THE TICKER

Steven Mnuchin has a big decision to make. The treasury secretary says he will announce today whether he’s sticking with his plan to attend the Future Investment Initiative in Riyadh next week. 

The trip is an increasingly lonely prospect, as fellow global finance chiefs, Wall Street bigs, corporate executives and others have beat a steady parade away from the "Davos in the desert" conference. A building pile of evidence suggesting the Saudi regime's involvement in the death of journalist Jamal Khashoggi has made the event toxic. (Axios is updating a list of those shunning the event here.)

Addressing reporters Wednesday, Mnuchin said he would “revisit the decision again tomorrow,” noting that “for now” he’s committed to attend. He said he would make a final call based on a report that Secretary of State Mike Pompeo, who visited Saudi Arabia this week, delivers to President Trump. During his trip, Pompeo privately warned Saudi Arabian Crown Prince Mohammed bin Salman in blunt terms that he needs to "own" the situation and that the facts will come out, CNN reports

But the Trump administration has resisted assigning blame, with the president repeatedly reaching for reasons to protect the U.S.-Saudi relationship, as my colleagues Bob Costa, Josh Dawsey and Phil Rucker report: “Trump has stressed Saudi Arabia’s massive investment in U.S. weaponry and worries it could instead purchase arms from China or Russia. He has fretted about the oil-rich desert kingdom cutting off its supply of petroleum to the United States. He has warned against losing a key partner countering Iran’s influence in the Middle East. He has argued that even if the United States tried to isolate the Saudis, the kingdom is too wealthy to ever be truly isolated.”

Trump "has argued that even if the United States tried to isolate the Saudis, the kingdom is too wealthy to ever be truly isolated," they write.

Against that backdrop, it would play against recent history for Mnuchin, a stout Trump loyalist, to scotch his plans. Recall, for example, that Gary Cohn — who is also Jewish — considered resigning last summer after the president equivocated about the white supremacist rally in Charlottesville; Mnuchin made clear at the time under no circumstances would he consider such a move. 

Mnuchin's  attendance at the Saudi conferece has become a proxy for Senate Republicans eager for the administration to register some outrage over Khashoggi. The latest: Sen. John Neely Kennedy (R-La.), who said Wednesday he didn’t think it was “appropriate” for Mnuchin to attend. He joins fellow GOP Sens. Marco Rubio (Fla.), Jeff Flake (Ariz.), and Todd C. Young (Ind.) in calling for the treasury secretary to skip the event.

From Flake: 

From Young: 

Not all Senate Republicans agree. Sen. Orrin G. Hatch of Utah said Wednesday that Mnuchin should attend if he wants. “Those are important meetings,” he said.  Senate Majority Leader Mitch McConnell (R-Ky.) told Fox News Radiothat he’s withholding judgment about the appropriate broader response until Pompeo delivers his report. “If what happened is what we think happened, I can't imagine there won't be a response,” he said. 

Meanwhile, the details emerging about what happened to Khashoggi after he entered the Saudi consulate in Istanbul on Oct. 2 are getting ever grislier. The New York Times reports that Saudi agents were waiting for him. “Mr. Khashoggi was dead within minutes, beheaded, dismembered, his fingers severed, and within two hours the killers were gone, according to details from audio recordings described by a senior Turkish official on Wednesday.” The paper also reports that U.S. intelligence officials have growing circumstantial evidence that MBS was involved. 

Controversy over the event is bound to overwhelm next week's conference, says Jon Alterman, the head of the Middle East Program at the Center for Strategic and International Studies — and that's one reason he says Mnuchin should skip it. “The Treasury Secretary not only doesn’t have anything to advance on the political front but also is almost invariably going to be photographed smiling,” he said. “That’s not the right mood to convey at this moment.”

And he said there’s little downside to bowing out. “The Saudis need us and are not going to punish us in a fit of pique,” Alderman said. “I don't think there’s a cost to not going to the conference. I think there’s a cost to going, which is the growing sense that the administration is trying to be an accomplice to obstructing truth rather than finding truth.”

CORRECTION: An earlier version of this story referred to Mnuchin as a former Democrat. He is a Republican who has a history of donating to Democrats. 

MARKET MOVERS

— Fed to stay course, minutes show. The Wall Street Journal's Nick Timiraos: “Federal Reserve officials signaled they see a strong economy justifying continued interest-rate increases — and said they will watch for evidence their moves are keeping economic growth on an even keel, minutes of their September policy meeting showed. The minutes, released Wednesday after a three-week lag, follow several weeks of Fed officials trying to emphasize uncertainty about the precise level of interest rates that will neither spur nor slow growth, a destination favored right now by most officials . . . 

"While a few participants at the meeting argued the economy would require the Fed to raise rates beyond a neutral level to intentionally slow growth and prevent the economy from overheating, a couple said they would want to see more evidence of inflation picking up before endorsing such a stance . . . The minutes are the latest piece of communications to mark a shift away from using neutral-rate estimates as an anchor for upcoming policy decisions.”

Fed's Daly endorses gradual hikes. Bloomberg News's Jeanna Smialek: “In her first remarks as a monetary policy maker, Federal Reserve Bank of San Francisco President Mary Daly said that she favors continued gradual interest-rate increases as the labor market overshoots full employment and inflation comes in near-goal. Daly said Tuesday the way she’s approaching policy is ‘very consistent with the way the FOMC has been approaching it’ and favors ‘a gradual pace of normalization.’ She will vote on interest rates at the Federal Open Market Committee’s Nov. 7-8 meeting.”

— Holiday hiring surges. Reuters: “Holiday hiring of more than 700,000 workers by U.S. retailers would be the largest since 2014, according to a report by a global outplacement firm, underscoring a robust economy that has seen consumer confidence at its highest in nearly two decades. Retailers have said they would add 704,000 jobs in total to their rosters ahead of the important holiday shopping season, which is up 1.2 percent from the previous best figures in 2014.”

— Housing starts fall. The Associated Press's Josh Boak: “U.S. home construction fell 5.3 percent in September, a sign that recent hurricanes and rising mortgage rates may be weighing on the market. The Commerce Department said Wednesday that housing starts slipped last month to a seasonally adjusted annual rate of 1.2 million, down from 1.27 million in August. So far this year, starts have increased 6.4 percent. But the pace of home building has downshifted since May. September ground breakings were also likely hurt by Hurricane Florence striking North Carolina — and ground breakings could possibly be depressed in October after Hurricane Michael hit the Florida panhandle.”

Investors have started to take notice of rising interest rates.
Bloomberg
Where We Live
Lying about Income was the most common type of fraud.
Michele Lerner
TRUMP TRACKER

TRADE FLY-AROUND:

Exclusive, free-trade group up with new ads: “Tariffs Hurt the Heartland,” a multi-million dollar campaign representing scores of trade groups opposed to Trump’s trade war, is launching new digital ads highlighting the effects of tariffs on consumers. The effort uses Google adwords advertisements, which will pop up when shoppers in key swing states — including Iowa, Illinois, Michigan, Ohio and Pennsylvania — search for items that are being pinched by the import duties. “This effort is about reminding people that it’s American consumers and businesses who pay these tariffs,” spokesman Jonathan Gold said. See the group’s new online ad here.

— Ross unhappy with Europeans. AP's Lorne Cook: “U.S. Secretary of Commerce Wilbur Ross on Wednesday criticized the European Union for moving too slowly in trade talks and warned that [Trump’s] patience with the Europeans might soon run out. . . . ‘We really need tangible progress. The president’s patience is not unlimited,’ Ross told reporters in Brussels, a day after talks with EU Trade Commissioner Cecilia Malmstrom. ‘This is not meant to be a five-year project. This is meant to be something that was to move quickly and in a cooperative fashion,’ he said. . . . Earlier, Malmstrom described her meeting with Ross on Tuesday as ‘a general stock-taking exercise.’ ”

— Treasury declines to label China a currency manipulator. NYT's Alan Rappeport: "The Trump administration is eagerly embracing a trade war with China, but on Wednesday, it opted once again not to label that nation a currency manipulator despite [Trump’s] repeated complaint that Beijing is weakening the renminbi. The Treasury Department’s biannual currency exchange report, the fourth of Mr. Trump’s presidency, criticized China’s trade and currency practices but still did not conclude that the Chinese government was improperly devaluing the renminbi... The Treasury Department determined that China’s direct intervention to reduce the value of its currency had been 'limited,' but it said Beijing’s practices deserved scrutiny."

Trump ditches postal pact with China. The Washington Post's Danielle Paquette: “Trump moved Wednesday to withdraw from a 144-year-old international postal agreement that enables businesses in China to mail small packages to the United States at a hefty discount, an arrangement government officials said boosts foreign competitors and costs the U.S. Postal Service roughly $170 million per year... The administration framed the departure as separate from the trade war in which Trump has impod tariffs on roughly half of Chinese goods entering the United States. Dropping out of the postal treaty, first ratified in 1874, is expected to exacerbate tensions with China, but the Postal Service and business groups applauded the action Wednesday.”

— Chinese manufacturers worry about 2019. Bloomberg News: “In China’s manufacturing heartland around the Pearl River Delta, Donald Trump’s 10 percent tariffs are causing little concern. The 25 percent duties that loom next year are another matter. Ben Yang, a furniture maker producing contemporary designs out of his facility in Dongguan — about 30 miles from Hong Kong — says that if those higher charges materialize from January as planned, the U.S. share of exports from his Sunrise Furniture Co. could plunge from 90 percent to less than a third . . . The region serves as both China’s traditional hub for manufacturing everything from toys to chemicals, as well as a higher-tech location that now hosts the headquarters of companies like Tencent Holdings Ltd. Exporters there are now seeking ways to adjust by diversifying sales to other overseas markets and domestic consumers.”

MELTDOWN WATCH:

POCKET CHANGE

— Shareholders seek Zuckerberg ouster. Reuters's Arjun Panchadar and Ross Kerber: “Four major U.S. public funds that hold shares in Facebook Inc on Wednesday proposed removing Chief Executive Officer Mark Zuckerberg as chairman following several high-profile scandals and said they hoped to gain backing from larger asset managers. State treasurers from Illinois, Rhode Island and Pennsylvania, and New York City Comptroller Scott Stringer, co-filed the proposal. They oversee money including pension funds and joined activist and original filer Trillium Asset Management. A similar shareholder proposal seeking an independent chair was defeated in 2017 at Facebook, where Zuckerberg’s majority control makes outsider resolutions effectively symbolic.”

— Tesla pursues China expansion. AP's Joe McDonald: “Electric auto brand Tesla Inc. said it signed an agreement Wednesday to secure land in Shanghai for its first factory outside the United States, pushing ahead with development despite mounting U.S.-Chinese trade tensions. Tesla, based on Palo Alto, California, announced plans for the Shanghai factory in July after the Chinese government said it would end restrictions on full foreign ownership of electric vehicle makers to speed up industry development . . . China is the biggest global electric vehicle market and Tesla’s second-largest after the United States . . . Local production would eliminate risks from tariffs and other import controls. It would help Tesla develop parts suppliers to support after service and make its vehicles more appealing to mainstream Chinese buyers.”

— Amazon.com eyes Mexico hub. Reuters's Daina Beth Solomon: “Amazon.com Inc is scouting for land in central Mexico for a fourth distribution center in the country, sources said, aiming at a bigger slice of the burgeoning e-commerce market in Latin America’s second-largest economy. The retail titan’s target is Queretaro state in the industrial center of Mexico, where it is looking to hire a developer to build a large hub, two real estate professionals familiar with Amazon’s property hunt said. . . . The expansion plan highlights Amazon’s intent to plant roots beyond Mexico’s bustling capital, banking on the nation’s potential to grow into an e-commerce engine of Latin America.” (Amazon.com founder and chief executive Jeffrey P. Bezos owns The Washington Post.)

Canada’s Green Day started in the red for stocks looking to benefit from the country’s legalization of recreational marijuana. By the end of the day, a few advancers emerged from the downdraft.
Bloomberg
Tesla Inc Chief Executive Officer Elon Musk will purchase company stock worth $20 million in the next open trading session, the electric carmaker said in a filing on Wednesday.
Reuters
He made billions for investors in his ESL Investments fund by bucking naysayers. At the storied American retailer, which filed for bankruptcy this week, his instincts proved wrong.
The Wall Street Journal
MONEY ON THE HILL

Dems accuse GOP of aiming to gut Social Security, Medicare. The Post's Erica Werner, Damian Paletta and Dave Weigel: "Democrats issued warnings Wednesday about the peril Republicans pose to Medicare and Social Security, accusing the GOP of plotting to cut critical safety net programs to close a budget deficit of their own making. 'A vote for Republican candidates in this election is a vote to cut Social Security, Medicare and Medicaid,' argued Sen. Chris Van Hollen (D-Md.). Van Hollen and other Democrats pounced on comments from [McConnell], in which the top Senate Republican blamed social programs for the growing deficit and said he hoped Congress would tackle spending on them 'at some point here.'"

Dems have raised $1 billionThe Post's Michelle Ye Hee Lee and Anu Narayanswamy: "Democratic candidates running for Congress this year collectively raised more than $1 billion for their campaigns — a record-shattering sum that highlights the party’s zeal to retake the House and Senate and underscores the enormous amount of money flowing into the midterm races. The $1.06 billion raised through the end of September surpasses the nearly $900 million collected by Republican candidates for Congress in 2012 — previously the largest haul registered by a single party by this point in the election cycle... And it is the first time since 2008 — when Democrats swept the White House and both chambers of Congress — that Democratic candidates for House and Senate have outraised Republicans in direct contributions to candidates’ committees."

Dubbing it the "nickel plan," Trump announced Wednesday that he's asking every Cabinet secretary to cut their next-year's budgets by 5 percent. Trump's budget request is due early next year.
AP
Business
“Raising the pay of your lowest-paid workers ... does not give you a free pass to engage in potentially illegal anti-union behavior,” Sanders and Warren say in a letter to Amazon's Jeff Bezos.
Jeff Stein
THE REGULATORS

Prudential no longer “too big to fail.” The Post's Renae Merle: “The Trump administration took another major step on Wednesday toward softening the regulatory burdens faced by big financial firms, finding that mega insurer Prudential Financial no longer requires strict federal oversight. The decision is a major victory for Prudential, one of the country’s largest insurance companies, which has spent years trying to convince lawmakers and regulators that it didn’t deserve to be lumped in with the banks that nearly brought down the U.S. economy a decade ago. The move could save Prudential millions of dollars a year in regulatory costs, industry analysts have said.”

DAYBOOK

Today:

  • The American Enterprise Institute hosts a presentation of the book “Finance and Philosophy: Why We’re Always Surprised” by Alex Pollock in Washington.

Coming soon:

  • 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: “The Donald Trump lecture series on ‘innocent until proven guilty.’”

 

BULL SESSION

Secret Service blocks reporter from questioning Jared Kushner:

USA Gymnastics interim CEO resigns after anti-Nike tweet:

Mega Millions: Things to know before you play.