Trump's job approval ratings rise | Historical hurdles confront GOP regaining control of House
— U.S./China trade policy update:
- China and the U.S. are in the final stage of completing a trade deal, with Beijing offering to lower tariffs and other restrictions on American farm, chemical, auto and other products and Washington considering removing most, if not all, sanctions levied against Chinese products since last year, the Wall Street Journal reported Sunday (link for details). The New York Times followed with a similar article (link). The reports follow President Trump's comments last week that two sides were "getting very, very close" to a deal and that he planned to meet Xi at his Mar-a-Lago resort in Florida.
- Pro Farmer released a special report Sunday on connecting the dots on President Donald Trump's initial goal on reducing the trade deficit gap and his overall goal for a comprehensive trade agreement with China with unambiguous enforcement. These goals are laced with 2020 presidential election crosscurrents. Link to the report.
- If you take your tariffs off now, I might take our tariffs off later... That appears to be the gist behind a Friday tweet from President Donald Trump when he said he is asking China to end its tariffs on American agriculture. Commodity traders said they want to see some confirmation of more Chinese buying or a final trade deal before getting too excited over the news.
- Goldman Sachs looked at what a U.S./China trade deal might look like. "Our base case is that an agreement would leave some US tariffs in place, potentially lifting them in stages as various commitments under the agreement have been met. We nevertheless expect some U.S. tariffs to remain in place into 2020," Goldman Sachs wrote in the report. Going forward, the process to reach a trade deal would be expected to occur in three phases, said Goldman. Link for more details via CNBC.
- Commerce Secretary Wilbur Ross said Friday that the Trump administration is trying to strike a trade deal with China that would allow the administration to enact "automatic" tariffs as an enforcement mechanism if China violated its terms. Getting the enforcement provision included would be the most "contentious" part of the talks, Ross said. "We need the ability to take unilateral action that punishes them, whether it's big tariffs or quotas or whatever we do," Ross said during an appearance at the Conservative Political Action Conference in Oxon Hill, Md. "We have to have an automatic ability to do something about it. You'd be amazed how much having unilateral ability to mete out punishment affects behavior." Ross said that such terms were needed to ensure that China abides by its commitments to the deal. Regular meetings among lower-level officials of both countries would be needed to monitor the deal along with more periodic ones between higher level officials.
- China's legislature is due to endorse a law that would address one portion of foreign complaints about Beijing’s regulation system by discouraging officials from pressuring companies to hand over technology. The law will be the framework for China to reduce its limits on foreign stakes in Chinese banks, insurers and asset management companies — something that Chinese leaer Xi Jinping had agreed to do in November 2017, when President Trump came to Beijing for talks ahead of the trade war. Sunday was the first day of the annual Chinese People's Political Consultative Congress, a body that nominally advises on laws and policy and whose members include numerous retired officials and celebrities. The National People's Congress, China's rubber stamp parliament, begins its annual session on Tuesday.
- Senate hearing. On Thursday, Senate Commerce Subcommittee on Security will hold a hearing on challenges posed by China for U.S. commerce, focusing on manufacturing competitiveness, intellectual property challenges, standards-setting, and cybersecurity threats.
- U.S. presses China to buy U.S. poultry products. As the Trump administration touts progress on a deal with China to reshape the trading relationship, Beijing is said to be requesting a compromise over poultry. China is asking to ship products made from its chicken to the U.S. in return for reopening its market for American poultry after four years, according to reports. Feet, wings and legs are on the table. The U.S. is asking Beijing to make substantial reforms on poultry to address longstanding concerns, the person said, adding that there is optimism about the discussions on the matter.
- If there is a U.S./China trade agreement, it could have transportation impacts. Reason: Big stockpiles of Chinese goods are sitting at West Coast ports, waiting to cross the country. Importers dumped loads of goods on the West Coast last year in anticipation of the Trump administration imposing stiff tariffs on imports.
— Trump administration vows to stay tough on China in trade report. The Trump administration said it will continue to press China over its unfair trading practices and urged Congress to approve a pact to replace the North American Free Trade Agreement this year, in an annual report outlining U.S. trade priorities (link).
The U.S. will also pursue trade negotiations with Japan, the European Union and the U.K., the U.S. Trade Representative’s office said in the report released on Friday.
“One of the administration’s top priorities in 2019 is to obtain congressional approval of the USMCA,” according to the report. “The USMCA gives more priority to the interests of American workers than any prior deal signed by the United States. It is not merely a new trade deal — it is a new paradigm for future agreements.”
— Historical hurdles confront GOP regaining control of the House. David Wasserman the respected and popular House editor for the bipartisan Cook Political Report, offers these historical perspectives:
* “The House majority hasn't flipped twice in a row since 1954 and hasn't flipped during a presidential cycle since 1952.
* “Democrats have gained House seats in five of the past six presidential elections (save for 2004, when Republicans drew a favorable new map in Texas) and in seven of the past eight presidential cycles, the net partisan seat shift in the House has been in the single digits.
* “It's tough to see Republicans winning the House back unless President Trump's approval rating is significantly higher than today's [level] come 2020.
* “A key 2020 House battleground will be Texas. Democrats picked up two seats in the suburbs of Dallas and Houston last fall, but came within single digits in six more district.”
Republicans will need to gain 18 seats to win back the majority (or 19 depending on the outcome of a new election in NC-09), and Wasserman notes they have “no shortage of good-looking targets, at least on paper: there are now 31 Democrats sitting in districts carried by President Trump in 2016 and just three Republicans sitting in districts carried by Hillary Clinton.”
Wasserman's bottom line: “It's too early to establish a range, but based on history and where this president's approval is, Republicans should gain seats but Dems are the early favorites to keep a slim majority.”
— Other items of note:
- Trump’s job-approval rating shows slight rise. Twenty months before the next presidential election, President Trump’s job-approval rating, at 46%, is similar to those of Presidents Clinton and Obama at this point in their terms, though personal ratings of Trump are below those of the two Democratic predecessors. Trump’s approval rating in the survey, which interviewed 900 Americans from Feb. 24-27, ticked up 3 percentage points from December and January to reach 46%. Some 52% disapproved of his job performance, down from 54% in each of the previous two months. The poll also found Democratic primary voters looking for a nominee with aggressive policy ideas Trump leads a generic Democratic opponent, 46% to 40%, in five Midwestern states he carried in 2016: Indiana, Michigan, Ohio, Pennsylvania and Wisconsin. But he trails a generic Democrat, 50% to 39%, in five Sun Belt states Democrats aim to flip in 2020: Arizona, Florida, Georgia, North Carolina and Texas. Link to latest Wall Street Journal/NBC News poll, which was conducted as Trump traveled to Vietnam for his second summit with North Korean dictator Kim Jong Un but before he returned home without completing a denuclearization agreement. The margin of error for the full sample was 3.27 percentage points.
- Huawei CFO heads to court. Huawei Technologies Chief Financial Officer Meng Wanzhou is scheduled to appear in court Wednesday, which is when the Canadian Justice Department plans to confirm its intention to proceed with an extradition hearing for a case at the center of tensions between the U.S., China and Canada.
- Rand Paul (R-Ky.) to vote to block emergency declaration, forcing Trump veto. Sen. Paul's pledge to support a resolution to block the national emergency will give the bill a majority in the Senate, forcing President Trump to issue the first veto of his presidency. The House passed the resolution to block Trump's emergency declaration last week in a 245-182 vote, with 13 Republicans joining Democrats to support it. The Senate will vote on the resolution before they leave town for a weeklong break starting on March 15. Trump has pledged that he will veto the resolution of disapproval.
— Markets. The Dow on Friday rose 110.32 points, 0.43%, at 26,026.32. The Nasdaq added 62.82 points, 0.83%, at 7,595.35. The S&P 500 moved up 19.20 points, 0.69%, at 2,803.69.
For the week, the S&P 500 rose 0.4% to crack 2,800 and the Nasdaq gained 0.9%, while the Dow fell back 0.1% to end a nine-week winning streak.
The Dow gained 11.1% during the first two months of 2019, its best two months since August 2009, while the S&P 500 rose 11.1%, its best two months since October 2010 — this week is the 10-year anniversary of when the S&P 500 Index bottomed out at 666 amid the financial crisis.
Weekly moves for other markets: Crude Oil WTI -2.6% to $55.77/bbl.; Gold -2.9% to $1,294.5/oz.; Natural Gas +4.9% to 2.849; Ten-Year Treasury Yield -0.4% to 121.63.
The U.S. is about to become a net energy exporter, a feat not seen since 1953. Exports of oil, gas and oil-based products have nearly doubled since 2012. Firms have been allowed to export U.S. oil only since late 2015, when a 40-year ban on letting crude exit the country was lifted. The U.S. became a net natural gas exporter in 2017. If the country stays on pace, oil and petroleum products will follow by 2021.