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Chill out on China — News that President Trump will likely not meet with Chinese President Xi Jinping before a March 1 deadline to strike a trade deal helped spook markets on Thursday with the Dow off over 200 points, or close to 1 percent. Administration officials have spoken repeatedly of ratcheting up tariffs on $200 billion of Chinese imports from 10 percent to 25 percent if no deal is made by then.
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But the delay in the Trump-Xi meeting does not necessarily mean the higher tariffs will go into effect. Trump has said he won’t do a final deal until he sits down with Xi. And his inability to do so now is more a matter of the calendar and the upcoming North Korea summit.
Phones exist — Trump could still choose to extend the deadline, though the hawks won’t like it. All Trump has to do is pick up the phone and talk to Xi, which we are told by a top source could absolutely happen between now and March 1.
Moving the Overton window — The “Green New Deal” resolution from Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Ed Markey (D-Mass.) is another blue sky proposal — in this case to completely shift to renewable energy by 2030 — that isn’t headed anywhere near passage soon. But just like the 70 percent marginal rate and the wealth tax, it’s a major shift in the acceptable policy ground Democrats will present and fight over in 2020.
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TRUMP TRAPPED ON THE BORDER — Our Eliana Johnson, Burgess Everett, and Gabby Orr: “Inside the White House, the Trump team is increasingly aware that the president is trapped. Facing a Republican Party unwilling to back another government shutdown or a national emergency declaration to build his border wall …
“Trump is in an unfamiliar position, according to multiple White House officials and lawmakers: prepared, potentially, to accept a compromise foisted on him by Congress.”
ABOUT THE EMERGENCY DECLARATION — “Though the White House has worked to prepare an emergency declaration invoking the president’s sweeping executive powers, several West Wing aides have warned that invoking it would alienate some conservatives who have otherwise been loyal to the White House.”
THE BIG IDEA: IS THIS FULL EMPLOYMENT? — JPMorgan’s Jim Glassman: “The participation rate among prime working-age adults today remains well below its pre-recession peak, implying that as many as 800,000 potential workers may return to the job search as the labor market tightens further. If this is the case, the economy could continue adding jobs at its current rate for another year before full employment arrives.” Read more.
SENATE FINANCE WON’T FIX SALT — Our Bernie Becker, Nick Niedzwiadek and Ryan Hutchins: “The Senate Finance Committee won’t be taking another look at the limit on state and local tax deductions enacted in the Tax Cuts and Jobs Act, H.R. 1 (115), a spokesperson for Chairman Chuck Grassley (R-Iowa) said …
“Trump had invited the question by telling reporters on Wednesday that he would be open to revisiting the $10,000 cap, saying he had heard the new policy had been ‘severe’ on some taxpayers.
“But there’s little appetite for any changes in the GOP-controlled Senate, since the states most affected by the cap — California, Connecticut, New York and New Jersey, for instance — are deep blue.” Read more.
NEW HIRE FOR DEUTSCHE PROBE — Our Zachary Warmbrodt: “The House Financial Services Committee has recruited Bob Roach, a seasoned investigator of financial industry misdeeds, to help run its probe of Deutsche Bank, a source familiar with the matter said.
“The hire is a major development in the coming investigation into the German lender, which is under scrutiny for its dealings with … Trump and its role in money laundering scandals. Roach previously worked for the Senate Permanent Subcommittee on Investigations under former Sen. Carl Levin (D-Mich.) … Roach’s hiring was first reported by Bloomberg News.” Read more.
WATCHDOG ASKS FOR ROSS PROBE — Our Patrick Temple-West: “A government ethics watchdog is asking the Commerce Department’s inspector general to investigate whether Secretary Wilbur Ross violated disclosure rules concerning his holdings of BankUnited Inc. stock.
“In a letter sent to Commerce Inspector General Peggy Gustafson today, the Campaign Legal Center said Ross apparently violated the law by allegedly claiming in May 2017 to have sold his BankUnited stock. In an Oct. 31, 2018, disclosure report, Ross said he had “a mistaken belief” that an order to sell BankUnited holdings had occurred in 2017. The shares were worth up to $15,000.” Read more.
BB&T-SUNTRUST TO MERGE — Our Victoria Guida: “BB&T and SunTrust on Thursday announced they plan to join forces to become the sixth-largest retail bank in the U.S., in the wake of moves by the Federal Reserve that make it cheaper for regional lenders to grow.
“If regulators and shareholders sign off on the deal, the merger would create a bank with $442 billion in assets — smaller in size than only JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and U.S. Bank. … Congress last year passed legislation that sets $250 billion as the new asset threshold for more stringent regulations.
“But under the Fed’s proposed large bank framework, lenders with between $250 billion and $700 billion in assets would also see their requirements eased slightly, particularly when it comes to the amount of liquid assets they’re required to hold in case of an emergency.” Read more.
SCHULTZ WOULD BOOST TRUMP — Bloomberg’s Joshua Green: “Howard Schultz is unlikely to land in the White House if he makes an independent bid for the presidency, but he would probably pull enough votes away from a Democratic candidate to strengthen … Trump’s prospects for re-election.” Read more.
ECONOMISTS AGREE ANOTHER SHUTDOWN WOULD BE BAD NEWS — WSJ’s Harriet Torry: “Economists say a fresh government shutdown would take a toll on U.S. economic growth as well as business and consumer sentiment, as a deadline to reach a deal over border-wall funding approaches next week.
“Most of the private-sector economic forecasters, 58.9 percent, surveyed in recent days by The Wall Street Journal said another shutdown would have ‘somewhat’ of an impact on economic growth, while 16.1 percent said it would have a significant impact.” Read more.
DATA CENTER SMOKE CAUSES OUTAGE FOR WELLS FARGO CUSTOMERS — AP’s Ken Sweet: “Smoke at one of Wells Fargo’s data centers left some of the bank’s customers without access to online or mobile banking as well as other services Thursday. Wells Fargo said workers discovered the problem following routine maintenance.
“‘We’re working to restore all our services as soon as possible,’ said bank spokeswoman Hilary O’Byrne. The bank apologized to customers for any inconvenience caused by the system issues, and said it would reverse any Wells Fargo fees incurred as a result of the issues.” Read more.
THE END OF THE FINANCIAL CRISIS CHILL ON BIG BANK DEALS — NYT’s Michael de la Merced and Emily Flitter: “Two banks announced the industry’s biggest merger in a decade on Thursday, signaling bank executives’ growing confidence that the regulatory constraints imposed after the 2008 financial crisis have begun to loosen.
“The $28 billion deal between BB&T and SunTrust Banks would create a Southeastern juggernaut that would be the sixth-largest bank in the country — perhaps giving it the heft to compete against national behemoths like Wells Fargo, Bank of America and JPMorgan Chase.” Read more.
Waters is already calling for ‘serious scrutiny’— Bloomberg’s Hannah Levitt: “BB&T Corp.’s planned acquisition of SunTrust Banks Inc. has at least one skeptic: House Financial Services Committee Chairwoman Maxine Waters.
“The deal, creating the sixth-biggest commercial bank in the U.S., raises a lot of questions and should be put under the microscope, Waters said Thursday in an emailed statement. ‘This proposed merger between SunTrust and BB&T is a direct consequence of the deregulatory agenda that Trump and congressional Republicans have advanced,’ the California Democrat said.” Read more.
CONSUMER BORROWING TOPS $4T — AP’s Martin Crutsinger: “Consumer borrowing rose at a slower pace in December, but that still pushed total borrowing to a new record above $4 trillion for the first time. The Federal Reserve said Thursday that borrowing increased by $16.6 billion in December after a $22.4 billion advance in November. The December increase nudged the total up to a record $4.01 trillion. Borrowing had crossed the $3 trillion mark back in June 2013.” Read more.
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