Trump’s four-year term ending where it began: chaos
In Today’s Updates
• Stimulating confusion: Traders ignoring Trump’s blasting of Covid aid/spending measure
• Argentine port strike continues, delaying soymeal exports
• Iron-ore prices closing out 2020 toward record territory
• Russian grain exports up 20% from year-ago
• Ukraine’s grain exports down 16% from year-ago
• Trump threatens to torpedo Covid relief with new demands
• China still buyer of U.S. wheat, soybeans and cotton
• China data shows another big jump in pork imports for November
• China to lower tariffs on 883 commodity imports
• USTR nixes request to delay Vietnam currency investigation
• Lighthizer: ‘Everyone ought to have the same tariffs’
• Turkey lowered taxes on rice imports from various countries
• U.K., Canada reach stopgap deal to avoid tariffs post-Brexit
Energy & Climate Change:
• Another increase in SRE requests
• Carbon crop harvesting
• U.S. to lower tariffs on Moroccan fertilizer maker after error
Food & beverage industry update:
• Cargill plans to resume processing at a Canadian beef plant on Dec. 29
• Pfizer nears deal for more vaccine doses
• White House virus coordinator Deborah Birx says she will retire
• Fauci says he'll have a better relationship with Biden than with Trump
Politics & Elections:
• Dem Hart asks House to intervene in Iowa 2nd congressional district
• Counting continues in New York’s 22nd Congressional district upstate
• Fudge, Haaland nominations may be delayed: AP
• Calif. Sec. of State Padilla to replace Harris in Senate; state’s first Latino senator
• Trump pardons 15
• Trump vows Thune ‘will be primaried in 2022’ for objecting to efforts to contest election
• Vilsack meets with Black farm leaders
• Dominion Voting Systems employee sues Trump campaign, OANN, Newsmax, Giuliani
Other Items of Note:
• Israel facing fourth election in two years
• Putin signs legislation that allows former presidents to become senators for life
• USDA names new NIFA director: Carrie Castile
Equities today: Global stock markets were mostly up overnight. U.S. stock indexes are also pointed toward firmer openings. The marketplace is not paying much attention to President Trump’s threat to not sign a U.S. stimulus package agreed upon by the Congress — see details below. The Nikkei advanced 88.40 points, 0.33%, at 26,534.79. The Hang Seng Index was up 223.85 points, 0.86%, at 26,343.10. European equities are mostly showing modest gains in early action, with volume likely light ahead of the holiday. The Stoxx 600 was up 0.4% with most markets showing similar or slightly stronger gains. The FTSE, however, is slightly weaker.
U.S. equities yesterday: The Dow declined 200.94 points, 0.67%, at 30,015.15. The Nasdaq was up 65.40 points, 0.51%, at 12,807.92. The S&P 500 was down 7.66 points, 0.21%, at 3,687.26.
On tap today:
• Initial jobless claims at 8:30 a.m. ET. Update: U.S. weekly jobless claims total 803,000, vs 888,000 expected.
• Personal income and spending for November, 8:30 a.m. ET. Update: U.S. household spending fell in November for the first drop since April, and incomes also dropped, signs the virus is weighing on economic growth. Household spending fell 0.4% in November, the Commerce Department said Wednesday. Personal income fell 1.1%. The decline in spending was slightly larger than expected while incomes fell far more than anticipated ahead of the data.
• Durable goods orders, 8:30 a.m. ET.
• USDA Weekly Export Sales, 8:30 a.m. ET.
• November new home sales, 10:00 a.m. ET.
• Michigan Consumer Sentiment reading, 10:00 a.m. ET
• Crude oil inventories, 10:30 a.m. ET.
• Baker Hughes rig count, 1:00 p.m. ET.
• Outside markets: The U.S. dollar index is lower in early U.S. trading. February Nymex crude oil futures prices slightly up and trading around $47.15 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.92%.
• Crude oil futures have moved higher ahead of U.S. market action and the release of U.S. government inventory data. U.S. crude is trading around $47.10 per barrel while Brent is around $50.25 per barrel. Futures were under pressure in Asian trading, with U.S. crude down 67 cents at $46.35 per barrel and Brent was down 68 cents at $49.48 per barrel.
• Argentine port strike continues, delaying soymeal exports. The strike by Argentine port workers has now stretched for more than 13 days, with talks between striking workers and soymeal plant operators at an impasse. Reports say that no trucks carrying soybeans have entered terminals at the Rosario port which handles about 80% of Argentine ag exports. The CIARA chamber of soy crushing companies said that more than 100 cargo ships have been unable to load during the strike. The situation has provided support for U.S. soybean/product futures as some expect foreign buyers could turn to the U.S. for supplies amid the impasse in Argentina.
• Iron-ore prices are closing out 2020 in a rush toward record territory. The price for the key industrial commodity has nearly doubled since the start of the year and reached its highest level since September 2011. The Wall Street Journal reports (link) the most recent surge comes as a fatal landslide at a Brazilian iron-ore mine intensifies concerns about supply while Chinese demand runs hot. Brazil’s shipments had yet to fully recover from earlier waste-dam collapses and pandemic-related disruptions to port and rail facilities when the landslide hit last week. Vale produces about 20% of the world’s iron ore traded by sea and had already set its 2021 production target below analyst expectations. There are also concerns about supplies from Australia as that country faces a trade battle with China. That leaves buyers and shipping companies likely facing more twists in a tumultuous year for commodities.
Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):
• Russian grain exports up 20% from year-ago
• Ukraine’s grain exports down 16% from year-ago
— Chaos Trump is back as he gives conflicting signals on Covid aid/omnibus spending measure. After aides to President Donald Trump said he would sign the massive $2.3 trillion dollar package (around $900 billion in coronavirus relief and a $1.4 trillion spending bill) into law, the president on Tuesday night all but said he won't sign the year-end omnibus appropriations and coronavirus relief package, telling Americans the tax rebates aren't big enough and that the measure is littered with unnecessary spending.
But Trump’s aides said they view his comments more as the president voicing his displeasure with the bill than an actual veto threat. But this case and other situations show the aides frequently misread a president hard to peg.
Trump criticized the coronavirus relief deal passed by Congress, saying the bill has “almost nothing to do with Covid” and called on lawmakers to increase direct payments to Americans to $2,000 from $600. “I am asking Congress to amend this bill and increase the ridiculously low $600 to $2,000 or $4,000 for a couple,” he said in a tweeted video. Some say Trump was confusing the Covid aid bill with the massive omnibus spending measure
The development, which stunned a Washington that thought it was used to Trump’s topsy-turvy ways, is likely to delay payments to Americans, upending a plan unveiled by Treasury Secretary Steven Mnuchin — a key negotiator on the package — for the first batch of payments to go out at the beginning of next week. Trump played little role in the negotiations.
If the president doesn’t sign or veto the bill within 10 days after it is passed, it would become law without his signature. If he does reject the bill, Congress could still vote to override his veto. But adding complexity to the situation is a potential pocket veto. Also, the latest stopgap spending measure goes through Dec. 28, so the fate of the matter should be known by then. If not, the government would face a shut down.
If the president vetoes the package, lawmakers would need to either pass new legislation meeting his demand for larger stimulus checks or vote to override his veto — which requires a two-thirds threshold for passage in each chamber. In March 2018, Trump threatened to veto a sweeping spending bill, but he ultimately signed it into law.
There's also a timing issue since the 5,593-page package hasn't been officially enrolled yet, which is necessary before it's even sent to the president's desk. If the bill isn't quickly sent to Trump, there's a real risk of a "pocket veto" — where the bill dies because no action was taken before the 117th Congress begins. The 10-day clock for a presidential signature or veto could run into the new congressional session that starts at noon Sunday, Jan. 3, at which point the bill would die. Sundays are excluded from the 10-day count under the Constitution, so enrollment and delivery of the bill would need to be occur by Tuesday night, or possibly Wednesday at the latest.
If the bill got to Trump's desk in time, Congress would have until noon that Sunday to override a possible veto
Trump is scheduled to leave Washington today to spend the holidays at his Florida resort, Mar-a-Lago, and he indicated he wouldn’t sign the current version. “I am also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation, and to send me a suitable bill, or else the next administration will have to deliver a Covid relief package,” he said. “And maybe that administration will be me, and we will get it done.”
Democrats said Trump should sign the bill and then work with them to pass additional aid. House Speaker Nancy Pelosi (D-Calif.) said on Twitter she would try to pass a bill with unanimous consent to approve $2,000 direct checks. That vote is expected Thursday, an aide said.
In his Twitter video, Trump took issue with foreign assistance spending, among other items; the fact that couples with mixed immigration status could receive rebate checks; the smaller size of the checks; and lack of relief for restaurants. "Congress found plenty of money for foreign countries, lobbyists and special interests, while sending the bare minimum to the American people who need it," Trump said. The virus "wasn't their fault; it was China's fault."
Specific line items in the bill Trump singled out include:
- $85.5 million for assistance to Cambodia.
- $134 million for Burma.
- $1.3 billion for Egypt and "the Egyptian military, which will go out and buy almost exclusively military equipment." Military aid to Egypt has been a staple of U.S. foreign policy since the 1979 Camp David accords.
- $25 million for "democracy and gender programs" in Pakistan.
- $505 million in aid to Central American countries.
- $40 million for the Kennedy Center in Washington, "which is not even open."
- $1 billion for the Smithsonian Institution and $154 million for the National Gallery of Art: "Likewise, these facilities are essentially not open."
- $7 million for "reef fish management."
- $25 million to combat invasive Asian carp.
- $2.5 million to "count the number of amberjack fish in the Gulf of Mexico."
- $3 million for poultry production technology.
- $2 million to "research the impact of downed trees."
- $566 million for FBI construction projects. Trump earlier this year had sought $1.75 billion in congressional funding to build a new FBI headquarters at its current site across the street from the Trump Hotel.
Comments: It’s classic Trump at a time when lawmakers from both political parties, after months on the issue, finally compromised and wanted to officially adjourn this Congress. The development brings focus back to the president, which he likes, and makes his top officials negotiating the matter with Democrats look embarrassed. It also likely pleases Pelosi who has already used Trump’s comments to get a vote on a bigger payment for eligible Americans. Trump supporters say he is correct to point out all the pork-barrel spending, but they acknowledge the president should have been far more involved in the process before lawmakers reached an accord and voted on the package.
— China still buyer of U.S. wheat, soybeans and cotton. U.S. export sales to China for the week ended Dec. 17 showed net sales of 3,000 tonnes of wheat, 11,789 tonnes of corn, 64,370 tonnes of sorghum, 526,402 tonnes of soybeans, and 185,597 running bales of upland cotton for delivery in the 2020-21 marketing year. Sales of 13,200 running bales of upland cotton were reported for 2021-22.
For pork and beef, net sales of 171 tonnes of beef for 2020 were reported, but net reductions of 6,139 tonnes of pork were reported (new sales of 5,158 tonnes but cancellations of 11,300 tonnes).
For 2021, sales of 157 tonnes of beef and 7,705 tonnes of pork were reported.
— China data shows another big jump in pork imports for November. The latest round of Chinese customs data showed the country imported 330,000 tonnes of pork in November, up 43.7% from year ago, according to Reuters. Through November 2020, pork imports were at 3.95 million tonnes, according to General Administration of Customs data, more than double the level seen during the same period in 2019, according to Reuters.
— China to lower tariffs on 883 commodity imports. China will lower tariffs on 883 commodities, according to Chinese media reports, based on a circular from the Customs Tariff Commission of the State Council. The provision tariffs will be lower than the most-favored nation (MFN) rates and will take effect Jan. 1. They are aimed at improving supply quality, according to the reports. Bilateral trade deals between China with countries including New Zealand, Peru, Costa Rica, Switzerland, Iceland, Australia, South Korea, Chile, Georgia and Pakistan will be affected by the adjustment, according to the People’s Daily. The tariffs rate in these deals will be further lowered. Reuters reported the notice indicated that China will exempt import tariffs on some anti-cancer drugs and raw materials of rare disease drugs, while import duties on artificial heart valves, hearing aids, as well as some raw materials for baby powders would be lowered. The report also said that import duties on parts, raw materials, and industrial equipment used in its new infrastructure and high-technology push would be lowered, along with emission-filtering devices for diesel engine vehicles and on some non-alloyed nickel and the minor metal niobium will be slightly cut in 2021 to encourage more imports. The report also indicated that sliding tariffs on cotton imported via additional quotas would be lowered “marginally,” lowering import costs on cotton. The South China Morning Post reported that some aviation equipment, logs and paper products were among the commodities along with some information technology products, with the latter starting July 1. Another report noted that the lower provisional import tariff rates exclude tariff quota commodities. The People’s Daily report did not cite the U.S. as one of the countries that would be affected by the adjustment in import tariffs.
— U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.
— USTR nixes request to delay Vietnam currency investigation. The U.S. investigation is expected to lead to the Trump administration imposing tariffs on billions of dollars of Vietnamese goods because of currency undervaluation. USTR General Counsel and acting Deputy U.S. Trade Representative Joseph Barloon turned down the request in a letter on Tuesday. He said parties not scheduled to testify could discuss the currency report in post-hearing comments that are due to USTR by Jan. 7.
— Lighthizer: ‘Everyone ought to have the same tariffs.’ In an interview with Bloomberg, U.S. Trade Representative Bob Lighthizer said: “Everyone ought to have the same tariffs,” saying the level could be set at something like 10%, with some room allowed for “some small amount of your goods because you have political reasons,” Lighthizer said. Had Trump won a second term, Lighthizer said he might have been able to close a deal with the U.K. before a congressional deadline next year. But he is also not convinced about the economic value of such a deal. His U.K. counterparts seem to want a deal for other reasons including a validation of their post-Brexit place in the world. Link to Bloomberg item for details.
— Turkey lowered taxes on rice imports from various countries including those in east Asia, according to a presidential decree published in the Official Gazette today.
— U.K., Canada reach stopgap deal to avoid tariffs post-Brexit. The U.K. and Canada reached a temporary agreement to prevent tariffs on goods and services between the two countries starting on Jan. 1, when the U.K. will no longer be covered by Canada’s trade deal with the European Union. In a statement Tuesday issued by the Canadian foreign affairs ministry, the governments said they agreed to continue giving each other’s products preferential tariffs. The measure will stay in place until the British and Canadian parliaments can ratify the Trade Continuity Agreement put forward in November. “This action is important for many businesses and jobs in Canada, which benefit from the strong economic ties between our two countries,” Chrystia Freeland, Canada’s finance minister, said in the emailed statement. Two-way trade between the countries was worth C$29 billion ($22.5 billion) in 2019, and the U.K. is Canada’s fifth-largest trading partner; Canada is the U.K.’s 15th-largest export market.
ENERGY & CLIMATE CHANGE
— Another increase in SRE requests. Data released by the Environmental Protection Agency (EPA) showed another increase in the level of small refinery exemptions (SREs) requested by refiners relative to the Renewable Fuel Standard (RFS). After remaining static for several months, there are now a total of 20 SREs that have been requested for the 2011-2018 compliance years, an increase of three from the November data. EPA also now shows that a total of 46 SREs have been requested for the 2019 and 2020 compliance years combined — 32 for the 2019 compliance year and 14 for the 2020 compliance year.
— Carbon crop harvesting. Big agriculture companies are jockeying with startups to encourage crop producers to adopt climate-friendly practices and develop farming-driven carbon markets The Wall Street Journal (link) took a look at the agriculture industry's latest cash-crop bet: carbon.
— U.S. to lower tariffs on Moroccan fertilizer maker after error. The U.S. Department of Commerce reduced the subsidy rate that OCP SA would face on phosphate exports to the U.S. to 16.88% from 23.46%, according to a memo from the agency (link). “On November 30, 2020, we received timely ministerial error allegations that Commerce made significant ministerial errors in the Preliminary Determination with respect to OCP’s subsidy rate,” the document says. “As a result, we have amended the OCP’s Group preliminarily ad valorem rate.” However, Commerce noted that it disagreed with other contentions made by OCP in the information they provided to Commerce.
FOOD & BEVERAGE INDUSTRY
— Cargill plans to resume processing at a Canadian beef plant on Dec. 29, bringing an end to a temporary shutdown after some employees tested positive for coronavirus earlier in the month.
— Summary: Global cases of Covid-19 are at 78,105,462 with 1,718,371 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 18,237,190 with 322,832 deaths.
— Pfizer nears deal for more vaccine doses. The federal government hopes to secure 100 million more doses of the company’s Covid-19 vaccine. The agreement, which could be announced as soon as today, would bolster the vaccination campaign under way in the United States. In exchange, the government would invoke the Defense Production Act to give Pfizer better access to roughly nine specialized products it needs to make the jab, which could help the U.S. partly offset a potential vaccine shortage that could leave as many as 110 million adult Americans uncovered in the first half of 2021. Pfizer and partner BioNTech, which already have a contract to supply the government with 100 million doses under Operation Warp Speed, as well as rival Moderna, are the only two groups that have won U.S. emergency use authorization for their respective Covid-19 vaccine candidates.
— White House virus coordinator Deborah Birx says she will retire. Dr. Deborah Birx, coordinator of the White House coronavirus response, said Tuesday she plans to retire, but is willing to first help President-elect Joe Biden’s team with its coronavirus response as needed. Birx, in an interview with the news site Newsy, did not give a specific timetable on her plans. “I will be helpful in any role that people think I can be helpful in, and then I will retire,” Birx told the news outlet (Link for details). Birx was outed on Sunday for not following her own holiday travel guidance, calling the experience “overwhelming.”
— France re-opens its border with Britain for freight. Passage of goods between the two countries was allowed to resume this morning after Britain agreed to conduct mass coronavirus testing of truck drivers. The move is aimed at relieving growing bottlenecks at British ports after the nation disclosed the growing spread of a more transmissible virus variant within its borders.
— Fauci says he'll have a better relationship with Biden than with Trump. Dr. Anthony Fauci has said he expects to have a better relationship with President-elect Joe Biden than he did with Donald Trump, saying he will likely be “dealing with him directly much more.” Fauci, the director of the National Institute of Allergy and Infectious Diseases, said he was currently spending much of his time trying to reassure people that the vaccination is safe, and encourage them to continue to take Covid-19 seriously.
POLITICS & ELECTIONS
— Democratic candidate Hart files complaint with House Administration Committee after losing by six votes in Iowa House seat race. Democrat Rita Hart lost the race for Iowa’s second district House seat by six votes to Republican Mariannette Miller-Meeks and has now filed a complaint with the House Administration Committee. The district extends southeast of Des Moines and is currently held by a Democrat. Miller-Meeks was declared the winner after a recount, but Hart maintains there were 22 ballots that were left out of the initial vote count and recount that would have given her a nine-vote lead and the House seat. The House Administration Committee will review the situation and make a report to the full House relative to seating Miller-Meeks or Hart. House Administration Committee Chair Zoe Lofgren (D-Calif.) issued a statement that the notice was received and is being reviewed. From 1933 to 2009, the Congressional Research Service (CRS) reports there have been 107 such contested election cases. Most of those were rejected, with a vacancy declared in one case and in three cases the candidate who contested the results was seated. The last time Congress overturned a state-certified House election result was when the Democratic majority didn’t seat an Indiana Republican in 1985. The GOP anger over that decision may have contributed to Newt Gingrich’s populist success in the House and overturning an election in 2021 would also guarantee a backlash.
— Counting continues in New York’s 22nd Congressional district upstate, where a state judge ordered a recanvass this month after Republican Claudia Tenney led by 12 votes in the initial count. Now she leads by 19, but the process is unlikely to be completed before the new Congress is sworn in.
— Fudge, Haaland nominations may be delayed: AP. President-elect Joe Biden may delay the nomination of Rep. Marcia Fudge (D-Ohio) to be Housing and Urban Development secretary, and Rep. Deb Haaland (D-N.M.) to be Interior secretary, in order to give House Speaker Nancy Pelosi (D-Calif.) a larger majority in the early months of the next Congress, the Associated Press reported (link). While not all races are decided, Pelosi is expected to have the slimmest House majority since 1945.
— California Secretary of State Alex Padilla to replace Harris in Senate, become state’s first Latino senator. California Democratic Gov. Gavin Newsom announced Tuesday that he plans to appoint Secretary of State Alex Padilla to replace Vice President-elect Kamala Harris in the Senate. Padilla will become the state’s first Latino senator. The state’s senior Democratic senator, Dianne Feinstein, had encouraged Newsom to name Padilla, who worked for Feinstein in the 1990s. After working for Feinstein and Cárdenas, Padilla ran for office himself, first serving on the Los Angeles City Council. Padilla was elected to the state Senate in 2006 and ran successfully for California Secretary of State in 2014. It’s not immediately clear if Padilla will have to run in a special election. Harris’ Senate term expires in January 2023. The governor could call a special election prior to that, but he is not legally required to do so, according to the California Secretary of State's office. If there is no special election, Padilla could serve out the rest of Harris' term and would have to seek a full term in 2022. Padilla has launched a Senate campaign committee, according to a Friday filing with the Federal Election Commission.
— Trump pardons 15. The president's pardons included a former campaign adviser whose activities set off the Russia investigation and four former military contractors convicted of wartime killing of Iraqi civilians. He also issued five commutations, including to three former congressmen.
— Trump vows Thune ‘will be primaried In 2022’ for objecting to his efforts to contest election. President Trump on lashed out at Senate Republicans on Twitter, claiming that they would have lost seats without his endorsement, and warned Senate Majority Whip John Thune (R-S.D.) will be “primaried in 2022.” Trump’s tweet came fter Thune said that efforts to object to the Electoral College vote would “go down like a shot dog” in the Senate.
— Vilsack meets with Black farm leaders. Tom Vilsack, President-elect Joe Biden’s nominee for USDA secretary, on Tuesday hosted a virtual meeting with Black farm leaders including Shirley Sherrod, the former Georgia rural development director Vilsack fired in a mix-up and then offered to rehire. “During the discussion, the participants shared their desire to find ways to increase reliable broadband in rural areas to provide better interconnectivity across areas,” the Biden-Harris transition team said in a new release. “The group also highlighted the importance of the Justice for Black Farmers Act and the discrimination that Black farmers have faced when trying to access programs, technical and financial assistance from the USDA. “The secretary-designee affirmed his commitment to establishing strong partnerships with organizations that provide assistance to Black farmers and will work to ensure that they have a seat at the table during his time as secretary. Both the secretary-designee and the network reiterated their commitment to an open and ongoing dialogue,” the release added. Link to full list of participants.
— Dominion Voting Systems employee sues Trump campaign, OANN, Newsmax, Giuliani. A Dominion Voting Systems employee is suing the Trump campaign, Rudy Giuliani, Sidney Powell as well as news networks OANN and Newsmax for defamation over their claims that the company's voting machines rigged the 2020 election. Eric Coomer, director of product strategy and security for the company, filed the lawsuit in Denver, Colorado on Tuesday.
OTHER ITEMS OF NOTE
— Israel is facing its fourth election in two years. Having failed to pass a budget by midnight on Tuesday, the parliament was automatically dissolved, triggering a poll on March 23. Binyamin Netanyahu, leader of the right-wing Likud party, had been due to cede the prime ministership to his centrist coalition partner, Benny Gantz, in October. Netanyahu faces challenges from the right as well as from Gantz.
— Vladimir Putin, Russia’s president, signed legislation that allows former presidents to become senators for life once they leave office. Putin changed the constitution this year to permit himself two more six-year terms, potentially keeping him in power until 2036. Meanwhile the Kremlin banned more European officials from Russia in response to sanctions imposed over the poisoning of Alexei Navalny, an opposition leader.
— USDA names new NIFA director: Carrie Castile, who formerly worked in the USDA rural development and farm program agencies, will begin work on Jan. 4 as the director of the grant-making National Institute of Food and Agriculture (NIFA), which was moved to Kansas City from Washington, DC in 2019.