Business

USMCA Replaces NAFTA as Trump Delivers on One of Biggest Promises

The U.S.-Mexico-Canada (USMCA) trade agreement formally replaced the North American Free Trade Agreement (NAFTA) on Wednesday, meaning that President Donald Trump has now officially completed one of the biggest promises of his insurgent 2016 campaign. Commemorating the occasion, President Trump issued a lengthy statement laying out the success: “When I ran for President, I made a solemn promise to the American people that I would end the job-killing failure called the North American Free Trade Agreement (NAFTA) and replace it with a better deal for our workers, farmers, ranchers, and businesses—the men and women of Main Street who built the most prosperous and equitable economy in human history,” Trump said. “Today, with NAFTA ending forever and the United States-Mexico-Canada Agreement (USMCA) entering into full force, our grateful Nation pays tribute to America’s workers and celebrates their ability to overcome decades of bad deals and failed policies. The USMCA is the largest, fairest, and most balanced trade agreement ever negotiated and contains innovative provisions to help grow the economy and support American jobs. It is a tremendous victory for our manufacturers and autoworkers, meaning more cars and trucks will be produced in the United States. The USMCA is also a historic breakthrough for American agriculture. Canada will provide greater access for American dairy products, poultry, and eggs, and finally give fair treatment to American-grown wheat. In addition, the USMCA includes groundbreaking provisions to address digital trade, services, small business, and more, which will protect America’s competitive edge in technology and innovation.” Trump’s statement continued by thanking Congress for approving the deal, which it did with huge bipartisan majorities in both chambers. The USMCA passed the U.S. Senate last year 89-10, a sign of massive bipartisan support. Then, later, it passed the U.S. House 385-41, another strong bipartisan showing. Trump said: ” The strong and overwhelming support the USMCA received from both parties in Congress—as well as from labor unions, business organizations, and champions of agriculture—shows just how much this trade agreement will benefit all Americans. Hundreds of thousands of jobs will be added to the economy,” Trump said. “The United States appreciates the efforts of our partners in Mexico and Canada to ensure that North America is strengthening its economic ties while working to combat the coronavirus pandemic. To mark this historic achievement, I look forward to welcoming President Andres Manuel Lopez Obrador of Mexico to the White House on July 8, 2020, to continue our important dialogue on trade, health, and other issues central to our regional prosperity and security.” Kayleigh McEnany, the White House press secretary, issued her own statement as wel, praising the jobs that will be created as a result of the USMCA going into effect. She said: ” Today, the United States-Mexico-Canada Agreement (USMCA) will go into effect. Thanks to the bold leadership of President Trump, the agreement will mean stronger economic growth, more jobs for American workers, and fairer trade for our country. President Trump has delivered for American manufacturers, farmers, businesses, and workers. The agreement will drive job creation and includes the strongest, most advanced, and comprehensive set of labor provisions of any United States trade agreement. American farmers will have access to fairer markets in Canada and Mexico, opening up more opportunities to export their goods. USMCA will strengthen American manufacturing, including incentivizing investment in high paying auto manufacturing jobs here in the United States. Just as promised, President Trump is replacing the disastrous North American Free Trade Agreement, which drove American jobs overseas for years. USMCA is a fair deal for American workers and finally brings our trade relationship with Canada and Mexico into the 21st century.” The International Trade Commission estimates that the USMCA will create between 176,000 and 589,000 jobs in America. In automotive manufacturing alone, the U.S. Trade Representative’s office estimates, there will be another $34 billion in investments and 76,000 new jobs for Americans. The U.S. Trade Representative’s office also says that several restrictions from Canada on American dairy, wheat, and wine producers end as a result of USMCA as well.

While not perfect, this is definitely a BIG step in the right direction.  Yes, it’s a big win for President Trump in this election year.  But, more importantly, it’s a big win for American workers and American jobs.  Excellent!!      🙂

Stocks Rise At End of Best Quarter in Decades

Stocks ended June with another move higher, capping the best quarter for the major indexes in decades. The Dow Jones Industrial Average ended up 217 points, 0.85 percent higher. The S&P 500 jumped 1.5 percent. The Nasdaq Composite climbed 1.87 percent. The Dow ended the second quarter with a 17.8 percent gain, the biggest quarterly gain since 1987. The S&P 500 is up nearly 20 percent, the best quarter since 1998. Nasdaq Composite is up 30.6 percent, the best quarter since 1999. The yield on the 10-year ticked up slightly to 0.658 percent, 0.022 points higher. Oil slipped slightly lower, with West Texas Intermediate crude closing at $39.38 a gallon, 0.86 percent lower, and the global standard Brent Crude falling 1.37 percent. All 11 sectors of the S&P were up for the day. Energy was the best performing sector, followed by health care and consumer discretionary. Utilities, industrials, and consumer staples–sectors that tend to outperform when investors seek to reduce risk–were the laggards.

Definitely some much-needed good news!     🙂

Opinion/Analysis: Carbon tax is a bad idea that would hurt our economy and destroy jobs

At a time when America’s economy has been crippled by shutdowns caused by the coronavirus pandemic and 45 million Americans have lost their jobs, we need major economic stimulus and employment programs to put Americans back to work. The absolute last thing our country needs is a new tax that would slow our economic recovery and hiring. But environmental zealots have never let facts get in the way of their radical policies to restructure our entire economy to be “green” – so why start now? Disregarding America’s worst economic crisis since the Great Depression, the green crusaders are pressing on with their dream of taxing carbon dioxide emissions, ostensibly to slow climate change. Lately, environmentalists have taken to calling their carbon tax a “fee” – as if changing the name means it won’t be taking money out of the pockets of individuals and businesses. This is absurd. It makes as much sense as calling robbery “income redistribution.” For decades, the environmental movement has sought to make America green. President Barack Obama and Vice President Joe Biden tried to regulate a green America into being by offering billions of taxpayer dollars to green companies. And the two used the Environmental Protection Agency to impose costly and unnecessary regulations on American oil, natural gas and coal companies – forcing up the price of the energy we all rely on. Growing up in the 1980s during the presidency of Ronald Reagan, I have imprinted in my soul the belief that taxes and government programs are never a solution. Reagan taught us the nine most frightening words in the English language: “I’m from the government and I’m here to help.” Government proposals aimed at improving life will usually make it worse. An organization seeking creation of a carbon tax called the Climate Leadership Council has even enlisted prominent Republicans in its ranks, including former Secretaries of State and Treasury James Baker III and George Schultz. While both these man are prominent figures who command respect and gratitude for their service to our nation, neither is an environmental or energy expert. They are simply wrong in seeking approval of a destructive carbon tax. I also criticized former New York City Mayor Michael Blomberg during his short-lived campaign for the Democratic presidential nomination for his belief that taxes should be used to dictate behavior. Whether this idea – and the carbon dioxide emissions tax it supports – is backed by a Republican or Democrat, it is bad policy on many counts. Keep in mind that all of us (and all animals) emit carbon dioxide every time we exhale. So we are not talking about toxic fumes coming out of factory smokestacks here – carbon dioxide has been part of our natural world since before human beings inhabited Earth. A tax on carbon dioxide emissions presumably wouldn’t be levied on all us whenever we exhale. Even the most fanatical environmentalist isn’t crazy enough to try that. But it would apply to everything that uses fossil fuels for energy – cars, trucks, trains, airplanes, most electric power plants, factories and more. That would translate into higher costs to fill up your vehicle’s fuel tank, heat and cool your home and keep the lights on, and for purchases of just about everything you buy. Factories, farmers and stores would all have to pass the carbon tax on to consumers. Beef prices have doubled in the past month because of the coronavirus pandemic. If they had doubled to pay for a carbon tax would Americans rejoice in a moral victory or just be burdened by the higher costs? The Climate Leadership Council claims the money that these taxes generate will be returned to the American people through dividend checks. The group claims we’ll pay more upfront, but we’ll get the money back from the Internal Revenue Service in the end. This proposal is a joke. This is the U.S. government after all, and we all know how well it manages money. It does a great job taking our money – but not in wisely spending it. President Reagan knew this. At the end of his presidency he warned us: “You can’t be for big government, big taxes, and big bureaucracy and still be for the little guy.” I watched that speech live on TV. I was 13. Carbon dioxide emissions are a global issue. The Paris Climate Accord – the international agreement aimed at reducing carbon emissions – recognizes this. But China emits twice as much carbon dioxide as the United States, yet has no plans to reduce emissions – let alone adopt a carbon tax for some global benefit. China doesn’t care about the rest of the world; we are still in the midst of a coronavirus pandemic because the communist country withheld the truth of the outbreak. In addition to China, most other countries are also not meeting the Paris Climate Accord mandates – among them major carbon dioxide emitters like India, Iran, Iraq and Saudi Arabia Russia, the world’s fourth-largest carbon dioxide emitter, made no commitment at all. We can safely assume that nation will not impose a carbon tax on itself. The very reason President Trump abandoned the Paris Climate Accord was because he wisely understood it makes no sense to punish Americans with a costly new tax while some of the world’s biggest emitters take no action. China would certainly applaud America for imposing a carbon tax on ourselves. Since 2000, almost 4 million American jobs have been lost to China. Why? U.S. policies made China more competitive and more attractive to businesses. Corporations seek only to increase their profit margins. A carbon tax would send businesses a signal: ship even more American jobs to foreign countries. Corporations would go elsewhere and do so without any second thoughts. They’ve done it before. It took 28 years for the White House to have an occupant as skeptical of big government and as aggressive in cutting taxes and keeping jobs in America as Reagan, but we have one now. Will that continue? Biden – the presumptive Democratic presidential nominee – is ahead in the polls. As president, he would punish the use of oil, natural gas and coal. This would not spur innovation nor would it reduce carbon dioxide emissions. It would just make life more expensive and throw even more Americans out of work. As President Trump pointed out in his speech to his rally in Tulsa Saturday night, Biden is relying on socialist Rep. Alexandria Ocasio-Cortez of New York – the sponsor of the extremist Green New Deal – to advise him on energy policy, naming her as co-chair of his energy task force. This is like appointing a pacifist to head a task force on national defense, or a vegan to head a task force on policy toward the meat industry. It spells disaster for the energy we all need. A carbon tax is anti-freedom, anti-growth, and thoroughly anti-Reagan. In his 1981 inaugural address, President Reagan told us “government is not the solution to our problem; government is the problem.” He was right then and his view remains right today.

Exactly right!  Thanks to Daniel Turner for that excellent piece.  Daniel is the executive director of Power The Future, a national nonprofit organization that advocates for American energy jobs. Follow him on Twitter @DanielTurnerPTF

Dow reclaims 27K, Nasdaq nears record as jobs, economy recover

Investors piled into U.S. equities after a surprise jobs report showed the U.S. economy is seeing a faster than expected rebound from its COVID-19 lockdowns. The Dow Jones Industrial Average surged 829 points or 3.15 percent, while the S&P 500 jumped 2.62 percent. New economy stocks helped the tech-heavy Nasdaq touch an intraday all-time high of 9,842, but the index closed just under that level with a gain of 2.06 percent. Amazon, Microsoft and Apple, which hit a fresh record, all contributed to the gains lifting the Nasdaq 100 Index. The U.S. economy added 2.51 million jobs in May as the unemployment rate fell to 13.3 percent, according to a report released Friday morning by the Labor Department. Wall Street analysts surveyed by Refinitv were expecting the economy to lose 8 million jobs as the unemployment rate spiked to 19.8 percent. President Trump, who posted an enthusiastic tweet afterward, praised the strength of the U.S. economy in a Rose Garden news conference and said 2021 would be its best year yet. That would also be the first year of Trump’s second term, should he fend off Democratic challenger and former Vice President Joe Biden to win re-election in November. “We’ll go back to having the greatest economy anywhere in the world, nowhere close,” Trump promised. The labor market may see further gains in the month of June after New York Gov. Andrew Cuomo on Thursday said New York City will begin its Phase 1 reopening on Monday, allowing construction, manufacturing and limited retail services to restart. Looking at stocks, Dow components Goldman Sachs and Home Depot helped drive the gains. Air carriers continued to soar after United Airlines announced plans to reinstate flights to 150 destinations beginning in July. Rival American Airlines announced on Thursday it would increase its flight schedule to 55 percent capacity. Hertz shares surged on the heels of the positive travel updates. The car-rental company filed for bankruptcy on May 22. Other travel-related names, including cruise operators, hotels and booking sites, also outperformed. In retail, embattled department store J.C. Penney is closing 154 sites in 38 states as it reorganizes its business after filing for Chapter 11 bankruptcy last month. On the earnings front, Gap lost nearly $1 billion during the three months through March as the COVID-19 pandemic forced the company to shutter stores. The retailer said 55 percent of its locations have reopened and online sales are strong. Messaging platform Slack, meanwhile, was under pressure as first-quarter revenue growth was little changed despite the majority of Americans working from home. West Texas Intermediate crude oil jumped 5.72 percent to $39.55 per barrel after OPEC and its allies neared a deal to extend production cuts through July. The energy component surged 11 percent this week. Gold fell 2.48 percent to $1,676.20 an ounce on Friday and lost 3.49 percent for the week. U.S. Treasurys remained under pressure, with selling driving the yield on the 10-year note up to 0.903 percent. In Europe, France’s CAC advanced 3.71 percent, Germany’s DAX climbed 3.36 percent and Britain’s FTSE rose 2.25 percent. Asian markets rallied across the board, with Hong Kong’s Hang Seng up 1.66 percent, while Japan’s Nikkei and China’s Shanghai Composite gained 0.74 percent and 0.39 percent, respectively.

Incredibly great news!!  Let’s pray this continues!!       🙂

Dow jumps 527 points with economic rebound in focus

U.S. equity markets secured a fourth straight day of gains Wednesday as investors received better-than-expected news on the jobs front and as the riots and looting that gripped America over the past week showed signs of abating. The Dow Jones Industrial Average climbed 527 points, or 2.05 percent closing above 26,000, a key psychological level. The S&P 500 and the Nasdaq Composite gained 1.36 percent and 0.78 percent, respectively. Financials, industrials and energy stocks helped drive the gains. West Texas Intermediate crude oil gained 1.3 percent to $37.29 a barrel. Protests following the death of George Floyd continued across the country on Tuesday evening, but there were fewer reports of violence than on previous nights. Meanwhile, the ADP Employment Report released Wednesday morning showed the private sector lost 2.7 million workers in May versus the 9 million job losses that analysts surveyed by Refinitiv were expecting. The report showed 20 million job losses in April. On Friday, the May jobs report will be released. Looking at stocks, gun-related names that had seen big gains over the past few sessions cooled off. Heavily beaten-down airline stocks continued their recent grind higher while cruise operators turned lower. Elsewhere, Tiffany & Co. shares were in focus after fashion trade publication Women’s Wear Daily reported board members of French luxury-goods maker LVMH expressed concerns about its acquisition of the jeweler. Coty and Kim Kardashian West are in talks to collaborate on certain beauty products. The company paid $600 million for a 51 percent stake Kylie Cosmetics, owned by Kardashian West’s half-sister Kylie Jenner, in November. On the earnings front, Zoom Video Communications reported better-than-expected earnings and revenue as the company benefitted from the increase in telecommuting caused by the COVID-19 pandemic. The company raised its full-year revenue outlook to between $1.78 billion and $1.8 billion, nearly double its previous forecast of $915 million. Campbell Soup saw first-quarter earnings surge 31 percent as consumers stocked up on canned soup and other non-perishable items to ride out the COVID-19 pandemic from home. Canada Goose warned it expects “negligible” revenue in its fiscal first quarter, a time when online sales reach a low point for the year, due to the uncertainty caused by COVID-19. The company’s fourth-quarter revenue outpaced Wall Street estimates. Looking at metals, gold fell 1.59 percent to $1,697.80 an ounce and U.S. Treasurys were under pressure, pushing the yield on the 10-year note up to 0.679 percent. Germany’s DAX led the advance in Europe, up 3.88 percent, while Britain’s FTSE and France’s CAC were higher by 2.61 percent and 3.36 percent, respectively. Markets gained across Asia with Hong Kong’s Hang Seng up 1.37 percent, Japan’s Nikkei higher by 1.29 percent and China’s Shanghai Composite edging up 0.07 percent.

Much needed good news!  Let’s pray it continues…

Stocks jump for month as oil posts record gain

U.S. equity markets curbed the bulk of their losses Friday after President Trump announced a new wave of crackdown efforts on China, but stopped short of instituting new sanctions or upending the trade deal between the two countries. The Nasdaq led the way, rising 1.29 percent, while the S&P 500 added 0.48 percent. The Dow Jones Industrial Average slipped fractionally, closing down more than 17 points. All three of the major averages posted weekly and monthly gains. Trump’s new initiatives include limiting some foreign nationals entering the U.S., a working financial markets group to examine Chinese companies listed on U.S. exchanges and the termination of America’s relationship with the World Health Organization. Meanwhile, at least nine states and Washington D.C. eased lockdown restrictions on Friday, with Illinois allowing outdoor seating at bars and restaurants and Michigan letting nonessential medical procedures resume. Washington will now permit outdoor seating at restaurants and the reopening of barber shops as well as curbside pickup and delivery for non-essential retail. Looking at stocks, China-based companies were in focus and social-media companies remained under a watchful eye after the president on Thursday issued an executive order that targets a liability shield, given to tech companies by Congress, if they “engage in censoring or any political conduct.” Trump lashed out against Twitter on Friday, saying the company is “doing nothing about all of the lies & propaganda being put out by China or the Radical Left Democrat Party” while targeting conservatives. Tesla CEO Elon Musk has the option to buy more than 1.6 million shares at $350.02 each — less than half their current price — after the stock’s performance exceeded targets set by the board of directors. Exercising that right would net Musk nearly $800 million. In the tech industry, Dow component Cisco Systems acquired the cybersecurity software firm Thousand Eyes for about $1 billion, according to Bloomberg. On the earnings front, Costco reported mixed fiscal third-quarter results and said global comparable sales fell in April as a result of stay-at-home orders, social distancing and the temporary closure of some locations. Nordstrom said first-quarter sales slumped 40 percent from a year ago as COVID-19 led to the temporary closure of its stores. The company expects all of its stores to be reopened by the end of June. Commodities posted monthly gains with oil rising over 88 percent to $35.49 per barrel, the biggest monthly gain on record, while gold rose to $1,736.90 an ounce. U.S. Treasurys rallied, driving down the yield on the 10-year note to 0.65 percent. European markets were lower across the board, with Britain’s FTSE down 2.29 percent, Germany’s DAX tumbling 1.65 percent and France’s CAC falling 1.59 percent. In Asia, Hong Kong’s Hang Seng slid 0.74 percent and Japan’s Nikkei lost 0.18 percent while China’s Shanghai Composite added 0.22 percent.

Stocks surge as reopening America gathers steam

U.S. equity markets rallied sharply Wednesday morning as investor optimism grew over plans to reopen America. The Dow Jones Industrial Average gained 348 points, or 1.39 percent, in the opening minutes of trading while the S&P 500 and the Nasdaq Composite rose 0.95 percent and 0.12 percent, respectively. The benchmark S&P 500 ended Tuesday’s session 12 percent below its all-time high set in February while the Nasdaq finished within 5 percent of its peak. At least two states eased lockdown restrictions, with Colorado allowing limited in-person dining at restaurants and Minnesota letting places of worship open to 25 percent capacity. Additionally, Kansas and Nevada on Tuesday evening announced further relaxing of their restrictions. The social and economic momentum boosted airlines, cruise operators and other travel-related names for a second straight day. Meanwhile, social-media companies were in focus after Twitter added a “fact check” of President Trump’s tweets for the first time on Tuesday evening. The president responded by saying, on Twitter, that the company is “stifling free speech” and that he “won’t allow it to happen.” Dow component Boeing will lay off 2,500 workers this week, as the jet maker works toward its previously announced goal of reducing its labor force by 10 percent. On the earnings front, Ralph Lauren lost $249 million in its fiscal fourth-quarter as the COVID-19 pandemic and Hong Kong protests had an adverse impact on business. While the apparel-maker’s loss was bigger than Wall Street analysts expected, sales of $1.27 billion outpaced estimates. Domino’s Pizza reported U.S. same-store sales surged 14 percent in the months of April and May. International sales edged up 1 percent over the same period. Rival pizza chain Papa John’s reported North American same-store sales soared a record 33.5 percent in May. Global revenue climbed 7 percent. Elsewhere, electric-vehicle maker Tesla announced price reductions for vehicles in North America and China as demand waned in the wake of COVID-19. The size of the price reductions are not yet known. Chinese rival Nio was upgraded to neutral and its price target raised to $3.50 from $2 at J.P. Morgan, ahead of the company’s quarterly earnings report, which is expected on Thursday. West Texas Intermediate crude oil slid 1.25 percent to $33.92 per barrel and gold sank 1.39 percent to $1,704 an ounce. U.S. Treasurys fell, pushing the yield on the 10-year note up 2 basis points to 0.718 percent. In Europe, France’s CAC gained 2.09 percent, Germany’s DAX climbed 1.68 percent and Britain’s FTSE rallied 1.45 percent. Asian markets ended mixed, with Japan’s Nikkei up 0.7 percent while China’s Shanghai Composite and Hong Kong’s Hang Seng fell 0.34 percent and 0.36 percent, respectively.

This is the second day in a row of great news on Wall Street!  Let’s hope the Great American Comeback is underway!!      🙂

Rental car giant Hertz files for bankruptcy

Hertz Global Holdings Inc., one of the nation’s largest car-rental companies, filed for bankruptcy protection Friday, saddled with about $19 billion in debt and nearly 700,000 vehicles that have been largely idled because of the coronavirus. The Estero, Fla.-based company entered chapter 11 proceedings in the U.S. Bankruptcy Court in Wilmington, Del., hoping to survive a drop-off in-ground traffic from the pandemic and avoid a forced liquidation of its vehicle fleet. The company’s collapse marks one of the highest-profile corporate defaults stemming from the pandemic’s impact on air and ground travel, though Hertz also had challenges before the current economic crisis. Even before the Covid-19 outbreak, Hertz had been struggling with competition from peers including Enterprise Holdings Inc. and Avis Budget Group Inc., as well as from ride-hailing services such as Uber Technologies Inc. and Lyft Inc. The company lost some $58 million last year, its fourth consecutive annual net loss. But Hertz’s business was hammered by the onset of the coronavirus, as people world-wide bunkered in at home and global travel shriveled up. Going forward, as businesses adapt by conducting meetings remotely, business travel may not return to pre-pandemic levels, according to bankers and analysts who follow Hertz. Hertz didn’t reach a deal with creditors before entering chapter 11, heightening the risk of a full liquidation of the fleet, although the company and investors have several weeks to work out an agreement avoiding that outcome, people familiar with the matter said. Hertz has spent years trying to restructure its business, and has blown through four chief executives in less than a decade. Most recently, former Chief Executive Kathryn Marinello was replaced Monday by Paul Stone, who previously served as the company’s executive vice president and chief retail operations officer for North America. Hertz has also had a debt problem that can be traced back to a 2005 leveraged buyout by private-equity firms. Founded in Chicago in 1918 and originally known as Rent-a-Car Inc., Hertz opened its first airport car-rental facility at Midway Airport in 1932. The company’s owners have included RCA Corp. and later Ford Motor Co., which sold Hertz to a buyout group led by Clayton Dubilier & Rice in 2005 for $5.6 billion. The company went public in 2006, and activist investor Carl Icahn, who started acquiring Hertz shares in 2014, now owns more than one-third of the company and has placed three of his representatives on the board. The pandemic has diminished automotive traffic in the U.S., squelched car sales and cut into rental reservations at Hertz. The Wall Street Journal reported in early May that Hertz, the nation’s second-largest rental-car company by fleet size behind Enterprise, was preparing for a bankruptcy filing. The bankruptcy is expected to be complex given the company’s vast debt and corporate structure, which includes $14.4 billion of vehicle-backed bonds at subsidiaries that aren’t part of the chapter 11 filing. Like Avis and some other rental car companies, Hertz doesn’t own its vehicles. The company leases its rental-car fleet, about 770,000 vehicles in total, from separate financing subsidiaries. The lease payments are earmarked for investors that own bonds backed by the fleet. Now that Hertz has filed for bankruptcy, investors with rights to the vehicle fleet have to wait for 60 days before they can foreclose on and sell the cars. Hertz and its creditors will likely aim to prevent a complete liquidation and strike a deal to downsize the fleet while keeping some vehicles in operation, said people familiar with the matter. With the $14.4 billion in vehicle-finance bonds so widely held—by pension funds, mutual funds and structured credit funds—the company has faced difficulty coordinating with bondholders, people familiar with the matter said. Rental-car companies play an important role in supplying newer models to the used-vehicle market. Hertz also is a major customer for U.S. automakers, purchasing about half of its fleet from General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV in 2019, according to a financial filing. Analysts feared that Hertz could be forced to sell part or all of its fleet into an unusually weak market. But the possible liquidation would come at a time when demand for used vehicles is rising slightly, and pricing in the market is showing signs of recovery after hitting historic lows in April. “Any ripple effect will be less than it was six weeks ago,” said Zo Rahim, an analyst for Cox Automotive, which owns vehicle auction operator Manheim Inc.

Trump announces $16 billion in direct payments for farmers hurt by pandemic ’caused by China’

President Trump on Tuesday announced $16 billion in direct payments for farmers and ranchers to compensate them for lost business from the coronavirus outbreak that he said was “caused by China.” During an event at the White House, Mr. Trump also directed Agriculture Secretary Sonny Perdue to pursue cutting off trade deals with countries that ship beef cattle to the U.S. He said the U.S. beef industry is “very self-sufficient.” The direct payments, funded by the $2.2 trillion CARES Act that was approved in March and a commodity credit law, follows farm bailouts totaling $28 billion in 2018 and 2019. Those earlier payments compensated growers and ranchers for losses from tariffs imposed by China during the administration’s trade war with Beijing. “Now we’re standing strong with our farmers and ranchers once again,” Mr. Trump said during an announcement at the White House. Growers lost much of their customer base when restaurants were ordered to close during the outbreak. Much of the money will be used to purchase food to supply food banks around the country. The president said of the pandemic, “It should have never happened. You know that, I know that. The people that caused the problem, they know that, too.” “These payments will compensate farmers for losses related to the global pandemic caused by China,” Mr. Trump said. “We’ll be providing billions of dollars for corn, cotton, soybean and specialty-crop farmers, cattle ranchers, just about every category I can think of.” Robert Mills Jr., owner of Briar View Farms Inc. in southern Virginia, said the money is not a bailout. “We always expect the unexpected, and we didn’t expect this [pandemic],” he said. “It’s not a rescue program. It’s going to help these farm families be able to make good, wise financial decisions. This country relies on what these farmers and ranchers do every day.”

It sure does!  What was also left out of this article from today’s announcements at the White House was Ivanka Trump’s comments about efforts to package up food into “20-25 pound boxes” that would otherwise be going to waste, and is now going to food banks to give to those in need.  As has already been mentioned (see previous article above), it is an effort that the First Daughter has been speerheading, and something she deserves credit for.

Texas fears losing oil-rich lands in Chinese takeover of weakened energy companies

Plunging prices have wreaked havoc on Texas oil companies struggling to avoid a wave of bankruptcies that has ravished the industry during the past five years, leaving them ripe takeover targets for rivals from China and elsewhere. Ninety-eight exploration and production companies in Texas with $75.7 billion of debt filed for bankruptcy from 2015 through 2020, according to the international law firm Haynes and Boone. That number is expected to grow even larger after West Texas Intermediate crude oil prices plunged 52 percent this year as stay-at-home orders designed to slow the spread of COVID-19 wiped out 30 million barrels per day of demand while Saudi Arabia and Russia ramped up production amid a price war. The companies’ vulnerability to foreign buyers raises the risk that the U.S. might lose control over valuable oil-producing lands in the Permian Basin, a swath of land in western Texas and southeastern New Mexico that helped the country become the world’s largest crude producer amid a shale boom. “We have discovered this volume of natural gas and oil that is more than any time in history,” said Wayne Christian, commissioner of the Texas Railroad Commission — the agency that regulates the state’s oil and gas industries. “I believe it’s a national security concern to allow unfriendly foreign countries to come in and buy land and oil in Texas and the United States,” he told FOX Business. A 2018 oil discovery in the Permian uncovered 46.3 billion barrels of crude, 281 trillion cubic feet of gas, and 20 billion barrels of natural gas liquids, according to an assessment by the U.S. Geological Survey. The discovery effectively doubled America’s oil and gas reserves and puts the country on a path for years of energy independence. A separate estimate from RS Energy Group found the discovery could be as large as 230 billion barrels. The oil industry is critical for the Texas economy, accounting for $16.3 billion of revenue in 2019 and about 10 percent of the state’s labor force. An oil worker makes about $132,000 a year, 1.6 times the state’s average wage. Exxon Mobil, Chevron, and BP are the major players in the industry, but there are also hundreds of companies that produce less than 1,000 barrels of oil per day. The scope of the industry reaches far beyond the oil and gas producers, also including midstream companies that operate pipelines, service rigs and more. To help smaller companies navigate the industry’s crisis, Christian said Texas is working on measures that include cutting regulations and permit costs. When the industry is prospering, such firms get bought out at a premium by the big international companies such as Exxon Mobil, leaving money in Texas and giving workers bonuses, Christian said. When markets sour, however, the firms can be snapped up at fire-sale prices. “The federal government should watch very carefully and raise their standards on who can buy,” Christian said. China and other countries are already “starting to look for deals,” said Malcolm McNeil, international practice co-leader at the law firm Arent Fox. He said that while recent volatility in oil prices has left some Chinese companies “cash poor,” those that have money are “going to be seeking bargains.” The uncertainty surrounding the outcome of the 2020 election will cause Chinese firms to “explore deals now, but wait to bargain-hunt until companies are really hurting” and there is more clarity on the political front, he added. Should President Trump win re-election, prospective acquisitions might be less appealing to Chinese buyers, given his administration’s prickly relationship with Beijing and efforts to limit Chinese control of vital U.S. resources. Any oil deal, unless it’s rudimentary, will likely involve the Committee on Foreign Investment in the United States (CFIUS), which would require arduous reviews. U.S. law prohibits foreign companies from directly holding many oil, gas and mineral leases, but does allow them to form U.S. corporations to make purchases. Chinese acquisitions of U.S. oil and gas companies have faced increased scrutiny since China National Offshore Oil Corporation in 2005 attempted a takeover of the El Segundo, California-based explorer Unocal, now a subsidiary of Chevron, causing public uproar. While that deal was blocked, the Chinese firm Yantai Xinchao Industry Co. in 2015 received CFIUS approval to forge ahead with a $1.3 billion purchase of oil assets in the Permian Basin owned by Tall City Exploration and Plymouth Petroleum. Stewart Glickman, an energy analyst at New York-based CFRA Research, told FOX Business that barring a “rapid V-shaped recovery in oil prices,” there are going to be a “fair number of new Chapter 11 filings.” While Texas is an attractive investment destination for companies from China and elsewhere, it’s difficult for them to “swoop in” and start acquiring acreage “like a vulture feasting on a carcass,” he said. Though companies from China, Saudi Arabia and elsewhere may have experience in oil and gas, shale is a “U.S. phenomenon,” Glickman noted. A more plausible way for foreign companies to gain access to the rock, according to Glickman, is to enter a joint venture that gives them financial exposure but not operational exposure. He added that such a route would also be the way to go for those seeking to gain access through midstream and downstream businesses. But while the tactic might help eager overseas buyers reach lucrative deals, such developments are precisely what Christian, the Texas railroad commissioner, hopes to avoid. “I don’t want to wind up five years from now with, all of a sudden, some foreign country shutting down production in Texas because they own it, and prefer buying from their own reserves overseas,” Christian said. “I think that would be inefficient use, and I would think it would threaten national security.”