Impeachment? "witch hunt" says Trump

Speaker Pelosi

The news came like a thunderbolt to the country, as US Speaker of the House, Nancy Pelosi announced on Tuesday that the House would begin an impeachment inquiry for the equally startling news about the accusation about a whistleblower’s report that President Trump had threatened to freeze financial aid to Ukraine, unless President Volodymr Zalensky agreed to an inquiry into alleged transactions, and violations, against rival presidential candidate, Joe Biden’s son, Hunter.

The fallout has spread banner headlines across the world, yet for most people, there has been exclamations, of “at last” and “finally” - but there seems to be a rush to judgement, for some people thinking that Trump would be immediately clapped in irons, forthwith.

While the Constitution allows a president to be impeached it is relatively silent on how the process should be carried out, other than the process begins in the House, and proceeds to the Senate for a trial.

“Impeachment is not, to be clear, the removal of corrupt presidents or other officials, but simply the adoption of charges by the House, triggering a trial in the Senate,” emphasized Intelligencer, in their coverage.

The two presidents that have been impeached, Andrew Johnson and Bill Clinton were not removed from office, and the expectations that Trump might be removed from office is not a given.

Trump’s enemies are as well-known as his supporters, and even the injection of reality into the argument has not been easy, and like the Mueller Report that predates the inquiry, to the squeals of the anti-Trump crowd, ‘he’s still there”, making public perception problematic.

“In past presidential impeachments, the House has formally voted to authorize the Judiciary Committee to initiate impeachment proceedings. But this step has been skipped on occasion in the impeachment of judges, and it’s entirely the product of custom and internal House rules (themselves interpreted and controlled by the House majority at a given time),” they added.

Meanwhile support for an inquiry has increased,  according to a recent poll from The New York Times, from House Democrats who, as of Thursday afternoon, are 217 supporting, one independent and 17 in opposition.

On the GOP side, there are 135 representatives opposed, and 63 have not responded..

For those in a hurry, they might as well take a seat, as the total investigation could take as long as a year, and with a controversial president, and a litany of alleged abuses, if the Mueller Report is to be believed, if not acknowledged then the country had better prepare for a lengthy inquiry.

To add fuel to the fire, it is not even necessary to have a trial, after the Judiciary Committee has made its decision In fact, “there are no constitutional provisions requiring a trial of any particular length or depth. Rules for impeachment trials can be set by a simple majority, which gives the party controlling the Senate considerable leeway. It’s assumed the House’s representatives (or “managers”) will be given an opportunity to present and explain the articles of impeachment on which the trial will be based, much like prosecutors in criminal cases,” added the Intelligencer.

Techniques aside, it’s apparent that Pelosi was pushed by the president’s actions to open the inquiry, and it’s just as clear, despite diminished expectations, after looking at the process, that this could easily backfire for those who hope that the American electorate will suddenly find itself in a rage, of discomfiture and rise up in arms to send Trump back to New York.

In a neat segue Pelosi has noted that the judiciary hearings from the House under Jerry Nadler constitute ongoing investigations, and inquiries, dovetailing with her earlier statements that when the facts were discovered, an inquiry might be launched.

Pelosi, a political veteran has “been there, done that” with process and treating the impeachment as another political process, demonstrates the seriousness of the allegations by the whistle-blower; and the deftness that she showed with the announcement, should caution future statements coming from the White House, as when the president calling the unnamed person, a spy, suggesting that he might be eliminated.

“I want to know who’s the person who gave the whistle-blower the information because that’s close to a spy," Trump said.

By all accounts reports have “suggested he was an analyst by training and made clear he was steeped in details of American foreign policy toward Europe, demonstrating a sophisticated understanding of Ukrainian politics and at least some knowledge of the law,” reported The New York Times

“The whistle-blower’s expertise will likely add to lawmakers’ confidence about the merits of his complaint, and tamp down allegations that he might have misunderstood what he learned about Mr. Trump,” they added.

The summary, and it was just a summary, released by the White House shows a strong role for Vice President Pence in the cover-up, so if that is part of the crime, then Pence as the successor is not desirable; if we are speaking of holding elected officials, the highest, to the standard of not being above the law.

Vice-President Pence

Adding fuel to the fire, Trump's personal lawyer Rudy Guilani’s involvement at pressuring Zelensky  adds to the seriousness of the charges, and to carry water for a quid pro quid does have damning consequences; but, for most, the real meat of the matter is if the Senate would “go up against” the president, the de facto leader of their party.

While Democrats can try to claim the moral high ground, the Republicans are in charge and it’s almost laughable, say some, to think that he will be removed from office, with the required two-thirds of a Senate vote.

Many are already urging a “go slow” approach and saying that the ban on soliciting foreign aid - in whatever form is overly broad, as a first amendment argument, yet proving that the solicitation is a determination of abuse, needs to be explored as an impeachable offense, is the issue, according to Rick Hassen a professor of political science at the University of California, Irvine, in an interview with CQ Roll Call.

An earlier argument noted that the airing of the misconduct will shift public opinion, and force the hand of the president to do good, but Thursday’s news that Trump “has decided to slash the American refugee program by almost half, deeply cutting the United States’ role in accepting persecuted refugees from most parts of the world", does not bode well for that argument.

“The administration said it would accept 18,000 refugees during the next 12 months, down from the current limit of 30,000 and a fraction of the 110,000 President Barack Obama said should be allowed into the United States in 2016, his final year in office.”

As noted earlier, and as the Intelligencer remarked, “the odds of Trump being removed via impeachment range from “slim” to “none.” It would take only 34 of 54 Senate Republicans to acquit Trump, and the idea that 20 senators from a party dominated by this president like a Bronze Age warlord would defy the MAGA base and try to defenestrate him on the brink of an epochal presidential election is, in a word, laughable.”

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Fed does another rate cut, but not enough for Trump

As most bankers and economists predicted, the Federal Reserve in its open market meeting that concluded on Wednesday, approved a rate cut by a one-quarter point, as investors became nervous and the two major indices took a nosedive in response.

While the US economy has shown strength in both employment and a corresponding consumer confidence, there are shadows on the horizon, both domestic and foreign, that have begun to lengthen: wages have inched up, but have nor returned to pre-depression levels, and there are continued layoffs that threaten to reduce overall employment, coupled with wages that have not met the increased cost of living.

Also a threat to the strength of the nation is the ongoing trade war with China, promulgated by President Trump and the Brexit debacle orchestrated by Britain's new prime minister, both of which have global economic consequences that could roil the world economy.

Some have said that this is more of an insurance move than one that is specifically tied to the United States, yet others feel that with record low inflation, below the 2 percent target rate, favored by the Fed, that this allows for greater ease in corporate transactions, yet still others have noted that corporate America has responded by putting on hold plans for capital investment.

Regardless of how Wednesday's move by the Fed is seen it is a symptom that more may come as outlined in the Chair’s remarks, who feels that they have some maneuverability should the need arise.

Specifically, Fed Chair Jerome Powell, noted in his published remarks that, “Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent.”

In keeping with that implied mandate, Powell indicated that should the need arise, there could be more rate cuts, a fact that has not been overlooked by some bankers that feel there could be at least three more, if needed.

The news was not well received from the White House, where Trump said, in a tweet: “Jay Powell and the Federal Reserve Fail Again,” and No ‘guts,’ no sense, no vision! A terrible communicator!”

That statement is consistent with a view of the president’s critics who point that his understanding of the role of the central bank is limited, but also the steady intertwining of politics and interface that is also quickly becoming a “new normal” for the global economy.

Powell seems to be reacting less from presidential pressure, although that can be argued, and more from the data, much like his predecessor, Janet Yellen, as he assess “risks to this positive outlook,'' meaning the mostly rosy economic forecast, and notably, that the Fed would use “more extensions,” if needed.

This new goal could be expanded to, some bankers say, to the end of the year, but most say not to the end of 2022.

There was not total consensus, in fact, who had dissented at the June meeting and who saw no need to cut.

“There was discord over the decision, with three officials dissenting. Two — Boston Fed President Eric Rosengren and Kansas City Fed President Esther George — have both voiced concerns that the US economy isn't in need of an extra boost from rate cuts. But St. Louis Fed President James Bullard favored a deeper, half-point cut,” said CNN Business, but he is seen, by some, as an outlier, when it comes to the FOMC meetings.

While the segue to another cut was predicted, there are some notable investors who see that there is more heat than light to the role of the Fed, and “In an interview with TheStreet, when asked about how he considers the Fed’s decisions, Buffett said, “I never give a thought to it.” When asked what he thinks of investors’ heavy emphasis on the Fed rate cut announcement, Buffett replied, “It’s a mistake to try and make investment decisions based on what you think the Fed is going to do.” He added, “just be content owning a good income-producing asset.”

“Mr. Powell also pushed back on Mr. Trump’s recent call for the Fed to slash rates below zero, saying such an idea was rejected during the height of the 2008 financial crisis and would not be high on the list of options if the economy worsened. If the Fed is forced to cut interest rates back to rock bottom, he said, it will again turn to bond-buying programs to provide added stimulus,” reported The New York Times.

Despite this assertion there are some, said the Times, that say otherwise, and feel that despite the traditional separation, “Some onlookers could view rate cuts, like Wednesday’s, as a sign that the central bank is caving to political pressure, particularly as dissent abounds.”

Less than six months ago, Trump noted brightly that he expected the economy to soar to 3.0 percent, but “Policymakers now anticipate the US economy will grow slightly stronger than previously expected, at a 2.2% rate, and unemployment will hold steady at 3.7%, according to their updated economic projections. In June, the Fed forecast that economic growth for the year would stand at 2.1% with unemployment at 3.6%,” reported CNN.

Perhaps, the best summary, was the BBC report, that quoted, “Brian Coulton, chief economist at Fitch Ratings, said the upgrade to that growth prediction underscores the fact that the Fed is worried about global factors, such as the trade war, rather than the underlying health of the US economy.

"This move is all about the deterioration in the global economic outlook over the late summer and very little about incoming US data," he said.

"While the Fed has maintained its 'will act as appropriate' language, we still see this as an insurance policy move and don't expect a series of further rate cuts," he added.

August Jobs report offers a mixed bag for US economy

For those that were looking for a significant increase in the August 2019 Jobs report,  from the U.S. labor department, it was beneficial to know that the dismal results of 130,000 is subject to revision, as has been the case for the last nine out of ten years.

There is nevertheless “Joy in Mudville” as economists, bankers and labor have praised the stable rate growth, or to be more accurate,  a pattern of steady, if not spectacular, growth, and indeed, this has been the case for months, as we see that low wages, not a typical characteristic of an economic resurgence, after a long depression; but there are those observers that see the 3.2 percentage wage “growth” as a bellwether fact, of unparalleled economic success; yet, that is something that even the hardiest of economists are dismissing.

That growth was 0.4 percent, and some, more optimistic market watchers, like Neil Irwin, writing for The New York Times, said, this is  “suggesting that employers are having to pay up to attract those workers. Over the last year, average hourly earnings were up 3.2 percent, which is something of a sweet spot: Pay is rising faster than consumer prices are, meaning American workers’ incomes are rising, yet not so fast as to raise alarm bells about inflation at the Federal Reserve.”

Others note that with an increasing cost of living, especially in urban areas, like Chicago, where rents are rising, even in “mom and pop” owned buildings, the increase may be significant, but not enough to meet increased cost of living.

As we noted before, most experts seem to agree the slowdown is based on cyclical developments that allow for boom, or bust cycles, but not an immediate recession; and, this report does not mean an imminent recession.

Leading this charge was Federal Reserve Chair, Jerome Powell, who, “on Friday repeated his pledge to do whatever it takes to keep the US economy growing and waved off fears of an imminent recession despite "significant risks" from uncertainty around trade.

"We are not forecasting or expecting a recession," said Powell during a discussion with Chairman of the Swiss National Bank, Thomas Jordan, in Zurich.

Instead, he said the outlook of the US economy continues to be a favorable one," which he attributed to the Fed's decision earlier this year to cut rates for the first time in a decade.

"We're going to continue to act as appropriate to sustain this expansion," Powell said in a report from CNN.

For President Trump, who is basing his reelection on a strong economy, the cracks appearing in the economy  has been worrisome, and as we reported last month, this is a cause for concern amongst White House staff, despite the fact that Trump feels the economist is just fine, and that anything to the contrary is simply fake news.

As The Hill noted, “The report comes as the Trump administration and China try to revive trade talks after more than a year of tit-for-tat tariffs between the world's two largest economies.

Deputy staff-level talks are set to begin later this month with hopes that they will open the door to a meeting between higher-level officials sometime in October.

But with just 14 months until the 2020 election, Trump faces a narrowing window to strike a truce with China that could steer the U.S. away from the edge of a recession.”

Adding fuel to the doomsday scenario of politics is a former federal reserve president who said, in an op-ed piece, that the Fed should just go ahead and give the economy a recession, to defeat Trump,which caused Powell to exclaim in horror, to the contrary. 

Mr. Powell

"Absolutely not," said Powell during the discussion. "Political factors have absolutely no role in our process. Our colleagues wouldn't tolerate it in our discussions."

He said the idea that the Fed would deviate from that is "simply wrong. The answer to that is, 'A hard no.'

"Our obligation is to use our tools to support the economy," said Powell, who declined to weigh in on the Trump administration's trade policy. "Trade policy uncertainty is not something that central banks have a lot of practice in dealing with."

Certainly the latest rounds of tariffs, on nearly all Chinese exports, care causing deep concern, and especially from American consumers who will shoulder the brunt of higher costs from, nearly everything, from cell phones to automobiles.

In southern parts of Illinois famers, a hardy constituent of Trump supporters, are balking that the cost of soybeans, exported to bacon loving Chinese, will increase due to the tariff on American exports; and, especially foodstuffs for a burgeoning Chinese middle class.

“The next test for the U.S. labor market will come in October, when Trump is set to raise tariffs on $250 billion in Chinese imports to 30 percent from 25 percent. The president is also set to finish imposing a 15 percent tariff on another $320 billion tranche of Chinese goods in December after applying the taxes to roughly half of those goods on Sept. 1.”

Powell’s remarks aside, this report, coming as it does amidst the trade talks and tariffs with China, can potentially disrupt the U.S. economy, as “proof” of a pending recession, and could send Trump from office, in 2020, but also damage the world economy, and particularly that of manufacturing, and factories, dependent on the inclusion of interrelated parts in their finished products.

What can be expected, when the dust settles, in less than two weeks,when the Fed meets, is another quarter-point raise say most bankers and economists.

“After September, we expect additional rate cuts in October and December as the downside risks are increasing,” Kathy Bostjancic, chief United States financial economist at Oxford Economics told  The New York Times.

In part, she said, the rate cuts are intended to compensate for the tariffs’ anticipated drag in 2020. She estimates that tariffs will reduce economic growth by more than half a percentage point next year.”

“Average hourly earnings increased by 0.4 percent, which is more than analysts had expected and up from a gain of 0.3 percent in July. And the length of the average workweek increased after falling in July.”

While there has been no definitive answer on exactly why wages remain steadfastly low, with either competition from big box stores to non-compete clauses in contracts, to regional variances, as the reason, the low-wage conundrum is still with us, and indicative of this is only the 96,000 increase in private sector jobs in August.

The monthly figure also got a bump with the hiring of 25,000 temporary census workers, and most have agreed that without them, the job figures would have hit a significant low.

In a desperate move, “Trump has asked the Fed to slash interest rates in half from their 2 percent to 2.25 percent range, demanding a level of stimulus last seen during the 2008 recession. The president renewed his attacks on the Fed and his handpicked chairman, Jerome Powell, in a tweet posted shortly before the jobs report was released.

"They were WAY too early to raise, and Way too late to cut - and big dose quantitative tightening didn't exactly help either," Trump tweeted. "Where did I find this guy Jerome? Oh well, you can't win them all!” in a report from The Hill.

Some are taking mid-bound position, based on the data: “The softening in job growth should surprise no one but it doesn’t mean the economy is headed toward a recession right away,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Households still have the income to keep spending,” according to Reuters.

Not so fast, said the Chicago based firm of Challenger, Gray and Christmas, Inc. who in a report released on Thursday, said, ”U.S.-based employers ramped up the pace of downsizing in August, as companies announced plans to cut 53,480 jobs from their payrolls. This is up 37.7% from July’s total of 38,845.”

“August’s total is the fourth highest for job cuts this year, and marks the eighth consecutive time job cuts were higher than the corresponding month one year earlier. Last month’s total was the highest August total since 2009, when 76,456 cuts were recorded.”

“The August total is 39% higher than the 38,472 cuts announced in August 2018. So far this year, employers have announced plans to cut 423,312 jobs from their payrolls, up 36.2% from the 310,773 cuts in the first eight months of 2018. It is the highest eight-month total since 2015, when 434,554 cuts were announced,” the report emphasized.

Adding the Chinese and US Tariffs, as a major factor, it added, “Employers are beginning to feel the effects of the trade war and imposed tariffs by the U.S. and China. In fact, trade difficulties were cited as the reason for over 10,000 job cuts in August," said Andrew Challenger, Vice President of Challenger, Gray & Christmas, Inc.

For Main Street observers, we see that “The weakness largely came from the retail sector, which saw a net decline in workers of 11,100 in August alone. Trade, transportation and utilities also lost 11,000 jobs, and mining and logging lost 5,000 positions,” noted CNBC.

“The weaker than expected job gains do make sense when looking at yesterday’s ISM and Markit figures on employment and just understanding how businesses respond to the slowing pace of growth and trade worries,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Companies have taken a time out on hiring until visibility becomes less cloudy, it’s only prudent.”

There was some good news, of sort: “The Labor Department’s report on Friday showed there was an even stronger rise in the share of prime working-age adults who were working, to 80 percent — up from 79.5 percent in July and the highest level in more than 12 years.”

With a worried president, a less confident consumer, and an atypical recovery, it’s going to be a bumpy road ahead.