China's Xi to have 'deep exchange of views' with Trump in Argentina
— The odds still favor a completed new farm bill in the lame-duck session of Congress, but... President Trump in remarks during his wide-ranging press conference Wednesday did not sound like he was ready to cut a farm bill deal. "The problem is the Democrats are not giving us the 10 votes that we need," he said. "Everybody wants it; the farmers want it — but the Democrats are not approving the farm bill with work rules. We could have a very fast [bill] without the work rules. But we want the work rules in. And the Democrats just do not want to vote for that. So at some point, they'll have to pay, maybe, a price."
The House and Senate farm bill versions vary greatly when it comes to work requirements and food stamps. The Senate bill doesn't make any significant adjustments.
Rep. Collin Peterson (D-Minn.), the likely House Ag Chairman in the new Congress next year, said the Democratic takeover of the House robbed outgoing House Ag Chairman Mike Conaway (R-Texas) of his remaining leverage to get what he wants on that issue. But Conaway has insisted he wants to see some of the House GOP's food stamp proposals make it into the final legislation. Tuesday's election results “don’t change the circumstances in farm country," said Conaway. I remain 100% committed to completing the farm bill this year.” Conaway for now has President Trump as leverage.
Meanwhile, the Trump administration is still working on a proposed rule to make it harder for states to get waivers from the existing work rules. While rule proponents say that would create cost savings, others note the proposed rule would take months to go through the public comment process.
— Trump open to corporate tax changes? President Trump during his Wednesday presser said he would be willing to make an “adjustment” to recent tax cuts for corporations and wealthy individuals in order to attract Democratic support for additional middle-class tax cuts. Senate Minority Leader Chuck Schumer (D-N.Y.) said at a news conference yesterday that he hopes Trump will consider reducing some of the tax cuts for corporations and the wealthy to help pay for an infrastructure package.
— Infrastructure a possible consensus topic between GOP and Dems. Trump, Senate Majority Leader Mitch McConnell (R-Ky.) and House Democratic Leader Nancy Pelosi (Calif.) yesterday all spoke at separate news conferences on the need to work together after Tuesday’s elections, mentioning infrastructure as one area for cooperation.
Trump said he foresees Democrats approaching his administration with legislative plans for infrastructure, adding that he sees a “much easier path” for negotiating with Democrats, while McConnell said he’s ready to work with the new House Democratic majority to fund infrastructure. Pelosi said she spoke with Trump and McConnell on providing funds for infrastructure. Rep. Peter DeFazio (D-Ore.), the likely chair of the House Transportation and Infrastructure Committee, welcomed such high-level support for infrastructure during a phone call with reporters yesterday. “There has to be real money, real investment and it has to be done soon,” DeFazio said.
— Argentina says U.S. to review biodiesel duties. A review of antidumping duties that the U.S. placed on imports of Argentine biodiesel will be undertaken by the U.S. Commerce Department, according to a statement from the Argentine Foreign Ministry.
Background. The U.S. placed duties on imports of biodiesel from Argentina after finding it was being sold into the U.S. market below market price, and the statement from Argentina indicated that the situation was now going to be reviewed by the U.S. side.
"If the negotiations are successful, imports of a product from our country, with high added-value, could recover their access to the very significant U.S. market," said Argentine Foreign Minister Jorge Faurie in the statement. Argentine press reports indicated the Commerce review is due to "change of circumstances" in Argentina, which referenced actions by the current Argentine government.
Reports note that the situation does not mean that imports are going to be opened up again, but that the situation will be reviewed by the Commerce Department. Reports indicate the U.S. government has noted "changes in export rates" on Argentine biodiesel.
Timeline. The review, if confirmed by the U.S. Commerce Department, would still take months to complete and may not result in the removal of the import duties the U.S. put on Argentine biodiesel.
— China's Xi to have 'deep exchange of views' with Trump in Argentina. President Donald Trump and Chinese President Xi Jinping will meet at the sidelines of the upcoming G20 meeting in Argentina, with Xi indicating after meeting with former U.S. Secretary of State Henry Kissinger that China wants to resolve differences with the U.S. but that America has to respect China's development path and interests. A "deep exchange of views" is expected in Argentina, Xi said, according to the Xinhua news agency. Xi also indicated that attention needs to be paid to "the increase in negative voices related to China in the United States." However, he did not offer any details on that topic.
Meanwhile, State Councillor Wang Yi separately said that the G20 session could be very important in the status of Sino-US relations. "That will be of great significance for both sides to manage differences effectively and resolve issues in a practical way," Wang said of the G20 session in remarks to reporters after meeting with Australian Foreign Minister Marise Payen. "We believe that meeting will help chart the course for China-U.S. relations."
Further, meetings Friday in Washington between Chinese Politburo member Yang Jiechi and Defense Minister Wei Fenghe are labeled a security and diplomatic dialogue, with Yang saying the two countries need to "properly manage differences and carefully prepare to ensure positive results in the Argentina meeting," according to a statement from China's Foreign Ministry.
— Other items of note:
Jeff Sessions exits after being pushed out by President Trump. The attorney general resigned at the request of the president. Sessions' chief of staff, Matthew Whitaker, will serve as acting attorney general. He has been a critic of the special counsel’s Russia probe to oversee the Justice Department. Sessions could eventually be replaced by potential picks including Alex Azar, Pam Bondi and Rudy Giuliani. Trump has long been furious that Sessions recused himself from Robert Mueller’s investigation into the Trump presidential campaign’s alleged Russia entanglements.
A House GOP pickup: Republican Jim Hagedorn narrowly defeated Democrat Dan Feehan for the open Minnesota seat now held by Democrat Tim Walz (who was elected Minnesota governor on Tuesday).
In Arizona, McSally leads by 17,000 votes with “hundreds of thousands” of ballots to be counted. Rep. Martha McSally (R) holds a narrow edge over Rep. Kyrsten Sinema (D) in the still-undecided race to succeed Jeff Flake (R). The Arizona Republic reports (link) that McSally led Sinema by “17,000 votes...as of Wednesday evening, a cliffhanger that could take days, if not weeks, to call.”
In Montana, Sen. Jon Tester (D-Mont.) narrowly edged Republican Matt Rosendale to secure a third term. Rosendale fell short by about 10,000 votes. The Libertarian candidate in the contest, who flirted with withdrawing and backing Rosendale, received more than 13,000 votes.
In Florida, the race between Gov. Rick Scott (R) and Sen. Bill Nelson (D) triggered an automatic recount, although election watchers note it will be difficult for Nelson to make up the estimated 30,000 votes that separate them.
Georgia Secretary of State Brian Kemp’s (R) campaign on Wednesday “declared victory” over ex-state Rep. Stacey Abrams (D) in the Georgia gubernatorial race “after election returns showed he maintained a slim majority... with nearly all precincts reporting, the Atlanta Journal-Constitution reported (link). Abrams, meanwhile, said she wouldn’t concede the race until all ballots are counted, and her campaign started preparing for what could be a lengthy battle in the courtroom and in the media over the outcome of the nationally watched race. Abrams “has urged supporters to prepare for a Dec. 4 runoff, which would be required if neither candidate holds a majority of the vote when the counting ends. The latest vote tally had Kemp nearly 65,000 votes ahead of Abrams — and about 30,000 votes over the 50% threshold.”
Californians approved Proposition 12, a ballot measure that requires more housing space for certain hens, breeding pigs and calves raised for veal. Out-of-state producers will also need to meet the new “cage-free” production standards to sell their goods in the Golden State. The measure garnered more than 4 million votes on Tuesday and passed with 61% of the vote. By 2022, hens raised in California must be raised "cage-free," though that definition could include indoor areas that provide between 1-square-foot and 1.5-square-feet of space per hen. Violations will result in a misdemeanor charge and a $1,000 fine. The measure also sets square-footage requirements for breeding pigs and calves raised for veal. Out-of-state producers will have to update their production standards if they want to sell products in California, which has a population of 39.5 million people and, according to the egg industry, imports roughly 25 million eggs per day from other states. Opponents have said the measure will raise prices without producing any tangible benefits to animal welfare or to food safety. Under Proposition 12, calves confined for production must have at least 43-square-feet (4-square-meters) of usable floor space, while breeding pigs must be given at least 24-square-feet (2.2-square-meters) of floor space in their pens, starting in 2022. Meanwhile, the House farm bill, which is in conference with the Senate, includes an amendment from Rep. Steve King (R-Iowa) that would require states to permit the sale of any agricultural product that is not prohibited under federal law.
Soda companies scored a win in Washington state with the passage of Initiative 1634. The measure prohibits new soda taxes statewide, though Seattle’s existing tax on the sugary beverages won’t be rolled back. In Oregon, voters rejected the similar Measure 103 overwhelmingly (43% to 57%).
— Markets. The Dow on Wednesday surged 545.29 points, 2.13%, at 26,180.30. The Nasdaq gained 194.79 points, 2.64%, at 7,570.75. The S&P 500 rose 58.44 points, 2.12%, at 2,814.89.
FOMC not seen adjusting policy at meeting conclusion. The two-day meeting conclusion will not have a post-meeting press conference, keeping attention focused on the post-meeting statement. That statement should continue to convey a view of a strong US economy and no policy changes are expected at this session – the Fed should leave the target range for the Fed funds rate at 2.0% to 2.25%. The meeting will also feature a new voter — San Francisco Fed President Mary Daly. Kansas City Fed President Esther George has voted at the last two meetings as the San Francisco bank's top spot was open due to its former president John Williams taking the top post at the New York Fed. This will be the last meeting without a press conference with the Fed chair – December's meeting already has a post-meeting presser scheduled and in 2019, all Federal Open Market Committee (FOMC) meetings will feature sessions with the press and Fed Chairman Jerome Powell.
Consumers ease use of credit cards. Consumer Credit increased $10.9 billion in September, well below expectations for a rise of $16.5 billion and a sharp drop from the upwardly revised August tally of $22.9 billion. And revolving credit — where credit cards are categorized — fell $300 million compared with August. Even though employment remains strong and consumer attitudes remain lofty, they turned more conservative on credit card use in particular in September. Some of the downturn in credit may be from younger workers entering the workforce, tempering the demand for student loans which are categorized as nonrevolving credit. That level rose $11.2 billion in September. This shows consumers remain overall subdued in their use of credit cards which bodes well for overall debt levels but still could raise questions about consumer activity.
China published trade data for October, the first full month for which American tariffs on $250 billion of Chinese imports were in effect. Chinese exports were strong over the past half-year as companies rushed to ship goods before America slapped duties on them. Exports to America held up well; to other parts of the world, they accelerated. Dollar-denominated exports rose 15.6% from a year ago, while imports advanced 21.4%, resulting in a trade surplus of $34 billion (and $31.7 billion with the U.S., down from a record $34.1 billion in September.
China aims to keep 2019 growth in reasonable range: Premier. Despite downward pressure on the Chinese economy, the country wants to keep economic growth in a reasonable range in 2019, according to a state radio report quoting Chinese Premier Li Keqiang. "We will carefully plan next year's development and ensure the smooth economic operation within a reasonable range," Li said, according to the report. China has set a goal of GDP around 6.5% in 2018, with the third quarter result of 6.5% its lowest since the global financial crisis. Li also said the government would take steps to improve policy coordination and ease lending issues facing small and private companies.
"China is expected to become the world’s largest nuclear power nation," declared Yu Jianfeng, chairman of the government-run China National Nuclear Corporation. The country's total nuclear capacity is anticipated to reach 120-150 gigawatts in total by 2030, more than triple the current rate but still lower than previous forecasts after a slowdown in new approvals.