Friday, April 22, 2016

Friday, April 22, Night Wall Street Roundup: Wall Street ends flat; Alphabet and Microsoft tumble

By Noel Randewich
April 22, 2016

Wall Street finished flat on Friday after disappointing quarterly reports from Microsoft and Alphabet slammed tech stocks, while a surge in oil prices lifted energy shares.

The S&P technology sector dropped 1.9 percent, its worst decline since early February, with Facebook down 2.5 percent and Intel falling 1.03 percent.

Microsoft dropped 7.17 percent, contributing the biggest drag to the S&P 500, and Google-parent Alphabet lost 5.41 percent as investors punished both companies for missing profit and revenue estimates. It was Alphabet's worst day since 2012.

Helped by a softer dollar and a recovery in oil prices, the S&P 500 has rebounded from a steep selloff earlier this year and is only about 2 percent short of last May's record high.

Wall Street has rock-bottom expectations as companies post their first-quarter results over the next few weeks, with S&P 500 companies on average seen reporting a 7.1-percent fall in profit, according to Thomson Reuters I/B/E/S.

Crude rose over 1 percent on signs of strong U.S. gasoline consumption, declining production around the world and oilfield outages.

Oil prices have moved in lockstep with U.S. stocks for several months and some investors expected more gains next week.

So far, 77 percent of first-quarter earnings have exceeded expectations, which is superior to the 63-percent beat rate in a typical quarter.

"What's driving the market right now is earnings and oil," said Thomas Wilson, Managing Director of Wealth Advisory at Brinker Capital.

"If earnings results come in above the very low bar of expectations that are out there, and you combine that with a continued rising price of oil, that should equate to an upward trend in the market next week."

The Dow Jones industrial average edged up 0.12 percent to end at 18,003.75 points, while the S&P 500 finished flat at 2,091.58.

The Nasdaq Composite dropped 0.8 percent to 4,906.23, reflecting the selloff in tech shares.

Eight of the 10 major S&P sectors rose, with energy up 1.33 percent.

For the week, the Dow added 0.6 percent, the S&P 500 gained 0.5 percent and the Nasdaq lost 0.6 percent.

Also hurting sentiment during Friday's session, Starbucks fell 4.88 percent after missing sales expectations, while Visa lost 2.08 percent after it cut full-year revenue forecast.

Advancing issues outnumbered decliners on the NYSE by 2,127 to 875. On the Nasdaq, 1,758 issues rose and 1,049 fell.

The S&P 500 index showed 11 new 52-week highs and two new lows, while the Nasdaq recorded 44 new highs and 21 new lows.

About 7.1 billion shares changed hands on U.S. exchanges, above the 6.8 billion daily average for the past 20 trading days, according to Thomson Reuters data.

FreeSeas (Stock Symbol FREE) is coming off the day low, and could rebound nicely in late trading this afternoon. Buy FREE Intraday @ $1.08; +/- .04

Today's Stock In Play is Aeropostale, Now Trading Under the Symbol #AROP

When Dixie Put Slaves on the Money

Harriet Tubman is not the first African American to appear on currency in this land—Confederates were quick to feature slaves on their money during the Civil War.

By Kevin M. Levin
The Daily Beast
April 22, 2016

Another racial barrier was overcome with the United States Treasury’s decision to replace Andrew Jackson with Harriet Tubman on the $20 bill and add Martin Luther King Jr. to the back of the $5 bill. While the announcement has been received with a great deal of excitement, it is not the first time in American history that African Americans have been featured on currency.

African Americans were depicted in a wide range of scenes on Confederate currency during the first year of the war. Their presence reveals how leaders of the new nation hoped to be viewed by foreign countries but, more importantly, these banknotes or Treasury notes highlight the importance that Confederate leaders placed on the preservation of slavery and white supremacy to their new nation. In early 1861 Vice President Alexander Stephens unapologetically argued that the preservation of slavery and white supremacy were the “cornerstones” of their nation. The inclusion of representations of slavery on Confederate currency suggest that, far from trying to conceal it, this new nation celebrated it as a mark of their “American Exceptionalism.”

Images of slaves on currency in the 1860s were not new. Individual Southern states included scenes of enslaved blacks on their currency beginning in the 1820s, which helped to fuel the expansion of the Cotton South and its place in a vibrant Atlantic economy that extended to European banks and manufacturing centers.

The first Confederate banknotes introduced images that became commonplace moving forward. Political icons such as presidents George Washington and Andrew Jackson attest to the Confederacy’s embrace of iconic national leaders and a need to secure its legitimacy. The inclusion of South Carolina Sen. John C. Calhoun reflects his role as the intellectual father and defender of the slaveholding South. These men were featured alongside popular symbols of liberty and freedom as well as symbols of the goddess of peace (Minerva) and the goddess of agriculture (Ceres). Vignettes of slaves round out numerous individual bills and point to what was distinct about Southern society. Their placement among these other representations provided reassurance that slavery was protected both by law and by tradition.

The $50 bill issued in Montgomery, Alabama, in March 1861, for example, features slaves hoeing cotton. Like other vignettes it is a peaceful pastoral scene that depicts slaves diligently working without any oversight and in full view of the plantation mansion. These scenes provided a stark contrast to how many white Southerners perceived their Northern neighbors, who had embraced a morality associated with industry and free labor. Issued a few months later, the $10 bill once again depicts slaves in the field, this time during the harvest season. Both bills introduce slaves that are well dressed and working without any threats of physical violence, which by the beginning of the war had defined many Northern accounts of the South’s “peculiar institution.”

A slave loading cotton bales onto a cart and a sailor leaning against an anchor on the $100 bill—also authorized in 1861—evokes the hopes of a peaceful end to the war. At the beginning of the war, Confederate officials prevented the sale of cotton to England in hopes that economic necessity would force it to push for a peaceful settlement. This never happened and within a short period of time the U.S. Navy bottled up Confederate shipping with a blockade, leaving stockpiles of cotton bales rotting on wharves.

For a nation now at war, scenes of working slaves provided reassurance that victory was possible. They depicted a unified nation with white men serving in the army and loyal slaves on the home front doing the necessary work to ensure a regular supply of food. Whatever fears the men harbored as they left home for the army, these images provided some reassurance that their loved ones were in safe hands with their slaves. Internal problems surfaced immediately, but Confederate currency provided some reassurance that the nation remained unified across both class and racial boundaries.

Images of slaves disappear from Confederate currency issued after 1862 in favor of a new nationalism that highlighted the nation’s leaders, martial symbols, and scenes of war. Bank notes featured Confederate leaders such as Davis and Stephens as well as the martyred “Stonewall” Jackson, the only general featured on Confederate currency. The disappearance of slaves from Confederate currency can be attributed to a growing belief among the poor that the wealthy slaveholding class was exploiting them to defend a system that they had been excluded from. This was reinforced in October 1862 when the Confederate government passed the Twenty Negro Law, which exempted one white man from the slaveholding class for every 20 slaves as a means to prevent violence on the home front.

In contrast, state banks continued to issue currency that included scenes of happy, loyal slaves working cotton fields and engaging in other agricultural tasks through to the end of the war. This represents a continuation of the antebellum emphasis on the virtues of the slave system and even continued for a time after the war ended. Lingering notes that circulated briefly during the postwar period served to remind ex-Confederates of their Lost Cause and the freedom of 4 million people.

It is fitting that Harriet Tubman will replace Andrew Jackson, who did much to encourage the spread of slavery westward. The stories of Tubman’s efforts to undercut slavery by leading the enslaved out of bondage can now be found in most history textbooks, but she also worked tirelessly during the war itself to defeat the Confederacy as a spy and as a battlefield nurse. Tubman’s efforts helped to ensure that a nation’s currency that celebrated the virtues of slavery remains worthless to this day. Her image on our own nation’s bills will go far in strengthening it.

Article Link to the Daily Beast:

Democrats are winning their war on big banks — but look who else pays

By Charles Gasparino
The New York Post
April 21, 2016

With all the fat-cat bashing from Hillary Clinton and her socialist foe Bernie Sanders, you’d think big banks have never stopped ripping off the poor, downtrodden consumer and are laughing all the way to their own bank vaults at Americans’ expense.

The banks, of course, still make money, though increasingly a lot less of it. But the dirty little secret Sanders is too ideologically warped to comprehend and Clinton doesn’t dare challenge is that Wall Street is a shell of its former self.

The once-massive industry of huge profit margins and immense power in political circles is in retreat.

Some of this is good: Following the 2008 financial collapse, the last thing we need is a bunch of bankers crafting economic policy that favors them at the expense of small business. But much of the post-financial-crisis reforms have been needless and all but killed an industry the left actually needs in order to fund its favored handouts.

New regulations like Dodd-Frank, championed and imposed by President Obama and his minions, don’t let banks perform simple tasks like trading stocks and bonds very much anymore, even though trading had little to do with the mortgage selling that led to the bank collapse.

And that’s on top of the countless billions of dollars in settlements banks are still coughing up for alleged misdeeds that may or may not have happened years ago. Banks find it easier and cheaper to just shell out the cash than fight these battles in court, which might be good for their shareholders but not for the taxpayers once the sugar high of the settlements (some of which are tax-deductible) wears off.

When that happens, even with the Dow at or near record levels, Wall Street sheds staff and cuts salaries, as it’s now doing. And that means thousands of middle-class jobs the banks offered people have now been either automated away or simply done away with. Tax revenue from the fat cats is down. The welfare state, particularly here in New York, is suffering and will continue to suffer unless drastic changes are made to the way banks are regulated.

Where are the Democrats? They’ve been silenced by the leftist mob that has taken over their party.

Some perspective: Here in the nation’s welfare-state capital (New York City) finance jobs account for more than 20 percent of private-sector wages, and more than 11 percent of all jobs are in some way related to finance. Much the same goes for the state.

And although overall finance jobs have inched a bit higher in recent years, they remain far from abundant and well off their highs of just a few years ago, which means less of this money is making its way to pay for the goodies our local pols love to hand out.

And things are likely to get worse. Even as the Dow has reached a record 18,000 plus, banks like Goldman Sachs and JP Morgan have announced disappointing earnings. Sure, the “global” economy is feeling the effects of China’s woes, but in the past innovations from banks would smooth out those bumps.

Instead, Goldman and JP Morgan — not to mention Morgan Stanley and Citigroup — are announcing layoffs and flat to lower bonuses for this year after a lousy 2015. These job cuts often don’t begin with the fat cats, but those lower down on the food chain — people who take the subway to work and the ferry back home to Staten Island.

While no one is shedding tears for some trader who can’t afford another Maserati because his bonus got axed, when the rich get paid less, they normally spend less — which means less money for the average folk who work at places that cater to the rich, like restaurants or car dealerships.

Then there’s the impact on city and state finances. The economies of New York City and state may have rebounded from the worst of the Great Recession, but given the massive size of their budgets, city and state coffers are always just one small economic downturn away from a massive deficit.

If you don’t believe me, listen to New York state Comptroller Tom DiNapoli, who in a rare bit of candor (for a Democrat) on the subject of banks recently stated: “Wall Street bonuses and profits fell in 2015, reflecting a challenging year in the financial market. . . Both the state and city budgets depend heavily on the securities industry and lower profits could mean fewer industry jobs and less tax revenue.”

The populists say let it burn. But destroying Wall Street will have a tremendous human cost; there will be fewer public companies, fewer jobs, less money for loans to people to buy homes, even more misery for the 99 percent the zany left-wingers like Sanders say they want to protect.

Article Link to the New York Post:

GOP Convention’s Task: Find a Party Unifier

By Jonah Goldberg
The National Review
April 22, 2016

What are political conventions for?

If you’ve ever been to one, you might think the purpose is for attendees to schmooze, drink, and drink some more. That holds true both for the delegates and for the journalists, who usually outnumber them by at least three to one.

But that’s not actually why political conventions exist. They’re sort of like volunteer fire departments that almost never get a call. It’s not that the firefighters don’t want to put out fires, but until they’re needed, they’re pretty happy to play cards, watch movies, and eat chili. They understand that when the call actually comes, the game ends, the TV goes off, and the boots go on.

Originally, conventions were partly a technological solution to a real problem. Phones didn’t exist and mail was too slow to coordinate the desires of the party faithful across a whole nation. (Also, few negotiators want to put all of their bargaining positions in writing.) You needed lots of face-to-face meetings.

By the 1960s, the telephone started to erode this function of conventions, as my American Enterprise Institute colleague Michael Barone has written.

Barone also notes that the media took one of the key jobs away from party bosses: counting delegates. The first media delegate count wasn’t until 1968, by CBS News.

Not long thereafter, conventions started to resemble infomercials. A political party throws a surprise party for the nominee that isn’t a surprise, because the nominee was determined well before the convention. In fact, the nominee is actually the party-planner-in-chief, choosing who sings his praises and when. The ending is no more in doubt than the question of whether the Ginsu knife in the TV ad will really be able to cut through the can.

But the core purpose of conventions never disappeared. It just got buried under all of the bunting and balloons. Even the communication function of the convention was a means to an end, not the end itself.

The real goal was to pick a nominee who could unify the party. That’s it. It wasn’t to pick a nominee who could win in November. That’s a huge consideration, but it was only one (very important) factor in deliberations over who should get the nomination.

Barry Goldwater didn’t get the Republican nomination in 1964, nor George McGovern the Democratic nomination in 1972, because they were seen as the best candidates to win a general election. They got the nomination because that is who the delegates, informed by voters, wanted as their standard-bearers.

Ideally, the candidate who satisfies both criteria — speaks for us and is most electable — is the nominee. But that doesn’t always happen.

This is precisely the dilemma the GOP is facing in July. Donald Trump may indeed end up being the nominee, but he’s nowhere close to the most electable candidate the GOP could offer, and he’s easily the most divisive choice the party could make. Ted Cruz is better on both scores – I would be happy to see him get the nomination – but he also has problems on both fronts.

John Kasich has a theory that he is more electable – and he may be right, though I’m unconvinced – but there’s very little evidence that many Republicans outside of Ohio want him to be their champion.

The current debate about the GOP nominating process (It’s rigged! It’s undemocratic!) is largely hogwash. If it’s rigged, it’s rigged in favor of the front-runner, which is why Trump’s share of delegates is higher than his share of votes.

The nominating system was set up not as some reality-show contest to see who can get the most delegates. It was set up to see who can unify the party. The primary system was introduced to give voters the first whack at that task. (But they didn’t always have the final say: Robert A. Taft got more votes than Dwight D. Eisenhower in 1952, but Ike got the nomination.)

If Trump fails to get 1,237 delegates – still the most likely outcome – that will mean the voters collectively failed to find a unifier.

That failure is the alarm that calls the firefighters – i.e., delegates — to duty. Whether they pick Cruz or Kasich or someone else, it will not be some undemocratic “theft.” It will be their effort to do their job: unify the party. I wish them luck.

Article Link to the National Review:

Delegates face death threats from Trump supporters

At the Republican National Committee’s spring meeting, delegates describe vicious missives demanding they support the GOP front-runner.

By Eli Stokols and Kyle Cheney
April 22, 2016

First it was an email warning Steve House, the Colorado GOP chairman, to hide his family members and “pray you make it to Cleveland.” Then there was the angry man who called his cell phone and told him to put a gun down his throat.

“He said, ‘I’ll call back in two minutes and if you’re still there, I’ll come over and help you’,” House recalled.

Since Donald Trump came up empty in his quest for delegates at the Republican state assembly in Colorado Springs nearly two weeks ago, his angry supporters have responded to Trump’s own claims of a “rigged” nomination process by lashing out at Republican National Committee delegates that they believe won’t support support Trump at the party’s convention — including House.

The mild-mannered chairman estimates he’s gotten between 4,000 and 5,000 calls on his cell phone. Many, he says, have ended with productive conversations. He’s referred the more threatening, violent calls to police. His cell phone is still buzzing this week, as he attends the RNC quarterly meetings in Florida, and he’s not the only one.

In hotel hallways and across dinner tables, many party leaders attending this week’s meetings shared similar stories. One party chair says a Trump supporter recently got in his face and promised “bloodshed” if he didn’t win the GOP nomination. An Indiana delegate who criticized Trump received a note warning against “traditional burial” that ended with, “We are watching you.”

The threats come months ahead of a possible contested convention, where Trump is all-but certain to enter with a plurality of delegates bound to him on the first ballot, but he could lose support on subsequent ballots as rules will allow delegates to vote however they choose. And although the harassers are typically anonymous, many party leaders on the receiving end of these threats hold Trump himself at least partly responsible, viewing the intimidation efforts as a natural and obvious outgrowth of the candidate’s incendiary rhetoric.

The Trump campaign did not respond to a request for comment.

“A Trump supporter recently got in my face and threatened ‘bloodshed’ at the national convention and said he would ‘meet me at the barricades’ if Trump isn't the nominee,” said one party chairman, who spoke on condition of anonymity.

“The Trump campaign needs to publicly reject bullying and threats of violence. They haven't, yet. It's not okay to give supporters threatening violence a wink and a nod.”

Trump’s campaign has never explicitly encouraged violence. But it has promoted tactics that have contributed to delegates’ fear. Earlier in April, a top Trump adviser posted the Tennessee state party chairman Ryan Haynes’ cell phone number online along with a message accusing the state party of trying to “STEAL your vote TODAY.”

Haynes told POLITICO at the time that he nearly canceled the party’s delegate selection meeting after a barrage of vitriol and the specter of violence.

The fears expressed by party leaders are bubbling up at a time Trump is facing internal pressure to rein in his confrontational inclinations too. Paul Manafort, Trump’s GOP convention chief who is in Florida to attend the RNC meetings and assuage the concerns of the GOP establishment, has encouraged the candidate to temper his bombast.

It’s a noticeable shift away from the slash-and-burn approach of Trump’s campaign manager Corey Lewandowski, who some party insiders blame for cultivating, or at least enabling, Trump’s brasher tendencies. One state party leader, who requested anonymity, described the intimidation tactics coming from Trump supporters as part of “Corey culture.”

For months, Trump’s campaign has played a recording before the start of its rallies, encouraging attendees not to physically harm protesters but simply to shout them down with chants of “Trump! Trump! Trump!” But one operative close to the campaign, an ally of Manafort, also blames the old regime for not doing more to rein in the violence that has occurred at some rallies and the threats many continue to make.

“That only happens when somebody is not driving the bus,” the operative said. “That’s all going to settle down now that Paul is in charge.”

But even if Manafort is able to nudge Trump toward a more traditional presidential bearing, the hostile energy his campaign has already whipped up among some supporters has left a trail of anger and intimidation that is likely to linger when the convention comes in July.

“I’ve had these thoughts quite a bit and had these discussions with people who think I’m an idiot for wanting to go to Cleveland,” said Craig Dunn, a delegate from Indiana who supports John Kasich. Dunn said he’s most nervous about exiting the convention arena in the moments after a potential Trump loss.

“That’s where there’s the greatest prospect for danger,” he said. “I don’t see myself walking outside the convention with a Kasich badge.”

Dunn was one of at least four Indiana delegates who received disturbing messages — several of which were investigated by local police — after telling POLITICO about their anti-Trump feelings.

Several delegates and party leaders told POLITICO that the rising atmosphere of fear has silenced some critics and led party leaders to eye extra security for state conventions and local gatherings where Trump supporters might take exception to the results.

Concerns about delegate safety at the RNC convention in Cleveland began to escalate earlier this month when Roger Stone, a long-time Donald Trump ally, promised to disclose the hotels and room numbers of delegates “directly involved in the steal.”

In their Wednesday meeting, the party chairs discussed developing security measures for delegates at the national convention in Cleveland. Louisiana chairman Roger Villere said he felt reassured by RNC chairman Reince Priebus and other party leaders that the security situation — helmed by the Secret Service — would be more than adequate to keep delegates safe.

“A lot of us bring our wives and children. Do we really want to? That’s one of the things that was asked,” Villere said. “They assured us that we would be protected.”

Villere himself became a target when Trump last month slammed GOP leaders in Louisiana — a state he won — over reports that his top rival, Ted Cruz, appeared likely to win more delegates to the convention than him.

“I have had personal calls and people are very aggressive on the phone who are supportive of Donald Trump,” he said. But none, he added, have been death threats. “I don’t think it’s any different from some tough campaigns I’ve been through in the past.”

But the degree of concern has varied among the chairs. One chairman described the conversation as “concern expressed by some new chairs and some chairs in states where threats have been particularly acute.” Veteran chairs, he said, tried to reassure colleagues that it would eventually fizzle.

Kevin Downey, chairman of the Minnesota Republican Party, said the discussion also included plans to have “a process in place” for any “specific or concrete threats that our delegates would become aware of.”

“Campaigns approaching delegates and pitching their candidates and trying to win delegate support — absolutely nothing new about that. It’s just part of the process and it’s what delegates expect,” he said. “We just want to make sure that nothing extends into the zone of being a threat or intimidation.”

Another chairman, speaking on condition of anonymity, said there were concerns raised about delegates being “pursued in extreme ways” traveling to and from the convention arena.

Dunn, the Indiana delegate, said his tormentors had largely moved on in recent days. But he expects them to return when the state hold its primary on May 3. He says he’s most frustrated at Trump for not recognizing the lingering impact his words have on supporters who don’t understand the complicated delegate process.

“You can take advantage of the people’s lack of understanding. He may premeditate when he does that and chuckle when he walks off the podium, but [his supporters don’t know when to turn it off,” he said. “By the time it gets down to the guy sitting in Row 63, that may be ‘I’m going to find one of those delegates’ … that’s the danger when you whip the audience and the crowd up.”

Amid conversations about convention security, Trump’s detractors face one harrowing fact: the fear wrought by threats and intimidation could be affecting convention rules — and, potentially, the GOP nomination fight itself — to Trump’s benefit

The RNC’s rules committee met Thursday afternoon and rejected a proposal to dramatically alter the party’s nomination process. With the likelihood of a contested convention for the first time in 40 years, every potential rule change is being highly scrutinized; and the individuals on the RNC rules committee are now acutely aware of the backlash they may face if there is any perception of them changing the rules to help a certain candidate.

“Several people said now is not the time to change the rules,” said House, the Colorado chairman. “Most people don’t want to make news and are being very, very careful. There’s an element of fear in the process.”

Article Link to Politico:

Delegates face death threats from Trump supporters

How Schilling Explains Trump’s Rise

April 22, 2016

As anyone who has followed his career in baseball and then sports broadcasting knew, Curt Schilling has had this coming for a long time. An opinionated, egotistical loudmouth as a star pitcher, Schilling repeated the act as an analyst on ESPN’s Sunday night game of the week broadcast. As an ace for two World Series championship teams, he earned a degree of baseball immortality that insulated him from any blowback from his big mouth. But in the media even the memory of his “bloody sock” performance for the Boston Red Sox’s miracle 2004 comeback only buys you only so much impunity for politically incorrect statements. That’s why Schilling was fired by ESPN yesterday after a series of gaffes about Muslims, Hillary Clinton, and transgender bathroom policies that got him in hot water.

For his employers who had already realized that he was more trouble than he was worth, it’s good riddance. Nor, I think, will many in the audience miss his insights all that much. But Schilling’s firing is significant in ways that go far beyond the realm of baseball and even the behemoth of cable broadcasting for which he worked. Schilling’s defenestration explains the rise of Donald Trump more clearly than the most cogent analysis of his supporters’ personalities and political proclivities.

What does Schilling have to do with Trump? The answer is plenty, and not just because he is well known to lean to the right on politics. The willingness of a major corporation to jettison a star over a questionable social media post illustrates better than anything else I can think of the way our society has become enslaved to a notion of political correctness.

More than any other factor — including disillusionment with Republican leaders or dislike of immigrants and anger about a perception of an American decline orchestrated or at least presided over by President Obama — it is resentment of the iron grip of political correctness on our culture that has fueled Trump’s meteoric ascent to the status of Republican presidential frontrunner. The billionaire has been able to do what every lout on every bar stool in the nation, as well as a good many other respectable persons, would like to do: Get away with saying something outrageous or otherwise outside of the bounds of what now passes for unexceptionable comments even about controversial subjects.

As I’ve noted more than a couple of times, Trump’s fans don’t like him in spite of his idiotic comments about Mexicans, prisoners of war or even his vile attacks on a rival’s wife. They like him because he can do what they dare not attempt. Even if they don’t actually want to brand Mexican immigrants as rapists and drug dealers or to applaud the beating up of someone who disagrees with them, they love the fact that Trump can say it and not pay a penalty. For them, the cost to society of his vulgarity, his dog whistling to racists or even his clear ignorance of policy questions that a potential president ought to be familiar with is balanced out by their sheer delight at his ability to say whatever he likes about anything he chooses.

That is something that cannot be said about Curt Schilling or at least not any longer.

Let me specify that, as a fan of the New York Yankees, I despise Schilling for his role in helping defeat them in the postseasons of 2001 and 2004. The fact that he was an arrogant jerk in his comments only made his heroics for the opposition even more loathsome to me, though I will readily confess that (as is the way of these things in sports) I would have loved him if he had played in pinstripes.

I also take a dim view of his foray into the business world. Schilling founded a video game company and, trading on his celebrity and his mythical status among the members of “Red Sox Nation,” he was able to bamboozle the state of Rhode Island into financing its expansion. Taxpayers were left holding the bag when it collapsed. In that sense, despite his conservative politics, he’s also a poster child for crony capitalism and the perils of big government intervention in the economy.

Given how articulate he was, it was no surprise that he eventually went into broadcasting. His tiresome pontificating could make the Sunday night games a trial to watch, but I’ll concede that he probably isn’t that much worse in that respect than most baseball color analysts. Balancing out that was the fact that he is a survivor of mouth cancer (caused by his addiction to smokeless tobacco) and that he also was a loving and supportive helpmate to his wife when she dealt with skin cancer. Like all of us, Schilling is a mix of good and bad.

As for the comments and social media posts that got Schilling into trouble, they illustrate the peril that celebrities face when they court controversy.

He was taken off the Sunday broadcast and relegated to the less watched Monday night game for making a comparison between “extremist Muslims” and Nazis. Any comparison with the Nazis is bound to be inexact, but who in their right minds does not consider the atrocities committed by groups like ISIS to be worthy of the most extreme condemnation?

He was also in trouble for a recent comment on a radio show in which he said that Hillary Clinton deserved to “be buried under a jail somewhere” if she turned out to be guilty of placing “classified information on hundreds if not thousands of emails on a public server, after what happened to General Petraeus.” Clinton loyalists may disagree but, again, that seemed to be a fair comment.

But the straw that broke the camel’s back for ESPN was a Schilling retweet of a picture of a man in drag with a comment about letting him into a bathroom “with your daughter.” The reference to the dispute over the right of transgender people to choose which bathroom to use has become the third rail of popular culture in recent days. Schilling’s appended comment in which he dismissed laws that would mandate such a right as “pathetic” is the sort of thing which gets states boycotted and people fired from their jobs these days, and that’s what happened to Schilling.

Let’s concede that this is not a free speech issue. ESPN has every right to fire Schilling. ESPN is running a business and if — rightly or wrongly — they think Schilling’s comments harm their interests, they are justified in terminating his employment. Schilling should have understood that sports broadcasters should stick to talking about that topic and that they do not have the same leeway that star athletes possess. If Schilling wants to be a pundit, he should not expect ESPN to be held accountable for his opinions. Moreover, the defensive rant he published on his website displays the same insufferable Curt Schilling that we have always known.

But the support Schilling is getting from the political right is equally unsurprising. Ted Cruz blasted ESPN in an interview with Glenn Beck in which the radio host said preventing transgender men from using lady’s restrooms might prevent little girls from being molested by sexual predators. Sarah Palin also weighed in to support Schilling.

It doesn’t matter whether you agree with Schilling about extremist Muslims, Hillary’s emails, or transgender bathrooms. Indeed, Trump likely confounded some of his supporters by supporting the right of transgender people to use any bathroom they liked. The key point in understanding the significance of all this is that a large number of Americans are sick and tired of elites drawing lines in the sand when it comes to speaking about certain topics across which no one may cross without severe consequences. Racism and intolerance are abhorrent, but Schilling’s problems illustrate the fact that you don’t have to actually advocate hate to be given pariah status. He may not have been wise or even correct, but for a man to lose his livelihood over these comments strikes a great many people as a sign of just how intolerant our liberal cultural elites and the corporations that fear them have become.

That is why voters prefer a candidate that they think “tells it like it is” to those who are more principled, informed about the issues or even more electable. There’s a lot about Donald Trump that is inexplicable to those of us who find it perplexing that so many of our fellow citizens are willing to put such an unworthy person in the same office that Washington, Jefferson, Lincoln, the two Roosevelts, and Ronald Reagan graced. But Curt Schilling’s firing explains Trump’s ascent about as clearly as any other issue I can think of.

Article Link to Commentary:

Does ‘Black Lives Matter’ Really Matter?

There has been no significant legislation passed, no federal prosecution of cops. The question now is how to turn talk into real reform.

By Goldie Taylor
The Daily Beast
April 22, 2016

WEST BALTIMORE — There are no helicopters in the sky, no plumes of dark smoke billowing in the distance, and no phalanx of riot gear-clad police officers lining the streets. This city remains what it has been—battered, broken, and paralyzed in too many places.

I was here just over a year ago, among the masses of mostly young black faces as the city boiled over after the death of 25-year-old Freddie Gray, watching as a liquor store was repeatedly looted and a local pharmacy burned. I was in St. Louis, my hometown, and in North Charleston, South Carolina and other places where the righteously indignant shut down shopping malls, major thoroughfares, bridges, and transit stations.

As people marched, prayed, and pumped their fists in the wake of high-profile killings of black people, I imagined that change was coming, that pushing those stories into the national discourse would somehow result in tangible policy solutions, a wave of reforms.

But here in Baltimore, as the city heads into a primary election to select a new mayor, as murders shot up 59 percent in 2015, from 217 the previous year to 344 as cops all but walked off the job in response to protests demanding that they do it better, one has to wonder: Does Black Lives Matter matter?

Unlike in the second wave of the civil rights movement, which began in the 1950s, there is no significant body of legislation so far, no systematic criminal justice system reforms worthy of the name at the state or local level. And there have been no federal prosecutions of police officers who were either not charged or who were given light sentences at the local level in incidences involving an unarmed black victim.

What there has been is media coverage. There have been meetings at the Justice Department and the White House. Local Black Lives Matter chapters have sprung up around the country. Hollywood royalty and celebrity athletes have added their names to the role of supporters. The Democratic National Committee passed a resolution supporting the movement and “affirming” that “black lives matter.”

Presidential candidates Hillary Clinton and Bernie Sanders awkwardly navigated the issues in their efforts to court black voters, with both at times appearing resentful when asked by young activists to explain their public records.

While both have since sharpened their messaging, Sanders once said he didn’t need to be lectured about black and Latino issues and Clinton urged activists to come up with a more positive vision.

In this third wave of the civil rights movement, there are those who—like Dr. King did—believe that public activism should run in tandem with engaging policymakers like Clinton and Sanders. And still others who think the two should be divorced and cannot live with integrity under the same roof. Both are invested in the hope that a substantial shift can be made in how non-white communities are policed. The demand for meaningful economic policies that drive income equality and access to wealth is universal among social justice allies—even if they differ on the path to get there.

But, if you are looking for hope, you won’t find it in the hard-faced, hollowed out buildings, situated along North Avenue, where the ghosts of yesteryear freely roam. You won’t find it in the faces of the dispossessed gathered on the corners, stoops, and storefronts to sing desperate songs of poverty and lack. There are no children here—not along Division Street, Pennsylvania or North Freemont Avenues—in a place where being “grown” isn’t always counted in years, but in the thickness of the trauma you have endured.

The Sandtown-Winchester neighborhood, where Gray was killed by Baltimore city police officers, is a place defoliated of its wealth and any ability to produce it by segregation, housing discrimination, and mass incarceration—by immoral federal and state policies designed to press down, trap in, and lock out. Its proverbial bootstraps were stolen and twisted around its neck until an entire community nearly lost consciousness and died.

Reno has lived off North Fulton, near Pressman Street, for as far back as he can remember. “It always been like this,” he shrugs. “Always going to be.”

He is 23 now, a high school drop out with a baby on the way and little faith that public demonstrations have or will make any real difference.

“Every day is every day,” he says, swigging a fruit punch. “It’s a whole lot of young Freddies out here.”

That six Baltimore police officers involved in Gray’s death have been indicted and face criminal trial does not change things for Reno. “They gave that man’s family six million dollars,” he says, referring to the $6.4 million the city paid out before the family even sued them. “They know what they did to him. They killed him just like they can kill me and get away with it.”

Asked about the protests and if he thought the uprisings would result in any meaningful change over time, Reno rolled his chocolate brown eyes.

“We got a new CVS and the family got a lot of money, but niggas still dying.”

The numbers bear that out. To be black and poor means, all too often, that your death will go unprosecuted and unpunished. Justice, if the available data means something, is often tied to the race and economic status of the victim—especially if the shooter is a police officer. And, if that victim has a criminal record of any kind, the chances of a successful prosecution fall exponentially.

“More than half of all African-American millennials indicate they, or someone they knew, had been victimized by violence or harassment from law enforcement,” according to a study conducted by the University of Chicago. “Researchers, who have surveyed millennials several times during the past decade, point out that the disparities existed well before the Black Lives Matter movement began.”

“They got these cameras now, though,” Reno tells me. “But that don’t mean nothing.”

A coalition that includes several of the movement’s most recognizable faces wants it to mean something. Co-led by Deray Mckesson, who is now running for Baltimore mayor, Campaign Zero announced a national platform in August 2015. The group was specific in outlining the dilemmas and in detailing comprehensive solutions “informed by data, research and human rights principles.”

Its adoption, however, in whole or part, appears unlikely at both the federal and the local level. There is a difference between demonstrating and lawmaking, as the group well knows. The difficulty is converting street action into legislative action. Then too, the anticipated explosion in 2016 primary election turnout never happened.

It means focusing not just on a presidential race, but also on congressional districts, state legislatures, and city councils, governors and county executives and, yes, mayors. Dismantling a racist system will take all of that and more.

Has Black Lives Matter moved the needle? Absolutely. That we are having this conversation at all is a testament to their fearless devotion, as well as the ability to organize and move. And, for the record, the movement is a direct challenge to those who protest that “all lives matter” and who don’t think there are special issues to be addressed.

Dr. King answered that 52 years ago, saying, “our society has been doing something special against the Negro for hundreds of years.”

Some 48 years after his assassination, we still live in an age when young men like Reno are feared on sight. Institutionalized biases will sooner land him in a jail cell rather than a classroom. For him, Black Lives Matter embodies the hope that he cannot embrace for himself.

“You can’t burn down what’s already been burnt down, can you?”

Article Link to the Daily Beast:

Noonan: That Moment When 2016 Hits You

‘I felt a wave of sadness,’ said one friend. This year’s politics have that effect on a lot of Americans.

By Peggy Noonan
The Wall Street Journal
April 21, 2016

Have you had your 2016 Moment? I think you probably have, or will.

The Moment is that sliver of time in which you fully realize something epochal is happening in politics, that there has never been a presidential year like 2016, and suddenly you are aware of it in a new, true and personal way. It tends to involve a poignant sense of dislocation, a knowledge that our politics have changed and won’t be going back.

We’ve had a lot to absorb—the breaking of a party, the rise of an outlandish outsider; a lurch to the left in the other party, the popular rise of a socialist. Alongside that, the enduring power of a candidate even her most ardent supporters accept as corrupt. Add the lowering of standards, the feeling of no options, the coarsening, and all the new estrangements.

The Moment is when it got to you, or when it fully came through.

My friend Lloyd, a Manhattan lawyer and GOP campaign veteran, had two Moments. The first came when he took his 12-year-old on a father-son trip to New Hampshire to see the primary. They saw Ted Cruz speak at a restaurant, and Bernie Sanders in a boisterous rally. “It was great and wonderful,” Lloyd said.

Then it happened. “The Monday night before the voting we were at a Donald Trump rally. A woman in the audience screamed out the P-word to refer to a rival candidate. Trump repeated it from the podium, and my kid heard it and looked at me.” Lloyd was mortified. Welcome to the splendor of democracy, son. “I thought, ‘So we have come to this.’ ”

It didn’t end there. Lloyd’s second Moment came a month later, the morning after the raucous GOP debate that featured references to hand size. Lloyd was in the car with his son, listening to the original Broadway cast recording of “Hamilton.” “I blurted out, ‘How exactly has America managed to travel from that to this?’ ” American history is fiercely imperfect and made by humans. “Yet in the rearview mirror it appears ennobling and grand. And now it feels jagged, and the fabric is worn.”

A friend I’ll call Bill, a political veteran from the 1980s and ’90s, also had his Moment with his child, a 14-year-old daughter who is a budding history buff. He had never taken her to the Reagan Library, so last month they went. As she stood watching a video of Reagan speaking, he thought of Reagan and FDR, of JFK and Martin Luther King. His daughter, he realized, would probably never see political leaders of such stature and grace, though she deserved to. Her first, indelible political memories were of lower, grubbier folk. “Leaders with Reaganesque potential no longer go into politics—and why would they, with all the posturing and plasticity that it requires?”

He added: “I felt a wave of sadness.”

Another political veteran, my friend John, also had his Moment during the New Hampshire primary. Out door-knocking for Jeb Bush, “I was struck as I walked along a neighborhood using the app that described the voters in each house. So many multigenerational families of odd collections of ages in houses with missing roof shingles or shutters askew or paint peeling. Cars needing repair.”

What was the story inside those houses? Unemployment, he thought, elder care, divorce, custody battles. “It was easy to see a collective loss of hope in a once-thriving town.” He sensed “years of neglect and sadness. Something is brewing.”

My Moment came a month ago. I’d recently told a friend my emotions felt too close to the surface—for months history had been going through me and I felt like a vibrating fork. I had not been laughing at the splintering of a great political party but mourning it. Something of me had gone into it. Party elites seemed to have no idea why it was shattering, which meant they wouldn’t be able to repair it, whatever happens with Mr. Trump.

I was offended that those curiously quick to write essays about who broke the party were usually those who’d backed the policies that broke it. Lately conservative thinkers and journalists had taken to making clear their disdain for the white working class. I had actually not known they looked down on them. I deeply resented it and it pained me. If you’re a writer lucky enough to have thoughts and be paid to express them and there are Americans on the ground struggling, suffering—some of them making mistakes, some unlucky—you don’t owe them your airy, well-put contempt, you owe them your loyalty. They too have given a portion of their love to this great project, and they are in trouble.

A few nights earlier, I’d moderated a panel in New York, on, yes, the ironic soundtrack of election year 2016, “Hamilton.” At one point I quoted a line. It is when Eliza sings, just as war has come and things are bleak: “How lucky we are to be alive right now.” As I quoted it my voice caught. I asked a friend later if he’d noticed. Yes, he said, quizzically, comfortingly, we did.

The following day I spoke at a school in Florida, awoke the next morning spent, got coffee, fired up the iPad, put on cable news. I read an email thread from a group of conservative women—very bright, all ages, all decorous and dignified. But tempers were high, and they were courteously tearing each other apart over Mr. Trump and the GOP.

Then to my own email, full of notes from people pro- and anti- Trump, but all seemed marked by some kind of grieving. I looked up and saw Hillary Clinton yelling on TV and switched channels. Breaking news, said the crawl. A caravan of Trump supporters driving to an outdoor rally in Fountain Hills, Ariz., had been blocked by demonstrators. The helicopter shot showed a highway backup for miles. No one seemed to be in charge, as is often the case in America. It was like an unmovable force against an unmovable object.

I watched dumbly, tiredly. Then for no reason—this is true, it just doesn’t sound it—I thought of an old Paul Simon song that had been crossing my mind, “The Boy in the Bubble.” I muted the TV, found the song on YouTube, and listened as I stared at the soundless mile of cars and the soundless demonstrators. As the lyrics came—“The way we look to a distant constellation / That’s dying in a corner of the sky / . . . Don’t cry baby / Don’t cry”—my eyes filled with tears. And a sob welled up and I literally put my hands to my face and sobbed, silently, for I suppose a minute.

Because my country is in trouble.

Because I felt anguish at all the estrangements.

Because some things that shouldn’t have changed have changed.

Because too much is being lost. Because the great choice in a nation of 320 million may come down to Crazy Man versus Criminal.

And yes, I know this is all personal, and not column-ish.

But that was my Moment.

You’ll feel better the next day, I promise, but you won’t be able to tell yourself that this is history as usual anymore. This is big, what we’re living through.

Article Link to the Wall Street Journal:

The One-Man Master Plan to Avoid War with China

Timing is everything for U.S. strategy in the South China Sea.

The National Interest
April 22, 2016

Two ideas have been tirelessly hawked by commentators about the Asia-Pacific in recent weeks. The first is that President Xi Jinping is the second coming of Mao Zedong for the unmatched power he wields over both the Chinese Communist Party (CCP) and his country. The second idea, often accompanied by island-spotted satellite images, is that right now is the moment for U.S. forces to rush headlong into the South China Sea to stop Beijing’s island building and maritime claims, and damn the consequences. Both ideas, however, are wrong. If permitted to percolate through U.S. policy, each could lead to misunderstanding and perhaps to war.

Xi Isn’t Mao

In its April 2 issue, the Economist cautioned, “Beware the cult of Xi,” fretting that the Chinese leader “has acquired more power than any Chinese leader since Mao Zedong.” In case the point was lost on any reader, a video posted on the Economist’s Twitter account morphed the cover image of Xi into Mao and back. Articles making similar points have appeared in other major publications.

Megalomania à la Mao is often given in these articles as the root cause of Xi’s power grab. For these China watchers, Xi’s strategy is a consequence of temperament. “[Xi] has shown a taste for audacious decisions and a loathing for dissent,” the New York Times explained of the leader, who is on a “steely quest for dominance.”

A purple description, but also a wrong one. China’s current president has of course consolidated power since 2012, but the reasoning behind his strategy is the opposite of what drove Mao. Even comparing the two on the simple point of having built up power in the CCP muddles the opposing logic animating each leader’s strategy. Above all, Xi seeks to be a guardian of stability and continuity, whereas Mao was a provocateur of disorder.

“The Mao era really is fundamentally quite different from the current era, even though Xi Jinping kind of draws on some of the imagery of Mao and some of the language of that period,” historian Andrew G. Walder noted recently. In contrast to Xi, “[Mao] didn’t talk about stability. He never would have talked about stability maintenance. Mao really believed that disorder was the only way China would progress.”

“I think that Xi Jinping’s job is fundamentally different from Mao’s,” Walder went on to say. “Mao had. . . up to the late 1950s, he had a highly disciplined and unified system, really. And he set about to smash it. He smashed it to pieces in the Cultural Revolution. . . . ”

Xi is many things, but a smasher isn’t one of them. “I think Xi Jinping’s view of the world is really shaped by the China that he grew up in, especially his fear of disorder, his fear of instability,” Walder explained.

The point is not academic. To view Xi with the unbridled power of Mao assumes that the current Chinese leader is freed from making foreign policy decisions with an eye toward domestic politics. In such a view, Xi can move the pieces around the chessboard as he pleases, and U.S. policy is simply a matter of catching the leader’s capriciousness at the right moment.

If, instead, Xi is on the defensive in preserving a fracturing, legitimacy-starved party, and if he is single-minded about not becoming “China’s Gorbachev,” then Washington should anticipate that there will be moments when Beijing’s foreign policy is more dictated by its CCP politics, and moments when it is less so. There will be periods when maritime escalation readily allows Xi to consolidate domestic power further, and others when it is a risk with diminishing or negative returns to the gains that the leader has already amassed. In the case of the former, U.S. policymakers could be caught off guard by Chinese escalation well in excess of whatever minor-to-moderate incident triggered the initial crisis. In the latter, however, the United States can push harder, and to greater effect.

Getting the Timing Right

When, then, is the best time to push back in the South China Sea? In the Financial Times last week, Senator John McCain made the case for right now, arguing:

“The potential threats China will pose in the South China Sea in the coming months demand a change of course that can reassure the region of America’s commitment and demonstrate to Beijing that its pursuit of maritime hegemony will be met with a determined response.”

The plan McCain outlined—a more robust Freedom of Navigation program, challenging any Chinese claims of an ADIZ—makes sense as a specific response to Beijing’s maritime actions. And China, for its part, is flagrantly pushing ahead in the South China Sea, with military aircraft landing in the disputed Spratly Islands on Monday. But hitting back hard now is only half a strategy. What happens when—not if—the United States and China have a minor-to-moderate incident in disputed waters?

In 2009, such an incident happened when the USNS Impeccable was approached by Chinese ships waving Chinese flags in the South China Sea. The boats harassed the Impeccable, throwing debris into the water ahead of the U.S. Navy vessel. In a rare move, the United States filed a formal (and public) complaint.

But the crisis did not lead to war. Hu Jintao, then president of China, chose a response that, while not caving to U.S. demands, nonetheless stopped further escalation and preserved the status quo. In a recent essay, China scholar Kai He looked at how this decision differed from other incidents that were not shut down as thoroughly by the Chinese leadership. He noted, critically, that Hu was in his second term and had gone a long way in removing rivals and promoting party members loyal to him:

“Hu was placed in a domain of gains when the Impeccable incident took place. For China in general and for Hu in particular, 2008 had featured great success and glory. This does not mean that Hu did not face domestic and international challenges. However, relatively speaking, it seems that everything was under control and everything was getting better for Hu.”

After 2017, Xi will in all likelihood be in a situation similar to Hu after 2007—that is, starting his second five-year term having solidified his support within the party to the furthest extent he will achieve. As He explained in his essay, “Although his leadership style and personality differ significantly from Hu’s, Xi still faces a similar or even the same political structure and international environment that Hu did.” That the 2001 U.S.-China aircraft collision in which both countries de-escalated while saving face occurred in Jiang Zemin’s second term supports this “second-term status quo” argument as well. There’s more. In 2001, with a new U.S. president, Chinese leaders were willing to defuse the crisis relatively quickly—specifically, permitting fewer antiforeign protests—as a signal to the new administration that “China should not be regarded as an enemy,” as scholar Jessica Chen Weiss has described. But with an outgoing American president, in 1999, the story was different. After the United States bombed the Chinese embassy in Bosnia in May of that year, Beijing did eventually de-escalate, but it was a much more fraught process than in 2001. Chinese leaders permitted many more anti-U.S. protests than it would two years later, all as a sign that the nation would not be bullied by the second-term U.S. president. In 2017, as in 2001, there will be a new American president—and perhaps one perceived by Beijing as more hawkish than the current president.

Right now, however, before Xi has consolidated power in next year’s Nineteenth Party Congress, the Chinese leader “will be more vulnerable to the influence and pressures of the military and the outside world if foreign policy crises occur,” according to He. “Consequently, Xi may adopt risk-acceptant policies as a political tool to establish his authority in the CCP.” Those calling for U.S. forces to ride into the western Pacific like the cavalry would do well to consider that, for domestic reasons, Xi may be more willing to risk confrontation now—and for reasons tangential (at best) to the South China Sea itself.

In a smart new essay, G. John Ikenberry has made another important point lost on those calling for a U.S.-led crusade against China: everyone in Asia is hedging. Japan, South Korea, Australia and the Philippines all have one hand outstretched toward Beijing and one toward Washington.

“They rely on the United States for security and providing a general counterweight to China, and they are increasingly tied to China for trade and investment. They gain from both relationships. This places constraints on the United States. The United States will not find its regional allies wanting to pursue a full-scale balancing strategy against China. They do not want to be placed in a situation in which they need to choose between the Eagle and the Dragon. . . . Countries in the region will not want to join a crusade. They will want steady and credible American security commitments. These considerations suggest that the United States will not want to organize its presence in Asia simply around ‘balancing’ China. It will need a more complex strategy of engagement, restraint, commitment, and the building of counterweights to China.”

Such a strategy must start with Xi. The Chinese leader will in all likelihood be in a much more secure position after 2017. Then, not now, the status quo may seem most appealing to Xi, with further maritime adventurism seen as more of a risk than at present. Should an incident occur between U.S. and Chinese ships or aircraft, it will be then, not now, that both countries are best positioned to avoid unnecessary escalation. As such, U.S. strategy can increase pressure carefully now, but must also be prepared both for much stronger engagement and for much firmer pressure in 2017 and beyond. Washington should also anticipate that pushing too hard on Beijing this year could trigger unexpected consequences for reasons that have little to do with the South China Sea.

Over the long term, China may seek regional hegemony and an exit for America from the western Pacific. But looking at the next five years—a much more realistic timeline—pushing back hardest only after Xi is more secure at home diminishes unnecessary risks in U.S. strategy while increasing the odds of keeping things steady in the South China Sea for now.

Article Link to the National Interest:

Can US, Iran maintain ties after Obama?

After three years of frequent and intense US-Iranian diplomatic contacts during the successful Iran nuclear deal negotiations, can the United States and Iran maintain their diplomatic opening after President Barack Obama leaves office and John Kerry is no longer secretary of state?

By Laura Rozen
April 22, 2016

WASHINGTON — As Secretary of State John Kerry flies back from Saudi Arabia to New York for his second meeting this week with Iranian Foreign Minister Mohammad Javad Zarif on April 22, some US officials and outside experts are thinking about how the functional diplomatic channels that have been established with Iran over the past few years between the Obama and Rouhani governments might be maintained in the next US presidential administration.

The channels established between the United States and Iran during the last three years of intense Iran nuclear deal negotiations that culminated in implementation of the landmark deal, the Joint Comprehensive Plan of Action (JCPOA), in January, have included unprecedented one-on-one contacts most frequently between Kerry and Zarif and their top deputies, but also between other Cabinet chiefs — US Energy Secretary Ernest Moniz and Iranian Atomic Energy chief Ali Akbar Salehi, and last week, for the first time, between US Treasury Secretary Jack Lew and Iranian Central Bank governor Valiollah Seif, as well as consultations between dozens of midlevel diplomats and experts. Indeed, as Kerry meets Zarif in New York on the sidelines of the signing of the UN Paris climate agreement, new US Undersecretary of State Tom Shannon and Stephen Mull, the State Department’s JCPOA implementation czar, will be meeting in Vienna with Iranian Deputy Foreign Minister Abbas Araghchi and others on the eight-member Joint Commission established to oversee implementation of the Iran nuclear deal.

But for all the frequency and growing to almost normalcy of US-Iranian official contacts in recent years, after decades in which that was taboo, they have yet to be institutionalized by formal US-Iran diplomatic relations, which were broken off after the 1979 Islamic Revolution and subsequent hostage crisis. What’s more, US-Iran normalization is not a realistic near-term prospect, Obama has said, even as he has ushered in historic shifts with Myanmar and Cuba. The prospect of rapprochement is even more fiercely rejected by Iranian Supreme Leader Ayatollah Ali Khamenei, who casts it as a fundamental threat to the nature of his regime.

Obama is willing to engage with the Iranians when useful, and has shown he is willing to break old taboos when he traveled to Cuba in March, the White House’s Ben Rhodes said April 21. But from the White House’s perspective, it is Iran putting the brakes on deeper engagement with the United States, Rhodes said.

“The president [Obama] has always indicated that he is willing to engage the Iranian leadership if he believes that that can make progress on different issues,” Rhodes, the deputy national security adviser for strategic communications, told journalists traveling with Obama in Saudi Arabia on April 21. “He’s spoken to [Iranian] President [Hassan] Rouhani on the phone.”

Rhodes said, “The fact of the matter is, we haven't seen from the Iranians, I think, a desire for that level of engagement. They’ve really focused on the channel between our foreign ministers. And so that's where I think it's most likely to continue.”

Current US-Iran state of play: balancing act

US officials describe a balancing act with Iran, continuing to engage with them quietly on nuclear deal implementation and, in certain settings, on regional issues such as Syria and Yemen, while pushing back on their destabilizing actions in the region, such as providing intelligence to interdict Iranian weapons shipments to Yemen’s Houthi rebels and to Hezbollah.

“The channels opened up as a result of the Iran [nuclear] deal have a meaningful effect, concrete already,” a senior US official, speaking not for attribution, said, citing the example of the US sailors detained by the Iranian Revolutionary Guard Corps on Jan. 12 when their vessel strayed into Iranian waters; the sailors were released unharmed 16 hours later, after Kerry spoke with Zarif multiple times to quickly resolve the crisis. “The deal created both of these things.”

Regarding US conversations with Iran on regional issues, such as Syria, “They [Iran] are at the table,” the official said, referring to Iran being a member, along with the United States, Russia and Saudi Arabia, of the 20-nation International Syria Support Group.

There are quiet conversations on Iraq, Afghanistan and Yemen, with the caveat that Iranian officials are cautious not to go overboard until their government is through the election cycle (Iran has runoff parliamentary elections April 29). Iranian domestic political considerations have put a brake on the pace of more discussions with Iran on regional issues.

“With respect to Iran, I think our approach has been that we will engage with the Iranians where we see an opportunity to make progress,” Rhodes said. “The main vehicle for that engagement has been Secretary Kerry with Foreign Minister Zarif, not just on the Iranian nuclear issue but on Syria and other regional issues.”

He added, “What we’re trying to foster … is a dynamic where we can have a diplomatic dialogue with the Iranians on issues related to these regional conflicts. Precisely because Iran has had a role in these areas, we would like to try to move them in a more constructive direction. And that requires some amount of dialogue. It also requires vigilance.”

Prospects for dialogue going forward

But even as officials such as Rhodes describe the desire to expand dialogue with Iran on regional issues in the coming weeks and months, while navigating domestic political constraints and deep disagreements on how they and their allies see the region, Iranian and US officials are aware that the clock is ticking on this administration, and uncertain if the next administration may seek to maintain relations at this level, if at all.

Former member of the US nuclear negotiating team Richard Nephew said now that the taboo has been broken, he expects that the Obama administration will hand off to its successor a continued open channel with Iran.

“I think that now that the membrane has been broken and we have now got a relationship with them, albeit not a normal one, I don’t see why it would change,” Nephew, now a program director with Columbia University’s Center on Global Energy Policy, told Al-Monitor in an interview. “Even a Republican administration would maintain those avenues of communication, because they exist.”

The “political risk” involving opening a communications channel, we are “through that now,” Nephew said. “There has proven some utility for it. I don’t see any chance of that going away.”

But the strength of the channel, and whether it is used to just resolve problems such as the detention of the US Navy sailors or nuclear deal implementation issues, or expanded and deepened to discuss other areas, may largely depend on who is the next secretary of state, or deputy secretary of state, Nephew said.

“There will be a handoff” from Kerry to his successor in terms of the communication channel with Zarif, Nephew anticipated. “It will be an easier handoff if it is Kerry to a Democratic successor. … It will be potentially more complicated if a Republican is coming in.”

Nuclear deal implementation will be basis for continued US-Iran dialogue

Iran nuclear deal implementation is likely to be the core of the basis for continued US-Iran dialogue after the transition from the Obama administration to its successor, Ali Vaez said.

“The best instrument for institutionalizing the channel of communication is the JCPOA and its implementation,” Vaez, a senior Iran analyst with the International Crisis Group, told Al-Monitor. “Both sides have coordinators who will have to closely monitor the accord's implementation during its lifetime and meet regularly at the Joint Commission's sessions or on ad hoc basis.”

Vaez said, “It is hard to imagine, given the level of skepticism and resistance in Tehran, that the Obama administration could take further steps, like staffing the US interest section in Tehran with Americans, before it runs out of time."

He added, “The only unilateral action that the administration could take is to dilute the no-contact policy. Both sides should also encourage regular contacts between their top diplomats at the UN level — in New York, Geneva and Vienna.”

US-Iran ties may become more "bare bones"

It is unlikely that the next US president is going to maintain this level of engagement with Iran beyond “the bare bones” of nuclear deal implementation, or expend as much political capital on it, at least initially, Gary Sick, a former National Security Council official in the Ford, Carter and Reagan administrations, told Al-Monitor.

“I don’t see Hillary [Clinton] walking away from the whole thing [nuclear deal], but I don’t see her as exhibiting any enthusiasm on trying to build on that, or deepen the relationship,” Sick, now a professor at Columbia University, told Al-Monitor.

“I think she does understand [the importance of the opening with Iran] and is surrounded by people like Wendy Sherman [the former US undersecretary of state and lead US nuclear negotiator] and Jake Sullivan [her former deputy chief of staff who was part of the back channel to Iran], who have personal relationships with the Iranians, and they do understand the importance of this,” Sick said. “They were part of it.”

He added, “I don’t see her or them turning around and walking away. But there is a difference between maintaining the bare bones, and taking advantage of what you got. Or as Obama has been prepared to do, be a little more forward leaning, make something more out of this, beyond just the JCPOA.

“Obama was prepared to put a lot of political capital in this. And I don’t think Hillary is. It’s a matter of degree.”

Zarif may provide continuity

What may provide continuity and be even more important than Obama’s and Kerry’s successors in terms of maintaining a US-Iran opening is Zarif, and the breadth of contacts he has quietly made in the US foreign policy community over the years, going back to his time as Iran’s ambassador to the United Nations, former State Department policy planning official Suzanne Maloney said.

If US-Iran ties last past the Kerry-Zarif channel “is an interesting question that gets to the heart, to what extent is this a personality-driven relationship, at this point,” Maloney, now deputy director of foreign policy programs at the Brookings Institution, told Al-Monitor. “Or have sufficient institutional ties developed over the course of the past three years of intense diplomatic interaction that, in effect, they will sustain themselves irrespective of the coming and goings of specific individuals.”

“I tend to lean to the latter,” Maloney said. “Despite the fact of the rapport established between Kerry and Zarif, Zarif has really well-established ties across Washington that predate his time as foreign minister,” Maloney said. “I imagine the constellation of folks in place who are in position to move into the secretary of state position have, if not prior direct exposure to him, they would be part of the community that has.”

“I think there are countervailing impulses on the Iranian side, about broadening dialogue or expanding the basis for US-Iran talks,” Maloney said. “There is such high-level scrutiny and pushback in Iran about anything that appears to … use the nuclear deal as a springboard for something that looks like rapprochement. It is more toxic there than here, and it is pretty toxic here.”

Al-Monitor has learned that in addition to his meeting with Kerry and signing of the Paris Climate Agreement in New York on April 22, Zarif is expected to quietly meet with some US lawmakers there, as he has occasionally done in the past. (When Kerry and Vice President Joe Biden were senators, both met with Zarif when he was Iran's UN ambassador in New York.)

Zarif “was as forward-leaning an Iranian diplomat as ever existed in the US-Iran relationship,” Maloney said. The bigger question than who succeeds Kerry may be what will happen to the nascent US-Iran opening if at some point Zarif leaves the government amid Iranian domestic churn or fallout over the engagement with the West and the nuclear deal.

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Friday, April 22, Morning Global Market Roundup: Yen's fall on possible BOJ move lets Japan stocks avoid Asia slide

By Nichola Saminather and Hideyuki Sano
April 22, 2016

Asian shares slid from a 5 1/2-month high on Friday on disappointing earnings from U.S. blue chip companies, but Japanese shares surged after a media report about a possible Bank of Japan policy change weakened the yen.

Japan's Nikkei .N225 erased earlier losses to end the day up 1.2 percent, reaching an 11-1/2 week high and extending the week's gains to 4.3 percent. The yen JPY=, which held steady against the dollar earlier in the session, slipped after a report by Bloomberg News said the Bank of Japan may consider applying negative rates to its lending program for financial institutions.

The dollar rose 0.5 percent, buying 109.98 yen.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.8 percent, a day after it hit its highest level since early November. With that decline, gains for the week shrink to 0.4 percent.

European shares look set to follow suit, with financial spreadbetters predicting Britain's FTSE 100 .FTSE and France's CAC 40 .FCHI will open down 0.5 percent, and Germany's DAX .GDAXI will fall 0.4 percent.

The Shanghai Composite index retreated 0.4 percent, extending its weekly loss to about 4.5 percent.

Hong Kong's Hang Seng index .HSI slid 0.9 percent, narrowing gains for the week to 0.5 percent.

On Thursday, Wall Street suffered its first loss in four sessions on a mixed bag of quarterly reports and a warning by Verizon Communications (VZ.N) that a strike would likely impact its bottom line.

The S&P 500 .SPX, which came within striking distance of its record closing peak of 2,134.28 touched last May, lost 0.52 percent to 2,091.48.

After the bell, Google parent-company Alphabet (GOOGL.O), Microsoft (MSFT.O), Visa (V.N) and Starbucks (SBUX.O) all posted disappointing quarterly reports, sending their stocks down 4 percent or more.

Alphabet, the world's second-largest company by market capitalization, fell more than 6 percent, taking around $32 billion off its market value.

"Essentially, global shares and commodities have been rallying since U.S. Federal Reserve Chair Janet Yellen had indicated a dovish stance in March," said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.

"But you would need more improvement in economic fundamentals for the rally to go further. The S&P 500 is quite overvalued, trading at 17.8 times the forecast profits. Disappointing earnings from hi-tech companies will surely cap the market," he said.

Oil prices fared better than shares, with strong gains on Friday contributing to one of their biggest weekly gains this year, as producers took advantage of higher prices by locking in production.

Brent crude futures LCOc1 advanced 1.5 percent to $45.19, bringing gains since Monday to 8.2 percent.

U.S. crude CLC1 rose 1.5 percent to $43.78, up 13 percent since Monday.

Both have surged about 67 percent since their January trough. But despite the recent rally, oil markets remain oversupplied with supply consistently exceeding demand.

The rise in oil prices is thought to be behind a noticeable rise in global bond yields in the past couple of days.

The 10-year U.S. Treasuries yield last stood at 1.8559 percent, compared to 1.752 percent at the end of last week. It rose to a three-week high of 1.891 percent US10YT=RR on Thursday.

The 10-year German Bunds yield rose to a five-week high of 0.242 percent DE10YT=RR on Thursday.

The euro advanced 0.1 percent to $1.1300 EUR= following a volatile session overnight but remained off its one-week high of $1.1399 set on Thursday.

The European Central Bank held policy steady at its meeting on Thursday, prompting a rally in the common currency on the view that the central bank won't boost stimulus anytime soon. But a statement by ECB President Mario Draghi that he would use all the tools at his disposal for "as long as needed" sent it skidding back to $1.1270.

Commodity currencies took a breather from their recent rally.

The Australian dollar advanced 0.2 percent to $0.7754 AUD=D4, off its 10-month high of $0.7836 touched the previous day.

Article Link to Reuters:

Oil Prices Rise as Investor Sentiment Turns Upbeat


April 22, 2016

Oil prices rose on Friday, setting crude futures on course for solid weekly gains, as market sentiment turned more upbeat despite ongoing oversupply.

International benchmark Brent crude futures LCOc1 were trading at $44.88 per barrel at 0713 GMT, up 35 cents, or 0.8 percent, from their last settlement.

U.S. West Texas Intermediate (WTI) crude was up 51 cents, or 1.2 percent, at $43.69 a barrel.

Brent has risen about 4.5 percent so far this week and WTI 8 percent, putting the contracts on track for a solid price rally. Crude is up by more than two-thirds since its 2016 lows between January and February.

Traders said that sentiment in the entire commodity complex had turned more confident despite ongoing oversupply, with new cash being put into the market by investors, lifting prices.

"While this recent rally has the potential to run further to the upside ... we believe that it is not yet driven by a sustainable shift in fundamentals," Goldman Sachs analysts said in a note to clients on Friday.

The bank said it was therefore "premature to embrace these green shoots."

Goldman said that it does not anticipate a sustainable shift in oil fundamentals until the third quarter but added that it changed its view on energy to "neutral" from "underweight" citing the reduced likelihood of extreme downside.

Another price driving factor has been producers taking advantage of higher prices by locking in production.

"We would expect producers in the U.S. taking every opportunity to aggressively hedge as soon as there is opportunity when oil prices recover for short periods of time," French investment bank Natixis said.

Falling output, especially in the United States, where many producers are shutting down following an up to 70 percent price rout since 2014, is also helping to lift the market.

Natixis said it expected U.S. oil production to drop by at least 500,000 to 600,000 barrels per day (bpd) this year, compared with 2015, and by another 500,000 bpd in 2017.

Despite the recent rally, oil markets remain oversupplied as between 1 and 2 million barrels of crude are being pumped out of the ground every day in excess of demand, leaving storage tanks around the world filled to the brim with unsold fuel.

"The energy complex remains volatile ahead of the 1Q16 reporting period which will likely be worse than what we thought was already an ugly 4Q15," U.S. investment bank Jefferies said.

Article Link to Reuters:

Russian forces in Syria fired on Israeli military aircraft

By Dan Williams
April 22, 2016

Russian forces in Syria have fired at least twice on Israeli military aircraft, prompting Prime Minister Benjamin Netanyahu to seek improved operational coordination with Moscow, Israel's top-selling newspaper said on Friday.

The unsourced report in Yedioth Ahronoth gave no dates or locations for the incidents nor any indication Israeli planes were hit. Russia mounted its military intervention in Syria in September to shore Damascus up amid a now 5-year-old rebellion.

Separately, Israel's Channel 10 TV said a Russian warplane approached an Israeli warplane off the Mediterranean coast of Syria last week but that there was no contact between them.

An Israeli military spokesman declined comment. Netanyahu's office and the Russian embassy in Israel did not immediately respond.

Israel, which has repeatedly bombed Syria to foil suspected arms handovers to Lebanese Hezbollah guerrillas, was quick to set up an operational hotline with Moscow designed to avoid accidentally trading fire with Russian interventionary forces.

Visiting Moscow on Thursday, Netanyahu told Russian President Vladimir Putin in televised remarks: "I came here with one main goal - to strengthen the security coordination between us so as to avoid mishaps, misunderstandings and unnecessary confrontations."

In an apparent allusion to Syria, Putin said: "I think there are understandable reasons for these intensive contacts (with Israel), given the complicated situation in the region."

According to Yedioth, the reported Russian fire on Israeli planes was first raised with Putin by Israeli President Reuven Rivlin, who visited Moscow on March 15. At the time, Putin responded that he was unaware of the incidents, Yedioth said.

Article Link to Reuters:

Why the U.S. Doesn't Want Britain to Secede

The Bloomberg View
April 22, 2016

Two hundred and forty years after his country ostentatiously tore up its membership card in the British Empire, the American president is traveling to London to warn the British not to do the same with theirs for Europe. It’s a bit rich, as some Brits would put it, but Barack Obama has not merely the right but the obligation to make his case.

He’s smart enough, no doubt, to be subtle about it. Like most people, the British don’t take well to being bossed around by foreign leaders. He should keep his message simple, too, and along the following lines: A British exit from the European Union, which will be decided by a referendum on June 23, would be a major disruption for the U.K. and all its trading partners, at a time when the world economy is far from strong. The U.K. needs to think about what’s at stake -- not just for itself, but for its friends.

On one point, admittedly, Obama’s position on Britain and Europe is strained. Exit campaigners worry mainly about the way the EU has eroded the sovereignty of its member states -- meaning their ability to govern themselves as they see fit. That’s a sentiment Americans will understand: As Boris Johnson, London’s mayor and a leader of the exit campaign, has observed, the U.S. defends its own sovereignty with “hysterical vigilance.” It’s unthinkable that the U.S. would ever choose an EU-like arrangement for itself.

But Britain did choose it, and by helping to build Europe’s deeply integrated “single market,” has benefited hugely. The costs of extricating itself from these complex trade commitments -- with no guarantee that better arrangements could replace them, and no reason to think the EU would help make the divorce a success -- would be great. And for all that, any resulting increase in actual, usable self-government might be modest.

On Monday, the U.K. Treasury published a detailed report on the potential economic costs of separation. It isn’t an evenhanded document -- the government, after all, is campaigning for Britain to stay -- but its estimates of costs are credible. In what the Treasury deems the most plausible scenario, the annual cost of diminished trade (and, with that, slower productivity growth) would be around 6 percent of gross domestic product by 2030.

The true cost could easily be much higher or lower, depending on how events unfold, which is impossible to predict. Yet there’s no denying the risk. Adding to the danger, the exit campaigners are divided among themselves about what should come next: They’ve failed to adequately explain what alternative arrangements they favor or how they expect to secure them.

Granted, the U.S. interest in Britain’s decision might be a little more complicated than Obama allows. His view that Britain would be a more useful ally as part of the EU than as an independent nation, for instance, is debatable. But the economic calculation is clearer. The global economy is already sagging, and the normal remedies aren’t working well. A British exit would be a serious economic shock to the U.K., Europe, the U.S. and the rest of the world. That’s the last thing the U.S. or any other friend should want -- and Obama ought to say so.

Article Link to the Bloomberg View: