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“U.S. Imposes Sanctions on Venezuela’s Oil Industry.”  Last night’s Wall Street Journal article led with:

The U.S. imposed sanctions (Treasury’s press release) on Venezuela’s state-owned oil giant in a dramatic move designed to empower the opposition and cripple the government of President Nicolás Maduro by preventing the proceeds of U.S. crude sales returning to Caracas.

The sanctions on Petróleos de Venezuela SA, the South American country’s main exporter, are the culmination of a two-year pressure campaign, and are an attempt to funnel income from the country’s biggest revenue generator into the hands of opposition leader Juan Guaidó.

The Hill reported this morning:

U.S. – China trade: A new round of senior-level trade talks with China begins Wednesday in the Eisenhower Executive Office Building adjacent to the White House, facing a March 1 deadline (The Hill).

Trump – China meeting: Trump will meet with Chinese Vice Premier Liu He on Thursday (Reuters).

More in last night’s Wall Street Journal article and New York Times article.

Feb. 15 shutdown negotiations will resume tomorrow.  
I expect a deal to be enacted in time to avoid another shutdown because, as The Hill reported this morning:

Bipartisan lawmakers in both chambers will meet on Wednesday to begin negotiations. Trump has already said he doesn’t expect to receive a bill that contains sufficient funds for a border wall. …

There is one noteworthy difference as round two of negotiations get underway: Trump and Republicans are not unified this time around.

Republicans are enormously frustrated by what they view as a politically damaging and pointless 35-day shutdown. They’re in no mood for it to happen again, and many are opposed to Trump’s threat of declaring a national emergency if he doesn’t get additional money for a border wall.

“U.S. Treasury Set to Borrow $1 Trillion for a Second Year to Finance the Deficit.”  Yesterday morning’s Bloomberg article led with:

The U.S. Treasury Department is set to maintain elevated sales of long-term debt to finance the government’s widening budget deficit, with new issuance projected to top $1 trillion for a second-straight year.

Many strategists at primary-dealer firms predict that this Wednesday’s quarterly refunding announcement will see the Treasury maintain note and bond sales at the record high levels they have boosted them to in recent months.

The total amount of 3-, 10- and 30-year securities to be offered at next week’s refunding auctions is seen by most at $84 billion. While that’s $1 billion more than the total for these maturities three months ago, that’s only because the size of the three-year sale was already nudged higher in December.

A heightened supply of Treasury securities follows tax cuts and government spending increases implemented under the current administration. That’s darkening a fiscal outlook already made worrisome by rising entitlement-program expenses and higher costs to service America’s nearly $16 trillion in debt. The Federal Reserve’s balance-sheet runoff is also adding to supply, forcing Treasury Secretary Steven Mnuchin to tap the public for more funding.

President Trump’s schedule (EST):
No public events scheduled.

CBO Director Keith Hall will testify on the Budget and Economic Outlook before the House Budget Committee at 10 AM and before the Senate Budget Committee at 2:30 PM.  Click on the links to watch them live.

“Top GOP senators propose repealing estate tax, which is expected to be paid by fewer than 2,000 Americans a year.”  Yesterday afternoon’s Washington Post Wonkblog led with:

Three Republican Senators introduced a plan Monday to repeal the federal estate tax, moving to eliminate a tax on a small number of the wealthiest households just as leading Democrats ramp up calls to tax the richest Americans.

Senate Majority Leader Mitch McConnell (R-Ky.) joined Sens. Charles E. Grassley (R-Iowa) and John Thune (R-SD), members of the Senate Finance Committee, in releasing legislation to permanently repeal the federal estate tax, which conservatives refer to as “the death tax.”

The Republican tax law passed in 2017 already dramatically weakened the estate tax, allowing couples with $22 million to pass on their estates without facing the tax.

In 2018, following the GOP tax law, only 5,000 taxpayers were expected to file estate tax returns, according to projections by the American College of Trust and Estate Counsel, an organization of estate attorneys, based on Internal Revenue Service data. About 1,700 families are expected to actually pay the tax annually, said Howard Gleckman, a tax expert with the Tax Policy Center, a nonpartisan think tank.

If this were included in a budget reconciliation bill, which is unlikely to materialize this year, it might pass the Senate, but there’s not much chance of passing the House, controlled by Democrats.

“$1.5 trillion tax cut had no major impact on business spending.” Yesterday morning’s Reuters articleled with:

The Trump administration’s $1.5 trillion tax cut package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the tax code in more than 30 years.

The National Association of Business Economics’ quarterly business conditions poll, published on Monday, found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

Political Insider

About Pete Davis

Pete Davis

Pete Davis advises Wall Street money managers on Washington, DC policy developments that affect the financial markets. Visit his website here daviscapitalinvestmentideas.yolasite.com.

Articles by Pete Davis

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