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Politics

After intel firing, top U.S. watchdog vows to maintain oversight of Trump administration

WASHINGTON (Reuters) – The top U.S. federal watchdog vowed on Saturday to continue to conduct “aggressive” independent oversight of government agencies, after President Donald Trump fired the inspector general of the U.S. intelligence community late Friday night.

Michael Horowitz, chair of the Council of the Inspectors General on Integrity and Efficiency (CIGIE), an independent agency in the executive branch and the inspector general at the Department of Justice, said in a statement that Michael Atkinson was known for his “integrity, professionalism, and commitment to the rule of law and independent oversight.”

Trump wrote in a letter to Congress Friday night that Atkinson, who was involved in triggering an impeachment probe of the president last year, will be removed from his position in 30 days.

The firing comes as U.S. inspectors general, who are charged with independent oversight of federal agencies, were recently tasked with broad surveillance of the government’s response to the coronavirus, including the historic $2.3 trillion fiscal package to mitigate its economic impact.

“The inspector general community will continue to conduct aggressive, independent oversight of the agencies that we oversee,” said Horowitz.

“This includes CIGIE’s Pandemic Response Accountability Committee and its efforts on behalf of American taxpayers, families, businesses, patients, and health care providers to ensure that over $2 trillion dollars in emergency federal spending is being used consistently with the law’s mandate.”

Democrats have expressed concerns about how the fiscal package will be doled out through the U.S. Treasury, headed by Steven Mnuchin. “We’re not here to create a slush fund for Donald Trump and his family, or a slush fund for the Treasury Department to be able to hand out to their friends,” said U.S. Senator Elizabeth Warren of Massachusetts.

The watchdogs’ role in the coronavirus oversight is to examine the decision-making process, and provide the public information about where the taxpayer dollars and other resources go.

Atkinson, a Trump appointee, had determined that a whistleblower’s report was credible in alleging Trump abused his office in attempting to solicit Ukraine’s interference in the 2020 U.S. election for his political benefit.

Trump said Friday Atkinson no longer had his “fullest confidence.”

Atkinson expressed concerns that Trump potentially exposed himself to “serious national security and counter-intelligence risks” when he pressed Ukrainian President Volodymyr Zelenskiy to investigate Democratic presidential hopeful Joe Biden and his son during a July 25 phone call, according to a Justice Department legal opinion.

U.S. Senator Richard Burr, who chairs the Senate Intelligence Committee, praised Atkinson, while noting Trump has the authority to fire him.

“Like any political appointee, the Inspector General serves at the behest of the Executive,” Burr, a Republican from North Carolina, said in a statement. “However, in order to be effective, the IG must be allowed to conduct his or her work independent of internal or external pressure.”

But U.S. Senator Charles Grassley, chairman of the Senate Finance Committee, demanded a better explanation for Atkinson’s firing.

“Congress has been crystal clear that written reasons must be given when IGs are removed for a lack of confidence,” he said. “More details are needed from the administration.”

Trump is trying to scare the watchdog community, Adam Schiff, a California Democrat and chairman of the House Intelligence Committee told MSNBC Saturday morning.

“He’s decapitating the leadership of the intelligence community in the middle of a national crisis,” he said. “It’s unconscionable, and of course it sends a message throughout the federal government and particular to other inspectors general.”

Senate Democratic Leader Chuck Schumer told CNN that Trump was undermining the intelligence agencies, adding that there were no laws to protect people against retaliatory firings.

“When you speak truth to power you should be a hero, but in this administration when you speak truth to power all too often you get fired,” said Schumer.

Republican House Representative Jim Jordan, a staunch Trump supporter, mocked Schiff’s concern about Atkinson’s firing.

“He was Schiff’s key impeachment enabler,” Jordan wrote on Twitter.

After contentious, partisan hearings, the Democratic-led House of Representatives voted to impeach Trump but the Republican-led Senate acquitted him of the charges in early February.

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Business

Coronavirus depresses U.S. payrolls, more job losses coming

WASHINGTON (Reuters) – The U.S. economy shed 701,000 jobs in March, abruptly ending a historic 113 straight months of employment growth as stringent measures to control the novel coronavirus outbreak shuttered businesses and factories, confirming a recession is underway.

The Labor Department’s closely watched employment report on Friday did not fully reflect the economic carnage being inflicted by the highly contagious virus. The government surveyed businesses and households for the report in mid-March, before a large section of the population was under some form of a lockdown, throwing millions out of work.

William Beach, commissioner of the Labor Department’s Bureau of Labor Statistics acknowledged this short-coming in a statement and also noted that data collection for the employment report was adversely affected by the coronavirus. But Beach also said, “we still were able to obtain estimates from our two surveys that met BLS standards for accuracy and reliability.”

The plunge in payrolls, which was the steepest since March 2009 and snapped a record streak of employment gains dating to September 2010, was led by 459,000 job losses in the leisure and hospitality industry, mainly in food services and drinking places. There were also decreases in health care and social assistance, professional and business services, retail trade, manufacturing and construction payrolls.

Economists polled by Reuters had forecast nonfarm payrolls falling by 100,000 jobs last month. Adding a sting to the report, the economy created 57,000 fewer jobs in January and February than previously reported.

The worst is still to come, with a majority of Americans now under “stay-at-home” or “shelter-in-place” orders. A record 10 million Americans filed claims for unemployment benefits in the last two weeks of March. Economists expect payrolls will sink by at least 20 million jobs in April, which would blow away the record 800,000 tumble during the Great Recession.

“We are just seeing the tip of the iceberg when it comes to the collapse of the labor market,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania.

Graphic: End of a historic jobs boom , here

Stocks on Wall Street fell, while U.S. Treasury prices rose. The dollar was up against a basket of currencies.

The report could sharpen criticism of the Trump administration’s handling of the public health crisis, with President Donald Trump himself faulted for playing down the threat of the pandemic in its initial phases.

Economists said the jobs bloodbath underscored the urgency for the U.S. Congress to consider additional fiscal stimulus following a historic $2.3 trillion package signed last week by Trump, which made provisions for companies and the unemployed. Both Trump and U.S. House of Representatives Speaker Nancy Pelosi have floated an infrastructure stimulus.

Separately, the Federal Reserve has undertaken extraordinary measures to help companies weather the virus. The United States has the highest number of confirmed cases of COVID-19, the respiratory illness caused by the virus, with more than 243,000 people infected. Nearly 6,000 people in the country have died from the illness, according to a Reuters tally.

MARSHALL PLAN NEEDED?

“Once the peak of the mountain in the virus infection is in sight, businesses will slowly return,” said Sung Won Sohn, a business economics professor at Loyola Marymount University in Los Angeles.

“But a V-shaped recovery is not likely. A Marshall Plan for the U.S. economy will be necessary,” he said, referring to the huge U.S. economic aid program to rebuild Europe after World War Two.

There are also perceptions that the recent fiscal package, which makes generous provisions for the unemployed, and the federal government’s easing of requirements for workers to seek benefits could encourage some not to work.

The unemployment rate rose 0.9 percentage point, the largest single-month change since January 1975, to 4.4% in March. The BLS said the rate could have been 5.4% if it were not for a misclassification error during the survey of households.

Graphic: U.S. jobless rate surged in March , here

With the ranks of the unemployed ballooning, economists say the jobless rate could top 10% in April. The labor force participation rate declined by 0.7 percentage point in March to 62.7 percent. The employment-to-population ratio fell by 1.1 percentage points over the month to 60.0%.

Mounting job losses spell disaster for gross domestic product, which economists believe contracted sharply in the first quarter. They predict that the economy slipped into recession in March.

The National Bureau of Economic Research, the private research institute regarded as the arbiter of U.S. recessions, does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries. Instead, it looks for a drop in activity, spread across the economy and lasting more than a few months.

“Any doubt about a U.S. recession was just put to rest,” said Chris Low, chief economist at FHN Financial in New York.

Wage growth picked up in March, but that is all in the rear view mirror. Average hourly earnings increased 0.4% in March after increasing 0.3% in February. That lifted the annual increase in wages to 3.1% last month from 3.0% in February.

The average workweek fell to 34.2 hours last month from 34.4 hours in February, with the workweek in the leisure and hospitality industry being shortened by 1.4 hours.

Job losses in March touched nearly every facet of the economy. The healthcare and social assistance industry purged 61,000 jobs in March, with losses mostly in dentists and doctors’ office. Social assistance job losses were in child day care services. Professional and business services lost 52,000 jobs in March, concentrated in temporary help services.

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  • Instant View: Coronavirus slams U.S. jobs growth in March

There were also declines in employment at travel agents and reservation services. The retail sector shed 46,000 last month, with job losses in clothing, furniture, and sporting goods, hobby, book, and music stores. But general merchandise stores payrolls increased by 10,000.

Construction employment fell by 29,000 in March. Employment in the ‘other services’ category declined by 24,000, with about half of the loss occurring in personal and laundry services.

Mining lost 6,000 jobs and manufacturing payrolls 18,000. But federal government employment rose by 18,000 in March, boosted by the hiring of 17,000 temporary workers for the 2020 Census.

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Categories
Business

Coronavirus brings record U.S. job growth to an end in March

WASHINGTON (Reuters) – The U.S. economy shed jobs in March, abruptly ending a historic 113 straight months of employment growth as stringent measures to control the novel coronavirus pandemic shuttered businesses and factories, all but confirming a recession is underway.

The Labor Department said employers cut 701,000 jobs last month after adding a revised 275,000 in February. The unemployment rate shot up to 4.4% from 3.5%.

According to a Reuters survey of economists, nonfarm payrolls had been forecast to decrease by 100,000 jobs last month, snapping a record streak of employment gains dating to October 2010. Unemployment was seen rising to 3.8%.

Friday’s report is far from an accurate depiction of the economic carnage being inflicted by the contagious coronavirus. The government surveyed businesses and households for the report in mid-March, before a large section of the population was under some form of a lockdown, throwing millions out of work.

The report could sharpen criticism of the Trump administration’s handling of the public health crisis, with President Donald Trump himself facing criticism for playing down the threat of the pandemic in its initial phases. Already, data has shown a record 10 million Americans filed claims for unemployment benefits in the last two weeks of March.

With jobless claims, the most timely indicator of labor market health, breaking records over the last couple of weeks and a majority of Americans now under “stay-at-home” or “shelter-in-place” orders, Oxford Economics is predicting payrolls could plunge by at least 20 million jobs in April, which would blow away the record 800,000 tumble in March 2009.

Related Coverage

  • Instant View: Coronavirus slams U.S. jobs growth in March

“The economy has fallen into the abyss,” said Chris Rupkey, chief economist at MUFG in New York. “Everywhere you look Washington and state governments were not prepared for the rapid spread of the virus and the devastating damage that would be done to the economy if businesses were shut down and workers sent home.”

Economists also worry the rapid closure of businesses could make it difficult for the Labor Department to accurately capture the magnitude of layoffs. There are also perceptions that a $2.3 trillion fiscal package signed by President Donald Trump last week, which makes generous provisions for the unemployed, and the federal government’s easing of requirements for workers to seek benefits could also be driving the jobless claims numbers higher.

“The April report should better reflect the severity of the recession, though the exact numbers are hard to pin down,” said Michelle Meyer, a U.S. economist at Bank of America Securities in New York. “Businesses that have closed won’t be responding to the survey.”

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Categories
World News

Biden: Trump administration showed 'poor judgment' in removing warship commander

(Reuters) – Democratic presidential contender Joe Biden said on Thursday that the Trump administration showed “poor judgment” in relieving the commander of an aircraft carrier who sought stronger measures to control a coronavirus outbreak onboard.

“Donald Trump’s Acting Navy Secretary shot the messenger – a commanding officer who was faithful to both his national security mission and his duty to care for his sailors, and who rightly focused attention on a broader concern about how to maintain military readiness during this pandemic,” Biden said in a statement to Reuters.

“And the Navy sent a chilling message to the rest of the fleet about speaking truth to power. The poor judgment here belongs to the Trump Administration, not a courageous officer trying to protect his sailors.”

The commander, Captain Brett Crozier, was removed from command after writing a scathing letter to Navy leadership about conditions on the nuclear-powered carrier that leaked to the public.

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Categories
Business

Trump says 3M 'will have a big price to pay' over face masks

WASHINGTON (Reuters) – President Donald Trump slammed 3M Co (MMM.N) in a tweet late on Thursday after earlier announcing he was invoking the Defense Production Act to get the company to produce face masks.

“We hit 3M hard today after seeing what they were doing with their Masks. ‘P Act’ all the way.’ Big surprise to many in government as to what they were doing – will have a big price to pay!” Trump said on Twitter.

At a White House briefing on the coronavirus pandemic earlier on Thursday, Trump announced he had signed a Defense Production Act order for 3M to produce face masks. “Hopefully they’ll be able to do what they are supposed to do,” he said, without elaborating.

St. Paul, Minnesota-based 3M did not immediately respond to a request for comment. The company’s brands include Scotch, Post-It and Nexcare, as well as healthcare products for professionals.

White House trade adviser Peter Navarro said at the briefing, “We’ve had some issues making sure that all of the production that 3M does around the world, enough of it is coming back here to the right places.”

The White House did not immediately respond to a request for comment on the president’s tweet.

N-95 face masks made by 3M and other companies are in short supply among healthcare workers treating coronavirus patients.

The Defense Production Act, which was passed in 1950, grants the president the power to expand industrial production of key materials or products for national security and other reasons.

The U.S. Centers for Disease Control and Prevention is expected to issue guidelines in the next few days that could tell Americans to wear face masks when leaving home.

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Categories
Economy

TREASURIES-Yields steady despite soaring U.S. jobless claims

 (Updates with market activity)
    By Ross Kerber
    BOSTON, April 2 (Reuters) - U.S. Treasuries shrugged off a
record rise in jobless claims shown in data on Thursday, leaving
yields steady as investors tried to gauge when the coronavirus
pandemic's economic impact might peak.
    The benchmark 10-year yield was down 1.6 basis
points at 0.6189% in afternoon trading. 
    That was close to where it stood at 8:30 a.m. EDT (1230
GMT), when the U.S. Labor Department reported the number of
Americans filing claims for unemployment benefits last week shot
to a record high for a second week in a row - more than 6
million.
    More jurisdictions enforced stay-at-home measures to curb
the pandemic, which economists say has pushed the economy into
recession.
    A closely watched portion of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes was at 39 basis points, about 2 basis points higher than
Wednesday's close.   
    Major Wall Street indexes were up on hopes of a truce
between major oil producers, also helping stabilize
yields. 
    Analysts contacted by Reuters said the market reaction
suggested the jobless numbers were so big that they were hard to
fit into traditional models.
    "The bad data is being priced in. We know that a large part
of the economy is shutting down, so maybe people just expected
an outlandish number," said Priya Misra, head of global rates
strategy at TD Securities in New York.
    "Now the market is more focused on the length of time the
shutdown will last," she said.
    Bond market investors are starting to absorb a growing
supply of Treasury securities meant to pay for a new $2.2
trillion federal aid package, though the exact mix of securities
the department will issue is not yet clear.
    The two-year U.S. Treasury yield was down less
than a basis point at 0.2255% in afternoon trading. It reached
as low as 0.202% overnight, its lowest level since 2013.
    However it is affected by the new Treasury supply, the yield
on the two-year typically moves in step with interest rate
expectations. The Fed has already cut its target interest rate
range to nearly zero and most analysts do not see that changing 
soon in the face of the worsening pandemic, bringing the yield
down.
    "Barring a big uptick in inflation, it's likely they will
stay there two years," said Guy LeBas, chief fixed income
strategist for Janney Montgomery Scott. 
        April 2 Thursday 3:47PM New York / 1947 GMT
                               Price                  
 US T BONDS JUN0               181-21/32    0-17/32   
 10YR TNotes JUN0              138-240/256  -0-12/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0925       0.0941    0.020
 Six-month bills               0.14         0.142     0.008
 Two-year note                 100-76/256   0.2255    -0.008
 Three-year note               100-162/256  0.2843    0.005
 Five-year note                100-144/256  0.3861    0.017
 Seven-year note               100-168/256  0.5293    0.000
 10-year note                  108-108/256  0.6189    -0.016
 30-year bond                  118-116/256  1.257     -0.032
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        23.25        -0.50    
 spread                                               
 U.S. 3-year dollar swap        14.75        -1.00    
 spread                                               
 U.S. 5-year dollar swap        11.50        -1.25    
 spread                                               
 U.S. 10-year dollar swap        4.75        -1.75    
 spread                                               
 U.S. 30-year dollar swap      -42.25        -0.75    
 spread                                               
 
 (Reporting by Ross Kerber in Boston; editing by Matthew Lewis
and Grant McCool)

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Categories
Business

Exclusive: Trump does not plan to ask U.S. oil producers for coordinated cuts – official

WASHINGTON (Reuters) – The United States does not know formal details of Saudi Arabian and Russian plans to reduce oil supply yet and will not ask U.S. domestic oil producers to chip in with their own cuts, a senior administration official told Reuters on Thursday.

Earlier, President Donald Trump said in a tweet that he expected Saudi Arabia and Russia to cut approximately 10 million barrels from daily production, a comment that sparked a jump in oil prices following weeks of steep declines.

The official said details of planned reductions remained unclear, but a big cut was expected.

Trump was set to meet with leaders of U.S. oil companies on Friday. He will discuss domestic production cuts but will not ask executives to agree on a coordinated drop in supplies, said the official, who spoke on condition of anonymity.

The official said the United States cannot orchestrate a mandated cut in domestic production. Trump has emphasized U.S. energy independence, approval of pipelines, deregulation and less stringent environmental standards as part of his push to build up the industry.

U.S. companies had already cut production in response to a collapse in market demand and as storage space filled up, the official said.

Global oil prices have tumbled by roughly two-thirds this year as the coronavirus slammed global economies even as Saudi Arabia and Russia flooded the market in a price war. Crashing prices have threatened the once-booming U.S. drilling industry with bankruptcies and massive layoffs, and Washington has scrambled to protect the sector.

The official described Trump as a broker between Saudi Arabia and Russia, calling their leaders multiple times to help solve the impasse. The president was in a good mood about the developments, he said.

Trump on Wednesday had suggested he knew a way to solve the problem with Russia and Saudi Arabia if the two countries did not reach a deal, but declined to elaborate.

“I do believe there’s a way that that can be solved or pretty well solved. And I’d rather not do that. I think that Russia and Saudi Arabia, at some point, are going to make a deal in the not-too-distant future,” he told reporters on Wednesday.

The official said tariffs on imported crude oil had come up as a potential solution to help domestic producers but indicated they were not under serious consideration. It would be difficult to impose tariffs when transactions were down, he said.

The government was also considering suspending royalty payments on oil production on federal property to help domestic suppliers, the official said.

Separately, the U.S. Department of Energy on Thursday announced it would lease out space to U.S. oil producers to store oil in the nation’s emergency stockpile, to help them with a shortage of available commercial storage capacity.

The official predicted a shakeout within the U.S. oil industry, in which an output boom in recent years has made the United States the top global producer of oil and gas.

Whether the government will provide financial support to mid- and small-sized oil companies remained to be seen, he said. The official noted bigger suppliers generally squeeze out the smaller ones.

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Categories
Business

U.S. Air Force recommends paying Boeing up to $924 million: sources

WASHINGTON (Reuters) – The U.S. Air Force has recommended the release of up to $924 million in payments to Boeing that were held back due to flaws in KC-46 air refueling tanker, according to memo seen by Reuters and a source familiar with the situation.

The recommendation, which was sent to Air Force contracting officials, is aimed at maintaining the financial health of the suppliers to the Department of Defense, and will free up funding for numerous contractors, not just Boeing.

Boeing’s financial situation has become increasingly precarious as economic fallout from the coronavirus has frozen key lending markets and cut off demand for Boeing’s commercial aircraft.

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Categories
Business

U.S. factory orders unchanged in February

WASHINGTON (Reuters) – New orders for U.S.-made goods were unexpectedly flat in February, and could remain weak as a global coronavirus outbreak strains supply chains and undercuts the manufacturing sector.

The Commerce Department said on Thursday the unchanged reading in factory orders followed a 0.5% decline in January. Economists polled by Reuters had forecast factory orders would increase 0.2% in February.

The Institute for Supply Management (ISM) reported on Wednesday that its index of national factory activity fell to a reading of 49.1 in March from 50.1 in February. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11% of the U.S. economy.

As well as causing disruptions in supply chains, the coronavirus pandemic has shut down demand, with the transportation industry almost crawling to a halt, and restaurants, bars and other social venues shutting.

The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 0.9% in February instead of declining 0.8% as reported last month.

Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, decreased 0.8 in February, rather than falling 0.7% as previously reported.

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Categories
Business

Wall Street falls at open as jobless claims top 6 million

(Reuters) – U.S. stock indexes fell at the open on Thursday after U.S. jobless claims blew past a record 6 million as more states enforced stay-at-home measures to combat the coronavirus pandemic.

The Dow Jones Industrial Average .DJI fell 124.05 points, or 0.59%, at the open to 20,819.46. The S&P 500 .SPX opened lower by 11.96 points, or 0.48%, at 2,458.54, while the Nasdaq Composite .IXIC dropped 43.13 points, or 0.59%, to 7,317.45 at the opening bell.

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