Friday, June 10, 2016

Friday, June 10, Night Wall Street Roundup: Within Sight Of A Record, Wall St. Runs Into A Wall

By Caroline Valetkevitch
June 10, 2016

U.S. stocks dropped for a second straight day on Friday following another drop in oil prices and renewed worries about the global economy.

Ahead of Britain's June 23 referendum on whether to stay in the European Union, a poll showed those in favor of Britain exiting the EU, or "Brexit," were well ahead of those who favor remaining. The British pound fell against the dollar.

"The global economy is weak and it can't handle any major shocks. If Brexit occurs, that's a major shock," said Adam Sarhan, chief executive of Sarhan Capital in New York.

The S&P 500 pulled further away from a record high after coming within about 12 points on Wednesday. The benchmark, which also ended lower for the week, is now 1.6 percent shy of its 2,130.82 record close, reached in May 2015.

"Because we failed to break through to new highs, everybody's attention shifts back to reality, and they start looking for reasons to sell and take some profits," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

Investors are bracing for next week's Federal Reserve meeting, though the U.S. central bank is expected to leave rates unchanged.

Leading losses for the day, the S&P energy index .SPNY was down 2 percent. U.S. crude fell 3 percent to end back below $50 a barrel.

The Dow Jones industrial average .DJI closed down 119.85 points, or 0.67 percent, to 17,865.34, the S&P 500 .SPX lost 19.41 points, or 0.92 percent, to 2,096.07 and the Nasdaq Composite .IXIC dropped 64.07 points, or 1.29 percent, to 4,894.55.

For the week, the S&P 500 was down 0.1 percent and the Nasdaq lost 1 percent, but the Dow was up 0.3 percent.

Investors around the world swapped equities for less risky assets such as U.S. Treasury bonds and the Japanese yen. Yields on government bonds fell globally, while the S&P financial index .SPSY was down 1.2 percent.

Jeffrey Gundlach, chief executive of DoubleLine Capital, said Friday investors are dropping risky assets because of falling GDP expectations amid China's slowing growth and the intensifying U.S. presidential race.

Some stock investors are betting on a return of the volatility that marked the first two months of the year. The bounce-back in commodity prices that fueled much of the 13.3-percent rally in S&P 500 index from its February lows is leveling off.

The CME Volatility index .VIX, Wall Street's fear gauge, jumped 16.3 percent.

Among Wall Street's few bright spots on Friday was Intel (INTC.O), up 0.3 percent. Bloomberg reported the chipmaker would replace Qualcomm as an Apple (AAPL.O) supplier for some iPhones. Qualcomm (QCOM.O) was down 2.1 percent.

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

NYSE declining issues outnumbered advancers by a 4.24-to-1 ratio; on the Nasdaq, a 3.75-to-1 ratio favored decliners.

The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq recorded 30 new highs and 39 new lows.

Republican Senator Prays For Obama's Death

The freshman senator from Georgia quoted scripture at a right-wing Christian confab to say the president's days should be short.

By Betsy Woodruff
The Daily Beast
June 10, 2016

At a major event for conservative Christians this morning, a Republican senator joked about praying for President Obama’s “days to be short.”

Sen. David Perdue, a freshman senator from Georgia, opened his remarks at the Faith & Freedom Coalition’s Road to Majority conference by encouraging attendees to pray for President Obama. But, he added in a joking tone, they need to pray for him in a very specific way: “We should pray for him like Psalms 109:8 says: May his days be short and let another have his office,” the senator said, smiling wryly.

The crowd chuckled and he moved on with his address.

The rest of that passage, which Perdue did not recite, reads, “May his children be fatherless and his wife a widow. May his children be wandering beggars; may they be driven from their ruined homes.”

The psalm is a pointed, lengthy death wish for one of David’s enemies.

“Let the creditor seize all that he has, and let strangers plunder his labor. Let there be none to extend mercy to him, nor let there be any to favor his fatherless children. Let his posterity be cut off, and in the generation following let their name be blotted out,” it continues.

Perdue’s joke drew immediate criticism. Adam Jentleson, a spokesman for Senate Minority Leader Harry Reid, tweeted, “Republican Senator David Perdue is praying for President Obama to die. This is why Trump is the GOP nominee.”

As the Washington Post’s Dave Weigel pointed out, conservatives have long invoked this verse in the yearning for an end to Obama’s days in office. A Christian Science Monitor report from November 16, 2009, detailed the popularity of bumper stickers that read simply, “Pray for Obama: Psalm 109:8.”

“It’s protected speech, but it’s clearly offensive,” the Anti-Defamation League’s Deborah Lauter said at the time.

The Road to Majority conference brings together top leaders in the social-conservative world, as well as prominent elected Republicans. Shortly after Perdue’s speech, Senate Majority Leader Mitch McConnell and top Trump adviser Sen. Jeff Sessions spoke. Donald Trump will keynote the event later today.

UPDATE: After publication, Perdue spokeswoman Caroline Vanvick gave this statement to Bloomberg’s Sahil Kapur:

“Senator Perdue said we are called to pray for our country, for our leaders, and for our president. He in no way wishes harm towards our president and everyone in the room understood that. However, we should add the media to our prayer list because they are pushing a narrative to create controversy and that is exactly what the American people are tired of.”

Article Link to The Daily Beast:

Friday, June 10, Morning Global Market Roundup: Asian Stocks Slip, Bonds Rally As Brexit Vote Looms

By Hideyuki Sano and Nichola Saminather
June 10, 2016

Asian shares pulled back on Friday as investors sought refuge in safe-haven assets amid festering concerns over the June 23 referendum that could see Britain exit the European Union.

European markets also look set to follow suit, with financial spreadbetters expecting Britain's FTSE 100 and France's CAC 40 to open about 0.2 percent lower, and Germany's DAX to start the day down 0.1 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.8 percent, but remains poised for a weekly gain of 1.4 percent.

Japan's Nikkei closed 0.4 percent lower, extending losses for the week to 0.25 percent.

Hong Kong's Hang Seng index slipped 0.7 percent, heading for a gain of 1 percent for the week. China is closed for a holiday.

"There are concerns over Brexit as polls seem to suggest the probability of Britain leaving Europe is rising," said Tatsushi Maeno, managing director at PineBridge Investments.

"You can't buy risk assets under such conditions even if you want to," he said.

Wall Street shares also pulled back on Thursday after three days of gains, as a decline in the number of unemployment benefit claims last week showed the labour market remains strong despite May's unexpected drop in job growth.

The S&P 500 lost 0.17 percent to finish at 2,115.48, but remained only about 15 points below its record closing high.

Global bond yields dropped to new lows and perceived safe-haven currencies gained as investors fled to the safety of bonds on concerns about Britain's referendum on European Union membership on June 23.

"There are a number of different factors driving yields lower and it started last week with the weak U.S. jobs data pushing rate-hike expectations back," said Patrick Jacq, European rate strategist at BNP Paribas.

"For the euro zone, this was the only constraining factor for lower yields."

The German 10-year Bund yield hit a record low of 0.023 percent on Thursday, and was last trading at 0.038 percent. The 10-year British gilt yield struck an all-time low of 1.222 percent on Thursday.

The start of the European Central Bank's corporate bond purchase programme also bolstered European bonds.

In Japan, the 10-year government bond yield slipped to minus 0.150 percent, close to the record low of minus 0.155 percent seen earlier in the session.

The 10-year U.S. Treasuries yield broke out of the trading range it has been in since March to hit a 3-1/2-month low of 1.659 percent on Thursday. It last stood at 1.6782 percent.

The retreat in risk sentiment is proving a boon for gold, which is hovering near a three-week high, and on track for a second straight weekly rise.

Spot gold pulled back 0.3 percent on Friday to $1,264.93 an ounce, after climbing as high as $1,271.31 overnight. It's up 1.7 percent for the week.

In the currency market, the decline in U.S. unemployment benefit claims and weakness in other currencies supported the dollar index, which tracks the greenback against a basket of six peers. The index advanced 0.3 percent, extending gains for the week to 0.2 percent.

The Swiss franc has gained 1.6 percent over the past five days, its biggest five-day gain since March 2015, hitting an eight-week high of 1.0886 franc per euro on Thursday. It last stood at 1.08955, on track for a weekly increase of 1.8 percent.

The low-yielding yen, which tends to be bought back when risk appetite suffers, stood at 107.07 per dollar, clinging near five-week highs of 106.26 set on Thursday, but remains down 0.5 percent for the week.

The euro eased to $1.1295 from a four-week high of $1.1416 set on Thursday, but is poised for a weekly decline of 0.6 percent.

The British pound slipped 0.1 percent to $1.4444, having slipped from this week's high of $1.4664 touched on Tuesday, and heading for a drop of 0.5 percent this week.

Although it has stayed 4.5 percent above its seven-year low set in late February, investors are actively seeking protection against a slide in the event of Brexit.

The cost of hedging against swings in sterling's exchange rate over the next month soared, with sterling's one-month implied volatility hitting its highest in more than seven years.

Oil prices also stepped back after notching another 2016 high.

Still, persistent threats by militants against Nigeria's oil industry and fear of more security incidents that could hit supply limited losses in crude.

Global benchmark Brent crude futures slipped 0.7 percent to $51.60 per barrel, after having risen to as high as $52.86 on Thursday, and looks set to record a 4 percent gain for the week.

U.S. crude also slid 0.7 percent to $50.18 a barrel, poised to end the week 3.2 percent higher.

Article Link to Reuters:

Oil Falls On Stronger Dollar; High Refinery Demand Lends Support

By Henning Gloystein
June 10, 2016

Oil prices fell on Friday, as a stronger dollar pulled crude off the 2016 highs hit this week, although strong refinery demand and global supply disruptions lent some support.

International Brent crude oil futures were trading at $51.45 per barrel at 0655 GMT, down 80 cents, or around 1 percent, from their last settlement. U.S. West Texas Intermediate (WTI) futures were down 57 cents at $49.99 a barrel.

Analysts said that a rebound in the dollar had dented oil prices by making fuel imports for countries using other currencies more expensive.

"Oil prices eased back from a near 12-month high as the dollar reversed its recent trend," ANZ bank said on Friday.

However, strong overall demand for oil especially from refineries, as well as supply disruptions, were helping to keep prices from falling faster and further.

"Despite falling slightly overnight, the outlook for oil (prices) remains positive – which should keep the recent upward trend intact," ANZ added.

Crude prices have virtually doubled since touching their lowest in more than a decade in early 2016 as strong demand and supply disruptions erode a glut that pulled down prices by as much as 70 percent from a mid-2014 peak.

Market rebalancing is ongoing. On the demand side, global refining activity is about to hit its highest on record just as crude supply disruptions around the world tighten the market.

Data in Thomson Reuters Eikon shows that currently available global refining capacity will reach 101.8 million barrels per day (bpd) in August, its highest on record, and up from around 97.25 million bpd in March.

Of the available capacity, investment bank Jefferies said on Friday that U.S. refinery utilization alone reached 90.9 percent in the first week of June.

Traders said this means producers need to pump every barrel of crude they can to meet refinery demand, and that the supply disruptions around the world - from Canadian wildfires, sabotage in Nigeria, and output cuts in the United States, Venezuela and Asia - will tighten the market and eat into inventories.

Yet the strong refinery output could end as fast as it came as the reserve capacity, the difference between available and installed capacity, is about to fall below half a million bpd, the tightest since late 2013, the data shows.

"Refining output, and by extension crude demand, can basically only go down as facilities either go into unplanned outage or refinery runs are cut to reduce an emerging product glut," said one trader in Singapore.

Article Link to Reuters:

Obama Approves Broader Role For U.S. Forces In Afghanistan

By Phil Stewart
June 10, 2016

President Barack Obama has approved giving the U.S. military greater ability to accompany and enable Afghan forces battling a resilient Taliban insurgency, in a move to assist them more proactively on the battlefield, a U.S. official told Reuters.

The senior U.S. defense official, who spoke on condition of anonymity, said the decision would also allow greater use of U.S. air power, particularly close air support.

However, the official cautioned: "This is not a blanket order to target the Taliban."

Obama's decision again redefines America's support role in Afghanistan's grinding conflict, more than a year after international forces wrapped up their combat mission and shifted the burden to Afghan troops.

It also comes ahead of Obama's eagerly anticipated decision on whether to forge ahead with a scheduled reduction in the numbers of U.S. troops from about 9,800 currently to 5,500 by the start of 2017.

A group of retired generals and senior diplomats urged Obama last week to forgo those plans, warning they could undermine the fight against the Afghan Taliban, whose leader was killed in a U.S. drone strike in Pakistan last month.

Under the new policy, the U.S. commander in Afghanistan, General John Nicholson, will be able to decide when it is appropriate for American troops to accompany conventional Afghan forces into the field - something they have so far only been doing with Afghan special forces, the official said.

The expanded powers are only meant to be employed "in those select instances in which their engagement can enable strategic effects on the battlefield," the official said.

That means that U.S. forces should not be expected to accompany Afghan soldiers on day-to-day missions.

"This added flexibility ... is fully supported by the Afghan government and will help the Afghans at an important moment for the country," the official said.

Aiding Afghan Offensive

The decision is a departure from current U.S. rules of engagement in Afghanistan, which impose limits on U.S. forces' ability to strike at insurgents.

For example, the U.S. military was previously allowed to take action against the Taliban "in extremis" - moments when their assistance was needed to prevent a significant Afghan military setback.

That definition, however, left the U.S. military postured to assist them in more defensive instances. The new policy would allow U.S. forces to accompany Afghans at key moments in their offensive campaign against the Taliban.

"The U.S. forces will more proactively support Afghan conventional forces," the official said.

The Taliban control or contest more territory in Afghanistan than at any time since they were ousted by a U.S.-backed intervention in late 2001, and U.S. officials have acknowledged the uneven performance of Afghan security forces.

Large portions of Afghanistan, including the provincial capital of northern Kunduz and multiple districts of southern Helmand province, have fallen, at times briefly, to the Taliban over the past year-and-a-half. Many other districts and provinces are also under varying degrees of Taliban control.

The new authorities that Obama has given the U.S. military could give it greater leeway in addressing the shortcomings of Afghan security forces.

Still, experts warn that its hard to predict when Afghanistan will be able to stand on its own against the Taliban, not to mention the country's enormous economic difficulties and fractious political system.

The U.S government’s top watchdog on Afghanistan told Reuters that the United States had wasted billions of dollars in reconstruction aid to Afghanistan over the past decade, and now a renewed Taliban insurgency was threatening the gains that had been made.

Article Link to Reuters:

Clinton BlackBerry Photo Led To State Official’s Query About Email Account

By Josh Gerstein
June 10, 2016

An iconic photograph of then-Secretary of State Hillary Clinton using her BlackBerry while wearing sunglasses on a military plane in 2011 prompted a recordkeeping official in her office to inquire about whether Clinton had been assigned a email address, the State Department disclosed this week.

Clarence Finney, who oversaw an office responsible for Freedom of Information Act searches, raised the question about an official account after seeing the photo in the media, according to testimony at a deposition held Wednesday and released Thursday. The image went viral on social media in 2012, prompting a "Texts from Hillary" meme.

"When Mrs. Clinton's photo appeared in the media with her using — appearing to use some sort of a mobile device, Clarence Finney checked with [information management staff] to confirm ... whether the answer was still that she did not have a e-mail account," State Director of Executive Secretariat Staff Karin Lang said.

Lang said Finney was told at the outset of Clinton's tenure as secretary that, "like her predecessor, [Clinton] would not use an official account." The follow-up question prompted by the photo elicited the same answer, that Clinton "still did not have a account," Lang added.

Finney can't recall who told him in 2008 or 2009 that Clinton did not plan to use official email, or who confirmed her continued lack of an account a few years later, Lang said.

The sworn testimony took place by court order in a Freedom of Information Act lawsuit filed by the conservative group Judicial Watch seeking records about employment arrangements of top Clinton aide Huma Abedin.

In the suit at issue, the group has requested testimony from several current and former State officials, as well as a generic witness to offer testimony on behalf of the agency. State designated Lang as that witness and arranged the testimony at a Justice Department office in Washington.

Under questioning from Judicial Watch lawyer Michael Bekesha, Lang said the personnel in charge of searching for records in Clinton's office were not aware during her tenure and for at least a year after she left that she used a private email account for work-related communications, even though dozens of senior officials corresponded with her at the private address.

"No one engaged in this FOIA search had awareness of that source of potentially responsive documents during the time period of this FOIA search," Lang said. "They were not aware of the existence of e-mails from the former Secretary that could be potentially responsive to this request."

Lang also testified that when the initial search for employment records related to Abedin was done, State did not search Abedin's email archive or anyone else's. Instead, officials searched three document databases and asked for records from the "human resources officer" for the secretary of state's office. Such a search was only done after Clinton, Abedin and others provided State with emails from personal accounts starting in 2014, Lang said.

A State Department Office of Inspector General investigation found that in recent years the secretary of state's office did not routinely search emails in response to FOIA requests, even when it would have been reasonable to expect emails to be responsive to such requests. State has said it's overhauling how it responds to FOIA requests.

Asked whether searchers who did gather emails from some employees would have noticed that others such as Clinton and her top aides were also sending or receiving private email addresses, Lang said those involved in the searches probably were not looking for that.

"The email addresses that may be involved in those...potentially responsive documents would not necessarily be an item of attention of the reviewer, unless that was the specific topic," Lang said.

Judicial Watch released a transcript of Lang's deposition on the group's website Thursday.

Former Clinton Chief of Staff Cheryl Mills was deposed in the litigation last month. Abedin and current Undersecretary of State for Management Patrick Kennedy are scheduled to be deposed at the end of June.

Article Link to Politico:

Clinton BlackBerry Photo Led To State Official’s Query About Email Account

Trump Can’t Wing It Forever

He needs a campaign—to raise cash, cut ads and keep him focused on Clinton.

By Kimberley A. Strassel 
The Wall Street Journal
June 10, 2016

The problem with accomplishing the impossible is that it leaves the impression doing so can be routine. In that mind-set may rest the question of whether Donald Trump has a shot at the presidency.

Give the man credit: He broke every law of political physics and still won the primary. He rambled; he barely spent a dime on TV; he skipped entire states; he ignored delegate math; his focus group was himself. An entire generation of political consultants is debating checking in to a psych ward.

His impossible victory in hand, Mr. Trump is proceeding as if he can win the general election the same way. Fundraising and advertising? Mr. Trump told Bloomberg that he had no plans to raise the $1 billion his campaign initially estimated, since “I get so much publicity” and free airtime. He wrapped up the nomination more than a month ago, yet only this week did his national finance team hold its first official meeting.

A data operation? The real-estate mogul last month said the whole know-who-your-voters-are thing is “overrated.” After all, he says he can reach nearly 20 million people on social media. How about a fully staffed campaign operation? No need. Mr. Trump is running a bare-bones effort—reported to be about 80 people in total—and he told the New York Times that such leanness is “smart.”

In short, he’s winging it. He continues to operate on the assumption that he will bask in free airtime forever, that the masses will flock to him come November, that he can tweet his way to the Oval Office. And perhaps, given his primary achievement, he gets the benefit of the doubt.

Save one thing: It isn’t working. Mr. Trump’s past rule-breaking succeeded because of a crowded primary field, in which Mr. Trump was the most entertaining figure, and in which the press didn’t have a stake. It succeeded because a decade of specific frustrations had made conservatives unusually open to his style and message.

That’s all over now. Mr. Trump is in a race against a seasoned politician who commands a machine and is already savaging him daily. The mainstream media are in the tank for her, and their airtime will be devoted to skewering him. Mr. Trump’s supporters remain the minority in a fractured party that he has yet to unify.

There’s no need to guess whether Mr. Trump’s lack of a campaign is hurting him. It’s proven by two irrefutable weeks of negative press coverage, missed opportunities and eroding poll numbers.

Campaigns exist to keep the candidate focused and ready to exploit rare opportunities. In recent weeks, Mr. Trump wasted three such golden moments: the report by the State Department’s inspector general on Mrs. Clinton’s email practices; Hillary’s foreign policy speech; and last week’s dismal jobs report.

Mr. Trump could have hammered the Clinton ethical morass and wrapped Barack Obama’s failed foreign and economic policies around Mrs. Clinton’s neck. Instead he confined himself to random tweets, calling the email report “devastating,” the jobs report a “bombshell,” and Hillary’s teleprompter skills unpresidential.

Campaigns exist to stop the candidate from digging himself into a hole, as Mr. Trump has with highly personal attacks on the judiciary. They exist to tee up a regular series of addresses on key issues, much like Mr. Trump did (admirably) on energy policy several weeks ago. (The mogul reportedly will give a major address next week on the Clintons’ “politics of personal enrichment,” which is at least a start.)

Campaigns exist to counter negative advertising. But the blitz that the Clinton camp commenced against Mr. Trump as far back as April has largely gone unanswered. The super PAC backing Mrs. Clinton has spent millions and vowed another $130 million. Her campaign, with an estimated $60 million in hand, had an ad up within days of the judge controversy. The Trump campaign has run one Web ad—weeks ago—about the Clintons, which hit Bill for his sexual past.

Campaigns exist to shore up the party, yet there are renewed rumblings about ditching Mr. Trump at the convention. They exist to work hand in hand with party leaders: The Republican National Committee has invested years and millions preparing for this race, but it can be of little help in the absence of an all-cylinders Trump campaign.

Mr. Trump boasts that he is a business success, and so he surely understands the necessity of a well-oiled operation. Were he to spend the next weeks focused on gearing up one, he’d even the odds against Hillary and make inroads among many Republicans who need reasons to feel confident.

What could it hurt? If Mr. Trump is as skilled as his supporters believe, imagine him also backed by a fabulous campaign.

Article Link to The Wall Street Journal:

Krauthammer: In The Matter Of Paul Ryan

He took the course he felt would be least damaging to the conservative cause in the long run.

By Charles Krauthammer 
The National Review
June 10, 2016

The morning after, the nation awakes asking: What have we done?

Both parties seem intent on throwing the election away. The Democrats, running against a man with highest-ever negatives, are poised to nominate a candidate with the second-highest-ever negatives. Hillary Clinton started with every possible advantage — money, experience, name recognition, residual goodwill from her husband’s successful 1990s — yet could not put away until this week an obscure, fringy, socialist backbencher in a country uniquely allergic to socialism.

Bernie Sanders did have one advantage. He had something to say. She had nuthin’. Her Tuesday victory speech was a pudding without a theme for a campaign without a cause. After 14 months, she still can’t get past the famous question asked of Ted Kennedy in 1979: Why do you want to be president?

So whom do the Republicans put up? They had 17 candidates. Any of a dozen could have taken down the near-fatally weak Clinton, unloved, untrusted, living under the shadow of an FBI investigation.

Instead, they nominate Donald Trump — conspiracy theorist (from Barack Obama’s Kenyan birth to Ted Cruz’s father’s involvement with Lee Harvey Oswald), fabulist (from his own invented opposition to the Iraq War and the Libya intervention to the “thousands and thousands” of New Jersey Muslims celebrating 9/11), admirer of strongmen (from Vladimir Putin to the butchers of Tiananmen).

His outrageous provocations have been brilliantly sequenced so that the shock of the new extinguishes the memory of the last. Though perhaps not his most recent — his gratuitous attack on a “Mexican” federal judge (born and bred in Indiana) for inherent bias because of his ethnicity. Textbook racism, averred Speaker Paul Ryan. Even Trump acolyte and possible running mate Newt Gingrich called it inexcusable.

Trump promptly doubled down, expanding the universe of the not-to-be-trusted among us by adding American Muslims to the list of those who might be inherently biased.

Yet Trump is the party’s chosen. He won the primary contest fair and square. The people have spoken. What to do?

First, dare to say that the people aren’t always right. Surely Republicans admit the possibility. Or do they believe the people chose rightly in electing Obama? Twice. Historical examples of other countries choosing even more wrongly are numerous and tragic. The people’s will deserves respect, not necessarily affirmation.

I sympathize with the dilemma of Republican leaders reluctant to affirm. Many are as appalled as I am by Trump, but they don’t have the freedom I do to say, as I have publicly, that I cannot imagine ever voting for him. They have unique party and institutional responsibilities.

For some, that meant endorsing Trump in the belief that they might be able to contain, constrain, guide, and perhaps even educate him. To my mind, this thinking has always been hopelessly misbegotten but not necessarily — nor in all cases — venal.

Which brings us to the matter of Paul Ryan, now being excoriated by many conservatives for having said he would vote for Trump.

Yet what was surprising was not Ryan’s ever so tepid semi-endorsement, which was always inevitable and unavoidable — can the highest elected GOP official be at war during a general election with the party’s democratically chosen presidential candidate? — but his initial refusal to endorse Trump when, after the Indiana primary, nearly everyone around him was falling mindlessly, some shamelessly, into line.

That was surprising. Which is why Ryan’s refusal to immediately follow suit created such a sensation. It also created, deliberately, the time and space for non-Trumpites to hold the line. Ryan was legitimizing resistance to the new regime, giving it safe harbor in the House, even as resisters were being relentlessly accused of treason for “electing Hillary.”

In the end, Ryan called an armistice. What was he to do? Oppose and resign? And then what? What would remain of conservative leadership in the GOP? And if he created a permanent split in the party, he’d be setting up the GOP’s entire conservative wing as scapegoat if Trump loses in November.

Ryan had no good options. He chose the one he felt was least damaging to the conservative cause to which he has devoted his entire adult life.

I wouldn’t have done it but I’m not House speaker. He is a practicing politician who has to calculate the consequences of what he does. That deserves at least some understanding.

One day, we shall all have to account for what we did and what we said in this scoundrel year. For now, we each have our conscience to attend to.

Article Link to the National Review:

Will Terrorists Strike France During Euro 2016?

As millions turn out for the month-long Euro 2016 soccer competition, French officials say they are ready to protect spectators and the public. But can they really?

By Christopher Dickey and Erin Zaleski
The Daily Beast
June 10, 2016

PARIS — Sirens whooped so loud they drowned out the buzz of travelers awaiting trains in the Gare de Lyon.

“The station must be evacuated!” intoned the omnipresent public address system, repeating the message in French and in English. “Please go to the exits and help people having difficulty.”

Nobody moved. Hundreds of people from all over France and indeed from all over the world milled about, frozen for a moment with a mix of fear and confusion, obliviousness, and blasé cynicism.

Some had heard the announcement shortly before that this would be just a test of evacuation systems. Some hadn’t. But all shared in that moment a taste of things to come in a country that has weathered two terrible terrorist onslaughts since January 2015, and is now preparing for more.

Beginning on Friday night, and for the next month, France will host Euro 2016, a competition among national soccer teams from all over Europe that will be watched by enormous audiences in stadiums around the country, on television around the globe, and—what worries French authorities the most—in open-air venues like the Champ de Mars around the Eiffel Tower.

In these so-called fan zones, thousands and even tens of thousands of people will gather to see the matches on enormous television screens, and while there will be security checks, especially this Friday night, it’s a good bet that as the matches go on day after day at venue after venue, some will grow more lax.

Ultimately, as with all counter-terror operations, the first and best line of defense is good intelligence, and when that fails—as it did most grievously before the jihadist attacks on the satirists at Charlie Hebdo and Jewish shoppers at a kosher supermarket in January; during the horrific slaughter in Paris in November; and the related carnage in Brussels in March—there is little that can be done to protect civilians from terrorists willing to kill anyone they can almost anywhere they can find them.

In the bloody Nov. 13 attacks in Paris, the suicide bombers who caused the fewest casualties were the ones who tried to get into a friendly soccer match between France and Germany in the huge Stade de France—and failed. (The same stadium will host the first Euro 2016 match, France v. Romania, on Friday night.) The real slaughter in November took place at a rock concert in town at the Bataclan concert hall, and in drive-by shootings that targeted sidewalk cafés. The terrorists who struck in Brussels could not get on planes, so they blew themselves up in the airport’s departure hall, and on the city’s subway.

French officials insist that intelligence gathering and intelligence sharing about jihadists has improved, but they made similar claims after previous terror incidents, and then more attacks came.

Some French government officials console themselves, privately, with the idea that the November atrocities in Paris and the March atrocities in Brussels were linked, and virtually all those known to be involved in Europe either blew themselves up or are under arrest.

But that will be little consolation if other cells are operating out of sight, or, having been noticed by authorities earlier, have fallen off the radar, which was the case with the monsters who struck in Paris and Brussels.

The French daily Le Monde reported last week that French authorities had detained a man who claimed to be part of an ISIS sleeper cell but who decided to repent and turn himself in. Others may not be so forthcoming.

It’s hardly reassuring that a leading jihadist recruiter in France, Omar Diaby, aka Omar Omsen, who went to Syria in 2013 and was believed killed last year, has now resurfaced alive and well, and giving ++Skype interviews to The Daily Beast from what he says is Syrian territory.

But the terrorist temptation held out by such major events as the Euro 2016 soccer championships is not only there for organized jihadist groups like the so-called Islamic State (ISIS) and al Qaeda, it’s also hard to resist for lone wolves and violent losers of other religious and ideological stripes.

Ukraine recently announced the arrest of an alleged partisan of the French far right, supposed to have been planning an attack on a mosque, a synagogue, and other targets in France, presumably to try to start an ethnic and religious war.

According to the Ukrainian security service, the SBU, Grégoire Montaux was in possession of an arsenal that included rocket-propelled grenades, assault rifles, and 150 kilos of TNT acquired from the flourishing Ukrainian black-market arms bazaar in Europe’s backyard.

That case is disturbing, as The Daily Beast reported, not only for the potential threat announced by the Ukrainians, but also because of the potential confusion created by deep mistrust of their intelligence service.

So could this young man with no criminal history and a passion for agriculture be another Anders Breivik, the hater of Muslims who killed 77 innocent people in Norway?

Although a preliminary investigation has been launched in France, Moutaux has yet to be named as a terrorism suspect, and officials are cautioning against jumping to conclusions. Indeed, the current charge against him is “arms smuggling,” and the regional judiciary in Nancy is handling the case, not the country’s Paris-based anti-terrorism unit.

“To say terrorism motives are ruled out is a bit strong,” a source close to the investigation told L’Express. “But right now there is nothing pointing in that direction.”

Real terrorists, fake terrorists, suspected terrorists, anti-terrorist terrorists—the fog of war is nothing compared to the treacherous uncertainties of the fight against lunatics with the will and the means to slaughter scores, if not hundreds or thousands, of innocent people.

To try to reassure the French public and visitors coming for the Euro 2016 matches, the French government has announced an extraordinary array of security measures in what professionals understand is a last line of defense against attacks.

As laid out by the French Interior Ministry, during Euro 2016, which lasts from June 10 to July 10, with games in Paris, Lille, Lens, Saint-Denis, Lyons, Saint-Etienne, Bordeaux, Toulouse, Marseille, and Nice, there will be 24 teams competing in 51 matches, attracting 2.5 million spectators in the stadiums, millions more outside, and 8 billion viewers around the world.

To protect the games and the public are 42,000 members of the National Police, 30,000 gendarmes, and 5,200 emergency workers, among them 300 bomb disposal experts.

Some of the 10,000 soldiers in the security deployment called Operation Sentinel will be assigned specifically to Euro 2016. There will also be 13,000 private security personnel, as well as some other civilian supporters and the municipal police in the various venues.

Altogether there will be 90,000 people deployed to keep the competitions safe.

And if all that doesn’t work?

Dozens of major training exercises were conducted this spring all over the country. The largest in the history of France, in the southwestern city of Nîmes, brought in more than 1,000 students from the National Police Academy there to endure a simulated radiological, biological, or chemical attack in a “fan zone.” The lessons were mainly about how to contain and channel panicking crowds once the terrorist deed is done.

Hence, as well, the drills at the crowded Paris station, the Gare de Lyon, where people wait to board high-speed trains that take them racing to their destinations in southern France at speeds of 300 kilometers (186 miles) per hour: “The station must be evacuated…” intoned the omnipresent public address system. Then, the reminder, “Ignore this test.” Unless and until, that is, it’s not a test at all.

One closing thought: Eight days before the Euro 2016 ends, the 22-day Tour de France begins. In a typical year, some 12 million spectators line the route of the world’s most famous bicycle race. The terrorist temptation continues.

Article Link to The Daily Beast:

Russian And Syrian Defense Ministers Arrive In Tehran For 'Strategic Meeting'

The defense ministers of Russia, Syria and Iran met in Tehran to discuss the latest regional developments and methods to "fight terrorism."

By Arash Karami
June 10, 2016

Russian Defense Minister Sergei Shoigu arrived in Tehran on June 9 to meet with Iranian Defense Minister Hossein Dehghan and Syrian Defense Minister Fahd Jassem al-Freij to discuss "regional developments and ways to strengthen and expand the fight against terrorism." According to Iranian media, "the strategic meeting" was called by Iran.

After the meeting, Dehghan discussed Iran's position on Syria and the region. On the cease-fires in Syria, which all sides have been accused of violating, Dehghan said, "We agree with cease-fires that do not result in the strengthening of terrorists in this country." Iranian officials refer to the armed opposition groups as terrorists and do not distinguish between the Islamic State, al-Qaeda and other Salafi-Jihadi groups. Dehghan accused the United States, Saudi Arabia and other regional countries of "justifying the support of terrorists under the cover of supporting moderate rebels." He said that this support "proves the falsehood of [the United States] being against terrorism" and said "claimants of human rights are closing their eyes to the most immoral acts and crimes of terrorists" in Yemen, Syria and Iraq.

Dehghan added that Iran would support a cease-fire that is a "complete cease-fire, providing disaster relief and humanitarian action while simultaneously preventing the arming and supporting of terrorist movements while at the same time taking decisive military action against terrorists." It is possible that Dehghan's third point about cease-fires — decisive military action against terrorists — is likely the reason for the meeting between the three ministers. In a televised speech to Syria's new parliament June 7, President Bashar al-Assad hinted at the purpose of the meeting when he said, "We will liberate every inch of Syria from the hands of the opposition."

Dehghan also requested of the Syrian groups currently in talks with the Syrian government to "collaborate to take steps to establish peace, calm and expel the terrorist threat." He also said that Iran has always supported Syrian-Syrian negotiations as a path to resolve the crisis in the country.

Dehghan thanked the Russian and Syrian defense ministers for meeting with him in Tehran to "exchange ideas, cooperation and adopting of strategic decisions to defeat the dangerous plot which has [sought] instability, disintegration and the distortion of the territorial integrity and national sovereignty of countries in the region."

Since Russia entered the Syrian civil war in September 2015 in order to back Syrian troops and Iranian forces, the tide of the war has changed. Armed Syrian opposition groups, backed by regional countries and Western countries, have mostly been in retreat. Iranian media has covered extensively successive Syrian army victories. Two June 9 articles from Tasnim News agency had the headlines "Advance of Syrian army on the suburbs of Damascus" and "The continued advancement of the Syrian army in Raqqa and the alarm of [IS]." Attacks on hospitals in opposition-held areas, such as ones that have happened recently in Aleppo, rarely make it into Iranian headlines.

Shoigu will also meet with Ali Shamkhani, secretary of Iran's Supreme National Security Council.

Article Link To Al-Monitor:

Russian and Syrian defense ministers arrive in Tehran for 'strategic meeting'

End America’s Reliance On Russia

By Max Boot
June 10, 2016

I am currently touring the Baltic republics, where residents live in constant terror that Vladimir Putin will do to them what he has already done to Ukraine and Georgia. To prevent that from happening, the U.S. has deployed a company of soldiers in each of the Baltic states — Latvia, Lithuania, and Estonia. Offshore, in the Baltic Sea, Russian aircraft are buzzing U.S. Navy vessels. So it is pretty strange that the U.S. Department of Defense, while protecting the U.S. and its allies from Russian aggression, is also subsidizing it.

How? By buying RD-180 rocket engines from a Russian company, which are then used to power the Atlas V rockets employed to launch military spy satellites. The American reliance on Russian rocket engines began in 1996 for commercial launches and then expanded to military payloads. As Eli Lake reminded us, the U.S. was supposed to transition over to exclusively American-made rockets by 2000, but that deadline keeps getting pushed back farther and farther because the Pentagon keeps claiming that it is too expensive to manufacture domestically.

This might have made some sort of sense in the days of the Russian “reset” but, by now, following the invasion of Ukraine, even the Obama administration doesn’t have many illusions left about the nature of the Putin regime. Yet the U.S. goes right on subsidizing Russia’s space industry which, by the way, is led by two officials who were sanctioned by the U.S. for their role in the invasion of Ukraine.

Senator John McCain, the chairman of the Senate Armed Services Committee, has been fighting to end this subsidy for the Russian military-industrial complex, and he has found support from former senior intelligence and defense officials. A group of former policymakers — including former Defense Secretary Leon Panetta, former NATO commander James Stavridis, and former CIA and NSA Director Mike Hayden — have released a letter which states: “We have an American industrial base with multiple providers that can produce All-American-made rocket engines. There is no need to rely on Putin’s Russia for this sensitive, critical technology.” Indeed, Elon Musk’s SpaceX has been fighting to get a share of the rocket-launch business from the Pentagon.

Yet the effort to phase-out the Russian rocket engines is being staunchly resisted by Boeing and Lockheed Martin, which have teamed up with the United Launch Alliance to build the Atlas V rockets that depend on Russian engines. Their position is supported by Senator Richard Shelby of Alabama and Senator Richard Durbin of Illinois, who just happen to represent the states where the Atlas Vs are assembled (Alabama) and where Boeing has its headquarters (Illinois). The Pentagon has also weighed in by claiming that getting rid of the Russian engines too soon will require moving money from other critical program areas.

The crux of the debate now is over whether to allow only nine more rocket launches with Russian-made engines, as McCain proposes, or as many as 18, as was proposed in a House bill. The impasse, it seems, could be broken readily enough if Congress were to appropriate the extra funds needed to make the switch expeditiously without forcing the Department of Defense to cut other planned expenditures.

Sure, it will cost a little more to go domestic, but it will be worth it to end America’s ludicrous reliance, as Eli Lake notes, “on Russian engines to launch the satellites that keep tabs on Russian aggression.”

Article Link to Commentary:

Britain's Great EU Debate Hasn't Been So Great

By Editorial Board
The Bloomberg View
June 10, 2016

Opinion polls say Britain’s vote on June 23 on whether to leave the European Union will be close. That’s disturbing: Voting to stay is the safer, wiser choice. The referendum debate should have promoted consensus on the point -- but it hasn’t, partly because the quality of discussion has been a letdown.

Campaigners on both sides of the debate have claimed that a complex issue is really pretty simple. The government-led Remain campaign says Brexit would be a catastrophe; the Leave campaign says it would be the dawn of a new golden age. Both campaigns have confused voters, inflamed prejudices, muddled the facts -- and changed few minds. The intelligent debate that was needed hasn’t happened. So much for direct democracy.

The Leave side has been the worse offender, often brazenly misrepresenting the most basic facts.

Former mayor of London Boris Johnson, a leading Brexit spokesman, said EU law banned children under 8 from blowing up balloons, prohibited the recycling of tea bags and limited the size of coffins. The chairman of a parliamentary committee exposed all this as fiction in a March hearing.

The Leave campaign’s claim that the EU has “given Turkey the nod” to become a full member no doubt appealed to voters alarmed by immigration, but it’s misleading at best. Turkey was declared eligible to join the EU in 1997, but negotiations are still at an early stage and all members will have to agree before they conclude -- so the U.K. has a veto.

Justice Secretary Michael Gove, another leading Leave campaigner, said leaving the EU would allow Britain to “take back the 350 million pounds we give to the EU every week.” That's wrong, too. The figure ignores the rebate the U.K. gets up front, as well as the other payments and grants Britain receives. And Gove's claim that leaving the EU would boost spending on Britain’s National Health Service was so egregious that that it caused one Leave supporter and Tory MP to defect

Worst of all, the Leave side has failed to say what Brexit would mean -- starting with the trade arrangements that would be needed to replace Britain’s rights and obligations as part of the EU. The Leave campaigners are divided on this, so uncertainty is all they can offer.

Such a weak campaign should have been easy to defeat, but the Remain side has made no progress in the polls since the debate began. That’s partly because it has relied too much on scaremongering. Prime Minister David Cameron’s May 9 suggestion that leaving the EU would threaten peace and stability in Europe was greeted with incredulity.

The Remain campaign has used the same kind of hyperbole when it comes to the economy. The economic risks of exit are real -- study after study has made this clear -- but the idea that Britain would be doomed if it left isn’t plausible. Life in Switzerland goes on, somehow. (And if the government thinks Britain would be crazy to leave, voters might wonder why it called a referendum in the first place.) The Remain campaign has failed to address voters’ concerns over immigration and has been suspiciously quiet about the further reforms that Europe needs if the union is to work well for its citizens.

There’s every chance of a surge of support for the status quo as the June 23 vote approaches. One must hope so: Voting to stay is the right choice. But it’s a shame the referendum campaigns have done so little to help voters think clearly and choose wisely.

Article Link to The Bloomberg View:

U.S. Taxpayers Are Funding Iran's Military Expansion

By Eli Lake
The Bloomberg View
June 10, 2016

One of the unexpected results of President Barack Obama's new opening to Iran is that U.S. taxpayers are now funding both sides of the Middle East's arms race. The U.S. is deliberately subsidizing defense spending for allies like Egypt and Israel. Now the U.S. is inadvertently paying for some of Iran's military expenditures as well.

It all starts with $1.7 billion the U.S. Treasury transferred to Iran's Central Bank in January, during a delicate prisoner swap and the implementation of last summer's nuclear deal to resolve a long-standing dispute about Iran's arms purchases before the revolution of 1979.

For months it was unclear what Iran's government would do with this money. But last month the mystery was solved when Iran's Guardian Council approved the government's 2017 budget that instructed Iran's Central Bank to transfer the $1.7 billion to the military.

Saeed Ghasseminejad, an associate fellow at the Foundation for Defense of Democracies, spotted the budget item. He told me the development was widely reported in Iran by numerous sources including the state-funded news services. "Article 22 of the budget for 2017 says the Central Bank is required to give the money from the legal settlement of Iran's pre- and post-revolutionary arms sales of up to $1.7 billion to the defense budget," he said.

Republicans and some Democrats who opposed Obama's nuclear deal have argued that the end of some sanctions would help to fund Iran's military. But at least that was Iran's money already (albeit frozen in overseas bank accounts). The $1.7 billion that Treasury transferred to Iran in January is different.

A portion of it, $400 million, came from a trust fund comprising money paid by the government of Shah Mohammad Reza Pahlavi, a U.S. ally, for arms sold to Iran before the 1979 revolution. Those sales were cut off in 1979 after revolutionaries took over the U.S. Embassy in Tehran and held the American staff hostage for 444 days. The remaining $1.3 billion represents interest on the $400 million principle over more than 36 years.

According to a letter from the State Department to Representative Mike Pompeo, a Republican who has called for an investigation into the January payment, that money came out of something known as the Judgment Fund, which is "a source of funding to pay judgments and claims against the United States when there is no other source of funding."

At the time of the transfer in January, the Obama administration said the $1.7 billion payment was a bargain for the taxpayer because the U.S. would probably have to pay a steeper interest rate had the matter been adjudicated at the Hague by a tribunal created to settle claims between the U.S. and Iran after 1979.

Nonetheless, the $1.7 billion payment has still rankled Obama's critics. In January, many observers, including Pompeo, said the transfer was more like a ransom payment because it coincided with the release of five Americans detained in Iran. The Iranian commander of the Basiji militia, Mohammad Reza Naghdi, said at the time: “Taking this much money back was in return for the release of the American spies." The White House disputed this claim and said the payment was independent of the negotiation to release the American prisoners.

In any case, Pompeo is angry. “The fact that U.S. taxpayers appear to be funding Iran’s military is outrageous," he told me.

The irony here is that Iran has been pleading poverty in recent months. The country's supreme leader and foreign minister have publicly complained that Iran's economy has not seen the benefits expected from the Iran nuclear deal. And yet Iran's 2017 $19 billion defense budget has increased by 90 percent from 2016, according to Ghasseminejad.

We now know where $1.7 billion of that came from.

Article Link to The Bloomberg View: