Saudi Arabia Tries to Temper Khashoggi Uproar with Investigation, 'Rogue' Killer

Posted on 10/16/2018 7:39 AM

ITC's USMCA timeline | Military bases could export coal, gas | Election updates | Deficits


Saudi Arabia began an investigation of journalist Jamal Khashoggi's disappearance. President Donald Trump sent Secretary of State Michael Pompeo to Saudi Arabia to meet with King Salman bin Abdulaziz and suggested that “rogue killers” might be behind the disappearance of journalist Jamal Khashoggi in Turkey. Trump said the king, in a 20-minute phone call, offered him a “flat denial” that the Saudi government was behind Khashoggi’s disappearance and possible murder.
     The International Trade Commission detailed its USMCA timeline for assessing the agreement. Transmittal of the Commission's report to President Trump and Congress must come no later than 105 days after the president enters into the agreement.
     Using military bases as export facilities for coal or natural gas is under Trump administration consideration, Interior Secretary Ryan Zinke told the Associated Press.
     Mexico will stop exporting crude oil to focus on production for internal use when its new president takes office on Dec. 1.
     The U.S. spent $1.5 billion per day on interest on the debt in FY 2018, and the interest rate debt and the overall deficits and debt is forecast to rise further.
     The Charlie Cook quote people are talking about: “One question that keeps coming back up is whether those who led the out-of-control demonstrations on Capitol Hill against the Kavanaugh nomination have any understanding of how much damage they did to Democrats.”
     This may catch climate-change deniers' attention: Some of the world's biggest beer makers are taking steps to maintain their supplies of key ingredients in the face of climate change, the Wall Street Journal reports, even as a new study suggests growing heat waves and droughts could cut slash barley production.

 

Saudi Arabia may say journalist's death was a mistake. The kingdom is considering an alternative explanation to confront accusations its agents killed Jamal Khashoggi, by saying the Saudi dissident journalist was killed by rogue operatives during an interrogation gone wrong. Saudi officials have repeatedly denied knowing what happened to Khashoggi.

President Trump suggested on Monday that Khashoggi, a columnist for the Washington Post, may have been the victim of “rogue killers.” This could defuse some criticism of the Trump administration, which has refused to back down from billions of dollars in weapons sales to the kingdom.

Meanwhile, U.S. Secretary of State Mike Pompeo arrived in Saudi Arabia today for talks with King Salman over the missing journalist. Saudi officials initially denied knowledge of Khashoggi’s whereabouts and threatened to respond to any American punitive action in kind. But then officials belatedly agreed to open the doors of the consulate to investigators.

ITC timeline in USMCA assessment. The U.S. International Trade Commission (USITC) has laid out the timeline related to its assessment of the U.S.-Mexico-Canada Agreement (USMCA) that is required under Trade Promotion Authority (TPA). The U.S. Trade Representative submitted a request to USITC Aug. 31 and the agency has instituted investigation No. TPQ-105-003 to prepare the report required by law.

"The report will assess the likely impact of the United States-Mexico-Canada Agreement (USMCA) on the US economy as a whole, on selected industry sectors, and on U.S. consumer interests."

The agency outlined the following dates relative to that investigation:
— Oct. 29, 2018: Deadline for filing requests to appear at the public hearing.
— Oct. 30, 2018: Deadline for filing prehearing briefs and statements.
— Nov. 15, 2018 and continuing on Nov. 16, 2018 if necessary: Public hearing.
— Nov. 23, 2018: Deadline for filing posthearing briefs.
— Dec. 20, 2018: Written submissions from the public.
— Transmittal of Commission report to the President and Congress: No later than 105 days after the President enters into the agreement.

The notice appears in today's Federal Register. Link

Trump administration could use military bases to export coal, gas. The Trump administration is considering using military bases to accommodate export facilities for coal or natural gas, Interior Secretary Ryan Zinke told the Associated Press. Zinke said the strategy is being considered as a way to thwart opposition by California, Oregon and Washington leaders to allowing export terminals in their states to sell coal or gas to Asia.

"I respect the state of Washington and Oregon and California," Zinke told AP. "But also, it's in our interest for national security and our allies to make sure that they have access to affordable energy commodities." Zinke said that may involve using "some of our naval facilities, some of our federal facilities on the West Coast." In his AP interview, Zinke only mentioned one possible facility for natural gas exports: the Adak Naval Air Facility in Alaska's Aleutian Islands, which closed in 1997. Link for details of AP interview.

Observers say it is not clear how long it would take to get the former military locations able to become export points for energy and liquefied natural gas (LNG).

AMLO: Mexico to halt exporting crude oil. Mexican President-elect Andrés Manuel López Obrador (AMLO) announced on Sunday that the country will stop exporting crude oil — and will instead focus on production for internal use when he takes office on Dec. 1. Mexico “is no longer going to sell, in the medium term, crude oil abroad,” he said in a press conference, Mexican news outlet Televisa reported. López Obrador added that Mexico will “only extract what is needed for our internal consumption.”

The U.S. purchased an average 608,000 barrels of crude oil from Mexico last year, according to the U.S. Energy Information Administration. Mexico has generally ranked as the third-biggest seller of crude oil and products to the U.S., after Canada and Saudi Arabia.

Other items of note:

  • After visiting storm-ravaged communities in Florida this week, President Trump declined to acknowledge climate change. He said the spate of storms wouldn't prompt him to rethink his decision to withdraw from the Paris climate accord. President Trump in an interview with 60 Minutes that aired late Sunday said he believes "something" is happening with global warming but added that he thinks it's likely the trend will revert or "go back." Trump added that he thinks “something's happening. Something's changing and it'll change back again. I don't think it's a hoax, I think there's probably a difference. But I don't know that it's man-made.” Trump noted he is “not denying climate change. But it could very well go back. You know, we're talking about over millions of years. They say that we had hurricanes that were far worse than what we just had with Michael.”
  • IRS will hold a public hearing today as the agency prepares to finish the rules for the new 20% deduction for pass-through businesses, leaving companies, accountants and the government struggling over who is eligible.
  • Beef, bee, fish organizations petition FMCSA to allow livestock drivers 16-hour on-duty period, 15-hour drive time. A group of organizations representing cattle farmers and honey bee producers has filed a petition with the Federal Motor Carrier Safety Administration (FMCSA) asking the agency to allow drivers hauling livestock, bees and fish 16 hours of on-duty time and 15 hours of drive time per shift. Current hours of service regulations limit livestock drivers to 14 hours on duty and 11 hours of drive time after a 10-hour off-duty period, but their clock begins only after they have left a 150-air-mile radius of the source of the livestock (such as a ranch or sale barn). The petition filed to FMCSA would retain the 10-hour off-duty period but extend their work days from the current limits. These hours limits would also only begin after a driver hauling livestock leaves the 150-air-mile radius of the stock’s source. The groups write that, if the petition is granted, drivers wanting the extended allotment of hours would need to complete training on pre-trip planning and fatigue management. Livestock and bee haulers have been exempt from using an electronic logging device (ELD), with the most current waiver allowing them until Dec. 7 to continue to run on paper logs. However, Congress could extend that until the end of September 2019.
  • Diesel fuel prices increased by about a cent during the week ending Oct. 15, marking the eighth straight week of increasing fuel prices, according to the Department of Energy’s weekly report. Following the nine-tenths of a cent increase during the week, the U.S.’ average price for a gallon of on-highway diesel is now $3.394, increasing the year’s high mark. Prices increased in all but two regions during the most recent week, as California’s prices dropped slightly and the Midwest region’s held flat. The largest increase during the week was seen in the West Coast less California region, which increased by 3.3 cents.
  • Barely enough barley for brews. The supply chain may start getting too hot for many breweries. Some of the world's biggest beer makers are taking steps to maintain their supplies of key ingredients in the face of climate change, the Wall Street Journal reports (link), even as a new study suggests growing heat waves and droughts could cut slash barley production. The study found barley yields could fall 3% to 17% world-wide by the end of the century, depending on the severity of climate change, making a beer costlier and harder to come by. Industry groups like the Brewers Association insist there’s no “impending calamity” in beer supply chains. But the report provides a new headache for an industry that has seen sales in the U.S. diminishing.
  • A new Emerson College survey finds Sen. Dean Heller (R-Nev.) opening up a seven-point lead (48% to 41%) over Rep. Jacky Rosen (D-Nev.). It’s the latest survey to find a GOP Senate candidate surging in a state Trump won in 2016 after the Kavanaugh confirmation battle. President Trump will hold a rally for Heller on Friday. Former President Obama will be out in Nevada on Friday to provide support for the entire Nevada Democratic ticket. Former Vice President Joe Biden will follow Obama to Las Vegas on Saturday.
  • In focus is tonight's debate between Sen. Ted Cruz (R-Texas) and Rep. Beto O’Rourke (D-Texas). Polls show Cruz pulling away, but O’Rourke’s hauled in $38 million this quarter — more than three times what Cruz raised. President Trump will hold a rally for Cruz next Monday.
  • In the Michigan Senate race, Republican nominee John James remains a long shot against Democratic incumbent Sen. Debbie Stabenow. The most recent poll shows him nine points behind. James is a small business owner and a West Point and Harvard graduate and a combat veteran.
  • Warren’s release of DNA results draws criticism. Media coverage of Sen. Elizabeth Warren’s (D-Mass.) release of a DNA analysis showing she does have some Native American ancestry is largely negative. Reports cast Warren’s move as an effort to quiet criticism from President Trump, who has made an issue of her claim, as she mulls a presidential bid in 2020. However, many reports point out Warren’s relatively small percentage of Native American ancestry, and several highlight studies which indicate her percentage is lower than the average European American. In addition, Warren’s release of the results weeks before the midterm elections drew criticism from the left.
  • A notable Charlie Cook remark: “One question that keeps coming back up is whether those who led the out-of-control demonstrations on Capitol Hill against the Kavanaugh nomination have any understanding of how much damage they did to Democrats.” In a recent column, Cook wrote, “The GOP majority in the House was very likely to fall to Democrats regardless of what happened with Kavanaugh, but while Republicans could lose their majority in the Senate, it would appear to be a bit less likely today than two months ago.” Cook is the owner of the bipartisan Cook Political Report.
  • All you ever wanted to know (and then some) about the expiration of a farm bill is included in a Congressional Research Service report (link).

Markets. The Dow on Monday ended down 89.44 points, 0.35%, at 25,250.55. The Nasdaq lost 66.15 points, 0.88%, at 7,430.74. The S&P 500 fell 16.34 points, 0.59%, at 2,750.79.

The federal deficit widened by 17% in fiscal year 2018, ending Sept. 30. Thanks to the 2017 tax cuts, an increase in spending, rising interest costs on debt and increased military funding, the government ran a $779 billion deficit in fiscal year 2018 — the largest in six years, according to the Treasury Department, and up $113 billion from FY 2017. Treasury projected that the deficit will surpass $1 trillion in fiscal 2019, which began Oct. 1. Overall receipts were similar to the previous year, up 0.5% despite a booming economy and a low unemployment rate. Outlays, however, rose six times faster, surpassing $4.1 trillion. Earlier this month, the nonpartisan Congressional Budget Office issued a similar deficit figure of $782 billion. Fiscal 2018 was the first full fiscal year under Trump's watch, and debt has risen from $20 trillion to around $21.5 trillion since he took office. Of note, the U.S. spent $1.5 billion per day on interest on the debt in FY 2018. Social Security spending also rose $39 billion while defense spending increased $32 billion. On the revenue side, corporate taxes fell by $76 billion, 22%, on the combination of lower tax rates and the ability to immediately deduct the full value of equipment purchases. Individual income tax receipts rose $23 billion, or 1%, as higher employment and wages were offset by lower withholdings.

Deficit blame game. Treasury Secretary Steven Mnuchin and White House budget chief Mick Mulvaney issued a joint statement that blamed Congress for the increasing deficits, arguing that the president had requested far-reaching spending cuts in his budget proposals. House Minority Leader Nancy Pelosi (D-Calif.) laid the blame for the rising deficits on the GOP tax law. The CBO estimated that the 2017 tax law would add $1.9 trillion to deficits over a decade.

Yellen: Trump's Fed attacks threaten central bank, financial stability. Former Federal Reserve Chair Janet Yellen said Monday that President Trump's recent attacks on the central bank could harm the Fed and endanger the global financial system. Yellen, who led the Fed from 2014 through February 2018, said Trump's criticism of recent Fed interest rate hikes are "essentially damaging to the Fed and to financial stability.” "I really think it is not a desirable thing for a president to comment so explicitly on Fed policy," Yellen said at the Mortgage Bankers Association convention in Washington. "Obviously, presidents can speak out if they choose to and give their opinions about policy. There's no law against that, but I don't think it's wise." Yellen, who raised rates four times between 2015 and 2018, also said she feared the economy could overheat if the Fed doesn't bring rates back toward historically neural levels. "Growth needs to slow to stop the unemployment rate from falling ever further, which I believe will eventually create inflationary pressures,' Yellen said.

Chinese inflation surged to its highest level in months. Consumer prices in China grew at a 2.5% year-over-year clip, the fastest since February, data released today by the National Bureau of Statistics showed, led mainly by higher food prices. China's factory-gate inflation cooled for a third straight month in September, rising 3.6% from a year ago, amid slowing domestic demand. The data points to more pressure on the economy as it remains locked in an intensifying trade war with the United States. China core CPI actually fell with the annualized rate at 1.7% in September, down from 2.0% in August.


 

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