Monday, June 6, 2016

Monday, June 6, Night Wall Street Roundup: S&P 500 Ends At Seven-Month High After Yellen Comments

By Caroline Valetkevitch
Reuters
June 6, 2016

The S&P 500 closed at a 7-month high on Monday as Federal Reserve Chair Janet Yellen painted a mostly upbeat picture of the economy but gave little sense of when a rate hike may be coming.

Energy shares also boosted the market after oil ended higher for a third straight session. The S&P energy index rose 2 percent, leading gains in the benchmark S&P 500.

Yellen's remarks, which were likely her last public comments before a policy meeting next week, followed Friday's dismal monthly jobs report, which raised concerns over the ability of the economy to absorb a rate hike as early as June.

Yellen called the jobs report "disappointing," but said "one should not attach too much significance to a single report."

Her remarks seemed to ease some fresh worries about the economy while also underscoring views the Fed may be in no rush to raise rates.

"I think she's still committed to rate hikes, but she is emphasizing there's not a timetable. She didn't say 'in the next few months,' which is dovish," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

In terms of rate hike, he said, "we're not talking about June or July but maybe later this year" now.

The Dow Jones industrial average closed up 113.27 points, or 0.64 percent, to 17,920.33, the S&P 500 gained 10.28 points, or 0.49 percent, to 2,109.41, its highest close in seven months.

The Nasdaq Composite added 26.20 points, or 0.53 percent, to 4,968.71.

The gains pushed the market a bit closer to all-time highs last reached in May 2015. The S&P 500 is now just about 21 points shy of its all-time closing high.

Biotech shares jumped, with the Nasdaq Biotech Index up 1.5 percent.

Kite Pharma rose 10.3 percent to $57.42 while Juno Therapeutics gained 10.5 percent to $48.50. Both said they could receive initial regulatory approvals next year for a type of immunotherapy treatment known as chimeric antigen receptor T-cell (CAR-T) therapies.

About 6.4 billion shares changed hands on U.S. exchanges, below the 6.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered declining ones on the NYSE by 2,119 to 928, for a 2.28-to-1 ratio on the upside; on the Nasdaq, 2,014 issues rose and 830 fell for a 2.43-to-1 ratio favoring advancers.

The S&P 500 posted 39 new 52-week highs and one new lows; the Nasdaq recorded 90 new highs and 29 new lows.


Article Link to Reuters:

Juan Williams: The Fantasy Of Trump's Appeal

By Juan Williams
The Hill
June 6, 2016

Leave it to Fox News’s Chris Wallace to hit the pause button on a major line of political spin coming out of the Trump campaign these days.

When Trump’s campaign manager, Corey Lewandowski, repeated to Wallace Trump’s claim that the candidate is “doing very well with women” and also “winning with Hispanics,” the “Fox News Sunday” host called for a reality check.

“Corey, wait, he’s not winning with women, he’s not winning with Hispanics, his numbers are hugely underwater with both,” Wallace shot back.

The numbers are on Wallace’s side.

Here we go:

A Quinnipiac University poll out last week found that 54 percent of female voters support Hillary Clinton while only 30 percent back Trump.

These findings track with those of a Fox News poll from mid-May which found Clinton with 46 percent support among women and Trump lagging with 33 percent support. A CBS/New York Times poll released the same week found Clinton beating Trump, 53 percent to 36 percent.

A Fox News Latino poll from last month found that Latinos overwhelmingly support Clinton over Trump, 62 percent to 23 percent. Far from “winning with Hispanics,” that’s a 39-point deficit for Trump.

“Much was made during the 2012 election about Mitt Romney's dismal performance among Latino voters,” Fox News Latino noted in its release of the survey. Later the pollsters added that Trump's 23 percent support "paired with the 74 percent unfavorable rating has the real estate mogul facing a monumental task if he wants to win over Latinos."

An April ABC News/Washington Post poll showed just how deep a hole Trump is in with these two key demographics. The real estate mogul has a 75 and 81 percent disapproval rating among women and Hispanics, respectively, according to that survey.

These are consistent findings from a variety of pollsters. Yet Trump and his surrogates repeatedly insist there is a great bandwagon of support for him picking up speed across the nation.

It’s all an illusion being created to make Trump seem more popular than he actually is.

Some TV networks buy into the fantasy to the point of inviting people to debate how many Bernie Sanders supporters are likely to vote for Trump in November.

That is amazing when Wall Street Journal/NBC News polls over January, February, March and April of this year found just 6 percent of people backing Sanders “felt positively about Mr. Trump, while 90 percent felt negatively.”

And that’s not even the biggest political illusion being used by Trump. The real whopper is his claim to have the support of most GOP voters, while he has only won a plurality.

According to the Census bureau, there were approximately 153 million registered voters in the United States as of the 2012 elections.

Just over 11.5 million have voted for Donald Trump so far in the GOP presidential primary. If we are going strictly by popular vote, a majority of the voters who cast ballots in the Republican primaries so far have voted for someone other than Trump. Over 14 million voters preferred Ted Cruz, Marco Rubio or John Kasich.

This means Trump has won the support of roughly 8 percent of registered voters. Those voters are overwhelmingly older and whiter that the general electorate.

As the Pew Research Center noted in a February report, “The U.S. electorate this year will be the country’s most racially and ethnically diverse ever.”

“Nearly one-in-three eligible voters on Election Day (31%) will be Hispanic, black, Asian or another racial or ethnic minority, up from 29% in 2012. Much of this change is due to strong growth among eligible Hispanic voters, in particular U.S.-born youth.” Pew concluded.

Given his problem with Hispanics, how does Trump’s recent attack on New Mexico’s Republican Gov. Susana Martinez, who is Latina, make sense? How is it supposed to help him win over Latinos, especially women?

At a rally in Albuquerque, Trump defamed Martinez as a lazy leader for the state, saying “we have got to get your governor to get going.”

What was Trump’s evidence for this outrageous broadside? According to him, the number of New Mexicans on food stamps had increased since 2000. Trump neglected to mention that Martinez only became governor in 2011.

Even Trump backer and potential vice presidential candidate Newt Gingrich called this a political error.

“You particularly don’t want to see a candidate who needs to both get stronger with Latinos, and stronger with women, attack a Latina woman Republican governor,” Gingrich said.

Trump’s women problem isn’t confined to women of color. White women are also expressing their distaste for his politics.

“The potential for the 2016 election to widen America's racial voting chasm even further is nothing new,” Washington Post polling manager Scott Clement recently wrote. “But Washington Post-ABC News polls have also identified a related dynamic: White Americans are splintering along education and gender lines at rates not seen in at least three decades.

“The gender split is similarly historic, with Trump’s support 22 points higher among white male registered voters than white female registered voters (69 vs. 47 percent), double the largest gap between these groups in previous presidential elections (11 points in 2000),” Clement reported.

The polling numbers on the limits of Trump’s appeal are consistent. But many of the Republicans feeling the need to get in line behind Trump have bought into the myth that he has widespread support — including from women and Hispanics.

If Trump’s claims about his own political appeal were summed up in a song title, it would be a choice between Carly Simon’s “Just Not True” and “You’re So Vain.”


Article Link to The Hill:

How Obama Is ‘Trump-Proofing’ His Climate Pact

While the GOP nominee-presumptive promises to dismantle the Paris accord, U.S. officials are rushing to secure it. And Trump’s energy czar is already hinting he may back down.



By Anne Usher
Politico Magazine
June 6, 2016


In a roomful of oil and gas executives in North Dakota late last month, Donald Trump reiterated his threat to “cancel” the Paris climate agreement, insisting the way to “make America great again” is to resurrect the coal industry and drill our way to prosperity.

But even if Trump is elected, taking down Paris is going to be a lot harder than he thinks. That’s certainly the view of Jonathan Pershing, President Obama’s new climate envoy, who’s rushing to Trump-proof America’s commitment to the pact—minimizing ways in which a President Trump could obstruct the global carbon reduction plan.

“We’re all in. We’re moving down this road,” says Pershing, who is seated on a couch in his office at the State Department, surrounded by relics of past climate negotiations. Pershing picks one up—the original United Nations document that launched them, back in 1990—as if to emphasize just how long people like him have been working to save the planet before Trump came along. The veteran diplomat, a distant relative of Gen. John "Black Jack" Pershing of World War I fame, has been in the room for many of these talks and it’s clearly a point of pride with him. Pershing took the mantle from Todd Stern in early April and is now part of a small team of senior administration officials who are trying to cement durable regulations on climate that will survive after Obama leaves office, no matter who succeeds him.

Pershing is now trying to lock in the U.S. side of the accord, which requires all nations to develop public plans detailing how they would cut carbon emissions through at least 2025. Oddly enough, Trump’s own hand-picked new energy czar, Rep. Kevin Cramer of North Dakota, agrees that his boss can do only so much damage. Cramer, in an interview with me in late May, was notably noncommittal when I asked him if Trump would simply renege on the Paris accord. He noted that Trump has said at a minimum that he’d “renegotiate” it, and he made the point that this is how Trump has approached past business negotiations, starting from an extreme position.

“I think you might see him pivot away” from his hard-line stance on scrapping the agreement altogether, Cramer told POLITICO.

Even Trump himself appears to be conceding some ground on the pact, saying at a minimum he will “rein it in as much as possible.” It all feels rather made-up-as-he-goes-along: Cramer, known as an energy hawk who wants to cut “punitive” fees on oil—but also wants to see more of a federal role for selling power across state lines—says he had spoken to Trump only twice before the campaign tapped him. One was on a radio talk show in early April, Cramer says, and then again a couple weeks later when Trump came to Washington to deliver a foreign policy speech.

In an era in which denial of global warming is still the official platform of the GOP, and the party’s newly anointed leader has repeatedly called it a “hoax,” the fate of the Paris accord under a potential Republican president may well be crucial to the future of the earth’s climate. Formally speaking, Trump can’t just wave a wand and pull the United States out of the Paris treaty; to leave it officially would require the United States to first wait three years, and then give a one-year notice—effectively putting a withdrawal beyond the next presidential election. Nor could Trump hope to renegotiate the international climate accord, which was reached by more than 170 countries after nearly 25 years’ worth of backroom meetings and formal negotiations. A President Trump would not be able to herd all those diplomats back to the table.

What Trump could do, however, is obstruct compliance at home by holding up key appointments, squeezing key agencies’ budgets or taking other executive actions that would have the cumulative effect of slowing down the international momentum Obama has built on climate. Just as Obama is trying to rush through new rules with executive decisions, a President Trump would have the latitude to reverse course on clean energy. This includes possibly approving construction of the Keystone XL oil pipeline, although the company hoping to build it, TransCanada Corp., has said projects like this are not usually structured for the U.S. government to get “a piece of the profits,” as Trump said he wants.

It’s not remotely likely that Trump could succeed in “eliminating” the Environmental Protection Agency, as he says he will do. But he would have a lot of Republican support for sharply cutting its budget. A much steeper hurdle would be to block it from carrying out the authority that Congress has already given it under the Clean Air Act to regulate pollution—which the EPA now says includes emissions from coal-fired plants. This is the heart of Obama’s Clean Power Plan—the biggest tool the administration has to cut carbon emissions. Under the plan, the Obama administration labeled carbon emissions as a pollutant and then sent through the EPA a rule for states to collectively cut heat-trapping carbon emissions from large coal-fired or natural gas power plants by about a third by 2030. A case testing this authority is now in the courts and if the EPA is defeated, it would have a damaging effect on the commitment the U.S. just made in Paris.

“The real risk is not that Trump would pull out of the treaty—but that he would not take the measures to meet the target that Obama committed us to,” says Alden Meyer, director of strategy and policy for the Union of Concerned Scientists. “There is no fear that he could derail Paris. This is unstoppable. … It’s a question of pace and whether we do it fast enough to head off the worst impacts of climate change.”

Thus, in the end, Trump could indeed delay the U.S. commitment by taking actions on the domestic side that would make it harder to rein in our carbon emissions, including expanding oil drilling. This is especially true if the court were to rule against the EPA and the U.S. under his leadership loosened restrictions it’s just set on coal plants.

Such a reversal on climate change has happened before. George W. Bush pulled out of the Kyoto treaty in 2001 shortly after EPA Administrator Christine Todd Whitman pledged to the G8 that the United States was committed to doing its part to meet its aims. That set back climate negotiations for years. But Meyer and others argue that this is a very different era, not least because even developing countries recognize now that it’s in their self-interest to contain climate change lest their economies are harmed by it; U.S. business is on board for the most part in developing green technology; and even climate-change-denying Republicans in Congress are backing renewable energy plans—as they did late last year in extending tax credits for clean energy.

In his North Dakota speech, Trump said he would drop subsidies for clean energy if elected, saying the government “should not pick winners and losers.” But his own party is now backing that approach. “Republicans supported [the subsidy legislation]. Are those same lawmakers going to let him scrap it?” says Meyer.

***

John Pershing is doing whatever he can to ensure that Paris never becomes Kyoto. He has just returned from two days in Bonn, Germany, where he had marathon meetings with officials to develop guidelines to prove countries are making the emissions cuts they have agreed to—including big emitters like China and India. This included determining to what extent American taxpayers will foot the bill to help countries meet these targets.

Pershing, who has had more than 20 years’ worth experience in climate negotiations, insists that the odds are virtually nonexistent that any president—including Trump—could abandon the Paris agreement because he would be going up against a tide of opinion and well-advanced negotiation that includes not just governments but major U.S. companies. Example: Google wants to know where it can source renewable power. Apple is heavily involved after pledging to cut its own carbon emissions—some 38.4 million metric tons worth last year from its global operations. They are among 81 companies that have signed a White House pledge to cut their emissions and use more clean energy. The commitments are not just about addressing global warming. They are responding to consumer demand, drops in solar and other green technologies, concerns over resource sustainability—and wanting to be on the front edge of where the global economy is moving.

“These are major American players. Will this stop given a different administration?” says Pershing. “The world is headed to low-carbon future. How would our guys compete?”

Obama administration officials are also quick to point out that China is now surging ahead in the renewable energy market—and its businesses are reaping the benefits. Global clean energy investment hit a record $329 billion last year and China represented a third of this, according to Bloomberg New Energy Finance.

Much of this growth has been on the back of direct support by the Chinese government—at the same time that it is shutting down coal plants. These subsidies were a key part of the accord, along with cutting carbon emissions. Obama joined 19 other countries in promising to double spending on clean energy in the next five years and, in Japan last week, he and other G7 leaders followed this with a commitment to end most fossil fuel subsidies by 2025.

What Paris represents “is the future of energy,” says Dan Utech, the president’s deputy assistant for energy and climate change. He noted recent sharp drops in solar and wind power prices, representing 67 percent of all new power capacity in the U.S. the past year. “Economically, trillions in new innovations will be made in the decades ahead.” Americans, he says, “clearly” care about being in a position to compete effectively, to become leaders in what is ‘an inevitable transformation.’”

This week, Obama will host Indian Prime Minister Narendra Modi, whom the president credits for helping to seal the Paris agreement. The U.S. government, in return, is helping India–the world’s third biggest carbon emitter—to meet a target to expand its solar capacity by five times in the next six years. Alden Meyer, who worked alongside Pershing in Bonn, says this also represents a big opportunity for American business. India’s energy minister told him the price of LED light bulbs there has dropped from $5 to $1—in just 18 months. “So India is planning to replace all the light bulbs on its streets,” he says. “Who’s going to supply them?”

If Trump is elected, could he succeed in increasing fossil fuel production to the point where the United States would fail to meet the targets to which it agreed in Paris—cutting U.S. emissions by 26 to 28 percent from 2005 levels by 2020? Yes, to a degree. Electricity production counts for the biggest share of U.S. greenhouse gas emissions and 67 percent of that comes from coal, natural gas and petroleum—which is why Obama made the sector a priority. But stiffer government regulations are only part of the reason why companies like Peabody Energy, the nation’s largest coal mining business, have filed for bankruptcy. Market dynamics—and consumer choices—are also at play—and they are much harder for presidents to roll back. Coal has been losing out to natural gas, which produces fewer emissions and is cheaper and more abundant.

“It’s not policy—ultimately it’s about markets,” says Ethan Zindler, an analyst with Bloomberg New Energy Finance. He argues that the United States will achieve the target even without Obama’s Clean Power Plan because gas is cheap and is expected to stay that way, because renewables have gotten much cheaper—and will continue to drop in price—and the renewable energy tax credits that Congress just passed are now on the books for the next five years.

“The contradictory part of Trump’s energy speech was the idea of expanding drilling but also helping coal. Gas is eating coal’s lunch. If you pledge to make gas bigger, you will hurt coal even more.” Zindler ultimately sees the Clean Power Plan as a backstop for an unlikely scenario: that gas prices suddenly rise and coal becomes more competitive again. “If that happens, and we start emitting more CO2, then we would need [the plan] to achieve the Paris goals. But this is not what we think will happen.” So U.S. carbon emissions, he and other analysts say, will continue to drop. It’s just a question of how fast and how aggressively the next president moves to influence that trajectory. Zindler also says that Obama’s earlier regulations, such as one that set a tougher standard for mercury, have already hit the coal industry to a degree that any future regulations can’t unwind.

As early as this fall, at least 55 countries are expected to ratify or otherwise join the historic Paris agreement. And the administration is working hard to flood hundreds of other environmental rules—many aimed at Paris-targeted carbon emissions—through the regulatory pipeline, from chemicals to phasing out hydrofluorocarbons (HFCs). Pershing told POLITICO the White House expects to see through to fruition an update to the little-known “Montreal Protocol,” which would set tougher limits on these pollutants. The Department of Energy is also planning to finalize more than a dozen energy efficiency rules on buildings and appliances this year. Businesses are rushing to conform.

Ultimately, it is the courts, not Trump, that will likely play the biggest role in determining whether Paris is the fait accompli that Pershing makes it out to be. Obama’s Clean Power Plan has been hit with lawsuits from 29 states and coal companies that challenged the EPA’s authority, and the Supreme Court issued a stay in February, temporarily blocking the administration from implementing the rule. Industry groups argued the EPA didn’t give enough consideration to the costs they would bear if the Clean Air Act is enforced. Supporters say the court has already ruled in favor of the EPA’s ability to regulate greenhouse gases as “air pollutants” under the act, in the 2007 case Massachusetts v. EPA.

The United States Court of Appeals for the District of Columbia Circuit will hear arguments in September in the case. Eighteen states and six cities opposed the stay, citing climate change, and many of those—like California—are expected to take their own steps to cut emissions, regardless of who next takes office. Before the stay, 20 states were discussing using carbon trading to meet the EPA guidelines. “California will not slow down our drive for clean air, renewable energy, and the good jobs that come from investing in green technologies,” Air Resources Board Chair Mary D. Nichols said at the time.

Utech argues that the rules will withstand legal challenges because the mandates fall under the Clean Air Act. “We strongly believe it’s on sound technical footing and we’re looking forward to our day in court,” he said. “We think we’re going to prevail and that it will be implemented.”

Congress itself gave the EPA the power to set standards when it passed the Clean Air Act back in 1970. And here too, if a President Trump wanted to roll things back, it would be an uphill battle in Congress to try to overturn the act itself—which has had durable bipartisan support since it was enacted. True, Senate Republicans are trying to pass measures to hurt the EPA’s ability to set and enforce pollution standards. With Trump’s support, they could hamstring its budget and slow walk appointments. But the agency would still have to carry out regulations under existing laws.

The White House—aware that it has only six months left— is once again trying to get new regulations through quickly, ahead of a 60-day period that would allow opponents in Congress to use the Congressional Review Act to overturn them. Obama’s next big move will be to set higher gas mileage requirements for semi-trucks and large pickup trucks and vans, a goal it put off after doubling fuel economy standards for cars during his first term. Observers say it could be in for tough industry negotiations. The administration will also be pushing by September to get American airlines to agree to a “net zero” carbon emissions standard through a global program. These are areas where a President Trump could try to roll back much of what Obama is doing. The hurdle is that once these regulations become law, undoing them requires an extensive rule-making process—or a vote in Congress to eliminate the original power it gave an agency to set standards.

Much more controversial is a limit it set this month on methane emissions from new oil and gas operations. Emitted from power plants, automobile tailpipes and factories, it accounts for nearly 11 percent of U.S. greenhouse gas emissions. The EPA will also be collecting more data from oil and gas producers, with an eye on tougher standards.

It also plans to define by the end of the year “how a federal coal program might be run differently,” Utech said. It has already set a pause button on new coal leases and is creating a federal database to track carbon emitted from extraction on federal land.

Trump seized on these moves in his North Dakota speech, calling the Obama climate rules “death by a 1,000 cuts over regulations.”

“I’m going to free up the coal,” he said, aiming his remarks at Hillary Clinton, who said early on in the campaign that the industry was as good as buried. She has now walked back those comments and has toured West Virginia towns where coal plants have closed.

At a minimum, Trump would have to get a win in the courts against the administration’s Clean Power Plan to dismantle the coal plant regulations. And to eliminate funds for clean energy, as he professes to want, would require a reversal from Congress. In line with the Paris agreement, it just passed five years’ worth of incentives for solar with key votes from Republicans like Iowa Sen. Chuck Grassley, whose state has big wind power potential. Overturning them would require votes from Democrats. “It’s not going to happen,” Utech says.

After being criticized by environmentalists for not doing enough on climate in his first term, Utech stresses that it’s an issue Obama sees as a top priority for defining his time in office. And he has public opinion firmly behind him, with 64 percent of U.S. adults telling Gallup in March they are worried a "great deal" or "fair amount" about global warming.

“We’re going to continue to make progress on this issue. That’s what the American people expect,” says Utech. “Coming out of Paris, it’s also what the rest of the world expects.”

Whether Trump ultimately conforms to those expectations—or continues to resist them—remains to be seen. But if he succeeds Obama, he’ll have a lot of work to do to dismantle the edifice that Pershing, Utech and others are building.


Article Link to Politico Magazine:

How Obama Is ‘Trump-Proofing’ His Climate Pact

Monday, June 6, Morning Global Market Roundup: Asian Shares Rise, Dollar Nurses Losses After Jobs Shock

By Lisa Twaronite
Reuters
June 6, 2016

Asian shares rose on Monday and the dollar dragged itself off its lowest levels in nearly a month after U.S. nonfarm payrolls showed the slowest job growth in more than five years, quashing expectations for a near-term U.S. interest rate hike.

European equity futures were higher, tracking Asian gains and portending gains, despite a larger-than-expected drop in German industrial orders.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.7 percent.

Japan's Nikkei stock index .N225 pared losses but still ended down 0.4 percent, after the U.S. jobs surprise knocked the dollar and pushed the yen higher.

Wall Street ended down on Friday, though off session lows, with the S&P 500 .SPX finishing within just 1.5 percent of its record closing high. [.N]

U.S. nonfarm payrolls rose by just 38,000 last month, the smallest increase since September 2010 and well shy of expectations for a rise of 164,000. All 105 economists polled by Reuters had forecast higher numbers.

A Reuters poll of Wall Street's top banks taken after the data showed that all of them expect the U.S. Federal Reserve to leave interest rates unchanged at its June 14-15 policy meeting.

"I am still on the side that the U.S. economy is better than these data look, but it is also the case that the Fed has less confidence than I do and the market is unlikely to turn around unless there is a major piece of data that surprises on the upside," Steven Englander, managing director and global head of G10 FX strategy at Citigroup in New York, said in a note.

Data on the U.S. non-manufacturing sector also disappointed, showing a drop in the May headline index to 52.9 from 55.7 in April.

Fed funds futures rates indicated that traders see only a 6 percent chance of a Fed hike this month, down from 21 percent as recently as Thursday, according to CME Group's FedWatch tool.

Later on Monday, Federal Reserve Chair Janet Yellen will address an event in Philadelphia. Markets will pay close attention to her last official remarks ahead of the pre-meeting media blackout.

"If she hints at a possibility of an interest rate hike next month, if not this month, the dollar may not fall further, and the impact to the stock market can be limited," said Takuya Takahashi, an equity strategist at Daiwa Securities.

Boston Fed President Eric Rosengren, speaking in Finland, said the U.S. economy's rebound from a weak winter has moved the central bank closer to raising rates, though the poor employment report might give it pause.

Cleveland Federal Reserve President Loretta Mester on Saturday said that gradual interest rate increases still seemed appropriate, and that the jobs figures did not change the overall economic picture.

The dollar index, which tracks the greenback against a basket of six major currencies, added 0.2 percent to 94.226 .DXY but remained not far above Friday's low of 93.855, its lowest since May 12.

The dollar rebounded 0.4 percent to 106.96 yen JPY= after touching 106.35 earlier in the session, its weakest in a month.

Japan's vice finance minister for international affairs, Masatsugu Asakawa, said on Monday that he was closely watching movements in foreign exchange markets.

The euro was down 0.2 percent at $1.1342 EUR=, after nosing up to $1.1375 earlier, its highest level since May 13.

Sterling tumbled 0.9 percent to $1.4384 GBP=D4 after sinking as low as $1.4352 earlier. It is wallowing around three-week lows as voters in Britain gear up for the June 23 referendum on whether to remain in the European Union. Recent polls have shown more respondents favoring "Brexit."

Crude oil prices retook some ground after plunging more than 1 percent in the wake of Friday's U.S. job data. Weekly industry data had also shown U.S. drillers added rigs for only the second time this year.

U.S. crude futures CLc1 advanced 0.8 percent to $49.01 per barrel, after logging a 1.1 percent drop for the week, the first weekly decline in four weeks.

Brent crude futures LCOc1 rose 0.7 percent to $49.97, after the eighth weekly gain in nine weeks.

Spot gold XAU= shed 0.3 percent to $1,240.80 per ounce after earlier rising as high as $1,248.40, its loftiest since May 24.


Article Link to Reuters:

As Iran's Oil Exports Surge, International Tankers Help Ship Its Fuel

By Keith Wallis and Henning Gloystein
Reuters
June 6, 2016

More than 25 European and Asian-owned supertankers are shipping Iranian oil, data seen by Reuters shows, allowing Tehran to ramp up exports much faster than analysts had expected following the lifting of sanctions in January.

Iran was struggling as recently as April to find partners to ship its oil, but after an agreement on a temporary insurance fix more than a third of Iran's crude shipments are now being handled by foreign vessels.

"Charterers are buying cargo from Iran and the rest of the world is OK with that," said Odysseus Valatsas, chartering manager at Dynacom Tankers Management. Greek owner Dynacom has fixed three of its supertankers to carry Iranian crude.

Some international shipowners remain reluctant to handle Iranian oil, however, due mainly to some U.S. restrictions on Tehran that remain and prohibit any trade in dollars or the involvement of U.S. firms, including banks and reinsurers.

Iran is seeking to make up for lost trade following the lifting of sanctions imposed in 2011 and 2012 over its nuclear program.

Port loading data seen by Reuters, as well as live shipping data, shows at least 26 foreign tankers with capacity to carry more than 25 million barrels of light and heavy crude oil, as well as fuel oil, have either loaded crude or fuel oil in the last two weeks or are about load at Iran's Kharg Island and Bandar Mahshahr terminals.

The resumption of international shipping of Iranian oil has been made possible by an increase in interim, limited, insurance cover by "P&I clubs" - maritime mutual associations that provide "protection and indemnity" insurance to shippers.

The International Group of P&I Clubs, which represents the world's top 13 ship insurers, increased the amount covered by so-called "fall-back" shipping insurance from 70 million to 100 million euros ($113.36 million) in April.

"In the first days after lifting sanctions only Iranian ships were loaded in the country, mainly due to several problems in finding insurance/reinsurance," said Luigi Bruzzone of ship broker Banchero Costa.

"The strong interest of the market in these trades pushed all the stakeholders to solve all the problems ... and almost all P&I Clubs have granted their insurance."

Insurance Risk?

The "fall-back" cover is designed to offset any shortfall in payments from U.S. reinsurers, who are still not allowed to deal with Iran.

"We are not surprised to see the increase in Iranian cargoes given the progress made by the P&I clubs and obviously the increase in Iranian production," said Brian Gallagher, head of investor relations at leading Belgian tanker owner Euronav, which itself is not involved in Iran yet.

"We're interested in such trade ... (but) it will still take time for Iran to be fully integrated as there remain restrictions around dollar denominated transactions."

Indeed, while the partial lifting of sanctions means foreign tankers can now transport Iranian oil, risks remain because large accidents might not be fully covered.

As a result, insurers say many first-tier oil shippers, many of them publicly listed such as Euronav, Teekay Group or Frontline, still shy away from carrying Iranian oil.

If the fall-back cover is exhausted in an incident, Andrew Bardot, executive officer at the International Group of P&I Clubs, said that costs like "collision and cargo liabilities, will not be covered, and will remain with the shipowner".

A single Very Large Crude Carrier (VLCC) supertanker costs around $90 million, and the costs of a large oil spill can reach into the billions of dollars.

"The limitations of the 'fall-back' cover - together with other continuing restrictions, for example those relating to the U.S. dollar and use of the U.S. financial system - however have discouraged a number of shipowners, and in particular the large shipping groups, from resuming trade with Iran in which they were previously engaged," said Bardot.

Near Pre-Sanctions Levels

With international vessels supporting Iran's own tanker fleet, traders said that its oil exports was now close to pre-sanction levels of around 2.5 million barrels per day (bpd).

"Iran has ramped up harder and faster than expected," Citi analysts said.

Traders said that if Iran was close to capacity, it might not be able to offset supply disruptions that have occurred in other regions recently - including Nigeria or Libya - and which have already helped tighten the market and pushed oil prices to around $50 per barrel.

Iran's oil exports were between 2.1 and 2.3 million bpd in April and May, up from 1.3 million bpd a year ago, when Iran was shut out of the European market and dependent on limited shipments to Asian buyers.

Asia is the main destination for crude shipped by foreign vessels, with India, China and Japan the biggest takers, but at least four international tankers are also heading for Europe.

India, in particular, is taking a lead role as its demand soars and refiners such as Essar Oil, Reliance Energy, Hindustan Petroleum Corp, and Bharat Petroleum Corp enjoy good ties with Iran.

The non-Iranian companies currently chartered to carry its oil include Chinese state controlled shipper China Shipping Development, PetroVietnam and Japan's Idemitsu Kosan.

Greek, Turkish and Seychelles-owned tankers are also shipping Iranian crude.


Article Link to Reuters:

From GOP Civil War To Insurgency

By Noah Rothman
Commentary
June 6, 2016

The simplest way to summarize the plot of the Republican Party’s crackup in 2016 is, like many uncomplicated narratives, not the most illuminating. Yet the unsophisticated storyline is largely the preferred one.

The account goes something like this: Two opposing camps within the GOP – dubbed for the purposes of convenience and comprehensibility the “establishment” versus the “outsiders” – have been engaged in a bitter series of confrontations since the onset of the Great Recession. In election cycle after cycle, the “outsider” candidates gradually gained the upper hand – either in defeating their opponents in contested primaries or in forcing their “establishment” foes to adopt their platform, rhetoric, and style. This long process of realignment was complete on May 5, 2016, when Donald Trump all but won the GOP presidential nomination. The “outsider” revolution ended in success; the vanquished gave up their ghost with relative alacrity, and the banners of establishmentarian resistance will be lowered and furled permanently at the party’s nominating convention.

That’s a pleasant story for those disinclined toward the complex. It is, however, misleading. No civil war ends unless the victor is predisposed toward magnanimity and reconciliation with their vanquished opponent. If the GOP under Trump is content to mimic the celebrity candidate’s style, there will be no reconciliation in the absence of total and unconditional surrender. And that kind of capitulation will not be forthcoming; that kind of deference to Trump is politically suicidal. As such, the GOP’s civil war hasn’t ended so much as it has evolved. A united front has crumbled, and the lines have turned into pockets of resistance. Great set piece battles are giving way to skirmishes and vandalism. Even the definitions in this evolving contest must adapt to changing circumstances. In victory, the “outsider” becomes the “establishment” and, in defeat, the “establishment” figure finds him or herself on the outside. The old descriptions that set the foundations of easily understood moiety in this struggle no longer apply.

Outlines of a new phase of this internal conflict within the Grand Old Party are visible in an internecine fight between Republicans in North Carolina. Again, the simple story to which American political observers have become familiar – conservative insurgent candidate takes on squishy compromising professional Republican politician – fails to describe events on the ground. In this election, its least interesting elements are the candidates. What might be most instructive are the organizations that are invested in this primary’s outcome.

In 2010, Representative Renee Ellmers appeared the perfect Tea Party candidate. She bucked the GOP committees and ran explicitly against business as usual Republicans in Washington. Ellmers won the endorsement of Sarah Palin and the Koch Brothers-backed libertarian group, Americans for Prosperity. By 2015, the New York Times described Ellmers as “one of the Republican leadership’s greatest freshman allies, and a rising star in the conference she once derided from her perch at Tea Party rallies back home.” “She has voted with Obama ever since she’s been there,” said a North Carolina-based volunteer working against Ellmers.

Political reporters have become inured to the narcissism of small differences that so frequently characterize the purity contests masquerading as GOP primaries. Furthermore, the journalists who cover this race may be inclined to dismiss its relevance as entirely the result of the growing (or shrinking) pains that typify reapportionment. Ellmers faces a challenge to her right from an ideological conservative and two-time state Senate candidate Greg Brannon, but she is also fending off a challenge from Representative George Holding, whose original district was moved across the state. The new district that Ellmers, Brannon, and Holding are vying to represent in Congress is composed of a variety of voters who have never cast a ballot for any of them in the past. The new terrain in which these seasoned political operatives are competing could lead national political observers to chalk defeat or victory up to the vicissitudes of the redistricting process. That could be a mistake.

This is a unique race if only by virtue of the outside forces at work. In an effort to recapture some of her lost reputation as an outsider candidate, Ellmers became one of the first Republican members of Congress to endorse Donald Trump in late March. She went so far as to author a pro-Trump blurb for a TIME Magazine profile of the celebrity candidate. “Donald Trump is being discounted by the elites as a candidate for office just like I was in 2010,” read a release to the press explaining Ellmers’ endorsement. This week, Trump repaid the favor. “I need her help in Washington so we can work together to defeat ISIS, secure our border and bring back jobs and frankly, so many other things,” the presumptive nominee said, employing his characteristic vagueness in a pro-Ellmers robocall.

If she has won the backing of Trump and the wing of the party he now commands, however, Ellmers has lost the support of what you might now call the “outsider” establishment. By March, the conservative group Club for Growth had spent nearly a half-million dollars targeting Ellmers. “CFG Action wants to be sure they know that Renee Ellmers is a big-government liberal,” said the president of the group’s political wing, David McIntosh.

Ellmers “became part of the Washington problem,” said the narrator in an ad sponsored by the group Americans for Prosperity. “After giving Rep. Ellmers every chance to match her votes to her prior rhetoric, she’s demonstrated an unacceptable pattern of supporting wasteful government spending and corporate welfare,” said the group’s president, Tim Phillips “North Carolinians deserve a true conservative who will fight for them, not special interests.” For the first time in the group’s history, AFP, which had supported Ellmers in 2010, dove into primary politics with the singular mission of ousting Ellmers from office. “AFP is not endorsing any of Ellmers’ opponents, the group says,” Politico reported. “But it does directly contrast Ellmers and Holding in one of the ads.”

Like so much of the Republican Party’s squabbles in 2016, this row cannot be divorced from the challenge to the GOP’s ethos posed by Donald Trump. While Holding said he would support the party’s presidential nominee, like much of the House GOP conference, he has been far less enthusiastic about the Trump candidacy and only did so after it was clear Trump had won the primary race.

Ellmers may find salvation in the fact that the voters in her new district are less acquainted with her record, her opposition is bifurcated, and North Carolina eliminated runoff elections so that the victor of the primary can win with a mere plurality of the vote. Having declined to read too much into Ellmers struggles in her home state, it would be imprudent for the national political press to make too much of the results of the June 7 primary. National media missed an opportunity, however, to delve into the unique dynamics in this state’s contest in which conservative activists are pitted against conservative insurgents, and the ultimate outsider candidates have become the faces of the formerly reviled “establishment.”

The battle lines in the GOP’s civil war are re-forming, but the battle is far from over. While the core issues animating the combatants in this fight have not changed, the frontlines have dissolved, and factional allegiances are harder to identify. If the primary fight in North Carolina is indicative of anything, it is that there is no new equilibrium with the GOP. Not yet. Routed, the establishment has adopted the tactics of the insurgency, and they have taken to the hills. They will fight on as partisans until the party of Donald Trump gives them a reason to accept defeat and assimilation within the party they once called their home. The civil war may be over for now, but the insurgency has just begun.


Article Link to Commentary:

France’s Infamous Undead Jihadist Recruiter

Omar Diaby, a.k.a. Omar Omsen, attracted scores of French fighters to Syria. Then, last year, he was reported killed. Now, it turns out, that wasn’t true.


By Dana Kennedy
The Daily Beast
June 6, 2016

NICE, France — They all know him at the snack bar on the outskirts of Nice that Omar Diaby established between prison stints and before he left here for Syria in 2013 to become France’s number one recruiter of jihadists.

Word got out last August that Diaby, the so-called “superjihadiste” also known as Omar Omsen, the prescient PR mastermind who began disseminating pro-jihad and anti-Western-imperialism videos in 2012, well before the rise of ISIS, had been killed. But last week it turned out that Diaby faked his own death—and took to French television to discuss it.

When The Daily Beast reached him by Skype on Saturday, Diaby told us he lied about being dead so he could go to Turkey on the down-low for a needed medical operation.

“I had to go away for a few months for an operation and it would have made me too much of a target,” Diaby said from a location he told us was in Syria near the Turkish border.

Diaby has not been implicated in either of the major terror attacks in France last year. But he in his France 2 interview he praised those who murdered the staff of the satirical magazine Charlie Hebdo in January 2015.

“Those who insulted the Prophet were executed,” he said, referring to Charlie Hebdo’s publication of cartoons lampooning the Prophet Muhammad, Islam’s holiest figure. “I wish I’d been chosen to do that,” he added.

But were reports of Diaby’s death more complicated than Diaby wanted to admit? Could it be that the once-famed jihadist, known for fronting Michael-Bay-style recruitment videos, has lost a little heat and needed to jack up his global profile with a faux death and a sexy resurrection?

Opinions were flying thick and fast Saturday at the snack bar where most of the customers knew Diaby back in the day and many had been pressured to join him after he left for Syria.

Among the clientele were Salafists (hard-line Muslims who follow fundamental precepts but who denounce the violence of ISIS and Al Qaeda), everyday Muslims, and teenage friends of youngsters who Diaby recruited. While downing hamburgers and French fries, they argued over Diaby’s current status in Syria.

Some wondered if Diaby is cooperating with French authorities in order to cut a deal to return to Nice, where his lively snack bar was and is a popular neighborhood hangout just a 15-minute tram ride from the beautiful beaches of the Cote d’Azur.

Other sources in Nice say Diaby has broken with the Al-Nusra Front, affiliated with Al Qaeda in Syria. “He’s been marginalized,” one old friend of Diaby told The Daily Beast. “He’s like a guy without a state. He’s not with al-Nusra anymore and he’s definitely not with Daesh [ISIS]. He needs to up his media profile and regain some of his power.”

“No,” Diaby, 41, told The Daily Beast. “I had to have a medical procedure and I needed time off without any eyes on me. That’s all. Nothing more to it,” he said.

But he did admit to being a bit homesick.

“I really miss socca,” Diaby told The Daily Beast, referring to the chickpea crepe that is a Niçois specialty. “I wish I could eat some right now.”

According to the investigation that aired last week on France 2 and was filmed by a Syrian cameraman, Diaby has returned to Syria with a clean bill and reigns as the head of a small group of Frenchmen—his “potes” or buddies—all from this same neighborhood in Nice. They now live a very different life, ruled by sharia law in a collection of white tents in the Syrian countryside.

The documentary appeared to be arranged and monitored by Diaby. Many of his men, most of whom are in their early twenties, have married women who wear the fullniqab, covering their faces and bodies completely. Babies and toddlers were seen being carried around the campgrounds by these women in black.

Oddly, the French men were pictured enjoying such pastimes as jumping joyfully into a big lake, eating ice cream and riding in open-air jeeps through the countryside. There was little evidence of hard-core combat against the Syrian troops deployed by President Bashar al-Assad, one of the alleged reasons Diaby left for Syria.

“It was difficult to see exactly what their goal was when watching the documentary,” Jean-Charles Brisard, president of the Center for the Analysis of Terrorism, told The Daily Beast. “They say they are engaging in battles in Syria but we didn’t see any in this particular show. I think what’s clear is that Omar needs to regain his previous stature of a high-profile foreign fighter.”

France 24, the international network, reported that Diaby’s return from the alleged dead coincides with the start of a trial in Strasbourg of seven Frenchmen suspected of traveling to Syria to join the Islamic State. The suspects include the brother of one of the November 13 Paris attackers and are all believed to have been recruited by Diaby’s former lieutenant, Murad Fares.

Bryan, 20, was recruited by Diaby three years ago and interviewed in the documentary. Handsome, brandishing a Kalashnikov, he was barely 17 when he put his belongings in a backpack and went to Nice International Airport where he caught a plane to Turkey and then traveled across the Syrian border.

Bryan, like the majority of youngsters Diaby recruited, was Christian by birth and converted to Islam after watching propaganda videos disseminated by Equipe 19HH, the rubric attached to Diaby’s videos.

“19HH” was a reference to the World Trade Center and the 19 terrorists who participated in its destruction on September 11, 2001.

Bryan’s distraught mother in Nice speaks to him at times via Skype, but always with someone standing near him, she has said. She wants him to come home but Bryan doesn’t want to.

“His mother is not doing well at all, but she still hopes Bryan comes home someday,” Samia Maktouf, a well-known Parisian lawyer who has counseled Bryan’s mother, told The Daily Beast. “This man Omar is very dangerous, he has a very big influence over young people.”

Still, Bryan seems to want to stay in Syria, where he reportedly married and has a baby.

“I can’t see returning home,” Bryan said on France 2. “I just don’t want to go back there.”

Bryan’s teenage cousin was in the snack bar Saturday playing with a basketball. “My aunt’s doing better,” he said. “But most of us really wonder if Bryan will ever come back.”

To locals in the St. Roch neighborhood here, the Senegalese-born Diaby, who spent his formative years in what Americans would call a “housing project”—this one fittingly named Bon Voyage—had a reputation among local cops and public defense lawyers as a typical “voyou.”

“He was just a kid in trouble a lot,” Richard-Dixon Pyné, his former lawyer in Nice told The Daily Beast in his offices in the center of the city on Friday. “He wasn’t a bad kid. He sat here just like you. Polite, quiet, nothing out of the ordinary except a long rap sheet.”

Those in his ‘hood saw him differently.

“Omar, he was a legend here,” Ahmed said Saturday, while pouring some Algerian hot sauce on his hamburger. “Everyone, especially the little kids, looked up to him. He was a big guy, very charismatic. Everyone knew him. He had a lot of power among the people here.”

Diaby’s videos have gotten tens of thousands of views and are thought to be the chief reason why so many French left France to fight in Iraq and Syria.

But it was a surprise to many when Diaby announced on France 2 his support for far-right, anti-immigrant politician Marine Le Pen.

“If the French don’t want war, they should vote for Marine Le Pen,” Diaby said, referring to France’s involvement in anti-jihadist military operations in Syria. “This woman has asked French troops to go home because this war is none of their business. Well, she’s absolutely right.”

Omar Diaby, clearly, is a man full of surprises.


Article Link to the Daily Beast:

Was That Really A Coup In Brazil?

President Dilma Rousseff's suspension broke no laws.


By Alvaro Vargas Llosa
The National Interest
June 6, 2016

Dilma Rousseff, recently suspended as president of Brazil in an impeachment process that will likely remove her permanently from power in a few months, continues to claim she has been the victim of a coup d’etat. The claim, originated by left-wing leaders, academics, and journalists, is an affront to the countless victims of real coups in the history of Latin America's republics.

Nothing in Rousseff's conduct as president, nor that of her predecessor Lula da Silva, both of the Workers' Party that has ruled since 2003, would justify a coup. Ruining the economy (which has shrunk by 10 percent in recent years), spending gargantuan amounts of money to maintain a political clientele (the fiscal deficit amounts to 10 percent of GDP), overwhelming private enterprise with taxes and regulations (investment levels, at 15 percent of GDP, are 5-8 points below those of several neighboring countries), and presiding over a 10 percent inflation rate are economic sins typical of Latin American-style populism, not grounds for a coup.

Lava Jato,” the corruption scheme involving bribes of some US$3 billion in exchange for contracts with public entities—started when Rousseff presided over the state-owned oil giant, Petrobras, during Lula's tenure and whose revelation is having consequences comparable to Italy’s “ManiPulite” in the 1990s—is grounds for protests, judicial probes, parliamentary investigations and law-enforcement action, not a valid reason to overthrow the government.

But that is precisely the point—the government has not been overthrown. The opposition and several allies that broke ranks with Rousseff in the wake of “Lava Jato,” backed by massive street protests that called for her impeachment or resignation, used the Constitution against her, just as it was used by the Workers' Party in 1992 to impeach Collor de Mello. But since evidence has not yet come to light that Rousseff benefitted financially from what happened under her nose, the politicians have had recourse to a different issue on which her fingerprints are clearly visible: the manipulation of the budget (“pedaladas” in Portuguese) to conceal the real deficit during her reelection campaign so that money could be directed to programs tied to her political clientele. (It worked—she barely defeated Aécio Neves.)

Following the Constitution, the impeachment process ran its course until a vote in the Senate dictated her temporary removal from power. Her permanent removal will need a two-thirds majority in a vote that will take place within six months.

The suspended president is right about some things: Her vice president, Michel Temer, who took over from her under the law, betrayed her, as did various organizations. And, yes, there was an element of political vendetta in the air as many opposition politicians who are themselves under investigation helped remove her from power with sanctimonious speeches that rang hollow. But where in the world does the political process not involve backstabbing, political opportunism and personal grudges? It was only because Lula's corrupt populist legacy and Rousseff's disastrous administration brought Brazil to the brink of the moral, political, and economic abyss that her position became untenable. More than two-thirds of the people—millions of former supporters—wanted her out. It was unrealistic to expect the political class not to seize the opportunity to impeach her.

No law was violated, no constitutional principle or passage was broken, and no use of force was involved in her suspension. In large part this accounts for the smooth transition to the Temer administration, which is now trying to enact unpopular but necessary reforms despite a big question mark over the interim president's future as well as the future of some of his ministers in relation to the ongoing investigations.

One can only hope that, unless some revelation about him gets in the way, Temer, who will not run in 2018, can render his country the same service rendered by Itamar Franco, who took over from Collor de Mello in 1992, when he resigned just before he was to be permanently removed from power with Lula's enthusiastic backing. Franco contented himself with being a low-profile, short-term leader preoccupied with putting the house in some kind of order before handing the power and glory to the elected successor.


Article Link to The National Interest:

Turkey's Erdogan: Pragmatist First, Ideologue Second

The West misreads the strongman’s intentions.


By Wayne McLean
The National Interest
June 5, 2016

The announcement of Transport Minister Binali Yildirim as Turkey’s new prime minister is fascinating, given much of the focus is on the technically neutral President Recep Tayyip Erdoğan. This is because Yildirim, an Erdoğan loyalist, has vowed “full harmony” with Erdoğan’s goal of moving Turkey to a presidential system with concentrated executive powers.

Yildirim’s ascent began with the publication of so-called Pelican Brief,” an anonymous blog criticising former prime minister Ahmet Davutoğlu for being seduced by the West and its political “Trojan horses.” It was widely viewed as coming from a source close to Erdoğanm with its function to reign in party dissent at a time when Erdoğan has many de facto, but few de jure powers.

A great deal of analysis views this as proof of Erdoğan emulating Putin’s increasingly autocratic role in Russia. Under this reading, Yildirim is a vessel to enable Erdoğan’s transition to authoritarianism. Yet this interpretation is too simple. Worse, it consolidates his position by feeding into the ruling Justice and Development Party’s (AKP) narratives about the West.

In particular, it fuels a long-held “victim” narrative that argues Turks have been humiliated and exploited by Europe since the decline of the Ottoman Empire. This allows criticism of Erdoğan to be quickly deflected by Ankara, which passes them off as destabilizing attacks by foreign saboteurs.

Erdoğan’s attempt to censor a German comic for a lewd joke involving a goat is instructive. Commentators in the West revelled in the absurdity and pettiness of the episode. For them, it confirmed their belief that Erdoğan is building a personality cult. Criticism emerged from influential British Tories too, including Boris Johnson, who won an anti-Erdoğan competition for best poem about the leader in the Spectator.

But for Turks, or at least those outside of the urban areas, this response confirms the humiliation narrative. The lesson is that while the ridicule is largely warranted, political leaders in Europe should, at least, understand the context. By outwardly mocking it, they risk consolidating and strengthening anti-European sentiment.

This is why the trend for Western journalists to frame Turkish politics as a simplistic battle between liberalism and authoritarianism is not helpful either. Within Turkey, journalists sympathetic to the AKP use these criticisms as proof of the persistence of crude “Orientalism” and Islamophobia. To them, this demonstrates that the Western powers will never treat Turkey as an equal, based on their belief that Islam and democracy are fundamentally incompatible.

AKP sympathizers would also counter that Turkish society is deeply engagement in political life. For example, the 2015 elections were viewed by the OECD as having “active and high citizen participation,” showing “a broad commitment to holding democratic elections.” Thus, Turkey’s electoral participation rate of 86 percent was second only to Belgium within the OECD.

Of course, this obfuscates a highly contested media environment. Journalists are routinely jailed and the country’s most popular daily, Zaman, was recently taken over by government forces. Nonetheless, the accusation that Turkey is inherently incompatible with democracy angers domestic voices and provides ammunition for the AKP.

It is also worth considering that Turkey has never been a strong liberal democracy. In fact, until the emergence of the AKP, Turkey was a quasi-military state. For example, the last coup, in 1997, occurred when the Welfare Party was banned for not pursuing the “correct” type of secular democracy. Erdoğan himself was persecuted in the aftermath, spending ten months in jail for reciting an Islamic-tinged poem.

Hence, Erdoğan’s presidentialization agenda does have personal aspects, but this interpretation disguises his pragmatism. To him, the shift from a parliamentary to a presidential system removes the indecisiveness of the parliamentary system, which can be exploited by fringe and external actors. It also removes the power of the military, which arguably fulfilled an important role in the Cold War period, but now is preoccupied with maintain its own political power.

In this sense, the appointment of Yildirim signifies a victory for Erdoğan and demonstrates a strategic acumen by navigating the complex Turkish political environment. His successes reveal that Erdoğan is a pragmatist and an ideologue second. It also demonstrates that many popular interpretations of Erdoğan’s rule—from both Europe and Turkey—are unhelpful in the long term.

So while cartoonish depictions of Erdoğan and Yildirim as his henchman provide easy tropes for external commentators, the reality is that these feed into and strengthen the new Turkish political order. Consequently, those who truly seek to restrain the political excesses of modern Turkey need to be much more aware of the complex set of issues driving the agenda in Ankara if they are to challenge Erdoğan’s rule.


Article Link to the National Interest:

Hollywood’s Chavez-Cheering Stars & Venezuela’s Victims

By Karol Markowicz
The New York Post
June 6, 2016

As sure as the sun rises in the east and sets in the west, Hollywood stars will take insanely dumb political positions and suffer no repercussions because of it.

But few positions are quite as backward and awful as their support for a political system that has been discarded by nearly every country that has tried it and continues to cause extreme suffering by those unlucky enough to still live under it. I’m referring, of course, to full-fledged socialism.

As Venezuelans scream “we want food” in ongoing protests roiling the country, it’s important to remember how many of our celebrities plumped for the corrupt regimes that led to the starving people in the streets — celebrities who were, are and will continue to be free and well-fed.

Sean Penn was pretty much Hugo Chávez’s BFF, praising him at every opportunity. When Chávez died, Penn mourned him and said, “Venezuela and its revolution will endure under the proven leadership of vice president [Nicolas] Maduro.”

And so it has. Maduro has continued Chávez’s policies with results that would only surprise people like Penn.

Michael Moore, who never misses an opportunity to stick his fingers in a dictatorial pie, always talked up the way Chávez allegedly shared his country’s oil profits with the people. After meeting Chávez, he tweeted, “He used the oil $ 2 eliminate 75% of extreme poverty, provide free health education 4 all.”

In 2007, Naomi Campbell interviewed Chávez for British GQ, calling him a “rebel angel” and praising Venezuela’s social programs.

“I am amazed by what I have seen here in only 24 hours,” Campbell was quoted as saying after visiting the new Children’s Heart Hospital in Caracas. “It’s marvelous to know and see what is being implemented here in Venezuela.”

Where’s Campbell now? CNN reports violent crime is rampant and gunshot victims are sitting in filthy hospitals with no medical supplies. One victim of an armed robbery had a “makeshift surgical drain, made from an empty gallon bottle, [that] draws fluid from his lungs. All the supplies, from gauze to syringes, had to be purchased out of his pocket.”

Where’s Michael Moore touting this free health-care? Did the armed robbers get the free education, or what?

You’d think that after the collapse of the Soviet Union, the Commie-and-socialist-loving dummies would rethink their support for an ideology that leads again and again to mass violence, mass oppression and mass starvation. But no, they keep on spouting their nonsense as if they haven’t been proven wrong at every turn.

It’s particularly painful for people like me, whose family survived the Soviet Union, made it to America and have to hear these know-nothings, lucky enough to have always lived in freedom, pontificate about how awesome people have it in countries like Venezuela and Cuba.

They get to fly home on their private jets having seen exactly what the dictator of the hour wanted them to see and then spread the ludicrous message that a system that’s an abject failure is actually a success when you look at it in the right light.

While he’s not a Hollywood celebrity, David Sirota’s 2013 article in Salon, titled “Hugo Chávez’s economic miracle,” should not be forgotten, either. In it, Sirota suggested the United States follow Venezuela’s example and nationalize the oil and bank industries.

“Chávez became the bugaboo of American politics because his full-throated advocacy of socialism and redistributionism at once represented a fundamental critique of neoliberal economics, and also delivered some indisputably positive results,” Sirota gushed.

Ronald Reagan said that freedom and democracy “will leave Marxism-Leninism on the ash-heap of history,” but he may have underestimated the usefulness of Hollywood idiots.

Sirota and his friends need to look the people of Caracas, dehydrated because they have no water, in the face and tell them about these supposed positive results. The people of Venezuela are owed something from these people.

As Penn, Moore, Campbell, Sirota and many others sleep in their comfortable beds in free countries, they should spare a thought for the people they left to live under the boot. An apology is the least they could do.


Article Link to the New York Post:

When It Comes To Donald Trump, Trust These Bookies Over Pundits

By David K. Li and Bob Fredericks
The New York Post
June 6, 2016

The bigger the gaffe, the better Donald Trump’s odds of winning the White House have become during the raucous GOP primary season, according to bookmakers in the UK, where gambling on politics is legal.

Top UK bookmaker Ladbrokes and other bookies — who calculate odds based on the amount of money people wager on sporting events or a political race — analyzed Trump’s chances before and after what for a normal politician in a normal year could have been fatal foul-ups.

And they concluded that bettors had it all over political pundits when it came to predicting Trump’s rise.

“Anyone making a bet obviously has skin in in the game. Take millions of people all waging real cash on a prediction and you have a pretty strong ‘wisdom of the crowd,’ “ said Alex Donohue, a rep for top British bookmaker Labrokes.

“I’ll start with this point: Anyone who said Trump had slim or no chance these past months, I’m very confident in saying we are more accurate than that.”

Famed handicapper Danny Sheridan added that bookies themselves saw Trump’s ascendancy long before TV news talking heads realized the Manhattan mogul was for real.

“Oddsmakers are much smarter than TV chatter pundits, as it’s in their self-interest to be – unlike the TV and print pundits. Oddsmakers have to be right or they’re out of business,” he said.

Trump started out as a 100-1 shot days after referring to Mexicans as criminals and rapists on June 16.

By the time he mocked John McCain’s POW status and heroism on July 18, he was down to 50-1.

Then, after insulting Megyn Kelly during the Aug. 6 GOP debate, he improved to 20-1.

By Dec. 7, when he called for a ban on Muslim immigration, the odds were 6 to 1 — and he’s currently at 2 to 1.

Larry Sabato, a political science professor at the University of Virginia, said Trump benefits from all the attention — and that his voters don’t care when he spouts off.

“Trump has gained after gaffes because, even with a controversy, he has seized center stage,” he told The Post.

“All of the supposed gaffes made by Trump jacked up the amount of news coverage Trump got and perhaps that led to more people betting on him and the odds getting shorter,” agreed Seton Hall U poly sci prof Matt Hale.

And the British bookies say they expect more action on the US presidential race than on the country’s upcoming vote to leave the EU.

Donohue predicted about $150 million will be bet on the White House campaign on legal web sites.

“This race will be the biggest political betting event, globally, of all time. Interest here in the UK has been off the charts,” Donohue said.

“And despite the EU referendum outcome being vastly more significant to daily lives of your average British punter (gambler), there are millions more being wagered on your White House race.”

And then there’s the millions, perhaps billions, being wagered in backrooms and barrooms that’ll never be counted.

“I guarantee you there are lines being put out every day in the Garment District and Wall Street,” Sheridan said, “with a frightening amount of money — I’m talking about enough to finance revolutions in small South American countries — being bet on the presidential race.”

If he ultimately wins the White House, Trump will go down in history, mentioned in the same breathe as Buster Douglas, the 2004 Boston Red Sox and the 1980 US Olympic hockey team – the longest of long shots who somehow won it all.

The Sox were 100-to-1 underdogs to win the World Series after falling down 3-0 to the Yankees in the American League Championship Series — but came back to win it all.

The “Miracle on Ice” hockey teams that beat the powerful Russian squad to capture the gold were 500 to i underdogs, while the unheralded Douglas beat Tyson in 1990 despite being a 42 to 1 underdog.

Sheridan said he believes Trump will be an even-money pick later this summer, especially if he makes a popular VP pick.

“Right now, I’d bet the hell out of Trump — for value reasons alone,” Sheridan said.

“Our biggest handle for any future (sports bet) is the Super Bowl. If we were able to take bets on the presidential election, we’d easily surpass that,” said Jay Kornegay, head oddsmaker at the Westgate Las Vegas.

“I believe some time down the line, we have a good chance of taking wagers on the presidential election.”


Article Link to the New York Post:

Trump Can't Win In Muhammad Ali's America

By Francis Wilkinson
The Bloomberg View
June 5, 2016

It's just a twist of fate, of course, that "the Greatest" should die in the middle of Donald Trump's misbegotten campaign to Make America Great Again. But humans get a kick out of coincidence, and History indulges us time and again.

Muhammad Ali, once America's most famous braggart, embodied much of what the Trump campaign has been organized to denigrate, delegitimize and contest. Ali's incessant claims of greatness were gigantic. They had to be: He was inflating millions of bruised and depleted egos in addition to his own.

Trump is America's most famous braggart now. He's a great businessman. He makes great deals. He'll be "the greatest jobs president God ever created." In his own way, Trump may even imagine his self-administered superlatives performing a similar service to Ali's, raising up a broken and battered people while advancing himself.

Ali was the most uppity man in the land at a time when up was the only direction that he and those who cheered him on could countenance. He didn't claim to be the white man's equal, as the civil rights movement taught. He simply said he was the greatest. By definition that meant he was better than any man on earth -- pick your color. He was a compact revolution, a confluence of physical power, beauty, grace, wit and explosive danger. White people by the millions detested him, some for his show of boundless arrogance, others because they feared that the radical, alien future that Ali almost singularly occupied might somehow make room for many more.

The logic of Ali's success implied uppity in perpetuity. Women. Blacks. Hispanics. Muslims. Asians. Gays. If he could spout like that, fight like that, win like that, why couldn't others? Even uppity nations, the world's Mexicos and Chinas, which Trump vows to put back in their place, drew inspiration from him.

In his statement on Ali's death, President Barack Obama summoned the youthful Ali, the radical, rather than safely dwelling on the fighter's later years, by which time the nation that had simultaneously battled and cheered Ali had thrown its exhausted arms around him. It's doubtful that Obama, regularly cautious around race, would have done so earlier in his administration. But with Trump breaking the racial sound barrier, promising to deport Hispanics and bar Muslims, winning the hearts of avowed white nationalists with his promise to recall their better days, the president isn't holding back. In his statement on Ali, Obama described the boxer's attitude:

“I am America,” he once declared. “I am the part you won’t recognize. But get used to me – black, confident, cocky; my name, not yours; my religion, not yours; my goals, my own. Get used to me.”

Yes, get used to me. Get used to me even in the Oval Office.

Obama made the connection explicit. In the same statement, after citing Ali for standing his ground in the turbulent 20th century, the president said, "His victory helped us get used to the America we recognize today."

Ali's journey from radical threat to avuncular hero tells us something about Trump's likelihood of success. After Ali's death, Republican Senate leader Mitch McConnell issued a statement calling him one of the "most beloved" athletes of the 20th century and claiming him as a native son of Kentucky. Ali is now viewed as an exemplar of the nation's pluralistic creed. Culturally, he's transcendent. (Who would have guessed, 50 years ago, that Bill Cosby would be the pariah and Ali the beloved?) Politically, Ali, like Obama, is mainstream.

Trump, Ali's contemporary, spent time in the ring himself, although his was the make-believe world of entertainment wrestling, where fakery is the requisite skill. Trump, too, is self-invented. But Ali worked a truer, harder ring. In death, Ali will continue to make claims on the future. In life, Trump is on a journey to the past. His nostalgia isn't entirely racial. (It's industrial, and sexual, too.) But on race, he's chasing Ali's ghost around the ring, swinging wildly, hoping to land one last punch.


Article Link to the Bloomberg View:

The Next Great Housing Bust

For years, we’ve heard about the “return to the city.” It was never as true as the hype, but now it’s about to collapse entirely.



By Joel Kotkin and Wendell Cox
The Daily Beast
June 6, 2016


From steamy Miami to the thriving cores of cities from New York, San Francisco, Houston and Chicago, swank towers, some of them pencil thin and all richly appointed. This surge in the luxury apartment construction has often been seen as validation of the purported massive shift of population, notably of the retired wealthy, to the inner cities. Indeed with the exception of a brief period right after the Great Recession, there was slightly greater growth in core cities than the suburbs and exurbs. It was said that we were in the midst of a massive “return to the city.”

Yet in reality the movement to the inner core has been much less spectacular than that. Indeed by 2014, growth once again was faster not only in traditional suburbs but also in the exurban areas that were broadly predicted to be the most doomed. At the same time, the fastest city growth, notes economist Jed Kolko, occurred largely in the most “suburbanized” cities, like Phoenix, San Antonio, and San Diego.

One major meme for the luxury developers had to do with well-off retirees—the one domestic population with the money to afford such housing. Newspapers have been crammed with anecdotal stories about this “trend.” Yet analysis of Census trends among seniors shows that the senior percentage share in both the inner core and older suburbs dropped between 2000 and 2010 while growing substantially in the newer suburbs and exurbs. The most recent data show these patterns continue. Since 2010 the senior population in core cities has risen by 621,000 while the numbers in suburbia have surged by 2.6 million.

So who’s buying them? It’s wealthy foreign nationals, largely as investments. In many cases these units are not really residences but pieds-a-terres for the world’s wealthy; in some markets, as many as 60 percent of units are not primary residences. But such sales are susceptible to changes in foreign economies. And today, many of these buyers must contend with slowing economies at home.

Perhaps most damaging has been the decline in many countries, such as Russia, Brazil, Argentina, Canada and some countries of the Middle East, that have been hit hard by the commodity slowdown. Most critical in many markets, particularly in California, has been the economic slow-down in China, now the largest foreign investor in U.S. real estate. In some markets, like Irvine and in Bay Area suburbs, Chinese investors have accounted for upwards of 30 percent of all buyers.

Realtors in Southern California, long a favored destination for Asian investors, report a significant slowdown in investment , particularly along the coast. In some developments, roughly half the Chinese buyers paid cash, often well over $1 million per unit. This in markets where barely 10 to 20 percent of the houses are affordable to the median income family.

Perhaps nowhere in urban America better epitomizes the relationship between foreign capital and high-end real estate than Miami. From 2004 to 2008, Miami enjoyed a massive luxury housing boom, with over 20,000 new units constructed—only to see many go them vacant for years.

The last five years have seen a resurgence once again. As fortunes were being minted, foreign money tended to end up invested in Miami’s luxury towers.

Now this dependence on foreign investment may wreak havoc. Some sources of investment, such as Russia, are drying up as low oil prices dissipate the wealth of that country’s free-spending oligarchs, and now must cope with sanctions over the annexation of the Crimea. In 2013, Russian buyers accounted for 23 percent of Miami luxury condo buyers; in 2014 they accounted for just 7 percent.

But in Miami, the big story has been the Latin Americans. Like the Russians, the major Latin American investors have been hard hit by declining oil and other commodity prices. In 2014, luxury developer Gil Gezer thanked Brazilians, for turning around the Miami high-end condo market; now they seem to be driving the market down. In the fourth quarter of 2015 the number of Miami Beach condo transactions declined nearly 20 percent from a year earlier, while inventory jumped by nearly a third, according to a report from appraisal firm Miller Samuel Inc. The median sales price slipped 6.6 percent. As prices drop and sales slow, more than half a dozen projects have been cancelled.

South Florida may be the ultimate mecca for luxury developers, but it’s hardly alone in facing a high-end property crash. Over the past decade, New York has been inundated with ultra-expensive high-rise real estate. The new towers have affirmed the city’s fundamental attraction to the ultra rich. In Lower Manhattan, 31 towers with over 5,000 apartments are sprouting up, with a median price for condos of $2.43 million, a 70 per cent increase since 2013. The overall Manhattan condo market has shot up “only” 54% to $1.84 million.

As in Florida, some of the problem stems from the retreat of foreign investors. Analyst Sami Karan suggests that rather than a massive demographic evidence of a “return to the city” by the ultra-rich, the luxury surge seems to be mostly a matter of investment strategies that can change more quickly than shifting one’s long-time domicile.

Not surprising then that some developments are being stalled across Manhattan. Property Markets Group and JDS Development Group, developers of the 111 West 57th Street, a 60-unit tower have announced that the once-imminent sales launch at the 60-unit tower would be pushed back for at least a year. In other cases, once ballyhooed conversions of office towers to condos—notably the famous “Chippendale” Sony/ATT building located at 550 Madison Avenue—have been shelved, signaling that some well-fed rats may be deserting the luxury yacht before the fall. The city faces what new analysis by the consultancy Miller Samuel could be a glutted luxury market for the next five years.

But over the past few years, no luxury market has been more over-heated than San Francisco. As occurred in the 1990s, the city’s luxury market has ridden the current tech bubble to unprecedented heights—in the process creating what may be one of the most severe real estate bubbles in the country. In the city proper, the median value of homes has skyrocketed, from $670,000 at the beginning of 2012 to $1.12 million today, a gain of more than 67 percent, according to Zillow.com.

Now there are signs that this boom is about to slow. This stems from two factors—the inability of consumers to afford this housing and the gradual slowdown of the tech bubble. The 87 tech IPOs over the past two years are trading 80 percent below their IPO price, and not surprisingly, venture capitalists are become more wary. Many key firms—Twitter, Hewlett Packard, Yahoo—are all laying workers off.

All this suggests that, as in Miami and New York, San Francisco property owners face stagnant or even declining prices. The market could be further weakened as tech workers and companies head to more affordable markets elsewhere.

Right now the decline in the luxury market has not yet turned into a full-on crash in multi-family housing. But there are some worrisome warning signs, such as rising apartment vacancy rates. Already some markets, such as Houston, seem to be overbuilt, particularly given weakness in the area’s critical energy sector. Other urban cores threatened by overbuilding include such disparate cities as Indianapolis, Raleigh-Durham, Denver and Atlanta. According to the consultancy firm Costar, vacancies in downtown areas are reaching double digits in such attractive markets as Boston, Charlotte and Philadelphia.

In some areas like San Francisco and New York, a rollback of multi-family prices could be beneficial, because high prices are driving young, educated people out to other regions. Since 2010 educated millennials have been headed increasingly to more affordable regions such as Nashville, Orlando, New Orleans, Houston, Dallas-Fort Worth, Pittsburgh, and Columbus. Even Cleveland and California’s exurban Inland Empire, which still has relatively reasonable housing prices, at least by California standards, are growing their millennial workforces faster than places like New York or San Francisco.

Young people may also benefit as units shift from condo to rental. Of course, the weakening market won’t be too good for the investors, developers and landlords, many of whom embraced the “back to the city” mantra with religious zeal and now will have to confront demographic reality.

But other trends suggest that this decline may be more painful than many suspect. We may be entering a phase where we have reached “peak urban millennials” as they head into their 30s, get married and move to the suburbs. The idea that investing in the urban core, and in luxurious density, guarantees a happy result has now lapsed into mythology. It needs to be replaced with something that more accurately effects not what developers hope (or planners decree) but what people need, and can afford.


Article Link to The Daily Beast: