Wednesday, June 15, 2016

Wednesday, June 15, Night Wall Street Roundup: Wall St. Falls As Fed Holds Steady And Brexit Vote Looms

By Noel Randewich
Reuters
June 15, 2016

Wall Street fell for a fifth straight session on Wednesday after the Federal Reserve left interest rates unchanged and investors stewed over an impending vote in Britain on whether to leave the European Union.

Major U.S. stock indexes spent most of the day with gains but abruptly fell late in the session, bringing the S&P 500's loss in the past week to 2.2 percent, in large part because of fears that a fractured EU could critically damage an already feeble global economy.

It was the S&P 500's longest losing streak since the five-day decline that culminated in its 2016 low on Feb. 11.

While the U.S. central bank put off an immediate rate hike, it lowered its economic growth forecast and signaled it still plans two rate increases this year.

Traders had not expected a rate increase this month by the Fed's Federal Open Market Committee, or FOMC, but they have been eager for clues about the health of the economy and the trajectory of future hikes.

Investors have become more nervous ahead of a vote in Britain next week on whether to leave the EU, with recent opinion polls indicating growing support for such a move.

"It is certainly one of the uncertainties that we discussed and that factored into today's decision," Fed Chair Janet Yellen said at a news conference.

The CBOE market volatility index .VIX, Wall Street's "fear gauge", fell 1.8 percent for the day but was still at elevated levels not seen in over three months.

"This is an FOMC announcement that really speaks to a global weakness and the bottom line is it underscores the fact the U.S. is not an island and the global markets and economy are more interconnected than they have ever been," said Peter Kenny, Senior Market Strategist at Global Markets Advisory Group in Berkeley Heights, New Jersey.

The Dow Jones industrial average .DJI lost 0.2 percent to end at 17,640.17 and the S&P 500 .SPX fell 0.18 percent to 2,071.50.

The Nasdaq Composite .IXIC dropped 0.18 percent to 4,834.93.

About 6.8 billion shares changed hands on U.S. exchanges, about average over the past 20 trading days, according to Thomson Reuters data.

Six of the 10 major S&P sectors dipped, led lower by the utilities index .SPLRCU, down 0.71 percent.

Chipmaker Intel (INTC.O) fell 1.65 percent and provided the biggest drag on the S&P 500. So far in 2016, the S&P 500 is up 1 percent.

Advancing issues outnumbered decliners on the NYSE by 1,833 to 1,189. On the Nasdaq, 1,536 issues rose and 1,271 fell.

The S&P 500 index showed 12 new 52-week highs and one new low, while the Nasdaq recorded 38 new highs and 37 new lows.


Article Link to Reuters:

In Trump, Pro-Gay Rights Republicans See A New Hope

His response to the Orlando mass-killing and statements regarding the LGBT community has social moderates hopeful of making changes to the party platform.


By Kyle Cheney
Politico
June 15, 2016

Republican gay rights advocates, long sidelined by the party’s socially conservative core, suddenly see an opening to move the GOP away from its hardline opposition to same-sex marriage. And they think Donald Trump is the candidate to help them do it.

Trump buoyed Republican LGBT activists with his defense of the gay community in the wake of Sunday’s mass murder at a gay nightclub. “Ask yourself, who is really the friend of women and the LGBT community. Donald Trump with his actions, or Hillary Clinton with her words?” he said Monday, in a speech condemning the Orlando attack, which left 49 club-goers dead at the hands of a man who pledged allegiance to the Islamic State and other terrorist groups. Trump followed it up with a tweet Tuesday in which he thanked LGBT Americans and said: “I will fight for you.”

The sudden warmth from a Republican standard-bearer comes amid a push to moderate the party platform’s current conservative stances on social issues — an effort bankrolled by some of the Republican Party’s biggest donors. That effort faces fierce opposition from social conservatives, who are looking to preserve the party’s position that regards same-sex marriage as an affront to social order and call for a Constitutional amendment to define marriage as between one man and one woman. But the more centrist elements in the party say Trump’s welcoming tone toward LGBT Americans and a sudden outpouring of national support for the gay community could move the debate in their direction.

“I believe we truly hit a tipping point in the LGBT equality movement in the United States in that for so long, you had Republicans reluctant to even mention the phrase ‘LGBT community’ and here we have our presumptive Republican presidential nominee not only using that phrase but directly expressing sympathy,” said Greg T. Angelo, president of the Log Cabin Republicans. “If Republicans try to position themselves as being justified in maintaining harsh anti-gay rhetoric in the platform … you better believe that Democrats are going to demonize them any chance they get.”

John Fluharty, an openly gay adviser to the Delaware GOP, said de-emphasizing language opposing same-sex marriage could invite gay Americans to vote for Republicans in November.

“Trump has a real opportunity to help expand the party by pushing Republicans to accept the reality of what happened in Orlando,” Fluharty said. “He can reset the clock for Republicans on LGBTQ issues if he’s willing to bring down the hammer on reactionary elements in the Party, and drive home the point that Orlando was not just an attack on America, but it was an attack aimed directly at American LGBTQ citizens …Republicans have to admit this reality and it needs to be reflected in the platform with language that supports ending discrimination and expanding equality.”

Conservatives, though, aren’t prepared to give any ground on the issue. Most members of the Republican convention’s 112-member Platform Committee, they note, are likely to be hardcore conservative activists. Even backers of a moderate approach acknowledge that disadvantage. Ted Cruz’s protracted battle with Trump for influence at the convention led to the appointment of hundreds of conservative delegates, from Virginia’s Ken Cuccinelli to Louisiana’s Tony Perkins, who will have outsized voices in the party’s debate. If even a quarter of them are willing to strike the party’s approach to gay marriage – the minimum number needed to force a debate of the issue on the convention floor – it would be a surprise, they said.

“Forces may try to use this as an opportunity and I think it would be a mistake,” said Ed Martin, president of the Eagle Forum, an evangelical group fighting to defend conservative planks at the Republican convention. “If you look at the makeup of the platform committee, it’s full of rock-ribbed conservatives. Donald Trump and his people know that.”

And Trump hasn’t expressed any willingness to spend political capital on changing the party’s platform, a divisive fight at a time when he’s trying to focus his energy on beating Hillary Clinton in the general election. Asked whether he would consider backing efforts to moderate the Republican Party platform on marriage, Trump campaign spokeswoman Hope Hicks said, “Mr. Trump continues his outreach to coalitions and communities all over the country. There has been tremendous support for Mr. Trump and we are excited to see that continue to grow.”

Throughout the campaign, Trump has alternately heartened and dismayed LGBT advocates. As recently as last week at a social conservative political gathering in Washington, Trump suggested he'd appoint judges that would support the traditional definition of marriage. And last year, he slammed the Supreme Court's ruling to legalize same sex marriage last year. But he also was critical of North Carolina Republicans for adopting a bill aimed at restricting bathroom use by transgender residents, distancing himself from the conservative position on the issue. He's repeatedly expressed fondness for gay people and touted decisions to hire gay people and support same-sex relationship. His long history of giving to Democratic politicians has raised flags for some conservatives about where his sympathies lie.

The party’s platform, approved in 2012, calls same-sex marriage “an assault on the foundations of our society” and urges a Constitutional amendment to define marriage as between one man and one woman. But since then, the Supreme Court has ruled that same-sex marriage is legal in all 50 states, and national polls have shown Americans growing more tolerant gay unions. More than half of all Americans support them, according to a Pew poll last month, including a third of Republicans and 61 percent of independent voters. Younger Americans, too, are far more open to same-sex marriage than their older counterparts.

Sunday’s massacre, the worst mass shooting in American history and deadliest terror attack since Sept. 11, 2001. In its aftermath, leaders on both sides of the aisle rallied around the LGBT community in Orlando and expressed solidarity with their families.

Conservatives who spoke to POLITICO said there’s nothing incongruous about condemning violence aimed at the gay community while opposing same-sex marriage on policy, religious or moral grounds.

“Aspects of the Islamic religion adhered to by fanatics and jihadists agree that gays should be murdered. ISIS murders gays regularly because they believe that’s part of their religion. We should oppose that,” said Jim Bopp, a conservative member of the convention’s Platform Committee. “There’s all sorts of people that I disagree with that I would stand with if someone was trying to murder them.”

A spokeswoman for Cuccinelli added that though he was “deeply saddened by the senseless tragedy in Orlando … traditional marriage has always been a key part of the Party platform and ideals.”

“As a conservative, Ken continues to support that position. Whether it will prove to be a contested agenda at the Convention remains to be seen,” said the spokeswoman Mallory Rascher.

Still, there are signs that proponents of same-sex marriage are going to be able to mobilize a degree of support at the convention. One member of the Platform Committee and supporter of same-sex marriage rights, who requested anonymity to describe ongoing efforts, said there will be a constituency within the committee to ease the party’s stance toward gay marriage.

“There will certainly be members that are arguing for some more inclusive — or at least less exclusive language with regard to LGBT issues,” said the committee member. “My hope, as a supporter of those issues and of equality generally, would be that we would be able to make some progress within our platform.”

Another Platform Committee member, Pennsylvania’s Jim McErlane, said he’s hopeful that the committee moves to “downplay social issues.” He noted that in 2008, when he also served on the Platform Committee, the convention adopted a stance on stem cell research that conflicted with John McCain’s position — a headache for the candidate and campaign. He doesn’t want to repeat history in 2016.

“I really want to stay away from that,” he said. “We have enough really difficult issues with national security issues and jobs.”

The American Unity Fund has largely spearheaded the organization in support of same-sex marriage within the Republican Platform. The group, funded by billionaire GOP financiers like Paul Singer, Dan Loeb, Seth Klarman and Cliff Asness, has been pushing for a middle-ground approach on same-sex marriage – striking the anti-LGBT language in the party’s platform and replacing it with acknowledgement of the widely varying opinions on the issue.

“I think Donald Trump has his finger on the pulse of the Republican Party. I think he is reflecting the sentiment that people have about LGBT issues, and in reflecting that he’s showing that it’s time to move on,” said Tyler Deaton, a senior advisor to the effort. “He’s said that in many different ways. He says that in a style that only Trump can do it.”

“I think that the language in the platform right now is very mean-spirited,” he said. “Our objective is for the Republican Party to embrace mutual respect [for the] diverse points of view on civil marriage.”

Bopp rejected the notion that Trump’s response to the attacks signaled a new openness to a moderate approach toward LGBT issues at the convention. Conservatives, he said, would have no problem defending their stance on traditional marriage.

“We’re in favor of equal rights, not special rights,” he said. The attack, he said, “has nothing to do with traditional marriage” and the response by Trump and other Republicans was about standing against “Islamic terrorists killing gays.”

“The guy didn’t go shoot up a marriage center or shoot up a gay marriage,” Bopp said. “He was murdering them because they exist.”


Article Link to Politico:

In Trump, Pro-Gay Rights Republicans See A New Hope

China's Bogus South China Sea 'Consensus'

Despite Beijing's proclamations, ASEAN unity is still relatively intact.


By Bhubhindar SinghShawn Ho, and Henrick Z. Tsjeng
The National Interest
June 15, 2016

The recently concluded 15th Shangri-la Dialogue in Singapore once again focused on the South China Sea disputes. At the Dialogue, Admiral Sun Jianguo, Deputy Chief of the Joint Staff Department of China’s Central Military Commission, rebutted criticisms of China’s actions in the South China Sea and reiterated China’s legal right to ignore an upcoming judgement in a case filed by the Philippines at the Permanent Court of Arbitration at The Hague.

As many governments and analysts view ASEAN’s reaction to this upcoming judgement as a gauge of its unity, it is timely to evaluate if Chinese foreign minister Wang Yi’s announcement of a four point “consensus” reached with Brunei, Cambodia and Laos in late April this year – which contained supposed agreements between the four countries on approaches to manage the South China Sea disputes, approaches congenial to China’s view of the disputes – was really a common agreement by all parties. This uncertainty over the “consensus” was shared by ASEAN Secretary-General Le Luong Minh. In a response to a question on 9 May in Singapore about it, he said that “we are not even aware of what was agreed with China and the three ASEAN countries…We’ve heard nothing from Laos and Brunei on what was agreed or what happened”.

As this “consensus” was only between three ASEAN countries and China, rather than between ASEAN as a whole and China, this would appear to indicate a split in ASEAN unity. It is therefore important to examine the three ASEAN countries’ respective perspectives of what happened during Minister Wang’s trip to their countries in order to assess if there was indeed a split in ASEAN unity.

Divergent Perspectives of the Bilateral Meetings

While it is clear that Minister Wang had met with leaders of Brunei, Cambodia and Laos in their respective countries in late April this year, there appears to be a divergence between their views and China’s perspective on what was really agreed upon in each bilateral meeting.

In their respective Foreign Ministry’s post-meeting statements, both Brunei and Laos avoided making any specific references to the South China Sea disputes and there was no mention of any agreement with China. As for Cambodia, its Foreign Ministry did not even issue a post-meeting statement regarding their bilateral meeting with China. Their government spokesman Phay Siphan did, however, confirm two days after China’s announcement that no deal had been reached with China: “There’s been no agreement or discussions, just a visit by a Chinese Foreign Minister.”

China’s Strategy

It is clear that China had gone to each of the three ASEAN countries with the intention to reach agreements with each of them over the South China Sea disputes. The choice of countries that Minister Wang visited – and the seven ASEAN countries that he did not visit – also provides some clues on China’s assessment of the countries which would not have a huge negative reaction to this China-declared “consensus.” Such a move can be seen as part of a broader strategy by China to project a split in ASEAN unity and garner support for its position in view of the upcoming judgement by the Permanent Court of Arbitration.

This “consensus” provides the impression that China had convened a meeting with all three ASEAN countries at the same time and had an agreement over their common approach in managing the South China Sea disputes. This is not true, especially since none of the statements issued by the Foreign Ministries of the three ASEAN countries had used the term “consensus” (or a term containing a similar meaning) with reference to the South China Sea disputes. The use of the word “consensus” therefore appears to be fully China’s unilateral idea. To China’s credit, their Foreign Ministry’s statement on the “consensus” did state that it was reached with the three countries “respectively,” though such a choice of words is still vague and does not clearly convey how the “consensus” came about.

ASEAN’s Unity

The conclusion that can be drawn is that the three ASEAN countries may not have viewed the “consensus” in the same light that China seems to have viewed it.

Therefore, concerns over a fracture in ASEAN unity may not have been as deep-seated as media reports have made it out to be, and that Brunei, Cambodia and Laos may still view the common ASEAN position as far more important than any agreement they may have had with China. This, along with the insistence at the ASEAN Defense Ministers’ Meeting in 2015 that the South China Sea disputes should not be included in the joint declaration, shows that ASEAN unity is still relatively intact. This bodes well for the contributions that Singapore can make as the country coordinator of ASEAN-China dialogue relations, as a relatively unified ASEAN is also a stronger ASEAN that can better engage China to discuss the management of the South China Sea disputes.

Looking ahead, ASEAN will nonetheless continue to face challenges. Singapore’s Defence Minister Ng Eng Hen said at the recent Shangri-la Dialogue that ASEAN’s assertion of its centrality is a “position attained by default.” All major powers have consistently recognised and accepted ASEAN centrality. The key challenge in the years ahead for ASEAN, however, is whether it can remain united in the face of the major shifts to the regional landscape, which is witnessing escalated great-power competition between the United States and China. A divided ASEAN is not in the interests of the ten Southeast Asian states, nor of the major powers. Only a united ASEAN can make positive and long-lasting contributions to the international affairs of the twenty-first century.



Article Link to the National Interest:

U.S. Oil Falls To Three-Week Low On Inventory Gains, Brexit Fears

By Aaron Sheldrick
Reuters
June 15, 2016

Crude futures fell on Wednesday as mounting concerns about Britain's possible exit from the European Union and a surprise build in U.S. inventories left investors ignoring an IEA declaration that oil markets are now in balance.

U.S. crude fell to a three-week low of $47.55 as the contract dropped for a fifth day. It was trading down 52 cents at $47.97 a barrel at 0703 GMT.

Brent was also down for a fifth day to hit its lowest in around two weeks. The global benchmark was 52 cents lower at $49.29 a barrel.

Data from the American Petroleum Institute showed U.S. crude inventories rose by 1.2 million barrels in the week to June 10 to 536.7 million, compared with analyst expectations for a decrease of 2.3 million barrels. [API/S]

But the impending vote on the so-called Brexit is dominating everything from currency markets to German Bunds, yields of which fell below zero for the first time on Tuesday after polls showed the "Out" campaign gaining over "In". [MKTS/GLOB]

"The broad picture at the moment is that oil is being swept up in a broad risk off move associated with Brexit primarily," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

The influential Sun newspaper, long a scourge of alleged European Union excess, also came out in support of Britain leaving the EU.

If Britain votes to exit the EU, investors fear the bloc could slip into a recession that would undermine oil demand.

The oil market is now in balance due to unplanned outages and robust demand, particularly from emerging economies, but this equilibrium will tip into surplus again early in 2017, the International Energy Agency (IEA) said on Tuesday.

But there is plenty of oil flowing into the market with Iran's exports on track to hit the highest in almost 4-1/2 years in June, as shipments to Europe recover to near pre-sanctions level, a source with knowledge of the country's crude lifting plans has told Reuters.


Article Link to Reuters:

The Presidency Isn’t A Real-Estate Deal

The skills required to flourish as a property mogul aren’t what you need in the Oval Office.


By Alan J. Pomerantz
The Wall Street Journal
June 15, 2016

Donald Trump claims that his business experience will help him Make America Great Again. His detractors point to failed ventures such as Trump University and Trump Steaks to suggest that his business success is vastly overrated. This debate misses the bigger point: Business isn’t politics.

Even if Mr. Trump’s success is as significant as he claims, his skills don’t necessarily translate into the Oval Office. I have been a real-estate lawyer for 48 years and have represented some of the business’s most successful people in some of its largest deals—including the 72-member bank group that held approximately $4 billion of Mr. Trump’s debt in the early 1990s. I believe the skills that make a successful real-estate entrepreneur would produce an unsuccessful president. Here are six reasons why:

1. Businessmen can always walk away from a deal. If a real-estate developer doesn’t trust a potential partner, he can find another interested party. In Mr. Trump’s line of work a different deal is almost always possible. The opposite is often true at the White House. The president cannot simply walk away from China if he does not like Xi Jinping.

What experience does Mr. Trump have in negotiating when the consequences of no deal are potentially devastating? Failed talks with Iran, Iraq, Syria, Russia or North Korea are not the same thing as an unsuccessful real-estate deal.

2. Companies usually can fire at will. In business, any employee or contractor who does not share the company’s vision, goals or methods will soon be replaced by one who does. Not so in politics. A President Trump would have to work with 535 members of Congress whom he cannot fire. Many will want him to fail. Some may have their eyes on his job.

Mr. Trump has not shown any skill at dealing with people who disagree with him—nor any desire to learn how. Instead, he has mocked and belittled anyone who has challenged him. See: “Little Marco,” “Lyin’ Ted” and “Crooked Hillary.” What would President Trump do if German Chancellor Angela Merkel voiced sharp disagreement with his international agenda? Could he restrain himself from personally attacking an American ally?

3. Executives are autocrats. Real estate is heavily regulated, but developers are not. Pretty much anyone can buy whatever he wants, as long as he has the money. It is inconceivable that Mr. Trump’s business decisions at Trump Enterprises could be overruled. Presidents, in contrast, are tightly constrained by laws, rules and regulations. Even if the White House’s actions appear to be in compliance with the law, courts may disagree.

Mr. Trump does not seem to understand the limits of presidential power. Take his pledge to make Mexico pay for a border wall. The candidate has suggested that he would recoup the cost of the wall by imposing a tariff on imports from Mexico. But such a tariff would have to be passed by Congress, and it would violate the North American Free Trade Agreement. Mr. Trump has also suggested that he would confiscate remittances to Mexico, which would require court action and proof of a criminal act. The courts would not support him.

4. In business there are rarely fact checkers. Sellers can say close to anything they want during a real-estate negotiation, which is almost always conducted in private. Those representations are eventually put in writing, and the buyer is responsible for verification. Most contracts specifically state that the parties cannot rely on anything said beforehand. If a significant misrepresentation is found, the buyer can abandon the deal. If the falsehood is found only after the agreement is completed, it is usually too bad for the buyer.

Does this sound like Mr. Trump’s campaign? How often has he said things that turn out to be untrue? Many are startled by the ease with which he does this. After participating in hundreds of real-estate deals, I’m not surprised. But words matter on the world stage. Can we take the chance that Mr. Trump, once elected, will be able to change his sales pitch? He has yet to show a willingness to even try.

5. A common ploy in business is to create anxiety. Take a loan restructuring, something Mr. Trump has great experience with. If negotiations stall, the borrower might simply stop paying, forcing the lender to contemplate a lengthy foreclosure. The proceedings might take years, all the while the lender isn’t getting paid and the borrower controls the asset. Suddenly cutting a deal doesn’t look so bad.

Sound familiar? Mr. Trump suggested that if he didn’t get the Republican nomination there might be riots or he might run a third-party campaign. He was presenting an outcome that party leaders wanted desperately to avoid—and he knew it. Well played, but does that kind of threat work in international affairs? Incorrectly calling a businessman’s bluff, at worst, ends the deal. What if the businessman has his finger on the nuclear button?

6. A business always has bankruptcy as an option. If a real-estate deal needs to be modified, the developer can threaten or actually file chapter 11—something Mr. Trump has done repeatedly with his casinos. This tactic has been successful, benefiting Mr. Trump at the expense of others. But it would be enormously destructive if employed regarding American financial obligations.

Mr. Trump has already threatened to renegotiate America’s debt, and to print more money to pay it. Markets have so far not taken this seriously, but the idea of a U.S. default or dilution of obligations will be hard to shrug off with Mr. Trump sitting in the Oval Office.

***

It is an axiom that people continue to do whatever made them successful. Mr. Trump promises to approach the presidency the same way he does any business deal. But a profitable record of buying real estate and licensing his name does not mean that he will be an able leader of the free world.


Article Link to The Wall Street Journal:

Hillary Clinton Is About To Clean Donald Trump’s Clock

The very early scorecard looks awfully good for Team Blue—Clinton 358, Trump 180.


By Michael Tomasky
The Daily Beast
June 15, 2016

People in my line of work try to be careful about predictions, because, you know, the future comes eventually, and you might be wrong. When I do make predictions, I’m always careful to add the conditions—if this, assuming that.

So let’s not call this a prediction, but an observation: I hereby observe that it is entirely possible that this election could—could—be a blowout. A humiliation. A decapitation. A world-historical debacle for one party. And I bet you can guess which one.

This observation is occasioned by the appearance this week of the first full-blown general-election Electoral College forecast, from frontloading HQ.com. The folks at FHQ looked at polls and recent electoral history and voting trends to take a stab at what the electoral college might look like on the night of November 8 if things don’t change much from today. And if you’re a fan of the candidate who’s a person of color—orange—it isn’t pretty.

They have it at Clinton 358, Trump 180. And if anything, they’re being a little conservative.

How could the spread be that big, when in most polls she’s still only a few points ahead? Or sometimes more than a few—a Bloomberg poll that dropped Tuesday evening has Clinton up 12 points, 49-37. A staggering 63% of women say that they could never vote for him. And whatever the popular margin ends up at, the college is remorseless, my friend. You just have to win a state. You win Ohio by 1 point or 20, you get the 18 electoral votes. And Clinton is projected to win nearly every big state.

Let’s go back in time first for some context about how thorough a thumping this would be. In the 1980s, of course, Republicans thrashed Democrats, who were at sea. Ronald Reagan’s first election, for example, was 489-49. But then came the culture wars of the 1990s. We started dividing up into camps, and wins of that size weren’t possible anymore. But even so, Bill Clinton ran up huge Electoral College numbers, much bigger than his vote margins: In 1996, for example, he beat Bob Dole by eight points but clobbered him in the electoral vote by 379-159.

Then came the era of the red-blue divide. George W. Bush 271-with-an-asterisk, Al Gore 267. Bush 286, John Kerry 251. That’s how it looked things were going to stay for a while, but then the financial collapse happened, John McCain picked Sarah Palin to run with him, lots of people were feeling hopey-changey, and Barack Obama won big in 2008, 365-173. He retreated in 2012, but 332-206 was still a big win, and Mitt Romney showed the limits of the present-day Republican Party. He won only one of the seven main swing states (North Carolina) and flamed out in the states Republicans always talk big about, just like they do now (Pennsylvania and Michigan).

So here we sit. In my experience, it’s been thought by insiders that Obama’s 2008 numbers aren’t replicable, that the Democratic advantage probably rests naturally around the 70 to 100 vote range.

But this could be epic.

FHQ gives Clinton all of Obama’s 2012 states plus North Carolina (which he won in 2008) and… drum roll… Arizona. Now, Arizona last went Democratic in 1996, and that was the first time it had done so since 1948. But don’t laugh. Clinton leads, by a point, in RCP average. That’s just two polls, so who knows. But Latino turnout will presumably be through the roof.

Let’s have more fun. Here’s where I think it’s possible the FHQ might be selling Clinton a little short. Think Georgia sounds crazy? Yeah, it kinda does. But Trump is up there by only four. I spoke Tuesday with a Democratic operative in the state who was spinning me to some extent, sure, but who sounded pretty bullish as he described the state GOP’s internal divisions and the fact that about 40 percent of the electorate is going to be non-white. That 40 percent is mostly African American, and Clinton’s going to win 85 or 90 percent of that 40 percent, so do the math—she’d need less than 30 percent of the white vote to win the state. Still sound crazy?

Let’s climb farther out the limb. How about Utah? One earlier poll from Utah actually showed Clinton slightly ahead; another came out yesterday showing a tied race.

And if that’s not crazy enough for you, contemplate Kansas. I said Kansas. Kansas hasn’t gone Democratic since I think 1236 (okay, 1936). A poll last week showed Clinton ahead there. Not by one. By seven. And if these states fall, it will mean Trump has had a total meltdown, and who knows what else is falling.

Now I don’t truly expect Clinton to win Utah or Kansas. But the mere existence of these polls is a joyous thing. And unless either Trump or “events” (i.e. the FBI) really change the direction of this thing, they’re going to keep coming. Tied in Missouri! Trump up only five in South Carolina! Gary Johnson pulls ahead of Trump in New Mexico, Colorado!

Okay, it’s all great fun, but what does it matter? Lord knows, as Dubya showed us, you’re as much the president with his 271 electoral votes as you are with Reagan’s 489. But still, it does matter. Two points.

One: It’s psychologically devastating for a party to lose a state it’s supposed to win. If, say, Clinton actually carried Georgia, it would wound the GOP badly and lead to loads of stories about how even the solid South is now slipping out of the ossified party’s geriatric hands. It wouldn’t be the same as, for example, Obama’s winning Indiana in 2008, which everyone knew was a fluke. Clinton winning Georgia wouldn’t be a fluke.

Two: It’s what the man himself deserves. There’s one word Trump hates more than any other in the English language, and it’s not “Mexican” or “Muslim.” It’s “loser.” How sweet it would be for him to have to live out his remaining years as a history-making loser. To a “girl,” no less! FHQ, from your spreadsheets to God’s ears.


Article Link to The Daily Beast:

Wednesday, June 15, Morning Global Market Roundup: Asian Shares Choppy Before Fed, Brexit Vote; China Sees Off MSCI Disappointment

By Nichola Saminather and Hideyuki Sano
Reuters
June 15, 2016

Asian shares were volatile on Wednesday as a U.S. Federal Reserve policy decision later in the day and Brexit worries kept investors on edge, though China took in stride MSCI's decision not to include domestic Chinese equities in its indexes.

European shares were set for a positive open, with financial spreadbetters expecting Britain's FTSE 100 to open up 0.2 percent, Germany's DAX 0.5 percent and France's CAC 0.4 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan were unchanged at 0640 GMT, after earlier swinging between gains and losses. The index slid 3.8 percent over the previous four trading days.

Japan's Nikkei closed up 0.4 percent.

Mainland Chinese shares, among Asia's worst performers this year, reversed initial losses, as investors, who had expected Chinese A-shares to be included in the emerging market index, pondered the U.S. index provider's decision.

China's CSI 300 index and the Shanghai Composite advanced 1.2 percent and 1.4 percent respectively. Hong Kong's Hang Seng index, which opened lower, gained 0.2 percent.

"Maybe regional investors have taken the view that the Brexit-driven sell-off was a bit overdone," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "Too early to ring the all-clear bell though, as uncertainty regarding Brexit will linger for at least another week yet."

"On China, I suspect the bounce so far indicates the importance of the MSCI decision was overstated," he added.

MSCI said it decided not to add local Chinese shares to its key emerging market index as Beijing had more work to do in liberalising capital markets.

The Chinese central bank set the yuan midpoint rate at 6.6001, the lowest level against the dollar since January 2011. It eased to 6.6020 per dollar on the open, and was last trading higher at 6.5943.

The offshore yuan held steady at 6.6057 to the dollar after earlier falling to 6.6152, its weakest level since early February as worries about China's economy deepened after data showed growth in China's fixed-asset investment slowed to a 15-year low.

On Wall Street, S&P 500 Index hit a three-week low to end at 2,075.32 on Tuesday, down 0.18 percent, in its fourth consecutive drop, led by a 1.45 percent fall in financial shares.

The Federal Reserve concludes its two-day June meeting later in the day. Fed funds futures show investors see almost no chance of the Fed raising rates after the dismal U.S. payrolls report for May.

The 10-year U.S. debt yield fell to a four-month low of 1.567 percent on Tuesday and last stood at 1.6198 percent.

Concerns over a British referendum next week that could see it exit the European Union dwarfed any optimism from solid U.S. retail sales data published on Tuesday.

"The last thing investors needed was further Brexit angst but the continued flow of opinion polls pointing to a possible 'leave' outcome has caused a further reassessment of risk profiling with respect to the outcome of next week’s vote," Michael Hewson, chief market analyst at CMC Markets in London, wrote in a note.

"This risk is likely to be at the forefront of today’s Federal Open Market Committee rate meeting where U.S. officials look set to keep rates on hold."

Worries that Brexit will deal a significant blow to the integration of Europe have helped to push up borrowing costs of European countries with weak credit ratings.

The gap between 10-year Portuguese bond yields and German peers rose to 337 basis points, its widest since February. The spread for Italian and Spanish debt also rose to levels not seen since February.

Investors instead flocked to the safety of German bunds, whose yield fell below zero for the first time in history on Tuesday.

The British pound struggled near its two-month low against the dollar touched on Tuesday. It recovered to $1.4139, compared with Tuesday's low of $1.4091.

The safe-haven Japanese yen also held firm, staying near a six-week high against the dollar and a 3 1/2-year high against the euro.

The yen was changing hands at 106.25 to the dollar, having hit a six-week high of 105.63 on Tuesday. The euro stood at 118.92 yen after falling to a low of 118.48.

Investors also took shelter in gold, which held steady at $1,285.30, near the 5 1/2-week high of $1,289.80 seen overnight.

Brexit fears, combined with a surprise build in U.S. inventories, weighed on oil.

U.S. crude dropped 1.3 percent to $47.88 a barrel, after earlier touching a 3 1/2-week low of $47.55.

Brent also slid 1.3 percent, to $49.18. It earlier fell to a near-two-week low of $48.91.



Article Link to Reuters:

London Traders Brace For Biggest Night Since 'Black Wednesday'

By William James, Freya Berry, and Patrick Graham
Reuters
June 15, 2016

The world's biggest banks including Citi and Goldman Sachs will draft in senior traders to work through the night following Britain's referendum on EU membership, set to be among the most volatile 24 hours for markets in a quarter of a century.

A vote to leave the European Union on June 23 would spook investors by undermining post-World War Two attempts at European integration and placing a question mark over the future of the United Kingdom and its $2.9 trillion economy.

Citi, Deutsche Bank, JPMorgan, Goldman Sachs, HSBC, Barclays, Royal Bank of Scotland and Lloyds are among those banks planning to have senior staff and traders working or on call in London as results start to dribble in after polls close at 2100 GMT, according to the sources.

Jamie Dimon, chief executive officer of JPMorgan Chase & Co, told employees on a visit to Britain this month that if the vote was to leave the EU, the bank would have to have "teams of people thrown on what that means".

"We won't know what it means: there is a wide range of outcomes," Dimon, a supporter of Britain's membership who has warned of job cuts at JPMorgan in Britain if there is an Out vote, said in the broadcast speech.

A vote to leave could unleash turmoil on foreign exchange, equity and bond markets, spoiling bets across asset classes and potentially testing the infrastructure of Western markets such as computer systems, stock exchanges and clearing houses.

Federal Reserve Chair Janet Yellen has cautioned that a Brexit vote could shake financial markets and potentially push back the timing of the next rise in U.S. interest rates.

Bank of England Governor Mark Carney has said sterling could depreciate, "perhaps sharply" and some major banks have forecast an unprecedented fall to parity with the euro and as low as $1.20 in the days following any vote to leave the bloc.

The Bank of England will be staffed overnight, with senior policymakers on call if markets go into meltdown. The finance ministry would not comment on its staffing plans.

The official Vote Leave campaign argues there is no evidence that leaving the EU would weaken sterling long term, while Nigel Farage, leader of the UK Independence Party has said that even if the currency did fall, it would simply boost British exports.

Brexit Night?

Sterling - the world's fourth most traded currency - has moved sharply in recent weeks, often on the back of opinion polls.

Depending on the results from across the United Kingdom, the night of June 23 and early morning of June 24 could rank as one of the most volatile nights in the history of the London market.

"We've all seen U.S. elections, UK general elections, we've had the Scottish referendum, the collapse of Lehman and QE (Quantitative Easing) but this is by far and away the biggest risk event that has presented itself to the UK," said Chris Huddleston, head of money markets at specialist bank Investec.

London accounts for 41 percent of global turnover in the $5.3 trillion-a-day foreign exchange market, more than double the turnover in the United States and far more than the 3 percent of its closest EU competitors, France and Switzerland.

"All the traders are going to be in ... They don't like missing big moments, if there's going to be one, they want to be at their desk," said a senior source at a major bank based in the Canary Wharf financial district of London.

Some banks are planning the night down to the smallest detail to keep their traders on top form - laying on all night catering and booking nearby hotels to offer temporary respite.

"It is the biggest planned risk event that anyone can remember, so everyone is going to be involved. The question is just when you try and get some sleep," said one senior foreign exchange trader.

No exit polls are planned by British broadcasters so the first numbers from the counts will be turnout results from 382 different areas followed by totals for 'Remain' and 'Leave' in each area.

Sterling

Polls have given contradictory pictures of British public opinion, keeping markets guessing on the final outcome.

That has left sterling, currently priced at $1.41, far away from either of its likely resting places after the final result is known - seen by banks as around $1.50 in the event of a remain vote, or $1.30 or lower if Britain votes to leave.

That almost-certain rapid repricing could set the scene for one of the rockiest sessions since traders wrestled down the value of sterling on Black Wednesday, September 16, 1992, when Britain crashed out of the European Exchange Rate Mechanism.

"If it's Brexit, then we're looking at something that's at least on the scale of Black Wednesday," said Nick Parsons, global co-head of FX strategy at National Australia Bank and a veteran of the 1992 sterling crisis.

Prices for derivatives used to mitigate the risk of sharp swings in sterling point to a period of intense volatility.

Officials and bank managers planning for the event draw comparisons with the 40 percent surge in the Swiss franc in January 2015, which bankrupted dozens of small investment funds and cost banks including Citi hundreds of millions of dollars.

Traders and analysts told Reuters they would expect a Brexit vote to cause sterling to 'gap', or plummet lower - as orders to sell the currency met an absence of willing buyers, leaving a blank spot on the price charts snaking across traders' screens.

Gaps can inflict huge losses on banks and traders, forcing them to bail out of trades at prices far below the automatic sell orders, or 'stops' they normally use to limit losses.

Currency market participants have urged the Bank of England to call on U.S. Federal Reserve if the turbulence gets really bad. The BoE could buy sterling with dollars borrowed directly from the U.S. central bank under arrangements first used in response to the global financial crisis in 2008.

Carney has said the Bank would not stand in the way of any exchange rate adjustment but would take the necessary steps to ensure markets remained orderly. It has not commented on whether or how the bank might intervene.

"Money To Be Made"

A senior source at one London bank said his firm had been building big reserves of sterling to lend out to any clients who get caught short by swirling asset valuations that require them to post extra security deposits with their trading partners.

Foreign exchange brokers such as PhillipCapital UK and Saxo Bank have raised the security deposit they demand from clients in order to trade, a step designed to offset the increased risk that customers get caught out by sharp moves.

One asset manager who declined to be named said his firm had run a test to see if it could cope with a 30 percent fall in sterling. The fund had increased its cash holdings and would have traders working overnight, ready to sell other assets in case it needed to raise more cash in a hurry.

Volatile markets not only put traders under pressure: they test the limits of the technology that underpin the market.

A source at the London Stock Exchange said volatility could spike on June 24 and that it was putting in emergency capacity for transaction reporting to cope with any spike in trading volumes that might otherwise overwhelm its systems.

A spokesperson for LSE declined to comment.

Despite facing a battle against surges in trading volumes, volatile prices and, at times, the absence of enough buyers or sellers to meet demand, some traders are rubbing their hands at the prospect of a night and day of high drama.

"You look forward to days like this," said one bond trader at a major London bank. "There's money to be made and lost ... You've just got to hope you're on the right side of it, not the one being carried out the door."


Article Link to Reuters:

Obama’s Tantrum A Striking Display Of Failed Leadership

By Michael Goodwin
The New York Post
June 15, 2016

If it is true that the best defense is a good offense, President Obama should be celebrating in the end zone now. Obviously furious over criticism that his anti-terror policies are weak and that the Orlando slaughter proves it, he went on a televised tirade to let America know he’s mad as hell and not going to take it anymore.

He laid waste to a field of straw men, cable-TV pundits and the always-evil “partisan rhetoric,” by which he means anyone who disagrees with him. It was a striking display of personal anger and pent-up grievances — and a total failure of leadership during a national crisis.

It also, inadvertently, captured why Donald Trump was able to brawl his way to the GOP nomination. All his nice Republican rivals couldn’t stir voters because they never knew how to rattle Obama the way Trump is doing. The president didn’t mention Trump yesterday, but the whole speech was nothing but a desperate and incoherent reaction to Trumpism.

As such, it was a huge moment in the general-election campaign, even though it comes before the nominees are formally crowned. For one thing, it showed that Obama’s plan to campaign against Trump as if he is running for his own third term won’t be a cakewalk for the president or his legacy.

For another, the Obama-Trump war means Hillary Clinton could be overshadowed in what was supposed to be her campaign for vindication. Throw in her husband and the stage is going to get crowded with alpha males competing for attention.

Obama’s demeanor and tone were far from presidential — tantrums rarely are. Nor was he effective in rallying the nation to his cause. No surprise there. His cause is himself, always and only, and his greatly diminished historic presidency looks especially insignificant next to the bloodshed in Orlando. The iconic redeemer who promised hope and change never seemed so small and hopeless.

America saw Barack Obama at low tide yesterday, revealed as brimming with fury and bankrupt of ideas and even sympathy for the dead. The man who had an answer for everything and a solution to nothing is now also out of excuses.

Jimmy Carter’s infamous “malaise” speech in 1979 was inspirational by comparison. Carter focused on a “crisis of confidence in the future” while Obama scolded the country for losing confidence in him. Carter tried to lift up America, Obama came to put it down.

He meant his attacks to be especially vicious, but the spectacle was more sad than provocative. The president needs a rest from the job as much as we need a new president.

Forty-nine innocent people were gunned down in a gay nightclub by an Islamic terrorist, another 53 lie wounded, yet Obama feels only his own pain. Public confidence in his effort to combat terrorism on his own peculiar terms while soft-pedaling the links to Islam were among the casualties in the Pulse nightclub. The world knows he’s a failure and he can’t stand the embarrassment.

So he lashed out at Trump, who dares not only to point out the obvious, but to rip away the veil of euphemism as he lunges for the jugular. Think Low Energy Jeb, Lyin’ Ted, Little Marco and Crooked Hillary. They’re all nasty and personal, yet ruthlessly accurate.

Now it’s Obama’s turn in the crucible. Cosseted by his media water carriers and surrounded by sycophants, he isn’t accustomed to dealing with a heavyweight street fighter.

Oh, would he love to run against Mitt Romney again. That way, he would never have to take a real punch.

The ostensible reason for Obama’s speech was an update on Orlando and to assert success against the Islamic State. The real reason was to lecture America about how right he is about everything on terrorism, from how to fight it to how to talk about it, and how Trump is worse than wrong.

At one point, Obama denounced politicians who tweet and go on cable TV. My first reaction was to wonder whether he meant Trump or Clinton, or both. Of course, when Obama does those things, it’s cool.

Most telling, and least surprising, was that his defense of why he doesn’t say “radical Islam” revealed there’s no there there. The idea that linking terrorism to Islam smears the entire religion is preposterous, as is his claim that it “does the terrorists’ work for them.”

We are long past the point where Obama’s saying so makes it so, or even worth discussing. His fundamental problem is that he has nothing to show for his approach. If he had been right over the last eight years, we should be seeing big-time gains by now.

Instead, Islamic terrorism is growing around the world and the body count is mounting at home. More and more police officers are being pushed into counterterrorism duties as the nation’s fear meter surges. It is noteworthy, too, that the most successful attacks since 9/11, in San Bernardino and now in Orlando, happened in cities that were not viewed as prime targets. That means no place is safe.

Meanwhile, the moderate American Muslims Obama is always defending are almost all silent in the face of unspeakable horrors committed in the name of their religion.

The president has no substantive response to any of that, and not much desire to find one. His passion is reserved for criticism of Americans who don’t see things his way, as though he can fool them one more time.

At the height of his anger, he warned that even talking about terrorism with a focus on Islam “makes Muslim Americans feel their government is betraying them.”

In that case, they are joining a very large club, with two out of three Americans saying the country is on the wrong track. Millions of the disenchanted are turning to Trump because they concluded that not only had their government betrayed them, but that both political parties were in cahoots to keep them down.

Of course, because most of them are working-class people who play by the rules and don’t demand special favors or government handouts, they’re not important in Washington.

So they found an outsider they believe will speak for them and fight for them. That’s why every punch Trump threw at the GOP establishment during the primaries, and every punch he throws at Clinton and Obama now, brings him more support and more loyalty.

It’s also why Trump is going to keep swinging all the way to November. It’s not elegant or pretty — in fact, it’s often coarse and vulgar. But it’s clearly getting under the president’s very thin skin, and that’s why it won’t stop.

Obama better get used to it. Finally, he may have met his match.


Article Link to the New York Post:

The Myth Of Germany's EU Dominance

By Leonid Bershidsky
The Bloomberg View
June 15, 2016

The latest sign that the U.K.'s exit from the European Union is not impossible is an editorial in the British tabloid, The Sun, which refers to the EU as a "relentlessly expanding ­German-dominated federal state." It's as useless to fact-check pro-exit campaigners as it is Donald Trump -- their arguments are emotional, not factual -- but it's worth asking whether the bloc is really dominated by Germany in any malignant way.

In 2011, right-wing journalist Simon Heffer wrote a column in The Daily Mail warning of the rise of a "Fourth Reich" -- a new German attempt to conquer Europe in the aftermath of its debt crisis. Heffer interpreted Germany's calls on other European countries to balance their budgets and coordinate economic policies as a first step toward "a fiscal union that will leave Germany dictating the financial terms for the rest of Europe."

Nothing of the kind has come to pass five years later, so it's not clear what The Sun means by a federal state: No federation can exist without common taxes. Presumably, the reference is to the hated EU bureaucracy in Brussels. It's by no means German-dominated, though.

The highest-ranking German in the EU hierarchy is Martin Schulz, president of the European parliament. The EU legislature is weaker than any of its members' own national parliaments, unable even to initiate legislation. It's the faceless technocrats on the European Commission's staff that do that, and Germans only make up 10 percent of the commission's non-technical staff, while Germany's population makes up 16 percent of the European Union's.

There are about as many Italians and Belgians among the EU administrators. And it's not as though Germans are overrepresented in key directorates: Their highest concentration is in the commission's analytical center.

Germany is, indeed, a little overrepresented when it comes to contributing money to EU programs. Its 2015 economic output was about 20.7 percent of the entire EU's, but its share of the EU budget reached 21.4%. The U.K. had about 16 percent of the EU's gross domestic product, more than its 12.6 percent share of the budget. It has no reason to complain about German "dominance" in paying for EU programs.

Exit boosters' complaints, then, aren't about any quantifiable German overrepresentation in the Brussels "superstate," such as it is. They're about a perception that Germany is too powerful politically and economically, that it is the de facto center of EU decision-making. There is, indeed, something to that: German Chancellor Angela Merkel has pushed Europeans to impose sanctions on Russia over its treatment of Ukraine; she and her Finance Minister Wolfgang Schaeuble took the lead last year in deciding how the Greek crisis should be handled; she barely consulted anyone in the EU when she invited Syrian refugees to Germany.

If there's anyone recently who has determined European policy whenever a crisis arose, it's Merkel. Or Merkiavelli, as Italian journalists Vittorio Feltri and Gennaro Sangiuliano dubbed her in their book about "El Quarto Reich."

Germany, of course, is the bloc's biggest economic power and its most populous country, but if the EU were designed to give an institutional advantage to bigger countries, nobody would have joined it in the first place. Merkel's and Germany's outsized political power comes from a willingness to assume responsibility and shoulder financial burdens.

Greece wouldn't have stayed afloat financially without German money. As the biggest creditor, it naturally has more say than others in negotiating bailout conditions. German politicians felt a responsibility for keeping the euro area intact -- perhaps because Germany benefits economically from sharing a currency with weaker economies.

Germany is a safe haven for investors when other euro countries get in trouble. It's not Germany's fault, however, that it has a strong export-oriented economy -- it's something other EU countries are supposed to want, too, including the U.K., whose exports reached just one third of Germany's last year. This part of Germany's "dominance" can't be regulated or negotiated away -- it's genuine, organic economic power.

On refugees, too, Merkel took the lead because her government was willing to pick up the bill. Others weren't. Germany handled 441,800 asylum applications last year, compared with 38,370 for the U.K.

Both the Greek bailout and the refugee crisis have shown the limits of German dominance: The EU's biggest nation is allowed to lead -- meaning it has an influential voice in endless contentious negotiations -- only if it's willing to contribute more than others to common projects. Even then, others may violently disagree: Germany was effectively isolated on refugees and forced to do a humiliating deal with Turkey to curb the inflow. And on the relatively painless Russia sanctions -- a costlier proposition to Germany than to most other EU members because of bigger pre-sanctions trading volumes -- the EU consensus is now eroding.

Under Merkel, Germany hasn't so much led as tried to keep the EU and the euro area together -- with limited success, as it's turned out. Leading would have meant, as Heffer suggested, pushing for closer integration, a fiscal union, a semblance of the "federal state" -- but Merkel has exhibited no political will for such a push. The German government won't be the first to press for closer integration because that would awaken memories of Nazi propaganda minister Josef Goebbels' 1945 rant about Europe in the year 2000. Goebbels wrote:

"One can also predict with a high degree of certainty that Europe will be a united continent in the year 2000. Germany will not be occupied by its enemies in the year 2000. The German nation will be the intellectual leader of civilized humanity."

More than 70 years after Goebbels's death, "Fourth Reich" fears are the biggest obstacle to German leadership, let alone dominance, in the European project. No German leader wants to be seen pushing for more power and compared to the Nazis. Merkel would gladly give up the appearance of leadership if somebody else were as interested in keeping the union together, and paying for it. France, however, is happy to play second fiddle, if only because it's less economically stable. And other countries' alliances -- such as the eastern European anti-immigrant coalition -- are purely situational, not attempts to take on a leading role.

In 2016, German dominance in the EU is a myth. The only advantage Germany has over its neighbors is a stronger economy. The EU is not turning into a federal state anytime soon, and opponents of closer integration should thank Germany's old inferiority complex for it.


Article Link to The Bloomberg View:

Israel's Prophet Of Freedom Gives In To Middle East Reality

By Eli Lake
The Bloomberg View
June 15, 2016

An irony about Natan Sharansky, the legendary Soviet refusenik turned Israeli politician, is that his treatise on "free" and "fear" societies had more influence on American conservatives than those in his adopted homeland. President George W. Bush has said the 2004 book Sharansky co-authored, "The Case for Democracy," inspired his second inaugural address. Yet in Israel, the former dissident's ideas are politely ignored.

Prime Minister Benjamin Netanyahu proves this point. A book about his foreign policy could be called "The Case for Dictatorship." He has expanded Israel's quiet security partnership with the Saudi royal family and is warming ties with Russian president Vladimir Putin, whom he has met with four times in the last year. These days Netanyahu is said to talk more frequently with Egyptian President Abdel Fattah El-Sisi -- the dictator who unseated an Islamist who won Egypt's first free election-- than he does with President Barack Obama.

From a purely diplomatic perspective, this would count as a triumph of realpolitik. And one would expect someone like Sharansky to scoff at such accomplishments as fool's gold. After all, he correctly predicted the cascade of revolutions that came to the Middle East in 2011.

Yet when I met with Sharansky this week at his office at the Jewish Agency in Jerusalem, he was more understanding of Netanyahu's foreign policy than I thought he would be. "Israel is in a special position," he told me. "It is not like France or the United States, Israel is in a permanent struggle for its survival. The cooperation with Sisi in the Sinai is not a matter of ideology, it is a question of physical survival."

Of the Arab Spring, Sharansky said that the Arab world is still building the civil societies that make democracy possible, even if some countries have experienced revolution. On Saudi Arabia in particular, Sharansky's view was that it's unreasonable for Israel to be more principled in its opposition to the Kingdom than the U.S. "If Israel for the first time has any chance to find some understanding with Saudi Arabia, then I don't oppose it," he said.

All of this sounds like a far cry from what Sharansky wrote in the book that so inspired Bush. Back then, he and co-author Ron Dermer, who is now Israel's ambassador to the U.S. and a close adviser to the Netanyahu, wrote, "When freedom's skeptics argue today that freedom cannot be 'imposed' from the outside, or that the free world has no role to play in spreading democracy around the world, I cannot but be amazed."

Sharansky and Dermer did not make the case explicitly for regime change, though they defended the invasion of Iraq. Rather, they argued that the free world can coerce dictators to open their societies by tying aid, recognition and trade to how these rulers treat their citizens.

Sharansky's contempt for fear-based societies comes from experience. From 1977 to 1986, he endured Soviet prisons and work camps for the alleged crime of providing to the U.S. government the names of refuseniks, or Jews in the former Soviet Union who were not allowed to emigrate to Israel. Sharansky also translated into English the work of nuclear physicist and dissident Andrei Sakharov, his personal hero whose portrait hangs on a wall in his office.

Today, Sharansky has mixed feelings about Russia. On the one hand he said the hope that a democratic Russia would emerge out of the ashes of the Soviet Union has evaporated. "I have been in touch with the new democratic dissidents and they have nothing good to say about Russia," he said.

But Sharansky praised President Vladimir Putin for his treatment of Russian Jews. "Putin told me in 2000 he believes it was a big mistake of previous Russian leaders to not allow Jewish communities to thrive; since then he has disappointed us on many things, but he has stuck to this," Sharansky said. "This should not be taken for granted that the leader of Russia is supportive of the Jewish community and the connection between the Jews of Russia and the state of Israel."

At the end of the day, Sharansky said, Israel is too small and threatened to lead the fight against dictatorships alone. This should be a job for the American president. "I cannot blame my government for the fact that the free world is playing less of a role in leading in the Middle East," he said. "So we have to make the best of it."

And while Sharansky said he'd like to see Obama and his successor emphasize human rights, he also conceded that in the midst of a global war against radical Islam, Western leaders must fight along with the allies they have. Twice in our conversation, the former dissident brought up the democratic nations' alliance with Stalin against Hitler.

But Sharansky also warned that Israeli and American leaders make a mistake if they believe their relationships with dictators will last. "When we have al-Qaeda in the Sinai and he is fighting with us, of course Sisi is our ally at this moment," he said. "At the same time, as someone who puts in jail every dissident from the Muslim brothers to the most liberal activists, I have no doubt he will fall in the years to come if he doesn't change."

Sharansky knows of what he speaks. He's a former political prisoner who has had the pleasure of seeing the regime that jailed him collapse.


Article Link to The Bloomberg View:

No One’s Looking For ‘Magic Words’

Commentary 
June 15, 2016

After the president’s statement on Sunday, which focused on the anti-gay “hate crime” aspect of the attack on Pulse and disregarded the specific fact that the shooter pledged his fealty to ISIS before and during his monstrous spree, the counterattack on those of us appalled by the astounding gap in the president’s words was perfectly captured by Jeffrey Goldberg’s tweet: “If Obama invokes the magical incantation ‘radical Islamic terrorism,’ will the problem go away? If yes, then he should do it right away.”

And though Hillary Clinton herself mentioned “radical Islamism” as a cause of the attack on Monday, she oddly echoed Goldberg on Tuesday by saying Donald Trump seemed to think they were “magic words.” So did the president, who said, “There’s no magic to the phrase ‘radical Islam.’ It’s a talking point.”

This is all an effort at misdirection. The problem with Obama’s conduct isn’t that naming radical Islam would solve the problem. Of course, it wouldn’t solve the problem. The issue is that the refusal to name radical Islam is part of the problem. Obama’s refusal speaks to the mindset at work in the White House about the threat we face.

Ironically, we’ve learned a great deal about this mindset from none other than Jeffrey Goldberg, whose stunning piece “The Obama Doctrine” essentially made the case that the president is almost clinically allergic to viewing the threats posed by these incidents as major national-security issues:

He has never believed that terrorism poses a threat to America commensurate with the fear it generates. Even during the period in 2014 when isis was executing its American captives in Syria, his emotions were in check. Valerie Jarrett, Obama’s closest adviser, told him people were worried that the group would soon take its beheading campaign to the U.S. “They’re not coming here to chop our heads off,” he reassured her. Obama frequently reminds his staff that terrorism takes far fewer lives in America than handguns, car accidents, and falls in bathtubs do. Several years ago, he expressed to me his admiration for Israelis’ “resilience” in the face of constant terrorism, and it is clear that he would like to see resilience replace panic in American society. Nevertheless, his advisers are fighting a constant rearguard action to keep Obama from placing terrorism in what he considers its “proper” perspective, out of concern that he will seem insensitive to the fears of the American people.

Here the blindness is staggering. Israeli resilience doesn’t involve ignoring terrorist acts. If Israel’s leaders went around saying “they’re not coming here to chop our heads off,” they would not be its leaders any longer. Israeli resilience in the face of constant terror involves moving against terrorists constantly in a multiplicity of ways, including the use of the military. Israel has fought four wars in the past 15 years to deal with “terrorism,” and quite successfully, I might add.

The problem with Obama’s attitude is that they are coming here to chop our heads off, only they’re not doing it one by one with kidnapped Americans. They’re shooting up their fellow workers in San Bernardino and a bar in Orlando. They may or may not be under foreign direction, but they are self-proclaimed jihadists. Obama won’t say it because saying it would oblige a kind of action he does not wish to take. That refusal is crystallized in his unwillingness to name the enemy. It’s proof of a deep ideological choice.

Will it be Hillary Clinton’s choice? Or will she break out of the Obama worldview and express one of her own?


Article Link to Commentary:

Why Palestinians Reject Peace

By Jonathan S. Tobin
Commentary
June 15, 2016

As the New York Times’ Jerusalem bureau chief from 1979 to 1994, David Shipler was was the focus of a great deal of justified criticism about the paper’s bias against Israel. He wrote a 1987 book titled Arab and Jew, which was the recipient both of a Pulitzer and full-throated and passionate criticism for its pure moral equivalence. But an interview with Shipler in the Times of Israel reveals a change in his thinking that tells us something about the way the conflict between Israel and the Palestinians has changed since his reporting days.

The conventional wisdom about Israeli society in most of the mainstream international media holds that the Jewish population has become more intractable and opposed to peace. Shipler provides a far more nuanced view, derived from conversations with young people conducted for a new edition of his book. They display a diversity of thought that is surprising to him. Whereas as late as 1993, the time of the signing of the Oslo Accords, almost all Israelis saw themselves as the sole victims of the long war for their independence, now they provide a variety of answers—with many recognizing the Palestinian narrative of suffering or seeing “everybody” in the region as victims of the conflict.

The contrast with Palestinians attitudes is what’s so striking. At the time of the publication of his book, Palestinians merely wanted to “turn back the clock to 1967” with an Israeli withdrawal from the territories. Today, Shipler says, things are very different:

"But in speaking to people now, I understood that the time frame has become 1948 for the Palestinians. … Now Israelis are seen only as colonialists. There is no recognition of Jewish history in the Land of Israel, of the Holocaust, and the real reasons for the creation of history."

Just as important is that he says that, whereas there was a wide gap between what Palestinian leaders and their people were saying in the 1980s, now there is no daylight between the sort of incitement that is spewed by Hamas and Fatah and the conversations he had with ordinary Arabs.

When Shipler was actively reporting on the conflict, he was an exponent of the idea that peace could only come when both sides would be able to see the justice in the claims of the other side. By that definition, it’s clear that one side has moved toward peace, the other has not.

Shipler’s assertion that most Israelis no longer view themselves as the sole victims in this conflict is unquestionable. It is also unquestionable that Palestinian attitudes have gone in the other direction. Indeed, Shipler’s impressions reinforce research conducted by Daniel Polisar demonstrating that support for terror and opposition to peace was mainstream Palestinian opinion and not merely the views of a small group of violent extremists.

After two decades of concessions and withdrawals on Israel’s part, Palestinians now routinely speak of all of Israel—including liberal, cosmopolitan Tel Aviv, where terrorists struck last week—as “occupied” territory. So, despite the emphasis on settlements and Netanyahu’s supposedly hardline personality, Israel’s willingness to do what Shipler and peace activists advised had the opposite effect on the Palestinians than they thought.

By granting legitimacy to Palestinian concerns, Israelis haven’t inspired reciprocity but have encouraged their foes to double down on their narrative in which the Jews are interlopers without rights or history. It has convinced them that the Israelis are thieves who must be forced to disgorge all of their stolen goods (i.e. all of Israel) rather than fellow humans with whom they must share land if there is to be peace. Shipler seems to have caught onto the basic conundrum of the peace process that has eluded many of his successors at the Times and elsewhere in the media.


Article Link to Commentary:

Why Many Iranians Are Feeling The Bern

Many Iranians and Iranian-Americans are still pulling for US presidential candidate Bernie Sanders, whose "real" image has "managed to change the general narrative about the United States."


Al-Monitor
June 15, 2016

Foad Shams is an Iranian journalist who supports US presidential candidate Bernie Sanders and has written about him in the Iranian press. When asked what is it about the Democratic hopeful that interests him, Shams told Al-Monitor, “The image of an alternative America is the most attractive feature of the Sanders campaign. Sanders is an alternative voice. In fact, he has managed to change the general narrative about the United States. We Iranians have two different — but equally wrong — images in our heads regarding the United States.” Shams explained, “On the one hand, we have the image that is propagated by Iranian state television and other official media outlets inside Iran that depicts the United States as the absolute evil. The other image is the one propagated by Hollywood and some foreign media outlets that present America as heaven on earth and a place where everyone is happy.” He added, “However, the image that Sanders presents of the United States — its people and their demands — is real.”

Al-Monitor spoke about the upcoming US presidential election with an adviser to President Hassan Rouhani. He said on condition of anonymity, “[Hillary] Clinton is the candidate who has a real chance of getting elected. Sanders is unlikely to succeed. However, we have an old saying in Iran which goes, ‘If it does turn into doogh [an Iranian yogurt drink], it will be great!’” referring to an impossible scenario that can only be realized in a dream.

The Iranian presidential adviser added, “We are closely monitoring the presidential election in the United States. We have spent many sessions at research centers discussing the election and its possible outcomes with the experts. At this point, the administration is not planning to make any comments about any of the candidates, considering that we are still in the primaries. However, we have made our own predictions.” In regard to Sanders, the senior Iranian official told Al-Monitor that while Sanders is “of course a long shot … we had predicted that if he ever makes it to the White House, he could perhaps solve many of the problems between Iran and the United States the same way [President Barack] Obama has managed to solve some of the United States’ problems with Cuba, and that he could help tear down the wall of distrust in Iran-US relations that the supreme leader had talked about. His presidency could have been a historic opportunity for peace in the world.”

With regard to the Republican front-runner, the adviser said, “Compared to Clinton, [Donald] Trump is less problematic for Iran since he is for the most part an isolationist. Of course, Clinton has softened her tone on Iran during the past few weeks, something that we attribute to the news we have recently received regarding a few pragmatic advisers joining her campaign. Nonetheless, we believe that the nuclear deal might not have gone through if she had remained as secretary of state.”

Al-Monitor also spoke with Ali Abdi, an Iranian journalist residing in the United States who has volunteered for the Sanders campaign. He said, “Sanders’ and Trump’s campaigns have had the highest number of volunteers, mobilization and citizen engagement. As part of Sanders’ campaign, some of the most important things we've done was calling voters, going to the voters' doors and being active on social media networks.”

Abdi added, “Sanders is the best option for the Iranian-American community and the immigrant population in general. Sanders has a much better position toward Iran. He is less of a warmonger. He has been fighting for freedom and justice for the past 40 years. A person with such a vision can capture the interest of the immigrant population. It is this vision that engages Iranians’ interest and draws them toward Sanders.”

Among the Persian-language materials of the Sanders campaign is a poster with the slogan “A Future to Believe in” in Persian. Prior to the June 7 California Democratic primary, 3,000 Iranians residing in California were invited to a Facebook event encouraging them to vote for Sanders.

Karim Yavari is a leftist student activist in Tehran who supports Sanders. Al-Monitor asked him whether he backs Sanders because he sees similarities between the Democratic hopeful and the head of Iran’s Green Movement, Mir Hossein Mousavi, who has been under house arrest since 2011, and whether the Sanders campaign is similar to the Green Movement.

“Sanders’ campaign managed to attract millions of youths in a period of only a few months. He shares many similarities with Mousavi, and therefore we are interested in his campaign and his plans. He talks about people’s social and economic demands in one of the most advanced societies in the world. His campaign showed the democratic, fresh and happy side of socialism as opposed to the angry, undemocratic and brutal images that have been associated with socialism in the past."

Al-Monitor asked Shams whether Sanders' supporters in Iran are realistic about what they can achieve.

“Of course I know that as an Iranian journalist living in Iran, my support for Bernie Sanders has no bearing on the outcome of the US election. We do not have any illusions in this regard. However, introducing Bernie Sanders to Iranian readers is certainly a positive thing to do. We cannot remain indifferent to a campaign that has sparked the interest of millions of Americans. There are Iranians who have US citizenship and thus the right to vote in the US election. Although their number is not large enough to have any meaningful impact on the election, they can play a more active role in Sanders’ campaign,” he said.

Shams also brought up the American Studies Program of Tehran University, saying, “At Tehran University, the United States’ political developments are being academically studied. In addition, there are research centers and institutes that are monitoring the election process. A while back, at a convention in Iran called 'Branding the Elections,' Donald Trump’s campaign model was studied.”


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