Lack of details on infrastructure funding | Farm bill cited in address | Focus on China
— Key topics President Trump addressed in State of the Union address:
- U.S. economy and national security: “Our country is strong.” Trump said the U.S. economy is “far and away the hottest economy anywhere in the world.”
Trump said, “If there is going to be peace and legislation, there cannot be war and investigation. It just doesn't work that way!”
"Congress has 10 days left to pass a bill that will fund our government, protect our homeland, and secure our Southern Border," he stated without directly threatening another shutdown.
When Trump praised the thriving economy for women and the record number of women elected to Congress in 2018, House Democratic women, many dressed in white as a symbol of women’s voting rights, jumped to their feet to cheer. Chants of “USA! USA!” broke out across the chamber.
Trump touted his tax cut and deregulation policies and their results.
- Immigration and border security: Trump stressed that “walls work, and walls save lives.” He cast his stance on immigration in stark class terms: “Wealthy politicians and donors push for open borders while living their lives behind walls and gates and guards. Meanwhile, working class Americans are left to pay the price for mass illegal migration,” he said. House Speaker Nancy Pelosi (D-Calif.) motioned to her caucus to stifle their groans as Trump warned about the latest migrant caravan approaching the border. Of note, Trump did not pause for the Speaker to introduce him, as is the custom at State of the Union addresses.
- China: Talks with China must “end unfair trade practices, reduce our chronic trade deficit and protect American jobs.” The president will likely meet Chinese leader Xi Jinping in Vietnam Feb. 27 or 28 around the time he meets with a second summit with North Korean leader Kim Jong un — the president told a group of television news anchors hours before his address on Tuesday that he plans to meet Xi during his time abroad this month, although it was not clear whether their sit-down would also occur in Vietnam. Beijing, Trump said, had for decades taken advantage of the country’s “calamitous trade policies... “We are now making it clear to China that after years of targeting our industries and stealing our intellectual property, the theft of American jobs and wealth has come to an end,” Trump said, noting his “great respect” for Chinese President Xi Jinping.
After Trump's speech, U.S. Trade Representative Bob Lighthizer said in a statement that “confronting China’s unfair trade practices” would help expand America’s export opportunities, strengthen its manufacturing and promote its “leadership in today’s digital economy.” Lighthizer added that the U.S.-Mexico-Canada Agreement (USMCA) would be “a model for all future trade deals.”
A senior Trump administration official said that through ongoing talks with China about Washington’s 142 trade demands, the number of items Beijing deemed non-negotiable has been sharply reduced. This would allow for the discussion of issues such as hacking of U.S. companies, the Wall Street Journal reported on Tuesday. The most challenging issue was enforcement, the official said, with talks ongoing but details of any possible verification framework remain unclear.
Lighthizer and Treasury Secretary Steven Mnuchin early next week will travel to Beijing to continue trade talks. A meeting between the two officials with their Chinese counterparts is seen as a laying the groundwork for President Trump and Chinese President Xi Jinping to close a deal. The trade war truce between the U.S. and China expires on March 1.
- Infrastructure: "Both parties should be able to unite for a great rebuilding of America’s crumbling infrastructure," Trump stated. "I know that the Congress is eager to pass an infrastructure bill — and I am eager to work with you on legislation to deliver new and important infrastructure investment, including investments in the cutting-edge industries of the future. This is not an option. This is a necessity."
House Speaker Nancy Pelosi (D-Calif.) got to her feet when Trump urged a renewed focus on infrastructure investment. Democrats faulted the president for calling for an infrastructure plan without explaining how to finance it. However, details on legislative initiatives are not usually provided in SOTU addresses. There is continuing debate in the White House over an administration plan that would sharply increase the role of public-private partnerships in building programs. Trump in the past has not favored public-private-partnerships relative to transportation funding.
Trump’s lack of detail on an infrastructure plan didn’t go unnoticed. “We need near- and long-term funding solutions to help rebuild transportation in America and prepare for mobility of the future,” AAA President and CEO Marshall Doney said. “All funding options should be on the table.”
- 2018 Farm Bill: Trump listed the omnibus farm measure as one of the bipartisan accomplishments of the last Congress.
- Arms-control treaty: Trump said the reason he pulled the U.S. out of a decades-old arms control treaty with Russia last week, sparking fears of an arms race, was Moscow’s alleged violations of its terms. He raised the possibility of negotiating a new agreement to replace the Intermediate-Range Nuclear Forces Treaty that would include China and other countries — an idea Beijing has previously opposed — but said that without a deal, the U.S. would “outspend and out-innovate all others by far.”
- Trump delivered a fiery attack on abortion, calling on lawmakers to pass a ban on late-term terminations and, more broadly “build a culture that cherishes innocent life.”
- The president discussed a plan to end transmission of the virus that causes AIDS in the U.S. by 2030.
— Russian grain exports to slow on high domestic prices: ag ministry. Seasonally low supplies had already begun to temper Russian grain exports, but the country's ag ministry said that higher domestic prices are now hampering the export prospects in the near-term. Prices have risen as export demand has seen exporters paying up to attract supplies from farmers who have been holding onto grain in hopes of selling at higher prices.
Despite the situation, the ministry indicated that no supply shortages are expected. "There is enough grain in the country as of today. Starting from March, domestic farmers will start more active sales of grain due to the preparation for spring grain sowing," the ministry said. The agency also said that it expected domestic prices would decline in one to three months.
Meanwhile the Ukrainian state sea port administration said that the Black Sea ports of Mykoayiv and Kherson have been affected by poor weather conditions, restricting cargo operations.
— Other items of note:
Goldman to cut back its commodities-trading arm. The retreat by the bank follows a monthslong review under new CEO David Solomon that showed the commodities business’s dwindling profits didn't justify its costs. Link to Wall Street Journal article.
Perdue consulting with Congress on proposed ERS and NIFA move. USDA Sec. Sonny Perdue said he will sound out Congress before moving ahead with the relocation of the Economic Research Service (ERS) and the National Institute for Food and Agriculture (NIFA). Perdue told reporters Tuesday that he will also provide lawmakers with a “very serious cost-benefit analysis” justifying the move of the two agencies from the nation’s capital. “Many of them have had concerns about what prompted” the relocation plan, Perdue said. Perdue revealed he would have a revised list of the potential relocation sites “very soon.”
Census Bureau: 75 million more immigrants by 2060, 95% of future U.S. growth. The Census Bureau is projecting that the population of the United States will hit 404 million by 2060, and nearly all of the net growth will be from immigrants and their families. A new analysis from the Center for Immigration Studies (link) of the figures notes the addition is roughly equal to the combined populations of France and Belgium. Almost all (75 million) of the post-2017 increase is due to future immigration. That is, immigrants who have not yet arrived, but who will do so absent a change in policy, plus their descendants. Without immigration, according to the analysis, the U.S. population would increase by just 3.7 million, the latest sign that the country is on a path to zero native population growth.
Mueller investigation report. Sen. Charles Grassley (R-Iowa) said on Hugh Hewitt’s radio show Tuesday that he believes Special Counsel Robert Mueller will release the report on his probe into potential collusion between the Trump campaign and Russia during the 2016 presidential election within a month. Grassley also said he believes the report should be released to the public. Grassley said, “I don’t care what the report says. We paid $25 million, maybe $35 million to do it, and the public ought to know what their $25 or $35 million bought.”
— Markets. The Dow on Tuesday gained 172.15 points, 0.68%, at 25,411.52. The Nasdaq rose 54.55 points, 0.74%, at 7,402.70. The S&P 500 moved up 12.83 points, 0.47%, at 2,737.70.
Federal Reserve Chairman Jerome “Jay” Powell is hosting a town hall meeting today with educators from across the U.S. and Federal Reserve Board Vice Chairman Randal Quarles is scheduled to deliver a speech about the Federal Reserve Stress Testing Conference at the Council for Economic Education Vantage Point Reception in New York City. The two Fed officials appearances with the CME FedWatch Tool currently showing a 3.9% rate hike probability for March through April and 9% odds for a rate hike in June through October.
Cargo-tracking firm Kpler reported crude shipments to the U.S. from OPEC and its partners fell to a five-year low of 1.41 million barrels a day in January. The firm noted shrinking Iraqi imports and deep output cuts by Saudi Arabia contributed to the decline. Meanwhile, the American Petroleum Institute reportedly said that a U.S. crude supply build of 2.51 million barrels of oil is expected for the week ending Feb. 1. The weekly U.S. crude stock build would be the third consecutive if EIA data confirms it later today.
The Commerce Department’s international trade data for November, delayed by the government shutdown, is expected to show the trade deficit narrowing to $54 billion. A slip in exports and rising imports pushed October’s number to a ten-year high of $55.5 billion. Focus will be on the U.S.-China merchandise trade gap after it widened to a record level in the previous report.