‘The One Thing He Brought to the Job as an Advantage Is Unraveling’
.. the president is choosing older manufacturing and mining goals instead of preparing for a future where the U.S. needs to compete in the arenas of AI, artificial intelligence, and non-fossil fuel energy sources.
.. This president is impulsive, has no specific agenda and tends to go back to moves that serve his most loyal base by acting first and then perhaps later actually making a big tack work as policy. These characteristics are reflected in wildly cowboy-like actions to expand tariffs on Chinese imports by another $100 billion.
.. That these Trump-style, disruptive actions may lead to unintended results in the stock market, among American farmers and manufacturers who depend on imported steel and aluminum and for consumer prices, well, that strikes me as something of a different order. If Mr. Art of the Deal is as much a savvy businessman as he thinks he is, he ought to be able to predict what happens when he fiddles with the levers of the U.S. economy.
.. So, my first gripe of the day is: Making unilateral policy when you don’t know where the actions will lead.
My second gripe of the day is: Where are the Republican congressional leaders? The silence, once again, speaks volumes. Where is the oversight over all this?
.. this president refuses to heed economic learning just as he rejects science in general. And he refuses to listen to advisers who simply are unable to persuade him of the likely outcomes of actions.
.. Why does Trump believe that faced with higher consumer prices on all sides, in China, America, Europe and the rest of Asia, that China will reform its ways? What they do in Beijing has been working pretty well for them. But even more, why does Trump believe suddenly that China will limit its responses to trade issues alone, that it will not reach into a more complete diplomatic, financial and strategically military response as well?
.. he has failed to share his income taxes because he wants to keep some aspect of the tax returns extremely private either because the returns show he has cheated or that he is not worth what he says he is. I realize that Trump’s negotiating style is just as much at issue as the policy he seeks to win.
.. Data show that, as this column predicted, companies are choosing to spend more money on
- debt retirement,
- stock buybacks and
- technology investments
than on job creation.
.. The very fact that the White House has been given the assignment to calm nerves should say a lot about how reckless the tariff approach is proving to be.
Morgan Stanley, Goldman Got Help From Fed on Stress Tests
Federal Reserve officials told Goldman Sachs Group Inc. GS -0.72% and Morgan StanleyMS -0.56% that they were about to flunk a portion of the annual stress tests but offered them a deal to avoid an outright fail and continue paying billions to shareholders.
.. regulators told them that to fully pass the test, they would have to cut almost in half the combined $16 billion they had hoped to pay out to shareholders
.. Fed officials gave the banks an unprecedented option: If they agreed to freeze their payouts at recent levels, they would get a “conditional non-objection” grade and avoid the black eye of failure. That meant the banks could pay out a combined $13 billion, or about $5 billion more than what they would have given back to investors if they had decided to retake the test and get a passing grade.
It also will boost a profitability measure that helps determine how much Goldman Chief Executive Lloyd Blankfein and Morgan Stanley CEO James Gorman are paid.
.. The arrangement is the first of its kind in the eight years of the Fed’s annual tests, and one of the clearest signs to date of a significant shift in the regulatory environment for banks, which have been expecting a gentler approach from Washington ever since the election of President Donald Trump.
“New refs, new rules,” consulting firm PricewaterhouseCoopers LLP wrote in a note.
This round of tests was the first graded by Trump appointee Randal Quarles, a former Wall Street lawyer and private-equity executive who last year became the Fed’s regulatory czar.
.. “This year’s stress test followed the same notification process as in past years—all firms were notified of the results and given the fixed option to reduce their capital payout plans with no negotiations,” a Fed spokesman said.
.. Fed officials said their leniency toward Goldman and Morgan Stanley was due in part to the impact of the 2017 tax law, which reduced the value of certain tax assets held by the banks and meant they entered the crisis scenario with diminished capital reserves
.. The stress tests, arguably the most visible sign of the postcrisis crackdown on Wall Street, are being changed in ways that benefit the industry. The Fed exempted three firms with less than $100 billion of assets from the test this year under the new banking law. Its treatment of Morgan Stanley and Goldman—as well as State Street Corp. , which got a pass although it also failed to clear capital requirements under the stress scenario—showed the Fed taking a more flexible approach to what had been a binary exercise.
“The Fed was very kind,” said Arthur Angulo, a managing director at Promontory Financial Group and a former Fed official. He added the Fed’s exercise of discretion on the quantitative portion of the test was “a potential slippery slope.”
.. The interim director at the Consumer Financial Protection Bureau, Mick Mulvaney, has largely stopped initiating new investigations and wants the consumer-finance regulator to be less antagonistic to the businesses it regulates.
.. If Goldman had been required to rejigger its plan until its capital ratios exceeded the Fed’s minimum, the bank would have been able to seek just over $1 billion in buybacks, instead of the $5 billion that was approved
Trump’s Potemkin Economy
According to legend, Grigory Potemkin, one of Catherine the Great’s ministers (and her lover), created a false impression of prosperity when the empress toured Ukraine.
.. the legend has become a byword for the general idea of prettifying reality to please a tyrannical ruler.
.. But Trump’s actual policy initiatives aren’t doing so well. His tax cut isn’t producing the promised surge in business investment, let alone the promised wage gains; all it has really done is lead to a lot of stock buybacks. Reflecting this reality, the tax cut is becoming less popular over time.
.. the trade war that was supposed to be “good, and easy to win” isn’t generating the kinds of headlines Trump wanted... Instead, we’re hearing about production shifting overseas to escape both U.S. tariffs on imported inputs and foreign retaliation against U.S. products... making stuff up is actually standard operating procedure for these guys... Trade policy itself is being driven by claims about the massive tariffs U.S. products face from, say, the European Union — tariffs that, like the immigrant crime wave, don’t actually exist... he declared that the head of U.S. Steel called him to say that the company was opening six new plants. It isn’t, and as far as we can tell the phone call never happened... the Council of Economic Advisers did an internal report concluding that Trump trade policy will cost jobs, not create them; Kevin Hassett, the chairman, pressed on these reports, said that he could neither confirm nor deny them; in other words, they’re true... Hassett is declaring that last year’s corporate tax cut has led to a “massive amount of activity coming home” — which is just false. Some companies are rearranging their accounting, producing what looks on paper like money coming back to the U.S., but this has no real effect on investment or employment... declaration by Larry Kudlow, the administration’s top economic official, that the budget deficit is “coming down rapidly” as “those revenues come rolling in.”.. reports that Trump wants to withdraw from the World Trade Organization... The best hope for breaking the cycle of retaliation would be for Trump to realize that the trade war is going badly, take a deep breath, and step back from the brink... But who will tell him how things are really going?.. Trump will dismiss reports of problems as fake news. Reality will take a long time to break through, if it ever does. And by then the world trading system may be broken beyond repair.
Go for Growth, Fellow Dems
To counter Trump, become the party of inclusive prosperity.
The attitude that regulation is fundamentally good—and any attempt to reduce it bad—is far too prevalent among Democrats... No one at the EPA seems to have asked if its regulations were actually the best way to preserve wetlands.
.. companies expect to reinvest the bulk of the tax savings in higher wages, increased capital expenditures and research and development. The companies surveyed anticipated passing only a quarter to shareholders in dividends and buybacks.