THE TICKER

Most Americans think the economy is flying high, and most aren’t giving President Trump credit. 

Voters have been making that split assessment for months. But it was underlined anew Monday, a day that the current economic expansion entered the history books as the longest on record. 

A new poll from the Associated Press-NORC Center for Public Affairs Research finds that while two-thirds of respondents say the economy is “good,” only 47 percent approve of Trump’s handling of it. 

That mark nevertheless represents a high point for the president, whose overall approval in the poll stands at 38 percent, an especially dismal rating amid a strong economy. It's a dichotomy that marks what may be the key turning point Trump's 2020 race for reelection: the president should be coasting to another term based on the economic picture, but is instead trailing leading Democratic contenders in national polling.

Trump’s standing — and the gap between it and voter sentiment about the economy — should be a flashing warning signal to his camp as he gears up for reelection. It also points to a potential opportunity for improvement, Republican pollsters say. 

“If you took on balance what people are hearing from the White House, my sense is you would see that people are hearing more about other things than the economy,” says GOP pollster David Winston told me. “The challenge here for the White House as they’re looking forward is to get more focused on what he’s done on the economy. It hasn’t happened on the scale it needs to at this point.”

A deeper look into the numbers reveals the shape of Trump’s problem. Winston points to 2016 exit polling of those who voted in House races that found only 36 percent rated the economy as excellent or good, while 63 percent said it was not so good or poor. By 2018, exit polling of House voters in the midterms shows those numbers had flipped, with 68 percent giving the economy positive marks and 31 percent rating it negatively.

Yet the president hasn’t enjoyed a similar lift in his numbers. It’s evidence, Republican pollster Whit Ayers says, that voters are “evaluating Trump’s job approval based on his conduct and behavior in office rather than the state of the economy.”

“Donald Trump is a nontraditional president, and he has severed the traditional relationship between economic well being and presidential job approval,” Ayers says. “A more traditional president in this economy would have job approval in the upper 50s, maybe even 60 percent or above.”

The AP poll shows it’s not only Trump’s behavior dragging on his economic marks. Voters are taking an increasingly sour view of his economic policies themselves. Per the survey, only 17 percent say they received a tax cut. And they take a dark view of the president's approach to renegotiating the country’s trading relationships, with 15 percent saying tariffs will help them and their family, and 26 percent saying they will help the national economy. Last August, 40 percent said tariffs would boost the economy. 

Perhaps most troubling for Trump is what these top-line numbers obscure: While unemployment has hit a 50-year low and wages finally appear to be rising, the benefits of the still-chugging expansion are not being distributed evenly across the country. And some of Trump’s most important constituencies aren’t seeing much improvement in their personal fortunes. 

Heartland farmers, specifically targeted by the Chinese government in retaliation for Trump’s tariffs on the country’s goods, are beginning to lose confidence in the president’s handling of the matter. A Washington Post-ABC News survey in April found 57 percent of rural Americans still approve of Trump’s performance. But a poll of farmers by Purdue University’s Center for Commercial Agriculture last month found only 20 percent believed the trade war would be resolved by now, a steep decline from 45 percent in March. “People are starting to say, ‘I don’t know how we’re going to survive this,’ ” said South Dakota farmer Ray Martinmaas, a Trump voter, told my colleague Annie Gowen last month. 

And the president’s campaign pledge to revive American manufacturing, which he touted in his successful bid to capture the industrial Midwest, remains unfulfilled. Manufacturing job losses in key counties in Michigan, Wisconsin and Pennsylvania will “test how far [Trump’s] appeal to white working-class voters stretches and whether their cultural alliance with him is enough to persuade them to stick with him,” the New York Times’s Michael Tackett wrote last week. Recent polling in Michigan — ground zero for a struggling auto industry — found only a third of voters would vote to reelect Trump. And the sector continues losing momentum: the latest Institute for Supply Management survey, released Monday, marked the third straight month of decline for its manufacturing index. 

The president lately has been focusing on taking credit for the stock market’s strong performance: 

At last week’s Democratic presidential debate, Sen. Kamala Harris (D-Calif.), had a ready critique for that boast. "You ask him, well, how are you measuring this greatness of this economy of yours? And he talks about the stock market,” Harris said. “Well, that's fine if you own stocks. So many families in America do not. You ask him, how are you measuring the greatness of this economy of yours? And they point to the jobless numbers and the unemployment numbers."

Still, the 30-point gap the AP poll registers between Trump’s overall approval and Americans’ assessment of the economy, at a minimum, suggests the president has plenty of room for improvement. 

Indeed, Winston says his research shows voters are still carefully evaluating economic conditions. “As they’ve watched this slow recovery occur, people aren’t jumping to conclusions. They’re taking a much more slow, deliberate approach,” he said. “They’re looking for more information all the time, and that’s where the opportunity is.” 

Or as Ayers put it, “A lot depends on how the president runs his reelection campaign. If he makes it a referendum on the state of the economy, it obviously improves his chances, as opposed to a referendum on his job approval, which is a proxy for his conduct and behavior in office.”

Then again, if the economic expansion derails, all bets are off. 

MARKET MOVERS

— Stocks surge in response to U.S-China trade cease-fire: “Global stock markets popped Monday after the United States and China reached a cease-fire on trade over the weekend, launching the second half of the year on a happy note,” my colleague Thomas Heath reports.

“The Dow Jones industrial average closed up 117 points, or 0.44 percent, at 26,717. The Dow’s increase comes after the blue-chip measure finished its best June since 1938. Apple led the Dow’s burst, as the smartphone giant has much to gain on U.S.-China economic peace. Nike, Dow, JPMorgan Chase and Disney followed. The Standard & Poor’s 500-stock index shot to a record high, posting a closing up more than 22 points at 2,964, an increase of 0.77 percent and a record high for the broad market. The S&P is coming off its best June advance since 1955.”

Companies warn of ugly earnings ahead. CNBC's Jeff Cox: "Stocks may have brushed up against record highs Monday. However, a looming threat is just a couple weeks away once profit reports from the second quarter hit. Analysts have been taking a dimmer view of what is ahead for earnings. They’ve already forecast a decline for the first three quarters of 2019. Now companies are echoing those concerns with a level of pessimism not often seen from corporate America.

"Ahead of a season that starts in earnest the week of July 15, 77% of the 113 companies that have issued earnings per share guidance have warned that their numbers will be worse than what Wall Street analysts are estimating, according to FactSet. That total of 87 companies is well above the typical level of 70% negative pre-announcements and the second-worst level since FactSet started keeping track in 2006. The worst was in the first quarter of 2016, which saw 92 negative such warnings."

Stock buybacks fade. WSJ's Michael Wursthorn: "Some companies are easing up on share repurchases this year, potentially removing a pillar of support from the stock market as executives contend with the consequences of trade tensions and slowing economic growth.

"Share repurchases contracted for the first time in seven quarters, with S&P 500 companies spending $205.8 billion to buy back stock in the first three months of the year, according to the latest S&P Dow Jones Indices data. While still robust, that is down from a record $223 billion in the fourth quarter, and analysts say the contraction could continue as companies show signs of tightening their purse strings."

The Fed, which signaled rate cuts could come soon due partly to uncertainty caused by the trade war, still faces a slowing global economy as well as businesses domestically putting off spending until China and the United States reach a lasting truce.
Reuters
TRUMP TRACKER

TRADE FLY-AROUND: 

Trump says trade talks with China have resumed: “[Trump] said Monday that trade talks with China, which had stalled out in May, have 'already begun' following his meeting with Chinese President Xi Jinping at the G-20 summit over the weekend,” CNBC’s Kevin Breuninger reports. “The renewed talks were being held by phone, Trump told reporters in the Oval Office. The president added that any deal between the two economic superpowers would need to lean in the U.S.′ favor.”

“The president also said that China’s ample trade surplus over the U.S. for years should mean that a potential trade deal with Beijing ‘has to be a deal that is somewhat tilted to our advantage.’”

Chinese signal move to open up to financial services. NYT's Keith Bradsher: "A top Chinese leader said on Tuesday that his country would cut tariffs and loosen limits on foreign investment, two measures that could ease trade tensions somewhat with the United States. Speaking in the Chinese port city of Dalian at a meeting of the World Economic Forum, Premier Li Keqiang, China’s No. 2 official, appeared to offer a small olive branch to the Trump administration. He said China would allow foreign financial services companies into its market a year earlier than previously promised and that it would rewrite many rules on foreign investment...

"By themselves, changes to foreign investment laws are unlikely to satisfy the Trump administration, but they might be a first step toward improving relations."

Trump administration steps up tariff threat against EU. WSJ's Joshua Zumbrun: "The U.S. widened its threat to impose tariffs against the European Union, pending the outcome of a World Trade Organization case over the EU’s subsidies of the airplane manufacturer Airbus SE. The Office of the U.S. Trade Representative said Monday that as part of a long-running dispute over aircraft subsidies it would consider tariffs on an additional 89 items with an annual trade value of $4 billion, including cheese, pasta and Scottish and Irish whiskies as well as chemicals and metals...

"The Trump administration has largely sought to portray these tariffs as separate from their other trade efforts, saying that these tariffs are part of a distinct dispute over aviation subsidies, and not part of the overall effort to apply pressure to the EU to negotiate a broad trade deal."

Trump waves off Mexican tariffs. Bloomberg's Shannon Pettypiece: "Trump said tariffs against Mexico are off the table after the country stepped up efforts to stem migrant flows from Central America to the U.S. Mexico is doing a 'great job' and the country’s efforts have had 'a very big impact' on migration, Trump told reporters Monday at the White House."

Monkey Cage
Trump exacerbates India’s strategic fears.
Christopher Clary
POCKET CHANGE

— Drugmakers push their prices higher: “Drugmakers initiated a new round of price increases on their products Monday, with some of them affecting generic hospital-administered injectable drugs that are in short supply,” the Wall Street Journal’s Jared S. Hopkins reports.

“B. Braun Medical Inc. recorded the most increases, raising the price of more than a dozen drugs, many of which are used by hospitals. B. Braun increased the price of antibiotic cefazolin by 50% to more than $9 a package. That drug, which has been around for decades, is now in short supply like several other antibiotics, according to the U.S. Food and Drug Administration. All told, 20 companies increased the list prices of over 40 prescription drugs by an average of 13.1%, according to Rx Savings Solutions, which sells software to help employers and health plans choose the least-expensive medicines.”

— Warren Buffet to donate $3.6 billion of Berkshire stock: “Warren Buffett, chairman of Berkshire Hathaway Inc., will donate his shares worth about $3.6 billion to five foundations, as part of his plan to give away most of his wealth to charities and other philanthropic efforts,” WSJ’s Kimberly Chin reports.

“The company said Monday that Mr. Buffett, 88 years old, plans to convert 11,250 shares of his Berkshire Hathaway Class A stock into roughly 16.9 million shares of Class B stock. Around 16.8 million of the Class B shares will be donated to the Bill & Melinda Gates Foundation, Susan Thompson Buffett Foundation, Sherwood Foundation, Howard G. Buffett Foundation and NoVo Foundation.”

UK gets a preview of Brexit chaos. CNN Business's Julia Horowitz: "A messy political fight between Switzerland and Europe is creating headaches for regional investors and showing Britain what life could be like after Brexit. Swiss regulators on Monday barred the trading of Swiss stocks in the European Union after negotiations stalled on the future relationship between the wealthy Alpine country and the world's richest trading bloc.

"That means investors, at least in the near term, will struggle to trade shares of companies including Novartis, Nestle and Roche on venues such as the London Stock Exchange and CBOE Europe, which is also based the major financial capital."

— Nike removes ‘Betsy Ross Flag’ shoe: “Nike Inc.  is yanking a U.S.A.-themed sneaker featuring an early American flag after NFL star-turned-activist Colin Kaepernick told the company it shouldn’t sell a shoe with a symbol that he and others consider offensive, according to people familiar with the matter,” WSJ’s  Khadeeja Safdar and Andrew Beaton report.

“The sneaker giant created the Air Max 1 USA in celebration of the July Fourth holiday, and it was slated to go on sale this week. The heel of the shoe featured a U.S. flag with 13 white stars in a circle, a design created during the American Revolution and commonly referred to as the Betsy Ross flag.”

MONEY ON THE HILL

China trade war threatens Ex-Im reauthorization. Politico's Zachary Warmbrodt: "The Trump administration has taken dramatic steps to combat China’s global influence, but a new proposal emerging from Congress is testing the limits of that hawkish stance against the U.S.’s top economic rival. Lawmakers are battling over whether the Export-Import Bank, which guarantees loans to foreign buyers of U.S. manufacturers like Boeing and GE, should continue to serve as a backstop for the sale of American goods to Chinese state-owned firms that may be working against American interests.

"Members of Congress, industry and labor groups are tangling over the question as Congress crafts legislation to reauthorize the agency before it expires at the end of September. The debate has become so intense that it forced House Financial Services Chairwoman Maxine Waters (D-Calif.) to delay a vote on a reauthorization proposal containing the China restrictions, which she included to win GOP votes pledged by the panel's top Republican, Rep. Patrick McHenry (R-N.C.)."

CHART TOPPER

Ball State University economist Michael Hicks sees declining RV sales forecasting a recession: 

DAYBOOK

The House and Senate are on recess for the July 4th holiday.

THE FUNNIES

From The Post's Ann Telnaes:

BULL SESSION

Everywhere we saw Ivanka during Trump's Korea trip:

Trump lists tanks, and fighter jets as part of ‘great’ 4th of July festivities:

Untangling the web of Scooter Braun, Taylor Swift and Big Machine: