The Finance 202: Trump’s coronavirus crisis response undermines his image as billionaire populist

Consider the optics: Just hours before Trump’s tweet, his top emissaries were on Capitol Hill pushing against a full and lengthy extension of $600 in enhanced federal benefits to jobless Americans that expired last week. And on Sunday — as the talks dragged on, with millions of people in limbo — Trump made the 284th visit of his presidency to one of his own golf courses.

Now polls indicate voters now think Trump is the one who has lost touch. Just 37 percent in a recent Quinnipiac University survey say he cares about average Americans, while 61 percent say he doesn’t. That represents a low for him on the matter — and a sharp drop from the 51 percent of Americans who gave him favorable marks on the question in late November 2016. Voters give former vice president Joe Biden a markedly better score, with 59 percent telling Quinnipiac in its most recent survey he cares about average Americans while a third of them say he does not. 

The president’s most outspoken priorities for the next round of emergency economic relief, meanwhile, haven’t centered on the jobless Americans closest to the brink. Instead, he continues to push for a payroll tax cut that even those in his own party have rejected as providing help to the wrong people — those who already have jobs — while doing little to encourage hiring. And his team has insisted on providing $1.75 billion for a new FBI headquarters in downtown Washington, an initiative with no discernible relevance to the economic crisis. The president’s push has drawn criticism from Democrats that Trump is moving to stifle competition for the Trump International Hotel, a block away. 

Trump himself has only known life on the rarefied end of the income divide, a fact underscored by the latest financial disclosures from his business empire: The Trump Organization reported $446 million in revenue in 2019, up about 2 percent from the previous year, according to disclosures the White House released on Friday. “The documents do not give details about 2020, when Trump’s company has been slammed by the coronavirus pandemic,” David Fahrenthold and Joshua Partlow note. “Some Trump properties were closed for weeks at a time, and others saw their occupancy rates nosedive, as the broader travel industry declined.”

Eric Trump, the president’s second son and an executive at the company, put a bullish spin on the report: “Our businesses thrived with strong revenues while remaining underleveraged and maintaining very low levels of debt,” his statement said. 

Trump’s golf courses proved a strength, with several reporting double-digit revenue gains, per the New York Times. 

Trump has received some heat for the amount of time he has managed to spend golfing, especially in light of the criticism he heaped on then-President Barack Obama for the same activity. But the visual carries the potential to do more damage to Trump amid public health and economic crises, conveying a sense Trump is taking his leisure while the country suffers. From Atlanta Journal-Constitution cartoonist Mike Luckovich last month:

Ivanka Trump and Jared Kushner, meanwhile, earned at least $36.2 million while they served in the White House last year, according to disclosures the president’s daughter and her husband filed Friday. The average American household pulled in about $63,000 last year — or roughly what Ivanka and Jared earned in 15 hours from their outside companies and investments.

Trump’s daughter took heat last month for urging out-of-work Americans to “find something new,” as part of a White House effort to promote skills-based jobs that don’t require a college degree. It landed with a thud. Critics noted the multimillionaire daughter of a billionaire for whom she now works in the White House is not the most credible messenger to the millions seeking work amid an economic collapse, when job seekers outnumber open positions by more than three-to-one.

Mnuchin argued on Sunday the $600 federal payments to the unemployed are too generous. Republicans are proposing instead to cut the payment to $200 or use a formula that would peg it to two-thirds of their wages before they lost their jobs. “In some cases, people are overpaid, and we want to make sure there are the right incentives,” he said on ABC’s “This Week.” 

“But some preliminary studies on the issue have not found the temporary bump is a disincentive for a noticeable number of workers,” Erica Werner and Eli Rosenberg report. “A recent study by three Yale economists found workers receiving the extra benefits returned to work at roughly the same rate as others, finding ‘no evidence that more generous benefits disincentivized work.’” 

The extra payments have helped people meet basic needs, including making rent and mortgage payments. But the benefit expired last week, along with a moratorium on evictions from federally-backed housing, putting more than 12 million renters at risk of losing their homes.

Mnuchin, the Goldman Sachs veteran now helping lead the administration’s response to this crisis, found opportunity to profit in the last one. He led a group of investors that put up $1.6 billion to buy the failed IndyMac Bank from the FDIC in 2009 as the great financial crisis hit full tilt. They completed a $3.4 billion merger with CIT Group in 2015, and Mnuchin walked away with a $10.9 million severance, on top of what he earned from stock options and a multimillion-dollar salary running the bank.

Mnuchin contended in his Senate confirmation hearings that his group stepped in to salvage a failed institution no others would touch. “OneWest inherited some 178,000 foreclosures already in the pipeline,” Politico reported. “As house prices fell and job losses mounted, more home seizures were inevitable.” Mnuchin emphasized the bank under his leadership made more than 100,000 modification offers to borrowers. 

But the bank also foreclosed on some 36,000 homes, by one estimate, and its federal regulator detailed cases of bank employees falsely claiming to review individual foreclosure filings. In 2011, the Treasury Department that Mnuchin would later lead forced his bank into an agreement to monitor the conduct of its employees.

The divergence between stocks and the economy continues to worry some investors: But “most money managers are wary of cutting equity exposure too drastically in a market that has rallied more than 40 percent since late March and stands near all-time highs despite widespread economic devastation and a global pandemic,” Reuters’s April Joyner reports.

“That disconnect is pushing some investors to beef up cash positions or tilt their portfolios toward Europe, where economic prospects appear to be brighter than in the United States.”

• Fed’s Kashkari calls for economy to shut down for another four to six weeks. Per Reuters: “The U.S. economy could benefit if the nation were to “lock down really hard” for four to six weeks, a top Federal Reserve official said on Sunday, adding that Congress can well afford large sums for coronavirus relief efforts. The economy, which in the second quarter suffered its biggest blow since the Great Depression, would be able to mount a robust recovery, but only if the virus were brought under control, Neel Kashkari, president of the Minneapolis Federal Reserve Bank, told CBS’s ‘Face the Nation.’”

The news offers some hope about the recovery: “More than halfway through second-quarter earnings, 82.1 percent of companies reporting have surpassed profit expectations, which would be the highest in the history of Refinitiv IBES data going back to 1994,” Reuters’s Caroline Valetkevitch reports.

“What’s more, the size of the beats is well above what is typical. S&P 500 companies have beaten earnings expectations by a whopping 21.7 percent, also set to be the highest on record since 1994, based on Refinitiv’s data as of Friday. The latest big boost to numbers came late last week, when results from Facebook and trillion-dollar market value companies Apple, Amazon.com and Google parent Alphabet surpassed forecasts.”

• There is one big caveat: “In many cases, estimates had been lowered so much ahead of earnings season that they were easier to beat, strategists said. Still, the results bolster the case for investors betting that the impact of coronavirus-led lockdowns and layoffs on companies’ bottom lines may not be quite as dire as previously believed.”

Fed weighs abandoning preemptive rate moves to curb inflation: “Instead, Fed officials would take a more relaxed view by allowing for periods in which inflation would run slightly above the central bank’s 2 percent target, to make up for past episodes in which inflation ran below the target,” the WSJ’s Nick Timiraos reports.

“Fed Chairman Jerome Powell hinted at the shift at a news conference last week when he said the central bank would soon conclude a comprehensive review of its policy-making strategy that began last year … Even before the severe shock from the pandemic, the Fed had grown concerned about spells of low inflation that have bedeviled authorities in Japan over the past two decades and in Europe for the past decade.”

Bitcoin is gaining again: “After trading flat for months, bitcoin rose as high as $11,868 on Saturday from around $9,100 in early July, extending its gain for 2020 to 65 percent,” the WSJ’s Paul Vigna reports.

“While volatility is nothing new for bitcoin, the latest run came abruptly. Since surging on a wild boom in 2017, bitcoin and its cryptocurrency peers have been largely flying under the radar. Meanwhile, companies including Facebook Inc. and central banks have got most of the attention as they build their own digital currencies.” 

• Birx says nation is in “new phase” of pandemic: “I want to be very clear: What we’re seeing today is different from March and April,” Deborah Birx, the physician overseeing the White House coronavirus response told CNN’s “State of the Union,” noting that cases were increasing in rural and urban areas. “It is extraordinarily widespread.”
• Experts caution against putting too much hope on a vaccine: “The confident depiction by politicians and companies that a vaccine is imminent and inevitable may give people unrealistic beliefs about how soon the world can return to normal — and even spark resistance to simple strategies that can tamp down transmission and save lives in the short term,” Carolyn Y. Johnson reports.
• New states to watch: “Alaska, Hawaii, Missouri, Montana and Oklahoma are among the states witnessing the largest surge of infections over the past week, according to a Washington Post analysis of health data. Experts also see worrisome trends emerging in major East Coast and Midwest cities, and anticipate major outbreaks in college towns as classes resume this month,” Antonia Noori Farzan reports.
• MLB continues to face struggles: “Major League Baseball’s hopes of salvaging its 2020 season amid a pandemic took another ominous turn Saturday, when the St. Louis Cardinals received word of additional positive tests for the novel coronavirus, requiring the postponement of the entire Cardinals-Brewers weekend series in Milwaukee and deepening the level of pessimism around the sport that the season can go on,” Dave Sheinin reports.

• HSBC profit slumps: “Profit for the global bank with Asian roots fell 96 percent to $192 million in the three months ended June. The London-based lender set aside $3.83 billion in provisions for losses from loans during the quarter, almost seven times more than in the same period last year. HSBC set aside $3 billion of provisions in the first quarter,” the Wall Street Journal’s Simon Clark reports.
• Lord and Taylor files for bankruptcy: “The country’s oldest department store chain, filed for bankruptcy protection joining about a dozen iconic retailers that have succumbed to Chapter 11 protection during the pandemic,” Abha Bhattarai reports.
• Retail rents plummet across New York City: “America’s glitziest and most expensive retail districts are losing tenants, and rents are in a free fall. The pressures … will likely have a lasting impact on shopping streets such as Michigan Avenue — better-known as the ‘Magnificent Mile’ — in Chicago, the Las Vegas Strip, and Rodeo Drive in Los Angeles, to name a few,” CNBC’s Lauren Thomas reports.

• Numerous countries hit grim milestones: “South Africa surpassed 500,000 confirmed cases on Saturday, meaning that the country now accounts for more than half the infections reported in Africa to date, and has the fifth-highest number of cases worldwide … Several Latin American nations are also seeing alarming upticks in both fatalities and new cases. The region’s cumulative death toll topped 200,000 on Saturday night, according to Reuters, with many of the new fatalities coming from Brazil, Mexico and Peru,” Antonia Farzan reports.
• Melbourne implements curfew: “Under the new regulations, residents can only leave their homes to shop food and other essential supplies, and to exercise for up to an hour a day. Both activities must take place within roughly three miles of their homes. Under the new regulations, residents can only leave their homes to shop food and other essential supplies, and to exercise for up to an hour a day. Both activities must take place within roughly three miles of their homes,” Antonia Farzan reports.
• Dozens of crew members test positive after cruises resume in Norway: “In June, Norwegian operator Hurtigruten became the first cruise line to set sail in the midst of a pandemic. Now, roughly two months later, at least 36 crew members aboard one ship have tested positive for covid-19, and all further cruises have been put on hold,” Antonia Farzan reports.

The company’s CEO spoke to Trump: “Microsoft said in a blog post that chief executive Satya Nadella and Trump had spoken and that the company is committed to addressing Trump’s concerns about the social media platform. Trump previously indicated he was not in favor of a deal and said that he planned to ban TikTok in the United States,” Rachel Lerman reports.

“If it goes through, the acquisition could dramatically shift the Big Tech landscape, adding a legacy giant into the scramble for social media users’ attention. Microsoft, currently valued at $1.55 trillion, is the third-most valuable company in the world and is one of the only ones positioned to take on such a purchase. Microsoft was conspicuously absent from a landmark antitrust hearing on Capitol Hill on Wednesday, when Facebook, Google, Apple and Amazon chief executives testified on their companies’ power.”

• But time may be of the essence: “He only agreed to allow Microsoft to negotiate a deal if it could secure a deal in 45 days …,” Reuters’s Yingzhi Yang and Brenda Goh report of Trump’s view.

A number of Republican lawmakers are backing the sale: But “Sen. Roger Wicker (R-Miss.), who chairs the Commerce Committee, [cautioned] that “tight security measures need to be part of any deal in order to protect consumer data and ensure no foreign access,” Reuters’s David Shepardson reports.

“Mnuchin said he and U.S. congressional leaders ‘all agree there has to be a change.’ He added that Trump could “either force a sale or the president can block the app using (International Emergency Economic Powers Ac).”

The probe will focus on a 2013 transaction with a Kushner-owned company. “In June 2013, the banker, Rosemary Vrablic, and two of her Deutsche Bank colleagues purchased a Park Avenue apartment for about $1.5 million from a company called Bergel 715 Associates, according to New York property records,” the NYT’s Jesse Drucker and David Enrich report. 

“Mr. Kushner, a senior adviser to the president, disclosed in an annual personal financial report late Friday that he and his wife, Ivanka Trump, had received $1 million to $5 million last year from Bergel 715. A person familiar with Mr. Kushner’s finances, who wasn’t authorized to speak publicly, said he held an ownership stake in the entity at the time of the transaction with Ms. Vrablic… Typically banks restrict employees from doing personal business with clients because of the potential for conflicts between the employees’ interests and those of the bank.”

• The Institute for Supply Management releases the manufacturing index for July
• Clorox, AIG, Lowes, Tyson Foods, Texas Roadhouse and Cooper Tire & Rubber are among the notable companies reporting their earnings, per Kiplinger

• BP, Disney, Allstate, Fox Corp.,Ralph Lauren, Western Union, WW International AMC Networks and Cinemark are among the notable companies reporting their earnings

• FTC chairman Joe Simons and the rest of the agency’s commissioners are set to testify before the Senate Commerce Committee 
• CVS Health, CenturyLink, Wendy’s, Humana, Etsy, Live Nation Entertainment, Jack in the Box, MetLife, Roku, Square, Fastly and the New York Times are among the notable companies reporting their earnings

• The Labor Department releases weekly jobless claims
• T-Mobile US, Toyota Motor, Norwegian Cruise Line, ViacomCBS, Papa John’s International, Post Holdings, Re/Max Holdings, News Corp, Dropbox and Yelp are among the notable companies reporting their earnings

• The Labor Department releases July’s jobs report