MARK WARNER “EMBARRASSED” FOR THE U.S. — In the latest POLITICO Money podcast, Senator Mark Warner (D-Va.) tells me he was “embarrassed” for the United States after President Donald Trump’s performance at the G-7 meeting and suggested the president set America’s standing in the world back decades.
“I was frankly embarrassed — embarrassed for our country,” Warner said. “This is not the way America leads and the way the America has led the world through Democratic and Republican administrations since the second World War.”
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Warner, mentioned as a potential Democratic presidential candidate in 2020, also ripped into Trump’s summit with North Korean dictator Kim Jong-un, saying the president gave Kim much of what he wanted and got little to nothing in return.
“One thing we do know is that North Korea came out a real winner. North Korea, which has been aspiring to have a meeting with a U.S. president on an equal footing since the end of the Korean War, achieved its goal. In terms of the United States and the West I think the jury is out.
“The North Koreans made, I wouldn’t even call it an agreement, but they made vague promises similar to promises that have been made in prior agreements. Whether they will honor them or not, time will tell.”
ON A POTENTIAL PRESIDENTIAL RUN … Warner repeated his previous line that he does not have “the fire in the belly” at the moment to make a run. But he did not rule it out and he articulated what could easily become the framework of a run.
“What I want to do is finish this Russia investigation. I do want to make sure that we’ve got a national security agenda that protects American values … And I’d like the Democratic candidate to articulate a forward-leaning economic agenda that’s pro-growth but also that realizes we need a new social contract and frankly that modern American capitalism isn’t working for enough people.” Read more.
KUDLOW COMING BACK? — MM spoke with a senior White House official on Tuesday night who said that staff members currently expect NEC Director Larry Kudlow to come back to work after his mild heart attack. “We are all operating on the assumption that he comes back. Everyone likes him and wants him to,” this person said. Another source told MM they expected Kudlow would leave the hospital on Wednesday.
As I wrote about here, others expect a Kudlow return as well, though some of his friends worry that the job is just too stressful and exhausting for the 70 year-old. Stephen Moore, the conservative Heritage Foundation economist who worked with Kudlow on Trump’s campaign tax plan, told he expected the National Economic Council director to return to the chaotic administration in a matter of days.
“I think it’s highly likely that he’ll be back on the job in a week or so, though he’ll certainly have to change his lifestyle a little bit,” Moore said. But Moore suggested that Kudlow, who recently visited China for trade talks and Canada for the G-7 meeting, would have to cut back his travel schedule and make other adjustments to ease the physical strain of life in the administration. “The problem is Trump works 20 hours a day and it’s hard to keep up with that.”
James Pethokoukis, a friend of Kudlow’s and scholar at the American Enterprise Institute, said the rancorous nature of Trump’s White House presented unique challenges for the affable Kudlow.
“It must be very difficult for someone who I think likes for people to get along,” he told me. “He is the eternal optimist and he’s gone into an environment that is all about conflict and infighting and political machinations. For anybody of any age and any health status that must be terribly stressful.”
HERE COME THE CHINA TARIFFS — POLITICO’s Adam Behsudi: “Trump is expected to impose tariffs on Chinese goods as soon as Friday or next week, according to two sources briefed on internal deliberations, a move that is sure to further inflame tensions and spark almost immediate retaliation from Beijing.
“The administration on Friday is planning to publish a final list of Chinese goods that will take the hit. The aggressive stance calls into question the future of talks between the two trade powers, which took a friendly turn in the weeks leading up to the North Korea summit as the U.S. sought China’s help.” Read more.
AT&T GETS THUMBS UP TO BUY TIME WARNER— POLITICO’s Steven Overly: “A federal judge approved the $85 billion merger between AT&T and Time Warner on Tuesday, delivering a major blow to the Justice Department’s effort to block the mega-deal opposed by …Trump. U.S. District Judge Richard Leon, in a 172-page decision, rejected the government’s position that allowing the two companies to combine could lead to higher television bills for consumers and stifle media competitors.
“Leon further admonished the government for failing to prove any of its arguments. And he strongly encouraged the DOJ not to try to hold up the deal pending further litigation. The companies are seeking to close on the deal by June 21. ‘The parties waged an epic battle,’ the judge said from the bench. ‘The court has now spoken. … The defendants have won.’” Read more.
THE RISKS TRUMP COMES HOME TO — President Trump is back at the White House Wednesday morning and as the buzz from his largely inconclusive Kim summit fades he will move back toward trade battles with China and other countries that could threaten the economy and the GOP’s fortunes in 2018. I explore this more here with POLITICO’s Christopher Cadelago.
“His bellicose strategy on trade, however, presents significant economic perils for the president and his party heading into the elections, with fewer opportunities to pass the buck. Economists warn that the biggest risk to an otherwise strong U.S. economy is a Trump-induced global trade war that could see the collapse of the North American Free Trade agreement, a tariff battle on automobiles with the European Union and a series of escalating trade levies with China that could drive up consumer prices and anger voters.
“While a near-term recession seems remote, a surprising slowdown in the global and U.S. economy is probably more likely in the balance of this year than most appreciate,” Jim Paulsen, chief investment strategist at The Leuthold Group wrote in a note to clients this week. …
“A NAFTA collapse has the potential to directly slow down the U.S. economy when it is finally having a nice, sustained period of faster growth for the first time since the Great Recession,” said Bodhi Ganguli, lead economist at Dun & Bradstreet.”
HERE COMES THE FED — Wednesday is also Fed Day with the central bank expected to announce another quarter point rate hike. But as POLITICO’s Victoria Guida reports here, they face a huge wild card.
“As the Federal Reserve strives to keep the U.S. economy on an even keel, one of its most formidable obstacles is another policymaker: … Trump. Trump is waging a trade war on multiple fronts, which could raise prices for American companies and consumers and slow economic growth.
“It has already put a dent in business confidence in the economy, according to a survey of the nation’s top CEOs. And if that becomes a drag on growth, the Fed could slow down its campaign of interest rate hikes. But Trump’s pro-growth policies also present risks: New tax cuts and government spending could kick the healthy economy into overdrive, requiring the Fed to raise rates more quickly, potentially choking the near-record-long expansion.”
NAVARRO WALKS IT BACK — POLITICO’s Megan Cassella reports here on a rarity from Trump World, an actual apology! “White House trade adviser Peter Navarro Tuesday walked back his comments over the weekend saying that there was a ‘special place in hell’ for Canadian Prime Minister Justin Trudeau, acknowledging that his language was ‘inappropriate.’ ‘Let me correct a mistake I made,’ Navarro said at a conference in Washington hosted by The Wall Street Journal.
“‘My mission was to send a strong signal of strength,’ he said, according to the Journal. ‘The problem is that in conveying that message I used language that was inappropriate. … In conveying that message I used language that was inappropriate and basically lost the power of that message,” he said, according to the Journal. ‘I own that, that was my mistake, my words.’”
GOOD WEDNESDAY MORNING — Wednesday? Are you kidding me? It’s only Wednesday? C’mon man. Email me on email@example.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on firstname.lastname@example.org and follow her on Twitter @AubreeEWeaver.
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DRIVING THE DAY — President Trump gets back to the White House around 6:00 a.m. … Senate Environment and Public Works Committee has a hearing at 10:00 a.m. on innovation in infrastructure … FOMC statement at 2:00 p.m. expected to include a quarter point rate hike and retain the current language about the future path of rates … Fed Chair Powell in his 2:30 p.m. news conference also expected to stick to the script on hikes though he will face questions about Trump and trade.
ALSO TODAY — The “We The People” summit in DC at 8:30 a.m. will feature over a dozen progressive groups and Sens. Booker, Gillibrand, Harris, Sanders and Warren. More info.
THE BIG SWITCH FROM PASS-THROUGHS — Via a new report from the Penn Wharton Budget Model: “The recent Tax Cuts and Jobs Act (TCJA) will cause 235,780 U.S. business owners—77 percent of whom have incomes of at least $500,000—to switch from pass-through entity owners to C-corporations, primarily to take advantage of sheltering their income from tax by converting to C-corporations.
“The biggest switchers include doctors, lawyers and investors, especially if owners can afford to defer receipt of business income to a later year. Other business owners, who are qualified to use the 20 percent deduction for pass-through business income, including painters, plumbers, and printers, are more likely to remain as pass-through entities.”
TRUMP’S SHIFTING NORTH KOREA TIMETABLE — POLITICO’s Annie Karni and Eliana Johnson: “Trump spent over an hour answering questions from reporters in Singapore after his historic handshake with North Korean leader Kim Jong Un. But when it came to offering any sort of timeline for the denuclearization of the Korean Peninsula – or anything else – he left himself plenty of exit chutes.
“Kim will begin dismantling his nuclear arsenal ‘very quickly,’ Trump said vaguely. Throughout the press conference, however, he even hedged when it came to offering any definition of his concepts of ‘quickly’ or ‘long.’ Trump said he wants to withdraw the American troops currently stationed in South Korea. When, exactly, will that be?
‘At some point…I want to get our soldiers out,’ he said. ‘At some point, I hope it will be, but not right now.’” Read more.
HOUSE TO VOTE ON IMMIGRATON BILLS — POLITICO’s Rachael Bade, John Bresnahan, and Heather Caygle: “House Republicans will vote next week on two immigration bills to address the plight of Dreamers who face possible deportation, Speaker Paul Ryan’s office announced late Tuesday. The floor votes will effectively stop an immigration discharge petition being advocated by moderate Republicans and Democrats.
“Moderates do not appear to have the 218 signatures needed to circumvent leadership and force a vote on their own bipartisan bills. One of the proposals the House will take up is a conservative measure drafted by Judiciary Committee Chairman Bob Goodlatte (R-Va.). The other is a compromise package still being assembled by Ryan and other party leaders in consultation with moderates and conservative Republicans.” Read more.
STOCKS (MOSTLY) UP AFTER SUMMIT — AP’s Ken Sweet: “Stocks mostly rose in a quiet Tuesday session, as investors reacted calmly to the outcome of a meeting between President Donald Trump and North Korean leader Kim Jong Un, and turned their attentions to this week’s trio of central bank meetings.
“The Standard & Poor’s 500 index rose 4.85 points, or 0.2 percent, to 2,786.85, closing at its highest level since February 1. The Nasdaq composite added 43.87 points, or 0.6 percent, to 7,703.79 and the Dow Jones industrial average fell 1.58 points, or less than 0.1 percent, to 25,320.73. The Russell 2000, an index that makes up mostly small companies, rose 7.62 points, or 0.5 percent, to 1,682.30. Both the Russell and the Nasdaq set new record highs.” Read more.
ZTE SHARES TO RESUME TRADING — WSJ’s Dan Strumpf: “Shares of ZTE Corp. are set to resume trading on Wednesday following a nearly two-month suspension, after a fresh deal with U.S. authorities to keep the Chinese telecom giant in business.
“ZTE said it filed paperwork with the Hong Kong stock exchange to resume trading in its shares there starting at 9 a.m. on Wednesday. Trading in ZTE shares has been halted since April 17, just days after the U.S. Commerce Department issued an order banning American firms from selling to the company. The order forced ZTE to effectively close for business.” Read more.
BITCOIN HITS KEEP COMING — Bloomberg’s Janine Wolf and Olga Kharif: “Bitcoin tumbled to its lowest level since February as the meltdown in the world’s largest digital currency accelerated, renewing concern about the long-term viability of the much hyped alternative to traditional currencies.
“The price of the digital coin fell as much as 4.6 percent Tuesday to $6,450.01, bringing the slide for the year to more than 50 percent. It’s down from a record high of $19,511 reached in December, the culmination of the more than 1,400 percent surge seen in 2017 as Bitcoin burst on to the mainstream.” Read more.
TOP NEW YORK COURT NARROWS MARTIN ACT — Reuters’ Jonathan Stempel: “New York’s highest court on Tuesday curbed the state attorney general’s ability to fight fraud on Wall Street, awarding a victory to Credit Suisse Group AG as it tries to end an $11 billion lawsuit over risky mortgage securities.
“By a 4-1 vote, the state Court of Appeals said New York’s top law enforcement office has just three years to bring claims under the Martin Act, a 1921 law granting that office broad power to pursue civil and criminal cases over securities fraud without having to prove intent to defraud.” Read more.
INVESTORS AREN’T EASILY SPOOKED — NYT’s Peter Eavis: “President Trump’s policies are straining the international trading system that for decades has helped corporate America reap increasing profits. So why is the stock market moving higher, while relations between the United States and its largest trading partners are deteriorating? …
“The calm makes some sense. Investors think that trade skirmishes could be outweighed by two major reasons to be bullish. First, economic growth in the United States, which has been relatively strong for some time, may now pick up even more. … Second, when Wall Street analysts do drill down to try to discern the impact of specific tariffs on companies, their conclusions are not that worrisome.“ Read more.
NEW ON THE PODS — Nasdaq CEO Adena Friedman chats with former SEC Chair Mary Shapiro and talks about convincing the Obama administration not to shut down her agency.
YELLEN JOINS EQUITABLE GROWTH STEERING COMMITTEE — Per release out this a.m. : “The Washington Center for Equitable Growth announced today that former Federal Reserve chair and Council of Economic Advisers chair Janet L. Yellen has joined the organization’s Steering Committee. …
“The Washington Center for Equitable Growth is a non-profit research and grantmaking organization dedicated to advancing evidence-backed ideas and policies that promote strong, stable, and broad-based economic growth.”
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