THE TICKER

With as little as a week remaining to strike a deal on a retooled North American Free Trade Agreement, negotiators from the U.S., Canada and Mexico have a lot of work left to complete and not much time to do it. But a bigger unknown looms: What will President Trump do? 

Failure by the negotiators could simply mean the 24-year-old pact remains on the books unchanged. Either way, though, Trump retains the option of moving unilaterally to pull the U.S. out of the deal — and he’s directed a drumbeat of hostile rhetoric toward Mexico that suggests it's a real possibility, including on the stump in Indiana last night. (The specter of Trump quitting the pact is serious enough that Sen. Pat Toomey (R-Pa.) is warning the president against it in a Wall Street Journal op-ed, writing, "Pulling out of Nafta by executive fiat would be economically harmful and unconstitutional.")

Talks among trade officials have stalled over carmaking rules. Specifically, American representatives have been driving a hard bargain on demands for higher autoworker wages south of the border and a minimum standard for how much of a new car must originate here. Negotiators have agreed on a broad approach but have yet to iron out the details, The Journal’s Siobhan Hughes and William Mauldin report. Other issues await — including the fate of an arbitration system prioritized by business interests and proposed U.S. tariffs on produce imports. And Speaker Paul Ryan (R-Wisc.) said this week that he needs a notice of a deal by Thursday for this Congress to be able to vote on it.

But like other Trump administration’s trade offensives, there are the nitty-gritty details and then there are the larger forces beyond the administration's control -- not to mention Trump's own shifting whims.

In the case of NAFTA, the president has tried to inject his demands for a border wall and stanching immigration flows into the debate. Three weeks ago, Trump explicitly threatened to make Mexican cooperation on those points a condition of a deal: 

It marked the second time last month the president dangled using NAFTA as leverage to make progress on his anti-immigration agenda. On Easter Sunday, Trump similarly lashed out on Twitter, warning he would “stop” NAFTA if Mexico didn’t crack down on the “big drug and people flows” over the border. 

The issue is top of mind for the president, according to a Thursday story from the New York Times’s Michael Shear and Nicole Perlroth. They report Trump remains irate about what he views as lack of progress on his border security promises, subjecting his Cabinet to a lengthy tirade on the matter Wednesday that drove Homeland Security Secretary Kirstjen Nielsen to the brink of resigning. At a rally in Elkhart, Ind., on Thursday night, Trump made no mention of progress in the NAFTA talks. He did, however, bemoan the state of U.S. immigration laws, calling them “the worst … in the history of mankind,” and offered inaccurate claims about the state of border wall construction. 

Watch him here: 

Would the president set aside his preoccupation with the border to embrace a reworked trade deal with Mexico, however favorable the terms? Trump’s track record suggests it could go either way. The vaunted dealmaker has done a lot more dismantling than building on international agreements. Consider his moves to withdraw from the Trans-Pacific Partnership, the Paris climate accords, and, just this week, the Iran nuclear deal.

Then again, his trade volleys have amounted to more bluster than bite. The administration has either sealed exemptions from its steel and aluminum tariffs or is in the process of negotiating them for most metal imports. The one trade deal it has forged — with South Korea — amounted to meaningfully less than what Trump initially signaled he would require, showing "that the administration is maybe not as tough as we think they are," former trade negotiator Wendy Cutler told Bloomberg at the time

Trump looks primed to get an earful from one constituency anxious to salvage a deal: He is set to meet with auto industry CEOs today at the White House. 

MARKET MOVERS

Buybacks steady market. WSJ's Ben Eisen and Akane Otani: "U.S. companies are buying back their shares at a record pace, providing support for the stock market when many investors have rushed for the exits. S&P 500 companies that have reported earnings for the first three months of 2018 bought $158 billion of their own stock in the first quarter, according to S&P Dow Jones Indices. That is on pace for the biggest amount in any quarter, based on data going back to 1998. About 85% of S&P 500 components have reported so far. The move has been fueled in part by a new tax law that is freeing up cash and encouraging companies to bring back money held abroad."

As Dow notches six-day winning streak. CNBC's Fred Imbert and Alexandra Gibbs: "The Dow Jones industrial average rose sharply on Thursday, posting its sixth straight day of gains, following the release of weaker-than-expected U.S. inflation data. Exxon Mobil and UnitedHealth were the best-performing stocks in the 30- stock index, which closed positive for 2018. The Dow rose 196.99 points to close at 24,739.53."

Apple's streak is even longer — it's now risen for nine straight days — as the tech giant continues what looks like an unstoppable march toward becoming the world's first trillion-dollar company. It's market cap now stands at about $960 billion. 

Dollar consolidates gains. Reuters's Hideyuki Sano: "The dollar consolidated gains on Friday and is set for a fourth consecutive week of gains as markets grow optimistic about the outlook for the U.S. currency in the coming weeks despite notching up some relatively quick recent gains.While some investors have been quick to point to the widening interest rate differentials in favor of the United States as a significant factor in the dollar’s surge, the currency has essentially benefited from a broadening recovery compared with a loss of economic momentum in Europe."

Recession by 2020? WSJ's Ben Leubsdorf: "The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed by The Wall Street Journal. Some 59% of private-sector economists surveyed in recent days said the expansion was most likely to end in 2020. An additional 22% selected 2021, and smaller camps predicted the next recession would arrive next year, in 2022 or at some unspecified later date."

The Federal Reserve is almost certain to raise short-term interest rates at its June policy meeting and will likely follow up with another increase in September, according to economists surveyed by The Wall Street Journal.
WSJ
The Treasury yield curve from 5 to 30 years flattened Thursday to the lowest level since August 2007, as a combination of weaker-than-expected U.S. inflation and solid demand for a record bond auction bolstered investor confidence in owning long-dated securities.
Bloomberg
There are few things in life as reliably stultifying as the corporate earnings call.
Bloomberg
TRUMP TRACKER

Trump will finally deliver his big drug prices speech. The Post's Carolyn Johnson: "Trump will deliver Friday afternoon a twice-delayed, much-anticipated speech about his plan to lower drug prices — after a year when harsh rhetoric against drugmakers was accompanied by little action. No one with a stake in drug prices... feels completely comfortable, given Trump's tendency to go off-script... But the administration has spent the past few weeks dropping clues about the policy directions it favors — including a slew of technical proposals that do little to threaten the pharmaceutical industry that would seem to be at greatest risk from any plan to lower drug prices. A senior administration official, speaking on background, said that Trump will unveil an 'American Patients First' blueprint that he called 'the most comprehensive plan to tackle prescription drug affordability.' He said that there would also be a request for information on ideas to lower drug prices."

He won't call for Medicare to negotiate lower prices. Trump broke with his party in embracing the long-held Democratic priority as a candidate. But the NYT's Robert Pear reports an administration official says it won't be a part of his plan. 

Trump's infrastructure plan is dead. CNBC's John Harwood: "The White House has made it official: the all-Republican government in Washington has no major legislative agenda this year. The news came without fanfare at the press secretary's daily briefing Wednesday. Sarah Huckabee Sanders told reporters that all of... Trump's talk of a massive, trillion-dollar upgrade to America's infrastructure, from "Infrastructure Week" declarations to a 53-page plan unveiled three months ago, won't produce 'a specific piece of legislation' in 2018. That conclusion managed to be extraordinary and unsurprising at the same time. Trump is just 16 months into his term, with fellow Republicans controlling both houses of Congress after an eight-year Democratic presidency. Yet the GOP's deep-seated anti-government stance leaves the modern party with fundamental reflexes of negation."

TRADE FLY-AROUND: 

China holds up U.S. goods. WSJ: "Ford cars and California fruits are among the goods piling up at Chinese ports, the result of increased inspections that business groups say is China’s way of reminding the U.S. how important its market is to American exporters. Navel oranges, lemons and cherries from California, along with American apples, have been sitting at Chinese wharves for longer than normal as Chinese inspectors spend more time inspecting the fruits for pests and decays, U.S. trade groups said."

Quotas make a comeback. WSJ's Kwanwoo Jun and William Mauldin: "The Trump administration’s efforts to block imports are bringing back a long-forgotten headache for manufacturers: the quota. U.S. officials have so far largely relied on tariffs—essentially taxes at the border—in their efforts to reduce imports of steel, aluminum and Chinese goods. But some countries are accepting hard limits, or quotas, on their shipments as they strike deals with the Trump administration to avoid the tariffs... South Korea was the first country to reach such a deal... Brazil, Argentina and Australia are also facing potential quotas, while the European Union, Canada and Mexico are still in talks ahead of the June 1 deadline for when the tariffs would kick in."

MELTDOWN WATCH: 

Cohen advised on Time Warner merger. The Post's Roz Helderman, Brian Fung and Tom Hamburger: "Three days after President Trump was sworn into office, the telecom giant AT&T turned to his personal attorney, Michael Cohen, for help on a wide portfolio of issues pending before the federal government — including the company’s proposed merger with Time Warner, according to documents obtained by The Washington Post. The documents detail the full scope of Cohen’s $600,000 deal with AT&T and how his contract specified that he would provide advice on the $85 billion merger, which required the approval of federal antitrust regulators... It is unclear what insight Cohen — a longtime real estate attorney and former taxicab operator — could have provided AT&T on complex telecom matters."

Adam Lerrick has withdrawn as President Donald Trump’s nominee for assistant Treasury secretary for international finance, after languishing for more than a year without Senate confirmation.
Politico
MONEY ON THE HILL

GOP struggles to sell its tax law. The Post's Erica Werner: "Republican leaders and campaign officials are scrambling to do more to sell voters on their signature legislative achievement — a $1.5 trillion tax cut — amid poor polling numbers, rank-and-file members who lack a consistent message and a president who refuses to focus on the issue... 

"Party leaders remain convinced the law remains their hope for November success, but some Republicans have begun expressing frustration at how difficult the law has been to sell to the public and question whether that will turn around in time to help them in the November midterms... By August, one lawmaker will win a “Ronald Reagan Award” for completing a checklist of assignments aimed at pushing the law, including holding 12 town hall meetings, making seven radio or TV appearances, and delivering three House floor speeches."

A Speaker Pelosi would revisit tax cuts. Bloomberg's Erik Wasson: "House Minority Leader Nancy Pelosi said that if Democrats take control of the House in November and she’s elected as their leader, she will seek to revise the GOP’s tax cut bill to reverse its estimated $1.9 trillion increase to federal budget deficits. 'The tax bill is a dark cloud over our children’s future,' the California Democrat said Thursday at the Peterson Foundation Fiscal Summit in Washington. 'We want to revisit in a way that puts the middle class first and reduces the debt.' Pelosi said she would seek to negotiate a bipartisan extension of the tax bill’s middle-class tax cuts for individuals, which expire in 2026."

Diversity bill targets Fed. Bloomberg's Christopher Condon: "Democratic Senator Kamala Harris on Thursday upped the pressure on the U.S. central bank to make its leadership more diverse, introducing legislation to compel the Federal Reserve’s 12 regional banks to interview at least one woman and one minority candidate when they search for a new chief. The bill, the Diverse Leadership Act, would also require regional Fed banks to report to the Senate Banking Committee, the House Financial Services Committee and the Fed’s Office of the Inspector General within 60 days of appointing a new president, providing demographic details on the pool of candidates they considered for the vacancy."

PowerPost
The Senate has just 67 working days left before the end of the fiscal year Sept. 30, with limited time to address must-pass spending bills and nominations.
Seung Min Kim
POCKET CHANGE

Wells Fargo to stay in the Fed's doghouse. WSJ's Emily Glazer: "Wells Fargo  will remain constrained by a regulator-imposed limit on growth for longer than expected, its chief executive said Thursday, as the bank continues to address the ramifications of risk-management failures. Citing 'widespread consumer abuses,' the Federal Reserve in February imposed an asset cap on Wells Fargo, an unprecedented enforcement action that threatened to crimp the San Francisco-based lender’s revenue and profit growth. Wells Fargo said at the time that reviews of its plans related to the Fed’s enforcement action would be completed by October... But on Thursday, CEO Timothy Sloan said during Wells Fargo’s investor day presentation that the bank needed more time to address and incorporate feedback from the Fed, and that the asset cap would continue into the first part of next year."

SPEAKING OF BANKS BEHAVING BADLY: 

RBS reaches $5 billion settlement. CNN Money's Rishi Iyengar: "The Royal Bank of Scotland has already paid out tens of billions of dollars in penalties following the global financial crisis. Now, it's paying $5 billion more in a bid to draw a line under the crisis. The British bank has reached an agreement 'in principle' with the US Department of Justice to end the department's investigation into allegations it sold risky loans worth billions between 2005 and 2007, it said in a statement on Thursday. Under the proposed settlement, RBS will pay a penalty of $4.9 billion. The deal is yet to be finalized, and will be subject to the bank and the DOJ entering into a legally-binding agreement."

DOJ eyes Dutch bank execs in drug probe. Bloomberg's Jesse Hamilton and Tom Schoenberg: "A river of drug-cartel money flowed through the U.S. arm of a Dutch banking giant, and now federal investigators are pursuing criminal cases against former senior executives for allegedly covering it up, two people with knowledge of the probe said. The Justice Department is considering whether to accuse Rabobank NA’s ex-Chief Executive Officer John Ryan, the lender’s former general counsel and its past compliance chief of obstructing U.S. bank examiners’ efforts to dig into the firm’s failures to prevent money laundering... A top banking regulator, the Office of the Comptroller of the Currency, is also aiming to sanction the executives."

Goldman, Apple team up on credit card. WSJ's Tripp Mickle and Liz Hoffman: "Apple and Goldman Sachs are preparing to launch a new joint credit card, a move that would deepen the technology giant’s push into its customers’ wallets and mark the Wall Street firm’s first foray into plastic. The planned card would carry the Apple Pay brand and could launch early next year... As new iPhone sales growth slows, Apple is focusing on services such as mobile payments, streaming-music subscriptions, and App Store sales... Goldman, meanwhile, is pushing into consumer banking to compensate for a slump in securities-trading, where revenue has fallen by two-thirds since the financial crisis."

JPMorgan revamps its stock trading business. CNBC's Hugh Son: "J.P. Morgan Chase, the world's biggest investment bank by revenue, has created a new management team to help it better serve Wall Street clients who increasingly want to trade with algorithms through electronic platforms."

Draper: Elizabeth Holmes "did a great job." The venture capital investor acknowledged no regrets about his Theranos bet in a jaw-dropping interview. CNBC's Chloe Aiello: "Tim Draper defended Theranos CEO Elizabeth Holmes on Thursday, despite the total collapse of the formerly heralded start-up. 'I feel we have taken down another great icon,' Draper said on CNBC's 'Closing Bell.' The founder and managing director of Draper Fisher Jurvetson, who was an early investor in Theranos, called the start-up a 'great vision,' despite the fact that the it lost investors close to $900 million and Holmes was later charged with 'massive fraud.' 'Look what she did, she created an amazing opportunity,' Draper said."

On Leadership
'Facebook has grown at an unbelievable pace,' a major investor wrote in a stinging op-ed. 'The capital structure has changed, and it is time for its governance to catch up.'
Jena McGregor
Business
Other HQ2 cities take note as Amazon’s relationship with its home area becomes fraught.
Jonathan O'Connell
THE REGULATORS

CFPB union ready to fight cuts. American Banker's Kate Berry: "The union representing employees at the Consumer Financial Protection Bureau is already battling plans by acting Director Mick Mulvaney to restructure the agency — and is preparing for a bigger fight if he moves to cut jobs. The union has not yet heard that there are concrete plans for layoffs... but it is worried such efforts are in the works... The union's involvement adds another layer of bureaucracy as Mulvaney seeks to put in place major policy changes."

Democrats want Mulvaney's schedule. Washington Examiner's Joseph Lawler: "Democrats want to take a look at... Mulvaney’s schedule to track his meetings with lobbyists, the latest headache for the acting director of the [CFPB] stemming from his controversial comments about how he gives access. Twenty-two Senate Democrats requested Thursday that Mulvaney turn over his calendar and any agency communications in which he discussed giving access to lobbyists, for both his position at the CFPB and his role as director of the Office of Management and Budget."

DAYBOOK

Coming Up

  • Brookings Institution holds an event on “The future of work: Robots, AI, and automation” on May 14.
  • The Heritage Foundation holds an event on “The Federal Reserve’s New Capital Rules Proposal” on May 22.
THE FUNNIES

From The Post's Tom Toles: 

BULL SESSION

“Keep America Great:” Trump announces his 2020 campaign slogan: 

Trump warns Republicans: “It's all at stake in November:” 

Trevor Noah on Michael Cohen’s “secret side hustle:”