Wednesday, October 19, 2016

No, Trump Didn’t Get It Done Tonight

By Jim Geraghty
The National Review
October 20, 2016

It’s a cliché of debate coverage to declare, “there was no game-changer, no knockout punches” but… tonight, in the third and final presidential debate, this was no game changer, and no knockout punches.

Maybe there was one self-inflicted knockout punch. Trump declared he wasn’t willing to commit to accepting the election results. He contradicted Mike Pence’s answers on this question in the past few days, but that’s not surprising. The grim implication is that on Election Night, Hillary Clinton could surpass 270 electoral votes and Trump will not concede; he may instead declare the election has been stolen from him. To a lot of voters, that sounds like a sore loser refusing to acknowledge his own defeat – and pouring gasoline onto an angry country and lighting a match.

Is there a legitimate concern about fraudulent votes? Sure. But most of the states are going to have margins beyond 100,000 votes. Based on past elections, some may have margins “only” in the tens of thousands. States like California, Texas, and New York could well have a margin of more than a million votes. If it comes down to another Florida-in-2000 scenario, it’s a different story. But right now, Trump needs a remarkable comeback in a slew of swing states just to get close to 270 electoral votes.

Trump had two particularly bad moments between his refusal to say that he will accept the election results on Election Night – “I’m going to keep you in suspense”- and his insistence that the accusations of groping and other sexual misconduct have been proven false and debunked. He had some better answers in policy, particularly on guns, abortion, Supreme Court justices and Hillary Clinton’s scandals.

A fair question is how many voters are still watching. Debate viewership dropped between the first and second debate; we would expect it to drop even further for the third debate. Trump has to hope that enough voters are still open to voting for him, that those voters were watching tonight, and that they preferred his answers on policy more than his flat denials of behavior he previously boasted about and the implication that he’ll deny the legitimacy of the election results if he loses.

The meltdown continues.


Article Link To The National Review:

The 14 Biggest Moments Of The Final Debate

]Trump will not commit to accepting a loss while Clinton warns he is a Russian puppet.


By Matthew Nussbaum
Politico
October 20, 2016

Hillary Clinton and Donald Trump did not hide their personal animus in their final debate.

Like their last meeting, they skipped the handshake and immediately launched into a heated battle on everything from abortion rights and the Second Amendment to Russian espionage aimed at helping the Republican win the White House.

And also like the second debate, this forum unfolded in the shadow of controversies. Numerous women have come forward to accuse Trump of the kind of sexual assault he was caught bragging about in a video. Trump has denied the accusations and alleged they are part of a media conspiracy to rig the election. Meanwhile, the Clinton campaign has been forced to grapple with the release of thousands of stolen campaign emails that reveal discrepancies in her public and private positions. Both came up in the course of the debate.

Chris Wallace of Fox News moderated.

Here are the most interesting moments of the third presidential debate.

Trump: “She was extremely upset, extremely angry”

Trump, in an attempted hit at Clinton’s temperament, said she was “extremely upset, extremely angry” in the wake of the Heller v. D.C. Supreme Court decision that upheld an individual’s right to bear arms.

“She was extremely angry about it, I mean I watched, she was very, very angry,” Trump said.

Clinton said that while she supports the Second Amendment, she would like to see the kind of regulations and limits that are circumscribed by the Heller decision.

Clinton, when asked if she was “extremely upset” by the decision, said she is upset that children have continued to perish at the hands of firearms in the home.

“What I would like to see is for people to come together and say, of course we're going to protect and defend the Second Amendment,” Clinton said. “But we're going to do it in a way that tries to save some of these 33,000 lives that we lose every year.”

Trump unclear if he wants Roe overturned


Trump repeatedly refused to say if he wants to see Roe v. Wade, the decision that affirmed a constitutional right to an abortion, overturned, though he said it likely will be overturned if he is elected.

“I am pro-life and I would be appointing pro-life judges, I would think that would go back to the individual states,” Trump responded when asked if he wanted Roe overturned.

Wallace pressed again: “Do you want to see the court overturn it?”

“If we put another two or perhaps three justices on, that is really what will happen,” Trump said. “That will happen automatically in my opinion. Because I am putting pro-life justices on the court. I will say this. It will go back to the states and the states will then make a determination.”

Clinton affirmed her support for Roe.


Clinton hits Trump for “scare rhetoric”

Trump criticized Clinton on abortion, saying she supports the right of women to abort a pregnancy in “the ninth month, on the final day.”

“If you go with what Hillary is saying, you can take baby and rip the baby out of the womb of the mother just prior to the birth of the baby,” Trump said. “Now, you can say that that is okay and Hillary can say that that is okay, but it's not okay with me.”

Clinton fired back that Trump’s rhetoric was wrong.


“That's not what happens in these cases,” Clinton said. “Using that kind of scare rhetoric is just terribly unfortunate. You should meet with the women I've met with. Women I've known over the course of my life. This is one of the worst possible choices that any woman and her family has to make. And I do not believe the government should be making it.”

Trump: Deport “bad hombres”

Trump said the United States needs to deport immigrants here illegally because there are some “bad hombres” among those here. He began his answer by saying there were four women in the audience who lost children to violence on behalf of those here illegally.

“We stop the drugs; we shore up the border,” Trump said. “One of my first acts will be to get all the drug lords, we have some bad, bad people in this country that have to go out. We're going to get them out. We're going to secure the border. And once the border is secured, at a later date, we'll make determination as to the rest. We have some bad hombres and we're going to get them out.”

Clinton: Trump “choked” on the wall

Clinton has made a routine of trying to get under Trump’s skin in the debates, and has proved adept at it. She took another shot Wednesday, hitting Trump on one of his top issues — a proposed border wall — and his trip to Mexico.

“He went to Mexico. Had a meeting with the Mexican president. He didn't even raise it. He choked,” Clinton said. “And then got into a Twitter war because the Mexican president said 'we're not paying for that wall.'"

“I had a very good meeting with the president of Mexico. Very nice man,” Trump responded.

On WikiLeaks, Clinton demands Trump disavow Russian influence


Pressed on a speech — revealed in an email hacked by Wikileaks — in which Clinton said she supported “open borders,” Clinton pounced on the opportunity to pivot to Russia’s interference in the U.S. presidential election.

“You are very clearly quoting from WikiLeaks,” Clinton said. “What is really important about WikiLeaks is that the Russian government has engaged in espionage against Americans. They have hacked American websites, American accounts of private people, of institutions. Then they have given that information to WikiLeaks for the purpose of putting it on the internet. This has come from the highest levels of the Russian government.”

Clinton called on Trump to reject “Russian espionage.”

Trump shot back: “That was a great pivot off the fact that she wants open borders.”

Clinton: Putin wants a “puppet”

Clinton has repeatedly hit Trump as too cozy with Putin, and Trump has done little to push back on the label. He said again Wednesday that it is unclear if Russia is involved in hacking to influence the election, though top intelligence officials and President Barack Obama have said that Russia is involved in such attempts.

“Now we can talk about Putin. I don't know Putin. He said nice things about me.” Trump said he would like to have a good relationship with Putin, and said Putin has “no respect” for Clinton.

“Well, that's because he would rather have a puppet as president of the United States,” Clinton shot at Trump.

“You’re the puppet,” Trump spat back.

They weren't done, as Clinton pressed forward with evidence that Russia has attempted to influence the election.

“We have 17, 17 intelligence agencies, civilian and military who have all concluded that these espionage attacks, these cyber attacks, come from the highest levels of the Kremlin,” Clinton said. “And they are designed to influence our election. I find that deeply disturbing.”

But Trump continued to deny the link.

“She has no idea whether it is Russia, China or anybody else,” Trump said.

“I am not quoting myself,” Clinton retorted.

“You have no idea,” he replied.

Clinton again mentioned the 17 intelligence agencies.

“She doesn't like Putin because Putin has outsmarted her at every step of the way,” he replied.

Trump went on to add: “I never met Putin. This is not my best friend.”

Trump: “I should win easily”

Wallace pressed Trump on his economic plan in harsh terms.

“Even conservative economists have said that the numbers don’t add up,” Wallace said, pointing out many have called it “unrealistic.”

Trump responded by citing India's and China’s economic growth rates, and said job growth in the U.S. is “anemic.”

“A terrible jobs report,” Trump said, citing the September jobs report. “I said ‘Is that the last jobs report before the election?’ Because if it is, I should win easily. The report was so bad.”

The recent report showed that the U.S. economy added 156,000 jobs in September, and the unemployment rate ticked up from 4.9 percent to 5 percent as more people were drawn back into the labor force.

Trump says Clinton campaign is behind sexual assault accusations

“Nine women have come forward and said that you either groped them or kissed them without your consent,” Wallace said. “Why would they all in this last couple of weeks…make up these stories?”

“First of all, those stories have been largely debunked,” Trump said falsely. He then said that Clinton’s campaign is responsible for the accusers, a statement for which there is no evidence.

“I didn’t even apologize to my wife, who is sitting right here, because I didn’t do anything,” Trump said. He said he did not know the women who accused him, and that they either want “fame” or were recruited by the Clinton campaign. Trump also accused Clinton and Obama of causing violence at his rallies.

Clinton hit back hard, saying Trump had said the women who accused him of assault were not attractive enough for him to grope them. Trump then falsely stated he had never made such statements.

“That’s who Donald is,” Clinton said, after saying all women know what it feels like to be belittled in such a manner.

“Nobody has more respect for women than I do,” Trump said.

The audience laughed.

“Please everybody,” Wallace chided the audience.

Trump hits Clinton on emails; she ignores

Trump skipped away from the accusations of sexual assault and hit Clinton for her use of a private email server as secretary of state. After calling the accusations “fiction,” Trump switched gears.

“I'll tell you what isn't fictionalized is her e-mails where she destroyed 30,000 e-mails criminally after getting a subpoena from the United States Congress,” Trump said, adding that a general who had done less is likely going to prison.

Clinton did not respond to the accusations, instead saying that when Trump is pushed on something, “he immediately goes to denying responsibility.”

Clinton hits Trump Foundation: “I mean, who does that?”


After defending the Clinton Foundation’s charitable work, Clinton turned her fire to the Trump Foundation, a controversial non-profit. Clinton pointed out that, as reported by the Washington Post, Trump used money from the Foundation to buy a portrait of himself.

“I mean, who does that?” Clinton said incredulously.

Trump went on to call the Clinton Foundation “a criminal enterprise” and defended his Foundation and said “100 percent” of the money goes to charities. Clinton pointed out that the issue could be resolved if Trump were to release his tax returns.

Trump may not concede the election

Trump may not concede the election if he loses, he said Wednesday, citing unsubstantiated cases of voter fraud and accusing the media of being biased in its coverage of the campaign. Wallace pointed out that Trump’s running mate, Gov. Mike Pence and daughter, Ivanka Trump, have said that Trump will accept the results of the election. Trump said that is not necessarily the case.

“I'll look at it at the time. What I've seen is so bad. The media is so dishonest and so corrupt and the pile on is so amazing,” Trump said. Wallace pointed out that peaceful concessions are a bedrock of American democracy.

“I’ll keep you in suspense,” Trump responded.

“That’s horrifying,” Clinton said. She accused Trump of calling things “rigged” whenever they are not going well for him, and mentioned he once called the Emmy Awards “rigged” when he did not receive one.

“Should have gotten it,” Trump said.

“It’s funny, but it’s also really troubling,” Clinton said.

Clinton unloads on Trump as “conspiracy” peddler and “dangerous”

After Trump said that the American-supported Iraqi military operation to take back the city of Mosul is politically-motivated to help Clinton, she slammed Trump as a peddler for conspiracy theories.

“That’s how Donald thinks,” Clinton said, after stating the military operation is divorced from American politics. “He has all these conspiracy [theories].”

Trump replied, hitting Clinton for her judgment and instincts, saying Bernie Sanders thinks Clinton has bad judgment and that John Podesta, Clinton’s campaign chairman, said in a leaked email that she has bad “instincts.”

Clinton responded by saying Trump should note who Sanders is supporting and campaigning for: Clinton.

“He said you are the most dangerous person to run for president in the modern history of America,” Clinton said. “I think he's right.”

Trump: Clinton is “such a nasty woman”

Clinton was discussing Social Security reform, saying she will seek to raise the payroll tax on high earners like herself and Trump. She said she and Trump will pay more, then added that is “assuming he can't figure out how to get out of it” — a nod to Trump’s past avoidance of federal taxes.

Trump leaned into his mic, speaking over her to declare that the first female major party nominee is “such a nasty woman.”

It served as an exclamation point on the final debate in a historically divisive election.

And she ignored him.


Article Link To Politico:

Europe Shares Mixed After China GDP; Travis Perkins Slips 6%

By Gemma Acton
CNBC
October 19, 2016

European stocks were mixed in morning trade Wednesday, following a raft of data out of China which showed government spending had helped the world's second-largest economy to stabilize.

China GDP Meets Estimates


The pan-European Euro Stoxx 600 Index was flat with major bourses pointing in directions. The main focus Wednesday was China's gross domestic product which grew 6.7 percent in the year to September, precisely in line with forecasts.

Tepid private investment was compensated for by robust government spending and a heated property market. Industrial output was the key disappointment and concerns persist that unsustainable credit growth was a key support factor in the numbers.

"Whilst today's official Chinese economic data rightly occupy a prominent spot in our headlines, we are always mindful of the criticism that often comes their way. After all, that China has been reproached in the past for 'smoothing' data will hardly be a revelation to readers," Neil Mellor, senior currency strategist at BNY Mellon, said in a morning note.

Travis Perkins Down 6%


Meanwhile on the earnings front, there was mixed news out overnight from Anglo-Australian miner BHP Billiton which reported a slide in quarterly iron ore production but said it sees the early signs of a commodity recovery. London-listed shares were down 0.5 percent in early deals.

French retailer Carrefour reported an acceleration in sales growth and saw its shares rise 3 percent.

Shares of building supplier Travis Perkins fell 5.5 percent after it announced branch closures and warned on its 2016 profit.

Credit management services company Intrum Justitia rose 6.6 percent in early deals after a string set of third-quarter results.


Article Link To CNBC:

Millennials Vs. Mutant Capitalism

This generation is skeptical of America’s economic system. No wonder.


By Christopher Koopman
The Wall Street Journal
October 19, 2016

About 70 million millennials will be eligible to vote in this year’s presidential election, according to Pew Research Center. How my generation votes matters more than ever—which makes the results of an April Harvard Institute of Politics survey seem very troubling. About a third of Americans ages 18-29 support socialism, while not even half back capitalism. College graduates view capitalism more favorably, but these still don’t appear to be encouraging numbers.

Analyzing similar data in February, pollster Frank Luntz wrote that “the hostility of young Americans to the underpinnings of the American economy and the American government ought to frighten every business and political leader.” There’s only one problem with this pessimism about millennials: As a generation, we don’t really know what we believe.

Clear majorities of millennials—whether they’re Bernie Bros, Trumpians or die-hard libertarians—point to the economy as their top issue. This shouldn’t be surprising. Most of us entered adulthood during the Great Recession and tried to find work in its aftermath. This harrowing experience left millions preoccupied with economic issues and convinced that the system is rigged against them.

Does this mean millennials have come to disdain capitalism? Not exactly. We might call it “capitalism” in opinion surveys, but in reality young people are rejecting a system that they have only been led to believe is capitalism.

For many, capitalism isn’t about free enterprise, nor is it about the startups and innovation. When they hear the term, millennials think about Wall Street bailouts, corporate greed, political scandals and tax codes riddled with loopholes for the wealthy and connected. Yet this has little to do with what equal-opportunity capitalism actually is: A system providing all Americans with a chance to use their unique skills to create a business with free access to different markets and customers.

Strip away the titles of “capitalism” and “socialism,” and the responses become drastically different. A 2015 Reason-Rupe poll found that college-aged respondents are far more supportive of a “free-market system” (72%) than they are of a “government-managed economy” (49%). In reality, millennials—regardless of party or ideology—have arrived at a surprising consensus: We support free markets, are very much unhappy with the current state of affairs, and are still looking for change.

This is good news, but it should also serve as a warning. Perhaps at no time in history has it been more important to differentiate genuine capitalism from the mutant system that has dominated economic policy over the last decade. Yet Mr. Luntz’s analysis is still absolutely right: Millennials are hostile to the underpinnings of the American economy. We simply shouldn’t confuse that economy with capitalism.


Article Link To The Wall Street Journal:

Hillary’s Open Borders ‘Dream’ Is A Nightmare For Workers

By Betsy McCaughey
The New York Post
October 19, 2016

Immigration will take center stage Wednesday night at the final Donald Trump-Hillary Clinton debate. Clinton dreams of “open borders.” Count on her to yank on your heartstrings. But workers who are losing their jobs to newcomers from other countries know first-hand the danger of increasing immigration.

Trump’s challenge will be to convince voters that putting American workers first is not racist or xenophobic. It’s simple economics. Hillary’s “dream” of open borders is a nightmare for wage-earners.

Do the math: In the last 12 months, jobs held by immigrants have increased five times as fast as those held by US-born workers. The American labor force is being displaced at a rapid pace.

To add insult to injury, some pink-slipped workers are being forced to train low-wage replacements after they’ve been fired. Last year, Walt Disney World in Orlando, Fla., fired 250 tech workers and then demanded they spend their final weeks on the job teaching their replacements from India.

Clinton promises to protect American jobs. Don’t count on it. Hillary’s “private position” on open borders — her secret dream of unlimited immigration — is one of the bombshell revelations in the recent WikiLeaks disclosure of her paid speeches.

Now it’s clear why she refused to disclose these speeches when Bernie Sanders demanded them.

Sanders smelled a rat during the primary season, when Hillary courted labor with assurances she’d preserve their jobs. He warned that her globalist views would allow wealthy corporations “to bring in all kinds of people [who] work” for low pay and “would make everybody in America poorer.” He did the math and saw that it’s already happening.

Since November 2007, jobs belonging to native-born workers have declined by 1.5 million, while jobs held by immigrants (legal and illegal) have grown by 2 million. In the last year alone, employment by native-born American workers inched up a meager 1 percent. Immigrant employment shot up 5 percent.

Some economists point to Adam Smith’s long-held theory that the invisible hand of the global market place should allow labor and raw materials to move wherever they will be used to maximum benefit. In short, open borders and free trade. That’s the theory.

But in the United States, Smith’s invisible hand is smacking labor upside the head.

A steady stream of newly arriving workers keeps wages down in industries like buildings-and-grounds maintenance and food preparation and serving. That benefits business owners and consumers, but the data show it depresses the standard of living of wage earners in these industries — the people mowing lawns, packaging frozen foods and serving burgers.

As Harvard economist George Borjas shows, it also hurts immigrants already here who are struggling to make it.

Hillary has declared income inequality Public Enemy No 1. She’s campaigning to raise the federal minimum wage. That’s two-faced, so long as she allows immigration to drive down wages of disadvantaged minorities, including high-school dropouts and people with limited English skills.

Mid-level computer workers and skilled technicians are also getting slammed by an influx of foreign workers brought here expressly to undercut their salaries.

US law allows companies to evade immigration limits and bring in foreign workers under H-1B visas to fill jobs as long as it doesn’t “adversely affect” conditions for US workers. But as one laid off Disney worker said, “Was I negatively affected? Yeah, I was. I lost my job.”

During the Republican primaries, Donald Trump attacked these special visas and pledged, “If I am president, I will not issue any H-1B visas.” Trump’s not entirely innocent — he used similar immigration loopholes to staff his resorts. But he says what he did as a businessman and what he’ll do as president are different.

Meanwhile, tech firms like Facebook and Apple are pushing for more — not fewer — H-1B visas and looser immigration laws. Tech moguls are shoveling millions into Clinton’s campaign. And remember: Money talks, especially with the Clintons.


Article Link To The New York Post:

WikiLeaks Founder Julian Assange’s Isolation Deepens

Ecuador’s move follows recent releases of emails from Democratic Party leaders and aides to Hillary Clinton.


By Robert McMillan and Jennifer Valentino-DeVries
The Wall Street Journal
October 19, 2016

Ecuador’s decision to pull the plug on Julian Assange’s internet connection has highlighted the isolation of WikiLeaks, the organization he founded to expose the inner workings of governments and other powerful institutions.

Some former allies and observers say that after four years confined to the Ecuadorean Embassy in London, Mr. Assange is alienating former supporters and undermining WikiLeaks’ relevance. They cite a series of leaks that they say supported Russian efforts to disrupt the U.S. election and carelessly promoted Turkish government documents exposing the personal information of thousands of ordinary citizens.

WikiLeaks “has pioneered open government but has now gone off the rails in a way that damages the global transparency movement,” said Alex Howard, a senior analyst at the Sunlight Foundation, a group once sympathetic to WikiLeaks that backs open-government efforts in the U.S.

WikiLeaks’ relationship with Russia has come under particular scrutiny lately after the release of thousands of documents from the Democratic National Committee and allies of Democratic presidential candidate Hillary Clinton. On Monday, WikiLeaks released a new batch of emails that it alleged were sent or received from John Podesta, a top campaign adviser for Mrs. Clinton.

U.S. government officials have accused Russia of conducting those intrusions as part of an effort to influence the U.S. election. Computer-security firm Kaspersky Labs ZAO said another set of documents published on WikiLeaks, known as the Saudi Cables, most likely came from the same hackers who breached the DNC.

There is no evidence of collusion between Russia and WikiLeaks, said Nicholas Weaver, a researcher at the International Computer Science Institute at the University of California, Berkeley. “However, Assange has made it very clear that he’s willing to be a useful idiot for any intelligence service, as long as it furthers his own agenda,” he said.

The Ecuadorean government, in a statement late Tuesday explaining its decision, said that the country doesn’t interfere in external electoral processes and so was temporarily restricting “access to some of its private communication network” within the embassy.

WikiLeaks had earlier accused the Ecuadorean government of severing Mr. Assange’s internet connection at the behest of U.S. Secretary of State John Kerry. A State Department spokesman on Tuesday rejected the assertion as false.

Mr. Assange still exerts vast influence on the global debate. Others conducting their own disruptive document leaks follow a game plan Mr. Assange sketched out a decade ago.

“Consider what would happen if one of these [political] parties gave up their mobile phones, fax and email correspondence—let alone the computer systems which manage their subscribers, donors, budgets, polling, call centers and direct mail Campaigns,” Mr. Assange wrote when founding WikiLeaks in 2006. “They would immediately fall into an organizational stupor and lose to the other.”

Representatives of WikiLeaks and Mr. Assange didn’t respond to multiple requests to comment.

WikiLeaks has long billed itself as a news organization. In its early days, it revealed documents ranging from secret Scientology manuals to the internal emails of climate researchers. But it became best known for information related to U.S. government policy.

The emergence of alternative outlets for publishing such material makes Mr. Assange less central. Others published two of the most important leaks in recent years—the Panama Papers documents taken from the Mossack Fonseca & Co. law firm and Edward Snowden’s treasure trove of NSA documents.

WikiLeaks once joined with major news organizations and used volunteers to purge personal information from data it published. But Mr. Assange later came to view former partners, including the New York Times and Britain’s Guardian, as enemies after disputes over their handling of WikiLeaks material, former Assange confidant and ghostwriter Andrew O’Hagan wrote in 2014. A Guardian representative said it last collaborated worked with WikiLeaks in 2010. Mr. O’Hagan and New York Times representatives didn’t respond to requests to comment.

In July, Turkish human-rights activists criticized WikiLeaks for a Twitter message that linked to a cache of documents containing sensitive information belonging to private Turkish citizens. Some academics and activists also faulted the organization for including phone numbers, credit-card information and passport numbers in other data releases it published this year.

Such actions have eroded WikiLeaks’ support among some advocates of transparency and privacy.

“Democratizing information has never been more vital, and @Wikileaks has helped. But their hostility to even modest curation is a mistake,” said Mr. Snowden in a June Twitter message.

Rainey Reitman, a co-founder of the Freedom of the Press Foundation, which helps people donate to WikiLeaks, said publishers, including WikiLeaks, have a right to publish leaks but “do have a responsibility to think through the privacy ramifications of everything they put up online.” She noted that WikiLeaks doesn’t conduct hacks itself, but publicizes material from hacks.

Backers of Russian President Vladimir Putin have pointed to the DNC emails as evidence that the U.S. isn't as democratic as it seems. “In America, there has been a gradual evaporation of democratic institutions, a seizure of power by the establishment,” Sergei Markov, a pro-Kremlin political commentator, said when asked about the hack of the DNC earlier this summer.


Article Link To The Wall Street Journal:

Say Hello To Taiwan

Taiwan and its friends are becoming more powerful together.


By Gordon G. Chang
The National Interest
October 19, 2016

John J. Mearsheimer, the distinguished University of Chicago political scientist, argued in the National Interest two years ago that Taiwan had almost no hope of maintaining de facto independence. China, he made clear, will grow so strong in the coming decades that it will, as a regional hegemon, be able to evict the United States from East Asia, dominate its periphery and, one way or another, absorb the island that lies a mere hundred miles from its shores.

Fortunately for the twenty-four million people living in Taiwan, almost everything Mearsheimer thinks about the island’s future is wrong. Mearsheimer gets one thing right, however: the People’s Republic of China will try to make Taiwan its thirty-fourth province.

Mearsheimer relies on standard realist theory to explain Taiwan’s predicament. “The only way to predict how a rising China is likely to behave toward its neighbors as well as the United States is with a theory of great-power politics,” he writes. Applying this theory, he tells us there are two “logics,” China’s nationalism and the country’s imperative to security. “Both logics,” he continues, “lead to the same endgame: the unification of China and Taiwan.” Mearsheimer believes the United States, working to prevent China from dominating its periphery, will at first try to make Taiwan a part of its “anti-China balancing coalition.” Eventually, however, Washington will decide to let go of Taiwan because the prize is more important to the Chinese than to the Americans. From there, it is all downhill for Taipei.

There is an elegant logic to Mearsheimer’s argument, even if it comes off as deterministic at times, but there are two main reasons why Taiwan will prove to be far more resilient than he thinks. First, China during the coming decades will not resemble the country that inhabits Mearsheimer’s imagination. Second, even if China becomes the dominant regional power, as he believes, its neighbors will block it from taking over East Asia. Mearsheimer, perhaps the leading realist thinker today, isn’t all that realistic about Taiwan’s future.

At the core of “Say Goodbye to Taiwan” is the assumption that China will continue its extraordinary rise. But will it? In 2014, when the piece appeared, Mearsheimer’s prediction appeared sound. Today, it does not.

China’s economy is sputtering. Beijing has given up on reform. Instead, it is moving to close off the country’s markets, targeting multinationals and recombining already monopolistic state enterprises. At the same time, Chinese technocrats have reacted to a slowdown in growth by piling on debt at alarming rates. The rapid buildup—debt is growing at least four times faster than gross domestic product—has enlarged underlying imbalances in the economy and postponed a natural downward adjustment, making the crash, when it comes, far more severe than it ever had to be. EvenPeople’s Daily, the ruling elite’s mouthpiece, appears anxious. In May, a front-page feature warned about a “systemic financial crisis.”

And while this is occurring, the country’s political system is fracturing, its social fabric fraying, its environment deteriorating, its people emigrating, its demography beginning a century-long decline. China is held together only through the Communist Party’s increasingly coercive governance, unsustainable in a fast-modernizing society. “China has hit the ceiling” is how Gerrit van der Wees, former editor of Taiwan Communiqué, characterizes the situation across the Taiwan Strait.

China, unfortunately for the party, has passed not just an inflection point but also the point of no return. A prolonged period of regressive moves on almost all fronts—well into its second decade—indicates there are no solutions possible within the context of a political system that leaders will not change.

Mearsheimer is not unaware of China’s difficulties. He notes at the end of “Say Goodbye” that Taiwan’s only hope is “a drastic slowdown in Chinese economic growth in the years ahead and that Beijing also has serious political problems on the home front that work to keep it focused inward.” Yet the line is an afterthought, no more than a passing comment at the end of a lengthy essay, and not integrated into his argument.

Mearsheimer’s fundamental premise—that China’s extraordinary rise will continue indefinitely—is unlikely to hold true. Yet even if he is right on this score, his application of realist theory to Asia is deeply flawed. In his telling, there are only two powers in East Asia that count: China and the United States. As Jon Meacham wrote in Time within months of the release of “Say Goodbye,” we should be thinking “in kaleidoscopic terms, not binary ones.” And with regard to both the world—Meacham’s topic—and East Asia, he is right. There is, in short, more to the region than just China and the United States.

As an initial matter, China does have friends. Beijing can almost always count on Cambodia and Laos to support its efforts to block the Association of Southeast Asian Nations from issuing resolutions it does not like. When prompted, the pair will put out statements of support on issues of the day. That, however, is about the extent of the help they could give China on Taiwan. Thailand, in a region without America, would likely gravitate into China’s orbit. Washington’s criticisms of prolonged military rule have already pushed Bangkok toward Beijing.

There is always the Democratic People’s Republic of Korea, China’s only formal ally. Pyongyang’s support on the Taiwan issue—if Beijing could attain it—is worth nothing in international councils. If anything, the North Korean regime, by mere association, further tars China’s image. The only utility Pyongyang provides in regards to Taiwan is on the battlefield. The North could, if it wanted, create an excellent diversion by sending armor over the Demilitarized Zone as Chinese ships sailed toward Taiwan’s shores. Yet Kim Jong-un, who has done his best to alienate his horrific regime from Beijing, is unlikely to jeopardize his position to help China, especially given the decrepit state of his conventional forces.

Moscow, more than Beijing’s other friends, could be a factor. Today, China and Russia appear to be coordinating actions in East Asia. In early June, for instance, they looked as if they were acting in tandem in pressuring Japan. Then, vessels from both navies intruded, at about the same time, into Japan’s “contiguous zone,” the band of international water between twelve and twenty-four nautical miles from a state’s shore. The incursions occurred around the Senkaku Islands, which China claims as its own. In September, the Chinese and Russian navies jointly practiced an “island-seizing mission” in the South China Sea.

The partnership between the dragon and the bear has grown closer in recent years as they have knitted their external policies together. China’s Xi Jinping and Russia’s Vladimir Putin are particularly close. They refer to the “uniqueness” of relations, and their ties, as both perceive them, are truly one of a kind. They view themselves in the same terms and see their interests converging; they are, in short, like-minded. Their partnership could survive their passing—in June, Xi said his country and Russia should remain “friends forever”—but new leaders could define their interests in different ways. Some speculate that a post-Putin Russia will return to a more adversarial stance toward neighboring China.

And yet, Russia failed to announce its full support for Beijing’s boycott of Philippines v. China, even though lining up endorsements was one of China’s most zealously pursued goals of recent years. Kremlin analysts can read Mearsheimer just as well as others and undoubtedly do not want the fast-expanding People’s Liberation Army (PLA) dominating that strategic body of water. And if that is the way the Russians feel, it would make sense for them to prevent Taiwan from falling into Chinese hands, giving Beijing control of the strategic intersection of the South China and East China Seas. Mearsheimer, applying his theory of great-power politics, believes Russia will eventually move to contain China.

And China has far more adversaries than friends. Even as Chinese power seemed to be growing inexorably, Beijing was losing support along its southern and eastern peripheries. The Chinese have seen friendly leaders go down in a string of elections, most notably in India in 2014, Sri Lanka and Burma last year, and Taiwan this January.

The electoral losses are a part of the trend of states coalescing against the region’s strongest power. And some of these states actually matter in the struggle between China and Taiwan. Take Japan, whose Self-Defense Forces are among the most capable conventional military of any East Asian state, especially if the Chinese ships and planes deployed outside the region are excluded from consideration.

As China historian Arthur Waldron of the University of Pennsylvania is fond of pointing out, on a clear day you can see Taiwan’s mountains from Japan’s soil. In fact, the westernmost inhabited Japanese island, Yonaguni, is actually south of Taipei and only fifty-eight nautical miles from Taiwan’s east coast. The Japanese, not surprisingly, are keenly aware of the geography and know that a Taiwan in Beijing’s hands would be a mortal threat to their country. “Taiwan and Japan are a single unit strategically,” Waldron told me. “Japan will simply not let China have it.”

The Chinese know of Japan’s determination—and its impressive self-defense capabilities—and appear to have been deterred for decades. After all, it would be difficult for the PLA to attack Taiwan without passing through Japanese waters or airspace, so, as Waldron notes, China, by taking on Taiwan, would be buying “two wars for the price of one.”

And should China take on Japan, it will probably have to confront a good part of the region as well. Thanks to Chinese provocations, Tokyo is developing military ties around East Asia with Taiwan, the Philippines and Vietnam. Moreover, Japan has other friends just beyond East Asia’s periphery—Australia and India, for instance. Poked incessantly by Beijing, New Delhi is increasingly becoming involved in the region. And India matters. Alone among Asian nations, it has a credible claim of becoming the owner of the twenty-first century, as Prime Minister Narendra Modi often reiterates. New Delhi has thrown in its lot with Tokyo and Hanoi, two capitals also directly threatened by Chinese actions. Indian vessels exercised with their Japanese counterparts, most recently in June in the Malabar drills. The region is coalescing around Japan, and at this rate it is more likely to become Nipponized than Sinicized. The acceptance of Japan’s new role is remarkable. In the first keynote ever delivered by a Japanese prime minister at the Shangri-La Dialogue, Shinzo Abe spoke of the “new Japanese” providing security around the region. In a few words at East Asia’s premier security conference, Japan’s leader staked out a position that could become the basis of the region’s security architecture.

Tokyo’s time has come. In late 2006, then Minister of Foreign Affairs Taro Aso talked about the region building an “arc of freedom and prosperity.” The concept was years too early. Then, nations were optimistic about China adhering to the international system’s rules, treaties and norms. Few outside Japan thought the region needed a plan B.

Now, however, nations realize the dangers of Chinese assertion and are scrambling to build defense networks. In Asia’s new kaleidoscope, even the weak, with friends, can hold off the strong. Among the weakest regional actors is the Philippines. Manila was not able to prevent China from grabbing Mischief Reef in 1995 or Scarborough Shoal in 2012. The loss of Scarborough was especially consequential, as the feature, located just 124 nautical miles from the main Philippine island of Luzon, guards the strategic Manila and Subic Bays.

After seizing the shoal, Beijing then went on to increase pressure on Second Thomas Shoal, off the coast of Palawan. There, Manila in 1999 grounded a World War II–era landing ship, the Sierra Madre, and placed a small detachment of marines on board to preserve its sovereignty. The Chinese, employing their so-called “cabbage strategy,” have stepped up efforts in recent years to prevent resupply.

The Philippines, which could not hope to compete with China ship for ship even in its own waters, turned to lawfare. In 2013, Manila instituted an arbitration under the UN Convention on the Law of the Sea in The Hague. At first, Beijing did not grasp the significance of the case. In early July, the arbitral panel issued a sweeping award against China, and Beijing reacted with anger, provocation and belligerence—what the Asia Society’s Orville Schell called a policy of “no acceptance, no participation, no recognition, and no implementation.” Beijing found itself isolated and, inadvertently, curried international favor for Manila. The Philippines has yet to recover Mischief or Scarborough, but China is facing a formidable coalition spread across four continents.

The Philippine case suggests that, contrary to Mearsheimer’s analysis, America’s departure from the region will not create a vacuum. In America’s absence, Japan will, in all likelihood, anchor a new security architecture. By focusing only on China and the United States, Mearsheimer ignores the possibility of regional actors defending Taiwan. He does, it is true, acknowledge that Taiwan is part of a U.S.-led coalition, yet does not discuss the grouping after the predicted American withdrawal. Nor does he give the coalition any agency, as if states in the region could not protect their interests if the United States were not around.

That coalition could end up the dominant factor in East Asia. China, unfortunately for the region, is insistent on using forceful tactics to dismember the Philippines, four other South China Sea claimants, South Korea and Japan. Those threatened will naturally draw together, as they are now doing. And Taiwan will be critical to that alliance. It is “the cork in the bottle,” the landmass in the “First Island Chain” that helps trap the Chinese navy close to shore. Japan and other Asian states, therefore, will have every reason to believe that defending Taiwan is defending their own territory.

Of course, the existence of such a coalition substantially decreases the possibility that the United States exits the region. After all, Mearsheimer thinks Washington will leave because Beijing will push it out. Nonetheless, the Chinese state, no matter how strong it may become, is unlikely to be so powerful that it will be able to match all the regional actors and the United States together in heft. As is becoming evident, in East Asia today, there is a divide between China and weak friends on one side and just about every other state on the other. In fact, regional diplomats for years have been pulling Washington into more active involvement in the region, precisely because they seek a counterweight to Beijing.

Apart from Mearsheimer’s flawed application of realism to the region, there are three other aspects of his argument deserving special mention. First, he makes unsubstantiated statements on Chinese public opinion. He tells us “the legitimacy of the Chinese regime is bound up with making sure Taiwan does not become a sovereign state and that it eventually becomes an integral part of China.” Furthermore, he writes, the “unification of China and Taiwan is one of the core elements of Chinese national identity.” Taiwan’s fate “is a matter of great concern to Chinese of all persuasions.” His argument is that the Chinese public will be instrumental in making sure the regime absorbs Taiwan.

It is beyond question that the party’s legitimacy is tied to taking territory because its leaders have made it so, but it is not clear what Chinese people feel and, more importantly, how strongly they feel about it. In authoritarian societies, it is extremely difficult to gauge public sentiment on issues important to the regime.

There are hotheads in China demanding immediate action to “reunify” the country, but there are those who fully appreciate why Taiwan does not want to be absorbed by an undemocratic state. My wife and I were living in Shanghai when Chen Shui-bian was elected Taiwan’s president in 2000. Many Chinese, especially those from younger generations, were inspired by his election and awed by the constitutionally mandated transfer of power from one political party to another. It is unlikely that these same people would ever push their leaders to destroy that society, especially because people in China view those in Taiwan as compatriots and “Chinese should not kill Chinese” is a sentiment often heard outside official circles.

Most Chinese people, due to relentless indoctrination, would probably like to see Taiwan join the People’s Republic. But they are unlikely to lend this issue much importance in a time of growing economic hardship. In any event, there is little evidence that public sentiment on Taiwan drives Beijing’s policy—or that it has the potential to do so.

Second, Mearsheimer tells Taiwan to look to Hong Kong for its future political arrangements. “Once China becomes a superpower, it probably makes the most sense for Taiwan to give up hope of maintaining its de facto independence and instead pursue the ‘Hong Kong strategy,’” he writes, referring to the “one country, two systems” (1C2S) model that Beijing employs to run the former British colony. “This is definitely not an attractive option, but as Thucydides argued long ago, in international politics ‘the strong do what they can and the weak suffer what they must.’”

Since “Say Goodbye” went to press, it has become obvious that 1C2S has completely failed. In the Hong Kong Special Administrative Region of the People’s Republic, calls for independence are steadily growing. Beijing has completely spent its popularity, so evident at the time of the “handover” in mid-1997, and the wave of anti-China sentiment has changed most every political calculation there.

Hong Kong’s former colonial master, once unpopular in many quarters, is now viewed with fondness and nostalgia. The most visible evidence of this complete reversal in thinking is the sight of the Union Jack. It is seen flying during moments of protest and frequently displayed proudly on clothing. Many people in the city no longer consider themselves “Chinese,” and those in the People’s Republic are not just foreigners but “locusts.”

The Taiwan public sees the failure of the Hong Kong strategy; the framework has absolutely no resonance in Taiwan. “Democracy is our way of life and the people of Taiwan cherish their hard-earned freedom,” Brian Su, deputy director general of the Taipei Economic and Cultural Office in New York, told me via e-mail. “We are determined to uphold our democratic system and our sovereignty, anything less is unacceptable.”

Third, in large part due to such determination, Taiwan’s political arrangements and civil society have become extraordinarily resilient. Mearsheimer, to his credit, acknowledges the strong desire of people in Taiwan to remain free, but small societies ultimately do not count for much in his great-power thinking.

Taiwan, however, has been unexpectedly hardy, withstanding great-power machinations. It is often forgotten that it survived Richard Nixon’s abandonment after his historic meeting with Mao Zedong in 1972. Then, Henry Kissinger and other American policymakers assumed a powerful China would inevitably absorb small Taiwan.

It did not work out that way because, among other reasons, Taiwan democratized, creating constituencies around the world in order to garner support for itself. As Gerrit van der Wees remarked to me, “The fact that Taiwan is now a full democracy means that the United States has one more reason to stand by its friend and ally.” In a world of depredation by authoritarian states, people in democracies are beginning to understand the importance of supporting other free societies, and newly inaugurated Taiwan president Tsai Ing-wen understands her endangered state must build those relationships in the region and beyond.

Yet Taiwan, with or without the help of others, can stand on its own. It has done so under even more trying circumstances. There is every reason to believe it will be able to maintain its independence indefinitely.

“Goodbye Taiwan” tells us “power is rarely static.” Mearsheimer is right, of course, and trends change all the time. At this moment—and for many moments to come—current trends suggest that Chinese power, having already reached its highpoint, will diminish. Meanwhile, Taiwan and its friends are becoming more powerful together. Soon enough, realists like Mearsheimer may have to say “hello” to Taiwan.


Article Link To The National Interest:

What To Expect As Apple Gets Ready To End Mac Update Drought

Apple said to plan event unveiling new Mac computers Oct. 27; Company hasn’t issued major Mac update in more than a year.


By Mark Gurman
Bloomberg
October 18, 2016

Apple Inc.’s long drought of Mac updates is soon coming to an end ahead of the important holiday sales period.

After launching new iPhones and Apple Watches last month, the Cupertino, California-based technology company is turning its attention to its oldest product category. It currently plans to announce the Mac updates at an event on Oct. 27, according to people familiar with the matter.

That’s two days after it reports quarterly results. Apple originally planned to discuss earnings on Oct. 27, but it moved that up to Oct. 25 because of a "scheduling conflict." Apple, known for meticulous event planning, rarely re-schedules earnings reports.

The Mac upgrades will be the first since 2015, save for the 12-inch MacBook receiving a new rose gold finish and slightly faster processors in April.

While Apple mainly relies on sales of the iPhone, the Mac line remains a key component of the business. Macs made up more than 10 percent of 2015 revenue, the second-largest source of sales. In the most-recent quarter, Mac revenue continued to outpace iPad sales, showing resiliency in a category that some analysts have said would be cannibalized by tablets.

"The way Apple looks at the Mac is more or less a testing ground to see what is possible, they see it as a way to push the envelope, to see what’s possible there, and over time bring the iPad to that point," Neil Cybart, an Apple analyst at Above Avalon, said. An Apple spokesman declined to comment. Technology news website Recode reported the Mac event earlier.

Apple has been developing multiple new Mac-related products, people familiar with the matter have said.

-- The big news will be an update to the MacBook Pro, representing the high-end laptop’s first overhaul since 2012. The updated professional laptop will include a thinner case, larger trackpad, faster graphics cards, and a secondary display in place of the standard function keys at the top of the keyboard. The virtual keys will change based on the application in use. For example, Apple’s word processor would show editing commands. Apple is already working with select developers to optimize third-party applications for the feature, another person familiar with the matter said.

-- A new version of the iMac has been in development with an option for new graphics chips from AMD. While the computer market has shifted toward laptops, the iMac remains important for users like video editors who require more power and larger screens.

-- A new version of the MacBook Air with multi-functional USB-C port technology has also been in development. While the MacBook Air doesn’t include newer high-end features like Apple’s sharper display technology, the product is key to the lineup as it is the company’s most affordable laptop, currently starting at $899.

-- Job listings have indicated that Apple, at some point in the near future, plans to again offer Nvidia graphics chips in its computers. Apple’s relationship with Nvidia soured a few years ago, but the partnership’s return should please gamers who consider Nvidia’s chips as superior to AMD’s offerings.


Article Link To Bloomberg:

Productivity Won’t Save The World

By Satyajit Das
The Bloomberg View
October 19, 2016

Thomas Malthus was wrong for one simple reason. Humans have survived his 1798 forecast that growing populations wouldn’t be able to feed themselves because innovation and productivity gains allowed them to produce more and more with the same amount of labor and capital: Irrigation, fertilizers, higher-yielding plant species and mechanization have enabled farmers to grow 5 to 6 times the amount of grain from the same piece of land as a century ago. The problem is that similar productivity gains may no longer be possible -- or effective.

There’s general agreement about the factors that improve productivity. Investment in machinery and equipment increases production levels and quality. Education and training improve worker skills. New products, technologies, organizational structures and work arrangements -- in other words, innovation -- raise efficiency. A healthy climate for entrepreneurship and competition encourages the creation of faster, smarter businesses.

Unfortunately, there’s also general agreement that productivity gains are flatlining. In advanced economies, productivity growth has fallen below 1 percent annually, significantly lower than the 3 to 4 percent common in postwar decades and even less than the 2 to 2.5 percent of the last decades of the 20th century. Similar trend lines are beginning to appear in developing nations. Combined with stagnant or declining workforces, slowing productivity gains are a key factor suppressing growth worldwide.

What no one can agree on is why this is happening. Some economists think traditional measures designed for manufacturing-heavy economies simply aren’t detecting productivity gains in services, or the effect of newer, information-intensive technologies. There’s also a natural lag between the introduction of new technologies and their full effect. It may simply be too soon to see productivity improvements.

Yet such factors have always been present to some degree; they’d also have affected earlier productivity estimates. The real issues are more fundamental -- and intractable.

Take the shift from manufacturing to services. The latter may not lend themselves to improvements as easily as industrial processes. They can’t all be automated. Many are local and not globally traded, and so don’t benefit from international supply chains. It’s hard to improve on certain personal services. A one-hour massage always takes one hour. The non-routine and non-repetitive tasks involved in, say, healthcare and aged care can’t easily be sped up.

The immense gains in education and skills over the last 50 years may not be repeatable. Rising costs have placed higher education beyond the reach of many. They’ve also forced graduates to start their working lives with significant debts, undercutting the attractiveness of going to college. The rise in contract or part-time jobs has contributed to de-skilling, since workers have little incentive to invest in training. A lack of retraining means that the skill levels of older workers -- a rising share of the workforce -- quickly become dated.

Many “new” manufacturing technologies are already being extensively exploited. New energy technologies, such as fracking and renewables, aren’t breakthroughs comparable to the discovery of hydrocarbons or electricity itself; they require certain conditions, such as high oil prices, to be efficient. Many biotech, IT and financial innovations are focused on lifestyle, longevity, consumption and entertainment -- all of which have limited productivity benefits.

In many ways and many places, it’s becoming harder to start and grow businesses. Regulations and class-action lawsuits have made doing business more complex and expensive. Anti-competitive behavior makes life tough for would-be disrupters, even in the technology sector. There’s now one major chipmaker (Intel), a few hardware makers, two dominant computer operating systems (Microsoft’s Windows and Apple), two dominant mobile operating systems (Android and iOS) and one major suite of business software (Microsoft’s Office). Cloud computing is the preserve of Amazon, Microsoft and Google. The internet is dominated by Google (search), Amazon (e-commerce) and Facebook (social networks).

Among established companies, the frequently short tenures of chief executives and pressure to show short-term results work against productivity gains. Financial engineering to boost share prices is favored over risky, longer-term initiatives such as research and development or staff training.

And finally, since 2008, unconventional monetary policies have clearly distorted the economy. Low interest rates have impeded the shift of capital from inefficient to more efficient enterprises or industries, allowing unproductive businesses to live on. This has left capital tied up in marginal firms and restricted the supply of credit to smaller, often more innovative companies.

Even if productivity growth could be revived, it’s not clear those gains would have as much of an impact on living standards as in the past. Simply being able to make more stuff isn’t terribly helpful in an era of excess capacity and also weak aggregate demand. Many innovations actually eliminate jobs and depress wages. They allow a few creators to capture large benefits but don’t aid the majority of the population.

A much-quoted study from Oxford University found that 47 percent of all jobs are threatened by automation. In 1967, Boeing employed 400 workers per each aircraft produced. By 2015, that number had dropped to 113 workers per aircraft, a decline of 72 percent. The company believes that the worker-to-aircraft ratio can be reduced another 60 percent in the next 20 years.

Fewer workers mean even less demand. Given that consumption makes up 60 to 70 percent of economic activity in developed economies, productivity gains may thus depress rather than boost growth. Even if the world can solve this one conundrum, plenty more questions -- about employment, income and inequality -- await.


Article Link To The Bloomberg View:

The Intel Money Pit: Renovations Cost More, No Results In Sight

Intel’s renovations aren’t going so well.


By Therese Poletti
MarketWatch
October 19, 2016

Intel Corp. is trying to get its house in order, but right now it seems to resemble a bad contractor: Costs continue to rise as expectations flag.

Intel INTC, +1.23% reported a better-than-expected third quarter Tuesday afternoon, but the news was overshadowed by increasing charges for a massive restructuring and a softer forecast for the normally stellar fourth quarter. Even the strong third-quarter performance was the result of an unexpected rebound in Intel’s personal-computer business, one of the units Chief Executive Brian Krzanich has been attempting to de-emphasize, and investors were unimpressed, sending shares down as much as 6% in late trading.

In April, Intel announced a major restructuring effort aimed at streamlining its PC business and refocusing more company resources on data centers, cloud computing and other faster growing businesses such as the Internet of Things. Intel said it would cut up to 12,000 jobs, or 11% of its total workforce, by mid-2017, and expected a $1.2 billion charge in the second quarter.

That restructuring charge increased to $1.6 billion in July’s earnings report. Now, six months after the first announcement, it has reached $2.3 billion, thanks to an added move: The sale of a 51% stake in its computer security business, to be known again as McAfee, to the private-equity firm TPG for $4.2 billion, including debt. Intel originally paid $7.7 billion for the company, best known for its antivirus software. The deal to sell McAfee is adding both additional restructuring charges and a pretax gain in 2017.

At least, that is what Intel says now. The continued growth of the restructuring charges, along with less-than-stellar results from the next-generation businesses it hopes to rely on in the future, instead feel like the road of another mature Silicon Valley giant, Hewlett Packard Inc. HPQ, +1.28% , which just keeps adding more layoffs to the pile amid massive changes in a business that just can’t seem to provide the growth investors would like.

Partners like HP appear to be gearing up for the holiday season, as Intel’s maligned personal-computer business reported revenue of $8.9 billion, up 21% sequentially and 5% compared with a year ago. Last quarter, revenue in client computing fell 3% on a year-over-year basis.

Still, the company is looking for a slightly softer fourth quarter in PCs, normally the strongest of the year. Stacy Smith, Intel’s outgoing chief financial officer who is moving to a different position within the company, said that as part of the company’s fourth quarter revenue outlook — a range of $15.2 billion to $16.2 billion — he expected Intel will “be down a little bit in terms of PC volume.”

So, as a key driver of Intel’s surprise earnings performance is expected to decline, its rebuild continues to get bigger and more expensive. It will be interesting to see what Intel looks like at the end of this massive remodel, but it seems there is no telling how long it will take to get there and how much it will cost in the end.


Article Link To MarketWatch:

U.S. Expects ISIS To Wield Chemical Weapons In Mosul Fight

By Phil Stewart and Idrees Ali 
Reuters
October 19, 2016

The United States expects Islamic State to use crude chemical weapons as it tries to repel an Iraqi-led offensive on the city of Mosul, U.S. officials say, although adding that the group's technical ability to develop such weapons is highly limited.

U.S. forces have begun to regularly collect shell fragments to test for possible chemical agents, given Islamic State's use of mustard agent in the months before Monday's launch of the Mosul offensive, one official said.

In a previously undisclosed incident, U.S. forces confirmed the presence of a sulfur mustard agent on Islamic State munition fragments on Oct. 5, a second official said. The Islamic State had targeted local forces, not U.S. or coalition troops.

"Given ISIL's reprehensible behavior and flagrant disregard for international standards and norms, this event is not surprising," the second official told Reuters, speaking on condition of anonymity, and using an acronym for Islamic State.

U.S. officials do not believe Islamic State has been successful so far at developing chemical weapons with particularly lethal effects, meaning that conventional weapons are still the most dangerous threat for advancing Iraqi and Kurdish forces - and any foreign advisers who get close enough.

Sulfur mustard agents can cause blistering on exposed skin and lungs. At low doses, however, that would not be deadly.

Roughly 5,000 U.S. forces are in Iraq. More than 100 of them are embedded with Iraqi and Kurdish Peshmerga forces involved with the Mosul offensive, advising commanders and helping them ensure coalition air power hits the right targets, officials said. Still, those forces are not at the front lines, they added.

Human Shields


The fall of Mosul would signal the defeat of the ultra-hardline Sunni jihadists in Iraq but could also lead to land grabs and sectarian bloodletting between groups that fought one another after the 2003 overthrow of Saddam Hussein.

U.S. President Barack Obama estimated on Thursday that perhaps 1 million civilians were still in Mosul, creating a challenge for Iraq and its Western backers trying to expel the group through force.

"If we aren't successful in helping ordinary people as they're fleeing from ISIL, then that makes us vulnerable to seeing ISIL return," Obama told reporters in Washington.

The International Organization for Migration’s Iraq chief, Thomas Weiss, said on Tuesday he expected Islamic State militants to use Mosul residents as human shields and lent his voice to concerns about the dangers of chemical agents.

The IOM had not managed to procure many gas masks yet, despite those risks, Weiss said from Baghdad.

"We also fear, and there has been some evidence that ISIL might be using chemical weapons. Children, the elderly, disabled, will be particularly vulnerable,” Weiss said.

Attacking Iraqi forces are still 12 to 30 miles (20 to 50 km) from the city itself and U.S. officials believe that Islamic State is most likely to use chemical weapons later in the campaign, in what could be a difficult, protracted battle.

The leader of Islamic State was reported to be among thousands of hardline militants still in the city, suggesting the group would go to great lengths to repel the coalition.

American officials believe some of Islamic State's best fighters are in Mosul.


Article Link To Reuters:

Wednesday, October 19, Morning Global Market Roundup: Asian Shares Edge Up On China Growth Relief, Oil Higher

By Wayne Cole
Reuters
October 19, 2016

Asian shares rose for a second session on Wednesday as a barrage of Chinese data confirmed the economy had stabilized on the back of government spending and a hot housing market, even if worries about debt continue to mount.

The initial reaction was muted with few fireworks in the figures and Shanghai stocks.SSEC edged up 0.2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.4 percent, on top of Tuesday's 1.4 percent jump.

Australian shares firmed 0.3 percent, while Japan's Nikkei .N225 rose 0.1 percent. EMini futures for the S&P 500 ESc1 were also a fraction firmer, while spreadbetters predicted modest opening gains for European bourses.

Chinese gross domestic product (GDP) expanded 6.7 percent in the year to September, exactly as forecast. Private investment remained subdued with government spending and property strong.

Other data showed retail sales rising a solid 10.7 percent and urban investment 8.2 percent, but industrial output disappointed by growing only 6.1 percent.

"The upshot from today's data is that economic activity seems to be holding up reasonably well, with few signs that a renewed slowdown is just around the corner," said Julian Evans-Pritchard, China economist at Capital Economics.

"Nonetheless, the recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom, both of which policymakers are now working to rein in."

Sentiment had got an early lift from Wall Street which benefited from encouraging corporate earnings. The Dow .DJI ended Tuesday up 0.42 percent, while the S&P 500.SPX added 0.62 percent and the Nasdaq .IXIC 0.85 percent.

Of the 52 S&P 500 companies that have reported results to date for the third quarter, 81 percent had earnings that topped average analyst estimates, according to forecasts collated by Thomson Reuters I/B/E/S.

One company seemingly disappointing investors was Intel (INTC.O), which slid 5.4 percent after the bell despite beating expectations on its earnings.

Pound Up Amid Brexit Confusion


A report on U.S. consumer prices showed underlying inflation moderated slightly in September to 2.2 percent, leading the market to slightly pare back bets on a December rate hike.

Fed fund futures <0> imply around a 65 percent probability of a move, down from 70 percent.

Federal Reserve Chair Janet Yellen said last week the U.S. central bank could allow inflation to run above its target.

U.S. Treasury yields dipped, in line with their UK counterparts, amid confusion on whether parliament will have to ratify Britain's exit from the European Union.

British lawmakers are seen as less inclined to take a hard line on Brexit than Prime Minister Theresa May.

The news headlines caught the market very short of sterling and left the pound up at $1.2279 GBP=D4, after a rally of 1 percent on Tuesday.

The dollar was steady on the yen at 103.82 JPY=, after edging back from 104.20 the previous session. Against a basket of currencies it dipped 0.1 percent to 97.809 .DXY.

The euro remained vulnerable at $1.0980 EUR= ahead of Thursday's meeting of the European Central Bank where some investors wager President Mario Draghi will push back against talk of a tapering in its asset buying.

In commodity markets, oil prices extended gains as an industry group's data showed an unexpected draw in U.S. crude inventories last week.

Brent crude LCOc1 was quoted up 47 cents at $52.15 a barrel, while U.S. crude CLc1 added 47 cents to $50.76.


Article Link To Reuters:

Coal: After The $100 Per Metric Ton Boom, How Long Until The Bust?

By Henning Gloystein and Keith Wallis
Reuters
October 19, 2016

As Australian thermal coal prices hit $100 per tonne on Tuesday for the first time since 2012, the fuel's rally is now among the commodity's top-three bull-runs on record.

The bull-run rivals the 2011 Fukushima nuclear meltdown and Australian mining flood spike, and the 2008/09 financial boom and bust. [L4N1CO2XG]

With Australian Newcastle spot cargo prices for November, up almost 100 percent since June to $100 per tonne, their highest since 2012, traders and analysts say a bust is inevitable.

"Of course it's not going to last. Rising prices are encouraging Chinese miners to raise output and the government, seeing how much prices have risen, has backed down somewhat and asked for an increase in production," said Ralph Leszczynski of shipping brokerage Banchero Costa.

While Newcastle prices are unlikely to drop back anywhere near annual lows, head of research at Marex Spectron Georgi Slavov believes there is a $20 premium that could be wiped out.

"I certainly believe we are at the top - coal will kill this rally by itself," he said in reference to higher prices stimulating greater production growth.

However, many believe prices could keep rising until the end of the year or possibly into early 2017 as the winter season fuels demand and miners take time to bring on more production.

The price rally for thermal coal, used to generate electricity, was triggered by a Chinese government decision to cap its mining output, aimed at reining in rampant overcapacity, and which forced its utilities to import more coal.

The intervention cut China's mining output by around 15 percent "and sent consumers – electricity generators and steel mills – back to global markets to meet the short-fall," said Gerard Burg, senior economist at National Australia Group.

He does not expect current prices to last "too much longer" as Chinese authorities urge miners to raise output again to control spiraling coal prices.

International exporters are also reacting to higher prices, with Glencore last week announcing it will hire more than 200 workers at its Collinsville coal mine in Australia, which mostly exports thermal coal.

Australia's Department of Industry and Science expects thermal coal exports from Australia to rise by three million tonnes to 203 million tonnes in fiscal 2017.

For Now, It's Red Hot


Vertical price jumps tend to be followed by sharp downward corrections, yet many analysts believe the coming downturn will be more gradual than the rally that preceded it.

"Increasing production comes with a lag as you need to re-hire workers, do training etc," said Leszczynski.

China and other big importers like South Korea are also short of supplies ahead of winter, which many forecasters expect to be colder than the last two.

Traders also pointed to big price rises for metallurgical coal, which has been hit by outages in Australia. This has also affected thermal coal since both coals tend to come from the same mines.

"There's a perfect storm in coal markets. Metallurgical coal is red hot, due to outages in Australia and - like in thermal coal - because of soaring Chinese imports," said a mining investment advisor in Singapore, who spoke anonymously due to the price sensitivity of the matter to his clients.

A somewhat gradual price retreat is mirrored in the forward curve, where Chinese coal futures show a price fall from $85.30 per tonne for November to $71 by April next year, and to $61.15 a tonne in October 2017.

Forward contracts show how much traders are willing to pay today for a product to be delivered at a later stage.

Utilities using coal to generate electricity are already preparing accordingly: a source at a South Korean utility said prices could rise further before tapering off into 2017.

He was therefore trying to avoid the spot market and instead "seeking to buy cargoes for next year's third and fourth quarters."

Newcastle coal cargo prices for the third quarter of 2017 are currently priced around $73.25 per tonne, $22.75 below current spot cargo prices.

Fallback Option

Despite years of policies and carbon taxes designed to banish the polluting fuel from its power generation sector, Europe is witnessing an unlikely coal renaissance that has seen physical prices hit two-year highs.

A domino effect that began with France shutting off several nuclear reactors for tests in recent weeks coupled with unusually low wind farm output in northern Germany has tightened Europe's power markets, making coal the only fallback option.

Marex Spectron's Slavov said the coal price upsurge across Europe should be temporary as there is plenty of spare Atlantic production capacity to be brought back, including in Colombia and the United States, where signs of growing output are already apparent, he said.

European API2 physical cargoes for 2017 delivery are now at $70 a tonne, a level not seen since December 2014, while API2 for October closed on Monday at $75.60, reflecting a market structure known as backwardation as spot prices are at premium to those in the future.

The decline in European coal prices further out reflects the belief that current power market tightness in France and Germany is a temporary phenomenon, Slavov said.


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Bad Winter Delays MH370 Search By Up To Two Months, Say Authorities

By Byron Kaye
Reuters
October 19, 2016

An undersea search for missing Malaysia Airlines flight MH370 will be delayed by up to two months because of bad weather in the Indian Ocean during the southern winter, authorities said on Wednesday.

The Boeing 777 disappeared on its way from Kuala Lumpur to Beijing in March 2014 with 239 passengers and crew on board, sparking a two-and-a-half year search that has focused on the Indian Ocean.

Authorities from Malaysia, Australia and China initially expected to finish searching a 120,000-square-km (46,000 square mile) target area by the end of 2016.

"Due to poor weather conditions over the Southern hemisphere winter, it is expected searching the entire ... area will be completed by around January/February 2017," they said in a statement.

In what has been the most expensive search in aviation history, the authorities said they had searched 110,000 square km (42,500 square miles) to date.

The search will be suspended once the target area is scoured, pending new information.

Why the aircraft went off course and came down are a mystery.

The only confirmed traces of the plane have been three pieces of debris found washed up on the island country Mauritius, the French island Reunion and an island off the coast of Tanzania.


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Sharp Expects Significant Profit Improvement, Shares Surge

Reuters
October 19, 2016

Japan's Sharp Corp on Wednesday said it expects significant improvement in annual profit due to restructuring and synergies with new owner Foxconn, sending shares in the display maker soaring more than 10 percent.

The statement came after the Nikkei business daily reported that Sharp forecasts operating profit of about 40 billion yen ($385 million) for the business year through March. That would compare with the 6.6 billion yen average of 11 analyst estimates in a Thomson Reuters I/B/E/S poll.

Meeting the forecast would mark the first operating profit in three years for Sharp, which is rebuilding under Taiwan's Foxconn. The world's biggest contract electronics manufacturer, formally known as Hon Hai Precision Industry Co Ltd, bought two-thirds of Sharp for 388.8 billion yen in August.

Sharp cut about 6,000 jobs to 43,500 in the last financial year through early retirement and an operations overhaul including withdrawal from its money-losing North American TV set business.

On Wednesday, Sharp said it expected profit to improve but revenue to fall. Its shares subsequently jumped nearly 11 percent to their highest price in about six months, far outperforming the benchmark Nikkei average share price index.

"Sharp stopped the bleeding by cutting fixed costs, but that's only a stopgap measure," said analyst Hideki Yasuda at Ace Research Institute. "It's still unclear how the company can attain its topline growth. It needs to find a new growth driver."

The prospects of Sharp's mainstay display panel business - the root cause of its decline - remain dim.

The global panel market is on the cusp of improvement as a production cutback resolved a supply glut and new product launches including Apple Inc's latest iPhone temporarily boost demand.

But Sharp still has to find ways to compete with Chinese peers rapidly expanding capacity, and with South Korean makers far ahead in next-generation technology. Apple is widely expected to adopt that technology - organic light-emitting diode (OLED) - for future versions of its iPhone, analysts said.

Sharp said it would provide a full-year earnings forecast on Nov. 1, when it announces its second-quarter results.

($1 = 103.8200 yen)


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Oil Rises On U.S. Crude Inventory Draw, Falling Chinese Output

By Henning Gloystein
Reuters
October 19, 2016

Oil prices rose on Wednesday, lifted by a report of a drop in U.S. crude inventories and declining production in China, while an upbeat OPEC statement on its planned output cut also supported the market.

A slightly weaker dollar boosted oil as well, traders said, as it makes fuel purchases cheaper for countries using other currencies, potentially spurring demand.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $50.73 per barrel at 0326 GMT, up 44 cents, or 0.87 percent, from their last settlement.

International Brent crude futures were at $52.14 a barrel, up 46 cents, or 0.89 percent.

"The American Petroleum Institute crude inventory numbers were released ... this has given early Asian trading a bullish start," said Jeffrey Halley, senior market analyst at OANDA in Singapore.

U.S. crude stockpiles fell 3.8 million barrels in the week to Oct. 14, to 467.1 million barrels, the API reported late on Tuesday.

The U.S. Energy Information Administration (EIA) is due to release official crude and fuel storage data later on Wednesday.

Traders said oil was supported by Mohammed Barkindo, secretary general of the Organization of the Petroleum Exporting Countries (OPEC), saying he is confident about the prospects of a planned production cut following an OPEC meeting on Nov. 30.

"I am optimistic we will have a decision," he said.

In its first output cut agreement since 2008, OPEC said it plans to reduce production to 32.50 million to 33.0 million barrels per day (bpd), compared with record output of 33.6 million bpd in September.

The group also hopes non-OPEC producers, especially Russia, will cooperate in a cut.

In China, a raft of economic and trade data was released on Wednesday.

While economic growth was in line with expectations, at an annual growth rate of 6.7 percent in the third quarter, its oil figures were supportive of higher oil prices, traders said.

China processed 43.8 million tonnes (10.7 million bpd) of crude oil in September, up 2.4 percent from a year ago, government data showed on Wednesday.

Over the same month, China's oil production fell 9.8 percent to 15.98 million tonnes (3.89 million bpd), in its steepest decline in 19 months.


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Another Quarter Of Weak Results Looms For U.S. Refiners

By Jarrett Renshaw and Devika Krishna Kumar
Reuters
October 19, 2016

U.S. independent refiners such as PBF Energy (PBF.N) and Phillips 66 (PSX.N) are expected to report another quarter of disappointing profits in coming weeks, as hopes that a record summer driving season would turn the industry's fortunes around do not appear to have materialized.

U.S. refiners are in the midst of their worst year since the shale boom began in 2011. High fuel inventories have punished margins this year, forcing some refiners to voluntarily cut production, delay capital work, lay off workers and slash employee benefits.

With margins expected to remain under pressure, relief is not coming anytime soon, analysts say. Overall supply levels are still elevated, and the cost to meet U.S. renewable fuel standards will drag on profits for the remainder of the year.

Earnings expectations have been falling over the last month for an index of nine independent refiners that are part of the S&P 500. Over the last 30 days, the forecast for the third quarter has dropped by 3.8 percent on average, according to StarMine, a unit of Thomson Reuters.

"2016 is probably a lost year for the U.S. refining industry," Barclays analyst Paul Cheng said.

The benchmark U.S. crack spread
Motorists hit U.S. roads in record numbers over the summer, but the demand was not enough to deplete the massive buildup in gasoline inventories that existed heading into the summer driving season. Those inventories - the result of overproduction last winter - hurt margins.

Heading into the winter, distillate stocks are at their highest seasonally since 2010. Refiners built up distillate stocks over the summer as they pushed their plants to pump out gasoline.

The U.S. refining industry has widely blamed its economic misfortunes on the country's renewable fuel program, which forces refiners to either blend biofuels like ethanol into their fuel pool or buy renewable fuel credits. The fuel credits, known as renewable identification numbers, or RINs, have jumped in price this year.

Delta Air Lines (DAL.N) opened the earnings season last week, reporting a $45 million loss at its Monroe Energy refinery for the third quarter, versus a $106 million profit a year ago. The company is expecting the refinery to lose more than $100 million this year, versus more than $300 million in profits last year.

Delta, which does not have a blending operation and must buy credits for the fuel it produces, said it spent $48 million in the third quarter on RINs, nearly triple what it paid last year.

Another local refinery, Philadelphia Energy Solutions, blamed the rising cost of RINs for its decision to lay off up to 100 non-union employees and slash benefits. [nL1N1CG0U7]

In May, Marathon Petroleum (MPC.N) laid off 46 employees at its Galveston Bay refinery in Texas. [nL2N18L1V4]

Standalone refineries like PES and Monroe will continue to struggle in the Northeast because they have little advantage over international rivals and face tougher environmental obligations at home, Sandy Fielden, director of research, commodities and energy at Morningstar in Austin, Texas, said in a report due Wednesday.

"U.S. refiner margins as a whole are lower in 2016 versus 2015 and Q4 is not likely to be different with higher crude prices and soft product prices due to higher inventories," he said.

The U.S. Energy Information Administration expects this winter to be about 18 percent colder than last year's historically mild season.


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