TUESDAY PRIMARY WRAP: CHAOS IN CLEVELAND? — Donald Trump took Florida easily, driving Marco Rubio out of the race. John Kasich won his home state of Ohio and all its 66 delegates. Trump also won North Carolina, Illinois and appeared set to narrowy beat Ted Cruz in Missouri. The upshot: Trump remains the strong front-runner but a contested convention in Cleveland in July appears increasingly likely. Trump could still get the 1,237 delegates he needs to win the nomination outright before the convention but he will have to win with higher percentages than he has thus far. And the terrain out west is not entirely friendly to him.
Some analysts argue that Kasich’s win actually helps Trump by keeping the field divided and denying Cruz a clear one-on-one shot. But Kasich’s win also denied Trump a bigger delegate haul on Tuesday and he will pull more delegates from Trump in future non-winner take all contests. On the Democratic side, Hillary Clinton won Florida, North Carolina and Ohio. She led in Illinois while Bernie Sanders led in Missouri. Clinton remains on track to lock down the delegates she needs well before the Democratic Convention in Philadelphia in late July. Full results: http://politi.co/1Vb1wMV
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Delegate tracker: http://politi.co/1nKh7p5
RUBIO SHINES ON THE WAY OUT — Rubio gave perhaps his most eloquent speech of the campaign in conceding defeat and suspending his race for the White House. “America’s in the middle of a real political storm, a real tsunami, and we should have seen this coming,” he said. He finished with a direct rebuke at Trumpism, pleading with Republicans to reject a “politics of resentment against other people [that] will not just leave us a fractured party, they’re gonna leave us a fractured nation. They’re gonna leave us as a nation where people literally hate each other because they have different political opinions.” And he begged his party: “Don’t give in to fear, don’t give in to frustration.”
WHAT DOES THE CHAMBER DO? — Per a close political observer: “What does the political heavyweight Chamber of Commerce do about the general election? Can [CEO Tom Donohue] support a candidate that 1. would impose massive tariffs that run counter to the pro-trade views of the Chamber; 2. has immigration views that are directly contrary to the Chamber’s views; 3. has attacked some of the most prominent and successful businesses in the US – GE, Ford, Apple, Pfizer, and all of Wall Street. Hard to imagine Donohue making a trek to Brooklyn Heights, but does he have a choice or will he just sit this one out?”
EXIT POLLS SHOW FRUSTRATION — CNN: “Voters in Tuesday’s contests expressed worries about the economy and a broad sense among Republicans that their party has betrayed them … As voters continued heading to the polls in Florida, Illinois, Missouri, North Carolina and Ohio, early polling showed bipartisan concern about both the economy and access to jobs. Republicans continued the trend of saying they felt betrayed by their party …
“Clear majorities of Republican voters Tuesday said they felt betrayed by their party: In Ohio the number was 57 percent, and in North Carolina it was 56 percent. But that feeling did not necessarily translate into overwhelming numbers looking for outsider candidates, with 54 percent in North Carolina and 50 percent in Ohio saying they were looking for an outsider.” http://cnn.it/1S2YWFT
PEOPLE ACTUALLY BETTING ON THE GOP OUTCOME … now see a contested convention as the most likely outcome. http://bit.ly/1TMEahl
FIRST LOOK: WEISS AT THE CHAMBER — From remarks to be delivered Treasury Counselor Antonio Weiss at the Chamber’s Capital Markets Summit: “Since last summer, financial markets have undergone several periods of turbulence. Volatility has not approached the levels of the crisis period. But it has provided a real-world test of U.S. economic strength, the resilience of our financial institutions, and the orderly functioning of our markets.
“Financial reform has been a buffer in volatile times … Going forward, our priority must be to safeguard the gains we’ve made since the crisis, while adapting to a continuously changing economic and financial landscape. Growing the economy and broadening the gains to all Americans will provide a bulwark against future economic shocks. Completing and protecting financial reform will reduce both the frequency and severity of future financial shocks.
THE BRUTAL IMPACT OF TRUMP-ISM — Some smart, high-level economists sympathetic to international trade ran the numbers on Trump’s proposals to slap a 45 percent tariff on Chinese goods and a 35 percent tariff on Mexican goods: “The initial shock … would be comparable to the largest tax increase since World War II. … Even after supply chains adjust, Trump’s proposals are estimated to cost the U.S. nearly $100 billion each year in lost income based on a computable general equilibrium model. …
“China would be virtually certain to retaliate with comparable measures against American goods in sectors like aircrafts, agriculture and autos … Trump tariffs would hit working families hardest with taxes on phones, clothing and computers … 35 percent Mexican tariff would likely significantly increase border stress, particularly around border communities like San Diego and El Paso.”
WHY ANTI-TRADE CANDIDATES STILL HAVE A POINT — NYT’s Eduardo Porter: “What seems most striking is that the angry working class … appears to have understood what the experts are only belatedly finding to be true: The benefits from trade to the American economy may not always justify its costs. In a recent study, three economists … raised a profound challenge to all of us brought up to believe that economies quickly recover from trade shocks. In theory, a developed industrial country like the United States adjusts to import competition by moving workers into more advanced industries that can successfully compete in global markets.
“They examined the experience of American workers after China erupted onto world markets some two decades ago. The presumed adjustment, they concluded, never happened. Or at least hasn’t happened yet. Wages remain low and unemployment high in the most affected local job markets. Nationally, there is no sign of offsetting job gains elsewhere in the economy. What’s more, they found that sagging wages in local labor markets exposed to Chinese competition reduced earnings by $213 per adult per year” http://nyti.ms/1SQPeJ3
FED AHEAD — Pantheon’s Ian Shephardson on the announcement and Janet Yellen presser: “The further improvement in labor market conditions and the jump in core inflation means that the economic data have given the Fed all the excuse it needs to raise rates today. But the chance of a hike is very small, not least because the fed funds future puts the odds of an action today at just 4 percent, and the Fed has proved itself very reluctant to surprise investors — at least, in a bad way — in the past.
“For the record, we think the Fed is making a big mistake if it doesn’t raise rates today. Dr. Yellen and her colleagues, in our view, are making the grave mistake of overweighting the importance of the manufacturing sector and the stock market … Dr. Yellen and her colleagues are focusing on events outside the U.S. simply because they can. The domestic data, as of right now, are not unduly alarming. Over the next six months or so, though, we expect this to change, with wage growth breaching the 3 percent mark and core PCE inflation rising close to the Fed’s 2 percent target”
DC METROMAGEDDON — POLITICO’s Kathryn A. Wolfe: “The Washington rail transit system will shut its doors all day Wednesday — an unprecedented lights-out for the malfunction-prone system, where safety has been under such scrutiny that it’s had its oversight taken in hand by the feds. … Metrorail will close for 24 hours, starting at midnight Tuesday, for emergency inspections of its power cables, following a cable fire Monday that forced significant delays. Buses will continue to operate, as will Capital Bikeshare and the newly opened D.C. streetcar. …
“It’s a stark and unprecedented step for the agency, particularly in the middle of a busy work week with Congress in session — and at the beginning of tourist season. Twitter users had already begun prepping for the complaint-fest to come, using the hashtag “#wmatageddon.”
GOOD WEDNESDAY MORNING — Email me tips and takes to bwhite@politico.com and follow me on Twitter @morningmoneyben.
DRIVING THE DAY — Fed make its announcement at 2:00 p.m. with Yellen presser to follow at 2:30 p.m. … U.S. Chamber holds its annual Capital Markets summit … American Banker’s Assoc. continues its annual DC meeting … House Budget Committee will mark up the Fiscal Year 2017 budget resolution
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Zachary Warmbrodt on Sen. Elizabeth Warren’s latest effort to influence hiring at regulators — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 info@politicopro.com
** A message from the U.S. Chamber’s Center for Capital Markets Competitiveness: The U.S. Chamber’s 10th Annual Capital Markets Summit will look at the current state of the capital markets, including how innovation is changing the landscape, and explore what changes are necessary to ensure these markets are modernized and well-regulated to ensure economic growth. WATCH LIVE: http://bit.ly/1SUQJXv #CCMCSummit **
MORE CHAMBER PREVIEW — From Donohue’s prepared remarks at the 10th Annual Capital Markets Summit: “If we get the policies right, then our capital markets are poised to provide capital to startups and businesses and to serve consumers. They are poised to provide a tremendous boost to jobs, growth, and opportunity.
TRUMP HEARTS RUSSIA — Bloomberg’s Josh Rogin: “When Donald Trump talks about his desire to have good relations between the U.S. and Russia, it’s not a recent attraction. Trump’s attempts to expand his business and his brand there date back decades, and this history casts a shadow over his pro-Russian foreign policy. As a presidential candidate, he courts Putin’s favor, extending the charm offensive intended to build the Trump real-estate empire. …
“Trump’s attraction to Russia seems to be mutual. There is a Russian-language website that collects Trump news and offers sales of Trump books and products. There’s even a Trump 2016 Russian language mock campaign site. What Trump rarely talks about is his decades-long effort to do business in the Soviet Union and post-Soviet Russia. Good U.S.-Russian relations are potentially very lucrative for the Trump Organization. The Trump campaign did not respond to a request for comment.” http://bv.ms/1PaCcPM
ANTI-TRUMP FORCES REGROUP — POLITICO’s Shane Goldmacher: “Three influential leaders in the conservative movement have summoned other top conservatives for a closed-door meeting this Thursday in Washington, D.C., to talk about how to stop Donald Trump and, should he become the Republican nominee, how to run a third-party ‘true conservative’ challenger in the fall. The organizers of the meeting include Bill Wichterman, who was President George W. Bush’s liaison to the conservative movement, Bob Fischer, a South Dakota businessman and longtime conservative convener, and Erick Erickson, the outspoken Trump opponent and conservative activist who founded RedState.com.
“The meeting is scheduled for Thursday … One person involved in the gathering described it as in the ‘embryonic’ stages. ‘It’s not like there’s a royal grand plan that’s going to be unfurled,’ this person said. ‘People aren’t giving up on the Republican Party yet.’” http://politi.co/1QVs8OZ
VALEANT COULD DEFAULT — WSJ’s Michael Rapoport: “Investors punished Valeant Pharmaceuticals International Inc. on Tuesday, cutting its shares in half after the drugmaker slashed its guidance and said it could be in danger of defaulting on some of its debt. Shares dropped 51 percent to $33.51, its lowest close since Jan. 5, 2011. As recently as August, shares of the one-time highflier traded above $262. The company lost $12 billion in market value on Tuesday.
“Tuesday’s plunge came as Valeant outlined the potential for a default, its cuts to quarterly and annual guidance, and tweaks to its business model that would scrap many of the practices that defined the company. Much of the news came during a lengthy and long-awaited earnings call, which the Canadian company had delayed in February after Chief Executive Michael Pearson returned from a two-month medical leave. Valeant has faced an assortment of bad news recently, including a delay in filing its annual report, a [SEC] investigation and a possible earnings restatement” http://on.wsj.com/1SQORhJ
ABA SEEKS RATE HIKES — FT’s Alistair Gray and Ben McLannahan in New York: “America’s biggest banking association has urged the Federal Reserve to hold firm with its plan to tighten monetary policy, arguing that protracted delays in rate rises — or, worse, going negative — could have damaging consequences. On the eve of the central bank’s next meeting on rates, James Chessen, chief economist of the American Bankers Association, warned that loose policies were building up problems in the economy.
“Economists anticipate the Fed, which in December raised rates for the first time in almost a decade, will leave them unchanged on Wednesday. Most surveyed by the Financial Times expect it to keep rates on hold until June. The Fed has said it plans to gradually increase its benchmark rate this year. … ‘They should be raising rates,’ Mr Chessen said. ‘I’m not suggesting it should be aggressive or instant. But it needs to be a firm path. My concerns are that there are things that are happening in the economy because credit has been so low for so long.’” http://on.ft.com/1UxabZB
HOUSE GOP BUDGET ON THE ROCKS — POLITICO’s Jake Sherman and Lauren French: “The House Republican budget is in trouble. Speaker Paul Ryan’s Republican leadership team knows it. Most members of the House are acutely aware of it. And most of them even realize how bad it will look. The same party that dreamed up ‘No Budget, No Pay’ to shame Democrats for skipping their fiscal blueprint might now take a pass on their own.
“The patient is not totally dead — but it’s fair to say the shock plates are firmly implanted on its chest. Top Republicans believe the GOP will be able to advance the 2017 budget out of Rep. Tom Price’s (R-Ga.) Budget Committee, but whether it will ever be able to make it to the House floor is an open question. Most aides and lawmakers involved in the process doubt it will garner the requisite votes to clear the chamber.” http://politi.co/1U69MPr
ALSO FOR YOUR RADAR —
CEO’S REMAIN DEPRESSED — Per BRT: “For the fourth quarter in a row, CEO expectations on the economy remain mixed, indicating an economy performing below its potential, according to the Business Roundtable first quarter 2016 CEO Economic Outlook Survey The Business Roundtable CEO Economic Outlook … increased modestly from 67.5 in the fourth quarter of 2015 to 69.4 in the first quarter of 2016. The index remains near three-year lows”
CHAMBER PUSHES ON ONLINE TAX — The U.S. Chamber of Commerce and more than two dozen other business groups wrote to the House Judiciary Committee to address online sales taxes issue, arguing that inaction “has left states, local governments and our merchants with no choice but to seek disjointed and confusing remedies through individual state activity.” http://bit.ly/21tZpn3
** A message from the U.S. Chamber’s Center for Capital Markets Competitiveness: Watch Live today from 8:00 a.m. – 3:45 p.m.: The U.S. Chamber’s 10th Annual Capital Markets Summit – The Foundation of Economic Growth. Speakers includes SEC Chair Mary Jo White, Treasury’s Antonio Weiss, CFTC Commissioner Chris Giancarlo, Sens. Joe Donnelly and Pat Toomey, Reps. French Hill and Randy Neugebauer, Charles Schwab President and CEO Walter Bettinger, Natixis Global Asset Management John Hailer, and Chamber President and CEO Tom Donohue. Attendees and speakers from the business community and government leaders will examine the current state of the capital markets, at home and abroad, and explore what changes are necessary to ensure these markets are modernized and well-regulated. FULL AGENDA: http://bit.ly/1QP722D WATCH LIVE: http://bit.ly/1SUQJXv Join the conversation with #CCMCSummit **
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