Tuesday should have been a banner day for Boeing’s stock. 

The White House announced that it is sending four top economic hands, led by Treasury Secretary Steven Mnuchin, to China next week in the hopes of negotiating a resolution to the escalating trade conflict that has rattled shares of the aerospace giant. And the administration named an acting head of the Export-Import Bank — the lending facility derided by conservative critics as the “Bank of Boeing” — that has been hobbled by vacancies since 2015. 

But the company’s shares slid nearly 4 percent amid a broader bloodbath for industrial stocks. The Dow Jones industrial average tumbled for the fifth consecutive day, its longest losing streak in more than a year, falling 600 points at one point before recovering slightly to close down 1.7 percent. 

It was a painful reminder that although investors have demonstrated they’re newly sensitized to political headlines, the stock market’s performance is still subject to broader forces. 

The culprit appeared to be a comment from Caterpillar Chief Financial Officer Brad Halverson on the company’s otherwise positive earnings call that its first-quarter profit represented a “high-water mark” for the year because executives expect increased investment to eat into margins. The comment “spooked industrials as well as the overall market,” Scott Clemons, chief investment strategist at Brown Brothers Harriman, told The Washington Post’s Thomas Heath. “Today is just a ripple effect.” 

Investor unease was arguably further stoked by a rising 10-year Treasury yield, which crossed 3 percent for the first time since 2014. A higher rate could eat into corporate profits by making it more expensive for companies to borrow money.

Carter Copeland, Melius Research’s lead aerospace and defense analyst, had an earthier take. “The market rolled over and puked all over itself,” he told me, “and Boeing got caught up in it.” He noted the stock mirrored the performance of the XLI, an industrial stock benchmark, to within a tenth of a percent. That suggests it got no lift from the trade news out of Washington.

Indeed, Boeing has emerged this year as a proxy for investor fears of a U.S.-China trade war. The company sends about 80 percent of its commercial planes abroad, and China is its largest single market. Analysts say China needs Boeing as much as the company needs it as that country seeks to develop a dominant aerospace sector. Yet after a stellar 2017 — its stock rose 90 percent, making it the Dow’s top performer — it’s had a rockier run since trade tensions started mounting this year. The stock has slid nearly 10 percent from its all-time high in late February

Boeing was among the poorest performers back on April 4th, sliding 1 percent after China announced it would respond to U.S. tariffs with 25 percent duties of its own on American exports. A week later, it gained 3.8 percent, the best performer in the Dow, after Chinese President Xi Jinping delivered a speech that sought to cool the confrontation. 

So Tuesday was an aberration, as Trump announced a negotiating mission that could prove a turning point. Joining Mnuchin: U.S. Trade Representative Robert Lighthizer, National Economic Council director Larry Kudlow and White House trade adviser Peter Navarro. “The president specified no particular goals for the delegation, but he said the trip is being organized at Beijing’s request,” The Post’s Damian Paletta and David Lynch write. “Chinese officials in recent weeks have repeatedly complained that the Trump administration has refused to say which concessions could resolve Trump’s complaints or even which U.S. official is in charge of the trade fight.”

Evercore ISI, in a note to clients, wrote that the news "confirms our consistent view that both the US and China have been signaling their strong preference for negotiations and that the proposed tariffs on both sides will not be imposed in the short term." It also cautioned that "markets should make no mistake that this is the beginning of a negotiating process that will take many months, and is not a quick or easy negotiation with some definite end within weeks."

Meanwhile, Trump tapped Deputy U.S. Trade Representative Jeffrey Gerrish to serve as the acting head of the Export Import Bank. The role doesn’t require Senate confirmation, and Gerrish will keep his USTR post. The bank’s board still lacks a quorum, without which it can’t approve deals worth more than $10 million. “What the Gerrish move means for the board nominees stuck in the Senate remains to be seen,” The Hill’s Vicki Needham writes

Yet the appointment is the first signal the bank remains on the president’s radar after his initial pick to lead it — former Rep. Scott Garrett (R-N.J.) — was rejected by the Senate last year.  Copeland says Boeing has enough sources of financing for its aircraft that the sidelining of the bank hasn’t hurt that piece of its business. But restoring the bank could provide a lift to the company’s satellite business.

Boeing announces its first quarter earnings today. 


— Cash for access? Mulvaney tells lobbyists to ply lawmakers with donations. NYT's Glenn Thrush: "Mick Mulvaney, the interim director of the Consumer Financial Protection Bureau, told banking industry executives on Tuesday that they should press lawmakers hard to pursue their agenda, and revealed that, as a congressman, he would meet only with lobbyists if they had contributed to his campaign. 'We had a hierarchy in my office in Congress,' Mr. Mulvaney, a former Republican lawmaker from South Carolina, told 1,300 bankers and lending industry officials at an American Bankers Association conference in Washington. 'If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.'... 

Mr. Mulvaney said that trying to sway legislators was one of the 'fundamental underpinnings of our representative democracy. And you have to continue to do it.' The association, which invited Mr. Mulvaney to give the keynote address at its conference, strongly backs his efforts to consider the financial burdens on banks imposed by the bureau’s actions."

(To be fair, the OMB head also said he always met with his constituents as a former South Carolina lawmaker, whether or not they forked over campaign contributions. But the optics of the other statement are pretty tone deaf in President Trump's "drain the swamp" Washington...)

The Twitterverse gasped:

Here was NYT's Maggie Haberman: 

National Journal editor Ben Pershing: 

— Also not so great for the image of democracy: Mulvaney wants to shut public out of CFPB database. CNN Money’s Julia Horowitz and Donna Borak: “For years, the government has operated a database of complaints about banks, mortgage lenders and student-loan service providers. But you might not be able to look through it much longer. Mulvaney… said Tuesday that he doesn't want to keep the contents of the database open to the general public. ‘I don't see anything in here that says I have to run a Yelp for financial services sponsored by the federal government,’ Mulvaney said at a banking industry conferenee, with a copy of the 2010 Dodd-Frank legislation that established the CFPB in hand. The CFPB database contains hundreds of thousands of grievances against financial services companies.”

The Post's Heather Long: 

Mulvaney is also changing the agency's name. AP's Ken Sweet: "The Consumer Financial Protection Bureau is dead. Long live the Bureau of Consumer Financial Protection. That’s the message the Trump administration is pushing, at least, in what on the surface seems like a minor tweak to the name of the federal consumer watchdog agency... But critics see it as a not-so-subtle effort to telegraph the abrupt ideological turn the bureau has taken since Trump-appointee Mick Mulvaney became acting director last year." 

With all the focus on the 10-year Treasury yield, it’s easy to overlook the tumult that may await global investors across other asset classes.
Americans’ optimism increased this month, another sign the U.S. economy remains strong.
Amid a sea of red in financial markets, Bitcoin is still flashing green.


 SCOTUS takes on the trade war. Reuters's Andrew Chung: "Trump’s trade fight with China moved inside the white marble walls of the U.S. Supreme Court on Tuesday, where lawyers for both countries faced off over whether Chinese companies can be held liable for violating U.S. antitrust laws. The nine justices heard arguments in an appeal by two American companies of a lower court ruling that threw out price-fixing claims against two Chinese vitamin C manufacturers based on submissions by China’s government explaining that nation’s regulations. Many of the justices signaled skepticism toward that ruling.

"The arguments gave both countries a chance to air their differences over an aspect of their trade relationship. The Supreme Court took the unusual step of letting China present arguments even though it is not an official party in the case. Typically, only the U.S. government is given that privilege... None of the heated rhetoric over tariffs trickled into Tuesday’s arguments, which remained respectful."

Trump's still obsessed with trade deficits. The Post's Heather Long: "As long as Trump is focused on narrowing the trade deficit, there's a real risk of more tariffs and protectionism.To Trump, the trade deficit is a sign of weakness and economic loss. If he is serious about wanting to reduce it — either overall or with certain countries like China — he will likely turn to tariffs and quotas, which have a high potential of igniting a trade war. The other options for reducing the trade deficit are equally unpleasant."

Perdue lobbies Trump on TPP. The Post's Erica Werner: "Agriculture Secretary Sonny Perdue told senators Tuesday that he’s encouraging... Trump to consider rejoining the Trans-Pacific Partnership, the 11-nation trade deal the president pulled out of days after taking office. Perdue’s comment is the latest mixed signal from the Trump administration over the TPP, which Trump recently told senators he’s open to rejoining, only to subsequently suggest over Twitter that he’s not."

Perdue's quote: "I think, again, it forms a united front with our allies in an effort of tariff reduction that excludes China, to our benefit and not to their benefit... I’ve encouraged the president in that regard to consider the TPP again.”


Warner to bankers: Lean on House GOP. Washington Examiner's Joseph Lawler: "Mark Warner asked bankers Tuesday to lobby Republican leaders in the House to simply pass his bipartisan banking bill without changes, warning that the bill will die if the House seeks to add to the bill. 'This bill will not pass if it comes back to the Senate,' the Virginia Democrat said at a meeting of the American Bankers Association in downtown Washington. 'We’ve stretched this about as far as we can go,” he said of the legislation... which he helped write with Republicans on the Senate Banking Committee."

Capital Alpha's Ian Katz writes that bankers are heeding the call: "Judging from the tweets and from the vibe at the ABA conference, it seems the bankers are pushing more for House members to pass the Senate bill than for senators to revise and re-vote on a new bill with House suggestions. We see the bankers’ pilgrimage as moderately helpful to the bill’s passage. That’s because most of the visitors are from small banks and don’t carry the reputational baggage of Wall Street firms." The firm assigns a 75 percent chance of the measure becoming law and thinks it will happen by June. "However, we think pressure from industry and the White House has made it quite possible it could happen even sooner, by Memorial Day."

Senators push banks for oligarch info. Reuters's Patricia Zengerle: "U.S. senators are pressing many of the world’s largest financial institutions to disclose any links between their companies and wealthy Russians allied with Russian President Vladimir Putin. Two Democratic senators, Jeanne Shaheen and Sheldon Whitehouse, have written to the banks, hoping to increase pressure not just on individuals on the U.S. Treasury’s so-called 'oligarchs list,' but also on financial institutions to closely consider those with whom they do business as Washington moves to impose sanctions on Moscow." The banks that got the letter: Bank of America, JPMorgan Chase, Citibank, Barclays, Deutsche Bank, UBS, HSBC and Credit Suisse.

Luetkemeyer seeks gavel. American Banker's Neil Haggerty: "As House Financial Services Committee Chairman Jeb Hensarling, R-Texas, gets ready to retire at the end of the term, Rep. Blaine Luetkemeyer, R-Mo., is lobbying to take his place. Luetkemeyer, who currently chairs the panel’s financial institutions and consumer credit subcommittee, said Tuesday at an American Bankers Association conference that he is putting his name in the race to chair the committee. 'I am actively pursuing that position,' Luetkemeyer said."

The Fix
Waters once said Comey had “no credibility.” Now, she says, “Then was then, and now is now.” Indeed.
Aaron Blake

Wells directors survive. WSJ's Emily Glazer: "Wells Fargo re-elected all of its 12 board directors with more than 89% of preliminary votes, in a shift from the bank’s turbulent shareholder meeting last year. Wells Fargo, which hosted the meeting in Des Moines, Iowa, near its mortgage-business headquarters, still heard complaints about Chief Executive Timothy Sloan, executive compensation and its relationship with the firearms industry during the 2 ½-hour-long meeting. Wells Fargo Chairman Elizabeth 'Betsy' Duke defended Mr. Sloan’s role as CEO, saying she disagrees with California Treasurer John Chiang’s and others’ calls for him to be removed. 'Tim’s time with the company is an advantage and his commitment to change is unwavering,' she said."

Execs get raises. Bloomberg: "Wells Fargo's leaders deserve fatter paychecks after a tough year, according to investors. Shareholders voted Tuesday 92.4 percent in favor of the bank’s executive compensation plan... The outcome is a sign of support for management despite more than two hours of at-times heated commentary at the event."

Gov't witness clashes with AT&T lawyer. The Post's Brian Fung: "The AT&T-Time Warner merger could end up costing consumers less money than what some earlier estimates suggested, the government's star witness said in federal court Tuesday as he clashed repeatedly with company lawyers over key figures in his economic analysis of the deal. Instead of paying a minimum of 27 cents more per month on their bills as a result of the deal, TV subscribers could conceivably pay a smaller premium of at least 13 cents a month more — a downward revision in the projections of Carl Shapiro, an economist at the University of California at Berkeley.

"Toward the other end of the range, the government has said consumers could collectively pay hundreds of millions of dollars a year, or 45 cents more per month on each of their bills. Shapiro's concession could weaken the government's case to block the $85 billion merger, which seeks to meld AT&T's wireless distribution capability with Time Warner's massive library of TV and film content."

Courts & Law
In a case involving bank financial services to terrorists who attacked Israelis, the court ruled 5-4 that the Alien Tort Statute from 1789 doesn’t apply to corporations.
Robert Barnes
On Leadership
Less than 2 percent of corporate America's board members are younger than 45.
Jena McGregor

Fed weakens capital cushion. The Post's Jeff Stein: "The Federal Reserve has proposed new rules that would allow eight of the biggest Wall Street firms to collectively lower by about $121 billion the capital cushions their banking subsidiaries are required to hold against a collapse... Critics of the plan say it would dangerously weaken a rule put in place after the global financial crisis and intended to ensure that banks have big enough stockpiles of safe capital to survive a panic. The banks say the new rule would give them greater flexibility and would not lead to riskier investment decisions... Meanwhile, the Fed is moving forward with a new proposal that would revamp the 'stress tests' banks face to periodically ensure that their assets are safe. Both rule changes, which now move to a public comment period expected to take 30 to 60 days, can be enacted by the Fed without congressional approval."

The company, which sold its core business to Verizon last year and renamed itself Altaba, did not admit wrongdoing as part of a settlement.
Renae Merle


  • The House Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies holds a hearing on the Office of Housing and Federal Housing Administration’s 2019 budget.
  • The House Financial Services Subcommittee on Housing and Insurance holds a hearing on “HUD’s Role in Rental Assistance."

Coming Up

  • The U.S. Chamber of Commerce holds the 12th Annual Capital Markets Summit on Thursday.
  • The House Financial Services Committee holds a hearingon oversight of the SEC’s corporation finance division on Thursday.
  • SEC chairman testifies before the House Appropriations Subcommittee on Financial Services and General Government on Thursday.
  • The Heritage Foundation holds an event on crowdfunding on Thursday.
  • The House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection holds a hearing on reform of the CFIUS review process on Thursday.

From the New Yorker: 

A cartoon by David Sipress. #TNYcartoons

A post shared by The New Yorker Cartoons (@newyorkercartoons) on


President Trump and French President Emmanuel Macron simply couldn’t get enough of each other:

Trevor Noah on Trump's day with Macron: 

Stephen Colbert weighed in on Trump and Macron's bromance, too: