2020 Budget
While impeachment is the daily story that dominates each news cycle, the big story could be a potential government shutdown on November 21. The Congress and the White House agreed to pass a Continuing Resolution, (CR) to avoid a shutdown on October 1 when the new fiscal year began, but that CR expires on November 21.
The House, Senate and White House are having discussions about the pending budget deadline, and to date the reports have been positive; but the President has made clear he can’t except any bill that limits his ability to continue construction of the border wall. It was wall funding that caused last year’s 35 day shutdown; and with impeachment and elections facing the President a shutdown might be a handy diversion.
Impeachment
Washington and the markets seem to have accepted the fact that every day the lead story will be about impeachment, and next week the public hearings begin. On Wednesday, November 13 the US Ambassador to Ukraine, Bill Taylor, will be the leadoff witness, followed by the Trump fired Ambassador Marie Yovanocitch on Friday.
They will layout the basic Trump strategy of working to get an investigation of the Bidens and the link to military aid from the US to Ukraine. As this begins the pubic hearings it will be interesting to see how the Republican members of the committee defend the President. It could be a foreshadowing of the strategy the Republicans will use as the process continues.
China Trade
There continue to be widespread reports that the US and China are close to finalizing the Phase One deal announced in October by President Trump. Initially President Trump and Xi were going to formalize the deal next weekend at the APEC meeting in Santiago, Chile but with the civil disorder in Chile the meeting was cancelled. Officials in DC and Beijing are looking for a new signing opportunity.
Acknowledging the importance of the increased Chinese agricultural purchases for the Trump re-election strategy, the President suggested Iowa as a place to sign the agreement. The Chinese are not likely to give the President such a domestic political win, but at some point the two leaders will officially sign an agreement and may delegate the signing to the two senior trade ministers.
The basic framework is likely to be an increase in US agricultural imports by China, the granting of some waivers to US companies to sell products to Huawei, and still to be resolved the future of tariffs. It is widely expected that the scheduled December 15 tariffs by the US on Chinese consumer goods will be suspended, but whether or not any tariff rollback will be included is still being discussed.
