Thursday, November 17, 2016

Musk Says Tesla’s Solar Shingles Will Cost Less Than A Dumb Roof

“Electricity is just a bonus.”


By Tom Randall
Bloomberg 
November 18, 2016

It’s official: After Tesla shareholders approved the acquisition of SolarCity, the new company is now an unequivocal sun-to-vehicle energy firm. And Chief Executive Officer Elon Musk didn’t take long to make his first big announcement as head of this new enterprise.

Minutes after shareholders approved the deal—about 85 percent of them voted yes—Musk told the crowd that he had just returned from a meeting with his new solar engineering team. Tesla’s new solar roof product, he proclaimed, will actually cost less to manufacture and install than a traditional roof—even before savings from the power bill. “Electricity,” Musk said, “is just a bonus.”

If Musk’s claims prove true, this could be a real turning point in the evolution of solar power. The rooftop shingles he unveiled just a few weeks ago are something to behold: They’re made of textured glass and are virtually indistinguishable from high-end roofing products. They also transform light into power for your home and your electric car.

“So the basic proposition will be: Would you like a roof that looks better than a normal roof, lasts twice as long, costs less and—by the way—generates electricity?” Musk said. “Why would you get anything else?”

Make no mistake: The new shingles will still be a premium product, at least when they first roll out. The terra cotta and slate roofs Tesla mimicked are among the most expensive roofing materials on the market—costing as much as 20 times more than cheap asphalt shingles.

Much of the cost savings Musk is anticipating comes from shipping the materials. Traditional roofing materials are brittle, heavy, and bulky. Shipping costs are high, as is the quantity lost to breakage. The new tempered-glass roof tiles, engineered in Tesla’s new automotive and solar glass division, weigh as little as a fifth of current products and are considerably easier to ship, Musk said.

When Musk first unveiled the tiles on Oct. 28, the pricing details were murkier. He said that someone who buys a Tesla roof when the product is released next summer will save money compared with someone who buys a comparable traditional roof, plus electricity from the grid. But on a large house over a long period of time, the value of that electricity could exceed $100,000. The new target he unveiled today is considerably cheaper, and it's considerably more promising for the future of rooftop solar power.


Article Link To Bloomberg:

Next For Tesla And SolarCity: The Lawsuits

Next chapter in Tesla-SolarCity merger could be written in Delaware.


By Claudia Assis
MarketWatch
November 18, 2016

Tesla Motors Inc. and SolarCity Corp. may have approved late Thursday the merger between the two Silicon Valley companies, but concerns about the deal will likely live on — in court.

Excluding the votes of Tesla TSLA, +2.57% CEO Elon Musk and other affiliated shareholders, more than 85% of shares voted were cast in favor of the $2.6 billion acquisition, Tesla said. SolarCity SCTY, +2.90% shareholders also approved the merger, and the transaction will be completed in the coming days, it said.

The proposal has had its fair share of detractors, and even the two major shareholder proxy services were split on their recommendations. In September, Tesla said that at least four lawsuits had been filed in the early part of the month in Delaware to challenge the merger, most alleging breach of fiduciary duty by Tesla.

”There have already been several lawsuits filed against the deal. They have now been consolidated in the Delaware Chancery Court and will move ahead,” said Stephen F. Diamond, a law professor at Santa Clara University.

Tesla will use Thursday’s shareholder vote as a show of support for the transaction, but “the presence of so many conflicts on the board of (Tesla) may give the Court pause and may pave the way to a full trial on the merits of the case,” Diamond said.

Diamond advised CtW Investment Group on the transaction, and the group didn’t oppose the merger per se, he said. It did, however, “raise a concern that the weak governance structure at the company undermined the credibility of the claim by Tesla that the acquisition of SolarCity made sense,” he said.

Analysts’ notes about the approval started pouring in late Thursday. CFRA analyst Efraim Levy kept his cautious view on Tesla, keeping his rating on the stock a “hold.”

The acquisition “is dilutive to (Tesla’s) profitability, will detract from senior management attention, and contribute to increased capital market funding requirements in ‘17,” he said. The removal of some uncertainty that has weighed on Tesla could be a positive, he said.

While adding costs and risks to the electric-car maker, “long-term (SolarCity) has the potential for its own profit stream, even excluding synergies. Elon Musk is clearly a force for change, but we think TSLA shareholders will see rewards delayed,” Levy said.

Tesla earlier this year amended its corporate bylaws, mandating that future lawsuits against it take place exclusively in Delaware courts.

Musk is the largest shareholder of both companies, and he also serves as SolarCity’s chairman. He excused himself from voting, but admitted to lobbying large institutional shareholders for an approval.

Musk took the stage shortly after the merger was approved — results were announced five minutes after the 1 p.m. (Pacific) meeting started. His first comment was that shareholders’ faith in the new company “will be rewarded.”

Musk said he expects Tesla’s newly unveiled solar tiles for homes to be cheaper or at least cost the same as a new roof, with electricity from solar coming “as a bonus.”

He made a joke about Election Day results, saying that “apparently there’s a new political landscape,” but said that Tesla would be even more competitive without any government incentives and subsidies.

“It’s impossible to scale electric vehicles and have incentives be relevant,” he said.

Tesla and SolarCity shares rose in the extended session after the merger was approved. The stocks have underperformed the benchmarks, however. So far this year, SolarCity shares have declined 60%, and Tesla shares are down 21%. That contrasts with gains of 7% for the S&P 500 index. SPX, +0.47%.


Article Link To MarketWatch:

Tesla's Musk Closes SolarCity Deal, More Challenges Lie Ahead

By Alexandria Sage and Nichola Groom 
Reuters
November 18, 2016

Tesla Motors Inc Chief Executive Elon Musk won approval on Thursday from the electric luxury automaker's shareholders for an acquisition of SolarCity Corp, the solar energy system installer in which he is the largest shareholder.

The stock swap deal, worth about $2 billion, caps a tumultuous year for Musk and Tesla. The proposed acquisition of SolarCity, a money-losing installer of residential solar power systems, prompted a 13 percent fall in Tesla's share price after Musk outlined the deal in June.

Tesla said the deal was "overwhelmingly" approved by 85 percent of unaffiliated shareholders. Shares rose 1.3 percent in after-hours trade after gaining 2.6 percent in the regular session to close at $188.66.

"Your faith will be rewarded," Musk told shareholders assembled at the company's Fremont, California, facility.

Tesla investors have also been rattled by a federal investigation of the death of a Tesla owner operating his car on Autopilot, a driver assistance system, and by concerns Musk may be overextended between ambitious future goals for Tesla, the work of integrating SolarCity, and his CEO duties at SpaceX.

The automaker's shares are down nearly 20 percent for the year, and took a hit after Donald Trump's victory in the presidential election. A key Trump adviser on environmental issues, Myron Ebell, has said federal tax subsidies for electric vehicles should be cut off.

Tesla faces more challenges in the months ahead, as the company tries to make a five-fold leap in its annual vehicle production and launch next year its new Model 3 sedan, aimed at mass-market customers able to buy a vehicle with a starting price of $35,000.

Tesla last month reported a narrow profit for the third quarter, and Musk said he did not expect the company would have to sell more shares to finance the Model 3 launch. However, most analysts expect the company will have to raise capital next year, possibly with a sale of equity.

Musk and other company insiders recused themselves from the shareholder vote on the SolarCity acquisition. But Musk campaigned hard for the deal, arguing SolarCity's operations would add $1 billion to Tesla's revenue by 2017, and generate an additional $500 million in cash over three years.

Musk received a boost for the SolarCity deal earlier this month when Institutional Shareholder Services (ISS) recommended that investors in both companies approve the deal. Under the proposed transaction, SolarCity shareholders will get 0.110 of a Tesla share for each share in the solar company.

As of Sept. 30, SolarCity had $259.3 million in cash and cash equivalents and $6.68 billion in total liabilities, including debt.

SolarCity has expanded dramatically in the last five years, but it relies heavily on borrowing money to finance its no-money-down residential solar installations. After expanding installations more than 70 percent between 2014 and 2015, SolarCity ratcheted down its forecast three times this year and now expects just a modest increase compared with 2015.

In addition to its deliberate slowing, SolarCity is grappling with state solar policy changes that have tempered demand for residential solar systems in major markets including Nevada and California.

At the same time, the extension of a federal tax credit for solar systems late last year eliminated any urgency homeowners may have felt to put up solar by the end of 2016.


Article Link To Reuters:

The Sad Record Of Democracy As Tyranny

President Obama may believe in universal democratic values, but President-elect Trump echoes those who see ‘democracy’ as nothing but a means to their end.


The Daily Beast
November 17, 2016

The owner of a Left Bank café heard me speaking English to a friend earlier this week and couldn’t restrain himself. He asked what we thought of President-elect Donald Trump. Americans overseas get that question a lot these days.

“People were very surprised,” I said, shaking my head. “And what do you think of Marine Le Pen?” I asked. “Could she be the next president of France?”

He nodded thoughtfully and a little ruefully at the mention of the female far-right dynamo who has taken her father’s fringe party and turned it into a major force, with the power to shake up not only France but all of Europe.

For years Marine Le Pen has built the wave of nationalist populism on this side of the Atlantic that Trump has only just begun to surf in the United States: a force so disruptive that it risks turning the very idea of “Western democracy” on its head.

The polls, for what they are worth, have predicted consistently that Le Pen will win a plurality of the popular vote next May, but lose the run-off for the presidency in June. Now, everybody is wondering: Can she win outright?

“It’s possible,” said the café owner, using an especially apt French word. “After Trump, people will be décomplexé,” which is to say freed of complexes and inhibitions. “They will say, ‘If the Americans can do this, why not us?’”

Indeed.

***

In Greece on Wednesday, lame-duck President Barack Obama gave a long lecture on globalization and disruption, laying out the case for liberal democracy as if he expected the world to be taking notes. And as happens so often when Obama adopts his professorial persona, he was philosophically right about almost everything, but emotionally convincing about almost nothing.

At the core of his argument was the idea, as he put it, that “countries that uphold democratic governance tend to be more just, more stable, and more successful.” He trotted out the old Churchillean chestnut that democracy is the worst form of government except for all the others. “It can be slow. It can be frustrating. It can be hard. It can be messy,” said Obama, but its ability to correct itself makes it the best form of government to meet the challenges ahead.

And, historically, that might be true. But in the present day what we are seeing is something altogether different. In many countries, the “democratic process” is being used to destroy what most of us thought were democratic ideals.

Back in 1997, Fareed Zakaria, then at Foreign Affairs magazine, warned of the rise of illiberal democracy, “from Peru to the Palestinian Authority, from Sierra Leone to Slovakia, from Pakistan to the Philippines.”

Democracy in those days had become the tool of populist authoritarians around the globe whose attachment to freedom, equality, and brotherhood, as the French like to put it, is negligible. And today? “Illiberal” is far too cautious a word.

Over the last decade, the list of emerging democracies trending toward tyranny is not only much longer than Zakaria’s, but several of the countries involved are much more important.

Turkey is a nation of more than 80 million people, an important member of NATO (with the second biggest army after the United States), and with longstanding aspirations to join that club of democracies called the European Union.

From 2003 to 2014, as the elected prime minister, Recep Tayyip Erdogan successfully stabilized the country’s economy and made it prosper. His party’s Islamic credentials were seen as moderate, and his nationalism made Turks proud. But in recent years, he moved to make himself the permanent ruler of his country, playing coyly with the so-called Islamic State, reigniting a war with Kurdish insurgents, exploiting public fears.

When some of Erdogan’s opponents in the military staged a coup in July (for which there are many precedents in modern Turkey), he survived, managed to outmaneuver them, and benefitted from a huge outpouring of support in the name of democracy.
Since then Erdogan has purged more than 80,000 people throughout the military, the bureaucracy and academia, while detaining or arresting tens of thousands. He has closed newspapers across the country, and crushed what once was a relatively free press.

Earlier this month Erdogan announced he would reinstate the death penalty, which the European Union has always seen as a red line for any country that wants membership. He’s clearly saying he doesn’t care anymore about Europe’s view of democracy.

Venezuela, with 31 million people, is a major oil producer and used to be an important moderate ally of the United States in Latin America. But Hugo Chávez, a military officer who led a failed coup in the early 1990s, founded a political party after a brief stint in jail and won the presidency by winning over the disenfranchised poor in 1998.

With his government underwritten by high oil prices, Chávez repeatedly won elections and ruled until his death in 2013. But his successor, Nicolás Maduro, cursed by a collapse in oil revenue, has overseen a devastated economy and confronted huge social unrest with no solutions in sight apart from claims that he will continue the Chavista variant of democracy, while using the courts he packed to hang on.

In the Philippines, recently elected President Rodrigo Duterte has discarded the rule of law in favor of vigilante justice to wipe out drug dealers, drug users, and anyone who gets in the way. Thousands have been killed. And rather than put up with American preaching about human rights and democracy, this democratically elected leader has opted to embrace China as his new protector and ally.

Iraq was liberated from the tyranny of Saddam Hussein by American-led forces in 2003’s Operation Iraqi Freedom, at a cost of much blood and trillions of dollars. But the democratic government established under American tutelage has come to be dominated by Shiite factions who have driven out Sunni representatives, lost control of separatist Kurds, and rely heavily on the support and sponsorship of Iran.

Egypt could have been the shining star of democracy in the Middle East after a popular uprising brought down the 30-year rule of Hosni Mubarak in 2011. But elections brought the Muslim Brotherhood to power, and despite its promises to honor democratic principles, it quickly tried to crush opposition. By 2013, ambitious military officers led by Gen. Abdel Fattah al-Sisi used mass demonstrations and brute force to bring down the Brotherhood. Sisi then got himself elected with huge support, and has since moved to crush all opposition. The Egyptian “democratic” pattern is all familiar. Sisi was, as it happened, one of the first heads of state to congratulate Donald Trump on his election.

In the months ahead, it appears certain we will see fear-mongering and intolerance mobilizing voters all over Europe. Already the democratically elected governments of Hungary and Poland are willing to brook very little dissent. We can expect the far-right to win elections in Austria, despite numerous technical issues that have prevented them from taking power so far.

The Netherlands and Italy both have ascendant far-right parties willing to profile, prosecute, persecute, and expel whole categories of people that don’t fit their putative national and religious identity.

***

There used to be a cliché cited privately by American diplomats arguing against democratic openings for Islamist groups in the Middle East: “They believe in one man, one vote, one time.”

Now that attitude is becoming a commonplace, and not only when it applies to Islamists. It appears “the people” really can be, as Alexander Hamilton is supposed to have said, “a great beast.”

As that café owner here in Paris understood, certain kinds of complexes and inhibitions are what actually allow democracies to function, they set the parameters based on common values. What we’ve seen in one country after another is that when you throw those values away, the best aspects of democracy quickly disappear with them.

The United States was never a perfect example of virtue in this regard, but it represented, at least, the idea of virtue—of moderation, of reason, of balance, fairness, and opportunity for change.

In the early 1950s, the demagogue Joseph McCarthy played on anti-communist hysteria to awaken what he called “the dormant indignation of the American people.” His enemies lists and fury intensified and spread. But he finally was brought up short by one single, devastating, purely rhetorical question, “Have you no decency, Sir?”

How wonderfully anachronistic that sentence sounds now. Where is the concept of “decency” in American politics today? Clearly it’s a notion Obama clings to, but if it still exists, it is very far from being universal.

The election of Donald Trump as president and the haphazard installation of ideologues and extremists in his administration has stripped away whatever American moral leadership lingered in the eyes of the rest of the world.

The presence of Stephen Bannon as senior strategist, with his designs to promote Breitbart-style misogyny and race-baiting populism all over Europe, is a particularly bad sign. But the decline of the American example does not date only to Nov. 8 or to the last year’s brutal political campaigns. It goes back decades.

In the 1980s and 1990s the United States stood in every respect as the greatest power in the world with the greatest potential to do good for all humanity.

In the decades since, America’s moral standing was weakened dramatically by the foolish, endless Iraq war that George W. Bush sold to the American public on false premises, and it was never completely restored by Barack Obama’s reticent struggles with the intractable political and military disasters he inherited.

By the time of Trump’s election, much of the world, in fact, already was décomplexé.

If you want to see where democratic values are headed globally, take a look at the United Nations. It was conceived in liberty after the defeat of imperial Japan and Nazi Germany, and dedicated to the propositions put forth in 1948 in the Universal Declaration of Human Rights. The document vowed the protection of such fundamentals as freedom of expression, freedom of religion, freedom from torture, freedom from arbitrary arrest, equal treatment before the law. There are only 30 articles in all, and they are very brief and basic. Read them today and weep.

And then think on this: The most powerful part of the United Nations is the Security Council, which has five permanent members. By next June the heads of state in those five countries could well be Donald Trump, Vladimir Putin, Theresa May, Xi Jinping, and Marine Le Pen.


Article Link To The Daily Beast:

Rove: Donald Trump Won Because Hillary Clinton Flopped

About 3.5 million Obama voters in 2012 didn’t cast ballots for Hillary this time.


By Karl Rove
The Wall Street Journal
November 17, 2016

Much of what passes for conventional wisdom about Donald Trump’s victory over Hillary Clinton is correct. But the Fox News exit poll shows interesting nuances.

Voters were supposed to be energized and turnout to be vast. The pool of eligible voters rose 5.5% compared with four years ago—to 227 million from 215.1 million, according to the Census Bureau. Yet the number of ballots cast increased only 1.5%, to 131.2 million from 129.2 million. (Another million votes or so, mostly mail-in ballots from the West Coast, are still to be counted.)

More striking: The votes cast for the two major parties fell in absolute terms. In 2012 the Republicans and Democrats took 126.9 million votes. This year? Only 123.7 million. Third-party candidates grabbed their biggest share since 1996: 5.5%, which translates into 7.5 million votes.

This is the fifth time in history that the winner of the Electoral College also lost the popular vote. It is the 14th time that the winner didn’t receive 50% of ballots. So far Mr. Trump has 61.3 million votes, or 46.8%, to Mrs. Clinton’s 62.4 million, or 47.7%. Her popular-vote lead will likely grow as ballots trickle in from predominantly blue states.

How do those figures compare with 2012? Mr. Trump received about 317,000 more ballots than Mitt Romney, but also a slightly smaller—0.5%—percentage of voters. Mrs. Clinton received 3.5 million fewer ballots and 3.4% less than President Barack Obama. Both candidates this year won fewer white votes—Mr. Trump 1.6 million and Mrs. Clinton 2.3 million—than four years ago.

In other words, Mr. Trump didn’t win because he greatly expanded the GOP, but because Mrs. Clinton lost a significant chunk of the Obama coalition. Compared with 2012 she dropped 1.8 million African-Americans, one million voters age 18-29, 1.8 million voters aged 30-44, 2.6 million Catholics, and nearly 4.5 million voters with family income of $30,000 or less.

Because the Hispanic share of the electorate rose from 10% to 11%, Mrs. Clinton received nearly 9.4 million Latino votes, up 180,000 from Mr. Obama’s total in 2012. But because Mr. Trump won 29% of Hispanics, up from Mr. Romney’s 27%, the president-elect won 4.2 million Latino votes, roughly 690,000 more than Mr. Romney.

The dominant narrative is that Mr. Trump rode a wave of blue-collar, working-class support, created in large part by concerns about globalization. The former interpretation, with caveats, is largely accurate; the latter less so.

Working-class voters have been deserting the Democratic Party since the late 1960s. They were an important part of Richard Nixon’s silent majority, and many later became Reagan Democrats. It’s true that they helped propel Mr. Trump’s victory, especially in Ohio, Wisconsin, Pennsylvania and Michigan.

But these voters aren’t what most pundits imagine, not simply people with little formal education. Only 18% of voters had a high school education or less, down from 24% last time, according to the exit poll. Mr. Trump received 12 million votes from them, 2.2 million fewer than Mr. Romney. Mrs. Clinton got 10.6 million votes, 5.8 million fewer than Mr. Obama.

Those with a two-year degree or some college grew to 32% of turnout, up from 29%. Compared with 2012, Mr. Trump gained 3.8 million, and Mrs. Clinton dropped 350,000. Voters with a B.A. also increased to 32% from 29%. Among them Mr. Trump gained 260,000 and Mrs. Clinton gained 2.9 million.

So Mr. Trump’s advantage among voters with some college outweighed Mrs. Clinton’s among people with four-year degrees. Both candidates suffered losses among high-school-educated voters, but Mrs. Clinton’s deficit was twice as large.

Despite the anti-globalization rhetoric, the electorate seems to have been motivated by concrete concerns about the current economy. About a third of voters told exit pollsters that the economy was “excellent” or “good,” and Mrs. Clinton took 77% of them. But among the nearly two-thirds who felt the economy was “not so good” or “poor,” Mr. Trump won 63%.

When asked if they wanted the next president to continue Mr. Obama’s policies, 28% of voters said “yes.” They broke 91% for Mrs. Clinton. The 48% who said they wanted more conservative policies went 83% for Mr. Trump.

Americans were historically unenthusiastic about their choices in this election. Eighteen percent of voters said they had a favorable opinion of neither Mr. Trump nor Mrs. Clinton. Those voters broke for the president-elect by 20 points, 49% to 29%.

As a result, the electorate could get grumpy quickly if President Trump doesn’t produce bigger paychecks and stronger growth. The economy remains the paramount issue for the incoming administration.


Article Link To The Wall Street Journal:

The Bush Mistake That Trump Might Repeat

By John Podhoretz
The New York Post
November 17, 2016

After pulling off the greatest political feat in modern American history — and maybe in all of American history — Donald Trump is in an enviable position.

With the exception of the very specific guarantee that he will “build the wall,” Trump’s outrageous campaign stances have been effectively rendered obsolete by the election he won.

Let me explain. In 2012, Mitt Romney’s campaign spokesman Eric Fehrnstrom was roundly criticized for saying that the shift from the primaries to the general election was an “Etch-a-Sketch” moment when Romney could shake off the polarizing positions he was forced to adopt to win his party’s nomination and reset his candidacy for the general electorate.

That was a huge problem for Romney, because it made it seem as though he was a man of no fixed principles and that he had been lying to Republican voters to secure their votes. Fehrnstrom’s boneheaded remark had the ironic result of limiting Romney’s ability to pivot to the center.

Trump doesn’t have Romney’s pre-existing authenticity problem. Even the fact that the president-elect was capable of taking three different positions on his own tax policy and to say wildly contradictory things about almost every major topic from foreign policy to health care to immigration somehow only made him seem more authentically himself.

He promised during the primaries he would “pivot” to a more presidential mien in the general election and never did — and that refusal to alter course may only have enhanced the “he tells it like it is” quality that seems to have impressed so many of his voters.

Since his core supporters apparently weren’t bothered by his policy contradictions, Trump now has a freedom most presidents-elect before him haven’t had. His base gives every indication it will not hold him accountable for changing his mind as long as he doesn’t change his tune. If he continues to serve as their tribune, as the vessel for their anger, they will back him to the hilt.

So he is now in the rare position of being able to pick and choose.

Which of his more general statements of purpose will be developed into full-blown legislative proposals requiring congressional approval and, following their passage into law, capable of withstanding constitutional challenge in the courts?

Which will only receive lip service? And which will simply and quietly be discarded?

If Trump reads the present situation correctly — and given his ability to read the national mood correctly, who better? — he will understand that his astonishing victory was partially if not largely attributable to an anti-Clinton wave demonstrated by the shocking withdrawal in key states of support for the Democratic candidate.

When all the votes are in, Trump will likely end up with only 2 million more votes nationally than John McCain received in the 2008 Barack Obama landslide — while Clinton will end up with 6 to 7 million fewer votes than Obama got that year. Even so, she will likely win the national popular vote by around 1.5 million.

Practically speaking, then, Trump is roughly where George W. Bush was when Bush assumed the presidency in 2000. Like Bush, Trump won around 48 percent (though he won 30 more electoral votes), and lost the popular vote.

It is long forgotten that Bush took office having appointed a very conservative cabinet — and then set himself the task of getting a major piece of legislation passed through bipartisan means. He teamed up with Teddy Kennedy on the No Child Left Behind Act. Conservatives hate that bill like poison.

9/11 and its aftermath changed the partisan dynamic Bush had sought to kick into gear, but until then he was aiming to win re-election as a bipartisan problem-solver. What if the noise surrounding Trump’s transition is meaningless, and he tries to do something similar?

Don’t forget that Trump has often said a colossal infrastructure bill is his first priority. To pass that, he’ll have to go bipartisan — he’ll need at least half a dozen Democratic senators to support it, since he’ll have to beat back a filibuster and votes against it by the likes of Rand Paul and Ben Sasse. But Chuck Schumer will be happy to make that deal.

Trump won enormous numbers of extremely conservative voters. Yet the candidate they championed might begin his tenure with a bill that rivals Obama’s stimulus package in size.

Opposing the 2009 stimulus was the key to triggering the Tea Party anti-spending movement that brought the GOP back from the brink after Obama’s massive triumph in 2008.

The danger of the bipartisan Trump strategy, if it’s pursued with a big spending bill, is that he would tear the heart out of the very movement that began the Republican Party renaissance his election completed.


Article Link To The New York Post:

The New Trump Democrats

Trump voters have become journalism’s biggest archaeological excavation site.


By Daniel Henninger
The Wall Street Journal
November 17, 2016

Will the donkey lie down with the elephant?

Two days after the election, Sen. Elizabeth Warren told the AFL-CIO executive council, “I will work with” Donald Trump.

Bernie Sanders: “I and other progressives are prepared to work with him.”

The Washington Post: “Pelosi says Democrats are willing to work with Trump.”

That was easy. Someone should tweet the news to the Occupy Trump Tower mobs on Fifth Avenue.

Of course this burst of Trumpian bonhomie comes with the word “if” attached: They’ll work with Donald Trump . . . if he becomes one of them. Which is to say, if he adopts the progressive policies and attitudes that just got the Democratic Party wiped out, from the presidency down to dogcatcher.

“If Republicans want to force through massive tax cuts,” thundered Sen. Warren, “we will fight them every step of the way.”

Even by the normal standards of post-election schadenfreude, it is hard not to be agog at the spectacle of Democrats trying to figure out what hit them and what to do about it.

A personal favorite is that Democrats must now distance themselves from “wealthy donors.” Party check-writers from Barbra Streisand to Jay Z put it all out there for Hillary, and this is the thanks they get—Bernie Sanders denouncing them to Stephen Colbert as “the liberal elite.”

A conclusion has emerged that the party forgot the forgotten man. In the past week, Trump voters have become the biggest archaeological dig in journalism, with the New York Times last weekend outputting three reports on lost tribes in Pennsylvania, Ohio and Michigan.

President Obama paused during his trip to Greece to admit Mr. Trump won because of voter “anxiety” over the economy. That is the emerging Democratic consensus: The party needs to rediscover the economic well-being of the kind of people who voted Democratic from FDR to Bill Clinton. It is a good question how a party could forget an 80-year constituency.

Nancy Pelosi’s leadership of House Democrats is now under challenge, we are supposed to believe, from members who seethed in silence for years as the party became defined by the Streisandian elites on the East and West Coasts.

Ohio’s Rep. Marcy Kaptur and fellow Ohioan Tim Ryan are both considering an attempt to overthrow the party’s most-famous San Francisco Democrat after Thanksgiving.

Will the progressive websites publish their annual advice column, “How to talk to your uncle at Thanksgiving dinner”? Maybe this year they should just listen.

Somewhere inside this Democratic mess may be the beginning of wisdom. But for all the commitment to rediscovering the lives of blue-collar Americans, Tiger Woods is more likely to figure out his golf swing before the party relearns the realities of the American economy.

This generation of Democrats doesn’t even know what the economy is anymore.

For the Democrats, America’s daily life of work, profit and loss across 50 states is essentially an alien phenomenon that sends them revenue, the way a pipeline transmits natural gas. This pipeline fuels their “economy,” which is the thousands and thousands of spending and line items in the $4 trillion federal budget.

Some would call this redistribution. The Democrats would call it their life’s work. Truth is, it isn’t working for them anymore.

There is no possibility that the Democrats are going to gain back enough of these Trump voters unless someone in their party stands up and shouts that these emperors of “economic fairness” aren’t wearing any clothes.

Other than the direct injection of infrastructure spending, you will look in vain through the party’s postmortems for a policy idea that would lift the economic prospects of people in places like Wilkes-Barre, Pa., who went over to Donald Trump.

In 1962 John F. Kennedy, whose campaign pledge was “get America moving again,” proposed a tax cut at the urging of his Republican Treasury Secretary, and Wall Street grandee, Douglas Dillon.

In a speech, Kennedy called for “an across-the-board, top-to-bottom cut in personal and corporate income taxes” to reform a system that “reduces the financial incentives for personal effort, investment, and risk-taking.” The economy grew strongly for years.

We’re there again, in a system that is risk averse and suppresses effort and investment. But the Democrats saying this week that they need to rediscover the economic life of America’s voters would rather drink arsenic than cut taxes on capital, lest some employer on one of the distant stars, say Wisconsin, might, ugh, make more money.

Possibly this assessment of the Democrats’ economic obtuseness is too harsh. If proven wrong, it will be withdrawn.

New Senate minority leader Chuck Schumer has brought West Virginia centrist Joe Manchin onto his leadership team. In 2018, Democrats must defend 10 Senate seats in states Donald Trump won. If I were one of these 10, I’d give the Democrats 2017 to reboot their persona. If not, I’d go over to the other side.


Article Link To The Wall Street Journal:

The Scary Reality Of Trump's Promises To Israel

By Daniel Gordis
The Bloomberg View
November 17, 2016

Many of us American expats living in Israel for years or even decades woke up early last Wednesday to watch the presidential election returns. Not obscenely early, of course, because the result was not really in doubt. The idea was to be awake for the moment that the networks declared the winner.

As we sat in shocked silence listening to the newscasters question whether Hillary Clinton “still has a path to the presidency,” Israeli radio reported that others, also American immigrants, had gathered in a celebratory rally in downtown Jerusalem. “Lock her up! Lock her up!” they chanted, echoing one of the uglier memes of a bitter campaign just ending.

Putting aside the sadness that the meanness had reached Israeli shores, the belief that Donald Trump’s shocking victory augers well for Israel or American Jews is also simplistic and dangerous. Trump’s election, in fact, represents a danger to the world’s largest Jewish communities.

Some of the Jerusalem celebration stemmed from the fact that Trump had “said all the right things” during the campaign, as far as American immigrants to Israel, most of them staunchly right of center, were concerned. He said he would move the American Embassy to Jerusalem, something that previous presidents avoided as not to enrage the Arab world. He does not believe the settlements are a major impediment to peace, said Jason Greenblatt, a Trump policy adviser. Naftali Bennett, leader of the right-wing Jewish Home Party, immediately declared that Clinton’s defeat meant the end of Palestinians’ drive for statehood. And, of course, Trump promised that he would “rip up” the Iran deal, which many Israelis think paves the way to an Iranian nuclear weapon.

Trump’s rhetoric appeals to Israelis who believe that President Barack Obama’s refusal to speak directly about the threat of radical Muslim terror makes fighting the scourge all the more difficult. Other believe (as Michael Oren asserts in his book “Ally”) that Obama purposely misled Israel regarding his intentions with Iran. And, of course, the specter of “moral clarity” coming from the White House is certainly appealing to Israelis who strongly believe that Palestinians’ rejection of Israel’s very right to exist is the root cause of the conflict’s insolubility.

Yet Trump and Israel will quickly find themselves in choppy seas should he move forward as he promised. Not surprisingly, Trump is already backing away from his promise regarding the Iran deal. The president-elect is also walking back his call to move the embassy -- someone must have explained to him that the move is more complicated than buying a building.

Even those Israelis who would understandably like the American Embassy to be located in their country’s capital should be relieved that Trump is rethinking that promise. The Palestinians have already said they would make his life miserable if he does it, using every diplomatic means at their disposal. What Palestinian President Mahmoud Abbas cannot say publicly, but is obvious, is that moving the embassy would likely unleash a new round of Palestinian violence, perhaps unprecedented in its ferocity. Ironically, were that violence to erupt, Israeli Prime Minister Benjamin Netanyahu could find himself begging Trump not to move the embassy so that some stability might return to the region.

Trump and his Israeli supporters would do well to recall that Israel walks a fine line in these tumultuous times. The Palestinians clearly have to hear that time is not on their side and that continued resistance to compromise will only harm their position (something that the Trump statement on settlements might actually accomplish). At the same time, however, Palestinians who think that they have nothing to lose will resort to violence. A careless Trump could bring about the deaths of hundreds of Israeli civilians, something no utterance or action by Obama ever did.

Across the ocean, there is equal cause for concern. Trump’s campaign has unleashed a stream of anti-Semitism that American Jews have not had to face for decades. Trump’s refusal to disavow former Ku Klux Klan leader David Duke as quickly as he should have, his campaign’s use of a Star of David to connote the corruption of the moneyed class, his appointment of alt-right supporter Steve Bannon as a senior adviser, and the wave of anti-Semitic tweets and even death threats against prominent Jewish journalists ought to have Jews everywhere very worried. The KKK’s announced victory march in North Carolina is an indication that anti-Semitism may just be warming up.

What's at stake are not tweets or marches, offensive graphics or graffiti. What is at stake is the American Jewish future. The question is whether history will see 2016 as the beginning of the end of the Golden Era of American Judaism. Jews thrived in America not because all Americans loved Jews, but because America was, with many notable exceptions, a fundamentally tolerant place, at least to Jews. There were, of course, periods of hatred and of hate filled demagogues such as Father Charles Coughlin and others, but because the U.S. was fundamentally a place where abject public hatred was out of bounds, Jews thrived. That unspoken social contract may just have ended.

The world’s two largest Jewish communities, in Israel and in the U.S., now face dangers that just months ago would have been unthinkable. Across the ocean, one wrong Trump move could unleash a wave of Arab violence that Israel could not easily subdue. And closer to home, Americans have elected a president who floated to power on a wave of hate. With derogatory remarks toward Muslims, Hispanics, women, people with disabilities and more, Trump has legitimated the sort of discourse in which Jews have never flourished. Those with even a modicum of knowledge of Jewish history know that there has never, ever been a society that was shaped by hate that sooner or later did not come for the Jews.


Article Link To The Bloomberg View:

Hong Kong Needs A Champion

By Anson Chan
The Bloomberg View
November 17, 2016

When he retired from Hong Kong’s Court of Final Appeal in 2012, Justice Kemal Bokhary predicted that a “storm of unprecedented ferocity” was gathering over the city’s judicial system and rule of law. Though dismissed as alarmist at the time, he’s turned out to be right. And all of Hong Kong’s friends -- both within and abroad -- should be paying attention.

The latest blow fell last week, when the Standing Committee of China’s parliament intervened in the controversy surrounding the swearing-in of two young and rebellious lawmakers in Hong Kong. The pair had deliberately sabotaged their first oath-taking by using insulting language and displaying banners that read “Hong Kong is not China.” While egregious, their behavior could have been dealt with under the Hong Kong legislature’s own disciplinary procedures. Indeed, the case was under review in the Hong Kong courts. Yet the Standing Committee went ahead and barred the lawmakers from retaking their oaths, interfering directly in Hong Kong's judicial processes.

The irony is that the courts came to the same decision on their own, ruling against the pair this week; China's intervention was completely unnecessary. The move has done grave damage to the rule of law, a fundamental pillar of the city’s system of governance. It threatens the autonomy guaranteed both by international treaty -- between China and Britain -- and our own Basic Law. In a striking march last week, thousands of legal professionals took part in a silent protest against the decision.

This would be bad enough in isolation. But China’s intervention appears to be part of a larger plan. In recent years, the city has witnessed a progressive erosion of freedom of speech and of the press; threats to academic freedom and the autonomy of our universities; extra-judicial abduction and detention of Hong Kong citizens in China; and the arbitrary and unexplained removal from a top post of a respected anti-corruption investigator, who was looking into allegations involving Hong Kong’s Chief Executive Leung Chun-ying.

The fear now is that the Standing Committee’s “interpretation” of the Basic Law might be extended to include other legislators who have been sworn in, but who campaigned on similar platforms to the ousted pair. The loss of just two more seats would deprive the pro-democracy camp in the legislature of its ability to veto controversial bills and prevent unwelcome changes to rules and procedures.

Even more worrying is the possibility, floated by Leung last week, that the government may now reintroduce controversial anti-subversion legislation aimed at treason, secession and sedition against China. While Hong Kong is bound to enact such legislation at some point, the government has held off ever since a first draft provoked massive street protests in 2003. Meanwhile, the central government in Beijing has made clear there will be zero tolerance for any form of social activism that promotes Hong Kong’s separate identity from the rest of China.

Hong Kong citizens find themselves in a lonely place -- desperately in need of a champion who will stand up for their interests, but with none in sight. The city’s government has failed them, led by a Chief Executive who appears more concerned with pleasing Beijing and winning reelection next year than with maintaining Hong Kong’s place as a vibrant financial hub. Britain, bound by treaty to defend Hong Kong’s autonomy, is increasingly reluctant to ruffle the feathers of an important trading partner.

Perhaps the saddest part is how many Hong Kongers -- not just the pro-Beijing camp within the legislature, but many members of the business community -- are willing to acquiesce to this whittling away of the bulwarks of our free society. If Hong Kong bankers and business leaders think that interference in the judicial process will be strictly limited to political and social issues, they’re sadly mistaken. Now that a precedent has been set, what is to prevent Chinese leaders from intervening in commercial disputes involving mainland companies? Where will it end?

This has been the fear ever since Hong Kong’s handover to China in 1997. Nearly two decades later, the city remains Asia's preeminent financial center, a global fintech hub and a great source of wealth and expertise for the mainland. It should be in everyone’s interest to defend its autonomy and its reputation for transparency, efficiency and rule of law. Not just Hong Kong's friends, but China's should remind leaders in Beijing of what they risk losing if they persist in their self-destructive course.

Article Link To The Bloomberg View:

U.S. Mideast Intelligence Analysts Fear Superiors Distorting Findings

By Idrees Ali 
Reuters
November 17, 2016

A National Intelligence survey found officials in U.S. Central Command, which oversees combat operations in the Middle East and South Asia, had far less confidence that superiors were not distorting or suppressing their analyses than counterparts in the other eight American military commands.

The December 2015 survey, conducted by the Office of the Director of National Intelligence (ODNI), is expected to be one of the main topics of a House intelligence committee hearing later on Thursday.

It is likely to reinforce questions in Congress and elsewhere about whether the administration is pressuring officials to make over-optimistic claims about progress against Islamic State and the Taliban so U.S. President Barack Obama can leave office in January on a high note.

A Republican congressional report earlier this year found "widespread dissatisfaction" among analysts at the Tampa-based Central Command who thought their superiors were distorting their reports.

In one of its more striking findings, only 36 percent of Central Command officials surveyed said they were confident that their mid- and senior-level managers were not deliberately distorting or suppressing their analyses.

The average for the other eight commands, which include those in the Pacific, Africa and Europe, was 72 percent.

Central Command directs the American military missions in Afghanistan, Iraq, Syria and elsewhere in the Middle East and South Asia.

Asked if "anyone attempted to distort or suppress analysis on which you were working in the face of persuasive evidence," 40 percent of the CENTCOM respondents said yes, compared to an average of 13 percent.

The survey found that when that question was asked, 65 percent of the command's respondents said "politicization" was an issue.

"The data suggests respondents from Central Command believe their workplace adheres to objectivity standards relatively less than do workplaces of their IC counterparts," the report said, using an acronym for the U.S. intelligence community.

Central Command and ODNI did not immediately respond to requests for comment.

The report said the survey has been conducted annually since 2006, and about 4,000 analysts and managers responded to it, including 125 CENTCOM analysts and managers. It cautions, however, that because responses were voluntary, "care should be taken when broadly interpreting results" for each command.

Officials in other U.S. intelligence agencies said the Central Command issues were not the product of pressure from White House or other senior officials, and played a minor role in the administration's public claims of progress against Islamic State and the Taliban, many of which have proved to be overly optimistic.

That is true, these officials said, because much of the Central Command analysis consists of daily bomb damage assessments and other situation reports, not strategic intelligence, and constitutes only a small part of the material that finds its way from numerous other intelligence agencies, including the CIA and the National Security Agency, into the President's daily intelligence briefing.

Nevertheless, the findings, which have not been public until now although the survey was posted with no notice last month on a remote part of the ODNI website, are likely to raise questions about intelligence assessments provided by Central Command.

Earlier this year, a U.S. congressional report said the Central Command painted too rosy a picture of the fight against Islamic State in 2014 and 2015 compared with the reality on the ground and grimmer assessments by other analysts.

The Defense Department Inspector General is investigating the findings and is expected to issue a separate report, military officials said.


Article Link To Reuters:

Clinton Urges Renewed 'Fight For Values'

By Ian Simpson 
Reuters
November 17, 2016

Defeated Democratic presidential candidate Hillary Clinton called on Wednesday for a renewed fight for a more-inclusive United States despite disappointment over an election loss that laid bare national divisions.

In her first public remarks since conceding to Republican Donald Trump last week, Clinton said that many Americans were asking whether his victory meant the United States was still the country they thought it was.

"The divisions laid bare by this election run deep, but please listen to me when I say this. America is worth it, our children are worth it," she said at a Children Defense Fund event honoring scholarship winners.

"Believe in our country, fight for our values and never, ever give up."

Although Fund founder Marian Wright Edelman called the nonprofit advocacy group's event "a love-in for Hillary Rodham Clinton," the former first lady said it had not been easy for her to attend.

"There have been times this past week when all I wanted to do was just to curl up with a good book or our dogs, and never leave the house again," said Clinton, whose ties to the Children Defense Fund date back to her work there as a young law student.

Clinton, a former secretary of state, won the popular vote but lost the crucial electoral college tally to Trump, a New York real estate magnate who has taken a hard line on immigration and has opposed accepting Syrian refugees.

"I know many of you are deeply disappointed by the results of the election. I am too, more than I can ever express," Clinton said.

"But as I said last week, our campaign was never about one person or even one election. It was about the country we love, and building an America that is hopeful, inclusive and big hearted."

She said that help for children backed by Republicans and Democrats was a hopeful sign of both parties working together. The federal Children's Health Insurance Program, for example, now covers 8 million children and its creation had relied on bipartisan support, Clinton said.

"For the sake of our children, and our families and our country, I ask you to stay engaged, stay engaged on every level," Clinton said.

She added, "I am as sure of this as anything I have ever known. America is still the greatest country in the world, it is still the place where anyone can beat the odds."


Article Link To Reuters:

Thursday, November 17, Morning Global Market Roundup: U.S. Treasury Yields Subside To Take Dollar Off 13-And-A-Half Year Peak, Asian Stocks Firm

By Shinichi Saoshiro
Reuters
November 17, 2016

U.S. Treasury yields eased on Thursday as a week-long surge that followed Donald Trump's shock election win subsided further, dragging the dollar off a 13-1/2 year peak set overnight and nudging Asian stocks a touch higher.

Spreadbetters saw the modest bounce for equities continuing in Europe, forecasting a slightly higher open for Britain's FTSE .FTSE, Germany's DAX .GDAXI and France's CAC .FCHI.

Japanese government bond yields also fell back from multi-month highs after the Bank of Japan conducted a special fixed-rate bond buying operation for the first time, firing a warning shot against excessive yield moves.

The dollar index, which measures the greenback's strength against a basket of major currencies, stood at 100.280 .DXY after climbing to 100.570 overnight, its highest since April 2003.

The dollar has soared since Trump was elected president last week, as investors eyed the prospect of U.S. interest rates rising faster than previously expected due to his plans for an expansionary fiscal policy that would stoke inflation.

But the rout in U.S. bond prices began to slow, with the benchmark 10-year note yield US10YT=RR pulling back to 2.197 percent in Asian trade after touching an 11-month high above 2.3 percent earlier in the week.

"The Trump-related move in fixed income has been very strong while information flow about the path of economic policy has not been. It's perhaps not surprising then that the rates market took a breather," wrote Sharon Zollner, senior economist at ANZ.

"The price action in fixed income suggests that the market has moved sufficiently for the time being, which raises the possibility that the dollar's rise may be due for a period of consolidation."

Global debt markets, at the mercy of surging U.S. yields until earlier in the week, began to regain some calm.

German and British benchmark yields have receded after peaking at ten-month and five-month highs, respectively, earlier in the week.

Japan's 10-year yield JP10YTN=JBTC was steady at 0.015 percent after rising to a nine-month high of 0.035 percent on Wednesday. Yields were knocked back after the BOJ offered to buy an unlimited amount of JGBs of certain maturities in a special operation.

BOJ Governor Haruhiko Kuroda said on Thursday he does not have to accept gains in JGB yields simply because U.S. Treasury yields are rising.

The Japanese central bank announced in September that it will aim to keep the benchmark yield pinned around zero percent.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS nudged up 0.1 percent. It was still down about 1 percent on the week as the prospect of higher U.S. interest rates pulled money away from emerging markets.

Japan's Nikkei .N225 dipped 0.1 percent after touching a nine-month high on Wednesday on the yen's sharp fall.

"In the Japanese market, as stocks have risen too fast, profit-taking is not surprising," said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.

In currencies, the dollar was flat at 109.060 yen JPY=after touching a five-month high of 109.760 overnight.

The euro EUR= added 0.1 percent from Wednesday to stand at $1.0702 after setting an 11-month low of $1.0666 overnight.

Crude oil prices eased as a bigger-than-expected U.S. crude inventory build outweighed hopes for a producers' freeze on output following Russia's comments about a possible meeting with Saudi Arabia.

Brent crude was down 0.2 percent at $46.55 a barrel LCOc1.

Gold nudged up slightly as the dollar consolidated. Spot gold XAU= inched up 0.1 percent to $1,226.10 an ounce, moving further away from the five-month low of $1,211.08 set on Monday.

Gold had still lost roughly $100 an ounce from last Wednesday's post-U.S. election high on the back of the sharp rise in bond yields and burgeoning appetite for risk.


Article Link To Reuters:

Oil Prices Fall On U.S. Crude Stock Build, OPEC Remains In Focus

By Mark Tay 
Reuters
November 17, 2016

Crude oil futures dropped on Thursday after official inventory reports indicated a larger-than-expected build in U.S. oil stocks.

Crude inventories in the United States rose by 5.3 million barrels in the week to Nov. 11, compared with expectations for an increase of 1.5 million barrels.

The climb in inventories was mainly due to higher imports that averaged 910,000 barrels per day (bpd), according to data released by the U.S. Energy Information Administration on Wednesday.

U.S. benchmark WTI crude CLc1 was down 10 cents, or 0.22 percent, at $45.47 a barrel. European ICE Brent LCOc1 crude futures fell 11 cents, or 0.24 percent, to $46.52 per barrel.

"Crude oil struggled to keep its head above water after the weekly EIA showed another large rise in inventories ... Stocks of crude oil jumped 5.27 million barrels, much more than expected," Australian bank ANZ said in a note.

Refining margins in all five U.S. regional petroleum districts fell in the week ended Nov. 11, Credit Suisse said in a weekly report on Wednesday.

"The U.S. EIA produced a higher-than-expected crude inventory figure, but this was subsumed into OPEC gossip," said OANDA senior market analyst Jeffrey Halley. "We are well into headline trading season as Nov. 30 approaches."

OPEC countries are ready to reach a "forceful" agreement on cutting oil output, Venezuelan President Nicolas Maduro said on Wednesday, following a meeting with OPEC Secretary-General Mohammed Barkindo in Caracas. OPEC members are due to meet on Nov. 30.

Russia has also expressed willingness to support an OPEC decision to freeze oil output, Russian Energy Minister Alexander Novak said on Wednesday, adding that he may meet Saudi Arabia's Energy Minister Khalid al-Falih at a gas conference in Doha this week.

Despite renewed optimism that an OPEC output freeze is on track, rising oil production data and changing fundamentals "makes a credible OPEC cut all the more difficult to achieve", American investment bank Jefferies said in a note on Thursday.

"The physical market has shifted back to oversupply because of surging OPEC output, with the most material increases driven by improving security conditions in Libya and (tenuously) Nigeria," the U.S. bank said adding that it maintains its 2017 Brent forecast at $58 a barrel.


Article Link To Reuters:

What Dismantling Dodd-Frank Can Do

The market bump from Donald Trump’s win is peanuts compared with what regulatory relief can bring.


By Peter J. Wallison
The Wall Street Journal
November 17, 2016

The sharp rise in the Dow Jones Industrial Average after Donald Trump’s election could be short-lived, but based on what the president-elect has promised to do it is an accurate assessment of the U.S. economy’s prospects. All through his campaign, Mr. Trump said regulatory relief for the economy was a priority, including the repeal of the Dodd-Frank Act. Repeal or thoroughgoing reform of that destructive law is certainly a key step toward an economic recovery.

Signed into law in 2010, Dodd-Frank was based on the idea that insufficient regulation, particularly of Wall Street, had allowed a buildup of subprime mortgages, a housing bubble and, ultimately, the 2008 financial crisis. The Democrats who controlled the Congress elected in 2008 acted quickly to follow out the implications of this diagnosis by adopting Dodd-Frank, the most restrictive financial legislation since the New Deal.

Strikingly for such important legislation, there was no significant debate in Congress about whether the cause of the crisis had been correctly identified.

A later study, in 2014 by my colleague at the American Enterprise Institute Edward Pinto, showed that by 2008 more than half of all mortgages in the U.S. were subprime or otherwise risky, and 76% of those were on the books of government agencies. This leaves no doubt that government housing policies—and not a lack of regulation—created the demand for these risky mortgages. But by then it was too late.

It is not difficult to find connections between Dodd-Frank and the historically slow recovery from the financial crisis. Here’s a sampling.

The Financial Stability Oversight Council, a Dodd-Frank invention, was empowered to designate large financial firms as systemically important financial institutions, or SIFIs, turning them over to the Federal Reserve for “stringent” regulation. One of the council’s earliest actions, in July 2013, designated GE Capital as a SIFI.

GE soon recognized that its huge financial subsidiary was wilting under the Fed’s control. Seeking an exit, GE wound down GE Capital, eliminating from the market an important source of funding for small and innovative firms.

The Volcker rule, another Dodd-Frank provision, prohibited banks and their affiliates from trading securities for their own account, although there was no evidence that this activity had any role in the financial crisis.

Soon, trading desks all over Wall Street were closing down, and traders were complaining that the debt markets were dangerously short of liquidity. The Treasury Department, deeply tied into Dodd-Frank, said it was “studying” the issue. It still is, and spreads are still historically wide.

Small banks, the credit sources for small businesses and startups, faced new and costly regulation, requiring them to hire compliance officers instead of lending officers.

One regulation on mortgage lending from the Consumer Financial Protection Bureau—a Dodd-Frank agency—was over 1,000 pages long. Imagine that landing on your desk in a small bank.

No wonder, as this newspaper recently reported, banks are no longer the nation’s principal mortgage lenders. Worse still, as reported last week, job gains at startup firms, which are major sources of new employment and technological innovation, are at their lowest level in 20 years.

Fortunately, some reforms take care of themselves because of the people Mr. Trump is likely to choose for his administration. The Financial Stability Oversight Council (FSOC) is headed by the secretary of the Treasury and composed of the heads of all the major financial regulators. It is unlikely that Mr. Trump’s new Treasury secretary or any other new appointees will be interested in designating SIFIs, so that threat to the economy is probably off the table.

A bonus is that the Financial Stability Board, a largely European body of which the Treasury and Fed are members, needs an active FSOC in the U.S. to implement its plan for regulating what it calls “shadow banks.” The Fed and the Treasury have been driving the stability board’s effort on this, but are now likely to stand down. Shadow banks—which the stability board defined as all financial firms, of any size, without a regulator of their risk-taking—are safe.

Other provisions must be addressed with legislation. Fortunately, House Republicans have laid the groundwork. The House Financial Services Committee, under Chairman Jeb Hensarling, has already voted through the Choice Act, which would let banks avoid costly regulations by holding significantly more capital, and which substitutes a tangible asset-based leverage ratio for the complex Basel risk-based capital rules.

Once made law, the Choice Act will create a new, less costly landscape for small banks and help revive small businesses and startups with the credit they’ve lacked under Dodd-Frank.

The Choice Act also turns the Consumer Financial Protection Bureau—now headed by a single administrator accountable to no one—into a bipartisan commission, funded by Congress as the Constitution intended for all executive agencies. Rulings that require 1,000 pages to explain, produced without consulting anyone, should be a thing of the past. The act would also repeal the Volcker rule, returning liquidity to the markets for debt securities.

These are among the most important provisions of the Choice Act, but other initiatives might also be considered.

Dodd-Frank authorized the Commodity Futures Trading Commission and the Securities Exchange Commission to make rules for trading derivatives, including requirements for mandatory clearing of most derivatives transactions. Because mandatory clearing could make clearinghouses the sources of systemic risk, the FSOC voted to give them access to the Federal Reserve’s discount window, setting up another government backstop that will impair market discipline. The Trump administration should consider removing that backstop, together with mandatory clearing itself.

With a Republican House and Senate, President-elect Trump has an opportunity to eliminate many of the regulations that have held back economic growth. As Ronald Reagan used to say, “If not us, who? If not now, when?”


Article Link To The Wall Street Journal:

Mexico Central Bank May Deliver Big Rate Hike After Peso's Trump Tumble

By Michael O'Boyle
Reuters
November 17, 2016

Mexico's central bank could deliver a bigger-than-expected interest rate hike on Thursday in a bid to support the peso after the currency was hammered to a record low by last week's election of Donald Trump as U.S. president.

The central bank had been expected to raise its benchmark interest rate MXCBIR=ECI by 50 basis points to 5.25 percent, according to the median of a Reuters poll of 15 analysts on Monday.

By Tuesday, the market was betting on a 75-basis-point hike, according to the results of the central bank's weekly debt auction. The central bank will issue its decision on Thursday at 1 p.m. (1900 GMT)

The peso MXN=MXN=D2 was driven past 20 pesos per dollar last week, its biggest two-day loss since a 1995 devaluation. The currency ended down nearly 9 percent on the week and its deep slump could fan inflation higher.

"The central bank needs to send a strong message," said Carlos Serrano, an economist at BBVA Bancomer, who is expecting a 75-basis-point hike.

"First, just to minimize the possibility of capital outflows, but they also need to do it to maintain inflationary expectations," he said.

Eleven analysts in Monday's poll expected a half-percentage-point increase, three saw a 75-basis-point hike and one bank expected a full percentage-point increase.

The peso had been pressured since mid-August whenever Trump gained ground in opinion polls. The Republican candidate threatened to unwind a free trade deal with Mexico and block the money sent home by migrants to pay for a border wall.

The central bank has lifted borrowing costs three times already this year in half-percentage-point hikes in a bid to bolster the peso, which has also been hurt by concerns about rising government debt and a bailout of state oil firm Pemex.

Mexico's annual inflation rate rose past the central bank's 3 percent target level in October for the first time in over a year and a half.

Although the peso saw big losses earlier in the year, Serrano said there was now a greater risk that inflation could pick up pace after Trump's win shifted the entire model analysts had been using to look at the peso.

"Before, the expectation was that the peso's weakness was something transitory," Serrano said. "Economic agents now think we have reached a new equilibrium," above 20 per dollar, he said.


Article Link To Reuters:

Dollar Stays Near 13-And-A-Half Year Peak; BOJ Bond Operation Weighs On Yen

By Masayuki Kitano and Lisa Twaronite
Reuters
November 17, 2016

The dollar caught its breath on Thursday, after charging to a 13-1/2 year high against a basket of currencies on bets the Trump administration will adopt inflationary policies, while the yen sagged after a Bank of Japan bond-buying operation.

The dollar index, which tracks the greenback against six major rival currencies, eased 0.1 percent to 100.32 .DXY, after climbing as high as 100.57 on Wednesday, its loftiest peak since April 2003.

The yen retreated from its intraday highs after the Bank of Japan conducted its first special operation to curb rising yields on Japanese government bonds (JGBs).

The BOJ later said it did not receive any bids for the fixed-rate JGB operation, which came after global bond yields spiked in the wake of Donald Trump's election as U.S. president.

The dollar rose to as high as 109.30 yen JPY= after the BOJ operation was announced, pulling up from an intraday low of 108.55 yen.

Later, the dollar was steady at 109.07 yen. On Wednesday, it reached a 5-1/2 month high of 109.76 yen.

The BOJ's JGB operation came at a time when moves in U.S. bond yields and U.S.-Japan yield differentials have been a focal point for the dollar's moves versus the yen.

"Rises in U.S. yields have been a significant factor behind the dollar's strength, but since that has started to calm down for now, moves in the dollar against yen have also settled down," said Shinichiro Kadota, a Tokyo-based FX strategist for Barclays.

The U.S. benchmark 10-year Treasury yield is now at 2.199 percent US10YT=RR, after reaching a 10-month high of 2.302 percent earlier in the week.

Later on Thursday, investors will turn their focus to Federal Reserve Chair Janet Yellen's remarks before the congressional Joint Economic Committee, and anything she might say about the recent rise in the dollar and U.S. bond yields. [FED/DIARY]

"A focus will be how she describes the latest moves in the market," a trader for a Japanese bank in Singapore said.

The euro inched up 0.1 percent to $1.0697 EUR=, after slipping to as low as $1.06665 on Wednesday, its lowest level since early December last year.

The euro could hit parity against the dollar next year, as Europe contends with political uncertainty and a weak economic recovery, Philip Saunders, Investec's co-head of multi-asset growth, told the Reuters Global Investment Outlook Summit on Wednesday.

The dollar remained underpinned by expectations that the Fed is on track to hike interest rates this year, and might have to take further action next year as well.

Philadelphia Federal Reserve President Patrick Harker said on Wednesday he favoured raising interest rates and that the U.S. central bank might have to hike more aggressively if the incoming Trump administration enacts a fiscal stimulus.


Article Link To Reuters:

Tesla ‘Easter Egg’ Makes The World’s Fastest Car Even Faster

A new software upgrade will get you to 60mph in just 2.4 seconds. But first you have to find it.


By Tom Randall
Bloomberg
November 17, 2016

The world’s fastest-accelerating car is about to get even faster.

Tesla’s high-end Model S will soon be able to go from zero to 60 miles per hour in just 2.4 seconds, following a software enhancement next month that shaves off a 10th of a second. That’s a new threshold that distinguishes it from any other production car on the road.

Tesla Motors Inc. Chief Executive Officer Elon Musk teased the update in a tweet on Wednesday—but there’s a twist. When the changes are delivered wirelessly next month to all P100D Model S vehicles, the owners will have to figure out how to enable it. It’s what’s known in the tech industry as an “Easter Egg”—a hidden feature that requires a specific series of gestures to unlock.

These speeds are crazy fast. For perspective, the Model S already outpaces sold-out supercars with tiny production runs, such as Ferrari’s $1.4 million LaFerrari, Porsche’s $845,000 918 Spyder, and Bugatti’s $2.3 million Veyron Grand Sport Vitesse. Tesla’s seven-seat Model X SUV will also shed a 10th of a second, putting it on a par with a $1.15 million McLaren P1.

Here’s a chart that shows how Tesla ranks in speed and price among the world’s elite. The latest Model S, however, is in a category all its own, especially when you consider it’s a spacious four-door sedan with two trunks. The Model X is the only SUV to make the list.



Speeds like this offer more Gs than Earth, so the rate of acceleration is faster than falling. It can feel difficult to support your head and shoulders if you don’t lean back on the headrest. And perhaps the strangest feeling of punching it on a Tesla is that, with two all-electric motors, the wheels don’t slip and acceleration is practically silent.

Previous Tesla Easter eggs have changed the car’s displays, but this is the first time one will alter performance. For example, accessing the service login from the car’s 17-inch touchscreen and entering access code “007” transforms the Model S graphic on the vehicle’s control panel into James Bond's submersible Lotus from the 1977 movie The Spy Who Loved Me. (Musk bought the Lotus for $1 million and says he plans to make it functional some day.)

Here’s a table of the world’s quickest cars. The acceleration times are provided by the manufacturers, though some cars have been clocked a bit faster on the track. (Previous versions of Teslas have, too.) In addition to the improved zero-to-60 times, the Model S will be able to sprint a quarter-mile in 10.6 seconds. 
 


Musk’s Easter eggs tend to have pop-culture references from his formative years. One turns the road into rainbows from Nintendo’s Mario Kart video game. Others reference the 1987 movie Space Balls and Douglas Adams’s 1981 book Hitchhiker’s Guide to the Galaxy.

A possible hint about the upcoming release came when a Twitter follower named @Locoboof wrote, “You mean to tell me as fast as this thing is, the beast hasn’t been fully unleashed?” Musk responded: “Locoboof it is not actually left-handed.” That’s an apparent reference to a sword fight in the movie Princess Bride, in which Dread Pirate Roberts (as played by Cary Elwes) and Inigo Montoya (Mandy Patinkin) both reveal midfight that they’ve been using their weaker sword hand to give their rivals a chance.

In December, the Model S is going to switch hands.


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Audi Sees Potential For Just One Diesel Model In U.S.

By Alexandria Sage
Reuters
November 17, 2016

Luxury German auto brand Audi envisions the potential of just one diesel model in its U.S. product mix in the wake of the diesel emissions scandal that has embroiled its parent company Volkswagen AG (VOWG_p.DE), Audi's U.S. head said on Wednesday.

"Once we hopefully get past everything, I see an opportunity for potentially, probably to offer it on one model, and that model would probably be the Q7 SUV," Audi of America President Scott Keogh told Reuters at the Los Angeles Auto Show.

"It's the one model that makes the most sense."

At its height, diesel made up seven percent of Audi's U.S. mix, said Keogh, who added it was "always a bridge technology" before emissions standards were to get progressively tighter.

Keogh said the future for Audi was electric, with battery electric vehicles projected to make up 25 percent to 30 percent of its mix in by 2025. The brand plans to launch its first electric SUV in 2018.

Chief Executive Officer of Volkswagen of America Hinrich Woebcken told the AutoMobilityLA auto dealers conference on Tuesday that diesel would never reach the 25 percent of Volkswagen sales it once enjoyed in the United States.

"Our prediction is that we will not come back with diesel in the same magnitude we had before," Woebcken said.


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SpaceX Seeks U.S. Approval For Internet-Via-Satellite Network

By Irene Klotz
Reuters
November 17, 2016

Private rocket launch service SpaceX is requesting government approval to operate a massive satellite network that would provide high-speed, global internet coverage, according to newly filed documents with the U.S. Federal Communications Commission.

The California-based company, owned and operated by technology entrepreneur Elon Musk, has proposed an orbiting digital communications array that would eventually consist of 4,425 satellites, the documents filed on Tuesday show.

The project, which Musk previously said would cost at least $10 billion, was first announced in January 2015.

The latest documents, which include technical details of the proposed network, did not mention cost estimates or financing plans.

Financial backers of the company, whose full name is Space Exploration Technologies Corp, include Alphabet's Google Inc and Fidelity Investments, which together have contributed $1 billion to Musk's space launch firm.

The proposed SpaceX network would begin with the launch of about 800 satellites to expand internet access in the United States, including Puerto Rico and the U.S. Virgin Islands, the FCC filings showed.

"The system is designed to provide a wide range of broadband and communications services for residential, commercial, institutional, government and professional users worldwide," SpaceX said in technical documents accompanying its filing.

Similar internet-via-satellite networks are under development by privately owned OneWeb and by Boeing Co.

Such a system would provide a space-based alternative to cable, fiber-optics and other terrestrial internet access currently available.

SpaceX did not say when its launches would occur.

The satellites would be launched into orbits ranging from 714 miles to 823 miles (1,150-1,325 km) above Earth.

Each satellite, about the size of an average car, not including solar panels, would weigh 850 pounds (386 kg), SpaceX said.

SpaceX's primary business is launching satellites into orbit for government and commercial customers. It also flies cargo supply ships to the International Space Station for NASA.

SpaceX rocket launches have been on hold since a Sept. 1 launch pad accident that destroyed a $62 million Falcon 9 booster and a $200 million Israeli communications satellite. The company hopes to resume flights next month.


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What Americans Can Learn From Brexit

By Heather A. Conley
Reuters
November 17, 2016

Forty-eight hours before Donald Trump was declared winner of the U.S. presidential election, it was, as the great Yogi Berra quipped, “déjà vu all over again.”

On the eve of the June 23 Brexit referendum, international markets and British bookmakers had concluded that Britain would remain in the European Union and markets and bets rose significantly despite some fairly close polling data.

The so-called “establishment” – government officials, leaders in the private sector, pundits and analysts – felt confident that the illogic and irrationality of leaving the EU would overcome emotion, lies and empty promises they believed fueled the “Leave” campaign. On the day of the referendum, turnout was high across the UK, yet another sign that its people would vote to remain.

As the early referendum results began to trickle in, they did not follow the predictions based on polling data. Markets began to sense change, the pound dropped precipitously and bookmakers rapidly re-assessed their odds. Although commentators remained hopeful that more populated and predictable districts could turn the tide, it never happened.

This pattern repeated itself in the United States on election night, with the exception that the U.S. polling data was off by much more significant margins than it was for Brexit. The common factor was that the establishment simply never believed it could happen.

For those who are unsure of what will happen in the United States over the coming weeks and months, it’s instructive to watch how the UK has fared over the five months following its shocking referendum, and draw some lessons about what to expect in America after Donald Trump’s stunning victory.

Genuine shock: Do not underestimate the profound emotional shock that the establishment is experiencing at a time when everyone is looking to them for answers on how this could have happened and how things will work in the future. This will take some time to process. Establishment voices are putting a brave face on things, but their statements are brief because they are so stunned that they don’t know what to say.

Real anger:
As soon as they regain the ability to form words, establishment anger will kick in and it will be visceral. In the UK, this anger focused on then-Prime Minister David Cameron’s recklessness at holding the referendum in the first place and then executing a poorly run campaign; it was the Labour Party’s political absence throughout the campaign (which led to a leadership challenge that ultimately failed); it was the fault of ignorant people who didn’t even know what they were voting about; it was the lies told by the Leave campaign.

In the United States, there will be soul searching on polling and data-driven models; the wrong candidate; the role of the media; Russia’s suspected interference in the election and the FBI’s mismanagement of Hillary Clinton’s private email server investigation. For Clinton supporters, grief will eventually give way to anger.

Powerful denial:
This is the most surprising result of Brexit after nearly half a year has passed: the establishment’s deep denial of an outcome it continues to view as illogical and self-injurious. Many members of the Remain campaign still believe that Britain will never actually leave the EU. Others are working to ensure Brexit fails – as leading British political figures call for a second referendum hoping to overturn the results of the last one – rather than accept a new reality and help make Brexit as successful as possible. The continued anti-Trump demonstrations in the United States speak to a strong desire for a “do-over” as well.

A flummoxed establishment:
Denial or not, the UK establishment simply does not know how to proceed. Since 1973, British officials have worked toward greater integration with the EU. Forty-three years of effort have now been rejected. What now? Help tear it down and join the Department to Exit the EU? Hope that the economy stumbles and jobs flee the UK so that those who supported Brexit change their minds? Keep pushing for the same immigration policies and hope no one notices? Five months after Brexit, many in the UK establishment are still unsure of what to do.

But in spite of the shock and denial among those who wanted to Remain, there are positive elements to consider.

Doomsday scenarios have not come to pass: Although many predicted post-Brexit catastrophe, it hasn’t yet happened. In fact, the British economy is doing reasonably well despite all the uncertainty. The depreciation of the pound will boost British exports and make some British firms attractive to outside investors. Changes in industrial policy may help diversify the British economy despite looming questions about international trade and the future of the British financial sector.

Agents of change meet institutional reality:
Members of the Leave campaign who made the case that exiting the EU would be quick and allow 350 million pounds per week ($436 million) to be diverted to the National Health Service now confront bureaucratic and institutional reality. As Trump will soon discover, he and his future administration are bound by checks and balances, laws and institutions. Brexit is entering this balancing act now as parliament seeks to have greater say on the government’s EU negotiations.

It is time to listen and rebuild trust:
In both the UK and the United States, a now-rejected establishment needs to stop talking about “interpreting” the voters’ message and begin to listen and make necessary adjustments to government policies on trade and migration. Repeatedly ignoring these messages has brought the establishment to this difficult political moment.

A cry for renewal:
Elections and referendums are exercises in validating the direction of a country or demanding a course correction. For many years, democratic societies have rebelled against the relentless pace of globalization and rapid social change that the policies of an entrenched establishment have encouraged, to no avail.

The challenge for both Brexit and the U.S. presidential election is that half the population validated the status quo while the other half completely rejected it. But despite these deep societal divisions, elections should be viewed as a source of needed democratic renewal. As shocking as it may be, this is what Brexit and Trump’s election represent.


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