The New York State Department of Taxation and Finance has just formally opened an investigation into Trump’s charity activities. The state accuses the Donald J. Trump Foundation of violating state tax laws regarding campaign financing, self-dealing, and illegally coordinating with the presidential campaign. The state seeks to dissolve the foundation in addition to other measures. The investigation may turn criminal, in which case it could widen in scope to include much of Trump’s personal financial affairs, including his tax returns.
FINSUM: Hard to know how broad this could extend, but it seems like it will certainly intersect with Mueller’s investigation. It could prove a big headache for the president.
President Trump faced nothing short of public and political outrage in the US yesterday, after he essentially sided with Russia’s view of the 2016 election meddling scandal. When asked about Russia’ alleged meddling in the election, Trump insinuated that he believed Putin’s side of the story more than that of US intelligence agencies (though he did not say this outright). That sparked widespread condemnation from political foes and allies alike.
FINSUM: Whatever you think of Trump’s comments, most might agree that these are some of his most provocative and risky comments yet. The reason being that appearing to “side” with Russia might undermine some of his own nationalist voter base.
Something very odd has been going on in markets for the last few weeks—investors are completely tuning out politics. The political situation both domestically and internationally has grown steadily worse in recent weeks. The US has a growing trade war with China, Brexit is a complete mess, Trump is meddling with allies etc., yet markets continue to move higher. Even emerging markets have rallied.
FINSUM: On top of politics, recession fears are also growing. Accordingly, it is slightly concerning markets are rising. Markets have learned to not take Trump’s comments too seriously, but that lack of sensitivity might be serving investors poorly right now. The Wall Street Journal says it best: “Markets are notoriously bad at pricing changes in the political weather until they are forced to”.
We have not covered the Trump probe saga in a while, and with good reason—there has been little news. However, that may be about to change. ABC News has run an interview which seems to suggest that Trump’s former attorney, Michael Cohen, may be about to turn on the president as he prioritizes his own family. “I will not be a punching bag as part of anyone’s defence strategy … My wife, my daughter and my son have my first loyalty and always will ... I put family and country first”. He says he is not the villain in this story and does not want to be depicted that way.
FINSUM: Maybe he is about to turn on Trump, but no one knows what cards he may or may not be holding.
President Trump has been leading a tumultuous trade war with the US’ largest trading partners. So far his efforts have put tariffs on many different goods, but with metals being the single most notable materials. However, a new interview with the President suggests that the metal tariffs were just an opening act to a much bigger area: autos. In an interview with Fox News yesterday, Trump said “You know, the cars are the big one … We can talk steel, we talk everything. The big thing is cars”. Trump is reportedly planning a 20% tariff on all imported cars as part of a national security measure.
FINSUM: We believe this would be a major line in the sand to the US’ trading partners. Both our Nafta partners and the EU, and maybe Japan, would be furious about this, but it is a major source of leverage for the US.
In what seems to be a perfect study in the law of untended consequences, the government’s new focus on tariffs are driving US manufacturers out of the country. American motorcycle maker Harley-Davidson (side note: can you think of a company more American than Harley-Davidson) has announced it will move some production off-shore because of retaliatory EU tariffs on American motorcycles. Europe is one of the biggest consumers of US products, including for Harley, and the company does not want to lose market share by raising prices for European consumers.
FINSUM: This is the downside of a trade war. Trump wants to have more US manufacturing jobs at home, but retaliations can cause perverse economic incentives to move manufacturing overseas.