Friday, July 1, 2016

Friday, July 1, Night Wall Street Roundup: Wall St. Ends Higher For Fourth Straight Day

By Lewis Krauskopf
July 1, 2016

The major U.S. stock indexes rose modestly on Friday, for a fourth straight day of gains, helped by encouraging U.S. manufacturing data.

The S&P 500 tallied its best week since November, staging a strong rebound from its worst two-day decline in 10 months sparked by Britain's shock vote last week to leave the European Union. The indexes have erased almost all their losses stemming from the "Brexit" vote.

"Clearly, people have assessed that either, one, it's not a big deal, or, two, it’s not going to happen at all, and they’re positioning according to those views," said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, South Carolina.

The Dow Jones industrial average .DJI rose 19.38 points, or 0.11 percent, to 17,949.37, the S&P 500 .SPX gained 4.09 points, or 0.19 percent, to 2,102.95 and the Nasdaq Composite.IXIC added 19.90 points, or 0.41 percent, to 4,862.57.

Seven of the 10 major S&P sectors ended higher, with the consumer discretionary group's .SPLRCD 0.9-percent rise leading the gainers. Financials .SPSY were the worst performing group, slipping 0.5 percent.

"It’s encouraging that the market has held on to the post-Brexit recovery that we’ve had," said Peter Jankovskis, co-­chief investment officer at OakBrook Investments in Lisle, Illinois.

With Wall Street's post-Brexit rebound, the S&P 500 is up nearly 3 percent for the year and ended the week less than 30 points from its record closing high. Still, some investors believe political and economic uncertainty stemming from Britain's vote could throw off markets in the weeks to come.

Data on Friday showed U.S. factory activity expanded at a healthy pace in June as new orders, output and exports rose, providing another sign that U.S. manufacturing was regaining its footing after weakness early this year.

"It's been a wild ride, but positive economic momentum in the United States has and continues to be a ray of sunshine," said Daniel Kern, chief investment strategist of TFC Financial Management in Boston.

Government bond yields around the world hit their lowest levels in years, driven by the prospect of further cuts in interest rates and more central bank bond buying to support weak economies.

Ford (F.N) shares rose 1.2 percent and GM (GM.N) gained 2.1 percent. Robust demand for pickups and SUVs pushed up U.S. auto sales in June but the growth fell short of estimates.

Harley-Davidson's (HOG.N) shares jumped 19.8 percent after unsubstantiated market chatter that the motorcycle company might be a takeover target. The stock was the top percentage gainer on the S&P.

Micron Technology (MU.O) fell 9.2 percent after the chipmaker posted disappointing sales and said it would cut jobs.

About 6.7 billion shares changed hands in U.S. exchanges, below the roughly 7.7 billion average over the past 20 sessions, ahead of the July Fourth holiday in the United States.

Advancing issues outnumbered declining ones on the NYSE by 1,918 to 1,088, for a 1.76-to-1 ratio on the upside; on the Nasdaq, 1,767 issues rose and 1,060 fell for a 1.67-to-1 ratio favoring advancers.

The S&P 500 posted 89 new 52-week highs and no new lows; the Nasdaq recorded 98 new highs and 11 new lows.

Article Link to Reuters:

Wall St. Ends Higher For Fourth Straight Day

Oil Falls As Oversupply Concerns Return To Center Stage

By Karolin Schaps
July 1, 2016

Oil prices eased on Friday as focus returned to oversupply as production from Nigeria and Canada revived and OPEC production reaching a record high in June.

Despite Friday's losses, oil prices were on track for the first weekly gain in three weeks after a bullish run this week on strong buying following Britain's vote in favor of leaving the European Union.

Global benchmark Brent crude futures were down 30 cents at $49.41 a barrel at 0940 GMT.

U.S. West Texas Intermediate (WTI) crude was trading at $48.08, down 25 cents day on day.

"Oil has settled down after the initial short covering squeeze earlier in the week," said Ole Hansen, commodity strategist at Saxo Bank in Copenhagen.

"A rising contango indicates that the market is getting ready to absorb returning supply from Nigeria and Canada."

Militant attacks in Nigeria had brought production to the lowest in 30 years but no new attacks have been carried out since June 16, allowing production to slowly ramp up.

In Canada, oil sands output was also gradually increasing after wildfires had curtailed production. As of Wednesday, around 400,000 barrels per day of production were still affected in the Fort McMurray area.

Adding to oversupply concerns, a Reuters survey showed OPEC production rose to a record high in June. Stronger supply from major Middle East producers, except Iraq, underlined their focus on maintaining market share.

Despite growing signs of lingering oversupply, U.S. Energy Secretary Ernest Moniz said on Friday he expected oil supply and demand to balance by 2017.

Article Link to Reuters:

Bond Yields Sink As Central Banks Head For Easier Policy

By Patrick Graham
July 1, 2016

The prospect of further cuts in interest rates and bond-buying to support a fractured global economy kept stock markets on the up in Europe and Asia on Friday, and drove U.S. and European government bond yields to their lowest in years.

Signs that the world's big central banks will go even easier on monetary conditions, extending an era of ultra-low interest rates, have been at the heart of a recovery for stock markets from the chaos caused by Britain's vote to leave the European Union last week.

But the big moves on Friday were in the bond yields that represent the cost of borrowing for governments and a benchmark for how much banks, companies and individuals pay for credit.

The 10-year U.S. Treasury yield US10YT=RR fell to its lowest in four years, taking it within striking distance of record lows. French and Dutch equivalents hit all-time lows and those for others among Europe's struggling southern states were around their lowest in a year.

The fall in peripheral yields came largely thanks to a Bloomberg report that the European Central Bank was considering looser rules for bond-buying that might include moving away from a link between purchases and the size of a country's economy. The report also helped European shares edge higher for a fourth day.

"The speculation that the ECB might adjust its QE program is something that is being received excitedly in bond markets," said Christian Lenk, a strategist at DZ Bank.

"It would mean that issuers who have large outstanding debt like Italy would stand to benefit."

Sources close to the ECB told Reuters that the ECB was not currently considering buying government debt out of proportion to euro zone countries' shareholding in the bank and that the hurdle for abandoning this capital key was high.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS cranked out its third gain in four days, up around half a percent. Japan's Nikkei .N225 closed 0.7 percent higher.

"If these reports are confirmed, this removes the risk of a post-referendum spike in (euro zone) peripheral bond spreads – and, hence, the most immediate way in which the UK referendum result could lead to near-term financial stress," Deutsche Bank equity analysts said in a morning note.

Bank of England Governor Mark Carney's signal on Thursday that more moves to support growth are likely over the summer has also helped crystallise expectations for broadly easier policy.

In the United States, that should take the form of a retreat from any prospect of higher rates this year, and possibly next. Europe and Japan are expected to have to do more but their hands are tied by the extent of moves already made.

There is also the growing question of whether any of this is likely to work after several years in which it has failed to reboot the world's biggest economies. The Brexit vote is just the latest blow to any recovery.

Shares in China, another big source of concern, wobbled after official surveys on Friday showed growth in the manufacturing sector stalled, although the main indices are up 2.5-3.0 percent this week. .CSI300 .SSEC

"The week ahead will no doubt see bouts of Brexit-related nervousness but it may continue to settle down in the absence of any new developments in Europe," said Shane Oliver, head of investment strategy at AMP Capital in Sydney.

In currency markets, sterling and the euro remain under pressure as investors head for the traditional security of the yen, the dollar and the Swiss franc. Both the pound and the euro were down just 0.1 percent on Friday. EUR= GBP=

Article Link To Reuters:

A Brexit Warning From Switzerland: Beware Votes On Free Movement

By Tom Miles
July 1, 2016

A shock referendum result demanding controls on European Union migration has created a serious headache for politicians, who must do the people's bidding without jeopardizing access to the single market.

Not Britain: Switzerland.

Home to more than a million EU citizens, Switzerland voted on Feb 9, 2014 to impose quotas on migration, potentially ripping up a bilateral deal with the EU on free movement of people. It could trigger a "guillotine clause" cancelling six other bilateral agreements, including on air transport, road, rail and agriculture.

The government sees few ways out and, in what could be a warning to Britain, may have no choice but to ask voters to reconsider. Though even that is difficult.

Switzerland is one of the models some supporters of Britain leaving the European Union have pointed to of a European economy that thrives outside of the EU. But in 1999, to negotiate access to the European single market, it had to agree to bilateral deals that allow free movement of workers from EU countries.

European leaders say they will demand similar "free movement" conditions if Britain is to retain easy access to the EU market, a position that British officials acknowledge makes it difficult to deliver the limits on migration that voters want while also keeping the free trade businesses need.

As in Britain, voters defied the advice of their government to deliver a narrow victory to a referendum campaign led by right-wing populists.

The Swiss referendum was backed in rural areas with few migrants, and carried with 50.3 percent of the vote, upsetting businesses and creating an unexpected dilemma for the government. Switzerland now has until February to implement the binding result.

"Right now we are in a situation that is both delicate and paradoxical," Swiss negotiator Jacques de Watteville told an audience of Swiss bankers earlier this month, before the Brexit vote.

Foreigners make up a quarter of the population of the neutral Alpine country, which despite being outside the EU is inside its Schengen zone of border-free travel. Three hundred thousand workers commute into Switzerland across borders from France, Germany and Italy every day.

New Referendum?

Swiss politicians now appear to face a choice of passing legislation that the EU will reject, abrogating their agreements with the EU unilaterally, or hoping that the 2014 vote will get overturned by a new referendum.

"I don't see any possibility for the EU to give anything to Switzerland," said René Schwok, a professor at the University of Geneva and author of books on Swiss-EU relations.

The referendum has already resulted in Switzerland being dumped from Europe's "Erasmus" university exchange program. Once the government passes legislation to implement it, the guillotine clause would end a range of other bilateral agreements, having far wider impact.

A campaign to overturn the 2014 referendum is already underway, but it would require a majority of Switzerland's 26 cantons to agree, as well as the population, which means it is unlikely to succeed, Schwok said.

Some in Britain are closely watching the Swiss case for the lessons they can learn. Remain campaigners say it shows that the victorious Leave side may not be able to deliver its promises.

"It's not at all clear that Switzerland is going to achieve the objectives that it has set out," said British Foreign Secretary Philip Hammond, who campaigned to remain in the EU against a Leave campaign also led by figures from his ruling Conservative Party.

"There are some of my colleagues in the Conservative party at the moment saying things like 'It'll be straightforward to agree access to the single market and there'll be no need to have freedom of movement,'" he told BBC radio this week.

"I'm afraid they are simply betraying a lack of understanding of the political realities in the European Union. It will be much more complicated than that."

De Watteville, the Swiss diplomat charged with finding a solution to the EU problem, said whatever solution is found, the Swiss will probably have to return to the ballot box.

"In the end, it’s going to be up to the Swiss people to decide, because in any scenario, it’s very likely that a referendum will be announced by one side or the other,” he said.

Article Link to Reuters:

 A Brexit Warning From Switzerland: Beware Votes On Free Movement

How Protectionist Rhetoric Endangers America

Ignore the politicians—free trade is in the U.S. national interest.

By Milton Ezrati
The National Interest
July 1, 2016

THE NEED to fight protectionism may well stand as one of America’s clearest and most vital national interests. From the voting booth to the country’s foreign-policy establishment, action is needed to defend free trade and shift away from past, unnecessarily partisan trade policies. Protectionism has destroyed prosperity time and again. The most dramatic illustration emerges from the history of the Smoot-Hawley tariffs of the 1930s. Sen. Reed Smoot and Rep. Willis Hawley, both Republicans, wanted to protect American jobs and industry from the ill effects of the 1929 stock market crash by building a tariff wall around the economy. Their legislation raised duties on some twenty thousand products by an average of 20 percent. Its immediate effect was devastating. The tariffs cut already hard-pressed workers and consumers off from lower-priced imports that had held down living costs and had helped sustain living standards in an already pressured situation. By denying American producers lower-priced imported inputs, the tariffs forced them to cut back even more than they already had, including their payrolls. Then, when the country’s trading partners retaliated with tariffs of their own, America’s global sales collapsed.

There can be little doubt that these effects deepened the Great Depression. World trade dropped 67 percent in the two years following the bill’s passage. Imports fell 40 percent, while exports fell some 75 percent. There is even evidence that the tariffs actually caused the Great Depression. Before they took effect in June 1930, business activity had actually begun to recover from the effects of the 1929 crash. Unemployment, which had hit 9 percent of the workforce early in 1930, had declined by June to 6.3 percent. After Smoot-Hawley passed into law on June 17, unemployment began to climb again, eventually verging on 25 percent. Certainly, the stock market anticipated the damage. It fell 10 percent the day President Herbert Hoover signed the bill into law.

For all this evidence, protectionism seems to retain a perennial appeal. AFL-CIO President George Meany in the 1960s and 1970s was famous for describing free trade as “a joke and a myth.” He consistently demanded “tighter restrictions on imports.” Each of his successors has done the same in one way or another. Presidents John F. Kennedy, Jimmy Carter and George H. W. Bush felt obliged, from time to time, to play to protectionist sentiment. JFK, though he imposed no restraints on trade, voiced concern several times over a “de-industrializing” economy. Countless books and magazine articles in almost every time period have made protectionist pleas. President Bush in the 1980s, no doubt in response to Japan’s great export successes, complained often of “unfair trade practices.” Sen. Lloyd Bentsen, a Texas Democrat, worried that because of trade “American workers [would] end up like the people of the Biblical village who were condemned to be hewers of wood and drawers of water.” Financier Felix Rohatyn also worried about “de-industrialization” and fretted that trade would make the United States “a nation of short-order cooks and saleswomen.”

This century has heard still more strident protectionist rhetoric, while Washington has shown a greater inclination to act on it. Early in his administration, President George W. Bush briefly imposed tariffs on imported steel. President Barack Obama imposed several select tariffs, most dramatically on tires from China. Proposals for more general import duties emerged in 2005 when Sens. Chuck Schumer and Lindsey Graham proposed 27.5 percent tariffs on all Chinese goods, a bipartisan bill that received the backing of sixty-seven senators. Though this bill never became law, both Republican and Democratic Congresses have since advanced over fifty pieces of anti-trade legislation.

Matters have become still more intense in this election campaign. According to Donald Trump, “If we want jobs in America, we need to enact my five-part tax policy . . . a 15 percent tax for outsourcing jobs and a 20 percent tax for importing goods.” (That happens to be the same rate as Smoot-Hawley.) Trump would push the duty up to 45 percent on Chinese manufacturers and penalize firms constructing factories abroad, saying in response to Ford’s plans to build an assembly plant in Mexico that a President Trump would make the firm pay a 35 percent duty on every car coming across the southern border. And Trump is far from alone. Other Republicans—Mike Huckabee, Rick Santorum and Ted Cruz—have all sounded protectionist notes, especially in the way they have lambasted the recently negotiated Trans-Pacific Partnership (TPP). It is hardly surprising or troubling that politicians would object to the deal. It has many weaknesses. What is dangerous is the tone they have used.

From the other side of the political spectrum, Bernie Sanders brags that he has voted against every major trade agreement since he entered Congress. When an interviewer asked if he would always resist trade promotion, he responded in the affirmative. Sanders signed the Currency Reform for Fair Trade Act, which would blithely impose tariffs on any country suspected of currency manipulation. Meanwhile, Hillary Clinton has held to the anti-trade position she first adopted during the 2008 Democratic primaries, when she and then candidate Barack Obama competed for who could shed more suspicion on international trade. When then Senator Obama said that he would “use the hammer of a potential opt-out as leverage” to push Canada and Mexico for concessions in the North American Free Trade Agreement (NAFTA), Clinton criticized him for not going far enough, calling for a “time-out” on trade deals. Their language was so harsh that Canada and Mexico formally rebuked the candidates and the United States.

Such persistence has roots, no doubt, in the highly asymmetrical effects of trade. The pains of trade fall acutely on easily identifiable groups in society. Pressured firms send operations overseas and in some cases close down their domestic operations altogether. Either way, working men and women lose their jobs. These people, in what only can be described as desperate straits, understandably club together to pressure the authorities to stop the pain that is trade. The media naturally relishes the opportunity to report on their suffering, stoking considerable sympathy in the general public and among politicians like Senator Smoot and Representative Hawley.

In contrast, trade’s benefits go less noticed, largely because they are less acute and more dispersed, certainly much less headline-grabbing than are the pains. Still, they are significant. Every worker and consumer enjoys the improved living standards afforded by flows of lower-priced imports. In the last twenty years, for instance, price comparisons suggest that free trade has held the rise in the cost of living down by half. According to the Peterson Institute for International Economics, the effect cumulatively has given the equivalent of as much as $3,300 per year additional income to every man, woman and child in the country. Such benefits for any one person pale next to another’s job loss, but since the gain occurs across a much larger number of people (all, in fact), the economy as a whole benefits.

Much evidence suggests that trade has brought meaningful employment gains, too. Access to cheaper imported inputs has impelled some domestic firms to expand more aggressively than they otherwise might. It is noteworthy in this regard that, despite foreign competition, the open economy since 1980 has created in excess of thirty million new jobs. Since that average growth rate of 1.5 percent a year is little different then in earlier years when trade was of less concern, it would seem that the benefits of trade to some employers has, at the very least, offset the job losses others suffer from foreign competition. Other indicators suggest that trade may have actually added to payrolls on balance. After all, up until the 2008–9 great recession, a larger proportion of America was employed, 64 percent of the population, than ever before. To be sure, that proportion has dropped in recent years, a reflection of, among other things, the lingering effects of that recession. But this recent decline can hardly be laid at the feet of open trade, while the earlier rise may well reflect it, at least in part.

These asymmetrical effects are clearly evident in the political maneuverings around trade questions. When, for example, the AFL-CIO recently advocated trade restraint, the Carpenters and Teamsters pointedly dissented. The Teamsters, of course, benefit from the shipping involved in trade, moving imports from the ports to the places of sale. Both unions also surely recognized the benefits to their members of lower living costs and were unwilling to give them up, especially since at the same time they could see that their members were less vulnerable to trade’s ill effects. Even more dramatic were the lines drawn when President Bush in 2002 decided to place tariffs on imported steel. Unsurprisingly, domestic steel producers and the steel unions were delighted. But steel users were far from pleased. Makers of machinery, appliances, autos, other steel-using products and their associated unions could clearly see the ill effects of more expensive steel on their businesses and on their jobs. They pressured Bush to rescind the tariff, which he did in less than a year, long before the World Trade Organization (WTO) could even hear the complaints of foreign steel producers.

WASHINGTON HAD the easiest time finessing protectionist sentiment in the 1940s and 1950s, right after the Smoot-Hawley experience had taught its painful lesson. In 1940, the Roosevelt administration even tied free trade to the Lend-Lease Agreement to help Britain against the Nazis. It stipulated that any recipient of the aid must cooperate with the United States in constructing a liberal, global trade system after the war. The Atlantic Charter of 1941 delivered the same message. The founding documents of the United Nations made the need for free trade explicit, establishing the precursor to today’s WTO. After the war, Washington pushed hard to set up the General Agreement on Tariffs and Trade (GATT) specifically to reduce trade barriers of all kinds across the globe. In 1947, when France’s Prime Minister RenĂ© Pleven resisted tariff cuts, President Harry Truman bluntly told him, “High Tariffs have not worked for the U.S. and they will not for France.” During this time, Washington resisted the urge to retaliate against the tariffs of other nations. Instead it used its diplomatic and economic leverage to reduce trade restrictions everywhere, using a series of negotiations, which largely succeeded.

This powerful protrade drive began to weaken in the 1980s. Protectionist rhetoric intensified. Moreover, it was then that Washington began to give up on efforts to reduce barriers globally. Policy instead began to pursue exclusive bilateral or multilateral trade deals. The first was NAFTA between the United States, Canada and Mexico. U.S. trade efforts have proceeded along these lines since, through the recently negotiated TPP. While such preferential trade agreements (PTAs to trade economists) are far from protectionist, they nonetheless fall far short of promoting a liberal, global trade system. Only their signatories gain the advantages of free trade. Otherwise PTAs pointedly exclude the rest of the world. Now, many running for office and their constituents would exclude the entire world.

If Washington is to promote the nation’s prosperity, a vital national interest if ever there was one, it must combat these trends. It must first reacquaint itself with the benefits of trade and the shortfalls of protectionism, as it learned the hard way in the 1930s. It must argue rigorously against those who call for protection, in political debate and as informed citizens at the ballot box. Meanwhile, politicians must cease the ever more common practice of courting special interests in contradiction to the needs of the commonweal. In this effort, policymakers must turn away from their practices of the last quarter century, cease the pursuit of PTAs and return to earlier efforts that sought to open trade globally.

On this last point, though the United States will effectively return to older policy principles, it will have to use very different tactics than it once did. The old way counted on a hegemonic dominance that the country no longer has. Then, the United States produced more than a third of the entire world’s output, averaged a significant trade surplus of exports over imports, its capital markets dominated more than half the world’s trading in financial assets and the country was the world’s greatest creditor. It could bully other nations into cooperating with its free-trade agenda and did, a point to which Truman’s blunt advice to Prime Minister Pleven speaks. Since then, the world has grown up around this country. Today, the United States produces less than a quarter of the world’s GDP, the economy grows at a halting rate, it runs a deficit of exports over imports, Europe’s capital markets can claim parity with America’s and the country borrows considerably more abroad than it lends. Bullying and direct confrontations to alter the illiberal policies of others will no longer work, at least not as they once did.

Efforts to promote freer trade globally do not, however, need to wait for the country to strengthen its economic and financial situation. Even relatively diminished, as it is, the United States retains enough economic and diplomatic muscle to alter global directions on trade. To do so, it will have to make efforts to marshal allies to the cause of a liberal agenda and work more within international institutions then it has in decades. These bodies—the WTO, the International Monetary Fund (IMF) and the like—have rules and means to discipline nations that pursue unfair trade policies. Washington can rely more on these, something it has done insufficiently in recent decades. By going a step further and rallying other nations within these institutions, it can gain in two additional critical ways. First, by arguing for a group instead of itself, the approach will deflect suspicions that the country is only seeking partisan advantage. Second, its allies, even if their narrow interests lie elsewhere, will gather more diplomatic and economic power to the free-trade agenda than this country can manage alone, making the effort more likely to change illiberal policies where they occur.

Take, for the sake of argument, the efforts this country has made during the last fifteen-some years to move China toward a more open, less manipulative approach to trade. Alone, Washington has had only limited success, even when Senators Schumer and Graham went so far as to threaten hefty tariffs in 2005. For all this relative failure, Washington’s insistence on acting on its own has painted the country in the eyes of the world as a partisan scrapper. Better to take advantage of the fact that other nations and groups of nations also object to China’s illiberal trade policies—including the European Union, India, Indonesia and Japan. Leading such a group of dissatisfied countries at the G-20, for instance, where China feels it has a special place, might meet with more success. Nor does it matter that these allies might harbor their own illiberal trade agendas. In such an alliance, they would nonetheless serve interests of the liberal, global trade order. The United States would look more like a principled leader than a partisan, while Beijing, with its overweening sense of self, might have an easier time accommodating global pressure than it would bowing to the demands of a Washington that it has chronically characterized as a bully.

Such a shift in policy, strategy and tactics will hardly be easy. It will face stiff headwinds in today’s domestic political climate, especially after years of unchallenged protectionist rhetoric and the official pursuit of partisan advantage in PTAs. It would also demand less grandstanding and more serous diplomatic effort on trade matters than this country has made in a long time, neither of which seems to fit with the day’s domestic political practice. But since a liberal, global trade order remains a clear and vital national interest, the country, for its own sake, has little option but to counter protectionist impulses, suppress the short-term satisfaction of securing partisan advantage in preferential trade deals and cease using foreign bodies for domestic parochial political advantage. Otherwise it might learn the lessons of Smoot-Hawley as it did the first time—the hard way.

Article Link To The National Interest:

Hillary Clinton’s Health Plan Would Kill Joe Biden’s Cancer ‘Moonshot’

By Robert Goldberg
The New York Post
June 30, 2016

Vice President Joe Biden launched the “Cancer Moonshot” — his mission to cure cancer — this week, just as Hillary Clinton was shooting it down, along with the hopes of millions of cancer patients.

Biden’s plan is to streamline decisions made by the FDA, NIH and other government agencies to both speed up drug approvals and give patients the freedom to obtain the combination of medicines that works best for them. He wants to increase tax incentives and patent protection for private companies to partner with and invest in government cancer research.

Clinton wants a vast new bureaucracy that would delay and limit such choices.

Clinton is planning to use a series of executive actions to control the price of cancer drugs, how they are used and who will get them. There is nothing Congress or the courts can do, short of replacing ObamaCare, to change that.

She strongly supports a Centers for Medicare and Medicaid Services experiment to randomly pay some doctors a lower fee when they use more expensive drugs for cancer and other complex illnesses to see if it saves money. Medicare has no provision to ensure that this arbitrary cost-cutting doesn’t cost lives. And if someone with cancer wants to opt out, tough luck. Medicare patients are forced to be lab rats in this experiment.

As former CMS official Scott Gottlieb observes, another part of the project allows Medicare to decide what drugs are “therapeutically similar” to each other and set a benchmark, or “reference price,” that it would pay for them all. But this flies in the face of Biden’s effort to use knowledge that cancer not only varies from person to person, but from tumor to tumor, to ensure patients get the best medicine possible.

Proponents of these policies claim that other health systems, such as those in Europe and Canada, reduce cancer-drug prices without hurting patients. In fact, cancer-drug spending is actually higher in Europe, but because access to new medicines is limited, mortality rates are higher, too. So is spending on cancer care.
Further, Clinton proposes letting outside, unelected entities decide which cancer drugs should be covered and who should get them.

In particular, Medicare and the Clinton campaign are relying on the Institute for Clinical and Economic Review and the Center for Health Policy and Outcomes to decide for the rest of us the price and use of drugs based on an arbitrary dollar value of how much an additional year of life is worth.

This methodology would also be used by the Independent Payment Advisory Board, which was established by ObamaCare to force Medicare spending to conform to levels predetermined by the bureaucrats. The board will limit both the uses and prices of drugs to achieve those cuts.

Hence Clinton is outsourcing life-and-death decisions about cancer care to a panel of unaccountable bureaucrats and political cronies using one-size-fits-all criteria.

She would empower a similar panel to decide which drugs are truly “innovative” and set prices accordingly. And what’s a Clinton presidency without crony capitalism? The panel would also include insurers and companies that manage prescription-drug coverage. Since both interests get a percentage of lower drug prices in the form of cash rebates (almost $125 billion a year!) there’s a self-serving incentive to ratchet them down as far as possible.

And just to ensure that drug companies comply, Clinton supports a proposal that would deem prices 20 percent higher than those set by this federal advisory committee to be unreasonable and to harm public health and to punish drug companies accordingly.

Finally, Clinton also plans to force drug companies to spend a minimum percentage of their revenue in R&D or face fines and possible federal prosecution.

Incredibly, Clinton promises that each of these steps — from restricting access to new cancer drugs to price controls, to redistributing income from biotech firms to insurers and government coffers — will increase investment in truly innovative drugs. As one Clinton adviser said: “If [a company] doesn’t invest in research and development, it won’t be a drug company anymore.”

Perhaps Clinton should ask the thousands of people participating in Biden’s summit what they think of her proposal.

Better yet, let her publicly explain in the next summit how she would vindicate hope for a cure, not crush it.

Article Link to The New York Post:

The Imploding Cabal To Criminalize Climate Dissent

By Adam Brodsky
The New York Post
July 1, 2016

New York Attorney General Eric Schneiderman and his fellow greenies are getting a lesson about the dangers of believing their own propaganda.

These know-it-alls claim there’s a “consensus” on climate change and what to do about it. And they believe that consensus is so broad that even prosecuting dissent would be a slam-dunk. Claude Walker’s monumental crash-and-burn this week blew up that theory. Schneiderman and his ideological pals, from Al Gore to Hillary Clinton, would be wise to take note.

Walker is the attorney general for the US Virgin Islands who launched a ludicrous racketeering probe of ExxonMobil and sent sweeping subpoenas to the company and the Competitive Enterprise Institute. Ostensibly, his suspicion, like that of a similar probe by Schneiderman, was that Exxon fraudulently downplayed climate-change’s dangers to the public and its investors.

But Walker sought Exxon’s correspondence with some 90 groups suspected of the “crime” of questioning climate-change orthodoxy. The obvious point was to make these groups think twice about the findings their research produces and their positions on the issue. It was also meant to scare off donors, like Exxon.

Yet Wednesday, Walker withdrew his Exxon subpoena. He’d already taken back his order to CEI.

So his probe, it seems, is kaput.

Walker & Co. miscalculated. Schneiderman launched his investigation in November. In March, he held a presser with attorneys general from nearly 20 other states, promising a cooperative effort against Exxon. Al Gore even appeared.

Yet only a few AGs actually launched probes and issued subpoenas. Massachusetts AG Maura Healey this week delayed her own subpoena of Exxon. Schneiderman is quickly becoming odd man out.

No surprise: The climate-change “consensus” isn’t as widespread as greenies claim.

Indeed, the claim itself is just another attempt to silence debate. The science is settled, they say. Anyone who disagrees must be a kook, a “denier.”

Schneiderman’s move and the March presser may have won plaudits from the radicals, who hope to end use of all fossil fuel. But it also drew outrage from First Amendment champions and those who saw the probes as an abuse of office.

Lawmakers like House Science Committee Chairman Lamar Smith (R-Tex.) questioned the actions of the AGs. Exxon counter-sued.

And this month, attorneys general from 13 other states bashed their counterparts’ gambit as a “grave mistake.” They made clear the hypocrisy and political motives of attacking Exxon: Schneiderman & Co. claim the firm may have fraudulently minimized climate-change risks. But what about, say, renewable-energy companies that might be exaggerating them?

If temperatures rise slower than expected (or not at all), they write, “many ‘clean energy’ companies may become less valuable and some may be altogether worthless.” Why aren’t Schneiderman & Co., who claim to be looking out for the public and investors, subpoenaing them?

If Exxon was wrong to fund researchers who “understate” climate risks, the attorneys asked, what about all the money going to those overstating it? “Does anyone doubt that ‘clean energy’ companies have funded nonprofits who exaggerated the risk?”

The Schneiderman gang targeted Exxon and fossil-fuel companies for a reason, and it’s not to protect investors. They see political hay here. They truly (or cynically) believe slamming these companies — and anyone who fails to toe the radicals’ line — will draw overwhelming support. (And campaign cash.)

Sure, states like New York (one of just a few places in America where fracking is banned) may applaud Schneiderman. But Instapundit’s Glenn Reynolds, a law professor, also notes some ironic potential costs to the attack: Under federal law, he writes, it’s a felony “for two or more persons to agree together to injure, threaten, or intimidate a person . . . in the free exercise or enjoyment of any right or privilege secured to him/her by the Constitution or the laws of the United States.”

The right to free speech is secured by the Constitution, even when it comes to climate change. Conspiring to deprive non-believers of that right certainly sounds like it meets the law’s definition.

Inspired by the 1990s victory against tobacco companies, the Schneiderman cabal thought it could score big-time by threatening a RICO case against fossil-fuel companies. How fitting if the same threat brings them to heel.

Article Link to The New York Post:

Blame The Brexit Liars, Not The Duped Voters

By Tim Farron
The Bloomberg View
July 1, 2016

Among the letters I have received from new members -- 10,000 have joined the Liberal Democrats in the wake of the referendum -- was one saying this:

"I can't believe just how stupid I’ve been, sorry doesn't really cover the hurt my part has caused more than 16 million residents of our great country. Please save the union between the United Kingdom and Europe."

Buyers' remorse after the vote to leave the European Union seems widespread. But I don’t blame those who were duped. I blame those who knowingly made undeliverable promises. Voters had barely returned home from the polls before "Leave" leaders announced there would not be an extra 350 million pounds ($473 million) a week to spend on the National Health Service, despite the claims plastered on the side of their battle bus. Promises to cut immigration have been similarly abandoned.

But the really big whoppers have yet to be revealed to voters. Boris Johnson promised that Brexit would create 300,000 jobs. But other than Whitehall scurrying to recruit an army of bureaucrats to haggle over emergency trade deals in the coming years, the only talk in the labor market is of job losses.

And then we have the really big lie: that somehow Britain would be able to reduce free movement from Europe but remain in the Single Market. Perhaps whoever inherits the title of Prime Minister -- or should that be poisoned chalice? -- will pull off a spectacular negotiating coup, but I’m not holding my breath. More ambitiously still, the "Leave" campaign suggested we will be able to strike a deal which restricts EU immigration to Britain but leaves Britons free to live and work on the Continent. Again, don't hold your breath.

It is now clear there is absolutely no Brexit plan, either from those who have schemed all of their political lives for this moment, or from George Osborne, who claims it is not his responsibility, even though he remains Chancellor of the Exchequer (for now at least). The Conservatives have put a bomb under the economy, destroying their reputation for economic competence. That is their problem; but since David Cameron announced his resignation, there has been a massive vacuum at the heart of the British state. Both the Conservatives and the Labour Party risk descending into civil war as they fight their respective leadership campaigns.

This puts responsibility on the Liberal Democrats to fight for our European future. There is particular frustration among young people, 73 percent of whom voted Remain, and we must give voice to them. There was already scandalous generational unfairness in Britain. All young people are asking for is economic competence, a government prepared to tackle international challenges with international solutions, and some of the opportunities that were enjoyed by the baby-boom generation; those are reasonable demands.

I was really struck by the mood of optimism, openness and determination at a massive rally I addressed this week in Trafalgar Square. Many of those attending were young and concerned for their future -- chanting "EU, EU, EU" with passion and fervor. Truly, we live in extraordinary times.

These are the people we politicians must fight for. Meanwhile, I have been in Brussels to urge understanding on European leaders furious with the market turmoil unleashed in their economies by Brexit. And I'm urging the government to pump funds into the British Business Bank to ensure liquidity.

Britain's overriding priority now must be to remain in the Single Market, to head off a major recession which will destroy jobs and livelihoods. No matter what the outcome of the bloody leadership battles in the Conservative and Labour parties, the Liberal Democrats will be the only party fighting the next election fully committed to maintain the best possible relations with Europe. Bring it on.

Article Link to The Bloomberg View:

Paul Ryan Among The Ruins

By Francis Wilkinson
The Bloomberg View
July 1, 2016

Paul Ryan is a sunny politician in a party devoted to spreading gloom. But as Republicans slouch toward Cleveland, even he must be having dark moments.

As the highest-ranking official in his party, he will oversee the Republican National Convention that is poised to nominate Donald Trump -- a role he could have avoided, and almost did. His predecessor as speaker, John Boehner, helped deliver a huge Republican majority in the House. Yet the party's conference was so ideologically unhinged and practically dysfunctional that it rewarded Boehner for this historic achievement by forcing him into retirement.

After a protracted show of ambivalence about replacing Boehner, Ryan opted to succeed him last October. "We will not duck the tough issues," Ryan said after being sworn in. "We will take them head on." The new motto, Ryan said, would be: "Opportunity for all."

It quickly became clear that Ryan couldn't even get a break for himself. His hopes for an actual budget and a return to "regular order" went nowhere. Under unified Republican leadership, Congress can't even organize itself to fund emergency measures to contain the Zika virus, whose first wave of victims will surely include Republican families in Republican districts across the Republican South. Last week's unruly Democratic sit-in to demand a vote on gun regulation only heightened the sense of chaos.

"Ryan's instinct to refuse the speakership opportunity was correct," said congressional scholar Thomas Mann, via e-mail. "It has been an unmitigated disaster. He has been unable to run the House as he promised (entirely predictable), he has been personally diminished in his relations with Trump (more to follow in Cleveland) and the job will become even worse if Hillary wins and Republicans retain a majority in the House."

There may be a less dire scenario, but not one Republicans will relish. Steve Bell, a former Republican Senate aide who is senior director of economic policy at the Bipartisan Policy Center, thinks that a strong Clinton victory could rescue Ryan, enabling him to emulate Democratic House Speaker Tip O'Neill's response to Ronald Reagan's 1980 victory, which gave Republicans control of the Senate and showed House Democrats that their policies were out of favor and their majority was shaky.

"Until the GOP really loses enough House seats to face a possible Democratic takeover, the far right will be the tail that wags the dog," Bell said, via e-mail. But if Democrats win the White House and the Senate, "the Speaker will have the ability to deal with the President and the Senate and get parts of his agenda done. O’Neill handled the situation masterfully and Ryan could do the same thing. That would elevate him not only as a Speaker, but as the national policy thinker that he is."

Ryan is unlikely to emerge from such a scenario a conservative hero. Because vulnerable House Republicans tend to be more moderate, a shrunken GOP majority will almost certainly include a higher concentration of anti-government zealots who categorically oppose compromise. Yet if Ryan opts to continue the obstructionism favored by the zealots, he risks further damage to a Republican brand that can ill afford it.

Republican strategist Liam Donovan said Ryan fully understood his challenge from the start. But Trump threw a new wrench into the works.

"It's easily the worst gig in Washington and I think he knew that going in," Donovan said, via e-mail. "So does the decision look worse in hindsight as a political calculation or a stepping stone for future ambitions? Certainly, if that was the primary goal. We were still clinging to delusions that Trumpmania might fade away back in October. But having nominated Trump rather than a Ryan-type, it's that much more important to have a competent national figure as Speaker."

Trump, who trafficks in racial demagogy and paranoid politics that Ryan has valiantly opposed, represents a challenge to everything Ryan says he holds dear: the positive, can-do, conservative "opportunity society" ethic that Ryan inherited from Republican Representative Jack Kemp.

"Trump by personality is the antithesis of Jack Kemp and a person who has not a settled thought on any topic," said former Republican Congressman Bob Inglis of South Carolina, a Kemp acolyte and Ryan cheerleader, in a telephone interview.

But Trump is the Republican standard-bearer because Republican voters thrilled to his ugly personal attacks and fact-free nostalgia -- not to Ryan's vision of a nation of strivers happily pulling themselves up, using strands of a shredded social safety net for bootstraps.

Ryan has been "unable to elevate himself above the greater ideological collapse of the Republican Party," said Democratic strategist Simon Rosenberg, in a telephone interview.

Some Democrats, presuming a Trump loss, suggest Ryan will be buried in the rubble. Trump's long, dark shadow would not just disappear or be easily incorporated into a positive vision. His legion of GOP followers can't be wished away.

Still, Ryan is arguably the most skillful and appealing politician in his party. He's also young enough to adapt outdated and unpopular ideas -- which is to say, his own -- into a program better suited to his time and place. If Ryan can't do it, who will?

Article Link to The Bloomberg View:

Being Uncharitable

July 1, 2016

One of the truly brilliant tactical innovations of Donald Trump’s presidential campaign is how it can cloud the minds of men. Gaffes and outrageous statements are quickly forgotten by the press and the public because there is always something else to comment about the next day. The same goes for his pledges about his charitable giving and donations to his own campaign. Trump has a habit of saying something and, by the time someone in the press checks up on it and finds out the truth, the campaign and the public have moved on to other things, burying the correction.

But now that we’re heading into the general election with even more intense scrutiny for the candidates, the bills are coming due on a lot of the things Trump has said. That means the truth about how his campaign is being funded and whether he has given as much to charity as he has claimed is emerging—and the picture it paints isn’t very flattering.

As NBC reported, Trump won’t release the proof that he has, as he claimed last week, forgiven over $45 million in loans to his campaign. Trump has never tired of boasting about how he is self-funding his quest for the presidency. But a week later, the Federal Elections Commission has said they haven’t received the minimal paperwork that would confirm the loans won’t be repaid. When pressed about it, Trump’s spokesperson Hope Hicks said the paperwork would be filed at the next FEC monthly report.

Assuming that it is just a matter of waiting a few weeks, does this matter? Actually, it does. As long as those loans are not forgiven, Trump can take any new donations and use them to pay himself back. Coming at a time when he is making his first serious efforts to raise money from the public, that option becomes a possibility. Moreover, this must be seen in the context of the fact that Trump has already directed over $6 million of his campaign funds and more than one-sixth of everything he spent in May to his own businesses. Unlike every other presidential candidate in memory, Trump has also never ceased his involvement in his far-flung business empire as we saw last week when he took time off from campaigning to promote his failing golf courses in Scotland. So these aren’t idle speculations, and, until we get proof that he isn’t self-dealing here, skepticism is in order.

Which brings us to another topic where Trump is more or less daring us to question his truthfulness.

Over the years, Trump has also boasted of his philanthropy, pledging to give the proceeds from various enterprises to good causes. The question arose after Trump promised to give more than $1 million to veterans’ causes back during the winter but never made good on the pledge until the Washington Post pressed him on it, for which Trump banned them from traveling with his campaign. But, unfortunately for Trump, that ludicrous act of vengeance hasn’t deterred the paper from inquiring more deeply into his other charitable giving.

As the Post reported:

"In the 15 years prior to the veterans donation, Trump promised to donate earnings from a wide variety of his moneymaking enterprises: “The Apprentice.” Trump Vodka. Trump University. A book. Another book. If he had honored all those pledges, Trump’s gifts to charity would have topped $8.5 million.

But in the 15 years prior to the veterans’ gift, public records show that Trump donated about $2.8 million through a foundation set up to give his money away—less than a third of the pledged amount— and nothing since 2009. Records show Trump has given nothing to his foundation since 2008."

Trump’s staff says that he has given lots to various causes off the books of his foundation. But the Post has been trying to dig up records since the 1980s and contacted 188 non-profits to which Trump has been connected. What they found is that he has a disconcerting habit of making promises without following up: “The search turned up just one donation in that period—a 2009 gift of between $5,000 and $9,999 to the Police Athletic League of New York City.”

Trump talks a big game about charity and has given some impressive donations. But what he gives is almost always far less than he has said he would and does not appear commensurate with the immense wealth that he is always bragging about.

Of course, we wouldn’t have to rely on the Washington Post’s Investigative work to discover the facts about his donations if Trump released his taxes. But, despite repeated promises to do so, that hasn’t happened and, by this point, no one expects it.

That makes him the first presidential candidate in recent history to refuse to disclose, and it’s hard to blame anyone for thinking the reason is that he is either not as wealthy as he has claimed or that he’s given far less to charity than even the skeptics have supposed.

Will any of this make a difference to the voters?

Probably not to Trump’s fan base. But in a general election, in which he needs to gain the support of independents and Republicans who are disgusted by his comments and antics as well as his left-wing protectionist economics and isolationist foreign policy, his credibility is key. It’s also important when you consider that the main problem with his opponent Hillary Clinton is her well-earned reputation for being untrustworthy. If Trump has lied about campaign loans and his charitable donations, that advantage is lost. So long as Trump’s stories keep shifting and the truth remains obscured, Clinton’s lies won’t matter.

Article Link to Commentary:

'Just Trust Us,' Say The Clintons. Nope.

Maybe the Clintons really feel that their purity is beyond reproach, their motives beyond question. Maybe that’s why they end up in so many circumstances that seem questionable to the rest of us.

By Jeff Greenfield
The Daily Beast
July 1, 2016

I’m willing to bet one of Bill Clinton’s speaking fees that he is absolutely sure there was nothing untoward about his half-hour meeting on a private jet with Attorney General Loretta Lynch. C’mon, she’s an old colleague! We talked about grandchildren! We talked about golf! We talked about travel! I’d bet almost as much—say, Chelsea’s speaking fee—that this is more or less what transpired.

And that’s the problem; not just with this incident, but with a decades-long pattern of behavior by both Bill and Hillary Clinton that goes a long way toward explaining why a hefty majority of Americans do not regard the likely next President of the United States as honest or trustworthy. It really does appear that both Clintons regard themselves as so removed from the grubby motives that tempt lesser mortals that they are to be judged by a wholly different set of standards.

Consider how just about anyone else might have thought about this latest dust-up. Hey, Loretta Lynch will be here in a few minutes. I’d love to catch up with her. But hold on—she’s the chief law enforcement officer of the United States, whose Justice Department is charged with deciding whether or not to charge my wife with a crime for her use of emails. I can’t sit down with her for a private chat; that’d be like the spouse of a litigant meeting with the judge in the case! I’ll catch up with her another time.

The most likely explanation for Bill Clinton’s behavior is his conviction that no one but a right-wing extremist could possibly see anything as quicky about this chat because…he’s Bill Clinton.

Does this sound flip? I think it helps explain how both he and Hillary Clinton have justified decades of questionable words and deeds. Just to offer a few:

Hillary Clinton explained the couple’s rush to cash in on their post White House years by explaining that they were “dead broke” when Bill’s presidency ended. And in one sense, this was true; they owed millions of dollars in legal fees. They also both had multi-million dollar book deals lined up, not to mention millions more in speaking fees and, in Bill’s case, consulting gigs. So they were “dead broke” like a jobless couple holding the winning Powerball ticket.

She brushed aside concerns about the $675.000 she collected for three Goldman Sachs speeches by saying, “that’s what they offered” (well, yes, because that’s what her representatives asked for). When she told Anderson Cooper that “I wasn’t committed to running [for President] …I didn’t know whether I would or not,” this was probably true—in the sense that she might be hit by a truck, or undergo a spiritual transformation that left her uninterested in temporal power. If Secretary Clinton didn’t know she’d be running for President when she gave those speeches, she was the last person who didn’t. As for the suspicion that she might be offering words of reassurance to the one percenters,—a suspicion that could be allayed if she simply released the transcripts—that would imply there’s reason for suspicion and in Secretary Clinton’s mind, that’s unthinkable.

Or take a more troublesome example. On two occasions last fall, Clinton said: “every survivor of sexual assault deserves to be heard, believed, and supported.” It was only a matter of time before she was asked—by a member of a town hall audience— “You say that all rape victims should be believed. But would you say that about Juanita Broaddrick, Kathleen Willey, and/or Paula Jones? Should we believe them as well?”

“Well,” Clinton replied, “I would say that everybody should be believed at first, until they are disbelieved based on evidence.”

It would be one thing to argue that Bill Clinton is a champion of women’s rights; that he named women to all kinds of important positions; that the people accusing him of such behavior are hard-right partisans out to defeat all the good things he stands for. But to leave herself open to an obvious rejoinder with so sweeping a statement as “every survivor…deserves to be believed” seems rooted in something else: a conviction that the normal approach to judging credibility should not apply to either Clinton.

You can find evidence for this almost wherever you look: during the Lewinsky affair, Bill Clinton said at one point: “I feel like somebody who is surrounded by an oppressive force that is creating a lie about me and I can’t get the truth out. I feel like the character in the novel ‘Darkness at Noon.’ “

He’s talking about Rubashov—the loyal Bolshevik purged by the Stalinists in Arthur Koestler’s classic novel. That comparison would have been apt—if Monica Lewinsky had been making up a phony story designed to damage his Presidency (That’s the story, by the way, the White House was preparing to tell until that blue dress turned up). How is it possible for Bill Clinton to have thought himself such a victim unless he saw himself as a force for good, fighting against forces of evil? (In his memoir, “My Life”, Clinton says at one point that the forces trying to remove him from office were the enemies of civil rights and other worthy causes).

Or consider Hillary Clinton’s “evolution” in recent years on some key political issues. She was once a stalwart advocate for traditional marriage, saying this on the Senate floor: “I believe marriage is not just a bond but a sacred bond between a man and a woman. [It is a] fundamental bedrock principle that it exists between a man and a woman, going back into the mists of history as one of the founding, foundational institutions of history and humanity and civilization.”

And when Fresh Air’s Terry Gross asked her to explain her evolution, she grew testy at the very suggestion that her evolution might be explained by political calculation.

“I think you’re trying to say I used to be opposed and now I’m in favor and I did it for political reasons, and that’s just flat wrong,” she said.

At the risk of a bit of amateur psychology I think she believed that; just as she may well believe that about why she voted for the Iraq War, or why she first supported, and now opposes, Obama’s signature trade deal. The possibility that she might have changed out of political calculation—something common to, say 90 per cent of office-seekers—seems to her to be an outrageous assault on her character.

Faced with an opponent like Donald Trump—actually, there is no other opponent “like” Donald Trump—a majority of voters may well decide that this pattern of behavior pales beside the potential disaster of a Trump Presidency.

But when Hillary Clinton says about her “trust” problem, “I personally know I have work to do on this front,” she might begin by convincing her spouse—and herself—to stop behaving as if they are above answering the questions their conduct has raised over and over again. 

Article Link To The Daily Beast:

Friday, July 1, Morning Global Market Roundup: Asia Stocks Up As Risk Appetite Recovers, Pound Under Fresh Pressure

By Nichola Saminather and Shinichi Saoshiro
July 1, 2016

Asian stocks rose on Friday and European markets were expected to follow as investors continued to recover from last week's Brexit shock, but the pound came under fresh pressure after the Bank of England's governor hinted at an interest rate cut ahead.

Financial spreadbetters expected Britain's FTSE 100 .FTSE to open 0.4 percent higher, Germany's DAX .GDAXI to start the day up 0.5 percent and France's CAC 40 .FCHI to rise 0.6 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5 percent.

The index has recovered nearly all the losses suffered last Friday when global markets plunged in response to Britain's decision to leave the European Union.

It has gained 3.6 percent since Friday's close on a combination of short-covering and relief that Brexit has not sparked contagion in the global financial system like that which engulfed markets during the 2008/09 crisis.

Japan's Nikkei .N225 closed 0.7 percent higher after the yen surrendered more of the territory gained during the flight to safety seen earlier in the week. It gained 4.9 percent for the week, its biggest weekly increase since mid-April.

South Korea's KOSPI .KS11 ended the day up 0.9 percent, rising 3.2 percent for the week.

"Share markets rebounded as worries about Brexit leading to global financial and economic chaos faded somewhat," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

"The week ahead will no doubt see bouts of Brexit-related nervousness but it may continue to settle down in the absence of any new developments in Europe."

Chinese shares wobbled after official surveys on Friday showed growth in the manufacturing sector stalled, while activity in the services sector accelerated. The CSI 300 index .CSI300 and the Shanghai Composite .SSEC were on track for weekly gains of 2.6 percent and 2.9 percent, respectively.

The Dow Jones industrial average .DJI climbed 1.3 percent on Thursday, posting its third straight day of gains and erasing a bulk of its losses after Brexit.

Some of the overnight gains on Wall Street were attributed to hopes for more monetary easing after BOE Governor Mark Carney said on Thursday the central bank would probably need to pump more stimulus into Britain's economy over the summer in wake of the Brexit shock.

A number of Asian central banks, including those in Japan, China and Australia, are also expected to ease policy further later this year, while a number of Asian governments have ramped up fiscal stimulus or are drawing up economic support packages.

Carney's comments forced the pound to head south on Thursday and cut short the currency's recovery from a 31-year low plumbed on Monday.

Sterling was flat at $1.3314 GBP=D4 after nearly touching $1.35 on Thursday. The pound, which lost almost 8 percent soon after the Brexit vote, has declined a further 2.6 percent since. It sank to $1.3122 on Monday, its lowest since 1985.

"Carney has always been nervous about how Brexit would impact the U.K. economy and now that it is a reality, he is preparing for the worst, agrees with the doom and gloom scenario and wants to assure the market that the BoE will be proactive," wrote Kathy Lien, managing director of FX strategy at BK Asset Management.

Sterling's slide added mild pressure on the euro, which slipped 0.2 percent to $1.1079EUR= extending an overnight slide from $1.1155, it highest in six days. It's poised to end the week 0.3 percent lower.

The dollar pulled back against the safe-haven yen, but retained most of this week's gains. The greenback, which fell to 99.00 yen in the initial phases of the Brexit shock, was last trading at 102.81 yen JPY=EBS, on track for a gain of 0.7 percent for the week.

In commodities, crude oil advanced on expectations of rate cuts and a better demand-supply balance.

U.S. crude CLc1 was up 0.6 percent at $48.60 a barrel after shedding more than 3 percent on Thursday, and looked set for a 2.1 percent gain for the week.

Brent crude LCOc1 rose 0.6 percent to $50.03, heading for a weekly gain of 3.4 percent.

But in a sign that risk appetite remains tentative, the safe-haven gold XAU= advanced 0.9 percent to $1,333.70 an ounce, set to end the week 1.4 percent higher, its fifth consecutive weekly gain.

Silver XAG= touched a 22-month high earlier in the session, and was last trading 3.2 percent higher at $19.2850 an ounce, heading for a gain of 8.8 percent for the week.

U.S. Shale Oil's Achilles Heel Shows Signs Of Mending

By Ernest Scheyder and Terry Wade
July 1, 2016

Since the beginning of the U.S. fracking revolution, oil producers have struggled with a vexing problem: after an initial burst, crude output from new shale wells falls much faster than from conventional wells.

However, those well decline rates have been slowing across the United States over the past few years, according to data analysis provided exclusively to Reuters.

The trend, if sustained, would help ameliorate the industry’s most glaring weakness and cement its importance for worldwide production in years to come. It also helps explain shale drillers' resilience throughout the oil market's two-year slump.

While shale oil production revolutionized the oil industry over the past decade, bringing abundance of global oil supplies, high costs and rapid production declines have been its Achilles heel. That is beginning to change thanks to technological innovation and producers' focusing less on maximizing output and more on improving efficiency and productivity.

According to data compiled and analyzed by oilfield analytics firm NavPort for Reuters, output from the average new well in the Permian Basin of West Texas, the top U.S. oilfield, declined 18 percent from peak production through the fourth month of its life in 2015. That is much slower than the 31 percent drop seen for the same time frame in 2012 and the 28 percent decline in 2013, when the oil price crash started.

The change was even more dramatic in North Dakota's Bakken shale, where four-month decline rates for new wells fell to 16 percent in 2015 from almost 31 percent in 2012.(

A slower decline means producers need to drill fewer new wells to sustain output, said Mukul Sharma, professor of petroleum engineering at the University of Texas at Austin.

"You can have cash flow without having to expend a lot of capital."

The recent decline rates mark a dramatic improvement from first-year 90 percent declines in the early years of the shale boom that made some investors question the sector's long-run viability.

New Philosophy

There are no 2016 figures yet, but oil executives expect the trend to continue this year and beyond.

Scott Sheffield, chief executive of Pioneer Natural Resources Co (PXD.N), a top Permian producer, credited improved fracking techniques for helping stabilize production, which shareholders rewarded by lifting Pioneer's shares up about 9 percent over the past year.

"We're exposing more of the reservoir and breaking it up so we don't get as sharp a decline," Sheffield told a recent energy conference.

Slower declines also reflect producers' more conservative approach to operating wells. In the early years of the hydraulic fracturing boom, high crude prices encouraged operators to boost initial production as much as possible.

To do this, they would let wells flow fast by keeping pressure low on the ground's surface. About seven years ago, however, some shale operators in Louisiana found this ultimately hurt production later on by causing rock fractures to shut.

Now, many operators maintain surface pressures higher, which limits initial flow rates and slows a well's decline rate.

"Conventional wisdom has shifted," said John Lee, a professor of petroleum engineering at Texas A&M University.

Sharma of the University of Texas said that while shale well decline rates remained far above a 10 percent first-year decline a conventional well might experience, they marked a radical improvement compared with early years of hydraulic fracturing.

Harold Hamm's Continental Resources Inc (CLR.N), for example, has told investors its new wells in Oklahoma's SCOOP region are now producing 40 percent more oil six months into their lives than as recently as last year.

Today's production techniques use larger volumes of sand and pressurized fluids to frack more spots along longer well bores, to extract more oil from the wells. (

Pioneer fracks its wells every 15 feet today compared to every 60 feet in 2013. It costs extra $500,000 per well to do so, but its wells produce two-thirds more oil than just three years ago, boosting profitability, Pioneer said.

To be sure, not all producers are seeing slower decline rates and the newer, more stable shale wells make up only a fraction of all producing U.S. oil wells, so their impact on overall domestic output is for now limited.

The Eagle Ford shale in southern Texas has seen decline rates slightly increase, for example, according to NavPort data.

Article Link to Reuters:

Rove: The Democrats’ Bernie Sanders Schism

His fans see Hillary as a sellout and Obama as a letdown—and they won’t stand down.

By Karl Rove
The Wall Street Journal
July 1, 2016

One of this year’s dominant news stories is how Donald Trump has roiled the GOP. Yet Democrats face an internal rupture that may be larger and more durable. That is my takeaway after reading “The Split,” the New Republic’s extraordinary June 14 symposium of liberal activists, historians, intellectuals, political scientists, pollsters and writers.

“The schism between Hillary Clinton and Bernie Sanders is knit into the DNA of the modern Democratic Party,” writes historian Rick Perlstein. In 1924, he recounts, Klan supporters in the party’s rightward wing dominated the Democratic convention. In 1937 opponents of FDR opposed the New Deal. “Hillary Clinton’s eagerness to please Wall Street,” he writes, “can be traced, in part, to that ideological split.”

Yale professor Jacob Hacker says that President Obama’s failure to govern as a hard leftist heightened these tensions. “There’s a sense,” he writes, “that supporting the Democratic establishment and going the conventional route hasn’t been that productive.” Duke Law professor Jedediah Purdy adds that the president promised “transformative politics” but didn’t deliver “the substance.”

The critique of Mr. Obama sometimes sounds vaguely Republican: “The Democratic Party today engages in delusional happy talk about economic recovery,” complains Princeton professor Keeanga-Yamahtta Taylor, “while a staggering 47 million Americans are struggling in poverty.” By contrast, writer and left-wing activist Mychal Denzel Smith says young Democrats are unhappy with “the ways economic inequality persists,” and activist Astra Taylor bemoans the Democrats’ failure to follow through on the vision of Occupy Wall Street.

Some of the symposium’s participants also attack Bill Clinton. Mr. Smith doesn’t name the former president but suggests that his anti-crime bill sustains “systemic, institutionalized racism.” Mr. Perlstein adds that “Bill and Hillary Clinton won the White House with the business-funded support of the Democratic Leadership Council, which sought to downplay the ‘big government’ solutions championed by FDR.” At least, political scientist Ruy Teixeira rejoices, today’s Democrats are no longer “obsessed with the national debt.”

Mr. Purdy writes that Sanders supporters “have no love for or confidence in elites, Hillary’s habitus. And why should they? They’ve seen growing inequality and insecurity, the naked corruption of politics by oligarchic money, total cynicism in the political class.” Mr. Hacker says: “This may be the first time in my life that there’s been a full-throated critique of the Democratic Party as being excessively beholden to money and too willing to work within the system.”

These disagreements are diminished for now by Mr. Trump. As Mark Green, former New York City public advocate, says, “the programmatic differences” between Mr. Sanders and Mrs. Clinton “are dwarfed by the differences between either of them and the first proto-fascist president.”

Still, the left’s frustration over the lack of radical change is undeniable. Young and minority voters feel a keen sense of urgency. “Clinton and the Democrats in Washington don’t understand the level of anxiety that Americans, and particularly the young, feel about their economic prospects,” writes journalist John Judis.

If Mrs. Clinton wins, Mr. Hacker hopes for “a true grassroots, longer-term movement that tries to move the center of gravity of American politics to the left.” And if she wins and ignores “the issues Sanders has raised,” Ms. Taylor warns, then she risks “losing a huge swath of the Democratic electorate for years.”

In any event, expect another insurgent in 2020, writes University of North Carolina professor Zeynep Tufekci: “Digital fund-raising, organizing, and messaging have given the left the weapons not just to tilt at the establishment’s windmills, but to come close to toppling them. Next time, they might just succeed.”

That seems to be the outcome Mr. Sanders intends to facilitate. Anyone who thinks the Democratic Party’s left will stand down soon should consult his statement Sunday about the party’s platform. He criticized the platform committee for voting down planks opposing the Trans-Pacific Partnership trade deal, supporting a $15 an hour federal minimum wage, and proposing a carbon tax and a fracking ban.

Having already criticized the existence of Democratic superdelegates and the Clintons’ dependence on Wall Street largess, Mr. Sanders is laying down more markers that could serve as rallying points for an insurgent movement to disrupt the Democratic Party after November, win or (especially) lose.

American politics is being convulsed, and neither party is immune. When the dust settles, the parties could look very different—especially the Democrats.

Article Link to The Wall Street Journal:

Noonan: A World In Crisis, And No Genius In Sight

An old order is being swept away, and political leaders everywhere seem lost.

By Peggy Noonan
The Wall Street Journal
July 1, 2016

The leaders of the world aren’t a very impressive group right now. There’s a sense with some of them of playing out a historical or cultural string, that they’re placeholders in some way. Many are young, yet so much around them feels tired.

Which has me thinking, again, of the concept of the genius cluster. They happen in history and no one knows why. It was a genius cluster that invented America. Somehow Franklin, Jefferson, Washington, Adams, Madison, Hamilton, Jay and Monroe came together in the same place at the same time and invented something new in the history of man. I asked a great historian about it once. How did that happen? He’d thought about it too. “Providence,” he guessed.

There was a small genius cluster in World War II—FDR, Churchill, de Gaulle. I should note I’m speaking of different kinds of political genius. There was a genius cluster in the 1980s—John Paul II, Reagan, Thatcher, Vaclav Havel, Lech Walesa, Lee Kuan Yew in his last decade of leadership in Singapore.

The military genius cluster of World War II—Marshall, Eisenhower, Bradley, Montgomery, Patton, MacArthur, Nimitz, Bull Halsey, Stilwell—almost rivaled that of the Civil War—Grant, Lee, Stonewall, Sherman, Sheridan, Longstreet.

Obviously genius clusters require deep crises, otherwise their gifts are not revealed. Historic figures need historic circumstances. Also members of genius clusters tend to pursue shared goals.

We have those conditions now—the crises, and what should be shared goals.

Everything feels upended, the old order that has governed things for 70 years since World War II being swept away. Borders have disappeared before our eyes. Terrorism, waves of immigration transforming whole nations, Islam at war with itself and parts of it at war with the world. In the West, the epochal end of public faith in institutions, and a dreadful new tension between the leaders and the led. In both background and foreground is a technological revolution that has actually changed how people experience life.

It is a world crying out for bigness, wisdom, steady hands and steady eyes.

We could use a genius cluster.

I’m not quite seeing its members coming, are you? Maybe they’re off somewhere gaining strength. But the point we’re in feels more like what a Hollywood director said was the central tension at the heart of all great westerns: “The villain has arrived while the hero is evolving.”

Let’s hope some evolve soon.

This thought is inspired by the past week’s Brexit aftermath. To limit criticism to the political players, the European Union did not distinguish itself, the British government didn’t even create a contingency plan in case Leave won, and the victors actually scrammed while markets convulsed and the pound fell. When Leave leader Boris Johnson finally did speak, what he said was astonishing.

The vote was significant, he wrote in the Telegraph, but shouldn’t be misunderstood: “It is said that those who voted Leave were mainly driven by anxieties about immigration. I do not believe that is so.” Instead they had “a sense that British democracy was being undermined.” The public wanted to seize back some control.

Well, yes. But immigration was very much part of the seize-back-control story. It’s in all the polls.

Then: “And yet we who agreed with this majority verdict must accept that it was not entirely overwhelming.”

It was 52% to 48%, not huge but decisive enough. And wait a second, “we who agreed” with the verdict? He led the campaign! He didn’t “agree” with the outcome, he was its most prominent advocate!

Whatever changes come, he added, they “will not come in any great rush.”

There’s a line between calming markets and undermining your cause. He crossed it.

What a failure of nerve. It likely contributed to the restiveness that led the other main Leave proponent, Michael Gove, to bolt away from Mr. Johnson and announce he would run to replace Prime Minister David Cameron.

Contrast what Mr. Johnson wrote with the statement, days later, of Home Secretary Theresa May, who had been pro-Remain though relatively quietly, certainly relative to Mr. Johnson. “Brexit means Brexit,” she said. “The campaign was fought, the vote was held, turnout was high and the public gave their verdict. There must be no attempts to remain inside the EU, no attempts to rejoin it through the back door and no second referendum.”

“Politics,” she added, “isn’t a game.”

Thank you, madam, and well done.

Ms. May is a moderate conservative with a steady hand who is said to be somewhat ideologically opaque. But here she was blunt and clear. More, she seemed to intuit the damage to be done to the public’s trust if Parliament threw the decision back in its face. Part of politics is simply knowing what people need when they need it. In this case it was the unambiguous taking of a stand.

In the end, Mr. Johnson bowed out of the contest for party leader. He is a witty and clever man, a showman who may have more lives than a cat. But he won’t be part of a genius cluster anytime soon.

EU leadership since the referendum has been wholly lacking. “What doesn’t kill you makes you stronger,” purred European Council president Donald Tusk, quoting Nietzsche.

In this case what doesn’t kill you this time will likely kill you next, so you might want to wake up.

The EU should be supple now, not brittle and predictable, which is to say bureaucratically brutal. It should surprise the world and demonstrate some give. It should grant Britain a relatively smooth exit. Let people see the decency and constructiveness of it and come to doubt their own antipathy. You’re not such a bad lot. Strategic pliancy would actually be an assertion of strength. If the European Union is a prison, as Brexit supporters felt, it makes sense for the warden to make an example of Britain to keep the other inmates in line. But if the EU is a place of peaceful commerce it has an opportunity to show it. Take it. The Brits aren’t the only ones who hate you.

The EU was founded for one great reason: to redirect the energies of a continent twice convulsed by world war and turn them to peaceful pursuits—trading goods, making money, each nation knowing the other in a context of constructiveness. It succeeded! But in the past 30 years it expanded, took on more power and authority, made more demands, fell too in love with its ability to apply limits. Even during the Brexit debate the EU’s conversation was not of devolving power to member states but taking more to Brussels. As Boris Johnson noted in March, when he seemed to remember such things, the result, in Britain, was public alienation, which contributed to a sense of “disengagement,” which has contributed to “the rise of extremist parties.”

That was an accurate diagnosis. I add only that the EU inculcated in its officials and apparatchiks an outrageous and insular snobbery that left them incapable of seeing critics as anything but ignorant, racist knuckle-draggers. They noticed, didn’t like it, and rebelled when they could.

Here’s to rebellion. Happy 4th.

Article Link to The Wall Street Journal:

A World in Crisis, and No Genius in Sight

Krauthammer: Brexit: Sovereign Kingdom Or Little England?

By Charles Krauthammer 
The Washington Post
July 1, 2016

Given their arrogance, pomposity and habitual absurdities, it is hard not to feel a certain satisfaction with the comeuppance that Brexit has delivered to the unaccountable European Union bureaucrats in Brussels.

Nonetheless, we would do well to refrain from smug condescension. Unity is not easy. What began in 1951 as a six-member European Coal and Steel Community was grounded in a larger conception of a united Europe born from the ashes of World War II. Seven decades into the postwar era, Britain wants out and the E.U. is facing an existential crisis.

Yet where were we Americans seven decades into our great experiment in continental confederation, our “more perfect union” contracted under the Constitution of 1787? At Fort Sumter.

The failure of our federal idea gave us civil war and 600,000 dead. And we had the advantage of a common language, common heritage and common memory of heroic revolutionary struggle against a common (British) foe. Europe had none of this. The European project tries to forge the union of dozens of disparate peoples, ethnicities, languages and cultures, amid the searing memories of the two most destructive wars in history fought among and against each other.

The result is the E.U., a great idea badly executed. The founding motive was obvious and noble: to reconcile the combatants of World War II, most especially France and Germany, and create conditions that would ensure there could be no repetition. Onto that was appended the more utopian vision of a continental superstate that would once and for all transcend parochial nationalism.

That vision blew up with Brexit on June 23. But we mustn’t underestimate the significance, and improbability, of the project’s more narrow, but still singular, achievement — peace. It has given Europe the most extended period of internal tranquility since the Roman Empire. (In conjunction, of course, with NATO, which provided Europe with its American umbrella against external threat.)

Not only is there no armed conflict among European states. The very idea is inconceivable. (Fighting among the various nations has been subcontracted to soccer hooligans.) This on a continent where war had been the norm for a millennium.

Give the E.U. its due. Despite its comical faux-national paraphernalia of flag, anthem and useless parliament, it has championed and advanced a transnational idea that has helped curb the nationalist excesses that culminated in two world wars.

Advanced not quite enough, however. Certainly not enough to support its disdainful, often dismissive, treatment of residual nationalisms and their democratic expressions. Despite numerous objections by referendums and parliaments, which it routinely either ignored or circumvented, the E.U. continued its relentless drive for more centralization, more regulation and thus more power for its unelected self.

Such high-handed overriding of popular sentiment could go on only so long. Until June 23, 2016, to be precise.

To be sure, popular sentiment was rather narrowly divided. The most prominent disparity in the British vote was generational. The young, having grown up in the new Europe, are more comfortable with its cosmopolitanism and have come to expect open borders, open commerce and open movement of people. They voted overwhelmingly — by 3 to 1 — to Remain. Leave was mainly the position of an older generation no longer willing to tolerate European assaults on British autonomy and sovereignty.

Understandably so. Here is Britain, inventor of the liberal idea and home to the mother of parliaments, being instructed by a bunch of pastry-eating Brussels bureaucrats on everything from the proper size of pomegranates to the human rights of terrorists.

Widely mentioned, and resented, was the immigration directive to admit other E.U. citizens near-automatically. But what pushed the Leave side over the top was less policy than primacy. Who runs Britain? Amazingly, about half of the laws and regulations that govern British life today come not from Westminster but from Brussels.

Brexit was an assertion of national sovereignty and an attempt, in one fell swoop, to recover it.

There is much to admire in that impulse. But at what cost? Among its casualties may be not just the European project (other exit referendums are already being proposed) but possibly the United Kingdom itself. The Scots are already talking about another vote for independence. And Northern Ireland, which voted to remain in the E.U., might well seek to unite with the Republic.

Talk about a great idea executed badly. In seeking a newly sovereign United Kingdom, the Brits might well find themselves having produced a little England.

Article Link to the Washington Post: