Thursday, August 17, 2017

Thursday, August 17, Morning Global Market Roundup: European Markets Open Lower

-- European markets open lower, U.S. dollar lags.
-- Data from the Office for National Statistics shows the number of EU workers within the U.K. has hit a record high despite Brexit.
-- Vestas and Kingfishersink lower.

August 17, 2017

Markets in Europe opened lower Thursday as uncertainty surrounding internal U.S. policy continued to weigh on investor sentiment despite lessening tensions from North Korea.

The pan-European Stoxx 600 started the day lower by 0.15 percent following a day of gains Wednesday. All major bourses fell into the red while sectors traded in mixed territory.

The construction and materials sector was the biggest laggard in early deals led by falls for British home improvement retailer Kingfisher. The business reported a fall in quarterly sales Thursday as it struggled with a slowdown at its B&Q business and weakening demand from France. The results will hurt the company's restructuring plans and caused the stock to dip 3 percent.

Danish wind turbine manufacturer Vestas also fell lower, down 4.6 percent, after reporting lower-than-expected operating profit in its second quarter results released Thursday. Despite this, the company has retained its forecast for 2017.

The worse performer was Swiss toilet maker Geberit, which fell 5.6. percent to hit the bottom of the European benchmark after missing second quarter profit expectations.

On the other end, Gn Store Nord, a Danish manufacturer of hearing instruments, rose 7.2 percent to the top of the rankings on reports that it is to produce over the counter hearing aids in the U.S.

Danish pharmaceutical company Novo Nordisk also moved higher after revealing its new drug had succeeded in tests to reduce glucose levels, paving the way for a new type 2 diabetes therapy. The stock was up 2.4 percent.

Elsewhere, new data released by the British Chambers of Commerce Thursday showed that exporter confidence has softened due to currency fluctuations and a shortage of skilled workers post-Brexit. This comes as Office for National Statistics announced that the number of EU citizens working in the U.K. has hit a record high.

Political Pressures Weigh On The U.S. Dollar

Asian stocks rose higher Thursday as pressure between the U.S. and North Korea showed continued signs of easing, but the U.S. dollar slipped into negative territory as investors lost confidence in the region's pro-growth agenda.

President Donald Trump disbanded two high-profile business advisory councils Wednesday after seeing a mass exodus from chief executives over his response to violence in Charlottesville over the weekend. Meantime, minutes from the Federal Reserve's latest meeting Wednesday showed policymakers divided over their view on inflation and their approach to interest rate hikes.

Article Link To CNBC:

Oil Edges Up On Decline In U.S. Crude Stocks, But High Output Caps Gains

By Henning Gloystein
August 17, 2017

Oil prices edged up on Thursday, but the market continued to be weighed down by high production, especially in the United States.

Brent crude futures LCOc1 were at $50.36 per barrel, up 9 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $46.80 a barrel, up just 2 cents.

The slight gains followed a more than 1 percent fall in the previous session.

Energy Information Administration (EIA) data on Wednesday showed that commercial U.S. crude oil stocks C-STK-T-EIA have fallen by almost 13 percent from their peaks in March to 466.5 million barrels. Stocks are now lower than in 2016.

"If inventory declines continue at this pace, stocks will fall back below the five-year average in around two months," said William O'Loughlin, analyst at Australia's Rivkin Securities.

"The pace of the declines indicates that the OPEC production cuts are having an effect, although the current oil price suggests that the market is skeptical about the longer-term prospects for rebalancing of the oil market," he added.

ANZ bank said the market seemed "to focus on the rise in (U.S.) production", which jumped by 79,000 barrels per day (bpd) to 9.5 million bpd last week, its highest level since July 2015, and 12.75 percent above the most recent low in mid-2016. C-OUT-T-EIA

The soaring U.S. output undermines efforts by the Organization of the Petroleum Exporting Countries which, together with non-OPEC producers like Russia, has pledged to restrict output by 1.8 million barrels per day (bpd) between January this year and March 2018.

Brent prices are down by almost 12 percent since the start of the cuts in January.

The subdued market sentiment also has roots on the demand side.

Oil producers have enjoyed years of rocketing demand, fueled largely by China's voracious thirst coming from over 2 million new car sales a month. aCNDSLSAUT

But this boom is coming to an end as its vehicle sales slow in a maturing market, and as cars become more efficient and start using alternative fuels.

"Gasoline consumption growth in China is set to see a marked slowdown over the coming years, due to macroeconomic headwinds, improving fuel economy and competition from alternative fuels," BMI Research said.

"We forecast average annual growth of 1.3 percent over 2017-2021, compared with 9.6 percent seen over 2011-2016," it added.

India, often touted as the 'next China' for oil demand growth, however, only sells around 260,000 cars per month and has not seen significant sales growth in the past years. aINDVEHCAR

Article Link To Reuters:

Is Colin Kaepernick Executing A Trick Play?

He’s been awfully quiet of late, but his supporters’ goal appears to be to sack a conservative institution.

By Jason Whitlock
The Wall Street Journal
August 17, 2017

Former San Francisco 49ers quarterback Colin Kaepernick’s national anthem protest hasn’t done much to change how we discuss criminal justice. It has, however, changed how some Americans view the National Football League, a conservative American television institution that once seemed impervious to criticism.

Professional football is the most popular TV show on five different networks, but the Kaepernick affair has swept the NFL into a racial controversy now entering its second season—and with no end in sight. Film director Spike Lee is promoting an Aug. 23 rally at the league’s New York headquarters protesting Mr. Kaepernick’s inability to convince a team to sign him. A petition calling for a nationwide boycott of the NFL on behalf of Mr. Kaepernick has gathered more than 150,000 signatures. When the Baltimore Ravens declined to offer Mr. Kaepernick a contract, his girlfriend tweeted a photo comparing the team’s owner to the white slave master played by Leonardo DiCaprio in “Django Unchained.”

Coverage of the Kaepernick saga has migrated from ESPN and FOX Sports 1 to Fox News, CNN and MSNBC. But even on the news channels, the televised debates rarely touch on the underlying issue of relations between police and the black community. They’re almost exclusively focused on whether NFL owners are racist for not signing an average quarterback carrying above-average media baggage.

An American industry that has made millionaires out of thousands of black men now finds itself locked in the progressive racial crosshairs. The NFL markets itself as a colorblind meritocracy, free of victims and aligned with America’s patriotic ideals. The Kaepernick kerfuffle is off-brand.

“Any conversation about bias, especially racial bias, is bad for the NFL,” NBC “ Sunday Night Football ” broadcaster Cris Collinsworth told me last week. “The sad thing is that I always considered sports in general far ahead of the rest of society on racial issues. We live and work together every day. Stereotypes always seem so ridiculous when you actually know the people being stereotyped.”

Mr. Collinsworth is right: Sports do tend to lead society when it comes to race. Jackie Robinson’s integration of Major League Baseball in 1947 predated the civil-rights movement of the 1950s and ’60s. Robinson’s success demonstrated how inclusion of black men enhanced the business of baseball. It created space for the idea that the rest of society could be integrated.

But while Brooklyn Dodgers owner Branch Rickey strategically chose Robinson to break baseball’s color barrier, Mr. Kaepernick’s protest came seemingly out of nowhere. Before the 2016 season, the mixed-race quarterback, who’d been adopted by a suburban white family, was known mainly for his chiseled abs, tattooed body and a touchdown celebration involving him kissing his biceps.

“He is the last guy you would expect to be at the center of this controversy,” a prominent NFL broadcaster told me last week. “We called a lot of his games. We sat down with him maybe 10 times. He’s a nice kid. You never saw this. [Seattle Seahawks cornerback] Richard Sherman, I could see. He always has something to say. He’s comfortable being outspoken.”

Mr. Kaepernick, the activist-athlete being analogized to Muhammad “Louisville Lip” Ali, has remained strangely silent for months. He communicates through tweets, Instagram posts and leaked bits of information to his vast array of media and celebrity surrogates. ESPN NFL reporter Adam Schefter reported in February that sources close to Mr. Kaepernick say he’ll end his national-anthem protest in the coming season. If his goal is to raise awareness around the issue of unfair policing involving black men, he is using a silence tactic no other activist has ever used and, at this point, it’s fair to question the effectiveness of his strategy.

But what if his goal is to drive a discussion focused on NFL ownership treating him in a racist manner? In that case, Mr. Kaepernick is serving as a Trojan Horse for the progressive media’s attack on an iconic institution. The NFL is the highest-rated show on NBC, FOX, CBS , ESPN and the NFL Network. It’s an important cultural force, and a conservative one. Mr. Kaepernick is a pretense to change the way football is discussed. It’s working this NFL offseason.

His impact during the regular season remains to be seen. Broadcasters argue the NFL isn’t likely to suffer any ill effects from the preseason boycotts and protests.

“Fans historically have been able to separate what happens off the field from their love of the game itself,” said Eric Shanks, president and chief operating officer of Fox Sports. Mr. Shanks pointed to previous NFL controversies such as Ray Rice’s domestic-violence incident and Michael Vick’s dogfighting conviction that disappeared when the games began. “We’ll have to wait and see if there is anything we can point to that says this issue is having an impact on viewership.”

NBC broadcaster Bob Costas added: “I don’t think the Kaepernick controversy hurts the NFL. Is it good for it? Probably not. I think it’s great for the debate shows. It’s a legitimate issue and a hot-button question. But I don’t see any discussion of it during the games unless Kaepernick is actually in the game. I think NFL ratings are what they are.”

The NFL and its TV partners will not be the first group surprised by a Trojan horse.

Article Link To The WSJ:

An Eclipse Is Just What The U.S. Power Sector’s Been Waiting For

This eclipse ‘is a little bit like Y2K’: energy software firm; Grid operators, utilities will use event to fine-tune toolkit.

By Naureen S Malik, Chris Martin, and Mark Chediak
August 17, 2017

Turns out the solar eclipse, set to plunge parts of the U.S. into total darkness on Monday, will offer exactly what the power sector’s been looking for: a completely predictable stage for experiments.

It’s not often that power grid operators, utilities and electricity generators get such precise and advance notice about more than 12,000 megawatts of solar power supplies set to suddenly drop off their systems. And some are looking forward to it -- as a means of testing plants, software and markets refined in recent years in anticipation of the day when renewable energy becomes the world’s dominant source of power.

The way David Shepheard, managing director at consultant Accenture Plc, sees it: The eclipse is the “forecastable dress rehearsal” for the grid of the future. It’ll be the perfect test, he says, “for operating the grid when the sun doesn’t shine and the wind doesn’t blow.”

Here’s a closer look at what utilities, power generators and grid operators will be watching as the eclipse plays out:

Perfecting Forecasting

Charlie Gay, director of the U.S. Energy Department’s SunShot Initiative, expects the eclipse to provide instant validation for power forecasting models being developed. The department is working with the National Renewable Energy Laboratory and grid operators to improve software controls that balance supply and demand as the continent goes dark.

“It gives us a test for the models,” he said. Using satellite data and maps of solar plant locations, the group expects to be able to match forecasts with what actually occurs before, during and after the eclipse.

Grid operators including PJM Interconnection LLC and Southwest Power Pool are similarly using the eclipse to measure exactly how much rooftop solar is on their systems and improve their supply models for the next eclipse in 2024.

Sizing Up Software

The proliferation of so-called smart meters, energy management equipment and software has helped provide power-line operators better data on the homes and businesses they supply. Some utilities can now control their customers’ air conditioners using remote devices, helping them curb demand during extreme weather.

The need for such software and technology has only grown as rooftop solar panels increasingly turn consumers into mini-generators. “Smart” inverters can now help balance the voltage and frequency coming from solar panels.

Grids and utilities “are quite frankly becoming tech companies” in their need to crunch big data to operate more efficiently, and this eclipse “is a little bit like Y2K,” said Austin Whitman, director of regulatory affairs at FirstFuel Software Inc. in Boston.

The event is going to give grid operators a chance to fine-tune their toolkit for dealing with big wind and solar fluctuations, the Energy Department’s Gay said. Battery storage may end up playing a bigger role because it offers more flexibility, Accenture’s Shepheard said.

Backing Up Solar

Utilities including PG&E Corp. and Edison International will also be relying on natural gas-fired power plants and hydropower resources to pick up the slack when the moon blocks the sun and solar power’s wiped out.

The event is coming at an opportune time for California to flex its hydropower muscle. Snow is melting and hydro is plentiful. The flood of quick supplies is what the state is hoping to dispatch to fill a 6,000-megawatt void of solar energy.

In North Carolina, a part of which will see total darkness during the eclipse, Duke Energy Corp. expects about 2,000 megawatts, or 80 percent, of utility-scale solar farms to go offline. The utility will treat it like a “gradual sunset,” said spokeswoman Tammie McGee, estimating that as much as 1,200 megawatts of gas generation will help pick up the slack.

The so-called energy imbalance market, formed by a group of utilities and California’s grid operator to trade power in real-time across much of the western U.S., will also be put to the test. Berkshire Hathaway Energy’s NV Energy utility in Nevada said it’ll rely on this regional system, capable of dispatching power every five minutes, to help balance supply swings and set aside 400 megawatts in reserves.

Power Surge?

Power bulls could meanwhile enjoy a rally in wholesale electricity prices due to solar’s sudden slide. The eclipse will start curbing solar a little after 9 a.m., just when the work week is ramping up and demand is taking off. According to energy data provider Genscape Inc., the event may extend the typical period of high power prices in California by about two hours.

Prices will probably retreat as soon as the moon starts moving past the sun and solar farms return, Genscape said. And the market impact in Texas, the Midwest and the East Coast will be limited because the region’s home to smaller concentrations of solar. 

Voltage Swings

Transmission operators have spent years adapting to growing volumes of renewable power coursing through U.S. power lines. So they’re not anticipating outages as a result of voltage fluctuations. Utilities from California to North Carolina have also been preparing for months to avoid sudden voltage losses.

“One of the advantages of being a national leader in the amount of solar energy connected to the grid is that our operators are experienced with dealing with fluctuations in solar power production due to weather conditions,” said Paul Grigaux, vice president of transmission substations and operations for Edison’s Southern California Edison utility.

And solar’s decline doesn’t just affect high-voltage transmission lines. Utilities in California and New Jersey, where large concentrations of households have installed solar panels on their rooftops, will have to deal with fluctuating voltage levels on local power lines.

While Duke plans to follow the same procedures it always follows during sudden outages, McGee noted that the magnitude of this event “is fairly unprecedented.”

Article Link To Bloomberg:

Trump’s Tariffs Would Kill These American Jobs

The U.S. bicycle industry needed protection once. Now it might be too late.

By Nick Leiber
August 17, 2017

Donald Trump would love what Arnold Kamler’s doing.

One of the president’s top campaign promises was to bring manufacturing jobs back to the U.S., and Kamler is on a quest to revive a decimated industry: American-made bicycles. Almost all of the roughly 18 million bicycles sold each year in the U.S. come from China and Taiwan.

This year, about 130 workers at Kamler’s new factory in Manning, South Carolina, will assemble 350,000 bikes. In just three years since the 200,000-square-foot factory opened, Kamler’s company, Kent International Inc., has become the biggest U.S. bike maker under its Bicycle Corporation of America brand.

Trump has repeatedly threatened to impose high tariffs on imports from China and Mexico. A similar strategy worked swimmingly for Kamler’s thriving European counterparts: More than half of the 20 million bikes sold in Europe last year were made there, and European bike makers say heavy tariffs protected the industry and jobs. Putting together all those frames, gears, and wheels directly keeps about 45,000 workers busy on shop floors from Portugal to Romania, according to industry estimates.

Kamler’s experience shows why it won’t be as easy in the U.S. as slapping a big tax on a box.

The stark difference goes back to the 1980s, when China began to flood Western stores with cheap bikes. Europe fought back with tariffs. But with U.S. retailers hungry for inexpensive products, American manufacturers moved production overseas.

So Europe never lost its domestic bike industry. The U.S. did.

Kamler’s family has been in the bike business for three generations, long enough to see U.S. manufacturing soar, then wobble and practically disappear. Initially, the family largely served as middlemen, supplying retail stores with bikes either made in America or imported.

By the 1970s, more than 15 million bicycles were produced domestically per year—the biggest modern bike-making boom in the U.S. More than 1 million of those were built in the Chicago factories of Schwinn Bicycles Inc. “Every plant was at or over capacity,” said industry consultant Jay Townley, a former executive at Schwinn.

Schwinn supported tariffs during the 1950s and 1960s, then flipped its position in 1971, arguing against them for the next three decades. The company’s reversal was prompted by its decision to move production overseas, Townley said. Dorel Industries Inc., which acquired Schwinn’s parent company in 2004, didn’t respond to requests for comment.

In 1979, Kent also started producing its own bikes at a factory in New Jersey but couldn’t afford to compete with Chinese-made products. In 1991, the company closed its factory and continued selling imports. That’s still the heart of the business: Kamler expects to import 2.6 million units from China this year for retailers. Kent’s total revenue will reach $230 million this year, up from $215 million in 2016, he said.

Europe’s bike makers were chugging along, making roughly 12 million units annually,
when the threat from China arose. They cried foul, suspecting the Chinese government was providing subsidies such as cheap or free equipment, energy, and property.

“Some of our competitors in China make money on the subsidies,” said Moreno Fioravanti, secretary general of the European Bicycle Manufacturers Association. “They sell product at a loss.”

Countries have long put tariffs on imports, both to protect domestic industries and raise money. But European bike manufacturers wanted more firepower to fight what they saw as unfair trade practices. They pushed the European Commission to use World Trade Organization rules to impose what are known as anti-dumping tariffs—additional levies meant to discourage foreign competitors from flooding markets with underpriced goods.

In 1991, the European Commission investigated and found “considerable price undercutting” by Chinese exporters that “had a major negative impact” on prices and sales for Europe’s producers. Two years later, Europe started charging an additional 30.6 percent anti-dumping tariff on bicycles imported from China—on top of the normal tariffs—steadily increasing it to today’s level of 48.5 percent.

A much different scenario unfolded in the U.S.

Major retailers blocked efforts from bike manufacturers to get U.S. officials to impose anti-dumping tariffs. They loved low-priced imports that lured customers in the door. By 1998, 87 percent of bicycles sold in the U.S. were imported. By 2000, it was up to 98 percent and has stayed around that level, according to industry figures.

These days, Europeans can buy a low-end, made-in-Asia adult model starting at roughly €90 ($106)—slightly less than its Europe-made equivalent. In the U.S., similar versions made in China start at around $80, about 25 percent less than they cost in Europe.

If the president follows through with an across-the-board tariff on all imports
, Kamler said it will undermine his business, making it prohibitively expensive to supply the South Carolina factory.

Each bicycle made in Kent’s South Carolina factory has about 40 parts, all imported from Asia. In his search for domestic suppliers, Kamler has talked to dozens of U.S.-based companies but hasn’t found any with competitive prices—even without costs such as shipping and warehousing. He might end up making the parts himself.

“There is no American bicycle parts industry left,” Kamler said. “My competitors all congratulate me to my face, but behind my back they’re still kind of giggling.”

This is generally true at the lower end of the market; boutique manufacturers such as Chris King Precision Components in Portland, Oregon, and Phil Wood & Co. in San Jose, California, thrive serving the high-end market and by making their own specialty parts.

Kamler isn’t a Trump supporter. “I’m not in favor of barriers to imports,” Kamler said. “The government should help and encourage American companies with more than just rhetoric.”

Within three years, automation could make it just as affordable to manufacture parts in the U.S. as in China, Kamler said.

He points to a blossoming bicycle parts manufacturing center in Portugal as an example of a healthy supply chain.

Occupying a hefty chunk of an industrial park south of Porto, Triangle’s - Cycling Equipments S.A. has built what it says is the world’s first fully automated aluminum bicycle frame maker. The factory is one of dozens producing parts and bikes in the region.

Triangle’s production lines of hulking German robots can help complete a frame in a minute or less—a fraction of the time it takes humans. And unlike Asian competitors with four-month lead times, general manager Luís Pedro said he can deliver frames at a similar price anywhere in Europe a few days after receiving an order.

That’s important to clients such as Spain’s Orbea S. Coop., Germany’s Riese & Müller GmbH, and the Netherlands’ Pon Holdings, which owns premium brands including Cervélo and Santa Cruz. “To speed delivery, having production as close as possible to consumer markets makes sense,” said Jon Fernández, the chief executive officer of 200-employee Orbea, one of Spain’s biggest bicycle makers.

Triangle’s €25 million, almost 200,000-square-foot factory opened in November. Pedro estimates the company will produce 100,000 frames for clients across Europe this year and bring head count to 120 employees next year. “We are in a low-cost country with skilled engineers,” in a location surrounded by other bike companies, aluminum suppliers, and “easy access” to the rest of Europe, said Pedro, noting these factors are crucial for an industry.

“There’s this whole nirvana of ‘We are going to make everything in our country,’” said Will Butler-Adams, managing director of Brompton Bicycle Ltd., which has been making folding bikes in London since its founder hatched the business in his South Kensington apartment in 1975. “It’s not so simple as Mr. Trump makes out.”

Brompton expects to sell 50,000 bikes this year, up from 44,500 in 2016. Last year the 240-employee company spent £1.65 million ($2.1 million) outfitting an 86,000-square-foot factory in West London.

“You’ve got to create the knowledge, the engineers, the demand through the infrastructure,” Butler-Adams said. “Politics is so short-term. And manufacturing, as a sector, is so long-term.”

Kent was able to spend $10 million on its South Carolina plant because it had a ready customer. Wal-Mart Stores Inc. wanted domestic bikes as part of its pledge to buy an additional $250 billion in products made, assembled, or grown in the U.S. by 2023. Wal-Mart bought 220,000 of Kent’s South Carolina-made units last year and will buy 280,000 this year, Kamler said.

A few weeks ago, Kent started making 2,000 bicycles a month for a high-tech bike-rental service and expects to increase that to 10,000 per month in November.

Kamler wants to eventually assemble 1 million bikes annually, making frames and forks in-house, which means more investment in automation and labor. He would grab business from importers, but he needs to get his costs down for it to work. He’s losing money on domestic production now but expects to be in the black next year.

“We’re not counting on the ‘Buy American’ thing,” Kamler said. “We’re not counting on the consumer to say, ‘Oh yeah, I’ll pay more for that product because it was made here.’”

Article Link To Bloomberg:

Coal Makes A Comeback

Trump’s policies and exports to Europe are helping the industry.

By The Editorial Board
The Wall Street Journal
August 17, 2017

Not long ago liberals hailed the demise of coal as inevitable while the Obama Administration strangled the industry with regulation. But don’t look now, Tom Steyer, because coal is showing signs of a revival and breathing economic life into West Virginia and other coal states.

Former Environmental Protection Agency Administrator Gina McCarthy proclaimed in 2015 that coal “is no longer marketable.” She planned to be the lead undertaker. The Obama Administration worked tirelessly to fulfill her mission and may have succeeded had Hillary Clinton become President. “We’re going to put a lot of coal miners and coal companies out of work,” the 2016 Democratic nominee famously promised.

Yet the Trump Presidency seems to have lifted animal spirits and coal. Weekly coal production has increased by 14.5% nationwide over last year with even bigger bumps in West Virginia (19%), Pennsylvania (19.7%) and Wyoming (19.8%). Exports were up 58% during the first quarter from last year. Apparently coal can be marketable if regulators let it be.


The Obama Administration first targeted coal consumption with rules on mercury emissions and ash disposal that would have made it next to impossible to build a new coal-burning power plant. Then came the 2015 Clean Power Plan that would have forced the existing fleet of coal plants into early retirement.

Finally, the Obama anti-coal warriors sought to shut down coal’s export potential. Thick-seamed coal on federal land in the Powder River Basin overlying Wyoming and Montana is relatively clean-burning and inexpensive to mine. The Obama Interior Department suspended new coal leases on federal land last winter and then reassessed royalty payments—thereby reducing investment and profitability. In December came the coup de grâce: Interior’s stream rule usurping state authority over permitting.

President Trump has called a cease fire to his predecessor’s “war on coal.” In February he signed a resolution repealing the stream rule under the Congressional Review Act. The Supreme Court stayed the Clean Power Plan in February 2016, and EPA Administrator Scott Pruitt is dismantling the power rule as well as the ash and mercury rules. Interior Secretary Ryan Zinke has re-opened leases and rescinded the royalty revaluation.

Meanwhile, coal is becoming more competitive as a fuel source relative to natural gas, whose price has risen 63% since March 2016 amid an expanding market. The Energy Information Administration says the U.S. will be a net exporter of natural gas this year.

Growing pipeline networks have boosted gas exports to Mexico and are providing new domestic outlets for gas trapped in the Marcellus and Utica Shales. Pipeline export capacity to Mexico is expected to nearly double by 2019. Several interstate pipelines are under review to deliver gas to the Midwest, eastern Canada and Gulf Coast for export. Liquefied natural gas exports have increased six-fold in the last year, and five new terminal projects are expected to be completed within three years. While coal and natural gas compete as electric power fuels, they can both prosper if energy markets expand.

This is all horrifying to the climate-change lobby, but they might note that U.S. coal exports are rising to countries that claim climate-change virtue. Exports to France increased 214% during the first quarter of this year amid a nuclear power plant outage. Other European countries like Germany and the U.K. are utilizing U.S. coal to stabilize unreliable renewable sources and make up for electric capacity lost from the shutdown of nuclear plants. First-quarter coal exports were up 94% to Germany and 282% to the U.K. Et tu, Angela Merkel?

Coking coal used to make steel is also currently a hot commodity, and its price can soar whenever a storm hits Australia and shuts down mines as one did this spring. Metallurgical exports to China rose 357% during the first quarter. As much as Mr. Trump denounces China’s overproduction of steel, U.S. coal miners are benefitting.


The bigger story is that there’s still demand for U.S. coal if regulators allow energy markets to work. The Energy Information Administration in June projected that U.S. coal power generation will increase by 13% by 2025 “as the existing fleet of coal-fired generators can be more fully utilized and fewer coal-fired generators are retired.” With the Obama Clean Power Plan, the EIA had forecast a 2% to 16% decline.

Coal production will likely never return to its heyday of decades ago. Recent bankruptcies that have made coal companies leaner and more competitive also mean that fewer workers are needed to produce the same output. But even the current modest rebound is helping coal states.

During the first quarter, West Virginia (3%) ranked second in the nation in GDP growth after Texas (3.9%), according to the Bureau of Economic Analysis. New Mexico, another heavy mining state, came in third (2.8%). Mining resurgences began in West Virginia, Kentucky and New Mexico last summer after the Clean Power Plan was stayed. After plummeting last year, Wyoming and Montana’s mining industries grew during the first quarter.

Two or three quarters of economic data don’t make a long-term trend, but all of this is still good news for coal states that have experienced two years of little or negative growth and years of political assault.

Article Link To The WSJ:

Apple Readies $1 Billion War Chest For Hollywood Programming

Company immediately becomes a considerable competitor in crowded market for original shows.

By Tripp Mickle
The Wall Street Journal
August 17, 2017

Apple Inc. AAPL -0.40% has set a budget of roughly $1 billion to procure and produce original content over the next year, according to people familiar with the matter—a sign of how serious the maker of iPhones is about making a splash in Hollywood.

Combined with the company’s marketing clout and global reach, the step immediately makes Apple a considerable competitor in a crowded market, where both new and traditional media players are vying for original shows. Apple’s budget is about half of what Time Warner Inc.’s HBO spent on content last year, and on par with estimates of what Inc. spent in 2013, one year after it announced its move into original programming.

Apple could acquire and produce as many as 10 television shows, according to the people familiar with the plan, helping fulfill Apple Senior Vice President Eddy Cue’s vision of offering high-quality video, similar to shows such as HBO’s “Game of Thrones,” on its streaming-music service or possibly a new, video-focused service.

Apple declined to comment.

The budget will be in the hands of Hollywood veterans Jamie Erlicht and Zack Van Amburg,poached in June from Sony Corp. to oversee content acquisition and video strategy. They exited their Sony contracts a month early and began work this month from Apple’s Los Angeles offices, where they are taking over programming responsibilities from the Apple Music team, according to the people familiar with the matter.

Apple’s existing video business—movie and TV-show rental via iTunes—has been challenged by the rise of Netflix and other video-subscription services that charge a monthly fee. Last year, iTunes generated an estimated $4.1 billion in revenue, but its share of the movie rental-and-sales market has dropped below 35% from about 50% in 2012.

Apple hopes original video bolsters the appeal of movie rentals and other offerings on iTunes—a critical contributor to its $24.35 billion in annual services revenue. Apple aims to double the business, which also includes App Store sales, Apple Pay and Apple Music, to about $50 billion by 2020.

It won’t be easy to catch up with Amazon and Netflix Inc., which have considerable head starts and far bigger programming budgets. And Apple has to avoid jeopardizing its 15% cut of subscription revenues its app stores take in for services like Netflix and HBO Go—money that is a growing contributor to the services business.

Hollywood has become a battleground as consumers increasingly sever cable subscriptions and transition to streaming services like Netflix or Hulu. The disruption has fueled competition between tech and traditional media companies eager to sell subscriptions or generate ad revenue with new entertainment programming. It has also fueled a major increase in scripted programming, which rose to more than 500 shows during the recently ended 2016-2017 season, nearly double the 2011 total.

In addition to Amazon and Apple, Facebook Inc. has begun acquiring original programming, like a reality show on NBA player Lonzo Ball’s family. Alphabet Inc.’s Google has announced a $35-a-month streaming TV service.

Netflix has aimed to outflank tech rivals by recruiting star TV producers like Shonda Rhimes, who developed ABC hits like “Grey’s Anatomy” and “Scandal.” Meanwhile, Walt Disney Co. announced this month it will pull its movies from Netflix and launch its own streaming service.

David Hill, former senior executive at 21st Century Fox Inc., said Apple’s recent entertainment hires give it a chance to catch up with established players like Netflix and Amazon. But the flood of new scripted shows is making it increasingly hard to attract viewers, he said. “There’s just not enough time” to watch, Mr. Hill said.

Programming costs can range from more than $2 million an episode for a comedy to more than $5 million for a drama. One episode of some high-end shows such as “Game of Thrones” can cost more than $10 million to produce.

When Netflix released its back-to-back successes “House of Cards” and “Orange Is the New Black,” its annual budget for original and acquired programming was about $2 billion. This year it is expected to spend more than $6 billion.

To gain relevance, Apple needs at least one hit, the people familiar with the plan said. Its initial video efforts via Apple Music—“Planet of the Apps” in June, and “Carpool Karaoke” out last week—were criticized by reviewers. But with $215.64 billion in revenue last fiscal year and more than $261 billion in cash on its balance sheet, Apple could quickly ramp up spending on content.

Messrs. Van Amburg and Erlicht have begun meeting with Hollywood agents about shows Apple could acquire, the people familiar said. They have hired Matt Cherniss, former president of cable TV channel WGN America, to oversee development, the people said.

The types of shows Mr. Cherniss made at WGN America have bolstered Hollywood’s expectations that Apple wants high-quality scripted programming—in contrast with Facebook, whose initial programming includes shows about cheese from Business Insider and about dog DNA testing from Mashable.

Article Link To The WSJ:

What Will Kim Do Next? Sixth Nuclear Test Seen Critical For North Korea

By Christine Kim and David Brunnstrom
August 17, 2017

North Korea says it has developed intercontinental missiles capable of targeting any place in the United States.

Now comes the hard part of fulfilling the declared goal of its leader Kim Jong Un: perfecting a nuclear device small and light enough to fit on the missile without affecting its range as well as making it capable of surviving re-entry into the earth's atmosphere.

To do that, weapons experts say, the isolated state needs to carry out at least another nuclear test, its sixth, and more tests of long-range missiles.

North Korea's two tests of an intercontinental ballistic missile (ICBM) last month likely carried a payload lighter than any nuclear warhead it is currently able to produce, the experts said.

One way to have a lighter warhead would be to concentrate on developing a thermonuclear device, or hydrogen bomb, which would offer much greater explosive yield relative to size and weight.

Pyongyang claims to have tested a hydrogen bomb, but this has not been proven, said Hans Kristensen, director of the Nuclear Information Program at the Federation of American Scientists.

"Doing so would take several more nuclear tests," he said. "The advantage of a thermonuclear warhead is that it packs a lot more power into less weight."

Choi Jin-wook, a professor of international relations at Japan's Ritsumeikan University and former president of South Korea's state-run Korea Institute for National Unification, said a sixth nuclear test would be essential for North Korea to develop an operational nuclear-tipped ICBM.

"In order to make a nuclear weapon deployable it has to be small and light, but North Korea doesn't seem to have this technology," he said.

South Korea's president said on Thursday Pyongyang would be "crossing a red line" if it put a nuclear warhead on an intercontinental ballistic missile, and U.S. President Donald Trump has warned that North Korea would face "fire and fury" if it threatened the United States.

Kim Must Weigh Risks

North Korea is a highly secretive nation and predictions of what it will do next are often little more than conjecture.

Still, Kim is likely to be carefully weighing the timing of even a new nuclear test because it will antagonize North Korea's sole major ally, China, and could trigger even tougher U.N. economic sanctions than those that followed ICBM tests in July.

A U.S. official, who asked not to be named, said that while periodic activity has been seen at North Korea's Punggye-ri nuclear test site, he had not seen movement there for over a month and there were no current signs of an imminent test.

A second U.S. official added that North Korea has had parts in place for a nuclear launch for months, but no new activity had been seen recently.

Besides developing a miniaturized hydrogen bomb, some experts say it appears Kim's rocket scientists have yet to master the technology to protect a warhead from the extreme heat and pressure of re-entering the earth's atmosphere after an intercontinental flight

South Korea believes North Korea will need at least another one or two more years to obtain that re-entry technology, Seoul's vice defense minister said on Sunday.

"Miniaturization for ballistic missiles is only one of the many challenges of targeting the U.S. with an ICBM," said David Albright, a physicist and founder of the non-profit Institute for Science and International Security in Washington.

"The re-entry vehicle has to survive and the warhead work," he said. "I am skeptical that North Korea has mastered all these steps."

Among North Korea's capabilities in the field, U.S. intelligence officials have said it likely can produce its own missile engines and does not need to rely on imports.

Essential To Survival

After Kim Jong Un ramped up the pace of weapons development last year with numerous missile launches as well as two nuclear tests in January and September 2016, some observers had expected a sixth nuclear test as early as this January.

Instead, Pyongyang has spent most of the year testing various types of missiles. After its first and second ICBM tests in July, it threatened to land missiles in the vicinity of Guam, a U.S. Pacific territory, drawing a stern warning from Trump.

Pyongyang has since said Kim has delayed his decision on Guam.

Pyongyang faces significantly tougher sanctions, including from China, if it conducts another nuclear test, said Moon Chung-in, a special adviser on foreign affairs and national security to South Korean President Moon Jae-in.

"If North Korea carries out a sixth nuclear weapons test, China will likely cut oil supplies to North Korea. I believe China has strongly warned North Korea not to conduct another nuclear test," Moon said.

The Punggye-ri site is just 60 miles (100 km) from the border with China and 125 miles (200 km) from Russia, and past tests have angered both countries and caused them to back increasingly tough U.N. sanctions.

Kim Jong Un, however, sees the ability to threaten the United States as essential to the survival of his personal rule.

"North Korea will conduct a sixth nuclear test in order to bring the United States to negotiations," said Yoo Ho-yeol, professor of unification and diplomacy at Seoul's Korea University.

"I don’t know exactly when (it will happen), but a sixth nuclear test is a less dangerous option for North Korea than firing missiles towards Guam."

Article Link To Reuters:

China Military Criticizes 'Wrong' U.S. Moves On Taiwan, South China Sea

By Ben Blanchard
August 17, 2017

The "wrong" actions of the United States on Taiwan, its South China Sea patrols and deployment of an advanced anti-missile system in South Korea have had a large, negative influence on military trust, a senior Chinese officer said on Thursday.

Fan Changlong, a vice chairman of China's powerful Central Military Commission, told Joseph Dunford, chairman of the U.S. Joint Chiefs of Staff, that mutual trust mechanisms between the two militaries had continued to improve, China's defense ministry said.

"But wrong actions on the Taiwan issue, the United States deploying the THAAD system around China, U.S. ships and aircraft's activities in the South China Sea, the United States close-in surveillance in the sea and air near China have had a large, negative influence on bilateral military ties and mutual trust," Fan added.

THAAD is the Terminal High Altitude Area Defence anti-missile system the United States has deployed in South Korea to defend against North Korea.

China says the system affects its own security because of its powerful radar, and will do nothing to ease tension with North Korea.

Fan said China was willing to work with the United States to find more potential for cooperation, handle disputes and sensitive issues appropriately and ensure military cooperation becomes a positive force in relations.

China and the United States, the world's two largest economies, say they are committed to having a stable military-to-military relationship, but there are deep fault lines.

China has been angered by U.S. freedom of navigation patrols near Chinese-controlled islands in the disputed South China Sea and continued U.S. arms sales and support for self-ruled Taiwan, which China claims as a wayward province.

The United States has expressed concern about what it calls unsafe intercepts of U.S. aircraft by the Chinese air force and a lack of transparency in military spending by China, which is in the midst of an ambitious military modernization program.

Speaking later to reporters, Dunford said the main deliverable for his trip was the signing of a framework agreement for a joint staff dialogue mechanism.

Dunford said China and the United States already have capability to do secure video teleconferences between Dunford and Fang Fenghui, chief of the Joint Staff Department of the People's Liberation Army.

The U.S. embassy also has immediate access to China's General Staff, he added.

"We have ways of communicating. What we're looking for is a more responsive 24 hours a day, seven days a week communications link that can actually be used in a crisis. And that's really one of the issues that we will work on."

Article Link To Reuters:

Bank Of England's Caution Is Justified. What Happens When It Isn't?

The textbooks would say to raise interest rates. Mark Carney is going off script.

By Daniel Moss
The Bloomberg View
August 17, 2017

Britain's labor market is powering ahead, and inflation exceeds the Bank of England's target. Is it hot in here? Don't expect Governor Mark Carney to cool things off.

Here's a major economy where price increases have not only picked up, but at 2.6 percent easily top the 2 percent target. Unlike in the U.S., the euro zone and Japan, a strong job picture is accompanied by inflation that would, according to textbooks, provide a great rationale for increasing interest rates.

Yet there's little appetite at the central bank to do that. At their August meeting, only two of eight policy makers voted to tighten credit. At a conference in Portugal at the end of June, Carney was thought to be warning of an impending move. That has not materialized.

The bank's hesitation made Carney an easy target for critics who claim he again walked up to the line and backed away. He's once again being mocked for his mixed messages and lack of follow-through -- like an "unreliable boyfriend," in the 2014 taunt from Pat McFadden of the House of Commons Treasury Select Committee. There's a risk that the epithet could become his epitaph.

Is the taunt justified? More importantly, is the textbook case for a rate increase really justified by not just the economic numbers, but also the velocity of the change in the numbers? How should the central bank consider the reasons the numbers look the way they do?

Britain's unemployment rate fell to 4.4 percent last quarter, the lowest since 1975, the Office of National Statistics said this week. Brexit was supposed to presage economic catastrophe. We aren't seeing it in the employment data.

Look a little closer, though, and some of the sheen comes off. The same figures also show wages rose at an annual pace of 2.1 percent. With inflation at 2.6 percent, workers not only aren't pocketing the gains, but are in fact paying for the gains out of their own pockets.

For officials sitting around the table at the BOE, that doesn't look great for consumer spending, the lifeblood of Britain's economy. Then there is inflation itself, which has been rising steadily since the vote last summer to leave the European Union. Carney & Co. caught a break when the government also reported this week that consumer price gains were steady at 2.6 percent. In other words: above target but not spiraling out of control.

The reason inflation is above target is getting some scrutiny at the bank. There's a view that it's solely a result of the slide in the pound that followed the Brexit vote. If that's true, a rate increase is not yet entirely warranted, and could hurt domestic economic behavior.

For all his signaling challenges, Carney has consistently been the adult in the room during these trying times in U.K. politics and policy. His allies say that anyone grading Carney should watch BOE actions and their results -- not engage in central bank Kremlinology.

Fair enough. The question, then, is what will happen when a rate increase truly is needed. Will the boyfriend prove reliable?

Article Link To The Bloomberg View:

Can Sterling Hit Parity With The Euro?

The British pound is already reaching seven-year lows against the euro, but some analysts believe the move has much further to run.

By Mike Bird
The Wall Street Journal
August 17, 2017

The British pound reached seven-year lows against the euro this week, with some analysts now projecting that sterling will fall to parity with the common currency—or further.

The pound has risen by around 4% against the dollar this year, climbing to nearly $1.30, but against the euro it is down by more than 6% to below €1.10. Sterling reversed a little of that move Wednesday, rising 0.2% against the euro.

Though sterling’s moves against the U.S. dollar often make the most headlines, the U.K.’s economic exposure to the rest of Europe give the pound’s movements against the euro a greater economic impact.

David Bloom, HSBC global head of foreign-exchange strategy, expects both sterling and the euro to end the year at $1.20, while Morgan Stanley currency analysts see the pound actually dropping slightly below the euro by the early months of next year.

Just two years ago the euro was hitting historic lows against the pound, when the European Central Bank’s QE program was getting under way and the Bank of England was expected to hike interest rates.

Since the summer of 2015 the euro has appreciated by more than 25% against sterling. Britain’s EU referendum vote and the increasingly strong performance of the eurozone economy have reversed those fortunes.

Central banks responsible for the euro and sterling have diverged, helping to drive the euro higher against the pound.

Expectations that the Bank of England will hike interest rates in response to higher inflation have dimmed. In contrast, investors are increasingly preparing for the European Central Bank to scale back its bond-buying program.

To be sure, sterling-euro parity is not a consensus call among analysts, and the recent view that the euro will rise is a sharp reversal for some. At the turn of this year, many strategists expected the euro to fall to parity with the dollar, rather than rise to above $1.17 as it has.

Any decline in sterling against the euro has a greater impact on the British economy, because of the geographic proximity of the monetary union and close trade ties. The euro area makes up a full 47.6% of the Bank of England’s sterling exchange rate index, compared to 19.4% for the greenback.

That means declines in sterling against the euro produces a larger reaction in terms of imported inflation, since more of the goods and services bought from outside the U.K. are denominated in euros than in dollars.

The ongoing Brexit negotiations also pose a reason for sterling to remain weak against the euro, according to some analysts.

“There are a number of ‘divorce’ stumbling blocks that need to be overcome before any transitional arrangement is signed, sealed and delivered,”said Viraj Patel, foreign-exchange strategist at ING. “Unlike previous times when we have traded beyond this key horizontal level—namely during crisis episodes—there are now fundamental reasons to stay here.”

Article Link To The WSJ:

Even EU Regulators Can't Stamp Out Food Scandals

Alarm over tainted Dutch eggs follows a familiar pattern: denial, then finger-pointing and a leisurely response.

By Therese Raphael
The Bloomberg View
August 17, 2017

Remember that Chinese pet food, laced with melamine, that caused kidney failure in the family European pooch? Or the pork and beef from Belgium containing cancer-causing dioxin? The horse meat passed off as beef burgers in Britain? Now tainted Dutch eggs are making diners uneasy.

There's something especially creepy about recurring food scandals, even the ones that don't pose a huge threat to public health. The latest, involving millions of eggs sold in 18 countries as far from Dutch chickens as Hong Kong, also teaches an unnerving lesson: Even the European Union, one of the most minutely regulated places on earth, struggles to protect its food supply.

Fraudsters allegedly hid the fact that an insecticide sold to chicken farmers contained fipronil, which is approved in Europe for getting rid of fleas, ticks and mites in animals, but not for those destined for human consumption. Two men were arrested last week in a series of raids in Belgium and the Netherlands; a Dutch and a Belgian company are under investigation.

Fipronil is considered moderately hazardous; an adult would have to consume a lot of eggs to become ill. But Europe prides itself on high standards of farm-to-fork protection, so this was big news.

The Netherlands, the world's largest exporter of eggs, temporarily shut down 180 farms; culls may follow. Egg products have been pulled from supermarket shelves across a number of European countries.

So where were Europe's regulators? Belgium's agriculture minister, Denis Ducarme, told a parliamentary hearing that his officials obtained an internal Dutch document "by chance," rather than through any kind of deliberate information sharing, that noted the presence of fipronil in Dutch eggs in November 2016.

Belgium originally said it thought the eggs contained levels that were not harmful to humans, but then changed that verdict after further analysis. Even after the toxin was detected, it took almost two months before products were withdrawn and the alarms sounded.

Germany has demanded to know why Belgium didn't sound the alarm earlier. Belgium blamed the Dutch for stalling. Europe has a number of agencies that deal with food fraud and food safety, but coordination was lacking and it was only July 20 when a notification went up on the EU's consumer portal.

The pattern of denial, finger-pointing and belated action is familiar. It was Belgium that infuriated its EU partners in 1999 by downplaying the contamination of animal feed with dioxin and then refusing to release information about the extent of the problem. And it took months for European governments, following revelations about horse meat disguised as beef, to communicate and coordinate their response.

On one level, U.S. producers are lucky here. The troublesome red mites that prompted farmers to grab the fipronil, no questions asked (or none answered), are a big problem in aviary-style "cage-free" poultry housing common in the Netherlands; only around 13 percent of U.S. eggs are laid by cage-free birds. Many European farms are also independently owned and more likely to rely on third parties for help with cleaning and disinfection, unlike highly integrated large-scale U.S. producers that will do most things in-house.

A veterinarian who works with a large commercial breeder told me there are no fipronil products approved for chickens in the U.S. (The Environmental Protection Agency, which regulates pesticides, would not confirm that over the past couple of days).

Since U.S. producers have long been told that their poultry is not fit for European dinner tables, the egg recall in Europe probably has a few Americans feeling smug. The U.S. is the second-largest poultry producer and exporter, selling over $38 billion worth of eggs, turkeys and chickens to Mexico, Canada, the EU, Hong Kong and many other countries. The value of egg production in 2016 was $6.48 billion.

Given the structure of large-scale production in the U.S., a fipronil-type fraud is unlikely. And yet, a browse through chat rooms used by smaller-scale poultry breeders turns up many mentions of fipronil-based products for poultry, and even YouTube videos demonstrating the application..

Mostly these are hobbyists. But some of their products may end up as somebody's omelette; how many is hard to say. They are difficult to police and the health risks, unlike for large-scale production, may be too remote to bother.

Back in Europe, the European Commission is promising a full investigation in late September; no rush there. Improved communication would be a nice outcome. But food fraud and deception has been around a long time. Given today's international supply chains, no amount of regulatory pile-on is likely to lower the risk to zero.

Article Link To The Bloomberg View:

China Shows How Not To Sell $11.7 Billion In Shares

China United retracts statement on share sale in Shanghai; ‘Confusion right to the very last moment,’ investor says.

Bloomberg News
August 17, 2017

For a deal that’s been months in the making, the $11.7 billion share sale plan announced by China’s second-largest wireless carrier sure looked like a rushed job.

That’s according to Francis Lun, Hong Kong-based chief executive officer of Geo Securities Ltd., after a series of gaffes by China Unicom (Hong Kong) Ltd. and Shanghai-listed China United Network Communications Ltd. undermined Wednesday’s disclosure that the Chinese carrier would bring in more than a dozen investors as part of a government push to privatize its state-owned enterprises.

"There’s been confusion right to the very last moment -- they shouldn’t be rushing ahead to make the announcements," Lun said. "It shows their incompetency. The approval process has to be called into question when they deliver misleading messages like this."

It began with the announcement itself, which kicked off as a presentation to journalists, analysts and investors at about 4:30 p.m. on Wednesday in Hong Kong but the material detailing of one of Unicom’s biggest deals ever wasn’t available online until about half an hour later.

The briefing material listed CRRC Corp. as one of its new investors but the Chinese train maker said the following morning that it didn’t participate in the deal. Unicom, voted as having the "Best Investor Relations in China" by FinanceAsia magazine, also said on Wednesday its shares would resume trading in Hong Kong the following day, only to change its mind hours later by saying the trading halt would continue until further notice.

Then there was China United, which released a statement on the sale to the Shanghai exchange, only to withdraw it hours later. The company, which has been halted from trading in Shanghai since April, then issued a statement on Thursday saying the stock will continue to be suspended for "technical reasons" for another three days, pending the release of the share-sale announcement.

A Unicom Group representative said the retraction was due to technical reasons. The representative referred all other queries to the company’s announcements.

While investors are more interested in whether Unicom’s new investors spur positive changes to the company, even that is under question, according to Geo’s Lun.

"It’s one thing to have new investors, it’s another thing if new investors can bring material change," Lun said. "That’s what we’re waiting to see. If the existing management still controls everything and nothing has happened then there will be disappointment."

Article Link To Bloomberg News:

Bannon: U.S. In Economic War With China

By Michael Perry
August 17, 2017

The United States is in an economic war with China, U.S President Donald Trump's chief political strategist has said, warning Washington is losing the fight but is about to hit China hard over unfair trade practices.

"We're at economic war with China," Steve Bannon told U.S. news site in an interview published in Wednesday.

"It's in all their literature. They're not shy about saying what they're doing. One of us is going to be a hegemon in 25 or 30 years and it's gonna be them if we go down this path," he was quoted as saying.

"If we continue to lose it, we're five years away, I think, 10 years at the most, of hitting an inflection point from which we'll never be able to recover."

Bannon said the United States would use Section 301 of the 1974 Trade Act against Chinese coercion of technology transfers from U.S. corporations doing business in China and follow up with complaints against steel and aluminum dumping, according to

On Monday, Trump authorized an inquiry into China's alleged theft of intellectual property in the first direct trade measure by his administration against Beijing.

"We're going to run the tables on these guys. We've come to the conclusion that they're in an economic war and they're crushing us," said Bannon, who acknowledged he was battling trade doves within the U.S. administration.

He said there was no reason to go soft on China in order to get Beijing's support over North Korea because he believed China would do little more to rein in Pyongyang.

Bannon said he might consider a deal in which China got North Korea to freeze its nuclear build-up with verifiable inspections and the United States removed its troops from the Korean peninsula, but such a deal seemed remote, reported.

In contrast to Trump's threat of "fire and fury" against North Korea, Bannon said: "There’s no military solution, forget it."

"Until somebody solves the part of the equation that shows me that 10 million people in Seoul don't die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about ..."

Asked about any connection between his economic nationalism and white nationalism in the United States, and in particular the racist violence in Charlottesville, Bannon said: "Ethno-nationalism — it's losers. It's a fringe element."

"I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more. These guys are a collection of clowns."

However, Bannon, who formerly led the right-wing website Breitbart, said focusing on race would help the Republicans politically.

"The Democrats, the longer they talk about identity politics, I got 'em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats."

Article Link To Reuters:

U.S. Talks Tough On Trade Deficit As NAFTA Discussions Begin

By Anthony Esposito and David Lawder
August 17, 2017

The United States drew a hard line for renegotiating the North American Free Trade Agreement on Wednesday, demanding major concessions aimed at slashing trade deficits with Mexico and Canada and boosting U.S. content for autos.

At the start of talks in Washington, U.S. President Donald Trump's top trade adviser, Robert Lighthizer, said Trump was not interested in "a mere tweaking" of the 23-year-old pact, which Trump has threatened to scrap without major changes.

"We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement," Lighthizer, the U.S. trade representative, said at the start of the talks, which reflected Trump's relentless criticism that NAFTA has caused massive U.S. manufacturing job losses.

Lighthizer put Mexico and Canada on notice that the United States would use its clout as their biggest export customer to wring concessions, saying the United States wanted substantially tougher rules of origin, including a requirement of "substantial U.S. content" for autos.

He also signaled a fight over NAFTA's trade dispute settlement system for changes that would allow more anti-dumping duties against Canada and Mexico, saying this provision should "respect our national sovereignty."

Canadian Foreign Minister Chrystia Freeland suggested earlier this week that her country could walk away if the United States insisted on scrapping the "Chapter 19" trade dispute settlement system that requires the use of binational panels.

In her opening statement, Freeland took a swipe at the U.S. fixation on cutting its trade deficits, saying: "Canada does not view trade surpluses or deficits as a primary measure of whether a trading relationship works.

U.S.-Canada-Mexico trade has quadrupled since NAFTA took effect in 1994, surpassing $1 trillion in 2015.

Mexico: NAFTA Has To "Work For All Parties"

Lighthizer blamed NAFTA for a direct loss of 700,000 U.S. manufacturing jobs since the pact took effect in 1994, a period that coincides with increasing automation across all industries that has allowed more output with fewer workers.

Auto industry groups have warned against changing the pact's rules of origin, which govern how much of a product's components must originate from NAFTA countries. They said the pact has allowed them to build a competitive North American supply base that has helped boost exports of U.S.-assembled vehicles globally.

The pact also has massively boosted U.S. farm income by increasing agricultural exports to both Mexico and Canada.

"We do not want them to use us as a trading tool and to do harm to the agricultural sector in all three countries," the president of the American Farm Bureau Federation, Zippy Duvall, told a news conference on Wednesday.

Corporate chief executives have been sounding "do no harm" warnings on NAFTA for months.

Trump's relationship with business executives became a high-profile issue this week as he disbanded two business advisory councils after several CEOs quit in protest over his remarks blaming weekend violence at a rally in Virginia on the protesters who opposed white nationalists as well as the white nationalists themselves. Canadian and Mexican officials at the NAFTA talks on Wednesday declined to weigh in.

Asked if there was concern that the political upheaval around Trump could impact the NAFTA talks, Mexico's finance ministry undersecretary, Vanessa Rubio, said: "These are internal issues of the United States." Freeland refused to be drawn into the U.S. political furor during a news conference before she returned to Ottawa.

The first round of NAFTA talks, which will last until Sunday, are expected to focus on consolidating the proposals and demands from all three countries.

The long list of U.S. demands could make it difficult for negotiators to reach agreement on modernization plans that also are expected to include new chapters on digital and energy trade, and environmental, labor and currency standards.

Both Freeland and Mexican Economy Minister Ildefonso Guajardo pushed back at the U.S. demands and defended NAFTA.

Guajardo said NAFTA should be modernized to produce more trade among its participants, not less, and needed more than one winner.

"For a deal to be successful, it has to work for all parties involved. Otherwise, it is not a deal," Guajardo said.

Guajardo later told a news conference that it was "too soon" for the three countries to begin narrowing their differences. He said it was not a good idea to add country-specific content requirements to the agreement.

Mexico is keen to maintain preferential access for its goods and services to the United States and Canada, where nearly 85 percent of its exports are shipped. Its NAFTA priorities also include greater integration of the continent's labor markets and energy sectors.

Weighing heavily over the talks is the 2018 Mexico presidential election. Mexico has urged all sides to complete the negotiations before the campaign ramps up in February to avoid having them become a political punching bag.

Article Link To Reuters:

Rebranding NAFTA

The trade alliance can be improved -- but the main thing is not to destroy it.

By The Editors
The Bloomberg View
August 17, 2017

As talks to revise the North American Free Trade Agreement start in Washington, it still isn't clear whether President Donald Trump wants to dismantle the pact -- "the worst trade deal maybe ever signed anywhere," he's called it -- or merely rebrand the same basic product under his own name. With any luck, it will be the latter.

The administration's negotiating goals, published last month, don't rule this out. It's even possible that the agreement can be improved here and there, bringing it up to date with current trading conditions and strengthening its support for cross-border competition and efficiency. The main thing, though, is to avoid a breakdown that puts the existing arrangements in jeopardy.

This risk arises because Trump has repeatedly said that trade deals only serve U.S. interests if they reduce the country's current-account deficit. This is simply wrong -- and if it becomes his litmus test for the new Nafta, the talks could easily do serious harm. Trade agreements don't drive trade imbalances. Their purpose is to foster competition -- hence greater efficiency, higher productivity and rising living standards.

Make that the test of the new pact, and the talks present an opportunity to make a good agreement better.

The U.S. says it wants stronger labor and environmental standards, and better protections for intellectual property. Those ideas -- built into the proposed Trans-Pacific Partnership, by the way, which the U.S. abandoned -- are worth pursuing. And seeking formal rules on currency manipulation shouldn't do much harm, because the issue hasn't arisen in North American trade; this too could set a useful precedent for future trade agreements.

There are two main hazards. The U.S. says it wants to weaken Nafta's dispute-settlement system, which would make it easier to take unilateral action against trade practices the U.S. deems unfair. The U.S. also wants governments to have more latitude to prefer local over foreign suppliers when it comes to their own procurement. The first of these, especially, might be capable of wrecking the talks. Canada has objected strenuously to the idea, and rightfully so. Resolving disputes through arbitration rather than unilateral sanctions is a core tenet of liberal trade.

By all means let Trump rebrand Nafta, especially if he can make it better at the margin. But if he succeeds in ruining a good thing, he'll be the worst U.S. president on trade maybe ever seen anywhere.

Article Link To The Bloomberg View:

Trump Can't Rebound Until Firing Bannon And Kushner

Not all of the president's problems are fixable, but this one absolutely is.

By Jonathan Bernstein
The Bloomberg View
August 17, 2017

In the wake of the events in Charlottesville and the president's reaction, some activists, including conservatives, are renewing their focus on removing Steve Bannon from the White House. Their reasons are familiar by now: He represents the so-called nationalist wing of the administration most closely tied to this weekend's violence and once bragged that his was the "platform for the alt-right." It seems like an easy call, but Maggie Haberman at the New York Times is offering a note of caution:

"The notion some folks are telling themselves is that if Bannon is gone, this all magically changes. It does not."

Is there really anyone who thinks that Trump is a benevolent character, or even a blank slate, who only says bigoted things because Bannon is whispering them in his ear? If so, well, yeah. Bannon may reinforce the president's long-established bigotry, but he's hardly unique in that regard. Trump will always have people who can do that, in the White House or not.

The bigger problem is Trump's susceptibility to flattery and, as Greg Sargent suggested in an excellent piece before Trump's ugly remarks, his inability to see beyond himself. I'd add his thin skin, too. The president's attraction to the fringiest of the fringe is beyond any ideological sympathy carefully molded by an adviser in the shadows. He rather openly prizes their adulation on Twitter and at rallies (one was just scheduled in Arizona for next week). By the same token, his lashing back in their defense is likely as much a (warped idea of) self defense as it is a real attempt to lend support the Confederacy or the Klan or Nazism.

So that's all going to be in play, Bannon or not.

Why, then, should Bannon be fired?

Because even a dumpster fire can be more or less contained, and having Bannon there encouraging bigotry almost certainly makes containment more difficult. The chief strategist was "thrilled with the remarks" roiling the nation at the moment, a friend of Bannon told Politico.

Because White House symbolism matters, too, and Bannon (whatever his private beliefs) has richly earned his place as a symbol of the mainstreaming of white supremacy hate groups.

Most of all, because when the president isn't remotely qualified for his job and shows no sign of learning the necessary skills, it's important to have a highly professional staff and not a clownish group of equally unqualified hangers-on.

That's what I've been saying from the get-go, and that's why I said getting rid of Bannon was the first test of whether John Kelly was going to be an adequate White House chief of staff.

And that's why getting rid of Bannon isn't enough. Jared Kushner has to go as well. He may not be a bigot (although the only visible effect of that are the frequent leaks to the press in which he and the president's daughter have ineffectively opposed whatever crazy thing the president has done), but he's simply not a governing professional. That doesn't magically change by giving him a fancy title -- senior adviser to the president -- and a wide portfolio of supposed major initiatives, from modernizing the federal government to bringing peace to the Middle East. In a White House desperate for people who actually know how the government works, that's a fireable offense.

Still, dropping Bannon and Kushner is not enough to make this White House the "fine tuned machine" that Trump bragged about before replacing his chief of staff, national security advisor, communications director (two or three times), press secretary, and others. But it will help contain the chaos and the damage that it can cause.

It's also still the case that Congress, especially Republican senators, have a tremendous amount of leverage they could use if they wanted to. Technically, of course, Congress doesn't have to appropriate any money at all for the White House staff. But even without threatening that drastic step, senators can -- and should -- threaten to shut down confirmation of some Trump executive branch nominees until he un-beclowns the White House staff.

Granted, hiring new qualified professionals may prove rather difficult for an administration with the reputation and (lack of) popularity of this one. But removing Bannon and Kushner (and some additional lower-level unqualified folks) would be addition by subtraction, even if they are replaced by empty desks.

Article Link To The Bloomberg View:

The New Right-Wing Extremism: Unified, Tech-Savvy And Emboldened

The white-nationalist movement, until recently fragmented, is amplifying its small numbers with help from the web and new leaders.

By Dan Frosch, Cameron McWhirter and Ben Kesling
The Wall Street Journal
August 17, 2017

The white nationalist drove from South Carolina. The self-described patriot trekked from Tennessee. The college student espousing white pride flew in from Nevada.

The right-wing extremist movement, which until recently was fragmented by division, starved for members and lacking steady leadership, rarely was capable of uniting its forces as it did last weekend. The mayhem in Charlottesville, Va., was a signal that even if not numerous, these groups are unifying.

Patrick LaPorte IV, 35 years old, a white nationalist from South Carolina who attended the rally, said he was drawn to the event even though there wasn’t a single group driving the charge, but rather a loose conglomeration of like-minded people connected on social media. Mr. LaPorte, who brought a mouth guard with him for protection in the event of a brawl, said he isn’t bothered when people call him a Nazi, though if he were to label himself he would say he subscribes to “white identity.”

In the past, he said, white nationalists might have been scared of showing their faces. For many, he said, those days are over.

For law-enforcement officials and others who have long tracked the extremist groups that descended on Charlottesville, the attendance of so many disparate elements made the gathering a watershed. While only several hundred people showed up, far fewer than the tens of thousands who have gathered to demonstrate against President Donald Trump or support immigrant and women’s rights, it was among the largest gatherings of its kind in decades.

Among the factors driving this new cooperation: a web-driven rebranding of white nationalism that has broadened its reach and allowed groups to work together; a wave of new young leaders that helped bridge old divisions; and Mr. Trump’s remarks on immigrants, Muslims and media bias, which have left such groups feeling emboldened.

Michael German, a former Federal Bureau of Investigation agent who worked undercover in white-supremacist and neo-Nazi groups in California and Washington during the 1990s, said back then they were so antagonistic toward each other that anyone joining one group was barred from others.

The weekend rally showed that attendees—including white nationalists, neo-Nazis and other groups including self-described defenders of Southern heritage and the First Amendment—were willing to put aside ideological differences to get behind a platform designed to appeal to the Trump administration, which they perceive as sympathetic to their causes, he said.

“What we’ve seen is that these groups are coming together and are maximizing their opportunity to get their point of view across,” he said, “not just to the nation, but to actually influence policy.”

Many leaders of the movement backed Mr. Trump during his campaign and continue to back his leadership, and support his disdain for the media. Eli Mosley, director of events for Identity Evropa—a group describing itself as “a generation of awakened Europeans”—and one of the Charlottesville rally’s organizers, said Mr. Trump gave groups like his “a megaphone” for their “message and ideas.”

“I would say Trump is not one of us, however he does have an implicit sense of white identity,” he said. “Maybe he doesn’t realize it, but he’s distinctly implying it.”

The Charlottesville rally, dubbed “Unite the Right,” was organized to protest the removal of a statue of Confederate Gen. Robert E. Lee. It quickly descended into violence. A car driven by an Ohio man with a history of sympathizing with Nazis plowed into a crowd, killing a woman and injuring 19 others. Two police officers who were monitoring the rally also died Saturday when their helicopter crashed.

It was the latest expression of an extremism that has flared throughout American history, especially during periods of social, economic and political stress. In the 1910s and 1920s, the revived Ku Klux Klan drew millions. During the Great Depression, the German American Bund, a Nazi organization, drew supporters with attacks on leftists and Jews. Splinter groups of the KKK and other white-nationalist organizations committed violence against civil-rights workers and blacks during the 1950s and 1960s.

By the 1970s, white-nationalist groups were splintered and small, yet still showed a propensity for violence. The 1995 Oklahoma City bombing, in which the main conspirator had been influenced by white-supremacist and anti-government ideas, killed 168 people and led to a prolonged FBI crackdown.

Many followers of those groups operated “on the edges of criminality,” said Kathleen Blee, a University of Pittsburgh sociologist who has written books about the Ku Klux Klan, so it became easy for law enforcement to turn followers into informants.

The Charlottesville gathering, she said, was “one of the first cases where people from old racist movements, the David Dukes, came together with the new alt-right in a common project. It’s remarkable that they could pull together this event.” (“Alt-right” is a catchall phrase for far-right groups that embrace tenets of white supremacy or reject mainstream conservatism.)

Social-Media Effect

The loose agglomeration has coalesced on social media— Facebook ,YouTube, Twitter —and online chat rooms. “I can punch a button and have a message out to 10,000 people immediately,” said Preston Wiginton, 52, who recently announced a “White Lives Matter” forum on Sept. 11 at Texas A&M University until the university canceled it on Monday.

Mr. Wiginton said groups such as his are starting to work closely with similar organizations. Meetings like Charlottesville show there is “an uprising” under way by whites against “displacement and marginalization” caused by “diversity and multiculturalism,” he said.

Some newer alt-right groups boast slick websites that have drawn new members. The website for Identity Evropa features photos of young, well-dressed members, essays on white superiority and “boutique” merchandise for sale. The organization is considered a white-supremacist hate group by a range of organizations, including New Jersey’s Office of Homeland Security and Preparedness.

Mr. Mosley of Identity Evropa disputed the hate-group characterization and said such designations are intended to stifle free speech.

The broader movement has developed greater cohesion around younger public leaders including white nationalist Richard Spencer, who runs The National Policy Institute, an organization dedicated, in its words, to “the future of people of European descent in the U.S.,” and is considered a founder of the alt-right. Mr. Spencer publicly promotes white-supremacist ideology and has called for a white homeland.

Jared Taylor, editor of the white-nationalist website American Renaissance, said Mr. Trump’s influence on the movement had been exaggerated. “This movement was growing with him, without him, and will continue to grow once he’s gone,” he said. “He was exciting, of course, because some of his policies were congruent with some of the policies we would like to see implemented.”

Mr. Trump faced criticism from Republicans and Democrats for not immediately condemning white supremacists for the Charlottesville violence, instead at first blaming “many sides.”

On Monday, Mr. Trump singled out white-nationalist groups by name for condemnation. On Tuesday, he backtracked, saying again that he blamed “both sides” for the violence and defending those who showed up to protest the removal of the Lee statue. Several chief executives resigned from a manufacturing-advisory council to the Trump administration in an apparent protest of his failure to speak out more quickly, and Mr. Trump tweeted on Wednesday that he was ending the council.

The White House dismissed white-nationalist claims that Mr. Trump’s reticence to immediately issue a condemnation counts as an expression of support. “The president has been clear on this in his condemnation of these groups,” said White House spokeswoman Sarah Huckabee Sanders in an email.

In some ways, the internet is proving to be as much a liability as a booster for the movement. Some who attended the Charlottesville rally are being identified on social media by counterprotesters demanding they be fired from their jobs. The Daily Stormer, a prominent neo-Nazi website, was kicked off hosting platforms GoDaddy and Alphabet Inc.’s Google for hate-speech violations after a social-media blitz by progressive activists against the site.

The movement’s size can be difficult to ascertain because membership is secretive and fleeting, meaning there is little detailed information on how many people are actively involved or espouse their beliefs.

A report this year by the Anti-Defamation League found that from 1993 to 2017 extremist right-wing individuals and groups committed 150 terrorist acts, attempted acts, plots and conspiracies in the U.S. The ADL found 43% of these incidents or conspiracies were by white supremacists, 42% were by antigovernment extremists and 11% were by antiabortion extremists.

The report found that the number of such incidents rose in the early 1990s, then fell off, only to rise again between 2009 and today.

Some white nationalists who attended the Charlottesville rally said despite the violence that marred the event there is a renewed sense of urgency that their voices be heard. Attendees in interviews said finally there was an administration that seemed to acknowledge their view that immigration was contributing to the country’s demise.

“We have about a 20-year window that’s going to allow for democratic political change,” said Mr. LaPorte, the white nationalist from South Carolina.

Jeans, Polo Shirts

He said the movement’s lack of cohesion doesn't matter online. Still, there was some coordination before arrival, he said. Some people came dressed in dark combat fatigues and others, like him, in jeans and polo shirts.

At the weekend march, the infamous hoods and robes of Klan rallies or brownshirts of neo-Nazis were hard to find, with many dressing like Mr. LaPorte. Even those who wore extremist garb often eschewed more well-known symbols such as swastikas and instead wore pins that read “88,” a number that serves as shorthand for Heil Hitler.

At the rally, older Southern-pride proponents with scraggly beards and militants dressed in all black with pants tucked into their combat boots rallied alongside young, clean-shaven men with neat haircuts, and at least one whose blazer sported a pocket square.

In one photo, a smartly dressed young man is seen hoisting a torch, his mouth agape as he shouts while marching through the city. Peter Cvjetanovic, a 20-year-old student at the University of Nevada, Reno, said in an interview he was the man in the picture.

Mr. Cvjetanovic said he joined Identity Evropa a month earlier and found out about the rally via an internal web server the group uses. He flew to Virginia, he said, “to honor and respect white heritage in all its good and all its bad.”

He said he was pleased so many organizations came together in Charlottesville. While he was unsettled by the violence, he said, he has felt compelled to stay true to his ideology since returning home, where he says he has received death threats. “The world hates me no matter what I do,” he said. “I can’t back down now.”

Doc Smith, who sells beef jerky in Clarksville, Tenn., at first wasn’t sure he wanted to attend last week’s gathering in Charlottesville, because he thought marching alongside neo-Nazis would reflect badly on the organization he belongs to, a self-described patriot group called the Hiwaymen.

On Friday morning, Mr. Smith, 50 years old, who has traveled the country to protest the removal of Confederate monuments, put that thought aside and climbed into his pickup truck for the nine-hour drive to Virginia. When he returned home on Sunday, despite his sadness over the death of a young woman, he felt the movement would be inspired. His Facebook page is a story line of videos and updates from Charlottesville.

“Watch the movement explode behind what happened in Charlottesville,” he said. “The next time we come back, there may be thousands.”

Article Link To The WSJ: