Ahead of Trump’s much anticipated tax announcement on Wednesday, the WSJ reports that the president has ordered his (mostly ex-Goldman) White House aides to accelerate efforts to create a tax plan “slashing the corporate rate to 15% and prioritizing cuts in tax rates over an attempt to not increase the deficit” which means that without an offsetting source of revenue, Trump is about to unleash the debt spigots, a proposal which will face fierce pushback from conservatives as it is nothing more than a continuation of the status quo under the Obama administration, and may well be DOA.
The WSJ adds that during an Oval Office meeting last week, “Trump told staff he wants a massive tax cut to sell to the American people” and that it was “less important to him if the plan loses revenue.”
Hoping to add a sense of dramatic urgency – after all his 100 day deadline hits on Saturday – Trump told his team to “get it done,” in time to release a plan by Wednesday.
Translation: Trump’s massive tax cut will be funded by debt, and as a result, will be at best temporary as it will be in breach of the revenue constraints in the reconciliation process; at worst it will never happen as it will now require Democrat votes.
Investors breathed a sigh of relief following the first-place showing of centrist and pro-European Union candidate Emmanuel Macron in the first round of France’s presidential elections Sunday, sending the Euro to a five-month high relative to the dollar. Populist Marine Le Pen ranked second in the voting.
Why it matters: The results make it more likely that Macron will be France’s next president, keeping France in the EU. That should have a positive impact on both French stocks and the U.S. economy.
Paris rising: High Frequency Economics’ Carl Weinberg predicts that French stocks will rally in trading Monday, and that interest rates on French government debt will fall. France isn’t out of the woods, however. Weinberg writes that Macron will have a tough time corralling a divided Parliament to implement pro-growth reforms.
Domestic affairs: A Blackrock Investment Institute note to clients calls Macron a “business friendly” candidate that will not get in the way of Europe’s improving economy. The U.S. economy has seen the benefits of faster growth in Europe—political stability across the Atlantic is good for business here.
Caveat: David Zahn of Franklin Templeton Investments warns that “it’s not a done deal yet,” and that the push and pull of a high profile election will cause “markets to remain volatile in the run-up to the final round of voting on May 7 and potentially even beyond.”
The prime minister added the Iranian deal should be reviewed or revoked.
“There’s no question that the deal with Iran, which paves the way to eventual Iranian acquisition of the critical elements of nuclear bombs and nuclear arsenal, something we don’t accept and never signed on the deal and we won’t let happen,” Netanyahu said Friday.
“My position vis-a-vis the deal with Iran… repeal or replace,” Netanyahu said, adding that Washington should not let Tehran “have the best of all world.”
The relations between Israel and Iran have been strained since the Iranian Revolution in the late 1970s. The ties are overshadowed by a number of issues, including Tehran’s nuclear and missile programs accompanied by controversial anti-Israeli statements of high-ranking Iranian officials, such as former Iranian President Mahmoud Ahmadinejad.
As pressure mounts on Trump to post some victories within the totally arbitrary window of the “First 100 Days” of his administration, the President is expected to join Treasury Secretary Steven Mnuchin later this afternoon to sign a combination of executive orders and memos targeting the reduction of tax regulations and certain components of Dodd-Frank.
Per a statement from the White House, one of Trump’s new executive orders will seek to undo tax rules put in place in the last year of Obama’s presidency that were designed to limit so-called ‘corporate inversions’ which allows U.S. traded companies to recognize income in lower cost countries like Ireland. Per Bloomberg:
Under President Barack Obama, Treasury sought to rein in U.S. companies’ attempts to shift their profit offshore by proposing rules that would curb so-called “earnings stripping” and inversions — mergers in which U.S. companies transfer their tax address overseas to low-tax countries like Ireland to cut their tax bills.
Some of those rules, first proposed in April 2016, sought to restrict lending among subsidiaries of the same corporate parent, a technique that can create income in low-tax countries and tax-deductible interest payments in the U.S. The proposed rules met a barrage of criticism from corporations and tax lawyers, who complained that they went too far by banning common, everyday cash-management practices that have nothing to do with tax avoidance.
Amid the criticism, Treasury last October softened the proposed rules to allow cash pooling, a common corporate money-management technique in which excess cash in subsidiaries is swept daily into a single pool. It also delayed a related proposal, which would require companies to extensively document their related-party lending, until Jan. 1, 2018.
It appears that if you want to be liked by the American public, go to war. After a non-stop plunge to record low ratings for a new president, Rasmussen’s most recent data shows President Trump’s favorability surging to 2-month highs since he started rattling sabres around the world.
The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 50% of Likely U.S. Voters approve of President Trump’s job performance. Fifty percent (50%) disapprove. This is the first time the president’s overall approval rating has been back in the 50s in nearly a month. Just after his inauguration, Trump’s job approval peaked at 59% and remained in the 50s every day until early March. It’s gone as low as 42% since then. The latest figures for Trump include 30% who Strongly Approve of the way Trump is performing and 39% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -9.
In its first official comments on Sunday morning’s failed missile launch, South Korea said the latest North Korean provocation threatens the entire world, and warned of a punitive action if it leads to further actions such as a nuclear test or a long-range missile launch.
“North Korea showing a variety of offensive missiles at yesterday’s military parade and daring to fire a ballistic missile today is a show of force that threatens the whole world,” South Korea’s Foreign Ministry said in a statement. “We have to warn again that if this leads to a strategic provocation of a nuclear or ICBM test, the North will face strong punitive measures that it will find hard to endure.”
Shortly after the failed test, U.S. Vice President Mike Pence touched down in South Korea Sunday for his first visit in a five-leg trip to the Asia-Pacific region, being the highest-level official from the Donald Trump administration yet to arrive here amid escalating tensions with the North. The arrival marked Pence’s first-ever visit to the South, and was nine hours after North Korea conducted its fifth ballistic missile test this year earlier in the morning, though it ended in failure.
Pence arrived at the Osan Air Base in Pyeongtaek, Gyeonggi, at 3:30 p.m. but has yet to make any public remarks. A joint statement between him and Prime Minister Hwang Kyo-ahn, who concurrently serves as acting president, is expected to come this afternoon after the two leaders discuss North Korean issues at Hwang’s office in central Seoul.
“This morning’s provocation from the North is just the latest reminder of the risks each one of you face every day,” Pence told a fellowship of U.S. soldiers and Koreans at a dinner in Seoul.
The U.S. Treasury Department has decided not to label China a currency manipulator in a report published Friday on the foreign exchange policies of America’s key trading partners, backing away from President Donald Trump’s campaign promise to do so.
The move was apparently taken out of consideration for China, which the U.S. hopes will help rein in North Korea’s nuclear and missile programs.
This was the Trump administration’s first release of the twice-yearly report, which evaluates the foreign exchange policies of major U.S. trading partners.
Although the report did not signal a major shift in Washington’s own currency policy, it is likely Trump will try to use the issue as a bargaining chip in negotiations with other countries. The U.S. may try to limit the dollar’s rise against the yen in its first economic dialogue with Japan, scheduled for Tuesday. Japan’s large trade surplus will probably be high on the agenda.
Trump’s Treasury Department used the same standards for determining currency manipulation as those of the previous administration under President Barack Obama. The report kept China, Japan, South Korea, Taiwan, Germany and Switzerland on a watch list as they met some of the criteria.
Japanese Prime Minister Shinzo Abe on Thursday urged U.S. President Donald Trump to insist on greater Chinese cooperation in the face of threats from North Korea, which tested yet another missile the previous day.
Japan requested the call, which lasted 35 minutes, just ahead of Trump’s scheduled summit with Chinese President Xi Jinping in Florida. Trump assured Abe that the North Korean issue would feature prominently on the agenda when he meets with Xi on Thursday and Friday, U.S. time, according to a Japanese government official.
Trump and Abe agreed that China has a key role to play in moderating Pyongyang’s behavior, and that a Beijing clampdown needs to go beyond the current suspension of coal imports from the North.
“All options” for dealing with the threat remain on the table, the U.S. president said.
In an earlier interview with the Financial Times, Trump had declared, “If China is not going to solve North Korea, we will.”
But while Trump’s White House is taking a harder line — going so far as to hint at the possibility of military action — China is reluctant to crank up the pressure.
The political scandal that has rocked South Korea since October is coming to a boil after a Seoul court approved a warrant for the arrest of impeached President Park Geun-hye early Friday.
The former leader abused her power by collecting money from businesses and violating the freedom of corporate management, the prosecutors’ office had said when requesting the warrant. She denied the allegations against her at an earlier questioning and could destroy evidence unless detained, they explained.
Apple Chief Executive Tim Cook expressed support for globalisation and said China should continue to open its economy to foreign firms, while speaking at a forum in Beijing on Saturday.
“I think it’s important that China continues to open itself and widens the door if you will,” said Cook, speaking at the government-sponsored China Development Forum.
Cook’s comments come amid rising tensions between the U.S. and China, with protectionist rhetoric from U.S. President Donald Trump sparking concern of increased trade friction between the two countries.
“The reality is countries that are closed, that isolate themselves, it’s not good for their people,” said Cook, in a rare public speech.
Apple said on Friday it will set up two new research and development centres in Shanghai and Suzhou in China.
It has pledged to invest more than 3.5 billion yuan ($508 million) in research and development in China.
Apple has been singled out in Chinese media as a potential target for retaliation in the event of a trade war.
The Global Times warned last November if Trump triggered a trade war with China, Beijing would then target firms from Boeing to Apple in a “tit-for-tat” approach.