Trump goes to war with the Fed

President Donald Trump praised Jerome Powell as “strong, committed and smart” last year when he nominated the former banker to lead the Federal Reserve. Now, the president apparently thinks Powell is a dangerous lunatic.

In an extraordinary series of attacks this week, Trump called the Fed “crazy,” “loco” and said it’s “gone wild” with interest-rate hikes. And he blamed the central bank, in part, for Wednesday’s sharp decline in the stock market.

The president kept up the assault on Thursday. “I think the Fed is out of control,” he told reporters as stocks gyrated after Wednesday‘s tumble of more than 3 percent in the Dow Jones Industrial Average.

“I think I know about it better than they do,” Trump said. He expressed disappointment with Powell but said he would not fire him, something he lacks the authority to do anyway barring extreme circumstances.

In the process of attacking the Fed Continue reading “Trump goes to war with the Fed”

Trump goes to war with the Fed

President Donald Trump praised Jerome Powell as “strong, committed and smart” last year when he nominated the former banker to lead the Federal Reserve. Now, the president apparently thinks Powell is a dangerous lunatic.

In an extraordinary series of attacks this week, Trump called the Fed “crazy,” “loco” and said it’s “gone wild” with interest-rate hikes. And he blamed the central bank, in part, for Wednesday’s sharp decline in the stock market.

The president kept up the assault on Thursday. “I think the Fed is out of control,” he told reporters as stocks gyrated after Wednesday‘s tumble of more than 3 percent in the Dow Jones Industrial Average.

“I think I know about it better than they do,” Trump said. He expressed disappointment with Powell but said he would not fire him, something he lacks the authority to do anyway barring extreme circumstances.

In the process of attacking the Fed Continue reading “Trump goes to war with the Fed”

The new NAFTA isn’t done yet

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The newly drafted trade agreement between the United States, Mexico and Canada still has multiple details that need to be worked out and includes a provision aimed directly at China that has angered leadership in Beijing.

On the latest POLITICO Money podcast, POLITICO Pro Canada’s Alexander Panetta breaks down exactly what is in the revamped NAFTA deal, known as the “U.S. Mexico Canada Agreement,” and the legislative and political challenges it still faces.

South China Morning Post U.S. correspondent Owen Churchill also explains how Beijing is reacting to the USMCA and where the trade war between the U.S. and China is headed next.

Dina Powell is top pick for U.N. ambassador, sources say

NEW YORK — Dina Powell, the Goldman Sachs executive and former senior White House official, is the top candidate to replace outgoing United Nations Ambassador Nikki Haley, two people familiar with the matter said Tuesday.

Powell, who returned to Goldman in a senior role after leaving her job as President Donald Trump’s deputy national security adviser, is said to be strongly considering the job but also weighing family concerns. Powell already lives in New York, where the UN is based, but has young children and left the administration in part to spend more time with family. She is also said to be happy in her job at Goldman.

Born in Egypt and raised in the United States, Powell is well liked by Trump as well as the president’s daughter Ivanka and son-in-law Jared Kushner. But she is already coming under criticism from some conservatives on social media who maintain that Continue reading “Dina Powell is top pick for U.N. ambassador, sources say”

Risks behind the new NAFTA

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The new trade deal between the United States, Mexico and Canada improves on NAFTA in many ways but presents potential risks to automakers, senior White House economic adviser Larry Kudlow acknowledged in an interview featured on this week’s POLITICO Money podcast.

“I know there is some grousing around,” Kudlow said Tuesday of concerns raised in the auto industry that the increased requirements for North American content in cars and trucks could drive up prices or force production overseas. “The cost issues, let’s look at it, I’ll say a maybe. It’s very important to the president though.”

Kudlow, director of the National Economic Council, added that content and wage provisions in the auto section of the new agreement were a “must” for President Donald Trump. “We didn’t want to lose any more jobs. This was an America Continue reading “Risks behind the new NAFTA”

Trump’s trade wars start biting GOP ahead of midterms

President Donald Trump’s trade battles are already triggering economic warnings — and rising danger for Republicans just ahead of the midterm elections.

As fresh U.S. tariffs on $200 billion in Chinese imports take effect Monday, surveys show consumers growing increasingly worried about higher prices this fall. Giant retailers such as Walmart are warning of price increases for manufactured goods. And smaller businesses in swing states and districts from Washington state to Iowa to Tennessee are complaining bitterly about big hits to their exports.

The economic fallout from Trump’s skirmishes with China, Canada, Mexico and the European Union risk making an already tough cycle for Republicans even more brutal, giving Democrats a chance to peel away voters linked to influential industries — like Washington state cherry farmers and Tennessee bourbon makers — who have long supported business-friendly Republicans.

“Where you have real-world effects of the trade war, you see people’s Continue reading “Trump’s trade wars start biting GOP ahead of midterms”

Trump set to tap former top Fed aide to central bank’s board

President Donald Trump is expected to nominate Nellie Liang, a 31-year veteran of the Federal Reserve staff, to an open seat on the central bank’s board, according to a person familiar with the matter.

Liang, a PhD economist and reportedly a registered Democrat, was the first head of the Fed’s office of financial stability from 2010 to early 2017. She gave key input into the development of the central bank’s post-crisis regulations and conducted extensive research into the interaction between interest rate policy and financial stability.

Her selection comes at a time when the Fed is watching closely to see whether an extensive period of low interest rates has led to a buildup in risks in the financial system.

When Liang is nominated, Trump will have put forward candidates for all the vacancies on the Fed’s seven-member board. Richard Clarida was sworn in this week as vice chairman, and Michelle Continue reading “Trump set to tap former top Fed aide to central bank’s board”

Why Jamie Dimon can never be president

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Anger from the financial crisis runs so deep in America that a banker like JPMorgan Chase CEO Jamie Dimon has no real shot at becoming president, financial journalist Andrew Ross Sorkin said on the latest edition of the POLITICO Money podcast.

Sorkin, a New York Times columnist and CNBC “Squawk Box” co-anchor, said the intense negative reaction on the left to the idea of Dimon running for president shows how the emotional impact of the crisis has barely eased over the last decade.

“I was surprised at how much vitriol there is about the financial crisis 10 years later,” he said of the reaction to Dimon saying last week that he could beat President Donald Trump. “The amount of anger was so palpable and I think that to this very day it pervades the entire conversation.” Continue reading “Why Jamie Dimon can never be president”

Podcast: Where Trump could take NAFTA

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As talks between the U.S. and Canada over a new North American Free Trade Agreement head into crunch time in Washington, the latest POLITICO Money podcast takes you inside the room for the high-stakes talks.

POLITICO trade reporter Doug Palmer discusses all the key issues on the table, from Canada’s support for dairy farmers to dispute resolution and cultural content protections.

The podcast also assesses how multiple scenarios could play out including the White House moving on with a bilateral deal with Mexico, a new NAFTA with all three countries as well as a possible confrontation between Trump and Congress if President Donald Trump decides to junk NAFTA altogether, as he has threatened in the past.

The discussion also covers just how frosty things have gotten between the White House and Canadian Foreign Affairs Minister Chrystia Continue reading “Podcast: Where Trump could take NAFTA”

Trump channels Richard Nixon on the Fed

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President Donald Trump has repeatedly attacked the decisions of Federal Reserve Chairman Jerome Powell in recent weeks, arguing he would like more “help” from the central bank chairman in keeping interest rates low and saying he was “not thrilled” with the Fed’s policies.

In the latest POLITICO Money podcast, POLITICO’s Victoria Guida talks about the potential impact of Trump criticizing his own pick for Fed chairman. So far, Powell and his colleagues have shown no inclination to bend to Trump’s will, signaling they will continue their path of gradual rate hikes as the economy improves.

The podcast also includes tape of then-President Richard Nixon calling his Fed chairman, Arthur Burns, and pressuring him to keep rates low. In Nixon’s case, Burns complied, setting the stage for runaway inflation that forced a rapid series of rate increases Continue reading “Trump channels Richard Nixon on the Fed”

No, impeachment will not crash the stock market

NEW YORK— The longest bull market run in American history could get killed off by a financial collapse in Turkey, a policy mistake by the Federal Reserve or a plain old economic recession.

It will probably not be slain by an impeachment of President Donald Trump.

That’s the consensus view of Wall Street traders and money managers, who say that while an ugly impeachment fight might cause temporary volatility, markets could easily survive an impeachment and even the unlikely event that Trump is removed from office in a Senate trial.

In fact, Wall Street pros often talk about a potential relief rally if Trump departs the White House early.

The underlying economy would remain strong and a hypothetical President Mike Pence would likely continue Trump’s policy of low taxes and fewer regulations without all the wild tweeting and investigations and persistent trade wars.

“I’m not sure the market would be Continue reading “No, impeachment will not crash the stock market”

How infrastructure week became a punchline

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President Donald Trump came into office pledging to update America’s rotting infrastructure with huge spending on big new projects. It hasn’t happened.

In this week’s POLITICO Money podcast, POLITICO Magazine’s Michael Grunwald talks about his piece on Trump turning cold on the Gateway project, an ambitious $30 billion effort to build a new rail tunnel from New Jersey to Manhattan and to update other pieces of a critical leg in the heavily trafficked Northeast Corridor that are in desperate need of repair.

Federal funding for Gateway is now in doubt. And the entire American approach to infrastructure — once a source of bipartisan deal-making — is now completely polarized. The result could be that nothing happens on infrastructure until catastrophe hits.

Kudlow: Economy will help GOP keep its grip on House

NEW YORK — Larry Kudlow, President Donald Trump’s top economic adviser, says Republicans will hold the House this fall and the economy will be a big reason why.

“These are very good times and the midterms will be a report card on that,” Kudlow, the director of the National Economic Council, said in an interview, dismissing concerns that relatively flat wages and a soaring deficit will cut into enthusiasm for the economy.

“The confidence indices are telling a very important story, and POTUS is polling in the low to mid fifties on the economy,” Kudlow said just before returning to the White House after some time off. “The great blue wall has crashed. I think GOP will lose seats but keep the House.”

Republicans are counting on faster growth and a low jobless rate to help them hold off expected Democratic gains in swing districts where Trump polls poorly. Continue reading “Kudlow: Economy will help GOP keep its grip on House”

How a T-shirt explains Donald Trump’s trade war

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Scott Lincicome, a veteran trade lawyer and adjunct scholar at the free-market Cato Institute, was scrolling through Twitter one Saturday morning when he saw a photo of a woman at a Donald Trump rally wearing a T-shirt that said something like “Tariffs are great!”

Then he had an inspiration. He would create his own shirt highlighting how difficult it is for opponents of protectionist trade policy to combat these kinds of easy slogans.

The shirt, which quickly went viral and has appeared on NBC, Bloomberg and other TV networks reads: “Tariffs not only impose immense economic costs but also fail to achieve their primary policy aims and foster political dysfunction along the way.” All proceeds from sales of the shirts go toward financial education programs.

On the latest episode of the POLITICO Money podcast, Continue reading “How a T-shirt explains Donald Trump’s trade war”

Why Trump’s economy could be downhill from here

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President Donald Trump has already hit his high-water mark on the economy and probably faces a significant slowdown heading into his reelection campaign, according to a leading economist.

“It’s probably as good as it gets,” Megan Greene, chief economist at Manulife said on the latest edition of the POLITICO Money podcast, regarding the robust second-quarter growth rate of 4.1 percent.

“I think Q2 is the peak,” she said. “We will probably decelerate and return to our potential GDP growth, or around our potential GDP growth, from here on out, which is going to be around 2 percent. We won’t go straight to 2 percent, it will take a while. But unless we fundamentally boost productivity growth or our labor force, I don’t see any other way of really boosting our potential GDP.”

Greene said Continue reading “Why Trump’s economy could be downhill from here”

Trump’s trade war boosts the economy — before it bites

NEW YORK — President Donald Trump is likely to get one of the best headlines of his presidency on Friday with a highly tweetable report expected to show the U.S. economy grew at its fastest rate in years in the second quarter.

But the big number risks becoming fool’s gold.

Economists warn that Trump’s trade war sped up U.S. exports in the second quarter as China and other countries rushed to snap up American soybeans and other products ahead of impending tariffs, lifting growth in ways likely to be reversed in the coming months.

And as Trump continues to argue that the strong economy and stock market offer him leeway to press his aggressive approach, his trade battles could wind up slowing an economy that is among the GOP’s strongest selling points to voters.

“We are going to see a spike in growth in the second quarter that’s Continue reading “Trump’s trade war boosts the economy — before it bites”

What Hollywood can teach us about the gig economy

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Back in the early days of Hollywood, A-list stars like Maureen O’Sullivan and Groucho Marx moved from job to job, enjoying little in the way of health care coverage or retirement savings options. They were the gig economy workers of their day.

But years of organizing efforts, including by Ronald Reagan, created the Screen Actors Guild and shifted power away from big studios and toward actors and production workers.

In the latest POLITICO Money podcast, POLITICO’s Andrew Hanna discusses his story on how early Hollywood could serve as a model for today’s gig economy workers — from Uber drivers to dog walkers — as they grapple with the same issues faced by movie stars in the 1930s.

Trump isolated in his push for tariffs on foreign cars

President Donald Trump’s threat to slap massive tariffs on imported cars and auto parts will rocket back into the spotlight this week with a high-stakes visit to the White House from European Commission President Jean-Claude Juncker, who is expected to bring with him some kind of concessions from the European Union designed make it easier on Trump to declare victory and back off.

White House officials opposed to the auto tariffs have high hopes that Juncker’s visit could head off a bruising automotive trade war, which even some of Trump’s top advisers think could be potentially disastrous, raising car prices and destabilizing a thriving industry on the eve of the midterm elections.

“There is not a lot of support for the auto tariffs internally,” one senior administration official said. “There are many people who don’t want to see it go through.” This person said U.S. Trade Representative Robert Continue reading “Trump isolated in his push for tariffs on foreign cars”

Are we really safe from the next financial crisis?

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The U.S. financial system is safer a decade after the worst financial crisis since the Great Depression. But that may be more a matter of luck and timing than anything done in response to the meltdown of 2008.

“We are safer,” Harvard economics professor Ken Rogoff said in the latest edition of the POLITICO Money podcast, recorded from a panel at the POLITICO Pro Summit. “A lot of it comes from when the whole system has been traumatized — consumers, investors, policy makers, regulators — you are less likely to have something right away afterwards. People are very nervous.”

But Rogoff said the rapid rollback of many protections in the Dodd-Frank financial reform law are unlike anything seen following previous major crises. “Usually it takes many decades before everybody says, ‘Hey, things are going Continue reading “Are we really safe from the next financial crisis?”

How Trump’s immigration crackdown could slam the U.S. economy

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The Trump administration’s immigration crackdown could severely limit American companies’ ability to hire workers in a tight labor market, economist Mark Zandi says.

“The labor market is very tight and we have a record number of open positions already, and it’s just going to get worse,” Zandi, chief economist at Moody’s Analytics, said in the latest edition of the POLITICO Money podcast.

“If the president wants to build his wall between Mexico and the United States, he’s going to have to hire Mexicans to do it because there are literally no American construction workers there to do anything other than build the homes that are going up,” Zandi said. “Immigrants are key to the workforce in every industry. Every industry is going to feel it. It’s pretty much across the board.”

The nation’s jobless rate sits Continue reading “How Trump’s immigration crackdown could slam the U.S. economy”