Trump bad economic timing?

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Quick Fix

Trump’s bad economic timing?I write on POLITICO this morning about the economic expansion, which at the end of the week will become the longest on record, an occasion likely to elicit bragging from the White House. But it will also highlight a major risk for President Donald Trump.

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Signs of a slowdown are mounting with weaker job growth, reduced manufacturing activity and a nervous Federal Reserve hinting at slashing interest rates — suggesting that Trump could suffer from terrible economic timing.

Trump may avoid running for reelection in an official recession, especially if he gets his much desired rate cuts from the Fed. But there is a good chance he’ll be seeking a second term with the economy slowing

Moody’s Mark Zandi tells me: “The economy has been a tailwind for him, but by Election Day next year it will at best no longer be blowing. And there is a reasonable probability that he will be facing an economic headwind for reelection with growth slowing to the point that unemployment is starting to rise next year…”

Much depends on China — Trump heads for Osaka, Japan and the G-20 meeting at the end of the week, where he will meet with Chinese President Xi Jinping. No trade deal is expected but senior White House officials hope Xi and Trump get along and set up a framework for fresh talks. A total failure would obviously be rough for markets. And total trade war would be crushing for the economy. (More below).

GOOD MONDAY MORNING — Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.

Driving the Day

DRIVING THE WEEK — Biggest moments come Friday and Saturday with the G-20 summit … The giant field of Democratic candidates engage in their first debate, a two-day affair Wednesday and Thursday evenings in Miami … Trump leaves for Japan on Thursday … House Financial Services has a hearing Tuesday at 10:00 a.m. on debt collection practices … Senate Banking has a hearing on Tuesday at 10:00 a.m. on Fannie and Freddie …

Fed Chair Jerome Powell speaks at 1p.m. Tuesday at a Council on Foreign Relations event … House Financial Services subcommittee has a hearing on Tuesday at 2:00 p.m. on fintech … Senate Banking has a hearing Thursday at 10:00 a.m. on the Ex-Im bank

GO DEEP ON THE ISSUES — POLITICO has a very cool and comprehensive new tool tracking all the Democratic presidential candidates positions on key issues. You can drill down on their views on the economy and financial services here.

CHINA DEAL WON’T FIX EVERYTHING — Deutsche Bank’s Torsten Slok: “Even if we get some agreement at the G20 meeting we may underestimate the damage already done to capex planning and corporate sentiment by the trade war because the global supply chain is much more integrated than we think …

“The 2018 corporate tax cut is running out of steam and the positive effects on growth are getting smaller and smaller … The rise in delinquency rates on consumer loans and associated increase in interest rates on credit cards and auto loans will begin to weigh on consumer spending”

TRUMP ON POWELL — Trump on Powell to NBC’s Chuck Todd: “I didn’t ever threaten to demote him. I’d be able to do that if I wanted, but I haven’t suggested that. … I have the right to do that, but I haven’t said that”

“Obama had someone that kept the rates very low. I had somebody that raised the rates very rapidly — too much. He made a mistake, that’s been proven.”

MM SIDEBAR — The story wasn’t that Trump said he’d demote Powell. It’s that the White House looked into the legality of such of a move, which it did. The White House also concluded Trump has no legal authority to demote Powell, which he doesn’t. But Trump doesn’t care.

WHITE HOUSE ROLLS OUT MIDEAST ECON PLAN — Our Gabby Orr: “The White House on Saturday released the first of a two-part Middle East peace plan, outlining the Trump administration’s ‘economic vision’ for Palestinian territories and neighboring Arab countries ahead of a diplomatic conference in Bahrain next week helmed by senior adviser Jared Kushner.

“The long-awaited proposal calls for a $50 billion investment in Palestinian territories along the West Bank and Gaza from private companies and donor countries to jumpstart local economies and boost conditions in Jordan, Egypt and Lebanon, which would each receive a portion of the funds.”

DEM DONORS’ TOP CHOICES — CNBC’s Brian Schwartz: “Democratic donors from across the country have been holding fundraising events and meetings for months trying to figure out who their preferred candidate is to take on … Trump.

“While they haven’t decided on a favorite, many financiers have put their resources behind former Vice President Joe Biden, Sen. Kamala Harris of California and South Bend, Indiana, Mayor Pete Buttigieg.”

DEMS TO CHALLENGE EX-IM DEAL — Our Zachary Warmbrodt: “House Democrats are poised to challenge a deal negotiated by Rep. Maxine Waters that would impose new restrictions on the Export-Import Bank, the first show of resistance among members of the Financial Services Committee since she became chairwoman in January.

“The new legislation that the California Democrat drafted with the finance panel’s top Republican, Rep. Patrick McHenry (R-N.C.), would renew the agency’s operations for seven years and expand its capacity to offer loan guarantees to foreign buyers of U.S. exports. Without action, the bank's charter would expire at the end of September.”

Markets

BOND-YIELD PLUNGE CONFOUNDS GLOBAL ECONOMY — WSJ’s Patricia Kowsmann, Avantika Chilkoti and Sam Goldfarb: “The collapse in bond yields since this spring has been stark, swift and global, upending expectations that the world’s economy would be strong enough to support a return to normal monetary policy after years of easy money.

“The drop says investors expect a recession may be looming, and that central banks will have to step in with lower rates to try to forestall it. Ten-year bond yields last week fell to record lows in Germany and France and below 2 percent in the U.S. for the first time since 2016.”

ICYMI: S&P 500 NOTCHED ANOTHER SOLID WEEK — AP’s Alex Veiga: “Wall Street finished a milestone-setting week on a downbeat note Friday after a late flurry of selling nudged stocks lower, ending the market’s four-day winning streak. Even with the modest losses the market delivered its third straight weekly gain, with the benchmark S&P 500 index hovering just below its record high close from a day earlier

IS FACEBOOK’S LIBRA A LICENSE TO PRINT MONEY? — WSJ’s James Mackintosh: “Buy Facebook’s Libra and you are literally giving the social media giant a license to print money, in the form of its new cryptocurrency. A bunch of big companies have agreed to pony up $10 million each to take part, and it is easy to see why: On some reasonable-sounding assumptions about its takeup, it could be insanely profitable in real money, too. Yet, delve into the plans and Libra looks a lot less appealing to users than Facebook’s hype suggests.

“The profits would come from interest on the reserve backing Libra, designed to keep Libra’s value stable. All interest is diverted to the companies backing Libra’s governing body, while holders of Libra itself earn nothing — giving the founders profits akin to the seigniorage made by central banks.”

Speaking of cryptocurrency — Bloomberg’s Eric Lam, Vildana Hajric and Joanna Ossinger: “Bitcoin traded above $11,000 for the first time in 15 months, recouping more than half of the parabolic increase that captured the attention of mainstream investors before the cryptocurrency bubble burst last year.

“‘The bounce-back of Bitcoin has been fairly extraordinary,’ said George McDonaugh, chief executive and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc. ‘Money didn’t leave the asset behind, it just sat on the sidelines waiting to get back in.’”

For Your Radar

TRANSITIONS — Russell Stokes is joining Mars, Incorporated as chief strategy officer. He previously was head of strategy and mergers & acquisitions at Whirlpool Corporation, and a member of Whirlpool’s Executive Committee and is also a Boston Consulting Group alum.

WEEKEND WEDDING — “Bryana Turner, Robert Jackson Jr.” – N.Y. Times: “Mrs. Jackson, 31, is the founder and principal of Turner Divorce Mediation ... Mr. Jackson, 42, is a commissioner on the United States Securities and Exchange Commission in Washington.

“He is currently on public service leave from the faculty of the N.Y.U. School of Law, where he specializes in corporate law and financial regulation. He previously served in the Obama administration as a counselor to senior Treasury Department officials during the financial crisis.”