On The Money: Trump blames Fed as manufacturing falters | US to join Trump lawsuit over NY subpoena for tax returns | Ex-Rep. Chris Collins pleads guilty in insider trading case

On The Money: Trump blames Fed as manufacturing falters | US to join Trump lawsuit over NY subpoena for tax returns | Ex-Rep. Chris Collins pleads guilty in insider trading case
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Happy Tuesday 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.

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THE BIG DEAL--Trump blames Fed for manufacturing slump driven by trade war: President TrumpDonald John TrumpSanders urges impeachment trial 'quickly' in the Senate US sending 20,000 troops to Europe for largest exercises since Cold War Barr criticizes FBI, says it's possible agents acted in 'bad faith' in Trump probe MORE on Tuesday blamed the Federal Reserve for a sharp decline in U.S. manufacturing activity that experts say is driven largely by his trade battles with China and Europe.

In a Tuesday tweet, Trump accused the Fed and its chairman, Jerome Powell, of harming U.S. exporters by keeping the value of the U.S. dollar too high. 

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The president repeated his call for the Fed to slash interest rates to the near-zero levels seen across Europe, where the economy is considerably weaker than in the U.S.

"As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high, Trump tweeted. 

"They are their own worst enemies, they don't have a clue. Pathetic!"

 

Why Trump was mad: Trump appeared to be responding to a steep drop in the Institute for Supply Management's (ISM) manufacturing index, a closely watched gauge of U.S. industrial health. 

The ISM index for manufacturing dropped 1.3 percent in September to 47.8 percent, according to data released by the group Tuesday, the lowest level in a decade. The Hill's Niv Elis has more on that here.

  • An index level below 50 percent indicates a retraction in the manufacturing sector.
  • New orders, production and employment measures were all in negative territory, while a gauge of supplier deliveries held in positive territory, even though it dipped from the previous month.

 

Growing pain from the trade war: Trump has long bashed the Fed for keeping interest rates above the near-zero levels seen in other major world economies. The president has urged the Fed to slash rates to weaken a strong U.S. dollar, which would make U.S. exports relatively cheaper in foreign markets.

But while Trump blamed the Fed for the manufacturing slump, firms surveyed by ISM pinned the industrial retraction on the fallout of the president's trade battles.

  • "Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019," said Timothy R. Fiore, chairman of the ISM survey committee.
  • Several businesses that responded to the ISM survey directly blamed Trump's tariffs on Chinese goods and a decline in global growth for their September losses.
  • "Chinese tariffs going up are hurting our business. Most of the materials are not made in the U.S. and made only in China," said a respondent from the food, beverage and tobacco industry, according to ISM.

 

In a nutshell: As we often note, Trump's re-election campaign depends largely on the strength of the U.S. economy, especially with fears of a recession rising. While the U.S. economy is still holding steady, results like today's ISM survey adds to fears that a record-stretch of U.S. prosperity could be coming to an end. 

Manufacturing job losses are also particularly sensitive for Trump, who won Pennsylvania, Ohio, Michigan and Wisconsin on a pledge to revive industrial America.

Even some of the most dour forecasts don't expect a recession to arrive until late next year at the earliest, so there's time for the U.S. to course correct. But negative economic headlines are sure to spur negative reactions from Trump, and blaming the Fed is his preferred way of dealing with that.

 

Read more:

  • Bloomberg News: "As Bankrupt Steelmaker Closes Plant, Governor Points to Tariffs"
  • The Washington Post: "Farm-state fury creates pressure for Trump as trade, energy pain collide"

  

LEADING THE DAY

Former GOP lawmaker pleads guilty in insider trading case: Former Rep. Chris CollinsChristopher (Chris) Carl CollinsHouse passes bill to explicitly ban insider trading Duncan Hunter pleads guilty after changing plea On The Money: Economy adds 136K jobs in September | Jobless rate at 50-year low | Treasury IG to probe handling of Trump tax returns request | House presses Zuckerberg to testify on digital currency MORE (R-N.Y.) pleaded guilty to one count of conspiring to commit securities fraud and another count of false statements on Tuesday in federal court in Manhattan, according to CNN.

Each charge carries a maximum penalty of five years in prison and three years of supervised release. He was originally indicted on 11 charges that included wire fraud and conspiracy to commit wire fraud.

The former congressman was arrested last summer on charges that he traded on nonpublic information about an Australian biotech company. He had previously blasted those charges as "meritless."

Under the terms of Collins' plea deal, he will not be able to appeal any sentence under 57 months, with the government agreeing to a range of 46-57 months.

Collins, the first sitting congressman to endorse Trump in 2016, submitted resignation letters on Monday to Speaker Nancy PelosiNancy PelosiSanders urges impeachment trial 'quickly' in the Senate Tech legal shield included in USMCA despite late Pelosi push GOP senator warns quick vote on new NAFTA would be 'huge mistake' MORE (D-Calif.) and New York Gov. Andrew Cuomo (D), who will decide whether to call a special election for Collins's upstate seat before the November 2020 election.

The Hill's Zack Budryk has more on Collins here.

 

US to join Trump lawsuit over NY subpoena for tax returns: The U.S. Attorney's Office for the Southern District of New York said on Monday that it would join a lawsuit filed by President Trump that aims to block a subpoena for his tax returns.

The office said it would file a submission in the case by Wednesday, CNN reports.

The move comes after the Manhattan District Attorney's Office subpoenaed Trump for his tax returns and other documents dating back to 2011.

The district attorney's office, led by Cyrus Vance, is investigating the Trump Organization's handling of hush money payments made to two women who claim they had affairs with Trump, though the president has denied both encounters.

 

Agriculture secretary: No guarantee family dairy farms can survive: Agriculture Secretary Sonny PerdueGeorge (Sonny) Ervin PerduePlan to lift roadless rule in Alaska's Tongass national forest threatens economy House Democrat asks USDA to halt payouts to Brazilian meatpacker under federal probe From state agriculture departments to Congress: Our farmers need the USMCA MORE warned Tuesday during a trip to Wisconsin that family dairy farms may not survive as the factory farm model moves to overtake them.

Perdue told reporters after attending the World Dairy Expo in Madison, Wisc., that dairy farmers in the state are increasingly struggling to make a living wage if they are milking fewer than 100 cows, The Associated Press reported.

"In America, the big get bigger and the small go out," Perdue told reporters, according to the AP. "I don't think in America we, for any small business, we have a guaranteed income or guaranteed profitability."

More than 550 dairy farms have closed so far this year in Wisconsin, in addition to 638 closing in 2018 and 465 in 2017, according to state data reported by the AP.

 

GOOD TO KNOW:

  • Zuckerberg, in leaked audio, vows to 'fight' efforts to break up Facebook if Warren wins White House
  • White House trade adviser Peter Navarro on Tuesday suggested that House Democrats' impeachment inquiry of President Trump could be more "dangerous" than foreign adversaries such as Russia and China.
  • General Motors will reportedly idle an assembly plant in Mexico due to a parts shortage that the company has blamed on an ongoing strike in the U.S. by United Auto Workers (UAW) union members.

 

ODDS AND ENDS