The Daily Update - Trump, Justice, Mining, Fed Members

So, with free markets and competition rife, not to mention clean air policies and carbon footprints, West Virginia Governor Jim Justice, an interesting name for a politician, has requested Donald Trump to consider his proposal to subsidise coal from the Appalachian Mountains as a matter of national security. Mr Trump is reported to be considering the idea.

The story goes that Justice, who was elected last year as a Democrat, but last week on meeting the President announced he was now a Republican, wants the Department of Homeland Security to pay $15 per short ton of coal burned by east coast utilities, according to Bloomberg that amounts to around $1.65bln per year. (A short ton is the US equivalent of our own measure but whereas our ton is 2240lb a short ton is just 2000lb).

Justice said ‘It’s a matter of national security because terrorists could easily blow up important gas pipelines or derail freight trains shipping coal to the east, leaving huge swaths of the country lacking power-plant fuel’.

Coal mining in West Virginia has been shrinking for years and the costs of access to the seams is a problem as other mining regions such as Wyoming and Montana have much easier access and therefore cheaper costs. When asked if Trump was considering subsidising West Virginia coal White House spokeswoman Kelly Love said ‘there was nothing to announce at this time’ would have been so funny if she finished with ’Night John-boy’. (The Walton’s, 1970’s)

Another angle Governor Justice could also use is to help the Fed get inflation up, as yesterday St. Louis Fed’s Bullard once again said that he’s concerned for inflation expectations; he reiterated prior concerns about the perceived credibility of the Fed’s inflation target. He also noted that he backs a press conference after every FOMC meeting. While Chicago Fed’s Evans also said that soft wage data suggests labour markets still have some room to run, that recent inflation weakness has ‘raised questions’ about the outlook, and that he didn’t see financial stability risks as “particularly high”. He also focussed on the balance sheet issue saying it would be ‘reasonable’ to announce a balance sheet reduction in September, noting that it ‘won’t have a big impact on financial markets or the economy.’

Have a great evening.