Displaying items by tag: Trump

(Washington)

The Trump administration is exploring a new $100 bn tax cut for Americans. The plan, which is designed to potentially bypass Congress, will try to use the Treasury Department’s own power to enact the cut. The core idea of the cut is to allow investors to account for inflation when calculating capital gains. What that effectively means is that investors could walk up their basis in shares as time progresses, minimizing the taxable portion of their gains. The cuts are far from final, as Treasury head Mnuchin says he is not even sure if the Treasury has the authority to do so. Mnuchin commented on the cuts that “We are studying that internally, and we are also studying the economic costs and the impact on growth”.

FINSUM: This cut makes logical sense to us, but there is already backlash in the media that this is a major gift only to America’s wealthy.

(New York)

The Wall Street Journal has put out an article painting an interesting, and perhaps realistic, view of how the trade war might play out. Their argument is essentially that the market itself will stop any trade war from becoming too serious. The WSJ says it best, “If the Trump trade war starts to squeeze economic growth, markets will react badly. When this happens, the impatient American president will have no choice but to declare victory, call off the war, and limit the damage”.

FINSUM: We tend to think this view is probably correct. That said, these kind of tariff wars can have unintended consequences that could make the damage more extensive and permanent than it is currently easy to foresee.

(Washington)

Rumors of former Trump lawyer Michael Cohen turning on the president have been stirring for weeks. Now it appears to have happened, as CNN has published a recording (which it says is from Cohen) of President Trump and Cohen discussing the “financing” of a payment to a former Playboy model. The conversation was apparently about buying the playmate’s story, a story which involved an alleged affair with Trump in 2006.

FINSUM: In our view this will likely just cause another minor firestorm. Trump doesn’t say anything really shocking or incriminating in the recording, so we don’t imagine this will have any significant impact.

(Washington)

It looks like the EU is going to pullout all the stops to try to avoid a trade war with the US. EU commissioner head Juncker is going to meet in Washington this week with President Trump to offer some new avenues for discussion as a way to avoid a broad tariff package. Trump is threatening a $50 bn tariff package on the EU, which he says has taken advantage of the US in trade. Europe is particularly worried for their car exports to the US, which are very vulnerable to Trump’s potential tariffs.

FINSUM: We have a hard time imagining Juncker is going to say anything to dissuade Trump, but maybe the EU has something sweet to offer.

(Washington)

In a highly unusual break from presidential tradition, President Trump weighed in yesterday on the Fed’s current policy approach, and he was not happy. Speaking in regard to recent rate hikes and plans to continue doing so, Trump said “I’m not thrilled … Because we go up and every time you go up they want to raise rates again ... I am not happy about it. But at the same time I’m letting them do what they feel is best.” Speaking plainly, Trump continued “I’m just saying the same thing that I would have said as a private citizen … So somebody would say, ‘Oh, maybe you shouldn’t say that as president. I couldn’t care less what they say, because my views haven’t changed. I don’t like all of this work that we’re putting into the economy and then I see rates going up”.

FINSUM: The media is trying to make a very big deal out of this, but in our view, these are pretty benign comments, especially coming from Trump.