Mueller report: Democrats slam Republicans for ‘stunning act of cynicism’ – live
Nancy Pelosi and Chuck Schumer called Mitch McConnell’s ‘case closed’ speech ‘a brazen violation of the oath we all take’ in a joint letter
Tom McCarthy in New York
Tue 7 May 2019 12.38 EDT First published on Tue 7 May 2019 09.00 EDT
Key events
12.38pm
Democrats call McConnell ‘case closed’ speech ‘a stunning act of political cynicism’
House speaker Nancy Pelosi and senate minority leader Chuck Schumer have issued a joint letter calling McConnell’s “case closed” speech this morning “a stunning act of political cynicism and a brazen violation of the oath we all take”:
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12.35pm
On Senate floor, Warren calls for impeachment
Warren brings her call for Trump’s impeachment from the campaign trail to the floor of the US senate:
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12.33pm
Senator Elizabeth Warren, also a 2020 candidate, as much as calls the president a criminal, speaking this morning on the Senate floor:
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12.30pm
As the White House stonewalls Congress in its effort to follow special counsel Robert Mueller’s road map to what many regard as Donald Trump’s criminal misconduct, Senator Kamala Harris, a candidate to unseat Trump in 2020, is preparing to introduce a law demanding transparency between the White House and attorney general on certain matters, she tells NBC’s Andrea Mitchell:
White House orders McGahn not to comply with subpoena
The White House has informed Congress that it has ordered former counsel Don McGahn not to hand over documents subpoenaed by a congressional committee investigating the findings of special counsel Robert Mueller.
In a letter to House judiciary committee chairman Jerrold Nadler, White House lawyer Pat Cipollone cited “significant Executive Branch confidentiality interests and executive privilege.”
McGahn in February 2018. Photograph: Jacquelyn Martin/AP
In a subpoena, Congress had requested documents from McGahn pertaining to 36 matters, including discrete episodes in the Russia affair ranging from the resignation of former national security adviser Michael Flynn to the June 9, 2016 Trump Tower meeting.
Cipollone said McGahn “does not have the legal right to disclose these documents to third persons.”
In a follow-up letter to Congress, a lawyer for McGahn said he intended to follow the White House direction. “Where co-equal branches of government are making contradictory demands on Mr McGahn concerning the same set of documents,” the letter reads, “the appropriate response for Mr McGahn is to maintain the status quo unless and until the committee and the executive branch can reach an accommodation.”
The order came a day after the Treasury Department denied a Congressional request for Donald Trump’s tax returns. Both document denials appeared to be subject to immediate legal challenge by Democrats.
Testimony by McGahn was central to Mueller’s record of conduct by Trump that critics from both parties, including hundreds of former federal prosecutors, have said amounted to felony obstruction of justice.
Updated at 11.33am EDT
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11.14am
Nixon, again:
Trump tax returns: Democrats to fight for release after Mnuchin refusal
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10.55am
After not tweeting all morning, the president is warming up for a planned meeting this afternoon with Republican senators to talk immigration:
Trump and Republican senators are scheduled to meet to discuss a new White House immigration plan, the AP reports:
White House counselor Kellyanne Conway describes the plan as “fairly comprehensive,” saying it aims to beef up border security and maximize merit-based immigration. Conway says it will cover other changes favored by Trump, including ending some family migration and visa lottery programs.
Conway says the plan could also touch on the plight of thousands who were brought to the U.S. illegally as children.
The proposals are being developed by senior adviser Jared Kushner, Trump’s son-in-law. A previous attempt by Trump to reach a comprehensive immigration deal with Congress collapsed.
Trump put immigration at the center of his presidential campaign, including a promise to build a wall on the U.S-Mexico border.
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10.51am
Wray: authorized surveillance is not ‘spying’
FBI Director Chris Wray says “spying” is not the term he would use for court-authorized surveillance conducted by the bureau, the Associated Press reports:
Wray was asked at a Senate Appropriations subcommittee hearing Tuesday about Attorney General William Barr’s assertion last month that the Trump campaign had been spied on during the 2016 election.
Asked if he believes that the FBI is involved in spying when it conducts surveillance with a warrant, Wray replied, “That’s not the term I would use.”
He acknowledged that different people use different language, but that the key question for him is “making sure it’s done by the book.”
Wray declined to discuss the FBI’s investigation into the Trump campaign because it’s part of an ongoing Justice Department inspector general investigation.
Having fun on the Hill back in April. Photograph: Carlos Barría/Reuters
In testimony before the Senate last week, Barr refused to back down from his use of the word “spying” to describe surveillance of the Trump campaign, then engaged in extensive secret contacts with Russian operatives.
“I’m not going to abjure the use of the word spying,” Barr said, noting he previously worked for the CIA. “I don’t think the word spying has any pejorative connotation at all.”
Updated at 10.52am EDT
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10.34am
Pompeo cancels talks with Merkel
Patrick Wintour
The US secretary of state, Mike Pompeo, has abruptly cancelled a long-established plan to hold talks with the German chancellor, Angela Merkel, in Berlin, citing unspecified “international security issues”.
The unusual last-minute schedule change follows brief talks between Pompeo and the Russian foreign minister, Sergei Lavrov, on the sidelines of an Arctic Council meeting in Finland on Monday.
Journalists travelling with Pompeo were not informed where they were going instead of Berlin, with Pompeo’s staff saying they may not be able to reveal the next destination until after they had left. Their plane has been tracked heading east.
Pompeo rang the German foreign minister, Heiko Maas, to explain the decision to drop his first meeting in Berlin as secretary of state, and promised to reschedule soon.
Norbert Röttgen, the chair of the German foreign affairs committee, described the cancellation as “very regrettable”, adding: “There is a lot to discuss about common challenges, but also about the internal relationship between Germany and the US. Even if there were unavoidable reasons for the cancellation, it unfortunately fits into the current climate in the relationship of the two governments.”
British and US sources said the Berlin cancellation did not mean talks planned for later on Wednesday between Pompeo, the UK prime minister, Theresa May, and the foreign secretary, Jeremy Hunt, would also be dropped.
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WORST CASE SCENARIO: Here’s what it looks like if Trump starts a trade war with China
Thomas Franck | @tomwfranck
Published 8 Hours Ago Updated 1 Hour Ago
CNBC.com
Wall Street’s top investment banks are preparing clients for the worst case scenario following President Trump’s surprise threat to hike tariffs on Chinese imports.
Jitters stemming from an escalated trade fight could be so bad that it could send the S&P 500 in a correction (10% slide), said UBS strategist Keith Parker.
“Fasten your seatbelt and don’t hold your breath,” Bank of America wrote Monday. “The latest escalation of the trade war was completely unexpected.”
All signs point to an escalation of the trade war between the United States and China, the world’s two-largest economies.
President Donald Trump tweeted Sunday that he would seek to increase tariffs to 25% on $200 billion worth of Chinese goods starting at 12:01 a.m. ET Friday due to China pulling back on trade promises. China is still sending a delegation to negotiate this week, but right now it looks like an all-out trade war is about to begin.
The worst-case outcome there, say experts, is a fight that sends the S&P 500 into a correction — which would be 10% off that key indicator. The companies likely to be hardest hit, say the experts, are likely Boeing, Apple and Caterpillar. They are all down about 5% this week already.
Then the pain ripples into the metals, mining and automobiles sectors.
“Fasten your seatbelt and don’t hold your breath,” Bank of America strategists wrote in a note this week. “The latest escalation of the trade war was completely unexpected, despite the strength of the economy and the markets.”
Stock market impact
Global equities have been on edge this week after Trump tweeted Sunday that the current 10% tax on $200 billion worth of Chinese goods will rise to 25% on Friday. The Dow Jones industrial average is down about 450 points this week, while the S&P 500 shed 1.9%.
“With risks having increased, it is worth asking where the largest asset market moves could occur if trade tensions were to rise further,” Keith Parker of UBS wrote Tuesday.
For its part, Bank of America Merrill Lynch said its bear case includes a U.S. tariff hike and a response from China on U.S.-made cars. Beijing could also decide to buy more soybeans from Brazil instead of the U.S., putting the pressure on farmers throughout the country.
An inflamed trade war would have sizable impacts on European and Asian markets, too.
Based on models complied by UBS’ Parker, the Stoxx 600 index — which tracks large-, mid- and small-capitalization companies among 17 European countries — could see another approximate slide of 7% if trade tensions worsen. The index is already 3.3% off its 52-week high.
WATCH: Jeremy Siegel: ‘Big blow to the markets’ if trade deal falls apart
Economic impact
He added that a full-blown trade war would shave off 45 basis points from global economic growth, while China’s GDP would take a hit of between 1.2% and 1.5%.
For his part, Morgan Stanley’s head of U.S. public policy strategy, Michael Zezas, wrote that while his base case expects China’s GDP growth to recover to 6.5% in the second and third quarters, a U.S. tariff hike could cut that estimate by 0.3 percentage point.
“While we expect a re-escalation would be temporary, as market weakness would help bring both sides back together, any escalation inherently augments uncertainty and further undercuts risk markets,” Zezas said.
Further, if China responds by raising its weighted tariffs on $60 billion of U.S. goods to 15% from the current 7%, that could reduce U.S. GDP by 0.1 percentage point.
“Negative surprises like a potential re-escalation of trade tensions can have a greater price impact than fundamentals might dictate,” Zezas told clients. “Near-term downside risk for Chinese equities onshore and offshore could be down 8% to 12%, arguably the biggest among major markets we cover.”
Will Fed step in?
To be sure, trade deliberations aren’t the only force at play in the markets. Any continued turbulence between the U.S. and China could be mediated by the Federal Reserve by lowering interest rates, suggested DataTrek co-founder Nick Colas.
“With US equity volatility looking to rise this week, markets will inevitably back into an ever-stronger view that Fed policy will have to shift,” Colas wrote Monday. “On the plus side, that should limit daily slides in stock prices. On the downside, it paints the Fed into an ever-tighter corner. And it will force equity investors to have higher conviction that a rate cut is coming than the central bank itself has just now.”
Fed Chair Jerome Powell said in March that weaker Chinese and European economies are undermining U.S. growth.
“Now we see a situation where the European economy has slowed substantially and so has the Chinese economy, although the European economy more,” he said at the time. “Just as strong global growth was a tail wind, weaker global growth can be a headwind to our economy.”
That Powell and other Fed members spent so much time in a recent meeting discussing softer growth in Asia and Europe could mean that the central bank could step in and lower borrowing costs if it felt the U.S. economy needed a boost.
Still, many Wall Street insiders had assumed that the relative calm in U.S.-Chinese trade relations to start the year would soon lead to a permanent resolution. Instead, Trump’s weekend remarks that trade progress is moving “too slowly” caught many — including UBS Washington strategist Chris Krueger — by surprise.
Paying homage to the doomed British cavalry charge of the 1850s, Krueger poked fun at the renewed barbs between the two nations in a portion of his market warning entitled “The Charge of the Lighthizer Brigade.”
Prior to U.S. Trade Representative Robert Lighthizer’s Monday comments, Cowen had assumed the “‘Great Man’ theory would hold, Trump and Xi would have the best conversation, talks would continue, and Trump would put tariffs on hold for ~30 days,” Krueger wrote.
Lighthizer told reporters Monday that the planned tariff increased will take effect at 12:01 a.m. on Friday, but added that Chinese Vice Premier Liu He is expected to join a trade delegation in the United States this week.
“This was Trump acting out on a rainy Sunday in Washington with nothing on the public schedule,” he added. “To paraphrase Lenin: there are decades where nothing happens and there are weeks when decades happen…and then there is a single week in the Trump Presidency. What a time to be alive.”
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