Monday, November 21, 2016

Monday, November 21, Morning Global Market Roundup: Asia Shares Shaky As Trump Bets Keep Emerging Markets Under Pressure

By Hideyuki Sano
Reuters
November 21, 2016

Asian shares were on the defensive on Monday, undermined by fears that the strength in the U.S. dollar and rising U.S. bond yields since Donald Trump's election to president could accelerate fund outflows from the region back to U.S. markets.

Asian markets were steady to slightly lower, with Hong Kong's Hang Seng .HSI flat, Australian shares down 0.2 percent and South Korea's Kospi .KS11 falling 0.3 percent.

But Japan's yen-sensitive Nikkei .N225 bucked the trend, rising 0.8 percent to hit a 10 1/2-month high, thanks to the weaker yen. European shares were expected to gain, with spread-betters seeing a rise of 0.2 percent in Germany's DAX .GDAXI and Britain's FTSE .FTSE.

Trump's unexpected election victory has led to a major repricing of assets, with investors rushing to buy U.S. stocks and the dollar, while dumping bonds and emerging market assets.

Trump's plan to expand fiscal spending, including more infrastructure spending, could be a game changer for markets that have long taken a policy mix of fiscal discipline and loose monetary policy for granted.

Under Trump's reflationary policies, the Federal Reserve might have to raise interest rates faster than expected to curtail inflation, making U.S.-dollar based assets more attractive at the expense of emerging nations.

"The markets driven by Trump may be just about to have run their course for now," said Toru Ohara, chief investment officer at Okasan Asset Management.

"A rise in interest rates is, generally speaking, not good thing for stocks, especially for emerging markets. But if you think that U.S. bond yields, which have been falling since 1982, may be bottoming out, that could mean the end of a low-growth/ low-inflation regime," he said.

Heightened uncertainty prompted investors to demand higher premiums for holding long-term U.S. debt, with the 10-year U.S. Treasuries yield US10YT=RR accelerating to 2.364 percent by last week from around 1.86 percent before the elections.

It last stood at 2.340 percent, with a rise above its 2015 peak of 2.5 percent seen as having potential to spark a further sell-off as bond prices fall.

To be sure, investors have little idea of the extent that Trump could actually implement his proposals, which include putting tariffs on goods from major trading partners such as China and Mexico, and going ahead with heavy tax cuts that would widen the U.S. fiscal deficit.

Some investors suspect markets will soon have a reality check as differences between the new administration and Congress over some of Trump's policies begin to emerge.

"Next week, we have events that would make investors more sober, such as the OPEC meeting and Italian referendum. By then this Trump-inspired market may have come to an end for now," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Higher U.S. yields are helping the dollar continue its bull run. The greenback rose to as high as 111.19 JPY=, its highest level since early June. It last stood at 111.08.

It has risen almost 10 percent from its low of 101.19 hit on Nov 9, when Trump's victory was initially seen as stoking uncertainty and triggering a rush to safer assets such as the yen.

The euro EUR= traded $1.0604, having hit a near one-year low of $1.0569 on Friday.

The Australian dollar hit a 4-1/2-month low of $0.7311 while the Chinese yuan CNY=CFXS fell to an 8 1/2-year low of 6.8992 to the dollar.

The data from the U.S. financial watchdog showed on Friday that in the first week after the U.S. elections speculators barely increased their net long positions in the dollar.

"This suggests the leveraged fund community largely missed out on the dollar rally," analysts at ANZ Research wrote.

Many emerging market currencies remained under pressure on fears investors could bring their money back to the United States. The Malaysia ringgit hit 14-month low MYR= while the Philippine peso PHP= edged to near its 2008 low.

Oil prices rose in early Monday trade after five-percent gains last week, their first weekly gains in about a month, on growing expectations that OPEC will find a way to cap production.

The Organization of the Petroleum Exporting Countries is moving closer to finalizing its first deal since 2008 to limit output, with most members prepared to offer Iran flexibility on production volumes, ministers and sources said.

Brent crude futures LCOc1 rose 1.3 percent to $47.47 per barrel.


Article Link To Reuters:

Oil Prices Climb On Expectation Of OPEC-Led Output Cut

By Henning Gloystein 
Reuters
November 21, 2016

Oil prices rose by more than 1 percent on Monday as producer cartel OPEC moved closer to an output cut to rein in oversupply that has put pressure on prices for over two years.

International Brent crude oil futures LCOc1 were trading at $47.48 per barrel, up 62 cents, or 1.3 percent, from their last settlement.

U.S. West Texas Intermediate (WTI) crude CLc1 was up 1.2 percent, or 56 cents, at $46.25 a barrel.

Traders said that markets were being supported by advancing plans by the Organization of the Petroleum Exporting Countries (OPEC) to cut production following over two years of low prices as a result of output exceeding demand.

"Crude oil will continue to be driven by headlines as the 30 November meeting regarding production cuts draws closer," ANZ bank said on Monday.

Agreeing on the terms of such a deal has proved tricky as some producers, most notably Iran, have been reluctant to cut output.

But an agreement has become more likely as Iran, keen to increase output after international sanctions against it were lifted last January, was expected to be given an exemption if it agrees to at least cap its production rather than cutting it. This would leave the onus of an outright reduction on other OPEC-members, including its political rival and de-facto OPEC-leader Saudi Arabia.

Barclays said that some form of production cut deal was likely, but the bank added that any such agreement might have little impact on markets.

"We expect OPEC to agree to a face-saving statement," the British bank said, but added that "U.S. tight oil producers can grow production at $50-$55 (per barrel) and will capitalize on any opportunity afforded to them by an OPEC cut".

Beyond the talk of a potential production cut, there were also signs of ongoing market weakness.

Japan, the world's fourth biggest oil consumer, on Monday reported a fall of 9.5 percent in crude oil imports in October from the same month a year earlier, to 2.78 million barrels per day.


Article Link To Reuters:

Hedge Funds Slow To Adjust Champagne Tastes To Beer Budgets

By Lawrence Delevingne
Reuters
November 21, 2016

Hedge funds have struggled of late to keep up their reputation as the sports cars of the investment world, often overtaken in the race for returns by the public buses of portfolios, index funds.

But the proverbial Ferraris of investing - paid big to beat the market or protect from its gyrations - have so far shown little sign of curtailing their lavish spending on compensation, offices and employee perks.

Hedge fund operators still work out of trophy offices in Manhattan’s Plaza district, Greenwich, Connecticut or London’s Mayfair. They are keeping the free lunch and snacks, ski and beach junkets, and even in-house yoga. And they continue to lavish portfolio managers with multi-million dollar pay, all in the face of poor performance and declining fees.

“These guys aren’t living in reality,” said Brad Balter, chief executive of Boston-based hedge fund investor Balter Capital Management.

A critic of the industry's extravagant ways and a longtime proponent of lower-cost mutual fund-like hedge funds, or liquid alternatives, Balter said many high-spending hedge funds will eventually have to change their ways and become more like their more humble mutual fund cousins in terms of compensation, perks and other costs.

But there are few signs of dramatic change.

Pay Raise


Many hedge funds have underperformed the equities market this year, with stock-pickers burned by losing bets on Valeant Pharmaceuticals (VRX.TO), Allergan (AGN.N) and Home Depot (HD.N), among others, while macroeconomic managers have struggled to trade their way through global political and economic uncertainty.

But the average portfolio manager at a firm running more than $4 billion with middling-performance - up about 1 percent year-to-date - is expected to make an average of $2.23 million this year.

That is up from $2.21 million in 2015 and down from $2.42 million in 2014, according to 2017 Glocap Hedge Fund Compensation Report.

Top executives stand to make far more. The average wealth gain for the highest earning 25 hedge fund managers in 2015 was $517.6 million, according to a ranking by industry publication Alpha. Five firm founders - Ken Griffin, James Simons, Ray Dalio, David Tepper and Israel Englander - made at least $1 billion.

By comparison, the average mutual fund portfolio manager, regardless of size or performance, is expected to make $634,000 in 2016, according to Glocap, up from $630,000 in 2015.

“Even if performance is down, managers still understand the need to pay big for top talent to avoid losing the very people who will help them generate returns,” said Peter Friedman, chief executive of Integra Advisors, a recruitment firm that focuses on quantitative investing.

Fee Cuts

There are some small signs of a reckoning. Poor recent performance of late and predictions by McKinsey & Co and others of tepid returns for years to come - because of low interest rates, slow economic growth and more - have caused a small but high-profile group of clients to revolt.

Investors have pulled some $51 billion out of the approximately $3 trillion hedge fund industry over the first three quarters of 2016, according to data tracker HFR, on pace for the biggest drop since the financial crisis of 2008 and its immediate aftermath.

For those staying put, clients are demanding steep reductions to the classic fee model of 2 percent of assets and 20 percent of investment gains. A handful of major firms have acquiesced, including Brevan Howard Asset Management, Caxton Associates and Och-Ziff Capital Management Group (OZM.N).

Many new managers are launching their firms with fees closer to 1.5 percent of assets and 15 percent of gains, including so-called “hurdles” that prevent charging for performance before beating a benchmark.

Free Stuff


Even so, there is little evidence so far of substantial changes to spending habits, according to recent conversations with more than two dozen industry participants.

Citadel, PDT Partners and Bridgewater all still provide copious free food for employees. Citadel has produced modest gains in its main funds this year while Bridgewater is down slightly in its flagship hedge fund. Performance for PDT was unavailable.

Decadent parties remain a perennial favorite. Balyasny Asset Management flew employees and their guests for a weekend at the Fontainebleau Miami Beach hotel last November for its annual business conference and holiday party event dubbed “BAM Bash.” The 2014 version of the same party in New York City featured pop star Taio Cruz and acrobatic performers. BAM funds have produced modest gains this year.

Renaissance Technologies still flies staff and their families for an all-expenses paid vacation weekend. This autumn the destination was a resort in Florida. And Two Sigma rented out the Intrepid Sea, Air & Space Museum in New York for its 2015 holiday party; the venue in 2014 was the nearby American Museum of Natural History.

Hedge fund offices continue to dazzle, even if returns do not. Och-Ziff Capital Management, which has suffered investor withdrawals due to a foreign bribery scandal and mediocre performance, works in the $200 per-square-foot Solow Building in Manhattan, one of the city’s most expensive office towers.

Two Sigma’s lower Manhattan office features spaces for playing games, recording music and working out - including fitness boot camps, meditation and same-day gym laundry service. D.E. Shaw & Co’s sleek midtown Manhattan headquarters feature nap pods, a gym, game room and back-up childcare.

D.E. Shaw, Two Sigma and Renaissance use computer-driven investment models, which means they compete for talent not just with other hedge funds but also top technology companies known for extensive employee perks, such as Alphabet Inc's Google (GOOGL.O) and Facebook Inc (FB.O). Like many so-called quants, all three firms have produced strong returns of late.

"While costs are certainly being scrutinized, the fact that the environment is becoming more favorable to delivering performance means that talent has to be retained," said Jack Inglis, chief executive of hedge fund lobbying group Alternative Investment Management Association. For that reason, he said, it makes no sense to yank perks or other relatively modest budget items.

Some Cracks


To be sure, some firms are making cuts.

Highland Capital Management slashed its conference budget in half, even though its public Global Allocation Fund is up more than 20 percent this year. It also recently traded its Solow Building outpost for less-pricey space in the Times Square Tower in New York

Brevan Howard, which has performed poorly this year, told employees to use their personal phones for company business and tightened its rules on travel.

Several hedge fund marketers, who drum up new customers for funds, said they planned to engage in conference freeloading: hanging around the venue of an event without entering, and meeting with clients after-hours, thereby avoiding the price of a ticket, which can cost between $5,000 and $15,000 per person.

Pershing Square, whose public fund is down 18.3 percent this year through mid-November, is soon moving into new offices that are 40 percent less expensive. There is one flourish in the planned Hell’s Kitchen, Midtown Manhattan space: a tennis court on the roof.

Other hedge funds are postponing real estate decisions this year, according to Ben Friedland, an executive vice president at CBRE, pointing to a more than 50 percent yearly decline in new leases signed by financial services firms, and a relatively high proportion of them renewing short-term contracts.

“Many firms are choosing to punt,” said Friedland.

Robert Olman, founder of recruitment firm Alpha Search Advisory Partners, said firms are becoming more cost-conscious given that performances fees are not yielding much.

“Twenty percent is not adding up to a lot these days,” Olman said, “So they are watching every dollar.”

Soul Searching


In some sign of change, a few large and relatively successful firms have announced restructuring efforts.

Ray Dalio’s Bridgewater, the world's largest hedge fund manager with 1,700 employees and more than $150 billion under management, said in September it was planning “significant changes to people, processes and technologies,” to address a surge in staff numbers that led to its non-investment divisions becoming “bloated, inefficient, and bureaucratic.”

Billionaire hedge fund manager Paul Tudor Jones laid off roughly five dozen employees in August, or about 15 percent of his Tudor Investment Corp workforce. Pershing Square cut 10 percent of its staff in June when founder and head Bill Ackman laid off eight lower-level employees. And Daniel Och’s Och-Ziff has seen its headcount decline by about 17 percent this year, a combination of layoffs and departures.

Others have closed foreign offices, including TPG-Axon Capital and Hutchin Hill Capital, or shut down altogether, including Perry Capital and Nevsky Capital.

Lisa Baird, a hedge fund specialist at Heidrick & Struggles, said the executive search firm is now getting more inquiries related to restructuring. The discussions with clients include the issue of whether pay for some roles is too high, given lower salaries for similar roles outside of the hedge fund industry.

“There has definitely been a premium paid by hedge funds for many roles,” Baird said. “That is coming into question with the squeeze on fees.”

For now though, most thoughts of big changes have not translated into action.

Anthony Keizner, a partner at recruitment firm Odyssey Search Partners, said many fund managers know changes could be necessary, but it is hard to be among the first the make a big shift given the potential for loss of talent.

“I’ve heard people say ‘Maybe we’re the frog in the boiling water scenario - we don’t realize yet we should be changing.’”


Article Link To Reuters:

Gun Shops Eye Busy Black Friday Despite Hillary Clinton Loss

By Noel Randewich
Reuters
November 21, 2016

Christmas came early for U.S. gun shop owners - who saw a rush of firearms purchases ahead of the presidential election - but they may now be hard-pressed to match last year's record holiday sales.

Gun merchants had a record October, federal background check data shows, as gun enthusiasts snapped up pistols and rifles on fears that Democrat Hillary Clinton would win the White House and seek to restrict ownership.

Traffic has fallen off substantially since Republican Donald Trump, a gun rights supporter, won the presidency on Nov. 8. Shares of Smith & Wesson Holding Corp (SWHC.O) are down 15 percent since then, despite a rebound this week, while Sturm Ruger & Company's (RGR.N) stock is 17 percent lower.

Like most other retailers, gun sellers thrive during the holidays. Last year's Black Friday featured record activity for a single day, according background check data.

December 2015 was the second busiest month ever, topped only by December 2012, when President Barack Obama threatened to rein in gun rights after a deranged man killed 26 people, including 20 children, in a shooting rampage at Sandy Hook Elementary School in Newtown, Connecticut.

Obama, a Democrat, never enacted any sweeping new gun restrictions because he faced opposition in a Republican-controlled Congress.

Now, with this year's Black Friday just days away, gun dealers say traffic is regaining momentum after the post-election drop.

"I'm not expecting it to be any slower than our normal Black Friday," said Kellie Weeks, owner of Georgia Gun Store in Gainesville, Georgia. "But if Hillary had won, we would have sold out already."

After Obama was elected in 2008, November background checks jumped 48 percent compared to the prior November, according to background check data from the National Shooting Sports Foundation. By comparison, checks rose a more modest 5 percent in November 2004 after Republican George W. Bush was re-elected.

Such checks are the best proxy for data on gun sales, which gun manufacturers do not publicly release. The foundation strips the data of applications for conceal-carry permits - typically made by people who already own guns - to give a better reflection of actual purchases.

Through October 2016, background checks are up 15 percent compared to the same amount of time last year, suggesting another a strong year of overall sales.

Wall Street expects Smith & Wesson's revenue to increase 28 percent in 2016 and 11 percent next year, according to Thomson Reuters data. The Springfield, Massachusetts, company reports its October-quarter results on December 1.

Even after the recent selloff, Smith & Wesson's stock is up 10 percent in 2016, better than the S&P 500's 7-percent rise.

Gilbert's Gun Shop in Frankfort, Kentucky, expects to sell fewer high-capacity magazines over the holidays because customers no longer fear they will be banned. But the shop and other gun stores consulted by Reuters remain hopeful that demand for newly launched compact and target pistols will help spur a busy holiday season.

"Some categories might be light," he said. "But in general, sales through Black Friday and Christmas, I still think will be very strong."


Article Link To Reuters:

Christie’s Transition To No Man’s Land?

The governor gave away his crown and defiled himself as a loyal footman in Donald Trump’s march to victory. And now, as a final indignity, it appears he’s being marched toward the exit.


By Olivia Nuzzi
The Daily Beast
November 21, 2016

Chris Christie walked along the path to the Trump National Golf Club in Bedminster, New Jersey, on Sunday afternoon, where the president-elect was waiting to greet him.

“Are you in line for a job?” a reporter shouted at him as he made his way up the steps.

“Governor Christie, what are you going to discuss with Mr. Trump today?” yelled another.

Christie didn’t acknowledge them.

He walked past the columns and large American flag to the entryway of the stately brick building, and met Donald Trump with a handshake. The two men faced the press and posed.

Trump was asked what they would be discussing.

“Lots of things,” he said. “Lots of good things.”

The club, nestled between Christie’s home in Mendham and the state house in Trenton, is the unofficial Trump transition weekend headquarters, meaning Christie, although still the governor, is no longer the most powerful politician residing this side of the Hudson.

And, although still in Trump’s orbit, he’s no longer the most influential politician on the transition, either. Presidential transitions occur in the short period of time after the election and before the inauguration, when presidents-elect staff their incoming administrations and select their political appointees, from secretary of state to secretary of interior. After leading the effort for months, following his own disastrous presidential campaign and his defection from the Republican establishment as one of its first members to support Trump, Christie was pushed out soon after Election Day, replaced by Vice President-elect Mike Pence, who, to add insult to injury, had previously beat Christie for the VP job.

Christie and Trump discussed “domestic security, law enforcement and the American Justice system,” according to a press release from the transition, sent out late Sunday evening. But whatever the reason for their meeting, this image of a silent Christie deferring to the president-elect served as his most recent, though surely not his final, humiliation: confirmation that he answers to the boss now, a man whom he once mocked as being unfit to serve, and whose son-in-law’s father he once sent to prison, back when he had real power.

It’s the kind of descent, set off by greed and hubris, that could serve as the subject of a Springsteen song if the characters had any redeeming qualities whatsoever.

Of course, they don’t.

There are competing narratives about Christie’s demotion. Trump himself has revealed little about what goes on behind the scenes of his transition, and his staffers are reluctant if not downright unwilling to go on the record with any meaningful information. Trump seems to enjoy the dramatic guessing game that results from his silence, a throwback to his days as a purveyor of the cliffhanger on The Apprentice, his reality show.

One version of events goes that Jared Kushner, husband of Ivanka Trump and son of Charles Kushner, the Donald Trump of the Jersey Shore, wanted revenge for what Christie did to his family.

In 2005, Kushner the senior was convicted of witness tampering, tax evasion, and making illegal campaign contributions, following Christie’s investigation, which, among other things, involved Kushner being caught secretly videotaping his brother-in-law’s tryst with a prostitute Kushner hired and mailing the footage to his sister. His imprisonment brought shame to the family and disrupted a young Jared’s life.

So he had Christie axed and sent his allies down the escalator with him.

This tale is most flattering to the governor, for it reminds us that he was the United States attorney, appointed by George W. Bush, one of just a handful of people close to Trump with any actual experience doing anything except nodding their heads at him.

The other story is that Christie’s ouster was caused by some combination of his self-inflicted political wounds and what some transition insiders say was his own unsatisfactory performance leading the operation.

Trump is unhappy anytime his allies are making headlines, and he was already under the impression that Christie knew about the 2013 access lane closures at the George Washington Bridge while they were happening, even though the governor has always denied any involvement. Still, when Christie’s staffers were convicted earlier this month, Trump was displeased and worried the issue would continue to haunt him.

According to Politico, Trump called Christie last week and “expressed his worry” about the scandal.

And that was on top of the fact that Christie had taken the transition job back when it seemed a menial task—since the idea that Trump might ever have to staff a White House was the stuff of heady fantasy for all but the most numbers-averse Deplorables until roughly 10 p.m. on Nov. 8—and Christie performed it like one. When Trump and his guys got around to surveying the governor’s work, they were disappointed to find lobbyists and people whose résumés they didn’t even have being installed in the nascent Trump administration.

“The Bridgegate issue did loom large over all of this,” one Trump transition official told me. “It’s tough to talk about draining the swamp when you have this whole Bridgegate issue hanging above you.”

Besides, the official said, when they “started looking under the hood,” they realized Christie hadn’t done his job. “The effort was not where it needed to be.”

The official added that “it’s only natural” Trump, who likes familiarity, wanted his No. 2 guy to form his administration with him.

Martha Kumar, the director of the White House Transition Project, a nonpartisan nonprofit dedicated to informing incoming White House staff about their offices as a means of aiding the transition to new administrations, said Pence brings experience to the table that Christie couldn’t offer. “They now have somebody who has experience with Congress, within the House leadership, and who has good relationships with Paul Ryan and Mitch McConnell,” she said. “Having someone with Pence’s background works well in that position.”

“It may be messy,” Kumar added, “but there’s a difference between being messy and chaotic.”

In New Jersey, in the Republican Party and in this incoming administration, Christie once called the shots.

He seemed to have learned from his early political mistakes—he began running for local and state offices in 1993 and didn’t stop until he was engulfed in flames and a libel lawsuit in 1996—and by 2012, he was a politician with promise and a public servant people trusted. That year, influential conservatives practically injured themselves bending over backward to convince him to run for president. He didn’t give, of course, a decision that set him on the path to tragedy.

When he lost his promise and trust, after Bridgegate and a disastrous presidential campaign that lasted all of eight months, he attached himself to Trump, who, a confidant told me, he believed as early as March would be the Republican nominee, if not the president.

Working with Kushner, whose life Christie had so thoroughly upheaved, was “a bit awkward,” the confidant said. Christie didn’t reveal if he and Kushner ever talked about or even acknowledged what Christie done to Kushner’s father.

Still, as Christie saw it, the two men were professional enough to work side by side in pursuit of a common goal. This may have been a miscalculation. Prone to mafioso airs as he is, it seems Christie underestimated Kushner’s loyalty to his family, and Trump’s loyalty to his.

On Monday at 11 a.m., Christie and his lieutenant governor, Kim Guadagno, will hold a cabinet meeting in Trenton, closed to the press and likely of great importance to his own administration. His political future is now in the tiny hands of a man he once laughed off as a joke.

Christie’s probably not laughing much now.


Article Link To The Daily Beast:

Trump's Towering Ignorance Of Syria

The president-elect’s view of the Syrian situation is so full of contradictions even Putin is backing away.


The Daily Beast
November 21, 2016

The Russian presidential administration’s readout of the phone call was terse but telling. “Mr. Putin and Mr. Trump,” it stated, “both spoke of the need to work together in the struggle against the number one common enemy—international terrorism and extremism. In this context, they discussed issues related to solving the crisis in Syria.”

That marriage of true minds occurred on Nov. 14, exactly six days after the world began referring, however reluctantly, to Donald Trump as president-elect of the United States.

It was an unknown number of days after the New York real estate baron received what he described as a “beautiful” letter from his soon-to-be Russian counterpart, a man whose steadfast leadership he has professed to admire and whose regime is currently—although perhaps not for long—under U.S. sanctions owing to its invasion and occupation of parts of Ukraine.

Vladimir Putin’s military is also responsible, according to the Syrian Network for Human Rights, for killing more Syrian civilians in a single year than ISIS has managed to do in three-and-a-half years—and all in the name of combating what Putin calls “international terrorism and extremism.”

Not that Trump is aware of that latter statistic (he has, at times, been unaware of Russia’s invasion of Ukraine), and not that he would be much bothered by it even if he were. His Syria policy, such as it can be divined from his statements and claims on the hustings, and now in his turbulent transition period, has remained doggedly opposed to reality.

His handle on the contemporary Middle East is both a monochromatic caricature of the war on terror (“bomb the shit out of them”) and a semi-conscious regurgitation of authoritarian propaganda and disinformation, the sort of lies he doesn’t dismiss and many enemies of the United States have long hoped a Western leader such as him would swallow.

The so-called Islamic State, as Trump sees it, is the sole problem bedeviling a region teeming with intractable dilemmas and bloody conflicts. It is therefore the only natural security consideration for the United States. He told the Wall Street Journal last week that he does not trust the anti-ISIS Sunni Arab rebels the CIA and Pentagon have trained in Syria, whereas he places a lot of faith in the armies that have been killing both, often to the benefit of the ISIS fanatics.

“My attitude was you’re fighting Syria,” he said, “Syria is fighting ISIS, and you have to get rid of ISIS. Russia is now totally aligned with Syria, and now you have Iran, which is becoming powerful, because of us, is aligned with Syria. … Now we’re backing rebels against Syria, and we have no idea who these people are.”

It scarcely matters that “Syria” is here represented by a mass murdering dictator who has in the past instructed his intelligence services to dispatch jihadists into Iraq to blow up American soldiers, and more recently released al Qaeda veterans from his prisons, as he continues to trade with ISIS in oil, natural gas, weapons and electricity.

Of no apparent consequence, either, is the fact that U.S. spies and military officials have drawn a straight line from scorched-earth tactics deployed by the Syrian regime, Russia, and Iran, and the successive waves of Syrian refugees pouring into Europe and North America. This is the most politically and socially destabilizing mass migration the likes of which have not been seen since World War II, and yet which Trump seems to think it’s the work of the caliphate, not his future friend Assad.

Indeed, Trump’s telegraphing of executive intent to the Journal was sufficient to earn a cautiously happy reply from Bashar al Assad himself. “We cannot tell anything about what he’s going to do,” Assad said on Portugal’s RTP television channel, in an interview that aired Tuesday, following a rather successful reputation laundering press junket he allowed into Damascus. “But if… he is going to fight the terrorists, of course we are going to be an ally, a natural ally in that regard with the Russian, with the Iranian, with many other countries.”

Putin and Assad would surely welcome a realignment of the world’s only military superpower into the Damascus-Tehran-Moscow orbit—one which Trump blames the weakling Barack Obama for enabling even as he vows to work with it as a geopolitical fait accompli, making the United States a moral underwriter of that troika’s war crimes.

Trump’s worldview suffers from a major strategic contradiction: one cannot be both pro-Putin and anti-Ayatollah at the same time. Least of all in Syria.

“The Assad regime does not even have control over the military forces fighting in its name,” Jennifer Carafella, a Syria analyst at the Washington, D.C.-based Institute for the Study of War told The Daily Beast. “Iran has disproportionate control over pro-regime forces. So if the U.S. is talking about entering into an alignment with Assad or Assad plus Russia, it’s actually talking about entering into an alignment with Iran’s Revolutionary Guard Corps,” Carafella said, referring to the elite expeditionary force of the mullahs. Trump has blamed the incumbent president for enriching that same group, to America’s peril, by way of the Iran nuclear deal.

Perhaps it is precisely because of uncertainty about how Trump will square this forbidding circle that the jubilant reception his dark-horse victory prompted in Moscow a few days ago now appears to be giving way to a “creeping sense of buyer’s remorse,” as Oliver Carroll, the managing editor of The Moscow Times, said.

Yes, it’s true that the Russians feel they’ve “got their man,” as Carroll put it, but the brighter bulbs in Putin’s inner circle know that a Trump foreign policy can swing wildly in either or both directions, depending upon his top cabinet picks. Naming former U.S. Ambassador to the United Nations John Bolton as Secretary of State, for instance, would be met with something less than delight in the Kremlin, according to Carroll, given Bolton’s hawkish consistency on both Iran and Russia.

As such, Putin isn’t waiting around to see how things shake out. He’s busying with his own transition.

On Nov. 15, some 24 hours after Putin’s congratulatory phone call to Trump Tower, Russian Defense Minister Sergei Shoigu announced the start of a “large-scale operation to deliver strikes against terrorists” all across the Syria, relying both on Russia’s year-old Khmeimim air base in Latakia and its recent naval deployment in the Mediterranean. Kalibr cruise missiles have been fired from the Admiral Grigorivich frigate on targets in Idlib, Aleppo and Homs provinces. Su-33 and MiG 29K fighter jets have taken off from—and sometimes successfully landed on—Russia’s only aircraft carrier, the Admiral Kuznetsov.

Crucial to Putin, the design of Iranian Supreme Leader Ali Khamenei and Assad is to retake east Aleppo, a redoubt held by mixed rebel and jihadist forces for several years. The enclave’s fall would constitute a decisive morale and propaganda victory for Damascus, albeit not an end to the anti-regime insurgency. That would chug along indefinitely, as even that perennial optimist Staffan de Mistura, the United Nations special envoy to Syria, explained to the Guardian following Trump’s election.

Much of the state-sponsored heavy lifting, on the opposition side is being done by Qatar and Turkey, according to Carafella. In the continued absence of American ownership of the rebel cause, these U.S. allies have grown even bolder in their financing and arming of hardline Islamist and jihadist factions to beat back Iranian hegemony in Syria and/or Kurdish expansionism.

A U.S. cutoff of armaments and cash to various Free Syrian Army units would not necessarily affect the course of this hinge battle.

However, Aleppo’s fall would do the opposite of what Trump claims he wants to do: destroy international terrorism.

Jihadist recruitment would spike. Already it has been on the rise as a result of Russia’s year-long campaign, Carafella says. “Even when Russia has targeted terrain held by ISIS, they’re violating the laws of armed conflict. They’re targeting ISIS-controlled market places. They’re killing civilians. We don’t want the Russians to target ISIS-held terrain because it won’t be effective militarily.”

This is why both the CIA and Joint Chiefs of Staff have characterized the sacking of East Aleppo as an impending humanitarian catastrophe as well as an urgent U.S. counterterrorism threat. The area contains no known ISIS militants. What it has got a lot of is civilians, some 250,000, now facing extermination, internal displacement or radicalization.

According to the pro-opposition Local Coordination Committee (LCC), 82 people were killed on Wednesday in Aleppo alone. “Most of them,” the report noted, were hit by Russian and Syrian warplanes. In the last week several hospitals have also been destroyed, including a specialized pediatric one, according to Médecins Sans Frontières. The World Health Organization has claimed that all hospitals in the area are now inoperable—although the London-based Syrian Observatory for Human Rights disputes that, saying that civilians are simply too terrified of being killed should they seek treatment at any of the still-functioning facilities.

Death from above can come quickly or slowly. Russian warplanes dropped parachute bombs on Hanano and Haidaria, two neighborhoods in Aleppo’s northeast, according to the LCC.

“It was the heaviest bombardment this month,” Monther Ekaty, an activist in the Seif al Dawla area of the city, told The Daily Beast on Wednesday, two days into the renewed campaign. “Tactical rockets, regular bombs, barrel bombs, cannon, mortars and surface-surface rockets” had all been fired on the city, which offers no escape from the inevitable slaughter. Other eyewitnesses say that chlorine-gas filled barrel bombs have been unleashed. Al Jazeera captured horrifying footage of an air raid striking on children’s hospital just as a father and his two children were being treated for asphyxiation from just such a chemical attack. The nurses scramble to rescue undernourished and near-lifeless infants from incubators, amid the smoke and debris.

“There is nowhere to run to,” said Ameen al Halabi. “We’re completely besieged and there are no routes out of the city.”

Contrast this claim of total encirclement with a text message sent to East Aleppo residents by the regime on Sunday, Nov. 13. The ill and wounded, it read, should flee the city or die as a “strategically planned assault using high precision weapons [would occur] within 24 hours.”

At the Halifax International Security Forum on Saturday, Sen. John McCain said that precision bombs are being used to purposefully target hospitals in Aleppo and characterized what Assad, Iran and Russia are doing as “one of the greatest acts of genocide in modern times,” for which the United States, through its fecklessness and inaction, is complicit.

“If Trump didn’t give them a green light, the Russian wouldn’t have started the Aleppo campaign again,” al Halabi said, echoing a widely held view.

The activists and rebels interviewed for this story responded to the prospects of a Trump presidency with a collective, “What else is new?” They’ve been through it all already.

“Okay, so look at what happened during the past week,” said photographer Fuad Hallak. “Trump got elected and more than 100 civilians were killed in Aleppo alone. If Clinton got elected instead, would these 100 be alive now? I don’t think so.”

Whatever hope may have once existed for American-led resolution to Syrians’ suffering ended in 2013, all interviewees said, when Barack Obama failed to punish Assad for using chemical weapons in Damascus. Instead, he cut a deal with Putin, which, East Aleppo residents believe, Trump is only likely to expand upon, with little or no bearing on how they live or die.

“Yesterday, Liwa Shuhada al-Islam were receiving ammunition from Turkey, via the Atmeh crossing,” said Suhel, a fighter with that unit of the Free Syrian Army. “So the arms did not stop yet, but I have no idea how Trump will affect us. I am not worried because the American government never really supported us. They are supporting us only with statements, but they act against us.”

“The unavoidable truth,” said Carafella, “is that al Qaeda has been fighting and dying in the trenches with the Syrian opposition against the Assad regime since the beginning of this war. If the U.S. enters into a partnership with Russia that is committing repeated war crimes—even if we manage to shift Russia’s campaign to anything productive—we still fail to recover legitimacy with the local population.”

“We’re in a competition with al Qaeda,” she added. “We have invested enough for our reputation to be on the line, but not enough to affect the outcome in any serious way. And that’s a terrible place to be.”

And there’s no guarantee that a President Trump could fix it even if he wanted to, and even if he had the remotest idea how to.


Article Link To The Daily Beast:

Why Are State Sponsors Of Terrorism Receiving U.S. Taxpayer Dollars?

U.S. law bars the federal government from providing support to terrorist organizations, but the United States' putative allies and de facto clients operate under a very different set of rules.


By Christopher A. Preble
The National Interest
November 21, 2016

How a President Trump will approach relations with Russia — and especially what that means for U.S. policy in the Syrian civil war — has become one of the most discussed issues during a tumultuous transition. But we should be paying at least as much attention to what America’s putative partners — including those groups currently receiving U.S. taxpayer funding — are doing to prolong a brutal conflict that has claimed nearly 500 thousand lives, and driven more than ten million from their homes.

During the campaign, Trump even tangled with his running mate Mike Pence over Syria. When Pence suggested during the vice presidential debate that the United States institute a no-fly zone over Syria, Trump promptly swatted the idea away. “He and I haven’t spoken, and I disagree.” Late last week, Trump admitted that he “had an opposite view of many people regarding Syria,” and suggested that he would withdraw support for anti-Assad rebels, and focus on fighting ISIS.

Members of the GOP foreign policy establishment, however, are doubling down on the status quo.

On Tuesday, in one of the first post-election warning shots fired across Team Trump’s bow, Senator John McCain warned the president-elect not to trust “a former KGB agent who has plunged his country into tyranny, murdered his political opponents, invaded his neighbors, threatened America’s allies and attempted to undermine America’s elections.”

“At the very least, the price of another ‘reset’ would be complicity in Putin and Assad’s butchery of the Syrian people.

“That is an unacceptable price for a great nation. When America has been at its greatest, it is when we have stood on the side [of] those fighting tyranny,” McCain added. “That is where we must stand again.”

Alas, finding those who are “fighting tyranny” but not secretly committed to imposing it once they prevail is the tricky part. The abundant evidence from Afghanistan, Iraq and Libya — not to mention the Cold War — shows that legitimate freedom fighters are often indistinguishable from charlatans and thugs. Despite this unhappy track record, McCain retains his childlike optimism in the United States’ ability to find the “good guys” and help them to reshape fractured foreign polities.

Few Americans are so inclined. President Obama was caught between wanting to see Bashar al-Assad’s regime overthrown, but not wanting to see violent extremists take its place, for example, Jabhat Fatah al-Sham (Conquest of Syria Front), the one-time Al Qaeda affiliate formerly known as Jabhat al-Nusra. Unsurprisingly, the president’s efforts to arm the few factions that cleared the vetting process were an abject failure, in part because the tools available to protect the U.S.-approved anti-Assad factions are deeply problematic.

A no-fly zone, for example, may forestall the complete annihilation of certain groups, but only at the risk of widening the war. Since Assad’s Russian ally is also operating from time-to-time in Syrian airspace, a no-fly zone would necessarily threaten Russian planes and pilots. And U.S. planes and pilots would also be at risk. At a meeting of the Council on Foreign Relations last month, National Intelligence Director James Clapper told CBS's Charlie Rose, “I wouldn't put it past them to shoot down an American aircraft.”

Some in Congress have pushed back against the executive branch’s occasional zeal for intervention in Syria. In the late summer and fall of 2013, members of Congress were flooded with phone calls urging them to block U.S. military action there. Obama got the message too, and backed away from his ill-advised red line that would have entailed direct U.S. military action in the civil war.

But the Obama administration continued to funnel money to some anti-Assad rebels. Since then, a few in Congress have tried to cut off funds for the so-called “Syrian Train and Equip” program. An amendment to the Defense Appropriations Bill sponsored by Reps. Tulsi Gabbard (D-HI) and Austin Scott (R-GA) garnered 135 votes from both Republicans and Democrats, despite opposition from party leaders and the White House. It is reasonable to believe that a similar effort would fare even better in the post-election environment.

For now, U.S. law bars the federal government from providing support to terrorist organizations, but the United States’ putative allies and de facto clients operate under a very different set of rules. They have been fueling the civil war by plowing money and material support to a host of organizations that couldn’t survive the U.S. government’s vetting processes. In other words, other countries, some of whom are recipients of U.S. foreign assistance, are funding terrorist organizations, including ISIS. We might even call them state sponsors of terrorism. And, in any other context, that fact alone would and should disqualify them from receiving U.S. taxpayer dollars.


Article Link To The National Interest:

How India Can Stop The Next Fake-Money Crisis

Counterfeit rupees are empowering India’s enemies around the world.


By Sajid Farid Shapoo
The National Interest
November 21, 2016

The Indian government’s recent decision to invalidate five-hundred- and one-thousand-rupee notes is a reflection of growing concerns about the widespread circulation of counterfeit currency notes in the predominantly cash-based Indian domestic economy. Data collected by the Indian Statistical Institute revealed that as many as 250 out of every million notes in circulation were fake. This may seem a small percentage, but in absolute terms it translates into mind-boggling numbers. The Indian media’s clamor over the politically exciting issue of black money is understandable, but it undermines the threat posed by counterfeit currency—both to monetary stability and to the internal security of the country. It was not surprising that the official notification by the ministry of finance, which regulates the production and circulation of Indian legal tender, categorically underlined that the decision to withdraw the notes was intended to curb the financing of terrorism through the proceeds from these fake notes.

India has a large unorganized, cash-based economic sector whose daily transactions number in billions of rupees. According to Boston Consulting Group, in the year 2015, 78 percent of all consumer transactions in India were cash-based. It is this large cash-based sector that was inundated with the circulation of counterfeit currency notes. The question is how big this circulation really is, and how such criminal activity, traditionally undertaken for economic gain by private individuals, organized gangs and crime syndicates, managed to erode common consumers’ faith in Indian legal tender.

Between 2010 and 2013, Indian law-enforcement agencies seized $150 million in counterfeit currency. The counterfeiting of high-denomination Indian legal tender is not an ordinary criminal activity; it is a well-orchestrated, state-sponsored enterprise, intended to adversely impact India’s economic security. It amounts to terrorism by other means.

In India, counterfeiting is performed by a large and well laid-out network of intermediaries. These intermediaries are not only located within Indian territory, but have woven an extensive web in neighboring countries like Nepal, Bangladesh and Sri Lanka. They use these locations as staging posts for pumping counterfeit currency into Indian territory through the porous border. Many Pakistani nationals have been arrested with huge amounts of Indian counterfeit in these countries.

David Headley, who is currently serving a sentence in the United States for his role in the Mumbai terror attacks, confessed before a Chicago court that a major of Pakistan’s ISI had provided him with counterfeit Indian currency to cover his various reconnaissance trips to India. Headley admitted that because of the high quality of the counterfeit, he never encountered any problem using the bills in India. It did not surprise Headley that Pakistani state actors were involved in the counterfeiting of Indian currency.

In the late 1990s and early 2000s, the United States faced a similar problem, in the form of counterfeit “superdollars,” which were illegally produced by North Korea and then pumped into the United States through shadowy banks and individual smugglers. A 2009 Congressional Research Service report, “North Korean Counterfeiting of U.S Currency,” admitted that high-quality counterfeit hundred-dollar bills had the ability to erode public confidence in U.S. legal tender. No wonder that many stores in the United States during that period simply refused to accept hundred-dollar bills.

The Indian government, for its part, has been trying to address this problem through a combination of legal indictments and diplomatic measures. India increased its diplomatic tempo after 2014, when Indian investigating agencies received a judicial conviction in a crucial transnational case of counterfeiting, where investigators armed with scientific evidence were able to nail down the role of Pakistan’s state agencies in the production of Indian counterfeit.

The sophistication of the counterfeiting, and the use of genuine currency paper, clearly suggested the involvement of state actors. Moreover, the counterfeit currency successfully imitated certain high-quality, cost-intensive security features of genuine Indian currency. Such features as a guilloché pattern in the background design, asymmetric see-through registration and latent image effects can only be incorporated using standard currency-making machines. These making machines are highly capital-intensive, and are sold only to sovereign governments and their central banks. There is only a handful of manufacturers for these currency-making machines in the world.

The clinching evidence for Indian investigators came when a Committee of Experts, set up to look into counterfeit forensics, opined that “all the batches of counterfeit currency notes which were seized by law enforcement agencies from different parts of the country, not only had a common source but based on their printing defects these were printed in the same currency printing press.” The earliest batch of these counterfeits dated back to 2000, when counterfeits five-hundred-rupee notes amounting to half a million Indian rupees (approximately $9,000) were recovered from the bodies of two Pakistani terrorists who were gunned down near the international border in Jammu and Kashmir.

The findings of the investigation were also taken to the Financial Action Task Force, an intergovernmental body set up to combat money laundering and terrorist financing.

The decision to invalidate five-hundred- and thousand-rupee denomination notes is a step in the right direction, as most of the counterfeit currency seized till now has been in these two denominations. This also makes sense, as five-hundred- and one-thousand-rupee notes together constitute 86.4 percent of the total value of Indian currency in circulation.

The Indian government needs to build upon this move with a multipronged strategy against counterfeiting by changing the cost/benefit calculus of decision makers in Islamabad. The strategy must involve both increasing costs and reducing benefits, in order to make the entire enterprise prohibitive. The present step of invalidating high-denomination notes would render millions of counterfeit notes as paper scrap. A few years ago, the Indian government amended its counterterror legislation and brought the circulation of high-quality counterfeit currency under the ambit of a “terrorist act.”

It is also imperative to ensure that the new notes have high counterfeiting costs. The invalidated five-hundred- and one-thousand-rupee notes had strong covert features, but it was the imitation of their overt features that dented their credibility. The new legal tender needs to have robust overt security features. Covert features are important, but these come into play only at the bank level, when the currency has already been circulated in the market. Effective counterfeit-resistant overt security features would make it easier for lay consumers to differentiate between genuine and counterfeit currency, thereby making counterfeiting a less profitable venture.


Article Link To The National Interest:

Oil Bets Are Biggest In 9 Years Amid OPEC, Trump Volatility

Producer, hedger bets on WTI rise to highest since 2007: CFTC; Oil traders buy record number of WTI calls on Nov. 15.


By Mark Shenk
Bloomberg
November 21, 2016

Money managers, producers and consumers made the biggest bets on West Texas Intermediate crude prices in nine years, amid signals more volatility is coming.

Global markets were roiled after Donald Trump’s election as U.S. president and as OPEC continued negotiations on a deal to cap output. The U.S. dollar climbed to the highest since January. A measure of oil volatility surged last week to a seven-month high, a sign that traders were anticipating bigger price swings.



Wagers on higher and lower prices held by speculators and hedgers reached 1.47 million contracts in the week ended Nov. 15, the most since 2007, U.S. Commodity Futures Trading Commission data show. Trading volume of calls giving investors the right to purchase WTI futures surged to a record that day. The CBOE Crude Oil Volatility Index reached the highest since April.

“There’s tension in the market, with both producers and consumers worried about what OPEC does or won’t do on Nov. 30,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “They want to be protected from surprising price moves.” 
 
OPEC Meeting

Investors are weighing the chances that the Organization of Petroleum Exporting Countries will complete a deal to cap output at its Nov. 30 meeting in Vienna. While Saudi Arabian Energy Minister Khalid Al-Falih told Al Arabiya television he’s optimistic a deal will be reached, only 7 of 20 analysts surveyed by Bloomberg last week expect the group to set output targets for its members.

OPEC agreed in September to cut their collective output to 32.5 million to 33 million barrels a day and has been trying to persuade other suppliers, notably Russia, to join the cuts. OPEC Secretary General Mohammed Barkindo said he’s confident the group can reduce record oil inventories and bring forward the rebalancing of the market.

“The Saudis are working hard to reach a deal,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “You don’t fight the Fed in the bond market and when it comes to oil you don’t fight the Saudis.”

The September agreement marked the end of OPEC’s two-year long experiment with pumping at will. Saudi Arabia led the group in the effort to grab market share and curb the development of more expensive reserves such as U.S. shale.

U.S. Production

While U.S. production has dropped from last year’s 44-year high, the decline is slowing. The Energy Information Administration this month raised its output forecast for 2017. Rigs targeting oil in the U.S. rose the most in 16 months last week, according to Baker Hughes Inc.

Producers and merchants increased short positions, or protection against lower WTI prices, to the highest level since March 2011. They added 66,613 bearish contracts over the past two weeks as prices retreated from last month’s peak at above $50 a barrel.

“The Saudis want higher prices but won’t sacrifice just to see a major competitor, U.S. shale, benefit,” said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. “The Trump election changes things. In one day the U.S. shale business got better. The government will be more responsive to the industry.”

Money managers’ net-long position in WTI advanced for the first time since mid-October, climbing by 3,906 futures and options to 163,321. Shorts climbed 14 percent while longs rose 8.1 percent. WTI gained 1.8 percent to $45.81 a barrel in the report week. It rose 1.1 percent to $46.20 as of 12:27 p.m. in Singapore on Monday.

In fuel markets, net-bullish bets on gasoline decreased 35 percent to 25,796 contracts, as futures slipped 2.5 percent in the report week. Money managers were net-short 393 contracts of ultra low sulfur diesel, from net-long 7,791 the previous week. Futures advanced 0.2 percent.

“I suspect that when the OPEC meeting is over there will have been a lot more smoke than fire,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “If they don’t come up with a convincing agreement, they’ll be forced to revisit the issue before long.”


Article Link To Bloomberg:

Global Trumpism Seen Harming Efforts To Reduce Climate Pollution

Climate not a priority for populist movements in U.S., Europe; Concern for UN talks as Obama’s leadership gives way to Trump.


By Jessica Shankleman
Bloomberg
November 21, 2016

Populism is drawing momentum from environmentalism in the U.S. and Europe, threatening the world’s effort to rein in climate change.

Donald Trump’s election in the U.S., the U.K. Independence Party and Marine Le Pen’s ascent in France all represent a break with political leaders who made the environment a priority. All three are skeptical climate change is happening and are resistant to international projects like the United Nations global warming talks.

Envoys from more than 190 countries gathered by the UN made progress this weekend in their work to contain fossil-fuel emissions and keep a lid on temperature increases. Two weeks of discussions in Marrakech, Morocco, were overshadowed by the election of Trump, who has called climate change a hoax. Many delegates left the city concerned about the forces working against them.

“If climate change is labeled as an elitist, global project, which is what UKIP and Le Pen want to do, then it’s dead,” said Nick Mabey, a former climate adviser to the U.K. government now leading the environmental consultant E3G.



Trump takes office in January and has said he’ll pull out of the Paris agreement negotiated through the UN. That’s a sharp contrast to outgoing President Barack Obama, who spent six years concentrating on the issue, resulting in a historic agreement with China in 2015 to work together on lowering emissions, prompting dozens of developing economies to follow suit. Trump’s stance is echoed by right-wing movements in Europe:

-- Le Pen’s National Front doubts global warming is linked to human activity and has promoted a “New Ecology movement” emphasizing national programs on the environment over global rules like the ones coming from the UN talks.

-- UK Independence Party leader Nigel Farage called the fight against climate change “one of the biggest and stupidest collective misunderstandings in history,” saying the science isn’t settled and technologies to defeat the problem like renewable energy are damaging to the economy. UKIP’s push to leave the European Union was endorsed by British voters on June 23, leaving Farage more influential in shaping government policy.

Delegates in Marrakech made progress in writing a rulebook on how to implement the 13-page Paris deal. They also set out a work plan for reviewing progress on emissions. A last-minute dispute involving India and Bolivia kept negotiators working into early Saturday, hours past their deadline to finish and underscoring the tensions that remain between rich nations and poor ones on how quickly to act.

India and Bolivia held out for more comprehensive discussions on a list of pre-2020 actions, including for when the most-polluting nations would curb emissions. They were concerned that negotiators were allowing other issues to slip down the agenda, such as long-term finance for climate projects. In the end, the envoys agreed to discuss the issues next year.

China, which for years acted as a spoiler at the UN talks, has flipped its role and now is lecturing the U.S. and Europe on the importance of the issue. Vice Foreign Minister Liu Zhenmin ripped into Trump’s claim that China invented the climate issue and reminded Western envoys of the need to act.

“The European Union has been a leading player in the climate change negotiations in the past 20 years,” Liu said in Marrakech. “We hope the European Union will continue to play its role. A continuation of the support of the climate change convention, the UNFCCC, and the Paris Agreement would be the responsibility of the U.S., it would be the liability of the U.S. to continue to support this process.”



Brazil, which was caught up in the 11th-hour spat with India and Bolivia, reminded envoys how delicate the talks are, noting careful diplomacy is needed to keep building on the goals set out in Paris.

“The Paris Agreement as it is, is not implementable,” said Antonio Marcondes, Brazil’s lead negotiator at the talks. “We agreed on Paris, but now we have to go down to minute issues that are very important, which is a very laborious task.”

Next Round

As if to emphasize international attention seeping away from the issue, the UN had trouble finding a host for next year’s talks. The annual UN climate jamboree drew more than 22,500 diplomats, media and environmentalists to Marrakech. In recent years, it was held in glittering resorts from Cancun, Mexico, to Durban in South Africa and Bali, Indonesia. And as recently as 2011, Asian nations including South Korea and Qatar competed for rights to host.

When it came time to nominate a venue for 2017, only Fiji stepped forward but will hold it at the secretariat of the UN Framework Convention Convention on Climate Change in Bonn. If that leaves the UN process lacking momentum, more concerning is the direction of politics in the U.S. under Trump and in Europe after elections in France and Germany next year.

The U.S. will “absolutely not” lead on climate under Trump in the way Obama did, said Robert Stavins, a Harvard University professor who formerly advised the Environmental Protection Agency in the U.S. “Given what’s going on in France with the ascendancy of Le Pen, maybe Germany will become the last bastion of liberal western democracy. But we can’t be sure of that either.”


Article Link To Bloomberg:

Parity In Sight For The Euro

Trump outlook and Fed’s likely move are strengthening dollar, and ECB may not help stop euro’s fall.


By Mike Bird and Ira Iosebashvili 
The Wall Street Journal
November 21, 2016

A 10-day losing streak for the euro against the U.S. dollar is rekindling an old debate: Will the common currency reach parity with the dollar?

In the last two weeks, the euro has fallen 4% against the dollar, hitting $1.06, a level last seen 12 months ago.

The sharp shift in expectations for U.S. interest rates and economic growth since the presidential election has refueled the euro’s fall against the greenback. If the Federal Reserve increases rates, expectations are the dollar would rise further by drawing money to the U.S. looking for higher returns.

The European Central Bank, meanwhile, is showing few signs of a major shift in a monetary policy that has pushed rates into negative territory and includes a huge bond-buying program.

The euro also has to contend with a gauntlet of coming eurozone votes that could increase power for the sort of populist parties that, many investors believe, embrace policies that could stymie growth.

Following Donald Trump’s victory, Citigroup said it had shifted its euro-dollar forecast “180 degrees.” The bank now predicts the euro will tumble to just 98 U.S. cents in the next six to 12 months. This past week others joined the bank in predicting parity. The euro was at $1.0591 late Friday in New York.

The divergence of U.S. monetary and fiscal policy with the rest of the world “should be very beneficial to the dollar,” said Adnan Akant, head of currencies at asset-management firm Fischer Francis Trees & Watts.

Mr. Akant now believes that parity could be reached fairly soon.

“Well, that’s only 7% to 8% away; yes, I would think so,” he said.



The euro’s decline could be good for the European economy. A weaker exchange rate will make the eurozone’s exports more competitive and should encourage inflation, which has been persistently below the ECB’s target near 2%. But such trends aren’t all good news for consumers, who will see a rise in the cost of dollar-denominated imports like oil.

Launched in 1999, the common currency spent much of its early years below parity, falling to as low as 83 cents in 2000, when there was a strong U.S. economy and a weak one in Europe.

But the currency has traded above $1 since late 2002, climbing to a high of $1.60 as the U.S. struggled with the financial crisis in 2008.

Analysts were last predicting parity in early 2015, when the euro was dragged down by the ECB’s introduction of quantitative easing, a bond-buying program designed to push down interest rates.

That March, the euro fell to as low as $1.046. But U.S. interest-rate rises didn’t occur as fast as economists were predicting, puncturing the trade.

Monetary-policy divergence is once again driving the euro lower against the dollar.

Goldman Sachs expects one interest-rate increase soon from the Federal Reserve, followed by another three in 2017, and believes the ECB will extend its quantitative-easing program to the end of 2017.

But the current fall is also different from 2015’s big decline. Back then, the euro dropped against the currencies of almost all its major trading partners. This time, the euro is actually up 1.8% this year against a trade-weighted basket of currencies.

Not all strategists believe parity is destined. There are two actors in this trade, the euro and the dollar.

“A lot of good news has already been priced in for the U.S., possibly too much,” said Geoffrey Yu, head of the U.K. investment office at UBS Wealth Management, who also bet against parity in early 2015.

“If you just look at how the eurozone has performed in terms of data, things look better than they did the last time people were gunning for parity,” he said.

The eurozone economy has grown slowly but consistently for each of the last nine quarters, expanding by between 0.3% and 0.8% of gross domestic product every three months.

Alongside interest-rate expectations, political risk is weighing on the currency.

“Both blades of the scissor are moving against the euro right now,” said Marc Chandler, a strategist at Brown Brothers Harriman in New York. “My view is that the currency goes to record lows.”

Europe has already witnessed one political earthquake this year, when the British surprised investors by voting to leave the European Union. Now, the eurozone’s political diary is full of potential market shocks.

Early next month, a constitutional referendum in Italy could sink the government of Prime Minister Matteo Renzi. The resignation of Mr. Renzi, one of Europe’s most reform-minded leaders, could freeze Italy’s economic overhaul and erase the meager growth the country has generated.

Also lining up are key elections in France, Germany and the Netherlands, all of which have seen populist right-wing parties gain support.

Investors “were surprised on Brexit, they were surprised on the U.S. election,” said Mark McCormick, head of North American foreign-exchange strategy at TD Securities. “This time, they will want to be more cautious when it comes to Europe.”


Article Link To The Wall Street Journal:

Dollar Hoisted Higher As U.S. Yields Rise On Trump Bets

Reuters
November 21, 2016

The dollar held near 13 1/2-year highs against a currency basket in Asian trading on Monday, as investors stuck with bets that President-elect Donald Trump's administration would adopt expansionary fiscal policies that will lead to higher interest rises.

The dollar index, which tracks the U.S. unit against a basket of six rivals, added 0.1 percent to 101.31, after adding more than 4 percent last week to mark its biggest weekly rise since March 2015. It notched a high of 101.48 on Friday, its highest since April 2003.

The dollar rose to 111.190 yen, its highest since early June. It was last up 0.2 percent at 111.09 as investors positioned ahead of U.S. Thanksgiving holiday later in the week. Tokyo markets will also be shut for a public holiday on Wednesday.

Expectations that a Trump presidency will usher in higher inflation and lead to faster-than-expected Federal Reserve interest rate increases have helped power the U.S. currency.

"The dollar-yen uptrend remains intact, but the pace of the rise could be slower," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo, who predicts the pair to trade in a 109.50-112 range this week.

"It's very hard to sell the dollar against the yen, in the current situation, beyond a certain level," he said.

The dollar surged as yields on Treasuries of all maturities marked their largest two-week gains in more than five years as investors dumped U.S. government debt after the Nov. 8 U.S. presidential election.

The yield on U.S. benchmark 10-year Treasury notes rose to a one-year high of 2.364 percent on Friday. It last stood at 2.342 percent, compared to its U.S. close of 2.337 percent.

"The market is buying the dollar and selling U.S. Treasuries, and it seems this trend may continue because we don't know the details of 'Trumponomics,' and we will not have it until after the 20th of January next year," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

"Until then, investors need to follow the trend," he said, adding, "We might see some correction ahead of Thanksgiving."

Data from the Commodity Futures Trading Commission released on Friday showed that speculators trimmed their dollar bets in the week through Nov. 15, as profit taking reduced net long positions after they had risen seven straight weeks. [IMM/FX]

Japanese yen net longs, meanwhile, posted their lowest level since early June, the data showed, with the yen a casualty of the dollar's strong rally.

Also underpinning the greenback, most market participants expect the U.S. Federal Reserve to raise interest rates at its Dec. 13-14 policy meeting.

On Thursday, Fed Chair Janet Yellen told a congressional panel that a rate increase was likely "relatively soon."

James Bullard, a voting member of the U.S. central bank's rate-setting committee, said last week that the Fed will raise U.S. interest rates in December barring a major shock, such as global market volatility or bad U.S. jobs data.

The euro inched up slightly to $1.0593 but remained not far above Friday's 11-month low of $1.0569.

The Australian dollar shed 0.2 percent to $0.7324, having touched a five-month nadir at $0.7311.

China's yuan weakened to near its lowest in 8 1/2 years. The official midpoint guided by the People's Bank of China (PBOC) was set weaker for a 12th consecutive day at 6.8985 per dollar prior to market open on Monday, compared with the previous fix 6.8796.


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APEC Leaders Vow To Fight Protectionism, Look To China On Trade

By Mitra Taj and Jeff Mason 
Reuters
November 21, 2016

Pacific Rim leaders vowed on Sunday to fight protectionism and Chinese officials said more countries are looking to join a China-led trading bloc after Donald Trump's election victory raised fears the United States would scrap free trade deals.

Trump campaigned for U.S. president on a promise to pull out of the 12-nation Trans-Pacific Partnership (TPP) trade deal, and also threatened to impose steep tariffs against China and Mexico.

Regional leaders responded on Sunday, saying they would push ahead with the TPP.

"We reaffirm our commitment to keep our markets open and to fight against all forms of protectionism," they said at a summit meeting of the 21-country Asia-Pacific Economic Cooperation (APEC) group in Peru.

On his last foreign trip before he leaves the White House in January, President Barack Obama said abandoning TPP would be a mistake for the United States.

"I think not moving forward would undermine our position across the region and our ability to shape the rules of global trade in a way that reflects our values and our interests," Obama told a news conference at the end of the summit.

Obama negotiated the TPP but has stopped seeking its congressional approval and says its ratification is now up to the incoming Trump administration.

China is not part of the TPP and has been pushing an alternative vision of free trade in Asia under the so-called Regional Comprehensive Economic Partnership (RCEP), which does not currently include countries in the Americas.

Tan Jian, a senior member of China's delegation at the summit, said more countries are now seeking to join its 16-member bloc, including Peru and Chile, and that current members want to reach a deal as soon as possible to counter rising protectionism.

In a final declaration, APEC leaders said the TPP and RCEP were both valid paths to a broader Free Trade Area of the Asia-Pacific, which has long been a goal of the APEC bloc that accounts for 57 percent of the world economy.

"We encourage that all regional undertakings, including TPP and RCEP, remain open, transparent and inclusive and draw on each other," they said.

Some APEC leaders in Lima have suggested the TPP could continue without the United States, but others said that would require a complete renegotiation.

Another way forward might be to make some cosmetic changes that would allow Trump to change his mind on the TPP without losing face, New Zealand Prime Minister John Key suggested.

Obama said he was already hearing calls for a "less ambitious" free trade agreement with fewer protections for workers and environmental standards, a likely reference to the China-led RCEP.

"That kind of agreement would obviously exclude U.S. workers and businesses and access to those markets," he said.

China's delegation warned against the "politicization" of trade agreements and said they should not just be for rich economies.

"If you have such high standards, then developing economies will have difficulty with trade," Jian told Reuters. A "low threshold for developing economies ... that is also important."

Peruvian President Pedro Pablo Kuczynski, who hosted the summit, said it was too early to write off the TPP and that Trump's support was due more to "difficult economic conditions" than to fierce protectionist sentiment.

Canada, a member of TPP but not RCEP, is keeping its options open on future trade deals, Prime Minister Justin Trudeau said.

Australia, similarly, said it was pursuing various opportunities, including RCEP.

"Well as I've indicated previously, Australia doesn't have all its eggs in one basket," Trade Minister Steven Ciobo told reporters. "It's not a case of the TPP is all that there is for Australia."


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Poll: Galaxy Note 7 Recall Did Not Damage Samsung Brand In U.S.

By Deborah M. Todd 
Reuters
November 21, 2015

A global recall of fire-prone Galaxy Note 7 smartphones did not appear to hurt U.S. consumers' willingness to buy Samsung Electronics (005930.KS) phones, a Reuters/Ipsos opinion poll released on Sunday showed.

The survey conducted Oct. 26 to Nov. 9 found that current Samsung smartphone users were as loyal to their brand as Apple Inc (AAPL.O) iPhone customers. It also found that people who knew about the recall were as interested in Samsung phones as those who did not.

Samsung was plunged into a global scandal after Note 7 phones caught fire this year, prompting a worldwide recall. Some customers reported fixed phones overheated, leading Samsung to take back replacements as well. Investors expected Samsung customers would turn to alternatives, chiefly Apple's iPhone 7.

Among those aware of the recall, 27 percent would first consider a Samsung smartphone if they were to shop for a phone, the poll showed. Among those who did not know about the recall, 25 percent would look first at a Samsung device.

The poll found that Samsung's customers were fiercely loyal to their brand. Some 91 percent of current Samsung users would likely purchase another Samsung smartphone, and 92 percent of current users would probably buy another Samsung product in general.

That was similar to the brand loyalty among current iPhone owners: 92 percent would likely buy another iPhone and 89 percent would likely buy another Apple product.

To be sure, it was unclear how much the Samsung recall weighed on the minds of consumers. The Reuters/Ipsos poll measured how interested people were in buying Samsung phones, not how much the recall directly influenced their decisions.

Jan Dawson of Jackdaw Research said the recall was mostly limited to early adopters rather than the majority of Samsung's customer base, which limited negative user experiences.

"Your own personal experience trumps what you read and what people tell you," Dawson said.

Samsung has said that customers chose another Samsung model as a replacement for the Note 7 in a majority of instances, without giving more detail. It has said nearly 85 percent of the recalled Note 7 devices had been replaced or returned through its refund and exchange program as of Nov. 4.

In a statement it said it was now focused on "ensuring customer safety and understanding the root cause of the issue."

The Reuters/Ipsos poll was conducted online in English in all 50 states. It included 2,375 people who own Samsung phones and 3,158 people who own iPhones. The poll has a credibility interval, a measure of accuracy, of 2 percentage points.


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Symantec To Acquire LifeLock For $2.3 Billion

By Liana B. Baker and Greg Roumeliotis
Reuters
November 21, 2016

Symantec Corp (SYMC.O) said it would acquire U.S. identity theft protection services company LifeLock Inc (LOCK.N) for $2.3 billion, in a deal that it hopes will prop up sales at its Norton cybersecurity unit.

Symantec's security software often comes bundled with personal computers. As a result, the company has suffered as consumers use mobile devices more than traditional computers. While Norton remains profitable, its sales have been falling.

"(Norton) had been declining with the declines in PC market share. This acquisition brings $660 million in revenue to the consumer business and returns it to longer sustainable growth," Symantec Chief Executive Greg Clark said in an interview.

Reuters was first to report earlier on Sunday that Symantec was in the lead to acquire LifeLock.

Symantec's purchase of LifeLock is in line with its efforts to diversify its offerings. In August, it bought Blue Coat Inc, which helps firms maintain security over the internet, in a $4.65 billion deal. Clark previously held the top job at Blue Coat, and made the switch after the deal closed.

Based in Tempe, Arizona, LifeLock offers services such as monitoring new account openings and credit-related applications in order to alert consumers about unauthorized use of their identity. It also works with government agencies, merchants and creditors to remediate the impact of identity theft.

Fran Rosch, executive vice president of Norton Business Unit, said that Symantec had dabbled in identity security but had nowhere near Lifelock's 4.4 million members.

"We had to extend our value proposition. It was a no brainer for us to get back to growth," Rosch said.

Symantec expects to finance the transaction with cash on balance sheet and $750 million of new debt.

The Mountain View, California-based company has been moving away from what is sees as more commoditized services, selling its data storage business Veritas in January to private equity firm Carlyle Group LP (CG.O) for $7.4 billion. Technology-focused firm Silver Lake Partners has also made a $1 billion investment in the company in two parts this year.

Symantec said the LifeLock deal is not expected to have a material impact on its financial results next year, and reaffirmed its fiscal year 2017 and 2018 guidance. The deal also represents a victory for activist hedge fund Elliott Management Corp, which had pushed LifeLock to explore its options.

Symantec was advised by Citigroup (C.N) and JP Morgan (JPM.N), along with Bank of America (BAC.N), Barclays Plc (BARC.L), and Wells Fargo (WFC.N). LifeLock was advised by Goldman Sachs (GS.N).


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