Wednesday, June 1, 2016

Wednesday, June 1, Night Wall Street Roundup: U.S. Stocks Stage Late Rebound, Dollar Slips

By Richard Leong
June 1, 2016

U.S. stock prices rose slightly on Wednesday helped by a late recovery in oil prices and an encouraging economic report from the Federal Reserve, but equity prices in other major world markets fell on worrisome Chinese and European factory data.

The U.S. dollar slipped on fresh doubts about a Federal Reserve interest rate rise in June and Japan's postponement of a sales tax increase which helped to boost the yen.

Oil prices ended lower but recovered from the day's worst levels after OPEC sources said the group will likely consider a production curb at its meeting on Thursday in Vienna. [O/R]

U.S. Treasury bond prices ended lower on the late bounce in stock and commodity prices.

Global manufacturing activity remained stuck in a rut last month with factory output from Asia, Europe and the Americas barely improving as producers struggled to bring in new orders, surveys released on Wednesday showed.

Speculation in recent weeks that the U.S. Federal Reserve will raise interest rates in the next few months and worries that a possible British exit from the European Union have undermined business confidence.

"The world economy will meander along at its slowest pace since the financial crisis for a second year in a row in 2016 as it is ensnared in a "low-growth trap", the OECD said on Wednesday, urging governments to boost spending.

The Federal Reserve's latest Beige Book, released late Wednesday, showed modest growth across most economic regions, while noting that inflation is edging up and the labor market improving.

"The numbers are not bad; they’re just not good either," Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, said about recent economic data. "We’re kind of trapped in limbo that way with respect to a lot of the fundamentals."

The Dow Jones industrial average ended up 0.01 percent at 17,789.67, the S&P 500 index finished 0.1 percent higher at 2,099.33 and the Nasdaq Composite closed up 0.08 percent, at 4,952.25.

The pan-European FTSEurofirst 300 fell 1.0 percent to 1,350.34, led by the resources sector.

Tokyo's Nikkei earlier ended down 1.6 percent.

The MSCI world index, which tracks shares in 45 countries, shed 0.1 percent, retreating from a one-month high earlier this week.

Brent crude oil settled down 17 cents, or 0.34 percent, at $49.72 a barrel, while U.S. crude ended 9 cents, or 0.18 percent, lower at $49.01.

The dollar index, which measures the greenback against six currencies, fell 0.5 percent to 95.413.

The U.S. currency fell to a two-month low against the yen after Japanese Prime Minister Shinzo Abe delayed a planned sales tax increase. The greenback was down more than 1.0 percent at 109.51 yen.

The yield on U.S. 10-year Treasury yield rose one basis point to 1.846 percent in late trading as traders shift their focus to Friday's U.S. Labor Department payrolls and unemployment report.

Gold prices turned negative, erasing earlier gains. Spot gold fell $3.58, or 0.29 percent, to $1,211.11 an ounce.

Article Link to Reuters:

Eric Holder Has A Twisted Take On Edward Snowden’s Treason

By Post Editorial Board
The New York Post
June 1, 2016

Former Attorney General Eric Holder seems ready to be a character witness for Edward Snowden — if the one-man largest-intelligence-breach-in-US-history ever comes home to face the music.

The nation’s onetime top law-enforcement official has declared that Snowden performed a “public service” by “raising the debate” on government surveillance.

Holder even said the courts, in passing sentence on Snowden, “could take into account the usefulness of having had” that debate.

Snowden, recall, took a job as a National Security Agency contractor solely to steal millions of classified documents. He went on the lam in 2013 to China and then Russia even as his associates started releasing much of the info.

Moscow has given him refuge, though he stands charged with violating the Espionage Act. It’s still not clear what secrets he shared exclusively with his overseas “hosts.”

What makes Holder’s call for leniency especially galling is that he concedes, “There are ways in which certain of our agents were put at risk, relationships with other countries were harmed, our ability to keep the American people safe was compromised” by Snowden’s massive leaks.

As for that “debate,” CIA Director John Brennan has said the “reforms” imposed post-Snowden — like the end of NSA collection of “metadata” on overseas phone calls — made it far harder to identify terrorists and may have helped pave the way for attacks like the ones last year in Paris.

After all, if law enforcement can’t collect key “dots,” it gets tougher to connect them.

Holder’s statement was so over-the-top the White House quickly announced that President Obama “does not” agree.

Then again, Holder made his comments to top Obama political adviser David Axelrod for “The Axe Files,” a podcast co-produced by an institute Axelrod runs. Makes you wonder if Obama will offer a different opinion once he’s left the White House . . .

Edward Snowden deliberately betrayed his country and ran to Vladimir Putin for protection. He deserves to rot in jail for life, or worse — and it’d be nice to know our nation’s leaders realize it.

Article Link to The New York Post:

In Defense Of The Cincinnati Zoo

No one wanted the gorilla to die, but in a dangerous situation, zookeepers were forced to take action.

By Rich Lowry 
The National Interest
June 1, 2016

The typical response when someone saves a small child from harm isn’t “How dare you?”

But the Cincinnati Zoo has been subjected to a torrent of abuse for making the agonizing decision to shoot and kill one of its gorillas, a 17-year-old silverback named Harambe, when a four-year-old boy fell into its enclosure.

Invariably, the adjective used to describe Harambe is “magnificent,” and rightly so. Gorillas are physically imposing and highly intelligent, with sophisticated social structures. In a better world, they probably wouldn’t be confined for our viewing pleasure, but that’s another issue.

The question is: What should the Cincinnati Zoo have done when forced to choose between the welfare of a prodigious animal and a small human?

This wasn’t a case of a hunter who went out of his way at great expense and trouble to shoot a lion or some other glorious creature for the triumphant photo with the carcass and the trophy on the wall back home. This wasn’t a poacher who killed for tawdry profit. This wasn’t a fly-by-night roadside attraction abusing the poor creatures in its clutches.

This was a serious, responsible institution confronted with a life-and-death crisis, in real time and not of its devising.

When the little boy somehow crawled through the fencing outside the enclosure and splashed into water with Harambe — and yes, the boy’s mother should have been paying closer attention — the child’s life was potentially in danger. This was self-evident to the shocked and dismayed witnesses, who watched Harambe drag the kid around by the ankle like a proverbial rag doll.

Everything that people lamenting the shooting say about Harambe may be true: He wanted to help. He didn’t mean the child any harm. He was merely confused. None of this means he wasn’t a danger.

We desperately want to anthropomorphize apes, and make them out to be the gentle giants of our imagination. We want to believe that King Kong was just misunderstood, with a thing for blondes. That Koko the sign-language gorilla really cares about global warming. Gorillas are indeed — putting aside their hair-raisingly brutal sexual politics — largely peaceful and admirable mothers and fathers.

They are still wild beasts. Harambe was a forbiddingly strong 400-plus-pound creature with no experience baby-sitting. He could seriously hurt a child without even trying.

Once that is acknowledged, it’s clear that the zoo had no good choices. Its critics — including celebrities who are suddenly amateur primatologists — have insisted there must have been a way to create a happy ending for all.

The zoo could have reasoned with Harambe. But zoo officials called the gorillas out of the enclosure when the child fell in; the two females complied, Harambe did not. They could have tranquilized Harambe. But this would have agitated him more, and the tranquilizers would have taken time to work. They could have, as one expert mused to an Australian paper, shot the gorilla in the shoulder. Because there’s nothing like a badly wounded gorilla in possession of a child.

G. K. Chesterton wrote of the healthy and unhealthy love of animals, with the latter characterized by its overseriousness. Exhibit A: the petition that has garnered more than 300,000 signatures and is titled “Justice for Harambe.”

For his part, Chesterton was quite prepared to love a rhinoceros (“with reasonable precautions”), but couldn’t give himself over to what he called “animal worship.” He believed that “wherever there is Animal Worship there is Human Sacrifice. That is, both symbolically and literally, a real truth of historical experience.”

In this case, the would-be human sacrifice wasn’t an abstraction. He was a four-year-old boy. The Cincinnati Zoo, to its credit, wasn’t willing to discount his welfare, even if the decision was excruciating. It sacrificed the beast to protect the child. In a less sentimental age, the moral calculus would be obvious.

Article Link To The National Review:

Inside Trump University’s Secret ‘Playbooks’

For a Donald Trump fan who wanted to learn how to strike it rich in real estate, no cash was no problem, according to newly published ‘playbooks’ used by Trump staff for sales pitches.

By Olivia Nuzzi
The Daily Beast
June 1, 2016

On the same day we learned Donald Trump misled the public about what he claimed was a $6 million donation to veterans’ charities, we learned that Trump University tried to scam single mothers out of their savings while urging other prospective students to finance their faux education with credit cards.

On Tuesday, almost 400 pages of internal Trump University documents were made public, revealing the “playbooks” Trump employees used to guide their sales pitches for seminars and mentorships that could run upward of $35,000.

The language employed by Trump University’s sales team is similar to that of multilevel marketing scams like AdvoCare and Amway, and even certain cults.

As in those types of institutions, Trump protégés could rise through the ranks—for a steep cost—and saying “no” to an offer was viewed as a starting point to briskly move past, not a conclusion.

The ethos was summed up in the playbooks’ introduction: “An attendee’s problem represents a golden opportunity.”

The draw, for Trump fans, was the free Profit From Real Estate orientation, which ran 90 minutes and was advertised in newspapers, online, and via direct mail.

But the purpose of the orientation was just to get warm bodies in the door and “set the hook,” as the Trump playbooks explicitly say.

Salespeople were instructed to use “the most persuasive words in the English language according to a study by the Psychology Department of Yale University”: You, New, Money, Easy, Discovery, Free, Results, Health, Save, Proven, Guarantee, and Love.

And the most persuasive phrases, to “plant seeds in a student’s mind”: You’re on the right track; this is a great first step; this is just the beginning of your real estate journey; you have been so close to living an amazing life so many times in your life, but always come up just a little short, let us make sure that never happens again; and so on.

Salespeople were told to speak to attendees in a manner designed to have a “powerful subconscious effect” on their thinking: “Take every opportunity to emphasize that they need to learn the Trump way for continued and growing success!”

“Remember,” the playbooks said, “that we need to stay on ‘offense.’”

The goal was to make the attendees bite, and pony up for the pricey packages that promised to turn humble Average Joes into gaudy real estate tycoons: the Trump Bronze Elite ($9,995), Trump Silver Elite ($19,495), or, best of all, Trump Gold Elite ($34,995).

Would-be students were asked to list their liquid assets, which helped the Trump sales team determine if they could be “buyers.”

Salespeople were instructed to “collect personalized information” about the potential students. As an example, the playbooks said, “are they a single parent of three children that may need money for food?”

According to the playbooks, “money is never a reason for not enrolling in Trump University; if they really believe in you and your product, they will find the money. You are not doing any favor by letting someone use lack of money as an excuse.”

Trump University was founded on May 23, 2005, the year after the debut of NBC’s The Apprentice—a runaway hit in the heyday of reality TV that averaged 28 million viewers per episode.

A for-profit institution, Trump University initially sold virtual lectures and courses on entrepreneurship, real estate, and marketing on CD-ROM for $300 each.

In theory, though, it was selling something more fantastic: the tools needed to become wealthy and powerful, to attain your very own cavernous boardroom high above Fifth Avenue, from which you could fire your very own lackeys from your very own big, leather chair.

At the time of its inception, Trump University’s roster of professors from elite institutions like Dartmouth, Yale, and Columbia lent it a sheen of authenticity. The school even had a crest of red and gold, with a medieval lion in the center.

But things quickly deteriorated.

By 2011, having been stripped of the privilege of calling itself a “university,” the newly named Trump Entrepreneur Initiative was out of business. Today, it remains the subject of two class-action lawsuits in California as well as a $40 million suit brought by the attorney general from New York, Eric Schneiderman.

According to what former Trump University professors previously told The Daily Beast, the focus of the pseudo-school shifted swiftly from producing and marketing legitimate educational materials that could help people to hosting seminars with questionably credentialed motivational speakers that could do little more than turn a profit for The Donald.

Judging by the playbooks, the desire to turn that profit knew few bounds—something Trump, understandably, wanted to keep secret.

The de facto Republican nominee, a fervent critic of President Obama’s “total lack of transparency,” fought, via his lawyers, to keep the playbooks from becoming public knowledge. But on May 27, U.S. District Court Judge Gonzalo Curiel ruled in favor of The Washington Post, which had requested their disclosure. In response, at a San Diego rally held Friday, Trump lashed out Curiel, who is from Indiana, by labeling him a “Mexican” and a “hater.”

Among the tips and tricks offered to get people to hand over their cash to The Donald was a script to use in response to likely objections, like not having the time or funds to take part in the program.

If a prospective student expressed concern about using their credit cards to finance their Trump University education, for instance, salespeople were instructed to respond by saying, “I see, do you like living paycheck to paycheck? Do you like just getting by in life? Do you enjoy seeing everyone else but yourself in their dream houses and driving their dream cars with huge checking accounts? Those people saw an opportunity, and didn’t make excuses, like what you’re doing now.”

When dealing with people without credit cards, salespeople told them, “We teach the technique of using OPM…Other People’s Money. What most people do is handle the tuition by putting it on their credit cards because it gives them the ability to make very small monthly payments and maintain a low overhead to run their real estate project. Then we [tell] them to use their success in real estate to pay off the banks in a couple of months or so. However, you don’t seem to have the advantage of having that kind of leveraging power. Do you have any other seed capital or savings set aside to further invest into your real estate projects?”

Further, the playbooks advised recruiters to ask about using their savings to “borrow from your own retirement account to finance real estate investments.”

Trump didn’t invent the get-rich seminar, and he isn’t the first person to use his considerable sense of self to convince other people that, with his help and his help only, they, too can achieve wealth and happiness.

But on the campaign trail today, he is the first American to take a get-rich sales pitch and apply it to the presidency.

Article Link to The Daily Beast:

Is Obama A ‘Great’ President?

June 1, 2016

A uniquely divisive season of presidential primaries is all but over. The losing factions of both the Democratic and Republican contests are content to sift about through the rubble in search of some logic that can allow them to surrender gracefully and with their heads held high. The theatrical process by which Republicans are coming to terms with supporting a high-dollar Democratic donor and former Clinton loyalist have thus far failed to compel a small but committed band of conservative partisans to come down from the hills. While the GOP’s efforts to pacify recalcitrant anti-Trump holdouts are quite public, the process by which anti-Clinton Democrats will be made to come to terms with their party’s standard-bearer are sub rosa and have only just begun.

In service to that effort, and unwilling to let a zombie Democratic primary shuffle on into the summer and toward Philadelphia, the columnist Froma Harrop offered a bit of advice for liberals who just cannot let go of Bernie Sanders. Harrop observed that Sanders supporters might take a page from the book of those “dead-enders” who had a difficult time coming to terms with Barack Obama’s victory over Clinton in 2008. At the time, she and other Clinton backers did not believe that the first term senator from Illinois was ready for the presidency. “And boy, were we wrong about Obama,” she professed.

"Obama pulled America from the brink of another Great Depression. He championed the Dodd-Frank finance reforms and oversaw the passage of the Affordable Care Act (individual mandate included). He did it with virtually no Republican support and not a whiff of personal scandal. Obama will go down as one of the greatest presidents of our lifetime."

That’s quite a projection. Though a talented and insightful columnist, Harrop doesn’t devote much effort to supporting her claim. The contentions she does make in defense of the notion that history will judge Obama to be one of America’s greatest chief executives are, to say the least, debatable.

It is a fact that the president inherited a financial crisis and two post-9/11 wars. As for the wars, the president’s declarations on multiple occasions that victory had been secured and America could safely retreat seem forgotten by his defenders. The president will leave office with American servicemen and women fighting and dying in Iraq and Afghanistan; in part, a result of his efforts to prematurely withdraw American forces from unstable post-war theaters. There’s a reason Harrop didn’t hype Barack Obama, the peacemaker.

The notion that the president rescued the nation from a second Great Depression is an unfalsifiable thought experiment. The president certainly pursued the same interventionist policies that protracted the recession of 1929 and created what we now refer to as the Great Depression. “It could have been worse,” is, however, a subjective assessment. We can only take stock of the effects of the Great Recession as they were observed, and those were and remain traumatic.

Americans associate the inauguration of the Depression with the 1929 stock market crash; it bookended Fitzgerald’s “age of excess” with the stark contrast of the insular and insecure 1930s. In truth, it began several months earlier when the American agricultural sector experienced a credit crunch. Similarly, the recession that began in 2007 took hold of the American psyche only in September of 2008. While the deep recession officially ended in June of 2009, the recovery that followed was the slowest and most painful since the end of the Second World War.

Left and right alike heap scorn upon backstop measures like TARP, which were designed to prevent a liquidity crisis in the immediate wake of the collapse of the housing market. Liberals are, however, not so fast to disown the president’s Keynesian spending programs – programs that even he admits failed to perform as advertised. Today, the unemployment rate is a healthy 5 percent, and new jobs have been added to the economy for the last 74 consecutive months. As the Wall Street Journal’s Gerald Seib observed, Americans perceive the economy to be far more unsatisfactory than the data suggests they should.

“By the middle of 2011, 67 percent said the country was off on the wrong track. By late 2013, that number had reached 78 percent,” he noted. “At the beginning of this year, 70 percent of Americans were dissatisfied with the state of the economy, up from 61 percent at the beginning of 2007, before crisis struck.” This, Seib explained, accounts for much of the political turmoil of 2016. Our own John Podhoretz also observed that restorationism, revisionism, and nostalgia for the mid-20th Century have possessed the American body politic. This is not an indicator of civic health.

This crisis of confidence is one result of a presidency that has perfected the practice of dividing the electorate against itself in order to carve off the support of 50 percent plus one. This is an administration that has sapped the public’s trust in virtually every governing institution, and it is hardly one that has been controversy-free. From the targeting of conservative groups by the IRS, to the flagrant misuse of public funds by so-called “green” energy firms, to the falsification of intelligence on ISIS to suit the administration’s preferred narratives, to the revelation that American veterans are literally dying for want of medical care at VA facilities, this is a scandal-plagued administration. The failure to acknowledge as much in major media outlets likely contributes to why the Fourth Estate seems so confounded by the rise of anti-establishment movements on both the right and the left.

As for the president’s health care reform law, it did indeed pass without a single Republican supporting it. That could partially account for why it remains an unpopular and resented expansion of the entitlement state. The law has been the subject of numerous Supreme Court challenges, some of which the law has survived – in one case, only after the Supreme Court rewrote the law and exposed the Democrats’ “it’s a penalty, not a tax” pitch to be a fraud. While the law has dodged a few bullets, it has absorbed many more. Even the likely Democratic presidential nominee acknowledges the obvious: the law as it was cobbled together and hurriedly passed by a Democrat-dominated Senate cannot survive as written.

While the Affordable Care Act is undoubtedly part of the reason why Republicans are at their strongest electoral position in nearly a century – another GOP triumph over which Obama presided – they may fail in their quest to retake the White House in January. By nominating the single most unpopular figure in modern times to run for the presidency, Republicans made a historic mistake. Given the lack of dramatic economic news or foreign policy triumphs, it is reasonable to presume that a fear of the future is driving the president’s job approval numbers into positive territory for the first time in three years.

If Barack Obama is succeeded by a Democrat, it will be the first time since George H. W. Bush replaced Ronald Reagan that a party has won a third consecutive term in the White House. That fact alone has convinced many Democrats that Barack Obama is their Reagan. But electoral success alone does not make a president “great.” How did Bill Clinton’s sky-high job approval ratings in 2000 affect how historians graded his presidency? How much emphasis do those who shape the consensus of posterity put on Harry Truman’s ugly job approval ratings in 1952? Is Reagan judged a success merely because his vice president defeated Mike Dukakis? Popularity is fleeting and subject to retrospective revision.

Through imprudence, Republicans may give Barack Obama a brief reprieve from the negative consequences of his actions and the unforgiving judgment of history. Contrary to the left’s protestations, Obama’s legacy is debatable.

Article Link to Commentary:

WSJ: Clinton Might Not Be The Nominee

A Sanders win in California would turbocharge the mounting Democratic unease about her viability.

By Douglas E. Schoen
The Wall Street Journal
May 31, 2016

There is now more than a theoretical chance that Hillary Clinton may not be the Democratic nominee for president.

How could that happen, given that her nomination has been considered a sure thing by virtually everyone in the media and in the party itself? Consider the possibilities.

The inevitability behind Mrs. Clinton’s nomination will be in large measure eviscerated if she loses the June 7 California primary to Bernie Sanders. That could well happen.

A recent PPIC poll shows Mrs. Clinton with a 2% lead over Mr. Sanders, and a Fox News survey found the same result. Even a narrow win would give him 250 pledged delegates or more—a significant boost. California is clearly trending to Mr. Sanders, and the experience in recent open primaries has been that the Vermont senator tends to underperform in pre-election surveys and over-perform on primary and caucus days, thanks to the participation of new registrants and young voters.

To this end, data from mid-May show that there were nearly 1.5 million newly registered Democratic voters in California since Jan. 1. That’s a 218% increase in Democratic voter registrations compared with the same period in 2012, a strongly encouraging sign for Mr. Sanders.

A Sanders win in California would powerfully underscore Mrs. Clinton’s weakness as a candidate in the general election. Democratic superdelegates—chosen by the party establishment and overwhelmingly backing Mrs. Clinton, 543-44—would seriously question whether they should continue to stand behind her candidacy.

There is every reason to believe that at the convention Mr. Sanders will offer a rules change requiring superdelegates to vote for the candidate who won their state’s primary or caucus. A vote on that proposed change would almost certainly occur—and it would function as a referendum on the Clinton candidacy. If Mr. Sanders wins California, Montana and North Dakota on Tuesday and stays competitive in New Jersey, he could well be within 200 pledged delegates of Mrs. Clinton, making a vote in favor of the rules change on superdelegates more likely.

Another problem: In recent weeks the perception that Mrs. Clinton would be the strongest candidate against Donald Trump has evaporated. The Real Clear Politics polling average has Mrs. Clinton in a statistical tie with Mr. Trump, and recent surveys from ABC News/Washington Post and Fox News show her two and three points behind him, respectively.

Then there is that other crack in the argument for Mrs. Clinton’s inevitability: Bernie Sanders consistently runs stronger than she does against Mr. Trump nationally, beating him by about 10 points in a number of recent surveys.

The worries about Mr. Sanders’s strength have stirred the beginnings of a capitulation to him—by the Clinton camp, in league with the Democratic National Committee—at the convention. To placate him, they have already granted Mr. Sanders greater influence over the party platform. Two divisive figures, Cornel West and Rep. Keith Ellison, have been added to the platform committee, ensuring that the party will be pulled further left. In addition to putting Mr. Sanders’s socialist nostrums on display, the platform negotiations are likely to spur an ugly fight over the U.S. relationship with Israel.

Mrs. Clinton also faces growing legal problems. The State Department inspector general’s recent report on Mrs. Clinton’s use of a private email server while she was secretary of state made it abundantly clear that she broke rules and has been far from forthright in her public statements. The damning findings buttressed concerns within the party that Mrs. Clinton and her aides may not get through the government’s investigation without a finding of culpability somewhere.

With Mrs. Clinton reportedly soon to be interviewed by the FBI, suggesting that the investigation is winding up, a definitive ruling by the attorney general could be issued before the July 25 Democratic convention in Philadelphia. Given the inspector general’s report, a clean bill of health from the Justice Department is unlikely.

Finally, with Mrs. Clinton’s negative rating nearly as high as Donald Trump’s, and with voters not trusting her by a ratio of 4 to 1, Democrats face an unnerving possibility. Only a month or two ago, they were relishing the prospect of a chaotic Republican convention, with a floor fight and antiestablishment rebellion in the air. Now the messy, disastrous convention could be their own.

There are increasing rumblings within the party about how a new candidate could emerge at the convention. John Kerry, the 2004 nominee, is one possibility. But the most likely scenario is that Vice President Joe Biden—who has said that he regrets “every day” his decision not to run—enters the race.

Mr. Biden would be cast as the white knight rescuing the party, and the nation, from a possible Trump presidency. To win over Sanders supporters, he would likely choose as his running mate someone like Sen. Elizabeth Warren who is respected by the party’s left wing.

Where is President Obama in all this? So far he has largely stayed out of the campaign, other than to say that he doesn’t believe Mrs. Clinton compromised national security with her home-brew email server. But with her poll numbers dropping, her legal headaches increasing, the Sanders candidacy showing renewed vigor, and Donald Trump looming as a wrecking ball for the president’s legacy, Mr. Obama and adviser Valerie Jarrett might begin sending signals to the Democratic National Committee and to the vice president that a Biden rescue operation wouldn’t displease the White House.

All of these remain merely possibilities. But it is easier now than ever to imagine a scenario in which Hillary Clinton—whether by dint of legal or political circumstances—is not the Democratic presidential nominee.

Article Link to The Wall Street Journal:

Is Trump's Biggest Leaker Trump?

Even as he mucks through the Clintons’ past, he’s trying to keep his own out of sight.

By David Cay Johnston
The Daily Beast
June 1, 2016

When Donald Trump told a huge, bald-faced lie to NBC’s Today Show, he did it for a strategic purpose: to keep journalists from digging too deeply into his past and thus keep Americans from acquiring a clearer understanding of his lifelong conduct and character.

The move, on May 15—or about a million news cycles ago—is worth revisiting as the perfect illustration of how masterfully the presumptive Republican nominee has manipulated the conventions of news to confuse public perceptions, especially when it comes to his decades-long history of deceiving business partners, customers, employees, journalists, vendors and wives.

Indeed, the whole incident may well have been orchestrated by Trump in a smart political move to convert a crystal clear case of deception into a muddled question of whether he was a perpetrator or a victim of deceit.

The story begins with a 1991 audio tape that the Washington Post obtained last month from a source it will not identify, which turns out to be a crucial detail.

Trump’s distinctive, if younger, voice, cadence and speech patterns were clear on the 14-minute tape, which captured an interview People Magazine reporter Sue Carswell conducted 25 years ago with “John Miller,” supposedly a newly hired vice president of the Trump Organization.

In tacky detail, the freshly hired publicist told Carswell exactly what was on the mind of Donald Trump as he was divorcing his first wife after she learned of his years-long affair with Marla Maples, soon to be the second Mrs. Trump.

“He’s living with Marla and he’s got three other girlfriends,” Miller bragged on behalf of Trump.

Miller said he was fielding People Magazine’s questions because Trump was too busy with other matters, including dealing with brand-name beautiful women like Carla Bruni and Madonna, who was supposedly pestering Trump for a date.

Predictably, the audio obtained by the Post generated all sorts of news stories, not about Trump’s promiscuity or his simultaneously disrespecting his wife and mistress. The stories were about whose voice was on the tape.

“Some mysterious audio tapes surfaced today,” Scott Pelley, the CBS Evening News anchor, declared hours after the story broke on May 13. “The question is—is the voice on them Donald Trump.”

John Roberts, a Fox news senior correspondent, raised the same question, as if the facts were in dispute. Had these reporters and others engaged in a basic reportorial function, checking the clips, the story would have had a different tone.

Instead, the news theme—Trump or no Trump on the tape?—continued the next morning when NBC’s Today Show played a snippet of the audio.

Savannah Guthrie asked, “Is it you?” on the tape.

“No,” Trump said, “I don’t know anything about it. You’re telling me about it for the first time. And it doesn’t sound like my voice at all. I have many many people that are trying to imitate my voice and you can imagine that. And this sounds like one of the scams, one of the many scams.”

Guthrie then said the Washington Post reported that using a fake name “is something you did rather routinely, that you would call reporters and plant stories and say either you were John Miller or John Barron, but in fact it was actually you on the phone. Is that something you did with any regularity?”

That would have been a smart first question, as many people assume the facts in a question and then deliver self-damning answers. But Trump, a student of how reporters operate who’d just denied to Guthrie that the voice was his, did not bite.

“No, and it was not me on the phone—it was not me on the phone. And it doesn’t sound like me on the phone, I will tell you that, and it was not me on the phone.”

Back in 1991, People Magazine’s report on the interview took a mocking tone as it outed Trump as “John Miller.” Days later Trump called People and ’fessed up to his deception, which the magazine dutifully reported back then.

In federal court testimony before that, Trump admitted using the name “John Baron” when calling people supposedly on Trump’s behalf, as New York City newspapers reported at the time.

We can label what Trump told Guthrie a lie, a knowing deception, for two reasons.

First, in his emphatic Today Show denials, Trump left himself no escape hatch, such as saying he did not remember. Keep in mind that last fall Trump told voters he has “the world’s greatest memory.”

Second, Trump’s admission back in 1991 that he was Miller and Barron (or Baron) was unequivocal.

So what reasons would Trump have to go on national television show and tell such a blatant, easily proven lie?

For that we need to go back to the source of the tape obtained by The Washington Post. The paper won’t say who its source was but Carswell, the only other voice on the tape, told Fox’s Megyn Kelly that Trump was the source of the tape acquired by the Post.

Carswell said she did not release the recording. Indeed, if Carswell wanted to make news she could have sold a piece with her byline on it about the 1991 interview and Trump’s subsequent confession.

That Trump would put out a tape and then deny his voice is on it may seem bizarre to many people, but makes perfect sense to journalists. They are accustomed to publicists and defense lawyers dishing on their clients for strategic reasons. Especially in gossip and criminal matters, the most damaging or salacious news items are often planted by the person who appears to be the one damaged, but who is in fact trying to control the damage by muddying up otherwise clear waters.

For example, defense lawyers often leak damaging facts about their clients. They want to raise public doubts, influencing jury pools by shaping the news that potential jurors may hear, read or see.

Trump’s purpose became clear in his last few words to the Today Show’s Guthrie when he sought to discredit her questions.

“And when was this, 25 years ago?” Trump said. “You mean you are going so low as to talk about something that took place 25 years ago about whether I made a phone call… let’s get on to more current subjects.”

There you have the strategy behind the lie. Trump does not want reporters telling people about his past. If they must hear about it, he wants to confuse and dispute those stories.

Trump doesn’t want people to know he once went to bat for a major cocaine trafficker whose Ohio case landed, briefly and mysteriously, before a federal judge in New Jersey who is Trump’s sister. That the trafficker later ended up living in Trump Tower.

He doesn’t want people to know that he spoke up on behalf of a labor fixer and convicted felon and the investment banker for the brutal Scarfo crime family. About the mob-owned concrete company he did business with. The convicted felon he partnered with, and who stood next to him at the opening of the Trump SoHo Hotel. And on and on and on.

By attacking journalists as “going so low as to talk about something that took place 25 years ago” Trump is trying to hide his conduct even as he attacks his expected Democratic opponent for the misconduct of her husband two decades ago.

It’s a smart strategy only if journalists continue to fail to do their duty, which is to ferret out the facts that candidates would rather keep out of sight, and to make sense of things candidates would make too confusing to be judged.

Article Link To The Daily Beast:

Striking Back At The Islamic State’s Foreign Fighter Pipeline

The Islamic State’s core in Iraq and Syria is now under intense pressure.

By Benjamin BahneyPatrick B. Johnston, and Howard J. Shatz
The National Interest
June 1, 2016

In March, the terrorist group known as the Islamic State struck in the heart of Europe for the second time in six months. The attack in Brussels caught European security forces flat footed; even though there were indications [6] that attackers—who were trained in Syria—were poised to strike. 

The Islamic State’s core in Iraq and Syria is now under intense pressure. It is time for the campaign against it to put increased attention on countering the group’s pipeline for international terrorism -- the fighters who might return to threaten their home countries. The group has generated a heightened terrorist threat to the West and to all the countries from which its members come due to its ability to vet and train the 30,000 or so foreign fighters who have travelled to Iraq and Syria [7], and to redeploy them to their home countries. The current threat might at least equal what al Qaida could muster at its peak.

Competing proposals from U.S. politicians to commit thousands of U.S. ground troops [8] to Iraq and Syria, or to vigorously police and patrol Muslim communities in the West [9] simply do not address the Islamic State’s ability to infiltrate the group’s trained foreign fighters back into their home countries. Targeting training camps in Islamic State territory, as well as monitoring and detecting the group’s returnees from Syria, are increasingly needed to address this threat.

In an effort to inform Western policy and actions against the Islamic State, our research team recently released a multi-year study [10] of one of the most comprehensive sets of the group’s internal documents ever put together – including memos, spreadsheets, and correspondence. Our analysis illuminated long-practiced Islamic State effort to administer its resources and territory. Its territorial control gives the group the flexibility to perpetuate terrorism both in the Middle East and worldwide while weathering the heavy battlefield losses it is now suffering in Iraq and Syria.

Our study suggests that, although necessary, targeting individual leaders will not be sufficient to defeat the Islamic State. The group has survived one-off personnel losses for years by institutionalizing its bureaucracy and decentralizing its decision-making to its mid-level leaders and field commanders. Rather, targeting the Islamic State’s resources—like manpower—will be the key to defeating the group. Local forces and the U.S.-led coalition are already taking back territory, as well as targeting the group’s financial resources, and the Obama Administration has announced a line of effort against foreign fighters [11] that focuses on countering extremism at home and building international cooperation [12] to curb foreign fighter flows. But the highest levels of government should mobilize the U.S. interagency and the international coalition to develop a dedicated line of direct military and intelligence operations against Islamic State operatives.

Our documents span five years of the group’s history, starting before it first declared an Islamic State in Iraq in 2006, through the group’s weakest point in 2010 when its top leaders were killed in a U.S.-led raid. Although these documents are now dated, they include detailed information on how the Islamic State managed and funded terrorists and fighters—Iraqis, other Arab nationals, and Europeans—and suggest lessons for dealing with current national security concerns. They show the Islamic State’s leadership designed the group’s structure largely based on al-Qaida’s organizational model. But Islamic State leaders enhanced this structure to more effectively take over and administer territory, which could then be used to raise vast amounts of money and to vet and train terrorist operatives.

The Islamic State is likely to retain an ability to strike abroad for some time: the documents also reveal how the group carefully manages its human capital. Even though its suicide bombers were almost entirely foreigners, our documents show that most foreigners actually elected to become trained fighters. The group vetted foreigners and trained them more extensively than they did locals. Islamic State training camps are important because they provide a venue to train their new recruits in explosive and weapons--key skills for both local and international attacks-- away from populated areas. This gave their foreign recruits the time and resources to develop skills at fighting, making explosives, or serving as bureaucrats – to master both the bang and the slang.

While there were only a handful of Western recruits in our data dating back to around 2005, there are now some 3,400 Western members [13] that the group could use to continue this effort in Europe and America alone. Recent Islamic State foreign fighter data leaked to NBC News [14] suggests that almost 90 percent of these recruits now opt to become fighters rather than suicide operatives. More recent information [15] indicates Islamic State training camps teach a wide range of skills. These include the arts of fighting, assembling and disassembling weapons, and training on medium and light arms. Trainees are then assigned to special forces, air defense, a snipers battalion, and other units. Accordingly, Islamic State training camps are the breeding grounds of tomorrow’s Brussels or Paris attacks, and their consistent penchant for training foreigners suggests that military and security officials need to get serious about how to deal with returnees from Iraq and Syria.

Further, the Islamic State may continue to prioritize external attacks in the face of military losses at home. Although the Islamic State almost exclusively focused on Iraq and Syria from 2006 to 2014, the coalition’s determination to “defeat and destroy” the Islamic State almost certainly has partially shifted the group’s focus to Europe and the West [16] for the foreseeable future. The focus on international plots harkens back to the group’s founding, when it was flush with resources and sought international acclaim. Its founder, Abu Musab al Zarqawi, plotted a series of international terrorist attacks from 2003 to 2006 across the Middle East and in Europe, culminating in the devastating 2005 bombings in Amman, Jordan.

The coalition against the Islamic State is proceeding along a number of lines, most notably countering their finances and taking back territory, such as with the recent battle of Ramadi and the current battle of Fallujah. While these efforts must be sustained to weaken the group on the ground in Iraq and Syria, the coalition and its partners should expand their focus. To defeat the group and thwart attacks in the United States and partner nations, the United States must degrade the Islamic State’s talent pool in the Middle East.

In testimony on May 26 [17], Department of Homeland Security Deputy Secretary Alejandro Mayorkas noted that while the home-grown threat is more likely, plots emanating from Iraq and Syria remain a concern, especially in Europe. The coalition would now be best served by increasing its focus on striking Islamic State training camps and foreign fighter facilitators. And further, the administration should intensify the focus of its intelligence and law enforcement agencies on returnees from Islamic State lands—people who are the most likely direct threats to the United States and its allies and partners.

Article Link to The National Interest: 

Brazil's New Government Has 90 Days To Save The Economy From Chaos

Momentum is on their side, but the hardest is yet to come.

By Oren Kesler
The National Interest
May 31, 2016

Over the last several years, Brazil has gone through political and legal turmoil that has polarized the public into warring camps, revived forgotten fears of a latter-day military coup, and reignited racial and economic discourse in a way not experienced for an extended period of time.

Despite the overwhelming support enjoyed by the pro-impeachment campaign, the process itself proved to be slow and painful—and can be viewed as a traumatic event for Brazil’s institutions and society as a whole. The country now finds itself wounded and facing the same problems as before—only now there is no prominent figure like Rousseff to absorb the public’s blame and anger.

The new government led by President Michel Temer—Rousseff’s former deputy—has minimal room for error or even to adapt. The public’s expectations are high, and the government is expected to provide impossibly immediate solutions to Brazil’s deep problems.

Crucial Days Ahead

The Temer government’s first challenge will be to restore investors’ trust and confidence in Brazil’s economy. Temer’s appointments of Henrique Meirelles as Minister of Finance and Ilan Goldfajn as President of the Central Bank are indeed a step in the right direction, and have been welcomed among Brazilian and foreign investors alike.

However, a full economic recovery could prove to be an unexpectedly difficult challenge. In the first quarter of 2016, Brazil’s GDP shrank by 1.44 percent relative to the fourth quarter of 2015—and by 6.27 percent compared to the first quarter of 2015. Overall, Brazil’s economy is set to shrink by 3.7 percent this year.

The GDP figures, however, only provide a partial picture of the depth and magnitude of the current crisis. Recently released data shows that unemployment has risen faster than previously thought, with more than 11.1 million (10.9 percent of the workforce) now looking for jobs. This figure represents a quarter-on-quarter increase of nearly two percent. If that wasn’t enough, inflation is on the rise—going from 9.34 percent in mid-April to 9.5 percent in mid-May.

Adding to these concerns is the recent statement made by Minister Meirelles that Brazil’s fiscal deficit prior to debt interest payments could reach $42.1 billion this year. Many fear this will grow further, as the economy is not showing any signs of near-term recovery.

Facing a worsening economic situation, investors are looking at the Temer government to ride the current wave of public support to swiftly execute necessary but painful reforms. Many investors consider the upcoming ninety days to be a crucial time period during which the new government needs to issue and execute economic reforms to cut the growing budget deficit and rising debt—a task the Rousseff government was neither willing nor able to tackle.

A partial view of the new government’s plans reveals the importance of using the presently existing momentum to tackle public spending, which is consuming about 35 percent of GDP. The new government has already announced plans to cut four thousand public-sector jobs, and Meirelles has made announcements regarding much-needed public pension reforms—starting with a minimum retirement age of sixty-five.

Another step the government is seeking to take is the privatization of state-owned enterprises such as hydroelectric dams, airports, marine ports, insurance companies and the postal services. In a recent simulation conducted by Wikistrat, it was agreed that such a plan is likely to encounter strong objection from local workers’ unions, despite high hopes from government officials. Leading to strikes and protests as have happened in the past.

In addition, Wikistrat analysts argued that low-income Brazilians—the main beneficiaries of Workers’ Party policies over the past sixteen years and who are the main consumers of many public services and plans—are likely to object as well, increasing the pressure on the government to abandon massive reforms in favor of minor ones.

To conclude, Rousseff’s impeachment might have brought a wave of optimism to Brazil’s business sector, but it has not solved any of the problems the country is currently facing. The next ninety days are crucial in this regard, and will signal whether the new government is capable of executing much-needed public reforms and austerity measures to pull the country out of its downward spiral or again enter a political storm.

Article Link to The National Interest:

Is Iran About To Cut Muqtada al-Sadr Loose?

While refraining from breaking with Muqtada al-Sadr and his rebellious followers, Iran is not fully embracing the Iraqi cleric either.

June 1, 2016

TEHRAN, Iran — The first chapter in the political life of Muqtada al-Sadr opened with the 2003 US-led invasion of Iraq and his armed resistance against foreign forces. In subsequent years, he gradually scaled back such activity and began to cooperate with the government of Prime Minister Nouri al-Maliki while continuing to insist that US troops withdraw from Iraq.

The next chapter began in August 2015, when Sadr rallied some 100,000 Iraqis in Baghdad's Tahrir Square in a protest against what he believed to be corruption and partisanship in the Cabinet of Prime Minister Haider al-Abadi, a clear sign of Sadr's return to the political scene. On Feb. 26, he again mobilized hundreds of thousands of Iraqis to take to the streets of Baghdad to protest against the incapability of the government to establish a nonpartisan and technocratic Cabinet.

A few weeks later, on March 18, Sadr and his supporters staged a sit-in outside the Green Zone, where government institutions, including the parliament, and foreign embassies are located. Sadr called the Green Zone a “bastion of support for corruption” and exhorted his supporters to continue sit-ins and strikes until the parliament and Abadi submit to their demand for political reform. Moreover, in a provocative speech on April 30, he tacitly encouraged his supporters to storm the parliament, which they proceeded to do. This means Abadi faces three main challenges: fighting the Islamic State (IS), implementing reforms and dealing with Sadr and his followers.

In general, to determine whether a political move is justifiable, useful or conventional, it should be assessed by criteria such as rationality, legitimacy, expediency and relative consensus of elites. As far as political rationality is concerned, it is obvious that to sow wind is to reap a whirlwind. By engaging in acts of sabotage and violence, such as storming the parliament, Sadr is provoking the other side, including the government, to take repressive actions against him. Such actions will create a cycle of chaos and disorder in Iraq and, as a result, everyone will suffer.

As far as legitimacy is concerned, it is again obvious that Abadi's government and Iraqi lawmakers — both elected through a democratic and lawful process — have a certain amount of appeal among most political groups in Iraq. Therefore, considering the rules of democracy, Abadi's administration as well as the parliament should be pressured through legal channels such as political parties, parliamentary factions and lobbying, rather than demonstrations, sit-in protests and storming the parliament.

There is no political expediency in Sadr’s actions either. He has chosen to rebel just as IS threatens the territorial integrity of Iraq, as Kurds are urged to secede by their leaders such as Massoud Barzani and as Saudi Arabia is fueling ethnic and religious conflict within Iraq. It would appear that Sadr has chosen the worst place and time for the sit-ins, strikes and blocking the normal activities of the Abadi government. More important, in terms of consensus he lacks the backing of main non-Sadrist parties, in addition to the fact that no prominent or reputable religious authorities or experts have voiced support for Sadr’s actions. Indeed, Grand Ayatollah Ali al-Sistani has on various occasions tacitly warned him against engaging in dangerous adventures.

Sadr can in many images over the years be seen seated next to key Iranian figures, showing that the Islamic Republic of Iran has not rejected the Iraqi cleric.

Right after the US-led invasion and Sadr's armed resistance against occupying forces, Tehran had morally and financially supported Sadr. Now, however, although Tehran has not condemned his actions, it hasn't supported them either. The Iranian Foreign Ministry spokesman, Hossein Jaber Ansari, reacted to rumors of Sadr’s visit to Iran in mid-May 2016 after his supporters had stormed the parliament by saying that the Iraqi cleric was not on an official visit and that “no official meeting has taken place between him and Iranian officials.” What this suggests is that Sadr perhaps decided to travel to Iran for personal reasons and that Tehran, seeking not to appear to legitimize his actions, did not arrange for official meetings between him and officials during his trip.

Ali Akbar Velayati, a foreign policy adviser to Iran's supreme leader, Ayatollah Ali Khamenei, was the only Iranian official to publicly react to the storming of the Iraqi parliament, stating that the people of Iraq will “resist” against “any threat to their security and rule of law” and will also “resist any group that engages in illegal activities.” To be clear, Velayati was indirectly alluding to Sadr's protests. Thus, it appears that Tehran does not seek to pursue an either-or approach toward Sadr and Abadi. In other words, the Iranians want to maintain ties with both Sadr and the Iraqi government.

On the one hand, Iran firmly supports Abadi’s administration. Indeed, Khamenei clearly stated to Abadi in October 2014, “We [Iran] stand with you and will support your administration as firmly as we supported the previous Iraqi administration.” Thus, Iran’s broader policy is to support the legitimate government of Iraq. At the same time, Iran knows full well that if it loses its influence over Sadr’s movement, the consequences will be unpredictable. Indeed, while Sadr was pursuing his political adventures in Baghdad, Quds Force commander Qassem Soleimani was in the command room near Fallujah during the operation to retake Fallujah, which Abadi had ordered.

Although some of Sadr's rebellious supporters shouted anti-Iranian slogans during their storming of the parliament, some members of the Islamic Supreme Council of Iraq claim that infiltrators and Baathists were responsible for them and that Sadr's true supporters are not anti-Iranian. Sadr himself has prohibited his supporters in the streets from chanting anti-Iranian slogans.

Tehran knows that chaos in a neighboring state will have negative consequences for Iran, especially a neighbor that after years of hostility has now become its political ally. Therefore, its general policy is to support Abadi's government while also refraining from completely alienating rebellious groups sympathetic to Iran, such as Sadr and his followers.

Turkey Faces Multiple Dilemmas In Syria

Ankara’s Kurdish phobia underlies its inability to come up with realistic strategies that will also serve its own long-term security interests.

By Semih Idiz
June 1, 2016

Turkey’s inability to produce a realistic strategy toward Syria and to coordinate its policy with its allies is coming home to roost, leaving it facing multiple dilemmas that are unlikely to be resolved soon. Ankara’s war with the outlawed Kurdistan Workers Party (PKK) and its related effort to prevent Kurds from gaining ground in northern Syria remains Turkey’s main problems.

This complicates, if not prevents, headway by the US-led coalition against the Islamic State (IS) in the region. Washington, by its own admittance, is trying to maintain a delicate balance between Ankara and the Democratic Union Party (PYD), the umbrella organization of the Syrian Kurds, which Turkey says is a terrorist group linked to the PKK.

While acknowledging that the PKK is a terrorist organization, Washington has refused to do the same for the PYD and its military wing, the People’s Protection Units (YPG), with which it is allied against IS.

The successes against IS by the US-supported Syrian Democratic Forces (SDF) — at least 60% of which are made up of YPG fighters — also contrasts sharply with the failure of groups supported by Ankara to make any headway against the Bashar al-Assad regime or IS.

The recent failure of groups supported by Turkey to stop IS advances on the Marea-Azaz line, while the SDF makes gains against IS in its sectors, has underscored this again. Having prioritized the fight against IS in Syria and Iraq, Washington is unlikely to sever ties with the YPG simply to please Ankara.

Turkey’s support for groups in Syria with links to al-Qaeda-related Jabhat al-Nusra, which the United States considers a terrorist group, also acts as a disincentive for Washington in this regard.

Ankara is now watching apprehensively as US Special Forces and US fighter jets work closely with the SDF to clear the northern sector of Raqqa from IS, in preparation for an onslaught against the whole city in coming weeks.

Turkey has declared the 98-kilometer (60-mile) stretch along its border between the Syrian towns of Jarablus to the east and Azaz to the west a no-go area for the Kurds and started shelling YPG positions in February from across the border to hammer this point home.

Turkey is concerned that if this region falls to the PYD, it will unite Kurdish-held territories east and west of the Euphrates River and lay the groundwork for an autonomous Kurdish region along the Turkish border. Turkey is worried that the liberation of Raqqa by SDF forces will speed up this process.

Compounding Ankara’s dilemma is the fact that it, too, is fighting IS, which has mounted deadly suicide attacks inside Turkey and rocket mortar attacks against the Turkish town of Kilis near the Syrian border.

Foreign Minister Mevlut Cavusoglu suggested earlier this week that Turkey could mount joint operations with the United States and other Western allies in northern Syria in order to dislodge IS from the region, provided the PYD is excluded from these operations.

Serkan Demirtas from Hurriyet Daily News cited unnamed US officials who said they had not received a detailed plan about Cavusoglu’s proposal. “Some concepts have been put forward, but none are doable or represent a detailed plan that can be enforced rapidly,” the official said.

The fact that US-led coalition jets taking off from Incirlik Air Base in Turkey are supporting YPG fighters as they advance toward Raqqa also shows how little real influence Turkey wields over developments in the region.

There is not even a hint from Ankara that it might prevent the use of Incirlik by the anti-IS coalition if the base is used to back YPG fighters. Ankara is aware that closing the base would remove what little influence it has over the United States.

The recent advances by IS along the Marea-Azaz line has left Turkey facing another dilemma with regard to refugees from the region. The refugees are reportedly moving toward regions held by the SDF, thus turning areas held by the Kurds into a potential safe zone, which the United States will clearly want to encourage.

Ankara is hardly likely to be happy over this because it will legitimize PYD rule in the region further in Western eyes. If IS advances along the Marea-Azaz line cannot be prevented, this will also increase the value of the YPG for the West as a much more viable force against IS when compared to groups supported by Turkey.

The ultimate dilemma for Turkey, however, is the fact that it has ended up in what appears to be an ineffectual situation in Syria, even though it is one of the countries bearing the biggest brunt from this crisis.

Mehmet Tezkan, a well-known columnist for daily Milliyet, argues that this situation is of Turkey’s own making. “If you insist that the only correct foreign policy position is yours. … If your actions at the start were wrong. If you buttoned your shirt the wrong way at beginning. … Then this is what you end up with,” Tezkan wrote in his column.

He went on to question Turkey’s opposition to YPG fighters entering Raqqa, asking what the alternative being proposed was. “Should Raqqa belong to IS then? No, you say, it should belong neither to IS nor to the YPG. If that is the case, should Assad take the city? No, you say, that won’t do either. So whose should it be? This is Ankara’s dilemma,” Tezkan argued.

Even the mood in the Islamist and staunchly pro-government media appears to be coming around to accepting that Turkey’s current Syria policy is unsustainable.

Ibrahim Karagul, the editor-in-chief of daily Yeni Safak, suggested in his column this week that the time has come for a change in the government’s Syria policy. “Turkey has to do today what it should have done three years ago,” Karagul wrote. “If we can’t intervene to prevent Syria from turning into a front from where Turkey can be hit for decades, then we will be responsible for the price this country will have to pay for this tomorrow.”

It is not clear if Karagul was exhorting military intervention by Turkey in Syria, a course that most strategists argue is unlikely to produce the expected results, or an intervention of another unspecified kind.

Karagul’s remarks nevertheless point at the confusion in the pro-government camp over Syria, as well as Ankara’s inability to find the right course in order to overcome its multiple dilemmas and make Turkey a key player in Syria again.

If that cannot be done, it is clear that Ankara will not be able to play a proactive role in efforts aimed at resolving this crisis in a manner that also addresses Turkey’s security concerns with help from its allies.

Article Link to Al-Monitor:

Turkey Faces Multiple Dilemmas In Syria

Wednesday, June 1, Morning Global Market Roundup: Asia Shares Wobble As Oil Slip Dampens Sentiment, Dollar Stalls

By Shinichi Saoshiro
June 1, 2016

Asian stocks were on a weak footing on Wednesday as a slip in crude oil prices dampened investors' appetite for riskier assets, while the recently bullish dollar stalled against the euro and yen following a mixed bag of U.S. economic data.

Spreadbetters also expected a shaky start for European shares, forecasting Britain's FTSE, Germany's DAX and France's CAC to open flat to slightly lower.

Japan's Nikkei lost more than one percent as the yen firmed. Other decliners included Australian stocks, which fell 1.0 percent.

Hong Kong's Hang Seng and South Korea's KOSPI stood little changed.

Shanghai see-sawed in and out of negative terrain, and was last up 0.1 percent, after rallying on Tuesday on expectations MSCI could add China's mainland stocks to its emerging market benchmark for the first time.

David Dai, Shanghai-based investor director at Nanhai Fund Management Co, said any market rally was unlikely to be sustainable at this stage.

"The economy is still weak, and the Fed will likely raise rates soon. I don't think the market will go up much further. The best strategy now is to take profit."

There was little market reaction to the official and private surveys on China's manufacturing activity, which were roughly in line with expectations, suggesting the world's second-largest economy is still struggling to regain traction.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) showed activity at China's factories shrank for a 15th straight month in May. The official manufacturing May PMI painted a slightly more optimistic picture and stood unchanged from the previous month at 50.1

MSCI's broadest index of Asia-Pacific shares outside Japan recovered from an earlier dip and crawled up 0.1 percent.

The Dow shed 0.5 percent and the S&P 500 dipped 0.1 percent on Tuesday, as energy shares weakened in the wake of a slip in oil prices and offset a rise in safe-haven utilities. [.N]

Crude pulled back from eight-month highs reached last week amid expectations that a global glut was easing, falling overnight to profit taking. U.S. crude was last down 0.7 percent at $48.76 a barrel and Brent fell 0.8 percent to $49.51. [O/R]

The fall in oil prices was exacerbated after United Arab Emirates Oil Minister Suhail bin Mohammed al-Mazroui said he was happy with the oil market, noting that prices had been correcting higher.

The UAE oil minister's comments touched a nerve in a market wary that an OPEC meeting on Thursday may not pave the way for a production freeze.

"The political will of the OPEC countries to enact a production freeze is clearly waning. A production freeze is unlikely to come up as an agenda at the June meeting," wrote Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.

"A sense of crisis among the oil producing countries appears to have receded following the recent spike in crude oil prices."

In currencies, the dollar was down 0.6 percent at 110.010 yen, having come off a one-month high of 111.455 struck on Monday after Federal Reserve Chair Janet Yellen's comments raised expectations for a near-term U.S. rate hike.

The euro was at $1.1120, putting some distance between a 2-1/2-month low of $1.1097 touched on Monday.

U.S. data overnight saw personal income-related and housing indicators come in strong, while the Chicago manufacturing PMI and consumer confidence data proved disappointing.

The Australian dollar was up 0.6 percent to $0.7277 helped by stronger-than-expected first quarter economic growth, which pushed it further away from last week's three-month low of $0.7145.

Sterling was on the defensive, last trading little changed at $1.4490 after dropping more than one percent on Tuesday, after polls showing those who support Brexit may be increasing.

Oil Prices Fall On Rising Middle East Output, Asia Demand Concerns

By Henning Gloystein
June 1, 2016

Oil prices fell over 1 percent on Wednesday as production from major Middle East exporters was expected to remain high or even increase just as concerns over the state of China's economy weighed on its fuel demand outlook.

Brent crude futures were trading at $49.29 per barrel at 0649 GMT, down 60 cents, or 1.2 percent, from their last settlement.

U.S. crude futures were down 51 cents, or 1.04 percent, at $48.59 a barrel.

Traders said that the falls were a result of the prospect of rising output from Middle East members of the Organization of the Petroleum Exporting Countries (OPEC), which meets this week to discuss market policy.

Most analysts said OPEC will continue to focus on defending market share instead of propping up prices by controlling output.

"Many OPEC members ... have plans to grow, so cutting supply now may interfere with those objectives," Morgan Stanley said.

Many Middle East oil producers have ramped up their supplies to Asia in an aggressive fight for market share.

But on the demand side, Morgan Stanley said it was worried about China.

"Our economists worry that April data showed China may be slowing ... The oil demand data from China should reinforce those concerns," the bank said.

China's official factory activity gauge expanded only marginally in May, data showed on Wednesday, while a private survey showed conditions deteriorated for a fifteenth straight month.

Analysts at BMI Research said Chinese port congestion and the impending refinery maintenance season will also weigh on crude imports over the next few months."

Barclays said there were also signs of "investor fatigue" in oil markets following months of heavy inflows.

A Reuters poll showed that most traders expect only limited potential for further price gains this year.

Despite this, oil prices have risen over 20 percent, or almost $10 per barrel, since early April, largely because of supply disruptions across the globe, and especially in Africa and Canada, and as overall demand remains strong despite China's slowing economy.

In the United States, the world's top oil consumer, demand increased by 2 percent in March, compared to the same month last year, to 19.6 million barrels per day (bpd), the highest seasonal level since 2008, according to Barclays.

As a result of a looming supply deficit, consultancy Energy Aspects said it expected the crude forward curve to flip into backwardation in the fourth quarter of the year, when prices for future delivery are below those for prompt delivery.

The current crude curve for Brent is in slight contango, reflecting ongoing oversupply, in which prompt prices are below those for future delivery.

North Korea Endorses Trump For President

By Jack Kim
June 1, 2016

North Korea has backed presumptive U.S. Republican nominee Donald Trump, with a propaganda website praising him as "a prescient presidential candidate" who can liberate Americans living under daily fear of nuclear attack by the North.

A column carried on Tuesday by DPRK Today, one of the reclusive and dynastic state's mouthpieces, described Trump as a "wise politician" and the right choice for U.S. voters in the Nov. 8 U.S. presidential election.

It described his most likely Democratic opponent, Hillary Clinton, as "thick-headed Hillary" over her proposal to apply the Iran model of wide sanctions to resolve the nuclear weapons issue on the Korean peninsula.

Trump instead has told Reuters he was prepared to talk to North Korean leader Kim Jong Un to try to stop Pyongyang's nuclear program, and that China should also help solve the problem.

North Korea, known officially as the Democratic People's Republic of Korea (DPRK), is under U.N. sanctions over its past nuclear tests. South Korea and the United States say its calls for dialogue are meaningless until it takes steps to end its nuclear ambitions.

DPRK Today also said Trump's suggestion that the United States should pull its troops from South Korea until Seoul pays more was the way to achieve Korean unification.

"It turns out that Trump is not the rough-talking, screwy, ignorant candidate they say he is, but is actually a wise politician and a prescient presidential candidate," said the column, written by a China-based Korean scholar identified as Han Yong Muk.

DPRK Today is among a handful of news sites run by the isolated North, although its content is not always handled by the main state-run media.

It said promising to resolve issues on the Korean peninsula through "negotiations and not war" was the best option for America, which it said is "living every minute and second on pins and needles in fear of a nuclear strike" by North Korea.

The North has for years called for the withdrawal of U.S. troops from the South as the first step toward peace on the Korean peninsula and demanded Washington sign a peace treaty to replace the truce that ended the 1950-53 Korean War.

Its frequently strident rhetoric also often threatens nuclear strikes against South Korea and the United States.

Microsoft Sells Patents To Xiaomi, Builds 'Long-Term Partnership'

By Jeremy Wagstaff 
June 1, 2016

Software maker Microsoft Corp (MSFT.O) is selling about 1,500 of its patents to Chinese device maker Xiaomi [XTC.UL], a rare departure for the U.S. company and part of what the two companies say is the start of a long-term partnership.

The deal, announced on Wednesday, also includes a patent cross-licensing arrangement and a commitment by Xiaomi to install copies of Microsoft software, including Office and Skype, on its phones and tablets.

Both companies declined to discuss financial terms of the deal.

"This is a very big collaboration agreement between the two companies," Wang Xiang, senior vice president at Xiaomi, said by telephone ahead of the deal.

Analysts said Xiaomi's ambitions to be a major player outside China were hampered by weak patent protection and a fear of a prolonged legal battle.

"This deal might just give them enough of a patent trove to move to Western markets," said Sameer Singh, a UK-based analyst. "Their position in China has been under constant attack from even lower-end Android vendors, so moving overseas is now a necessity."

Shipments of Xiaomi phones fell 9 percent year-on-year in China in the first quarter, according to Strategy Analytics, and its market share dipped to 12 percent from 13 percent, squeezed not only by Huawei [HWT.UL] and Samsung Electronics (005930.KS) but also smaller contenders including Oppo and Vivo.

Wang said the acquisition of Microsoft patents, which included voice communications, multimedia and cloud computing, on top of some 3,700 patents the Chinese company filed last year, were "an important step forwards to support our expansion internationally."

Xiaomi launched its first U.S. device earlier this month, a TV set-top box it developed in cooperation with Alphabet Inc's (GOOGL.O) Google, which owns the Android operating system it and most Xiaomi devices run on. Xiaomi has also launched a tablet which runs a version of Microsoft's Windows operating system.

Jonathan Tinter, corporate vice president at Microsoft, said the company was keen to tap into Xiaomi's young, affluent and educated users by having its products pre-installed on their devices. He declined to go into detail about the patent deals, but said the overall deal was something "we do only with a few strategic partners."

Microsoft has cut licensing deals with many Android device makers over the years, but has had less luck with Chinese manufacturers.

Florian Mueller, a patents expert who consulted for Microsoft in the past, said it was rare for Microsoft to actually sell its patents, adding "it's possible Microsoft found it easier to impose its Android patent tax on Xiaomi as part of a broader deal that also involved a transfer of patents."

Article Link to Reuters: