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Letter from Washington

Political Insider

FOMC Minutes — 2 PM Wednesday

Fed Monetary Policy Report — 11 AM Friday

2019 U.S. Monetary Policy Forum, New York, NY:

Fed Vice Chair Clarida, 12 PM Friday, “The Federal Reserve’s Review of Monetary Policy Strategies, Tools, and Communications,” and

Fed Vice Chair Quarles, 1:30 PM Friday, “The Future of the Federal Reserve’s Balance Sheet.” 

Congress is on recess this week, except for pro forma sessions.  The House will return next Monday afternoon, but no details have been released yet.  The Senate will return at 3 PM, Monday, February 25th, at which time Senator Fischer will deliver Washington’s Farewell Address.  Following the address, the Senate will resume consideration of the motion to proceed to Calendar #17, S.311, Born-Alive Abortion Survivors Protection Act. At 5:30pm, there will be a vote on the motion to invoke cloture on the motion to proceed to S.311.

President Trump’s schedule (EST):

MONDAY:        Gave a speech to the Venezuelan American community in Miami. 

TODAY:           11:30 AM:  Meets with Secretary of State Pompeo;

                        12:15 PM:  Meets with Secretary of Homeland Security Nielsen;

                          1:00 PM:  Lunch with Vice President Pence; and

                          2:00 PM:  Signs Space Policy Directive 4. 

WEDNESDAY: Trump will have lunch with Secretary of State Pompeo. 

                         Meets with Austrian Chancellor Sebastian Kurz. 

THURSDAY:     Attends a reception for African American History Month.

China Trade Talks Resume Today in D.C.  Bloomberg reports:

Chinese and U.S. trade negotiators will start the next round of talks this week in Washington, after discussions in Beijing last week that President Donald Trump called “very productive.”

The talks will begin on Tuesday, White House Spokeswoman Sarah Sanders said, with Vice Premier Liu He then meeting with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Feb. 21-22, according to a statement from China’s Commerce Ministry.

The talks are picking up pace as the March 1 deadline approaches, Steve Censky, the U.S. Department of Agriculture’s deputy secretary said, “but we still have ways to go.”

Trump has said he’s open to pushing back that deadline. He’s considering a 60-day extension for negotiations, people familiar with the matter said last week. There were still key differences in the positions of both sides at the end of last week and the threat of further escalation in the trade war if talks fail is adding to uncertainty for the global economy.

Sunday, President Trump Tweeted:

Important meetings and calls on China Trade Deal, and more, today with my staff. Big progress being made on soooo many different fronts! Our Country has such fantastic potential for future growth and greatness on an even higher level!

EU Auto Import Report Went To President Trump Sunday.  Last night, The Wall Street Journal reported:

On Sunday, the president received a Commerce Department report laying out options for blocking auto imports in the name of national security—a measure that would largely affect U.S. allies in Europe, Japan and South Korea.

The administration didn’t make public the details of the report, and it remains unclear whether Mr. Trump will decide to impose car tariffs, or just continue to use the prospect as a threat to extract new concessions from trading partners. Under the law used to justify the tariffs, a decision is required by mid-May.

Many trade lawyers and lawmakers from both parties said it is difficult to make a case that car imports pose an actual national security threat, and that any such move would draw fierce political opposition.

“Germany Posts Record Surplus, Bolstering Trump Claim on Trade Imbalances.”  This morning’s Wall Street Journal article led with:

FRANKFURT—Germany’s current-account surplus was the world’s largest for the third year in a row in 2018, confirming deep disparities in the global economy that have drawn ire from the Trump administration and helped justify U.S. efforts to reset global trade rules.

The data come at an awkward time for European officials, who are in the midst of negotiating a new trade agreement with the U.S.

Peter Altmaier, Germany’s Economics Minister, told German public radio on Tuesday “we are not yet where we want to be” in the trade talks., warning that “the most difficult part starts now.”

Since his election, President Trump has warned he might impose a 25% tariff on European car imports if the negotiations don’t bear fruit. European Commission President Jean-Claude Juncker told a German newspaper on Monday that such a move would draw swift retaliation from Europe.

Germany’s current-account surplus, a measure of excess savings in the economy, was $294 billion in 2018, or 7.4% of the nation’s economic output, German think tank Ifo said Tuesday.

That puts Europe’s largest economy some way ahead of second-placed Japan, which recorded a surplus of $173 billion last year, or 3.5% of annual economic output. Russia came third with $116 billion. China fell out of the top three due to increased imports of machinery.

USMCA push.  Last night, The Wall Street Journal also reported:

At the same time, the administration is ramping up its push to win the necessary approval from a divided Congress for the rewritten North American Free Trade Agreement, called the U.S.-Mexico-Canada Agreement.

Large numbers of lawmakers from both parties have said they won’t clear the pact either without revisions to the text, or broader changes in Trump trade policy, casting a cloud over prospects for its passage.

“New Zealand to target online firms like Google, Facebook and Amazon with digital tax.”  Yesterday, Reuters reported:






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