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Financial 202: The government's deadline is threatening to bust economic growth



TICKER

The longest shutdown is on the way for this coming weekend to become a lunar age, and economic damage is beginning to accumulate.

Since there is no end, a significant worsening of the damage can occur in order to overcome the heel situation.

Economists do not agree with how the end of the operation to wider economic growth. The rough standard is that every week or two the government is overshadowed by a tenth of a percent of GDP growth.

However, quantitative effects – when government contractors or others who rely on federal workers as customers, stiffen, do not benefit employees or creditors and possibly see their business fail – are hardly measurable, Pantheon Macroeconomics chief economist Ian Shepherdson in a weekend survey. "Even the monthly outage would seriously hit the growth without saying the misery caused," hhe writes. And if the situation deteriorates during the first quarter, "we would be looking for a full decline in GDP in the first quarter."

Partial closure could also end the 99-month period of continuous employment growth in the country, the longest such segment since 1939. "The January employment figure could be quite ugly," says Moody's economist Ryan Sweet, Eric Morath of the Wall Street Journal.

Deutsche Bank's analysts are more sanguine and during the weekend write-offs will cause "minimal" damage if they are over soon and unnecessarily frustrate the significant impact on the job posting in January.

They see more concentrated pockets of pain, for example, they realize Unemployed claims in Washington, D.C., jumped to the highest level for more than six years in the last three weeks. This statistic points to the closest victims of government funding: the 800,000 federal workers who were not paid on Friday. As Ali Velshi from MSNBC notes, a growing number of companies are trying to organize unpredictable events for customers who might forget about payments:

"At a general level, the economy does not generally reflect major damage from weaning," Federal Reserve Chairman Jay Powell said in an interview last week at The Economic Club of Washington. "A long shutdown is something we did not have. If we have an extended shutdown, then I think it would be quite clear. "

The GDP benchmark itself and a number of other key economic indicators from the business department and beyond are also maintained until it ceases to work. It forces the Fed – like investors – to fly partially blind. Reports showing sales and housing details starting to pay this week are unlikely to be released, States chief economist at High Frequency Economics, Jim O'Sullivan.

Shutdown also fired the key to Wall Street deals, "threatening to postpone initial public bids and takeover requiring national security clearance or approval by the patrol pavilion of the competition" FT Eric Platt, Nicole Bullock and Shannon Bond report:

"The National Security Review of Foreign Investment Acquisitions in the United States, a strong inter-agency group in Washington, which was taken over by a veterinarian, has been suspended, while the Federal Trade Commission, the Justice and Nutrition Commission, has sent thousands of home workers," he writes. "Bankers and lawyers warn that skeleton crew could slow down antitrust ratings and push companies to postpone scheduled IPOs. SEC has ceased to investigate proxies and registration statements, and its staff will not provide interpretive advice to companies or merchants seeking regulatory feedback. "

While there is no evidence that President Trump is ready to bend in his request to fund border walls, it seems that pressure is on the Republican Senate to make a deal. Former White Senate Ally Lindsey O. Graham (R-S.C.) On Sunday, he recommended that Trump agree to the reopening of the government and the continuation of negotiations.

But Trump and Congressional Democrats "stayed away from Sunday" Felicia Sonmez and Cat Zakrzewski from Washington Post write. "Tweeting from the White House, when capital was hit for the first time this year, Trump continued to point to the Democrats who said they were" everywhere except Washington, while people are waiting for their salary. ""

MONEY ON HILL

Most Americans blame Trump, GOP for shutdown. Scott Clement and Dan Balz: "Most Americans accuse President Trump and Republicans of Congress of more than Americans than Congress Democrats for a record break of the government, and most of them reject the President's claim that the illegal immigration crisis of the southern border has taken place, Post-ABC News.

"Support for wall-building at the border, which is the leading point on the heels between the president and the Democrats, has increased over the past year, and today 42% say they support the wall, an increase from 34% in January, with a modest majority of Americans (54 percent) against this idea, against 63 percent a year ago, with stronger support among Republicans whose support for a long-term campaign promised 16 points last year, from 71 percent to 87 percent. "

MOVE MARKETS

– Tthe largest US corporations are losing momentum. Akane Otani of WSJ: "The largest American companies warn that their profits may not be as strong as they hoped for this year, boosting the pressure on the bull market that tried to get back." in September it posted a 17% profit growth in the fourth quarter compared to the previous year.

"But the sober expectation of global growth and disappointment in holiday sales forced many companies to cut their predictions, which estimates an estimated quarter-on-quarter revenue growth rate close to 11%, according to the FactSet. Estimates – the strongest since 2017 – are the latest signs that corporations in the United States, from retailers and airlines to phone makers are losing momentum after several quarters of significant growth. The constant stock market reflects anxiety about how fast businesses reduce their predictions. "

– Big banks are also strengthening. Michael Rapoport of WSJ: "The earnings outlook is about to get for the big banks." The IMF's 2017 tax cut brought billions of dollars to the bottom of banks, which helped gains grow sharply. to be launched this week, will mean the last period in which the new law will cut the rate to 21% from 35%, increasing earnings growth ….

"And while Wall Street estimates suggest that most large banks report solid results, growth will be confused because a year ago the results were hit by large special fees that many banks have made in the context of tax changes for the first time to measure growth in the period reduction in the tax rate The result: Banks' revenue growth in 2019 is probably not as strong as in 2018. "

– Most traders are high in emerging markets – so far. Netzy ​​Iudau Ismail et al .: "It is a measure of how climate change has changed so rapidly in emerging markets that the decision on interest rates in Turkey this week, an event that six months ago had traders on tenterhooks, virtual shrug of the shoulder …

"It is true that further developments in trade talks or a lot of negative economic indicators from China could change everything. For now, however, the far more unpleasant tone of the Federal Reserve Fund is, and the central bank generally associated with declining volatility, relatively low value, and rising commodity prices keep most investors positive. "

– Brexit on the brink. Andrew Atkinson of Bloomberg: "Theresa May is launching the latest attempt to rescue her Brexit agreement, warning Eurosceptics who are about to kill their plan that Britain is more likely to remain in the European Union than to leave without a deal, will enter one of the most stormy weeks of her the Prime Minister will try to avert what is almost certain that it is a huge defeat on Tuesday in the Chamber of Deputies to vote on the agreement he is negotiating with the EU.

"In a pause on Monday, he will warn that there is now a better chance that MEPs block Brexit than it would not be possible because many eurosceptic conservatives who want a clean break from the EU would be Brexit's betrayal, who decided to leave the block in 2016, will say. "

TRUMP TRACKER

TRADE FLY-AROUND:

Chinese exports hit skis. Daniel Shane of CNN Business: "The huge export industry in China suffered only for its worst month in two years but nevertheless managed to reach a record surplus of trade with the United States in 2018 despite new tariffs." The value of goods shipped from China to the rest of the world declined by more than 4% in December, compared to the same period a year ago, showed data from the Chinese government, which represents the worst monthly performance for China's export sector in more than two years, and the first year, the year since March 2018. Economists by asking Reuters to predict that exports from China will increase slightly in December. "

Top Dem tells Trump to stay tough in China. James Politi from FT: "The older Democratic legislator warned the Trump government not to make" easy one-off transactions "with China amid growing signs that the US president is ready to start an agreement with Xi Jinping in early March to avoid Richard Neal, and Means, who oversees US trade policy, the Financial Times said that US and China policy must be "in America's best interest today and for the future." "The USTR has a duty to look beyond the political pressures at the moment and easy one- to ensure a real and lasting change in China's anti-China behavior, "said Neal, a Massachusetts Democrat. declaration."

MELTDOWN WATCH:

  • "Trump's border wall battle could soon retreat to a greater fight with the Democrats over Russia and the indictment"Greg Jaffe from the paper.
  • "Trump confronts the prospect of a "nonstop political war" of survival"NYT Peter Baker.
  • "Trump hid details of his personal meetings with Putin from senior officials in the administration."Post Greg Miller.
  • "Why the FBI might think that Trump could work for Russia."Mail is Aaron Blake.

CHANGE OF PAPER

– Automotive recession in Detroit. Bloomberg is Keith Naughton, David Welch and Gabrielle Coppola: "This should be the boom period for Detroit." Unemployment is low for half a century, gasoline is cheap, and car sales in the US have been almost record-breaking last year. factories, cutting shifts and dismissing thousands of workers. The industry behaves like the recession that has come, in one segment of the market.

"Detroit finds itself in the light of a car recession that has been marked by a collapse in the demand for traditional sedans, which represented half of the market just six years ago, with buyers being bulked out of classic family cars and sports cars, such as Honda Accord and Ford Fusion 2018 have dropped by 30 percent in US sales and things will only get worse. "

– PG & E investigating bankruptcy funding. Mike Spector and Liana B. Baker at Reuters: "PG & E Corp is in talks with investment banks on a multibillion-dollar funding package to help manage bankruptcy proceedings, indicating that preparatory work in Chapter 11 is intensifying due to potentially overwhelming commitments from deadly fires …

"The owner of California is in contact with large banks about the so-called borrower financing in the property, which could range from $ 3 billion to $ 5 billion, although the exact figure remains in the flow and could end up higher … The company can alert employees immediately after Monday of preparations for a possible bankruptcy in accordance with the law on giving notice at least 15 days before such an event, said one of the people. "

OPINION

DAYBOOK

SOON:

  • The Brookings Institution hosts a debate on how China and the US advance in Artificial Intelligence on Monday in Washington.
  • The Bipartisan Policy Center hosts a discussion on the book "Bright Future: How Some Countries Address Climate Change and the Rest May Follow" in Washington on Monday in Washington.
  • The Heritage Foundation will welcome Washington's "Constitution and Economic Freedom" event.

FUNNY

– Trevor Spaulding, New York

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