Displaying items by tag: US

(New York)

Ever since the now infamous “op-ed” about Trump’s inner circle appeared in the New York Times earlier this week, there has been increasing discussion of the 25th amendment, so we thought it would be good to give a quick primer on it. Basically what the amendment allows for is a president’s cabinet to remove them from office if they are deemed “unable to discharge the powers and duties” of the office. The vice president and a majority of the cabinet need to agree in order to remove the president. But if the president protests, it takes a 2/3 majority in Congress to remove the head of state. It has never been used to remove a president and was only ratified in 1963.

FINSUM: Given the likelihood that Trump would protest any move, a 2/3 majority in Congress seems like a massive obstacle for anyone trying to remove the president.

(New York)
The last few months have been bleak for the US housing market. There has been a steady stream of negative data showing that the market is definitively slowing. Now a new one is emerging—bank lending is contracting quickly in the space. The fall off is so strong that banks are laying off workers in lending units. Both sources of demand for mortgages—refinancing and new home purchases—have dried up as interest rates and housing prices have risen. July showed the fifth straight month of declining home sales, coming in the time of the year when they should be strongest. Speaking about the state of home prices and mortgage demand, the chief economist at Fannie Mae says, “people are saying, ‘at these prices, and with rates rising, I’ll stay where I am’”.

FINSUM: We believe the US is in for a long winter of falling home prices. We think the market is at a turning point right now where sellers are trying to cling to high prices, but buyers have finally stopped giving in.

(Washington)

The US and Mexico’s last minute trade deal before a deadline this week left investors wondering what happened to Canada. Trump and the US’ northern neighbor have been in a spat on trade, but the US-Mexico breakthrough has apparently proven a catalyst for renewed talks. Canada’s foreign minister Chrystia Freeland has flown into Washington directly from Europe and will restart talks this morning as part of a last minute effort to reach a deal with the US.

FINSUM: Having Canada in on any new-Nafta deal seems very important, but we don’t doubt that a deal may not materialize given the current environment.

(Washington)

The US and Mexico have reached an important trade agreement after a year of acrimonious bickering over Nafta. The new deal, from which Canada is conspicuously absent, will put harder trade restrictions on Mexico. The deal is a sign that Trump and the US are willing to ease their fight with neighbors as the country ramps up a battle with China. The Trump administration was in a rush to get a deal done before a power change coming in Mexico. The deal will no longer be called Nafta, but the US-Mexico trade agreement.

FINSUM: This is encouraging from our perspective. The last thing we want right now is a multi-fronted trade war. Hopefully a deal with Canada can be reached as well.

(New York)

We don’t want to say that investors are sleepwalking into it, but in many ways it seems an apt metaphor. Whether stock investors like it or not, the US trade war with China is continuing apace. The two countries’ negotiations on the issue last week went nowhere, and the US is about to hit Beijing with $200bn more in tariffs. Their response will hurt the US economy, as many of them will be on consumer goods, which could raise prices and lower demand. Industrial stocks are likely to be hit by Beijing’s retaliations. 50% of all Chinese imports will soon be subject to new tariffs.

FINSUM: We are starting to wonder if tariffs might lead to “stagflation” in the near term. In consumer demand ebbs at the same time as prices rise for goods, it seems like a perfect recipe for stagnation and inflation.