentally alter the way millions of people exchange currency online.

The company’s digital currency project, Libra, is backed by dozens of powerful businesses, including MasterCard and Uber, and is slated to launch next year. Libra has branded itself as an effort to aid the “unbanked,” the estimated 1.7 billion people in the world who do not have access to traditional banking.

• On Wednesday, the Senate Banking Committee under Chairman Mike Crapo (R-Idaho) became the first to schedule a hearing on the project and related privacy issues, set for July 16.

• And a House Financial Services Committee Chairwoman Maxine Waters (D-Calif.), within hours of the company’s announcement Tuesday, called on Facebook to halt the project altogether until lawmakers have more answers.

Facebook’s toughest critics are seizing on the project with the company already facing a slew of other concerns over its market powers and privacy protections. The Hill’s Emily Birnbaum brings us up to speed here.

 

IRS in-house watchdog calls agency’s taxpayer service ‘woefully inadequate’: The IRS’s in-house watchdog on Thursday criticized the agency’s taxpayer service as “woefully inadequate” and said that many taxpayers who needed help from the IRS during the recent filing season had a challenging experience.

In her final report to Congress before she retires, National Taxpayer Advocate Nina Olson said that the IRS had a “generally successful filing season for most taxpayers,” but that the agency had a lower level of service on its phone lines compared to the 2018 filing season and the IRS provided face-to-face assistance at its taxpayer assistance centers to fewer people. The Hill’s Naomi Jagoda explains why here.

• The IRS faced a lot of challenges during this year’s filing season. It began just after a 35-day government shutdown ended and was the first filing season in which taxpayers filed returns that reflected many of the provisions in President Trump’s tax-cut law.

• Olson said in her report that most people received tax refunds in a timely fashion but was critical of the IRS’s telephone service.

• Olson also noted that because of the shutdown, there was a delay in training for most new customer-service representatives hired to answer calls and resolve tax issues.

 

Apple seeks tariff relief: Apple is asking the U.S. government to exclude its products — including the mega-popular iPhone — from President Trump’s next round of proposed tariffs on Chinese imports.

In a letter made public on Thursday, the tech giant wrote that the tariffs could give an advantage to Apple’s Chinese competitors as well as reduce Apple’s contributions to the U.S. economy.

Apple’s case: “U.S. tariffs would also weigh on Apple’s global competitiveness,” Apple wrote to U.S. Trade Representative Robert Lighthizer. “The Chinese producers we compete with in global markets do not have a significant presence in the U.S. market, and so would not be impacted by U.S. tariffs. Neither would our other major non-U.S. competitors.”

Not only Apple: This week, numerous companies have testified to the U.S. trade representative against the proposed tariffs, with businesses arguing they depend on Chinese imports for part of their supply chains.

The companies are raising concerns that more tariffs could result in higher prices for customers and lower revenues.

The Trump angle: Apple has an advantage over other companies in some ways, considering the company’s CEO Tim Cook has a close relationship with Trump.

The Hill’s Emily Birnbaum has more here.

 

Key Dem doesn’t expect USMCA vote before August recess: Rep. Earl Blumenauer (D-Ore.), chairman of the House Ways and Means Subcommittee on Trade, weighed in on efforts to pass President Trump’s revised NAFTA deal during an event hosted by the American Council for Capital Formation on Wednesday, reports The Hill’s Victoria Scott.

Blumenauer said he does not believe a vote will happen on the deal before lawmakers leave Washington for the August congressional recess.

Blumenauer, who is part of a working group of House Democrats, seeking changes to Trump’s United States, Mexico, Canada Agreement (USMCA), said there were important changes to be made, but worried partisan fighting between both parties would hamper efforts at a deal.

“There are real problems with NAFTA 1.0. Mexican workers are less well off today in terms of inflation from where we started. I’m hoping NAFTA 2.0 will be different,” Blumenauer said.

Fred Bergsten, a senior fellow and founding director of the Peterson Institute for International Economics, was also at the event. Bergsten said Trump needed allies to counter China on trade.

“We’ve failed to work with our allies to address China. We’ve lost trade wars against our own allies,” he added. 

 

GOOD TO KNOW

• The Republican Governors Association (RGA) on Thursday sent a letter to congressional leaders urging them to pass the United States-Mexico-Canada Agreement (USMCA), President Trump’s trade pact proposed to replace the North American Free Trade Agreement.

• President Trump on Wednesday awarded the Presidential Medal of Freedom to economist Arthur Laffer, praising him for his influence on economic policy dating back to the Reagan administration.

• Deutsche Bank AG executives expect U.S. regulators to impose additional restrictions on its Wall Street investment bank “even if it passes an annual health check,” according to Reuters.

• Initial claims for state unemployment benefits dropped by 6,000 to 216,000 for the week ending June 15, the Labor Department said on Thursday.

• Sen. Kirsten Gillibrand (D-N.Y.) introduced legislation Thursday to block a Housing and Urban Development rule evicting households including undocumented immigrants from subsidized housing.

 

ODDS AND ENDS

• The Save Journalism Project, a group started by recently laid-off journalists aimed at highlighting tech giants’ effect on the news industry, is launching its first ad campaign this week urging lawmakers to take on Facebook and Google.

• Bipartisan lawmakers on the House Foreign Affairs Committee joined forces Thursday to advance legislation imposing new sanctions on Myanmar’s military regime for its violent purge of ethnic minorities.