Lingering Trade Policy Issues Remain Focus

Posted on 09/16/2018 6:48 AM

Panel vote on Kavanaugh | House out, Senate in | Farm bill in limbo


The Senate is the only chamber working as the House is on recess until Sept. 25.
     Key focus this week comes Thursday with the Senate Judiciary Committee holding a vote on Supreme Court nominee Brett Kavanaugh. The panel is expected to vote along party lines, 11-10.
     Trade policy issues will continue in focus with U.S., Canada talks likely being held on NAFTA 2.0, while stakeholders wait for the next development regarding lingering trade issues between the U.S. and China (
link for details). On Friday, U.S. and Japanese officials will meet on some type of trade agreement between the two nations.
     Farm bill conference issues will be part of at least one phone call among the major players this week, with a face-to-face session not being ruled out if compromises on lingering issues can be found.
     President Trump will travel to the Carolinas to survey hurricane damage once it is determined his travel will not disrupt any rescue or recovery efforts, White House Press Secretary Sarah Huckabee Sanders said in a statement.

 

The House is on recess until Sept. 25; the Senate remains in session.

The Senate will vote on a spending package that funds Defense, Labor and HHS though fiscal year 2019 and would fund other portions of the government through Dec. 7, while longer-term bills are finished. Congress has already cleared one minibus spending bill, and with passage of the defense package, about 75% of the government would be funded for all of FY19.

The Senate will vote on a package of bills that would modify Medicare and Medicaid rules to combat opioid epidemic. The House has passed legislation, which would change Medicare, Medicaid payment rules to expand Medicaid reimbursement for inpatient drug rehabilitation services, amend privacy rules for drug treatment records and let Medicare pay more for non-opioid pain-management drugs.

Senate Judiciary panel votes Thursday on Brett Kavanaugh to be a Supreme Court justice. The result will likely be a party-line vote of 11-10.

Trade policy updates:

  • NAFTA 2.0: Mexican Economy Minister Ildefonso Guajardo has said he hopes for clarity on whether Canada will be part of a revised NAFTA deal by the end of this week.
  • U.S./China: President Donald Trump instructed aides last Thursday to proceed with tariffs on about $200 billion more in Chinese products despite his Treasury secretary’s attempt to restart talks with Beijing to resolve the trade war, according to Bloomberg. Announcement is now expected at the beginning of this week. Trump previously threatened a third tranche of tariffs on another $267 billion of Chinese imports, which would mean levying duties on nearly everything China exports to the U.S. Trump said those tariffs were “ready to go on short notice,” but the administration has not published a list for public comment. (Link for more details.) Meanwhile, on Wednesday, the U.S. Trade Representative’s office holds a meeting on request for comments, public hearing on China’s compliance with WTO commitments. On Friday, China is expected to ask the WTO for permission to retaliate against the U.S. due to its failure to modify its various anti-dumping methodologies. A WTO arbitrator this year determined U.S. must comply with 2017 ruling that found certain aspects of U.S. anti-dumping regime to be illegal. The U.S. acknowledged on Aug. 27 that it hadn’t fully complied with the ruling, and said it "continued to consult with interested parties on options to address the recommendations" of the dispute settlement body.
  • U.S./Japan: On Friday, Japanese Economy Minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer are expected to hold a second round of trade talks in the U.S. The meeting precedes a summit between Japanese Prime Minister Shinzo Abe and President Trump on the sidelines of the U.N. General Assembly General Debate on Sept. 25.

Economic updates are light this week.

Monday: The New York Federal Reserve releases the Empire Manufacturing Survey for September. Consensus estimates are for a 22.6 reading, down from August’s 25.6.

Tuesday: National Association of Home Builders reports its September housing market index. Economists expect a 66 reading, down slightly from August’s 67.

Wednesday: U.S. Census Bureau releases its housing starts data for August. Consensus estimates are for a 1.24 million annualized rate, up from July’s 1.17 million. Building permits authorizing new homes is expected to remain almost flat at a 1.31 million annual rate. | The Bureau of Economic Analysis releases second-quarter current-account data. The U.S. is expected to post a trade deficit of $115 billion compared to a $124 billion deficit in the first quarter.

Thursday: National Association of Realtors announces existing home-sale figures for August. Economists project a 5.36 million annual rate, close to July’s reading, which was the lowest in over two years. | Conference Board releases its Leading Economic Index for August. Consensus estimates are for 0.5% increase from July’s reading, indicating continued economic growth. | Philadelphia Fed releases its Manufacturing Business Outlook Survey for September. Expectations are for a jump to 18.6 reading from August’s 11.9, which was a 21-month low.

Friday: IHS Markit releases its Manufacturing Purchasing Managers Index. Economists expect a 55 reading, a slight uptick from August’s 54.7.

Key USDA and international agriculture and energy-related reports and events on tap this week:

Monday, Sept. 17

Ag reports and events:

  • Export Inspections
  • Crop Progress
  • Feed Grains: Yearbook Tables
  • Turkey Hatchery
  • U.S. National Oilseed Processors Association data on soy processing
  • EU’s monthly Monitoring Agricultural Resources (MARS) bulletin on crop progress and weather conditions in Europe
  • U.N. FAO releases report on agricultural commodity markets, with focus on trade, climate change and food security
  • EU weekly grain, oilseed import and export data

Energy reports and events:

  • OPEC+ Joint Technical Committee conference call, preparing for meeting of Joint Ministerial Monitoring next weekend in Algiers
  • EIA’s Drilling Productivity Report

Tuesday, Sept. 18

Ag reports and events:

  • Vegetables and Pulses Data
  • Livestock, Dairy, and Poultry Outlook
  • Sugar and Sweeteners Outlook
  • Fruit and Tree Nut Data
  • Brazil’s crop agency Conab releases its third estimate for 2018 coffee crop
  • Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) releases agricultural commodities report

Energy reports and events:

  • API weekly U.S. oil inventory report

Wednesday, Sept. 19

Ag reports and events:

  • Broiler Hatchery
  • Hop Stocks
  • Milk Production
  • Malaysian Palm Oil Council (MPOC) holds International Palm Oil Sustainability Conference in Kota Kinabalu, Malaysia, Sept. 19-20; Executives from FAO, Nestle, Olam, Sime Darby, MPOB expected to attend
  • INTL FCStone holds agribusiness conference in Sao Paulo, with Finance Minister Eduardo Guardia and BRF CEO Pedro Parente due to speak

Energy reports and events:

  • U.S. weekly ethanol inventories
  • EIA weekly U.S. oil inventory report
  • Mexican President-elect’s energy adviser Fluvio Ruiz Alarcon speaks at Rice University’s Center for Energy Studies in Houston

Thursday, Sept. 20

Ag reports and events:

  • Weekly Export Sales
  • Livestock Slaughter
  • EU weekly grain, oilseed import and export data
  • Buenos Aires Grain Exchange weekly crop report
  • Intertek and AmSpec release their respective data on Malaysia’s Sept. 1-20 palm oil exports

Energy reports and events:

  • EIA natural gas storage change
  • API’s Monthly Statistical Bulletin

Friday, Sept. 21

Ag reports and events:

  • CFTC weekly commitments of traders report on various U.S. futures and options contracts.
  • Peanut Prices
  • Cattle on Feed
  • Chickens and Eggs
  • FanceAgriMer weekly updates on French crop conditions

Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts

Other reports and events this week include:

Monday, Sept. 17

  • Trade policy. Six former U.S. trade representatives speak at the Center for Strategic & International Studies event.
  • Tokyo Stock Exchange closed in observance of Respect for the Aged Day.

Tuesday, Sept. 18

  • United Nations’ General Assembly convenes in New York.
  • President Trump hosts Polish President Andrzej Duda at White House; the two leaders plan to discuss ways to strengthen strategic partnership, as well as trade, military and security matters.
  • Health-care costs. Senate Health, Education, Labor and Pensions Committee hearing on reducing health-care costs.
  • Border security. Senate Homeland Security and Governmental Affairs Committee hearing on border security, illegal immigration enforcement.
  • Farm Foundation forum, The ROI for Higher Education in Food and Agriculture. At National Press Club.

Wednesday, Sept. 19

  • Bank of Japan will announce its monetary policy after a two day meeting. The market overwhelmingly expects the central bank to maintain its -0.1% interest rate, according to Bloomberg data.
  • Sugar trade policy. A U.S. sugar refiner may get new fuel in its fight against a U.S.-Mexico sugar deal Sept. 19, when the Commerce Department must turn over records of talks surrounding the deal. U.S. refiner CSC Sugar is fighting the pact with a pair of lawsuits.
  • China WTO commitments. U.S. Trade Representative’s office holds a meeting on request for comments, public hearing on China’s compliance with WTO commitments.

Thursday, Sept. 20

  • Supreme Court nominee vote. Senate Judiciary Chairman Chuck Grassley (R-Iowa) plans a panel vote on whether to advance the nomination of Supreme Court nominee Brett Kavanaugh.
  • Federal Energy Regulatory Commission (FERC) to resume monthly meetings after an August break.
  • Trade policy, WTO. Group of trade officials gather in Geneva to discuss the Canadian government's blueprint on how to reform the WTO.

Friday, Sept. 21

  • Quadruple witching day on Wall Street. Index futures, index options, stock futures, and stock options are all set to expire.
  • U.S./Japan trade talks. Japan’s Economic Revitalization Minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer will meet for the second round of “free, fair, and reciprocal” talks.
  • Trade policy. China is expected to ask the WTO for permission to retaliate against the U.S. due to its failure to modify its various anti-dumping methodologies.

 

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