THE TICKER

On a day when President Trump signaled his protectionist approach to trade will prevail at least until Election Day 2020, the two leading Democratic contenders on the presidential debate stage in Detroit made clear they’d keep new trade deals in an ice bath for even longer. 

Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) both used the brief discussion on the issue to bolster their populist bona fides, framing trade accords as giveaways to multinational corporations and disasters for American workers. And they defended the position against critiques from more moderate rivals flanking them onstage. 

Most notably, in a dynamic that played out time and again over the two-and-a-half hour debate, former Rep. John Delaney (D-Md.) ripped Warren for the trade proposal she released Monday, saying it “would prevent the United States from trading with its allies. We can't go and -- we can't isolate ourselves from the world.”

Warren’s proposal, part of her “economic patriotism” agenda, would severely restrict the countries with which the U.S. could seek new deals by requiring they meet ambitious environmental, labor and human rights standards — many of which she acknowledged the U.S. itself doesn’t meet today. And she would set up new roadblocks to ratifying those deals by forcing public disclosure of draft agreements; imposing a “border carbon adjustment tax” on imported goods from countries with weaker carbon emissions rules; and raising the bar for an up-or-down vote for a final agreement in Congress, among other changes.

Dan Drezner, a Post contributor and Tufts University professor of international politics, wrote Tuesday that Warren's rebuke of corporate influence on trade deals is well-founded. But if she wins the nomination, "then there will be no debate about trade in the general election. That is because in its effects, Elizabeth Warren’s trade policy is even more protectionist and unilateralist than [Trump’s]."

Delaney, who sought from the start of the debate to set himself up a pragmatic foil to Warren and Sanders, said instead of embracing protectionism, Democrats should support reviving the 12-nation Trans Pacific Partnership that President Obama pursued in part as a strategy to contain China’s rising profile as an economic hegemon.

Warren retorted her plan is worker-friendly, not extreme. “What the congressman is describing as extreme is having deals that are negotiated by American workers for American workers. American workers want those jobs, and we can build the trade deals that do it,” she said. 

Sanders, pointing to his own history of opposing the North American Free Trade Agreement and permanent normal trade relations with China, aligned himself with Warren. He said the Massachusetts Democrat is “absolutely right” that corporate interests pressing for freer trade don’t give “one damn about the average American worker.”

But Delaney got reinforcements from some other lower-profile Democrats looking to break through on Monday. Former Colorado Gov. John Hickenlooper said Delaney “has got a point.”

“The bottom line is, you talk to any economist, there is not a single example in history where a trade war had a winner. Trade wars are for losers,” Hickenlooper said. “And the bottom line is we've got to recognize, let's negotiate a better trade deal. But you're not going to win against China in a trade war when they've got 25 percent of our total debt.”

Former Rep. Beto O’Rourke (D-Tex.) endorsed a multilateral approach to trade that resembled the TPP. “When have we ever gone to war, including a trade war, without allies and friends and partners? As president, we will hold China accountable, but we will bring our allies and friends, like the European Union, to bear,” he said. 

Warren and Delaney also clashed over Warren’s plan to institute a “wealth tax” of 2 percent on households worth more than $50 million. Delaney — a former entrepreneur whose estimated $65 million net worth would be subject to the levy, as CNN moderator Don Lemon noted — called it “arguably unconstitutional” and “impossible to implement.” Instead, Delaney advocated taxing capital gains as ordinary income. 

Warren retorted by listing a litany of progressive programs a wealth tax could fund, including universal pre-K, free college and student debt cancellation. But she reeled off her most stinging rebuke of Delaney earlier in the debate, during an exchange with him over the viability of the Medicare-for-all plan she has endorsed. “You know, I don't understand why anybody goes to all the trouble of running for president of the United States just to talk about what we really can't do and shouldn't fight for,” she said. 

MARKET MOVERS

Fed poised to cut today. The Wall Street Journal's Nick Timiraos notes it will mark only the fifth time in the last quarter century the central bank moved from raising to cutting interest rates. And the Fed's policy statement, out today at 2 p.m., followed by Federal Reserve chair Jerome Powell's press conference could offer clues about where monetary policymakers are headed next.

Per Timiraos: "In the four prior cases, the Fed never cut rates just once. In 1995 and 1998, officials made three small reductions over a few months, and the economy avoided a downturn... Fed officials have approvingly cited the examples of the 1990s, which could reflect hopes that a few small cuts now will keep the decadelong expansion going and avoid a full-blown rate-cutting cycle.

  • Consumers keep spending, and inflation stays soft. WSJ's Paul Kiernan and Harriet Torry write the latest data is likely to reinforce the Fed's decision to cut: "Personal-consumption expenditures—a measure of household spending on everything from airline tickets to furniture—increased in June to a seasonally adjusted 0.3% from the prior month, the Commerce Department said Tuesday. The Fed’s preferred inflation gauge, the PCE price index, rose a seasonally adjusted 0.12%, which is below the monthly pace needed to hit the central bank’s 2% yearly inflation target."

European growth stalls. WSJ's Paul Hannon: "Europe’s economy is slowing again as its factories count the cost of increased uncertainty about global trade rules, underpinning worries at the Federal Reserve about the impact of weaker world demand on U.S. growth. The slowdown is a fresh indication that the global economy had a weak second quarter, with the U.S. and China also losing some momentum in the three months through June. The prospect of a global slowdown has prompted a number of central banks, including the Fed, to provide fresh stimulus or consider such a move."

Sliding pound could test Johnson's Brexit resolve. Bloomberg's Anooja Debnath and Charlotte Ryan: "The pound’s relentless grind lower has done little to sway U.K. Prime Minister Boris Johnson so far from his tough line on Brexit. It may be just a matter of time. A plunge of about 10% in sterling in a short span of time may cause Johnson’s cabinet to refrain from pursuing a no-deal exit, according to Commerzbank... 

"Emerging as the market’s real-time barometer of Brexit sentiment, the pound is headed for the biggest monthly drop since October 2016. Johnson, who took office earlier this month, hinted he may hold no negotiations with the European Union before the Brexit deadline on Oct. 31."

TRUMP TRACKER

TRADE FLY-AROUND: 

— Trump backpedals on China threats: “[Trump] said Tuesday that a new trade deal with China might not come until after the 2020 elections, a significant departure from more than a year of trying to exert pressure on the world’s second-largest economy,” my colleagues Taylor Telford, Damian Paletta and David J. Lynch report.

“His comments were the latest in rapidly evolving and sometimes contradictory strategic shifts … In a series of Twitter posts, Trump accused China of delaying negotiations, which began in earnest last December. Even as Trump’s chief trade advisers resumed talks in Shanghai, the president’s tweets suggested a deal may be further away than it had seemed in recent months.” 

As talks in Shanghai conclude with no progress. Bloomberg: "China and the U.S. concluded a new round of trade talks in Shanghai on Wednesday following a hiatus of almost three months, with little immediate evidence of progress being made toward ending their year-long dispute.

"U.S. delegates including Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer wrapped up talks with their Chinese counterparts including Vice Premier Liu He Wednesday afternoon at the Xijiao State Guest Hotel, a leafy compound of luxury reception buildings and accommodation in the west of the port city, according to a pool report. The U.S. delegation was headed to the airport, the report said."

Trump poised to win at WTO: “[Trump’s] assault on the World Trade Organization -- and the global system of rules that guide international businesses -- may be quietly scoring a major victory,” Bloomberg’s Shawn Donnan and Bryce Baschuk report.  “Thanks to a U.S. veto on new appeals judges, the WTO’s dispute arm is expected to start slipping into the institutional equivalent of a coma at the end of this year. That has set off a scramble by the European Union, Canada and other countries to set up a temporary alternative allowing the use of arbitrators rather than three-judge panels to hear appeals.”

— Majority of trade aid went to big farms: “More than half of the Trump administration’s trade-war aid for farmers went to just one-tenth of the recipients in the program, according to an analysis of payments by an environmental organization,” Bloomberg’s Mike Dorning reports.

“Eighty-two farming operations received more than $500,000 each through April under the U.S. Agriculture Department’s Market Facilitation Program, according to the Environmental Working Group, which analyzed records it obtained through the Freedom of Information Act covering $8.4 billion in payments.”

— Huawei shows resilience amid trade war: “Huawei Technologies Co. said revenue rose sharply in the first half of the year despite a U.S. export blacklisting, but the Chinese telecommunications giant signaled tougher times ahead as it copes with uncertainty around its access to U.S. technology,” WSJ’s Dan Strumpf reports.

“The Shenzhen-based company said revenue rose 23% to 401.3 billion yuan (about $58.3 billion) from a year earlier. The figure marked an acceleration in growth from the previous January-to-June period. The closely held company self-selects numbers it reports.”

— California Gov. escalates war over Trump’s taxes: “California’s Democratic governor signed a law Tuesday requiring presidential candidates to release their tax returns to appear on the state’s primary ballot, a move aimed squarely at Republican [Trump],” the Associated Press’s  Kathleen Ronayne and Adam Beam report. “Most of the major Democratic candidates for president have already publicly disclosed their personal income tax returns as Trump has refused to do so, breaking with decades of tradition by candidates from both parties. 

POCKET CHANGE

Capital One breach continues big banks' fight with hackers. NYT's Stacy Cowley and Nicole Perlroth: "Large financial companies have to thwart hundreds of thousands of cyberattacks every single day. Data thieves have to get lucky only once. Big banks like Capital One, the victim of a recent attack that captured the personal information of over 100 million people, are a target for digital troublemakers, like individual hackers trying to impress their peers or intelligence operatives for foreign governments.

"A single weak spot is all savvy hackers need. And they often find them. Already this year, there have been 3,494 successful cyberattacks against financial institutions, according to reports filed with the Treasury Department’s Financial Crimes Enforcement Network."

  • Sen. Sherrod Brown (D-Ohio), the top Democrat on the Senate Banking Committee, called on Capital One to explain how it will protect consumers. From a Tuesday statement: "Capital One should outline exactly what occurred in March, how the company will help consumers protect their personal data from further abuse, and what steps it will take to prevent similar breaches from happening in the future. At the same time, as we continue to see massive privacy breaches harming consumers across the country and around the world, it’s past time for corporations to step up and do more to protect their customers from these attacks."

— States’ lawsuits complicates T-Mobile-Sprint merger: “T-Mobile US Inc. and Sprint Corp., whose union was blessed by the Justice Department last week, are still wrangling with a group of state attorneys general trying to sink the wireless companies’ merger in court. But the very conditions the federal government imposed on the deal could make the states’ effort even more challenging,” WSJ’s  Brent Kendall and Drew FitzGerald report.

“The states, led by New York and California, filed suit to block the deal on June 11, before the Justice Department had made up its mind on the $26 billion-plus transaction. The department gave the green light Friday, after the companies agreed to a host of asset sales and conditions, including ones designed to set up satellite-TV provider Dish Network Corp. as a new competitor in the wireless sector.”

— P&G posts strong sales: “Procter & Gamble Co. reported its highest quarterly sales growth in more than a decade, riding strong consumer spending on household staples from toothpaste to laundry detergent even as the company continued to raise prices,” WSJ’s Sharon Terlep and Aisha Al-Muslim report.

“The strong quarterly sales were marred by an $8 billion charge the Cincinnati-based company took to write down the value of the Gillette razor business it acquired 14 years ago. The charge is a reminder of the challenges facing big brands amid shifting consumer habits and new online entrants.”

MONEY ON THE HILL

Trump, McConnell whip Senate Rs on budget vote. Politico's Burgetss Everett, John Bresnahan and Sarah Ferris: "Senate Republican leaders and [Trump] are working to whip up support for their bipartisan, $2.7 trillion budget deal, hoping to stave off embarrassing defections ahead of a vote that’s splitting the party. Senate Majority Leader Mitch McConnell and Majority Whip John Thune are trying to win over undecided rank-and-file senators to avoid a replay of last week’s effort in the House, when roughly two-thirds of House Republicans opposed the deal, according to multiple senators and aides. Trump is 'strategically' making calls to on-the-fence members, Thune said."

Trump team divided over cap gains cut. NYT's Alan Rappeport and Jim Tankersley: "Trump administration officials are divided over whether to give investors a big tax cut that would primarily benefit the rich before the 2020 election heats up in earnest. Republican senators and conservative anti-tax groups are increasingly pushing the administration to use executive authority to deliver a tax cut to investors on profits they earn when selling assets like stocks or bonds...

Supporters of the plan include Larry Kudlow, the director of President Trump’s National Economic Council, who is leading a White House task force examining the proposal... But the move has skeptics, including Treasury Secretary Steven Mnuchin, whose department is bound by a 1992 opinion from the Office of Legal Counsel that determined the Treasury Department does not have the authority to index capital gains to inflation by regulation."

OPINIONS

Kelleher: Wall Street should embrace Warren. Better Markets president Dennis Kelleher writes in an op-ed in the The Hill that the financial services industry would be wise to support Warren's tough reforms now. "“The 2020 choice is between trying to preserve the current predatory, anything-goes, anti-democratic, crony capitalism as practiced by Wall Street today, or restoring democratic capitalism. That’s the system America needs: One where finance supports the productive economy that benefits the many and once again fuels the kind of economic growth that builds a vibrant middle class and broad-based prosperity…

"If Wall Streeters had an ounce of self-enlightenment, they would see that their self-interest is in choosing a Warren or Warren-like presidency. Wall Street should be looking for a candidate who is going to most responsibly, but concretely and meaningfully, respond to the political moment and make the changes that are being demanded by – and deserved by — so many Americans who have been left behind."

CHART TOPPER

Jobs and economic inequality — shown respectively in yellow and gold in this Bloomberg graphic — got relatively scant attention in the first night of the Democratic debate: 

DAYBOOK

Today:

  • The Federal Reserve’s Federal Open Market Committee holds its fifth meeting of the year where it will consider a rate cut/
  • The U.S. Senate is expected to vote on the budget and debt ceiling deal before leaving for their summer recess.
  • The second night of round two of the debates is held in Detroit tonight, participants include former Vice President Joe Biden and Sens. Kamala Harris (Calif), Cory Booker (N.J.) 
  • Sprint, Dominion Energy, Fiat Chrysler, Humana, Spotify, McKesson, Hyatt Hotels and Qualcomm are among the notable companies reporting their earnings, per Kiplinger

Upcoming:

  • The Hudson Institute holds an event on countering emerging economic threats on Thursday.
  • General Motors, Verizon, U.S. Steel, Yum Brands, Re/Max Holdings, Clorox, Dunkin, DuPont, Archer Daniels Midland and DaVita are among the notable companies reporting their earnings on Thursday, per Kiplinger.
  • The House Financial Services Subcommittee on Oversight and Investigations holds a field hearing in Detroit looking back on the housing crisis in Michigan on Friday.
  • Chevron, Exxon Mobil and Honda Motor are among the notable companies reporting their earnings on Friday, per Kiplinger.
THE FUNNIES

From The Post's Tom Toles:

BULL SESSION