Thursday, October 13, 2016

Trump’s Party Of One

Donald Trump is right where he wants to be—alone, and at the center of it all.

By Daniel Henninger
The Wall Street Journal
October 13, 2016

The 2016 presidential election feels like a 1930s Hollywood movie about people lost in a jungle. No, not “ King Kong.” The one in which lost souls slog and sweat through a swamp, attacked by bugs, cobwebs and things falling out of the trees. Inevitably there’s a moment when one of the party, gripped by fever, abandons the group and heads deeper into the swamp alone.

Donald Trump is now a party of one. It’s better that way.

Never forget that Donald Trump is a celebrity. He called his show “The Celebrity Apprentice” and stocked it with celebrities because he saw that America’s appetite for fame had become limitless.

Mr. Trump, however, was not just one of the dime-a-dozen celebrities who pile up like tumbleweeds on reality TV. Donald Trump was—and remains—a mega-celebrity. He exists in the upper atmosphere of fame where people are known by one name: BeyoncĂ©, Gaga, Tiger, Trump.

Defining Mr. Trump as a celebrity is not intended as denigration. It is an admission of some realities about him that the political culture never quite recognized.

At some point in the upward spiral, whether they wish it or not, celebrities separate from everyone else. They are powerful, charismatic, often petulant loners.

One of the reigning ideas in political science is that presidential candidates emerge from an array of forces—politicians, activists, donors—who ultimately come together around an individual who is best able to carry the party flag of Republican or Democrat.

It was never in the cards that Donald Trump, an utterly unique phenomenon, would integrate his interests with the interests of the Republican Party. The two simply don’t inhabit the same space.

“It is so nice that the shackles have been taken off me,” he tweeted, “and I can now fight for America the way I want to.” Take his word for it: Donald Trump is where he wants to be—alone, the center of it all, a party of one.

It is almost surely true that the GOP’s three principal figures—Reince Priebus, Paul Ryan and Mitch McConnell—always understood this. But there was no chance—none—that any would ever admit that Mr. Trump was running as an independent candidate inside the formal structure of the Republican Party. Mr. Trump’s 45% plurality in the primaries—and the possibility that some of them might defect from the party’s candidates—guaranteed that this obvious reality could never go public.

This meant that nearly all other Republican candidates would have to survive in a universe different than Donald Trump’s. From the day Mr. Trump secured the nomination, there was never much chance that he would integrate his personal fame, for example, with the pedestrian daily grind and needs of a Kelly Ayotte in New Hampshire or Pat Toomey in Pennsylvania.

Whether they or the other at-risk candidates— Richard Burr, Rob Portman, Ron Johnson or Mark Kirk—should have been pro-Trump or anti-Trump is at this point a secondary matter to the practical realities of their own campaigns.

Donald Trump passes in and out of their states like a visiting meteor. It’s an awesome event, but there’s nothing they can do but gape, and get back to work inside the smaller orbit of a North Carolina or Wisconsin.

Many Trump supporters are currently in a rage because these candidates won’t merely attach themselves to Mr. Trump’s candidacy. But that is hard to do when every few days the mercurial Mr. Trump is producing a personal October surprise or midcourse policy correction.

Some may call this genius. It still means that these candidates, rather than conduct a consistent campaign of their own, must answer reporters’ questions about every new variable or revelation that is wholly idiosyncratic to Mr. Trump. It’s impossible.

The question now is whether Republican voters and Mr. Trump’s supporters can distinguish between his unique candidacy and everything else. In short: Forget unity and live with the reality before everyone’s eyes.

His most dedicated supporters either will stay aloft to share in his go-it-alone, in-your-face triumph, or fall to earth with him. But refusing to vote for at-risk Republican incumbents because of insufficient Trump loyalty or disdain for his candidacy is cutting off your nose to spite your face.

Just two years ago, voters sent arguably the strongest class to the U.S. Senate in a generation, including Tom Cotton, Cory Gardner, Joni Ernst, Ben Sasse and Dan Sullivan. Now many of these same voters are threatening to tell them: Drop dead under the thumbs of Chuck Schumer, Elizabeth Warren and Nancy Pelosi. The Clinton super PAC, Priorities USA, is spending money on congressional races to achieve precisely that.

As to relaunching the past year’s populism project for 2020, that’s a pipe dream if Democrats win it all by default. Full progressive government control, including a compliant Supreme Court, will impose so many political constraints, notably on fundraising, that the populists will have to head into the woods with the Bundy family.

Let Trump be Trump. Enjoy the ride. But Republican and independent voters have to figure out where the limits lie.

Article Link To The Wall Street Journal:

Rove: Neither Side Will Win The GOP Civil War

Trump spent the week bashing his own party. Paul Ryan should have simply kept mum.

By Karl Rove
The Wall Street Journal
October 13, 2016

Donald Trump has opened a civil war with Republicans. After video of Mr. Trump’s vulgar sex talk was published last week, Speaker Paul Ryan said he was “sickened by what I heard.” On Monday, during a conference call with House Republicans, Mr. Ryan said that he would no longer defend Mr. Trump or campaign with him.

This was perhaps unwise because it was unnecessary. Mr. Ryan should have simply promised his nervous caucus that he would devote all his energy, time and resources to holding the GOP’s House majority. He could have left his views about Mr. Trump unsaid. His caucus would have been elated, controversy avoided, and Mr. Trump left without an excuse for a new outburst.

Instead, Mr. Trump spent Tuesday in a Twitter tirade. He accused Republicans of being disloyal and weak. He announced his liberation, proclaiming that “the shackles have been taken off me and I can now fight for America the way I want to.” Who knew that The Donald we have been seeing was the restrained version?

Striking at the party wasn’t the best move for Mr. Trump. If he wants to be elected and to govern successfully, he should not have attacked congressional Republicans. He has little standing to preach party loyalty, having only recently joined the GOP. He funded Democrats for decades and made a special effort to elect Nancy Pelosi speaker in 2006.

If Mr. Trump wants a Republican Senate to approve his nominees and a Republican House to pass his agenda, then he should give GOP candidates the freedom to do what they must to win. Almost every one of them is polling ahead of him. He needs their coattails to get to the White House.

Mr. Trump’s comments undoubtedly thrilled the “alt-right” leaders of his campaign, who want to burn down the Republican Party perhaps even more than they want Mr. Trump to win. But swing voters are less than impressed. As of Wednesday, Mrs. Clinton’s lead had grown to 6.2 points, 48% to 41.8%, in the Real Clear Politics average of polls.

It’s notable that Mr. Trump has lost more ground in recent weeks than Mrs. Clinton has gained. Before the first debate her lead was much smaller, 46.6% to 44.3%. Mr. Trump’s showing in that debate, while lousy, was probably less damaging than his inexplicable actions over the next five days, when he continually disparaged a former Miss Universe whom Mrs. Clinton had used to bait him.

By the time of the second debate this past Sunday, Mrs. Clinton had widened her lead, 47.5% to 42.9% That face-off was like no other. From the moment they marched on stage, refusing to shake hands, until the final question forced them to say something nice about each other, it was brutal.

Expectations for Mr. Trump were incredibly low: Simply because he didn’t commit televised hara-kiri, he lived to fight another day. Expectations for Mrs. Clinton were unrealistically high. She was supposed to deliver a knockout blow, but it never came.

So much is thrown at viewers during a 90-minute debate that the aftermath—the media coverage that follows and the campaign responses—can be even more important in crystallizing voter perceptions. Yet after the second debate, Mr. Trump again picked a fight, this time with a Twitter-storm about his own party.

By late-evening Tuesday, when Mr. Trump gave a speech in Panama City, Fla., he was back on the teleprompter. He talked effectively about how the latest WikiLeaks dump of Clinton emails showed her to be untrustworthy, slippery and out-of-touch with ordinary Americans. But the speech was overshadowed by his tweets and remarks that morning and afternoon.

This is simply how the news cycle works. On each of the days remaining in the campaign, the candidates can share one thought—basically a sentence or two—that might stick with the public. Voters weave these individual threads into a comparative narrative, which helps them decide whom to support.

It would be a grave mistake for Mr. Trump to aim each day’s valuable thought at his base. With less than a month to go, he is far behind. His path to Electoral College victory has become even narrower than before. The only way for him to win the White House is to pry swing voters away from Mrs. Clinton and to convert undecided voters. This means dominating as many of the 26 days left by criticizing her on real issues and offering constructive change for America, not merely red meat for his base.

However, Mr. Trump seems to be considering a different approach: He tweeted Tuesday that “disloyal” Republicans “don’t know how to win,” adding, “I will teach them!” Lashing out may be cathartic, but it could also make Mr. Trump the big loser on Nov. 8.

Article Link To The Wall Street Journal:

ObamaCare Just Killed My Health Insurance — Again

By Michelle Malkin
The New York Post
October 13, 2016

Once was a shock. Twice was an outrage. Thrice is a nightmare that won’t end.

Over the past three years, my family’s private, individual health-insurance plan — a high-deductible Preferred Provider Organization — has been canceled three times.

Our first death notice, from Anthem Blue Cross Blue Shield, arrived in the fall of 2013. Our second, from Rocky Mountain Health Plans, came last August. Three weeks ago, we got another ominous “notice of plan discontinuation” from Anthem informing us that the insurer “will no longer offer your current health plan in the State of Colorado.”

Every time we get a cancellation letter, I recall President Obama’s big lie: “If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Then I imagine Vincent Price’s evil “Thriller” laugh reverberating at the end of that cruel punchline: Mwahahahahahaha!

(You can play a real-life horror soundtrack by watching Obama speechwriters Jon Lovett, David Litt and Jon Favreau cackle with PBS host Charlie Rose earlier this year about authoring ObamaCare’s big lie. Google it, but take your blood-pressure meds first.)

Like 22 million other Americans, I’m a self-employed small-business owner who buys health insurance for my family directly on the individual market (as opposed to group insurance through a company or third party). Our most recent plan features a $6,000 deductible with a $1,000 monthly premium.

It’s nosebleed expensive, but provides us access to specialists not curtailed by bureaucratic gatekeepers. This has been important for us because several members of my family have required specialized care for chronic illnesses. Once again, however, I’ll soon be talking about our plan in the past tense.

Choices for families like mine have evaporated in the ObamaCare era. In Colorado, UnitedHealthCare and Humana will cease selling individual plans next year. Rocky Mountain Health Plans is leaving the individual market in all but one county.

Nearly 100,000 Coloradans will be forced to find new alternatives as open enrollment approaches on Nov. 1, according to the Denver Business Journal. As Anthem abandons PPOs, the cost of remaining individual-market plans will soar an average of 20 percent.

It’s a nationwide implosion. Individual-market customers on Oklahoma’s ObamaCare exchange learned last week that they’ll face average rate hikes of a whopping 76 percent. Last month, Maryland approved double-digit rate hikes for all individual market plans.

In August, Tennessee approved rate hikes of 44 to 62 percent for three insurers still carrying individual-market plans. In Minnesota, the individual market is on the brink of collapse; state officials recently OK’d rate hikes averaging 60 percent next year — affecting an estimated 250,000 people.

The private individual insurance market is in peril. The government-run exchanges are flailing. And the nonprofit ObamaCare co-ops that were supposed to dramatically lower costs have bombed despite billions in taxpayer subsidies.

I believe this meltdown — which many of us predicted from the get-go — is not by accident, but by design. As Oklahoma Insurance Commissioner John Doak put it: “This system has been doomed from the beginning.”

Smug propagandists for ObamaCare, such as liberal magazine Mother Jones, continue to dismiss the plight of millions of families like mine and accuse us of concocting a “phony” crisis. But it’s the architects of ObamaCare who prevaricated all along.

Remember: ObamaCare godfather and MIT professor Jonathan Gruber bragged that “lack of transparency” was a “huge political advantage,” along with “the stupidity of the American voter.”

This Trojan horse was sold to gullible Americans as a vehicle for expanding “affordable” access to health insurance for all. Now, millions of us are paying the price: crappier plans, fewer choices, shrinking access to specialists, skyrocketing price tags — and no end in sight to the death spiral.

Mission accomplished.

Article Link To The New York Post:

You Might Want To Stock Up On Bourbon Before It’s Too Late

By Lisa Fickenscher
The New York Post
October 13, 2016

Jim Beam lovers may want to stock up on their favorite spirit.

Union workers at two of the company’s Kentucky distilleries have voted to authorize a labor strike.

If a deal on a new contract can’t be worked out by Friday, the workers may strike the following day.

And a prolonged strike, one that lasts several weeks, could result in Jim Beam bourbon product shortages on store shelves, experts said.

Owned by Suntory Holdings, a Japanese beverage company, Jim Beam has until Oct. 14 to work out a deal with the United Food and Commercial Workers union.

The two sides have been negotiating for 33 days over contracts for workers at distilleries in distilleries in Clermont and Boston.

“We are seeking to understand the reasons why the union membership voted down this competitive two-year contract proposal unanimously recommended by their own representatives,” said Jim Beam spokesman Kevin Smith. “The proposal includes substantial wage increases, coupled with other enhancements including elimination of the two-tiered wage system for almost all employees.”

The workers knew that they could cause the most disruption by going on strike now as opposed to the summer when production slows down, according to Fred Minnick, author of, “Bourbon, The Rise, Fall and Rebirth of an American Whiskey.”

“Every single day, they are moving barrels and bottling,” Minnick said. “It’s a constantly working distillery.”

A spokeswoman for Beam Suntory declined to comment on whether a strike could result in shortages at bars and liquor stores.

But supplies could get tight if a strike dragged on for a month, Minnick said.

“There are thousands of Jim Beam cases in the wholesale system en route to retailers and bars right now, but after a month,” he added, “supplies could be diminished.”

Bourbon is one of the fastest-growing types of spirits in the country, with shipments growing 32 percent over the past five years.

Article Link To The New York Post:

A Tale Of Two (Alleged) Gropers

As thousands cheered Donald Trump, Kenneth Jacobson was in a holding cell, charged with serial groping such as Trump had described with glee and three more women have now described The Donald committing.

The Daily Beast
October 13, 2016

When a groper lacks a tower or a limousine or a beauty contest dressing room, he is liable to do his groping in the subway system, as allegedly was the case for 44-year-old Kenneth Jacobson of the Bronx.

Unlike a celebrity self-proclaimed groper such as Donald Trump—whose denial at Sunday’s presidential debate that he had ever “done those things” he was caught bragging about on tape prompted four outraged women to come forward and accuse him of groping them in the past—a subway groper runs the risk of being arrested.

Even as Trump was addressing a campaign rally in Panama City, Florida, on Tuesday night, Jacobson was being led into Manhattan criminal court for arraignment on charges of groping at least five young women over a five-year period beginning in 2011.

“Docket 715,” a court officer called out. “Ken Jacobson, step up.”

Jacobson stood before Judge Joanne Watters in a gray sweatshirt, black shorts, and sneakers, as might fit a man described by his lawyer as a “freelance ice hockey coach.”

Assistant District Attorney Charles Kee reported that two of the victims were 13, another 16, the others 18 and 24. The 18-year-old had snapped a cellphone photo of the molester. Her twin sister later saw it and said the same man had had groped her some time before.

“Putting his hand under their skirt or on their vaginal area over their clothing,” the prosecutor said of the five attacks.

That brought to mind Trump’s declaration on the Access Hollywood tape, “Grab ‘em by the pussy, you can do anything.” Kee described such behavior as was put forth in the criminal complaint filed against Jacobson.

“Forcible touching…sexual abuse,” he said.

Kee added that this “extreme and ongoing behavior” carried a maximum penalty of two years in prison. He asked that the judge impose bail of $25,000.

Jacobson’s lawyer, Howard Weiswasser, said his client denied the charges and had no prior criminal record and was sure to make all his court appearances. Weiswasser noted that Jacobson’s father was present.

“The father does have $1,500 cash with him,” Weiswasser said.

The judge had welcomed Weiswasser by holding out her hand and chatting with him as if he were an old friend. She was still not about to shrug off the allegations as if Jacobson had just been acting out some locker room talk.

“Bail is set in the amount of $20,000,” she said.

Jacobson did not look back as he was returned to the holding cells.

“He’s not happy being in there,” his lawyer said afterward.

At almost that very moment, the self-described groper seeking to be president was down in Florida, rousing the crowd with talk of Hillary Clinton’s supposed email crimes, which the FBI has said were not crimes at all but simply terrible judgment.

“People have gone to jail for a lot less,” Trump said.

“Lock her up! Lock her up!” his supporters chanted.

The chant had been heard at many previous rallies, but became ironic as well as absurd given last week’s revelation that Trump had been recorded describing sexual behavior that was undeniably criminal, the very behavior that had gotten Jacobson and any number of other alleged subway gropers locked up.

Trump denounced as false a New York Times article of several months ago, “Crossing the Line: How Donald Trump Behaved With Women in Private,” that he said accused him of being “a little bit lewd” with a number of women.

“Then the women called and said, ‘I didn’t say that. I like him, he’s a great guy,’” Trump told the crowd.

But Trump did avoided mentioning the Access Hollywood outtake on which he had talked about groping women at will. He was apparently not including women when he told the Florida gathering, “I’ve always treated working people of this country with dignity and respect.”

Trump might have been a subway groper insisting on his innocence when he addressed the accusations that he had made himself a lurking and intrusive figure during the second presidential debate.

“She entered my space,” Trump complained to the crowd. “I was very careful. I said, ‘I’m not getting near this woman.’ She walks, she stands right next to me. And the next day, they said, ‘Donald Trump entered her space.’”

Trying to obliterate any thought of Donald the Groper by presenting himself as Donald the Savior, he outdid even his previous demagoguery by proclaiming that leaked emails from Clinton’s campaign gave proof of a “criminal government cartel” in which she had secretly agreed “behind closed doors” to abolish our borders and “end forever the American independence our founders gave to us and wanted us to have.”

“American soldiers have fought and died to keep America’s freedom and now Hillary Clinton wants to surrender that freedom to open borders and open trade and a global government,” he said.

The candidate who had often professed his love for veterans was invoking their sacrifice as part of a gambit to make people forget that he had spoken about grabbing women by the pussy.

“The election of Hillary Clinton will lead to the destruction of our country,” Trump declared. “Make sure to go out and vote Nov. 28.”

He may have simply misspoken about the date, and later in the speech he got the right day of the election, Nov. 8. Much of the rest of his speech remained as willfully false as he had been when he and Billy Bush stepped off the Access Hollywood bus and strode smiling up to Arianne Zucker, who had no idea that the two of them had just been talking about her in terms too crude and demeaning even for a locker room.

The kindest thing that might be said about Trump’s supporters is that they, too, have no idea who he really is. But with the Access Hollywood tape and all the lies and fear mongering and bigotry that preceded it, they must be coming to know who he actually is. And they must be so blinded by their dislike of the Clintons or their own psychic twists that they just don’t care.

“We’re gong to make history together,” Trump said to cheers on Tuesday night.

Up in Trump’s hometown, Kenneth Jacobson was in a holding cell, charged with serial groping, such as Trump had described with such glee, such as three more women have now described The Donald committing.

A good number of voters—in particular the many women who had been groped themselves—could not take the latest Trump revelations as just another concoction of the rigged media. And that was causing Republican leaders to suddenly rediscover a sense of decency and abandon him. Others were wavering, and here is what the pussy-grabber-in-chief’s campaign manager Kellyanne Conway said to them on ABC’s Good Morning America on Wednesday:

“Enough of the pussyfooting around in terms of, you know, do you support us or do you not support us?

Her wordage seemed all the more bizarre when, later on Wednesday, The New York Times detailed accusations by two women that he had groped them, one in the first-class cabin of a jetliner, the other by an elevator in Trump Tower. The Palm Beach Post carried similarly detailed accusations by a third woman, this one saying she was groped by Trump at Mar-a-Lago. A People magazine writer recounted an unwelcome embrace and kiss also at his Florida club.

All four said they had been incensed when they heard Trump’s denial during the second debate that he had ever committed a sexual assault such as he had described himself committing in the Access Hollywood tape. He can be sure that these women are never going to suddenly say the reports got it wrong and that they like The Donald and think he is a great guy.

Were it not for the statute of limitations, there would be only one thing to say:

Lock him up.

Article Link To The Daily Beast:

Are Will And Kate Becoming Post-Brexit Business Ambassadors For Britain?

After the U.K.’s dramatic vote to leave the European Union, the royals are reportedly being lined up to convince the rest of the world to trade with Britain.

By Tom Sykes
The Daily Beast
October 13, 2016

Kate Middleton engaged in her first solo overseas royal engagement Tuesday.

A mere five and a half years after she married Prince William in a dazzling ceremony at Westminster Abbey, Duchess Kate finally felt confident enough to board a flight on her own.

She went to the Netherlands, where she met with the powerless King Willem-Alexander of that country before going to the national art gallery, followed by a visit to a community center where she chaired a discussion on the mental health of teenagers, currently a favored cause, before flying back home on a scheduled British Airways flight to London (ah, the thriftiness). As the Daily Mail snarkily but accurately observed, she came on board dressed exactly like a pastiche of a flight attendant.

It was certainly a busy day, and came a mere week after Kate had got back from a week-long trip to Canada.

The stated purpose of the trip was Kate’s attendance at the opening of a remarkable new exhibition of Dutch Old Masters loaned to the country’s national gallery by the queen, “At Home in Holland: Vermeer and His Contemporaries From the British Royal Collection.”

However, conspiracy theorists in sections of the pro-Brexit British media—the Telegraph, the Daily Mail, and the Express, to name a few—were quick to pick up on and disseminate the notion that Kate’s visit was actually a sort of test run for a new stealth campaign that would involve the royals acting as roving international post-Brexit love-bombers, the idea apparently being that the promise of a visit by Kate Middleton wearing the queen’s earrings would somehow convince the Dutch government to do business with the U.K.

The Mail noted, “Kate has been heralded as a ‘secret weapon’ for U.K. diplomacy as the country faces Brexit negotiations,” while the Telegraph argued ahead of the trip that Kate would “be a ‘potent force’ in Britain’s bridge-building with EU countries as Brexit looms.”

The Telegraph story was based on a quotation, attributed to a “recently-retired British ambassador, who spoke on condition of anonymity.”

The mysterious diplomat’s actual quote, when taken in context, was rather less emphatic than the Telegraph’s introduction made out, and ran as follows: “We need to start beefing up our bilateral relationships with EU countries. Those links need to become stronger and the Royal family is a very potent force in that exercise. It would not surprise me if we see more trips to Europe by members of the Royal family because there are 27 countries and we will want to let them know that we haven’t left the scene.”

The Telegraph’s premonition that Kate’s visit to the Netherlands was actually some kind of secret business trip was justified on the day by the presence of the queen’s private secretary, Sir Christopher Geidt, among Kate’s entourage.

Certainly it was very unusual for Sir Christopher—a savvy political operator who is credited with ensuring that Prince Charles will take over from the queen as titular head of the Commonwealth—to accompany the duchess.

Buckingham Palace said that Geidt was attending in his capacity as a trustee of the Royal Collection, the body which owns the artworks on display, but many conspiracy theorists were quick to contend that Geidt was really there in a kind of Tyrion Lannister, hand of the king-type role, as a secret adviser to the Duchess.

According to this strain of opinion, Kate’s visit was a portent of the crucial role that the royal family will have in helping to safeguard the U.K.’s relations with its European neighbors as Brexit becomes a reality in the coming years.

There is a certain logic to the argument. After all, the official reasoning behind all international royal engagements is that they foster positive relationships between the U.K. and the country being visited, while also offering an opportunity to promote British interests abroad, while quietly selling the U.K. as a sophisticated tourist destination.

But whatever benefit Kate Middleton going to Holland might bring to the U.K. economy, it’s hard to imagine it would ever be an effective substitute for a common market.

The allegedly remarkable importance of the royals in our rosy post-Brexit future has been a line relentlessly sold by the pro-Brexit media for some time now.

The Telegraph has probably been the most entertaining of these voices, if you enjoy the theatre of the absurd.

The newspaper has rejoiced at the Brexit result.

Despite some dissenting voices, especially in the business pages, which, even the most ideological of editors and owners would concede need to retain some semblance of credibility on financial issues, the Telegraph has tried hard to convince its readers—typically older, whiter and wealthier than the general British population—that Brexit will be a wonderful new dawn, in which we will be free not only to repudiate undesirable immigrants from our shores but also joyfully purchase bananas in pounds and ounces.

Last month the Telegraph came up with their big idea; a campaign to re-launch the royal yacht Britannia!

Britannia, the luxurious royal yacht on which the royal family enjoyed many a splendid holiday, was retired by Tony Blair’s government in 1997. The queen was cross and upset, going so far as to shed a tear—and allegedly blackball Blair from William’s wedding 14 years later.

The Telegraph wheeled out a number of obliging old duffers and obscure Tory MPs to say what a brilliant idea this was. The biggest name was Michael Heseltine, who told the paper, “She was a symbol of many things about this country we have now not got.”

The royal yacht is portrayed by the Telegraph’s campaign as a wonderful mechanism by which to seduce foreign leaders and decision makers, but the truth is that Britannia was always much more about being a luxurious floating fortress for the royals, an environment they could completely control. The queen once said of the yacht, “Britannia is the one place I can truly relax.”

In an illustration of just how the success of the Brexit movement has emboldened politicians to market self-interested xenophobia as fiscally responsible patriotism, one MP, Gerald Howarth, a former defense minister, argued that money “should be diverted from the annual aid budget and spent on a £120 million successor to the royal yacht.”

Unfortunately, that the absurd plan to revive Britannia should have found so many backers, apparently intoxicated by the heady brew of royalty, patriotism and arrogance is not entirely surprising, when you consider that many of the same people think it’s a good idea to replace a long-standing and successful continental trade deal with the undoubted charms of Kate Middleton.

Article Link To The Daily Beast:

A Pound Of Worry

Those theories that sterling’s fall will help the U.K. economy? Wrong.

By Review & Outlook
The Wall Street Journal
October 13, 2016

Markets have reacted sourly to British Prime Minister Theresa May’s Brexit agenda, with the pound on Tuesday hitting a historic low against a basket of currencies. Some of our Keynesian friends are saying that’s nothing to worry about, since a falling currency will also boost British exports and gain market share by making them cheaper. Not quite.

It’s true that some U.K. merchants—luxury retailers and hotels come to mind—have profited as a weak pound makes Britain more attractive to foreign visitors. A September survey of manufacturers also shows export orders are picking up somewhat, though manufacturers also are starting to worry about the potential for rising import costs.

But those benefits obscure the limits to how much Britain can gain from a cheaper pound. In Japan a 40% yen depreciation between 2012 and 2014 barely budged export volumes. Japanese export growth still trails that of neighbors such as South Korea, against which a weak yen is supposed to offer an advantage.

This happens because demand for exports from economies such as Britain’s depends on more than simple price competition. Britain long ago replaced price-sensitive industries such as textiles and cars with pharmaceuticals, precision tools and other ultra-high-tech companies whose customers will buy their products at nearly any price because they can’t easily find substitutes.

Meanwhile, the costs of a cheap pound will be considerable for an economy as dependent on imports as Britain is. Roughly 25% of the value of Britain’s final exports originated abroad in the form of imported inputs in 2011, the most recent year for which we have data, and that figure has risen steadily. Rising input costs limit any pricing benefits from a cheap pound.

As for households, they rely on imports for more than 40% of the clothes they buy, 30% of their food, half of their shoes and nearly 57% of the spare parts for their cars. Britain also imports much of its fuel, and the weak pound is helping to push gasoline prices to their highest level in a year and rising. That means employers will quickly face demands for higher wages as a weak pound leads to higher prices.

To protect themselves from these effects, U.K. firms have been raising, not cutting, pound-denominated prices. As the pound fell 15% between November 2015 and July, exporters increased pound-denominated prices by 11%, according to Pantheon Macroeconomics. This would be a boon if companies used their additional sterling profits to invest in capital upgrades and additional capacity at home. But British businesses are likely to delay investments while they wait to see what trading relations Britain develops after Brexit and whether Mrs. May will liberalize the economy to stimulate growth. Given these worries, it’s especially hard to see how a slumping pound will magically boost exports.

Japan again leads the way: Despite rising profitability for exporters as the yen depreciated, capital expenditure hasn’t returned to its pre-2008 level and companies instead are hoarding cash or engaging in financial engineering such as a record level of share buybacks this year.

Rather than pretend that a plunging pound is a disguised blessing, Brexit supporters should treat it as a warning. Global investors, on whom Britain depends to finance its trade deficit, are worried about regulatory, trade and immigration policies that would deter investment and depress growth. Britain can’t devalue its way to success. Only an aggressive free-trade, pro-liberalization agenda will work.

Article Link To The Wall Street Journal:

The Tarnished Golden Rule

By Lucy P. Marcus
Project Syndicate
October 13, 2016

“Do unto others as you would have them do unto you.” What a simple and logical concept – a straightforward way to resolve knotty moral dilemmas. Yet, at a time when distinguishing right from wrong seems to be more difficult than ever, this classic postulate – the “Golden Rule” – seems to be going out of fashion.

The ethical norm of reciprocity pervades human history, beginning with the ancient civilizations in Egypt, Greece, India, and China. It is among the only intellectual threads that connect the teachings of virtually every major religion and those of philosophers through the ages, from classical Rome’s Seneca the Younger to Jean-Jacques Rousseau and John Locke, and on to Jean-Paul Sartre and John Rawls.

The Golden Rule is the backbone of our modern understanding of universal human rights and forms the core of the modern social contract. It is the starting point of our interactions with one another within our communities and on a global basis. It underpins the rise of today’s sharing economy, exemplified by Uber and Airbnb. It even guides our personal relationships.

But the Golden Rule is under assault, and those with the most influence are leading the charge. Politicians, even in the world’s supposedly enlightened democracies, are refusing to provide refuge to desperate people fleeing brutal war; making little, if any, effort to address high and rising economic inequality; and are all but ignoring the factors driving civil-rights movements like America’s Black Lives Matter.

This lack of empathy is frightening, and it is not limited to politics. At a time when business has massive – perhaps even excessive – influence worldwide, companies, in their drive for profit or power, often disregard their own societal obligations.

Consider the case of Theranos, a biotech company founded by Elizabeth Holmes in 2003 that promised to revolutionize blood tests. For several years, the company’s “Edison” blood-testing devices were lauded as groundbreaking. Theranos boasted reputable financial backers, partnerships with a large number of pharmacies, and a board that seemed very impressive on paper. Its valuation skyrocketed to $9 billion.

Last year, the truth came out: Theranos was all smoke and mirrors. Not only were the vast majority of the lab tests the company offered conducted on traditional machines; many of the results it was producing were inaccurate. In fact, it later emerged that Theranos had stopped using the Edison machines altogether in the summer of 2015, and had voided results from them that had been issued since 2014, sending tens of thousands of corrected reports to physicians and patients.

But Theranos could not void the damage. It was, after all, in the health-care industry; it wasn’t selling socks or soap. Its mistakes had real-world consequences for the many patients who had based their health decisions on erroneous data.

It is hard to fathom the hubris and callous disregard for human beings that enables a CEO and management team to play with people’s health and hopes in such a manner. Holmes, who was touting her company’s transparency and reveling in its massive valuation long after she knew that the Edison machines were not cutting it, did not just break the Golden Rule; she melted it down.

And she has plenty of company. The Panama Papers – the leaked files of the world’s fourth-largest offshore law firm, Mossack Fonseca – provided a glimpse of the lengths to which people go to hide their assets and avoid paying taxes. Major multinationals like Apple, Amazon, and Starbucks have structured their businesses to minimize taxes to such an extent that they are now facing sanctions from the likes of the European Union. The New York Times recently disclosed that US presidential candidate Donald Trump is a tax-avoidance enthusiast, as well.

Trump calls tax avoidance “smart.” Most people, including me, call it selfish, insidious, irresponsible, and a breach of the social contract that enabled him and his family to accrue their wealth in the first place. Any society that made a virtue out of his reckless and self-serving behavior could not function, much less prosper.

Yet such behavior is increasingly common, with serious consequences. In the United Kingdom, political leaders stoked fears and made impossible promises – ultimately bringing about a vote to “Brexit” the EU. The new president of the Philippines, Rodrigo Duterte, has launched what is essentially a war on human rights, while pursuing an isolating path of aggressive behavior toward other countries.

The Trump campaign may be collapsing under the weight of its standard-bearer’s personal history; but an important reason it got this far is that it advanced the lie that American workers would benefit from the construction of a wall – both literal and metaphorical – around the country. The truth, however, is that Trump’s isolationist approach – which will not die with his defeat next month – would have the opposite impact.

The reciprocity norm has been virtually omnipresent since the dawn of human civilization. Yet we cannot take it for granted. We must not lose sight of its value, in our personal or professional lives, and we must not allow our leaders to do so, either.

Article Link To Project Syndicate:

U.S. Military Strikes Yemen After Missile Attacks On U.S. Navy Ship

By Phil Stewart 
October 13, 2016

The U.S. military launched cruise missile strikes on Thursday to knock out three coastal radar sites in areas of Yemen controlled by Iran-aligned Houthi forces, retaliating after failed missile attacks this week on a U.S. Navy destroyer, U.S. officials said.

The strikes, authorized by President Barack Obama, represent Washington's first direct military action against suspected Houthi-controlled targets in Yemen's conflict.

Still, the Pentagon appeared to stress the limited nature of the strikes, which were aimed at radar that enabled the launch of at least three missiles against the U.S. Navy destroyer USS Mason since Sunday.

"These limited self-defense strikes were conducted to protect our personnel, our ships, and our freedom of navigation," Pentagon spokesman Peter Cook said.

U.S. officials, speaking on condition of anonymity, said U.S. Navy destroyer USS Nitze launched the Tomahawk cruise missiles around 4 a.m. local (0100 GMT).

"These radars were active during previous attacks and attempted attacks on ships in the Red Sea," including the USS Mason, one of the officials said, adding the targeted radar sites were in remote areas where the risk of civilian casualties was low.

The official identified the areas in Yemen where the radar were located as: near Ras Isa, north of Mukha and near Khoka.

The failed missile attacks on the USS Mason - the latest of which took place on Wednesday - appeared to be part of the reaction to a suspected Saudi-led strike on mourners gathered in Yemen's Houthi-held capital Sanaa.

Michael Knights, an expert on Yemen's conflict at the Washington Institute for Near East Policy, suggested the Houthis, fighters from a Shi'ite sect, could be becoming more militarily aligned with groups such as Lebanon's Shi'ite militant group Hezbollah.

"Targeting U.S. warships is a sign that the Houthis have decided to join the axis of resistance that currently includes Lebanese Hezbollah, Hamas and Iran," Knight said.

The Houthis, who are battling the internationally-recognized government of Yemen President Abd Rabbu Mansour al-Hadi, denied any involvement in Sunday's attempt to strike the USS Mason.

But U.S. officials have told Reuters there were growing indications that Houthis fighters, or forces aligned with them, were responsible for Sunday's attempted strikes, in which two coastal cruise missiles designed to target ships failed to reach the destroyer.

The missile incidents, along with an Oct. 1 strike on a vessel from the United Arab Emirates, add to questions about safety of passage for military ships around the Bab al-Mandab Strait, one of the world's busiest shipping routes.

The Houthis, who are allied to Hadi's predecessor Ali Abdullah Saleh, have the support of many army units and control most of the north, including the capital, Sanaa.

The Pentagon warned against any future attacks.

"The United States will respond to any further threat to our ships and commercial traffic, as appropriate," Cook said.

Although Thursday's strikes against the radar aim to undercut the ability to track and target U.S. ships, the Houthis are still believed to possess missiles that could pose a threat.

Reuters has reported that the coastal defense cruise missiles themselves used against the USS Mason had considerable range, fuelling concern about the kind of weaponry the Houthis appear willing to employ and some of which, U.S. officials believe, is supplied by Iran.

One of the missiles fired on Sunday, for example, traveled more than two dozen nautical miles before splashing into the Red Sea off Yemen's southern coast, one U.S. official said.

Article Link To Reuters:

Putin Ally Tells Americans: Vote Trump Or Face Nuclear War

By Andrew Osborn
October 13, 2016

Americans should vote for Donald Trump as president next month or risk being dragged into a nuclear war, according to a Russian ultra-nationalist ally of President Vladimir Putin who likes to compare himself to the U.S. Republican candidate.

Vladimir Zhirinovsky, a flamboyant veteran lawmaker known for his fiery rhetoric, told Reuters in an interview that Trump was the only person able to de-escalate dangerous tensions between Moscow and Washington.

By contrast, Trump's Democratic rival Hillary Clinton could spark World War Three, said Zhirinovsky, who received a top state award from Putin after his pro-Kremlin Liberal Democratic Party of Russia (LDPR) came third in Russia's parliamentary election last month.

Many Russians regard Zhirinovsky as a clownish figure who makes outspoken statements to grab attention but he is also widely viewed as a faithful servant of Kremlin policy, sometimes used to float radical opinions to test public reaction.

"Relations between Russia and the United States can't get any worse. The only way they can get worse is if a war starts," said Zhirinovsky, speaking in his huge office on the 10th floor of Russia's State Duma, or lower house of parliament.

"Americans voting for a president on Nov. 8 must realize that they are voting for peace on Planet Earth if they vote for Trump. But if they vote for Hillary it's war. It will be a short movie. There will be Hiroshimas and Nagasakis everywhere."

Zhirinovsky's comments coincide with deep disagreements between Washington and Moscow over Syria and Ukraine and after the White House last week accused Russia of a campaign of cyber attacks against Democratic Party organizations.

Even as WikiLeaks released another trove of internal documents from Clinton’s campaign on Wednesday, Putin insisted his country was not involved in an effort to influence the U.S. presidential election.

The Russian Trump?

Zhirinovsky likes to shock liberal public opinion and he has frequently heaped scorn on the West, which he and other Russian nationalists regard as decadent, hypocritical and corrupted by political correctness.

His combative style, reminiscent of Trump's, ensures him plenty of television air time and millions of votes in Russian elections, often from the kind of blue-collar workers who are the bedrock of the U.S. Republican candidate's support.

Zhirinovsky once proposed blocking off mostly Muslim southern Russia with a barbed wire fence, echoing Trump's call for a wall along the U.S. border with Mexico.

Zhirinovsky, who said he met Trump in New York in 2002, revels in his similarities with the American businessman - they are the same age, favor coarse, sometimes misogynistic language and boast about putting their own country first. Zhirinovsky has even said he wants a DNA test to see if he is related to Trump.

But unlike Trump, a billionaire real estate developer who casts himself as the anti-establishment candidate in the U.S. presidential race with no past political experience, Zhirinovsky is a consummate political insider who has sat in the Duma for more than two decades.

Putin has also praised Trump as "very talented", while the Republican candidate has said the Kremlin boss is a better leader than U.S. President Barack Obama. Clinton has accused Trump of being too cozy with Putin and questioned his business interests in Russia.

In other comments that have delighted Moscow, Trump has questioned the value of NATO for Washington, has spoken ambiguously about Russia's 2014 annexation of Ukraine's Crimea and suggested that the United States under his leadership would adopt a more isolationist foreign policy.

"He (Trump) won't care about Syria, Libya and Iraq and why an earth should America interfere in these countries? And Ukraine. Who needs Ukraine?," said Zhirinovsky, who once counted himself a friend of Iraq's Saddam Hussein and Libyan dictator Muammar Gaddafi and whose deaths he still laments.

"Trump will have a brilliant chance to make relations more peaceful ... He's the only one who can do this," he said, adding that Trump could even win a Nobel peace prize.

Clinton "Craves Power"

In contrast, Zhirinovsky described Clinton as "an evil mother-in law" and said her record as secretary of state under Obama in 2009-2013 showed she was unfit to lead her country.

"She craves power. Her view is that Hillary is the most important person on the planet, that America is an exceptional country, as Barack Obama said," said Zhirinovsky. "That's dangerous. She could start a nuclear war."

In typically chauvinistic remarks, Zhirinovsky said Clinton's gender should also bar her from the presidency.

"Most Americans should choose Trump because men have been leading for millions of year. You can't take the risk of having one of the richest, most powerful countries led by a woman president," he said.

Asked about lewd comments Trump made about women in 2005 that have harmed his campaign, Zhirinovsky defended the Republican: "Men all round the world sometimes say such things that are just for their comrades. We must only consider his business (and political) qualities."

Though Putin and Trump have never met, Zhirinovsky said he believed they could establish a close working relationship, adding: "Victory for Trump would be a gift to humanity. But if Hillary Clinton wins it will be the last U.S. president ever."

Article Link To Reuters:

Thursday, October 13, Morning Global Market Roundup: Asia Stocks Stumble As Weak China Trade Data Raise Growth Concerns

By Saikat Chatterjee 
October 13, 2016

Asian stocks stumbled to three-week lows and U.S. stock futures and Treasury yields fell after China's September trade data showed a sharp decline in exports, raising fresh concerns about the health of the world's second biggest economy.

Risky assets have had a torrid start to the final quarter of 2016 after recent outperformance as concerns around the outcome of U.S. elections, fallout from a "hard Brexit" and a struggling German banking sector spread turmoil in markets.

Early on Thursday, the mood soured after data showed Chinese imports in dollar terms were back in contractionary territory in September while exports dropped by a sharper-than-expected 10 percent.

The weak trade data fueled a broader-risk off move. Some analysts said the soft data also raised concerns that China may pursue a weaker currency policy in the coming months, stoking deflationary pressures for the rest of the region at a time when corporate earnings' growth has slowed.

"The continued underwhelming performance of Chinese exports adds weight to our view that the People’s Bank will maintain its recent policy of gradual trade-weighted renminbi depreciation in coming quarters," economists at Capital Economics wrote in a note.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, its lowest since Sept. 19. Hong Kong stocks fell 1.5 percent in opening trades while Japanese shares were down 0.4 percent.

"The China data has exacerbated the broad cautious mood and we should see more gains for the yen and other safe-haven assets," said a currency trader at an Asian bank in Hong Kong.

Ten-year yields on U.S. Treasury debt fell five basis points to 1.74 percent, a relatively large move in the Asian timezone, while U.S. stock futures deepened losses to be down 0.6 percent on the day.

Despite the broad pull back in U.S. Treasury yields, markets were relatively more confident in the view of a likely rate increase in December.

"In our view, if you came into these minutes with a December hike penciled in, there is no reason to change your stance," Omair Sharif, an economist at Societe Generale, wrote in a note.

Wall Street struggled to find fresh momentum after breaking conclusively below a 100-day moving average this week. The Dow Jones industrial average closed up 0.09 percent, while the S&P 500 gained 0.11 percent. [.N]

The CBOE Volatility Index, the "fear gauge" of near-term investor anxiety, held just below 16, indicating broader market uncertainty.

Elsewhere, sterling treaded water after British Prime Minister Theresa May's offer to give UK lawmakers a say in plans to leave the European Union.

Within Asia, the Thai baht will be in focus after falling to an eight-month low in the previous session on concerns about the health of 88-year-old King Bhumibol Adulyadej. The health of the world's longest reigning monarch has "overall not yet stabilised", the palace said on Wednesday.

Oil prices struggled following a 1 percent drop overnight after the Organization of Petroleum Exporting Countries reported its output hit an eight-year high in September, offsetting optimism over the group's pledge to restrict output.

U.S. West Texas Intermediate crude slipped 1.1 percent to trade at $49.62 a barrel. Gold stabilized around the $1,250 per ounce level after falling sharply last week.

Article Link To Reuters:

A Fed Divided Against Itself

By Mohamed A. El-Erian
The Bloomberg View
October 13, 2016

The minutes of the September meeting of the Federal Reserve’s Open Market Committee released Wednesday explained why three Fed board members had dissented from the majority’s “close call” decision to keep rates unchanged. The highly anticipated transcript provides insights into internal and external developments, illustrating the “unusual uncertainty” that policy makers must contend with.

The transcript is an important reminder of how difficult it has become to maintain a high level of conviction about the correct policy in a time of such fluidity in the economic, financial, political and institutional environment.

Here are the main takeaways, including those where there seems to be broad agreement, those where there are differences and ending with what proved to be the missing tiebreaker.

Fed officials agreed that “the labor market has continued to strengthen” and that this is highly likely to remain the case in the period ahead. As a result, economic activity is expected to continue to expand “at a moderate rate.” Policy makers also agreed that external economic conditions, including the aftershocks of the Brexit referendum, were less threatening. In addition, they stated that “global financial conditions had improved somewhat in recent months.” This anchored the view that “near-term risks to the economic outlook” are “roughly balanced.”

When looking at the details of developments in the U.S. labor market, officials correctly noted the need to take a further look at “differential patterns of unemployment across racial and ethnic groups that remained after taking education into account.” This is both warranted and important, especially given the extent to which growth (which has been too low to begin with) has been insufficiently inclusive.

The central bankers also seemed united in acknowledging a phenomenon that is now attracting greater analytical attention in many quarters: “the apparent fall over recent years in the neutral real rate of interest -- or r*.” That is a reference to the “equilibrium” rate -- the federal funds rate that neither stimulates nor restrains growth and stable inflation.

However, even though officials cited contributing factors to the lowering of r*, they are said to have disagreed on the extent and durability of the fall.

This leads us to areas where Fed officials have yet to arrive at a common viewpoint.

They disagreed about the overall looseness remaining in the labor force. Some “judged that the labor market had little or no remaining slack,” while a larger number felt there was more room. The September jobs report, which came out after their meeting, does not help to resolve this difference.

The gaps in perception reflect more than the inherent difficulty of making judgments about the potential for an increase in a labor participation rate that, disappointingly, is still too close to multi-decade lows. There is also genuine uncertainty about today’s process for setting wages, especially in the context of the evolving influence of technology.

Given these differences, it should come as no surprise that “the decision at this meeting was a close call.” After all, the economic considerations are rather balanced. Indeed, as I have argued previously, it is hard to expect a tie-breaking stance to emerge. But this is not to say such a position doesn’t exist. It is just that Fed officials seem hesitant to embrace it openly.

Although the minutes contain some mention of the risk of excessive leverage, as well as the danger from higher savings due to threats to the institutional effectiveness of long-term providers of financial services (such as pensions, endowments and life insurance), Fed officials appear to have shied away from a discussion of how prolonged reliance on ultra-low rates (and negative ones in Europe and Japan) is increasing the threat of future economic and financial instability.

Had officials taken these circumstances into account, an understandably “close call” on economic considerations alone would have turned into an argument to hike interest rates, and could have been a reminder to market participants that this cycle will be unusually shallow, with irregularly paced increases and an endpoint that is far lower than historical averages.

Article Link To The Bloomberg View:

Samsung Slashes Third Quarter Profit Estimate By A Third After Pulling Plug On Note 7

By Se Young Lee 
October 13, 2016

Samsung Electronics Co (005930.KS) slashed its quarterly profit estimate by a third on Wednesday, soaking up a $2.3 billion hit from ditching its flagship smartphone in what could be one of the costliest product safety failures in tech history.

Quantifying the financial pain of Tuesday's move to scrap the Galaxy Note 7 smartphone after a global recall and weeks of mounting problems, the world's top smartphone maker said it expects its July-September operating profit was 5.2 trillion won ($4.7 billion), down from the 7.8 trillion won it estimated five days ago.

Samsung said in a statement the 2.6 trillion won ($2.3 billion) guidance cut reflects the sales and earning impact it currently expects from the decision to permanently halt sales of the $882 Note 7 device. Its third-quarter revenue estimate was also cut to 47 trillion won from 49 trillion won previously.

The new earnings guidance is 30 percent below third-quarter 2015's operating profit, and left investors and analysts pondering the longer impact on Samsung's brand and earnings. Rival suppliers of smartphones that use the Android operating system, like Samsung's, stand to benefit if the Note 7 damage drive consumers elsewhere.

"It's possible there could be additional profit impact in the fourth quarter but it likely won't be as large as the third quarter," said Park Jung-hoon, a fund manager at HDC Asset Management, which owns shares in Samsung. "I think it's possible for fourth-quarter profits to come in as much as the high 7 trillion won range."

Samsung shares ended down 0.7 percent on Wednesday, with the Seoul market closing before the earnings guidance cut was announced.

HDC's Park said the initial guidance issued last week likely already factored in a 1 trillion won profit impact, putting the total third-quarter earnings hit at around 3.6 trillion won. While this was a major blow, he said some investors had feared the profit impact could be as large as 5 trillion won this year.

Billion-Dollar Buyback?

Samsung shares have already fallen 10 percent this week and are on track for their biggest weekly decline since May 2012, having touched a one-month low of 1.494 million won as investors worried the Note 7 crisis could inflict long-term damage on Samsung's reputation and earnings.

Some investors said Samsung may need to return more cash to shareholders, either through a dividend or additional buybacks, to calm market jitters. HDC's Park said the cash-rich firm may need to announce a buyback of between 2 trillion won and 3 trillion won in order to mollify shareholders whose nerves have been jangled.

The tech giant announced the recall of 2.5 million Note 7s in early September following reports of the phones catching fire. The firm appeared to have the situation under control as it issued replacement devices with different batteries, until new phones also began to smoke and combust.

Investors and analysts agreed that the damage to Samsung's brand and future earnings would deepen the longer the market was left in the dark about the origin of the fault. Some have already predicted lost revenue in the region of $17 billion for Samsung.

"There needs to be explanation from Samsung in order for consumers to understand that problems won't occur in the next models...Samsung needs to clearly explain and admit what went wrong," said IBK Asset Management fund manager Kim Hyun-su. The asset manager owns shares in Samsung.

Samsung would likely push ahead to get the latest version of its premium S-series smartphones to market as soon as possible, fund managers said. Typically, the South Korean company unveils a new Galaxy S phone on the sidelines of the Mobile World Congress tech trade show in the first quarter as it battles Apple Inc (AAPL.O) to stay at the top of the smartphone market.

'Damage Control'

Experts are baffled by what could be causing the overheating in the replacement phones, if not the batteries, and Samsung has not commented.

An official at the Korean Agency for Technology and Standards, which is investigating the problem alongside Samsung, said the fault in the replacement devices might not be the same as the problem in the original product. The official asked not to be identified as he was not authorized to speak publicly.

Aviation authorities and airlines around the world are telling passengers to switch off their Note 7s and keep them out of checked baggage, amid fears they could bring down a plane.

"Damage control at Samsung will face an uphill battle to redeem the company's tarnished image owing to the dangerous and dramatic nature of the phone's failure," Vijay Michalik, an analyst at research firm Frost & Sullivan, said.

While the damage to Samsung's brand, if not its earnings, remains hard to quantify, negative publicity from the botched recall could touch off a turf war among Android smartphone manufacturers, analysts said.

Consumers tend to commit to their choice between Apple's iOS operating system and Google's Android, leaving Samsung's fellow Android manufacturers such as LG Electronics Inc (066570.KS) and Alphabet Inc's (GOOGL.O) Google in prime position to strike.

($1 = 1,114.7500 won)

Article Link To Reuters:

Dollar Falls From 2-1/2 Month High Versus Yen After Weak China Trade Data

By Masayuki Kitano 
October 13, 2016

The dollar pulled back from a 2-1/2 month high against the yen on Thursday after surprisingly weak Chinese trade data stirred fresh concern about the world's second-largest economy.

The dollar dropped to as low as 103.555 yen JPY= at one point, down 1 percent from the day's high of 104.635 yen, which was the greenback's strongest level since late July.

The dollar last stood at 103.84 yen, down 0.3 percent from late U.S. levels on Wednesday.

The safe haven yen pushed higher after data showed that China's exports denominated in yuan fell 5.6 percent in September from a year earlier.

September dollar-denominated exports later showed that exports fell 10 percent from a year earlier, far worse than expected.

China's imports unexpectedly shrank 1.9 percent after picking up in August, suggesting recent signs of steadying in the economy may be short-lived.

The weak Chinese trade data triggered a fall in equities and a drop in U.S. bond yields and gave a lift to the yen, a safe haven currency that tends to rise in times of market stress.

"There have been expectations that the Chinese economy is stabilizing because of fiscal stimulus... at the same time there's also expectations that the global trade slowdown that we have endured seems to be coming to an end," said Sim Moh Siong, FX strategist for Bank of Singapore.

"I think this Chinese data has challenged the expectations," he said.

Against a basket of six major currencies, the dollar last stood at 97.868 .DXY, having pulled back from a seven-month high of 98.122 set earlier on Thursday.

The dollar has been supported by growing market expectations that the U.S. Federal Reserve will raise interest rates in December, and rising U.S. bond yields.

The U.S. 10-year Treasury yield stood at 1.7428 percent US10YT=RR in Asian trade on Thursday, after climbing to a four-month high of 1.801 percent on Wednesday.

Minutes of the Federal Reserve's September policy meeting released on Wednesday showed several voting members of the policy committee judged a rate hike would be warranted "relatively soon" if the U.S. economy continued to strengthen.

"Whether the latest bull phase by the dollar is real or not depends on how the various U.S. asset markets can co-exist with the prospects of a Fed hike," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

The euro inched up 0.2 percent to $1.1024 EUR=, getting some respite after slipping to $1.1002 earlier on Thursday, its lowest level since late July.

Sterling fell 0.2 percent to $1.2183 GBP=D4, after rising about 0.7 percent on Wednesday.

Sterling had rebounded on Wednesday after British Prime Minister Theresa May said she would give lawmakers some scrutiny of the Brexit process and would seek "maximum possible access" to Europe's single market.

Woes for sterling appeared far from over, however, as May sounded less concessionary when speaking in parliament.

Sterling had set a 31-year low below $1.1500 last Friday on worries about the possibility of a "hard Brexit" scenario that is seen as leaving Britain out of the European Union's single market.

The yuan CNY=CFXS dipped to 6.7277 to the dollar after the central bank set a weaker mid-point for the seventh session in a row. It recently reached the key psychological mark of 6.7 after authorities had kept it relatively steady since mid-July.

"The continued underwhelming performance of Chinese exports adds weight to our view that the People’s Bank will maintain its recent policy of gradual trade-weighted renminbi depreciation in coming quarters," economists at Capital Economics wrote in a note.

Article Link To Reuters:

Hanjin Shipping Asia-U.S. Operations To Be Put Up For Sale As Early As Friday

By Joyce Lee
October 13, 2016

The South Korean court overseeing Hanjin Shipping Co's (117930.KS) receivership process plans to put the collapsed shipper's Asia-U.S. operations up for sale as early as Friday, a court spokesman said on Thursday.

The sale comes as creditors line up claims less than two months after the company, applied for court receivership as the first major shipping line to be dragged down by global industry overcapacity and comparatively low freight rates. The firm had total debt of 6.03 trillion won ($5.41 billion) as of end-June, according to its court filing.

Hanjin Shipping shares surged 14 percent on hopes for the asset sale, and were trading 8.8 percent higher as of 0124 GMT. The stock has tumbled about 34 percent since late August.

Hanjin Shipping received court approval to seek buyers for assets in order to pay back creditors now in the process of making claims until October 25. Its container ship capacity had shrunk to 17th place in global rankings as of Oct. 9, according to shipping data provider Alphaliner.

The spokesman for the Seoul Central District Court said the deadline for binding bids is expected to be Nov. 7. He declined to comment on potential price or interested parties for the assets.

The assets likely to be put up for sale include the manpower and operating systems for Hanjin Shipping's U.S.-Asia routes, five container ships, seven overseas businesses and logistics operation systems. Terms of the sale are subject to change.

Article Link To Reuters:

China September Exports Fall More Than Expected, Imports Back In Contraction

By Kevin Yao
October 13, 2016

China's September exports fell 10 percent from a year earlier, far worse than expected, while imports unexpectedly shrank 1.9 percent after picking up in August, suggesting signs of steadying in the world's second-largest economy may be short-lived.

That left the country with a trade surplus of $41.99 billion for the month, the General Administration of Customs said on Thursday.

Analysts polled by Reuters had expected imports to rise 1 percent, after unexpectedly advancing 1.5 percent in August for the first time in nearly two years on stronger demand for coal as well as other commodities such as iron ore which are feeding a construction boom.

Exports had been expected to fall 3 percent, slightly worse than in August as global demand for Asian goods remains stubbornly weak.

Analysts had expected the trade surplus to expand to $53 billion in September from August's $52.05 billion.

The September import reversal raises questions over the strength of the recent recovery in domestic demand, Julian Evans-Pritchard at Capital Economics said in a note after the data.

"The data we have so far suggests that a drop in import volumes of a number of key commodities, including iron ore and copper, are partly responsible," he said.

"This could be an early sign that the recent recovery in economic activity is losing momentum, although we would caution against reading too much into a single data point given the volatility of the trade figures."

A rebound in global commodity prices in recent months has helped temper China's long export and import slump, but the country's foreign trade still faces significant downward pressure, Xinhua news agency reported last week, citing Shen Danyang, a spokesman for the Ministry of Commerce.

Last month, the World Trade Organization cut its forecast for global trade growth this year by more than a third to 1.7 percent, reflecting a slowdown in China and falling levels of imports into the United States.

China's economy has shown signs of steadying in recent months, but conditions are uneven, with larger industrial firms expanding their activity and seeing higher profits, while smaller companies continue to struggle.

China's economic growth also has become more dependant on a government infrastructure spending spree and a housing boom as private investment fizzles and exports remain sluggish.

Article Link To Reuters:

Oil Prices Fall On Higher OPEC Output, Rise In U.S. Crude Stocks

By Henning Gloystein 
October 13, 2016

Oil prices fell on Thursday after OPEC said its production had risen to the highest level in at least eight years and following reports of an increase in U.S. crude stockpiles.

International Brent crude oil futures LCOc1 were trading at $51.37 per barrel at 0256 GMT, down 44 cents, or 0.85 percent, from their previous close.

U.S. West Texas Intermediate (WTI) crude futures were down 54 cents, or 1.08 percent, at $49.64 per barrel.

Traders said oil markets had come under pressure after the Organization of the Petroleum Exporting Countries (OPEC) reported a rise in output, despite the producer cartel having plans, potentially with non-OPEC producer Russia, to cut output in a bid to rein in a global supply overhang.

"Crude responded predictably, with both Brent and WTI falling," said Jeffrey Halley, senior market analyst at brokerage OANDA in Singapore.

OPEC on Wednesday reported its oil production climbed in September to the highest in at least eight years and raised its forecast for 2017 non-OPEC supply growth, pointing to a larger surplus next year despite the group's deal to cut output.

The producer cartel pumped 33.39 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, up 220,000 bpd from August.

"In the absence of any OPEC-Russia headlines to give crude its daily adrenaline shot, the market looks nervously to the EIA Crude Inventory figures due in the U.S. this evening," Halley added.

The U.S. Energy Information Administration (EIA) is due to publish official storage inventory data later on Thursday.

The American Petroleum Institute, a trade group, reported on Wednesday that U.S. crude inventories rose by 2.7 million barrels to 470.9 million barrels in the week to Oct. 7. This would be the first rise in oil stocks following five straight weeks of declines.

"Seasonally softer gasoline consumption, flagging demand from China and the return of refineries from maintenance will likely drive up global stock levels over Q4," BMI Research said in a note, but added that it did not see stocks returning to 2015 highs.

Traders said a strong dollar, which was hovering near seven-month highs on Thursday .DXY on reinforced prospects for a near-term U.S. interest rate hike, was also weighing on crude futures.

A stronger dollar makes it more expensive for countries who use other currencies domestically to import dollar-traded oil, potentially weighing on demand.

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Investors May Be Betting Oil Glut Will End Soon, But Crude Traders Beg To Differ

October 13, 2016

Investors may have driven crude oil futures prices above $50 a barrel and amassed large bullish positions in expectations of further gains to come but their optimism isn’t shared by the people who produce, refine, ship or trade the real stuff on a daily basis.

They inhabit a very different world in which there is plenty of oil sloshing around and buyers can get cargoes of crude at discounts to their official selling prices. Neither do they see much of an impact anytime soon from plans by members of the Organization of the Petroleum Exporting Countries (OPEC) to cut production from record highs PRODN-TOTAL as they seek to rein in two years of oversupply.

Ian Taylor, chief executive of commodities trading giant Vitol, told Reuters this week that there is more physical crude around than the futures prices are indicating.

Global oil production has outpaced consumption since at least early 2015, with the current mismatch at about half a million barrels every day, according to data on Thomson Reuters’ Eikon.

Jeffrey Halley, senior analyst at brokerage OANDA warned that while the financial markets were becoming more confident, "the reality is the world is pumping a lot more oil than it uses."

Consequently, crude futures are trading at premiums to their underlying physical grades. Brent futures LCOc1 are currently at a premium of about $2 a barrel to the main physical cargoes that underpin those contracts.

And in a further sign of a well-supplied market, Middle East crudes from the United Arab Emirates and Qatar last month traded in the spot market at discounts of as much as 25 cents a barrel to their official selling prices.

Producer's Hedging 

Market data shows that just as financial traders have amassed long positions, producers have built up large short positions in the crude futures market. That helps them to hedge against any possible plunge in the prices of the crude they sell.

Some in the financial markets are taking notice.

Goldman Sachs told clients this week that despite a production cut becoming a "greater possibility", markets were unlikely to rebalance in 2017, warning of another price fall to the low $40s per barrel. That would be a repeat of 2015 when financial markets pushed up prices just to slump back amid the ongoing glut.

Many investors, though, are betting on the days of oversupply ending within a few months. They are supported by energy economists and strategists at some of the other banks.

"The oil market is irrevocably gravitating towards equilibrium, leading to higher prices," said Hans van Cleef, senior energy economist at Dutch bank ABN Amro in a note to clients this week.

A collapse in the gold XAU= to oil price ratio supports the bullish sentiment.

The ratio between these two key commodities has plunged from 40 to below 25, and the head of oil research at Japan's Nomura bank, Gordon Kwan, said this implied either higher oil or lower gold going forward.

"One reason the gold/oil ratio spikes around periods of financial crisis is because oil prices tend to fall when economic growth is weak and investors are worried, while gold thrives in that environment," he added.

"Assuming gold stabilizes at $1,250, if the gold/oil ratio hits 20x, this implies oil price could rise above $60 per barrel, consistent with our 2017 Brent crude average forecast," Kwan said.

Morgan Stanley said this week that it expected Brent prices to rise from an average of $42 per barrel this year to $51 in 2017 and to $70 on average for 2018.

But, while the focus is on OPEC's proposed cut, with Russia possibly joining, others warn output is creeping up elsewhere.

Eikon data shows that the amount of U.S. rigs drilling for new production has steadily increased since May RIG-USA-BHI.

"Productivity has surprised on the upside... and with the rig count slowly climbing upwards one can be cautiously optimistic that the U.S. shale industry is gearing up for a recovery," said Ted Young, chief financial officer of Dorian LPG, one of the world's biggest shippers of liquefied petroleum gas (LPG).

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Wells Fargo's New CEO Faces Immediate Test

By Dan Freed
October 13, 2016

Tim Sloan will not have much time to prepare his pitch for Wall Street.

The newly installed chief executive of Wells Fargo & Co (WFC.N) will present third-quarter results on Friday, less than 48 hours after replacing John Stumpf at the helm of the bank.

Investors are seeking reassurance that Wells Fargo can rebuild its reputation and retain profits while overhauling the hard-charging sales culture at the heart of a scandal over unauthorized accounts.

Sloan's nearly 30 years with Wells, largely spent on the corporate and institutional side of the bank, and his moderate temperament make him a safe pair of hands.

But as chief operating officer of the bank since November 2015, he had oversight over Wells' retail division, where employees opened up to 2 million accounts without customers' knowledge, some of them during his tenure as COO.

Much of his success will depend on how he navigates the demands of Wall Street for growing returns with the political and public clamor for change.

“The fact they have named him CEO indicates to me that he has at least passed some litmus test about his part in all of this and indicates to me that there was little or no part," said Nancy Bush, an analyst with NAB Research, which owns Wells shares.

"I know Tim, he has vast experience in every part of Wells Fargo and yes, I think he is the right man."

Wall Street is trying to get a handle on what a long list of probes and lawsuits regarding the bank's opening of unauthorized customer accounts will ultimately cost.

So far the tab has been relatively small: Wells agreed to a $190 million settlement last month, representing less than 1 percent of its annual earnings. But that deal itself led to a range of other inquiries the San Francisco-based bank is now contending with.

Wells Fargo is expected to say how much money it has set aside for legal costs it can reasonably predict when management discusses results on Friday. At least nine separate regulators, prosecutors, enforcement agencies and congressional committees appear to be looking into the bank's actions, according to a Sept. 26 Bernstein Research report. That comes in addition to private lawsuits from shareholders, customers and former workers.

"I don't think there will be a surprise to the downside in terms of the legal cost. The surprise will be that it's more than anyone suspects right now," said Michael Holland, president of Holland & Co, which manages $5 billion worth of investments.

Wells' settlement on Sept. 8 with the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and a Los Angeles prosecutor revealed the bank had opened as many as 2 million accounts in retail customers' names without their permission. The bank fired 5,300 employees for improper practices and is now working to retool risk-management protocol as well as pay incentives and training for workers.

Former employees have described a pressure-cooker sales culture inside the bank where managers had browbeat staff into hitting aggressive daily sales quotas, which in turn led some workers to create unauthorized accounts.

Khalid Taha, a former Wells Fargo personal banker who left the bank in July after suing them over sales pressures, said Sloan did not represent a new era.

"Wells Fargo’s problems go from top to bottom,” he said. “Sloan is part of that problem. I can’t see him as a solution.”

As government authorities examine Wells Fargo, it is likely they will find abuses in other parts of the bank beyond retail customers, said Harvey Pitt, founder of consulting firm Kalorama Partners and a former chairman of the U.S. Securities and Exchange Commission.

"The damage to customers could be much more significant," said Pitt.

Earlier this month, Reuters reported a probe by U.S. Senator David Vitter has found 10,000 small business customers were also victims of improper practices.

A Wells Fargo spokesman did not respond to requests for comment.

Forecast Cuts

It is difficult to estimate the total cost of the probes and litigation Wells will face over the unauthorized accounts, analysts said. Some matters could drag on for years before being resolved, and there are a range of possible outcomes.

Even so, most analysts have cut profit forecasts for Wells Fargo, citing fallout from the scandal. The average estimate for Wells Fargo's 2017 net income is now $20.8 billion, down $300 million since Sept. 7, according to Thomson Reuters data.

State and local municipalities including Illinois, California, Seattle and Chicago have publicly cut ties with Wells. While some analysts expect other government entities to make similar moves, the impact on Wells Fargo’s revenues appears immaterial at this point.

Less than 1 percent of Wells Fargo revenue comes from working with local governments, non-profit hospitals and universities, according to a presentation the bank made to investors earlier this year.

The bank has also lost some retail customers, though Wells is still opening more accounts than it is closing, senior executives said on an internal call on Monday that was reported by the Wall Street Journal.

“It’s not business as usual at Wells Fargo. There’s an enormous amount of work to be done to regain the public’s trust,” said Thomas Russo, managing member at Gardner, Russo & Gardner, a top 50 shareholder.

Article Link To Reuters:

Wells Fargo’s Political Sacrifice

CEO John Stumpf is offered up to the Beltway gods.

By Review & Outlook
The Wall Street Journal
October 13, 2016

The political class got its second ritual sacrifice for the sins of Wells Fargo, as the bank’s chairman and CEO John Stumpf resigned Wednesday, effective immediately.

Mr. Stumpf had already forfeited $41 million in unvested equity grants as recompense for the sales tactics that caused employees to open accounts that customers hadn’t asked for. Now he’s paying with his job, as the bank tries to appease the political lords who under Dodd-Frank have become more or less co-owners of our largest banks. The politicians claim to want compensation clawbacks, but what they really want are heads on pikes.

You won’t read this elsewhere, but Mr. Stumpf has been one of the most successful American CEOs of recent times. Our colleague Dennis Berman reports that in nine years he produced some $149 billion in profits and saw an increase in market cap of $124 billion. Wells Fargo tried to turn down the government’s rescue funds during the 2008 financial panic because it didn’t need the help, only to be forced by Treasury to take the money.

Mr. Stumpf’s management failure is real in the sales fiasco, especially in not acting sooner to stop it. But he and the bank are paying a fearsome price for one mistake, showing again the accountability that exists in the private economy. The same can’t be true for the regulators at the Consumer Financial Protection Bureau who didn’t stop Wells’s problems and merely shot the wounded after they came to light. A bureaucrat’s job is forever.

Article Link To The Wall Street Journal: