“This would be [approximately] 500,000 barrels per day less than stipulated in the production cuts agreement, meaning significant over compliance with the requirements,” said analysts at Commerzbank in a research note. Also Wednesday, the International Energy Agency said in a monthly report that global supply fell by 1.4 million to 99.7 million barrels a day in January.The gains for crude come despite data from the Energy Information Administration Wednesday that revealed domestic crude supplies rose by 3.6 million barrels for the week ended Feb. 8. That marked a fourth-straight week rise, and was larger than the 2.7 million-barrel rise expected by analysts polled by S&P Global Platts. The American Petroleum Institute data on Tuesday showed a decline of 998,000 barrels, according to sources. “Despite a big drop in imports due to inclement weather on the Gulf Coast last week, a plumbing of the depths in terms of refinery maintenance has meant we have still seen a build to crude inventories,” said Matt Smith, director of commodity research at ClipperData. Separately, a monthly EIA report released Tuesday revealed higher U.S. crude production forecasts for 2019 and 2020. The report also included higher WTI and Brent price forecasts for this year, but reduced the 2020 price views for both benchmarks by more than 4%. On Tuesday, OPEC said its crude output fell by 797,000 barrels a day in January, month on month, to average 30.81 million barrels a day, in the cartel’s separate monthly production update.
The sleeping pro-Europe majority must be mobilized to defend its values, George Soros says
Chris McGrath/Getty Images
MUNICH, Germany (Project Syndicate) — Europe is sleepwalking into oblivion, and the people of Europe need to wake up before it is too late.
If they don’t, the European Union will go the way of the Soviet Union in 1991. Neither our leaders nor ordinary citizens seem to understand that we are experiencing a revolutionary moment, that the range of possibilities is very broad, and that the eventual outcome is thus highly uncertain.
Most of us assume that the future will more or less resemble the present, but this is not necessarily so. In a long and eventful life, I have witnessed many periods of what I call radical disequilibrium. We are living in such a period today. The first step to defending Europe from its enemies, both internal and external, is to recognize the magnitude of the threat they present. The second is to awaken the sleeping pro-European majority and mobilize it to defend the values on which the EU was founded. The antiquated party system hampers those who want to preserve the values on which the EU was founded, but helps those who want to replace those values with something radically different. This is true in individual countries and even more so in trans-European alliances. The EU’s dominant country is Germany, and the dominant political alliance in Germany — between the Christian Democratic Union (CDU) and the Bavaria-based Christian Social Union (CSU) — has become unsustainable. The alliance worked as long as there was no significant party in Bavaria to the right of the CSU. That changed with the rise of the extremist Alternative für Deutschland (AfD). In last September’s länder elections, the CSU’s result was its worst in over six decades, and the AfD entered the Bavarian Parliament for the first time. The AfD’s rise removed the raison d’être of the CDU-CSU alliance. But that alliance cannot be broken up without triggering new elections that neither Germany nor Europe can afford. As it is, the current ruling coalition cannot be as robustly pro-European as it would be without the AfD threatening its right flank. In the United Kingdom, too, an antiquated party structure prevents the popular will from finding proper expression. Both Labour and the Conservatives are internally divided, but their leaders, Jeremy Corbyn for Labour and Theresa May for the Tories, are so determined to deliver Brexit that they have agreed to cooperate to attain it. The public is also becoming aware of the dire consequences of Brexit. The chances that May’s deal will be rejected on Feb. 14 are growing by the day. That could set in motion a groundswell of support for a referendum or, even better, for revoking Britain’s Article 50 notification.
Italy’s predicament Anti-European forces may look good in comparison: at least they have some principles, even if they are odious.
Europe’s interests It is difficult to see how the pro-European parties can emerge victorious from the election in May unless they put Europe’s interests ahead of their own.
Russia is losing its faith in Venezuelan President Nicolas Maduro’s ability to emerge victorious from the political crisis gripping the country, Kremlin sources say. Moscow still publicly backs Maduro’s regime but ‘recognizes that the disastrous state of Venezuela’s economy is inexorably draining what remains of his public support’. The unidentified sources also pointed out that the army, part of which is currently deployed to block an aid shipment of food and medicine from entering the country from Colombia, will be reluctant to continue crack downs on fellow Venezuelans. This comes as Venezuelan army continues its blockage of a bridge on the border with Colombia ahead of an anticipated humanitarian aid dispatch. Maduro claims humanitarian aid is a forerunner of a US-led invasion, and defended his decision to order a barricade of the bridge by saying that ‘no one will enter, not one invading soldier.’ Opposition leader Juan Guaido, now recognised as interim president by the West and the US, claims that up to 300,000 people face death if the aid being blocked by Maduro’s army is not delivered. The opposition-dominated National Assembly, led by presidential challenger Guaido, had warned the armed forces that blocking aid would mean crossing a ‘red line’. ‘You know there’s a red line, you know well there’s a limit, you know that medicines, food and medical supplies are that limit,’ lawmaker Miguel Pizarro said in a message to the military. Venezuelan military officers used a tanker truck and huge shipping container to block access to the Tienditas bridge, which links Cucuta, Colombia to Urena, Venezuela. Franklyn Duarte, an opposition lawmaker from the border state of Tachira, told AFP that troops from the armed forces were blocking the crossing. The aid delivery was being coordinated by Guaido, who has declared himself interim president of the oil-rich country and now enjoys the backing of some 40 countries as Venezuela’s legitimate leader. Maduro, 56, has repeatedly accused the United States of fomenting a coup. His blockage of food, medicine and necessities to hundreds of thousands of starving Venezuelans came as weapons were discovered in cargo which the government claims was sent from Florida. The weapons, including 19 rifles and high-calibre ammunition, were found at an airport in the city of Valencia, having been transported on an Airbus jet that flew in on Sunday, the Interior Ministry wrote on Twitter. It is not known who the intended recipient of the weapons was. The US, which has not ruled out a military intervention in crisis-wracked Venezuela, was the first to recognize him as acting president, followed by a dozen Latin American countries. In his State of the Union address Tuesday night, President Donald Trump reaffirmed US support for Guaido, saying ‘we stand with the Venezuelan people in their noble quest for freedom.’ Britain, France, Germany and Spain were among 20 EU nations to side with Guaido this week after Maduro ignored their demands that he announce new presidential elections by February 3. Guaido is trying to force Maduro from power, set up a transitional government and hold a new presidential poll.
Singapore — Crude oil futures fell during mid-morning trade in Asia Thursday as the Energy Information Administration reported higher crude stocks. Additionally, record high domestic output has also capped prices, analysts said. Receive daily email alerts, subscriber notes & personalize your experience. According to EIA data released Wednesday, US crude inventory rose by 1.26 million b/d to 447.21 million barrels, which was well under analysts’ expectations of a 3.7 million-barrel build in an S&P Global Platts survey of analysts conducted on Monday. Meanwhile, record high domestic output, coupled with slowing factory output in Germany also capped prices, analysts said. Despite this, market participants felt that prices would be higher on lower OPEC productions, US sanctions on Venezuela’s PDVSA and supply side issues. OPEC’s oil production fell to a near four-year low in January, according to an S&P Global Platts survey, as the cartel’s new output cuts designed to halt the price slide of late-2018 went into force. OPEC’s crude output plunged to 30.86 million b/d last month, a fall of 970,000 b/d from December, excluding flows from Qatar, which left the production group at the start of the year, the survey of industry officials, analysts and shipping data showed. The month-on-month fall was the biggest since December 2016 and the lowest OPEC output since March 2015, the survey found. In other news, US sanctions on PDVSA, Venezuela’s state-owned oil company, have already had a dramatic impact on global crude and diluent flows and is likely to hasten the already historic collapse of the South American nation’s oil sector. While the sanctions have yet to affect oil prices significantly, that could change if the crisis in Venezuela drags on, S&P Global Platts reported.
LONDON (Reuters) – Soothing sounds from the Federal Reserve propelled world stocks to their best January on record on Thursday although, having scored stellar gains this time last year only to flop spectacularly, traders were trying not to get too carried away. Crucially, it also said that the rundown of its balance sheet – or the stockpile of bonds it has accumulated over the past 10 years of quantitative easing – could slow too. That ticked all the boxes for financial markets. Wall Street and Asia both rallied and Europe ran up as much as 1 percent] until news that Italy was back in recession and other poor data took the wind out of the sails of most markets bar London. Futures pointed to the U.S. S&P 500 and Nasdaq both rising later though [.N]. That likely move added with Asia’s gains lifted the $4 trillion MSCI world index, which tracks 47 countries, for the 20th day out of the last 23. For January it is up more than 7 percent, which is its best January since the index began in 1990 and the best performance in any month since December 2015. “The rally really does lift all boats,” said Pictet emerging market portfolio manager Guido Chamorro. The gains for stocks were matched in bond markets. Benchmark U.S. Treasury yields, which tend to set the bar for global borrowing costs, had dived significantly and Europe’s big move saw Italian 2-year yields hit their lowest since May. But it was all pain for the dollar. It was struggling near a three-week trough against its major peers and emerging market currencies rose almost in unison having been crushed by the greenback last year. “Risk assets are dancing in the streets and the dollar’s down in the dumps,” Societe Generale strategist Kit Juckes said. “We may yet get a (Fed) rate hike in June, but if what matters is where policy’s heading in the medium term, the FX market would overlook that and sell the dollar anyway.” U.S. stocks were also set for another packed day of data and earnings. Jobless claims figures had already come out showing a 1-1/2 year high, Electric carmaker Tesla missed forecasts again but General Electric surged, marked up almost 10 percent after it beat estimates.
Foxconn is reconsidering plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus, and said it intends to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.Announced at a White House ceremony in 2017, the 20-million square foot campus marked the largest greenfield investment by a foreign-based company in U.S. history and was praised by President Donald Trump as proof of his ability to revive American manufacturing. Foxconn, which received controversial state and local incentives for the project, initially planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. It later said it would build smaller LCD screens instead. Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high. Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States. Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks. The company’s own growth projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup, according to budget think tank the Wisconsin Budget Project.
Staff shortages linked to the US government shutdown have caused significant delays to flights at north-eastern airports. The closure means some federal staff, including air traffic controllers, are currently working without pay. Nancy Pelosi, Speaker of the House of Representatives, has blamed President Trump for the disruption. The delays come one day after air industry unions issued a stark warning about the risk posed to public safety. “In our risk averse industry, we cannot even calculate the level of risk currently at play, nor predict the point at which the entire system will break,” air traffic control, pilot and flight attendant union leaders said in a joint statement. In total about 800,000 employees have been working without pay, or have been temporarily laid off, since areas of the federal government shut down due to lack of funding 35 days ago.
President Trump has refused to approve any new funding agreement that does not include $5.7bn (£4.4bn) for his southern border wall. Democrats in Congress refuse to approve wall funding, so the two sides are stuck at an impasse. In a tweet on Friday, Mrs Pelosi appealed to the president to “stop endangering the safety, security and well being of our nation” and reopen the government. Flights were halted at New York’s LaGuardia airport – the 20th busiest in the country – shortly before 10:00 local time (15:00 GMT). The US Federal Aviation Administration (FAA) confirmed the temporary ground stop was lifted about 45 minutes later – but hundreds of flights there are disrupted. In a statement, the FAA said a “slight increase” in sick leave absences at two air traffic control facilities had led to the schedule changes – which it said was to ensure safety levels were maintained. It said departure delays at Philadelphia, Newark and LaGuardia were linked to the shortages. The FAA has advised the public to check with individual airlines for more information. On Thursday, the CEO of JetBlue Airways said the impact on carriers from the shutdown had so far been limited, but warned it was nearing a tipping point. Southwest Airlines head Gary Kelly has described the shutdown as “maddening” – estimating they have lost out on $10-15m (£7.5-11m) in January sales. On Friday, the Association of Flight Attendants issued a blistering statement in response to the delays. “The aviation system depends on the safety professionals who make it run. They have been doing unbelievably heroic work even as they are betrayed by the government that employs them,” President Sara Nelson said in a statement.
US authorities are jumping into the ongoing investigation surrounding the Estonian branch of Danske Bank. According to a Bloomberg report, the Federal Reserve (Fed) is now looking at Deutsche Bank’s involvement in what is shaping up to be one of the largest money laundering cases in recent history. The investigation can be traced back to September of 2018. A whistle-blower, who has since been identified as Howard Wilkinson, the branch’s former Head of Trading, revealed that anti-money laundering procedures were not being properly adhered to. It is unclear exactly how much money passed through the Danish bank’s Estonian branch but some outlets have estimated that $230 billion of illicit cash was funnelled through it. According to the Danish Financial Services Authority, the bulk of the money came from Russia and countries that formerly made up the Soviet Union. Deutsche Bank fits into the picture because it allegedly acted as Danske Bank’s main correspondent bank. As with much of the case, many of the details surrounding Deutsche Bank remain murky and it is still unclear as to whether or not the German firm engaged in any wrongdoing.The company’s CEO, Christian Sewing, has already urged members of the public to not judge the firm until more evidence comes to light. Sewing has also said that the bank is pursuing its own internal investigation into the Danske Bank case. According to Bloomberg, the Fed’s investigation into the case, which is yet to be made public, will look at whether Deutsche Bank did enough to assess the funds that were flowing in from Danske Bank. In a statement, Deutsche Bank denied that there was a probe but said that it had received requests for information from regulators across the globe. The German banking giant said that this was “not surprising at all” as regulators want to look at the Dankse Bank case and see what lessons can be drawn from it. Nick Note :t hey are a dead broke piece of shit!
Delaying or cancelling Brexit would be a “calamitous” breach of trust with the electorate and worse than leaving the EU with no deal, Liam Fox has said.The Brexiteer minister told BBC’s Radio 4’s Today programme MPs pushing for a delay actually wanted to stop Brexit. He said this was the “worst outcome” of the current wrangles. MPs are proposing alternative plans to the PM’s deal with the EU, including seeking an extension to the UK’s exit date – which is scheduled for 29 March. But the prime minister has said the “right way” to rule out no-deal Brexit is to approve her withdrawal agreement. Under current law, the UK will exit the EU on 29 March, whether or not a deal has been struck. The decision to leave was taken by 52% to 48% in a referendum in June 2016.Liam Fox said MPs should think about the “political consequences” of delaying Brexit not just the “short-term economic consequences”. “There is no doubt that leaving with a deal and minimising disruption both to the UK and our EU trading partners is in our best interest,” the international development secretary said. “But I think the most calamitous outcome would be for Parliament, having promised to respect the result of the referendum, to turn around and say it wouldn’t.” But Conservative Remainer Anna Soubry said it was “not true” that Tory MPs backing a move to prevent a “no deal” Brexit – such as Nick Boles, Nicky Morgan and Sir Oliver Letwin – wanted to stop Brexit and had in fact voted for Theresa May’s withdrawal deal. Mr Boles said Mr Fox had “never been very good at detail”. Former Chancellor George Osborne, a key player in the Remain campaign during the referendum, has said delaying the UK’s exit from the EU was now the “most likely” option. Speaking to BBC business editor Simon Jack in Davos, Mr Osborne, now a newspaper editor, said that the prospect of no-deal meant “the gun is held to the British economy’s head”. “Russian roulette is a game which you should never play because there’s a one-in-six chance that the bullet goes into your head,” he said. Mr Osborne, who was sacked by Mrs May when she became prime minister after the referendum, said his successor Philip Hammond had “sensibly” told businesses that leaving without a deal was not a possibility. “But we now need to hear it from the British prime minister,” he said. The other 27 EU member states would need to agree to an extension of the UK’s departure date. Next Tuesday MPs will get to vote on Theresa May’s way forward on Brexit, after rejecting her initial plan by a record-breaking 230 votes last Tuesday. Mrs May is hoping to tweak the deal to address concerns about the Northern Irish “backstop” among her own backbenchers and Northern Ireland’s Democratic Unionist Party, which she relies on to keep her in power. But MPs are attempting to take control of the Brexit process by tabling amendments to Mrs May’s plans
NEW YORK (Reuters) – Oil prices steadied on Thursday, boosted by a rebound in U.S. equities, after earlier losses on fears about surging U.S. crude production and a weakening global economy. Brent crude oil futures LCOc1 were down 14 cents to 61.19 a barrel by 2:04 p.m. EST (1904 GMT). U.S. crude futures CLc1 fell 32 cents to $52 a barrel. Earlier in the session, both benchmarks dropped about 2 percent. The Organization of the Petroleum Exporting Countries in its monthly market report cut its forecast for the average demand for its crude in 2019 to 30.83 million barrels per day, down 910,000 bpd from the 2018 average.
OPEC, however, said it cut oil output sharply in December before a new accord to limit supply took effect, suggesting that producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand
Saudi Arabia led the cuts of 751,000 bpd in December, the biggest month-on-month drop in almost two years.
The group and its allies plan to meet on April 17-18 in Vienna to review the supply reduction deal that began in January.
U.S. crude output has climbed by 2.4 million bpd since January 2018 and stockpiles of crude and refined products have risen sharply, U.S. Energy Information Administration data showed. [EIA/S]“Going forward, we should start getting a little better indication of Saudi production trends. I think that’s going to be supportive to the market,” Ritterbusch said. In response to the drop in price in the second half of last year, OPEC and non-members plan to cut production by a joint 1.2 million bpd this year. Oil is still about 20 percent above the lows reached in late December, but analysts said Brent has been trading in the low $60s and U.S. crude in the low $50s due to ongoing nervousness about relations between Washington and Beijing and China’s economic outlook. “Brent needs to move past $62 before we can talk about $65,” BNP Paribas head of commodities Harry Tchilingurian told the Reuters Global Oil Forum.
PARIS: BNP Paribas, France’s largest listed bank, will close its proprietary trading desk unit Opera within the next three months, a source close to the matter said Friday, confirming an earlier report from Bloomberg.
The bank had already downsized its proprietary trading operations following the 2008 financial crisis in a bid to reduce exposure to market volatility. The bank held the operation in a distinct legal entity called Opera to comply with local banking regulations that ban French banks from directly trading on markets with their own funds. They are only allowed to do market-making for clients. Regulators in France, like in other countries, have toughened rules to prevent banks from speculating on markets with funds from depositors. BNP Paribas didn’t disclose Opera’s performance, but has said the entity handles 600 million euros in capital. The unit is not significant for the bank’s operations and only employs 17 people, mainly in London and Paris, the source said. Nick Note :F&%* you, you banking Corporate Assholes. one of many more to come
“What if the 1.2 million barrels of cuts are not enough? I am telling you that if it is not, we will meet and see what is enough and we will do it,” Mazrouei said.
KUWAIT (Reuters) – OPEC and allied oil producers are ready to hold an extraordinary meeting and will do what is needed if the current cut in oil output by 1.2 million barrels per day does not balance the market next year, the United Arab Emirates’ energy minister said on Sunday. Extending the output pact signed in early December will not be a problem and producers will do as the market demands, Suhail al-Mazrouei told a news conference at a gathering of the Organization of Arab Petroleum Exporting Countries (OAPEC) in Kuwait. “The plan (to cut oil production) is well studied but if it does not work, we always have the power in OPEC to call for an extraordinary meeting,” he added. “If we are required to extend for (another) six months, we will do it … I can assure you an extension will not be a problem.” Mazrouei was speaking at a joint news conference with the Iraqi and Algerian energy ministers as well as Kuwait’s OPEC governor, Haitham Al-Ghais. Saudi Arabia’s OPEC governor, Adeeb Al-Aama, who attended the OAPEC meeting, said oil market oversupply had fallen to 37 million barrels of crude in November from 340 million barrels in January 2017, when OPEC and its allies began cutting production in an attempt to lift prices. The Iraqi minister, Thamir Ghadhban, said there was an expectation that the output cut decision could be renewed, adding that Iraq would be willing to extend the production agreement in April. OPEC is set to hold its next oil output policy decision meeting that month in Vienna.
“We will be watching the prices and how they react over time,” Ghadhban said.
Saudi Arabia is fully committed to the reduction agreement, Al-Aama said, adding that the world’s top oil exporter’s production in January was seen at 10.2 million bpd, lower than its output target of 10.3 million bpd under the recent pact.
The kingdom has over-committed with previous cuts, reducing by more than its share and reaching compliance of 120 percent from January 2017 until May 2018, Al-Aama said.
London — OPEC kingpin Saudi Arabia has pledged to lower its crude oil output to 10.311 million b/d — a 322,000 b/d cut from its October level — according to a breakdown of member quotas under the producer group’s supply accord obtained by S&P Global Platts. Iraq, OPEC’s second highest producer, will cut 141,000 b/d to reach an output level of 4.512 million b/d and the UAE will cut 96,000 b/d to average 3.072 million b/d, according to the document prepared by OPEC’s secretariat.
OPEC, Russia and nine other non-OPEC allies agreed earlier this month to a combined 1.2 million b/d supply reduction for the first six months of 2019 to shore up what many expect to be weakening market fundamentals ahead.
The document shows that OPEC will shoulder 812,000 b/d of those cuts, while the non-OPEC participants will cut 383,000 b/d.
Saudi energy minister Khalid al-Falih has already pledged that the kingdom’s production will fall to 10.2 million b/d in January, exceeding its commitment.
Russia, the largest non-OPEC participant, has previously said it committed to reduce its production gradually by 230,000 b/d. The document says Russia’s quota under the deal is 11.191 million b/d. Russian energy minister Alexander Novak said his country would lower its output by 50,000 to 60,000 b/d in January. The agreement exempts OPEC members Libya, Iran and Venezuela. For the other 11 OPEC countries, the cuts represent a 3.04% reduction from the baseline October levels, as determined by an average of six independent secondary sources, except for Kuwait, which was given a September benchmark due to bad weather that impacted its production in October.
The non-OPEC countries are also using October as their baseline, except for Azerbaijan, which is using September, and Kazakhstan, which is using November.
OPEC production allocations (million b/d)
|Iran, Libya and Venezuela are exempted from the cuts|
|All reference levels are October 2018, except for Kuwait, which is September 2018|
Non-OPEC production allocations (million b/d)
|All reference levels are October 2018, except for Azerbaijan, which is September 2018, and Kazakhstan, which is November 2018|
WASHINGTON (AP) — President Donald Trump appeared Tuesday to back off his demand for $5 billion to build a border wall, signaling for the first time that he might be open to a deal that would avoid a partial government shutdown. The White House set the tone when press secretary Sarah Huckabee Sanders indicated that Trump doesn’t want to shut down the government, though just last week he said he’d be “proud” to do so. The president would consider other options and the administration was looking at ways to find the money elsewhere, Sanders said. It was a turnaround after days of impasse. Without a resolution, more than 800,000 government workers could be furloughed or sent to work without pay beginning at midnight Friday, disrupting government operations days before Christmas. One option that has been circulating on Capitol Hill would be to simply approve government funding at existing levels, without a boost for the border, as a stopgap measure to kick the issue into the new Congress next month. The chairman of the Appropriations Committee, Sen. Richard Shelby, R-Ala., confirmed late Tuesday his office was preparing legislation to keep government funded, likely into February. The White House preference was for a longer-term package, although the conversation remained fluid and Trump has been known to quickly change course, said a person familiar with the negotiations but not authorized to discuss them by name.
Trump’s inaugural committee has been probed by Mueller for illegal foreign donations, a topic that the incoming House Intelligence Committee chairman plans to further investigate next year. Two years after Donald Trump won the presidency, nearly every organization he has led in the past decade is under investigation.Trump’s private company is contending with civil suits digging into its business with foreign governments and with looming state inquiries into its tax practices. Trump’s 2016 campaign is under scrutiny by special counsel Robert S. Mueller III, whose investigation into Russian interference has already led to guilty pleas by his campaign chairman and four advisers. Trump’s charity is locked in an ongoing suit with New York state, which has accused the foundation of “persistently illegal conduct.” The mounting inquiries are building into a cascade of legal challenges that threaten to dominate Trump’s third year in the White House. In a few weeks, Democrats will take over in the House and pursue their own investigations into all of the above — and more. The ultimate consequences for Trump are still unclear. Past Justice Department opinions have held that a sitting president may not be charged with a federal crime. House Democrats may eventually seek to impeach Trump. But, for now, removing him from office appears unlikely: It would require the support of two-thirds of the Senate, which is controlled by Republicans. However, there has been one immediate impact on a president accustomed to dictating the country’s news cycles but who now struggles to keep up with them: Trump has been forced to spend his political capital — and that of his party — on his defense. On Capitol Hill this week, weary Senate Republicans scrambled away from reporters to avoid questions about Trump and his longtime fixer Michael Cohen — and Cohen’s courtroom assertion that he had been covering up Trump’s “dirty deeds” when he paid off two women who claimed they had affairs with the president before he was elected.
The stars of the biggest hedge funds are losing their shirts as analysts fear a major financial wipeout is imminent.From Ken Griffin’s Citadel, to Israel Englander’s Millennium Management, one big name after another is racking up negative returns lately, amid bad bets in a saturated market. “Some sectors of the fund industry are crowded and competing with other investment vehicles,” said Nicholas Tsafos at EisnerAmper, who advises hedge funds.There’s also a wide disparity lately in returns among managers chasing similar investment strategies. “That alone should cause the number of closures to increase, as bad managers get fired and money is recirculated into those managers that do better,” said Don Steinbrugge, managing partner at Agecroft Partners, a hedge fund consulting and marketing firm. As hedge funds fall like dominoes (and returns underperform the S&P 500), managers also blame a sharp rise in stock market volatility and low interest rates. Although there are still more launches than failures — and as new money was infused into hedge funds in the first half of 2018 — nervous investors have pulled $10.1 billion from hedge funds through October, according to eVestment. “We remain bearish, as investor positioning does not yet signal ‘The Big Low’ in asset markets,” said Michael Hartnett, chief investment strategist at Merrill Lynch, summing up overall investor sentiment in the firm’s latest fund survey. Analysts are forecasting a surge in redemptions, especially toward year end, as more clients pull money out of losing funds. The news is hardly good for a parade of managers at some of the biggest hedge funds. According to industry reports, November was a bone-crushing month for David Einhorn’s Greenlight Capital, which saw a 3.6 percent loss; Steve Cohen’s Point72 Asset Management, which took a 5 percent hit; Citadel, which absorbed a 3 percent loss; Millenium Management, which ran into the red by 2. 8 percent; and Dmitry Balyasny’s Atlantic Global Fund, with a decline of 3.9 percent and firm-wide job cuts of 125 after losses and withdrawals eliminated $4 billion in assets. And each day brings more depressing news. Most recently, hedge fund closures included Brenham Capital, Brenner West Capital Partners, Tourbillon Capital Partners LP, Highfields Capital Management and Criterion Capital Management.
After flooding the US market with oil in recent months, Saudi Arabia reportedly plans to downgrade exports of crude oil. US-based oil refiners were told to expect a much lower shipment from Saudi Arabia in January than in recent months, following the OPEC agreement to reduce production, sources briefed on the plans of state oil company Saudi Aramco told Bloomberg.
The shipments apparently could hit a 30-year low set in late 2017 of 582,000 barrels a day, which is 40% less than the recent three-month average, sources added on condition of anonymity, as the information they are providing has not been made public.
According to sources, Riyadh hopes to show the market it is making good on its promise to cut supplies following the OPEC decision. The shift in crude exports to the US could potentially have a huge impact on the market because data are available on a weekly basis, while in other regions oil traders only receive official figures on a monthly basis, or not at all. The Saudi energy ministry did not provide any official comment. The decision to cut supplies would demonstrate that Saudi Arabia is sincere with its promise to bring supply and demand in line, yet it might also lead to a conflict of interests with US President Donald Trump, who repeatedly posted on Twitter his demand that OPEC maintain its current levels of supply.
Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!
— Donald J. Trump (@realDonaldTrump)
Total Saudi oil exports are expected to drop by 1 million barrels a day in January, down from about 8 million barrels a day in November-December, sources said. Khalid Al-Falih, the Saudi energy minister, told reporters last week that Saudi production will eventually drop in January to 10.2 million barrels a day, down from 11.1 million barrels a day in November. The export cuts, if they are to be implemented, will affect big US refiners such as Valero Energy Corp., Phillips 66, Chevron Corp., Exxon Mobil Corp., and Marathon Petroleum Corp., forcing them to find other exporters in Mexico, Canada or Venezuela. Saudi’s supply to the US has been 860,000 barrels of crude a day on average so far this year, according to Bloomberg calculations based on weekly customs data, hitting its highest average of 975,000 barrels a day in July-December.
MOSCOW (Sputnik) – US President Donald Trump has expressed concern about the possibility of being impeached, CNN reported, citing a source close to Trump. According to the source, Trump believes that impeachment is a “real possibility” after the House of Representatives comes under the control of the Democrats. Another source told the media that Trump’s aides believed that the only problem that might lead to impeachment is the allegations of Trump’s involvement in violating campaign finance rules in the case of Cohen, who brokered the silence of Trump’s mistresses. Additionally, White House officials do not believe that the Robert Mueller-led investigation into the alleged ties between Trump and Russia could lead to the president’s being impeached. Earlier this week, Jerry Nadler, a democratic representative from New York’s 10th Congressional District in the US House of Representatives, said that claims about Trump tasking his former lawyer Michael Cohen with making illegal hush payments to women, who allegedly had affairs with Trump, might result in “impeachable offences” if proven true. Last week, Cohen pleaded guilty to charges of lying to the US Congress about plans to build a Trump-branded real estate project in Moscow. Cohen’s attorneys asked a judge for no jail time for their client, citing his cooperation in the probe into Russia’s alleged role in the 2016 presidential election. Cohen should be sentenced next week in New York. Moscow has repeatedly refuted accusations of meddling in US elections.
MILAN (Reuters) – The European Commission is willing to accept an increase in Italy’s deficit target to 1.95 percent for next year, daily newspaper La Repubblica said on Tuesday. The EC has rejected Rome’s draft budget which says the deficit will rise to 2.4 percent of gross domestic product (GDP) in 2019 from 1.8 percent this year. Brussels says it breaks previous commitments to reduce borrowing and will not lower Italy’s large public debt. Italy’s Finance Minister Giovanni Tria is pushing the government to reduce its deficit target to 2.0 percent, to find a compromise with Brussels and avoid a procedure over the country’s budget, La Repubblica added. Rome has in recent weeks shown willingness to reduce the deficit target. But it remains unclear how far it plans to go. Italy’s Prime Minister Giuseppe Conte will meet the commission’s president Jean-Claude Juncker on Wednesday in an attempt to avoid the procedure which would keep Italy under prolonged market pressure and could lead to fines, cuts of EU funds and other financial sanctions.
(Reuters) – The S&P 500 fell to an eight-month low on Monday as Apple Inc, as well as financial and healthcare sectors led losses on mounting worries over global growth, the U.S.-China trade war and uncertainty over Britain’s exit from the European Union. The S&P and the Dow Industrials, already in the red for the year after shedding more than 4.5 percent last week, fell over 1 percent. The Nasdaq reversed after an earlier bounce to drop about 0.5 percent. Markets have been dogged by signs of cooling global growth, concerns over interest rates and worries that escalating tensions between the United States and China could scuttle a fragile trade truce. “You have political tensions with China, the potential for slowing global growth, and other geopolitical tensions, that continue to weigh on the markets,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. All the 11 major S&P sectors were lower. The biggest drag on the market was a 2.5 percent drop in financials as the U.S. Treasury yields dropped further on worries over U.S.-China trade conflict and the Brexit turmoil. [US/] British Prime Minister Theresa May said she was delaying a planned vote in parliament on her Brexit deal as it was set to be rejected “by a significant margin”. The rate-sensitive bank stocks tumbled 3.22 percent on worries that Brexit could hamper global growth, giving the Federal Reserve more reason to slow its pace of interest rate hikes. “If the Fed is slowing, that means economic activity is below normal and that can negatively impact earnings,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. JPMorgan Chase & Co, Wells Fargo & Co, Citigroup Inc and Bank of America Corp fell over 3 percent. Energy stocks retreated 3.1 percent, as oil prices fell. Global pharmaceutical stocks weighed the most on the health index, which fell 1.3 percent and led losses among the seven sectors that were down over 1 percent. Apple dropped 2.1 percent after Qualcomm Inc said it had won a preliminary order from a Chinese court banning the import and sale of several iPhone models in China due to patent violations.
(Bloomberg) — The tumult of personnel turnover that’s come to characterize Donald Trump’s administration is suddenly posing a major problem — just as his presidency enters an especially risky phase. The president lacks an immediate successor for Chief of Staff John Kelly following his announcement on Saturday that the retired Marine general would leave the White House. Trump’s failure to line up a replacement before abruptly announcing Kelly’s departure to reporters sets up a potentially chaotic transition for a job crucial to maintaining a semblance of stability under a commander-in-chief famed for his unpredictability, Jennifer Jacobs and Margaret Talev write. The president said yesterday evening that he was interviewing chief-of-staff candidates after Vice President Mike Pence’s top aide, Nick Ayers, turned him down. But Ayers’s rejection of Trump’s overtures hints at the challenge whoever assumes the post will face. Kelly’s successor must help Trump deal with the new Democratic House majority — some members of which would like to see the president impeached — as well as the next phases of Special Counsel Robert Mueller’s probe into alleged Russian election meddling. Added to those are the demands of navigating the 2020 reelection campaign. For U.S. allies in Europe, Asia and beyond, Kelly’s departure means there’s one fewer of the so-called adults in the room to constrain Trump.
NEW YORK (Reuters) – Oil prices jumped more than 4 percent on Friday as Saudi Arabia and other producers in OPEC, as well as allies like Russia agreed to reduce output to drain global fuel inventories and support the market. The Organisation of the Petroleum Exporting Countries and its Russia-led allies, referred to as “OPEC+,” agreed to slash production by a combined 1.2 million barrels per day from 2019, larger than the minimum 1 million bpd that the market had expected, despite pressure from U.S. President Donald Trump to reduce the price of crude. The producer club will curb output by 800,000 bpd from January while non-OPEC allies contribute an additional 400,000 bpd of cuts, Iraqi Oil Minister Thamer Ghadhban said after OPEC concluded two days of talks in Vienna. Russian Energy Minister Alexander Novak confirmed the combined output cuts of 1.2 million bpd, saying that the market will be oversupplied through the first half of the year.
A 1.2 million-bpd cut, if implemented fully, “should be enough to largely attenuate, but not eliminate, expected implied global inventory builds in the first half of next year,” said
Harry Tchilinguirian, global oil strategist at BNP Paribas in London told the Reuters Global Oil Forum. Oil prices have plunged 30 percent since October as supply has surged and global demand growth has weakened. Prices fell almost 3 percent on Thursday after OPEC ended a meeting in Vienna with only a tentative deal to tackle weak prices. Talks with other producers were held on Friday. But Iran gave OPEC the green light on Friday to reduce oil output after finding a compromise with rival Saudi Arabia over a possible exemption from the cuts, an OPEC source said. Oil output from the world’s biggest producers – OPEC, Russia and the United States – has increased by 3.3 million bpd since the end of 2017 to 56.38 million bpd, meeting almost 60 percent of global consumption. The surge is mainly due to soaring U.S. oil production C-OUT-T-EIA, which has jumped by 2.5 million bpd since early 2016 to a record 11.7 million bpd, making the United States the world’s biggest producer. Trump has asked OPEC to keep prices low, pleading with the Saudis in twitter messages. Russia had initially balked at cutting production alongside OPEC.
America turned into a net oil exporter last week, breaking almost 75 years of continued dependence on foreign oil and marking a pivotal — even if likely brief — moment toward what U.S. President Donald Trump has branded as “energy independence.”The shift to net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania. While the country has been heading in that direction for years, this week’s dramatic shift came as data showed a sharp drop in imports and a jump in exports to a record high. Given the volatility in weekly data, the U.S. will likely remain a small net importer most of the time. “We are becoming the dominant energy power in the world,” said Michael Lynch, president of Strategic Energy & Economic Research. “But, because the change is gradual over time, I don’t think it’s going to cause a huge revolution, but you do have to think that OPEC is going to have to take that into account when they think about cutting.” The shale revolution has transformed oil wildcatters into billionaires and the U.S. into the world’s largest petroleum producer, surpassing Russia and Saudi Arabia. The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century. The shift to net exports caps a tumultuous week for energy markets and politics. OPEC and its allies are meeting in Vienna this week, trying to make a tough choice whether to cut output and support prices, risking the loss of more market share to the U.S. “The week started with Qatar leaving OPEC; then a mysterious U.S.-Saudi bilateral meeting in Vienna; followed by a canceled OPEC press conference, and now the latest news that the U.S. turned last week into a net petroleum exporter,” said Helima Croft, commodities strategist at RBC Capital Markets LLC and a former analyst at the Central Intelligence Agency. The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined products such as gasoline and diesel, compared to net imports of about 3 million barrels a day on average so far in 2018, and an annual peak of more than 12 million barrels a day in 2005, according to the U.S. Energy Information Administration. The EIA said the U.S. has been a net oil importer in weekly data going back to 1991 and monthly data starting in 1973. Oil historians that have compiled even older annual data using statistics from the American Petroleum Institute said the country has been a net oil importer since the mid-1940s, when Harry Truman was in the White House. U.S. crude exports are poised to rise even further, with new pipelines from the Permian in the works and at least nine terminals planned that will be capable of loading supertankers. The only facility currently able to load the largest ships, the Louisiana Offshore Oil Port, is on pace to load more oil in December than it has in any other month.
The massive Permian may be even bigger than previously thought. The Delaware Basin, the less drilled part of the field, holds more than twice the amount of crude as its sister, the Midland Basin, the U.S. Geological Service said Thursday. While the net balance shows the U.S. is selling more petroleum than buying, American refiners continue to buy millions of barrels each day of overseas crude and fuel. The U.S. imports more than 7 million barrels a day of crude from all over the globe to help feed its refineries, which consume more than 17 million barrels each day. In turn, the U.S. has become the world’s top fuel supplier.
JERUSALEM — Israel started a military operation on Tuesday to expose and thwart offensive tunnels Hezbollah had been building across the Lebanese border, the military said, the first time that Israel has taken open action to combat underground passageways in the north. The effort, called Operation Northern Shield, was aimed at an unspecified number of tunnels in the area of Metula, said Lt. Col. Jonathan Conricus, A spokesman for the Israel Defense Forces. None of the tunnels were ready to be used, he said, and the army was neither asking civilians in the area to evacuate nor calling up reserves. But it declared an area around Metula, in the northernmost reaches of the Galilee panhandle, a closed military zone and said it had “enhanced its presence and readiness” in the north and was “prepared for various scenarios.” Prime Minister Benjamin Netanyahu said the early stages of the operation had already proven successful. “Whoever tries to harm the state of Israel will pay a heavy price,” he said in a statement. He added that Israel would continue to act, “openly and covertly, to ensure the security of Israel.” Brig. Gen. Ronen Manelis, the chief military spokesman, said Israel was prepared for a “broad operation over several weeks.” It was expected to extend beyond the Metula area, along the border. The military also warned Hezbollah and soldiers of the Lebanese Army to stay away from the tunnels, saying their lives were in danger, though the Israeli Foreign Ministry emphasized that the operation was taking place on the Israeli side of the border, within Israeli territory. With the winding down of the civil war in neighboring Syria, Israel appears to have increasingly shifted its focus to Lebanon. Hezbollah, the Lebanese Shiite organization backed by Iran, has been fighting for years against insurgent groups in Syria to defend the rule of President Bashar al-Assad, and Israel has been working intensively to prevent Iran’s efforts to entrench itself in Syria. But Israel has also been warning in recent months of Iranian efforts to strengthen Hezbollah in Lebanon, making a conflagration seem only a matter of time. While Israeli experts said the action against the tunnels could lead to an escalation, it was not immediately clear if, or how, Hezbollah would respond. “Now the ball is in the Hezbollah court,” said Yaakov Amidror, a former Israeli national security adviser and retired general. “They can react and the reaction to their reaction might be devastating,” he told reporters on Tuesday, in an apparent effort to deter Hezbollah. Israeli officials have accused Iran of helping Hezbollah build underground factories in Lebanon to upgrade the militant group’s arsenal of missiles. In addition, Israeli news outlets have reported that Iran has been flying advanced weaponry directly to Beirut, bypassing overland routes through Syria that Israel has repeatedly bombed.
VIENNA (Reuters) – OPEC and its allies are working towards a deal this week to reduce oil output by at least 1.3 million barrels per day, four sources said, adding that Russia’s resistance to a major cut was so far the main stumbling block. The logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen at OPEC’s headquarters in Vienna, Austria June 19, 2018. REUTERS/Leonhard Foeger OPEC meets on Thursday in Vienna, followed by talks with allies such as Russia on Friday, amid a drop in crude prices caused by global economic weakness and fears of an oil glut due largely to a rise in U.S. production. The producer group’s de facto leader, Saudi Arabia, has indicated a need for steep reductions in output from January but has come under pressure from U.S. President Donald Trump to help support the world economy with lower oil prices. Possibly complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh. The sources, three from the Organization of the Petroleum Exporting Countries and one from a non-OPEC producer, said the meetings were taking place in a difficult environment and that Russia’s position would be key in reaching a deal. “Russia is playing tough,” one of the OPEC sources said. Another OPEC source said: “The Saudis are working hard on the cut. But if Russia says no cut, then we (OPEC) won’t cut.” Russian sources have indicated the country could contribute some 140,000 bpd to a reduction, but Middle East-dominated OPEC insists Moscow cut by 250,000-300,000 bpd. Two sources said talks were focusing on a pro-rata cut of 3-3.5 percent from October output levels, with no exemptions for any member. Sources also said OPEC could delay a decision to cut if the main criteria such as Russia’s involvement were not met, even though doing so would mean a further fall in prices. “OPEC can always meet again in February, for example, and decide on a cut then. Those who were not able or willing to cooperate will be wanting to cut then,” one source said. Saudi Arabia previously insisted on a need to reduce production. It was unclear whether the apparent shift in position was caused by OPEC using negotiation tactics to bring Russia on board or by pressure from Trump to refrain from cutting output. US, China offer differing takes on trade ceasefire In October 2018, OPEC pumped 32.916 million bpd, while its non-OPEC allies pumped 18.252 million bpd, according to the group’s internal data. The non-OPEC source said a deal could still be done this week, though details remained unclear: “The Saudis and Russians have an agreement to cut. They are just working on the final details on the volumes and mechanisms.” Brent oil prices LCOc1 rose more than 2 percent on Tuesday, boosted by expectations OPEC would reduce output [O/R].
A proposed cut by China to tariffs on US car imports created confusion in Washington, a day after it was announced by US President Donald Trump. Beijing has not yet confirmed the move and President Trump’s advisers appeared less certain about the agreement.
Uncertainty also surrounded the details of the broader trade war truce struck by the US and China at the G20 summit. Amid scant details, carmaker Ford told the BBC it is “looking forward to learning more” about the truce. The US accuses China of unfair trading practices and tariffs are intended to counter Chinese practices that make it difficult for American companies to compete. Tariffs, in theory, make US-made products cheaper than imported ones, and encourage consumers to buy American. After months of escalating threats, Washington and Beijing said they had reached a temporary agreement in their bruising trade dispute at the G20 meeting in Argentina over the weekend. Central to the deal was an agreement between President Trump and China’s President Xi Jinping t The US president later said in a tweet that Beijing had “agreed to reduce and remove tariffs on cars coming into China from the US”.His comments relate to the 40% tariff China imposes on US vehicle imports, which were brought in as part of the trade battle in July. The rate is much higher than the 15% it places on other trading partners and forced many carmakers in China – the world’s largest car market – to raise prices. The day after the announcement, there was confusion over the details in Washington, with senior figures in the White House contradicting each other. Asked whether China would remove the 40% auto tariffs Larry Kudlow, the US president’s top economic adviser, said he “believed that commitment was made”. In a briefing to reporters, he also said the US did not yet have a “specific agreement” on auto tariffs. Another senior White House figure, trade adviser Peter Navarro, said only that the issue “certainly came up” in discussions at the G20. Confusion has also arisen over when the agreed 90-day period for negotiations will kick in, with some saying it begins now, others claiming it starts in January.
President Trump in a bilateral dinner meeting with President Xi Jinping during the Group of 20 summit meeting.Announces Trade Deal
WASHINGTON — President Trump cast his Saturday meeting with President Xi Jinping of China as a huge win for the United States, insisting that American farmers and automakers would reap immediate benefits from a trade truce that has yet to produce any concrete commitments and created more questions than answers about what China is truly prepared to offer. Mr. Trump and Mr. Xi agreed during the G-20 meeting in Buenos Aires to pause the trade war between the world’s two largest economies for 90 days and work to resolve several areas of tension, including the trade gap between what America imports from China and what China buys from the United States. But nothing beyond their official statements exists and deep divisions remain, particularly related to China’s industrial policies and its treatment of American companies. That did not stop Mr. Trump from declaring victory for farmers, automakers and other key political constituencies in the wake of the meeting — statements that helped send volatile financial markets higher on Monday. Despite talk of a grand bargain, the meeting’s outcome has been clouded by conflicting signals from the White House over how long the truce will last, what commitments China actually made and the president’s tweets touting wins that others in his administration said did not technically exist. “Farmers will be a very BIG and FAST beneficiary of our deal with China,” Mr. Trump said in a Twitter post on Monday. “They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants.” In a separate tweet late Sunday night, Mr. Trump said that China had agreed to reduce and remove tariffs on cars coming into China from the United States. The current tariff rate is 40 percent, which China reached in response to Mr. Trump’s tariffs on $250 billion worth of goods, and it was not clear to what level it would fall.
One of the big uncertainties of the upcoming meeting of major oil producers next week is whether Russia will cooperate with any decision by the Organization of the Petroleum Exporting Countries to reduce production. A lot is at stake at the Dec. 6 meeting in Vienna of OPEC and non-OPEC oil producers following a more than 30% drop in oil prices since early October. That hefty decline may not be enough of an incentive for Russia to cooperate because it can produce a barrel of oil at a much cheaper rate than OPEC member Saudi Arabia. Still, on Thursday, citing two industry sources, Reuters reported that Russia is becoming more convinced that it needs to reduce oil output along with OPEC, but that it is “still bargaining” with Saudi Arabia, the group’s biggest oil producer, over when and by how much to cut. The news agency had reported just two weeks earlier that two high-ranking Russian sources said Russia wants to be left out of any OPEC-led oil production cuts. Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman are expected to meet on the sidelines of the Group of 20 summit in Buenos Aires that gets under way on Friday. “Major oil exporters…need to address their own respective economic interests,” said Peter Kiernan, lead energy analyst at the Economist Intelligence Unit, pointing out that Saudi Arabia’s break-even point for oil prices is at $70 and the “vast majority of Middle East exporters need a price of at least $50, as does Russia.” “OPEC also needs to keep the market in balance and avoid stocks building too quickly as this will depress prices,” he said. That’s why OPEC launched its output-cutting strategy in the first place, he said, reaching an agreement in 2016 that was implemented in 2017. By the middle of this year, that “approach was shown to be successful.” From the end of 2016 to the beginning of June this year, front-month contract prices for global benchmark Brent crude LCOF9, -1.39% had climbed by more than 30%. In late June, however, Saudi Arabia and Russia agreed to raise production, which “pleased” U.S. President Donald Trump, who had been calling for an increase, said Kiernan. “Back then, the surplus in stocks had been soaked up and with the expectations that Iran’s exports would be cut severely at the end of the year, both Saudi Arabia and Russia thought that an increase in supply was warranted to avoid too much market tightening,” he said. “They therefore had their own reasons for increasing supply at the time.” Oil futures climbed to their highest settlement in nearly four years in early October, with Brent crude topping $85 a barrel and U.S. benchmark West Texas Intermediate oil settling above $76 a barrel, in large part to due to expectations that U.S. sanctions on Iran’s energy sector would tightening global supplies. Those sanctions took full effect on Nov. 5 but at the same time, Trump granted eight countries, including China, temporary waivers to continue buying Iranian oil, effectively erasing that threat to global supplies. Prices then saw a more than 30% plunge to their lowest levels in more than a year, from the October peaks. On Wednesday, Brent settled at $58.76, while WTI finished at $50.29. On Thursday, WTI briefly dipped below $50 a barrel for the first time since October 2017 before rebounding in the wake of the Reuters report. With the lower break-even oil price, however, Russia is in “much better shape,” then Saudi Arabia, said Phil Flynn, senior market analyst at Price Futures Group. Russia is using “the Saudi’s pain, not to mention its problems with the [murder of journalist Jamal Khashoggi], to their political advantage,” he said. “Yet despite the drama, [OPEC] will have to cut and it’s clear that the Russians just want to watch the Saudis squirm a bit.”
ANCHORAGE, Alaska (KTUU) – Crews conducting inspections along the Trans-Alaska Pipeline have so far found no problems following Sunday’s M6.4 earthquake near Kaktovik.
Alyeska Pipeline Service Company, the firm that manages TAPS, says it has completed broad checks and aerial surveys of the pipeline and its facilities between pump stations 1 and 4, a 150-mile stretch. Starting on Tuesday, the company will begin going through everything with a fine-toothed comb. “We’re going to go back through and check for settlements, movements, any kind of smaller issues that might have presented in the last 24 hours, or that we missed the first time around,” said Alyeska spokesperson Kate Dugan. Michael West, who directs the Alaska Earthquake Center, said Sunday’s earthquake likely produced no more than a couple centimeters of vertical ground motion. That’s well within what the pipeline is designed to withstand. “Each section of the pipeline might have different designed allowances depending on the seismic activity for that zone,” Dugan said. “But as we saw for this earthquake, even in a less-likely area, the pipeline operated as it was supposed to and did not have any issues.” Anywhere that it’s above ground, the pipeline has an allowance of up to two feet of ground movement, and much more in areas near major fault lines. Near the Denali Fault Line, for example, the pipeline can handle 20 feet of lateral and 5 feet of vertical ground movement. The Denali Fault was the site of a massive 7.9M earthquake in 2002, but even that was not enough to cause main line damage to the pipeline. TAPS was operational after only a few minor repairs. Meanwhile, scientists and the Alaska Earthquake Center are still compiling data from the earthquake, which was the largest ever recorded on the North Slope. West says he thinks the shaker underscores the lack of data the center has for seismic activity in this part of Alaska. “Nobody’s ever spent a lot of time trying to understand the earthquake hazards in the Eastern Brooks Range, and I think it’s very likely that we have just historically underestimated what it’s capable of,” West said. Aftershocks continue to shake Alaska the day following massive 7.0 magnitude quake. Nick Note: this may not be the end but the start of massive quakes
Mohammad Salman ‘probably ordered’ killing relies in part on 11 messages he sent to adviser who oversaw hit squad around time it killed journalist How did the CIA conclude that journalist Jamal Khashoggi was killed on the orders of Saudi Crown Prince Mohammed bin Salman? WSJ’s Warren P. Strobel has an exclusive look at the secretive evidence behind the assessment. Saudi Crown Prince Mohammed bin Salman sent at least 11 messages to his closest adviser, who oversaw the team that killed journalist Jamal Khashoggi, in the hours before and after the journalist’s death in October, according to a highly classified CIA assessment. The Saudi leader also in August 2017 had told associates that if his efforts to persuade Mr. Khashoggi to return to Saudi Arabia weren’t successful, “we could possibly lure him outside Saudi Arabia and make arrangements,” according to the assessment, a communication that it states “seems to foreshadow the Saudi operation launched against Khashoggi.” Mr. Khashoggi, a critic of the kingdom’s leadership who lived in Virginia and wrote columns for the Washington Post, was killed by Saudi operatives on Oct. 2 shortly after entering the Saudi consulate in Istanbul, where he sought papers needed to marry his Turkish fiancée. Excerpts of the Central Intelligence Agency’s assessment, which cites electronic intercepts and other clandestine information, were reviewed by The Wall Street Journal. The CIA last month concluded that Prince Mohammed had likely ordered Mr. Khashoggi’s killing, and President Trump and leaders in Congress were briefed on intelligence gathered by the spy agency. Mr. Trump afterward questioned the CIA’s conclusion about the prince, saying “maybe he did; and maybe he didn’t.” The previously unreported excerpts reviewed by the Journal state that the CIA has “medium-to-high confidence” that Prince Mohammed “personally targeted” Khashoggi and “probably ordered his death.” It added: “To be clear, we lack direct reporting of the Crown Prince issuing a kill order.” The electronic messages sent by Prince Mohammed were to Saud al-Qahtani, according to the CIA. Mr. Qahtani supervised the 15-man team that killed Mr. Khashoggi and, during the same period, was also in direct communication with the team’s leader in Istanbul, the assessment says. The content of the messages between Prince Mohammed and Mr. Qahtani isn’t known, the document says. It doesn’t say in what form the messages were sent. It is unclear from the excerpts whether the 2017 comments regarding luring Mr. Khashoggi to a third country cited in the assessment are from Prince Mohammed directly, or from someone else describing his remarks. Saudi Arabia has acknowledged Mr. Khashoggi was murdered in the consulate. But it has denied Prince Mohammed had any role and blamed the operation on rogue operatives. The Saudi Public Prosecutor’s office last month announced charges against 11 Saudis in connection with Mr. Khashoggi’s death, saying it would seek the death penalty in five cases. The office didn’t release their names. The U.S. Treasury Department in mid-November slapped sanctions on 17 Saudis whom it linked to the killing. But Mr. Trump, in a statement days later, said he intended to maintain strong relations with the crown prince because of Saudi Arabia’s opposition to Iran, its investments in the U.S. and its role in the oil market. The Trump administration’s posture has angered many in Congress, and the intercepts and intelligence gathered by the CIA may complicate Mr. Trump’s efforts to maintain relations with Prince Mohammed, the de facto leader one of the world’s biggest oil producers. The two are among the world’s leaders meeting this weekend in Buenos Aires for a summit of Group of 20 nations. Earlier this week, the Senate voted to begin consideration of a resolution to withdraw U.S. support for a Saudi-led military coalition fighting against Houthi rebels in Yemen, with senators venting their frustration over Mr. Trump’s reluctance to hold Prince Mohammed responsible for Mr. Khashoggi’s death.
LONDON (Reuters) – One of British Prime Minister Theresa May’s most trusted lawmakers said on Tuesday he will not back her Brexit deal, further stacking the odds against it passing through parliament next month. Under the deal secured with EU leaders on Sunday, Britain would leave the bloc in March with continued close trade ties. But the agreement has attracted criticism from lawmakers of all parties, both from supporters of a cleaner break with the EU and from opponents of Brexit. Michael Fallon, May’s former defence secretary who resigned last year after a journalist accused him of sexual harassment, told BBC radio that British negotiators should head back to Brussels to secure a better divorce agreement. Asked whether he would vote against the current deal, Fallon said: “As it stands at the moment, yes. I don’t think this gives us the certainty that we need and it is therefore a gamble.” Some Brexit-supporting lawmakers in May’s Conservative Party could support her deal if she sets out when she will quit, The Times newspaper reported. May told lawmakers on Monday that no better deal was available and that no one could predict what would happen if they rejected it. May has 314 active Conservative lawmakers in the 650-seat House of Commons and would need around 320 votes to ratify the deal under current attendance projections, when it goes to lawmakers on Dec. 11. Falling business morale points to weak German growth Her de facto deputy prime minister, Cabinet Office Minister David Lidington, told the BBC on Tuesday that no other plan was on the table. “There’s no plan B because the European Union itself is saying the deal that is on the table is the one that we have had to compromise over,” Lidington said. Asked if Britain could delay Brexit to get a better deal, he said: “It’s not government policy and I don’t really see that gets us anywhere because the EU has made its position very clear.”
Palladium has enjoyed the best market performance among major metals in 2018, thanks in large part to tough new Chinese car pollution standards which have pushed automotive producers to install catalytic converters which contain the metal in their cars. Palladium prices have appreciated over 9 percent on the New York Stock Exchange year-to-date, hitting just short of $1,170 per ounce on Friday, with futures jumping 5.2 percent last week alone and market analysts telling Bloomberg that the bull run is just getting started. The silvery-white precious metal, used in pollution control devices, electronics, jewellery, groundwater treatment equipment, chemical applications and dentistry, has enjoyed a steady upward climb in value over the last decade, starting off at a low of $235 per ounce in November 2008. Close to 70 percent of demand is driven by the automotive market, according to CPM Group, a New York-based commodities research firm. And with car sales remaining steady despite fears of a decline in many other industries, investors are expecting palladium’s climb to continue over the short to medium term. “The market has a very positive fundamental outlook,” Maxwell Gold, director of investment strategy at Scotland-based investment firm Aberdeen Standard Investments told Bloomberg. “We’ve been dealing with supply deficits going on eight years, and that’s expected to continue. Supply has certainly been an issue on the mining front as well as the draw-down of existing stockpiles,” he added. With palladium prices climbing above those of its sister-metal, platinum (which closed at $843 per ounce on Friday), investors say its possible that platinum may replace palladium in many automotive and industrial applications. However, Standard Chartered Bank precious metals analyst Suki Cooper said it would take at least 18-24 months for manufacturers to make the switch, not to mention the costs and headaches associated with doing so. Where does Russia come into all this? Well, the country is rich in both precious metals, and enjoys the status of being the world’s largest palladium producer, mining some 81 tonnes of the precious metal in 2017. Norilsk Nickel alone accounted for 41 percent of total global palladium production the same year. Norilsk Nickel, which also engages in the extraction and refining of platinum, cobalt, silver, gold, tellurium and selenium, increased its palladium output by 6 percent in 2017, and platinum output by 4 percent. It is looking to continue growing its output amid market concerns about the closure of mines in South Africa, the world’s second-largest palladium producer. Zimbabwe, Canada and the United States round out the top five global palladium producers, with their total output amounting to just 27 percent of combined Russian and South African output in 2015.
BOSTON (Reuters) – Oil prices slumped up to nearly 8 percent to the lowest in more than a year on Friday, posting the seventh consecutive weekly loss, amid intensifying fears of a supply glut even as major producers consider cutting output. Oil supply, led by U.S. producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting on Dec. 6. But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses. Prices were on course for their biggest one-month decline since late 2014. A trade war between the world’s two biggest economies and oil consumers, the United States and China, has weighed upon the market. “The market is pricing in an economic slowdown – they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago, referring to expected talks next week between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G20 summit in Buenos Aires. “The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand,” Flynn said.
Brent crude futures settled down $3.80 a barrel, or 6.1 percent at $58.80. During the session, the benchmark dropped to $58.41, the lowest since October 2017.
U.S. West Texas Intermediate crude (WTI) lost $4.21, or 7.7 percent, to trade at $50.42, also the weakest since October 2017. In post-settlement trade, the contract continued to fall. For the week, Brent fell 11.3 percent and WTI posted a 10.8 percent decline, the largest one-week drop since January 2016. Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally. Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 percent higher than a year ago. Crude production has soared as well this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million barrels per day (bpd) this year while demand next year was expected to grow 1.3 million bpd.
Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd.
However, Trump has made it clear that he does not want oil prices to rise and many analysts think Saudi Arabia is coming under U.S. pressure to resist calls from other OPEC members for lower crude output. If OPEC decides to cut production at its meeting next month, oil prices could recover, analysts say. “We expect that OPEC will manage the market in 2019 and assess the probability of an agreement to reduce production at around 2-in-3. In that scenario, Brent prices likely recover back into the $70s,” Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients. If OPEC does not trim production, prices could head much lower, potentially depreciating toward $50 a barrel, argues Lukman Otunuga, Research Analyst at FXTM.
Mark Connors, global head of portfolio and risk advisory at Credit Suisse, told Reuters this week that the action among macro and CTA funds reflects a risk-aversion trade, as net long positions have dropped from near five-year highs to roughly even exposure between longs and shorts. Hedge funds and other money managers cut their net long positions in Brent by 32,263 contracts to 182,569 in the week ended Nov. 20, according to data provided by the Intercontinental Exchange (ICE) on Friday. That’s the lowest net long position since December 2015. Volatility, a measure of investor demand for options, has spiked to its highest since late 2016, above 60 percent, as investors have rushed to buy protection against further steep price declines. The decline in oil prices pulled U.S. energy shares lower. Oil majors Exxon Mobil Corp and Chevron Corp fell more than 3 percent and were the leading decliners on the Dow Jones Industrial Average Oilfield service providers Schlumberger NV and Halliburton Co also fell nearly 3 percent.
LONDON (Reuters) – Oil prices fell to their lowest in more than a year on Friday, on course for their biggest one-month decline since late 2014, even as oil producers considered cutting production to try to stem a rising global surplus. Oil supply, led by U.S. producers, is growing more quickly than demand and to ward off a build-up of unused fuel such as the one that emerged in 2015, the Organization of the Petroleum Exporting Countries is expected to start trimming output after a meeting planned for Dec. 6. But this has done little so far to prop up prices. The value of a barrel of oil has dropped by around 20 percent so far in November, in a seven-week streak of losses. “Oil bears have re-asserted their authority,” said Tamas Varga, analyst at London brokerage PVM Oil. “The weakness is the continuation of the prevailing bearish sentiment aided a little bit by the stronger dollar.” Volatility has spiked to its highest since late 2016, as investors have rushed to buy protection against further steep price declines. Volatility, a measure of investor demand for a particular option, has jumped above 60 percent for very bearish near-term sell options, double what it was two weeks ago. Oil production has surged this year. The International Energy Agency expects non-OPEC output alone to rise by 2.3 million bpd this year. Oil demand next year, meanwhile, is expected to grow by 1.3 million bpd.
Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply as it pushes OPEC to agree to a joint output cut of 1.4 million bpd. If OPEC agrees to cut production at its meeting next month, oil prices could recover sharply, analysts say.
“We expect that OPEC will manage the market in 2019 and assess the probability of an agreement to reduce production at around 2-in-3. In that scenario, Brent prices likely recover back into the $70s,” Morgan Stanley commodities strategists Martijn Rats and Amy Sergeant wrote in a note to clients.
A report released by the Commerce Department on Wednesday showed a much steeper than expected drop in new orders for U.S. durable goods in the month of October, with the sharp decline largely reflecting a substantial decrease in orders for transportation equipment.
The Commerce Department said durable goods orders plunged by 4.4 percent in October following a revised 0.1 percent dip in September.
Economists had expected orders to slump by 2.5 percent compared to the 0.7 percent increase that had been reported for the previous month. The steep drop in durable goods orders was primarily due to the sharp pullback in orders for transportation equipment, which tumbled by 12.2 percent in October after climbing by 0.9 percent in September. Orders for non-defense aircraft and parts plummeted by 21.4 percent in October after plunging by 19.3 percent in September, while orders for defense aircraft and parts nosedived by 59.3 percent after soaring by 117.1 percent. Excluding the substantial decrease in orders for transportation equipment, durable goods orders inched up by 0.1 percent in October after a revised 0.6 percent decrease in September. Ex-transportation orders had been expected to rise by 0.4 percent compared to the 0.1 percent uptick originally reported for the previous month.
The uptick in ex-transportation orders came as notable increases in orders for electrical equipment, appliances and components and computers and electronic products were partly offset by a significant decline in orders for primary metals. The report also said orders for non-defense capital goods excluding aircraft, a key indicator of business spending, were nearly unchanged in October after falling by 0.5 percent in September. Shipments in that category rose by 0.3 percent in October, barely reversing the drop seen over the two previous months.”This report is another piece of evidence that suggests the sharp rise in interest rates is beginning to restrain economic growth,” said Michael Pearce, Senior U.S. Economist at Capital Economics. He added, “The weakness of business investment is particularly disappointing because it should have been boosted by the tax changes at the beginning of the year.” The Commerce Department also said shipments of durable goods fell by 0.6 percent in October after jumping by 1.0 percen
Consumer sentiment in the U.S. unexpectedly deteriorated by more than initially estimated in the month of November, according to a report released by the University of Michigan on Wednesday. The report said the consumer sentiment index for November was downwardly revised to 97.5 from the preliminary reading of 98.3. Economists had expected the consumer sentiment index to be unrevised at 98.3, which was still down slightly from 98.6 in October. “Although the data recorded a decline of 2.8 Index points following the election, the drop was related more to income than political party,” said Surveys of Consumers chief economist Richard Curtin. “Among those with incomes in the bottom third, the Sentiment Index rose by 10.4 points and fell by 6.6 points among those in the top third of the income distribution,” he added. “In contrast, the Sentiment Index remained unchanged among Democrats and Republicans.” The report said the current economic conditions index for November was downwardly revised to 112.3 from 113.2 and is now below the October reading of 113.1. The index of consumer expectations dipped to 88.1 from 89.3. On the inflation front, one-year inflation expectations slipped to 2.8 percent in November from 2.9 percent in October, while five-year inflation expectations rose to 2.6 percent from 2.4 percent.
NEW YORK (Reuters) – Oil prices rose more than 1 percent on Wednesday, recovering from the lowest levels in months, after U.S. government data showed strong demand for gasoline and diesel, but gains were limited by concern over rising global crude supply. U.S. crude stocks USOILC=ECI rose 4.9 million barrels last week, the Energy Information Administration said. More than expected. Crude inventories have risen for nine straight weeks, the longest streak of increases since March 2017. [EIA/S] Crude stocks at the Cushing, Oklahoma, delivery hub for WTI USOICC=ECI fell 116,000 barrels, the first drop in nine weeks, EIA said. Gasoline stocks USOILG=ECI fell 1.3 million barrels to the lowest level since December 2017, while distillate stockpiles USOILD=ECI dropped by 77,000 barrels, the EIA data showed. “The report was somewhat bearish due to the large crude oil inventory build, but the drawdown in refined product inventories and the big jump in refinery activity could signal the end of the recent string of mostly bearish reports,” said John Kilduff, a partner at Again Capital Management in New York. However, Wednesday’s gains did little to reverse overall market weakness. Crude fell more than 6 percent in the previous session, while world equities tumbled as investors grew concerned about economic growth prospects. Brent has fallen by more than 25 percent since reaching a 4-year high of $86.74 on Oct. 3, reflecting concern about forecasts of slowing demand in 2019 and ample supply from Saudi Arabia, Russia and the United States.
Worried by the prospect of a new supply glut, the Organization of the Petroleum Exporting Countries is talking about reducing output just months after increasing production.
OPEC, Russia and other non-OPEC producers are considering a supply cut of between 1 million barrels per day (bpd) and 1.4 million bpd at a Dec. 6 meeting, sources familiar with the issue have said. However, Saudi Arabia may find taking action to support prices harder, analysts said, with U.S. pressure to keep them low. U.S. President Donald Trump on Wednesday praised Saudi Arabia for helping to lower oil prices. Riyadh could feel more inclined to heed U.S. demands after Trump promised on Tuesday to be a “steadfast partner” of Saudi Arabia despite saying Crown Prince Mohammed bin Salman may have known about a plan to murder journalist Jamal Khashoggi. “It’s fair to say that the price of oil is going to continue to be pretty volatile between now and Dec. 6 when OPEC meets,” said Brian Kessens, managing director at Tortoise. “There’s going to be a lot of different rhetoric and anticipation of what will actually transpire.
Washington (AFP) – US President Donald Trump on Wednesday ignored criticism that he gave Saudi Arabia a free pass on the murder of a dissident journalist, instead praising the Islamic kingdom for keeping oil prices low. Trump, on holiday at his Florida Mar-a-Lago Club, doubled down on an unusually worded statement from Tuesday that he was essentially ignoring the killing of Jamal Khashoggi because of what he said were more important US strategic and commercial interests.
“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82,” he tweeted. “Thank you to Saudi Arabia, but let’s go lower!”
The fulsome praise for Saudi Arabia’s help in maintaining cheap oil built on comments he made Tuesday at the White House, saying that “if we broke with them, I think your oil prices would go through the roof.””They’ve helped me keep them down,” he said.The focus on oil prices is one strand of Trump’s argument against punishing the US ally for Khashoggi’s death, even though the CIA reportedly found strong evidence that de facto Saudi leader, Crown Prince Mohammed bin Salman, was involved. Khashoggi, a US resident who wrote for The Washington Post and had been critical of Prince Mohammed, was lured to the Saudi consulate in Istanbul on October 2, killed and reportedly dismembered. After lengthy denials, Saudi authorities admitted responsibility and said 21 people had been taken into custody. However, a CIA analysis leaked to the US media went further, reportedly pointing the finger at Prince Mohammed, who has especially close contacts with the Trump White House. In a formal statement Tuesday — released just after nearly the entire White House press corps had left to cover the lighthearted annual ritual of the president sparing a turkey from the Thanksgiving table — Trump said the prince “could very well be” in on the crime. But he then went on to flatly reject any suggestion of punishing the Saudi leader, saying Washington “intends to remain a steadfast partner.” Trump’s reasoning was that Saudi Arabia and the United States are partners in opposing Iran and the Saudis have committed to $450 billion in weapons contracts and other investments, as well as being a major oil producer. “Very simply it is called America first!” Trump concluded. This was in contrast to previously stated positions where Trump promised a tough response, warning in an October interview with The Wall Street Journal, for example, that the US-Saudi relationship “would take a while to rebuild.” Trump’s posture has provoked rare dissension among the ranks of senior Republicans. Senator Lindsey Graham said on Fox News that Prince Mohammed is “crazy.” “It’s not too much to ask an ally not to butcher a guy in a consulate,” he said. And Senator Bob Corker, the Republican leader of the foreign relations committee, tweeted scathingly: “I never thought I’d see the day a White House would moonlight as a public relations firm for the Crown Prince of Saudi Arabia.” Corker and the senior Democrat on the committee, Bob Menendez, demanded that the Trump administration issue a clear statement on whether Prince Mohammed was involved. Another prominent Republican, Senator Rand Paul, added “Let’s put America first, not Saudi Arabia,” while Khashoggi’s old employer the Post said in an editorial that Trump’s position meant “a world where dictators know they can murder their critics and suffer no consequences.” Secretary of State Mike Pompeo pushed back in a radio interview Wednesday, saying: “We are going to make sure that America always stands for human rights. We’ve watched the Saudis actually move in that direction during our time in office as well. “It’s not an unblemished record, but there certainly have been steps forward.”
From its 2018 peak on October 3 to November 13, the price of a barrel of West Texas Intermediate crude oil fell by 27%. In the later stage of its decline, it closed at a lower price for 12 consecutive days, something it’s not done in at least 35 years. This of course has significant first order implications for the energy industry and for the economy at large. Perhaps less intuitive, however, is the effect that a falling oil price may have on Fed policy. As the price of oil has fallen, so too have inflation expectations. Over last six weeks, the 5-year breakeven inflation rate has fallen from 2.07% to 1.88%. Regressing the breakeven rate against the price of oil from the beginning of 2009 through November 13 generates this relationship:
5yr BE = 0.932+0.01*WTI, with an R square of nearly 40%.
This has had the effect of pushing one measure of the real fed funds rate (fed funds rate minus 5-year breakeven rate) up to its highest level since January 2009. While the market’s expectation of a December rate hike remains largely unchanged, its outlook on subsequent hikes in 2019 has become less clear. If oil continues to fall, and inflation expectations with it, the Fed’s efforts to normalize policy may involve an earlier-than-expected intermission.
NEW YORK (Reuters) – Oil prices tumbled about 7 percent on Tuesday, with U.S. crude plunging to its lowest level in more than a year, caught in a broader Wall Street selloff that was fed by rising concerns about slowing global economic growth. U.S. West Texas Intermediate (WTI) crude futures were down $3.90, or 6.8 percent, at $53.30 per barrel by 2:01 p.m. EST (1901 GMT). The contract fell as much as 7.7 percent earlier in the session to $52.77 a barrel, the lowest since October 2017. So far in the session, more than 868,000 front-month WTI contracts had changed hands, exceeding the daily average over the last 10 months. Brent crude futures fell $4.50, or 6.7 percent, to $62.29 a barrel. The international benchmark fell as much as 7.6 percent to $61.71, the lowest level since December 2017. Tuesday’s drop extended a slide that has been largely unimpeded since early October. WTI prices have fallen more than 30 percent from their near-four-year peaks in early October, weighed down by surging supply and the selloff in risk assets worldwide. “For the time being it’s more about risk,” said Jim Ritterbusch, president of Ritterbusch and Associates. “When the stock market comes off 8 or 9 percent, it tends to conjure up images of a weak global economy and that feeds into expectations of weaker-than-expected oil demand.”The S&P 500 index .SPX hit a three-week low on Tuesday as weak results and forecasts from big retailers fanned worries about holiday season sales, while tech stocks continued to slide on concerns about iPhone sales. Global stock markets have suffered a shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and international trade tensions. Amid the uncertainty, financial traders have become wary of oil markets, seeing further downside risk to prices from the growth in U.S. shale production as well as the deteriorating economic outlook. Prices ticked lower after U.S. President Donald Trump said the United States intends to remain a “steadfast partner” of Saudi Arabia even though “it could very well be” that Saudi Crown Prince Mohammed bin Salman had knowledge of the killing of journalist Jamal Khashoggi last month in Turkey. Oil markets have been concerned about potential supply disruptions amid heightened tensions between the United States and Saudi Arabia over the killing.But experts said any threat to supplies were limited to begin with. “I never really understood the premium behind some kind of friction between U.S. and Saudi Arabia from a policy standpoint … It really is a too-big-to-fail relationship,” said Joe McMonigle, senior energy policy analyst at Hedgeye Risk Management in Washington. Apple gives stocks the holiday blues “I think today what’s driving oil is the continued equity selloff, and oil is really collateral damage.” Meanwhile, the United States was considering adding Venezuela, one of its biggest crude suppliers, to Washington’s list of state sponsors of terrorism but no final decision has been made, a person familiar with the deliberations said late on Monday. Expectations for a ninth straight week of U.S. crude inventory increases also weighed on prices. Analysts polled ahead of weekly data forecast crude stocks rose about 2.9 million barrels last week. U.S. crude production has soared almost 25 percent this year, to a record 11.7 million barrels per day (bpd). The Organization of the Petroleum Exporting Countries is pushing for a supply cut of 1 million bpd to 1.4 million bpd when it meets on Dec. 6. The OPEC envoy for the United Arab Emirates said it was very likely that the group would reduce its output but the exact level had yet to be decided.
The International Energy Agency (IEA), however, warned OPEC and other producers of the “negative implications” of supply cuts, with many analysts fearing a spike in crude prices could erode consumption.
“We are entering an unprecedented period of uncertainty in oil markets,” IEA Executive Director Fatih Birol said on Monday.
WASHINGTON (Reuters) – President Donald Trump vowed on Tuesday to remain a “steadfast partner” of Saudi Arabia despite saying that Saudi Crown Prince Mohammed bin Salman may have known about the plan to murder dissident journalist Jamal Khashoggi last month. Defying pressure from U.S. lawmakers to impose tougher sanctions on Saudi Arabia, Trump also said he would not cancel military contracts with the kingdom. Such a “foolish” move would only benefit Russia and China, said the U.S. president, whom critics accuse of exaggerating the importance of those weapons sales to the American economy.
In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%). The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9% These numbers that the Federal Reserve Board of Governors reported Monday afternoon are like a cold shower in consumer land where debt levels are considered to be in good shape. But wait… it gets complicated. The credit-card delinquency rate at the largest 100 commercial banks was 2.48% (not seasonally adjusted). These 100 banks, due to their sheer size, carry the lion’s share of credit card loans, and this caused the overall credit-card delinquency rate for all commercial banks combined to tick up to a still soothing 2.54%. In other words, the overall banking system is not at risk, the megabanks are not at risk, and no bailouts are needed. But the most vulnerable consumers – we’ll get to why they may end up at smaller banks – are falling apart:
Credit card balances are deemed “delinquent” when they’re 30 days or more past due. Balances are removed from the delinquency basket when the customer cures the delinquency, or when the bank charges off the delinquent balance. The rate is figured as a percent of total credit card balances. In other words, among the smaller banks, at the end of Q3, 6.2% of the outstanding credit card balances were delinquent.The credit card business is immensely profitable, and so banks are willing to take some risks. It’s immensely profitable for three reasons:
- The fee the bank extracts from every transaction undertaken with its credit cards (merchant pays), even if the credit-card holder pays off the balance every month and never incurs any interest expense.
- The fees the bank extracts from credit card holders, such as annual fees, late fees, etc.
- The huge spread between the banks’ cost of funding and the interest rates banks charge on credit cards.
So how low is the banks’ cost of funding? For example, in its third-quarter regulatory filing with the SEC (10-Q), Wells Fargo disclosed that it had $1.73 trillion in total “funding sources.” This amount was used to fund $1.73 trillion in “earning assets,” such as loans to its customers or securities it had invested in.
This $1.73 trillion in funding was provided mostly by deposits: $465 billion in non-interest-bearing deposits (free money), and $907 billion in interest bearing deposits; for a total of $1.37 billion of ultra-cheap funding from deposits.
In addition to its deposits, Wells Fargo lists $353 billion in other sources of funding – “short-term and long-term borrowing” – such as bonds it issued. For all sources of funding combined, so on the $1.73 trillion, the “total funding cost” was 0.87%. Nearly free money. Rate hikes no problem. In Q3, Wells Fargo had $36.8 billion in average credit-card balances outstanding (not including balances it had securitized and sold off), carrying an average interest rate of 12.77%! So, with its cost of funding at 0.87%, and the average interest rate of 12.77% on its credit card balances, Wells Fargo is making an interest margin on credit cards of 11.9 percentage points. In other words, this is an immensely profitable business – hence the incessant credit-card promos. The thousands of smaller banks cannot offer the same incentives and lack the marketing clout to attract this large pool of customers with good credit. So they market to customers with less stellar credit, or with subprime-rated credit — and charge higher interest rates. 30% sounds like a deal, even if the customer will eventually buckle under that interest rate and will have to default. That’s why banks take risks and don’t mind higher charge-offs: they’re getting paid for them! At some point, it gets expensive. And greed could pose a big problem for a little bank. In that case, the FDIC might swoop in on a Friday evening and shut down the bank over the weekend. No biggie. Happens routinely. The real problem with credit cards isn’t the banks – credit card debt is not big enough to topple the US banking system. It’s the consumers, and what it says about the health of consumers.The overall numbers give a falsely calming impression about how vulnerable a portion of consumers really are. Credit card debt and other revolving credit has reached $1.0 trillion (not seasonally adjusted). This is about flat with the prior peak a decade ago. So no problem?
Since the prior peak of credit-card debt in 2008, the US population has grown by 20 million people, and there has been a decade of inflation and nominal wage increases, and so the overall burden per capita is far lower today than it was in 2008 (though student loans and auto loans have shot through the roof). But this overall data hides the extent to which the most vulnerable consumers are getting into trouble with their credit cards, having borrowed too much at usurious rates. They’ll never be able to pay off or even just service those balances. For them, there is only one way out – to default. The fact that this process is now taking on real momentum shows that the group of consumers that are falling apart is expanding. And these are the good times, of low unemployment in a growing economy.
Sentiment didn’t fall this sharply from one month to another even during the worst of the housing crisis
The many headwinds that have been dogging the industry finally showed up in this report. Labor is still expensive, lots are still scarce, lumber is at the mercy of tariff politics, and now, mortgage rates are rising and customers are holding back. NAHB, the building industry’s Washington lobby, noted in a press release that the reading of 60 is still “positive,” but that “customers are taking a pause.” The eight-point plunge is only reminiscent of the nine-point drop just after the 9/11 attacks and one other instance, a 10-point drop, in early 2014. The overall reading is the lowest since mid-2016. November’s results badly missed the Econoday consensus of a flat reading. In November, the sub-gauge of current conditions fell seven points to 67, the tracker of expected future conditions plunged 10 points to 65, and the gauge of buyer traffic was down eight points, to 45. Any reading over 50 signals improvement. The gauge of builder sentiment has long been considered an early read on the pace of construction, an important economic indicator considering how desperately more new homes have been needed. But such a sharp drop may presage something more sinister than a slower pace of building. Home builders were one of the first groups to feel the top of the market cycle just before the Great Recession. In June 2005, NAHB’s index hit 72, its cycle high. It started to tumble the next month, and by mid-2006 stood in contraction territory. To be sure, builders may not be the canary in the coal mine now as they were a decade ago. And many economists have called the top of the housing cycle already. Still, such a sharp drop can only seem ominous. “Housing is performing at a moderately high level, but it also appears to be settling into a plateau,” Jefferies economists wrote after the NAHB release. “Moderation in housing activity is a blessing that delays what has previously been an inevitable development of excesses. While the pace of housing market activity has decelerated, there are no signs of threatening excesses such as inventory overhangs and a surge in delinquencies.” Moody’s Investors Service on Monday downgraded its outlook on the U.S. building materials industry, saying that “private residential construction growth is decelerating.”
Washington: The CIA has concluded that Saudi Crown Prince Mohammed bin Salman ordered the assassination of journalist Jamal Khashoggi in Istanbul last month, contradicting the Saudi government’s claims that he was not involved.
The CIA’s assessment, in which officials have said they have high confidence, is the most definitive to date linking Mohammed to the operation and complicates the Trump administration’s efforts to preserve its relationship with a close ally.
The CIA believes Saudi Crown Prince Mohammed bin Salman ordered the killing of journalist Jamal Khashoggi in Istanbul, according to sources familiar with the matter.
A team of 15 Saudi agents flew to Istanbul on government aircraft in October and killed Khashoggi inside the Saudi consulate, where he had come to pick up documents that he needed for his planned marriage to a Turkish woman. In reaching its conclusions, the CIA examined multiple sources of intelligence, including a phone call that the prince’s brother Khalid bin Salman, the Saudi ambassador to the United States, had with Khashoggi, according to the people familiar with the matter who spoke on the condition of anonymity. Khalid told Khashoggi, a contributing columnist to The Washington Post, that he should go to the Saudi consulate in Istanbul to retrieve the documents and gave him assurances that it would be safe to do so. It is not clear if Khalid knew that Khashoggi would be killed, but he made the call at his brother’s direction, according to the people familiar with the call, which was intercepted by US intelligence. Fatimah Baeshen, a spokeswoman for the Saudi embassy in Washington DC, said the ambassador and Khashoggi never discussed “anything related to going to Turkey.” She added that the claims in the CIA’s “purported assessment are false. We have and continue to hear various theories without seeing the primary basis for these speculations.” The CIA’s conclusion about Mohammed’s role was also based on the agency’s assessment of the prince as the country’s de facto ruler who oversees even minor affairs in the kingdom. “The accepted position is that there is no way this happened without him being aware or involved,” said a US official familiar with the CIA’s conclusions. The CIA sees Mohammed as a “good technocrat,” the US official said, but volatile and arrogant, someone who “goes from zero to 60, doesn’t seem to understand that there are some things you can’t do.” CIA analysts believe he has a firm grip on power and is not in danger of losing his status as heir to the throne despite the Khashoggi scandal. “The general agreement is that he is likely to survive,” the official said, adding that Mohammed’s role as the future Saudi king is “taken for granted.”
A spokesperson for the CIA declined to comment.
Over the past several weeks, the Saudis have offered multiple, contradictory explanations for what happened at the consulate. This week, the Saudi public prosecutor blamed the operation on a rogue band of operatives who were sent to Istanbul to return Khashoggi to Saudi Arabia, in an operation that veered off course when the journalist “was forcibly restrained and injected with a large amount of a drug resulting in an overdose that led to his death,” according to a report by the prosecutor.
The assassination of Khashoggi, a prominent critic of Mohammed’s policies, has sparked a foreign policy crisis for the White House and raised questions about the administration’s reliance on Saudi Arabia as a key ally in the Middle East and bulwark against Iran.
President Donald Trump has resisted pinning the blame for the killing on Mohammed, who enjoys a close relationship with Jared Kushner, the president’s son-in-law and senior adviser. Privately, aides said, Trump has been shown evidence of the prince’s involvement but remains skeptical that Mohammed ordered the killing. The audio shows that Khashoggi was killed within moments of entering the consulate, according to officials in multiple countries who have listened to it or been briefed on its contents. Khashoggi died in the office of the Saudi consul general, who can be heard expressing his displeasure that Khashoggi’s body now needed to be disposed of and the facility cleaned of any evidence, according to people familiar with the audio recording. The CIA also examined a call placed from inside the consulate after the killing by an alleged member of the Saudi hit team, Maher Mutreb, a security official who has often been seen at the crown prince’s side and who was photographed entering and leaving the consulate on the day of the killing.
DUBAI/LONDON (Reuters) – OPEC and its partners are discussing a proposal to cut oil output by 1.4 million barrels per day (bpd), three sources familiar with the issue said, although Russia may not be on board for such a large reduction. Worried by a drop in oil prices due to slowing demand and record supply from Saudi Arabia, Russia and the United States, the Organization of the Petroleum Exporting Countries is talking about a U-turn just months after increasing production. Such a shift could anger U.S. President Donald Trump, who urged OPEC on Monday not to cut supply. It also risks handing market share to the United States, while the sources said Russia might not be willing to back such a move. A steep slide in prices has surprised many oil market participants. Brent crude has fallen from a four-year high of $86 a barrel in early October to $66 on Wednesday. Just weeks ago, some trading firms were talking of $100 oil. The sources, who declined to be identified by name as the talks are confidential, said a cut of 1.4 million bpd – equal to 1.4 percent of world demand – was one option discussed by energy ministers from Saudi Arabia, non-OPEC Russia and other nations in Abu Dhabi on Sunday.
OPEC and a group of non-OPEC nations, led by Russia, have been cooperating to limit oil supply since the start of 2017. They partially unwound their reduction in June after pressure from Trump to lower prices. The OPEC-led deal got rid of a glut that built up in 2014 as supply from the United States and other countries outside the group soared. OPEC production rose too, after the then Saudi Oil Minister Ali al-Naimi blocked an OPEC curb on supplies to preserve market share.
This time, Saudi Energy Minister Khalid al-Falih has publicly spoken of a need to lower supplies by 1 million bpd, showing price support is trumping market share. OPEC meets on Dec. 6 to set policy for 2019.
A new round of OPEC-led supply cuts in 2019 would further support U.S. shale oil production, potentially repeating the cycle that played out in 2014. Oil prices LCOc1 rose on Wednesday, after Tuesday’s 6.6 percent drop, the largest one-day loss since July. With three weeks to go until the Dec. 6 meeting in Vienna, OPEC and its partners have not settled on a final figure for a new supply cut, the sources said. One of the three sources said a minimum cut of 1 million bpd was being considered and it could be larger than 1.4 million bpd. Another source, an OPEC delegate, agreed that a larger cut than 1.4 million bpd was possible, depending on the market. Nigeria and Libya, which are exempt from the current supply limiting accord, could be included in a new agreement, two of the sources familiar with the matter said. “We are talking about a cut from everyone, including Nigeria and Libya because their production has exceeded the cap in recent months,” one source said. While Nigeria and Libyan output has risen, another OPEC member Iran is facing lower exports due to U.S. sanctions that started this month. Tehran might not be called upon to deliver a voluntary cut, another of the three sources said. Iran, which was angered by higher Saudi and Russian production in response to pressure from Trump, will welcome supply cuts by those producers. OPEC officials were not sure whether Russia will join another round of supply cuts. Russian Energy Minister Alexander Novak said on Wednesday no emergency action was warranted to stem the decline in prices. “The market is quite volatile today. We remember that the oil price was sharply rising in the same way, now it is going down. We have to look into long-term development, into how the price will be stabilized,” he said in Singapore. But OPEC officials hope Moscow will come round eventually.
London (CNN Business)The British pound dropped sharply on Thursday after two key UK government ministers resigned, plunging the Brexit process into deep uncertainty and hiking the risk of a chaotic rupture with the European Union. Brexit Secretary Dominic Raab said in a statement on Thursday that he “cannot in good conscience support the terms proposed for our deal” to leave the European Union. He is the second Brexit Secretary to resign this year. Work and Pensions Secretary Esther McVey resigned about an hour later, saying the draft deal does not honor the result of the Brexit referendum in 2016. There were more resignations at a junior level from May’s government, and an open call from one leading Brexit supporter for May to resign. The United Kingdom is due to leave the bloc — its biggest trading partner — on March 29, 2019. The pound fell as much as 1.8% against the dollar to below $1.28 following the resignations. Shares in UK banks declined sharply, with Lloyds (LYG) and Barclays (BCS) shedding roughly 5% and Royal Bank of Scotland dropping nearly 9%. The political upheaval could derail the Brexit deal that Prime Minister Theresa May has painstakingly negotiated with the European Union. May said Wednesday that she had secured the support of her cabinet for the deal, but its future is now in real doubt. She also warned that the alternatives to her plan were leaving the European Union without a deal, or Brexit not happening at all. Investors are most worried about a scenario in which Britain crashes out of the European Union without having negotiated an orderly departure. That would mean new trade barriers, disruption to supply chains for food, medicines and manufactured goods, and a shock to the broader economy. “The risk of very disorderly Brexit is increasing as we speak,” said John Wraith, head of UK rates strategy at UBS. The International Monetary Fund said in a report published Wednesday that a disorderly exit from the European Union would “lead to widespread disruptions in production and services,” and severe market consequences. “A sudden shift in investors’ preference for UK assets could lead to a sharp fall in asset prices and a hit to consumer and business confidence,” the IMF warned. Over the long run, the fund said the UK economy would be 5% to 8% smaller under a “no deal scenario” than if the country had remained in the European Union.
Washington (CNN)President Donald Trump is acting like he knows something about the Russia investigation that the rest of America has yet to learn.
NEW YORK (Reuters) – Oil rose nearly 2 percent on Wednesday, recouping some of the previous session’s heavy selloff, on growing prospects that the Organization of the Petroleum Exporting Countries and allied producers would cut output at a meeting next month to prop up prices. After a record 12 straight days of losses and the steepest one-day loss in more than three years, the oil market reversed course after Reuters reported that OPEC and its partners were discussing a proposal to cut output by up to 1.4 million barrels per day (bpd), more than officials had mentioned previously. Oil markets are being pressured by surging supply from OPEC, Russia, the Unites States and other producers and worries that a global economic slowdown could cut into energy demand. This has pushed the price of global benchmark Brent down more than 20 percent since early October, one of the biggest declines since a price collapse in 2014. “The market has cratered over the last few weeks and the pop today is related to the chatter that producers could cut up to 1.4 million bpd in 2019,” said Gene McGillian, vice president of market research for Tradition Energy in Stamford, Connecticut. “Maybe some of the fears of extra supplies and reduced demand have finally been priced into the market, but I wouldn’t say that a bottom has set in yet.” As oil has crashed from its October high, natural gas futures NGc1 soared as much as 56 percent during that time to a 4-1/2 year high. Oil’s latest selloff was exacerbated as traders unwound long oil-short natural gas trade, market participants said. The relative strength index (RSI) for both Brent and U.S. crude remained below 30, a technical level often regarded as signaling a market that has fallen too far. Financial firms hedging the risk incurred by selling put options to oil producers generated added downward pressure when prices fall toward option strikes, Goldman Sachs said in a note. “This market is attempting to find a price bottom following an unprecedented 12 consecutive days of decline,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
“Although the supply surplus is still relatively modest, the market is focusing on the dynamic of expansion in the overhang that will need to show signs of reversal before a price bottom can be established.”
In its monthly report, the Paris-based International Energy Agency (IEA) said the implied stock build for the first half of 2019 is 2 million bpd. The IEA left its forecast for global demand growth for 2018 and 2019 unchanged from last month, but cut its forecast for non-OECD demand growth, the engine of expansion in world consumption. U.S. crude output from its seven major shale basins was expected to hit a record 7.94 million bpd in December, the U.S. Energy Information Administration (EIA) said on Tuesday. Oil prices plummet on fears of weak global demand The surge in onshore output has helped overall U.S. crude production C-OUT-T-EIA hit a record 11.6 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia. Most analysts expect U.S. output to climb above 12 million bpd in the first half of 2019. The rise in U.S. production is contributing to higher stockpiles. Ahead of industry storage data on Wednesday and the government’s report on Thursday, analysts forecast a 3.2 million-barrel rise in crude inventories, the eighth straight weekly build. [EIA/S]
LONDON (Reuters) – Sterling tumbled and the rest of Europe’s share markets groaned on Thursday, after a long-awaited Brexit agreement was thrown into chaos as Britain’s chief negotiator for the deal quit just 12 hours after it had been unveiled. Up until that point markets had looked relatively calm. Asia had cheered news that China and the United States were back in contact about their bitter trade dispute and oil was holding steady again having snapped out of a record losing streak.
But then came the hammer blow. London’s Brexit minister Dominic Raab quit in protest at Prime Minister Theresa May’s deal for leaving the European Union.
“No democratic nation has ever signed up to be bound by such an extensive regime, imposed externally without any democratic control over the laws to be applied, nor the ability to decide to exit the arrangement,” he said in his resignation letter. Cue a sterling meltdown. The currency slumped a full cent to $1.2830 GBP= and though that made the FTSE stronger — a weaker pound makes life easier for exporters on the index — the rest of Europe sank swiftly into the red. [.EU] “The reaction is sterling shows that the chance of no Brexit deal has spiked,” said Tim Graf, Head of Macro Strategy for EMEA at State Street Global Markets. Nick Note: as you know we have a trade for this… don’t let them shit you over and over again. their will be no deal.. this will be the nastiest divorce ever
Saudi Arabia’s top prosecutor is recommending the death penalty for five suspects charged with ordering and carrying out the killing of Saudi writer Jamal Khashoggi. Saudi Al-Mojeb told journalists in a rare press conference in Riyadh on Thursday that Khashoggi’s killers had set in motion plans for the killing on 29 September, three days before he was killed inside the kingdom’s consulate in Istanbul. The prosecutor says the highest-level official behind the killing is Saudi former deputy intelligence chief Ahmad al-Assiri, who has been fired for ordering Khashoggi’s forced return. The prosecutor says 21 people are now in custody, with 11 indicted and referred to trial. Turkey has blamed the highest ranks of power in Saudi Arabia for Khashoggi’s brutal death, saying the kingdom sent an assassination squad for him.
Abu Dhabi, UAE (CNN Business)Saudi Arabia will reduce oil supply next month in response to lower demand, and more cuts could follow next year. Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December. Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added. “The consensus among all members is that we need to do whatever it takes to balance the market,” Al Falih said. “If that means trimming supply by a million [barrels per day], we will do it.” Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak. Fear of a global economic slowdown and a decision by the United States to allow some countries to keep buying Iranian crude oil following the reintroduction of sanctions have hit market sentiment.
SINGAPORE (Reuters) – Oil markets struggled to find their footing on Wednesday after plunging by 7 percent the previous session, with surging supply and the specter of faltering demand keeping investors on edge. U.S. West Texas Intermediate (WTI) crude oil futures were at $55.54 per barrel at 0159 GMT, down 15 cents from their last settlement. International benchmark Brent crude oil futures LCOc1 were up 4 cents at $65.51 per barrel. Markets fell by more than 7 percent the previous day. Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since prices collapsed in 2014. The slump in spot prices has turned the entire forward curve for crude oil upside down. Spot prices in September were significantly higher than those for later delivery, a structure known as backwardation that implies a tight market as it is unattractive to put oil into storage. By mid-November, the curve had flipped into contango, when crude prices for immediate delivery are cheaper than those for later dispatch. That implies an oversupplied market as it makes it attractive to store oil for later sale. Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown. U.S. crude oil output from its seven major shale basins is expected to hit a record of 7.94 million barrels per day (bpd) in December, the U.S. Department of Energy’s Energy Information Administration (EIA) said on Tuesday. That surge in onshore output has helped overall U.S. crude production C-OUT-T-EIA hit a record 11.6 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia. Most analysts expect U.S. output to climb above 12 million bpd within the first half of 2019.
“This will, in our view, cap any upside above $85 per barrel (for oil prices),” said Jon Andersson, head of commodities at Vontobel Asset Management.
The surge in U.S. production is contributing to rising stockpiles. U.S. crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million as refineries cut output, data from industry group the American Petroleum Institute showed on Tuesday. The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) has been watching the jump in supply and price slump with concern. OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.
“OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on Dec. 6,” said Andersson.
That puts OPEC on a collision course with U.S. President Donald Trump, who publicly supports low oil prices and who has called on OPEC not to cut production.
Abu Dhabi, UAE (CNN Business)Saudi Arabia will reduce oil supply next month in response to lower demand, and more cuts could follow next year. Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December. Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added. “The consensus among all members is that we need to do whatever it takes to balance the market,”
Al Falih said. “If that means trimming supply by a million [barrels per day], we will do it.”
Major oil producers discussed potential reductions to crude production at their latest meeting, as concerns over growth in output combined with expectations for a slowdown in demand, prompting prices to post their largest monthly loss in more than two years. The meeting, held in Abu Dhabi over the weekend, came ahead of the latest updates on supply and demand due out this week from the Energy Information Administration (EIA), OPEC and the International Energy Agency (IEA). The Joint OPEC-non-OPEC Ministerial Monitoring Committee debated over whether an output reduction next year of about one million barrels a day would be necessary to avoid a glut of global supplies, according to The Wall Street Journal. JMMC officials, which include Organization of Petroleum Exporting Countries member Saudi Arabia as well as non-member Russia, monitor implementation of the crude output-cut agreement that began on Jan. 1, 2017, between members and nonmembers. The EIA recently reported that U.S. crude-oil production reached 11.3 million barrels a day in August, surpassing 11 million barrels a day for the first time on a monthly basis and making the nation the leading crude-oil producer in the world. Oil prices logged hefty October declines, with U.S. benchmark West Texas Intermediate crude CLZ8, -1.89% posting a loss of nearly 10.8% and global benchmark Brent crude LCOF9, -1.72% down 8.8% for the month—their largest monthly percentage losses since July 2016. Saudi Arabia and other major oil producers had raised production as global supplies tightened ahead of U.S. sanctions on Iran’s energy sector but as the sanctions kicked in earlier this month, the U.S. granted waivers to eight nations, allowing them to temporarily continue to import Iranian crude. They included China, which is among the largest importers of Iran’s crude.
A decision on production is expected at the next OPEC meeting, which will be held on Dec. 6 in Vienna.
In a press release dated Sunday, the JMMC said that prospects in 2019 point to “higher supply growth than global requirements,” and also noted th at the “dampening of global economic growth prospects … could have repercussions for global oil demand in 2019—and could lead to widening the gap between supply and demand.” “Comments from this weekend’s meeting between OPEC and other major producers suggest that policymakers are increasingly concerned by the recent fall in oil prices,” said Jason Tuvey, senior emerging markets economist at Capital Economics, in a note Monday. “OPEC’s de facto leader, Saudi Arabia, floated the idea of fresh oil output cuts. Oil Minister Khalid al-Falih said that the “Kingdom would lower its supply by 500,000 [barrels per day] in December.” “Algos don’t sleep and have a built-in advantage to pounce on all opportunities to violently shove a market,” said Michael Bertuccio, founder and chief executive officer of Houston-based HB2 Inc., a private oil and gas company, referring to a type of automated trading done with mathematic formulas. There’s “no better time” for that to happen “than a quiet Friday [after Thanksgiving] when all the humans are in food comas fueled by turkey.”
MOSCOW (Reuters) – Russian energy majors are putting pressure on Western oil buyers to use euros instead of dollars for payments and introducing penalty clauses in contracts as Moscow seeks protection against possible new U.S. sanctions. Seven industry sources told Reuters that Western oil majors and trading houses have clashed with Russia’s third and fourth biggest producers, Gazprom Neft and Surgutneftegaz, over 2019 oil sales contract terms during unusually tough annual renegotiation in recent weeks. The development mirrors a similar stand-off between Western buyers and Russia’s top oil producer, Rosneft (ROSN.MM). Earlier this week, trading sources told Reuters that Rosneft wants Western oil buyers to pay penalties from 2019 if they fail to pay for supplies in the event that new U.S. sanctions disrupt sales. Now sources have told Reuters that Surgutneftegaz and Gazprom Neft have also clashed with their buyers over penalties and the use of euros and other currencies to replace the dollar in contracts. “It is part of the same trend – the Russian oil industry is working on mitigating new sanctions risks. The buyers in turn argue they cannot carry those risks so we are trying to find compromises,” said one source with a Western buyer involved in negotiations, asking not to be named as the talks are confidential. Russia has been under U.S. and EU sanctions since 2014 when it invaded Ukraine’s Crimean peninsula. The sanctions have been repeatedly widened to include new companies and sectors, making it tough for Russian oil firms to borrow money abroad, raise new capital or develop Arctic and unconventional deposits. President Vladimir Putin’s administration has been hoping for a thaw in relations with the United States since President Donald Trump came to power but Washington has imposed new sanctions instead, including on some of Russia’s richest people. Russian businesses are preparing for a new wave of sanctions expected in the coming weeks. The firms are trying to diversify away from dollar payments and tapping Asia for more of their financing and technology needs. According to four industry sources, Surgutneftegaz asked buyers to be prepared to switch from dollar to euro payments in contracts, and insisted on buyers being effectively responsible for any losses arising from sanctions.
“They basically said – sanctions don’t matter. Buyers have to find a way to pay, or to return purchased goods, or pay penalties,” a source with a big trading house said.
Gazprom Neft has also asked buyers to use euros in payments and bear financial responsibility for contract breaches in the case of new sanctions, according to three sources. Russia supplies over 10 percent of global oil, so drastic sanctions against it could lead to a steep spike in oil prices. All global oil majors rely on Russia to feed their refineries, especially in Europe and Asia, and hence they cannot just walk away from annual contract negotiations if they are unhappy with terms. Talks with both Gazprom Neft and Surgutneftegaz have been progressing slowly and painfully, according to trading sources. Several Western buyers have managed to agreed compromises with Surgutneftegaz and Gazprom Neft, but others are still in tough talks with the producers, the sources said. Russia clashes with Western oil buyers over new deals as sanctions loom All Surgutneftegaz’s contracts are bespoke and are negotiated individually in the Siberian town of Surgut by the firm’s management and visiting Western trading bosses. The sources declined to name companies that have already reached compromise deals. In one such compromise, a large European buyer agreed to the use of euros in payments in exchange for Surgutneftegaz dropping its demand for penalties from buyers who fail to pay for cargoes. “We have been arguing that if sanctions make it impossible to pay for an oil cargo, how on earth are we supposed to pay penalties,” one trading source said. “So we have agreed that the payment remains suspended for the entire duration of sanctions – just like it works with Iran,” he added.
WASHINGTON (Reuters) – The U.S. Commerce Department on Wednesday said it would impose final anti-dumping and anti-subsidy duties on Chinese common alloy aluminium sheet products of 96.3 percent to 176.2 percent. The decision marks the first time that final duties were issued in a trade remedy case initiated by the U.S. government since 1985. The Trump administration has promised a more aggressive approach to trade enforcement by having the Commerce Department launch more anti-dumping and anti-subsidy duties on behalf of private industry. “We will continue to do everything in our power under U.S. law to restrict the flow of dumped or subsidized goods into U.S. markets,” said Commerce Secretary Wilbur Ross in a statement. The final aluminium sheet duties, however, were reduced from those first imposed in April and July. The initial combined range was 198.4 percent to 280.46 percent. In 2017, imports of common alloy aluminium sheet from China were valued at an estimated $900 million, the Commerce Department said. The flat-rolled product is used in transportation, building and construction, infrastructure, electrical and marine applications. The U.S. International Trade Commission (USITC) is scheduled to make its final injury determinations on Dec. 20 after it voted 4-0 in January to authorise the investigation. U.S. aluminium industry firms including Aleris Corp (ALSD.PK), Arconic Inc (ARNC.N), Constellium NV (CSTM.N), Jupiter Aluminium Corp, JW Aluminium Company and Novelis Corp [NVLXC.UL] testified in December 2017 about what they termed a surge “in low-priced, unfairly traded imports of common alloy sheet from China.” The firms said the volume of aluminium sheet product imports had increased by nearly 750 percent over the last decade and by more than 91 percent between 2014 and 2017. This resulted in “significant market share gains by Chinese imports at the direct expense of the U.S. industry.” Heidi Brock, president and CEO of the Virginia-based Aluminium Association, said in a statement the body and its members were “extremely pleased” with the decision. Wen Xianjun, vice president of the China Nonferrous Metals Industry Association, whose department leads aluminium anti-dumping negotiations with the United States, told Reuters on Thursday even the reduced final U.S. duties made common alloy sheet exports to the country impossible. “We think we are causing no harm to the United States. We are just waiting for the USITC to judge,” Wen said. China’s aluminium exports fell by 3.6 percent from September to 482,000 tonnes in October, the lowest since May, according to customs data released on Thursday.
BEIJING (Reuters) – China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates due to kick in at the start of next year. Import growth also defied forecasts for a slowdown, suggesting Beijing’s growth-boosting measures to support the cooling economy may be slowly starting to make themselves felt. The upbeat trade readings from China offer good news for both those worried about global demand and for the country’s policymakers after the economy logged its weakest growth since the global financial crisis in the third quarter. October was the first full month after the latest U.S. tariffs on Chinese goods went into effect on Sept. 24, in a significant escalation in the tit-for-tat trade battle. But analysts continue to warn of the risk of a sharp drop in U.S. demand for Chinese goods early in 2019, with all eyes now on whether presidents Donald Trump and Xi Jinping can make any breakthroughs on trade when they meet later this month. China’s exports rose 15.6 percent last month from a year earlier, customs data showed on Thursday, picking up from September’s 14.5 percent and beating analysts’ forecasts for a modest slowdown to 11 percent. “The strong export growth in October was buoyed by front-loading activities by exporters…,” said Iris Pang, Greater China Economist at ING in Hong Kong, noting the month is traditionally quieter due to long holidays. “We expect exports to remain strong towards the end of the year as businesses are afraid of a failure in the Trump-Xi meeting, which could lead to broader tariffs on more Chinese goods from the U.S.” Pang said. Washington has vowed to hike the tariff from 10 percent to 25 percent at the turn of the year, while Trump has warned that if talks with Xi are not productive, he could quickly slap tariffs on another $267 billion in Chinese imports. Despite several rounds of U.S. duties this year, China’s exports have been surprisingly resilient as firms ramped up shipments before even tougher measures went into effect. Container ship rates from China to the U.S. West Coast remain near record highs, suggesting shipments will remain solid well into November and possibly early December. China’s exports to the U.S. rose 13.2 percent from a year earlier in October. In another positive sign, China’s exports by volume also showed solid growth, according to Oxford Economics, which estimated they rose “an impressive” 9.9 percent. But analysts say robust export readings won’t last much longer, noting Chinese factory surveys have been showing contracting export orders for months. U.S. orders for Chinese goods at the latest Canton fair dropped 30.3 percent from a year earlier by value, as higher U.S. tariffs made goods from batteries to farm tractors more expensive.
WASHINGTON (Reuters) – Armed with subpoenas and a long list of grievances, a small group of lawmakers will lead the investigations poised to make President Donald Trump’s life a lot tougher now that Democrats have won a majority in the U.S. House of Representatives. Using their control of House committees, Democrats can demand to see Trump’s long-hidden tax returns, probe possible conflicts of interest from his business empire and dig into any evidence of collusion between Russia and Trump’s campaign team in the 2016 election. Trump said early on Wednesday that House investigations would be countered by investigations of Democrats by the Senate, which remains in Republican hands after Tuesday’s congressional elections. “If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!” the president said on Twitter. Senate Republican Leader Mitch McConnell’s office was not immediately available for comment on Trump’s tweet. Democrats said Republican lawmakers will no longer be able to protect Trump from a watchful Congress. “The American people have demanded accountability from their government and sent a clear message of what they want from Congress,” Representative Jerrold Nadler, the New York Democrat poised to become chairman of the House Judiciary Committee, said in a tweet after Democrats claimed the majority.
Trump “may not like it, but he and his administration will be held accountable to our laws and to the American people.”
Nadler, once described by Trump as “one of the most egregious hacks in contemporary politics,” is one of three prominent Democrats who have clashed with the president and who will take over key House committees when the new Congress convenes in January. The others are Elijah Cummings, who will almost certainly head the House Oversight Committee, and Adam Schiff of the Intelligence Committee, slammed by the president as “sleazy.” Control of the committees – where they are currently the highest-ranking Democrats – will give them the power to demand documents and testimony from White House officials and important figures in Trump’s campaign team and businesses, and to issue subpoenas if needed. They will also have more money and staff for investigations that could delay or derail Trump’s agenda. “I plan to shine a light on waste, fraud, and abuse in the Trump administration,” Cummings said on Wednesday. “I want to probe senior administration officials across the government who have abused their positions of power and wasted taxpayer money, as well as President Trump’s decisions to act in his own financial self-interest,” he said in a statement. The White House could respond to committee demands by citing executive privilege, but that would likely result in court battles. A first salvo in the battle is expected to come from Representative Richard Neal, who is the likely Democratic chairman of the tax-writing House Ways and Means Committee and who has said he will demand Trump’s tax returns from Treasury Secretary Steven Mnuchin. Such a move could set in motion a cascade of probes into any disclosures the documents might hold. Women candidates make history at the polls Even before the election, Schiff said his committee would look at allegations that Russian money may have been laundered though Trump’s businesses and that Moscow might have financial leverage over the president. Nadler’s panel would handle any effort to impeach Trump, depending on the outcome of Special Counsel Robert Mueller’s federal probe into Russian meddling in the 2016 U.S. elections and possible Trump campaign collusion with Moscow. The panel is expected to look for ways to protect Mueller and his probe from any Trump effort to torpedo the investigation or suppress its findings. Trump denies any collusion by his campaign and has long denounced Mueller’s investigation as a witch hunt. Moscow has denied meddling in the 2016 election. Nadler’s committee is unlikely, however, to move quickly toward impeachment. He has said that any impeachment effort must be based on evidence of action to subvert the Constitution that is so overwhelming it would trouble even some Trump supporters. Nadler, Cummings and Schiff are expected to coordinate their efforts and seek bipartisan cooperation to avoid the appearance of unbridled partisanship ahead of the 2020 presidential election. Still, Republicans accuse Democrats of preparing to abuse their authority with political attacks on Trump and his allies. They predict a partisan drive that could backfire on Democrats, like the Republican effort to impeach former President Bill Clinton did in the 1990s. “There will be irresistible pressure to overreach in their investigations and ultimately impeach the president,” said Republican strategist Michael Steel. Cummings’ team says his Oversight Committee will also focus on public issues including skyrocketing prescription drug costs, the opioid epidemic, voting rights, the Census and the U.S. Postal Service. Reporting by David Morgan and Susan Cornwell; Additional reporting by Patricia Zengerle, Amanda Becker, Susan Heavey and Mark Hosenball; Editing by Peter Cooney and Frances Kerry
Natural-gas futures decline after larger-than-expected rise in U.S. supplies
Oil futures edged lower Thursday, as recent data showing sizable increases in crude output from major producers fed oversupply concerns. Crude output in Saudi Arabia, Russia and the U.S. had climbed ahead of U.S. sanctions on the Iranian energy sector, which were expected to contribute to tighter global oil supplies. The sanctions began earlier this week, but the U.S. granted eight countries temporary waivers—allowing them to continue buying Iranian oil.
Meanwhile, data showing strong crude imports by China in October helped to limit losses in oil prices.
U.S. production climbed by 400,000 barrels a day to 11.6 million barrels a day for the week ended Nov. 2, the Energy Information Administration said in its weekly petroleum supply report issued Wednesday. That marked a record high, and the “pace of the increase was the highest since October of last year when Hurricane Nate caused [1 million barrels a day] of Gulf production to come offline and then quickly return,” said Tyler Richey, co-editor of the Sevens Report. “But unlike last October, there are no extenuating circumstances for this sizeable production spike.” The EIA report also revealed a seventh straight weekly rise in U.S. crude supplies, up 5.8 million barrels last week. The weekly output data followed an updated forecast from the EIA released Tuesday, which raised the 2018 and 2019 outlooks on domestic crude production. For 2019, the government expects a production average of 12.06 million barrels a day. While worries about the Iran sanctions had previously served to boost oil prices, an October swoon in part reflected expectations that increased output by Saudi Arabia and Russia would largely offset the lost barrels. Saudi Arabia’s production rose to 10.67 million barrels a day in October, according to an S&P Global Platts survey Wednesday. That was the most in the 30-year history of the survey, which also showed that the Organization of the Petroleum Exporting Countries’ October output edged down by 30,000 barrels to 33.04 million barrels a day.
Russia’s crude production rose to a post-Soviet record of 11.4 million barrels a day in October, according to Bloomberg.
“While the focus was on the embargo against Iran and Venezuela’s output struggles over the past months, i.e. the risks of too little supply, the market increasingly looks concerned about the prospects of too much supply,” said Norbert Ruecker, head of macro and commodity research at Julius Baer, in a note. “The petro-nations under the lead of Saudi Arabia and Russia have opened their taps, civil-war-torn Libya surprised with strong exports as of late, and the pipeline bottlenecks no longer seem to be too much of a temporary constraint for the U.S. shale boom,” he said. Meanwhile, Chinese government data showed the country imported 9.61 million barrels a day of crude in October, noted analysts at Commerzbank, after refinery processing had climbed to a record in September, pointing to increased demand for crude. The selloff in crude last month may have been used by Chinese refineries to stock up on Iranian oil before U.S. sanctions began to bite, they said, noting Bloomberg data that showed Iranian oil shipments to China rose to 741,000 barrels a day last month—the second-highest level of the year. Natural-gas futures declined after the EIA reported on Thursday a larger-than-expected rise of 65 billion cubic feet for the week ended Nov. 2.
Proclamation to require asylum-seekers to apply only at border crossings
The Trump administration is moving ahead with a plan to limit when and where foreign nationals can apply for asylum at the U.S. border with Mexico. The administration will publish a new rule aimed at pushing asylum seekers to already crowded border crossings and deny the opportunity to apply for asylum to nearly all immigrants caught crossing the border illegally. In a call with reporters Thursday, senior administration officials said President Donald Trump is expected to sign a presidential proclamation that blocks illegal border crossers from the asylum process. The administration officials said the president has the authority to limit asylum for some foreigners under the Immigration and Nationality Act. The rule change and expected proclamation — which could be signed as early as Friday and effectively changes U.S. immigration law — is aimed at reducing the volume of immigrants crossing the border illegally to seek asylum in the U.S. It comes as part of a focus by the president on a group of thousands of mostly Central American migrants making their way to the U.S. in multiple caravans traveling through Mexico. The groups are several hundred miles away from the nearest stretch of U.S. border in Texas’ Rio Grande Valley.
WASHINGTON (Reuters) – U.S. President Donald Trump said on Friday that he will likely make a deal with China on trade, adding that a lot of progress had been made to resolve the two countries’ differences but warning that he still may impose more tariffs on Chinese goods. “China very much wants to make a deal,” Trump told reporters in Washington just hours after his top economic adviser expressed caution about talk of a possible U.S.-China trade agreement. “We’ve had a very good discussions with China, we’re getting much closer to doing something,” Trump said before departing the White House for a campaign event. “I spoke with President Xi (Jinping) yesterday. They very much want to make a deal,” Trump said. “I think we’ll make a deal with China, and I think it will be a very fair deal for everybody, but it will be a good deal for the United States.” Trump said he will discuss trade with Xi when the two meet for dinner on the sidelines of the G20 leaders’ summit at the end of November in Buenos Aires, Argentina. His administration has demanded that Beijing make sweeping changes to its policies on intellectual property protections, technology transfers, industrial subsidies and domestic market access, along with steps to reduce a $375 billion U.S. good strade deficit with China.Trump said a deal with China would also be good for Beijing. “If we can open up China and make it fair, for the first time ever — this should have done years ago by other presidents but it wasn’t — I am very much willing to do it. But China very much wants to make a deal,” he said.
Trump’s comments came a day after a phone call with Xi that he described as “very good.”.
The president’s remarks helped U.S. stocks to trim their losses on a day that started with market optimism over a Bloomberg report quoting unnamed sources as saying that Trump had ordered his cabinet to draw up terms for a China trade deal.
But by midday, shares had turned negative, weighed down by Apple Inc.’s (AAPL.O) disappointing earnings forecast and comments from White House economic adviser Larry Kudlow that he was less optimistic than previously about a deal betweenWashington and Beijing.
Kudlow, speaking on CNBC, contradicted the Bloomberg report and added: “There’s no mass movement, there’s no huge thing. We’re not on the cusp of a deal.”
One of China’s vice commerce ministers Wang Bingnan said on Saturday the country is willing to resolve trade issues with the United States through mutually respectful talks and on an equal footing, similar to past comments from Beijing.
Trump administration officials have said U.S.-China trade talks cannot resume until Beijing outlines specific actions it would take to meet U.S. demands for sweeping changes to policies on technology transfers, industrial subsidies and market access.
Trump said that if a deal is not made with China, he could impose tariffs on another $267 billion in Chinese imports into the United States, adding that China’s economy had “been hit very hard” by previous U.S. tariffs.
The United States has imposed tariffs on $250 billion (192.74 billion pounds)worth of Chinese goods so far, while China has retaliated with $110billion worth of tariffs on U.S. goods.
The Trump administration also has taken action to hit the Chinese semiconductor industry, indicting two companies accused of stealing trade secrets and banning U.S. software and equipment exports to one of them
Reporting by Roberta Rampton, Susan Heavey and David Lawder in Washington; Additional reporting by Li Zheng and Engen Tham in Shanghai; Writing by David Lawder; Editing by Steve Orlofsky and Chizu Nomiyama & Kim Coghill
President Donald Trump vowed to end the right of citizenship to children born in the United States to non-citizens and illegal immigrants in his latest bid to dramatically reshape immigration policies just days before the midterm elections. Trump would target the citizenship right through an executive order, he told news website Axios in an interview published on Tuesday, a move that would prompt a legal fight. The right of US citizenship is granted to US-born children under the 14th Amendment of the Constitution, which cannot be changed by the president. The text of the 14th Amendment reads: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.” Current Supreme Court precedent shows that the children of non-citizens born in the United States are citizens. It was unclear what specific action his order would pursue, and Trump gave no details. He did not say when he planned to sign the executive order, or how the White House would go about reviewing the change. He has previously lied about proposed executive orders, which have gone unfulfilled. “This is blatantly unconstitutional,” Omar Jadwat, head of the ACLU Immigrants’ Rights Project told Reuters. “The president obviously cannot overturn the Constitution by executive order. The notion that he would even try is absurd.” Changing an amendment in the Constitution would require the support of two-thirds of the US House of Representatives and the Senate, and the backing of three-fourths of US state legislatures at a constitutional convention. But Trump said he has talked to his legal counsel and was advised he could enact the change on his own. Asked about the dispute over such presidential powers, Trump said he stood by his comments. “It’s in the process. It’ll happen,” he told Axios in the interview, which will air in full on the HBO pay cable channel on Sunday. Trump also claimed that the US is the only country to have such a policy, which is entirely false. There are about 30 countries that apply the principle of birthright citizenship. Some conservatives have long pushed for an end to the guarantee of birthright citizenship. Republican Senator Lindsey Graham welcomed Trump’s announcement on Twitter, calling the practice a “magnet for illegal immigration”.
I will be introducing legislation to deal with the issue of birthright citizenship for children of illegal immigrants — in a prospective manner — as I have always contended it has become a magnet for illegal immigration in modern times.
Lindsey Graham (@LindseyGrahamSC) October 30, 2018
But other Republicans pushed back on the news, saying that a key tenet of the American Constitution could not be changed so easily. “You cannot end birthright citizenship with an executive order,” said House Speaker Paul Ryan. “You obviously cannot do that,” he continued, speaking to Kentucky radio station WVLK on Tuesday. Trump, whose hard-line immigration stance helped him win the White House, has seized on the issue in recent weeks in the run-up to the November 6 vote that has Americans sharply divided and grappling with race and national identity. His latest comments also come after the deadliest attack on Jews in US history on Saturday and a series of bombs sent to top Democrats and other Trump critics last week. Democrats and other critics have condemned the president’s rhetoric as inflammatory, urging Trump to tone down his language and calling on voters to use the elections as a way to reject such policies. US Senator Chris Coons, a Democrat on the Senate Foreign Relations Committee, told MSNBC that Trump “was driving a false narrative on immigration” in many ways to stoke fear and turn it into an election issue.
NEW YORK (Reuters) – Oil prices dropped more than 1 percent on Tuesday on signs of rising supply and concern that global economic growth and demand for fuel will fall victim to the U.S.-China trade war. Earlier in the session, Brent reached a session low of $75.09 a barrel, the lowest since Aug. 24. WTI slumped to $65.33 a barrel, the weakest since Aug. 17. Prices were little changed in post-settlement trade after industry group the American Petroleum Institute reported U.S. crude inventories rose 5.7 million barrels last week, more than analysts’ forecast for a 4.1 million-barrel build. Investors will look to official government data on U.S. inventories due to be released Wednesday. Both crude benchmarks have fallen about $10 a barrel from four-year highs reached in the first week of October and were on track to post their worst monthly performance since July 2016. Oil has been caught in the global financial market slump this month, with equities under pressure from the trade fight between the world’s two largest economies. The United States has imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of U.S. goods. U.S. President Donald Trump said on Monday he thinks there will be “a great deal” with China on trade but warned that he has billions of dollars worth of new tariffs ready to go if a deal is not possible. Trump said he would like to make a deal now but that China was not ready. He did not elaborate. “One discussion that is developing is that (trade tensions) are hurting demand for crude oil. There’s probably an element of truth to that,” said Bob Yawger, director of futures at Mizuho in New York. The International Energy Agency (IEA) said high oil prices were hurting consumers and could dent fuel demand at a time of slowing global economic activity. Oil production from Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed. C-RU-OUT C-OUT-T-EIA PRODN-SA That is an increase of 10 million bpd since the start of the decade and means the three producers alone now meet a third of global crude demand. The United States is set to impose new sanctions on Iranian crude from next week, and exports from the Islamic Republic have already begun to fall. Saudi Arabia and Russia have said they will pump enough to meet demand once U.S. sanctions are imposed. China, Japan factory output weakens in face of trade threat “The fact that this price weakness is developing just ahead of the official kickoff of the Iranian oil sanctions suggests an amply supplied market in which additional supply was brought to market well in advance of a likely acceleration in Iranian export decline,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Despite calls for him to cool his overheated rhetoric after the deadly synagogue shooting and pipe bomb mailings, President Trump on Monday continued his assault on the “Fake News Media” by continuing to accuse them of stoking rage.
“There is great anger in our Country caused in part by inaccurate, and even fraudulent, reporting of the news. The Fake News Media, the true Enemy of the People, must stop the open & obvious hostility & report the news accurately & fairly,” he wrote on his Twitter account.
“That will do much to put out the flame of Anger and Outrage and we will then be able to bring all sides together in Peace and Harmony. Fake News Must End!,” the president posted, just two days after 11 people were gunned down by a man yelling “all Jews must die” at a Pittsburgh synagogue. The tweets also come three days after Cesar Sayoc was arrested for sending 14 pipe bombs through the postal system to a number of prominent Democrats, including former President Barack Obama, his Vice President Joe Biden, and Trump’s 2016 presidential opponent, Hillary Clinton — all outspoken critics of Trump’s. GOP Sen. James Lankford of Oklahoma said Trump can’t be blamed for the actions of a “hate-filled individual” at the synagogue, but urged the president to tamp down his rhetoric because it “doesn’t help the basic dialogue.” “I’ve said this to the president before: The president needs to be more clear in his rhetoric and doesn’t need to be as caustic in his rhetoric,” Lankford said Sunday on CBS’ “Face the Nation.” Anthony Scaramucci, the former White House communications director, said Trump doesn’t need to go to “war with the media.” “There’s no need to have a war with the media,” he told CNN’s “State of the Union” on Sunday. “You know, as far as I’m concerned, you can have an adversarial relationship, but we should be de-escalating this stuff.” But Democrat Rep. Adam Schiff said Trump’s comments set a tone “of division, often one of hatred, sometimes one of incitement of violence against journalists, and there is no escaping our responsibility.” “This president’s modus operandi is to divide us,” the California lawmaker said on CNN. “It’s not enough that on the day of a tragedy he says the right words, if every other day of the year he’s saying things to bring us into conflict with one another.” Trump condemned the synagogue shooting as “anti-Semitic” and “pure evil.” “There must be no tolerance for anti-Semitism in America or for any form of religious or racial hatred or prejudice,” Trump said during a rally Saturday in Illinois.
PITTSBURGH (KDKA) – Eleven people have been killed and a number of others injured after a shooting at The Tree of Life Synagogue in Squirrel Hill on Saturday. Police sources tell KDKA’s Andy Sheehan the gunman, Robert Bowers, walked into the building and yelled, “All Jews must die.” Sheehan’s sources also confirmed that eleven people have died. No children are among the deceased. Bowers was reportedly armed with an AR-15 and three handguns. The initial call to 911 was made around 9:54 a.m. and officers were dispatched to the scene within a minute. Two officers arrived on the scene and observed a male who was carrying an assault-style weapon, according to police. Bowers opened fire on the two officers and then retreated back into the building. One of the officers suffered a gunshot wound to the hand and the other officer received several cuts to his face from shrapnel and broken glass. Pittsburgh SWAT officers arrived on scene, formed a small team and entered the building. Upon entering the building officers observed the devestation. SWAT medics carried two victims, one male and one female, outside of the building. The victims were transported to UPMC Presbyterian Hospital for treatment. Officers began searching the third floor of the synagogue when they encountered Bowers again, who opened fire on the SWAT team. One officer was shot multiple times and critically wounded and another officer was also shot multiple times by Bowers. The remaining SWAT officers engaged Bowers while the two injured officers were carried outside to Pittsburgh Paramedics. Bowers was injured in the exchange of gunfire. After being taken into custody, the suspect made statements to an officer that he wanted all Jews to die and also that Jews were committing genocide on his people, according to authorities.
The recent stampede by investors has erased about $5 trillion in value from global stock and bond markets in October alone. But that shouldn’t be severe enough to affect the economy, for now, according to economists at Deutsche Bank. Still, unless the markets regain their footing soon, the pressure for the Federal Reserve to reassess their monetary policy will continue to mount, they said. “Academic studies of the wealth effect find that households and companies don’t react to short-term fluctuations in their wealth but instead react to a moving average of where their wealth levels are,” said Torsten Slok, chief international economist at Deutsche Bank Securities, said in a note to clients. As the chart below illustrates, global markets shed roughly $5 trillion in market cap just this month, but the total value of equity and debt markets has increased $15 trillion from 2017.
“The bottom line is that we need a more significant correction before it will begin to have a meaningful impact on the economic outlook,” he said. The Fed said wages and prices are rising in its 12 districts and overall economic activity expanded at a “modest to moderate” pace, according to the Beige Book released on Wednesday. The report, which compiles anecdotal observations about the economy, by and large suggests that the Fed is likely to stay on course to execute its fourth rate rise of 2018 in December and deliver additional increases next year unless there is a more dramatic unwind in the financial markets. Much of the stock market’s volatility have been blamed on worries over the adverse impact of higher rates as the 10-year Treasury yield TMUBMUSD10Y, -1.35% spiked in early October to 3.261%, a level not seen since 2011. A rise in yields leads to steeper borrowing cost for corporations and eventually can slow economic expansion. It can also call make bonds an attractive alternative to more volatile equities. Gross domestic product grew 3.5% in the third quarter, compared with 4.2% in the second quarter, according to a government report Friday. Data showed that consumer spending rose in the latest quarter but was offset by a slowdown in business and residential investment. Even so, with U.S. stocks reeling, the threshold for the Fed to reconsider its hawkish stance may be near, according to Matthew Luzzetti, senior economist at Deutsche Bank. “The recent financial market turbulence should not affect the Fed outlook dramatically unless it becomes more severe and protracted,” he said earlier this month.For that to happen, the Deutsche Bank’s financial conditions index would have to move down to near zero, per the following chart.
“A further 10% decline in equities, which would amount to a roughly 15% decline from the recent peak…would be needed to tighten financial conditions by enough to materially impact the Fed,” said Luzzetti. U.S. stocks headed south Friday with the S&P 500 SPX, -1.73% and the Dow Jones Industrial Average DJIA, -1.19% turning red for the year as disappointing results from a handful of megacap companies weighed on investors’ sentiment. The sharp selloff this month has prompted at least one market expert to suggest that stocks are in the midst of a sustained downward spiral. “With the S&P 500 only five weeks removed from its all-time high, we’ve not been definitive about labeling this move a new cyclical bear market. But it’s very likely we are experiencing one,” said Doug Ramsey, chief investment officer at Leuthold Group, in a report.
He noted that the MSCI ACWI Ex-USA Index, a benchmark for 46 foreign markets, closed only 0.1% away from “official” bear territory and the market action reminds him of the dismal summer days of 1990. “While the big event in that year’s first half was the Japanese stock market’s collapse from its late-1989 high, foreign markets of all stripes were down sharply by the time the S&P 500 saw its final high in mid-July,” he said. Back then, the MSCI ACWI Ex-USA bottomed out ahead of the S&P 500, something which Ramsey expects to recur fairly soon.
The U.S. economy grew by a healthy 3.5% in the third quarter of 2018. As Ed Morrissey notes, “For the first time in more than three years, the US economy grew at an annualized rate of 3% in GDP in two successive quarters. The third quarter expansion measured 3.5% following Q2’s 4.2%.” As the Associated Press observes, “The result was slightly higher than many economists had been projecting. It was certain to be cited by President Donald Trump as evidence his economic policies are working.” As CNBC notes, inflation also remains low: “The U.S. economy grew at a faster-than-expected rate in the third quarter as inflation was kept in check and consumer spending surged, according to data released by the Commerce Department on Friday…. “The department said the PCE price index, a key measure of inflation, increased by 1.6 percent last quarter, much less than the 2.2 percent increase expected by economists polled by StreetAccount.” Unemployment recently fell to 3.7 percent, the lowest since 1969. Minority and disabled workers have made major job gains. The Trump administration has helped fuel economic growth by bringing an end to the wave of burdensome and unnecessary new red tape issued by the Obama administration. That red tape often confused businesses, and made them more reluctant to hire people due to increased costs. Since 2017, employers have been able to hire new employees and make new investments without worrying as much that the ground rules will change and make them regret their earlier decision. As Wayne Crews of the Competitive Enterprise Institute noted in 2017, Trump has pruned unnecessary regulations more vigorously than any president since Reagan. And over “1,500 Obama rules in the pipeline but not finalized were withdrawn or delayed.” Crews says this focus on “cutting red tape is exceptionally good news for consumers, businesses and the economy.” In recent years, “the U.S. federal regulatory burden has amounted to nearly $2 trillion annually. This amounts to a hidden tax of nearly $15,000 per household in a given year.” Pruning more regulations “would jumpstart the economy, finally resulting in the economic relief Americans have been waiting for: more jobs and higher wages. It would also help small business owners, driving more growth, investment, and productivity.”However, the strong economy may not last. Many Obama-era regulations were so burdensome or politically risky that the Obama administration issued them in 2016, but with compliance dates in 2017 or 2018. That created an economic time-bomb for the incoming Trump administration. Although the Trump administration tried to delay the compliance dates of these costly regulations, liberal judges have blocked some of the delays based on procedural technicalities, such as the failure to solicit comment from the public before doing so. (It can take two years to repeal or alter a regulation through a formal notice-and-comment rulemaking process). When Obama took over from Bush in 2001, liberal think-tanks such as the Center for American Progress claimed that a new administration’s delays of agency rules issued in the waning days of the previous administration didn’t require an agency to go through “notice and comment” before the delay could go into effect. But after Trump unexpectedly won the 2016 election, liberal think-tanks and interest groups changed their tune. With liberal backing, special-interest groups sued the Trump administration, and got liberal judges to block some of the Trump administration’s delays based on the very procedural requirements that liberals previously claimed didn’t apply. With Trump picking new judges to fill over 100 judicial vacancies, the federal judiciary may get more conservative. As a result, the administration may get a more sympathetic hearing in future challenges to the administration’s delay or repeal of economically-harmful Obama-era regulations. But that depends on the U.S. Senate voting to confirm more conservative judges. The Senate is almost evenly divided between Republicans and Democrats now, and the Democrats are voting together against Republican nominees — not just against conservatives, but even against well-respected moderate Republicans who served capably in the Bush administration. If the Democrats retake the Senate, they are expected to block any future appointments to the Supreme Court while Trump is in office. They are also expected to block virtually all appointments of judges to the federal appeals courts (and perhaps even to federal district courts), leaving many federal judgeships vacant. Initially, the Chief Justice would likely declare “judicial emergencies” in various regions of the country, but as the problem spreads, this would do little to help.
The stock market has fallen in the past month, perhaps reflecting political risks. As one commentator notes, socialism is gaining ground in the Democratic Party.
For example, self-proclaimed socialist Julia Salazar unseated a Democratic incumbent. She did so even though she received plenty of negative press coverage. According to a Gallup survey, 57 percent of Democrats have a positive view of socialism, while most don’t have a positive view of capitalism. Former President Obama recently endorsed self-proclaimed “Democratic Socialist” Alexandra Ocasio-Cortez for Congress. Even a liberal-leaning web site admits that her economic proposals would cost the country $42 trillion. That would bankrupt America.
LONDON (Reuters) – Ratings agency Fitch said on Friday it no longer assumed that Britain would leave the European Union in a smooth transition and said an acrimonious and disruptive “no deal” Brexit could lead to a further downgrade of its sovereign credit rating. “In Fitch’s view, an intensification of political divisions within the UK … has increased the likelihood of an acrimonious and disruptive ‘no deal’ Brexit. “Such an outcome would substantially disrupt customs, trade and economic activity, and has led Fitch to abandon its base case on which the ratings were previously predicated.” Previously Fitch had assumed Britain would leave the EU in March next year with a transition deal in place and the outline of a future trade deal with the bloc. But Prime Minister Theresa May has struggled to agree a deal that can secure the backing of Brussels and her own lawmakers in the Conservative Party. The ratings agency currently rates British government debt at AA with a negative outlook which means a further lowering of the rating is possible. Fitch cut its top-notch AAA rating on Britain in 2013, citing the outlook for weaker public finances. Ratings downgrades up to now have had little impact on investors’ appetite for British government debt, which is still seen as a safe asset at times of political or economic turmoil. But downgrades are embarrassing for May’s Conservative government, which emphasised preserving the country’s AAA rating when it embarked on an austerity programme in 2010.
A 56-year-old man has been arrested in Florida in connection with a mail-bombing campaign aimed at critics of US President Donald Trump. US officials named the man as Cesar Sayoc. He faces five charges including mailing explosives and threatening ex-presidents. Mr Trump said the acts were “despicable and have no place in our country”. Fourteen items have been sent in recent days to figures including ex-President Barack Obama and actor Robert de Niro. Two were found in Florida and New York City on Friday morning. Later, two more were discovered in California. Billionaire and Democrat donor Tom Steyer said that a package sent to him had been intercepted at a mail facility in Burlingame, and another addressed to Democrat Senator Kamala Harris was reported in Sacramento. The incidents come less than two weeks before the US mid-term elections, with politics highly polarised. The president praised law enforcement for the quick arrest of the suspect, describing the search as looking for a “needle in a haystack”. “These terrorising acts are despicable and have no place in our country,” he said. The comments were in stark contrast to Mr Trump’s tweet earlier in the day, when he suggested the incidents, which he described as “‘Bomb’ stuff”, were slowing Republican “momentum” in early voting. But Mr Trump returned to the theme later, accusing US media of exploiting the latest case. “The media’s constant, unfair coverage, deep hostility and negative attacks… only serve to drive people apart and to undermine healthy debate,” he said at a rally in North Carolina. US media reports suggest Mr Sayoc is a registered Republican who attended some of Mr Trump’s rallies in 2016 and 2017. However, the president rejected any suggestion that his rhetoric had contributed to the attacks. “I heard he was a person that preferred me over others. There’s no blame, there’s no anything,” Mr Trump said. Former intelligence chief James Clapper, one of the recipients of Friday’s packages, told CNN: “This is definitely domestic terrorism, no question in my mind.” He said that anyone who had been a critic of President Trump needed to be on the alert and take extra precautions.
“I’m not suggesting a direct cause-and-effect relationship between anything he’s said or done and the distribution of these explosives. But I do think he bears some responsibility for the coarseness of civility of the dialogue in this country,” he added.
Cesar Sayoc was caught at a vehicle parts shop in the city of Plantation, Florida. FBI Director Christopher Wray revealed that he was detained after his fingerprint was allegedly found on one of the packages. Officials also said DNA and mobile phone data were used to track the suspect down. The Department of Justice said he faced up to 48 years in jail. “We will not tolerate such lawlessness, especially political violence,” US Attorney General Jeff Sessions said at a news conference. “Let this be a lesson to anyone, regardless of their political beliefs, that we will use the full force of the law against you.” Law enforcement agencies said Mr Sayoc lives in Aventura, Florida. In 2002, he was arrested for making a bomb threat in Miami-Dade County, and received one year of probation for the charge. Mr Sayoc has a criminal record dating back to 1991 in Broward
Another Sears death knell: Stock delisted from Nasdaq
As Sears gears up to close some 142 stores after filing for Chapter 11 bankruptcy, some mall operators are worried that big banners and garish signs could spoil the holiday vibe at their shopping centers — and further tarnish the already-battered image of shopping malls. In a filing in US Bankruptcy Court on Monday, big mall owners including Macerich and Brixmor sought to clamp down on attention-getting tactics used by liquidators, including strobe lights, bullhorns and balloons. Likewise, the landlords are looking to ban phrases including “Total Liquidation Sale,” “Going out of Business,” “Everything Must Go” and “Bankruptcy Sale.” Consider the neighboring stores, the mall owners pleaded in their Monday filing. “Shopping center tenants bargain for a certain environment as part of their decision to lease space in centers,” the mall operators said in the filing, arguing that folks handing out fliers about liquidation sales aren’t part of that deal. Indeed, five landlords were so concerned about potential violations that they asked a bankruptcy judge to approve a list of do’s and don’ts before these sales get seriously underway in their malls — the biggest one among them South Coast Plaza in Irvine, Calif. Sears didn’t hire one of the more prominent liquidators like Gordon Brothers, Hilco or Tiger Capital, instead choosing lesser-known Abacus Advisors Group, said bankruptcy attorney David Pollack of Ballard Spahr, who represents Brixmor. “It’s more of a proactive measure, but we also haven’t been able to make contact with the liquidator to make an agreement with them,” Pollack said. In the meantime, the mall operators are not leaving anything to chance. They’ve asked the court to ban neon or “day-glo” signs, and to limit the number of signs Sears is permitted to display in its own stores to five. They’re also asking that any signs not be visible from the “doors or windows of the store.”Exterior signs are out of the question, the landlords contend, while any window signs have to be displayed 12 inches away from the window and cannot take up more than 50 percent of the space. “Landlords have a primary interest in maintaining an aesthetic appearance in the shopping centers for the benefit of all the tenants, especially during the holiday season,” the mall companies wrote. The concerns come amid reports that Sears’ biggest shareholder and former chief executive, Eddie Lampert, is trying to secure a $300 million loan to keep some of the better stores open and humming, sources confirmed to The Post. Lampert is in talks with Cyrus Capital Partners, which holds some of Sears’ existing debt. The bankruptcy loan is in addition to a $300 million loan from Sears’ lenders, including Bank of America, Citigroup and Wells Fargo, which have agreed to provide a temporary lifeline to the 125-year-old retailer.
(Reuters) – Wells Fargo & Co said on Wednesday it put two executives on leave in connection with ongoing regulatory reviews into the bank’s retail sales practices. Chief Administration Officer Hope Hardison and Chief Auditor David Julian have begun leaves of absence and will no longer be members of the bank’s operating committee, the bank said. The bank declined to comment on the reason for the moves, which it announced in a press release. Hardison is a 24-year veteran of Wells Fargo and assumed the CAO role in 2015, according to the company website. Julian joined Wells through its merger with Wachovia Corp and has served as chief auditor since 2012, according to LinkedIn. Wells Fargo has been coping with the fallout of a sales practice scandal since late 2016, when it was revealed that millions of fake accounts may have been opened in customers’ names by bankers facing lofty sales targets.
Since then the bank has been hit with penalties including a $1 billion fine and a cap on assets put in place by the Federal Reserve.
Earlier this week, the bank settled for $65 million with the New York attorney general’s office which alleged that the bank misled investors about its sales practices. The fourth-largest U.S. lender is still facing inquiries into its customer sales abuses by the Department of Justice, the Securities and Exchange Commission and the Department of Labor, according to Wells Fargo’s most recent regulatory disclosure. The bank is also facing several class-action lawsuits from angry customers. “We remain steadfast in our focus on making things right for customers and building a better Wells Fargo,” Chief Executive Officer Tim Sloan said in a statement on Wednesday.
Trump also said Tuesday. “But certainly you have people coming up through the southern border, from the Middle East and other places that are not appropriate for our country. And I’m not letting them in.”
Vice President Mike Pence also said that the Honduran President Juan Hernandez told him over a phone call today that the migrant caravan was financed by Venezuela and organized by leftist groups. “At the President’s direction I spoke with President Hernandez of Honduras. He told me that the caravan that is now making its way through Mexico headed for the southern border was organized by leftist organizations and financed by Venezuela,” Pence said. “And the Democrats maybe?” Trump joked. Pence also declined to offer specific proof that Middle Eastern individuals are in the caravan, instead citing a statistic of how many suspected terrorists are prevented from coming into the country daily. “The United States of America intervenes and prevents 10 terrorists or 10 suspected terrorists from coming into our country every day. So, it is inconceivable that there would not be individuals from the Middle East as part of this growing caravan,” Pence said. Trump said he does not believe he is stoking fear for political gain by addressing the caravan. “No, not at all,” he said, “I’m a very non-political person. And that’s why I got elected President.”
(CNN)For days, as migrants have traveled thousands of miles toward the US-Mexico border, President Donald Trump has warned of the dangerous people who make up their pack. He’s tweeted that “[c]riminals and unknown Middle Easterners” are “mixed” in with the caravan, and, on Monday afternoon, doubled down on his claims, telling reporters on the South Lawn of the White House to “go into the middle” of the caravan and “search. You’re gonna find MS-13. You’re gonna find Middle Eastern.” While the President insinuates terrorists have infiltrated the group that CNN crews have observed to include mostly mothers and their children, a senior counterterrorism official has also refuted the President’s claim. “While we acknowledge there are vulnerabilities at both our northern and southern border, we do not see any evidence that ISIS or other Sunni terrorist groups are trying to infiltrate the southern US border,” a senior counterterrorism official told CNN. Officials at the Department of Homeland Security have been less direct, but have disproved the President’s point nonetheless. When asked for evidence for the President’s claim that “[c]riminals and unknown Middle Easterners are mixed in” with caravan migrants, a DHS official responded with a hodgepodge of numbers: “In FY 18, CBP apprehended 17,256 criminals, 1,019 gang members, and 3,028 special interest aliens from countries such as Bangladesh, Pakistan, Nigeria, and Somalia. Additionally, CBP prevented 10 known or suspected terrorists from traveling to or entering the United States every day in fiscal year 2017.” None of that, however, proves that criminals or people from the Middle East are in the caravan crowd. And on top of that, the countries the DHS official mentioned are actually South Asian and African, not in the Middle East. There was also no mention of whether Customs and Border Protection made those apprehensions at the southwest border or elsewhere. It is also unclear how or where CBP prevented terrorists from traveling to the United States. CBP spokesperson Corry Schiermeyer said she would not comment on the President’s tweets, and referred additional questions to DHS, which oversees CBP. Former Homeland Security acting Undersecretary John Cohen told CNN that there has “clearly been an effort” by the administration to create a sense of fear as the caravan gets closer to the US.
The streamer’s long-term debt has soared north of $10 billion, though Moody’s says ratings and outlook remain stable.
Netflix’s insatiable appetite for content, both original and licensed, is causing the giant streamer to borrow another $2 billion, and Wall Street has mixed emotions on the matter. While Monday’s disclosure of additional debt didn’t immediately knock the stock down, several hours later shares had given back the day’s gains and ended by trading down 1 percent. Longtime skeptic Michael Pachter of Wedbush Securities says the additional debt did not come as a surprise, considering Netflix’s penchant for reporting negative cash flow. “It is precisely what we modeled,” says Pachter. “So long as they burn cash, they will have to raise capital to fund their content spending.” Netflix is a victim of its own success. Its original content streamed on demand has proved so popular it has attracted many copycats, so Netflix must spend wildly to keep up with relative upstarts like Amazon, CBS All Access, HBO Now and Hulu. It also must replenish what it is gradually losing from Warner Bros. and Disney, as each of them prepare to launch their own services next year that will directly compete with Netflix. This means that if Netflix users want to stream episodes of Friends or the movie Coco, for example, they eventually won’t have the option without signing up for yet-to-be named services from Warners and Disney, respectively. ”
They’re burning around $3 billion a year, so we should expect them to borrow around $3 billion a year for the foreseeable future,” Pachter says of Netflix.
With the additional $2 billion, Netflix’s long-term debt has soared north of $10 billion, though Moody’s says ratings and outlook remain stable.
Netflix’s spending on content is expected to be about $8 billion this year alone, though some speculate it could swell to $13 billion. The streamer boasts some 137 million subscribers, and it is depending on signing millions more globally to keep the rapid growth investors have grown accustomed to. “Despite the continuing issuances of debt to fund the company’s negative cash flows, we expect leverage to drop gradually over time as the transition from licensed content to produced original content levels off and newer international markets begin to contribute to profits and overall margins improve,” says Neil Begley, an analyst with Moody’s. “The interest rate charged will reflect their perceived ability to repay, and until creditors refuse to lend to them, I expect the cash-burn and borrowing cycle to continue,” adds Pachter. Netflix bulls agree that more spending is in the cards; they just aren’t overly concerned about it. The stock, after all, has nearly doubled in two years amid heavy borrowing and negative cash flow. “Netflix is willing to invest heavily to be the global leader in entertainment for the next several decades. If you want to go to the moon, you have to burn a lot of fuel,” says Ben Weiss, chief investment officer at 8th & Jackson Capital Management.
(Reuters) – Investors slammed U.S.-based stock funds during the latest week, pulling $17.5 billion, the most cash from such investments since June, according to Lipper data on Thursday. The withdrawals came during a volatile week for markets as minutes from the most recent Federal Reserve policy meeting showed broad agreement on the need to raise borrowing costs further, cementing investor concerns that had helped cause a major sell-off the week before. [.N] Domestic stock mutual funds and exchange-traded funds (ETFs) posted $18.2 billion in withdrawals, only marginally offset by $648 million moving into equity funds focused abroad, according to data from the research service that covers the seven days through Oct. 17. Rising rates could draw money away from stocks and into bonds. It could also crimp the economic growth that has plumped corporate profits to record levels and enabled a near decade-long rally. “There were people ducking for cover,” said Tom Roseen, head of research services at Lipper. “This is fast money – people getting in and getting out.” Also during the week, Japanese stock funds based in the United States but invested primarily in Tokyo pulled in $1.2 billion, the most cash since 2013 and an endorsement of that market’s chances to rally. Despite a strong start to earnings season and the hope of rising rates increasing bank profits from lending activity, fast-money investors pulled $2.5 billion from financial sector funds, the most on record.
Italy’s government bonds are sinking and their yields are spiking. There are plenty of reasons, including possible downgrades by Moody’s and/or Standard and Poor’s later this month. If it is a one-notch downgrade, Italy’s credit rating will be one notch above junk. If it is a two-notch down-grade, as some are fearing, Italy’s credit rating will be junk. That the Italian government remains stuck on its deficit-busting budget, which will almost certainly be rejected by the European Commission, is not helpful either. Today, the 10-year yield jumped nearly 20 basis points to 3.74%, the highest since February 2014. Note that the ECB’s policy rate is still negative -0.4%: But the current crisis has shown little sign of infecting other large Euro Zone economies. Greek banks may be sinking in unison, their shares down well over 50% since August despite being given a clean bill of health just months earlier by the ECB, but Greece is no longer systemically important and its banks have been zombies for years. Far more important are Germany, France and Spain — and their credit markets have resisted contagion. A good indicator of this is the spread between Spanish and Italian 10-year bonds, which climbed to 2.08 percentage points last week, its highest level since December 1997, before easing back to 1.88 percentage points this week.
Much to the dismay of Italy’s struggling banks, the Italian government has also unveiled plans to tighten tax rules on banks’ sales of bad loans in a bid to raise additional revenues. The proposed measures would further erode the banks’ already flimsy capital buffers and hurt their already scarce cash reserves. And ominous signs are piling up that a run on large bank deposits in Italy may have already begun.
It’s not just the banks that are panicking; so, too, are Italian insurers which could face having to shell out more in advance taxes on their premiums as a result of the new budget, assuming it is ever given the green light by Brussels. “We need to be very careful dealing with these issues … because we are one of the pillars of the national system,” the chairman of Italy’s biggest insurer, Generali, said on Tuesday. Global investors also have big reasons to worry. Italy’s government faces an eye-watering €270 billion worth of bond redemptions in 2019 alone. With interest on Italian government debt rising to its highest level in five years and its biggest margin buyer of the last three years, the ECB, exiting the market, it’s looking like a tall order. The Bank of Italy is afraid that a vicious cycle is forming over the country’s debt costs. If market tensions don’t ebb, it warns, interest spending could surge above government estimates in 2019-20. Interest expenditures had fallen to €65.5 billion in 2017 from a high of €83.6 billion in 2012, helped along by the ECB’s buying of sovereign bonds as part of its QE program. The new big fear is that this month, either or both, Moody’s and S&P, will downgrade Italian debt two notches into junk territory. The potential implications of such a move, not only for Italy but for the European project as a whole, are so huge that many market players are discounting it as a possibility altogether.
“A downgrade to junk could trigger a full-blown (euro zone) crisis,” said Nicola Mai, a portfolio manager at PIMCO, the world’s largest bond investor. “…
Which is why I don’t believe the agencies will do it, I don’t think they will want to be the ones causing a crisis in Europe.” Iain Stealey, a fixed income portfolio manager at JP Morgan Asset Management, concurs. “It would be a very, very big decision, just given the size of the Italian bond market; it makes up something like a fifth of government bonds in the euro zone,” he said. In other words, contagion would spread across the Euro Zone like wildfire.
Weakness in China’s currency and a rout in its stock market in 2018 are raising warning bells among investors haunted by memories of the August 2015 devaluation scare and the ensuing volatility that spooked investors. Underscoring those fears, China’s officials reported that gross domestic product grew at a slower pace than anticipated for the third quarter. Data released late Thursday showed its economy expanding 6.5% year-over-year between July and September, compared with 6.6% expected and 6.7% in the prior period. The GDP report represented the weakest read since 2009 and was followed by a parade of statements from the People’s Bank of China, its securities regulator and banking and insurance regulator in support of the stock market and what was billed by that cohort as China’s positive economic fundamentals. Still, looking at the year so far, both China’s major stock market benchmarks and the yuan have suffered—and it market participants worry that Friday’s rebound belies grave concerns that further economic and stock-market pain lie ahead. A weak currency, which makes Chinese products more competitive on the global market—and offsets some of the impact of U.S. tariffs—could help China stave off some of the slowdown. But as the yuan still hovers near a psychologically important 7.00 mark, worries about how authorities will handle the situation are on the rise. “A steady depreciation of the yuan could help Beijing cushion the impacts of U.S. tariffs by boosting export competitiveness—ultimately supporting economic growth,” said Lukman Otunuga, research analyst at FXTM. “However, such a move is likely to fuel capital outflows, spark fears of a currency war and pressure [other] emerging markets.” “I think China is trying to walk a fine balance of easing monetary and fiscal policy to compensate for the negative effects of the trade war,” said Danske Bank chief China economist Allan von Mehren in emailed comments. Overdoing it on the easing side, he added, would “risk igniting capital outflows due to yuan devaluation and also delay the deleveraging process too much.” While the currency has sold off further versus the U.S. dollar than investors may have expected at the start of the year, but the move has been widely attributed to market forces. In light of a strengthening greenback DXY, -0.36% particularly in the second quarter of the year, emerging markets, including China, sold off. The yuan has dropped more than 6% versus the dollar so far this year, both in Beijing and in the more freely traded offshore currency. “Regardless, a scenario where the yuan sharply weakens toward 7.00 [yuan per dollar] is poised to fuel concerns over the health of the world’s second largest economy,” Otunuga said. He said that the Chinese yuan breaching the psychological level would weigh on global sentiment, with Asian emerging-market currencies sitting in the hot zone. Those are risk of the effect of China contagion include the South Korean won USDKRW, -0.57% Taiwanese dollar USDTWD, -0.3258% and Malaysian ringgit USDMYR, -0.1968% and the respective stock markets in those regions are also likely to be slammed. The fragility of China’s currency have been at least partly a byproduct of monetary tightening from the Federal Reserve and easing from the People’s Bank of China, market participants said. But the PBOC’s policy-easing measures and shore up its economy likely won’t bear fruit until the middle of next-year, Jones said.
WASHINGTON (Reuters) – The United States plans to turn up sanctions pressure on Venezuela but sees less need to immediately target its energy sector, given sagging production from the OPEC member’s state-run oil company, a senior U.S. administration official said on Wednesday. The U.S. government has imposed several rounds of sanctions on Venezuelan military and political figures close to socialist President Nicolas Maduro, who it blames for trampling on human rights and triggering the country’s economic collapse. Earlier this year, the Trump administration had weighed escalating sanctions by targeting a Venezuelan military-run oil services company or restricting insurance coverage for oil shipments. The actions would have built upon last year’s ban for U.S. banks from any new debt deals with Venezuelan authorities or state-run oil giant PDVSA [PDVSA.UL]. Asked by reporters whether the U.S. government had slowed down on its push for sectoral sanctions, the senior official described them as some of the many “tools” it is keeping in reserve. “With regards to Venezuela, all options are on the table,” said the official, who spoke on condition of anonymity. Venezuela’s crude oil production hit a 28-year low in 2017, a slump blamed on poor management and corruption. “At the end of the day, Nicolas Maduro has taken care of really running PDVSA to the ground, and essentially more and more making it a non-factor,” he said. Almost 2 million Venezuelans have fled since 2015, driven out by food and medicine shortages, hyperinflation, and violent crime. The exodus has overwhelmed neighboring countries. Maduro, who denies limiting political freedoms, has said he is the victim of an “economic war” led by U.S.-backed adversaries. The Trump administration also plans to ramp up economic pressure on Cuba’s military and intelligence services, the official said. In his speech last month to the United Nations, President Donald Trump linked Venezuela’s crises to “its Cuban sponsors.” “That is a message that we will continue to put out, but frankly its a message that the region needs to talk about,” the official said, noting John Bolton, Trump’s national security adviser, is expected to elaborate on the issue publicly soon. “The issue of Cuban involvement in Venezuela is a fact. It’s not a theory, it’s not a story,” the official said.
Despite fierce blowback from President Trump, the Federal Reserve’s policymakers unanimously agree they should keep hiking interest rates to cap inflation That’s according to the minutes of the latest Fed meeting, in which every policymaker backed a move to raise interest rates in September. The display of solidarity raises the prospect of a fourth rate-hike this year in December. The release of the minutes comes amid growing tensions between the White House and the Fed, which is an independent agency. Last week, Trump called the Fed “loco” and “too aggressive” for its commitment to cooling the economy, and blamed the central bank for the more than 1,000-point drop in the Dow Jones industrial average last week. Trump, who has openly criticized the Fed since July, doubled down on Tuesday, declaring the Fed his “biggest threat” in an interview on Fox Business. But Trump’s complaints don’t seem to have fazed the honchos at the world’s most important central bank. Members of the Federal Open Market Committee, which determines the Fed’s monetary policy, didn’t bother to discuss comments made by Trump warning against further increases in the central bank’s benchmark interest rate, according to minutes of the Sept. 25-27 meeting released Wednesday. Instead, some members of the committee believed that the Fed would need to impose “modestly restrictive” conditions on the economy, the minutes show. The Dow Jones industrial average on Wednesday fell 91.74 points, to 25,706.68. The minutes did suggest, however, that the committee remains split on how much further to raise rates next year, with a few participants expecting rates would need to rise enough to modestly restrain economic growth, even as two others “indicated that they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation.”
HOUSTON/SINGAPORE (Reuters) – In the middle of a Sino-U.S. trade war, the world’s largest publicly traded oil and gas company is turning toward Beijing for business at a time when most of Corporate America is looking elsewhere to avoid the threat of tariffs. Exxon Mobil Corp is placing big bets on China’s soaring liquefied natural gas (LNG) demand, coupling multi-billion dollar production projects around the world with its first mainland storage and distribution outlet. Its gas strategy is moving on two tracks: expanding output of the super-cooled gas in places such as Papua New Guinea and Mozambique, and creating demand for those supplies in China by opening Exxon’s first import and storage hub, according to an Exxon manager and people briefed on the company’s plans. That combination “will guarantee us a steady outlet for lots of our LNG for decades,” said the Exxon manager who was not authorized to discuss the project and spoke on condition of anonymity. One of the company’s top policy goals this year, the manager said, is building its Chinese client roster. “China’s natural gas demand is rising really fast, with imports soaring well over 10 percent annually at the moment because of the government gasification program and due to fast rising industrial demand, including in petrochemicals,” the Exxon manager said. Exxon said last month it would participate in the construction of an LNG import terminal in Huizhou, Guangdong region and provide supplies to it. This makes it only the second foreign major with such a stake in an LNG terminal. Exxon is among the top ranked U.S. companies that are pushing ahead in China despite the trade dispute, but it is not alone. U.S. and European car makers are opening or expanding China plants to avoid hefty tariffs and transport costs. Tesla Inc this month acquired a Shanghai site for a car and battery-manufacturing complex. The decision to expand its LNG production and open an import terminal in the world’s fastest growing LNG market is a step by Exxon Chief Executive Darren Woods to pull the company out of an earnings rut.
BEIJING (Reuters) – China’s coal output hit its highest in nine months in September, government data showed on Friday, boosted as new mining capacity started up in the country’s northwest. China has been given the go-ahead for a number of big coal mines as it tries to ease concerns about fuel shortages amid a crackdown on small outdated mines and tightened emission controls. Miners churned out 306.01 million tonnes of coal last month, up 3.2 percent from 296.6 million tonnes in August and up 5.2 percent from the same time last year, according to the data from the National Bureau of Statistics (NBS). Output over the first nine months of 2018 in the world’s top producer of the commodity reached 2.59 billion tonnes, up 5.1 percent from a year earlier. “The increase in coal output is not surprising as new mining capacity in the northwest was released on schedule,” said Cheng Gong, senior coal analyst at Zheshang Securities. Coal output from the region of Inner Mongolia last month jumped 11.3 percent from the same month in 2017, while Shaanxi province saw growth of 9.9 percent, according to NBS. By the end of June, China had a total of 3.49 billion tonnes of coal mining capacity, while another 976 million tonnes of capacity is still under construction, according to data from the National Energy Administration. “We expect to see more capacity being released in the coming months, which will further boost coal output in China,” said Cheng. Meanwhile, northern China will soon turn on coal- or gas-powered heating as temperatures drop sharply in the run-up to winter. The official heating season starts on Nov. 15. Benchmark thermal coal prices on the Zhengzhou Commodity Exchange CZCcv1 have risen around 6 percent from early September.
(Reuters) – China’s soybean imports are set to drop by a quarter in the last three months of 2018, their biggest fall in at least 12 years as buyers curb purchases amid the Sino-U.S. trade war and high domestic stockpiles.
Soybeans, crushed to make protein-rich animal feed ingredients and vegetable oils, have been at the heart of the tit-for-tat trade dispute between the world’s top two economies. China in July imposed a retaliatory 25-percent import duty on U.S. soybeans as part of the conflict, a saga that has gathered steam since then with the introduction of fresh tariffs on other products. Soybean imports by China, which buys 60 percent of the oilseed traded worldwide, will likely decline to around 18-20 million tonnes in the fourth quarter, compared with 24.1 million tonnes in the same period last year, traders said. “Imports will average around 6 million tonnes per month in the fourth quarter,” said a Singapore-based trader at an international company that owns oilseed processing plants in China. “Purchases are going to be mainly from Brazil and some from Argentina and Canada. Buyers are not willing to take chances by bringing in U.S. beans,” the trader added, declining to be identified as he was not authorized to speak with media. The benchmark Chicago soybean contract dropped to a 10-year low of $8.12-1/4 last month, although prices have since recovered on fears of crop-damage following rains ahead of the harvest in parts of the U.S. Midwest. It was trading down 0.8 percent at $8.78-1/2 on Thursday. The landed cost of U.S. beans in China is currently similar to Brazilian soybeans even with the 25-percent tariff, but Chinese crushers are reluctant to take U.S. supply as they fear authorities may not approve cargoes and that tariffs could climb further. “Right now China’s import duty on U.S. wheat is 25 percent, who knows, the duty might go up to 50 percent by the time your boat arrives,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.China’s soybean purchases of around 24 million tonnes in the fourth quarter of last year were more than triple 2006 levels, climbing for 10 out of 12 years, according to the country’s customs data. The estimated decline of 4 to 6 million tonnes in October-December this year would be the biggest fall since at least 2006. China, which largely uses soy in feed for the world’s biggest pig herd, is unlikely to face a shortfall in supplies despite the drop in imports as it has abundant domestic reserves after a strong pace of imports. “We will be fine until the end of February. For March, April, it’s a bit tight, but if demand is not so good, then we can probably even survive until then,” said a Beijing-based soybean trader who forecast imports in the fourth quarter at 20 million tonnes. Soybean stocks at China’s ports stood at 8.57 million tonnes this week, down marginally from a record of around 9 million tonnes at the end of last week. Crush margins in Shandong, the hub of China’s soybean processing industry, have been in positive territory since early August, reaping strong profits for companies making feed ingredients such as soymeal. Processors are making 305 yuan ($44.04) a ton, not far from last month’s two-year high of 315 yuan. “Soymeal demand from the feed millers has been pretty strong as they build stocks,” said the first Singapore-based source.
So grave is the fallout from the disappearance of Saudi journalist Jamal Khashoggi that King Salman has felt compelled to intervene, five sources with links to the Saudi royal family said.
Last Thursday, Oct. 11, the king dispatched his most trusted aide, Prince Khaled al-Faisal, governor of Mecca, to Istanbul to try to defuse the crisis. World leaders were demanding an explanation and concern was growing in parts of the royal court that the king’s son Crown Prince Mohammed bin Salman, to whom he has delegated vast powers, was struggling to contain the fallout, the sources said. During Prince Khaled’s visit, Turkey and Saudi Arabia agreed to form a joint working group to investigate Khashoggi’s disappearance. The king subsequently ordered the Saudi public prosecutor to open an inquiry based on its findings. “The selection of Khaled, a senior royal with high status, is telling as he is the king’s personal adviser, his right hand man and has had very strong ties and a friendship with (Turkish President) Erdogan,” said a Saudi source with links to government circles.Since the meeting between Prince Khaled and Erdogan, King Salman has been “asserting himself” in managing the affair, according to a different source, a Saudi businessman who lives abroad but is close to royal circles. Khashoggi, a U.S. resident and leading critic of Prince Mohammed, vanished after entering the Saudi consulate in Istanbul on Oct. 2. Turkish officials say they believe the Saudi journalist was murdered there and his body removed, allegations which Saudi Arabia has strongly denied. Initially the king, who has handed the day-to-day running of Saudi Arabia to his son, commonly known as MbS, was unaware of the extent of the crisis, according to two of the sources with knowledge of the Saudi royal court. That was partly because MbS aides had been directing the king to glowing news about the country on Saudi TV channels, the sources said.
That changed as the crisis grew.
“Even if MbS wanted to keep this away from the king he couldn’t because the story about Khashoggi’s disappearance was on all the Arab and Saudi TV channels watched by the king,” one of the five sources said. “The king started asking aides and MbS about it. MbS had to tell him and asked him to intervene when Khashoggi’s case became a global crisis,” this source said. Since he acceded to the throne in January 2015, the king has given MbS, his favourite son, increasing authority to run Saudi Arabia. But the king’s latest intervention reflects growing disquiet among some members of the royal court about MbS’s fitness to govern, the five sources said. Khashoggi’s disappearance has further tarnished the crown prince’s reputation, deepening questions among Western allies and some Saudis about his leadership. “Even if he is his favourite son, the king needs to have a comprehensive view for his survival and the survival of the royal family,” said a fourth Saudi source with links to the royal court. “In the end it will snowball on all of them.” Saudi officials did not immediately respond to Reuters requests for comment.
What will it take for the housing market to find equilibrium?
Existing-home sales ran at a seasonally adjusted annual rate of 5.15 million in September, the National Association of Realtors said Friday. That was a 3.4% decline for the month, and the lowest pace of sales since November 2015. Sales of previously-owned homes stabilized in August after declining for four straight months, so September’s lurch lower was not welcome. Sales were 4.1% lower than year-ago levels. September’s selling pace missed the MarketWatch consensus forecast of a 5.27 million rate. The median sales price in September was $258,100, which was 4.2% higher than a year earlier. Home prices are still growing faster than wages, but the pace of price increases is decelerating steadily. That’s likely because inventory is ticking up gradually. At the current pace of sales, it would take 4.4 months to exhaust available supply, up from 4.3 months last month. And it’s taking properties longer to get snatched up: homes stayed on the market for 32 days in September, up from 29 days in August. The Realtors blamed another stagnant month in the housing market on rising mortgage rates, higher prices, and the supply stranglehold. But it’s also likely that many would-be buyers are dropping out of a market that’s become too competitive, expensive, and unsatisfying, especially as conditions in the rental market ease up. The national median rent declined compared to a year ago in September, Zillow ZG, -1.24% said Thursday. That was the first yearly decline since 2012, and reflects a glut of supply, with more to come. NAR Chief Economist Lawrence Yun now forecasts that existing-home sales will be 1.6% lower in 2018 than last year. Economists at mortgage financier Fannie Mae are even more bearish: they’re projecting a 2% decline.
President Donald Trump’s chief of staff and his national security adviser engaged in a profanity-laced argument outside the Oval Office on Thursday, according to three people familiar with the episode. The chief of staff, John Kelly, and the national security adviser, John Bolton, fought over immigration and border crossings, including the performance of the Homeland Security Department under Secretary Kirstjen Nielsen, one person familiar with the matter said. She was at the White House for meetings on Thursday but not present for the argument, the person said. Bolton criticized DHS, and Kelly defended Nielsen, a former deputy whom he supported to replace him at the department. Trump sided with Bolton, the person said, which may once again stir speculation that Kelly will soon depart the White House. Trump has lately expressed fury about a large group of migrants who are traveling from Honduras toward the U.S. border. He vowed Thursday to deploy the military and shut down the Mexican border unless the migrants are turned back. The clash is an indication that tension is flaring in the White House 19 days before midterm elections in which Republican control of Congress is at stake. The shouting match was so intense that other White House aides worried one of the two men might immediately resign. Neither of the men is resigning, the people said. Trump is aware of the argument, the people said, even though the president told reporters he didn’t know about it before boarding Air Force One to travel to Montana for a campaign rally. He has recently sought to make immigration a more prominent political issue, blaming Democrats for increased numbers of migrants crossing the border.
Even as debilitating U.S. sanctions targeting Iran’s oil industry remain slated to snap back in November, Tehran may seek to maintain a status-quo arrangement with the West until the fate of the Trump presidency becomes clearer, according to top Iran expert Karim Sadjadpour. “It seems that the Iranian strategy is essentially to wait out the Trump administration,” Sadjadpour, a senior fellow at the Carnegie Endowment for International Peace, said. “To wait what happens with the midterm elections, wait until 2020, to see if President Trump is reelected.” In an interview with Intelligence Matters host and CBS senior national security contributor Michael Morell, Sadjadpour outlined a range of possible outcomes from the U.S.-Iran standoff as theon the regime. “Outcome number one is essentially status quo,” Sadjadpour said. “The U.S. has pulled out of the deal, but Iran remains part of the nuclear deal as do other parties to the deal: Europe, Russia and China.” In a status-quo scenario, Sadjadpour said, Iran is likely to maintain that the United States, under Trump, and in reneging on its international commitments, is behaving like a rogue regime – all while Iran makes good on its agreements. “Which, if you’re the United States,” he told Morell, “isn’t a bad outcome because Iran is continuing to keep its foot on the nuclear brakes.” Last month, the European Union’s high representative for foreign affairs, Federica Mogherini, announced the establishment of a while avoiding the effects of U.S. sanctions. A number of European businesses, however, have nonetheless suspended its relationships with Iran – whose currency, the rial, has lost 70 percent of its value in the past year. “Iran is a country which has enormous potential. It’s got enormous human capital. And obviously it has enormous resources in oil and gas,” Sadjadpour said. “But it’s tremendously– it’s consistently punched below its weight as an economy.” In a second scenario – which might appeal to President Trump, Sadjadpour continued – the Iranians would, by virtue of deteriorating economic conditions and heightened risk of social unrest, be effectively forced to engage diplomatically and renegotiate the nuclear deal “along the lines of what happened with Kim Jong Un.” “Iran’s supreme leader is much more stubborn,” Sadjadpour observed, but “has a much shorter timeframe than Kim Jong Un.” President Trump has signaled a willingness to meet and negotiate with Iranian president Hassan Rouhani, who has largely rebuffed offers of dialogue with the U.S. “Trump’s offer of direct talks with Iran is not honest or genuine,” Rouhani wrote in an op-ed last month. “I think President Rouhani would like to see a different relationship between America and Iran,” Sadjadpour told Morell, “but as long as Khamenei is supreme leader, that acrimony is going to remain.” Khamenei, Sadjadpour said, has for years sought to downplay the impact of sanctions while assigning blame to domestic mismanagement. “The modus operandi of Iran’s supreme leader is he wields power with accountability,” Sadjadpour explained, “and in order to do that, he needs a president who has accountability without power.” The supreme leader also maintains a carefully calibrated symbiotic relationship with Iran’s powerful Revolutionary Guard Corps, Sadjadpour told Morell, in part by routinely exchanging economic benefits for steadfast political and military support. “[The IRGC have] made a lot of money over the years,” Sadjadpour said. “They’re not only Iran’s increasingly the most powerful political institution, but also Iran’s most powerful economic institution.”
WASHINGTON (Reuters) – U.S. homebuilding dropped more than expected in September as construction activity in the South fell by the most in nearly three years, likely held down by Hurricane Florence. Other details of the report published by the Commerce Department on Wednesday were also soft. Building permits declined to their lowest level in almost 1-1/2 years. The housing market, which has been a weak spot in a robust economy, has been hobbled by an acute shortage of properties for sale. Residential investment contracted in the first half of the year and the latest data supports economists’ expectations that housing remained a drag on economic growth in the third quarter. Housing starts fell 5.3 percent to a seasonally adjusted annual rate of 1.201 million units last month. Data for August was revised down to show starts rising to a rate of 1.268 million units instead of the previously reported pace of 1.282 million units. July’s sales pace was also revised lower. Starts in the South, which accounts for the bulk of homebuilding, tumbled 13.7 percent last month. That was the biggest decline since October 2015. Hurricane Florence slammed North and South Carolina in mid-September and flooding from the storm probably depressed homebuilding last month. Building permits fell 0.6 percent to a rate of 1.241 million units in September. That was the second straight monthly decline and left permits at their lowest level since May 2017. Economists polled by Reuters had forecast housing starts declining to a pace of 1.220 million units last month. Starts surged 29 percent in the Northeast and rose 6.6 percent in the West. They fell 14.0 percent in the Midwest.U.S. Economists blame the sluggish housing market on rising mortgage rates, which have combined with higher house prices to make home purchasing unaffordable for some first-time buyers. The 30-year fixed mortgage rate jumped 19 basis points to 4.90 percent last week, the highest level since mid-April 2011, according to data from mortgage finance agency Freddie Mac. The mortgage rate has risen about 91 basis points this year. While mortgage rates are still low by historical standards, the rise has outpaced annual wage growth, which has been stuck below 3 percent. House prices have increased 6.0 percent on an annual basis and are being driven by the dearth of properties. Single-family homebuilding, which accounts for the largest share of the housing market, decreased 0.9 percent to a rate of 871,000 units in September. Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years. Permits to build single-family homes rose 2.9 percent in September to a pace of 851,00 units. They, however, remain below the level of single-family starts, suggesting limited scope for a strong rebound in homebuilding. Starts for the volatile multi-family housing segment plunged 15.2 percent to a rate of 330,000 units in September. Permits for the construction of multi-family homes declined 7.6 percent to a pace of 390,000 units. With starts and building permits declining last month, housing supply will likely remain tight. That was also reinforced by a 4.1 percent drop in homebuilding completions in September to a rate of 1.161 million units, the lowest level since November 2017. Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to plug the inventory gap. The stock of housing under construction increased 0.3 percent to more than an 11-year high of 1.129 million units last month. However, multi-family homes accounted for much of the increase.
NEW YORK (Reuters) – Oil prices fell on Wednesday, with U.S. futures slipping below $70 a barrel for the first time in a month, after U.S. stockpiles rose by 6.5 million barrels, almost triple what analysts had forecast, while exports dropped. Oil had been rising on worries about Iranian sanctions and tensions between the United States and Saudi Arabia after the death of Saudi journalist Jamal Khashoggi. “This market is dangerously close to $70. If it goes down through $70, I think some of that speculative position may have interest in getting out, and that could accentuate the downside,” said Bob Yawger, director of futures at Mizuho in New York. Crude stocks rose 6.5 million barrels for the week through Oct. 12, and exports were down to 1.8 million bpd, the U.S. Energy Information Administration said, in a report analysts characterized as bearish. Oil futures were already sinking in anticipation of larger crude inventories and in tandem with recent declines in equity markets worldwide. The scandal over the disappearance of prominent Saudi critic and journalist Jamal Khashoggi, who disappeared two weeks ago after entering the Saudi consulate in Istanbul, had underpinned oil markets earlier in the week. U.S. lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers, but President Donald Trump’s comments suggested that White House may not take additional action against the Saudis, particularly after Saudi Arabia has said it will conduct an investigation. Investors worry Saudi Arabia could use oil supply to retaliate against critics. Jim Ritterbusch, president of Ritterbusch and Associates, said Saudi Arabia could cut as much as 500,000 barrels per day of crude production “as a warning shot” to discourage U.S. sanctions. A claim by the United States that it aims to reduce Iran’s oil exports to zero is a “political bluff”, the head of the state-run National Iranian Oil Company was quoted as saying on Wednesday. New U.S. sanctions on Iranian oil exports start on Nov. 4, while Iran has accused Saudi Arabia and Russia of breaking an OPEC-led agreement on output cuts by producing more crude.
With concerns that Saudi Arabia may have ordered the gruesome murder of a dissident journalist who went missing two weeks ago, President Donald Trump admitted in a new interview that Saudi Arabia has “been a great ally.” Trump sat down with Fox Business Network Tuesday and discussed myriad topics, including the disappearance of Saudi writer and U.S. resident Jamal Khashoggi. “Turkey and Saudi Arabia are looking at it very strongly. It depends whether or not the king or the crown prince knew about it, in my opinion,” Trump said. “No. 1, what happened, but whether or not they knew about it. If they knew about it, that would be bad. If they didn’t know about it, bad things can happen.” Trump then explained how Saudi Arabia has been a strong partner in the pushback against Iran. “You look at what they’re doing in Iran. Don’t forget, Saudi Arabia is our partner, they’re our ally against Iran, against missiles, and against what they’re doing, trying to take over the Middle East,” he said. “They’ve been a great ally to me.” After referencing a U.S.-Saudi Arabia arms deal that’s worth $110 billion, Trump did concede that it would not at all be appropriate if Khashoggi was killed on orders from the Saudi government. “With all of that being said, you can’t do what we’ve been reading about. We’re gonna learn a lot about it,” he said.
WASHINGTON (AP) — Facing the prospect of bruising electoral defeat in congressional elections, President Donald Trump said Tuesday that he won’t accept the blame if his party loses control of the House in November, arguing his campaigning and endorsements have helped Republican candidates. In a wide-ranging interview three weeks before Election Day, Trump told The Associated Press he senses voter enthusiasm rivaling 2016 and he expressed cautious optimism that his most loyal supporters will vote even when he is not on the ballot. He dismissed suggestions that he might take responsibility, as his predecessor did, for midterm losses or view the outcome as a referendum on his presidency. “No, I think I’m helping people,” Trump said. “I don’t believe anybody’s ever had this kind of an impact.” Trump spoke on a range of subjects, defending Saudi Arabia from growing condemnation over the case of a missing journalist, accusing his longtime attorney Michael Cohen of lying under oath and flashing defiance when asked about the insult — “Horseface” — he hurled at Stormy Daniels, the porn actress who accuses him of lying about an affair. Asked if it was appropriate to insult a woman’s appearance, Trump responded, “You can take it any way you want.” In an interview with the Associated Press, President Donald Trump criticized the rush to condemn Saudi Arabia for the mystery surrounding missing journalist. He also said he is not responsible if the GOP loses seats after the midterm elections (Oct 16)
A blacklist of 21 countries whose so-called “golden passport” schemes threaten international efforts to combat tax evasion has been published by the west’s leading economic thinktank.Three European countries – Malta, Monaco and Cyprus – are among those nations flagged as operating high-risk schemes that sell either residency or citizenship in a report released on Tuesday by the Organisation for Economic Cooperation and DevelopmentIn exchange for donations to a sovereign trust fund, or investments in property or government bonds, foreign nationals can become citizens of countries in which they have never lived. Other schemes, such as that operated by the UK, offer residency in exchange for sizable investments.
The programme operated by Malta is particularly popular because as a European member state its nationals, including those who buy citizenship, can live and work anywhere in the EU.
The country has, since 2014, sold citizenship to more than 700 people, most of them from Russia, the former Soviet bloc, China and the Middle East. But concern is growing among political leaders, law enforcement and intelligence agencies that the schemes are open to abuse by criminals and sanctions-busting business people.
Transparency International and Global Witness, in a joint report published last week, described how the EU had gained nearly 100,000 new residents and 6,000 new citizens in the past decade through poorly managed arrangements that were “shrouded in secrecy”. Also on the OECD blacklist are a handful of Caribbean nations that pioneered the modern-day methods for the marketing of citizenship. These include Antigua and Barbuda, the Bahamas, Dominica, Grenada, St Lucia, and St Kitts and Nevis, which has sold 16,000 passports since relaunching its programme in 2006.Second passports can be misused by those wishing to “hide assets held abroad”
The OECD believes the ease with which the wealthiest individuals can obtain another nationality is undermining information sharing. If a UK national declares themselves as Cypriot, for example, information about their offshore bank accounts could be shared with Cyprus instead of Britain’s HM Revenue and Customs. The final names on the list are Bahrain, Colombia, Malaysia, Mauritius, Montserrat, Panama, Qatar, Seychelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu.
LONDON (Reuters) – Nearly half of Europe’s largest stocks are now in what analysts call a bear market or downturn, data analysed by Reuters showed on Monday, as fears mount that the post-financial crisis rally might be on its last legs outside the United States. The pan-European STOXX 600, currently at a 22-month low, is itself down almost 12 percent since its January peak, and 290 of its 600 components have lost at least 20 percent in value from their highest levels in the last 52 weeks.Two sectors stand out particularly in the retreat: the automotive industry and banks, which have lost roughly 28 percent and 25 percent respectively. While Wall Street’s buoyant indexes managed to bounce back last Friday after the biggest scare since a market correction in February, shares in Asia and in Europe are currently failing to recover. The divergence between bullish U.S. stock markets and the rest of global stock markets has been a red flag for investors since the beginning of the year. European equities have struggled as political turmoil and the region’s vulnerability to trade risks starkly contrasted with the allure of tax cuts, stock buybacks and a booming economy in the United States. A poll of about 30 brokers, fund managers and analysts at the end of August showed that the STOXX 600 index was expected to rise by only 2.8 percent to 400 points by year-end, but this forecast looks increasingly optimistic. “I was one of the most pessimistic but I think I was right,” said Stephane Barbier de la Serre, a strategist at Makor Capital Markets who participated in the poll and expects the index to end the year at 350 points.Hit by a toxic mix of rising U.S. Treasury yields, a strong dollar, slowing domestic growth, an escalating Sino-U.S. trade war and rising oil prices, equities from emerging markets are already deep into bear market territory, down more than 25 percent, and have lost more than $1.1 trillion in value. Analysts from Bank of America Merrill Lynch said on Friday that 1,557 global stocks out of 2,767 – or 56 percent of the MSCI ACWI – are in a bear market.
Retail sales rise 0.1% in September, below Wall Street forecast
The numbers: Sales at U.S. retailers barely grew in September as Americans spent less at restaurants, grocery stores and gas stations, raising questions about whether the economy slowed toward the end of summer. Retail sales rose just 0.1% for the second month in a row. Wall Street had expected a 0.6% increase, according to Econoday.
Sales would have fallen if not for a big month at auto dealers. Sales may have been hindered in part by Hurricane Florence, but the U.S. Census Bureau said it could not calculate the impact. The storm battered parts of the Atlanta seaboard, most notably the Carolinas. After a string of strong sales, bars and restaurants saw a big dropoff. Sales sank 1.8% in September to mark the biggest decline since the end of 2016. Sales fell sharply at gas stations and department stores. Department stores have been losing ground for years to internet retailers such as Amazon AMZN, -1.68% . Sears SHLD, -23.91% is the latest victim of the switch from traditional brick-and-mortar shopping to online sales. The giant and long established department store is entering bankruptcy proceedings.Sales at internet retailers climbed 1.1% in September. Auto dealers posted a 0.8% increase. The U.S. appeared to enter the fall with strong momentum, but the second straight weak retail sales report suggests the economy might have cooled off a bit in the third quarter. The prospect of the Federal Reserve raising interest rates and last week’s big decline in the U.S. stock market could add to the anxieties.
Lampert steps down as CEO and is exploring potential bid for some Sears stores
Sears Holdings Corp. filed for bankruptcy protection from creditors, marking the collapse of a company that dominated American retailing for much of the 20th century. The retailer SHLD, -23.83% , which sought chapter 11 protection in U.S. Bankruptcy Court in White Plains, N.Y., reached a deal with its lenders that will allow the 125-year-old company to keep hundreds of its stores open for now. The company said its controlling shareholder, Edward Lampert, has stepped down as CEO, but will remain chairman. The hedge-fund manager, who took control when he merged Kmart with Sears in 2005, ran the company as it racked up losses and closed hundreds of stores in recent years. Sears said it would close 142 money-losing stores near the end of the year, with liquidation sales expected to begin shortly. The closings are in addition to 46 stores that are expected to close by next month. Currently, the company operates roughly 700 Sears and Kmart stores. It employs about 70,000 people. The bankruptcy filing came before Sears was required to repay $134 million in loans later on Monday. Sears has lined up $1.875 billion in bankruptcy financing to pay off its existing loans and fund its stores pending the chapter 11 case, or about $300 million more than what the company had before the filing. Lampert’s hedge fund, ESL Investments Inc., is in talks to provide another $300 million junior bankruptcy loan that would provide additional cash for the retailer’s business. ESL is also exploring a stalking-horse bid to buy “a large portion” of the company’s stores in the bankruptcy process.
“Just spoke to the King of Saudi Arabia who denies any knowledge of whatever may have happened ‘to our Saudi Arabian citizen.’ He said that they are working closely with Turkey to find answer. I am immediately sending our Secretary of State to meet with King!’
Khashoggi, a Saudi national and U.S. resident who has been a vocal press critic of Saudi Prince Mohammed bin Salman, has not been seen since entering the Saudi consulate in Istanbul on Oct. 2. He is feared dead. His disappearance has sparked a worldwide outcry. Turkish authorities claim they have video and audio recordings indicating Khashoggi was first interrogated in the consulate, then tortured and murdered. The Washington Post reported evidence has been shared with U.S. authorities. The alleged hit squad was sent from Saudi Arabia and organized the killing. A bone saw was used to dismember Khashoggi’s body and it was placed in handheld cases and transported back to Saudi Arabia. Pompeo is expected to go to Riyadh and later visit Turkey.
NUSA DUA, Indonesia (Reuters) – Italian officials must stop questioning the euro and need to “calm down” in their budget debate as they have already caused damage to firms and households, European Central Bank President Mario Draghi said on Saturday. A senior member of Italy’s ruling coalition shot back that it was Draghi who should calm down, rather than draw attention to occasional comments on the euro which were personal opinions and had no implications for government policy. Italy’s government is in a war of words with European officials over its plans to triple the deficit next year, backtracking on a previous pledge to narrow the budget gap in one of the bloc’s most indebted countries. “A budgetary expansion in a high debt country becomes much more complicated … if people start to put in question the euro,” Draghi told a news conference at the International Monetary Fund’s annual meeting in Indonesia. “These statements … have created real damage and there’s plenty of evidence that spreads have increased in connection with these statements,” Draghi said. “The results of which is that household and firms pay higher interest rates on loans.” Italian bond yields rose sharply this month after a senior official from one of the ruling parties said Italy would be better off with its own currency, though he later reiterated the government’s frequent reassurances that quitting the euro is not in its program and it has no plans to do so. “The very first thing (to do) is to calm down with the tone. And then the second thing is we have to wait for the facts,” Draghi said, stressing the need to examine the actual spending plans, which may differ from the government’s communications. Alberto Bagnai, a senator from the right-wing League who heads the Senate finance committee, said Draghi himself risked agitating markets by drawing attention to rare personal opinions on the single currency that were not government policy. “Draghi should calm down and stop mentioning the euro. Nobody does it around here,” he tweeted. Draghi also batted back accusations from some corners in the Italian government that the ECB’s plan to phase out asset purchases by the end of the year had caused the increase in spreads. Draghi, a former governor of Italy’s central bank, said markets had not reacted in June to the ECB’s decision to end its asset buys but had moved specifically on local Italian issues. He pointed to the narrowing of the yield difference between Italy and Greece as evidence that the problem is localized. Since the ECB is buying Italian but not Greek bonds, a bigger rise in Italian yields would suggest that investors are not acting on overall ECB policy change but a local issue.
Washington (CNN)The retired British spy who wrote an explosive dossier about President Donald Trump’s alleged ties to Russia broke his silence to criticize Trump and the “distorted” state of US politics. The former spy, Christopher Steele, wrote to Vanity Fair shortly after he was named to the magazine’s “2018 New Establishment List.” CNN reviewed a copy of Steele’s email, which included his most political comments since his dossier gained international attention in January 2017. “In these strange and troubling times, it is hard to speak unpalatable truths to power, but I believe we all still have a duty to do so,” Steele said. “I salute those on your list, and otherwise, who have had the courage to speak out over the last year, often at great personal cost.”
Steele went on to say, “(A)t a time when governance is so distorted and one-sided, as I believe it currently is in the United States, the media has a key role to play in holding it accountable.”
Ministers threaten to QUIT in protest at concessions to the EU
Theresa May vowed she will never sign up to a Brexit deal that ‘permanently’ traps the UK in the EU customs union. The PM made the promise as ministers threaten to quit over the latest concessions to Brussels. Mrs May is under fire from all sides as she races against time to thrash out a divorce deal with the EU that does not tear her government to pieces. But her latest plan to break the deadlock has caused fury amid claims it could see the UK commit to staying in the customs union beyond 2020 with no hard departure date. In an effort to soothe tensions, Downing Street insisted today: ‘The Prime Minister would never agree to a deal which would trap the UK in a backstop permanently.’ Meanwhile, the DUP is warning it will oust Mrs May if she bows to demands from Brussels for Northern Ireland to stay within the single market.
The walls are closing on the premier with just days to go until a crunch EU summit that could decide the country’s future.
Mrs May gathered her Brexit ‘War Cabinet’ last night to try and swing them behind her ideas for unlocking the negotiations. Her new ‘backstop’ plan to avoid a hard Irish border would see the UK effectively remain in a customs union with the EU after Brexit until a permanent solution to the Irish border problem can be found. A previous commitment that the UK will have cut ties by the end of 2021 ‘at the latest’ is set to be dropped after fierce resistance from Brussels. Sources insist that backstop would still be ‘temporary’ and is likely to last ‘months, not years’.
The meeting last night – are believed to be considering whether they can go along with the compromise Work and Pensions Secretary Esther McVey (pictured) is also believed to have serious doubts about Mrs May’s approach But Liam Fox, Sajid Javid, Gavin Williamson, Jeremy Hunt, Michael Gove and Dominic Raab all voiced concern about the concession. Commons Leader Andrea Leadsom, Work and Pensions Secretary Esther McVey, and Aid Secretary Penny Mordaunt – who were not invited to the meeting last night – are believed to be considering whether they can go along with the compromise. No formal proposal was put to the ministers, but they were asked to agree the ‘direction of travel’ as negotiators seek agreement with the EU. One Cabinet source predicted the issue could lead to resignations in the coming days, saying: ‘This is going to be a big test for some ministers. Are they willing to accept assurances that this is temporary if those words have no legal force? If not, then they surely have to resign.’ It would see the whole of the UK stay in the customs union ‘temporarily’ until a wider trade deal is struck. Northern Ireland would effectively remain in the single market to avoid regulatory checks on the border with the Republic. The government’s previous plan said that it wanted the UK to stay in the customs union until 2021 ‘at the latest’. But it is not clear whether the UK would be subject to rules that stop countries striking their own trade deals outside the bloc. The backstop is designed to fall away when a wider trade pact is agreed – which Mrs May says should be based on her Chequers plan for a ‘combined customs territory’ with the EU.
International Trade Secretary Dr Fox, whose plans for trade deals outside the EU would be severely limited inside a customs union, has told friends the proposal would ‘make life very difficult for me’. However, Government Chief Whip Julian Smith last night urged Tory MPs and ministers to rally round, saying: ‘The Prime Minister and the Government are conducting a complex negotiation that is going well and we should be backing the Prime Minister.’ Proposals for a so-called ‘temporary customs arrangement’ were first announced in June as part of ‘backstop’ plans to resolve the Irish border problem. At the time, the then Brexit secretary David Davis threatened to resign unless a clear end date was inserted, forcing Mrs May to accept the plan would be ‘time limited’. But Brussels has been implacable in its opposition to an end date, saying the ‘backstop’ plan must be ‘all-weather’. Tory Brexiteer Jacob Rees-Mogg said: ‘Income tax was supposed to be temporary. Gladstone said it would expire in 1860. ‘Likewise, the 1911 Parliament Act says it is temporary. Both are still here.’ Chancellor Philip Hammond today signalled that the EU and UK were getting closer to agreement – and held out the prospect of a ‘deal dividend’ for the economy if a settlement is reached. ‘What has happened over the last week, 10 days, is there has been a measurable change in pace,’ he told the BBC. ‘There is a real sense now of engagement from both sides, of shared enterprise in trying to solve a problem rather than posturing towards each other. A really important step change. ‘But that shouldn’t conceal the fact that we have some big differences left to resolve. Process is a lot more positive this week, substance still very challenging. ‘If we are able to get to a good deal for Britain as we leave the European Union I believe there will be a dividend, a deal dividend for us.’ As pressure mounted on Mrs May last night, a DUP MP called for her to be replaced with a new Tory leader. The party has become increasingly alarmed that Mrs May will accept Northern Ireland staying in the single market while mainland Britain leaves – something they say would split the UK.
The world’s supply and demand of crude have reached record levels, accord to the International Energy Agency (IEA)
The figures have hit 100 million barrels a day.A new IEA report points out: Both global oil demand and supply are now close to new, historically significant peaks at 100 mb/d, and neither show signs of ceasing to grow any time soon. Fifteen years ago, forecasts of peak supply were all the rage, with production from non-OPEC countries supposed to have started declining by now. In fact, production has surged, led by the US shale revolution, and supported by big increases in Brazil, Canada and elsewhere. In future, a lot of potential supply could come to the market from places like Iran, Iraq, Libya, Nigeria and Venezuela, if their various challenges can be overcome. There is no peak in sight for demand either. “Peak supply” was based on the notion that the world would begin to run out of oil reserves, which eventually would weigh on prices. Among the reasons the theory is not true is future production. Nigeria and Venezuela have had problems with political tensions, and economic disasters. However, Venezuela has the world’s largest proven oil reserves, and Nigeria is in 10th place by the same measure. Sanctions against Iran could hamper its exports, for now. It has the fourth largest proven oil reserves in the world. As demand increases, so does the strain on oil production and refinery capacity. This, in turn, probably will increase prices. IEA experts point out: It is an extraordinary achievement for the global oil industry to meet the needs of a 100 mb/d market, but today, in 4Q18, we have reached new twin peaks for demand and supply by straining parts of the system to the limit. Recent production increases come at the expense of spare capacity, which is already down to only 2% of global demand, with further reductions likely to come. This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy.
It’s well known at this point that just under 30 percent of Americans ages 17 to 24 ― the prime age to join the Army ― aren’t eligible to join. But beyond that, almost a third of those who sit down with a recruiter to take the first steps are immediately disqualified. Why? Because of their weight. “Out of all the reasons that we have future soldiers disqualify, the largest – 31 percent ― is obesity,” Maj. Gen. Frank Muth, head of Army Recruiting Command, said Wednesday at AUSA’s annual meeting in Washington, D.C. A freshly published study, “Unhealthy and Unprepared” concludes that America’s rising numbers of overweight youth are going to have real impacts on the military’s ability to maintain effectiveness. “We’ve got to make sure that message gets out, because our concern is what happens when that percentage that qualify … potentially goes down?” Muth said. “Or if the obesity, if that starts to go up.”The study was undertaken by researchers with Mission: Readiness, an organization of more than 700 retired senior military leaders. One solution, they found, was institutionalized fitness and nutrition programs in schools, to ensure that kids grow up with healthy habits. Researchers found that of the 29 percent of young Americans who have a high school diploma, no criminal record and no chronic medical issues, just 17 percent would be qualified and available for active duty, and 13 percent would qualify, be available, and achieve a satisfactory score on the Armed Forces Qualification Test. “These numbers are particularly concerning because as the recruitable population has declined, so has interest in serving in the military,” the study found.
Experts say healthy eating choices have to start young if the Army is going to be able to find enough recruits who meet weight requirements. (Scott T. Sturkol/Army) In 2016, 13 percent of 16- to 24-year-olds were interested in joining the military, and that number dropped 2 percent in 2017. And for recruits who are overweight but not so much so that they can’t enlist altogether, there are risks after they have joined and are getting in shape during training. The obesity issue is particularly stark in the South, from which the Army draws a large number of its recruits. The Citadel, a military college in South Carolina, found that recruits in 10 Southern states had lower levels of physical fitness and were 22 percent to 28 percent more likely to be injured during basic training than their peers from other areas of the country, according to Mission: Readiness. Further, a 2016 study published in the American Journal of Preventive Medicine found that “active duty soldiers with obesity were 33 percent more likely to suffer musculoskeletal injury, contributing to the more than 3.6 million injuries that occurred among active duty service members between 2008 and 2017.”
Musculoskeletal injuries and stress fractures have also been the leading cause of medical evacuations during deployments to Iraq and Afghanistan, above and beyond other injuries. As of 2015, 7.8 percent of active duty service members were considered overweight by their height and weight, up 73 percent from 2011, according to the report. “[The Defense Department] spends $1.5 billion a year on obesity-related health care for active duty service members and veterans and their family members,” or missing 650,000 days of work for active duty troops, said retired Lt. Gen. Thomas Spoehr. The Army expects to see positive results from implementing the Occupational Physical Assessment Test to evaluate potential recruits before they join up, then following up with the Army Combat Fitness Test through their careers, as part of a holistic program that provides dietitians, physical therapists and other support staff at the unit level. One retired three-star put the issue in harsher terms. “You know, lieutenant, fat people don’t make good soldiers,” said retired Lt. Gen. Sam Ebbessen, recalling the words of an advanced individual training instructor master sergeant he worked for at Fort Dix, New Jersey. “They’re a weak link in the chain, and they get themselves and others killed.”
(Reuters) – Sears Holdings Corp (SHLD.O) is preparing to file for Chapter 11 bankruptcy protection in the coming days following years of declining sales, sources said on Wednesday, casting doubt over the survival of what was once the world’s largest retailer. The bankruptcy filing would end a standoff between Chief Executive Officer Eddie Lampert, the retailer’s biggest shareholder and lender, and a special board committee the company has formed to consider a rescue plan proposed by Lampert that would involve asset sales and a debt restructuring. The committee has been resisting the plan amid concerns that creditors and shareholders would sue over it being too favorable for Lampert. His history of financial engineering at Sears for more than a decade through deals tied to his hedge fund ESL Investments Inc could now be subjected to new scrutiny by Sears’ creditors in bankruptcy court, according to the sources.. A $134-million debt payment that Sears has to meet on Monday has added pressure on both Lampert and the special committee to find a resolution. Lampert had told the special committee he would not help the company fund that obligation unless it agreed to his plan, the sources said. “For whatever reason, Sears’ board said enough is enough,” said Chad Brand, president of Peridot Capital Management, which holds Sears bonds. Brand added that he had significantly cut down on his Sears bond holdings earlier this year amid concerns from his clients. At its peak in the 1960s, Sears sold everything from toys and auto parts to mail-order homes, and was a key tenant in almost every big mall across the United States. But it has struggled to reinvent itself in the face of online competition from companies such as Amazon.com Inc (AMZN.O), as well as from other brick-and-mortar retailers, including Walmart Inc(WMT.N). It is not clear whether Sears would survive a bankruptcy process. When Toys ‘R’ Us, the largest specialty toy retailer, filed for bankruptcy protection last September, it sought to emerge from it after restructuring its debt and shutting stores. Instead, it was forced to liquidate last March, after creditors balked at providing a new lifeline to the company. If Sears were to file for bankruptcy, its financial performance during the upcoming holiday season could prove crucial in determining its future, according to the sources. Toys ‘R’ Us’ creditors lost faith in the retailer after revenue during last year’s holiday season failed to meet their expectations.
Rick Huether’s family has run a manufacturing company in Maryland since the 1940s. So he knows a bit about keeping blue-collar jobs in America. But now he, like many other manufacturers in the US, is worried. In March, President Donald Trump announced steep tariffs on foreign steel and aluminium, citing the need to protect those industries. But the move has left hundreds of other firms, including Mr Huether’s Independent Can Co, exposed. His firm, which employs more than 400 people and takes over $100m (£77m) in annual sales, relies on tin-plated steel from Europe and Canada to make specialty products such as biscuit tins and coffee cans. The tariffs are expected to add about $1.5m in surprise expense this year. And Mr Huether says they have already cost him one long-time customer, who turned to China amid the uncertainty. “We need a strong steel industry – no question about it,” he says. “But I don’t think they’ve thought through the ramifications.” To assuage business concerns, the Commerce Department said it would allow firms to apply for exemptions from the tariffs. The department rules on the request after a comment period, during which metal producers can object. Instead of calming debate, however, the procedure has triggered new turmoil, after companies overwhelmed the department with requests. About 800 businesses, including Independent Can, submitted more than 34,000 petitions, citing issues such as as quality flaws, delivery delays and lack of production in the US. As of 10 September, officials had decided on more than 4,300 of the requests, approving about 55%. But the majority of the applications are still pending, leaving Independent Can and many others in limbo. “It’s very frustrating. If we could buy domestic, we would buy everything domestic,” says Mr Huether, who submitted more than 30 requests and estimates he has spent about $100,000 trying to navigate the process. “We only went overseas because quality issues domestically forced us.” The decision lag has led to fierce lobbying and complaints from Republicans and Democrats alike about a lack of transparency and bureaucratic micromanagement. Nor has it escaped notice that many of the denials appear to be prompted by objections from steelmakers – an industry with close ties to the administration. For example, Commerce Secretary Wilbur Ross used to own steel companies, while the head of steelmaker Nucor advised Mr Trump during the 2016 presidential election. The Commerce Department has twice revised its process, bringing on more staff and expanding the opportunities for manufacturers to respond to the objections, but their frustration remains high. “There’s no criteria,” says Chad Bown, senior fellow at the Peterson Institute for International Economics. “So of course it opens up a huge can of worms and concerns that for anybody who gets [a waiver], it’s favouritism or corruption or just not transparent.” US Steel, one of the firms that opposed Mr Huether’s requests, declined to comment on how the administration is handling the process. But a company spokeswoman said its expansion plans – it has already restarted one blast furnace and is preparing to restart another – showed it had the ability to meet US demand. Peter Morici, an emeritus professor at the University of Maryland business school, says politicians are dramatising the problems ahead of US congressional elections in November. As US steel and aluminium makers boost capacity, the kinds of issues cited by manufacturers should subside, he adds. “In the near term, there’s an adjustment problem,” Mr Morici says. “In the longer term, there’s no steel that we can’t make here.” But many firms can’t afford to wait, especially as the surging demand for US-made metals has led to higher prices, says Christine McDaniel, a senior research fellow at the Mercatus Center, a pro-free market think tank housed at George Mason University, who has analysed the requests. “Eventually this does come out of the bottom line of firms, of shareholders or of consumers. You can’t escape it,” she says. “And small and medium-sized manufacturers are the ones that are feeling the brunt of this right now.” Companies in Missouri, Indiana, Illinois and elsewhere have announced hundreds of layoffs already. Other firms have scaled back expansion plans or said they will shift work overseas. Independent Can raised prices in September, breaking with its custom of setting prices at the start of the year. It is looking to automate lower-skilled jobs, often filled by temporary workers, to reduce expenses
LONDON (Reuters) – British surveyors are the most downbeat about house prices since the Brexit vote in 2016 with some unsettled by reports that Bank of England Governor Mark Carney warned ministers of a possible house price crash if Britain leaves the EU with no deal. The Royal Institution of Chartered Surveyors (RICS) said its headline house price balance fell to a four-month low of -2 in September, below all forecasts in a Reuters poll. The outlook for prices in three and 12 months’ time was the lowest since June 2016. “Uncertainty relating to Brexit negotiations is at the very top of the list followed by references to the confidential remarks made by the Bank of England Governor to the cabinet,” RICS Chief Economist Simon Rubinsohn said. Last month British media reported Carney privately told ministers that mortgage rates could spiral and house prices fall by 35 percent over three years in a chaotic no-deal Brexit. The BoE declined to comment on the remarks and whether Carney had been referring to extreme financial scenarios used for previous BoE tests of banks’ financial health. Carney himself did not address the reports in a public appearance on the day they appeared, but reiterated that the BoE had tested banks against “very severe” scenarios including “dramatic house price falls”. Britain’s housing market overall has slowed since the Brexit vote in June 2016. Official data for July showed prices up 3 percent on the year compared to gains of around 8 percent at the time of the referendum. The headline figure masks big regional variations. Prices are falling in London, which saw the biggest rises before the Brexit vote. The city is vulnerable to Brexit worries among foreign investors and any barriers to financial services trade. By contrast, RICS said prices continued to rise in most of the United Kingdom outside London and neighbouring areas. Sales were slow almost everywhere, however. New buyer enquiries were the weakest since March and houses were taking the longest to sell since RICS started asking its members about this regularly in February 2017.
NUSA DUA, Indonesia (Reuters) – International Monetary Fund Managing Director Christine Lagarde on Thursday warned countries of the perils of a trade or a currency war, saying they could be detrimental to global growth and hurt “innocent bystanders.” Lagarde urged countries to “de-escalate” trade frictions and fix global trading rules, rather than abandon them. “We certainly hope we don’t move in either direction of a trade war or a currency war. It will be detrimental on both accounts for all participants, Lagarde told a news conference during the annual meetings of the IMF and World Bank in Indonesian resort island of Bali. “And there would also be lots of innocent bystanders.” China and the United States have slapped tit-for-tat tariffs over the past few months, rattling financial markets as investors worried the escalating trade war could knock global trade and investment. On recent yuan declines, Lagarde said they were mainly driven by the strength of the dollar, noting that it has not depreciated as much against a basket of currencies. “We’re seeing more and more countries, China included, let their currencies fluctuate,” Lagarde said. The yuan currency CNY=CFXS has faced strong selling pressure this year, losing over 8 percent between March and August at the height of market worries, though it has since pared losses as authorities stepped up support. A U.S. Treasury official on Monday repeated that the Trump administration was concerned about the yuan’s recent weakening as the department prepares a semi-annual report on currency manipulation due out next week. US President Donald Trump has accused China of deliberately manipulating its currency to gain a trade advantage, claims Beijing consistently rejected. “We have supported the move of China toward (currency) flexibility,” she said, adding that the IMF has encouraged Chinese authorities to “go down that path.” Lagarde urged China to follow through on the IMF’s recommendation to continue moving toward a system that allows the yuan to move flexibly She declined to comment on the recent market rout, but said U.S. equities and overall stock prices “in general have been extremely high.”
President Donald Trump again criticized the Federal Reserve for raising interest rates, calling it a “mistake” hours after the worst U.S. stock market sell-off since February. “The Fed has gone crazy,” he told reporters on Wednesday as he arrived in Pennsylvania for a campaign rally. “So you can say that well that’s a lot of safety actually, and it is a lot of safety, and it gives you a lot of margins, but I think the Fed has gone crazy.” White House Press Secretary Sarah Sanders said in a statement following the close of markets that the U.S. economy is “incredibly strong” despite the selloff, which analysts attributed in part to trade tensions with China. “It’s a correction that we’ve been waiting for for a long time,” Trump said. He frequently celebrates publicly when the stock market reaches new highs, pointing to the gains as affirmation for his economic policies. Trump was briefed on the market turmoil earlier in the day, a White House official said. He has repeatedly criticized the central bank for raising interest rates this year, decisions aimed at preventing the economy from overheating. “The fundamentals and future of the U.S. economy remain incredibly strong,” Sanders said in a statement. “President Trump’s economic policies are the reasons for these historic successes and they have created a solid base for continued growth.”
U.S. stocks tumbled Wednesday the most since February as fresh concern about the impact of the trade war with China roiled technology and industrial shares.
The broad selloff took the S&P 500 to the lowest in three months, the Dow Jones Industrial Average plunged as much as 836 points and the Nasdaq 100 Index tumbled more than 4 percent for its worst day in seven years. The sell-off came a day after the International Monetary Fund said the world economy is plateauing and cut its growth forecast for the first time in more than two years, blaming escalating trade tensions and stresses in emerging markets. Trump has slapped tariffs on $250 billion in Chinese goods this year, and Beijing has retaliated with levies $110 billion of American products. The IMF projections don’t take into account Trump’s threat to expand the tariffs to effectively all of the more than $500 billion in goods the U.S. bought from China last year. During an event earlier Wednesday amid the selloff, Trump and his top economic adviser, Larry Kudlow, said they believed the U.S. economy was strong. “It is doing well,” Trump said.
(Reuters) – Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund said on Wednesday. IMF Financial Counselor and Director for the Monetary and Capital Markets Department Tobias Adrian talks to media during Global Financial Stability Report press conference at the 2018 International Monetary Fund (IMF) World Bank Group Annual Meeting at Nusa Dua in Bali, Indonesia, October 10, 2018 in this photo taken by Antara Foto. Antara Foto/M Agung Rajasa/ via REUTERS The IMF, whose autumn meetings with the World Bank get under way on the Indonesian resort island of Bali this week, also noted that while the banking system has been shored up by regulators in the decade since the 2008 global financial crisis, easy financial conditions are contributing to a buildup of vulnerabilities such as high debt levels and “stretched” asset valuations.
New bank resolution regimes meant to avoid future bailouts are largely untested, the Fund said in its biannual global financial stability update.
“Near-term risks to global financial stability have increased somewhat,” the IMF said. “Overall, market participants appear complacent about the risk of a sharp tightening in financial conditions.” IMF capital markets director Tobias Adrian said potential shocks to the system could come in many forms, such as higher-than expected inflation that triggers a sharp jump in interest rates or a “disorderly” exit by Britain from the European Union. But the severity of the impact from such shocks will be determined by vulnerabilities including growing non-financial debt levels now exceeding 250 percent of GDP, a decline in underwriting standards outside the traditional banking sector and elevated asset prices that could drop sharply. “It’s this interaction between the buildup of vulnerabilities and the decline in asset prices that can generate adverse implications for macroeconomic activity,” Tobias told a news conference. The rapid build-up in debt in China in recent years also is a concern, although Chinese authorities have taken steps to rein in debt growth, he said. In the report, the IMF said economic growth appears to have peaked in some major economies while the gap between advanced countries and emerging markets was widening. The IMF on Tuesday cut its global growth forecasts due to an escalating U.S.-China trade war and growing financial strains on emerging markets The United States continues to grow strongly and the Federal Reserve raised interest rates for the seventh time in the last eight quarters at its latest policy meeting in September. U.S. stock markets are also at record highs. That contrasts with a slowing in the euro area and Japan. China’s economy is also showing signs of moderating and that could be exacerbated by its trade disputes with the United States, which has imposed tariffs on $250 billion worth of imports from Beijing and is threatening duties on $267 billion more. The normalization of monetary policy in the United States as well as a stronger dollar and escalation in trade tensions has already begun to affect emerging market economies, the Fund said.
New IMF research shows emerging market countries excluding China could face debt portfolio outflows of up to $100 billion, a level last seen during the global financial crisis.
The Fund cited a number of other near-term risks to financial stability including the possibility of a “no-deal” Brexit or renewed fiscal policy concerns in some highly indebted euro area countries. It also urged global regulators to keep in place measures taken since the financial crisis and both heighten supervision of market liquidity and raise the amount of capital banks have to set aside to cushion any downturn. “The financial regulatory reform agenda should be completed, and a rollback of reforms should be avoided,” the Fund said. “To adequately address potential systemic risks, financial regulation and supervision should be used more proactively.”
(CNSNews.com) – UN Ambassador Nikki Haley announced Tuesday that she is resigning from her post, effective at the end of the year, saying she believes in term limits and giving someone else a chance to do the job. Appearing with President Donald Trump at the White House on Tuesday, Haley told reporters she will not run for president in 2020 but will campaign for Trump.
The president said he felt it was necessary to make the announcement in person instead of in a written statement, which is how it’s usually done.
“I wanted to do this because Nikki Haley, ambassador to the United Nations, has been very special to me. She’s done an incredible job. She’s a fantastic person, very importantly, but she also is somebody that gets it. She has been at the United Nations from the beginning with us, from the beginning and worked with us on the campaign,” he said. Trump praised Haley as “a very successful governor of South Carolina for eight years.” “And this is possibly even more intense with what’s going on in the world, and very dangerous and a lot of things, but she’s doing a fantastic job, and we’ve done a fantastic job together. We’ve solved a lot of problems, and we’re in the process of solving a lot of problems,” he said. Haley thanked Trump “for just allowing us to come out and talk to you this way.” “It has been an honor of a lifetime. I said I am such a lucky girl to have been able to leave the state that raised me and to serve a country I love so very much has really been a blessing, and I want to thank you for that, but I’m most excited,” she said. When asked whether the ambassador’s decision was personal because she’s been away from her family for so long, Haley said, “My family is very supportive, so no, there’s no personal reason.
“I think that it’s just very important for government officials to understand when it’s time to step aside, and I have given everything I’ve got these last eight years, and I do think that sometimes it’s good to rotate in other people who can put that same energy and power into it. So there really is, a lot of people are gonna want to say there’s a lot of reasons why I’m leaving,” she said.
Banks are going to bat for Democrats in the U.S. November midterm congressional elections as part of an ambitious strategy to rebuild the bipartisan support they enjoyed before the 2007-2009 financial crisis. Commercial banks have so far donated a total of $2.5 million to U.S. Senate Democrats in the 2018 election cycle, the largest sum since 2008, according to data from the Center for Responsive Politics. The backing of Democrats marks a shift for banks, which have kept a low profile in Washington since the crisis. Democrats had all but abandoned the financial industry in the aftermath, wary of appearing to do favors for Wall Street. But some moderate Senate Democrats in May backed the first easing of financial rules since the crisis and now are seeing a boost to their campaign coffers as the sector seeks to broaden its support on Capitol Hill. Of the 20 Senate candidates receiving the most money from banks during the 2018 cycle, 15 are Democrats, according to the Center for Responsive Politics data which tracks donations made by political action committees and individuals. When those seats were last up for election in 2012, only seven Democrats were in the top 20. Senators Heidi Heitkamp, Jon Tester and Joe Donnelly, moderates who helped pushed through the May legislation easing rules on community banks introduced by the 2010 Dodd Frank law, are the top three recipients, the data shows. Representatives for Senators Tester, Heitkamp and Donnelly did not respond to requests for comment. All three senators are locked in tight contests on Nov. 6. Analysts predict Democrats are likely to gain control of the House of Representatives but have a more narrow path to taking back the Senate. The other 12 Senate Democrats, some of whom also voted for the bank rule-easing bill, are also moderates. The exception is Ohio Senator Sherrod Brown, whose position as ranking member on the Senate Banking Committee makes him an important stakeholder for the industry. The sector hopes boosting moderates will constrain the big bank-bashing wing of the Democratic Party, including Senator Elizabeth Warren, a likely presidential candidate in 2020, and Representative Maxine Waters, who is poised to chair the committee overseeing banks if Democrats win the House. Rebuilding broad bipartisan support will be challenging, consumer advocates say. Big banks continue to be a sensitive issue within the Democratic Party, which was bitterly divided over the May legislation, and among voters. The midterm elections mark the first time since 2012 that the banking industry has given more money to Senate Democrats than Republicans, according to center’s data, which is based on federal records released on Sept. 24. The sector has dished out $2.5 million to Senate Democrats and $1.8 million to Republicans this election cycle. By contrast, the industry gave $1.6 million to Senate Democrats and $5.2 million to Senate Republicans during the 2016 elections. The American Bankers Association, the top Washington bank lobby group, has contributed $83,000 to Senate Democratic candidates this cycle and is leading the industry’s push to regain bipartisan support, said its CEO Rob Nichols. Nichols, whose association has for the first time bought advertisements for 12 midterm candidates, including four Democrats, called enhancing the industry’s political capability “strategically important.” “This is rigorously bipartisan: if you support us, we want to support you,” he said. “This is not about playing party favorites. For decades, banking policy was bipartisan up until Dodd Frank, and we’re excited to see a return to this bipartisanship.” Industry officials hope the senators they support will back further legislation easing capital markets rules drawn up in a package that passed the House in July but has yet to pass the Senate. “Democrats being supported by the banks are generally viewed as moderate elements in a Senate that is being steadily stretched to its extreme ideologically,” said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading.
He added that the industry is also anxious to ensure these senators are around to oversee a swift implementation of May’s new laws by the banking regulators.
Two-thirds of registered voters are more likely to vote for a candidate who supports regulating Wall Street and big banks when they talk about the economy, according to a September survey by The Harris Poll on behalf of Better Markets, which lobbies for tighter industry regulation. Ken Bentsen, the chief executive of bank lobby group the Securities Industry and Financial Markets Association (SIFMA) and a former Texas congressman, said it was unfortunate that the industry continued, in his view, to be seen “as a political piñata.” But he said Democratic views on the banking industry were not monolithic, and he saw opportunities to work with members of the party. “We’ll address it, however it turns out,” he said of next month’s election.
Sellers and brands may not like it, but Amazon is clearly doubling down on its private label business. This is where Amazon sells its own branded products, or products with third-party brands that are sold exclusively on Amazon. Private label brands benefit Amazon in many ways. They expand product selection while giving Amazon better profit margins. Supply chain management becomes easier too. It can also pressure bigger brands to cut prices on Amazon to stay competitive. Last week, CNBC reported that Amazon is more aggressively growing its private label business, having launched a new “accelerator” program for third-party sellers to become part of the “Amazon family of brands,” and a special feature that promotes its own brands at the bottom of competitor listings. That followed recent reports of Amazon having significantly ramped up the number of private label brands sold exclusively on its website. This comes at a time when sellers and brands are increasingly reliant on Amazon, where almost half of all online sales take place. More Amazon-owned brands mean they will have to directly compete with Amazon for consumer wallet share. Amazon’s effort to grow the number of private label brands is the clearest sign yet of how far it wants to go in its quest to become the “Everything Store.” But that’s stoking more fear and concern among sellers and brands that sell on Amazon’s website, as they have to go head-to-head with the e-commerce giant in a growing number of categories. “Amazon’s dominance of the e-commerce sphere has forced brands to adopt an Amazon-first strategy in order to remain relevant, but now those same brands are facing off against the retailer’s own products in the fight for the digital shelf,” Peter Andrews, director of insights at One Click Retail, wrote in report published this week. Amazon first got into the private label business in 2009, with commodity products such as batteries and USB cables. That slowly expanded to diapers and baby wipes, and now its catalog of exclusive brands ranges from toys and shoes to food and mattresses. The company currently has over 120 of them, according to a report published by TJI Research. That’s more than a nine-fold increase since early 2016, SunTrust Robinson Humphrey wrote in a note in June. The firm expects Amazon’s private-label business to generate $7.5 billion in sales in 2018 and $25 billion by 2022. “The goal of [Amazon’s] private-label products is to provide consumers a large selection as well as good prices and quality,” D.A. Davidson’s Tom Forte wrote in a note from June. Multiple sellers and brands told CNBC that they are concerned about Amazon’s move into the private label space. If big concerns to date have been counterfeits and reliance on Amazon as a platform, now they are worried that Amazon will be a bigger competitor in the market. Jeff Benzenberg, director of marketing at eRetailing, a Columbus, Ohio-based company that sells custom apparel, told CNBC that it just makes being a seller on Amazon much more difficult.
“It’s a huge fear,” he said. “We’re worried all the time that they’re about to enter our space in private label or whatever method they choose.”
Data shows Amazon can quickly become a formidable competitor if and when it decides to get serious about a certain category. According to One Click Retail, Amazon’s Mama Bear diapers now outsell other smaller brands like Honest Company and Bambo Nature, after lagging behind in sales earlier this year. The report said that Mama Bear’s sales jumped over 40 percent between the second and third quarters of this year, after Amazon ramped up its promotions, to reach an average sales of $200,000 per week. “Competition has never been so fierce,” One Click Retail wrote in the report. Forte at D.A. Davidson said pressure from Amazon’s private label brands can make competitors to purchase more ads on Amazon, so they could be found more easily on the marketplace. Amazon gives its private label brands more exposure across its site, listing them high in search results under a separate box titled “Top Rated from Our Brands.” But the bigger ambition may be in becoming a massive retail juggernaut that can handle everything from manufacturing and storage to storefront and delivery, according to Juozas Kaziukenas, who runs the e-commerce research firm Marketplace Pulse.
The dramatic unfolding of the Trump administration’s intensified offensive on China.
The administration’s clearest and most comprehensive broadside on China yet followed what one official called “thousands of hours” of study and planning. It will involve agencies across the U.S. government, from the Pentagon to the U.S. Trade Representative. The consequences will be both immediate and potentially generational for global economic and security matters. Senior officials in Beijing have increasingly worried that President Donald Trump, with his new tariffs on more than $200 billion of Chinese imports, wasn’t just acting as a deal-maker seeking greater leverage for market openings. They suspected a shift was afoot in Washington to more fundamentally address the Chinese challenge. What lies behind a series of administration statements and actions was a deepening conviction that Trump’s predecessors have done too little to respond to years of unfair Chinese trade practices, cyber transgressions, rapid military growth, growing technological prowess and the underlying strategic consequences of the so-called Belt and Road economic initiative, whose aggregate investment and loan figures are a multiple of the Marshall Plan. Four pieces of news this week underscore the far-reaching, multi-faceted nature of the Trump administration efforts aimed at China, with senior officials promising more in the weeks ahead.
- A landmark speech by Vice President Mike Pence at the Hudson Institute, calling out China as America’s foremost threat, ahead of Russia, due to both the scope and seriousness of its activities abroad and within the United States.
- An underreported aspect of the new U.S.-Mexico-Canada trade agreement that requires all three parties to inform the others if they begin trade talks with “non-market economies” (read China). Trump administration officials view it as a template for trade deals to follow.
- A leaked report that the U.S. Navy’s Pacific Fleet has proposed a series of military operations during a single week in November to send a warning to China and to provide a deterrent to its Beijing’s regional military ambitions.
- On Friday, the Pentagon released the results of a yearlong look at vulnerabilities in America’s manufacturing and military industrial base. “China represents a significant and growing risk to the supply of materials deemed strategic and critical to U.S. national security,” including a “widely used and specialized metals, alloys and other materials, including rare earths and permanent magnets,” the ve to know … Beijing is employing a whole-of-government approach, using political, economic and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States. China is also applying this power in more proactive ways than ever before, to exert influence and interfere in the domestic policy and politics of our country.”
“Most have abandoned the hope that Chinese economic growth would bring with it democratic change, a greater embrace of individual rights and thus greater common cause with the U.S.”
Graham Allison of Harvard popularized the concept of “Thucydides Trap,” namely that when one great power displaces another, war is most often the result. He argued this week that to avoid that outcome this time around the U.S. and China will require the kind of “extreme imagination” that has failed them thus far.
The Trump administration’s China shift is one of its boldest moves yet. Far more difficult will be to forge a strategy that manages the competition without conflict and deploys “extreme imagination” to create a world order that defends U.S. interests and embraces a risen China.
Former Secretary of State Colin Powell spoke out against President Donald Trump in an interview with CNN’s Fareed Zakaria on Sunday, blasting his anti-press rhetoric, retreat from the world stage, and his insults of U.S. allies. Zakaria asked Powell and his other guest, former Secretary of State Madeleine Albright, about American foreign policy and whether the country is still leading the rest of the world by example. Powell, a Republican who has maintained a low profile during the Trump administration, called out “what we are not doing as the United States of America.” “What are we doing? We’re walking away from agreements, we’re walking away from alliances,” Powell said. He noted that Trump insulted U.S. allies at the NATO summit. After Powell invoked the violence at Charlottesville, Zakaria asked: “Do you think this president can be a moral leader for the world?” “I don’t know that he can do that,” Powell said. “Because right now that is not the way he is acting.” Powell said that his favorite three words in the Constitution are “we the people.” “Recently, it has become ‘me the president’ as opposed to ‘we the people,’” he said. “And you see things that should not be happening,” Powell continued. “How can a president of the United States get up and say that the media is the enemy of Americans? Hasn’t he read the First Amendment? You are not supposed to like everything the press says, or what anyone says… that’s why we have a First Amendment, to protect that kind of speech.” “I hope the president can come to the realization that he should really stop insulting people,” Powell said. “I used this two years ago when I said I could not vote for him in the 2016 election. Why? He insulted everybody. He insulted African-Americans. He insulted women. He insulted immigrants. He insulted our best friends around the world. All of his fellow candidates up on the stage during the debates. I don’t think that’s what should be coming out of a president of the United States. But I don’t see anything that’s changed in the last two years.” Albright added that Trump’s rhetoric about America being a victim is “so not true.”
“The world is watching,” Powell said. “They cannot believe we’re doing things like separating mothers and children who are trying to get across the border from south of our border. They can’t believe we’re making such an effort to cease immigration coming into the country. It’s what’s kept us alive!” “The world is watching and wondering, why are we pulling away from all the things we helped create?” he said. “I don’t think that’s going to create a better America.”
LONDON (Reuters) – Britain’s top stock index fell more than 1 percent on Friday, posting its biggest weekly drop in six months, as a strong U.S. jobs report raised concerns of a widening selloff in global markets. The export-oriented FTSE 100 index .FTSE, down 1.3 percent, was hurt also by a stronger pound. The British currency rallied by a quarter of a percent after European Union Brexit negotiators said that a divorce deal with Britain was very close. Strong U.S. data and confident remarks by U.S. policymakers had fuelled a surge in U.S. Treasury yields which had spilled over into broader global stock markets as investors worried that policymakers may tighten policy more than expected. “It is a strong jobs report, make no mistake,” said Kenneth Broux, an FX strategist at Societe Generale in London. An unemployment rate of 3.7 percent was what the Fed had forecasted for the fourth quarter but we have got there sooner.” U.S. job growth slowed in September as Hurricane Florence depressed restaurant and retail payrolls, but the unemployment rate fell to near 49-year lows of 3.7 percent, indicating more tightening in labour market conditions. The main index closed down 1.3 percent at 7,318 points and is has fallen 2.5 percent on the week, its biggest weekly fall since the week of March. 21. The sell-off in U.S. Treasuries – 10-year bond yields are up 15 basis points this week and set for the biggest weekly rise in eight months — rippled into bond markets in Europe and Britain and pushed stock markets around the world lower.
Miners were the main drags on the index with Anglo American (AAL.L) and Rio Tinto (RIO.L) leading losses. The mid-cap index .FTMC was down 0.7 percent and the small-cap index FTSC> was down 0.4.
NEW YORK (Reuters) – Crude futures steadied on Friday after climbing to four-year highs earlier this week, and both Brent and U.S. crude marked weekly gains ahead of U.S. sanctions on Iranian oil exports. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 1 cent to settle at $74.34 a barrel.
Global benchmark Brent crude LCOc1 futures for December delivery fell 42 cents to settle at $84.16 a barrel. On Wednesday, Brent hit its highest price since late 2014, at $86.74.
“They’re taking a pause after yesterday’s sell-off,” said Andrew Lipow, president of Lipow Oil Associates. WTI’s weekly gain was about 1.3 percent; Brent’s was around 1.4 percent. Price gains this week were limited by Saudi Arabia and Russia’s saying they would raise output to at least partly make up for expected disruptions from Iran, OPEC’s No. 3 producer, due to the U.S. sanctions that take effect on Nov. 4. Oil prices are up 15-20 since mid-August, at their highest levels since late 2014. Washington wants governments and companies around the world to stop buying Iranian oil to pressure Tehran into renegotiating a nuclear deal. Saudi Arabian Crown Prince Mohammed bin Salman insisted the kingdom is fulfilling promises to make up for lost Iranian crude supplies, Bloomberg reported. Saudi Arabia is now pumping about 10.7 million barrels per day (bpd) and can add a further 1.3 million “if the market needs that,” he said. India will buy 9 million barrels of Iranian oil in November, two industry sources said, indicating that the world’s third-biggest oil importer will keep purchasing crude from the Islamic republic. Many analysts said they expected Iranian exports to drop by around 1 million barrels per day. U.S. bank Jefferies said there was enough oil to meet demand, but “global spare capacity is dwindling to the lowest level that we can document.” S&P Global Platts sees prices strengthening “a little” toward the end of the year, said Chris Midgely, the company’s global director of analytics, at the S&P Global Platts Analytics annual summit. Fundamentals indicate a price in the high $70s for Brent, but the reality is seen above that, he said. Prices are then likely to weaken in the first two quarters of 2019 before strengthening about $4 to $5 a barrel in the second half of the year as the market anticipates a shipping fuel regulation that takes effect in 2020. U.S. drillers cut two oil rigs in the week to Oct. 5, General Electric Co’s (GE.N) Baker Hughes energy services firm said RIG-OL-USA-BHI. Rising costs and pipeline bottlenecks in the nation’s largest oil field have hindered new drilling since June. Hedge funds cut their combined futures and options position in New York and London by 13,459 contracts to 333,109 in the week to Oct. 2, the U.S. Commodity Futures Trading Commission (CFTC) said.
Technology stocks took another leg down Friday, dragging the tech-heavy Nasdaq Composite to its worst week since early spring. Investors sold many of the year’s best performing stocks, moving into so-called safety stocks such as utilities. The sentiment shift occurred as the stock market’s momentum appeared to stall in the face of suddenly higher long-term government bond yields. The Nasdaq Composite fell 91.06, or 1.2%, to 7788.45. For the week, the index is off 3%, its worst performance since the week ended March 23. Among big tech stocks, Apple slumped $3.70, or 1.6%, to $224.29 while Netflix fell 12.30, or 3.4%, to 351.35. The Dow Jones Industrial Average fell 180.43 points, or 0.7%, to 26447.05, while the S&P 500 dropped 16.04 points, or 0.6%, to 2885.57. “It doesn’t feel like the bottom yet,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus, adding that he expects to see a “sloppy” Monday for stocks, too. As Treasury yields have risen to multiyear highs, and as solid economic data puts the Federal Reserve on track for more short-term rate increases in coming months, the rising yields on bonds have some investors questioning the value of their stockholdings relative to the perceived safety of their bondholdings. The result has been two days in a row of big drops in the stock market. And while many analysts and traders said they expect stocks will end the year higher, they said they expect more swings similar to Thursday’s and Friday’s moves in the final three months of the year. “We’re going to be seeing more volatility,” said Tracie McMillion, head of Global Asset Allocation at Wells Fargo Investment Institute. “The market is trying to assess: How do you discount stock prices when interest rates are going up?” Shares of technology companies in the S&P 500, which have been the best performers in 2018 as investors chased growth, slumped 1.3%. “Tech is definitely pulling back this week, but given the backdrop of strong earnings, it’s just a pullback after a run-up earlier this year, not a reversal,” said Jeff James, portfolio manager at Driehaus Capital Management, who added that he had reduced his tech exposure recently. In other stock markets, the Stoxx Europe 600 declined 0.9%, putting its weekly losses at 1.8%. In Asia, Japan’s Nikkei Stock Average fell 0.8% and Hong Kong’s Hang Seng dropped 0.2%.
(CNN)America’s most senior naval officer in Europe, Adm. James Foggo, said Friday that he was “concerned” about some of Russia’s newer and more advanced fleet of submarines. “Russia is not 10 feet tall but they do have assets that keep me vigilant, concerned. One of them is in the undersea domain,” Foggo, the commander of US Naval Forces Europe, told reporters at the Pentagon. While Foggo said Russia’s surface fleet, including its aging aircraft carrier, posed little threat — saying Moscow did “not have a robust capital ship capability” — he did express concerns about Russian advancements in its development of submarines and cruise missiles. “We’ve seen creation of new classes of all sorts of submarines and ships. I’m more concerned with submarine warfare,” Foggo said earlier on Friday while addressing the Atlantic Council in Washington. “Russians have produced the new Dolgorukiy-class submarine. They’ve produced the Severodvinsk-class submarine. They’ve produced the new Kilo hybrid-class submarines,” Foggo told reporters at the Pentagon. He said six of the Kilo-class subs were either “operating in the Black Sea or the eastern Mediterranean,” where “they’re firing the Kalibr missile,” a Russian-made cruise missile that he called “very capable,” saying it could reach “any one of the capitals of Europe.” “That’s a concern to me, and it’s a concern to my NATO partners and friends. So we should know where they are at all times,” he added, advocating for increased US and allied investment in anti-submarine warfare capabilities. Foggo, who is also the commander of NATO’s Allied Joint Force Command-Naples, also discussed the upcoming NATO exercise Trident Juncture, which is due to begin October 25 and will involve some 45,000 troops from all NATO members as well as Sweden and Finland. The exercise, which Foggo called NATO’s largest since 2002, will take place in Norway and the surrounding areas of the North Atlantic and the Baltic Sea. It will include 150 aircraft, 60 ships and up to 10,000 vehicles. Foggo said Russia had been invited to observe the military exercise in accordance with international agreements and that the exercise would send a message of “deterrence” to any would-be adversary.
BERLIN (Reuters) – A no-deal Brexit would not be good for Britain, Europe or Germany, a German government spokesman said on Friday, adding that Chancellor Angela Merkel sees that close cooperation with Britain will be possible in some areas. “Britain exiting without an agreement would not be in the interests of Britain, Europe or Germany,” spokesman Steffen Seibert told a government news conference, adding that the aim was to make “maximum progress” before the next EU summit.
ROME (Reuters) – The Italian government on Thursday dismissed concerns that the European Commission would reject its plan to raise deficit spending next year and signaled that it would not backtrack, even under market pressure. After a selloff hit Italian bonds on Tuesday, the government made up of the anti-establishment 5-Star Movement and the right-wing League on Wednesday watered down its original plan to keep its deficit steady at 2.4 percent of gross domestic product (GDP) in 2020-21. But it stuck to its 2.4 percent target for next year, and on Thursday government officials said they had no plans to make further revisions to that goal, which is three times more than one set out by the previous government. Speaking about the multi-year budget targets that must be reviewed by Brussels by mid-month, Deputy Economy Minister Massimo Garavaglia said on Thursday: “(Either) it passes or it doesn’t, but this isn’t the problem. We’re more focused on what is happening in the markets.” Garavaglia also said the government’s GDP growth forecast for next year would be 1.6 percent, much higher than the 1.2 percent median projection of 51 analysts polled by Reuters last month. Economy Minister Giovanni Tria later said in a letter to the European Commission that the growth forecasts had actually been set at 1.5 percent in 2019, 1.6 percent in 2020 and 1.4 percent in 2021. He called for an “open and constructive dialogue” with the Commission over the budget plan. The gap between Italy’s benchmark 10-year bond yields and their safer German equivalent on Tuesday widened to more than 300 basis points, its widest since May, on concerns about Italy’s plans. On Thursday, the spread had narrowed to 278 basis points. League leader Matteo Salvini, speaking on RAI state radio, said that next year’s deficit spending was needed to spark growth and create jobs, and added that the government would not back down even if the spread widened to 400 basis points. “This is a budget that looks to the future, and we will absolutely not go backwards,” Salvini said. The government’s confident tone came as la Repubblica newspaper reported that the commission had already sent Italian officials an informal note saying it would reject next year’s spending plans. Sources close to economic commissioners in Brussels said the report was “unfounded”. The commission must formally give its opinion on the budget forecasts by the end of the month. Separately, deputy prime minister and 5-Star leader Luigi Di Maio denied an article in Il Fatto Quotidiano saying the government was seeking a cabinet reshuffle, mainly to replace Economy Minister Giovanni Tria in December or January. Di Maio also seemed unfazed by concern expressed earlier this week by commissioners and EU allies over the deficit spending plans. “We have brought home the people’s budget, and we’re going to forge ahead more determined than before,” Di Maio said in an interview with Radio Radicale. “Now we can start a serious and healthy discussion with the European Commission to reach a positive conclusion.”
LONDON (Reuters) – Oil prices rose as traders anticipated a tighter market due to U.S. sanctions on Iran’s crude exports. Benchmark Brent crude oil was up 30 cents a barrel at $84.88 by 0750 GMT. On Thursday, Brent fell by $1.34 a barrel or 1.6 percent. The contract was on course for a gain of around 2.6 percent for the week. Both crude benchmarks retreated on Thursday following news of a rise in U.S. oil inventories and after Saudi Arabia and Russia said they would raise output to at least partly make up for expected disruptions from Iran. But the pull-back did little to dent two months of rises that have added 15-20 percent to oil prices since the middle of August as impending U.S. sanctions on Tehran restrict Iranian crude oil exports. Washington wants governments and companies around the world to stop buying Iranian oil from Nov. 4 to put pressure on Tehran to renegotiate a nuclear deal. It is not clear exactly how much impact the sanctions are having on supply but many analysts say they expect Iranian exports to drop by around 1 million barrels per day (bpd). “Iranian exports could fall below 1 million bpd in November,” U.S. bank Jefferies said. “It now appears that only China and Turkey may be willing to risk U.S. retaliation by transacting with Iran.” The investment bank said there was enough oil to meet demand, but “global spare capacity is dwindling to the lowest level that we can document … meaning any further supply disruptions would be difficult for the market to manage – and could lead to spiking crude oil prices”. Speculators have accumulated bullish long positions betting on a further rise in prices amounting to almost 1.2 billion barrels of oil. Meanwhile, the number of short positions in the six biggest oil futures and options contracts has fallen to the lowest level since before 2013. But Goldman Sachs says the uptrend may not last. “While upside price risks will prevail for now, fundamental data outside of Iran has not turned bullish in our view,” Goldman said in a note to clients. “We expect fundamentals to gradually become binding by early 2019 as new spare capacity comes online … pointing to the global market eventually returning into a modest surplus in early 2019.”
Hundreds of Facebook Inc. employees have expressed outrage about a top global policy executive’s decision to support Supreme Court nominee Brett Kavanaugh and appear at his hearing last week, people familiar with the matter said. Employees raised the question directly to Chief Executive Mark Zuckerberg during his weekly question-and-answer session last Friday, the people said. Chief Operating Officer Sheryl Sandberg also weighed in on the controversy on Friday in an internal discussion thread that has so far drawn hundreds of comments, many of which were critical, according to people who reviewed the posts. The debate began shortly after an image of Joel Kaplan, Facebook’s head of global policy, surfaced in the middle of Judge Kavanaugh’s lengthy hearing last Thursday, people familiar with the company said. His appearance quickly became an internal referendum on how Facebook’s top executives felt about the #MeToo movement, Trump-era politics and freedom of speech and expression, the people said. Mr. Zuckerberg said last Friday he wouldn’t have made the same decision but the appearance didn’t violate Facebook policies and that Mr. Kaplan has long been close friends with Judge Kavanaugh. Following an FBI investigation into allegations against Judge Brett Kavanaugh, WSJ’s Shelby Holliday looks at key Senators to watch ahead of a confirmation vote. Photo: Getty Images The controversy hasn’t died down internally. Senior Facebook executives, including Mr. Zuckerberg and Ms. Sandberg, are planning to hold a town hall meeting Friday to address employee concerns about Mr. Kaplan’s decision, people close to Facebook say. Mr. Kaplan, who is based in Washington, D.C., will participate as well, the people said. “This fire has been burning for a full week now,” said one employee. Mr. Kaplan’s appearance came in the midst of a difficult week for the company. Last Monday, the co-founders of Instagram abruptly resigned after clashing with Mr. Zuckerberg on strategy. Friday, the company disclosed its largest-ever security breach.
The attack by Chinese spies reached almost 30 U.S. companies, including Amazon and Apple, by compromising America’s technology supply chain, according to extensive interviews with government and corporate sources. In 2015, Amazon.com Inc. began quietly evaluating a startup called Elemental Technologies, a potential acquisition to help with a major expansion of its streaming video service, known today as Amazon Prime Video. Based in Portland, Ore., Elemental made software for compressing massive video files and formatting them for different devices. Its technology had helped stream the Olympic Games online, communicate with the International Space Station, and funnel drone footage to the Central Intelligence Agency. Elemental’s national security contracts weren’t the main reason for the proposed acquisition, but they fit nicely with Amazon’s government businesses, such as the highly secure cloud that Amazon Web Services (AWS) was building for the CIA.
The New York state tax department said Tuesday it is investigating reports that President Donald Trump helped his parents dodge millions of dollars in taxes and received far more money from his father’s real estate empire than he has claimed in the past. Earlier, The New York Times said its own exhaustive probe of a vast trove of tax returns and confidential records showed Trump had engaged in suspect tax tactics, including “outright fraud” that greatly inflated the funds he received from his parents. Trump has stated on numerous occasions that he received little help from his father, New York property developer Fred Trump, in building his fortune. “The Tax Department is reviewing the allegations in the NYT article and is vigorously pursuing all appropriate avenues of investigation,” New York state Taxation and Financing spokesman James Gazzale told AFP. The Times said Trump received the equivalent of $413 million in today’s dollars from his father’s real estate activities — having earned $200,000 a year in today’s dollars by age three. By age eight, he was already a millionaire. Trump was receiving the equivalent of $1 million a year from his father shortly after his college graduation, it added, noting that the funds grew to more than $5 million per year when he was in his 40s and 50s. The Times said the bulk of the funds owed to tax evasion tactics that Trump helped devise, including a “sham corporation” he and his siblings created to hide millions of dollars in gifts from their parents. There were also millions of dollars in improper tax deductions and Trump helped further reduce his parents’ tax bill by undervaluing their real estate holdings by hundreds of millions of dollars on tax returns, according to the Times. The newspaper said Trump’s parents, Fred and Mary Trump, who died respectively in 1999 and 2000, transferred more than $1 billion in wealth to their five children. This could have produced a tax bill of at least $550 million but the Trumps paid a total of just $52.2 million, the Times said, citing tax records. One of Trump’s lawyers, Charles Harder, decried the newspaper’s allegations as “100 percent false, and highly defamatory.” “There was no fraud or tax evasion by anyone. The facts upon which The Times bases its false allegations are extremely inaccurate,” he added. “President Trump had virtually no involvement whatsoever with these matters.” Harder insisted the matter was mostly handled by other relatives who relied “entirely” upon licensed professionals to “ensure full compliance with the law.” The White House, meanwhile said that “Many decades ago, the IRS reviewed and signed off on these transactions.” Spokeswoman Sarah Sanders instead shifted blame onto the Times itself, saying “Perhaps another apology from The New York Times, like the one they had to issue after they got the 2016 election so embarrassingly wrong, is in order.” The Times said Trump’s tax-hating father used various methods to funnel his wealth to his children and shield it from the Internal Revenue Service, some of which tax experts said was improper or possibly illegal. Among the tactics, Fred Trump gave ownership of most of his real estate empire to his children a year and a half before his death.The properties were valued at just $41.4 million although they were sold off over the next decade for more than 16 times that amount, it said. The Times said Trump got a cut of $177.3 million, or $236.2 million in today’s dollars, from the sale. Breaking with the practice of past presidents, Trump has refused so far to release his tax returns. Citing tax experts, the Times said Trump was unlikely to face criminal prosecution for helping his parents evade taxes but could face civil fines for tax fraud if the matter is pursued by the authorities.
NEW YORK (Reuters) – The U.S. dollar rose to its highest in six weeks on Wednesday as Federal Reserve Chairman Jerome Powell said the U.S. economy is “remarkably positive” and spoke of the need to continue raising interest rates. Hawkish Fed speakers have helped elevate the greenback this week, after the Fed last Wednesday raised rates as expected and said it foresees another rate hike in December, three more next year and one in 2020. Powell on Wednesday continued to talk up U.S. economic strength a day after hailing a “remarkably positive outlook” for the U.S. economy that he feels is on the verge of a “historically rare” era of ultra-low unemployment and tame prices. Data on Wednesday supported the view that the U.S. economy is in strong shape. Services sector activity raced to a 21-year high in September and companies boosted hiring, signs of enduring strength at the end of the third quarter. The dollar is outperforming as U.S. growth remains strong while economic data in other large economies including the euro zone has come in below expectations. “One of the reasons we think why the dollar has been so bid in the last several months has been because the U.S. economy has been performing reasonably well, whereas we’ve seen a material slowdown in terms of data coming out of the euro zone and Japan and other large economies,” said Rai. The euro is also being hurt by uncertainty surrounding Italy’s debt, fiscal plans and future ties with the rest of Europe, which has unnerved markets and exacerbated tensions with other euro zone leaders. The euro has been testing key technical support at $1.1510-$1.1508, which was a temporary low set in June. If the euro zone single currency sustains its break below this level it may next test the $1.13 area, which was the one-year low reached in August.
Auto stocks have hit the skids.
Russian President Vladimir Putin said his American counterpart’s Iran sanctions are largely to blame for current high oil prices. “President Trump considers that the price is high; he’s partly right, but let’s be honest,” Putin said at the Russian Energy Week conference in Moscow on Wednesday. “Donald, if you want to find the culprit for the rise in prices, you need to look in the mirror.” The Russian leader pushed back against escalating criticism of OPEC and its allies, which Trump has blamed for Brent crude’s rise to a four-year high near $85 a barrel. Still, Putin said his country has already boosted output and has the capacity to add another 200,000 to 300,000 barrels to the market. Saudi Arabia, Russia’s closest ally within the oil-producers’ group, earlier showed signs of bowing to Trump’s pressure. The kingdom has “significantly” raised production to a near-record level of 10.7 million barrels a day, Energy Minister Khalid Al-Falih told reporters in the Moscow. Russia’s cooperation with the Organization of Petroleum Exporting Countries successfully restored the oil market to balance and a good price range of $65 to $75 a barrel, Putin said. Current prices are “largely the result of the current U.S. administration — these expectations of sanctions against Iran, the political problems in Venezuela,” Putin said. “Look at what’s happening in Libya. The state is destroyed. It’s the result of irresponsible policies which have a direct impact on the world economy.”
LONDON (Reuters) – European shares rose and Italian bonds rallied on Wednesday as some of the worries that have rippled across markets this week were soothed by signs Rome was amenable to cutting budget deficits and debt in coming years. While the euro ceded some earlier gains against the dollar to trade flat on the day, the positive sentiment rippled across the Atlantic where Wall Street looks set for a stronger session. Markets were lifted on Wednesday by a report in the Milan daily Corriere della Serra – later confirmed to Reuters by an Italian government source – that said the deficit would fall to 2.2 percent of gross domestic product in 2020 and to 2 percent in 2021, from the 2.4 percent earlier outlined. That relieves some fears that Italy’s decision to expand budget deficits well beyond what was agreed by a previous government would deepen its debt problems and stoke conflict with the European Union. “That the Italian government is trying to appease its EU partners can be seen as a step in the right direction and therefore justifies some euro-positive reaction,” Thu Lan Nguyen, a FX strategist at Commerzbank, said. While U.S. President Donald Trump agreed a new trade pact with Mexico and Canada, a disputed clause in the trilateral agreement, forbidding similar deals with “non-market” countries, was seen as raising risks for Sino-U.S. talks.
DUBLIN (Reuters) – Ryanair (RYA.I) cut its forecast for full-year profit by 12 percent on Monday and said worse may be to come if recent coordinated strikes across Europe continue to hit traffic and bookings. Europe’s largest low-cost carrier has struggled with labour relations since it bowed to pressure to recognise trade unions for the first time last December. Industrial unrest has escalated in recent months as it makes slow progress in talks with some unions. Shares in Ryanair, which is also counting the cost of stubbornly high fuel prices, fell by as much as 10 percent, and the warning reverberated around the sector, with rivals Lufthansa (LHAG.DE), Air France KLM (AIRF.PA) and easyJet (EZJ.L) down by 0.5-3.3 percent. The Irish airline now expects profit for the year, excluding start up losses in Laudamotion, to come in at 1.10-1.20 billion euros ($2.66 billion), compared with its prior forecast of 1.25-1.35 billion euros. That would represent a 17 to 24 percent fall from the record 1.45 billion euros profit after tax booked in its most recent financial year to March 31. It added that it could not rule out further disruption, which may require full-year forecasts to be lowered again and further cuts to its loss-making winter capacity. While Ryanair said it was able to manage initial smaller strikes, two coordinated walkouts since August in Portugal, Germany, Spain, Belgium and the Netherlands hit passenger numbers, last minute bookings, yields and forward air fares. Those strikes, which also spread to some staff in Sweden and Italy, disrupted the plans of more than 100,000 customers. Quoting a call management held with analysts on Monday, Barclays said Ryanair was working to resolve all union deals in the next 3-5 months. Ryanair shares fall after profit warning – reut.rs/2ItN1lZ
CUSTOMER CONFIDENCE DENTED
Ryanair said progress in reaching collective labour agreements with staff in other major markets of Ireland, Britain and Italy have not been repeated in the five other EU countries due to what it called “interference” in negotiations. “Customer confidence, forward bookings and Q3 fares have been affected, most notably over the October school mid-terms and Christmas in those five countries,” Ryanair chief Michael O’Leary said in a statement. Goodbody Stockbrokers analyst Mark Simpson said the warning came as a surprise given that O’Leary had said there was no change to guidance just two weeks ago. Analysts at Bernstein said the cut was the latest indication that the “low cost wins, legacy loses” story may be coming to an end after budget rival easyJet gave a cautious outlook for next year on Friday, despite benefiting from Ryanair’s woes. Ryanair said fares in its second quarter to end-September had fallen by around 3 percent from a 1 percent dip forecast previously, and said that it now expects fares in the second half to fall 2 percent.
Ryanair warned last week that the strikes were damaging business just as oil prices rose strongly and said on Monday that its unhedged fuel costs have jumped as oil prices rise to $82 a barrel, hitting 10 percent of volumes for its current financial year and the entire fuel bill of Austria’s Laudamotion, which it agreed to buy this year. Goodbody therefore estimated that every 1 percent of jet fuel price increase would take 3.5 percent off Ryanair’s full year 2020 forecast but only 2 percent off easyJet’s before any resulting adjustments to capacity growth or pricing. To cope with the lower fares, higher oil prices and strike costs, Ryanair trimmed its winter capacity by 1 percent, removing aircraft from its Eindhoven, Bremen and Niederrhein bases which will result in some more flight cancellations. It said it would seek to minimise job losses by offering pilots vacancies elsewhere and exploring unpaid leave and other options for cabin crew. Shares in Ryanair were 8.9 percent lower at 11.94 euros by 1032 GMT, their lowest level in almost two years, having fallen 27 percent since the industrial action ramped up in mid-July.
MIDLAND, Texas (Reuters) – The west Texas drillers that drove the shale revolution have overwhelmed the region’s infrastructure with oil production -driving up costs, depressing regional oil prices and slowing the pace of growth. The U.S. government continues to forecast the country’s oil output rising to fresh record. But competition for limited resources in Texas is making it harder for shale producers to turn a profit and encouraging some to invest elsewhere. Texas is home to the Permian Basin, the largest U.S. oil field and the center of the country’s shale industry. In the past three years, production from the Permian has risen a whopping 1.5 million barrels per day (bpd) to 3.43 million bpd.All that oil means pipelines from the shale patch are full, so producers are paying more to transport oil on trucks and rail cars. Shortages of labor, water and even the fuel used in fracking are driving up production costs. At the same time, Permian producers are getting less for their oil, which in August traded as much as $17 a barrel below the U.S. crude benchmark. Sellers have to offer the discount to compensate for the higher transport costs. “We’re our own worst enemy,” said Ross Craft, chief executive of Approach Resources, a small west Texas oil producer which last year averaged about 11,600 barrels of oil equivalent daily output.
“We can drill, bring these wells on so quickly that we basically outpace the market. It is going to take a little bit of time,” he said, for the infrastructure to catch up to producers. Approach Resources is leaving some wells uncompleted. That means the firm drills the wells, but does not fracture the rock to produce the oil. Other shale producers are also leaving the oil in the ground, waiting for higher prices to make the drilling more profitable.
The number of uncompleted wells in the Permian jumped by 80 percent to 3,630 in August compared with a year earlier, according to U.S. Energy Department data. For the rest of the United States, uncompleted wells are up 10 percent from the same period a year ago.
Some companies are reducing the scope of their operations in the Permian. ConocoPhillips (COP.N) and Carrizo Oil & Gas (CRZO.O) each moved a Permian drilling rig to another oilfield, and Conoco idled a second, the companies have said. Noble Energy (NBL.N) also has cut back on its well completions and said it is moving some drilling resources to Colorado. Global Drilling Partners, a drilling contractor based in the Woodlands near Houston, was set to drill seven wells with a Permian operator this July, but that has dropped to two wells starting in December due to lack of pipeline takeaway, said John Hopkins, a managing partner at the company. “There will be a shift out of West Texas temporarily until they can solve their midstream problems,” he said. Companies are looking to boost their drilling in other fields in Texas, Colorado and Oklahoma, he said. Suppliers including sand and rail companies say they are hedging their bets by expanding elsewhere.
Elon Musk’s settlement of a securities-fraud case has removed a cloud over the company and its leader. But another remains: how its electric-car production is measuring up against Mr. Musk’s ambitious forecasts, a matter that a federal regulator is still investigating. One group of internet sleuths thinks it has found clues in plain sight, pointing to lots and garages in California, New Jersey, Arizona and other states where Tesla cars have been found parked in large numbers. The group’s efforts to document those sites could shed light on the delivery troubles that the Tesla chief has acknowledged, and reveal whether demand for the company’s cars is as high as he has suggested. Since July, Tesla has been parking anywhere from a couple of dozen to a few hundred cars at a lot in Burbank, Calif. In Lathrop, 70 miles east of San Francisco, Tesla has as many as 400 cars at an industrial site. A similar number turned up outside an industrial building nearby. At times cars have been seen entering and leaving the building, suggesting it may be a collection point or repair center. Hundreds more have been found in Antioch, northeast of San Francisco. On Thursday, a batch of about 100 Model 3s turned up in Bellevue, Wash. Smaller collections have surfaced in Chicago, Dallas, Las Vegas and Salt Lake City. The parked vehicles were discovered over the last two months by the amateur detectives, who in at least some cases are also investors betting that Tesla’s share price will fall. Some have flown drones over the parking lots to take pictures of the cars. At least one has access to a plane and shoots high-resolution photographs from the air. They post the photos on Twitter and have taken to calling themselves the Shorty Air Force. The sleuths — including three interviewed for this article, who asked not to be identified — say they feel Mr. Musk has not been candid about the company’s situation, particularly its sales. A Tesla spokesman, Dave Arnold, said by email that the large lots of vehicles were “logistics transit hubs” and added, “Anyone observing those lots will see a change from one day to the next.” (He said Monday that the cars in Bellevue were awaiting delivery. Photos posted online on Sunday show hoods open, possibly indicating maintenance work.)
Do the cars simply reflect a delivery problem?
Mr. Musk recently acknowledged that the company was having difficulty shipping cars to customers, saying Tesla was in “delivery logistics hell.”
Sorry, we’ve gone from production hell to delivery logistics hell, but this problem is far more tractable. We’re making rapid progress. Should be solved shortly.
— Elon Musk (@elonmusk) September 17, 2018
He attributed the problem to a shortage of trucks to haul cars around the country. “That’s total nonsense,” said Mark B. Spiegel, a managing partner at Stanphyl Capital, which has a large position shorting Tesla. He is a vocal critic of the company and Mr. Musk on Twitter. “A quick search would reveal plenty of car hauler capacity. Perhaps Tesla doesn’t have the cash to pay for them.” The Auto Haulers Association of America is not aware of any shortage of car haulers, nor of any other automakers that are having trouble shipping new vehicles. “There’s quite a few carrier companies in California,” said Guy Young, the association’s general manager. A worrisome problem is Tesla built these cars and now doesn’t have customers willing to take them. Mr. Musk had long promised that the Model 3 would be available for as little as $35,000. But the least costly version available now starts at $49,000, and the price nears $60,000 if a customer wants the Autopilot driver-assistance software and other options.The company has said that more than 400,000 customers are waiting to buy Model 3 sedans, and that each paid a $1,000 deposit. Many who put down deposits may be waiting for the more affordable base model. Holding inventory is itself an issue for Tesla. The company has reported that it is selling almost all of the cars it is making. Each quarter, the number produced was close to the number delivered or in transit. Brian Johnson, an analyst at Barclays Capital who follows Tesla, said he suspected that the company had a mismatch between inventory and demand — that it had built more rear-wheel drive Model 3s than it could sell. He noted that Tesla was telling customers that it could deliver rear-wheel drive models in four weeks but that all-wheel-drive and pricier versions require waits of four to 12 months. “That suggests there is unmatched rear-wheel-drive inventory,” he said. In some cases, cars have been marked — with a bar-coded sticker or with grease pencil on the windshield — to indicate that they are inventory vehicles, meaning they have no customers awaiting them. Some markings indicate repairs required before the cars can be sold, like scratches, dents or components that don’t work.
The thing is, one of the judge’s friends provided NBC with texts apparently showing that he knew about the claim before that, and tried to recruit people to defend him. This report has some lawyers and prominent pundits suggesting this constitutes witness tampering.
lol witness tamperinghttps://t.co/CU8HCA7WH7
— T. Greg Doucette (@greg_doucette) October 1, 2018
Based on these facts, we can’t say that Kavanaugh has engaged in witness tampering. We *can* say that it’s grossly inappropriate for a sitting judge to contact potential witnesses against him.
AND, it sure seems like Kavanaugh lied (again) under oath to the Senate. https://t.co/MmLzaBhJxs
— Elie Mystal (@ElieNYC) October 1, 2018
A couple of days ago, I told someone I thought Kavanaugh was too smart to be reaching out to potential witnesses himself. It looks like I was wrong. From @LACaldwellDC and @HeidiPrzybyla https://t.co/McATlSjrmn
— Jonathan Allen (@jonallendc) October 1, 2018
7/ Here is the transcript. Kavanaugh tells a bald-faced lie to @senorrinhatch @OrrinHatch.
And now we are also talking about witness tampering.https://t.co/sum8dO1M1r
— Jed Shugerman (@jedshug) October 2, 2018
“And now we are also talking about witness tampering,” wrote Fordham law professor Jed Shugerman, an expert on American courts. Ramirez, one of Kavanaugh’s classmates at Yale, said he drunkenly stuck his penis at her during a party decades ago. The texts in the NBC story were provided by Kerry Berchem, a partner at the Akin Gump law firm. In the messages, Karen Yarasavage, another Kavanaugh friend, told her that “Brett” asked her to deny Ramirez’s allegation on the record. She also wrote about communicating with “Brett’s guy.” Yarasavage declined to speak to NBC, but Bechem provided a statement. “I understand that President Trump and the U.S. Senate have ordered an FBI investigation into certain allegations of sexual misconduct by the nominee Brett Kavanaugh,” she wrote. “I have no direct or indirect knowledge about any of the allegations against him. However, I am in receipt of text messages from a mutual friend of both Debbie and mine that raise questions related to the allegations. I have not drawn any conclusions as to what the texts may mean or may not mean but I do believe they merit investigation by the FBI and the Senate.” Bechem said that she has been trying to get these messages to the FBI, but they haven’t contacted her. She said that Yarasavage claimed to turned over a copy of a wedding party photo to Kavanaugh. “I had to send it to Brett’s team too,” she reportedly wrote in a text. This photo shows seven people posing at a 1997 rehearsal dinner. Kavanaugh is second from right, and Ramirez on the far left. The wedding was between a pair of mutual friends. Obstensibly, the picture could be used to undermine the allegation, but Becham, who said she was at the wedding, said Ramirez seemed uncomfortable. She “clung to me,” and “never went near” Kavanaugh and his friends, Becham wrote in a Sept. 24th text to Yarasavage. She suggested that Ramirez was trying to stay away from him even in the photo. A spokesman for Sen. Chuck Grassley (R-Iowa), the Judiciary Committee Chairman, dismissed the texts as a political ploy by Democrats. George Hartmannsaid “the texts from Ms. Berchem do not appear relevant or contradictory to Judge Kavanaugh’s testimony.” “This appears to be another last-ditch effort to derail the nomination with baseless innuendo by Democrats who have already decided to vote no,” he said.
Texts suggest Supreme Court nominee knew of Ramirez accusations months before when he testified he had heard them
Details emerged Monday about a bar fight that Supreme Court nominee Brett Kavanaugh was involved in while he was in college, as a separate report raised questions about when he knew about an accuser’s claim against him. NBC News on Monday reported that a college classmate of Kavanaugh has sought to contact the FBI investigation into his past, showing text messages from Kavanaugh and his friends sent before accusations from Deborah Ramirez were made public. According to the report, the text messages asked classmates to refute Ramirez’s claims that Kavanaugh exposed himself to her while in college, before a report detailing the accusation was published by The New Yorker in September. The classmate, Kerry Berchem, told NBC she has yet to talk with the FBI. The texts date back to July, NBC News reported. That could contradict Kavanaugh’s sworn testimony last week before a Senate committee, in which he said he had no knowledge of Ramirez’s allegations before the New Yorker story was published. A number of Democratic senators have accused Kavanaugh of lying under oath, both in his testimony last week regarding sexual assault allegations, and in his original confirmation hearing earlier in September. Separately, a pair of reports Monday detailed Kavanaugh’s role in a bar fight in 1985, when he was an undergrad at Yale. Citing a police report, the New York Times reported Kavanaugh threw ice at a bar patron, which escalated into a fight and the patron being hit in the head with a beer mug by one of Kavanaugh’s friends. The victim was treated and released from a hospital, and while police were called to the scene, there was apparently no arrest or charges filed. Bloomberg News cited the same incident in a report Monday, based on a statement released Sunday from one of Kavanaugh’s college friends, who said Kavanaugh cursed the patron and threw a beer in his face, inciting a brawl. “It was sort of a general feature of hanging out with Brett in college,” said the friend, Charles Ludington, a former Yale basketball player and current professor at North Carolina State University, according to Bloomberg. “When you’re having beers on a Friday or Saturday night, that was kind of Brett’s shtick. He was aggressive. He was belligerent.” In his testimony as well as in a Fox News interview last week, Kavanugh downplayed his drinking behavior. But Democratic critics of Kavanaugh have questioned his temperament and whether he was truthful in his testimony, including the question of whether he ever drank to the point where he blacked out. “I can unequivocally say that in denying the possibility that he ever blacked out from drinking, and in downplaying the degree and frequency of his drinking, Brett has not told the truth,” Ludington said in his statement. Ludington said he is willing to tell his story to the FBI investigators.
The Dow Jones Industrial Average on Monday finished the session with a triple-digit advance and the S&P 500 flirted with a fresh all-time high to start the first day of October and the fourth quarter after the U.S. and Canada reached an 11th-hour deal to revise the North American Free Trade Agreement. However, the Nasdaq Composite Index sat out the day’s rally, ending lower on the day. The Dow Jones Industrial Average DJIA, +0.73% rose 193 points, or 0.7%, to reach 26,651, powered by shares of Boeing Co., which delivered a nearly 70-point jolt to the price-weighted blue-chip index. The S&P 500 index SPX, +0.36% closed up 0.4% at 2,924, less than a half-percent short of its Sept. 20 closing high at 2,930.75, while the Nasdaq COMP, -0.11% finished down 0.1% at 8,037. All three benchmarks finished off their best levels of the day. The North American Trade Agreement forged with Canada, brings the U.S.’s northern neighbor into a new trilateral agreement that Mexico had agreed to weeks ago. The deal, known now as the U.S. Mexico Canada Agreement, or USMCA, must still be approved by Congress but was heralded by President Donald Trump as a “historic news.” Meanwhile, the Russell 2000 index RUT, -1.39% of small-capitalization companies, fell 1.5% to end at 1,673, marking its worst day since July 27th, according to FactSet data. The index has been a respite for investors hoping to lessen the impact of trade on their holdings because the revenue of its constituents aren’t directly hurt by trade because they tend to be domestically driven. In corporate news, shares of Tesla Inc. TSLA, +17.35% jumped after Chairman and Chief Executive Elon Musk settled a Securities and Exchange fraud probe over the weekend and said the company was nearing profitability, while shares of General Electric GE, +7.09% jumped after after the troubled industrial conglomerate said its chief executive officer, John Flannery, was being replaced after a little over a year in the role.
A new US trade pact with Canada and Mexico is “a great deal” for all three countries, President Donald Trump said on Monday, hailing the replacement of the old NAFTA deal which he had long railed against and threatened to cancel. “Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico,” Trump said on Twitter. “It is a great deal for all three countries.” The new pact known as the United States-Mexico-Canada Agreement (USMCA) “solves the many deficiencies and mistakes” in the 24-year-old North American Free Trade Agreement it replaces, Trump said after accomplishing one of his signature policy initiatives. USMCA “greatly opens markets to our Farmers and Manufacturers” while reducing trade barriers “and will bring all three Great Nations closer together in competition with the rest of the world. The USMCA is a historic transaction!” the president said. The rewritten deal “will result in freer markets, fairer trade and robust economic growth in our region,” a joint statement from US Trade Representative Robert Lighthizer and Canada’s Foreign Affairs Minister Chrystia Freeland said late Sunday after six weeks of intense talks and more than a year of fraught, broader negotiations. In the end, Canada and the United States overcame their differences after both sides conceded some ground to reach a deal covering a region of 500 million inhabitants and which conducts about $1 trillion in trade a year. “It’s a good day for Canada,” Canadian Prime Minister Justin Trudeau said Sunday night. Mexican Foreign Minister Luis Videgaray tweeted that the deal was good for his country “and for North America”. The political stakes were high. Trump, who pursues an “America First” policy on trade, needs to look strong heading into the November midterm elections where his Republican Party is fighting to keep control of Congress. Trudeau, for his part, did not want to be seen as caving in before next year’s general election in Canada. But on the other hand, it risked being frozen out of a US-Mexican deal reached in August. Early Monday a copy of the deal’s 34 chapters was posted on the US Trade Representative’s website. The pact can now be signed before Mexico’s President Enrique Pena Nieto leaves office December 1, the date that caused the last-minute flurry of activity. US law requires the White House to submit the text to Congress 60 days before signing — and officials barely made it by the midnight deadline.In order to reach the deal Canada agreed to open its dairy market further to US producers, and — in return — Washington left unchanged the dispute settlement provisions. Under Canada’s supply-managed dairy system, Ottawa effectively sets production quotas, which raises prices to consumers but provides farmers with a stable income. Tariffs of up to 275 percent have kept most foreign milk out of the Canadian market. Canada had opposed US demands to weaken or eliminate NAFTA’S dispute resolution mechanism, whose arbitration panels Ottawa used to resolve trade conflicts, particularly concerning its important lumber industry. In recent days warnings were mounting that time was running out to clinch a new deal, but a senior US administration official said the final rewrite is a “fantastic agreement”.Alongside changes to the dairy market in Canada, officials said it includes stronger protections for workers, tough new environmental rules, and updates the trade relationship to cover the digital economy and provides “groundbreaking” intellectual property protections. The AFL-CIO, a Washington-based federation representing millions of unionized employees, said it was too early to “make a final judgment” on the new deal’s impact on working people. One of the most important sectors concerns the auto sector, which NAFTA revolutionized. The US had sought increased American content for duty-free autos. The new text provides rules to encourage North American supply of components. While the pact should protect Mexico and Canada from Trump’s threatened 25 percent tariffs on cars, still pending are the duties on steel and aluminum, which officials said was on a “separate track”, handled by the Commerce Department. Under Sunday’s deal, the trade pact will remain in force for 16 years but will be reviewed every six years. US negotiators had been demanding reauthorization every five years.
“That’s a question you’d have to ask the Senate.”
On Fox News Sunday, White House Press Secretary Sarah Huckabee Sanders refused to answer whether the White House is limiting the FBI investigation into Supreme Court nominee Brett Kavanaugh. “Has the White House limited in any way who the FBI may talk to?” host Chris Wallace asked her in an interview that aired on Sunday. “And specifically, has the FBI given a list of potential people to talk to that does not include Julie Swetnick, the woman, the third accuser who talked about gang rapes — and also college friends who may contradict Judge Kavanaugh on the issue of heavy drinking?” Sanders did not explicitly answer Wallace’s question about reports that the White House counsel gave a specific witness list to the FBI that did not include Swetnick, who last week said that Kavanaugh and his friend Mark Judge were both involved in sexual assault and gang rapes when they were students at Georgetown Preparatory School in the 1980s. “The White House is not micromanaging this process,” she replied vaguely. “The Senate is dictating the terms, they laid out the request, and we’ve opened it up, and as you’ve heard the president say, do what you need to do. The FBI, this is what they do, and we are out of the way letting them do exactly that.” “But to be specific, did the White House counsel give the FBI a list?” Wallace pressed. “Not that I’m aware of. The White House counsel has allowed the Senate to dictate what the terms look like and what the scope of investigation is. Again, the White House isn’t intervening, we’re not micromanaging this process. This is something — it’s a Senate process, it has been from the beginning and we’re letting the Senate continue to dictate what the terms look like.” “So do you know if either the Senate or the White House is saying don’t interview Julie Swetnick?” “That’s a question you’d have to ask the Senate,” she replied. NBC News reported on Saturday that White House counsel Don McGahn’s witness list to the FBI also excludes former classmates of Kavanaugh who have described him as a heavy drinker (contradicting his own accounts). Also not on the list are his high school classmates who could explain why he and and a group of his male friends used the name of a student at a nearby all-girls Catholic school to repeatedly refer to themselves as “Renate Alumnius.”
The sources who spoke to NBC News said that questioning Mark Judge would not be the FBI’s top priority. Dr. Christine Blasey Ford, who testified before the Senate Judiciary Committee on Thursday that Kavanaugh sexually assaulted her, said that Judge was present in the room during the assault. The sources also said that the limits imposed by the White House did not change after Trump’s tweet on Saturday saying the FBI can investigate whoever it wants. In a similar fashion to Sanders, Kellyanne Conway, counselor to President Trump, was unable to reject reports Sunday that the White House had imposed limits on the FBI investigation.
“Did Don McGahn say you can interview these witnesses but not these witnesses?” CNN host Jake Tapper asked her. “I don’t think he would do that. But I’ve not talked to him about it.” Three women have publicly come forward to accuse Kavanaugh of sexual assault: Dr. Christine Blasey Ford, Deborah Ramirez, and Julie Swetnick.
Tesla and its CEO Elon Musk have agreed to pay a total of $40 million and make a series of concessions to settle a government lawsuit alleging Musk duped investors with misleading statements about a proposed buyout of the company. The securities fraud agreement, disclosed by the U.S. Securities and Exchange Commission on Saturday, will come as a relief to investors, who had worried that a lengthy legal fight would only further hurt the loss-making electric car company. The SEC on Thursday charged Musk, 47, with misleading investors with tweets on Aug. 7 that said he was considering taking Tesla private at $420 a share and had secured funding. The tweets had no basis in fact, and the ensuring market chaos hurt investors, it claimed. Investors and corporate governance experts said the agreement could strengthen Tesla, which has been bruised by Musk’s recent behavior, which included smoking marijuana and wielding a sword on a webcast, and attacking a British rescue diver via Twitter. The settlement should place more oversight on Musk while not taking the “devastating” measure of forcing him out, said Steven Heim, a director at Boston Common Asset Management, which owns shares in Tesla battery maker Panasonic Corp. Tesla must appoint an independent chairman, two independent directors, and a board committee to set controls over Musk’s communications under the proposed agreement. “The prompt resolution of this matter on the agreed terms is in the best interests of our markets and our investors, including the shareholders of Tesla,” SEC Chairman Jay Clayton said in a statement. Thursday’s charges shaved about $7 billion off high-flying Tesla, knocking its market value to $45.2 billion on Friday, below General Motors Co’s $47.5 billion. In the settlement, the agency pulled back from its demand that Musk, who is synonymous with the Tesla brand, be barred from running Tesla, a sanction that many investors said would be disastrous. “I think this is the best possible outcome for everyone involved” said Ivan Feinseth of Tigress Financial Partners, who rates Tesla “neutral” and who called the SEC’s penalty “a slap on the wrist” for Musk. “The fact that he can remain CEO is very important for the company.” Neither Musk nor Tesla admitted or denied the SEC’s findings as part of the settlement, which still must be approved by a court. Tesla and Musk did not immediately respond to requests for comment. Musk had been directly involved in almost every detail of Tesla’s product design and technology strategy, and drove the company’s employees to extraordinary achievements – much as another Silicon Valley chief executive, Steve Jobs, did at Apple Inc. The entrepreneur is now required to step down as chairman of Tesla within 45 days, and he is not permitted to be re-elected to the post for three Thursday that the SEC’s actions were unjustified. Tesla shares jumped after his Aug. 7 tweets, a blow to short-sellers betting on the stock’s decline.
Donald Trump spoke on the phone Saturday with King Salman bin Abdulaziz of Saudi Arabia, days after the U.S. president’s latest criticism of OPEC over high oil prices. The pair discussed the stability of the oil market and the strategic partnership between the two countries, Al Arabiya TV reported, without providing more details. The White House said Trump and the King spoke on “issues of regional concern.” Hedge funds are watching Trump’s back-and-forth with the kingdom for any signs that the U.S. might take action against the country or other members who belong to the cartel. Trump’s been increasing the pressure on OPEC, saying it’s pushing oil prices too high. At its latest meeting, the group ignored his call to reduce oil prices. This week, Trump again said he wasn’t happy with OPEC, Middle East nations and oil prices, asserting that the producer group was causing prices to rise while benefiting from protection of the U.S. military. Trump has gone after OPEC multiple times this year, including while speaking at the United Nations on Sept. 25. “OPEC and OPEC nations, are, as usual, ripping off the rest of the world, and I don’t like it,” Trump said in an address to the United Nations General Assembly in New York. “We want them to stop raising prices. We want them to start lowering prices and they must contribute substantially to military protection from now on.”
Brent crude, the international oil benchmark, surged on Friday to a fresh 4-year high above $83 a barrel as the market braces for the impact of the U.S. energy sanctions on Iran.
Gasoline pump prices are on the rise in the U.S., squeezing consumers weeks before critical mid-term elections. The national unleaded average gas price was $2.875 per gallon on Friday, according to AAA, up 1.4 percent in the past month and 11.7 percent higher than a year ago.
The Federal Reserve just keeps on hiking, and it could be setting the U.S. economy up for its next recession, says Peter Boockvar, chief investment officer at Bleakley Advisory Group. This week, the Fed raised its benchmark interest rate a quarter point, and upgraded its expectations for economic growth for this year and next. However, rising borrowing costs have been faulted by a few observers, including President Donald Trump, who just days ago said he was “not happy” about the central bank’s move. One of those who echoed the president’s concerns was Boockvar, who told CNBC’s “Futures Now” on Thursday, that 10 of the last 13 rate hike cycles ended in recession. “We’re now getting deeper into the rate hike cycle, and while we all focus on where the fed funds rate is going to be, behind the scenes the Fed continues to shrink their balance sheet,” the veteran investor said.
The Fed built up $4.5 trillion in bonds and other securities during its quantitative easing program which began nearly a decade ago.The dual approach of hiking rates while reducing asset holdings tightens monetary conditions at a faster pace than a change to the fed funds rate alone.
Next month, the Fed will increase its reductions to $50 billion a month — five times the pace this time last year. Separately two other major central banks are also pulling back on cheap money stimulus “What worries me going into next year is that it’s not just the Fed,” added Boockvar. “The ECB is ending QE by year end… and then you add on what the Bank of Japan is doing,” said Boockvar. “The monetary spigot really changes a lot next year.” Fiscal policy from the Trump White House may not have the same effect in offsetting the Fed’s monetary policy going forward, either, Boockvar cautioned. “Next year you start to lose the one-time step-up to earnings from the tax cut and…the monetary tightening begins to pick up steam,” he said. The GOP’s corporate tax cuts, which passed late last year, have raised companies’ earnings by a wide margin this year. That one-time boost created easy comparables that made profit growth appear even more impressive this year. S&P 500 earnings are expected to increase 22 percent this year, according to FactSet, nearly double the rate in 2017.
President Donald Trump, speaking on the world’s biggest stage, this week laid for the United Nations his case for patriotism and against globalism. He then doubled down on his determination to push back on China. If he’s determined to do the first, however, he will fail at the second. Put another way: If he wants to dramatically reduce U.S. engagement through multilateral institutions, he will lack the leverage to either counter China or shape its behavior. Thus, President Trump should have instead remade himself as a “patriotic globalist.” After all, it was patriotism at its best that prompted U.S. decision makers after the Second World War to establish an America-led system of alliances and institutions that ended the destructive cycle of zero-sum relations in Europe and Asia. They did so not out of abstract benevolence or Utopian naivete, but because global engagement ensured American interests. And history has proven them right. Through establishing international norms for free trade and a U.S. military presence around the world to enforce them, U.S. leaders enabled U.S. businesses to securely trade globally, thus creating unprecedented profits and jobs. Whatever you think of Trump’s style, what appeals to his supporters is that he frequently puts his finger on real problems that other politicians have swept under rugs. His UN speech betrays a misunderstanding of how U.S. international engagement since World War II has served American interests. Cold War victory over Soviet-style communism and its global influence efforts, without a shot being fired by the principals, came about only due to consistent U.S. leadership of allies and friends, working through acronymic institutions such as NATO, the OSCE, the EU and the IMF. Hardly a week passes when the U.S.-established order doesn’t face strains, many exacerbated by the Trump administration itself. Finally, it remains uncertain whether Canada will join the recent U.S.-Mexico trade agreement and thus strengthen NAFTA, or whether the trilateral trade pact will come undone and lead to even greater trade tensions with America’s nearest neighbor and ally. These short-term developments are not disconnected strands but rather all relate to maintaining U.S. international interest though existing international institutions and agreements. The stakes for the international system, however, are highest in the contest between the United States and China over who will have the most influence in shaping the coming century.
BEIJING (AP) — Asian stock markets were mostly lower Tuesday after a Chinese government report accusing the Trump administration of bullying other countries dampened hopes for a settlement in their escalating tariff war. KEEPING SCORE: The Shanghai Composite Index lost 0.8 percent to 2,775.91 and Sydney’s S&P-ASX 200 shed 0.1 percent to 6,180.10. Tokyo’s Nikkei 225 advanced 0.1 percent to 23,900.57 while Hong Kong and Seoul were closed for holidays. Benchmarks in New Zealand, Malaysia and the Philippines retreated while Taiwan and Singapore advanced. WALL STREET: Industrial companies and bank sank after news reports that China pulled out of possible talks proposed by Washington on ending their fight over Beijing’s technology policy. The Standard & Poor’s 500 index lost 0.4 percent to 2,919.37. The Dow Jones Industrial Average lost 0.7 percent to 26,562.05. Both the S&P 500 and Dow set record highs last week. General Electric dropped 3.5 percent and 3M declined 1.3 percent. China issued a report accusing Washington of abandoning “mutual respect” required for international relations and “trade bullyism” toward other governments. At the same time, both governments imposed new tariffs on each other’s goods in their war over U.S. complaints that Beijing steals or pressures companies to hand over technology. The criticism of Washington “suggests that China might prefer to wait out the current U.S. administration, rather than embarking on potentially futile negotiations,” said Cheng Wei Liang of Mizuho Bank in a report. “It is increasingly likely that both sides will not resume negotiations for some time, at least until there is a noticeable shift in the political mood on either side.”
A Russian-American businessman who donated a substantial sum to Donald Trump’s 2016 presidential election effort boasted to a senior figure in Moscow that he was “actively involved” in the Republican candidate’s campaign, the Guardian can reveal. Simon Kukes said he was helping Trump with “strategy development” and shared photos of his 29-year-old Russian girlfriend posing with the future president. Kukes made the claims to Vyacheslav Pavlovsky, a career Kremlin official and former ambassador to Norway. Pavlovsky is currently vice-president of Russian Railways. The disclosure raises questions about the role played by Kukes in the run-up to the election and what information, if anything, was being relayed by him to his associates in Russia. Kukes’s donations began two weeks after the meeting at Trump Tower in June 2016, when Donald Trump Jr, Paul Manafort, and Jared Kushner discussed “dirt” on Hillary Clinton with a Russian lawyer. In total Kukes gave $273,000 (£207,000) to Trump Victory – a fundraising committee that distributes donations between the candidate, the Republican National Committee (RNC) and state Republican parties. He had no previous history of giving money to political causes. During this period he was in regular contact with Pavlovsky. In one email written in July 2016, Kukes wrote in Russian: “I am actively involved in Trump’s election campaign, and am part of the group on strategy development.” Kukes said that he would be in Switzerland from 20 July until 2 August, and asked Pavlovsky if he wanted to meet there. Kukes emailed again a week later, saying he would like to introduce Pavlovsky to a “close friend”, a Moscow oil executive, “who has just flown in”. They were discussing “very interesting projects for Russia and the US”, he wrote, adding: “I hope one of them will materialise.” One US intelligence expert described Kukes’s communications with Pavlovsky as suspicious. “To me this reads like an email exchange between a source and a handler, or a source and headquarters,” Lindsay Moran, a former CIA officer, told NBC News after reviewing the email exchanges. Since giving money to Trump, Kukes has avoided publicity. He founded a Houston-based consultancy, Nafta Consulting LLC, and invested in a company that develops US shale and oil assets. He was an investor in Promstroy, an oil services company.
UNITED NATIONS (Reuters) – North Korea’s foreign minister told the United Nations on Saturday continued sanctions were deepening its mistrust in the United States and there was no way the country would give up its nuclear weapons unilaterally under such circumstances. Ri Yong Ho told the world body’s annual General Assembly that North Korea had taken “significant goodwill measures” in the past year, such as stopping nuclear and missiles tests, dismantling the nuclear test site, and pledging not to proliferate nuclear weapons and nuclear technology. “However, we do not see any corresponding response from the U.S.,” he said. “Without any trust in the U.S. there will be no confidence in our national security and under such circumstances there is no way we will unilaterally disarm ourselves first.” While Ri reprised familiar North Korean complaints about Washington’s resistance to a “phased” approach to denuclearization under which North Korea would be rewarded as it took gradual steps, his statement appeared significant in that it did not reject unilateral denuclearization out of hand as Pyongyang has done in the past. Ri referred to a joint statement issued by Kim Jong Un and Donald Trump at a first ever summit between a serving U.S. president and a North Korean leader in Singapore on June 12, when Kim pledged to work toward “denuclearization of the Korean peninsula” while Trump promised guarantees of North Korea’s security. North Korea has been seeking a formal end to the 1950-53 Korea War, but the United States has said Pyongyang must give up its nuclear weapons first. Washington has also resisted calls to relax tough international sanctions on North Korea. “The U.S. insists on the ‘denuclearization-first’ and increases the level of pressure by sanctions to achieve their purpose in a coercive manner, and even objecting to the ‘declaration of the end of war,'” Ri said. “The perception that sanctions can bring us on our knees is a pipe dream of the people who are ignorant about us. But the problem is that the continued sanctions are deepening our mistrust.”
On Wednesday, Trump said he did not have a time frame for this, saying “If it takes two years, three years or five months – doesn’t matter.”
The Security Council has unanimously boosted sanctions on North Korea since 2006 in a bid to choke off funding for Pyongyang’s nuclear and ballistic missile programs. Pompeo has visited North Korea three times already this year, but his last trip did not go well. He left Pyongyang in July saying that progress had been made, only for North Korea within hours to denounce him for making “gangster-like demands.”
Mexico City (AFP) – The United States and Canada have told Mexico they could reach a compromise within 48 hours on keeping the updated North American Free Trade Agreement a three-country deal, the Mexican economy minister said Friday. Speaking as he presented the Mexican Senate with the current US-Mexican agreement to update NAFTA — which does not include Canada, the third member of the original deal — Economy Minister Ildefonso Guajardo said Washington and Ottawa were making a “very serious,” last-ditch attempt to bridge their differences. “For the first time, we’re seeing a real effort by both sides,” he said. “In the next 48 hours, we will know if we are going with a trilateral agreement.” Guajardo, Mexico’s top negotiator for “NAFTA 2.0,” insisted that even if no 11th-hour US-Canadian deal is reached, a three-way deal would still be possible at some point in the future. But that would mean “going ahead with a bilateral agreement and then later defining what legal actions we would have to take to maintain the possibility of a three-way deal,” he said. A Canadian government source told AFP that Canada’s top negotiator, Foreign Minister Chrystia Freeland, “is in constant communication with the Americans, both formally and informally.” The United States and Mexico want to push their deal through their respective legislatures before Mexican President-elect Andres Manuel Lopez Obrador takes office on December 1. In the United States, there is a three-month timeframe for doing so — meaning Congress must have the text of the deal by Sunday. US President Donald Trump has been pushing for a complete overhaul of the 25-year-old trade deal, which he says has been a “rip-off” for the United States. In August — more than a year into the negotiations — the United States and Mexico announced they had reached a two-way deal, after breaking away for bilateral talks on their outstanding issues. But the ensuing talks to incorporate Canada have stumbled. According to the negotiators, Canada’s insistence on a trade dispute provision and its protected dairy sector are the last major sticking points. Ottawa is also seeking assurances that the United States will not, after signing a new NAFTA deal, turn around and hit Canada with punitive auto tariffs. Tempers flared this week on both sides as the end-of-month deadline approached. “We’re not getting along with their negotiators,” Trump said Wednesday of Canada. “Canadians are tough negotiators, as we should be,” Trudeau fired back.”We won’t sign a bad deal for Canada.” The politics are high-stakes on both sides: Trump needs to look strong heading into the US mid-term elections in November, while Trudeau does not want to be seen as caving with a general election looming next year. The man whose impending inauguration is responsible for the rush — Mexican President-elect Andres Manuel Lopez Obrador — downplayed the importance of the end-of-month deadline. “There is no fatal date, there is still time to reach a deal,” he told a press conference earlier Friday. The leftist president-elect, a free-trade skeptic, had criticized NAFTA in the past. But his transition team played an active part in the recent negotiations, and he has firmly backed the US-Mexican deal — which he wants Canada to join. Lopez Obrador, widely known as “AMLO,” said he had spoken by phone Thursday with Trudeau. “He said the negotiations were very difficult, that it might not be possible (to reach a three-way deal), but that they (Canada) had made a proposal,” he said. But he said he considered the substance of the US-Mexican deal to be final, and that Mexico did not want to renegotiate points that had already been agreed with Washington. “We don’t want to put our economic future and our country’s financial stability at risk,” he said.