Trump to Give Economic and Trade Policy Address at New York Economic Club

Posted on 11/12/2019 6:09 AM

Trump expected to delay auto tariff decision re: EU | Survey on ag economy, farm income

In today's updates:

* Trump speech today in NYC on economy and likely trade policy
* Protesters in Hong Kong block roads, rail line amid escalation in conflict
* Weather and China trade woes did not bail out cotton from low prices, higher stocks
* Trump widely expected to delay car tariffs as Europe invests in U.S. auto sector
* Update to DOJ seeks stay of sugar order re: Mexico
* USTR Lighthizer to meet with India Commerce minister on Wednesday
* Survey: Ag economy, farm income stressed in 2019; limited signs of improvement
* Rep. Peter King (R-N.Y.), a 14-term lawmaker, plans to retire from Congress
* Stopgap funding bill likely to run through Dec. 20
* Amazon confirmed its plans to launch a new grocery store line
* Ryan Talley elected chairman of the Western Growers board of directors
* DACA gets Supreme Court focus today
* Former President Jimmy Carter enters hospital for surgery
* Officials: Taliban will free American and Australian professors
* Trump plans to limit research EPA can use to justify clean air and water regulations

Markets: Seaborne imports into the largest U.S. gateway for trans-Pacific goods plummeted last month. The ports of Los Angeles and Long Beach handled 120,077 fewer loaded inbound containers in October than a year ago, a 14.1% drop. The Pacific ports together handle about 37% of U.S. seaborne container import volume, and are considered a bellwether of U.S. trade. The decline in container volume followed the U.S. implementation of a new round of tariffs in September on more China-made products, including the first large swath of consumer goods to be slapped with levies. Link to WSJ article.

Meatless craze goes global. Capitalizing on the rollout of its Impossible Whopper in the U.S., Burger King today is launching a vegetarian burger in more than 20 markets across Europe. The Rebel Whopper, made with patties from Unilever-owned The Vegetarian Butcher, will be available in more than 2,500 locations across the continent. Boosted by the success of the Impossible Whopper, Burger King’s U.S. same-store sales grew by 5% during the third quarter, its biggest jump since 2015.

Wow way... Huawei will double October salaries to thank its 190,000 employees for enduring the Trump administration’s blacklisting, according to an internal message obtained by Nikkei Asian Review.

 

U.S./China trade policy update:

  • Traders to focus on whether President Trump will have new comments about pending U.S./China trade talks when he speaks today at a luncheon event at the New York Economic Club. Late last week, the president said he had not yet agreed to roll back U.S. tariffs on Chinese goods. Most will see if the president, as he usually does, goes off script and reveals any new developments relative to ongoing talks with China or perhaps in his dealings with Chinese leader Xi Jinping. A White House spokesman said to expect the president to tout how his policies of lower taxes, deregulation and reciprocal trade have supported the longest economic recovery in history. Perspective: The speech in part is important because there are many conflicting media reports on what it may and may not cover.
  • Protesters in Hong Kong again blocked roads and rail lines during the morning commute. They also vandalized buses and traffic lights in the city’s central business district during the lunch hour. On Monday evening, Carrie Lam, Hong Kong’s chief executive, described the protesters as “enemies of the people,” promising not to yield to “escalating violence.” On Monday, a protester was hit by a live round in the chest. The U.S. State Department said it was watching events in Hong Kong with “grave concern” on Monday evening and called on Beijing to honor commitments under the Sino-British Joint Declaration, after one of the bloodiest days in Hong Kong since anti-government protests began in June.
  • U.S. cotton growers rival their soybean brethren in negative impacts from ongoing U.S./China trade war. Bloomberg took an extended look at the U.S. cotton supply and demand situation and concludes that bad weather, a big drop in yields and a cratering of demand from China have raised carryover and plummeted prices. Link to article.
  • Rethinking Phase 1. After some optimism around the prospects of a Phase 1 trade deal last week, some analysts have flagged concerns that investors could be disappointed by the scope of any agreement, the Wall Street Journal reported.
  • Chinese premier says will use macro policies to meet targets. China’s state TV is quoting Chinese Premier Li Keqiang as saying the country will use counter-cyclical adjustment measures to keep macro policies stable and make sure the country meets its economic targets this year. The report also quoted Li as saying the country will speed up recovery of hog production to ensure supplies and will curb surging prices of some ag products. However, the report did not indicate what actions China will take on the hog side or ag product prices.

Trump widely expected to delay car tariffs as Europe invests in U.S. auto sector. The Trump administration is expected to again delay a decision on whether to slap tariffs on European automobiles after German carmakers plan to shift global production to American suppliers. In May, Trump gave himself a deadline of mid-November to decide whether to impose levies on cars and auto parts from the European Union. The EU threatened to retaliate with tariffs on $39 billion of American goods if the president carried out his threat.

Background. Japan has since signed a trade agreement with the U.S. that includes a verbal pledge by Trump not to proceed with a 25% tariff on cars and car parts. Canada and Mexico reached an agreement to avoid the tariffs as part of talks over a North American trade pact. And South Korea signed a revised trade deal with the Trump administration in September 2018 that it has long argued should shield it from tariffs. Link to NYT article on topic.

Update to DOJ seeks stay of sugar order re: Mexico. Monday's item (link) noted that the court said CSC was not in the discussions (negotiations) about the 2017 amendments. But a legal contact said, “The court did not say that and the record shows CSC was deeply involved with Commerce Secretary Wilbur Ross” and others.

Lighthizer to meet with India Commerce minister on Wednesday. U.S. Trade Representative Bob Lighthizer will meet with India’s Commerce Minister Piyush Goyal Nov. 13 in Washington. The meeting could be a sign that a limited trade deal is near that could give U.S. farm products increased market access in India in return for the U.S. restoring some of India’s tariff free benefits.

Survey: 57% of farm borrowers were profitable in 2019. The American Bankers Association and Federal Agricultural Mortgage Corporation released a survey of ag lenders on Monday. Among the findings: About 57% of farm borrowers were profitable in 2019, up six percentage points from 2018, but 82.5% said their profits were declining. Dairy, livestock and grains were seen as the most troublesome sectors. “The agricultural economy and farm income remained stressed in 2019 with limited signs of improvement in 2020,” according to the report. Link to survey.

Lenders listed credit quality, competition for loans and weaker loan demand as their chief concern, the report said, while producers listed liquidity, income and leverage as their top concerns. However, the report noted that “trade, tariffs and weather edged up on the list.”

Only 9.1% of respondents said that they expected increased profitability for farmers the next 12 months while 55.1% expected profitability to decline.

As for specific ag sectors, the report said that dairy, grains and cattle were sectors of the most concern. However, interest in financing for hemp and alternative energy were big interest items, with 49.9% of lenders say farmers were asking about financing for hemp production and 36.8% inquired about alternative energy financing.

Some 49.6% of lenders expect land values to decline in 2020, with lenders reporting an average of 37.8% of land in their markets was above market value. “Lenders also expect compression in cash rents, but few lenders reported above-market value rents compared to 2018,” the report said.

Nearly half of lenders said there was an increase in farmer retirements in 2019 and nearly two-thirds said they look for that pace to quicken in the next 12 months.

Other items of note:

  • Rep. Peter King (R-N.Y.), a 14-term lawmaker, plans to retire from Congress at the end of his term, joining a growing list of Republicans who have decided to leave the House this year. King, 75, said he decided that while he and his wife were in good health, it was time to spend more time with children and grandchildren, including a daughter who recently moved to North Carolina. Democrats consider King's potential opponent, Babylon Town Councilwoman Jackie Gordon, a formidable candidate. David Wasserman, House editor of the Cook Political Report, notes that “he's the sixth most senior Republican in the House and one of just five remaining from New York. His heavily suburban Long Island district moves from Likely Republican to Lean Republican.”

  • Stopgap funding bill likely to run through Dec. 20. Congressional leaders are tentatively eyeing a temporary spending bill to last through Friday, Dec. 20, according to congressional contacts. Meanwhile, today's meeting on funding the government will be between Senate Appropriations Chairman Richard Shelby (R-Ala.) and House Appropriations Chairwoman Nita Lowey (D-N.Y.) due to a scheduling conflict with the ranking members.

  • Amazon confirmed its plans to launch a new grocery store line as an alternative to Whole Foods, which the firm purchased in 2017. The stores will open in California next year, CBS reports (link).

  • Ryan Talley was elected chairman of the Western Growers board of directors, succeeding Ron Ratto. Talley will fill the role for one year, the group announced (link).

  • DACA gets Supreme Court focus today. The Supreme Court today will hear arguments over President Trump’s efforts to end the program that protects about 700,000 undocumented immigrants who were brought to the U.S. as children. Trump has praised the goals of the Obama-era program, called Deferred Action for Childhood Arrivals, or DACA, but has said that it’s unconstitutional. A ruling is expected in late June 2020.

  • Former President Jimmy Carter enters hospital for surgery. Carter was admitted to a hospital on Monday evening for a surgery to relieve pressure on his brain, caused by bleeding due to his recent falls, his spokeswoman said. The procedure is scheduled for this morning at Emory University Hospital, Deanna Congileo said in a statement.

  • Officials: Taliban will free American and Australian professors they abducted in 2016, in exchange for three captured insurgent commanders. Both government and Taliban officials said Tuesday that the transfer was imminent. The exchange would be a major step toward reopening peace talks between the U.S. and the insurgents, observers note.

  • A Trump administration plan would limit the research the EPA can use to justify clean air and water regulations, making them harder to enact, observers note.

Markets. The Dow on Monday rose 10.25 points, 0.04%, at 27,691.49. The Nasdaq was down 11.04 points, 0.13%, at 8,464.28. The S&P 500 was 6.07 points lower, 0.20%, at 3,087.01. This marked the ninth record finish for the Dow in 2019.


 

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