THE TICKER

President Trump is a historically unpopular president presiding over a historically strong economy, a singular state of affairs scrambling expectations for Republicans three weeks ahead of the midterms. 

The GOP paradox played out on the president’s Twitter feed on Tuesday. He interrupted a stream of personal grievance-airing to amplify a message fellow Republicans welcome:

Trump actually understated the good news on job openings. The figure is 100,000 openings higher, a record high in the 16-year history of the Labor Department survey. The stock market surged Tuesday on that news, and reports of some strong corporate profits, pushing the Dow Jones industrial average up 548 points and erasing some of last week’s losses.

Yet Trump bracketed that focus on the positive with a slew of insults lobbed at a variety of foes, which are helping keep his approval ratings underwater. He called the adult-film actress who alleges an extramarital affair with him “Horseface”; railed about the investigation into his campaign’s Russia ties while slamming his own attorney general; recycled his denigrating nickname for Sen. Elizabeth Warren (D-Mass.); and blasted the media for raising questions about his financial ties to Saudi Arabia.

“It’s an intriguing, mixed bag,” says Micah Roberts, a partner with the Republican polling firm Public Opinion Strategies.

History is, of course, against the  president's party gaining seats in a midterm election-- and results are worse when that president is unpopular. Since World War II, a president polling below 50 percent approval has seen his party lose an average of 37 House seats in the midterms (this year, Democrats need to net 23 seats to gain control of the chamber). And Trump told the AP yesterday that he wouldn't take responsibility if Republicans lost the House majority as is predicted. "No, I think I’m helping people," Trump said.

Trump’s approval has never broken into positive territory. At the same time, several measures of economic sentiment show after a years-long funk, Americans are finally believing in a brighter future for themselves and the country. “It’s very difficult to make that traditional connection between his unpopularity and other things moving in a consistently positive direction,” Roberts says. 

Indeed, a record-high 48 percent of respondents to CNBC’s new All-America Economic Survey said they are optimistic about the economy now and for its future. Those results — from polling done by Roberts’s firm along with the Democratic Hart Research Associates — match the findings of the latest Economic Anxiety Index, out this morning from Marketplace and Edison Research. The index is hitting an all-time low in its three-year history, with fewer respondents describing themselves as frequently or sometimes anxious about their financial situation than in any previous survey.

The Marketplace poll shows 60 percent of Americans say the economy is strong, up 7 points from earlier this year. And among that group, nearly two-thirds credit Trump, though a slightly higher number also credit the private sector. The CNBC poll found Trump earning narrow approval for his economic policies. But, tellingly, by a 21-point margin, respondents say they are concerned about his temperament. 

The result tracks with the most recent Washington Post-ABC poll, which found the president earning net positive reviews of his economic stewardship for the first time, with 49 percent approving of his handling of the economy while 46 percent disapproved. 

But as The Post’s Scott Clement and Dan Balz noted, the president’s improved standing “has not translated into similar Republican gains on the generic ballot because a record 90 percent of those who say they disapprove of the president now say they are supporting Democratic House candidates, up from 83 percent in August.”

The poll found voters trust Republicans over Democrats on the economy, 45 to 41 percent, though Democrats hold leads on five other top issues. Overall, Democrats hold a 7-point edge over Republicans on dealing with the main problems facing the nation; when Democrats retook the House in 2006, they led on that question by 19 points. 

Roberts said satisfaction with the economy could mute Democratic anger against Trump. “Angry people vote,” he said. And there should be less anger because of the robust economy. “That’s what makes this such an interesting election: There are a lot of signals that would make you want to believe the election will go one way or the other, and they’re pushing against each other… A trend’s only a trend until it’s not.”

MARKET MOVERS

Trump calls Fed his “biggest threat.” AP's Martin Crutsinger: “Stepping up his attacks on the Federal Reserve, [Trump] declared Tuesday that the Fed is 'my biggest threat' because he thinks it’s raising interest rates too quickly. Trump said he doesn’t speak with Chairman Jerome Powell because of the Fed’s political independence but said. “I’m not happy with what he’s doing because it’s going too fast” in raising rates at a time when inflation has remained relatively low. Asked about his decision as president to replace Janet Yellen with Powell, Trump said: 'Can I be honest, I’m not blaming anybody. I put him there and maybe it’s right, maybe it’s wrong but I put him there.”' Trump made his comments in an interview with Fox Business Network’s Trish Regan."

As Fed could drop clues about its rate-hiking path. Bloomberg's Jeanna Smialek and Ivan Levingston write that the minutes from the latest Fed meeting “set for release at 2 p.m. Wednesday in Washington are unlikely to offer answers, but they may drop a few hints about how officials are thinking... The flurry of Fed-speak has made it clear that officials still think policy is easy and are comfortable with continued gradual increases, but have yet to decide how high rates will ultimately climb.”

Investors hunt for safety amid turbulence. WSJ's Akane Otani and Michael Wursthorn: "The volatility racking markets this month is the latest chapter in investors’ struggle to adapt to a world of reduced central-bank stimulus. Even after a sharp rally Tuesday, the Dow industrials are off 2.5% this month and on course for their worst start to a quarter since 2016. Treasury yields have shot to multiyear highs, pressuring shares from New York to Hong Kong to London. Many investors say the turbulence reflects the early stages of what they call a rotation, a pragmatic decision to reallocate resources away from assets whose gains now appear at risk—in this case, to sectors such as safer bonds and away from the most highly valued stocks."

Small stocks have lost their edge. NYT's Matt Phillips: "Earlier this year, small stocks were a big trade. Among investors, the bet was that smaller American businesses had less to lose in the global trade fight than big multinationals, and more to gain from the Trump administration’s tax cuts. With this backdrop, small stocks surged ahead of the giants that make up the Standard & Poor’s 500-stock index, beating them for much of the year. That’s over now. Instead of being insulated, small companies are actually more likely than larger ones to be impacted by investors’ big new worry:  rising interest rates. After peaking in August, the benchmark for so-called small caps, the Russell 2,000-stock index, is down more than 8 percent."

— U.S. is the most competitive economy in the world again. WSJ’s Joanna Sugden: “The U.S. is back on top as the most competitive country in the world, regaining the No. 1 spot for the first time since 2008 in an index produced by the World Economic Forum, which said the country could still do better on social issues. America climbed one place in the rankings of 140 countries, with the top five rounded out by Singapore, Germany, Switzerland and Japan. All five countries’ scores rose from 2017, with the U.S. notching the second-biggest gain after Japan’s. The top spot hasn’t gone to the U.S. since the financial crisis stalled output and triggered a global economic slowdown.”

TRUMP TRACKER

TRADE FLY-AROUND:

— McConnell: Revamped NAFTA will wait. Bloomberg News's Jenny Leonard: “Trump’s renegotiated trade deal with Mexico and Canada won’t get a vote in Congress this year, Senate Majority Leader Mitch McConnell said, setting up a potential contentious fight with Democrats next year over a signature White House accomplishment. ‘My trade advisers say you can’t possibly do it under the various steps that we have to go through. I had not heard that it might be possible to address it this year,’ McConnell said in an interview with Bloomberg News Tuesday in Washington . . . Asked about the administration’s trade policy more broadly, including U.S. tariffs on Chinese imports, McConnell said he’s taking a wait-and-see approach. He said Trump ‘deserves to have a little slack cut here and that’s what we’re doing’ to improve America’s trade relationships in the longer term, he said.”

U.S. announces talks with E.U., U.K., and Japan. The Post's Heather Long: "The Trump administration formally launched trade talks with the European Union, Britain and Japan on Tuesday as the president looks to expand his “America First” trade policy. U.S. Trade Representative Robert E. Lighthizer sent Congress three letters Tuesday notifying lawmakers that Trump and his team are going to negotiate trade deals with those governments. The move was widely expected — Trump has been discussing trade with E.U., British and Japanese leaders for months. But giving notice to Congress signals an intent to make wide-ranging free-trade agreements with those countries and a commitment to keep pursuing deals around the globe even as Trump escalates his fight with China."

China cuts U.S. debt holdings again. Bloomberg: "China’s holdings of U.S. Treasuries fell for a third consecutive month in August as the Asian nation struggles to prevent the yuan from weakening amid trade tensions with America. China’s ownership of U.S. bonds, bills and notes was $1.165 trillion, down from $1.171 trillion in July, according to data released by the Treasury Department on Tuesday... Beijing’s sale of Treasuries is sometimes viewed as a response to the trade war, especially after China’s ambassador to the U.S. signaled in March his country could scale back purchases of the debt to retaliate against American tariffs."

Lawmakers urge exclusions from latest China tariffs. Bloomberg's Mark Niquette: "A bipartisan group of almost 170 members of Congress is urging the Trump administration to establish a process for U.S. companies to seek relief from the president’s latest tariffs on Chinese imports. Republican Representative Jackie Walorski of Indiana and Democrat Ron Kind of Wisconsin sent a letter Monday signed by 167 other members, including House Majority Leader Kevin McCarthy, to U.S. Trade Representative Robert Lighthizer asking for an exclusion process for duties on $200 billion in goods imposed last month."

As others focus on chickens. The Associated Press's Richard Lardner: “Well before [Trump] began slapping tariffs on steel, aluminum and other imported goods, there was a deal with South Africa that gave U.S. chicken producers duty-free access to a market that had effectively been shut to them for years. But that trade deal, worth tens of millions of dollars to American businesses, now is being threatened by Trump’s metal tariffs. A group of senators from chicken-producing states — Democrat Chris Coons of Delaware and Republicans Johnny Isakson of Georgia and Roger Wicker of Mississippi — have detailed their concerns in a recent letter to Commerce Secretary Wilbur Ross. They cite a lawsuit in South Africa that aims to end duty-free imports of American chicken unless South Africa is exempted from Trump’s metal tariffs. The dispute illustrates the risk Trump runs by employing tariffs so aggressively."

Chinese leader Xi Jinping has reacted to American pressure with a level of desperation that is good for neither Washington nor Beijing.
Politico Magazine
The U.S., Mexico and Canada agreed to replace the North American Free Trade Agreement, but nobody agrees on what to call it; votes for T-MEC
The Wall Street Journal

MELTDOWN WATCH:

— Graham calls for sanctions on Saudi Arabia. WSJ's Courtney McBride: “A senior Republican senator on Tuesday called for sanctions against Saudi Arabia over the disappearance and presumed killing of a dissident journalist in the kingdom’s Istanbul consulate this month, and said he would not return to the kingdom as long as Crown Prince Mohammed bin Salman remains in power. In an interview on Fox News, Sen. Lindsey Graham (R., S.C.) said it was up to [Trump] to decide the U.S.’s course of action, but he said, ‘I know what I’m going to do: We’ll sanction the hell out of Saudi Arabia.’ He did not elaborate. ‘Nothing happens in Saudi Arabia without MBS knowing about it,’ Mr. Graham, a top Republican foreign policy hand, said, using shorthand for Prince Mohammed, a son of Saudi King Salman and the de facto leader of the kingdom.”

BlackRock says it won't cut ties. Reuters: "BlackRock Inc Chief Executive Officer Larry Fink said on Tuesday that he would not cut ties with Saudi Arabia even as pressure mounts on the country to explain the disappearance of a prominent critic. Fink is one of several top business executives, including JPMorgan Chase & Co’s Jamie Dimon and HSBC Holdings plc CEO John Flint, who pulled out of a major investment conference in Riyadh after Saudi journalist Jamal Khashoggi, a Washington Post columnist who has been critical of the country’s policies, went missing... Asked on CNBC if he would cut off all business ties with Saudi Arabia if it became clear that King Salman bin Abdulaziz Al Saud or Crown Prince Mohammed bin Salman had ordered Khashoggi’s murder, Fink said, 'No.' ... Fink has long had relationships with Saudi officials and one year ago announced plans to open offices within the country."

Middle East
Meanwhile, Turkey sought to expand its probe to the Saudi consul general’s residence and consular vehicles.
Carol Morello, Erin Cunningham and Souad Mekhennet
National Security
Secretary of State Mike Pompeo arrived in Turkey after talks with Saudi leaders about the journalist’s disappearance.
Carol Morello and Loveday Morris
POCKET CHANGE

— Goldman Sachs and Morgan Stanley beat expectations. AP's Ken Sweet: “The leading U.S. investment banks — Goldman Sachs and Morgan Stanley — each reported third quarter profits that beat analysts’ expectations Tuesday, helped by strong performance in their trading operations and better-than-expected revenue from stock underwriting. Investors welcomed the strong results. . . . Both companies’ stocks have struggled this year as investors have worried about the investment banks’ ability to bring in new business, and cope with slower trading businesses. . . . Goldman, the larger of the two banks, reported a profit of $2.52 billion in the quarter, or $6.28 per share. . . . Meanwhile, Morgan Stanley earned a profit of $2.11 billion, or $1.17 per share, which is up 19 percent from a year ago, when the bank earned $1.78 billion, or 93 cents per share.”

Bloomberg has a rundown of analyst reactions. The short version: They like Goldman's results but love Morgan Stanley's. 

— Walmart pitches itself as a new company. Reuters's Nandita Bose: “Walmart Inc’s chief executive officer on Tuesday urged investors to revise their view of the company’s business, touting its tech investments to grow online sales at a time that Walmart is battling Amazon.com for market share. Walmart, based in Bentonville, Arkansas, also lowered its earnings forecast for its current fiscal year and said e-commerce growth next year would be slower than in the current year ending in January. ‘I want to challenge your thinking about Walmart,’ Chief Executive Doug McMillon told the company’s annual investor meeting, which was webcast. ‘There is a change within the company that is related to mindset, culture behavior, and we are inventing again.’ . . . Walmart is doubling down on online grocery delivery and pickup options. By the end of the year, 800 U.S. stores will offer grocery delivery and more than 2,000 will offer a pickup service.”

The ride-hailing company recently received proposals from banks valuing it at as much as $120 billion in an initial public offering that could take place early next year.
WSJ
Western investors piled into the Dubai-based Abraaj Group, whose founder, Arif Naqvi, pledged to make money by helping the poor in developing countries. Now it’s the world’s largest insolvent private-equity firm.
WSJ
Salvaged artifacts have been the focus of a tussle over who gets to own a part of the ocean liner’s history. They’re worth $19.5 million, at least.
NYT
MONEY ON THE HILL

McConnell: Deficit is “very disturbing.”  The Post's Damian Paletta: “Mitch McConnell on Tuesday called the ballooning budget deficit 'very disturbing' but said large federal spending programs were to blame, dismissing criticism that last year’s GOP tax cuts are saddling the country with more debt. McConnell, in a Bloomberg News interview, also said there was little chance Republicans would be able to cut government spending next year if they retained control of Congress because any changes would need leadership from Democrats. McConnell (R-Ky.) said that tackling the mandatory spending programs such as Medicare and Social Security, as well as Medicaid, could not be done by Republicans alone, suggesting that it was unlikely to occur unless Democrats controlled at least one chamber of Congress.”

No, the tax cuts aren't paying for themselves. NYT's Jim Tankersley: “There are several ways to ask the question, 'Are tax cuts paying for themselves?' Based on the data we have right now, they all arrive at the same answer: 'No.' ... By the Treasury’s numbers, total revenues grew 0.4 percent from the 2017 fiscal year to the 2018 fiscal year. That’s weak, historically speaking, for an economy growing as fast as it is.”

THE REGULATORS

Prudential de-designation expected. From CapAlpha's Ian Katz: "The FSOC, in its readout after Tuesday’s meeting, only indicated that Prudential’s SIFI designation status was discussed. No news of a vote to rescind the designation, which had been widely expected. However, Politico reported Tuesday night that a vote could be announced as early as Wednesday... The FSOC has previously voted electronically between meetings. So if a vote wasn’t taken at Tuesday’s meeting (and we don’t even know for sure that one wasn’t), it can be held shortly thereafter. The FSOC doesn’t have to wait for a regularly scheduled council meeting to hold a vote.

Judge approves Tesla settlement. Reuters: "A U.S. judge on Tuesday approved a settlement between a federal regulator, Tesla Inc and its chief executive officer, Elon Musk, over his tweets promising to take the company private, signaling an end to a tumultuous period for investors. Tesla shares rose as much as 5.5 percent to $273.88 before easing to $271.63 in early-afternoon trade on Nasdaq. Despite the gains, the stock is still down more than 20 percent since Aug. 6, the day before Musk said on Twitter he would take the company private and claimed he had secured funding to do so."

DAYBOOK

Coming soon

  • The American Enterprise Institute hosts a presentation of the book “Finance and Philosophy: Why We’re Always Surprised” by Alex Pollock in Washington tomorrow.
  • The Heritage Foundation holds an event titled “Problems with the JOBS Act and how they can be fixed” in Washington on Oct. 23.
THE FUNNIES

— From The Post's Tom Toles: “We are shocked that Trump’s tax-cut-for-the-rich didn’t pay for itself. Shocked.”

BULL SESSION

“Donald Daters”: The app that wants to “Make America Date Again.”

Meet the Hirshhorn's newest staffer, Pepper the robot:

Parking in the lap of luxury: