Donald Trump and the “Chaos Trades”

White House optimistic despite wild stock market swings

The Story:

A theory about recent stock futures activity is spreading around the US that suggests a conspiracy involving President Donald Trump. It has become known as the “chaos trades” theory, and surely more will be heard of it between now and election day a year from now.

The Theory:

The spreading view is that there are traders who benefit from the chaos that the President, with a single tweet,  or a casual remark made before boarding a helicopter, can inflict upon Wall Street and upon the related futures market in Chicago.

William Cohan gave this theory a classic formulation for VANITY FAIR in recent days. Cohan said that “the President’s talk can move markets — and its made some futures traders billions. Did they know what he was going to say before he said it?” Cohan quoted a longtime trader at the Chicago Merc, who said: “There is definite hanky-panky going on, to the world’s financial markets’ detriment.”

There has been a good deal of pushback against Cohan’s “hanky-panky” conclusions, even from people who have no interest in defending President Trump’s policies. Still, the issue is likely to bubble along in the months to come.

The Thing to Know:

All of the five biggest single-day point losses in the history of the Dow Jones index have taken place during the Trump administration. Though the general movement of the Dow during the Trump era has been up, it has been a very bumpy ride.

 

Vanity Fair: Beware The Time Bomb In The President Donald Trump Economy | Velshi & Ruhle | MSNBC

Vanity Fair: Beware The Time Bomb In The President Donald Trump Economy | Velshi & Ruhle | MSNBC

As another rollercoaster of a day on Wall Street begins, President Trump is touting good economic figures. Congressman Dan Kildee, Vanity Fair Special Correspondent Bill Cohan, CNBC’s Kayla Tausche, and Leslie Picker join Stephanie Ruhle to discuss how the Trump economy might actually be a time bomb.
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Vanity Fair: Beware The Time Bomb In The President Donald Trump Economy | Velshi & Ruhle | MSNBC

Batten School and Center for Politics host Margaret Brennan

sabato-and-brennan
The event began with a brief discussion between Brennan and Larry Sabato, Center for Politics director and professor of politics, followed by an opening of the floor to questions from the audience.

Margaret Brennan, a 2002 University graduate and moderator of CBS’s Face the Nation, spoke to a crowd of more than 170 students, faculty and community members in Garrett Hall Wednesday evening as a part of the Batten School and the Center for Politics’ “Democracy in Perilous Times” series. Brennan talked about her career as a journalist and her experiences prominently covering the White House and hosting a broadcast news program during the Trump administration.

The event began with a brief discussion between Brennan and Larry Sabato, Center for Politics director and professor of politics, followed by an opening of the floor to questions from the audience. Sabato provided an introduction to Brennan’s life and career. After studying foreign affairs, Middle Eastern studies, and Arabic while at the University, Brennan began working for CNBC covering Wall Street, later moving to Bloomberg Television to continue her financial reporting as an anchor. She joined CBS in 2012 as a White House correspondent and became the moderator of Face the Nation in February 2018.

Brennan said the expertise she gained studying and covering these specific issues have shaped the way approaches her current journalistic work.

“I covered Wall Street for a decade,” Brennan said. “And Wall Street is shorthand for how the world functions often … so I brought that and I brought my background covering national security policy, and those are things that are often on my front burner and headlines that catch my attention.”

In her talk, Brennan noted the fast-paced nature of a television newsroom and explained the process of booking political figures for the Face the Nation broadcast, which airs Sunday mornings. Trump and his cabinet are usually more eager to appear on Sunday news programs than past administrations, according to Brennan. Earlier this year, Brennan notably spoke with Trump on Face the Nation, and she shared how she navigates interactions with difficult interview subjects.

“You wonder how much the viewer is perceiving your interjection as interruption,” Brennan said. An interjection to interject a fact … is I think is our responsibility. That’s different than just shouting over, which is not what I do — that’s not my style.”

Brennan also discussed her experience as the only…

Obamacare Legacy: Three Sides of the Issue for 2020

The Story:

Many of the Democrats in Congress are determined to move beyond the Affordable Care Act of 2010, toward a single-payer insurance system. Meanwhile, the Republicans, both in Congress and the White House, continue to oppose the ACA, though they are still quite vague about any specific replacement. The third force, the one that stands behind the ACA, also known as ‘Obamacare,’ is: Wall Street.

Wall Street’s View:

One measure of Wall Street’s sentiment about Obamacare is the value of the iShares US Health Care ETF (IYH). This is a fund designed to track the investment results of an index composed of US equities in the healthcare sector.

Suppose one had invested $10,000 in this ETF on March 23, 2010, the day of the passage of the ACA. How would that principal have grown? Its value would have increased in a fairly steady manner until the middle of 2015. It would have been worth more than $26,000 by that time. It would then have hit choppier waters, and would still have been in the neighborhood of $26,000 two years latter, in the middle of 2017. But …

In the middle of 2017 efforts to replace Obamacare failed in the US Senate, on the downward pointing thumb of Senator McCain At that point, health care companies in the US (which had accustomed themselves to the system) received a stimulus in the form of a higher level of confidence that the ACA rug was not about to be pulled out from under their endeavors. The health care ETF started a big upward move at that time. The initial $10,000 would have been more than $34,000 by October 1, 2018.

In 2019, though, that ETF has stagnated again. As of this writing, the principal would be worth slightly less than it was worth in October. The twin threats to the ACA status quo, from left and right, have both intensified and this may well account to the pause on growth in the health care industry that stagnation represents.

The Thing to Know

It is safe to say not only that Wall Street has made its peace with Obamacare, but that the health care investing portion of Wall Street has learned to thrive with Obamacare, and regards any marked move against it (for Senator Sanders’ reasons or for President Trump’s) as a threat.

Kamala Harris’ mortgage meltdown record under scrutiny as campaign heats up

Attorney General Kamala Harris held a press conference to announce an enforcement action related to a wide-ranging mortgage fraud on Thursday, August 18, 2011 at the State Building in San Francisco, Calif.

Democrats running for president are competing to see who can sound tougher toward big business, whether their target is Wall Street or Silicon Valley.

Sen. Kamala Harris of California regularly points to how, as state attorney general, she wrestled $20 billion from the nation’s big banks in 2012 after the housing meltdown — after initially walking away from negotiations when the institutions offered $2 billion to settle. No attorney general secured more for their state from Wall Street after the mortgage crisis.

But Harris rarely mentions something else that happened in 2012: Her office declined to sue OneWest, the California bank whose CEO was now-Treasury Secretary Steven Mnuchin, an architect of the Republican tax cut law that Harris and other Democrats deride as being a giveaway to the wealthy.

Attorneys in her office had singled out the bank for allegedly stacking foreclosure proceedings against homeowners, but Harris says she was hamstrung by legal rules protecting financial institutions from state legal action.

Low-income housing advocate Paulina Gonzalez-Brito remains disappointed that Harris didn’t pursue a case.

“The question is, when push comes to shove, when you’re faced with that level of opposition from monied interests, are you willing to stand up to those monied interests?” said Gonzalez-Brito, who is the executive director of the California Reinvestment Coalition, which represents 300 community organizations, mostly in low-income neighborhoods. The nonprofit does not endorse candidates.

“In this case, Kamala Harris made a decision to not take on OneWest Bank,” said Gonzalez-Brito, who has included the hashtag #teamwarren on some of her tweets but says she has not personally endorsed Sen. Elizabeth Warren of Massachusetts or any other candidate.

“It’s unfortunate,” Gonzalez-Brito said. “It was disappointing.”

We need a leader who will unapologetically take on Wall Street. A leader who has taken on Wall Street and won. #TeamWarren https://t.co/bjHo2Ca0lS

— Paulina Gonzalez-Brito (@paupau323) March 28, 2019

Some of Harris’ competitors for the Democratic nomination are ramping up their corporate-busting rhetoric and offering policy proposals.

Warren wants to break up big tech companies. She and fellow presidential candidates Sens. Amy Klobuchar of Minnesota, Cory Booker of New Jersey, Bernie Sanders of Vermont and Kirsten Gillibrand of New York asked the Federal Communications Commission to kill the proposed merger of Sprint and T-Mobile, saying it would raise prices for consumers and “harm workers.” Several candidates, including Harris, say they will not accept money from corporate political action committees.

Still, some wonder what happened in the case of OneWest.

The bank, headquartered in Pasadena, began operating in March 2009 and quickly acquired the assets of several financial institutions that had been devastated by the mortgage crisis.

As part of those deals, OneWest inherited “tens of thousands of troubled loans,” according to a 2012 memo from then-Attorney General Harris’ state Justice Department. Many of those were home…

Stocks Retreat as Political Risks Trim Sentiment, China Trade Questions Linger

The Tuesday Market Minute

  • Global stocks ease from multi-month highs amid heightened geo-political risks in the Asia region and new developments in Britain’s complex Brexit saga.
  • President Donald Trump heads to Vietnam for a summit with North Korea’s Kim Jong Un aimed at regional denuclearization.
  • Pound trades at four-week high amid multiple reports that Prime Minister Theresa May is prepared to delay Britain’s March 29 Brexit deadline.
  • Global oil prices extend declines, following yesterday’s 3%-plus declines triggered by Trump’s OPEC criticism.
  • U.S. equity futures suggest modest declines on Wall Street ahead of Senate testimony from Jerome Powell and earnings from Home Depot, Macy’s and Discovery Communications.

Market Snapshot

Global stocks pulled away from multi-month highs Tuesday amid a series of geo-political risks that trimmed risked appetite in the Asia region and could ripple into the U.S. trading session ahead of key housing data and Senate testimony from Federal Reserve Chairman Jerome Powell.

President Donald Trump heads to Vietnam later today for a Wednesday summit with North Korean leader Kim Jong Un in Hanoi in which the two men will attempt to solidify terms of their 2018 meeting in Singapore aimed and the denuclearization of the Korean Peninsula.

Trump told reporters in Washington Monday before heading to the region, however, that his trade team was “very close” to cutting a deal with China following weeks of negotiations between Washington and Beijing, adding it “could happen fairly soon, or it might not happen at all”.

The President’s non-committal stance on trade talk progress, despite his decision to extend a March 1 deadline on tariffs, pulled Asia stocks from their recent five-month highs and allowed U.S. equity futures to trade lower in early European hours.

Markets were also unsettled by news of a…

GM investors brace for earnings, potential political flak

General Motors Co. approaches its quarterly earnings day ready to renew the promise of reshaping itself into a leaner, nimbler 100-year-old car maker.

Wall Street may need some convincing beyond GM’s reporting fourth-quarter profit and sales at least in line with expectations.

For one, GM may soon find itself in even hotter water with Washington: Workforce cuts are expected to start to roll on Monday, said David Kudla, chief investment strategist with Mainstay Capital Management in Michigan.

As the company unfurls more of its cost-cutting plans, expect “more political and public backlash,” Kudla said in a recent note.

The macro picture is also not that favorable, with U.S. new-car sales slowing and concerns that GM profits may have peaked.

Here’s what to expect:

Earnings: Analysts polled by FactSet expect GM to report adjusted fourth-quarter earnings of $1.24 a share, compared with adjusted earnings of $1.65 a share in the fourth quarter of 2017.

GAAP earnings are expected to come to $1.22 a share, versus a loss of $3.65 in the year-ago period.

Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company…

BlackRock’s Larry Fink rattles employees amid political posturing

Laurence “Larry” Fink, the founder and chief executive of BlackRock, recently told the firm’s 14,000 employees that he is instituting potentially the most aggressive diversity program in Corporate America ensuring that, “a bunch of white men”, will no longer be running the world’s largest money management firm.

BlackRock, he said is now “putting the pieces in place so that five years from now we’ll have a more diverse (company) not just a bunch of white men.”

Larry Fink, BlackRock CEO, speech to employees

The comments, obtained by FOX Business and confirmed by a BlackRock spokeswoman, come as Fink has ruffled feathers inside his company, as well as among some clients for embracing a number of progressive political causes and advocating what has been described as “corporate socialism” – a management concept that implores CEOs to run their companies in a way that doesn’t just benefit shareholders, but also “the communities in which they operate.”

In his comments on diversity, Fink used surprisingly strident language and said executives could see their paychecks cut if they didn’t meet certain hiring goals, according to a text of his remarks. Some BlackRock executives told FOX Business they believe that Fink is now instituting hiring quotas at BlackRock.

Fink, of course, isn’t the only CEO who supports progressive politics. Famed investor Warren Buffett was a staunch supporter of President Obama, and has spoken about the need for the rich to pay more in taxes to close the budget deficit.

But even corporate titans like Buffett attempt to avoid overt political discussions because they don’t want to upset shareholders and clients who might disagree with them. Legally, their primary responsibility is to enhance shareholder value, not to make the world a better place.

As a result, the tone of Fink’s recent pronouncements on issues such as the environment, diversity and corporate responsibility has now sparked a debate inside C-suites and among corporate governance experts. At issue is the propriety of a public company executive using business resources and his perch as CEO to advance a personal agenda.

“This is fundamentally not the role of a public company and it’s unfair to investors who may not agree with his politics,” said Charles Elson, a corporate governance expert at the University of Delaware. “A CEO shouldn’t use house money to further a goal that may not create economic returns.”

Finks remarks to his employees on diversity have yet to be reported and they came on the heels of his annual “Letter to CEOs,” a yearly missive where he has increasingly pushed his fellow corporate titans to embrace progressive causes and manage with a “social purpose.”

In this year’s letter, released last Thursday, Fink stated that, “society is increasingly looking to companies, both public and private, to address pressing social and economic issues. These issues range from protecting the environment to retirement to gender and racial inequality, among others.”

“Society is increasingly looking to companies, both public and private, to address pressing social and economic issues. These issues range from protecting the environment to retirement to gender and racial inequality, among others.”

Larry Fink, BlackRock CEO 2019 “Letter to CEOs”

In private remarks to all of BlackRock’s employees a day earlier, Fink underscored the firm’s diversity efforts. To be sure, Corporate America and Wall Street in particular, have begun various programs and incentives for management to attract and retain more women and minorities to their executive ranks. Meeting diversity goals is among several factors that corporate managers are graded on.

But Fink appeared to go further at least in his remarks. He warned managers that their bonuses and pay will decline if they fail to meet diversity hiring targets, while using language to describe the new diversity effort that some BlackRock executives considered offensive. “My leadership team is being measured and their pay is being reflected…

President Trump’s Own Advisers Are Sounding Economic Alarms Over Shutdown | The 11th Hour | MSNBC

President Trump's Own Advisers Are Sounding Economic Alarms Over Shutdown | The 11th Hour | MSNBC

The White House’s own economic advisers admit the government shutdown is wreaking more economic havoc than previous believed. Jill Colvin discusses.
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President Trump’s Own Advisers Are Sounding Economic Alarms Over Shutdown | The 11th Hour | MSNBC

White House optimistic despite wild stock market swings

White House optimistic despite wild stock market swings

Partner and business development leader at PWC Mitchell Roschelle gives his predictions for the U.S. economy for 2019. #DailyBriefing #FoxNews

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