Overnight Finance: Stocks tank amid new Chinese tariffs, US tech woes | Mulvaney asks Congress to weaken consumer bureau | Kudlow joins White House

Happy Monday and welcome back to Overnight Finance, where we’re rocket-blasting 5,800 pounds of knowledge into your inbox after a brief break. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@digital-stage.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

THE BIG DEAL: Another set of tariffs means another bloody day on Wall Street.

U.S. stocks took heavy losses on Monday, seemingly in response to new Chinese tariffs on U.S. goods and widespread troubles among American technology companies.

The Dow Jones industrial average closed at 459 points down Monday, a 1.9 percent loss, after falling by more than 700 points in trading. The Standard and Poor’s 500 index and Nasdaq lost 2.2 and 2.7 percent each, falling into correction range, a 10-percent drop from their 52-week highs.

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Investors fear the impact of a growing trade war between the U.S. and China.

China announced before markets opened Monday that it would impose a 15 percent tariff on more than 120 goods imported from the U.S., including pork, fruit and nuts. The levies were ordered as retaliation for President Trump’s enacted tariffs of 25 and 10 percent on foreign steel and aluminum, respectively.

Tech troubles drag stocks too: A slew of unrelated difficulties facing U.S. tech companies have also pushed stocks lower. Amazon’s share price has plummeted since Trump began attacking the internet giant on Twitter over its impact on the U.S. Postal Service and American retailers. Stock in Amazon fell another 5.2 percent Monday after heavy losses late last week.

Facebook stock also continued to fall Monday (down 2.75 percent) as the social network faces scrutiny over its sale and collection of user data. Tesla shares dropped 5.1 percent as analysts raise flags about the company’s ability to meet manufacturing goals and its billions of dollars in expected shortfalls.

What comes next: The road ahead is fraught with potential trade-related shocks for the market. The Trump administration will have to decide which countries will receive long-term exemptions from the steel and aluminum tariffs, forge ahead with NAFTA talks, and deal with another round of tariffs from China.

Trump has surrounded himself with advisers either ideologically or temperamentally inclined to agree with his protectionist trade views while ousting the most forceful free-trade advocates on his staff. There’s little reason to think he will reverse this stance on his own.

 

LEADING THE DAY

Mulvaney asks Congress to curb consumer bureau power: Trump budget director Mick Mulvaney, who is pulling double duty as the acting Consumer Financial Protection Bureau chief, asked Congress to take control of the bureau’s funding, make his successors fireable at will by the president, install an inspector general and give lawmakers the sole power to finalize the bureau’s rules.

All four measures would be drastic blows to the CFPB’s power and independence.

They are in line with the views that Mulvaney had as a member of Congress. In fact, Mulvaney voted for the changes as a Republican lawmaker from South Carolina in 2017.

Mulvaney wrote in the CFPB’s semiannual report that “Congress established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism.”

“The Bureau is far too powerful, and with precious little oversight of its activities,” wrote Mulvaney, who as a congressman had opposed the CFPB’s existence. Read more about Mulvaney’s vision for the bureau here. 

 

Kudlow comes aboard: Trump on Monday met with the new director of his National Economic Council (NEC), Larry Kudlow, to discuss the administration’s economic agenda.

“Larry and the NEC team look forward to building on the successes of the President’s economic agenda, raising wages, and creating jobs across the country,” the White House said.

Trump announced last month that Kudlow would succeed Gary Cohn in the role following Cohn’s resignation due to disagreements with Trump’s decision to put tariffs on steel and aluminum imports.

 

Another trick for the wall? A pair of Senate Democrats are warning the Pentagon against using its budget to help build Trump’s U.S.-Mexico border wall, saying the move could potentially be illegal. 

Sens. Dick Durbin (Ill.) and Jack Reed (R.I.) sent a letter on Monday to Defense Secretary James Mattis asking for his views on the legality of using fiscal year 2018 money marked for the military to pay for the wall.

“Since no funds have been appropriated for that purpose, we conclude that an expenditure of funds by the Department of Defense for the construction of a border wall would very likely violate the Antideficiency Act,” they wrote.

Trump is doubling down on his months-long demand for the controversial border wall that was at the heart of his 2016 presidential campaign. 

“Must build Wall and secure our borders with proper Border legislation. Democrats want No Borders, hence drugs and crime!” Trump said in a string of immigration-related tweets on Monday morning.

He added that Congress must pass “border legislation, use nuclear option if necessary,” referring to the elimination of the legislative filibuster.

 

What comes next? The Pentagon said last week that Mattis and Trump have spoken about the possibility of using Defense Department funds for the border wall, but it’s unlikely Congress will let that happen. Democrats and some Republicans, are opposed to providing funding for the wall without a long-term deal for “Dreamers” — immigrants brought into the country illegally as children.

 

GOOD TO KNOW

• From CNBC’s John Harwood: “Dow Jones Industrial Average is down 1,111 points, or 4.4%, since Congress passed tax cut last December.”

• The potential selection of a white man to head the New York Federal Reserve — the central bank’s second-most powerful job — has sparked a fierce backlash from Sen. Elizabeth Warren and other progressives, according to Politico.

• The Trump administration has asked the Supreme Court to toss out its case against Microsoft over whether law enforcement can search and seize data stored overseas, citing language that was included in last month’s $1.3 trillion spending bill.

• Missouri’s attorney general said on Monday that he’s subpoenaed Facebook about its data practices following reports that a political consulting firm improperly obtained information on 50 million users.

• $4.1 billion in securities backed by subprime loans were issued last year, ten years out from when a massive wave of foreclosures on homes purchased through such loans kneecapped global financial markets, according to the Financial Times.

• Speaking of which, The Wall Street Journal reports that by bulking up on debt, U.S. companies have added new uncertainty into financial markets.

 

GOING DEEPER

• Washington is grappling with how to govern cryptocurrencies, with many lawmakers facing a steep learning curve to understand how bitcoin and its brethren even work. I write here about how virtual currencies are blurring decades-old lines that regulators use to police financial markets, posing new challenges for state and federal officials.
• The $1.3 trillion omnibus package Congress passed last month included $108 billion in spending above the caps that Democrats and Republicans set in their February budget deal, according to an analysis by the Committee for a Responsible Federal Budget, a watchdog group.

• More than three months after the passage of the GOP’s tax-cut law, new surveys suggest that many people don’t think they are getting bigger paychecks, which could cut into support for Republicans in this fall’s midterm elections.

 

ODDS AND ENDS

• A Texas pastor with ties to former President George W. Bush reportedly plans to turn himself in on fraud charges.

• Thousands of teachers marched Monday in state capitals in Oklahoma and Kentucky, shuttering schools and demanding that Republican-controlled legislatures vote to increase their pay.