U.S. economy slows in second quarter; consumer spending accelerates

FILE PHOTO: Shoppers carry bags of purchased merchandise at the King of Prussia Mall in King of Prussia, Pennsylvania, U.S., December 8, 2018. REUTERS/Mark Makela/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. economic growth slowed less than expected in the second quarter as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build, which could further allay concerns about the economy’s health.

The fairly upbeat report from the Commerce Department on Friday will probably not deter the Federal Reserve from cutting interest rates next Wednesday for the first time in a decade, given rising risks to the economy’s outlook, especially from a trade war between the United States and China.

Despite the better-than-expected GDP reading, business investment contracted for the first time in more than three years and housing contracted for a sixth straight quarter. Fed Chairman Jerome Powell early this month flagged business investment and housing as areas of weakness in the economy.

But robust consumer spending, together with a strong labor market, further diminish expectations of a 50 basis point rate cut and could raise doubts about further monetary policy easing this year.

Gross domestic product increased at a 2.1% annualized rate in the second quarter, the government said. The economy grew at an unrevised 3.1% pace in the January-March quarter. Economists polled by Reuters had forecast GDP increasing at a 1.8% rate in the second quarter.

The economy has expanded for 10 years, the longest run in history. Activity is slowing largely as the stimulus from the White House’s $1.5 trillion tax cut package fades. The tax cuts together with more government spending and deregulation were part of measures adopted by the Trump administration to boost annual economic growth to 3.0% on a sustained basis.

The economy grew 2.9% in 2018 and growth this year is expected to be around 2.5%. Economists estimate the speed at which the economy can grow over a long period without igniting inflation at between 1.7% and 2.0%.

The GDP report showed a pickup in inflation last quarter, though the trend remained benign. A gauge of inflation tracked by the Fed increased at a 1.8% rate last quarter, just below the U.S. central bank’s 2% target. Inflation increased 1.5% compared the second quarter of 2018.

The government also published revisions to GDP data from 2014 through 2018. The updated data showed growth in the second and third quarters of last year was not as robust as previously estimated, and the economy grew much more slowly in the fourth quarter than had been reported in March. Revised price data showed moderate inflation last year.

The dollar extended gains versus a basket of currencies after the data, while prices for U.S. Treasury fell. U.S. stock index futures pared gains.

STRONG CONSUMER SPENDING

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged at a 4.3% rate in the second quarter, the fastest since the fourth quarter of 2017. Consumer spending grew at a 1.1% rate in the first quarter.

Some of the slowdown in consumer spending early in the year was blamed on a 35-day partial shutdown of the government.

Spending is being supported by the lowest unemployment rate in nearly 50 years, which is lifting wages.

The jump in consumer spending helped to offset some of the weakness from exports, which fell at a 5.2% rate last quarter, in a reversal of the strong growth experienced in the first quarter.

The plunge in exports caused a deterioration of the trade deficit. As result, trade subtracted 0.65 percentage point from GDP growth last quarter after contributing 0.73 percentage point in the January-March period.

The acceleration in consumer spending also helped businesses to whittle down an inventory overhang, leading to a smaller inventory build.

Inventory investment increased at a $71.7 billion rate, slowing from the first quarter’s $116.0 billion pace of increase. While inventories cut 0.86 percentage point from GDP growth in the second quarter, the smaller pace of stock accumulation is a potential boost to manufacturing.

Businesses have been placing fewer orders with factories while working through stockpiles of unsold goods, which contributed to undercutting manufacturing production. Inventories added 0.53 percentage point to GDP growth in the first quarter.

Business investment fell at a 0.6% rate in the second quarter, the first contraction since the first quarter of 2016. It was pulled down by a 10.6% pace of decline in spending on structures, which includes oil and gas well drilling.

Investment in structures was depressed by decreases in commercial and healthcare, and mining exploration, shafts and wells. Spending on intellectual products, including research and development, increased. Business spending on equipment rebounded at a 0.7% rate in the second quarter. It is seen constrained by design problems at aerospace giant Boeing.

Boeing reported its biggest-ever quarterly loss on Wednesday due to the spiraling cost of resolving issues with its 737 MAX airplane and warned it might have to shut production of the grounded jet completely if it runs into new hurdles with global regulators to getting its best-selling aircraft back in the air.

The plane was grounded worldwide in March after two fatal crashes in Ethiopia and Indonesia. Production of the aircraft has been reduced and deliveries suspended.

Growth in government investment accelerated, notching its best performance in 10 years, but spending on homebuilding contracted for a sixth straight quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

France’s Macron offers tax cuts to quell ‘yellow vest’ protests

French President Emmanuel Macron speaks during a news conference to unveil his policy response to the yellow vests protest, at the Elysee Palace in Paris, France, April 25, 2019. REUTERS/Philippe Wojazer

PARIS (Reuters) – French President Emmanuel Macron pledged on Thursday to cut tax further and said the French would have to work more as he outlined his response to months of anti-government protests that have challenged his authority.

Two years into his presidency, Macron is under pressure to deliver policies to quell the five-month old “yellow vest” movement, after a first salvo of measures worth 10 billion euros ($11.13 billion) last December failed to put the genie back in the bottle.

Macron said he wanted a “significant” cut in income tax, which would be financed by closing loopholes, squeezing government spending, but the French would also have to work more.

Although the number of demonstrators has declined since a peak in November, protesters clashed with police for a 23rd straight week last Saturday.

Thursday’s response is the result of a three-month long national debate, during which Macron rolled up his sleeves to discuss issues from high taxes to local democracy and decaying shopping streets with mayors, students and hard-up workers.

He stuck to his guns on Thursday, however, about the bulk of reforms his government has already implemented.

“I asked myself: Should we stop everything that was done over the past two years? Did we take a wrong turn? I believe quite the opposite,” Macron told a news conference, the first of his presidency in the Elysee Palace.

The street rebellion erupted over planned diesel tax hikes last November but morphed into a broader backlash against inequality and a political elite perceived as having lost touch with the common person.

Macron, who swept to power promising to “transform France” and “make work pay”, has seen his ambitious reform agenda derailed by the unrest. Pension and unemployment insurance reforms planned for 2019 have made little progress so far.

(Reporting by Michel Rose, Marine Pennetier, Jean-Baptiste Vey; writing by Leigh Thomas, Editing by Sarah White)

President Donald Trump’s Accomplishments; The List is Growing

U.S. President Donald Trump closes his eyes in prayer along with Pastor Andrew Brunson, after his release from two years of Turkish detention, in the Oval Office of the White House, Washington, U.S., October 13, 2018. REUTERS/Mike Theiler

By Kami Klein

On January 20th, 2019 it was two years since President Donald Trump took the oath to lead our country and began the task of making America great again.  It has been an arduous task under constant scrutiny, challenging world policies as well as many profound events in our country. Despite these daunting obstacles the inventory of accomplishments from the White House grows even longer.

Below is a list compiled by the Washington Examiner and compared with information offered through the White House, on the accomplishments and promises kept by the President.  This list was released in October of 2018, showing 20 months of actions and leadership of this Presidency. Despite his opponents, President Trump continues to make new policies as well as fight for the campaign promises he made when he decided to run for the highest office in our country.  

While we do try to keep up with the ever-broadening list of accomplishments it can be a daunting task. One of our most direct research sites is within the White House itself.  Media today has the tendency to take small bites out of statements and remove the entirety of the comments made which can be very misleading.  If you are interested in hearing the press briefings, remarks by the president and news covered by White House press you can follow this link to get the entire briefing. 

For incredible articles written by directors of the many departments in our United States Government please follow this link.  These are well written, informative articles authored by people like Vice President Pence and  Secretary of the Treasury Steven Mnuchin as well as staff White House reporters.

For a list of very informative Presidential actions, you can follow this link.  Here you will find nominations, directives and proclamations as well as executive orders signed by and created by the President.

To be influential Americans we must be informed Americans. As the true drivers of policy in this country, we must begin to create our own opinions of leadership and the issues without the commentary of those competing with each other in mainstream media.        

With change come difficult moments and we understand as Americans that it is in those times that we can take action with prayer and encouragement.  We ask that you keep our President, Lawmakers, Senators, World Leaders, as well as community leaders in your prayers. May God’s blessings be upon this Nation!  

Economic Growth
4.2 percent growth in the second quarter of 2018.
For the first time in more than a decade, growth is projected to exceed 3 percent over the calendar year.

Jobs
4 million new jobs have been created since the election, and more than 3.5 million since Trump took office.
More Americans are employed now than ever before in our history.
Jobless claims at lowest level in nearly five decades.
The economy has achieved the longest positive job-growth streak on record.
Job openings are at an all-time high and outnumber job seekers for the first time on record.
Unemployment claims at 50 year low
African-American, Hispanic, and Asian-American unemployment rates have all recently reached record lows.
African-American unemployment hit a record low of 5.9 percent in May 2018.
Hispanic unemployment at 4.5 percent.
Asian-American unemployment at a record low of 2 percent.
Women’s unemployment recently at the lowest rate in nearly 65 years.
Female unemployment dropped to 3.6 percent in May 2018, the lowest since October 1953.
Youth unemployment recently reached its lowest level in more than 50 years.
July 2018’s youth unemployment rate of 9.2 percent was the lowest since July 1966.
Veterans’ unemployment recently hit its lowest level in nearly two decades.
July 2018’s veterans’ unemployment rate of 3.0 percent matched the lowest rate since May 2001.
Unemployment rate for Americans without a high school diploma recently reached a record low.
Rate for disabled Americans recently hit a record low.
Blue-collar jobs recently grew at the fastest rate in more than three decades.
Poll found that 85 percent of blue-collar workers believe their lives are headed “in the right direction.”
68 percent reported receiving a pay increase in the past year.
Last year, job satisfaction among American workers hit its highest level since 2005.
Nearly two-thirds of Americans rate now as a good time to find a quality job.
Optimism about the availability of good jobs has grown by 25 percent.
Added more than 400,000 manufacturing jobs since the election.
Manufacturing employment is growing at its fastest pace in more than two decades.
100,000 new jobs supporting the production & transport of oil & natural gas.

American Income
Median household income rose to $61,372 in 2017, a post-recession high.
Wages up in August by their fastest rate since June 2009.
Paychecks rose by 3.3 percent between 2016 and 2017, the most in a decade.
Council of Economic Advisers found that real wage compensation has grown by 1.4 percent over the past year.
Some 3.9 million Americans off food stamps since the election.
Median income for Hispanic-Americans rose by 3.7 percent and surpassed $50,000 for the first time ever in history.
Home-ownership among Hispanics is at the highest rate in nearly a decade.
Poverty rates for African-Americans and Hispanic-Americans have reached their lowest levels ever recorded.

American Optimism
Small business optimism has hit historic highs.
NFIB’s small business optimism index broke a 35-year-old record in August.
SurveyMonkey/CNBC’s small business confidence survey for Q3 of 2018 matched its all-time high.
Manufacturers are more confident than ever.
95 percent of U.S. manufacturers are optimistic about the future, the highest ever.
Consumer confidence is at an 18-year high.
12 percent of Americans rate the economy as the most significant problem facing our country, the lowest level on record.
Confidence in the economy is near a two-decade high, with 51 percent rating the economy as good or excellent.

American Business
Investment is flooding back into the United States due to the tax cuts.
Over $450 billion dollars has already poured back into the U.S., including more than $300 billion in the first quarter of 2018.
Retail sales have surged. Commerce Department figures from August show that retail sales increased 0.5 percent in July 2018, an increase of 6.4 percent from July 2017.
ISM’s index of manufacturing scored its highest reading in 14 years.
Worker productivity is the highest it has been in more than three years.
Steel and aluminum producers are re-opening.
Dow Jones Industrial Average, S&P 500, and NASDAQ have all notched record highs.
Dow hit record highs 70 times in 2017 alone, the most ever recorded in one year.

Deregulation
Achieved massive deregulation at a rapid pace, completing 22 deregulatory actions to every one regulatory action during his first year in office.
Signed legislation to roll back costly and harmful provisions of Dodd-Frank, providing relief to credit unions, and community and regional banks.
Federal agencies achieved more than $8 billion in lifetime net regulatory cost savings.
Rolled back Obama’s burdensome Waters of the U.S. rule.
Used the Congressional Review Act to repeal regulations more times than in history.

Tax Cuts
Biggest tax cuts and reforms in American history by signing the Tax Cuts and Jobs act into law
Provided more than $5.5 trillion in gross tax cuts, nearly 60 percent of which will go to families.
Increased the exemption for the death tax to help save Family Farms & Small Business.
Nearly doubled the standard deduction for individuals and families.
Enabled vast majority of American families will be able to file their taxes on a single page by claiming the standard deduction.
Doubled the child tax credit to help lessen the financial burden of raising a family.
Lowered America’s corporate tax rate from the highest in the developed world to allow American businesses to compete and win.
Small businesses can now deduct 20 percent of their business income.
Cut dozens of special interest tax breaks and closed loopholes for the wealthy.
9 in 10 American workers are expected to see an increase in their paychecks thanks to the tax cuts, according to the Treasury Department.
More than 6 million American workers have received wage increases, bonuses, and increased benefits thanks to tax cuts.
Over 100 utility companies have lowered electric, gas, or water rates thanks to the Tax Cuts and Jobs Act.
Ernst & Young found 89 percent of companies planned to increase worker compensation thanks to the Trump tax cuts.
Established opportunity zones to spur investment in left behind communities.

Worker Development
Established a National Council for the American Worker to develop a national strategy for training and retraining America’s workers for high-demand industries.
Employers have signed Trump’s “Pledge to America’s Workers,” committing to train or retrain more than 4.2 million workers and students.
Signed the first Perkins CTE reauthorization since 2006, authorizing more than $1 billion for states each year to fund vocational and career education programs.
Executive order expanding apprenticeship opportunities for students and workers.

Domestic Infrastructure
Proposed infrastructure plan would utilize $200 billion in Federal funds to spur at least $1.5 trillion in infrastructure investment across the country.
Executive order expediting environmental reviews and approvals for high priority infrastructure projects.
Federal agencies have signed the One Federal Decision Memorandum of Understanding (MOU) streamlining the federal permitting process for infrastructure projects.
Rural prosperity task force and signed an executive order to help expand broadband access in rural areas.

Health Care
Signed an executive order to help minimize the financial burden felt by American households Signed legislation to improve the National Suicide Hotline.
Signed the most comprehensive childhood cancer legislation ever into law, which will advance childhood cancer research and improve treatments.
Signed Right-to-Try legislation, expanding health care options for terminally ill patients.
Enacted changes to the Medicare 340B program, saving seniors an estimated $320 million on drugs in 2018 alone.
FDA set a new record for generic drug approvals in 2017, saving consumers nearly $9 billion.
Released a blueprint to drive down drug prices for American patients, leading multiple major drug companies to announce they will freeze or reverse price increases.
Expanded short-term, limited-duration health plans.
Let more employers to form Association Health Plans, enabling more small businesses to join together and affordably provide health insurance to their employees.
Cut Obamacare’s burdensome individual mandate penalty.
Signed legislation repealing Obamacare’s Independent Payment Advisory Board, also known as the “death panels.”
USDA invested more than $1 billion in rural health care in 2017, improving access to health care for 2.5 million people in rural communities across 41 states
Proposed Title X rule to help ensure taxpayers do not fund the abortion industry in violation of the law.
Reinstated and expanded the Mexico City Policy to keep foreign aid from supporting the global abortion industry.
HHS formed a new division over protecting the rights of conscience and religious freedom.
Overturned Obama administration’s midnight regulation prohibiting states from defunding certain abortion facilities.
Signed executive order to help ensure that religious organizations are not forced to choose between violating their religious beliefs by complying with Obamacare’s contraceptive mandate or shutting their doors.

Combating Opioids
Chaired meeting the 73rd General Session of the United Nations discussing the worldwide drug problem with international leaders.
Initiative to Stop Opioid Abuse and Reduce Drug Supply and Demand, introducing new measures to keep dangerous drugs out of our communities.
$6 billion in new funding to fight the opioid epidemic.
DEA conducted a surge in April 2018 that arrested 28 medical professions and revoked 147 registrations for prescribing too many opioids.
Brought the “Prescribed to Death” memorial to President’s Park near the White House, helping raise awareness about the human toll of the opioid crisis.
Helped reduce high-dose opioid prescriptions by 16 percent in 2017.
Opioid Summit on the administration-wide efforts to combat the opioid crisis.
Launched a national public awareness campaign about the dangers of opioid addiction.
Created a Commission on Combating Drug Addiction and the Opioid Crisis which recommended a number of pathways to tackle the opioid crisis.
Led two National Prescription Drug Take-Back Days in 2017 and 2018, collecting a record number of expired and unneeded prescription drugs each time.
$485 million targeted grants in FY 2017 to help areas hit hardest by the opioid crisis.
Signed INTERDICT Act, strengthening efforts to detect and intercept synthetic opioids before they reach our communities.
DOJ secured its first-ever indictments against Chinese fentanyl manufacturers.
Joint Criminal Opioid Darknet Enforcement (J-CODE) team, aimed at disrupting online illicit opioid sales.
Declared the opioid crisis a Nationwide Public Health Emergency in October 2017.

Law and Order
More U.S. Circuit Court judges confirmed in the first year in office than ever.
Confirmed more than two dozen U. S. Circuit Court judges.
Followed through on the promise to nominate judges to the Supreme Court who will adhere to the Constitution
Nominated and confirmed Justice Neil Gorsuch and Brett Kavanaugh to the Supreme Court.
Signed an executive order directing the Attorney General to develop a strategy to more effectively prosecute people who commit crimes against law enforcement officers.
Launched an evaluation of grant programs to make sure they prioritize the protection and safety of law enforcement officers.
Established a task force to reduce crime and restore public safety in communities across Signed an executive order to focus more federal resources on dismantling transnational criminal organizations such as drug cartels.
Signed an executive order to focus more federal resources on dismantling transnational criminal organizations such as drug cartels.
Violent crime decreased in 2017 according to FBI statistics.
$137 million in grants through the COPS Hiring Program to preserve jobs, increase community policing capacities, and support crime prevention efforts.
Enhanced and updated the Project Safe Neighborhoods to help reduce violent crime.
Signed legislation making it easier to target websites that enable sex trafficking and strengthened penalties for people who promote or facilitate prostitution.
Created an interagency task force working around the clock to prosecute traffickers, protect victims, and prevent human trafficking.
Conducted Operation Cross Country XI to combat human trafficking, rescuing 84 children and arresting 120 human traffickers.
Encouraged federal prosecutors to use the death penalty when possible in the fight against the trafficking of deadly drugs.
New rule effectively banning bump stock sales in the United States.

Border Security and Immigration
Secured $1.6 billion for border wall construction in the March 2018 omnibus bill.
Construction of a 14-mile section of border wall began near San Diego.
Worked to protect American communities from the threat posed by the vile MS-13 gang.
ICE’s Homeland Security Investigations division arrested 796 MS-13 members and associates in FY 2017, an 83 percent increase from the prior year.
Justice worked with partners in Central America to secure criminal charges against more than 4,000 MS-13 members.
Border Patrol agents arrested 228 illegal aliens affiliated with MS-13 in FY 2017.
Fighting to stop the scourge of illegal drugs at our border.
ICE HSI seized more than 980,000 pounds of narcotics in FY 2017, including 2,370 pounds of fentanyl and 6,967 pounds of heroin.
ICE HSI dedicated nearly 630,000 investigative hours towards halting the illegal import of fentanyl.
ICE HSI made 11,691 narcotics-related arrests in FY 2017.
Stop Opioid Abuse and Reduce Drug Supply and Demand introduced new measures to keep dangerous drugs out the United States.
Signed the INTERDICT Act into law, enhancing efforts to detect and intercept synthetic opioids.
DOJ secured its first-ever indictments against Chinese fentanyl manufacturers.
DOJ launched their Joint Criminal Opioid Darknet Enforcement (J-CODE) team, aimed at disrupting online illicit opioid sales.
Released an immigration framework that includes the resources required to secure our borders and close legal loopholes, and repeatedly called on Congress to fix our broken immigration laws.
Authorized the deployment of the National Guard to help secure the border.
Enhanced vetting of individuals entering the U.S. from countries that don’t meet security standards, helping to ensure individuals who pose a threat to our country are identified before they enter.
These procedures were upheld in a June 2018 Supreme Court hearing.
ICE removed over 226,000 illegal aliens from the United States in 2017.
ICE rescued or identified over 500 human trafficking victims and over 900 child exploitation victims in 2017 alone.
In 2017, ICE Enforcement and Removal Operations (ERO) arrested more than 127,000 aliens with criminal convictions or charges, responsible for
Over 76,000 with dangerous drug offenses.
More than 48,000 with assault offenses.
More than 11,000 with weapons offenses.
More than 5,000 with sexual assault offenses.
More than 2,000 with kidnapping offenses.
Over 1,800 with homicide offenses.
Created the Victims of Immigration Crime Engagement (VOICE) Office in order to support the victims and families affected by illegal alien crime.
More than doubled the number of counties participating in the 287(g) program, which allows jails to detain criminal aliens until they are transferred to ICE custody.

Trade
Negotiating and renegotiating better trade deals, achieving free, fair, and reciprocal trade for the United States.
Agreed to work with the European Union towards zero tariffs, zero non-tariff barriers, and zero subsidies.
Deal with the European Union to increase U.S. energy exports to Europe.
Litigated multiple WTO disputes targeting unfair trade practices and upholding our right to enact fair trade laws.
Finalized a revised trade agreement with South Korea, which includes provisions to increase American automobile exports.
Negotiated a historic U.S.-Mexico-Canada Trade Agreement to replace NAFTA.
Agreement to begin trade negotiations for a U.S.-Japan trade agreement.
Secured $250 billion in new trade and investment deals in China and $12 billion in Vietnam.
Established a Trade and Investment Working Group with the United Kingdom, laying the groundwork for post-Brexit trade.
Enacted steel and aluminum tariffs to protect our vital steel and aluminum producers and strengthen our national security.
Conducted 82 anti-dumping and countervailing duty investigations in 2017 alone.
Confronting China’s unfair trade practices after years of Washington looking the other way.
25 percent tariff on $50 billion of goods imported from China and later imposed an additional 10% tariff on $200 billion of Chinese goods.
Conducted an investigation into Chinese forced technology transfers, unfair licensing practices, and intellectual property theft.
Imposed safeguard tariffs to protect domestic washing machines and solar products manufacturers hurt by China’s trade policies
Withdrew from the job-killing Trans-Pacific Partnership (TPP).
Secured access to new markets for America’s farmers.
Recent deal with Mexico included new improvements enabling food and agriculture to trade more fairly.
Recent agreement with the E.U. will reduce barriers and increase trade of American soybeans to Europe.
Won a WTO dispute regarding Indonesia’s unfair restriction of U.S. agricultural exports.
Defended American Tuna fisherman and packagers before the WTO
Opened up Argentina to American pork exports for the first time in a quarter-century
American beef exports have returned to China for the first time in more than a decade
OK’d up to $12 billion in aid for farmers affected by unfair trade retaliation.

Energy
Presidential Memorandum to clear roadblocks to construction of the Keystone XL Pipeline.
Presidential Memorandum declaring that the Dakota Access Pipeline serves the national interest and initiating the process to complete construction.
Opened up the Alaska National Wildlife Refuge to energy exploration.
Coal exports up over 60 percent in 2017.
Rolled back the “stream protection rule” to prevent it from harming America’s coal industry.
Cancelled Obama’s anti-coal Clean Power Plan and proposed the Affordable Clean Energy Rule as a replacement.
Withdrew from the job-killing Paris climate agreement, which would have cost the U.S. nearly $3 trillion and led to 6.5 million fewer industrial sector jobs by 2040.
U.S. oil production has achieved its highest level in American history
United States is now the largest crude oil producer in the world.
U.S. has become a net natural gas exporter for the first time in six decades.
Action to expedite the identification and extraction of critical minerals that are vital to the nation’s security and economic prosperity.
Took action to reform National Ambient Air Quality Standards, benefitting American manufacturers.
Rescinded Obama’s hydraulic fracturing rule, which was expected to cost the industry $32 million per year.
Proposed expansion of offshore drilling as part of an all-of-the-above energy strategy
Held a lease sale for offshore oil and gas leases in the Gulf of Mexico in August 2018.
Got EU to increase its imports of liquefied natural gas (LNG) from the United States.
Issued permits for the New Burgos Pipeline that will cross the U.S.-Mexico border.

Foreign Policy
Moved the U.S. Embassy in Israel to Jerusalem.
Withdrew from Iran deal and immediately began the process of re-imposing sanctions that had been lifted or waived.
Treasury has issued sanctions targeting Iranian activities and entities, including the Islamic Revolutionary Guard Corps-Qods Force
Since enacting sanctions, Iran’s crude exports have fallen off, the value of Iran’s currency has plummeted, and international companies have pulled out of the country.
All nuclear-related sanctions will be back in full force by early November 2018.
Historic summit with North Korean President Kim Jong-Un, bringing beginnings of peace and denuclearization to the Korean Peninsula.
The two leaders have exchanged letters and high-level officials from both sides have met resulting in tremendous progress.
North Korea has halted nuclear and missile tests.
Negotiated the return of the remains of missing-in-action soldiers from the Korean War.
Imposed strong sanctions on Venezuelan dictator Nicholas Maduro and his inner circle.
Executive order preventing those in the U.S. from carrying out certain transactions with the Venezuelan regime, including prohibiting the purchase of the regime’s debt.
Responded to the use of chemical weapons by the Syrian regime.
Rolled out sanctions targeting individuals and entities tied to Syria’s chemical weapons program.
Directed strikes in April 2017 against a Syrian airfield used in a chemical weapons attack on innocent civilians.
Joined allies in launching airstrikes in April 2018 against targets associated with Syria’s chemical weapons use.
New Cuba policy that enhanced compliance with U.S. law and held the Cuban regime accountable for political oppression and human rights abuses.
Treasury and State are working to channel economic activity away from the Cuban regime, particularly the military.
Changed the rules of engagement, empowering commanders to take the fight to ISIS.
ISIS has lost virtually all of its territory, more than half of which has been lost under Trump.
ISIS’ self-proclaimed capital city, Raqqah, was liberated in October 2017.
All Iraqi territory had been liberated from ISIS.
More than a dozen American hostages have been freed from captivity all of the world.
Action to combat Russia’s malign activities, including their efforts to undermine the sanctity of United States elections.
Expelled dozens of Russian intelligence officers from the United States and ordered the closure of the Russian consulate in Seattle, WA.
Banned the use of Kaspersky Labs software on government computers, due to the company’s ties to Russian intelligence.
Imposed sanctions against five Russian entities and three individuals for enabling Russia’s military and intelligence units to increase Russia’s offensive cyber capabilities.
Sanctions against seven Russian oligarchs, and 12 companies they own or control, who profit from Russia’s destabilizing activities.
Sanctioned 100 targets in response to Russia’s occupation of Crimea and aggression in Eastern Ukraine.
Enhanced support for Ukraine’s Armed Forces to help Ukraine better defend itself.
Helped win U.S. bid for the 2028 Summer Olympics in Los Angeles.
Helped win U.S.-Mexico-Canada’s united bid for 2026 World Cup.

Defense
Executive order keeping the detention facilities at U.S. Naval Station Guantanamo Bay open.
$700 billion in military funding for FY 2018 and $716 billion for FY 2019.
Largest military pay raise in nearly a decade.
Ordered a Nuclear Posture Review to ensure America’s nuclear forces are up to date and serve as a credible deterrent.
Released America’s first fully articulated cyber strategy in 15 years.
New strategy on national biodefense, which better prepares the nation to defend against biological threats.
The administration has announced that it will use whatever means necessary to protect American citizens and servicemen from unjust prosecution by the International Criminal Court.
Released an America first National Security Strategy.
Put in motion the launch of a Space Force as a new branch of the military and relaunched the National Space Council.
Encouraged the North Atlantic Treaty Organization (NATO) allies to increase defense spending to their agreed-upon levels.
In 2017 alone, there was an increase of more than 4.8 percent in defense spending amongst NATO allies.
Every member state has increased defense spending.
Eight NATO allies will reach the 2 percent benchmark by the end of 2018 and 15 allies are on trade to do so by 2024.
NATO allies spent over $42 billion dollars more on defense since 2016.
Executive order to help military spouses find employment as their families deploy domestically and abroad.

Veterans affairs
Signed the VA Accountability Act and expanded VA telehealth services, walk-in-clinics, and same-day urgent primary and mental health care.
Delivered more appeals decisions – 81,000 – to veterans in a single year than ever before.
Strengthened protections for individuals who come forward and identify programs occurring within the VA.
Signed legislation that provided $86.5 billion in funding for the Department of Veterans Affairs (VA), the largest dollar amount in history for the VA.
VA MISSION Act, enacting sweeping reform to the VA system that:
Consolidated and strengthened VA community care programs.
Funding for the Veterans Choice program.
Expanded eligibility for the Family Caregivers Program.
Gave veterans more access to walk-in care.
Strengthened the VA’s ability to recruit and retain quality healthcare professionals.
Enabled the VA to modernize its assets and infrastructure.
Signed the VA Choice and Quality Employment Act in 2017, which authorized $2.1 billion in additional funds for the Veterans Choice Program.
Worked to shift veterans’ electronic medical records to the same system used by the Department of Defense, a decades-old priority.
Issued an executive order requiring the Secretaries of Defense, Homeland Security, and Veterans Affairs to submit a joint plan to provide veterans access to access to mental health treatment as they transition to civilian life.
Increased transparency and accountability at the VA by launching an online “Access and Quality Tool,” providing veterans with access to wait time and quality of care data.
Signed legislation to modernize the claims and appeal process at the VA.
Harry W. Colmery Veterans Educational Assistance Act, providing enhanced educational benefits to veterans, service members, and their family members.
Lifted a 15-year limit on veterans’ access to their educational benefits.
Created a White House VA Hotline to help veterans and principally staffed it with veterans and direct family members of veterans.
VA employees are being held accountable for poor performance, with more than 4,000 VA employees removed, demoted, and suspended so far.
Signed the Veterans Treatment Court Improvement Act, increasing the number of VA employees that can assist justice-involved veterans.

Macron administration warns of ‘great violence’ in Paris from hard core ‘yellow vests’

Trash bins burn as youths and high-school students clash with police during a demonstration against the French government's reform plan in Marseille, France, December 6, 2018. REUTERS/Jean-Paul Pelissier

By Richard Lough and Marine Pennetier

PARIS (Reuters) – French authorities warned another wave of “great violence” and rioting could be unleashed in Paris this weekend by a hardcore of ‘yellow vest’ protesters, as senior ministers sought to defuse public anger with conciliatory languages on taxes.

Despite capitulating this week over plans for higher fuel taxes that inspired the nationwide revolt, President Emmanuel Macron has struggled to quell the anger that led to the worst street unrest in central Paris since 1968.

Rioters torched cars, vandalized cafes, looted shops and sprayed anti-Macron graffiti across some of Paris’s most affluent districts, even defacing the Arc de Triomphe. Scores of people were hurt and hundreds arrested in battles with police.

French police stand guard as youth and high school students burn a trash container during a protest against the French government's reform plan, in Bordeaux, France, December 6, 2018. REUTERS/Regis Duvignau

French police stand guard as youth and high school students burn a trash container during a protest against the French government’s reform plan, in Bordeaux, France, December 6, 2018. REUTERS/Regis Duvignau

An official in Macron’s office said intelligence suggested that some protesters would come to the capital this Saturday “to vandalize and to kill.”

Prime Minister Edouard Philippe said 65,000 security personnel would be deployed across the country on that day to keep the peace.

In a bid to defuse the three-week crisis, Philippe had told parliament late on Wednesday that he was scrapping the fuel-tax increases planned for 2019, having announced a six-month suspension the day before.

Finance Minister Bruno Le Maire told a conference he was prepared to bring forward tax-cutting plans and that he wanted workers’ bonuses to be tax-free.

But he added: “In this case, it must go hand-in-hand with a decrease in spending.”

He also said France would impose a tax on big internet firms in 2019 if there was no consensus on a European Union-wide levy, seeking to appeal to the “yellow vests'” anti-business sentiment.

SOCCER MATCHES CANCELED

The threat of more violence poses a security nightmare for the authorities, who make a distinction between peaceful ‘yellow vest’ protesters and violent groups, anarchists and looters from the deprived suburbs who they say have infiltrated the movement.

On Facebook groups and across social media, the yellow vests are calling for an “Act IV”, a reference to what would be a fourth weekend of disorder.

“France is fed up!! We will be there in bigger numbers, stronger, standing up for French people. Meet in Paris on Dec. 8,” read one group’s banner.

Education Minister Jean-Michel Blanquer urged people to stay at home during the coming weekend. Security sources said the government was considering using troops currently deployed on anti-terrorism patrols to protect public buildings.

Several top-league soccer matches on Saturday have been canceled and the Louvre museum said it and others were awaiting word from Paris officials on whether to close their doors.

The protests, named after the fluorescent jackets French motorists are required to keep in their cars, erupted in November over the squeeze on household budgets caused by fuel taxes. Demonstrations swiftly grew into a broad, sometimes-violent rebellion against Macron, with no formal leader.

Their demands are diverse and include lower taxes, higher salaries and Macron’s resignation.

France’s hard-left CGT trade union on Thursday called on its energy industry workers to walk out for a 48 hours from Dec. 13, saying it wanted to join forces with the yellow vests. The movement, with no formal leader, has so far not associated itself with any political party or trade union.

A French riot policeman stands next to a burning car as youth and high school students protest against the French government's reform plan, in Nantes, France, December 6, 2018. REUTERS/Stephane Mahe

A French riot policeman stands next to a burning car as youth and high school students protest against the French government’s reform plan, in Nantes, France, December 6, 2018. REUTERS/Stephane Mahe

STREET POLITICS

The fuel-tax volte-face was the first major U-turn of Macron’s 18-month presidency.

The unrest has exposed the deep-seated resentment among non-city dwellers that Macron is out-of-touch with the hard-pressed middle class and blue-collar laborers. They see the 40-year-old former investment banker as closer to big business.

Trouble is also brewing elsewhere for Macron. Teenage students on Thursday blocked access to more than 200 high schools across the country, burning garbage bins and setting alight a car in the western city of Nantes.

Meanwhile, farmers who have long complained that retailers are squeezing their margins and are furious over a delay to the planned rise in minimum food prices, and truckers are threatening to strike from Sunday.

Le Maire said France was no longer spared from the wave of populism that has swept across Europe.

“It’s only that in France, it’s not manifesting itself at the ballot box, but in the streets.”

(Reporting by Richard Lough and Marine Pennetier; additional reporting by Leigh Thomas, Michel Rose and Myriam Rivet; Editing by Toby Chopra)

Two years in, Trump holds stock market bragging rights

U.S. President Donald Trump speaks at a campaign rally on the eve of the U.S. mid-term elections at the Show Me Center in Cape Girardeau, Missouri, U.S., November 5, 2018. REUTERS/Carlos Barria  

By Noel Randewich

SAN FRANCISCO (Reuters) – U.S. President Donald Trump has taken credit for the stock market’s gains during his nearly two years in the White House, and those claims are reasonable given the impact of tax cuts and pro-business policies on investor sentiment.

The S&P 500 has risen 28 percent since Trump’s election in November 2016 to the eve of congressional midterm elections on Tuesday. This surpasses the market’s performance over the same time frame under any other president in the past 64 years. Under President Dwight Eisenhower, the S&P 500 rose 29 percent from his election in November 1952 through November 1954.

Sweeping corporate tax cuts, an initiative driven by Trump, supercharged U.S. companies’ earnings and helped lift the cash-rich technology sector. The Republican party last year passed the biggest overhaul of the U.S. tax code in over 30 years, boosting U.S. corporate earnings.

Still, other sectors that could have been expected to benefit strongly from a Trump presidency have lagged. Indeed, the individual stocks that have gained and lost the most during his reign have little discernable link to Trump’s presidency.

How the market shakes out in the final two years of Trump’s presidency will probably be influenced by Tuesday’s elections. Analysts expect pressure on stocks if Democrats gain control of the House of Representatives and a sharper downward reaction if they sweep the House and Senate.

On the contrary, if Republicans hold their ground, stocks could gain further, with hopes of more tax reform ahead.

Trump’s strong stock market record has been maintained even after a recent pullback on Wall Street as worries about trade battles, inflation, and rising interest rates have increased caution among investors. Starting in 2010 under President Barack Obama as the world recovered from the financial crisis, the S&P 500 has enjoyed its longest bull market in history.

With more than half of Trump’s presidency still to come, how the market will perform over his whole term is unknown. Democratic President Bill Clinton saw the S&P 500 triple during his two terms in the White House.

Average S&P 500 company earnings per share are on track to rise 24 percent this year, the strongest annual gain in eight years, according to IBES data from Refinitiv.

Investor confidence stemming from the tax cuts and Trump’s other business-friendly policies so far have more than made up for ongoing worries on Wall Street that his trade conflict with China is hurting the U.S. economy, and that it could become worse.

The tax cuts also led Apple and other multinationals in the technology sector to repatriate billions of dollars in profits held overseas, some of which went toward buying back stock and sending Wall Street higher.

The S&P 500 information technology index has gained 51 percent since Trump’s election. Financials, which benefited from Trump’s deregulation of the banking industry, have climbed 34 percent since Nov 8, 2016.

Still, some companies that had been expected to boom under Trump have fared poorly. The S&P 500 energy index is flat since Trump’s election, even though crude prices rose over 50 percent during that time and despite Trump putting the brakes on Obama-era policies aimed at reducing the country’s reliance on oil.

Semiconductors have fared better than any other industry group, even though they are highly exposed to China and could become casualties in Trump’s trade war with Beijing.

Along with telecommunications, food and tobacco companies, automakers on average have fared worst among 27 industry group’s since Trump’s election. General Motors Co and Ford Motor Co have been wrestling for years with tepid global demand, with recent signs of a deep slowdown in China.

Industry groups are more detailed categories than the 11 sectors widely tracked on the stock market.

Interest rates, economic growth, company earnings and inflation are widely viewed as strong influences on stock prices, making who holds power in Washington just one of many factors affecting investor sentiment.

Abiomed Inc, the S&P 500’s top performer since Trump’s election, has jumped over 260 percent, helped in part by the success of its Impella heart pumps.

General Electric’s 68 percent loss makes it the S&P 500’s worst performer since Trump was elected. The former industrial powerhouse has foundered in several key markets in recent years and is aggressively cutting costs and selling businesses.

(Reporting by Noel Randewich; Editing by Megan Davies and Cynthia Osterman)

Forget gridlock, Republican win may be better for stock market

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., November 1, 2018. REUTERS/Brendan McDermid

By Noel Randewich

SAN FRANCISCO (Reuters) – U.S. President Donald Trump has warned that his favorite measure of success, the stock market, is imperiled if voters favor Democrats in next week’s congressional elections.

While not fully accurate – stocks tend to rise regardless of who controls the government – it does bear out that the market has delivered a slightly stronger performance on average when Republicans dominate in Washington.

A Reuters analysis of the past half-century shows stocks fared better in the two calendar years after congressional elections when Republicans control Congress and the presidency than when Democrats controlled the two branches, and at least as well as during times of gridlock. Many investors are now hoping for a continuation of the Republican agenda.

“There is Trump ‘the person’, who is very controversial,” said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. “And there’s also Trump ‘the agenda’. The Trump agenda, the stock market loves. To the extent it continues, the market will like that.”

Republicans traditionally push pro-business policies such as tax cuts and deregulation, which boost stock prices. The market has, on the whole, given Trump a thumbs-up, with the market rising almost 20 percent during his presidency so far.

Polls show strong chances that the Democratic Party may win control of the House of Representatives in the Nov. 6 midterm elections after two years of wielding no practical political power in Washington, with Republicans likely to keep the Senate.

Trump warned in a tweet on Tuesday that a change in Congress would be bad for the market, saying: “If you want your Stocks to go down, I strongly suggest voting Democrat.”

Investors often favor Washington gridlock because it preserves the status quo and reduces uncertainty.

“Traditionally, gridlock is good for the markets. But I think this election is very tricky; I’m not sure that’s the preferred market outcome because a lot of the benefits of the past two years have come from not being in a gridlock environment,” said Mike O’Rourke, Chief Market Strategist at JonesTrading.

Should his fellow Republicans maintain or extend their grip on Congress, Trump may be emboldened to pursue more of his political agenda, including further tax overhauls.

By contrast, Democratic gains that allow the party to control the House of Representatives, and possibly the Senate, could stifle Trump’s policy aims and perhaps lead to attempts to impeach him. It could also lead to resistance to increasing the government’s debt limit next year.

“Our economists believe that two likely consequences of a divided Congress would be an increase in investigations and uncertainty surrounding fiscal deadlines, which could raise equity volatility,” Goldman Sachs said in a report this week.

Over the past 50 years, gridlock has been the norm rather than the exception in Washington, with the presidency and Congress won by one party in just seven out of 25 congressional election year.

Looking at the two calendar years following each congressional election, the S&P 500 had a mean annual increase of 12 percent under Republican-controlled governments, compared to an increase of 9 percent for Democrat-controlled governments and a 7 percent rise for gridlocked governments.

However, using median averages, which exclude outliers, differences are less clear, with the S&P 500 seeing annual increases of 11 percent under Republican-controlled governments and under gridlock, and 10 percent gains under Democrat-controlled governments.

An analysis by BTIG brokerage of data going back to 1928 also indicates gridlock is not necessarily ideal. It showed U.S. stocks performing better under united governments.

“While government control is by no means the sole determinant of market performance, investors clearly favor a unified regime,” BTIG strategist Julian Emanuel wrote in his report.

Interest rates, economic growth, company earnings and inflation are widely viewed as strong influences on stock prices, making the balance of power in Washington just one of many factors affecting investor sentiment.

Two Democratic presidents – Bill Clinton and Barack Obama – have presided over the strongest S&P 500 performances http://tmsnrt.rs/2jtEpzi since 1952, with gains of 208 percent and 166 percent, respectively.

Wall Street has applauded Trump since he took power in January 2017 and quickly pushed through measures to deregulate banks and other companies. Last December, his Republican party passed sweeping corporate tax cuts that have S&P 500 companies on track this year to grow their earnings per share by over 20 percent, the biggest jump since 2010, according to Refinitiv IBES data.

“Volatility may rise regardless of the outcome, but, based on historical relationships, equities may be more likely to rise if Republicans manage to maintain control of Congress,” Deutsche Bank said in a recent report.

(Reporting by Noel Randewich; Editing by James Dalgleish)

FedEx commits $3.2 billion to raise pay, expand hubs after U.S. tax overhaul

A FedEx Express Boeing 737-45D (BDSF) OO-TNN aircraft is seen at the Chopin International Airport in Warsaw, Poland January 8, 2018. Picture taken on January 8, 2018.

By Eric M. Johnson

(Reuters) – Package delivery company FedEx Corp said on Friday it will spend more than $3.2 billion on wage increases, bonuses, pension funding and capital investment, taking advantage of the U.S. tax overhaul signed into law in December.

The Memphis, Tennessee-based company said it would invest $1.5 billion to significantly expand its hub in Indianapolis over the next seven years and modernize and enlarge its Memphis SuperHub.

The new tax code allows companies to immediately write off the full value of capital costs, which helps make projects more financially attractive, but that benefit starts to phase out in 2023. It also permanently lowers the U.S. corporate rate to 21 percent from 35 percent.

The announcement makes FedEx the latest U.S. company to promise higher pay for workers, citing the tax cuts.

FedEx, which said the recent tax changes would likely boost economic growth and investment in the United States, also said it would contribute $1.5 billion to an employee pension plan.

The company plans more than $200 million in higher compensation, about two-thirds of which will go to hourly employees with the remainder funding increases in performance-based incentive plans for salaried workers.

FedEx shares were down 0.3 percent in morning trading.

(Reporting by Rachit Vats in Bengaluru, Eric M. Johnson in Seattle, and Nick Carey in Detroit; Editing by Arun Koyyur and Meredith Mazzilli)

Long-awaited U.S. Republican legislation calls for deep tax cuts

A congressional aide places a placard on a podium for the House Republican's legislation to overhaul the tax code on Capitol Hill.

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – President Donald Trump’s drive for the deep tax cuts that he promised as a candidate reached a major milestone on Thursday, with his fellow Republicans in the House of Representatives unveiling long-awaited legislation to overhaul the tax code.

The bill called for slashing the corporate tax rate to 20 percent from 35 percent and cutting tax rates on individuals and families by consolidating the current number of tax brackets to four from seven: 12 percent, 25 percent, 35 percent and 39.6 percent, which is now the top rate and would be retained.

Largely in line with expectations for the tax-cut plan they have been developing behind closed doors for weeks, the House tax-writing Ways and Means Committee proposed roughly doubling the standard deduction for individuals and families.

It also called for preserving the home mortgage interest deduction for existing mortgages and for newly purchased homes up to $500,000, as well as continuing the deduction for state and local property taxes, capped at $10,000. It would retain the tax benefits of popular retirement savings programs including 401(k) and IRA.

The bill is the starting gun for a frantic race toward what Trump and Republicans in the House and Senate hope will be their first major legislative victory since he took office in January: the enactment this year of a package of deep tax cuts.

“This is the beginning of the end of this horrible tax code,” House Ways and Means Committee Chairman Brady told reporters on Thursday as he entered a meeting with Republican lawmakers ahead of the bill’s release.

The bill would create a new family tax credit, double exemptions for estate taxes on inherited assets and repeal the estate tax over six years, while also allowing small businesses to write off loan interest, according to the document.

The bill would cap the maximum tax rate on small businesses and other non-corporate enterprises at 25 percent, down from the present maximum rate on “pass-through” income of 39.6 percent. It would also set standards for distinguishing between individual wage income and actual pass-through business income to prevent tax-avoidance abuse of the new, lower tax level.

It would create a new 10-percent tax on U.S. companies’ high-profit foreign subsidiaries, calculated on a global basis, in a move to prevent companies from moving profits overseas, the Wall Street Journal reported.

Foreign businesses operating in the United States would face a tax of up to 20 percent on payments they make overseas from their American operations, the Journal added.

 

MARKET REACTION

U.S. equities have rallied in 2017 to a series of record highs, partly on expectations of deep corporate tax cuts. They were down slightly on Thursday as initial details of the Republican plan emerged. Housing stocks fell; bank stocks initially fell but then cut their losses.

Investors cautioned the tax plan was preliminary and it was too soon to gauge the effect on specific industries and asset classes. Long-dated bond yields and the U.S. dollar were down.

“This was what the market has been waiting for,” said Sean Simko, head of fixed-income management at Sei Investments Co in Pennsylvania. “It’s pretty much what the market has heard and priced in for. We are also waiting for the Fed chair nominee announcement and the payrolls number (Friday). Until then, the markets are going to be pretty contained.”

Congress has not succeeded with comprehensive tax changes since 1986, when Republican Ronald Reagan was in the White House and Democrats controlled the House. Bipartisan cooperation led to the passage of that plan, but Republicans have frozen Democrats out of the process of developing this legislation and passed a budget plan that would enable them to pass it with no Democratic votes.

Independent analysts have said that, based on an outline of the plan previously made public, corporations and the wealthiest Americans would benefit the most, and the federal deficit would be greatly expanded over the next decade because of a loss of tax revenue.

Trump said at the White House this week that he wanted Congress to pass the tax overhaul by the U.S. Thanksgiving holiday on Nov. 23.

Trump, House Republican leaders and Republican members of Brady’s panel will then meet at the White House on Thursday afternoon. Trump is also meeting separately with Republican senators, who must also unite to pass the tax plan.

“We’re going to get it done,” added House Republican leader Kevin McCarthy.

Brady himself predicts the initial legislation will change next week, when his panel is due to begin preparing it for an eventual House vote.

While Republicans control the White House and both chambers of Congress, intra-party differences have prevented them from passing major legislation sought by Trump, as exemplified by the collapse of their effort to dismantle the Obamacare law. Any failure to pass tax cuts legislation would call into question Republicans’ basic ability to deliver on promises.

The bill must also pass the Senate, where Republicans hold a slimmer 52-48 majority and earlier this year failed to garner enough votes to pass a major healthcare overhaul. Senate Republican leaders have said they aim to finish their work on taxes by year-end.

Democrats have criticized the proposed tax cuts as a giveaway to corporations and the wealthy that would harm workers and middle-class Americans.

 

 

(Reporting by Amanda Becker and David Morgan; Additional reporting by Richard Leong, Susan Heavey and Susan Cornwell; Writing by Will Dunham; Editing by Lisa Von Ahn and Nick Zieminski)

 

Wall Street sinks on fears of delays to Trump tax cuts

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 21, 2017. REUTERS/Lucas Jackson

By Noel Randewich

(Reuters) – Wall Street fell sharply on Tuesday as investors worried that President Donald Trump will struggle to deliver promised tax cuts that propelled the market to record highs in recent months, with nervousness deepening ahead of a key healthcare vote.

The S&P 500 and Dow Jones Industrial Average lost over 1 percent in their worst one-day performances since before Trump’s election victory in November.

The S&P financial index <.SPSY> sank 2.87 percent, its biggest daily fall since June. That added to losses in the sector since the Federal Reserve last week raised interest rates by 25 basis points and signaled it would remain on a gradual pace of hikes, a less aggressive stance than some investors expected.

Banks benefit from higher interest rates and their stocks are sensitive to changes in expectations of how quickly the Fed will adjust rates. Bank of America <BAC.N> slumped 5.77 percent, the biggest drag on the S&P 500, while a 3.72-percent drop in Goldman Sachs <GS.N> pulled the Dow lower.

“There was a feeling the Fed was going to possibly be more hawkish last week. That didn’t happen,” said Mark Kepner, managing director at Themis Trading in Chatham, New Jersey. “That takes a little out of the higher rates that the banks want.”

Republican party leaders aim to move controversial healthcare legislation to the House floor for debate as early as Thursday. But they can only afford to lose about 20 votes from Republican ranks, or risk the bill failing, since minority Democrats are united against it.

With valuations stretched, investors see the Trump administration’s struggles to push through the healthcare overhaul as a sign he may also face setbacks delivering promised corporate tax cuts. Expectations of those tax cuts are a major reason for the 10-percent surge in the S&P 500 since Trump’s election.

“The market is starting to get a little fed up with the lack of progress in healthcare because everything else is being put on the back burner,” said RJ Grant, head of trading at Keefe, Bruyette & Woods in New York.

The Russell 2000 <.RUT> index of smallcap stocks fell 2.71 percent, its worst day since September.

The financial sector has been the best performing of the 11 major S&P sectors since Trump’s election, surging 18 percent on his proposals to cut bank regulations and reduce taxes.

The Dow Jones Industrial Average <.DJI> dropped 1.14 percent to end at 20,668.01 points, while the S&P 500 <.SPX> lost 1.24 percent to 2,344.02.

The Nasdaq Composite <.IXIC> fell 1.83 percent to 5,793.83.

The CBOE Volatility index <.VIX>, Wall Street’s “fear gauge”, jumped 10 percent.

Under Trump, Wall Street has become unaccustomed to steep selloffs. The last time the S&P 500 lost 1 percent or more in a day was 110 trading sessions ago on October 11. Over the past two years, the S&P 500 has suffered losses of 1-percent or more about once every 11 sessions, according to Thomson Reuters data.

But investors have grown worried about elevated valuations. The S&P 500 is trading at about 18 times forward earnings estimates against the long-term average of 15, according to Thomson Reuters data.

Shares of FedEx Corp <FDX.N> dropped 3 percent in extended trade after the delivery company’s quarterly report disappointed investors.

Declining issues outnumbered advancing ones on the NYSE by a 3.92-to-1 ratio; on Nasdaq, a 5.25-to-1 ratio favored decliners.

The S&P 500 posted 27 new 52-week highs and 7 new lows; the Nasdaq Composite recorded 78 new highs and 79 new lows.

About 8.3 billion shares changed hands in U.S. exchanges, compared with the 7.1 billion daily average over the last 20 sessions.

(Additional reporting by Chuck Mikolajczak and Sinead Carew in New York, editing by Nick Zieminski)

Trump vows military build-up, hammers nationalist themes

U.S. President Donald Trump addresses the American Conservative Union's annual Conservative Political Action Conference (CPAC) in National Harbor, Maryland. U.S., February 24, 2017. REUTERS/Kevin Lamarque

By Emily Stephenson and Steve Holland

NATIONAL HARBOR, Md./WASHINGTON (Reuters) – President Donald Trump said he would make a massive budget request for one of the “greatest military buildups in American history” on Friday in a feisty, campaign-style speech extolling robust nationalism to eager conservative activists.

Trump used remarks to the Conservative Political Action Conference (CPAC), an organization that gave him one of his first platforms in his improbable journey to the U.S. presidency, to defend his unabashed “America first” policies.

Ahead of a nationally televised speech to Congress on Tuesday, Trump outlined plans for strengthening the U.S. military, already the world’s most powerful fighting force, and other initiatives such as tax reform and regulatory rollback.

He offered few specifics on any initiatives, including the budget request that is likely to face a harsh reality on Capitol Hill: At a time when he wants to slash taxes for Americans, funding a major military buildup without spending cuts elsewhere would add substantially to the U.S. budget deficit.

Trump said he would aim to upgrade the military in both offensive and defensive capabilities, with a massive spending request to Congress that would make the country’s defense “bigger and better and stronger than ever before.”

“And, hopefully, we’ll never have to use it, but nobody is going to mess with us. Nobody. It will be one of the greatest military buildups in American history,” Trump said.

Appealing to people on welfare to go to work and pledging to follow through on his vow to build a wall on the U.S.-Mexican border, Trump drew rounds of applause from the large gathering of conservatives, many of them wearing hats emblazoned with the president’s campaign slogan, “Make America Great Again.”

His speech was heavy on the nationalist overtones from his campaign last year, focusing on promises to boost U.S. economic growth by retooling international trade deals, cracking down on immigration and boosting energy production.

ROCKY FIRST MONTH

Trump is looking to put behind him a rocky first month in office. An executive order he signed aimed at banning U.S. entry by people from seven Muslim-majority countries became embroiled in the courts and he had to fire his national security adviser, Michael Flynn, for Russian contacts before Trump took office.

With the federal budget still running a large deficit, Trump will have to fight to get higher military spending through Congress. In his speech, he complained about spending caps put in place on the defense budget dating back to 2011.

He also heaped criticism on what he called purveyors of “fake news,” seeking to clarify a recent tweet in which he said some in the U.S. news media should be considered an “enemy of the people.”

He said his main beef was the media’s use of anonymous sources. “They shouldn’t be allowed to use sources unless they use somebody’s name. Let their name be out there,” Trump said.

His comments came on the same day CNN reported that White House Chief of Staff Reince Priebus asked FBI Deputy Director Andrew McCabe to deny a Feb. 14 report in the New York Times that said Trump’s presidential campaign advisers had been in frequent contact with Russian intelligence officers. The request came after McCabe told him privately the report was wrong.

A senior administration official said on Friday that FBI Director James Comey told Priebus later that the story was not accurate. Priebus asked if the Federal Bureau of Investigation could set the record straight, but Comey said the bureau could not comment, the official said.

Trump has repeatedly chosen to make news media criticism a focus of his public remarks since taking office on Jan. 20.

The speech allowed Trump to put his stamp firmly on the conservative political movement, even as some activists fretted that his immigration and trade policies go too far.

With Trump in the White House and Republicans holding majorities in both houses of Congress, CPAC and the thousands of conservative activists who flock to the event each year from across the country are seeing their political influence rising.

(Additional reporting by Richard Cowan; Editing by Kevin Drawbaugh and Jonathan Oatis)