On The Money: Stocks rally as US, China agree to trade talks | House to vote on stopgap spending measure | Treasury unveils plan to overhaul Fannie, Freddie | Economists make case for wealth tax

On The Money: Stocks rally as US, China agree to trade talks | House to vote on stopgap spending measure | Treasury unveils plan to overhaul Fannie, Freddie | Economists make case for wealth tax

Happy Thursday and welcome back to On The Money. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

 

THE BIG DEAL-- China, US agree to meet in October for trade talks: U.S. and Chinese officials have agreed to meet in early October for a new round of negotiations amid the escalating trade war between the nations, officials from both nations said Wednesday night.

U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerOn The Money: Economy adds 164K jobs in July | Trump signs two-year budget deal, but border showdown looms | US, EU strike deal on beef exports Chinese, US negotiators fine-tuning details of trade agreement: report The Trump economy keeps roaring ahead MORE and Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Morning Report - Trump grapples with Turkey controversy Trump hypes China trade deal as new doubts emerge Overnight Defense — Presented by Boeing — Trump to slap sanctions on Turkey for Syria offensive | Trump calls on Turkey to broker ceasefire | Pelosi, Graham seek deal on sanctions | Ex-Trump aide testifies in impeachment probe MORE spoke with Chinese Vice Premier Liu He, Beijing's top trade negotiator, and they agreed on further talks in Washington D.C., with consultations to take place in mid-September to prepare, the Chinese Commerce Ministry announced, according to CNBC, which was the first to report news of the meeting.

ADVERTISEMENT

A U.S. Trade Representative spokesperson confirmed China's announcement to The Hill and said preliminary meetings will happen this month. 

"They agreed to hold meetings at the ministerial level in Washington in the coming weeks.  In advance of these discussions, deputy-level meetings will take place in mid-September to lay the groundwork for meaningful progress."

Stocks rallied on the news Thursday, sending the Dow Jones Industrial Average 372 points higher for a gain of 1.4 percent. The S&P 500 rose 1.3 percent, while the Nasdaq soared 1.75 percent higher.

 

The upside: A deal between the U.S. and China can't happen unless the Trump administration and Xi government are talking, so this is at least a step forward toward some sort of deescalation. Even if the meeting goes well, there will still be plenty of work to do before they reach a deal, but this is how it has to begin.

 

The downside: While staff-level discussions are set to begin in a few weeks, top officials won't meet until October, which is after the U.S. and China are set to raise or impose new tariffs on each other's goods. 

If the staff-level talks go well, Trump and Xi might be able to strike a non-escalation pact to hold off on further tariffs ahead of the meeting between their top aides. But if not, Trump will raise tariffs on $250 billion in Chinese imports from 25 percent to 30 percent.

 

LEADING THE DAY

Private sector adds 195K jobs in August, beating expectations: ADP: U.S. businesses added 195,000 jobs last month, according to the ADP National Employment report released Thursday, exceeding expectations amid concerns of a possible recession in 2020.

Despite slowing economic growth and the escalating cost of global trade tensions, private sector payrolls gained well more than the 145,000 workers that economists had projected for August.

What it means: The ADP figures are a welcome sign ahead of a highly anticipated monthly jobs report from the Labor Department that's scheduled to be released Friday. The federal report includes both private sector and government hiring, providing a broader picture of labor market conditions.

"It suggests that if nothing goes off the rails, we should be in pretty good shape and the expansion should go on for the foreseeable future," said Moody's Analytics chief economist Mark Zandi, who co-leads the monthly employment report.

"If the trade war is resolved, meaning the war simply is not escalated, sentiment would likely stabilize and the expansion would continue on." I break down the data here.

 

Democrats walk tightrope in fight over Trump wall funds: Democrats face politically fraught options in opposing President TrumpDonald John TrumpWarren defends, Buttigieg attacks in debate that shrank the field Five takeaways from the Democratic debate in Ohio Democrats debate in Ohio: Who came out on top? MORE's move to divert $3.6 billion in military funds to build 175 miles of his border wall.

  • The legislative responses available to Democrats are few, given that the courts have largely ruled in the administration's favor when it comes to emergency powers and the transfer of Pentagon funds. 
  • Pressing the issue runs the risk of derailing government funding legislation that Congress needs to pass by Oct. 1 to avert another shutdown.
  • And Democrats know that trying to add stringent language about the wall to any funding bills this month could increase the odds of another shutdown.

"The goal of keeping the government open would outweigh a provision the White House would never agree to," said a Democratic aide.

The Hill's Niv Elis and Cristina Marcos explain here.

 

House to vote on stopgap funding bill: The House is slated to vote on a short-term measure to fund the government and prevent a shutdown in mid-September, Majority Leader Steny HoyerSteny Hamilton HoyerOvernight Health Care — Presented by National Taxpayers Union — Buttigieg targets Warren, Sanders on health care ahead of debate | Judge overturns ObamaCare transgender protections | Poll sees support drop for 'Medicare for All' Hillicon Valley: Google, Reddit to testify on tech industry protections | Trump joins Amazon-owned Twitch | House to vote on bill to combat foreign interference Overnight Health Care — Presented by Coalition Against Surprise Medical Billing — Judge blocks Trump 'public charge' rule | Appeals court skeptical of Trump arguments for Medicaid work requirements | CDC offers guidance for treating vaping-related cases MORE (D-Md.) announced Thursday.

In a "Dear Colleague" letter, Hoyer said that he expects the House to take up a "clean" stopgap measure, known as a continuing resolution (CR), during the week of Sept. 16. 

House Democrats passed 10 of 12 annual appropriations bills over the summer for the next fiscal year, but the Senate has yet to even approve any of its versions out of committee.

Senate Republicans opted to hold off on beginning their appropriations process amid negotiations between the White House and Speaker Nancy PelosiNancy PelosiTrump-GOP tensions over Syria show signs of easing Democratic debate starts with immediate question on Trump impeachment White House, Pentagon, Giuliani reject House subpoenas MORE (D-Calif.) for a two-year budget deal, which President Trump signed into law last month.

While the budget deal establishes spending levels and suspends the debt limit into 2021, government funding runs out on Sept. 30.

Given the limited timeframe, Hoyer acknowledged that a stopgap will be necessary to buy time for the House and Senate to reconcile their appropriations bills. More on the House approach from Cristina Marcos here.

 

Treasury unveils plan to release Fannie, Freddie from government control: U.S. Treasury Secretary Steve Mnuchin on Thursday unveiled a plan to overhaul the housing market that would release Fannie Mae and Freddie Mac from government control.

"The Trump Administration is committed to promoting much needed reforms to the housing finance system that will protect taxpayers and help Americans who want to buy a home," he said.

Fannie Mae, which stands for the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corporation, were put into government conservatorship during the 2008 financial crisis, which started in the housing market.

The Treasury Department, which has plowed $190 billion into the institutions since the crisis, called their conservatorship the "last unfinished business of the financial crisis."

But whether Congress can approve the complicated 50-part plan in an election year is an open question. More from Niv on Treasury's plan here.

 

GOOD TO KNOW

  • Some of the nation's largest corporations are stepping into the gun control void, adopting new restrictions on sales in the absence of action by Congress and the White House.
  • Two prominent economists who have advised several presidential campaigns released a new paper on Thursday making the case for a wealth tax as the issue receives attention in the Democratic primary.
  • New York City is suing T-Mobile over its "abusive" sales tactics, accusing the telecom giant of taking advantage of its millions of low-income and immigrant customers.

 

ODDS AND ENDS

  • A bipartisan push for legislation to protect patients from massive "surprise" medical bills is facing a buzzsaw of opposition from doctors and hospitals, and reservations from some Democrats worried about delivering President Trump a health care victory when he is still attacking ObamaCare.