Worried by oil slump, OPEC and partners discuss larger supply curbs: sources

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.

Pound falls sharply as risk of chaotic Brexit rises

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.

Trump takes aim at Mueller as speculation over Russia probe’s end grows

Washington (CNN)President Donald Trump is acting like he knows something about the Russia investigation that the rest of America has yet to learn.

His Twitter explosion on Thursday targeting special counsel Robert Mueller — his “thugs” and his “witch hunt” investigation — came without an apparent immediate cause. But Trump’s temper apparently boiled over after meetings on three successive days between the President and his lawyers as they work out written answers for Mueller about alleged collusion between his campaign and Russia in the 2016 campaign. The Washington Post reported on Thursday that there are at least two dozen questions about events that took place before the 2016 election. “There are some that create more issues for us legally than others,” Trump’s lawyer Rudolph Giuliani told the paper. Some questions were “unnecessary” and others were “possible traps” or might be irrelevant, he said. For Trump, there’s no easy way out of his funk Giuliani’s striking complaint about a perjury trap appears to raise the question of why he might be worried about such an issue — if the President were simply to tell the truth, in answers that will be scrubbed by his legal advisers. The questions resulted from a tortuous negotiation between Trump’s lawyers and the White House over the President’s testimony. They only relate to the collusion part of the investigation and do not concern allegations that the President obstructed justice in the firing of former FBI Chief James Comey.
Trump’s huddles with his lawyers coincided with intense activity around the Mueller investigation, which largely went quiet in the days leading up to the midterm elections earlier this month.
The comings and goings have left Washington on tenterhooks amid mounting speculation that significant action by the special counsel could be imminent. In the past, the President’s tirades about Mueller have sometimes coincided with developments in the special counsel probe. There are expectations that Mueller, who has not unveiled any indictments since July, could be preparing more. CNN has reported that he has also started writing a final report on his investigation. Whitaker backlash prompts concern at the White House
The President’s fury sparked questions over whether he has any advance knowledge of any indictments Mueller may be preparing, or has gleaned other insight about the case from his new acting-Attorney General Matthew Whitaker. Much of Mueller’s work is taking place behind closed doors, but the evident bustle suggests plenty of reasons for Trump’s dark mood. Those events included a visit by Trump’s former personal lawyer, Michael Cohen, who is facing jail time on tax and fraud charges, to the special counsel’s office on Monday. Attorneys for Trump’s former campaign chief Paul Manafort, who is cooperating with Mueller after his own conviction, were seen at Mueller’s office this week. Jerome Corsi, an associate of former Trump political adviser Roger Stone said on Monday he expects to be indicted for giving false information to Mueller or the grand jury. Corsi later suggested in an interview with Reuters that he’s in plea talks with Mueller’s team.
Stone, who also appears to be in Mueller’s sights, released text messages with an alleged Wikileaks back channel about “big news” about Hillary Clinton’s campaign six days before the site released hacked emails. Trump’s son, Donald Trump Jr. has reportedly told friends that he could he could be indicted, possibly over a meeting he and other Trump campaign officials held with a Russian lawyer promising “dirt” on Clinton. With all that in mind, Trump’s Thursday morning tweetstorm appears to reveal a President fuming with resentment about the probe and possibly deeply concerned about what it might reveal. Mueller’s questions likely offered Trump his most explicit sense yet as to where the investigation may be going and could perhaps offer him some hints about what witnesses have told Mueller. And the task of answering the questions, under the risk of perjury, may be a deeply unpleasant experience for him. “The inner workings of the Mueller investigation are a total mess. They have found no collusion and have gone absolutely nuts,” Trump tweeted. “They are screaming and shouting at people, horribly threatening them to come up with the answers they want,” the President said, in a comment that could be interpreted as evidence that he has inside knowledge of the investigation. “These are Angry People, including the highly conflicted Bob Mueller, who worked for Obama for 8 years. They won’t even look at all of the bad acts and crimes on the other side. A TOTAL WITCH HUNT LIKE NO OTHER IN AMERICAN HISTORY!” Trump wrote in one of his most furious attacks on Mueller. Mueller was actually appointed to head the FBI in 2001 by President George W. Bush, and stayed for the rest of his administration and three years into President Barack Obama’s term. Obama later extended his 10-year term for another two years.  Speaking on CNN’s “The Situation Room” Democratic Rep. Mike Quigley defended Mueller and his team, adding “if they are going to do something, I suspect it will be rather soon.” “Obviously, the President had a bad week and he doesn’t like these questions, so he is lashing out because he is afraid to take responsibility, frankly for anything,” Quigley said. The President also revealed his anger about the Russia probe in an interview with The Daily Caller on Wednesday, which to some observers seemed like an tacit admission that he had appointed Whitaker after firing Attorney General Jeff Sessions in order to rein in the special counsel.
“Matthew Whitaker is a very respected man. He’s — and he’s, very importantly, he’s respected within DOJ,” Trump told the conservative website. “You know, look, as far as I’m concerned this is an investigation that should have never been brought. It should have never been had,” he said. “It’s something that should have never been brought. It’s an illegal investigation.”
Democrats have warned that Whitaker, who is on record with fierce criticisms of the Mueller probe, and now oversees it, is nothing but a political henchman inserted into the top Justice Department job to rein in Mueller. His appointment has added fresh urgency to an effort on Capitol Hill to protect Mueller. Republican Sen. Jeff Flake warned he would not vote to advance judicial nominees unless a bill shielding the special counsel got a floor vote. Senate Republican Majority Leader Mitch McConnell blocked a vote on Wednesday on the measure, which would allow any decision by Trump to fire the special counsel to be challenged in court.

Oil rebounds from steep selloff as OPEC, partners discuss supply cut

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]

Sterling, euro stocks scuttled as Brexit deal hits the rocks

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 prosecutor seeks death penalty in Khashoggi murder case

Death penalty sought for five out of 11 suspects charged with the journalist’s murder
Jamal Khashoggi
Jamal Khashoggi was killed in Saudi Arabia’s Istanbul consulate on 2 October. Photograph: Johnny Green/PA

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.

Saudi Arabia is reducing oil supply and OPEC may cut too

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.

BP (BP) CEO Bob Dudley said the Saudi cut represented “quite a bit of oil.” “That probably would adjust sentiment and get [prices] back into a corridor with less volatility,” he told CNN Business.
A senior OPEC source said the cartel and other major producers are discussing cutting production by as much as 1.2 million barrels per day. A decision could be taken at the next OPEC meeting in Vienna on December 6. A cut of that magnitude would reverse a decision in June by OPEC and Russia to pump over a million barrels per day more to make up for the expected loss of Iranian exports.
“The size of any potential cut will depend on how much oil demand growth slows down, how much Iranian supply falls due to US sanctions, and how fast US supply rises,” said Giovanni Staunovo, an analyst at UBS. Russia appears to need more convincing that it should be cutting production.
Russia’s energy minister Alexander Novak said in Abu Dhabi on Sunday it was too early to make a decision to reverse course and cut supply.
“We’re going to do everything we can to keep supply and demand inventories within a reasonably narrow band, ” Al Falih said on Monday, during a debate moderated by CNN Business’ Emerging Markets Editor John Defterios. “We hope that markets will calm down.” Crude prices jumped by as much as 2% on the prospects of reduced supply from OPEC. US crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday. The United States last week said eight jurisdictions — China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey — would be able to continue buying Iranian oil for six months without fear of US penalties under sanctions on trading with Iran. “The sanctions on Iran have turned out to be a damp squib for the time being with the Trump administration granting exemptions,” said Devesh Mamtani, head of investments and advisory at Century Financial, a brokerage firm in Dubai. “The exemptions have even surprised Saudi Arabia as oil supplies from Iran are likely to spike in the coming days,” he added. UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn’t allow the market to become oversupplied. “We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability,” he said.

Oil struggles to find footing after 7 percent slump, sentiment stays weak

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.

Saudi Arabia says need for 1 mln bpd cut in oil

“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.

Saudi energy minister Khalid Al Falih said the kingdom’s oil output would fall by 500,000 barrels per day in December.

Saudi Aramco's Ras Tanura oil refinery and oil terminal.
Saudi Aramco’s Ras Tanura oil refinery and oil terminal.

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. Iran is still exporting oil as sanctions deadline passes BP (BP) CEO Bob Dudley said the Saudi cut represented “quite a bit of oil.”
“That probably would adjust sentiment and get [prices] back into a corridor with less volatility,” he told CNN Business. A senior OPEC source said the cartel and other major producers are discussing cutting production by as much as 1.2 million barrels per day. A decision could be taken at the next OPEC meeting in Vienna on December 6.
A cut of that magnitude would reverse a decision in June by OPEC and Russia to pump over a million barrels per day more to make up for the expected loss of Iranian exports. “The size of any potential cut will depend on how much oil demand growth slows down, how much Iranian supply falls due to US sanctions, and how fast US supply rises,” said Giovanni Staunovo, an analyst at UBS. Russia appears to need more convincing that it should be cutting production. Russia’s energy minister Alexander Novak said in Abu Dhabi on Sunday it was too early to make a decision to reverse course and cut supply. “We’re going to do everything we can to keep supply and demand inventories within a reasonably narrow band, ” Al Falih said on Monday, during a debate moderated by CNN Business’ Emerging Markets Editor John Defterios. “We hope that markets will calm down.”
Crude prices jumped by as much as 2% on the prospects of reduced supply from OPEC. US crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday. The United States last week said eight jurisdictions — China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey — would be able to continue buying Iranian oil for six months without fear of US penalties under sanctions on trading with Iran. “The sanctions on Iran have turned out to be a damp squib for the time being with the Trump administration granting exemptions,” said Devesh Mamtani, head of investments and advisory at Century Financial, a brokerage firm in Dubai. “The exemptions have even surprised Saudi Arabia as oil supplies from Iran are likely to spike in the coming days,” he added. UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn’t allow the market to become oversupplied.
“We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability,” he said.

OPEC mulls oil output cuts as risk of global glut grows

AFP/Getty Images Officials at the Joint Ministerial Monitoring Committee meeting on Nov. 11 discussed potential crude production cuts.

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.”

Exclusive – Russia clashes with Western oil buyers over new deals as sanctions loom

FILE PHOTO: The Rosneft logo is pictured on a safety helmet in Vung Tau, Vietnam April 27, 2018. REUTERS/Maxim Shemetov/File Photo

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.

U.S. to impose new duties on Chinese aluminium sheet products

FILE PHOTO: A worker checks aluminium rolls at a warehouse inside an industrial park in Binzhou, Shandong province, China April 7, 2018. China Daily via REUTERS

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.

China October exports surprisingly strong in race to beat higher U.S. tariffs

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.

Manchin: We’re ‘on the verge’ of a constitutional crisis due to Sessions’s firing

Sen. Joe Manchin (D-W.Va.) said Thursday that the U.S. is on the “verge” of a constitutional crisis because of the forced resignation of Attorney General Jeff Sessions.  “I think it’s a big mistake to let Sessions go,” Manchin, who was the only Democratic senator to vote to confirm the former attorney general, said on “CBS This Morning.”

Manchin pointed to the potential ramifications Sessions’s ouster could have on special counsel Robert Mueller‘s investigation into Russia’s election interference to back up his claim.  His comments came just a day after Sessions formally resigned from his role at the Department of Justice at President Trump‘s request. Trump announced on Twitter on Wednesday that Matthew Whitaker, Sessions’s chief of staff, will serve as acting attorney general.  Whitaker, who has publicly criticized certain elements of the Mueller investigation, will now oversee it. Deputy Attorney General Rod Rosenstein had been overseeing the probe since Sessions recused himself in early 2017.  Democratic lawmakers, including Manchin, have criticized Whitaker’s oversight of the Mueller probe. “What raises my concerns is a person that’s been so vocal against the investigation that was going on is [put] in charge a day after the [midterm] election,” Manchin told CBS. “I think that gives concern to every senator, Democrat and Republican. We are a country — the rule of law is everything. “Looking like it’s been tilted one way or the other is wrong.”

Trump has repeatedly called the Russia investigation a “witch hunt,” and on Wednesday said that he could fire everyone in Mueller’s office if he wanted. He said he would not take that step for political reasons, however.

Trump faces a blitz of investigations from Democratic-run House

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

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

Oil falls as rising production feeds concerns of an oversupply

Natural-gas futures decline after larger-than-expected rise in U.S. supplies
Getty Images

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.

Trump moves to deny asylum to most migrants who cross border illegally

Proclamation to require asylum-seekers to apply only at border crossings
Getty Images President Donald Trump speaks at the White House on Wednesday.

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.

Trump says ‘I think we’ll make a deal with China’ on trade

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.”.

U.S. President Donald Trump holds a campaign rally at Huntington Tri-State Airport in Huntington, West Virginia, U.S., November 2, 2018. REUTERS/Carlos Barria

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.”

Stocks soar on jobs reports, hopes of U.S.-China trade 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

Trump says he can defy US Constitution to end birthright citizenship

© Nicholas Kamm, AFP | In this file photo taken on October 27, 2018, US President Donald Trump speaks with reporters before departing for a rally in Murphysboro, Illinois.

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”.

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.

Oil prices down on rising supply, trade war

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.

Trump accuses media of stoking ‘great anger’ in US

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.

11 Dead, Several Others Shot At Pittsburgh Synagogue

robert bowers 11 Dead, Several Others Shot At Pittsburgh Synagogue(Photo Credit: Pennsylvania Department of Transportation)

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 global selloff has erased $5 trillion from stock and bond markets in October

IStockphoto What’s a few trillion gone from investors’ portfolios?

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.

US Economy Grew by Healthy 3.5% in Third Quarter

President Donald J. Trump (Photoby Joe Raedle/Getty Images)

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.

Fitch says it no longer assumes Britain will get a smooth Brexit

FILE PHOTO: The Fitch Ratings logo is seen at their offices at Canary Wharf financial district in London,Britain, March 3, 2016. REUTERS/Reinhard Krause

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.

US mail bombs: Cesar Sayoc charged after campaign against Trump critics

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

Malls fear Sears bankruptcy signs will scare off buyers

If you’re going out of business, try not to make too much of a fuss about it.

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.

Two Wells Fargo executives go on leave of absence amid sales scandal review

A Wells Fargo logo is seen in New York City, U.S. January 10, 2017. REUTERS/Stephanie Keith

(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 admits ‘there’s no proof’ of his ‘unknown Middle Easterners’ caravan claim

President Donald Trump on Tuesday defended his unsubstantiated assertion that “unknown Middle Easterners” are traveling in a migrant caravan traveling north to the United States from Central America, but admitted “there’s no proof of anything.” “They could very well be,” Trump reiterated during a bill signing in the Oval Office, referring to Middle Eastern individuals embedded in the caravan. “I have very good information.” However, pressed for the proof of Middle Eastern individuals in the caravan by CNN’s Jim Acosta, Trump said “there’s no proof of anything.” “There’s no proof of anything but they could very well be,” Trump said. On Monday, Trump tweeted “criminals and unknown Middle Easterners are mixed” into the migrant caravan moving toward the United States. He called this a “national emergy” (sic). However, there have been no reports, in the press or publicly from intelligence agencies, to suggest there are “Middle Easterners” embedded in the caravan he’s referring to. Trump added Tuesday that “there’s a very good chance” of Middle Eastern individuals being in the caravan. “I also think that over a course of a period of time you (will) have (Middle Eastern individuals in the caravan), or they don’t necessarily have to be in that group. But certainly, you have a lot of people coming up through the southern border from the Middle East and other places that are not appropriate for our country,” he said. “They don’t necessarily have to be in that group,”

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.”

Counterterrorism official contradicts Trump: No sign ISIS or ‘Sunni terrorist groups’ are in caravan

(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.

“That fear, from a law enforcement perspective, is highly misplaced,” Cohen said. “It may be effective at energizing the base, but it creates a needless fear of the caravan.”
The President’s tweets and comments come just about two weeks ahead of the 2018 midterm elections, where he is emphasizing immigration as a key issue. Trump has, without evidence, accused Democrats of allowing immigrants to overrun the borders. The President has said, “Democrats want caravans. They like the caravans. A lot of people say, ‘I wonder who started that caravan …’ ” Trump has often returned to immigration as a talking point that will motivate his base voters to go to the polls in the midterms, and his policies on immigration have been cited as one of the key factors that led to his victory in 2016. Right-wing news outlets had speculated about a terror-connection in the caravan in the days leading up to Trump’s morning tweet. On Fox News Sunday morning, Tom Fitton, a conservative legal advocate, cited remarks by the president of Guatemala, who said earlier this month at a conference in Washington, DC, that his country had arrested nearly 100 people “highly linked to terrorist groups, specifically ISIS.”

Netflix’s New $2 Billion in Borrowing Raises Wall Street Eyebrows

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.

U.S. fund investors pull most cash since June from stocks: Lipper

(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 Debt Crisis Thickens

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.

Why investors are growing increasingly anxious about China

AFP/Getty Images

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.

U.S. eyes more Venezuelan sanctions, but oil on backburner: U.S. official

FILE PHOTO: Oil pumps are seen in Lake Maracaibo, in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela, March 20, 2015.REUTERS/Isaac Urrutia/File Photo – S1BETFVJVBAB/File Photo

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.

Fed plans to keep hiking interest rates despite Trump blowback

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.”

Exxon Mobil bets big on China LNG, sidesteps trade war

FILE PHOTO: The ExxonMobil Hides Gas Conditioning Plant process area is seen in Papua New Guinea in this handout photo dated March 1, 2018. ExxonMobil/Handout via REUTERS/File Photo

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.

China September coal output hits nine-month high as new capacity starts up

FILE PHOTO: A loader is seen amid coal piles at a port in Lianyungang, Jiangsu province, China January 25, 2018. REUTERS/Stringer

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.

Trade off: China soybean imports set for biggest drop in 12 years amid tariff conflict

(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.
FILE PHOTO: Soybean seeds are seen in a container at a farm in Gideon, Missouri, U.S., May 16, 2018. REUTERS/Shannon Stapleton/File Photo/File Photo

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.

Rosenstein Defends Mueller Probe as ‘Appropriate,’ ‘Independent’

deputy attorney general rod rosenstein speaks at a podium
Deputy Attorney General Rod Rosenstein (Mark Wilson/Getty Images)

As Khashoggi crisis grows, Saudi king asserts authority, checks son’s power

© Bandar AL-JALOUD / Saudi Royal Palace / AFP | Saudi King Salman bin Abdulaziz (C) attending the inauguration on September 25, 2018 of a new high-speed railway linking Mecca and Medina. Text by NEWS WIRES
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.

Existing-home sales slump to a near 3-year low as buyers back out

What will it take for the housing market to find equilibrium?

Getty Images Prospective buyers look at a room in a home for sale during an open house. According to the National Association of Realtors, TK

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.

Kelly, Bolton Get in Profane Shouting Match Outside the Oval Office

John Kelly, left, talks with John Bolton in the Oval Office on Oct. 10. Photographer:  Pablo Martinez Monsivais/AP

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.

Top Iran expert says Tehran may seek to wait out Trump administration

top Iran expert Karim Sadjadpour.

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 the Trump administration ups economic and diplomatic pressure on 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 new payment system to allow EU member states, Russia and China to maintain economic ties with Iran 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.”

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U.S. housing starts, building permits fall in September

Construction workers build a single family home in San Diego, California, U.S. February 15, 2017.

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.

Oil prices slump after large increase in U.S. stocks

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.

Trump: ‘That Would be Bad’ If ‘Great Ally’ Saudis Tied to Khashoggi’s Alleged Murder

president donald trump speaks during an interview with the associated press in the oval office.
(AP Photo/Evan Vucci)

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.

Trump tells AP he won’t accept blame if GOP loses House

Donald Trump
President Donald Trump listens to a question during an interview with The Associated Press in the Oval Office of the White House

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)

 

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21 countries with ‘golden passport’ schemes

OECD says schemes selling either residency or citizenship threaten efforts to combat tax evasion
View of  Monaco
Monaco is one of the countries flagged as operating high-risk schemes which sell either residency or citizenship in the OECD’s report. Photograph: Alamy Stock Photo

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.

Nearly half of Europe’s biggest stocks are in bear market

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.

U.S. retail sales are soft for the second month in a row

Retail sales rise 0.1% in September, below Wall Street forecast
Stephen Chernin/Getty Images After a busy spring, sales at U.S. retailers appeared to soften toward the end of summer.

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.

Sears files for Chapter 11 bankruptcy in attempt to keep stores open for now

Lampert steps down as CEO and is exploring potential bid for some Sears stores
Getty Images Sears is expected to close at least 150 stores immediately.

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.

Trump Speaks to Saudi King, Sends Pompeo for Follow-Up

Trump Speaks to Saudi King, Sends Pompeo for Follow-Up
Saudi Arabia’s King Salman (Getty Images)
President Donald Trump says he’s spoken to King Salman of Saudi Arabia, who “denies any knowledge of whatever may have happened” to missing Washington Post journalist Jamal Khashoggi. In a tweet issued shortly before 9 a.m. ET Monday, Trump also said he was dispatching Secretary of State Mike Pompeo to meet with the king :

“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.

Biden: Trump is ‘trashing American values’

© Getty Former Vice President Joe Biden on Friday slammed President Trump in one of his most stinging rebukes of the president, saying at a campaign rally that Trump was “trashing American values.”

“He is just trashing American values the way he talks about people, the way he makes fun of people, the way he denigrates folks,” Biden said at a rally in Owingsville, Ky., according to The New York Times. “I got to tell you, I think there is a method to his madness because he wants you to get down in the mosh pit with him.” Biden’s remarks came as he stumped for Democratic House candidate Amy McGrath. McGrath faces a tough challenge from GOP Rep. Andy Barr, who has represented Kentucky’s 6th District since 2013. McGrath, a former fighter pilot, is running in a district President Trump won by more than 15 points. Still, nonpartisan political handicapper The Cook Political Report has rated the race a “toss-up.” Trump is scheduled to campaign for Barr on Saturday. “We can’t possibly in my view win the presidency unless we can begin to reclaim those white working-class voters that used to vote for us,” Biden told the Times after the rally, adding that he thought Trump’s appeal to such voters was limited. “His value set is much too narrow and self-serving, and I think it’s deliberately designed to appeal to the legitimate frustrations of a lot of working-class people by finding a scapegoat, the ‘other,’ ” Biden added. “Your lost your job, your identity is being threatened because of that immigrant. It’s an old, old method.” “I look out there and I just don’t know how much more grievance can be appealed to by this guy to keep a majority,” he said. Biden, who has been seen as a potential front-runner for the Democratic nomination in 2020, said Wednesday that he is not a candidate for his party’s presidential nomination “at this point.” “I think there are many people in the Democratic Party who can defeat Trump,” he said. “And not a single aspiring candidate that I can think of for the nomination — and I am not one at this point — does not have a better understanding and formulation of American foreign policy than President Trump, in my view.” Biden and Trump have sparred frequently in recent years. The former senator said in March that he would have “beat the hell out of” Trump in high school over his degrading comments about women, later saying that he regretted making the comment. Trump, last week, said at a campaign-style rally in Kansas that if he fought Biden “it would not last long.” “Remember he challenged me to a fight. ‘I’d like to take him behind the barn.’ I’d love that. That wouldn’t last long. That would not last long. That wouldn’t last long,” the president said, imitating Biden.

Italy must ‘calm down’ and stop questioning the euro: Draghi

FILE PHOTO: European Central Bank (ECB) President Mario Draghi testifies before the European Parliament’s Economic and Monetary Affairs Committee in Brussels, Belgium September 24, 2018

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.

Trump says won’t limit Saudi arms sales over missing journalist

U.S. President Donald Trump said on Thursday that he saw no reason to cut off arms sales to Saudi Arabia because of the disappearance of Saudi journalist Jamal Khashoggi, possibly setting up a clash with the U.S. Congress.

© Saul Loeb / AFP | US President Donald Trump in the Oval Office of the White House in Washington, DC.

Trump also said the United States may be closer to finding out what happened to Khashoggi, a prominent critic of Saudi policies who was last seen entering the Saudi consulate in Istanbul on Oct. 2. Turkish sources have said they believe Khashoggi was killed inside the building and his body removed, allegations that Riyadh dismisses as baseless. In a sign Turkey and Saudi Arabia might be looking for a way forward, Turkey accepted a Saudi proposal to form a joint working group to investigate the case, Turkey’s state-run Anadolu news agency quoted presidential spokesman Ibrahim Kalin as saying. The Washington Post, citing unidentified U.S. and Turkish officials, reported that Turkey had told U.S. officials it has audio and video recordings that prove Khashoggi was killed inside the consulate. It was not clear that U.S. officials had seen the footage or heard the audio, the Post reported, but Turkish officials have described the recordings to them. Turkish investigators were prepared to enter the consulate, a Turkish security official told Reuters, but were awaiting final authorization from the Saudis. Speaking to reporters, Trump said he saw no reason to block Saudi purchases of U.S. arms or its investments in the United States despite the journalist’s case, saying the Gulf nation would just move its money into Russia and China. “They’re spending $110 billion on military equipment and on things that create jobs … for this country. I don’t like the concept of stopping an investment of $110 billion into the United States, because you know what they’re going to do? They’re going to take that money and spend it in Russia or China or someplace else,” he said.

Trump rules out halting arms sales to Saudi Arabia

His comments prompted pushback from members of the U.S. Senate, including from some of his fellow Republicans, many of whom signed a letter on Wednesday forcing his administration to investigate Khashoggi’s disappearance and paving the way to possible sanctions on Saudi officials. “If it’s found that they murdered a journalist, that will hugely change our relationship,” Senator Bob Corker, chairman of the Senate Foreign Relations Committee, told reporters. “There will have to be significant sanctions placed at the highest levels.” The Khashoggi incident might make it very hard for the Trump administration to win congressional approval for arms sales to the Saudis. Many lawmakers, including some Republicans, have already questioned U.S. support for Saudi’s involvement in Yemen’s civil war, which has prompted a humanitarian crisis. Under U.S. law, major foreign sales of military equipment can be blocked by Congress. There is also an informal process in which key lawmakers can put “holds” on arm sales. Trump, who sealed a $110 billion deal for U.S. companies to sell arms to Saudi Arabia on his first foreign trip as president in May 2017, said they were looking into the disappearance.

Russia dossier author criticizes Trump, slams ‘strange and troubling times’

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.”

The ex-spy also lamented that due to “the present legal and political situation,” he could not attend a Vanity Fair summit in Los Angeles featuring many of the newsmakers on the list. Despite global intrigue with his story, Steele has avoided public events out of fear for his safety. “I sincerely hope and trust that these circumstances will change soon,” Steele added. The Vanity Fair list features business leaders, media moguls and other rising stars. Special counsel Robert Mueller was ranked at the top, despite the fact that he might be the least flashy person on the list, which includes social media maven Kylie Jenner and filmmaker J.J. Abrams. An official from Steele’s private intelligence firm in London confirmed to CNN that Steele sent the email to Vanity Fair. Representatives from Vanity Fair did not immediately respond to emails seeking comment on Wednesday. The winding saga of Steele and his dossier dates to the 2016 presidential campaign, when a law firm working for Democratic presidential nominee Hillary Clinton hired an opposition research company named Fusion GPS to dig up dirt about Trump. Fusion GPS then hired Steele, who tapped his sources in Russia to gather information about Trump’s ties to the country.
Steele passed along his memos to the FBI before the election, and details from his research later circulated among US intelligence agencies and senior members of Congress. It wasn’t until after Trump’s victory that the public saw the 35-page dossier, which alleged widespread collusion between his campaign and the Russian government. Trump and his associates who were named in the dossier deny any collusion. In the past, US intelligence agencies saw Steele as a valuable and trusted source of information. Mueller is currently investigating Russian election interference and possible collusion between Trump associates and Russians. Since he became a key player in the Russia investigation, Steele has remained quiet, speaking publicly only once to thank his supporters. He was deposed in a lawsuit stemming from the publication of the dossier and was privately interviewed by Mueller’s team in the summer of 2017. His critics have been much more vocal. Trump called Steele a “failed spy” and said the allegations were “phony.” Top Republicans on Capitol Hill have seized on Steele’s ties to the Clinton campaign and the FBI to allege a far-reaching conspiracy to stop Trump’s election. Two Republican senators asked the Justice Department to investigate whether Steele criminally lied to the FBI. Nick Bit: Despite the incredible i believe the Steele Dossier is true. This should be a warning to Americans and the great danger their empire and Democracy is in. This is exactly how a free people become poor and end up slaves. I never met a rich slave! In fact i never met a rich man who was a slave.

May vows she will NEVER sign up to a Brexit deal that traps the UK in the customs union ‘permanently’

 Ministers threaten to QUIT in protest at concessions to the EU
heresa May (pictured in Downing Street this week) is facing probably the biggest test of her premiership, with just six days to go until a crucial EU summit
May (pictured in Downing Street this week) is facing probably the biggest test of her premiership, with just six days to go until a crucial EU summit

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.

Oil Supply and Demand Reach Record 100 Million Barrels a Day

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.

America’s obesity is threatening national security, according to this study

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.

Service members at the dining facility Fort McCoy, Wis. 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)
Service members at the dining facility Fort McCoy, Wis.

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.”

Sears prepares to file for bankruptcy in coming days: sources

(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.

Postal Service seeks record price hikes to bolster falling revenues

A letter carrier prepares mail for delivery at the United States Postal Service Joseph Curseen Jr. and Thomas Morris Jr. processing and distribution center in Washington, D.C., U.S., on Tuesday, Dec. 12, 2017.
letter carrier prepares mail for delivery at the United States Postal Service Joseph Curseen Jr. and Thomas Morris Jr. processing and distribution center in Washington, D.C.,
Facing pressure from the Trump administration to address a revenue shortfall, the Postal Service on Wednesday proposed raising the price of 1-oz. letters from 50 cents to 55 cents, which would be a record nominal increase if approved. The price of each additional ounce would go down slightly.
The request was made by the USPS’ board of governors, which has been operating on an emergency basis because of a lack of confirmed members. It will have to be approved by the Postal Regulatory Commission.”The Governors believe these new rates will keep the Postal Service competitive while providing the agency with needed revenue,” the USPS said in a press release. “The Postal Service has some of the lowest letter mail postage rates in the industrialized world and also continues to offer a great value in shipping.”
 Rates for mailing services — which includes catalogs and magazines as well as letters — are pegged to consumer prices. Those have been rising faster this year, but still limited the price hike for that category to 2.5 percent. Prices for packages, however, can float with market rates. The USPS wants to boost Priority Mail prices by an average of 5.9%. A small flat-rate box that costs $7.20 to ship, for example, would next year cost $7.90. The steep price increases come at a time when the USPS’ losses have been mounting, dragged down in part by a requirement that the quasi-public agency pre-fund the cost of retiree health benefits. As letters and advertising mailers have been replaced by e-mail and online ads, the USPS has been making less and less money. Revenue from first class mail declined from $28.4 billion in fiscal year 2015 to $25.6 billion in 2017.
Package revenues fueled by the rise in e-commerce have been a bright spot, bringing in $19.5 billion in 2017, up from $15 billion in 2015. But it hasn’t made much of a dent in the $58.7 billion net deficit that the Post Office has accumulated over the years. The White House has proposed privatizing the Post Office, a plan that postal unions protested in nationwide demonstrations on Monday. President Donald Trump has repeatedly criticized the terms of USPS’ contract to deliver Amazon packages, the details of which are confidential. The Postal Service says it makes a profit through the arrangement. “Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump tweeted last December. “Should be charging MUCH MORE!” In April, Trump ordered a review of the Postal Service’s business model by a task force led by the Treasury Department. Postal Service spokesman Carl Walton says the review has been completed, but that the agency hasn’t seen it yet. “I think they’re waiting until after the elections,” Walton said. “We’re waiting just like everybody else.”

Leaked Google research shows company grappling with censorship and free speech

A rare look at how the employees of the world’s most powerful search engine are trying to balance two opposing forces
Illustration by Alex Castro / The Verge

 

A leaked research presentation put together by employees of Google shows the extent to which the search giant is grappling with decisions around freedom of speech and censorship. The presentation, leaked to Breitbart News this week and published in full by the organization, is titled “The Good Censor,” and it’s a mix of findings and insights based on interviews and contributions from a number of journalists, academics, and cultural critics. The aim, according to the first slide of the presentation, is to “reassure the world that [Google] protects users from harmful conduct while still supporting free speech.” The slides are a rare and stark look at Google’s ongoing struggles, which are mirrored by many Silicon Valley tech platforms, including Facebook and Twitter, that now moderate a large swath of human conversation. Essentially, the company is asking itself whether it’s possible to protect against the negative aspects of free speech — violent threats, fake news, bots, trolling, propaganda, and election interference, to name just a few — while promoting a platform that gives everyone a voice. Google says in the presentation that the internet was founded on “utopian principles of free speech,” and that Silicon Valley was largely built under the guiding principles of those ideals.

Google’s presentation acknowledges that “censorship can give governments — and companies — the tools to limit the freedom of individuals.” But it also lays out all the reason why tech platforms like Google search and YouTube are responsible for policing what happens on their apps and websites. The slides give a history of how parts of the internet have become dominated by bad actors, and how both tech companies and governments have failed to address the issues. With regard to censorship, Google notes in the slides how government takedown requests have tripled in the last two years, and how YouTube is now the target of a majority of these requests, with Google Search behind it. The presentation concludes that tech companies “are performing a balancing act between two incompatible positions,” and that’s the reason why censorship is on the rise as companies like Google, Facebook, and Twitter take more heavy-handed approaches to moderation in response to heightened criticism. The slides conclude that transparency, consistency, and responsiveness are paramount in addressing this ongoing imbalance, and that there is not a “right amount of censorship” that will please everyone and solve these issues. While the presentation is certainly a candid look at how a company as powerful as Google is analyzing these issues and attempting to solve them, hanging over the entire conversation is the prospective launch of a Google search product and news site in China, codenamed Dragonfly. The company still has barely acknowledged its work on the project, but investigative reporting on its existence has led to massive internal strife, high-profile resignations, and serious inquiry from Congress. The slides make no mention of China, its historical approach to online censorship and social authoritarianism, or any plans to operate there. In response to the leak, Google has said the research is not indicative of any official company position, but rather research to better understand how users think about these key issues. In a statement, the company told The Verge, “Google is committed to free expression — supporting the free flow of ideas is core to our mission. Where we have developed our own content policies, we enforce them in a politically neutral way. Giving preference to content of one political ideology over another would fundamentally conflict with our goal of providing services that work for everyone.”

The manufacturers fighting Trump’s tariffs

Image caption Rick Huether’s family has run Independent Can Co since 1948

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

UK surveyors see weakest house price outlook since Brexit vote – RICS

FILE PHOTO: Terraced houses are seen in Primrose Hill, London, Britain September 24, 2017. REUTERS/Eddie Keogh

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.

IMF’s Lagarde warns trade, currency wars could be detrimental for growth

 

FILE PHOTO: Christine Lagarde, International Monetary Fund (IMF) Managing Director, attends a news conference in Tokyo, Japan October 4, 2018. REUTERS/Issei Kato

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.”

Trump Says Fed ‘Has Gone Crazy’ Following Stock Market Selloff

Trump talks with reporters after arriving in Erie, Pa. for a campaign rally on Oct. 10

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.

Global financial stability risks rising with trade tensions, IMF says

(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.”

Watchdog: ‘Nearly all’ new US weapons systems vulnerable to cyber attacks

The watchdog’s report says the GAO “found that from 2012 to 2017, (Department of Defense) testers routinely found mission-critical cyber vulnerabilities in nearly all weapon systems that were under development.” During some of the tests, testers were able to hack into some of these complex weapons systems and take control over them “using relatively simple tools and techniques.”
US F-35 fighter jet conducts first-ever airstrike

US F-35 fighter jet conducts first-ever airstrike
“In one case, it took a two-person test team just one hour to gain initial access to a weapon system and one day to gain full control of the system they were testing,” the report said. In some cases, the “weapon systems used commercial or open source software, but did not change the default password when the software was installed, which allowed test teams to look up the password on the internet and gain administrator privileges.” One of the reasons that the weapons systems are so vulnerable to cyber-attack is their connectivity to other systems, something long seen by the Pentagon as an advantage. Weapons like the F-35 Joint Strike Fighter have been celebrated for their ability to connect to a range of other systems, allowing critical military information to be more easily shared. But the GAO’s reports says that connectivity makes weapons systems vulnerable as potential hackers would only need to penetrate one of the connected systems to potentially gain access to the others. “These connections help facilitate information exchanges that benefit weapon systems and their operators in many ways—such as command and control of the weapons, communications, and battle space awareness,” the reports says while adding “If attackers can access one of those systems, they may be able to reach any of the others through the connecting networks.” Pentagon spokesperson Maj. Audricia Harris told CNN that they “takes threats to our nation seriously.” “We are continuously strengthening our defensive posture through network hardening, improved cybersecurity, and working with our international allies and partners and our defense Industrial Base and defense Critical Infrastructure partners to secure critical information,” she said.
The revelation that so many Pentagon weapons systems are vulnerable to cyber-attacks raises questions about the billions of dollars the US has invested in its various programs. The report said that part of the problem was the fact that cyber-security has only recently been emphasized when developing requirements for these systems.
The report did say the Pentagon “is taking steps to improve its understanding of its weapon systems’ vulnerabilities, determine how to mitigate risks from those vulnerabilities, and inform future development of more secure systems,” but added that the Defense Department faced challenges with regard to boosting its defenses given the cost of recruiting and retaining talented cyber-security professionals and difficulties in sharing information. The Department of Defense recently released its cyber strategy which said the Pentagon is seeking to incorporate cyber-security awareness throughout the institutional culture of the department.

Haley Announces She is Resigning as UN Ambassador, Says U.S. Is Respected Again

UN Ambassador Nikki Haley and President Donald Trump (Screenshot)

(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.

Commercial Banks Donate $2.5 Million to Senate Democrats for Midterms

block letters spelling out election on top of flag and $100 bill

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.

Amazon is doubling down on its private label business, stoking ‘huge fear’ in some sellers

 

Jeff Bezos, president and CEO of Amazon and owner of The Washington Post, speaks at the Economic Club of Washington DC's "Milestone Celebration Dinner" in Washington, U.S., September 13, 2018. 
Joshua Roberts | Reuters Jeff Bezos, president and CEO of Amazon and owner of The Washington Post, speaks at the Economic Club of Washington DC’s “Milestone Celebration Dinner” in Washington, U.S., September 13, 2018

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 Trump administration just escalated its high-stakes competition with China

Vice President Mike Pence speaks at the Hudson Institute in Washington, D.C., U.S., on Thursday, Oct. 4, 2018. Pence laid out allegations of Chinese election interference in a harshly worded speech Thursday, signaling a firmer U.S. pushback against Beijing as trade anxiety weighs on the looming midterm congressional elections. 
Joshua Roberts | Bloomberg | Getty Images Vice President Mike Pence speaks at the Hudson Institute in Washington, D.C., U.S., on Thursday, Oct. 4, 2018
. Pence laid out allegations of Chinese election interference in a harshly worded speech Thursday, signaling a firmer U.S. pushback against Beijing as trade anxiety weighs on the looming midterm congressional elections.  Even with all news noise focusing on the Brett Kavanaugh Supreme Court confirmation fight and the “not NAFTA” trade agreement among the U.S., Mexico and Canada, it would be a mistake to miss this week’s most significant geopolitical development:

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.

They include:

  • 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.”

2014.

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.

Colin Powell Rips Trump on Immigration, NATO, Anti-Press Rhetoric: The World Can’t Believe What’s Happening

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.”

British stocks posts biggest weekly drop in six months on strong U.S. jobs report

FILE PHOTO: Traders looks at financial information on computer screens on the IG Index trading floor in London, Britain February 6, 2018. REUTERS/Simon Dawson

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.

.FTSEFT-SE International
-99.80(-1.35%)
.FTSE

 

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.

Oil prices mark weekly gain ahead of Iran sanctions

FILE PHOTO: Oil pumpjacks are seen near Aneth, Utah, U.S., October 29, 2017. REUTERS/Andrew Cullen

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.

Tech Stocks Tumble as Market Momentum Stalls

Falling U.S. government bond prices also weigh on investors

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%.

Top US admiral warns of Russian submarine threat

 

(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.

Germany says no-deal Brexit not in UK, EU or German interests

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.

Italy dismisses concern the EU will reject its budget plan

FILE PHOTO: Italian Economy Minister Giovanni Tria attends as Prime Minister Giuseppe Conte (unseen) speaks during his first session at the Lower House of the Parliament in Rome, Italy, June 6, 2018. REUTERS/Tony Gentile/File Photo

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.”

Oil prices rise on Iran sanctions, outlook uncertain

FILE PHOTO: Oil pumpjacks are seen near Aneth, Utah, U.S., October 29, 2017. REUTERS/Andrew Cullen

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.”

Zuckerberg Faces Anger Over Facebook Executive’s Kavanaugh Support

Joel Kaplan, head of global policy, appeared at the Supreme Court nominee’s Senate hearing

Joel Kaplan, vice president of global public policy at Facebook, and Mark Zuckerberg, the company’s founder, in Paris earlier this year.
Joel Kaplan, vice president of global public policy at Facebook, and Mark Zuckerberg, the company’s founder, in Paris earlier this year. Photo: Christophe Morin/Bloomberg News

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 Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies

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.

New York Investigating Trump Tax Dodging

New York Investigating Trump Tax Dodging

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.

Dollar hits six-week highs on hawkish Fed

FILE PHOTO: Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

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 tumble, but technician says one has breakout potential

Auto stocks have hit the skids.

Trading Nation: Auto stocks skid
Trading Nation: Auto stocks skid
Over the past three months, trade worries and weak sales drove General Motors, Ford, Fiat Chrysler and Toyota to their lowest level of the year. Disappointing declines in monthly car sales for GM and Ford added to the industry’s pain on Tuesday. “I wouldn’t call any of them technically attractive right now, but if I had to pick one, it’d be Toyota,” Instinet’s chief market technician said Tuesday on CNBC’s “Trading Nation.” Since its lows in December 2009, Toyota has rallied nearly 130 percent. Its performance in recent years could have set it up for a larger rise. “Over the last five years, it’s about flat, but it hasn’t broken down yet and that’s interesting because it’s built this constructive pattern along the way,” said Cappelleri. “I’d be patient but I wouldn’t mind buying this breakout to $140 if it gets there.” Toyota briefly traded at $140 at the beginning of the year, 11 percent higher than Tuesday’s close of $125.71. Chad Morganlander, portfolio manager at Washington Crossing Advisors, is concerned the broader auto space could lure investors into a value trap. “We would be cautious on the autos,” Morganlander said on “Trading Nation” on Tuesday. “They look cheap from a P-E perspective, but when you include debt on the valuation, then they’re not cheap.” Ford, for example, trades with a price-to-earnings ratio below 7, more than half the multiple on the S&P 500. However, it ended the second quarter with $102 billion in long-term debt and $221.5 billion in total liabilities. Morganlander says GM has a similar setup. “When you’re looking now at this stage in the market cycle you want to find companies that have good quality, consistent earnings growth,” he said. “If you want industrials and you need that cyclical torque in your portfolio, look at 3M, look at Stanley, Black & Decker, but avoid companies that have a lot of debt on their balance sheets.” By comparison to Ford’s $102 billion, 3M had $11.3 billion in long-term debt on its balance sheet at the end of its June quarter, while Stanley, Black & Decker held $2.8 billion.

Putin Tells Trump to Blame Guy in the Mirror for High Oil Prices

Putin Tells Trump to Blame Guy in the Mirror for High Oil Prices

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.”

Italy budget concession hopes switch risk sentiment back on

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.

Ryanair warns on profit as strikes and rising fuel prices take toll

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

Reuters Graphic

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.

Too much oil? Texas boom outpaces supply, transport networks

A pumpjack is shown outside Midland-Odessa area in the Permian basin in Texas, U.S., July 17, 2018. REUTERS/Liz Hampton

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.

Unraveling a Tesla Mystery: Lots (and Lots) of Parked Cars

Groups of new vehicles are being detected in unexplained locations across the country. Evidence being posted online has raised questions about production, logistics, quality and even demand.

 

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.)

Mr. Musk recently acknowledged that the company was having difficulty shipping cars to customers, saying Tesla was in “delivery logistics hell.”

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.

Legal Experts: New Text Messages Show Kavanaugh Might Have Tampered with Witness

Supreme Court nominee Brett Kavanaugh told the Senate Judiciary Committee on Thursday that he first heard about the Deborah Ramirezallegation when it was published in The New Yorker on Sept. 23.

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.

“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.

New reports question Kavanaugh’s credibility on past drinking behavior, when he knew about allegations

Texts suggest Supreme Court nominee knew of Ramirez accusations months before when he testified he had heard them
Getty Images Brett Kavanaugh testifies in front of the Senate Judiciary committee on Thursday.

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.

Dow ends about 190 points higher, S&P 500 closes near record as Nafta deal sparks rally

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.

Trump Hails ‘Great Deal’ on US-Canada-Mexico Trade

Trump Hails 'Great Deal' on US-Canada-Mexico Trade

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.

Sarah Sanders won’t say the White House isn’t interfering in FBI investigation of Brett Kavanaugh

“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.

Musk out as Tesla chair, remains CEO in $40M SEC settlement

© Brendan Smialowski, AFP | Tesla and its CEO Elon Musk have agreed to a $40 million settlement with the government over a misleading tweet. Musk will remain CEO but will relinquish his role as chairman for at least three years.

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.

Trump Grabs Oil Market’s Interest Over Call With Saudi King Salman

Trump Grabs Oil Market's Interest Over Call With Saudi King Salman

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 Fed could be hiking the U.S. into a recession, warns Peter Boockvar

The Fed and global central banks could push the U.S. into recession: Boockvar
The Fed and global central banks could push the U.S. into recession: Boockvar

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.

If Trump abandons globalism, American interests will suffer ‘irreparable harm’

President Donald Trump addresses the 73rd session of the General Assembly at the United Nations in New York September 25, 2018. 
Nicholas Kamm | AFP | Getty Images President Donald Trump addresses the 73rd session of the General Assembly at the United Nations in New York September 25, 2018.

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.

Asian stocks lower on US-China trade worries

A man cycles past in front of electronic stock board of a securities firm in Tokyo, Tuesday, Sept. 25, 2018.

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.”

Russian-US tycoon boasted of ‘active’ involvement in Trump election campaign

Exclusive: Simon Kukes was in contact with senior Kremlin official in 2016 while donating to Trump-supporting committe

Simon Kukes and the former New York mayor Rudy Giuliani at a fundraising dinner in New Work in August 2016.
Simon Kukes and the former New York mayor Rudy Giuliani at a fundraising dinner in New Work in August 2016.

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.

 

North Korea says ‘no way’ will disarm unilaterally without trust

North Korean Foreign Minister Ri Yong Ho attends a meeting with his Russian counterpart Sergei Lavrov in Moscow
FILE PHOTO: North Korean Foreign Minister Ri Yong Ho attends a meeting with his Russian counterpart Sergei Lavrov in Moscow, Russia April 10, 2018. REUTERS/Sergei Karpukhin By David Brunnstrom and Michelle Nichols

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 says US, Canada could reach new NAFTA deal in 48 hours

Economy Minister Ildefonso Guajardo, Mexico's top negotiator for "NAFTA 2.0," insists 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
Economy Minister Ildefonso Guajardo, Mexico’s top negotiator for “NAFTA 2.0,” insists 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 (AFP Photo/NICHOLAS KAMM)

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.

South Korea’s LG Display to cut jobs through voluntary retiremen

A man walks out of the headquarters of LG Display in Seoul, October 20, 2011. REUTERS/Jo Yong-Hak/File Photo

SEOUL (Reuters) – South Korea’s LG Display Co Ltd, an Apple supplier, will cut jobs through voluntary retirement for the first time since its founding, a spokeswoman confirmed on Saturday. LG Display plans to receive applications in October for voluntary redundancy among employees in production that make up about 65 percent of its workforce, South Korean newspaper Chosun Ilbo reported earlier on Saturday citing the company, adding the target size of the voluntary redundancy has not been decided. The spokeswoman said the voluntary retirement offer is driven by automation as well as the company’s portfolio switch from liquid crystal display (LCD) to organic light-emitting diode (OLED) screens, which require fewer production personnel. The company will secure competitiveness by increasing the portion of R&D workers and engineers, she added. Prices of LCD screens, the company’s mainstay, have plummeted partly due to Chinese competition, causing LG Display to say in July it would slash $2.7 billion in capital spending planned through 2020 in order to switch its portfolio to OLED screens. Company officials had previously said that it was not planning layoffs for fear of losing talent to China.

Judge lets Democrats in Congress sue Trump over foreign payments

President Donald Trump at the United Nations in New York, September 25, 2018. 
LUDOVIC MARIN | AFP | Getty Images President Donald Trump at the United Nations in New York, September 25, 2018.

A federal district judge in Washington ruled on Friday that a group of nearly 200 Democratic senators and representatives have legal standing to sue President Donald Trump to prove he violated the U.S. Constitution’s emoluments provision banning the acceptance of gifts from foreign and domestic interests. The U.S. District Court Judge Emmet Sullivan found that lawmakers have adequately shown that they’ve suffered harm from the president’s alleged violation of the emoluments clause, which bans benefits from foreign governments unless a majority of both houses of Congress consent. The ruling was the second time a federal court judge has decided to advance such unprecedented constitutional lawsuits against the president. A federal judge in Maryland ruled in July that a similar lawsuit against Trump filed by the attorneys general for Maryland and the District of Columbia could proceed, but only as pertained to earnings from Trump’s Washington, D.C., hotel.To allow the lawsuit to proceed, Sullivan said he would “accept as true the allegations that the President has accepted prohibited foreign emoluments without seeking the consent of Congress.” Justice Department spokeswoman Kelly Laco said in a statement that the government believes this case should be dismissed and “will continue to defend the President in court.” The lawyers representing 198 congressional Democrats were led by Sen. Richard Blumenthal, a Connecticut Democrat who, along with his colleagues, have argued that Trump isn’t letting them do their jobs. He praised Sullivan’s ruling. “This is a bombshell victory enabling us to move forward to hold the president accountable for violating the chief corruption prohibition in the United States’ Constitution,” Blumenthal told the AP. “President Trump has been violating it repeatedly with impunity and now we as members need to hold him accountable.”

The Democrats’ attorney Elizabeth Wydra, who is president of the nonprofit Constitutional Accountability Center and argued the case in court, said that “by recognizing that members of Congress have standing to sue, the court proved to all in America today that no one is above the law, not even the president.”

The Trump Organization did not immediately respond to a request for comment. The case argues that the president has received foreign government favors, such as Chinese government trademarks for his companies, payments for hotel room stays and event-space rentals by representatives of Saudi Arabia and Kuwait, and proceeds from Chinese or Emirati-linked government purchases of office space in Trump Tower. Ethics experts say the constitutional emoluments clause was created by the Founding Fathers to ensure that government officials act with the interests of the American public in mind instead of their own pocketbooks.

Unlike prior presidents, Trump chose not to divest from his assets and he remains the owner of the Trump Organization, a sprawling business empire with 550 entities in more than 20 countries that include branded hotels, golf courses, licensing deals and other interests. His Washington, D.C., hotel is near the White House and has become a magnet for foreign governments, previously hosting groups tied to Kuwait, Bahrain, Turkey, Malaysia and Saudi Arabia.

The District of Columbia case is one of three that argues the president is violating the emoluments clause, but this case is notable because the plaintiffs in this suit — members of Congress — are mentioned in the clause itself. The Democrats’ attorneys have argued that Congress not only has a right but is required, as part of their jobs, to weigh in on potential emoluments to Trump such as a $6.5 million condo purchase by the Qatari government or a Chinese-government owned company’s investment in a project that will include a Trump-branded hotel and golf course in Indonesia. Justice Department lawyers argued in court papers that the Democrats suing the president are not being injured by him at all but by their colleagues in Congress, who have refused to take up the emoluments issue. While the judge acknowledged that the case did raise separation of power concerns, he also noted that “plaintiffs have no adequate legislative remedy” but can be resolved by the judicial process by requiring the president to ask for congressional consent before accepting emoluments. Sullivan’s decision broadens the potential legal peril for Trump and his companies after U.S. District Judge Peter J. Messitte ruled that the emoluments clause lawsuit filed in a Maryland federal court could proceed against Trump. That case, however, is only limited to earnings Trump has received from the Trump International Hotel, which opened in Washington in September 2016. In July, Messitte dismissed the Justice Department’s contention that Trump’s business activity such as hotel room earnings don’t qualify under the constitutional definition of emoluments. The case has moved to the legal discovery stage. The Justice Department, however, has asked for an appeal in that case and for all proceedings to halt until an appeals court rules.

Facebook hack exposed 50 million users’ info — and accounts on other sites

by Heather Kelly
An attack on Facebook exposed information on nearly 50 million of the social network’s users, the company announced Friday — and gave the attackers access to those users’ accounts with other sites and apps that they logged into using Facebook. The attackers exploited a bug in a feature called “View as” that lets users see their Facebook page the way someone else would. The attackers were able to take over the accounts and use them exactly as if they were the account holders. That would include posting or viewing information shared by any of that account’s friends. Facebook says no credit card information stored with the company was accessed. Facebook(FB) said it does not know who the attackers were or where they were based. It also said it has already fixed the issue and informed the FBI and other law enforcement, as well as lawmakers and regulators. It has also informed the Irish Data Protection Commission about the breach, a step required by Europe’s GDPR regulations. The commission said it received the notification, but expressed concern with its timing and lack of detail More than 90 million users were forcibly logged out of their accounts by Facebook and had to log back in on Friday for security reasons. The accounts of Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg were among the 90 million accounts forcibly logged out by Facebook. Users do not need to take any additional security precautions or reset their passwords, said Facebook. All logged out users will receive a notification about the issue from Facebook. The attackers would have also been able to access third-party services or sites accessed with a Facebook login, Facebook’s Guy Rosen said in a follow-up call with reporters on Friday, though it is not yet clear if they did so. It could have also impacted Instagram accounts that use the same login as Facebook, but Rosen said WhatsApp, which is also owned by Facebook, was not impacted. The company declined to confirm if this was the largest hack it has experienced to date. The company says it does not know if the affected accounts were misused in any way or if any user information was actually accessed. It has not determined if any specific locations or accounts were targeted. It has turned off the “View As” feature that the attackers exploited while it investigates. “From experience, breach notifications like this always tend to get worse as time goes on and information from investigations is shared with the public,” said Jessy Irwin, the head of security at cybersecurity firm Tendermint. “There’s not much that is public about how those [linked] accounts are impacted, but this seems to go much deeper into Facebook’s entire ecosystem than Cambridge Analytica did.” Facebook says the vulnerability is the result of three distinct bugs, and originally appeared in July 2017 when the company made a change to a video uploading feature. The company first detected some unusual activity — a spike in user access to the site — on September 16, 2018. It launched an investigation and uncovered this attack on Tuesday, September 25. On Wednesday it notified law enforcement and on Thursday evening it fixed the vulnerability and began resetting login tokens, according to Facebook.  The attackers stole Facebook “access tokens” which keep a person logged into their Facebook account over long periods of time so they don’t have to keep signing in. Facebook reset all 50 million tokens, as well as tokens for an additional 40 million people who had used the “View as” feature in the past year as a “precautionary step.” The reset also unlinked accounts like Instagram and Oculus, both of which are owned by Facebook, which users will need to relink. “The reality here is we face constant attacks from people who want to take over accounts or steal information…. we need to do more to prevent this from happening in the first place,” CEO Mark Zuckerberg said during a call with reporters shortly after the announcement. The announcement is the latest issue for the company, which has struggled with security breaches, privacy issues and misinformation in recent years. Facebook says it is investing heavily in security going forward, and increasing the number of people working on security from 10,000 to 20,000. “Security is an arms race and we’re continuing to improve our defenses,” said Zuckerberg.

China Says It Won’t be Pushed Around by US on Trade

China Says It Won't be Pushed Around by US on Trade
(AP)

China warned Friday that its critical relationship with the United States could break “like a glass,” and used the most global of stages to warn the Trump administration it wouldn’t be pushed around on trade. Foreign Minister Wang Yi insisted that his country “will not be blackmailed” or bow to pressure. “Protectionism will only hurt oneself, and unilateral moves will bring damage to all,” he told the U.N. General Assembly gathering of world leaders.  President Donald Trump this week cranked up punitive tariffs on China, and Beijing responded in kind, escalating a trade war between the world’s two largest economies. Trump upped the ante by then accusing China of meddling in the upcoming U.S. midterm elections because it opposes his trade policies. He has presented little evidence to back up the allegations, which China says are untrue. Wang, in separate remarks at a think tank, said U.S.-China relationship was at a critical point, four decades since ties were normalized. “The relationship between our two countries is a common asset. It must be preserved and valued. It’s the result of generations of people’s efforts,” Wang said. “It’s like a glass. It’s easy to break it” and would be difficult to repair, he said. Although Wang presented China as upholding multilateral institutions — drawing an implicit contrast with Trump’s anti-globalist stance — Beijing’s top diplomat said the suspicions that China seeks global hegemony and to displace the U.S. as a world leader is false. But he warned it’s an idea that is spreading, amplifying differences between the two countries. “This is a serious strategic misjudgment,” Wang told the Council on Foreign Relations in New York, “that will be extremely detrimental to U.S. interests and the future of the United States.” He said China rather seeks a path of peaceful development. He defended China’s assertive behavior in the South China Sea, where it has built man-made islands to reinforce its sweeping territorial claims that are disputed by its neighbors. He said military facilities on those islands are for defensive purposes to counter military activities by other nations in the area, including the United States. Wang also defended China’s recent participation in military drills with Russia that have added to U.S. anxiety that its key strategic rivals are setting aside historical differences and teaming up against it. He said military-to-military ties are normal to build “mutual understanding.” On human rights, Wang was asked about the reported harsh treatment of Uighur Muslims in China’s far west. He maintained that China had brought law and order to a region once blighted by terrorism. The Trump administration is reportedly considering sanctions in response to members of the religious minority being forced into “re-education” camps on a massive scale. Trump increased tariffs Monday on $200 billion of Chinese goods. Beijing responded by imposing penalties on $60 billion of American products. That was on top of an earlier duty increase by both sides on $50 billion of each other’s goods. The tit-for-tat is fueling anxiety that smaller nations will suffer. “There is a trade war going on between the two most powerful nations, and the rest of the world is feeling the pain,” Malaysian Prime Minister Mahathir Mohamad told the General Assembly on Friday.

Senate GOP agrees to one-week delay on Kavanaugh Supreme Court confirmation to allow for FBI probe

Cornyn: GOP agrees to one-week delay for Kavanaugh FBI probe
Cornyn: GOP agrees to one-week delay for Kavanaugh FBI probe

Senate Republicans have agreed to delay a vote on Supreme Court nominee Brett Kavanaugh’s confirmation for one week to allow for an FBI probe into allegations of sexual misconduct against the judge, according to a statement issued by the Senate Judiciary Committee on Friday. The committee requested that the White House “instruct the FBI to conduct a supplemental FBI background investigation with respect to” Kavanaugh’s nomination, the statement said. The president agreed in short order. In a tweet posted by White House Press Secretary Sarah Huckabee Sanders on Friday afternoon, the president said had ordered a supplemental investigation that would be “limited in scope and completed in less than one week.” The delay means that a floor vote on Kavanaugh’s confirmation, which had been expected for Tuesday, could now happen three days later. Senators will move forward with a procedural vote expected Saturday. In a statement released by the White House Friday afternoon, Kavanaugh said he would “continue to cooperate.”

Senate Majority Whip John Cornyn, R-Texas; Majority Leader Mitch McConnell, R-Ky., and a number of other Republicans huddled in McConnell’s office Friday afternoon to discuss how to proceed on the confirmation following a call from a number of key senators to delay the vote. The president, who has stood by his nominee amid a turbulent confirmation process roiled by accusations of sexual abuse, said Friday that he would be “totally reliant” on Judiciary Committee Chairman Chuck Grassley, R-Iowa.

President Donald Trump speaks during a press conference on September 26, 2018, on the sidelines of the United Nations General Assembly (UNGA) in New York.
President Trump orders supplemental FBI investigation into Kavanaugh
 

“I’m going to rely on all of the people including Senator Grassley, who’s doing a very good job,” Trump said. The Judiciary Committee voted on Friday along party lines to advance Kavanaugh’s nomination to the full Senate, but a dramatic last-minute speech from retiring Sen. Jeff Flake, R-Ariz., thrust the process into chaos. Flake, who earlier announced that he would vote “yes” on Kavanaugh’s confirmation, said at the committee meeting that his floor vote would be contingent on an FBI probe. A number of other senators considered to be swing votes soon followed suit, with Republican Sen. Lisa Murkowski of Alaska and West Virginia Democratic Sen. Joe Manchin signaling their support for Flake’s proposal almost immediately. The delay follows an explosive, nearly nine-hour day of testimony before the Judiciary Committee on Thursday from Kavanaugh and one of his accusers, Christine Blasey Ford. Ford has alleged that Kavanaugh attempted to rape her at a high school gathering that took place more than three decades ago. Kavanaugh has vehemently denied the accusation. The prospect of an FBI probe was contentiously debated at the hearing Thursday. The two top members of the committee sparred over the utility of such an inquiry — as well as if it could even be conducted. Sen. Dianne Feinstein, the top Democrat on the committee, said an FBI probe would be “the best way to ensure a fair process to both Kavanaugh and Ford.” In contrast, Grassley called Democratic demands for the FBI to get involved “consistent with their stated desires to obstruct the Kavanaugh nomination by any means necessary,” and said he had “no authority to force an executive branch agency to conduct an investigation into a matter it considers to be closed.” Ford and Kavanaugh themselves were split on whether the FBI should investigate. While Ford has pushed for the bureau to look into her claims, Kavanaugh has pushed back. He said he wants to do whatever the Judiciary Committee thinks is best.

Global funds raise U.S. stock holdings to three-and-a-half-year high

LONDON (Reuters) – Global investors increased holdings of U.S. equities to their highest since May 2015 in September while reducing their exposure to emerging-market assets, where a majority believe the shake-out still has some way to go.Reuters’ monthly asset allocation poll of 54 wealth managers and chief investment officers in Europe, the United States, Britain and Japan was carried out Sept. 17-28 as the S&P 500 .SPX and Dow Jones .DJI climbed to record peaks. Asset managers boosted their exposure to U.S. stocks by 2 percentage points to 42.7 percent. They trimmed overall equity exposure to 48 percent of their global balanced portfolios. Cedric Baron, head of multi asset at Generali Investments, was among those remaining overweight in U.S. equities because of attractive fundamentals. He cited economic growth — 4 percent in the second quarter — corporate earnings growth, sentiment indicators reaching high levels, and accommodative financing.Investors were unperturbed about the political fallout from Special Counsel Robert Mueller’s investigation of Russian interference in the U.S. 2016 presidential elections, which turned up the heat on President Donald Trump in September.  In late, August Trump warned that the stockmarket would crash if he were impeached. But 88 percent of poll participants who answered a question on this did not expect the market to tumble. Several prefaced said they regarded the probability of impeachment as very low.

“Obviously, starting an impeachment process could lead to increased volatility and an initial stock market correction,” said Frank Haertel, head of asset allocation at Bank J Safra Sarasin. “However, a new president could also bring significant upside potential.”

Investors raised their European equity exposure by 1.5 percentage points to 19.5 percent, a four-month high. Pascal Blanque, group chief investment officer of Amundi, said the segment had not been in favor to the same extent as U.S. shares but had become more attractive as valuations got cheaper. European equities look set to end the quarter up around 1.4 percent, compared with gains of over 7 percent for the S&P 500 and almost 9 percent for the Dow Jones.Conversely, emerging markets were regarded with caution. Equities were cut by half a percentage point to 10.5 percent, while emerging-market debt fell to 9.4 percent from August’s 10.2 percent.  The segment had another turbulent month with equities .MSCIEF hitting a 15-month low and currencies such as the Indian rupee INR= and Indonesian rupiah IDR= reaching record or multi-year lows.

Year-to-date, emerging-market equities are down 9.4 percent, while the Turkish lira TRY= has fallen around 37 percent versus the dollar and Argentina’s peso ARS= over 50 percent.

Some 59 percent of poll participants who answered a question on this topic said emerging markets were only in the middle of the meltdown, with a more optimistic 32 percent saying they were nearing the end.

Standard & Poor’s Corp2918.48
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+4.48(+0.15%) Some 60 percent of poll participants who answered a question on Brexit said they did not expect Britain and the European Union to agree a post-Brexit trading agreement by November. “Mrs May is facing strong internal opposition from a large number of Conservative MPs. This reduces her room of maneuver, and we see a serious risk of early elections in the UK,” said Nuno Teixeira, head of cross asset investments at Natixis Investment Managers International.

Italy hikes deficit goal, defies EU and rattles markets

FILE PHOTO: Italian Economy Minister Giovanni Tria attends as Prime Minister Giuseppe Conte (unseen) speaks during his first session at the Lower House of the Parliament in Rome, Italy, June 6, 2018. REUTERS/Tony Gentile/File Phot

ROME (Reuters) – Italy’s new government proposed a 2019 budget with a deficit three times bigger than the previous administration’s target, setting up a clash with the European Commission and sparking a sell-off of state bonds. Italy has the heaviest debt burden among big European Union economies, at 130 percent of gross domestic product. It is under pressure from the EU to rein in spending amid fears it could sow the seeds of a debt crisis in the heart of the euro zone. The four-month-old government late on Thursday night offered a budget with a deficit of 2.4 percent of GDP for the next three years, to fund a major expansion of welfare spending, tax cuts and a boost to public infrastructure investment. It marked a victory for ruling-party chiefs over Economy Minister Giovanni Tria, an unaffiliated technocrat who had been seen by investors as a comparative fiscal conservative. Tria had initially wanted a deficit set as low as 1.6 percent next year, hoping to respect European Union demands that Italy progressively cut the fiscal gap to rein in its debt. The euro slumped on the news overnight before recovering ground. Italian bonds were set for their worst day in over three months, and banking shares also swooned, though fears of a savage selloff were avoided.

“They seem to be on a collision course with Brussels,” said ING rates strategist Martin van Vliet.

European Economics Commissioner Pierre Moscovici said nothing would be gained from a clash with Italy but added: “We don’t have any interest either that Italy does not respect the rules and does not reduce its debt, which remains explosive.” The coalition government of the 5-Star Movement and the League, which took power in June, had been pushing for a deficit around 2.4 percent of GDP to fund costly campaign promises. Tria had been trying to hold out for something below 2.0 percent. “There is an accord within the whole government for 2.4 percent, we are satisfied, this is a budget for change,” 5-Star leader Luigi Di Maio and League chief Matteo Salvini said in a joint statement after meetings with Tria. The statement appeared to refer only to the 2019 deficit target, but government officials and Justice Minister Alfonso Bonafede later said the same deficit level would be maintained for three straight years to 2021. The policy marks a striking shift from the previous centre-left administration, which had targeted a deficit of 0.8 percent of GDP in 2019 and a balanced budget in 2020. “Today is a historic day, today Italy has changed,” Di Maio posted on Facebook after the deficit goals were announced. Di Maio said the 2019 budget, which must be presented by Oct. 20, will set aside 10 billion euros ($11.6 billion) for 5-Star’s flagship policy of a “citizens’ income” of up to 780 euros per month for 6.5 million poor Italians. Salvini said the budget would also allow people to retire earlier, freeing up about 400,000 jobs for the young, and cut tax rates for a million self-employed workers. And in a sign of rising tensions between Rome and Brussels over the budget, a League lawmaker close to Salvini said on Friday that the EU should not risk a battle with Italy while also struggling to deal with Britain’s exit from the bloc.

Brett Kavanaugh accuser releases polygraph showing ‘no deception’ in her account of assault

Verified photos of Christine Blasey Ford who has accused Supreme Court nominee Brett Kavanaugh of sexual assault. 
Verified photos of Christine Blasey Ford who has accused Supreme Court nominee Brett Kavanaugh of sexual assault.

Attorneys for Christine Blasey Ford, who alleges that Supreme Court nominee Brett Kavanaugh sexually assaulted her in the early 1980s, released the results on Wednesday of a polygraph test their client took in early August, before her allegations became public. The test was administered to gauge the truthfulness of Ford’s account of the alleged attack, which she says happened when she was 15 and Kavanaugh was 17. The results, which were analyzed using three separate analytical methods, all indicated that Ford is telling the truth. Ford and Kavanaugh are both scheduled to testify about the alleged assault before the Senate Judiciary Committee on Thursday. Ford’s polygraph test was administered by Jeremiah Hanafin, a certified polygraph examiner whose professional resume indicates that he spent nearly 20 years as a special agent in the FBI. According to Hanafin’s report, Ford described her account of the night she says Kavanaugh locked her in a room, pinned her down on a bed and attempted to take her clothes off at a suburban Maryland house party. She also alleged that Kavanaugh covered her mouth with his hand and that “this act was the most terrifying for her.” According to the report, Ford said that Kavanaugh and his close friend, Mark Judge were both in the room at the time of the assault, and that they were both laughing. Ford said she only escaped when Judge jumped on top of her and Kavanaugh, and they all fell to the ground. She also said the experience left her with lasting emotional trauma. Kavanaugh has denied Ford’s allegation, as well as accusations by two other women that have emerged in the past week. One woman, Deborah Ramirez, claims that Kavanaugh aggressively exposed himself to her in college. A third woman, Julie Swetnick, said Wednesday in a sworn statement that she witnessed Kavanaugh and Judge deliberately giving young women at parties alcohol and drugs in quantities designed to incapacitate them, after which, she alleged, the women were gang raped. Ford’s polygraph test is the latest document to be released by her attorneys ahead of her testimony Thursday. Earlier in the day Wednesday, the Senate Judiciary Committee received four sworn statements from people close to Ford, who all said she had told them of the assault, prior to Kavanaugh’s nomination to the Supreme Court

A robot that can peel lettuce takes us closer to automating delicate farm work

Machines are still learning to be as dextrous as human hands

Photo by John Moore/Getty Images 

There are lots of barriers to automating agricultural work. The cost of robots is one and the difficulty of integrating them into supply chains is another. But a particularly big stumbling block is just how clumsy machine labor can be. That’s why new research from Cambridge University showing a robot that can peel a lettuce is a small but significant step forward. Harvesting lettuces is time-consuming work. The vegetables grow close to the ground, have to be cut from their roots by hand, and the outer layers peeled off before packaging. There are automated solutions that help speed up this process up (one machines drops lettuce heads into bags; another cuts multiple heads at a time) but they only take care of part of the harvest. It still requires nimble human hands to do some of the work. This new research from Cambridge University’s Department of Engineering shows that robots might take over soon though. In the video below, you can see a modified Sawyer bot picking the outer leaves off a head of lettuce. It’s slow but it does the job.

Interestingly, unlike other work we’ve seen improving robot dexterity, this doesn’t rely on any research breakthroughs per se, but instead combines existing robotics and AI elements into a new pipeline. Machine vision algorithms are used to identify the stem of the lettuce; a robot arm nudges it into the correct position if its off-center; and a 3D-printed suction nozzle then peels off the outer layer of leaves. The team behind the solution, which is described in an aptly named paper “Achieving Robotically Peeled Lettuce,” say this system could also work for other vegetables. “Lettuce leaf peeling is an interesting robotics problem from an engineering perspective because the leaves are soft, they tear easily and the shape of the lettuce is never a given,” said Cambridge University’s Luca Scimeca in a press statement. “The computer vision we have developed, which lies at the heart of our lettuce peeling robot, can be applied to many other crops, such as cauliflower, where similar information would be required for the post-processing of the produce.” However, this robot is still going to need some upgrades before it hits the fields. It’s slow, taking 27 seconds to peel each lettuce (compared to just a few seconds for a human) and sloppy (it successfully removes the outer shell only 50 percent of the time). Still, the future is coming, and faster than ever.

Only one in five adults want Rosenstein to leave: Reuters/Ipsos poll

Deputy U.S. Attorney General Rod Rosenstein speaks during the Bureau of Justice Assistance’s rollout for the “Fentanyl: The Real Deal” training video in Washington, U.S., August 30, 2018. REUTERS/Chris Wattie

NEW YORK (Reuters) – Americans are largely supportive of the Department of Justice official overseeing the special counsel investigating the 2016 campaign of President Donald Trump, a Reuters/Ipsos poll found. Those wanting U.S. Deputy Attorney General Rod Rosenstein to stay outnumber those who want him out by a margin of almost two-to-one. The Sept. 25-26 poll, released on Wednesday, found that 42 percent of adults agree that Rosenstein should “keep his job.” That compares with 22 percent who said they disagree, and another 35 percent who said they “don’t know.” Rosenstein has been in Trump’s crosshairs ever since he appointed former FBI Director Robert Mueller to investigate Russian interference in the 2016 presidential election. The probe, which Trump has frequently labeled a “witch hunt,” has resulted in more than 30 indictments and six guilty pleas so far. On Monday, some news organizations reported Rosenstein was out of the job after a report in the New York Times had said he suggested secretly recording Trump. That was not the case, but Trump later said that he had not decided what to do about Rosenstein. Rosenstein is expected to meet on Thursday with Trump to discuss his future at the Justice Department. It is unclear who would take over as Mueller’s supervisor if Rosenstein leaves. The poll also found that while the public is split along party lines regarding Mueller — two-thirds of Democrats have a favorable impression of the special counsel and two-thirds of Republicans have an unfavorable impression of him — a slight majority want an independent investigation to continue. If Mueller “were to be terminated or resign,” 51 percent said an independent investigation should continue, while 24 percent said it should not. The Reuters/Ipsos poll was conducted online, in English, throughout the United States. It gathered responses from 1,187 adults, including 441 Democrats and 383 Republicans. The poll has a credibility interval, a measure of precision, of about 3 percentage points.

Stock investors not only buy the most at market tops but pay more, too

What kind of irrationality causes investors to accept exorbitant prices for active management?

Getty Images

Most “rational” people will prefer more money to less money. Accordingly, they will prefer to gain more monetary value rather than less from what they buy, and they will prefer to pay less for what they buy rather than more. Except when it comes to their investment decisions. Low-cost indexed investment management has gained strength at a great rate in recent years. Yet much-higher-cost active management still claims the majority of investors’ assets.  Repeated studies have shown that as much as 97% to 99% of active equity managers underperform passive stock market indexes. Therefore, they provide investors with less monetary value than passive, indexed investment management. On the cost side, the cost for active management can be as much as 40 or more times the cost of passively managed index funds. With fees like that, over an investor’s lifetime the investor can lose as much as a third- to a half of her wealth to fees. How could any rational investor — one who prefers more value in the investment product purchased to less, and lower cost to higher cost — possibly choose active fund management over passive management? Heaton and Pennington use methods developed by Nobel Prize-winning psychologist Daniel Kahneman and his late colleague Amos Tversky to research investor irrationality. Their starting point is to posit that investors suffer from what is called the “conjunction fallacy.” The conjunction fallacy is an apparent failure of logic, represented by the following example: Which of these two possibilities do you think is more likely?

A.  Johnny gets an “A” on his final exam.

B.  Johnny studies hard and gets an “A” on his final exam.

Most people will answer that B is the more likely. But this is a fallacy, because option A includes the possibility that Johnny didn’t need to study hard to get an “A” and didn’t study hard, while option B doesn’t include that possibility and is therefore less likely. However, people are so used to conjoining “studying hard” with “getting an A” that they don’t see their logical error. To fit this line of inquiry to the investment management area, Heaton and Pennington posed the following question to experimental subjects: ABC Fund invests in common stocks listed on U.S. stock exchanges.

Which is more likely?

1. ABC Fund will earn a good return this year for its investors.

2. ABC Fund will earn a good return this year for its investors, and ABC Fund employs investment analysts who work hard to identify the best stocks for ABC Fund to invest in.

From this, Heaton and Pennington conclude that investors choose active management because they adamantly believe that hard work and a high level of competence must surely be rewarded with good results — even if the evidence shows otherwise. Many active managers, when questioned by clients or prospects about their high fees, will invoke the “brain surgeon” analogy. They will say, “If you need brain surgery would you choose the lowest-cost brain surgeon?” This rejoinder has been proven to work time and time again, because, as Heaton and Pennington would argue, the clients believe that in a just world, “hard-working experts should produce superior outcomes.” Therefore, they should be paid more, even if — bewilderingly and incredibly — the statistics plainly show that they do not produce superior outcomes.

Trump postpones meeting with Rosenstein until next week

Meeting between Trump and Deputy AG Rosenstein rescheduled
Meeting between Trump and Deputy AG Rosenstein rescheduled
President Donald Trump postponed a scheduled meeting with Deputy Attorney General Rod Rosenstein on Thursday, in order to not distract from congressional hearings for his Supreme Court nominee, Brett Kavana “The president spoke with Rod Rosenstein a few minutes ago and they plan to meet next week,” press secretary Sarah Sanders told reporters. “They do not want to do anything to interfere with the hearing.” The White House said earlier this week that the purpose of Trump and Rosenstein’s meeting would be to discuss the deputy attorney general’s future at the Justice Department, amid conflicting reports Monday that Rosenstein was either planning to resign or expecting to be fired. By midweek, however, Trump appeared to have moved away from the idea of firing Rosenstein. “My preference would be to keep him,” Trump said at a press conference Wednesday afternoon in New York. “I would certainly prefer not” firing him. Rosenstein’s position at the Justice Department is more visible than those of other officials because he is charged with overseeing the special counsel’s Russia probe. Attorney General Jeff Sessions has recused himself from the investigation. Trump has effectively gone to war against his own Justice Department in the past year, primarily over the Russia probe, which is run by former FBI director Robert Mueller. But the president is equally furious over what he sees as a failure by the department to protect him and his allies, and to pursue his political enemies

CEOs are cashing in on the market boom

Insiders at US companies have dumped $5.7 billion of stock this month, the highest in any September over the past decade, according to an analysis of regulatory filings by TrimTabs Investment Research. It’s not a new trend. Insiders, which include corporate officers and directors, sold shares in August at the fastest pace in 10 years as well, TrimTabs said. The selling is noteworthy because it occurred as the market rebounded sharply from an early 2018 tumble. Fueled by tax cuts and a strong economy, the Dow recently notched its first record high since January.  Some corporate insiders have much of their net worth tied up in stock, so it could be that they are simply exercising caution. The bull market, already the longest history, can’t last forever. “It’s a very prudent thing for them to unload some shares — no matter how much they like the stock,” said Joe Saluzzi, co-partner at brokerage firm Themis Trading. “It doesn’t necessarily mean they see something wrong.” TrimTabs does not break down how many of the insider sales were pre-planned. The SEC allows executives to schedule stock sales ahead of time to avoid the appearance of insider trading While the captains of Corporate America are cashing out, they are doing the exact opposite with shareholder money.

US public companies have authorized a stunning $827.4 billion of stock buybacks in 2018 — already a record for any year, according to TrimTabs. Apple (AAPL) alone announced plans last quarter for $100 billion of buybacks.

The flurry of buybacks has been viewed by investors as a sign of confidence among CEOs. “Insiders aren’t announcing buybacks because they think stocks are cheap,” said David Santschi, director of liquidity research at TrimTabs. “What they’re doing with shareholders’ money and their own is quite different.”number of shares outstanding. Corporate America is enjoying record profitability thanks to the strong economy and a big reduction in what they owe Uncle Sam. The Republican tax law reduced the corporate tax rate to 21% from 35% and also gave companies a break on foreign profits that are returned to the United States. The tax windfall has also enabled companies to spend more on job-creating investments like new equipment and research projects. But buybacks are growing even faster. In fact, Goldman Sachs found that buybacks are garnering the largest share of cash spending by S&P 500 companies for the first time in a decade.

chart buybacks capital spending

Given the spike in buybacks, Saluzzi said it would be odd if insiders are rapidly dumping shares outside of preplanned transactions. “You’ve got to raise your eyebrows and look at what’s going on here,” Saluzzi said.

Fed lifts U.S. rates by quarter percentage point

NEW YORK (Reuters) – The U.S. Federal Reserve raised interest rates on Wednesday, as expected, and left its monetary policy outlook for the coming years largely unchanged amid steady economic growth and a strong job market. In a policy statement that marked the end of the era of “accommodative” monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent. It still foresees another rate hike in December, three more next year, and one increase in 2020 “They took out ‘accommodative,’ but then they clustered more hikes around the median and they edged up their long term, so that’s a little bit hawkish. The question who focuses on what – you never know. “I found that the reactions post-the FOMC are important. And what the market seems to be doing to me is correct, which is the curve is flattening because the Fed is going to hike more than what’s priced into the forward. You might see equities wobble a bit here because I don’t think they got the joke that the Fed’s going to keep going and when that happens, they break something. “Additionally, the removal o the “accommodative” language on policy sent a somewhat hawkish message to financial markets—as this was offset by expectations for stronger growth in 2018 and 2019.

“It was also quite obvious, without them saying it, that they rejected President Trump’s request for them to stop raising interest rates which is their right as an independent Board as well as it is President Trump’s right, in my opinion, to express his reservations.

“One thing here seems clear to me. The government of the United States, as exemplified by the Jobs Cuts and Tax Bill, is trying to grow the economy while the Federal Reserve Bank, is actually trying to slow it down by raising rates, which increases the costs of both corporate and personal borrowing, as well as mortgage rates. “It is quite odd, in my view, that our elected government is going off in one direction while the nation’s central bank is headed off in the opposite direction. It seems that we are at an impasse here and I wonder just how long it can or will continue.”

Study Finds Link Between Bee Deaths and Roundup

honey bees
Klaus Nowottnick/picture-alliance/dpa/AP Image By Jason Devaney

A new study found a definitive link between weed killers and the death of bees worldwide. Researchers at the University of Texas in Austin looked at potential causes of bee deaths, a phenomenon that has been extensively written about in recent years, and discovered that the active ingredient in Roundup could be the culprit. Glyphosate, according to the study, can disrupt a bee’s gut bacteria and make it more susceptible to contracting pathogens that can eventually lead to its death. “We need better guidelines for glyphosate use, especially regarding bee exposure, because right now the guidelines assume bees are not harmed by the herbicide,” graduate student Erick Motta, who co-led the bee study, told Phys.org. “Our study shows that’s not true.” Bee deaths have been reported on over the last several years as scientists tried to determine what is causing massive die-offs in hives. Experts believe the chemicals in pesticides and herbicides are the likely culprits. The Obama White House even said in 2015 that tighter restrictions on pesticides might be necessary to save honeybees, which pollinate plants and produce honey.

Democrats have leads in Rust Belt states that Trump won: Reuters poll

FILE PHOTO: A combination photo shows L-R: U.S. Senator Joe Donnelly (D-IN), Wisconsin Governor Scott Walker, Ohio gubernatorial candidates; Republican Mike DeWine and Democrat Richard Cordray, all running in 2018 races in one of five states that President Donald Trump carried in 2016, from Reuters files. REUTERS/File Photo

NEW YORK (Reuters) – An Indiana U.S. Senator seen as one of the chamber’s most vulnerable Democrats has a slight edge while four of his Rust Belt Democratic colleagues have solid leads in states President Donald Trump won in 2016, a Reuters poll found. A Reuters/Ipsos/UVA Center for Politics Poll released on Wednesday found that a majority of likely voters in Pennsylvania, Wisconsin, Ohio, Michigan and Indiana disapprove of the Republican president and more than one-third were “very motivated” to back someone who would oppose his policies. The poll found that Senator Joe Donnelly of Indiana has a 3 percentage point lead among likely voters over Republican businessman Mike Braun. Braun, a former state representative, has positioned himself as a Trump-like candidate who would bring an outsider’s perspective to politics in Vice President Mike Pence’s home state. Democrats are aiming to win two more Senate seats in the Nov. 6 congressional election to take a majority in that chamber and serve as a check on Trump’s agenda. They can ill afford to lose any of the five seats covered by the poll. Trump won the five states after pitching himself as a business-savvy pragmatist who would improve the lives of working class Americans. Two years later, more than half of likely voters in those states think the country is now on the “wrong track,” the poll found. “There are lots of places in this region where economic opportunity has been stifled,” said Kyle Kondik, a political analyst at the Center for Politics. Kondik said the Rust Belt frequently shifts its support between parties, in some cases because voters who are frustrated with the lack of economic progress come to the ballot box intent on checking the party in power. This year Democrats have the added advantage of being able to attack an unpopular president as well as Republicans’ deficit-increasing tax plan and their failed effort to dismantle the Affordable Care Act, better known as Obamacare, he said. The state polls were conducted online, in English, from Sept. 12 to Sept. 21. They surveyed between 1,074 and 1,181 likely voters in each of five states and weighted the responses according to the latest government population estimates. The polls each have a credibility interval, a measure of precision, of about 3 percentage points, meaning the results could vary in either direction by that much. The results measured how voters felt at the time of the survey. Those feelings may change: In 2016, one in eight Americans said they made their presidential pick in the week before Election Day, according to a Reuters/Ipsos poll.

Pentagon Innovation Leader Warns U.S. Falling Behind China

Michael Brown
(CQ Roll Call via AP Images) By Theodore Bunker

The head of the Pentagon’s Defense Innovation Unit, Michael Brown, has warned that China is outpacing the United States in military development, Defense One reports.Brown, the former CEO of Symantec, co-wrote a paper published last year that analyzed how Chinese investment has affected American technological development. In a recent interview with Defense One, he explained how many people in Silicon Valley and other American technology hubs fail to grasp the importance of the “race” to develop new technology. “While the report is being used as, ‘here’s the justification for … protectionist steps’—And we aren’t arguing against taking any protective steps, because you can’t leave the barn door wide open—the Chinese are a near peer competitor economically,” he said. “They’re quite creative at inventing now. They aren’t just copying technology. We’re in a race and so what are we going to do as a country to deal with that? It has to include what we’re doing protectively on the investment side.” “The Chinese government has taken control of resources to be able to pull what they call their business or commercial sector, which we point out is government-controlled, unlike our own,” Brown said. “So they’re pulling all of those resources together to make technological breakthroughs and really advance science and technology in their own country. [In the paper] we point out that we’ve been the victims of cyber theft and industrial espionage on a much broader scale than any other country has ever perpetrated against the U.S.”

BREAKING: Michael Avenatti Reveals Client Making ‘Gang Rape’ Allegation Against Kavanaugh

Attorney for Stormy Daniels, Michael Avenatti, earlier this week, claimed to have a client with a third allegation against Supreme Court nominee Brett Kavanaugh. He made the announcement, and tweeted lurid accusations, without offering the identity of the client or any evidence. Today, Avenatti tweeted a name and photo of that client, along with a sworn statement from the alleged victim laying out her serious allegations.

In the statement, Julie Swetnick, a current government employee, alleges Kavanaugh and his friend Mark Judge attended a party where she was drugged and gang raped by a series of boys. While she does not accuse Kavanaugh of assaulting her, she claims she witnessed him participate in the gang rapes. In his tweet that included the screenshots, Avenatti asserted that Kavanaugh’s nomination must not go forward without more investigation of the claims.

Paragraph 13 of the sworn statement (below) has the specific personal allegation.

In approximately 1982, I became the victim of one of these “gang” or “train” rapes where Mark Judge and Brett Kavanaugh were present. Shortly after the incident, I shared what had transpired with at least two other people. During the incident, I was incapacitated without my consent and unable to fight off the boys raping me. I believe I was drugged using Quaaludes or something similar placed in what I was drinking.”

Davis’ statement (below) also alleges that she witnessed Kavanaugh waiting in a rape line for his “turn” in the gang rape of another woman, whom they allegedly incapacitated.

I also witnessed efforts by Mark Judge, Brett Kavanaugh and others to cause girls to become inebriated and disoriented so they could then be “gang raped” in a side room or bedroom by a “train” of numerous boys. I have a firm recollection of seeing boys lined up outside rooms at many of these parties waiting for their “turn” with a girl inside the room. These boys included Mark Judge and Brett Kavanaugh.”

Below are the images of the statement shared by Avenatti.

[Featured image via Getty Images]

Fed to Raise Rates by 1/4 of ONE and Still Not DONE

Jerome Powell, chairman of the U.S. Federal Reserve, reacts to a question during a House Financial Services Committee hearing in Washington, D.C., on Wednesday, July 18, 2018. 
Andrew Harrer | Bloomberg | Getty Images Jerome Powell, chairman of the U.S. Federal Reserve, reacts to a question during a House Financial Services Committee hearing in Washington, D.C., on Wednesday, July 18, 2018.

The Fed is expected to raise interest rates by a quarter point Wednesday and indicate it plans to keep hiking them in what many expect to be a hawkish message for markets. Wall Street economists expect the Fed to make a number of changes that reinforces a hawkish tone, including raising its growth forecasts, dropping language that says its policy is accommodative and sounding more confident about the outlook. The Fed releases its statement and revised economic and interest rate forecasts at 2 p.m. ET Wednesday, and Fed Chairman Jerome Powell holds a briefing at 2:30 p.m. Ahead of the meeting, the 2-year Treasury note yield Tuesday rose to 2.84 percent, its highest level since 2008. The 2-year most reflects Fed policy but the 10-year was also moving higher, touching just below its year high of 3.12 percent Tuesday.

Rising rates fail to deliver big bank rally, market watchers say
Rising rates fail to deliver big bank rally, market watchers say

“I think there’s one very key thing we have to watch…which is they increase their long-term growth forecast. Currently it’s 1.8 percent,” said Jim Caron, portfolio manager at Morgan Stanley Investment Management. “If they take it up to 1.9 percent, that’s a pretty important signal.” A higher longer term growth rate is both hawkish and bullish. It means the Fed is also likely to raise its near term forecasts, but it also means it sees a sustainable higher pace of growth for the economy, implying higher corporate earnings growth. Mark Cabana, head of U.S. short rate strategy at Bank of America Merrill Lynch, also expects the Fed to boost its growth forecasts, for the near term and the longer term. “I don’t think the Fed is going to come out and sound like they’re on the war path to raising rates. I think they’re going to sound more measured— ‘the data has been strong, and we’re more confident in our forecast,'” said Cabana. Cabana said he expects the Fed to “sound more confident in the outlook, more confident to keep going the way they have been going, and I think the market will probably not be sorry it’s pricing in ongoing rate increases from the Fed.” He said the market is now pricing two hikes for next year, nearly double what it was expecting just several weeks ago. “It’s just a fact the data in the U.S. continues to be strong. Some of the worst fears over trade were not realized,” he said. He expects the Fed will keep its forecast of four hikes for this year, three for next, one for 2020, and in a new forecast, add about a half a hike in 2021. That would bring the fed funds rate to 3.50 percent.

Savings rates still lag as Fed readies eighth increase of the cycle

The average rate on a 12-month CD is not even a half point
Reuters Federal Reserve Chairman Jerome Powell

When the Federal Reserve had interest rates near zero, critics in Congress and on Wall Street would argue that the central bank was waging a “war on savers.” Few are making that argument now that the Fed has increased interest rates seven times, and on Wednesday the central bank is due to make its eighth increase. Yet savers effectively have seen just one rate increase. According to RateWatch, the average rate that savers get on a benchmark $10,000 minimum, 12-month certificate of deposit was just 0.43% in August. Meanwhile, the federal funds rate was 1.91%, and is expected to head higher on Wednesday when the Federal Open Market Committee meets.

Federal Reserve Chairman Jerome Powell back in February acknowledged that retail deposit rates were “sticky” on the way up. “They generally come up with a lag,” he told the House Financial Services Committee. Banks have profited. Net interest income in the second quarter rose 9% to $134.1 billion, with 85% of banks reporting year-over-year increases, the Federal Deposit Insurance Corp. reported. Net interest margins rose to 3.38%, a six-year high. It’s not always the case that depositors fare worse. Particularly during the recession, banks kept savings rates high since funding was scarce.

Stock investors should be wary of consumer confidence at an 18-year high

High levels of confidence tend to be followed by weak market returns
Courtesy Everett Collection

U.S. consumers are feeling very good about the economy, but history suggests that may ultimately lead to investor disappointment. Multiple reads of confidence have come in extremely strong lately, and while many view this as an optimistic sign for spending and demand, many market watchers also see it as a contrarian signal, one that suggests a complacency building in the market. That dynamic, in turn, could signal tepid future returns. On Tuesday, the Conference Board’s consumer confidence index jumped to its highest level in 18 years, signaling a level of optimism that is near all-time highs. That comes on the heels of a reading of small-business sentiment, which hit a record in August. And as pointed out by Liz Ann Sonders, the chief investment strategist at Charles Schwab, a Gallup poll showed that the percentage of Americans who see economic issues as their biggest problem “is at the lowest level in decades.”

Previous lows on with this poll question have occurred near market peaks, including in the late 1990s and before the financial crisis.

According to Charlie Bilello, director of research at Pension Partners, high levels of confidence tend to be followed by “below-average returns and a lower probability of a positive return” going forward. “When there’s good news in the economy (high consumer confidence), investors are willing to pay a higher multiple for a given level of earnings than when there’s bad news (lower consumer confidence),” he wrote in a blog post published in August. “That’s important when it comes to stocks because higher valuations tend to be associated with below average forward returns.” Per Bilello’s data, when consumer confidence readings are in the top decile, the average forward return for the S&P 500 SPX, -0.13%   over the coming year is 3.8%. When confidence is in its lowest decile—meaning consumers are at their least confident about the market—the average return is significantly higher, at 19.3%. Overall, the average return is 12.2%. When confidence is low, that tends to be following by strong gains for an extended period. According the data, investors have historically seen double-digit returns every year for seven years (on an annualized basis) following weak confidence readings. Furthermore, there is an extremely high likelihood of positive returns following low confidence readings. On the other hand, when confidence is high, as it is now, returns are slightly negative on a two-year, three-year, and four-year basis. In addition, there is a greater-than-even chance of negative returns in the subsequent years, as demonstrated by the table below.

Courtesy Pnesion Partners

Torsten Sløk, chief international economist at Deutsche Bank Securities, recently wrote that confidence was “at levels normally indicating a recession is imminent.” On a related note, strategists at JPMorgan Chase & Co. recently wrote that the current strength of the economy and stock market could embolden President Donald Trump on geopolitical issues, risking “a major miscalculation from sanctions that are tough to calibrate.” While consumers are extremely optimistic about the economy, many on Wall Street aren’t, or, at least, they are unabashedly euphoric. According to the latest survey of investor sentiment by the American Association of Individual Investors, the number of investors who describe themselves as bullish on the market—meaning they expect prices will be higher in six months—is below the historical average.

The Fed has a lot to talk about besides higher interest rates

Presidential influence. A trade war with China. Rising interest rates. Recession-proofing of US banks.
Those are just some of the topics Federal Reserve Chairman Jerome Powell is likely to face at a press conference on Wednesday after the Federal Open Market Committee concludes its two-day policy-setting meeting.

Policymakers gathered in Washington this week are expected to raise the benchmark interest rate by a quarter of a percentage point for the third time this year, to a range of 2% to 2.25%. The rate hike is widely expected by investors. What’s not as well known is how the Fed is contending with risks to economic growth, including the ballooning trade war and rising oil prices, or with President Donald Trump’s desire to keep rates low. What’s more, in recent weeks, Fed officials have appeared publicly divided on how fast the Fed will need to act next year and beyond. The central bank has penciled in a fourth rate hike later this year, then three more in 2019 and one in 2020. Analysts will be watching for any possible changes when policymakers update their forecast on Wednesday. All eyes will be on Powell, who will have an opportunity to respond publicly to Trump’s criticisms about the Fed’s policies. Over the summer, the president took the rare step of repeatedly going after his Fed chair, who he said was undermining America’s competitive edge against China by raising interest rates. Since Trump took office, the Fed has raised rates five times, including twice this year under Powell. The Fed is gradually raising rates as the economy gains strength.

“I’m not thrilled with his raising of interest rates, no. I’m not thrilled,” Trump, who appointed Powell to lead the central bank, said during an interview with Reuters in August. “I should be given some help by the Fed.

Presidents have historically avoided commenting on the Fed’s policies. The central bank is designed to be independent from political interference. The Fed hasn’t commented on the president’s criticism. But Powell expressed a deep commitment to the central bank’s independence during an interview with American Public Media’s “Marketplace” radio show in July. Fed officials are already worried about how the trade war may affect the US economy. But as tensions rise, how is the Fed calculating and planning for those risks and uncertainties? That’s the question investors want answered. Policymakers have said a “major escalation” of trade disputes could speed inflation and cause businesses to pull back on investments, according to minutes of their July meeting. Such turmoil, participants noted, could reduce household spending and disrupt companies’ supply chains. So far, Powell has been publicly cautious about the impact that trade tensions could have on wages and capital spending. “We don’t see it in the numbers yet, but we’ve heard a rising chorus of concern” about businesses scaling back plans for capital spending, Powell told lawmakers in July. He also said it’s challenging to forecast the economic impact. Since Powell said that, the Trump administration has followed through on its threats to impose a 10% tariff on $200 billion in Chinese goods, on top of other tariffs levied on China earlier this year. The most recent level is set to rise next year to 25% if the trade impasse is not resolved. Efforts to restart talks between the world’s two largest economies have also waned, adding to uncertainty about how long the trade fight will continue. Some officials, like Fed Governor Lael Brainard, have argued that the recent tax cuts and a spike in government spending will further heat the economy and require higher interest rates over the next year or two. In August, Powell defended the Fed’s strategy of raising rates gradually at a conference in Wyoming. He said it keeps the economy on even keel, as long as inflation is stable and unemployment continues to fall. For the first time, Fed officials are also weighing whether to trigger a mechanism that would require banks to hold even more capital as a buffer against a financial calamity. The regulatory tool, created under the 2010 Dodd-Frank Act, requires banks to pad their balance sheets with additional capital during good economic times to help soften the fallout in periods of hardship. It’s never been used before, and banks don’t want to see it take effect. But Fed officials are debating whether to push forward to lessen the likelihood of another financial crisis.

PM May – No-deal Brexit better than current EU offer

NEW YORK (Reuters) – Prime Minister Theresa May signalled on Tuesday that she would prefer a ‘no-deal’ Brexit to the offer currently put forward by the European Union, stressing that Britain needs to see counter-proposals from the EU to move Brexit negotiations forward. Britain’s Prime Minister Theresa May makes a statement on Brexit negotiations with the European Union at Number 10 Downing Street, London September 21, 2018 . Jack Taylor/Pool via Reuters May last week issued an angry edict to Brussels when a summit of EU leaders which had been billed as a chance to generate momentum towards a deal in October or November ended in a blunt dismissal of British proposals. “I’ve always said no deal is better than a bad deal,” May told reporters. “I think a bad deal would be a deal that broke up the United Kingdom,” May said when asked whether a no-deal Brexit was better than one similar to the existing Canada-EU trade deal. Her spokesman said later that May was specifically referring to the type of deal the EU is currently offering on future trade, which Britain believes will split England, Wales and Scotland from Northern Ireland by insisting Northern Ireland adhere to different customs rules. Her position also effectively rules out alternative Brexit proposals put forward by rebel eurosceptic members of her own party, which are based on a wide-ranging free trade agreement similar to that agreed between the EU and Canada. Speaking to reporters on her way to New York to attend the United Nations General Assembly, May said she welcomed comments from European Council President Donald Tusk that the bloc still wanted to strike a deal, but added that the onus was still on the EU to break the deadlock on Chequers. “If they have concerns, they need to detail those concerns to us and if they have counter-proposals, let’s hear the counter proposals and then we can discuss those,” she said. May said the opposition Labour Party’s Brexit plans were not in the national interest after Labour’s Brexit policy chief said the party was likely to vote against any deal she reaches with the European Union. Even if May is able to secure a deal on Brexit with Brussels, it is far from certain she will be able to get the terms approved by parliament. In addition to Labour lawmakers, many in her own party also disagree with her exit plans. If she loses a vote, May has said Britain will leave the EU without a deal. But, in the likely chaos around a parliamentary defeat she could also face a leadership challenge, calls for a new national election, and even a second Brexit referendum. “I still do believe that we can get a good deal … at that point all members of parliament will have a clear choice,” she said. “They’ll have to recognise, looking at their vote, that what we’re doing is delivering on the vote of the referendum, delivering on the vote of the British people.”

Trump, Deputy Attorney General Rosenstein to meet on Thursday

(Reuters) – President Donald Trump and U.S. Deputy Attorney General Rod Rosenstein, who oversees the special counsel investigation into Russia’s role in the 2016 presidential election, will meet on Thursday to discuss Rosenstein’s future.

A source told Reuters that Rosenstein had spent the weekend contemplating whether he should resign after a New York Times report last week said he had suggested secretly recording Trump in 2017. The White House announced the meeting on Monday after a flurry of conflicting reports about whether Rosenstein, a frequent target of Trump’s anger, would be leaving the post. “At the request of Deputy Attorney General Rod Rosenstein, he and President Trump had an extended conversation to discuss the recent news stories,” White House spokeswoman Sarah Sanders said on Twitter. She said the meeting will be on Thursday because Trump was at the U.N. General Assembly on Monday and has meetings with world leaders later in the week. The Rosenstein furor, kicked off by unconfirmed reports that he had verbally resigned, underscored the mounting tension in the White House over the investigation by special counsel Robert Mueller into Russia’s role in the 2016 presidential election. There had been widespread speculation that Trump would fire Rosenstein since Friday when a New York Times report said that in 2017 Rosenstein had suggested secretly recording the president and recruiting Cabinet members to invoke a constitutional amendment to remove him from office.The Times said none of those proposals came to fruition. Rosenstein denied the report as “inaccurate and factually incorrect.” Shortly after the Times story, Trump told supporters at a rally in Missouri that there is “a lingering stench” at the Justice Department and that “we’re going to get rid of that, too.” Rosenstein’s departure would prompt questions about the future of Mueller’s investigation and whether Trump, who has called the probe a “witch hunt,” would seek to remove Mueller.

US student debt might lead to the next financial crisis

In may not be trigonometry, but if you do the math, there is a great divide in how an estimated $2 trillion will be paid back in the near future. For some analysts, US student debt has shades of the subprime crisis that felled the economy back in 2007

Next crash will be ‘worse than the Great Depression’: experts

But this time, instead of bricks and mortar for collateral, the new toxic debt is “secured” by diplomas, the supply in many cases far exceeding demand. “What is the collateral there? I will give you my English thesis on Henry James in return?” asked P.J. O’Rourke, the best-selling author and economic satirist, of the riskiest student loans. O’Rourke told said, while promoting his new book, “None of My Business” (Grove Atlantic), that mounting unsecured debt such as student loans is setting the economy up for financial disaster. “We are headed for trouble,” he said. At its current pace, student debt is careening toward $2 trillion within the next three years, according to debt calculations. By contrast, in March 2007, in the lead-up to the financial crisis, the value of subprime mortgages was estimated at $1.3 trillion.

Global Debt Now at $247 Trillion, Crisis Looms

Concept of Earth imprisoned by big heavy debt
© Tomas Griger | Dreamstime.com By F McGuire

Global debt has been soaring to stratospheric levels, seemingly without anything to stop its runaway path. And that unbridled spending could very well trigger America’s worst economic crisis in a decade. To be sure, the amount of debt held by both mature and emerging markets tracked by the Institute of International Finance rose to a record $247 trillion in the first quarter of 2018, up 11.1 percent from the same period a year ago, Reuters reported. “We think the major economies are on the cusp of turning into the worst recessions we have seen in 10 years,” Murray Gunn, chief of global research at Elliott Wave International, told the New York Post. “Should the [U.S.] economy start to shrink, and our analysis suggests that it will, the high nominal levels of debt will instantly become a very big issue,” Gunn said, according to the Post. The global-debt report, recently released by global bank-lobbying group IIF, said the ratio of debt to gross domestic product of these nations, which include the Group of Seven industrialized nations and the majority of emerging market economies, increased to 318 percent. That is the first quarterly increase in the debt-to-GDP ratio since the third quarter of 2016. “With global growth losing some momentum and becoming more divergent, and U.S. rates rising steadily, worries about credit risk are returning to the fore – including in many mature economies,” the IIF said. Since December 2015, the Federal Reserve has raised interest rates seven times to a range of 1.75 percent to 2.00 percent, with more increases expected. Debt levels for household, non-financial corporate and general government sectors rose to $186 trillion in the first quarter of 2018. Financial sector debt rose to a record high $61 trillion. Emerging market debt rose by $2.5 trillion to a record $58.5 trillion in the first quarter. Meanwhile, it’s corporate sector debt that investors should be worried about, said Joseph LaVorgna, chief Americas economist at Natixis. “The corporate sector is highly leveraged and could be very vulnerable to higher interest rates,” LaVorgna told CNBC, which cited his research note that warned a primary reason corporate debt-to-GDP is so high is thanks to interest rates being historically low due to quantitative easing and forward guidance. “Firms have used artificially low rates to borrow in the capital markets and only buy back stock in the equity market,” LaVorgna said. “The inherent instability of debt over equity financing suggests that the next downturn could hit investment spending unusually hard.”

OPEC Signals No Rush to Increase Oil Output

The Saudi oil minister, Khalid al-Falih, center, on Sunday at the OPEC meeting in Algiers. “Since June, Saudi Arabia has met the demand for every barrel that has been requested,” he said .CreditCreditEPA, via Shutterstock

 

Oil producers led by Saudi Arabia and Russia signaled on Sunday that they did not see any rush to increase output, despite pressure from President Trump to pump more oil and hold down prices. Meeting in Algiers, officials from the Organization of the Petroleum Exporting Countries and allied governments, including Russia, said that after having increased production in recent months, customers now have adequate supplies. “Since June, Saudi Arabia has met the demand for every barrel that has been requested,” the Saudi oil minister, Khalid al-Falih, said at a news conference after the meeting. The Saudis and their allies appear to be trying to walk a fine line between accommodating Mr. Trump and not putting so much oil into the market that prices crash — as they did in 2014, damaging their petroleum-dependent economies. “They are trying to assuage Trump while keeping internal OPEC division from blowing up in the open,” said Antoine Halff, a founding partner of Kayrros, a research firm based in Paris. With oil prices recently hovering at around $80 a barrel for Brent crude, Mr. Trump has used Twitter and other means to lean on OPEC to increase oil supplies. His messages have mainly been directed at Saudi Arabia, the largest OPEC producer. Last week, Mr. Trump renewed his pressure. “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!” he wrote on Twitter on Thursday. “The OPEC monopoly must get prices down now!. Analysts say Mr. Trump wants to try to head off higher gasoline prices in the United States that could hurt Republican candidates in the coming midterm elections. “Sitting presidents in an election year have a proverbial fear of high oil prices,” Mr. Halff said. The agreement by OPEC and Russia in late 2016 to restrain oil production has contributed to a nearly 20 percent rise in Brent crude prices this year. Mr. Trump’s decision this year to reimpose sanctions on Iran has also helped push up prices, analysts say. Traders are calculating that exports from Iran, a major producer, may dry up in the coming months. The full sanctions do not kick in until November, but analysts say Iranian sales are already falling as buyers in Europe and Asia cut orders because they fear being hit with financial penalties by Washington. Responding to pressure from Mr. Trump, the Saudis and allies like Kuwait and the United Arab Emirates have increased production since May but not by the full one million barrels a day that Mr. Falih had indicated at OPEC’s last meeting in June. In a statement on Sunday, the OPEC group urged countries that could produce more oil “to work with customers to meet their demand during the remaining months of 2018.”

NBC News/WSJ poll: Democrats hold the advantage in November’s elections

by Mark Murray

WASHINGTON — Six weeks before the 2018 midterm elections, Democrats hold a 12-point lead in congressional preference among registered voters, with nearly six-in-10 saying they’d like to see significant change in the direction President Donald Trump has been leading the country, according to a new national NBC News/Wall Street Journal poll.
The results suggest a political environment where Democrats have the clear advantage in their pursuit to win back control of Congress in November.

“Americans are hitting the brake in a midterm, and trying to send the signal that they’re not satisfied,” said Republican pollster Bill McInturff, who conducted the survey with Democratic pollsters at Hart Research Associates. “The public is clearly saying, once again, they want to shake up the status quo,” added Democratic pollster Fred Yang.

House leader Nancy Pelosi are potent in individual races; and that nearly 70 percent of voters are satisfied with the economy. In the survey, which was conducted Sept. 16-19, 52 percent of registered voters say they prefer a Democratic-controlled Congress, versus 40 percent who want the Republicans in charge.

That 12-point lead for Democrats — their highest of the cycle in the poll — is an increase from August, when they held an 8-point edge, 50 percent to 42 percent, although the change is within the survey’s margin of error.

In the larger pool of registered voters, McInturff points to warning signs for Republicans. They trail Democrats among moderates and independents by more than 30 points; they’re losing women ages 50 and older by nearly 20 points; and they’re behind among voters living in competitive congressional districts by 12 points, 53 percent to 41 percent. Additionally, a combined 59 percent of voters say they’d like to see either “a great deal of change” or “quite a bit of change” in the direction Trump has been leading the country. That includes 61 percent of independents and even a third of Republican respondents. And by a 42 percent-to-31 percent margin, voters say their message in November will be for more Democrats to serve as a check and balance to Trump and the congressional Republicans, instead of Republicans who will help Trump and the GOP pass their agenda.  President Trump’s job rating in the poll stands at 44 percent approve, 52 percent disapprove — essentially unchanged from August’s poll.

Venezuela crisis: Chinese hospital ship docks for a week

Image copyright Reuters Image caption Traditional Venezuelan dancers welcomed the hospital ship when it arrived on Saturday

A Chinese hospital ship has docked in Venezuela, where for the next week it will provide free health care to local patients. Venezuela’s Defence Minister Vladimir Padrino López, went to the port of La Guaira to welcome the Chinese crew. He said that the Peace Ark’s visit was agreed by President Nicolás Maduro during a visit to Beijing last week.

Venezuela agreed at the time to increase its exports of oil to China, which is one of its main creditors.

Venezuela’s economic crisis has led to severe shortages of food and medicines and the collapse of public services. The opposition says the presence of a Chinese hospital ship in Venezuela shows the extent of the humanitarian crisis. Mr Padrino López thanked China for the gesture of friendship and said that both countries would benefit. “It is a pleasure to have this ship in Venezuela, which has arrived here after travelling to more than 40 countries” he said. “This is how true diplomacy is done: with concrete cooperation actions,” added Mr Padrino López. The Venezuelan government blames an international boycott led by the United States for Venezuela’s economic crisis. On Friday, US Secretary of State Mike Pompeo promised to unveil “in the coming days” a series of actions against “Venezuelan leadership folks”. President Donald Trump has previously called President Maduro a dictator and accused his government of illegally detaining, beating up and killing opposition activists.Hundreds of thousands of people have fled the country over the past year, as the crisis worsened. According to United Nations figures, 2.3 million people left Venezuela between 2014 and June 2018. Mr Maduro travelled to China last week, looking for support to help rebuild the economy. He said he had signed 28 trade and investment deals with China.

 Venezuela said it would increase oil exports to 1 million barrels a day.

The two countries also agreed to invest $5bn (£3.8bn) to help rebuild Venezuela’s ailing oil industry.

China summons U.S. ambassador to protest sanctions over Russia military equipment

FILE PHOTO: Flags of U.S. and China are placed for a meeting at the Ministry of Agriculture in Beijing, China, June 30, 2017. REUTERS/Jason Lee/File Photo

SHANGHAI/WASHINGTON (Reuters) – China’s foreign ministry on Saturday summoned the U.S. ambassador in Beijing to protest Washington’s decision to sanction a Chinese military agency and its director for purchasing Russian fighter jets and an advanced surface-to-air missile system. Chinese Deputy Foreign Minister Zheng Zeguang summoned Ambassador Terry Branstad to lodge “stern representations” and protest the sanctions, the foreign ministry said. Earlier, Chinese defence ministry spokesman Wu Qian said China’s decision to buy fighter jets and missile systems from Russia was a normal act of cooperation between sovereign countries, and the United States had “no right to interfere”. On Thursday, the U.S. State Department imposed sanctions on China’s Equipment Development Department (EED), the branch of the military responsible for weapons procurement, after it engaged in “significant transactions” with Rosoboronexport, Russia’s main arms exporter. The sanctions are related to China’s purchase of 10 SU-35 combat aircraft in 2017 and S-400 surface-to-air missile system-related equipment in 2018, the State Department said. A senior U.S. State Department official on Saturday said China was the only country that had taken possession of the advanced S-400 surface-to-air missile system, in a breach of a U.S. sanctions law imposed in response to Russia’s “malign behaviour”. The official, speaking to Reuters on condition of anonymity, insisted that the sanctions were aimed at Moscow, not Beijing. The so-called Countering America’s Adversaries Through Sanctions Act, or CAATSA, was signed into law in 2017 to punish Russia for meddling in U.S. elections, aggression in Ukraine and involvement in Syria’s civil war. “China is the first country in the world to use both of those systems,” the official said. “Both of those systems are extremely sophisticated and very high value.” The mobile S-400 batteries, which include radars, a control system, and missiles with a range of up to 250 miles (402.34 km), was first deployed in Russia in 2007 and is considered Moscow’s most effective defence against aircraft, missiles and drones. Russia has deployed S-400s in Syria, according to official Russian news media, and U.S. officials have been discussing the interest other nations, particularly NATO ally Turkey, have expressed in buying the system. Washington has expressed concern that Turkey’s planned deployment of S-400s could threaten some U.S.-made weapons and other technology used by Turkey, including the F-35 fighter jet. The official said the move against the Chinese agency was not discretionary, but was made because Beijing broke U.S. law. “We hope it will be paid attention to because … our goal is to prevent these types of transactions,” he added. The U.S. sanctions will block the EED and its director, Li Shangfu, from applying for export licences and participating in the U.S. financial system. “The U.S. approach is a blatant violation of the basic norms of international relations, a full manifestation of hegemony, and a serious breach of the relations between the two countries and their two militaries,” Wu said in a notice posted on the Chinese defence ministry’s official Wechat account. He warned that the United States would face “consequences” if it did not immediately revoke the sanctions.

From reality TV to U.N., Trump to wield Security Council gavel

U.S. President Donald Trump speaks during his meeting meets with Egyptian President Abdel Fattah al-Sisi during the U.N. General Assembly in New York, U.S., September 20, 2017.

UNITED NATIONS (Reuters) – He has chaired board meetings, cabinet meetings and starred in a reality television show, but on Wednesday U.S. President Donald Trump will wield the gavel in the United Nations Security Council to denounce Iran for what it sees as its malign regional behavior. Trump is able to preside over the 15-member council as the United States holds the monthly rotating presidency, which coincides with the annual gathering of world leaders at the United Nations in New York this week. “I am sure that’s going to be the most watched Security Council meeting ever,” U.S. Ambassador to the United Nations Nikki Haley told reporters. But despite the unpredictable nature of Trump, some diplomats aren’t expecting a reality television performance in the Security Council, where nearly every member is likely to be represented by their prime minister or president except Russia and China, which are expected to send ministers “I don’t think it will be that entertaining at all,” said one senior U.N. diplomat, speaking on condition of anonymity. “Even those who don’t like him, the attitude of all other heads of state and government in a public meeting when faced with any president of the United States of America is to be on their best behavior,” the diplomat said. It is rare for the council – formed in 1945 to maintain international peace and security – to meet at the head-of-state and government level. This will be the third time the body is chaired by a U.S. president. It has the ability to impose sanctions or authorize the use of military force. Trump’s predecessor Barack Obama presided over meetings in 2009 and 2014 on nuclear non-proliferation and foreign terrorist fighters. In both cases the council adopted resolutions on the topics under discussion. U.S. Ambassador Nikki Haley said there are no plans to adopt a resolution at Wednesday’s meeting. “We want to make sure (Iran) understands the world is watching. That’s the biggest reason for this meeting,” she said earlier this month. The topic of the meeting will be non-proliferation of weapons of mass destruction, a broad issue that allows leaders around the horse-shoe table to raise a variety of subjects from North Korea to chemical weapons attacks in Syria and Britain. However, Trump signaled on Twitter he will zero in on Iran, when he posted: “I will chair a United Nations Security Council meeting on Iran.” Tehran has accused the United States of abusing the power of the Security Council president. The U.S. concept note on the meeting circulated to Security Council members does not specifically mention any countries. “The purpose of this meeting is to discuss ways the Security Council can better enforce the resolutions it has adopted … to counter the spread and use of the world’s most dangerous weapons,” it reads.

Next crash will be ‘worse than the Great Depression’: experts

Ten years ago, it was too-easy credit that brought financial markets to their knees. Today, it could be a global debt of $247 trillion that causes the next crash. After a decade of escalating US household debt brought on by low wages and the national debt more than doubling over the same time frame, to $21 trillion, debt could soon put the brakes on this economic recovery, analysts warn. “We think the major economies are on the cusp of this turning into the worst recession we have seen in 10 years,” said Murray Gunn, head of global research at Elliott Wave International. And in a note, he added: “Should the [US] economy start to shrink, and our analysis suggests that it will, the high nominal levels of debt will instantly become a very big issue.”

  • US household debt of $13.3 trillion now exceeds the 2008 peak. That’s due in part to mortgage lending, which is hovering near its decade-ago level of $9 trillion-plus.
  • Student loans outstanding have skyrocketed from $611 billion in 2008 to around $1.5 trillion today.
  • Auto loans, at nearly $1.25 trillion, have exceeded the 2008 total, while credit card balances are just as high now as before the Great Recession.
    Meanwhile, global debt — a result of central bankers flooding economies with cheap money to lift them out of an funk — is now $247 trillion, up from $177 trillion in 2008. That is close to 2 ¹/₂ times the size of the global economy.

“We won’t be able to call it a recession, it’s going to be worse than the Great Depression,” said economic commentator Peter Schiff, forecasting a major economic downturn as early as the tail end of the Trump presidency’s first term. “The US economy is in so much worse shape than it was a decade ago.” Economic theorists say insurmountable debt is the big kahuna. The huge sums today certainly fed the boom times. But since it must eventually be repaid, the tipping point will come when a wave of defaults by overwhelmed borrowers — potentially squeezed by rising interest rates — leads to a widespread reduction in spending and incomes, economists explain Although Schiff has gotten some calls wrong in the past — he incorrectly predicted the US Federal Reserve would fail in its roundabout quantitative easing campaign to “reflate” housing and stocks in the wake of the financial crisis — he is convinced he is right on the money this time. “I think we are going to have a dollar crisis — you think the Turkish lira looks bad now, wait till you see when the dollar is imploding and we have a sovereign debt crisis in the US,” he told The Post. “The US government is going to be given a choice between defaulting on the debt, or else massive runaway inflation.” Earlier this year, Goldman Sachs said the fiscal outlook for the US was “not good,” and could threaten the nation’s economic security during the next recession. Schiff dismisses the latest batch of positive indicators, including the lowest unemployment rate in a generation, soaring business confidence spurred by President Trump’s tax cuts and the Dow hitting record highs. “Obviously, there is a whole lot of optimism — but there is a very good chance the US economy is in recession within the next two years. This is already the second-longest economic expansion in history,” Schiff said, adding that recent dips in new housing starts and auto sales may be red flags. Gunn sees a brutal deflationary spiral ahead in the next downturn. “People will look to central banks to help them out, but the authorities will be found wanting,” Gunn warned. “Our prediction is that central banks will go from being feted for ‘saving the world’ in 2008 to being vilified for being impotent in the coming deflationary crash.”

Yeild Curve Flattening End of Bull market in stocks is neigh

All bull markets come to an end, even the 35-year Great Bond Bull Market.

The US Treasury 2-year yield crept up 3 basis points during the week, to 2.81% at the close on Friday, the highest since June 2008. In a month or two, as the fourth rate hike for 2018 and more rate hikes next year are getting further baked in, the 2-year yield will cross the 3% mark! Just two years ago, many soothsayers on Wall Street said this would never happen again – that the Fed, in fact, could never raise rates to this point. But here we are.

The 10-year yield rose 8 basis points during the week, to 3.07%. This widened the spread between the 2-year and the 10-year yield on Friday to a still hair-thin 26 basis points. This chart shows that spread going back to 2007:

For periods in 2006 and 2007, the 2-year yield was higher than the 10-year yield, and thus the yield curve was “inverted.” At the left end of the chart, denoting 2007, the line dipped below zero. The Great Recession officially began in December 2007, by which time the yield curve was no longer inverted as the Fed had started cutting short-term rates. This scenario has played out repeatedly in past decades, when the “inverted yield curve” phenomenon was followed by recessions or worse. Inverted yield curves didn’t cause those recessions; but they were reliable predictors of them. The chart below of the 2-year and 10-year yields shows the last two recessions (shaded areas), the yield curve inversions before those recessions, and the steepening of the yield curves following the recessions. The yield curve inverted where the black line is above the red line (click on the chart to enlarge):

Starting in 2008, the Fed imposed its yield-repression policy on the Treasury market, thus totally manipulating the market. But since December 2015, the Fed has been “gradually” stepping away from those methods of yield repression. So the yield curve is not showing free-market behavior; it’s showing the Fed’s manipulations, and the side-effects of the Fed’s backing away from these manipulations.

There will be another recession. There always is at some point. A recession is an essential and necessary part of the normal business cycle. The only question is when

During these 35 years, yields dropped during each recession as the Fed cut rates, but then yields didn’t return to prior highs. Instead they wobbled from lower lows to lower lows. And after each recession, their peaks remained lower than their peaks before the recession. Nick Bit: This time rates will go negative…And the great recession will turn into a Great Depression

 

U.K.’s Theresa May Says Brexit Negotiations Have Reached ‘an Impasse’

The prime minister said it was now up to the European Union to provide an alternative Brexit deal
Getty Images

Embattled British Prime Minister Theresa May on Friday warned that Brexit talks had hit an impasse and called on European leaders to present new proposals as negotiations between the two sides turn increasingly acrimonious. Following a tense meeting with her EU counterparts earlier this week in Salzburg, where her post-Brexit plans were rejected as being unworkable, May said it was now up to European leaders to smooth the path for Britain’s departure from the European Union. “We now need to hear from the EU what the real issues are and what their alternative is so that we can discuss them,” May said, standing in front of two Union Jack flags in Downing Street. “Until we do, we cannot make progress.” Investors are becoming increasingly nervous that the U.K. could crash out of the EU without a deal. The pound GBPUSD, -1.4169%  slipped further against the dollar DXY, +0.34%   and the euro EURUSD, -0.2547%   as May spoke, adding to losses earlier in the day. The pound was down 1.5% against the dollar and 1% against the euro.

Walmart letter warns tariffs will raise prices and tax American businesses

The retail giant says tariffs put a commitment to purchase ‘$250 billion in products that support American jobs’ at risk

Getty Walmart, and many other retailers, are opposed to the proposed tariffs

Walmart Inc. has sent a letter to U.S. Trade Ambassador Robert Lighthizer warning that proposed tariffs on $200 billion on Chinese goods would hurt consumers and American businesses.The letter, dated September 6, focuses on what Walmart WMT, +0.16%  says will be the repercussions of the tariffs, which would apply to goods like food and beverages, personal care products like shampoo, detergents, motor vehicles and paper goods like napkins. Walmart is the biggest retailer in the U.S.The tariffs were initially proposed in July and are scheduled to go into effect on September 24. The 10% tax on Chinese imports will rise to 25% on January 1, 2019, according to members of the Trump administration.  China said it would impose tariffs on $60 billion worth of U.S. goods. And China’s Commerce Ministry has vowed retaliation and says the proposed U.S. plan has led to “uncertainty” for negotiations between the two countries. “Should the tariffs go into effect, Walmart customers will face cost increases for essential items like car seats, cribs, backpacks, hats, pet products and bicycles,” Walmart’s letter says. The company also said that tariffs would put a commitment to purchase an additional $250 billion in products that support American jobs in jeopardy. “For lower-income families, a 25% tax on these items would be a serious burden on household finances,” Walmart wrote. “Walmart and our suppliers will pay the cost of increased duties, which are simply taxes levied on products at the border. As a result, either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether.” Walmart outlined the hurdles in finding alternate suppliers, including safety issues on products for children, and the fact that China is the primary or sole source of imports for many products. There are also requirements that new suppliers have to meet, and costs that could come from the change. The retailer also says that it serves as an exporter of many goods through channels like Walmart China. Many of these items face tariffs as well. Cherries, for example, face 50% duties and, according to Walmart, have seen sales and margins slip. Other U.S. items of concern include beef, pork, nuts and wine, which are subject to Chinese retaliation. The National Retail Federation has also chimed in, with the organization’s President Matthew Shay saying that “thousands” of businesses consider this a “tax on American families.” The NRF has joined a coalition of more than 100 groups called Americans for Free Trade that will oppose tariffs and partnered with Farmers for Free Trade on a campaign that will host town hall events and perform outreach to Congress and the Trump administration on the issue. Events are planned for Chicago, Nashville, Pennsylvania and Ohio.

“It’s disappointing that, despite the voices of those impacted, the administration continues to advance harmful tariff policies that threaten to weaken the U.S. economy,” the statement said. “We cannot afford further escalation, especially with the holiday shopping season right around the corner.”

The Retail Industry Leaders Association says it is “disappointed” by the tariff announcement as well.

U.S. oil sanctions on Iran threaten global supplies, but a demand slowdown poses a real risk

China already shows ‘signs of reducing their level of [oil] imports’: analyst
Getty Images

There are still several weeks before U.S. sanctions on Iranian oil actually kick in, but expectations of tight crude inventories already have contributed to much of this year’s gain in global prices. The rise has come despite concerns over potentially lower energy demand and plans by two of the world’s biggest producers to boost output. “The markets are always forward-looking,” said Tamar Essner, energy director at Nasdaq IR Intelligence. “Exports from Iran are already down about 35%, when you look at crude and condensate [a very light oil] together,” since President Donald Trump announced the U.S. withdrawal from the Joint Comprehensive Plan of Action in May. The deal between Iran and six world powers and the European Union was made to ensure that Tehran’s nuclear program had a peaceful purpose, rather than to make nuclear weapons. “The market has really been surprised by the degree of enforcement from the U.S.,” Essner said. In the past, she adds, Washington had “targeted reductions in exports” with sanctions, but the current administration has “focused on elimination” of exports from Iran, the Organization of the Petroleum Exporting Countries’ third-largest producer. Nations such as South Korea have reached full compliance with the sanctions, and “critically, we’ve also seen China already showing signs of reducing their level of imports,” Essner said, noting that a buildup of Iranian oil in offshore storage shows that “it’s been harder for Iran to find buyers.” U.S. allies have until Nov. 4 to end imports of oil from that country.Since Trump’s announcement in early May through mid-September, the price of Brent crude LCOX8, +0.91% the global benchmark, climbed roughly 7%. It settled at $78.60 a barrel on Thursday, up about 18% since the year began. “European companies will almost certainly comply with these sanctions to avoid fines and confrontation with the U.S.,” said Sebastian Leburn, senior portfolio manager of Boston Private. “About a third of Iran oil is exported to Europe, and this is where the curtailment will be most pronounced.” Iran’s crude and condensate exports averaged 1.92 million barrels a day in August, down from 2.32 million in July, according to estimates from S&P Global Platts. Saudi Arabia and Russia have been trying to ensure market stability in the aftermath of the Iran sanctions, but some question their ability to make up for the lost barrels of crude. In June, OPEC and allied producers said they would rein in production curbs implemented in January 2017. That could raise daily output by one million barrels, to help offset a possible supply shortage from the Iran sanctions and production losses in Venezuela and elsewhere. A committee of OPEC and non-OPEC producers was expected to discuss how best allocate the production increase at a meeting in Algiers on Sept. 23. However, it’s doubtful that Saudi Arabia or Russia can make up for the lost oil, maintains Campbell Faulkner, a senior data analyst at EOXLive. “Neither country has the swing production it did a number of years ago.” It’s more likely that U.S. benchmark West Texas Intermediate crude prices CLX8, +1.00%  will spike into the $100 range, prompting production from drilled-but-uncompleted wells to ramp up, “along with greater U.S. exports to ease the tight market,” said Faulkner. That “will not replace the totality of the loss, but it, along with marginal production increases globally, can soak the market to prevent” oil from going into the $130 range. Trump has imposed tariffs on, and plans even more, on hundreds of billions of dollars’ worth of goods from China, the world’s largest energy consumer. The “bigger factor through the rest of the year is likely demand rather than supply,” said Brian Youngberg, senior energy analyst at Edward Jones, and the “real” threat to oil demand comes from the “broader economic downturn in emerging markets as a whole, not just China.”

Wells Fargo plans to cut up to 10% of workforce in the next 3 years

  • A customer exits a Wells Fargo & Co. bank branch in Los Angeles Patrick T. Fallon/Bloomberg via Getty Images
    Patrick T. Fallon | Bloomberg | Getty Images A customer exits a Wells Fargo & Co. bank branch in Los Angeles Patrick T. Fallon/Bloomberg via Getty Images

Wells Fargo is lowering its employee headcount by 5 to 10 percent in the next three years as part of the bank’s ongoing turnaround plan, the company announced Thursday. “We are continuing to transform Wells Fargo to deliver what customers want — including innovative, customer-friendly products and services — and evolving our business model to meet those needs in a more streamlined and efficient manner,” the bank’s Chief Executive Officer Tim Sloan said in a press release. Wells Fargo has 265,000 employees, meaning the reduction would result in a loss of between 13,250 and 26,500 jobs. The decline will be a mix of displacements and team member attrition, Sloan said. The move is part of Wells Fargo’s “ongoing transformation, which addresses industry trends and changes in customer behavior, during a regularly scheduled companywide town hall meeting,” Sloan said. The company, which has $1.9 trillion in assets, blamed “changing customer preferences,” including the “adoption of digital self-service capabilities,” as a key catalyst. Shares had little reaction to the news, and were last up by about 0.8 percent.

EU’s Brexit hard line angers Theresa May

We are preparing for no deal,’ says UK prime minister after EU leaders brand her plan unacceptable.
British Prime Minister Theresa May speaks to the media at the conclusion of the summit of leaders of the European Union on September 20, 2018 in Salzburg, Austria | Sean Gallup/Getty Images

SALZBURG, Austria — U.K. Prime Minister Theresa May warned Thursday that she is prepared to walk away from the Brexit talks — bringing an acrimonious end to an EU leaders’ summit that was supposed to showcase newfound unity and cooperation in working toward a deal. “Let nobody be in any doubt, as I’ve always said, we are preparing for no deal,” May, visibly angry, said at a news conference just moments after European Council President Donald Tusk declared at a gathering of EU leaders in Salzburg, Austria, that her Brexit plan “will not work.” Appearing defiant, May told reporters she still has hope. “I believe there is willingness to do a deal,” she said. But the prime minister quickly added that she and the U.K. would be ready to walk away. “If we get to the position where it is not possible to reach a deal,” she said, “then the British people can be confident that we will have done what is necessary to ensure we make a success of leaving the European Union, regardless of the terms on which we do so.” “I am negotiating hard in the interests of the British people,” May said. May’s warning came after Tusk and the EU27’s most powerful leaders, German Chancellor Angela Merkel and French President Emmanuel Macron, forcefully rejected the central component of May’s plan for a post-Brexit relationship at a trio of news conferences. They reiterated that the EU would not agree to May’s plan for a free-trade area for goods but not services, which they said would divide the EU’s single market and grant the U.K. preferential benefits over EU members. “While there are positive elements in the Chequers proposal, the suggested framework for economic cooperation will not work,” Tusk said at the informal summit’s closing news conference, “not least because it will risk undermining the single market.” In a move clearly aimed at pressuring London, Tusk also said EU leaders are standing firm in their demand that negotiators complete a Brexit withdrawal treaty by October, and would not call a special summit for November unless it becomes necessary.

Donald Tusk: UK Brexit plan ‘will not work’

“I am negotiating hard in the interests of the British people. I am negotiating to deliver on what the British people voted for in the referendum” — Theresa May

Tusk’s aides insisted that he merely restated positions that the EU, and its chief negotiator Michel Barnier, have articulated repeatedly over the more than two months since May first unveiled her proposal. The aides said that Tusk did not in any way intend to be provocative. But while the EU opposition is not new, the context of the remarks  — at a major summit, after May addressed her colleagues at a dinner on Wednesday and urged further compromise — seem to strike a significant blow, raising the risk of a breakdown in negotiations. It also appeared to put May in severe political jeopardy at home, just 10 days before the Conservative Party conference. Critics of May’s handling of Brexit, including the former Brexit secretary, David Davis, and the leading Brexiteer MP, Jacob Rees-Mogg, quickly demanded that she abandon her Chequers plan. “Chequers goes pop,” Rees-Mogg gloated on Twitter.

More broadly, it is clear once again that Brussels and London might as well be in different universes when it comes to how officials see and hear the debate over Britain’s withdrawal. May’s reaction left a sense that she felt ambushed, even though she had met one-on-one with Tusk just minutes before his news conference. EU officials, in turn, were stunned that May was the least bit surprised by their remarks.

French President Emmanuel Macron said that Brexit shows “it’s not so easy to leave the EU, it’s not without a cost, it’s not without consequences …
[Chequers] is not acceptable because it doesn’t respect the integrity of the single market.” He said British voters opted to leave based on lies told to them by advocates of Brexit. Brexit, he said, is “the choice of the British people, a choice pushed by those who predicted easy solutions … they are liars, they left the next day so they didn’t have to manage it.” The spectacle of the EU’s top brass piling on in their rejection of May’s plan threatens her chances of reaching a divorce agreement with Brusselsacceptable to her party and parliament. Their criticism will be jumped on by Conservative Brexiteers as further evidence that May should abandon her Chequers plan altogether and begin serious preparations for a no-deal departure if a much looser arrangement cannot be reached for the whole of the U.K.

Michael Cohen spoke to Mueller team for hours; asked about Russia, possible collusion, pardon: Sources

PHOTO: Michael Cohen leaves Federal court, Aug. 21, 2018, in New York City.

President Donald Trump’s former personal attorney, Michael Cohen, has participated over the last month in multiple interview sessions lasting for hours with investigators from the office of special counsel, Robert Mueller, sources tell ABC News. Add Russia Investigation as an interest to stay up to date on the latest Russia Investigation news, video, and analysis from ABC News. The special counsel’s questioning of Cohen, one of the president’s closest associates over the past decade, has focused primarily on all aspects of Trump’s dealings with Russia — including financial and business dealings and the investigation into alleged collusion with Russia by the Trump campaign and its surrogates to influence the outcome of the 2016 presidential election, sources familiar with the matter tell ABC News. Investigators were also interested in knowing, the sources say, whether Trump or any of his associates discussed the possibility of a pardon with Cohen. Over the 16 months that Mueller has been investigating, the president has repeatedly bashed the investigation as a partisan witch hunt, insisting there has been no collusion and no obstruction of justice. The interviews with Cohen took place in Washington, D.C., and New York City. They were also attended in part by prosecutors from the U.S. Attorney’s Office in the Southern District of New York. Cohen’s participation in the meetings has been voluntary — without any guarantee of leniency from prosecutors, according to several people familiar with the situation. ABC News has also learned that Cohen is also cooperating with a separate probe by New York state authorities into the inner workings of the Trump family charity and the Trump Organization, where Cohen served as an executive vice president and special counsel to Trump for 10 years.

PHOTO: Then-FBI Director Robert Mueller listens as he testifies on Capitol Hill in Washington, June 13, 2012.
J. Scott Applewhite/AP, FILE Then-FBI Director Robert Mueller listens as he testifies on Capitol Hill in Washington, June 13, 2012.more +

The news of Cohen’s dealings with federal and state investigators comes close on the heels of another potentially perilous legal development for the president: the guilty pleas last week from Trump’s former campaign chairman, Paul Manafort, who struck a deal with Mueller’s prosecutors in exchange for his cooperation. As the Manafort deal was taking shape — Mueller’s team had already been talking to Cohen.

Dow jumps more than 250 points to record high as Apple rises and trade-war fears simmer down

Market sentiment has changed in respect to the tariff story, says Pimco EVP
Market sentiment has changed in respect to the tariff story, says Pimco EVP
 

The Dow Jones Industrial Average hit its first record high since January on Thursday as gains in Apple and a decrease in trade fears lifted the 30-stock index. The Dow jumped 255 points as Boeing, Caterpillar and Apple rose. The S&P 500 also rose 0.8 percent to an all-time high, its first since late August, as consumer staples and tech outperformed.President Donald Trump touted the S&P 500’s record in a tweet, saying “Congrats USA!”

The Nasdaq Composite also rose 1 percent as Amazon gained 1 percent ahead of an event where they are expected to unveil new Alexa-powered devices. Apple, meanwhile, jumped 1.3 percent.

Boeing and Caterpillar, two bellwethers for trade, rose 1.2 percent and 2.1 percent, respectively.

The Chinese commerce ministry said Thursday the country hopes the U.S. will take steps to correct its behavior. The comments come as the two countries slapped tariffs on each other’s goods.

Traders work on the floor of the New York Stock Exchange (NYSE) at the closing bell, November 30, 2017 in New York City
Drew Angerer | Getty Images News | Getty Images Traders work on the floor of the New York Stock Exchange (NYSE) at the closing bell, November 30, 2017 in New York City

“I think we’re moving away from fears of a global trade war to maybe just one with China,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. Earlier, “it seemed like more countries would be caught in the administration’s cross hairs; not it appears to be just one.” The U.S. administration announced Monday it would inflict 10 percent tariffs on $200 billion worth of Chinese imports, which would rise to 25 percent by year-end. China retaliated Tuesday by announcing levies targeting over 5,000 American products worth $60 billion and to go into effect next week. The country has also filed a complaint with the World Trade Organization about the U.S.’ latest round of duties. However, the levies imposed by both countries were seen as less than previously feared, helping lift sentiment on Wall Street. The Dow is up more than 1 percent over the past two days. The S&P 500, meanwhile, has risen more than 0.6 percent in that time period. “I’m not at all surprised investors are taking the latest tariffs and the more muted response from China as a positive,” said Kate Warne, investment strategist at Edward Jones. She noted that trade news have been both a positive and negative catalyst for stocks this year. Hence, a more muted escalation to the trade conflict is seen as a net positive. “But I don’t think the worries about trade are completely over, especially if the U.S. tariffs on China increase to 25 percent.” J.P. Morgan Chase CEO Jamie Dimon also played down the conflict between the U.S. and China, calling it a skirmish and not a trade war. Tom Martin, senior portfolio manager at Globalt, thinks investors should be more concerned with the trade situation, however. “It will take people some time realize this is not going away anytime soon,” he said. “We think the situation with China will take the longest time to resolve.”

Oil climbs as EIA reports a 5th-straight decline in U.S. crude stockpiles

Traders also weigh Iran sanctions concerns against U.S.-China trade tariffs
AFP/Getty Images

Oil  climbed Wednesday, with the U.S. benchmark getting a boost after a government report revealed a fifth-straight weekly decline in U.S. crude inventories. The decrease in supplies was smaller than the market expected, but it contradicted the increase reported by a trade group on Tuesday. Traders also weighed expectations for lower global output due to impending U.S. sanctions on Iran, as well as the prospects for energy demand on the heels of a worsening trade dispute between the U.S. and China. The U.S. benchmark, October West Texas Intermediate crude CLV8, +0.34% rose 86 cents, or 1.2%, to $70.71 a barrel on the New York Mercantile Exchange. The contract, which expires at Thursday’s settlement, was trading at $70.41 before the supply data. November Brent LCOX8, +0.39% the global benchmark, added 16 cents, or 0.2%, to trade at $79.19 a barrel on ICE Futures Europe, a day after ending up 1.3%.

The Energy Information Administration reported Wednesday that domestic crude supplies fell by 2.1 million barrels for the week ended Sept. 14. The EIA had reported declines in each of the previous four weeks.

“Although refinery runs have dropped 442,000 [barrels per day] as we slide into fall maintenance, refining activity remains elevated, with runs over 800,000 [barrels-a-day] higher than in 2016,” said Matt Smith, director of commodity research at ClipperData, adding that 2017’s figures were “muddied by Hurricane Harvey.” “We see another counter-seasonal draw to crude inventories as rising exports have countered a rebound in imports,” he said. Gasoline stockpiles declined by 1.7 million barrels for the week, while distillate stockpiles climbed by 800,000 barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply declines of 1.6 million barrels for gasoline, and 282,000 barrels for distillates, which include heating oil.

“If we continue to see that rise—and coupled along with the trade war—we could see the equity markets come off, along with a slowdown in global growth if the trade war goes to the next level,” said Zahir. “Even with Iran barrels [expected] to come off market, the global macro picture could put a damper on crude oil demand as we go through the end of the year.”

Major oil producers, including Russia, have been wrestling with how to ensure market stability once the U.S. sanctions against Iran are imposed in early November. Iran is the third-largest oil producer and a member of the Organization of the Petroleum Exporting Countries. On Tuesday, oil prices got a lift from a report indicating that Saudi Arabia—OPEC’s de facto leader— is growing more inured to the prospect of higher Brent futures prices above $80 a barrel. OPEC and other producers including Russia are set to meet on Sept. 23 in Algeria to discuss how to best distribute planned increases to offset the loss of Iranian output, estimated at 1.4 million barrels a day, according to S&P Global Platts Analytics.

EIA: US crude inventories decrease 2.1 million bbl

US crude oil inventories, excluding the Strategic Petroleum Reserve, decreased by 2.1 million bbl for the week ended Sept. 14, according to data from the US Energy Information Administration. At 394.1 million bbl, US crude oil inventories are about 3% below the 5-year average for this time of year, the report indicated. The report said total motor gasoline inventories decreased by 1.7 million bbl and are about 8% above the 5-year range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 800,000 bbl last week and are about 2% below the 5-year average for this time of year. Propane-propylene inventories increased by 100,000 bbl last week and are about 12% below the 5-year average for this time of year, EIA said. US refinery inputs averaged 17.4 million b/d for the week ended Sept. 14, about 442,000 b/d less than the previous week’s average. Refineries operated at 95.4% of capacity. Gasoline production decreased, averaging 10.3 million b/d. Distillate fuel production decreased, averaging 5.5 million b/d. US crude oil imports averaged 8 million b/d, up by 433,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.7 million b/d, 6.9% more than the same period last year. Total motor gasoline imports averaged 561,000 b/d. Distillate fuel imports averaged 141,000 b/d.

Senate approves $854B spending bill

The Senate is racing to avoid the third government shutdown of the year ahead of a looming end-of-the-month deadline. Senators on Tuesday voted 93-7 to pass a sweeping $854 billion spending bill that includes funding for the Departments of Defense, Health and Human Services (HHS), Labor and Education, which make up the lion’s share of total government spending. Six Republican senators — Jeff Flake (Ariz.), Mike Lee (Utah), Rand Paul (Ky.), David Perdue (Ga.), Ben Sasse (Neb.) and Pat Toomey (Pa.) — joined Sen. Bernie Sanders (I-Vt.) in voting against the bill, which also includes a short-term stopgap bill to fund the rest of the government through Dec. 7 and prevent a shutdown that would start Oct. 1. Passage of the sweeping package of defense and domestic spending marks a significant victory for Senate Majority Leader Mitch McConnell (R-Ky.) who has dedicated weeks of floor time to government funding and avoiding another catch-all omnibus bill less than two months before the midterm election, where control of Congress hangs in the balance.  It’s the first time the Senate has approved funding for Labor, HHS or Education outside an omnibus bill since 2007, though even then the package was not completed on time. The bills normally get bogged down by fights over partisan riders, but Senate negotiators agreed early on to avoid attaching them to their legislation and were able to keep them out of the final House-Senate version of the package. “These milestones may sound like inside baseball, but what they signify is a Senate that is getting its appropriations process back on track, a Senate that is attending to vital priorities for our country,” McConnell said.  Despite containing only two appropriations bills, the package represents roughly two-thirds of Congress’s 2019 spending. Of the $854 billion, $785 billion fell under agreed-upon budget caps, and the rest came from off-budget funds such as Overseas Contingency Operations. It includes provisions for military pay raises, defense research, increases for Pell grants and the National Institutes of Health, and workforce development training, among others. The House is out this week but expected to take up the funding legislation next week, ahead of the Sept. 30 deadline to keep the government funded. Congress already sent an initial spending bill to President Trump’s desk that funded military construction and veterans’ affairs, the legislative branch and energy and water. If Trump signs both bills before the end of the month that would allow lawmakers to get 5 out of the 12 individual appropriations bills to his desk before the end of the 2018 fiscal year. The two chambers are working on a third package of four bills they hope to send to the president as well, but differences remain between the House and Senate. Those bills include Agriculture, Interior, Financial Services and Transportation funding measures. A continuing resolution (CR) in the bill extends funding for all other agencies through Dec. 7, after the midterm elections.

The inclusion of the resolution in the Department of Homeland Security bill puts off a contentious debate on Trump’s proposed border wall. While Trump could still choose to veto the spending bills, congressional leaders have expressed confidence that the inclusion of the defense bill with the CR will make it difficult for him to do so.

And Trump told Fox News earlier this month that he “most likely” would not shut down the government, a move that would spark a risky fight for Republicans less than two months before the midterm. “I guess when you get right down to it, it is up to me,” Trump said during an interview with Fox News about shutting down the government, “but I don’t want to do anything to hurt us or potentially hurt us.” Instead, senators are bracing for a December fight over funding for the border wall with both chambers far apart on how much to include. The House version of the bill included $5 billion of funding, while the Senate version included $1.6 billion and limited construction to fencing along a 65-mile stretch of the Rio Grande Valley. Trump had made getting funding for his border wall a top priority, including threatening to veto a March spending bill that he and his conservative allies felt didn’t include sufficient funding for the wall.

Judge Napolitano: Manafort’s Deal ‘Bulletproof’ From Trump Pardon

Image: Judge Napolitano: Manafort's Deal 'Bulletproof' From Trump Pardon
(Getty Images) By Sandy Fitzgerald

President Donald Trump should be “very, very worried” at the news that his former campaign aide, Paul Manafort, is cooperating with special counsel Robert Mueller’s investigation, as the deal is “bulletproof” from a presidential pardon, Fox News judicial analyst Judge Andrew Napolitano said Monday.

“When Paul Manafort pleaded guilty to two crimes, witness tampering and conspiracy to defraud the government, basically not paying taxes, he also admitted to 18 other crimes.” Many of those were federal crimes, or all state crimes, said Napolitano, making it “bulletproof” from being shot down by a pardon. “If President Trump were to pardon Paul Manafort, to prevent him from spilling the beans against the president to Bob Mueller, he would be immediately indicted by the attorneys general, appropriate authorities in the four states where the bank fraud occurred,” Napolitano said of Manafort. “This is part of the Mueller method of operating.” Last Friday, Manafort pleaded guilty to two federal crimes after he made a deal with prosecutors and agreed to cooperate with Mueller’s Russia probe, allowing him to avoid a second criminal trial. Last month, Manafort was convicted of eight financial crimes during a trial in Virginia, and faces 7-10 years in prison in that case. Prosecutor Andrew Weissman said Manafort will plead guilty to charges related to his Ukrainian political consulting work.

U.S. trade war with China isn’t winnable, but Trump will likely claim victory anyway

With President Donald Trump announcing a new round of tariffs on China –imposing 10 percent on about $200 billion worth of goods from the country — Beijing said on Tuesday that it would retaliate with a new round of tariffs on U.S. imports. As these tariffs roll on and cause some fear and dread in several industries, it’s worth asking: What does a victory in a trade war with China actually look like? “If they get meaningful concessions out of the Chinese, they will consider this a success,” said Bart Oosterveld, director of the Global Business and Economics Program at the Atlantic Council. What, exactly, is a “meaningful confession,” though? Are there any hard targets included in that definition? Although the aim of these tariffs is to lower the U.S.-China trade deficit — by either $100 billion or $200 billion by the end of 2020 — a “win” can be defined in a number of ways. “Within the administration there are very different views about what a good outcome with China is,” said Oosterveld. Some, he pointed out, such as U.S. trade representative Robert Lighthizer, want to see complete reform, with China becoming a free-market economy. “Then there are others who want concessions on specific trade practices,” said Oosterveld, adding, “You can claim victory pretty quickly in this environment.” So, with some kind of (at least claim to) victory assured, we can expect more of the same in the short term — at least, until the November midterm elections. Along with the announcement of the new tariffs on Monday night, President Trump also said that if China retaliates (which it is). then the U.S. will “immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports” — or pretty much everything the U.S. imports from China. Feeling pretty confident with a strong stock market and high employment figures, Oosterveld said the administration is sure to push ahead with the third round of tariffs. “The administration has no incentive, politically or economically, to back down before the midterms,” said Oosterveld. “This escalation kind of serves them well,” he added. Will these tariffs work to change China’s behavior and help narrow the trade deficit? Well, maybe, said Oosterveld, who sees the Chinese as being “relatively willing” to make some concessions. “But if you’re going to address the trade practices of China, long-term, I think you need to work with allies, like the E.U. and Japan, to apply pressure. I don’t think that’s happening right now,” he said. Indeed, the president seems to view this as a bilateral issue rather than a global one, and his Tuesday morning tweets make more of a nationalistic (or emotional) case for his actions, rather than a pragmatic one pitting China against America’s “great patriots”:

But many U.S. businesses worry that the president’s tariffs will be what puts them in the line of fire: Thousands of companies and trade industries have registered their concerns with Lighthizer’s office, saying that their businesses will take a hit from which they can’t recover. Many have applied to get their products off the tariff list. This, said Oosterveld, seems to be an acceptable price to pay for the Trump administration. “We have very solid economic growth and this, in and of itself, won’t trigger an  economic downturn … I’m sure there’s downstream harmful effects to individuals, to certain companies, to certain industries, certainly to companies abroad and certain industries there — I don’t think that’s a major area of concern to this administration right now.”

May cautions: support my Brexit deal or face no deal

Britain’s Prime Minister Theresa May leaves 10 Downing Street in London, September 5, 2018. REUTERS/Hannah McKa

LONDON (Reuters) – British Prime Minister Theresa May has warned rebels in her party that unless they support her potential Brexit deal with the EU then they will face a no deal. The United Kingdom is due to leave the EU on March 29 and yet little is clear: There is, so far, no full exit agreement and some rebels in May’s Conservative Party have threatened to vote down a deal if she clinches one. “I think that the alternative to that will be having no deal,” May told BBC TV. The fate of May’s government and her Brexit plan is in doubt because it is unclear whether she could command the 320 votes she needs in the House of Commons, the lower house of the British parliament, to approve a deal. Recent signals from Brussels have buoyed hopes that the United Kingdom and the EU can agree and approve a proper divorce agreement before the UK leaves on March 29, though the sides are still divided on about one fifth of the detail of a deal. But many business chiefs and investors fear politics could scupper an agreement, thrusting the world’s fifth largest economy into a “no-deal” Brexit that they say would weaken the West, spook financial markets and block the arteries of trade. As Britain now faces a choice between a bad Brexit deal or a damaging “no-deal” Brexit, voters should be given another referendum, London mayor Sadiq Khan said. May’s former foreign minister, Boris Johnson, attacked May’s Brexit plans.

“If the Brexit negotiations continue on this path they will end, I am afraid, in a spectacular political car crash,” Johnson wrote in the Daily Telegraph newspaper.

May’s proposals, named for a country house where they were hashed out in July, call for free trade of goods with the EU, with Britain accepting a “common rulebook” that would apply to those goods. “The whole thing is a constitutional abomination, and if Chequers were adopted it would mean that for the first time since 1066 our leaders were deliberately acquiescing in foreign rule,” Johnson said, referring to the 11th Century invasion which established Norman rule over England. Johnson scolded May for her handling of the Brexit negotiations on the future of the border between Northern Ireland and the Irish Republic, the only land border between the EU and the United Kingdom after Brexit. The Times newspaper reported that the EU’s chief negotiator, Michel Barnier, is working on a new protocol text outlining how to use technology to minimise checks on the border. Under the EU plan, goods could be tracked using barcodes on shipping containers under “trusted-trader” schemes administered by registered companies, the Times reported. Reuters reported on Sept. 12 that EU officials were working on a sensitive Irish protocol to the draft Brexit treaty with Britain, as part of what Barnier has called efforts to “de-dramatise” the issue and get a deal. The proposals are to be circulated to European governments after the Conservative Party conference which starts on Sept. 30, according to the Times. The “revised draft of the Northern Ireland protocol”, according to a diplomatic note of talks between EU ambassadors, will propose that most new checks would not happen at any border, the Times said.