THE TICKER

Of all President Trump’s feuds — and there are scores of them — his ongoing scuffle with the U.S. Chamber of Commerce may be the most helpful to his political brand as a Republican disrupter taking on the old Washington establishment. 

So it should come as no surprise that he jumped at the opportunity Monday to renew the hostilities in an impromptu interview with CNBC’s “Squawk Box.” After Myron Brilliant, the Chamber’s head of international affairs, appeared on the show and criticized Trump’s “weaponization of tariffs” in his showdown with Mexico, the president called in to respond by blasting the business group as a front for multinational corporations working against American interests. (See the transcript here.)

Foreign countries “take advantage of us in every way possible, and the U.S. Chamber is right there with them,” Trump said. “The Chamber is probably more for the companies and the people that are members than they are for our country.”

A decade ago, the specter of a Republican president publicly attacking the grand poobah of the business lobby would have been unthinkable. During the most recent Bush administration, for example, the Chamber functioned effectively as a private arm of the White House, a deep-pocketed enforcer helping to drive its agenda on Capitol Hill while spending big in election seasons to maximize GOP gains. 

Trump’s break with the group encapsulates just how fundamentally his rise has shattered a decades-old conservative coalition that included big business as an unshakable pillar. And it points to the struggles of a group that still represents 80 percent of the Fortune 100 and dramatically outspends all of its interest group rivals to remain relevant amid a rapidly shifting ideological dynamic in Washington. 

“Trump is right that the Chamber is not just diametrically opposed to him on almost every issue — from tariffs, to immigration to raising the gas tax — they’re diametrically opposed to most Republican voters on those issues,” one former administration official tells me. “It’s been that way for a long time. The Trump presidency just exposed that fact for all to see.”

Asked about the president’s criticism of the group, a Chamber spokesman emails, “We recently called on the White House and the Mexican government to come together and reach a deal to protect American consumers against tariffs. This is good news and we are glad to see that the President is no longer going to impose tariffs on American consumers and businesses.”

The president’s beef with the Chamber dates back to the 2016 campaign, when Chamber President Tom Donohue made clear he didn’t favor Trump’s brand of nationalism, especially when it came to trade issues. Trump took note, at one point refusing to shake hands with a Chamber executive after his victory, the Wall Street Journal’s Brody Mullins and Alex Leary reported last month. “The chill has hurt the U.S. Chamber, which for decades was the unmatched voice of industry,” the pair wrote. “Its revenue has dipped, spending on lobbying and elections has fallen, and its large-donor pool has shrunk.”

The group has scrambled to retool. In April, Chamber leadership revealed to my colleague James Hohmann that for the first time in 40 years, it is overhauling its process for endorsing lawmakers, with the intent of finding more Democrats to support. “It's very unfortunate that the far right has gone very far right, and the far left has gone very far left. If you think about this, there is a hole in the middle,” Donohue told James at the time. “So what we’re doing — and this is critical — is adjusting and responding to the new politics. We're adjusting and responding to the new Congress and the way the administration operates. The people that win in sports and in politics and in business are the people that are not so focused on one approach but are ready to adjust.”

Just last week, the shakeup extended to Donohue’s own position at the Chamber. On Wednesday, after the WSJ told the group it would be publishing a follow-up story by Mullins on Donohue’s personal use of the Chamber’s private jet, it announced he would be stepping down as president while staying on as CEO until 2022. (The story continues to reverberate: Politico reports the Chamber fired a top consultant "after checking his cell phone records and determining that he had spoken to a Wall Street Journal reporter.") 

Yet despite the group’s shrinking profile, and Trump’s evident animosity toward it, the White House could use some help from the Chamber right now advancing its top legislative priority. The group has been lobbying Congress to ratify the administration’s reworked North American trade pact.

One top trade association official said it was unclear how the renewed rift between Trump and the Chamber would affect that effort. “If this were a normal administration, you understand as long as you fight the right way, there are times when you’ll disagree and others when you need each other. With this administration, who knows,” this official said.

We recently wrote here that people involved in the effort to get the deal through Congress are concerned that business interests haven’t stoked enough urgency behind the new trade pact known as the USMCA.

Meanwhile, Trump in his CNBC interview said he himself is a member of the Chamber, though “maybe I’ll have to rethink that.” The Chamber didn’t respond to a question about Trump’s membership status. 

MARKET MOVERS

Trump blasts Fed, again. CNBC's Thomas Franck: "Trump criticized the Federal Reserve on Monday for raising interest rates too quickly and giving the Chinese an upper hand in trade negotiations.

"'They devalue their currency, they have for years: It’s put them at a tremendous competitive advantage. And we don’t have that advantage because we have a Fed that doesn’t lower interest rates,' Trump told CNBC’s Joe Kernen on 'Squawk Box.' 'We should be entitled to have a fair playing field, but even without a fair playing field — because our Fed is very, very disruptive to us — even without a fair playing field we are winning.'"

The jawboning from Trump is making Powell's already-difficult job even tougher. WSJ's Nick Timiraos: "Looking ahead, Mr. Powell will have to apply what he’s learning to a question that could define his term—whether to cut interest rates at coming meetings to keep the economy growing. The Fed chairman is navigating three discrete challenges: setting a policy to extend what is already a 10-year-old expansion, explaining clearly why the Fed does what it does, and ignoring the loudest public Fed badgering from a president in recent memory."

Trade uncertainty is confounding Wall Street forecasts. NYT's Stephen Grocer: "Given the concern surrounding tariffs... why haven’t earnings forecasts slipped more? The answer, in short, is that it’s hard to quantify the costs of various on-again, off-again trade conflicts, or threats of future measures... But the stock market is at risk of steeper declines if analysts do begin to revise down their forecasts.

"The S&P 500’s slide in recent weeks has left the index by some measures looking fairly valued, with a price-to-earnings ratio, which compares stock prices to expected profits over the next 12 months, of 16.2 percent. That’s below the five-year average for the index. But stocks could quickly begin to look expensive if the economy and earnings falter."

TRUMP TRACKER

TRADE FLY-AROUND:

— For Trump, tariffs make the difference: “It remains to be seen whether Trump’s deal with Mexico will achieve his goal of stemming a surge of unauthorized immigration. But Trump’s takeaway from his gambit to tie tariff threats to a non-trade issue — a strategy that provoked an outcry from big business and a near-revolt among GOP lawmakers — was that the naysayers had been proven wrong,” my colleague David Nakamura reports.

“The president’s gleeful posture struck foreign policy analysts and economists as a clear sign that he intends to intensify his strategy, not just ramping up the threat of levies against China but, potentially, on other countries. Trump already has threatened new auto tariffs on allies, including Japan and Germany, in recent months.”

On cue, Trump threatens China with new tariffs: “[Trump] on Monday threatened to impose large tariffs on $300 billion in imports if Chinese leader Xi Jinping did not meet with him in Japan later this month, showing how he plans to immediately pivot from his trade war with Mexico back to Beijing,” my colleague Damian Paletta reports. He leveled the threat during his CNBC interview.

About that possible meeting: “A widely anticipated meeting between [XI} and [Trump] at the end of this month in Japan could be a formal face-to-face negotiation over dinner instead of a quick handshake and chat, a source who was briefed on the arrangement told the South China Morning Post,” SCMP’s Zhou Xin reports.  

“Beijing has not formally confirmed any plans or provided any details of the high-stakes meeting that is widely expected to take place on the sidelines of the G20 leaders summit in Osaka, Japan on June 28 and 29.”

— Tech companies cut employees’ access to Huawei: “Some of the world’s biggest tech companies have told their employees to stop talking about technology and technical standards with counterparts at Huawei Technologies Co Ltd in response to the recent U.S. blacklisting of the Chinese tech firm, according to people familiar with the matter,” Reuters’s Paresh Dave and Chris Prentice report.

“Chipmakers Intel Corp and Qualcomm Inc, mobile research firm InterDigital Wireless Inc and South Korean carrier LG Uplus have restricted employees from informal conversations with Huawei, the world’s largest telecommunications equipment maker, the sources said.”

— Mexican Foreign Minister says there’s no secret deal: “The Mexican foreign minister said Monday that no secret immigration deal existed between his country and the United States, directly contradicting [Trump’s] claim on Twitter that a ‘fully signed and documented’ agreement would be revealed soon,” the New York Times’s Michael D. Shear and Maggie Haberman report.

“Marcelo Ebrard, Mexico’s top diplomat, said at a news conference in Mexico City that there was an understanding that both sides would evaluate the flow of migrants in the coming months. And if the number of migrants crossing the United States border was not significantly reduced, he said, both sides had agreed to renew discussions about more aggressive changes to regional asylum rules that could make a bigger impact.”

Mexican troops’ mission remains unclear: “Members of Mexico’s newly created national guard are to be deployed this week to the country’s southern border, forming a force that will eventually reach 6,000 as part of the agreement with the United States that helped to stave off [Trump’s] threat of tariffs,” my colleagues Kevin Sieff and Mary Beth Sheridan report from Mexico City... It was a use of the national guard that most Mexicans had not expected. But according to Ebrard, the idea was not new... 'We agreed to deploy them faster, that’s all.'"

Trump threatens French wine. Trump raised the issue in his CNBC interview, telling the network, "You know, France charges us a lot for the wine and yet we charge them little for French wine. So the wineries come to me and they say—the California guys, they come to me: 'Sir, we are paying a lot of money to put our products into France and you’re letting – meaning, this country is allowing this French wine which is great, we have great wine, too, allowing it to come in for nothing. It is not fair.' And you know what, it’s not fair. We’ll do something about it."

— Trump expresses concern about potential Raytheon merger: “The morning after manufacturers Raytheon and United Technologies announced a blockbuster merger that would create a giant in the aerospace and defense sectors, [Trump] said he was ‘a little bit concerned’ about the deal’s anti-competitive potential,” my colleague Aaron Gregg reports.

“Echoing concerns that top Pentagon procurement officials have raised for years, the president said he is worried that the deal would harm the military supply chain by giving government buyers fewer competitive options to turn to for individual weapons systems.”

— Kushner-linked company receives millions from unknown offshore source: “A real estate company part-owned by Jared Kushner has received $90m in foreign funding from an opaque offshore vehicle since he entered the White House as a senior adviser to his father-in-law [Trump],” the Guardian’s Jon Swaine reports.

“Investment has flowed from overseas to the company, Cadre, while Kushner works as an international envoy for the US, according to corporate filings and interviews. The money came through a vehicle run by Goldman Sachs in the Cayman Islands, a tax haven that guarantees corporate secrecy... [Kushner's] holding is now valued at up to $50m, according to his financial disclosure documents.”

Chao created special path for McConnell’s favored projects: “The Transportation Department under Secretary Elaine Chao designated a special liaison to help with grant applications and other priorities from her husband Mitch McConnell’s state of Kentucky, paving the way for grants totaling at least $78 million for favored projects as McConnell prepared to campaign for reelection,” Politico’s Tucker Doherty and Tanya Snyder report.

“Chao’s aide Todd Inman, who stated in an email to McConnell’s Senate office that Chao had personally asked him to serve as an intermediary, helped advise the senator and local Kentucky officials on grants with special significance for McConnell — including a highway-improvement project in a McConnell political stronghold that had been twice rejected for previous grant applications.”

A lack of diversity in the highest ranks of the Trump-era Treasury Department is a microcosm of challenges across the administration.
Politico
POCKET CHANGE

— Facebook co-founder praises Warren and Ocasio-Cortez's wealth tax: “Senator Elizabeth Warren has proposed a new wealth tax of 2 percent on assets greater than $50 million and 3 percent on assets above $100 million. This is a great start,” Chris Hughes writes in a new edition of the quarterly magazine Democracy Journal out today that focuses on post-neoliberal economics in the United States. “Her proposal would go right to the heart of the problem in the American economy today by taxing the vast stores of wealth that our weak tax policy has helped create.”

— Insys declares bankruptcy over opioid penalties: “Insys Therapeutics filed for Chapter 11 protection on Monday, one week after agreeing to pay $225 million to resolve a federal investigation into a bribery scheme designed to induce doctors to overprescribe its highly addictive fentanyl spray,” my colleague Taylor Telford reports.

“This marks the first time a drugmaker has turned to bankruptcy court to contend with legal expenses incurred by its role in the nation’s deadly opioid epidemic.”

— CEOs slam states’ antiabortion laws: “More than 180 CEOs signed an open letter opposing state efforts to restrict reproductive rights, as business leaders weigh how to most effectively exert pressure on abortion bans,” my colleague Rachel Siegel reports.

“Square chief executive and Twitter co-founder Jack Dorsey as well as fashion icon Diane von Furstenberg and others wrote that restrictions on abortion access threaten the economic stability of their employees and customers, and make it harder to build a diverse workforce and recruit talent.”

— Beyond Meat stock surges: “Beyond Meat Inc. shares continued to soar on Monday, after the faux meat-maker’s first earnings report as a public company wowed analysts and investors, prompting a nearly 40% jump in the stock price on Friday,” Bloomberg News’s Esha Dey reports.

“Shares of the company, which started trading on May 1, gained as much as 34% on Monday, touching a record high of $186.43. The shares are now up a staggering 646% from the initial public offering price of $25.”

— Nissan and Renault’s relationship worsens: “The cracks in the world’s largest auto alliance grew wider on Monday, as Nissan Motor condemned as 'most regrettable' a decision by its French partner, Renault, to withdraw support for the Japanese automaker’s efforts to overhaul its governance,” the Times’s Ben Dooley and Jack Ewing report.

“The message signals a new low in the relationship, and reflects the fallout from the collapse last week of a proposed merger between Renault and Fiat Chrysler that would have created one of the world’s biggest carmakers. Nissan’s hesitance to agree to the deal was a contributing factor in the breakdown.”

MONEY ON THE HILL

— Elizabeth Warren’s plans would remake the economy: “As the 23 candidates seeking the Democratic nomination struggle to distinguish themselves, Senator Elizabeth Warren has set herself apart with a series of sweeping proposals that would significantly remake the American economy, covering everything from tax policy to business regulation to student debt relief. Together, her plans offer a detailed portrait of what her presidency might look like,” the Times’s Thomas Kaplan and Jim Tankersley report.

“Many of the proposals from Ms. Warren, a former Harvard law professor and hawk on financial regulation, could face a difficult path to winning over moderates in a general election, and to gaining approval in Congress if she did take the White House. But the sheer volume of her plans, and their detail and variety, is forcing her rivals to play catch-up and stake out their own positions.”

Firearms distributor United Sporting Cos. loaded up on guns ahead of the 2016 U.S. presidential election, expecting a surge in sales would follow the election of a Democrat. Then Hillary Clinton lost.
Bloomberg
CHART TOPPER

Washington is in Wall Street's head. Here’s proof of what most traders probably could have told you already: Headlines out of Washington over the last two years are driving stock market volatility more than at any other time in the last three decades. That’s the conclusion economists from Northwestern, Stanford, and the University of Chicago reached after developing an “Equity Market Volatility tracker” linking news coverage of Washington policy news to the VIX index. From a write-up of the study in the NBER Digest: 

DAYBOOK

Today:

  • The House Financial Services Subcommittee on Oversight and Investigations holds a hearing on the student loan servicing market.
  • The Peter G. Peterson Foundation holds its annual Fiscal Summit, featuring Q & As with acting White House chief of staff Mick Mulvaney, House Speaker Nancy Pelosi and more.

Upcoming:

  • The Cato Institute holds a summit on financial regulation, which will include FDIC chairman Jelena McWilliams, on Wednesday.
  • The Brookings Institution holds an event on Hong Kong and trade on Wednesday.
  • The Peterson Institute for International Economics holds an event featuring National Economic Council Director Larry Kudlow on Thursday.
  • The National Economists Club holds an event with the National Association for Manufacturers Chad Moutray on Thursday.
THE FUNNIES

From The Post's Tom Toles:

BULL SESSION