Wednesday, July 6, 2016

Wednesday, July 6, Morning Global Market Roundup: Global Stocks Singed, Bonds Surge As Brexit Fears Flare

By Wayne Cole and Hideyuki Sano
July 6, 2016

Asian share markets turned tail on Wednesday as fears over instability in the European Union returned with a vengeance, sending the pound to three-decade lows and hammering risky assets of all stripes.

In frantic trading reminiscent of the fateful Friday after Britain voted to abandon the EU, sterling shed a full U.S. cent in a matter of minutes to crater at $1.2798 GBP=D4.

Perhaps taking advantage of the distraction, Beijing allowed the yuan to fall to the lowest since late 2010 CNY=CFXS and secure a competitive advantage for its exports.

Concerns that central banks might not be able to soften this latest blow to global growth hit commodities hard. Having shed near 5 percent on Tuesday, Brent crude oil LCOc1 fell further to $47.84, with U.S. crude at $46.43 a barrel.

Spooked investors rushed into safe-haven sovereign debt and took markets deeper into unknown territory.

Yields on U.S. Treasuries, the benchmark for bonds worldwide, hit record lows out to 30 years. The 10-year note offered just 1.35 percent US10YT=RR and investors were willing to pay Japan 0.27 percent to lend Japan money for a decade.

"There's no inflation prospects, there's no strong growth. The only thing we have is uncertainty," said Hiroko Iwaki, senior bond strategist at Mizuho Securities.

The sudden mood swing saw Japan's Nikkei .N225 skid 2.5 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.5 percent.

EMini futures for the S&P 500 ESc1 shed 0.5 percent, on top of a 0.7 percent drop on Tuesday. German stocks .GDAXI were seen starting down 1.2 percent, while France .FCHI looked to lose 1.0 percent.

Since Britain's shock decision to exit the EU two weeks ago, investors have been consoling themselves with the expectation of yet more policy easing from major central banks.

Yet analysts, and many at the banks themselves, have warned that the scope for maneuver was strictly limited and any new steps could prove counter-productive.

"Financial markets appear to have taken a more realistic view around the complexity and uncertainty characterizing the global political background and its impact on already lackluster economic growth," wrote analysts at ANZ in a note.

"This suggests the tug-a-war between more central bank support and economic fundamentals is going to increase, driving market volatility."

Sterling Sinks, Gold Buoyant 

The pound was again a major casualty, cracking supports at $1.3000 and $1.2950 to last stand at $1.2888 in fast-moving trade. This was ground not visited since 1985 when it got as far as $1.2565 - depths that could be revisited all too soon.

Against the yen, it fell below 131.00 GBPJPY=R for the first time since late 2012, while the euro scored a 2-1/2 year high around 85.00 pence EURGBP=R.

The Japanese yen benefited broadly as a traditional safe harbor and climbed to 100.90 per U.S. dollar JPY=. Likewise, spot gold XAU= hit its highest since early 2014 at $1,371.40.

Dealers said there was no single event behind the manic moves, but rather an accumulation of negative news.

Three British commercial property funds worth about 10 billion pounds suspended trading as asset prices plunged, while the Bank of England had to take action to ensure local banks kept lending.

Across the channel, shares in Italy's banks tumbled, shaking the financial foundations of the euro zone's third-largest economy.

"Italy faces a severe crisis that is exponential. This is not gradual and not linear," said Francesco Galietti, head of the Policy Sonar risk consultancy and a former finance ministry official. "The immediate trigger is the banking crisis."

Article Link to Reuters:

Global Stocks Singed, Bonds Surge As Brexit Fears Flare

Oil Prices Edge Up Amid Brexit Concerns, Supply Risks

By Aaron Sheldrick
July 6, 2016

Oil prices were slightly higher after falling earlier in Asian trading on Wednesday amid the wider market turmoil set off by mounting concerns over the economic impact of Britain's vote to leave the European Union.

U.S. crude was up 4 cents at $46.64 a barrel at 0635 GMT, after initially gaining then falling in thin trade. The contract fell 5 percent to end at $46.60 on Tuesday as U.S. investors digested news of an OPEC increase in production after the July 4 holiday on Monday closed trading.

Brent futures were up 5 cents at $48.01. On Tuesday they settled down 4.3 percent at $47.96 a barrel.

Oil prices are up almost 80 percent from 12-year lows of around $27 for Brent and $26 for U.S. crude in the first quarter and they are ripe for supply shocks just as the so-called Brexit vote came as a body blow to global growth hopes.

"You have the dollar strengthening, risk aversion rising because of the ongoing Brexit saga and then there are the actual supply and demand aspects to consider on top of all this," Fawad Razaqzada, market analyst for, said in a note.

The pound slumped to a new 31-year low against the dollar in early Wednesday trading, after three UK property funds were suspended in the face of a rush of redemptions from investors fearing a slump in British property values.

The Bank of England also took steps to ensure British banks keep on lending, by lowering the amount of capital banks must hold in reserve, as UK business confidence plunged.

A flurry of data from China in the coming weeks is also likely to show weaker trade and investments.

The rebound in crude had been fueled by supply outages from Canada to Nigeria that created the perception that a two-year-old supply glut may be easing.

But OPEC's oil output in June was its highest in recent history, as Nigeria's oil industry partially recovered from militant attacks and Iran and Gulf members boost supplies.

Market intelligence firm Genscape was showing a build of 230,025 barrels at the Cushing, Oklahoma storage hub for U.S. crude futures, during the week to July 1, traders said.

The yen rose further on Wednesday as investors hit the shelters with a broad risk-off mood gripping wider markets, while gold also climbed.

Article Link to Reuters:

Different Targets, Different Countries: The Challenge Of Stopping ISIS

By Warren Strobel  and John Walcott
July 6, 2016

Deadly attacks in four countries linked to Islamic State show the limitations of U.S.-led efforts to loosen the group's grip in Syria and Iraq, and the challenge of stopping attacks that are not only globally dispersed but very different in their choice of targets, current and former U.S. officials said.

"Bombing the heck out of (Islamic State's capital) Raqqa is not going to stop this stuff," said Paul Pillar, a veteran CIA analyst now at Georgetown University.

In recent months, Obama administration officials have frequently portrayed the group's deadly strikes worldwide as a direct response to the U.S.-led military coalition's success in ousting it from large tracts of Iraq and Syria.

While that may be true in part, the current and former U.S. officials said, it is overly simplistic and understates how Islamic State's influence has spread beyond the territory it controls.

The ultra-hardline Sunni Muslim group's recruiting and propaganda directed outside its self-proclaimed caliphate long predates its loss of key cities in Iraq such as, most recently, Falluja, U.S. officials said.

"Evidence has been growing for some time that ISIS has been expanding its outreach, recruiting and propaganda, both online and with emissaries, as the military and economic costs of maintaining, much less expanding, its original caliphate have become clear," said a U.S. official who closely watches militant Islamic groups.

In its new guise, some analysts said, Islamic State is coming to more closely resemble al Qaeda, which has primarily focused on large-scale attacks rather than try to hold territory.

Building and maintaining a caliphate has possibly been more expensive and complicated than Islamic State first realized, the U.S. official said.

U.S. officials said they are still analyzing the links between Islamic State and a June 28 attack on Istanbul airport that killed 45 people; an attack on a cafe frequented by foreigners in Dhaka on Friday that killed 20 people; a suicide truck bombing in a mainly Shi'ite Baghdad neighborhood on Saturday that killed at least 175 people; and attacks in Saudi Arabia targeting U.S. diplomats, Shi'ite worshippers and a security office at a mosque in the holy city of Medina.

All took place during the Muslim holy month of Ramadan, which ends this week with the Eid al-Fitr feast.

A U.S. official said the attacks in Turkey, Iraq and Saudi Arabia appear to have direct links to Islamic State. The one in Bangladesh may have been Islamic State-inspired but also have local roots, the official said.

Intercepted Islamic State messages suggest targets to attack, including gathering places for non-Muslims and Shi'ite Muslims in predominantly Sunni areas, and government installations, another U.S. official said.

"There's a fair amount that falls somewhere in between inspiration and outright direction," this official said. "Call it suggestion."

Counter-terrorism experts say there is no silver bullet that will stop strikes on civilians that are so globally dispersed and use methods of attack that range from single suicide bombers to massive truck bombs to hostage-taking.

"The challenge involved is, the action and initiative is coming from a lot of different places," said Georgetown's Pillar.

Closer diplomatic cooperation, intelligence sharing and tracking money flows were crucial, he said.

"We've always made clear that the military campaign is not enough to defeat Daesh (Islamic State) or to remove the threat that it poses," State Department spokesman John Kirby said on Tuesday. "A holistic campaign that addresses the root causes of extremism is the only way to deliver a sustainable defeat.

Article Link to Reuters:

3 Things to Know About Record-Low U.S. Yields

By Mohamed A. El-Erian
The Bloomberg View
July 6, 2016

This week, the U.S. became the latest advanced economy to experience a decline to record levels of the yield of its benchmark 10-year government bonds, along with a continued flattening in the yield curve for its Treasury securities.

But the traditional drivers can't explain these developments. That also means the signals being transmitted to markets and the implications for the economy and policy can't be analyzed in the usual way. Instead, here are three major takeaways from these unprecedented circumstances:

1. This notable decline in Treasury yields is not following a conventional path, particularly as it says a lot more about Europe and Japan than about the U.S.

Traditionally, lower yields and a flatter yield curve in the U.S. are strong signals of an approaching recession -- and, in this particular case, they would be signaling a painful downturn, given how far yields have dropped and how flat the curve has become.

Yet that reading doesn't apply in this case: Rather than being driven by U.S. conditions, the Treasury yield curve has been captured by developments in Europe and, to a lesser extent, Japan-- specifically, the prospects for yet another economic slowdown and the likelihood of additional central bank stimulus (including lower rates in the U.K. and an expansion of the European Central Bank’s large-scale program of security purchases). 

Concerns about sluggish growth abroad have been amplified in recent days by the outcome of the Brexit referendum, which adds unusual institutional uncertainties to already fragile economic conditions, a fluid financial situation and an imbalanced policy stance that is over-reliant on central banks.

The aftermath of the U.K. vote to leave the European Union is correctly predicted to lead to lower business investment in Britain and more muted consumer confidence. Although the injection of liquidity by the Bank of England and the easing of banks’ reserve requirements could act as a moderating force, the impact will be marginal. The proposal to cut the corporate tax rate by Chancellor of the Exchequer George Osborne will have even more limited beneficial economic effects, though it will complicate negotiations with the EU and fuel concerns that the “political establishment” is again favoring the “business elites.”

Lower U.K. growth will have unfavorable spillover effects on the rest of Europe. This will be compounded by the constraints placed on economic policy by the destabilizing effects of anti-establishment movements, despite the buyer’s remorse that followed the Brexit vote.

The good news for Americans is that the negative spillover from lower growth in Europe is likely to be limited. The U.S. is still in control of its economic destiny, though there is little to be done about the yield curve. As negative rates in much of Europe make U.S. fixed income assets even more appealing to bond investors around the world, the resulting decline in yields and the associated flattening of the curve will far exceed what is warranted solely on the basis of U.S. economic and policy prospects.

2. The beneficial impact of lower yields on the economy will be limited, and could even be offset by financial considerations.

The lower interest rate configuration throughout the advanced world is unlikely to provide much of a boost to economic activity. Most importantly, it does little to address longstanding structural headwinds, which, in recent days, have been compounded by uncertainties about the future of the U.K.’s trade and business relations with the rest of the European Union.

Yet the changes in yields will impose even more pressure on the banking system by darkening the prospects for earnings and profit. This is particularly worrisome for European banks whose recovery process has lagged that of their U.S. counterparts, and for whom the credit quality of loan portfolios will be affected by the economic slowdown.

The lower yields will also amplify worries about excessive risk taking by non-banks. As they try to meet unchanged -- and increasingly unrealistic -- objectives, investors are likely to stretch even further for financial returns, increasing the risk of financial instability down the road.

3. This will further complicate the challenging task facing Federal Reserve policy makers.

None of these developments will come as good news to the Fed, which is already carrying an excessive policy burden.

In addition to making interest rate decisions more complicated -- including whether to hike this year -- recent developments are likely to accentuate worries about the ability of macro-prudential policies and the regulatory apparatus to counter the mounting challenges to future financial stability and economic well-being.

Article Link to The Bloomberg View:

Brexit Is In Limbo, If Britannia Waives The Rules

By Mark Gilbert
The Bloomberg View
July 6, 2016

Luxembourg Prime Minister Xavier Bettel said last week that Britain has to be "married or divorced, but not something in-between. We are not on Facebook with `it's complicated' as a status." It turns out he may be wrong.

In the wake of the referendum decision to leave the European Union, millions of Britons learning that life doesn't come with an undo function. While all the candidates for Conservative Party leadership have echoed Teresa May's "Brexit means Brexit" comment, the British government has refused to sign the divorce papers, leaving the next government a fair amount of wiggle room.

U.K. politicians seem to be all over the map with what they want. U.K. Foreign Secretary Philip Hammond advocates an "informal discussion" about the separation terms before the government triggers Article 50, the mechanism for leaving the bloc. Before he bowed out of the Conservative Party leadership race, Boris Johnson seemed to suggest the country could stay in the single market while still restricting freedom of movement. The Tory candidate he is backing, Andrea Leadsom, claims to want a quickie divorce, saying she will trigger Article 50 as soon as she became prime minister. Theresa May, the leading candidate to be the next British prime minister, has ruled out doing so before the end of the year.

EU leaders have tried to present a show of unity, but they are anything but united. European Council President Donald Tusk repeated on Tuesday that there won't be any talks until the U.K. starts the formal notification process, adding that "access to the single market means acceptance of all four freedoms. No single market a la carte." But the view from France seems to be, the sooner the better. As Alain Juppe, a former prime minister and an early front-runner for next year's presidential election, noted: "When you get divorced, you don't stay in the same house. It's not a question of days, but it has to be fast."

EU rules specify a two-year period of negotiation after the triggering of Article 50, but they don't set a timetable that can be enforced against a departing member. Martin Schulz, president of the European parliament, hopes EU lawyers will now find a way to speed up the triggering of Article 50.

Without a written constitution, whether and how Britain respects the June 23 vote becomes a matter of judgment rather than law. This is unlike the referendum on changing Britain's voting system in 2011, in which there was a legal trigger requiring parliament to act on the result. Mischon de Reya, one of London's top law firms, said this week that a group of unidentified clients will take legal action unless parliament votes to ratify the referendum result before Article 50 comes into force. Oliver Letwin, the minister put in charge of preparing exit talks, insists no vote is required. You can see why even the British winners of the exit campaign seem worried that defeat might be snatched from the jaws of victory.

On Monday, Austrian Finance Minister Hans Joerg Schelling went as far as to suggest the U.K. might not end up leaving. Former U.K. Prime Minister Tony Blair also cast doubt on whether the plebiscite, which saw a 52 percent vote to "leave," is binding. "The referendum expressed the will of the people. But, you know, the will of the people is entitled to change," Blair said in an interview broadcast Sunday by Sky News. "I’m not saying we have another referendum. I’m simply saying, there’s no rule about this. We’re a sovereign people, we can do what we want to do."

EU leaders now have to acknowledge that the 16 million Britons who voted to stay in the EU are in mourning (along with a portion of the 17 million who voted to leave and now may be suffering buyer's remorse), and that they should be given time to grieve.

The risks posed by the aftershocks of the Brexit vote to the entire European project are great enough without making the situation worse by trying to bully a departing member. The EU, which will need a demonstration of democratic legitimacy eventually if it is to continue integrating, will find it hard to continue as before. Post-Brexit, Europe is torn between wanting to finalize Britain's departure so that it doesn't taint the pool of remaining EU members and having to respect the process they laid out. German Finance Minister Wolfgang Schaeuble told Die Welt that the EU can't afford to allow any delays:

"It is right for us to say clearly to London, `you have caused such turmoil in the EU with your referendum that we now have to do everything we can on our side to limit the damage. We ask you to make a decision, and do it quickly.' Europe would make itself laughable if, after such a plebiscite, we said, 'You've got time, think about it as long as you like.' That won't happen."

He's wrong; the EU risks more damage, not less, by trying to rush Britain. The U.K. isn't the only member of the bloc with concerns about losing sovereignty to the European project; by respecting the ambiguity of the current situation and recognizing that the timing is Britain's to decide, the EU can ease some of those worries among its remaining participants.

"It's not an amicable divorce, but it never really was a close love affair anyway," EU Commission President Jean-Claude Juncker said in a TV interview with German public-service broadcaster ARD the day after the vote. Whether Britain is consciously or unconsciously uncoupling, Europe needs to resist the urge to act vindictively. The uncomfortable truth is that Britain's spurned partners can't and shouldn't try to impose their timetable on the country's exit. There are no foregone conclusions.

Article Link to The Bloomberg View:

Trump's Twitter Troll Ringmaster

How many hoax videos or anti-Semitic memes can you share before you’re out? That’s the question for Dan Scavino, Trump’s director of social media.

By Olivia Nuzzi
The Daily Beast
July 6, 2016

Before there was the Star of David, there were other screw-ups.

He criticized Barack Obama for giving a televised address on the first night of Hanukkah. He suggested, instead, that the president should have done so on the previous Friday or Saturday night, during Shabbat, when a considerable portion of Jewish people forgo television and other technology.

Next, he shared a video he claimed was of Syrian refugees rallying in support of ISIS in the streets of Germany. The video was a hoax, footage of a 2012 protest that had been repurposed by the fringe right as anti-refugee propaganda.

And then he posted another video, one that implied, with no discernible evidence, that Ted Cruz had an affair with his former staffer Amanda Carpenter, a married mother of two who was forced to go out and declare, on CNN, where she now works, that she has always been faithful to her husband.

All of this was done on Twitter, one of the mediums that Dan Scavino, as director of social media for a major presidential campaign, is supposed to have mastered. But like so many aspects of Donald Trump’s operation, Scavino’s digital outreach is not just unorthodox but a veritable forest of dumpsters doused with gasoline and lit by a match. Scavino, who did not return a phone call, text message, or email requesting an interview, is about as skilled a director of social media as Corey Lewandowski would be a masseur.

A registered independent, Scavino couldn’t even vote for his boss in the New York primary.

But to Trump, none of this matters much.

Scavino has a large, square head and close-cropped hair. His nose is permanently scrunched up, like he’s smelling something awful, and his lips are permanently pressed together, like he’s tasting something sour. He is everything Trump, the de facto Republican nominee, looks for in an employee: confident despite little reason to be; bright enough to take orders but not enough to question them; frankly just lucky to be there; and above all—mostly due to that last thing—loyal.

“Is there anything he could say or do that would lead you to abandon him?” Scavino was asked in April.

For the briefest moment, he looked off into space—almost a suggestion of introspection, though he never quite got there.

“No,” he said.

He shook his head and he said it again.


On Saturday, a graphic was sent from Trump’s personal Twitter account—@realDonaldTrump—that depicted Hillary Clinton, in black and white, before a pile of money. “History Made,” it read. And, within the confines of a red Star of David, “Most Corrupt Candidate Ever!”

Trump added his own commentary. “Crooked Hillary - - Makes History!”

The graphic originated on a white supremacist message board and was tweeted by an account that also distributed an image of a swastika made out of photos of Hillary Clinton’s head.

Trump’s critics—including House Speaker Paul Ryan—labeled the graphic anti-Semitic, but Trump, true to form, blamed the media for his own actions.

“The social media graphic used this weekend was not created by the campaign nor was it sourced from an anti-Semitic site,” Scavino said in his own statement. “It was lifted from an anti-Hillary Twitter user where countless images appear.” He added, “The sheriff’s badge—which is available under Microsoft’s ‘shapes’—fit with the theme of corrupt Hillary and that is why I selected it.”

On Twitter, Scavino was even more defensive. “For the MSM to suggest that I am antisemite is AWFUL. I proudly celebrate holidays w/ my wife’s amazing Jewish family for the past 16 years [sic].”

That Scavino, a devoutly religious husband to a wife with what he says is chronic Lyme disease, and father who twice met the pope and was named an Inspiring Catholic of 2012 by Our Sunday Visitor, would be down in the trenches of anti-Semitic smut with Trump at 40 years old is not quite the surprise you’d think. Trump seems to inspire a certain kind of Northeastern man to get down in just about any trench with him without a second thought.

Scavino met Trump during his freshman year as a communications major at SUNY Plattsburgh, he told Westchester magazine. Since high school, he’d spent his summers caddying at what was then called Briar Hall Country Club and one day, Trump, who was considering buying it, showed up.

“I’ll never forget the day his limo first pulled up,” Scavino told the publication. “I was star-struck. I remember his first gratuity. It was two bills—two hundred-dollar bills. I said, ‘I am never spending this money.’ I still have both bills.”

Scavino said he remembered Trump saying, “You are going to work for me one day.”

Trump eventually bought the club and renamed it Trump National Golf Club Westchester, and true to Trump’s alleged prediction, Scavino eventually became its manager—succeeding Carolyn Kepcher, who left to join The Apprentice.

In 2008, speaking to the Aberdeen Evening Express, Scavino discussed all the big names who frequent the golf course, including Bill Clinton. “Clinton comes up in the evening with eight Secret Service guys,” he said. “We’ve got to know them pretty well.”

He told HVMag that Clinton is “one of the most unbelievable people I’ve ever met, as far as charisma. He has a tremendous personality and he’ll play with anybody. He plays with Donald and he too loves the game of golf.”

Scavino, who is on the board of the Eric Trump Foundation and, according to his bio there, “has committee involvement with The Joe Torre Safe at Home Foundation, along with the Wounded Warrior Project,” became Trump’s director of social media in February 2016, after first helping to build donor lists, according to one source formerly associated with the campaign.

Scavino soon joined the campaign’s traveling staff which, incidentally or by design it isn't clear, was populated, too, by political novices like himself. Beyond George Gigicos, the director of advance about whom little is known, there is Hope Hicks, the spokeswoman who rarely speaks; and, until very recently, Lewandowski, the campaign manager who'd never run a presidential campaign before he helped Trump all-but secure the Republican nomination. (Lewandowski, who was fired on June 20, now works for CNN).

Scavino developed a friendship with Lewandowski, with whom he shared his ferocious loyalty to their boss, but he was not similarly pushed out of Trump’s orbit with the hiring of more traditional campaign operatives like Paul Manafort, an establishment lobbyist.

Unlike Lewandowski, who courted and valued power during his time with Trump, Scavino was considered harmless by the Manafort faction of the campaign—his many mistakes notwithstanding. Much like Hicks, Scavino is seen as a facilitator rather than an operator.

But how many hoax videos or anti-Semitic memes can you share before you’re out? That’s the question for Scavino, as he remains in Trump’s ever-professionalizing inner circle despite an apparent lack of professionalism.

Article Link To The Daily Beast:

Marine Le Pen’s Post-Brexit Hangover

The National Front leader was overjoyed when the Brits voted to leave. Now the hard work begins.

Politico EU
July 6, 2016

PARIS — There are smiles, and then there are mile-wide victory grins. On the day Britain voted to leave the EU, French far-right leader Marine Le Pen couldn’t wipe the latter from her face.

Brexit had “given [her] wings,” Le Pen told glossy magazine Paris Match a few days later, while underlings reported they had rarely seen her so “happy and energized.”

It’s easy to understand why the vote lifted her spirits. After a tough year marred by a bitter public feud with her father, an election defeat and constant squabbling in her party, Britain’s vote to leave brought much-needed validation.

But as the first flush of Brexit subsides, Le Pen faces a big challenge. Over the next 10 months, she will have to prove that France should also leave the European Union, while widening her electoral base enough to get 51 percent of the vote and take over the presidency.

Does Brexit improve her chances of becoming French president in 2017? According to a pollster, a National Front expert and officials inside the party, the simple answer is ‘No’ — not unless Brexit turns out to be a runaway success for the U.K.

Brexit may even make the path ahead trickier as mainstream candidates raid Le Pen’s anti-EU toolbox for ideas; concerns about post-Brexit uncertainty work against her; and France’s dominant parties close ranks to keep the National Front out of power.

“The honeymoon was over by Monday morning,” said Jérome Fourquet, an analyst at the Ifop polling agency.

“In France there is no majority for leaving the EU. Even if people are Euroskeptic, they understand that getting out is complicated and messy, even more so with Britain’s example.”

The Problem With Brexit

An immediate problem for Le Pen is how to turn Brexit into a persuasive political argument at home.

Before the vote, France and Britain shared similarly high levels of Euroskepticism, with a Pew Research poll showing that mistrust of the EU was even higher in France than across the Channel, and second only to Greece within the bloc.

But disliking the EU is not the same as wanting to be rid of it. Since the June 23 Brexit vote, several polls have shown that a majority of French people want to remain in the bloc, and there is no clear majority behind the idea of an In/Out referendum.

Le Pen still has plenty of convincing to do. And Britain now provides a real-life example of what happens when you leave the EU — and in many respects it doesn’t look good.

While financial markets calmed down after an initial post-Brexit panic, Britain’s economy still faces long-term uncertainty. Bank of England governor Mark Carney warned Tuesday of an imminent economic slowdown.

Just over the horizon, even darker clouds loom — especially if British-based companies lose the right to do business in the rest of the EU.

Then there is the spectacle of Britain’s ongoing political crises, with the Conservatives and Labour both in turmoil.

In the best-case scenario, by the time Le Pen is campaigning to be president in earnest next year, Britain will be politically stable but still in limbo with regard to its relationship with the EU.

Not exactly a good advertisement for “Frexit.”

“Of course, the British experience is going to be crucial,” an aide to Le Pen told POLITICO. “We’re hoping that everything goes well, but the rest of Europe will work hard to punish the Brits. Our fingers are crossed for everything to go well.”

Stealing From The Front

Six months ago, after losing a regional election battle, Le Pen faced a crucial policy choice.

With the National Front in turmoil, she could choose either to move toward the Right by hardening her stance on social issues and softening the anti-EU rhetoric. Or she could choose to double down on the National Front’s core identity: its hatred of the EU.

She chose the latter.

Now, as France’s political establishment digests the lessons of Britain’s vote, and Catholic conservatives turn against the Front, the choice is making her look vulnerable.

Prior to Brexit, Le Pen enjoyed a measure of exclusivity in being France’s Euroskeptic-in-chief. Both mainstream parties, President François Hollande’s Socialists and Nicolas Sarkozy’s Les Républicains (LR), were equivocal about the EU and avoided advancing hard positions on the bloc’s future.

But with Brexit, France has a chance to reassert its role in the bloc, and the mainstream positions have shifted dramatically. All leading candidates for the Right’s presidential nomination want to roll back Brussels’ powers, give more say to national parliaments and ultimately vote on EU reform in a vast, bloc-wide referendum.

The only difference between that and Le Pen’s proposal? They do not want to give the French an option to leave.

“At this rate, the only anti-EU argument left to Le Pen will be her promise to leave” — Jérome Fourquet

Hollande’s camp also sounds increasingly Euroskeptic. First Prime Minister Manuel Valls said that France would not ratify the TTIP trade agreement with the U.S., and this week he threatened to stop applying Europe’s directive on posted workers.

With those remarks, he stole Le Pen’s thunder in denouncing two favorite bugbears of the National Front: free trade and the free movement of workers.

Hours after Valls criticized the posted workers directive, senior Le Pen aide Florian Philippot rushed out a statement challenging the prime minister to follow up his words with deeds. But it had less bite than his usual accusations of collusion with EU overlords.

“At this rate, the only anti-EU argument left to Le Pen will be her promise to leave,” said Fourquet of Ifop.

No Friends, No Frexit

For Fourquet and other pollsters, Le Pen’s potential at the polls currently maxes out at around 30-35 percent of the electorate. In order to reach the magical threshold of 50.1 percent, she needs to widen the party’s appeal far beyond its current preserve of largely blue-collar, young, non-urban voters.

One way to earn their respect is to recruit notable conservatives. Former UKIP leader Nigel Farage used the technique successfully against Prime Minister David Cameron, stealing MPs and voters until he Cameron no choice but to propose a referendum on EU membership.

Yet, whether by choice or by design, Le Pen has not engaged significantly with France’s conservative establishment. The National Front has not lured a single conservative MP, and the few transplants it has recruited have been low-ranking and facing dead-end careers.

The result is that Le Pen, unlike Farage, has failed to infect the establishment party with her ideas.

Instead, its politicians have become inoculated to her worldview — and developed antibodies to use against her.

“The French Right is more Euroskeptic, less friendly on immigration, maybe even a bit populist — but it’s not about to explode,” said Fourquet.

“For Le Pen, that’s a problem, because one still cannot win a presidential election without allies in France.”

Article Link to Politico EU:

The FBI Just Told Us We’d Be In Bad Hands With Hillary

By John Podhoretz
The New York Post
July 6, 2016

FBI Director James Comey stood before the nation and issued a list of Hillary Clinton’s astounding wrongdoings Tuesday as regards America’s national security — and then said he was not recommending prosecution because, in essence, what Mrs. Clinton did was “extremely careless” but not criminal.

As he spoke, I recalled F. Scott Fitzgerald’s peerless description in “The Great Gatsby” of a feckless wealthy couple: “They were careless people, Tom and Daisy—they smashed up things and creatures and then retreated back into . . . their vast carelessness or whatever it was that kept them together, and let other people clean up the mess they had made.”

Fitzgerald’s Tom and Daisy are pikers compared to Bill and Hillary. If one wishes to accept Comey’s contention that Mrs. Clinton is a careless but not criminal person, and one then considers her carelessness as a continuum with her husband’s careless conduct during his time in the Oval Office, then the Clintons have earned the dubious distinction of being the most outrageously careless couple this nation has ever known.

Say you are a Hillary supporter and believe she would be a good president, and say you believe Bill was a good president. You still must reckon with the damage they have done and will continue to do — damage to the good working order of the executive branch of government and damage to the American people’s view of politics and politicians.

Consider the event last week when Bill Clinton acted like Mrs. Kravitz on “Bewitched,” walking across the tarmac in Las Vegas from his plane to Attorney General Loretta Lynch’s plane to borrow a cup of sugar.

This astonishing social call — paid by the husband of the subject of the nation’s most significant criminal investigation to the person called upon to make the final decision about that investigation — was practically designed to make everybody in America (save the most slavish of hackish apologists) think a fix was in.

If you think Bill Clinton’s action was innocent of any intent to pressure Lynch, the only possible defense for it is that Clinton — one of the most important and influential Americans of our age — is just unthinkably, unspeakably careless.

Indeed, in his role as a former president, he has a moral obligation to protect the good name of the United States. But then, he had that obligation as president and didn’t seem all that concerned about it then either.

He doesn’t think about the consequences of what he does. He just does it.

And that, too, is the only possible defense for Hillary Clinton’s conduct, as Comey intimated. She set up a private server that handled the communications of the secretary of state for her own purposes.

What Comey appears to want us to believe is that this was stupid and dangerous — and that she should have known it was wrong — but that it was not undertaken with criminal intent.

We’ll never know what her true purposes were, but there’s nothing in her or her husband’s behavior that could incline anyone (again, save an apologist) to think it was all just an innocent effort to protect herself in some way.

Comey’s press conference statement had a surreal tone — for after laying out what his mammoth investigation into Mrs. Clinton’s handling of classified information, he could just as easily have said he would recommend she be indicted.

Although he claimed no prosecutor would have looked at the evidence the FBI assembled and sought to try a case, he also declared, “This is not to suggest that in similar circumstances, a person who engaged in this activity would face no consequences. To the contrary, those individuals are often subject to security or administrative sanctions.”

Reading between the lines, Comey was saying that were Hillary still serving, she would be fired and have her security clearance removed.

In short, the carelessness with which he tasked her so firmly is the very quality that saved her from criminal prosecution.

Like Fitzgerald’s Daisy, Hillary went and “smashed up things” — like America’s security — and “then retreated back into her vast carelessness.”

And if you had to bet, you’d bet on her being the next president of the United States. With her at the helm and her husband standing next to her, this country will be in very bad hands. The FBI director just told us so.

Article Link to The New York Post:

Hillary Clinton's Mixed Blessings

On a day when the president made a forceful case for Clinton, the FBI findings underscored lingering doubts about her trustworthiness.

By Annie Karni
July 6, 2016 

CHARLOTTE, North Carolina — Hillary Clinton for months had been desperate for the FBI to wrap up its investigation of her State Department email use, hoping to remove the threat of criminal charges that has hung over her campaign since Day One.

But when that cloud finally lifted Tuesday morning — in an announcement that took Clinton and her campaign by surprise — the timing was fraught with political risk.

Just hours before she boarded Air Force One with President Barack Obama for the biggest rally of her campaign, FBI Director James Comey said his agency would not recommend charges against Clinton. But in his remarks, he attached the tag of “extremely careless” to the woman trying to present herself as the steady hand in the race against “reckless” Donald Trump.

Comey’s findings, which undermined Clinton’s own claims about her handling of classified email, were a reminder that the presumed Democratic nominee is closer to unifying the party than putting to bed questions about her character and trustworthiness — even with Obama and his 52 percent approval rating as her character witness.

In Charlotte — where Obama rolled up his shirt sleeves and ditched the teleprompter to deliver the most forceful case for his potential successor to date — the rivals-turned-partners borrowed each other’s sentences to underscore the unity of the Democratic Party against Trump.

Waiting for hours in 94-degree heat outside the Charlotte Convention Center, Clinton supporters read about Comey’s findings on their phones outside the rally.

“I think it was careless,” said Mark Henriques, an attorney who purchased a baby blue “Madame President” T-shirt from a street vendor to show his support. “But I think it’s time to move on,” he said.

Clinton’s campaign operatives agreed. A top Clinton official said the campaign was “relieved and surprised” by Comey’s morning announcement and “did not expect it would happen this quickly. That’s all great news.”

As for battling the lingering doubts about Clinton’s trustworthiness, the official said, “there’s not a magic set of words that can deal with that. People have to see her at her job and understand they can count on her.”

When they arrived at the convention center just after 3 p.m. — basking in three minutes of sustained cheers — Clinton and Obama were eager to present themselves as a unique and united team. Without mentioning the FBI investigation, a fired-up Obama, enlivened by his rock star-like return to the campaign trail, delivered a strong testimonial for the woman he would like to see succeed him and protect his legacy.

“I’m here today because I believe in Hillary Clinton,” Obama said in his full-throated, 40-minute endorsement speech, while Clinton sat on a stool slightly behind the podium, smiling and nodding.

“Hillary is steady, and Hillary is true,” he said, reminding a crowd of close to 10,000 people that he had gained his admiration for Clinton as both a friend and a foe.

“Hillary’s got her share of critics,” Obama said. “That’s what happens when you’re somebody who’s actually in the arena. That’s what happens when you fought for what you believe in, when you dedicate yourself to public service over the course of a lifetime. She never stopped caring, she never stopped trying.”

Echoing a line Clinton often uses to discuss Obama’s eight years as president, he said “she doesn’t get the credit she deserves” because she’s been in the public eye for so long.

“We like new things,” he said. “And I benefited from that culture, let’s face it. When I came on the scene in 2008, they said ‘Well, he’s new.’ Sometimes we take somebody who’s been in the trenches, and fought the good fight, and been steady, for granted.”

In her remarks, Clinton highlighted what bonds the two politicians together in their own minds, and in the eyes of their supporters: the history-making aspect of the first female president following the first African-American president.

“Nobody who looked like Barack Obama or me would have been included back then,” Clinton said of the country’s founders, with Obama nodding behind her. “But we’re here today because the story of America is the story of hard-fought, hard-won progress.”

She reminisced about their greatest moments together, like the hijinks they pulled during the 2009 climate negotiations in Copenhagen, when Clinton and Obama crashed a meeting Chinese officials were holding in secret.

Behind the stage, Clinton’s top campaign aides — senior adviser Jake Sullivan, campaign chairman John Podesta, speechwriter Dan Schwerin, communications director Jennifer Palmieri and top aide Huma Abedin — stood shoulder to shoulder with White House officials, including press secretary Josh Earnest, political director David Simas and speechwriter Ben Rhodes, all blending together like one large staff.

Clinton aides had seen a draft of Obama’s remarks before he delivered them. But the force of his delivery — reminiscent of the fresh candidate who took the political world by storm eight years ago — as well as his major detours off script, still took them by surprise, they said.

For her part, Clinton delivered her standard stump speech, with added portions about the president, calling him a “statesman” and lauding his diplomacy — traits she said are lacking in Trump.

Still, Clinton’s rally was bookended by distractions. Seeking to hold onto North Carolina, a state Obama lost in 2012, Trump scheduled a rally in Raleigh on Tuesday night, where he attacked Clinton for costing taxpayers money by riding aboard Air Force One. He pounced on Comey’s investigation as an example of a “rigged system” and called the joint Obama-Clinton rally a “carnival act.”

But Clinton and Obama sought to tune out any distractions to their campaign trail reunion. On the plane from Washington, D.C., to Charlotte, Clinton and Obama did not discuss the conclusion of the FBI investigation, Earnest told reporters. “I am confident that the president and Secretary Clinton are not discussing the FBI investigation that is being completed,” he said. “I’m confident that they are not discussing the findings of the investigation that were disclosed by Director Comey today.”

Now old friends who instead of talking business scrolled through pictures of Clinton’s grandchildren in the motorcade on the way to the event, Clinton and Obama were eager to blur any line between them into nonexistence.

“I don’t know about you,” she said, ending with Obama’s famous 2008 rallying cry, “but we are fired up and ready to go.”

Article Link to Politico:

Hillary Clinton's Mixed Blessings

The Last Stand For Sanders’s Environmental Activists?

For the greens looking to change the Democratic Party platform, it's the end of the world as we know it.

By Emma Foehringer Merchant
The New Republic
July 6, 2016

“Shame on you. Shame!” The shout rang out from the audience as the platform committee for the Democratic National Convention voted in late June. The room in St. Louis, Missouri, was so quiet that the interruption was impossible to ignore. The chairman, Representative Elijah Cummings, asked the audience to settle down, and the committee completed its vote: 7-6. This year’s Democratic platform would not include a moratorium on fracking.

In the weeks after Hillary Clinton secured the party’s presumptive nomination, environmentalists who supported Bernie Sanders slowly began to come around to her candidacy. Even though their revolution would not come to pass, green activists saw the drafting of the platform as a silver lining. But with three hearings complete and only one left before the convention begins on July 25, environmentalists are beginning to realize that Sanders’s breakthrough campaign didn’t earn as much “leverage” as they had hoped. Sanders already lost the nomination. Now his green supporters are losing their last hope for concrete commitments in 2016: the platform.

“You have a sense that this is not a meaningful process—that it is simply a dog-and-pony show set up to create the impression of a meaningful debate,” said R.L. Miller, chair of the California Democratic Party’s environmental caucus and president of the Climate Hawks Vote PAC, which endorsed Sanders. “The Sanders people are really angry.”

The last committee meeting will be held this week in Orlando, Florida, on July 8-9. Environmentalists are hoping the committee will reconsider some previously voted-down amendments, like a moratorium on fracking and opposition to the Trans-Pacific Partnership trade deal. In preparation, greens are drafting petitions and priming for a battle they know well. The Sanders campaign continues to send near-daily emails imploring supporters to keep up the opposition to fracking and the TPP. But with the balance of power restored to the Democratic Party, the outcome seems certain: The platform will not be the place where the environmental status quo is overthrown.

The Democratic Party had planned to appease Sanders’s millennial supporters by offering the senator five seats on the 15-person platform drafting committee. Clinton received six. As it now stands, the platform draft shows several Sandersian touches—like calling for a $15 minimum wage and an end to the death penalty—as well as compromises between the two sides. But the environmental team is unmistakably losing.

Bill McKibben, a cofounder of the environmental group and the most high-profile environmental champion Sanders selected for the committee, proposed a roster of nine climate amendments to the platform draft, including a carbon tax, keeping fossil fuels in the ground, and a “climate test,” modeled after the Keystone XL pipeline decision, that would have federal decision makers weigh the climate impacts of policies. Six, including those greens most ardently hoped for, were rejected, most by a tight 7-6 vote. To environmentalists who had pushed for months to get a seat at the establishment table, it was clear Democrats were intent on doing business as usual. “What’s needed is more of a sense that [Democrats are] willing to spend political capital on climate change,” McKibben told me in an email. “Obama wasn’t ready to do that in his first term, and it took an enormous movement to help him get there. That movement needs someone it can work with, not someone it will have to work on.”

Two days after the drafting meeting in St. Louis ended, McKibben’s frustration found outlet in an article for Politico Magazine. He claimed Clinton supporters were systematically “obstructing change.” Even though they recognized the severity of climate change, they were doing nothing proactive to halt it. “The Clinton campaign is at this point rhetorically committed to taking on our worst problems, but not willing to say how,” he wrote. “Which is the slightly cynical way politicians have addressed issues for too long—and just the kind of slickness that the straightforward Sanders campaign rejected.”

The article drew a heated response from one of Clinton’s committee members, Carol M. Browner, who was previously an EPA administrator in Bill Clinton’s administration and an energy adviser to Obama. In an article she wrote for the same magazine two days later, she called this year’s platform historic—a claim Sanders’s green supporters do not refute—and said the process was not obstructionist, but democratic. “Debating the merits of different policy solutions is quite different from setting up a litmus test for what it takes to be ‘serious’ about climate change,” she said. “And that is what the Sanders campaign and its representatives have done, claiming that the Democratic platform falls short because it does not include their preferred amendments.”

Objectively, this year’s platform is revolutionary in its consideration of climate change. Notably, the platform rejects past acceptance of an “all-of-the-above energy policy” in which all sources, including fossil fuels, are considered part of a healthy mix. Democrats also agreed on an amendment to include an investigation of fossil fuel companies that mislead the public about climate science (an allusion to theExxon Knew scandal), and to increase the country’s percentage of clean energy to 100 percent by 2050. But Sanders’s supporters see the tensions at the drafting table as a reflection of the central conflict in this year’s Democratic primary: incremental change versus urgent and drastic action.

Furthermore, they see the reluctance to take action as little better than being a climate change denier. Environmentalists are now describing Democrats as out of touch with the dire reality of climate change. “The problem is about the difference between better and good enough,” says Collin Rees, a campaigner with environmental group Oil Change International, who attended the platform hearing in Washington, D.C. “That’s what the fights are over—whether we’re going to get the kind of action that we need.” After Politico published Browner’s article, Miller of Climate Hawks Vote tweeted that the piece was “amazingly deceptive.” “Carol Browner sets a goal atop a ladder and kicks out all the legs. That’s incrementalism, or worse,” she said.

However, the divisions are as much about politics as they are about ideology. Environmentalists—who consider climate change a life-or-death issue in the near term—see the platform as an attainable way to hold Clinton’s feet to the fire. But the Clinton camp is shifting towards the general election, and doesn’t want to be tied to positions that may hurt its candidate in battleground states. In typically pragmatic fashion, Clintonistas see little benefit in committing to positions if it costs Democrats the White House—and hence the ability to do anything about climate change at all.

Still, it is rare that grassroots greens have gotten so close to the seat of power and been rebuked so directly. “Platforms don’t matter, right?” McKibben wrote in his Politico piece. “But this is a new kind of election: The Sanders campaign has been about issues, issues, issues.” It may be enough to make optimistic environmentalists disillusioned with the whole process—unless they can turn it around in Orlando. “We’ve learned our lesson over the last eight years with President Obama,” said Rees. “No politician is perfect.”

Article Link to The New Republic: