by Zero Hedge - January 24th, 2017 8:30 am
After months of threatening to levy a 35% border tax a cars imported from Mexico, Trump will sit down with the CEO’s of the Big 3 domestic auto manufacturers this morning to discuss ideas on how to keep manufacturing jobs in the U.S. Trump sent the following tweet previewing the meeting saying he wants “plants to be built here for cars sold here!”
Will be meeting at 9:00 with top automobile executives concerning jobs in America. I want new plants to be built here for cars sold here!
— Donald J. Trump (@realDonaldTrump) January 24, 2017
We suspect the meeting will include a little tit-for-tat with auto executives seeking to cut onerous Obama regulations including the fuel efficiency standard he signed into law back in 2011 requiring OEM fleets to have an average 54.5 mpg fuel economy rating by 2025. Per a statement from Sean Spicer, the White House will be looking for any and all ideas from the Big 3 CEO’s on how to keep jobs in the U.S. Per Reuters:
It will be the first time the CEOs of the big three automakers meet jointly with a U.S. president since a July 2011 session with then-president Barack Obama to tout a deal to nearly double fuel efficiency standards to 54.5 miles per gallon by 2025. Fiat Chrysler is the Italian-American parent of the former Michigan-based Chrysler.
White House spokesman Sean Spicer on Monday said Trump “looks forward to hearing their ideas about how we can work together to bring more jobs back to this industry.”
Of course, this meeting with auto execs come after months of tweet storms from the President which sent a very clear message to businesses looking to offshore manufacturing operations that imports would be hit with a massive 35% tariff. Here is a December 4th tweet storm from the President-elect on the topic:
The U.S. is going to substantialy reduce taxes and regulations on businesses, but any business that leaves our country for another country,
— Donald J. Trump (@realDonaldTrump) December 4, 2016
fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. ……
by Zero Hedge - January 24th, 2017 8:16 am
Senate Democrats are set to unveil a $1 trillion infrastructure plan and offer President Donald Trump their support if he backs it, the NYT reports.
The plan includes $180 billion to rail and bus systems, $65 billion to ports, airports and waterways, $110 billion for water and sewer systems, $100 billion for energy infrastructure, and $20 billion for public and tribal lands.
Cited by the Times, Chuck Schumer said “our urban and rural communities have their own unique set of infrastructure priorities, and this proposal would provide funding to address those needed upgrades that go beyond the traditional road and bridge repair.” The Senate Democrat leader adds that “We’re asking President Trump to work with us to make it a reality/”
As part of his agenda, Trump has promised to unveil an ambitious infrastructure package during the first 100 days of his presidency. “We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation,” he vowed in his Inaugural Address.
One of Trump’s top advisers said Monday, however, that the president’s plan may run into roadblocks in the Republican-led Congress.
“He has to come up with a financing plan, and I think there’s going to be a little bit of a tug of war between the conservatives in the Republican party who are concerned about deficits and the president who’s concerned about jobs,” Richard LeFrak said on CNBC’s “Squawk Box.” “I think he will prevail, ultimately, because he wants to put people to work.”
Republicans resisted President Barack Obama’s push for an infrastructure “surge” for eight years, arguing that the federal government couldn’t afford it and that state and local governments should shoulder more responsibility for improvements. However, now that Trump “has taken up the Democratic cause”, they may find it more problematic.
Meanwhile, as the NYT adds, the first major test of Mr. Trump and his sway over congressional Republicans will come Tuesday morning at 10 a.m. That is when the Congressional Budget Office, the nonpartisan Capitol Hill scorekeeper, will update its budget outlook. The office is expected to say that the federal deficit, after years of decline, will start swelling again this year and will pick up steam over the next decade if policies aren’t changed to curb the
by Zero Hedge - January 24th, 2017 8:00 am
“Day two” on the job for Donald Trump is shaping up as another busy day for both the White House and Capitol Hill. Below is a preview of all the scheduled events of interest today in Washington.
- 9am: President Trump meets with CEOs of the U.S. ‘Big Three’ automakers: GM, Ford, Fiat Chrysler
- 10am: Trump meets with Chief of Staff Reince Priebus
- 11am: Trump signs executive order; White House schedule doesn’t provide details on what order may entail
- 1pm: Trump speaks with Indian Prime Minister Narendra Modi
- 1:30pm: Trump meets with CIA Director Mike Pompeo
- 3pm: Trump meets with Senate leaders
- 3:45pm: Trump meets with Senate Majority Leader Mitch McConnell
- 10am: House convenes
- 10:30am: House Ways and Means Cmte Chairman Kevin Brady details panel’s 2017 agenda; U.S. Chamber of Commerce, 1615 H St. NW
- Noon: House considers H.R.7, which would amend Affordable Care Act to bar expenditure of federal money to purchase insurance that covers abortion services
- 9:30am: Senate Armed Services Cmte holds hearing on defense budget for FY18 and onward; 216 Hart Senate Office Building
- 10am: Senate Judiciary Cmte votes on nomination of Sen. Jeff Sessions for attorney general; 226 Dirksen Senate Office Building
- 10am: Senate Banking, Housing and Urban Affairs Cmte votes on nomination of Ben Carson for HUD secretary; 538 Dirksen Senate Office Building
- 10am: Senate Finance Cmte holds hearing on nomination of Rep. Tom Price for HHS secretary; 215 Dirksen Senate Office Building
- 10am: Senate Commerce, Science and Transportation Cmte to vote on nominations of Elaine Chao for Transportation secretary and Wilbur Ross for Commerce secretary; 253 Russell Senate Office Building
- 10:30am: Senate Budget Cmte holds hearing on nomination of Rep. Mick Mulvaney for OMB director; 608 Dirksen Senate Office Building
- Related: Trump Budget Director to Say National Debt Needs Action Quick
- 10:30am: Senate Small Business Cmte holds hearing on nomination of Linda McMahon for SBA administrator; 428-A Russell Senate Office Building
- 12:15pm: Senate Democratic Leader Chuck Schumer, other top Democratic sens. hold press conference to unveil infrastructure proposal; Senate Radio-TV Gallery
- 2:30pm: Senate Homeland Security and Governmental Affairs Cmte holds hearing Rep. Mick Mulvaney for OMB director; 342 Dirksen Senate Office Building
- Senate Health, Education, Labor and Pensions Cmte pushed confirmation vote to Tuesday, Jan. 31, for Education secretary
by Zero Hedge - January 24th, 2017 7:51 am
- Dollar steadies after stumble, sterling rides out Brexit ruling (Reuters)
- After U.S. exit, Asian nations try to save TPP trade deal (Reuters)
- U.K. Court Rules Brexit Trigger Needs Parliamentary Vote (BBG)
- Brexit plans unlikely to be slowed by Article 50 defeat (Reuters)
- Health Secretary Nominee Proposed Bill Benefiting Puerto Rico Investments (WSJ)
- How Trump Would Rework Nafta—and What Mexico, Canada Want in Return (BBG)
- Trump calls for more U.S. auto jobs, factories ahead of CEO meeting (Reuters)
- Belarus Businessman Said to Be Indirect Source on Trump Dossier? (WSJ)
- Canadian Drillers Brave Deep Freeze as Oil Patch Revives Growth (BBG)
- A $90 Billion Wave of Debt Shows Cracks in U.S. Real Estate Boom (BBG)
- China pushes back at U.S. over South China Sea (Reuters)
- This 36-Year-Old May Be Running America (BBG)
- China’s Efforts to Stem Capital Outflows Are Starting to Pay Off (BBG)
- Iran, Russia, Turkey say will jointly enforce Syria ceasefire (Reuters)
- Generali Jumps on Report Intesa Plans to Mount Takeover Bid (BBG)
- Bankers Cash In on Postelection Stock Rally (WSJ)
- BT Plunges After Cutting Outlook, Tripling Italy Writedown (BBG)
- After Bond Chief’s Exit, Millennium’s Englander Left Alone Again (BBG)
- Verizon Misses Profit Estimates as Holiday Promos Take Toll (BBG)
- At Wells Fargo, Bank Branches Were Tipped Off to Inspections (WSJ)
- DuPont Pushes Back Expected Closing of Dow Merger to First Half (BBG)
- Goldman Hails Global Rebound as Currie Sees Commodity Demand (BBG)
Overnight Media Digest
- President Donald Trump started his first full workday at the White House focused on the economy, trade and jobs, withdrawing from the Trans-Pacific Partnership (TPP) agreement and promising to tax firms that move operations overseas. http://on.wsj.com/2klQzOb
- A federal judge Monday blocked the proposed merger of health insurers Aetna and Humana on antitrust grounds, a potentially fatal legal blow to the $34 billion deal. http://on.wsj.com/2klXsis
- The Senate confirmed Representative Mike Pompeo of Kansas as director of the Central Intelligence Agency, putting a Republican lawmaker in charge of the nation’s top spy agency. http://on.wsj.com/2km04wI
by Zero Hedge - January 24th, 2017 7:22 am
Sparking his latest confrontation with the media, mostly the NYT, CNN and WaPo, overnight president Trump told members of Congress on Monday in a private reception that he lost the popular vote in the election because millions of undocumented immigrants cast votes for his opponent.
Trump’s claim, which much of the mainstream press has determined to be “fake news” despite reported evidence to the contrary, was first made by Trump before his election, and drew widespread criticism by the press overnight.
According to a Bloomberg report, Trump told Republican and Democratic congressional leaders at the White House reception that he would have won the popular vote had three to five million undocumented immigrants not cast ballots for Democrat Hillary Clinton, three people familiar with the remark said. Two of the people said Trump used the term “illegals” to describe the alleged immigrant voters. As a reminder, Hillary Clinton won the national popular vote by about 2.9 million ballots.
A White House spokesman, Marc Short, told Bloomberg that the administration would not comment because the reception was off the record. The White House press secretary, Sean Spicer, later said that he would “look into” the report.
Naturally, it is illegal for anyone but citizens to vote in most U.S. elections. Various reports during and after the election, especially during the infamous Jill Stein recount, found irregularities in voting which suggested that illegal voters were indeed allowed to cast votes, however not to the extent claimed by Trump, who suggested that at least 3 million undocumented immigrants voted in the 2016 election. There were sporadic reports of people voting illegally, as there are in nearly all elections, but federal and state officials of both parties said that the election’s integrity was overwhelmingly secure.
Trump first asserted that illegal ballots had tilted the popular vote in Clinton’s favor in a Nov. 27 tweet. “In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally,” he said. He provided no evidence for the claim. Elections officials in California, New Hampshire and Virginia said it was baseless.
Subsequently Trump said he would have won the popular vote had he campaigned for the most votes in the election, rather than focusing on
by Zero Hedge - January 24th, 2017 7:04 am
On the surface, key Dow component Johnson & Johnson reported strong earnings, with EPS of $1.58 coming stronger than the $1.56 consensus expectation, despite revenue of $1.81BN missing consensus of $18.28BN. Among the key notables in the earnings report was the company’s announcement it was in a process to evaluate potential strategic options for the Johnson & Johnson Diabetes Care Companies, specifically LifeScan, Animas, and Calibra. Such option “may include the formation of operating partnerships, joint ventures or strategic alliances, a sale of the businesses.”
However, the reason why the stock was over 2% lower in the pre-market, and pressing the entire Dow average as a result, is because Dow took a page out of the IBM playbook, when it used yet another sharply reduced effective tax rate, which in Q4 dropped to 14.5%, on an adjusted basis (and 11.8% unadjusted), down from 17.7% the prior quarter. Had JNJ used its previous tax rate, it would have missed both the top and bottom line.
Additionally, Wall Street appears to be further disappointed with the company misses across virtually all key drug sale categories, as follows:
- 4Q Remicade rev. $1.62b, est. $1.64b
- 4Q Stelara rev. $879m, est. $881.7m
- 4Q Zytiga rev. $519m, est. $588m
- 4Q Imbruvica rev. $346m, est. $377m
- 4Q Invokana rev. $371m, est. $387.7m
- 4Q Simponi rev. $426m, est. $445m
- 4Q Olysio rev. $10m, est. $33m (1 est.)
- 4Q Xarelto rev. $598m, est. $559.7m
Completing the disappointing trifecta was JNJ’s outlook, which came in below the Wall Street consensus estimate: the company now sees FY17 sales $74.1b to $74.8b, and FY adj. EPS $6.93 to $7.08.
by Zero Hedge - January 24th, 2017 6:50 am
US equity futures were flat, European stocks rose and Asia was mixed after the dollar posted a modest rebound overnight despite Mnuchin’s “strong dollar” comments, while oil was flat and gold fell, as investors focused on President Donald Trump’s plans to boost growth. The pound fell after a U.K. court ruled that Parliament must vote on triggering Brexit.
The dollar struggled in Asia on Tuesday as U.S. President Donald Trump’s focus on protectionism ahead of fiscal stimulus fueled suspicions his administration might be content to gain a competitive advantage through a weaker currency. However, early European trading saw modest gains in the USD, which rose to 113.4 in the USDJPY after dropping as low as 112.52, while the EURUSD declined to 1.73 after rising as high as 1.77 in Asian trading. The talk of trade wars came even as more data pointed to a welcome revival in activity worldwide. A survey of Japanese manufacturing out Tuesday showed the fastest expansion in almost three years as export orders surged. Indeed, sentiment took an early knock when Mnuchin told senators that he would work to combat currency manipulation but would not give a clear answer on whether he views China as manipulating its yuan.
Still, the recent euphoria surrounding the Trumpflation trade now appears largely gone: “It’s interesting that markets did not respond positively to a reaffirmation of lower taxes and looser regulation, reinforcing the impression that all the good news is discounted for now,” wrote analysts at ANZ in a note. “As week one in office gets underway, there is a growing sense of scepticism, not helped by the tone of Friday’s inaugural address and subsequent spat with the media.”
Doubts about exactly how much fiscal stimulus might be forthcoming helped Treasuries rally. Yields on 10-year notes eased to 2.39 percent, having enjoyed the steepest single-day drop since Jan. 5 on Monday. “The driver of a shift higher will be optimism that President Trump’s policies deliver more growth,” Juckes said. “If he starts tweeting about fiscal policy instead of trade policy maybe the bond bears can come out of hibernation again.” As the chart below shows, the dollar continues to trade in lockstep with 10Y TSY yields.
As traders arrive at their desks in the US, the greenback has managed to advance against most major
by Zero Hedge - January 24th, 2017 6:19 am
With Wall Street consensus expecting the Turkish central bank to hike its benchmark repo rate by 50bps (in two cases by as much as 75 bps and five analysts were expecting as much as a 100 bps increase) in hopes of arresting the recent record collapse in the Turkish Lira, this morning the central bank again proved it has become a political appendage of Erdogan, who has repeatedly stated he is against any rate hikes, when the central bank kept its overnight benchmark repo rate unchanged at 8%, even as it raised its less relevant overnight lending rate by the expected 75 basis points.
The latest breakdown of Turkey’s rates:
- Benchmark repo rate: 8%
- Overnight lending rate: 9.2%
- Overnight borrowing rate: 7.25%
The disappointment was particularly acute following a November decision to hike rates by 50 bps, the first such increase in more than two years.
As a result, the lira plunged nearly 2% with USD/TRY surging as much as 1.9% to session high of 3.8284.
In its justification, the central bank said that it can deliver further tightening if needed, noting “inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.”
“Moreover, necessary liquidity measures will be taken in case of unhealthy pricing behavior in the foreign exchange market that cannot be justified by economic fundamentals.”
“Recent data indicate partial recovery in economic activity, which is “expected to continue at a moderate pace. Yet, excessive fluctuations in exchange rates since the previous meeting have increased the upside risks regarding the inflation outlook”
It concluded that “significant rise in inflation is expected to continue in the short term due to lagged pass-through effects and the volatility in food prices.”
In other words, expect Turkish inflation to soar in the near future as the currency crash accelerates, all the while Erdogan blames some vast foreign conspiracy to overthrow him.
by Zero Hedge - January 24th, 2017 5:54 am
In a blow to Theresa May’s ambitions to implement a “clean Brexit”, on Tuesday morning UK’s Supreme Court ruled the UK Prime Minister can’t start the Brexit process without approval from Parliament, a decision that could potentially complicate her path toward a clear break from the European Union. Eight justices voted against the government and three voted in favor of it, in a decision that was widely expected.
The case had been brought by a group of British citizens opposed to Brexit with the help of some of the U.K.’s top constitutional lawyers. Spearheading the legal challenge were British businesswoman Gina Miller and hairdresser Deir Dos Santos. Grahame Pigney, a France-based expatriate who used crowdfunding from more than 4,000 people to pay for lawyers, joined the suit as a co-party
The government responded that the ruling wouldn’t affect May’s plans to trigger talks to leave the EU by the end of March and the opposition Labour Party said after the judgment it wouldn’t seek to stop Brexit from happening. But Labour said it would try to amend any bill introduced by Mrs. May to kick off the Brexit process, possibly influencing how the U.K.’s new relationship with the EU will look.
According to the WSJ, while a majority of lawmakers voted to stay in the EU, many have said they won’t seek to block Article 50, which formally starts Britain’s exit from the EU, given the popular vote, in which 52% voted to leave. “The British people voted to leave the EU, and the government will deliver on their verdict—triggering Article 50, as planned, by the end of March,” a U.K. government spokesman said. “Today’s ruling does nothing to change that.”
Lord David Neuberger said any change in the law to put Brexit into effect must be made by an act of Parliament. “To proceed otherwise would be a breach of settled constitutional principles stretching back many centuries,” he said. He said the Supreme Court justices were ruling on the process of legally bringing the result into effect, and that the ruling had nothing to do with whether the U.K. should exit from the EU or the timetable.
While the outcome was not surprising, the case has been one of the most politically charged in decades. After the High Court ruled against the government
Trump Wins The Unions: Teamsters Praise TPP Withdrawal, Labor Chiefs Describe “Incredible” Meeting With Trump
by Zero Hedge - January 24th, 2017 5:35 am
Shortly after Donald Trump made good on one of his core campaign promises on Monday morning by signing an executive order formally withdrawing the U.S. from the Trans-Pacific Partnership free-trade deal, Trump told labor union leaders that he would renegotiate the North American Free Trade Agreement “at the appropriate time.”
The remarks came at the start of a meeting at the White House with leaders of construction, carpenters, plumbers and sheet metal unions, during which Trump pledged to stop trade deals that harmed American workers.
According to the White House, participants included North America’s Building Trades Unions President Sean McGarvey, Laborers’ International Union of North America President Terry O’Sullivan, SMART sheet metal workers’ union President Joseph Sellers, United Brotherhood of Carpenters President Doug McCarron and Mark McManus, president of the United Association that represents plumbers, pipefitters, welders and others. The union meeting also included several local union officials and follows a gathering of 12 chief executives of large companies at the White House to discuss revitalizing the U.S. manufacturing economy.
“We’re gonna get ‘em working again, right?” says Pres Trump, hosting photo op with union leaders in the Oval.. “Great meeting,” he said. pic.twitter.com/aCq5ZLGpfC
— Mark Knoller (@markknoller) January 23, 2017
“This is a group that I know well,” Trump said referring to the union bosses, adding “we’re going to put a lot of people back to work” and “stop the ridiculous trade deals.”
When Trump said the administration “just officially terminated TPP,” it prompted applause from the labor chiefs (and this time it certainly wasn’t by paid members of the studio audience), who later described their meeting with Trump as “incredible.”
Union leaders speak to WH reporters and described meeting with President Trump as “incredible” pic.twitter.com/7lSJW0UiJP
— shannon A (@shogustus) January 23, 2017
Trump also added that he doesn’t blame former President Obama for decades of bad trade deals, which – at least mathematically – makes sense.
But even more notable, was the dramatic pivot by the US labor unions, historically stalwart democrat supporters, who have suddenly emerged as big supporters of Trump policies, and perhaps no one more so than AFL-CIO President Rich Trumka who said TPP withdrawal is “a good first step toward building trade policies that benefit workers.”