Subject: POLITICO's Morning Money: Trump doubles down on deportation — The first 100 Trump days — Is the economy better than we think? — Wage gains picking up pace
From: Morning Money <[email-masked]>
To: <[email-masked]>
Date: Thu, 5 May 2016 06:03:24 -0600

By Ben White | 05/05/2016 08:00 AM EDT

TRUMP DOUBLES DOWN ON DEPORTATION - In an interview with NBC "Nightly News" on Wednesday night, presumptive GOP nominee Donald Trump again said he would seek to deport 11 million undocumented immigrants currently living in the United States: "Yes, they're going to be deported. Look, we either have a country, or we don't. We have many illegals in the country. And we have to get them out, and go through a process, go through a system. And ones that have done well and have really achieved, we want to bring 'em back in." 

Some economists believe doing this, especially in a single year, would dramatically reduce GDP and send the U.S. into recession and possibly depression. This could happen because many of the jobs done by immigrants (in restaurants, hotels etc.) would go unfilled. And the spending these immigrants do would vanish. http://go.politicoemail.com/?qs=4d69a8c5f55ff957cf2ebe4dca3cf28aa6bbbe999361998f64d741ef2cce4ed4 Trump interview: http://go.politicoemail.com/?qs=4d69a8c5f55ff95788b4105084b1b51a32ef21154e5605e63818fa9e83d19850

THE FIRST 100 TRUMP DAYS - NYT's Patrick Healy: "He would start 'building a government based on relationships,' perhaps inviting the Republican leaders Paul D. Ryan and Mitch McConnell to escape the chilly Washington fall and schmooze at Mar-a-Lago over golf and two-pound lobsters. ... On Inauguration Day, he would go to a 'beautiful' gala ball or two, but focus mostly on rescinding Obama executive orders on immigration and calling up corporate executives to threaten punitive measures if they shift jobs out of the United States." 

"And by the end of his first 100 days as the nation's 45th leader, the wall with Mexico would be designed, the immigration ban on Muslims would be in place, the audit of the Federal Reserve would be underway and plans to repeal the Affordable Care Act would be in motion." http://go.politicoemail.com/?qs=4d69a8c5f55ff95762d6de2a65ea9e39d866945cbd89a38d11edc7c4c3a9af98

LET'S TAKE ON A FEW OF THOSE - Calling up and haranguing business leaders over relocations seems more like the hallmark of Democratic administration. Republicans usually focus on changing the incentives that often cause companies to relocate, especially a complex tax code with the highest corporate rate in the OECD at 39 percent which is also the third highest in the world behind only Puerto Rico, Chad and the UAE. We are also not aware of executive authority to unilaterally "punish" individual companies that move jobs abroad. 

Trump can certainly design a wall and try to convince Mexico to fund it. But Mexico is probably not going to do that and Congress is not likely to approve the spending it would take to build the wall. Congress is also not likely to approve a ban on Muslims immigrating to the U.S. (which the Supreme Court could also toss out as an unconstitutional religious test). And the Fed is already extensively audited. So starting a new audit would be redundant. Changing oversight of the Fed would also require an act of Congress. 

GRAPH OF THE DAY - "Over the last two days, more than 70 Republican governors, senators, representatives, officials and donors were contacted directly or through aides for comments about Mr. Trump. Only about 20 replied, with many aides saying their bosses did not want to take a stand yet; others begged off by saying the officials were traveling or 'too busy' to email, call or release a statement." http://go.politicoemail.com/?qs=4d69a8c5f55ff9576aa438bf172ef499adf01371303aaad36d180b011be421c5

M.M. SIDE NOTE - I talked to multiple members of Congress at the Milken Conference and most of them wanted to change the subject when the question of supporting Trump came up. One GOP senator suddenly had an urgent meeting to get to as soon as I started down that line of questioning. 

THE BIG IDEA: IS THE ECONOMY BETTER THAN WE THINK? - Wells Capital's Jim Paulsen: "The current economic recovery has been the slowest of the post-war era. Indeed, throughout this recovery, U.S. real GDP has hovered near the 'stall speed' of about 2 percent ... What if the pace of real GDP growth during this recovery was actually closer to 3 percent rather than sustaining near the Mendoza Line? 

"Official reports suggest U.S. productivity has grown at its slowest pace of any economic recovery in the post-war era. ... However, the real wage rate has been climbing steadily throughout this recovery suggesting much stronger productivity performance and thereby stronger real GDP growth. Moreover, the growth of investment, consumer spending and job creation during this recovery also imply that the pace of overall economic growth in this recovery has been stronger than officially reported." 

THE BIG IDEA II: WAGE GAINS PICKING UP PACE - Via Goldman Sachs: "While the large cumulative decline in labor market slack is broadly acknowledged, there remains a widespread belief that wages are not picking up. Looking across a range of indicators, we do see quite compelling evidence that wage growth has picked up although it remains below its estimated equilibrium level of 3-3.5 percent.

"Our preferred tool for summarizing wage growth is our composite GS wage tracker. ... [I]t has accelerated to a 2.5 percent rate, the fastest pace of the recovery so far. Our wage tracker continues to include the employment cost index, average hourly earnings, compensation per hour in the nonfarm business sector, and the Atlanta Fed's wage growth tracker based on the household survey" 

MM SIDENOTE II - MM spoke to a Fortune 500 CEO on Wednesday who said the GDP number is essentially meaningless and employment, wages, the health of consumer and corporate balance sheets all reflect an economy doing significantly better than the official growth statistics show. 

TRUMP WON'T SELF FUND FOR THE GENERAL - WSJ's Monica Langley and Rebecca Ballhaus: "Facing a prospective tab of more than $1 billion to finance a general-election run for the White House ... Trump reversed course Wednesday and said he would actively raise money to ensure his campaign has the resources to compete with Hillary Clinton's fundraising juggernaut. ... His campaign also is beginning to work with the [RNC] to set up a joint fundraising committee

"'I'll be putting up money, but won't be completely self-funding,' the presumptive Republican nominee said ... Mr. Trump ... added that he would create a 'world-class finance organization.' The campaign will tap his expansive personal Rolodex and a new base of supporters who aren't on party rolls, two Trump advisers said." http://go.politicoemail.com/?qs=4d69a8c5f55ff95760cf586229783e6a431b223633b8bafaff5ae3e2dff9675e

GOOD THURSDAY MORNING - A while back I said in this space that if Donald Trump won the GOP nomination I'd eat a bag of rusty nails. Now, I'm not actually going to eat nails (unless they are baked for me in some delicious form) because that would be very unhealthy. But boy was I wrong! Super, duper, totally and spectacularly wrong! 

Sure I have plenty of company in this regard. But still. I completely underestimated Trump's ability to manipulate the media and hijack the GOP. I pat myself on the back when I'm right but also try to cop to it when I'm wrong. So, mea culpa! ... Email me your non-booze related rusty nail recipes to [email-masked] and follow me on Twitter @morningmoneyben. 

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES - Jon Prior on a House investigation of the CFPB's arbitration rule proposal -- and to get Morning Money every day before 6 a.m.-- please contact Pro Services at (703) 341-4600 [email-masked]

HOW TRUMP BLACK-SWANNED POLITICS - BI's Myles Udland: "Back in 1998, the world of finance learned a very painful lesson: Models break and markets aren't efficient. And with the rise of Donald Trump from sideshow to presumptive Republican nominee, politics has learned the same lesson. ... [LTCM] was a hedge fund staffed by several Nobel Prize winners that possessed a supposedly unmatched grasp on how markets work. 

"The firm had the most sophisticated methods for exploiting any and all inefficiencies, millions and millions of times over. And it blew up. Spectacularly. ... Trump was not only written off as a marginal and unserious candidate because he himself is so unserious, but also because no outsider candidate with no establishment support and using only his money to fund his campaign could, the theory goes, win a nomination. ... [T]he party itself failed - the market failed to self-correct its inefficiency ... and thus the arguments undergirded by a belief in a coherent party structure inevitably fell apart." http://go.politicoemail.com/?qs=4d69a8c5f55ff957c60149fe60163cc37d49b095228a2d7da5f8edb6667f2d55

ASIA DOWN AGAIN - Reuters: "Asian shares slipped for a seventh straight session on Thursday as mixed economic data did nothing to assuage concerns about global growth, keeping sovereign bonds well supported as a hedge against deflation risks. The latest survey from China showed the service sector expanded at a slower pace in April, though firms did resume adding staff. ... Yields on 10-year U.S. Treasury notes were at their lowest in two weeks at 1.777 percent, a notable rally from last week's top of 1.94 percent." http://go.politicoemail.com/?qs=4d69a8c5f55ff9577b48046d314ad7b2daf5761989165f89cc0755bebe757c3e

PROGRESSIVE TO FED: STAY PUT - In a paper going out this a.m. from the Economic Policy Institute, Josh Bivens and Dean Baker argue that the Fed "should not use bubbles (real or imaginary) as an excuse to raise interest rates" http://go.politicoemail.com/?qs=4d69a8c5f55ff957497dc54c45fe436e3eb5a8137e9a824eccba1a101229335d

TRUMP BEGINS WAY BEHIND - POLITICO's Steven Shepard: "Trump begins the general-election phase of the campaign facing the prospect of a near-historic blowout defeat. And pollsters think he might be so far in the hole that he can't dig himself out. He's trailing Democrats Hillary Clinton and Bernie Sanders by margins not seen in a generation. Despite Trump's frequent claims to the contrary, he trails Clinton, his most likely opponent, in nearly every hypothetical general-election poll thus far - often by wide margins. 

"Overall, the HuffPost Pollster average of public polls gives Clinton a 7-point edge, 47 percent to 40 percent. A CNN/ORC International poll conducted just before Tuesday's Indiana primary found Clinton leading Trump by 13 points among registered voters nationally, 54 percent to 41 percent. ... One serious problem confronting Trump is the fact that he enters the general election more defined than the party's last nominee, Mitt Romney - meaning Trump has less room to grow in the polls and describe himself to voters on his own terms" http://go.politicoemail.com/?qs=4d69a8c5f55ff957206e276fdcaba0c7d509a78a52bb28e7f51974650f833788

ECB KILLS THE 500-EURO NOTE - NYT's Jack Ewing: "A suitcase stuffed full of cash may soon be worth a lot less. In a move aimed at hampering cash transactions by terrorists, drug dealers and money launderers, the European Central Bank ... announced an end to the 500-euro bank note, worth roughly $575. When it comes to moving money nefariously, the €500 note has been especially handy.

"It is a large denomination in a widely circulated and easily convertible currency. In the United States, the largest denomination is $100, after the Federal Reserve discontinued the $500, $1,000, $5,000 and $10,000 bills in 1969. Switzerland has a 1,000-franc note, worth about $1,050, but its supply is limited. The €500 note is also more compact and convenient for evading the gaze of authorities. The equivalent of $1 million, in that high euro note, weighs about five pounds and fits in a small bag" http://go.politicoemail.com/?qs=4d69a8c5f55ff957b2fce4eba6d2cb8e4c432b70132c85c988cb7f9260d482f4

BUSINESSES WORRIED BY TRUMP - FT's Barney Jopson: "Trump's emergence as the presumptive nominee of the traditional party of business has left uneasy companies facing a candidate with policies their own top lobbyist has labelled as 'stupid'. ... Business leaders usually depend on the Republican nominee to defend their interests, but mirroring the horror of mainstream party supporters, they have been aghast to see him assailing them as part of a failing establishment ... More than anything else, business has been troubled by Mr. Trump's protectionist threats to rip up trade deals and impose punitive tariffs on imports. 

"Mr. Trump has threatened to target US companies that move manufacturing overseas - such as Apple, Carrier, the air-conditioner maker, and Mondelez, the Oreo-maker - with financial penalties and presidential hectoring. ... On Wednesday a Chamber spokesperson said the group would not discuss Mr. Trump and his personality, but said companies confronted 'extraordinary political and geopolitical uncertainty" and added: 'Politicians should think twice before bashing business.'" http://go.politicoemail.com/?qs=4d69a8c5f55ff9578cb4e802c9d6a0d696fe6f6cd2f16c7e4afc51a85328bb9b

TRUMP EYES VEEPS - POLITICO's Hanna Trudo: "Trump could assign a new nickname to one of his past rivals: Veep. In an interview with Fox News' Bill O'Reilly on Wednesday night, the presumptive Republican presidential nominee said he would consider Ted Cruz, John Kasich and Marco Rubio for possible spots in his administration." http://go.politicoemail.com/?qs=4d69a8c5f55ff95782439cab675525a550a923c2c77cfbf07dd8dbe08285ed64

TREASURY COULD BUY BACK OLD DEBT - FT's Joe Rennison: "The US Treasury has debated a sweeping overhaul of the $13tn government bond market, including a proposal to buy back old debt as officials focus on the health of trading in a core asset of many global investment portfolios. The idea being discussed would involve retiring older Treasury debt, then replacing it with new benchmark securities, which are more widely traded ... 

"The overhaul, which would be designed to improve trading conditions, has only been quietly discussed and could go nowhere as current Treasury officials are likely to leave office after November's elections. But the topic is now also gaining ascendancy among industry participants, while discussion of extensive debt buybacks highlights an official focus on the structure and efficiency of the Treasury market after wild price swings stunned investors in October 2014" http://go.politicoemail.com/?qs=4d69a8c5f55ff9578e04b784e8c455f1fd267898f2b0cc7211cdd36a099a5404

GUNDLACH: GET READY FOR A DEBT-DRIVEN PRESIDENT TRUMP - Bloomberg: "Jeffrey Gundlach, chief investment officer of DoubleLine Capital, told attendees at the Sohn Investment Conference to prepare for a Donald Trump presidency. 'What's going to happen is you're going to get a Reagan response with Donald Trump,' Gundlach told the New York crowd. 

"'He promises a wall, he promises to bring jobs back, and he promises a lot of infrastructure spending. Let's face it: Trump is extremely comfortable with debt.' ... The money manager predicted that if Trump wins the White House, the ratio of public debt to gross domestic product will rise." http://go.politicoemail.com/?qs=4d69a8c5f55ff957a3fae4f53280fda5321ec6eb2e2fc2a8fc2985f0e367a256

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