Friday, February 17, 2017

Asia Shares Ease After Run Of Gains; Oil Lifted By OPEC Cut Extension Hopes

By Nichola Saminather
February 17, 2017

Asian stock markets took a breather on Friday from their recent surge as investors booked profits, while the dollar inched up after Thursday's slide and optimism over possible renewed supply cuts by OPEC lifted oil prices.

Financial spreadbetter CMC Markets expects Britain's FTSE 100 to start the day flat, Germany's DAX .GDAXI to be slightly higher and France's CAC 40 .FCHI to be marginally lower, with markets failing to recover Thursday's losses.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS pulled back 0.2 percent, on track to end the week up 1.2 percent, its fourth straight weekly gain.

Overnight, Wall Street lost momentum, with the Dow Jones Industrial Average .DJIbarely eking out its sixth straight record high, while the S&P 500 .SPX and Nasdaq .IXICsnapped a seven-day winning streak as investors slowed buying to digest recent gains.

U.S. President Donald Trump's first solo news conference on Thursday, where he adopted a combative stance against the news media and deflected questions about contacts between his presidential campaign and Russian operatives, also gave investors pause.

"Apart from a reflection of the slight easing in U.S. market momentum after several strong days, investors are making some greater allowance for rising risk," said Angus Gluskie, managing director of White Funds Management in Sydney. "Trump’s erratic performance in the press conference has had a destabilizing influence on investor confidence."

The arrest of Samsung Group chief Jay Y. Lee over his alleged role in a government corruption scandal is also a source of concern, Gluskie said.

Until Thursday, the index had beaten its previous intraday highs for seven consecutive sessions, and closed at 19-month highs in the past two.

A batch of positive economic data out of Asia this week, driven by improving exports and rising commodity prices, has bolstered shares, although concerns linger that any protectionist threats posed by Trump could reverse the recovery.

On Friday, Singapore revised its fourth-quarter gross domestic product growth sharply higher. Earlier in the week, Taiwan raised its 2017 economic growth target to a three-year high, Indonesia's January exports rose at the fastest pace in more than five years and China's January inflation picked up by more than expected to near six-year highs.

Japan's Nikkei .N225 closed 0.6 percent lower, down 0.7 percent for the week. Australian shares fell 0.2 percent at the close, shrinking the week's gains to 1.5 percent.

Chinese shares slipped after earlier touching a near two-month high after the securities regulator said that, starting Friday, it will relax certain rules on stock index futures trading as restrictions imposed during the 2015 stock market crash are unwound.

The CSI 300 index .CSI300 lost 0.4 percent after gaining as much as 0.5 percent, on track for a weekly advance of the same magnitude.

Hong Kong shares .HSI dropped 0.7 percent, but are still poised to close up 1.6 percent for the week.

The dollar edged up, but remained near the one-week low hit on Thursday, when it posted its biggest one-day drop in more than two weeks, as uncertainty about the timing of the next Federal Reserve rate hike offset the impact of stronger economic data.

Manufacturing activity in the U.S. Mid-Atlantic region surged to its highest in 33 years, housing data indicated a recovery in the sector was on track, and weekly jobless claims pointed to a labor market that continues to tighten.

But traders concluded that Fed Chair Janet Yellen's economic testimony before Congress on Wednesday didn't offer enough conviction that the central bank would raise rates at its next meeting in March.

The dollar climbed almost 0.2 percent on Friday to 113.41 yen JPY=, up by the same percentage for the week. It lost about 0.8 percent on Thursday.

The dollar index .DXY, which tracks the greenback against a basket of trade-weighted peers, was fractionally higher at 100.49, on track to end the week 0.3 percent lower. It tumbled 0.7 percent on Thursday.

The euro was little changed at $1.0671 on Friday, retaining Thursday's 0.7 percent gain, and set to end the week 0.3 percent higher.

The stronger dollar on Friday weighed on gold XAU=, which slipped 0.1 percent to $1,237.36 an ounce. But the precious metal remains poised for a 0.3 percent rise for the week.

Oil prices built on Thursday's gains, driven by a report that the Organization of Petroleum Exporting Countries may consider extending its oil supply-reduction pact with non-members and may even apply deeper cuts if inventories don't fall to a targeted level.

For now, that optimism appears to be winning the tug of war with concerns over a rise in U.S. production, but the worry is set to leave oil prices with a weekly loss.

U.S. crude CLc1 added 0.2 percent to $53.42 a barrel, but is headed for a decline of 0.8 percent for the week.

Global benchmark Brent crude LCOc1 advanced 0.1 percent to $55.74, narrowing the week's loss to 1.7 percent.

Article Link To Reuters:

Asia Shares Ease After Run Of Gains; Oil Lifted By OPEC Cut Extension Hopes

Oil Firms As OPEC Floats Extended Output Cut; Markets Still Bloated

By Henning Gloystein 
February 17, 2017

Oil prices edged up on Friday, lifted by a report that producer club OPEC could extend an output cut aimed at reining in a global fuel supply overhang.

Brent crude futures were trading at $55.76 per barrel, up 11 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures, were up 10 cents at $53.46 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia plan to cut output by almost 1.8 million barrels per day (bpd) during the first half of 2017, and estimates suggest compliance by OPEC is around 90 percent.

The cuts are aimed at curbing oversupply that has dogged markets since 2014.

To help rebalance the market, OPEC sources told Reuters that the supply reduction pact could be extended if all major producers showed "effective cooperation".

For now, inventories remain bloated and supplies high, especially in the United States.

Recent price movements reflect this, with Brent and WTI trading within a $5 per barrel price range this year, in what has become the longest and most range-bound period since a price slump began in mid-2014.

"Despite the headlines, the massive inventory glut in both oil and gasoline continues to thwart any upward momentum," said Stephen Innes, senior trader at OANDA in Singapore.

In the United States, rising output has helped push up crude and fuel stocks to record highs.

In Asia, oil flows into the region remain as high as they were before the production cuts, data in Thomson Reuters Eikon shows, as exporters shield their big customers in a fight for market share.

This comes amid signs of stuttering demand growth in core markets, China and India.

In India, fuel demand growth fell in January, while in China sagging car sales and soaring gasoline and diesel exports also point to a slowdown in growth.

That leaves Europe, where OPEC has significantly cut supplies. However, Eikon data shows rising North Sea oil exports to Asia, indicating there is no real supply shortage there either.

Despite the ongoing glut, analysts expect oil markets to tighten in the longer term.

"In the fourth quarter of 2018, global oil demand will most likely surpass 100 million barrels per day," AB Bernstein said on Friday in a note to clients.

"If oil prices stay around $60 per barrel and GDP growth over 3 percent per annum, then oil demand growth will be stronger over the next 5 years, than the previous decade. What we are witnessing is a rather surprising renaissance of oil consumption," it added.

Article Link To Reuters:

Frenzied Betting, Sleeping Market: Something Must Give In Oil

Money manager bets on a rally surge while price stays flat; Forward curve shows a crude oil market still in surplus.

By Alex Longley
February 17, 2017

As hedge funds and money managers place record trades on a rally in oil, the price itself has fallen asleep. Logic dictates that something should give. Here are five charts examining the unprecedented speculative build-up and what the market’s next turn might be.

1. Frenzied betting...

At the start of February, speculators were betting a net 865 million barrels of oil across the market’s two global benchmarks that prices would rise. As well as being a record, their bullish positioning expanded by 78 percent since just before the Organization of Petroleum Exporting Countries and 11 other producer nations pledged to cut global crude supplies. Benchmark prices rose about 20 percent over the same period.

2. ...sleeping market

Unfortunately for the bulls, the oil market itself has fallen asleep after an initial surge. As Standard Chartered analysts including Paul Horsnell pointed out this week, prices have been stuck around a dollar a barrel above or below $55.50 since mid-December. Meanwhile U.S. crude closed above $54 a barrel only once since OPEC’s Nov. 30 meeting, despite crossing that price level 14 times. “If crude prices are to break out of their recent range in the next few weeks, the risk is to the downside," JBC Energy GmbH in Vienna said Thursday.

3. Spreads still show glut

The shortest-term oil prices show that an oversupply endures. The nearest Brent and West Texas Intermediate contracts remain in a structure known as contango, which typically occurs when there is too much supply, depressing short-term prices. While the market remains in contango, it is costly for traders to hold on to oil contracts from one month to the next, diminishing the profits of those speculatively betting on rallies. JBC sees no global reduction so far in inventories, although it’s still just six weeks since OPEC and its allies started to implement their cuts.

4. Rampant U.S. stockpile builds

OPEC’s main menace has made a comeback since the producer club made its cuts. U.S. crude inventories rose to the highest level since the Energy Information Administration started compiling weekly data, according to statistics released on Wednesday.

5. A cut above?

It’s not all doom and gloom. OPEC compliance with cuts -- somewhere around the 90 percent mark -- was at a record last month. Michael Hinds, an analyst at Goldman Sachs Group Inc., is among observers who say the oil market could soon start pricing in scarcer supply. The market could be in backwardation by mid-2017, he wrote in an e-mailed report this week.

Article Link To Bloomberg:

A Stock Market Crash Is A Way Off, But This Boom Will Turn To Bust

Markets are at record highs, but optimism breeds recklessness. The question is how big the bubble will get before it bursts.

By Larry Elliott
The Guardian
February 17, 2017

All three main measures of the health in the stock market are at record levels. Donald Trump is bragging about the boost he has given to share prices. Bourses around the world are taking their lead from Wall Street and heading higher.

What does that mean? It means the stock market is going to crash because sooner or later optimism breeds recklessness and boom will turn to bust. All that’s in question is how big the bubble will get before it bursts and when that moment will come.

Let’s be clear, that moment is still a way off. Markets are in that part of the cycle where every piece of news is a reason to buy equities. Rising inflation? A sign that the global economy is picking up speed, which is good for corporate profits. Hints from the Federal Reserve that it is contemplating another increase in US interest rates? An expression of confidence by America’s central bank in the health of the world’s biggest economy.

Wall Street is also salivating at the prospect of nice fat tax cuts from Trump. The White House will announce details of its plans shortly but they are certain to involve a hefty cut in corporation tax. Another reason to pile into the stock market.

The other indication of a bubble mentality is that all bad news is ignored or downplayed. So, investors seem blissfully unconcerned that Trump might trigger a new global trade war or by his chaotic foreign policy. The risks of a victory for the far right in the imminent Dutch and French elections are being brushed under the carpet.

Keynes provided the best explanation for this kind of herd behaviour, noting that markets can remain irrational longer than investors can stay solvent. A fund manager might think stocks are already richly valued but if everybody else is buying then the temptation is to swallow any doubts and do likewise.

Traditionally, one of the best yardsticks for whether shares are over-valued or under-valued has been the cyclically adjusted price earnings ratio constructed by the economist Robert Shiller. This ratio is currently at about 29 and has only twice been higher: in 1929 ahead of the Wall Street Crash, and in the last frantic months of the dotcom bubble of the late 1990s.

Already, reasons are being put forward for why Shiller’s metrics are not applicable to today’s market conditions. Whenever the words “it’s different this time” are uttered it is a sure sign of trouble ahead.

For the time being, Wall Street is being supported by negative real interest rates and the prospect of tax cuts to come. That means stock market records will continue to be broken over the months ahead.

Until the moment comes when traders get spooked by rising interest rates, burgeoning budget deficits, protectionism or a combination of all three. Wall Street is getting intoxicated on irrational exuberance. But remember: the wilder the party, the bigger the hangover.

Business Rates Trumps Brexit Worries

Forget Brexit. For Britain’s army of small companies, the burning issue of the moment is not the triggering of the article 50 divorce negotiations with the EU but the imminent shake-up of business rates.

The poll conducted by the Federation of Small Businesses suggests that the Treasury’s claim that the first revaluation in seven years will be revenue-neutral has fallen on deaf ears. Three-quarters of respondents said business rates were the single biggest issue affecting them, a long way ahead of economic uncertainty.

The Treasury is coming up against two of the iron laws of taxation. Any changes create losers as well as winners. And the losers tend to be a lot more vociferous than the winners.

The current changes are proving particularly controversial. Business rates are an annual tax on commercial properties based on their rental value and the latest uprating is based on changes in property prices since 2008.

That has led to glaring anomalies. A small independent bookshop in London will be facing a whopping increase in business rates, while Amazon’s out of town distribution warehouses are set for a tax cut.

The government has made much of the progress it has made in cutting corporation tax but business rates are far more important for most companies, particularly the smaller ones. Unless ministers want to see even more charity shops in high streets they should make good on pledges to provide transitional relief. Even better would be a reduction in business rates paid for by a penny on corporation tax.

Article Link To The Guardian:

Behind The Scenes, Obamacare May Be In Grave Danger

Pay attention to the man behind the curtain.

By David Dayen
The Nation
February 17, 2017

On Capitol Hill, the prospects for transforming the health-care system don’t look good. Hard-line conservatives want to go back to the initial plan of repeal first, replace later (or never). The Freedom Caucus wants to eliminate the Medicaid expansion, while congressional leaders want to increase the funding to compensate mostly red states that never expanded, ensuring parity nationwide. Republicans are essentially caught between their promise that nobody will lose coverage after Obamacare and the vow of their right flank to reduce federal health-care dollars. And without the president coming in to dictate the way forward, lawmakers will likely remain at one another’s throats and searching for a resolution.

But get outside the Capitol rotunda and you’ll find that Obamacare is changing rapidly. The law is either stabilizing or careening toward disaster, depending on your perspective, thanks to numerous private-sector developments, enforcement priorities, and proposed rulemaking.

First off, insurance giant Humana announced it would pull out of individual market exchanges in 2018. Humana offers exchange coverage in only 11 states and to only 150,000 customers, a fraction of the 12 million who have exchange policies.

This would have been a far worse outcome if Humana successfully merged with Aetna, which a judge blocked, sinking the deal. Another major insurance merger between Cigna and Anthem is all but shattered, with Cigna suing to get out of it. In theory, more participants bring more competition to the marketplace, but if insurers continue to drop out of the exchanges and focus on other business lines, then the part of the industry most transformed by the ACA could find a lack of willing issuers.

What’s interesting is how this has been framed as a problem for Republicans, who have always blamed any setbacks in insurance on Obama. With great power comes great responsibility, a comic book once said, and with total control of the government, the GOP feels the need to save the exchanges or face the consequences.

To that end, newly minted Health and Human Services Secretary Tom Price issued proposed rules for “market stabilization” on Wednesday, which look more like rules to increase the hassle of obtaining coverage.

The proposed rule (which I don’t see accompanied with the identification of two other rules that could be repealed, as per a Trump executive order) would cut in half the annual open enrollment period for exchanges, moving the deadline from January 31 to December 15. It would force higher verification standards on anyone who tries to elect coverage outside the open-enrollment period because of a significant life event (like unemployment, for example, or a marriage or the birth of a child). Insurance companies would be able to apply premium payments to a prior debt incurred by the same individual, allegedly to prevent gaming from customers who only pay sporadically but take advantage of guaranteed issue to get coverage when they need it.

This is the equivalent of putting an insurance-company storefront on the eighth floor with no elevator, so people too infirm to make it up the stairs cannot apply. Shrinking the time to get coverage and building in hurdles to get coverage outside the enrollment period has the effect of making it harder to get insurance. You can call that “stabilization” if you want, but it’s a pretty transparent effort to design regulations favorable to the industry. Furthermore, we really lack the data to say that individuals are gaming the system by only paying for coverage when necessary. Yet all these regulations are written with that fear in mind. HHS is also seeking comment on whether rules that require continuous coverage year-round would be preferable to a mandate to obtain coverage. This is part of Price’s proposal for an Obamacare replacement, and you can expect HHS rule making to trend in this direction.

The other big regulatory change in this proposed rule concerns the actuarial value of coverage. One big change to Obamacare is that coverage had to have some sort of minimum value, so you would actually get coverage you could use. HHS is proposing to give insurers more flexibility in setting those actuarial values. Before, the “de minimis” variation could be within only two percentage points of the actuarial value target that is written into the law. Now an insurer can issue policies that are up to four percentage points less, though they still cannot go over two points on the upside.

This isn’t a huge difference, but it chips away at the value of allowable exchange coverage. The professed goal is to stabilize premium prices and “cost sharing” by consumers. But you will get what you pay for. And having “coverage” instead of real coverage doesn’t do much good when someone gets sick.

Price has many more options to alter the system, but so do other agencies. According to a much-discussed report in Reason, the IRS decided against changing its policy to reject all forms that don’t answer the question of whether or not a taxpayer maintained health-insurance coverage. This only means that things stay the same as in previous years. However, as tax collection is the main enforcement mechanism for the individual mandate, it signals that the IRS won’t see the mandate as much of a priority. Whether that results in fewer people paying the penalty remains to be seen. But, if nothing else, it’s a subtle weakening of the mandate.

If de-emphasizing the mandate leads to fewer healthy people in the risk pool, it would have the opposite effect of stabilizing the individual market. But so many of these executive actions appear designed to shrink that marketplace so it can be drowned in the bathtub. Not only does this build a narrative of Obamacare failure; it also reduces the stakeholders in the exchanges. It could make repeal easier down the road, which is why Republicans are encouraging Price to do his worst.

So while legislative action is stalled, the themes for executive action are deregulation for insurers and flimsier, harder-to-obtain coverage for consumers. That’s what “fixing” the Affordable Care Act looks like in practice under Republicans.

Article Link To The Nation:

Americans Are Struggling To Pay Off Their Auto Loans

By Richard Morgan
The New York Post
February 17, 2017

Auto loan delinquencies in the fourth quarter hit their highest level since the financial crisis, a report out Thursday revealed.

About $23.27 billion in loans were 30 days or more late as of Dec. 31 — a whopping 14 percent increase from the year earlier and the most since the $23.46 billion in the third quarter of 2008, according to the New York Federal Reserve.

Delinquencies have moved up as the credit quality of the loans has deteriorated and the length of the auto loans has increased — sometimes to 84 months.

“Greater access to auto loans for non-prime consumers suggests that lenders have made deliberate decisions to accept more risk from non-prime loans in their portfolio,” Jason Laky, TransUnion’s automotive and consumer lending business leader, said in the agency’s 2017 credit-market forecast.

“An increase in delinquency is the natural consequence of that strategy,” he said.

Seriously delinquent loans — those 90 days or more past due — jumped an eye-popping 19 percent in the quarter from the previous year, the New York Fed said.

Delinquencies are the canary in the coal mine when it comes to losses for carmakers.

But despite the uptick in delinquencies in loans, the New York Fed is mostly concerned with those made to subprime borrowers with credit scores under 620.

It calculated that subprime borrowers accounted for about $280 billion in auto loans in the fourth quarter — not notably different from the $345 billion in auto loans attributed to the most creditworthy borrowers (those who had credit scores above 760).

Almost all borrowers with credit scores above the subprime cutoff of 620 are “performing very well,” it said.

The average monthly car payment in the fourth quarter rose above $500 for the first time, according to the credit-rating agency Experian.

Moreover, of those subprime auto loans, the New York Fed said a full 75 percent originated with auto finance companies — a class of lender that, unlike banks and credit unions, has been loosening its credit standards since 2010.

The result of these divergent lending practices had about 1 in 20 auto loans issued by finance companies running at least 90 days in arrears during the fourth quarter, compared with 1 in 100 for auto loans issued by banks and credit unions.

Despite the worsening case for subprime borrowers, the NY Fed nonetheless noted that the median credit score on all auto loans rose to 763 in the fourth quarter, from 753 in the year-earlier period.

The NY Fed also calculated that the number of total car loans increased to a record 106 million in the fourth quarter — a pickup of 6 million during the year.

And since the average auto debt per borrower inched up 2.1 percent to $18,391, according to data published Thursday by TransUnion, the credit-reporting agency predicted delinquency rates would continue their climb.

Article Link To The New York Post:

Zuckerberg’s ‘Manifesto’ Is Just An Ad For Facebook, Not A Rebuke Of Trump

Facebook chief executive’s bloated essay is just an advertisement for his social network.

By Therese Poletti
February 17, 2017

Mark Zuckerberg posted a 6,000-word “State of the Union”-style mission statement for Facebook Inc. on Thursday, which many in the media immediately took to calling a “manifesto” that refutes the isolationist ideas of President Donald Trump.


The lengthy diatribe, which is nothing like the pithy, controversial manifestos of political and artistic movements of the past, is just Zuckerberg’s attempt to create a warm and fuzzy feeling for Facebook FB, +0.30% The world’s largest social network has taken a public beating for being a platform for fake news during the recent U.S. presidential election, and been excoriated by some on the left for keeping Trump advisor and early Facebook investor Peter Thiel on its board.

On Thursday, though, the media that has at times been critical of Facebook for those issues gushed with laudatory praise of Zuckerberg. Buzzfeed, which interviewed him at the company’s Menlo Park, Calif., campus, wrote a lead that could be a description in a romance novel, mentioning his “grammarian’s enunciation,” “posture of a palace soldier” and the way his “hazel eyes engorge.”

“Simply put, Facebook is embracing humanistic values and incorporating them in its broader technological mission to connect the world,” BuzzFeed wrote.

The New York Times wrote that “the letter comes close to a political statement ... essentially arguing against a tide of isolationism that is rising across the world.”

That isolationism is personified by Trump, the ideology that won him the presidency and his actions since taking office. Yet Zuckerberg said nothing about the most important touchpoint in Silicon Valley and much of the world right now: Trump’s attempt to ban entry to the U.S. of visitors from seven predominantly Muslim countries.

In fact, Zuckerberg totally avoided the two parts of globalization that Trump and his isolationist ilk in Europe and beyond largely fight against: trade and migration. Zuckerberg instead hinted that, somehow, his mission of connecting everyone around the world via their smartphones or computers is endangered by Trump’s isolationist agenda.

“Facebook stands for bringing us closer together and building a global community. When we began, this idea was not controversial. Every year, the world got more connected and this was seen as a positive trend,” Zuckerberg wrote. “Yet now, across the world there are people left behind by globalization, and movements for withdrawing from global connection. There are questions about whether we can make a global community that works for everyone, and whether the path ahead is to connect more or reverse course.”

The global connection Facebook provides is not in the crosshairs, however. Trump would obviously rather have people in Sudan or Yemen staring at Facebook in their home countries instead of coming to the U.S., based on his travel ban. And he is obviously fine with global social networks despite his trade protectionism, judging by his rampant use of Twitter Inc. TWTR, -2.33%

Zuckerberg does not really offer any solutions to the issues he sees, other than to call for more political and community engagement, of course on Facebook. He noted that with Facebook’s help, there were more voters in the last election.

“We helped more than two million people register to vote and then go vote. This was among the largest voter turnout efforts in history, and larger than those of both major parties combined,” he said.

This type of cheerleading for Facebook is exactly what Zuckerberg’s post was meant to engender, and media jumped in to do so Thursday, with more than a few posting headlines about his efforts to “save the world.” In fact, Zuckerberg is just trying to save Facebook and the billions in profit it makes from advertising and users’ data with a free commercial splashed across the biggest media sites in the world.

Article Link To MarketWatch:

Facebook CEO Warns Against Reversal Of Global Thinking

By David Ingram
February 17, 2017

Facebook Inc Chief Executive Mark Zuckerberg laid out a vision on Thursday of his company serving as a bulwark against rising isolationism, writing in a letter to users that the company's platform could be the "social infrastructure" for the globe.

In a 5,700-word manifesto, Zuckerberg, founder of the world's largest social network, quoted Abraham Lincoln, the U.S. president during the country's 19th century Civil War known for his eloquence, and offered a philosophical sweep that was unusual for a business magnate.

Zuckerberg's comments come at a time when many people and nations around the world are taking an increasingly inward view. U.S. President Donald Trump pledged to put "America first" in his inaugural address in January. That followed Britain's decision last June to exit the European Union.

"Across the world there are people left behind by globalization, and movements for withdrawing from global connection," Zuckerberg wrote, without naming specific movements.

The question, the 32-year-old executive said, was whether "the path ahead is to connect more or reverse course," adding that he stands for bringing people together.

Quoting from a letter Lincoln wrote to Congress in the depths of the Civil War, he wrote to Facebook's 1.9 billion users: "The dogmas of the quiet past, are inadequate to the stormy present."

Zuckerberg said that Facebook could move far beyond its roots as a network for friends and families to communicate, suggesting that it can play a role in five areas, all of which he referred to as "communities," ranging from strengthening traditional institutions, to providing help during and after crises, to boosting civic engagement.

In comments on Facebook, some users praised Zuckerberg's note for staying positive, while others declared "globalism" dead.

Facebook has been under pressure to more closely police hoaxes, fake news and other controversial content, although the concerns have had little impact on its finances. The company reported 2016 revenue of $27.6 billion, up 54 percent from a year earlier.

One area where Zuckerberg wrote that Facebook would do better would be suggesting "meaningful communities." Some 100 million users are members of groups that are "very meaningful" to them, he wrote, representing only about 5 percent of users.

Facebook is also using artificial intelligence more to flag photos and videos that need human review, Zuckerberg wrote. One-third of all reports to Facebook's review team are generated by artificial intelligence, he wrote.

Zuckerberg's letter was "a bit more ambitious and a bit more of the 30,000-foot view than I see from most tech company CEOs," Peter Micek, global policy and legal counsel at Access Now, an international digital rights group, said in a phone interview.

But Zuckerberg stayed away from certain subjects on which Facebook could be vulnerable to criticism, mentioning the word "privacy" only once, Micek said.

Article Link To Reuters:

Snap Lowers Valuation Expectations In Highly Awaited IPO

By Lauren Hirsch and Sruthi Shankar
February 17, 2017

Snap Inc (SNAP.N), owner of the popular messaging app Snapchat, set a lower-than-expected valuation range on Thursday, amid mounting investor concern over its unproven business model, slowing growth and tight founder control.

The company, which filed for an initial public offering earlier this month, was widely expected to be valued at between $20 billion and $25 billion. However it said on Thursday it was targeting a valuation between $19.5 billion and $22.3 billion, ahead of an investor roadshow due to start on Monday in London.

The lower valuation range reflected initial investor feedback. Snap wants to ensure there is sufficient demand for shares of the company that it trades up on its first day in public market.

Investors have been poring over the filing for Snap's upcoming IPO to assess whether the still-unprofitable company will be the next Facebook Inc (FB.O), which has figured out how to make money from its social media platform, or if it will be more like Twitter Inc (TWTR.N), which is struggling to achieve the same goal.

With platform-hopping millennials as its prime customer base, and constantly evolving competition, the fact that Snapchat's new user growth has already begun to slow concerns investors, sources said, asking not to be named because the deliberations are confidential.

New active user growth was mostly flat in the early part of the last quarter in 2016, according to the IPO filing. Facebook's Instagram, which had 600 million users as of late 2016, has introduced its own form of disappearing video content. On average, Snapchat has 158 million daily users.

"Snap is already demonstrating decelerating growth before they have managed to break even," said Yann Magnan, managing director at Duff & Phelps.

Unlike social media platforms such as Twitter and Facebook, Snapchat can be harder for new users to understand and easier for non-users to avoid, some investors said.

"With Facebook you almost feel left out, socially, if you’re not on it. You may miss a picture or invitations. I don’t get the sense people feel they’re missing out if they’re not on it,” said Chris Carter, portfolio manager for the Buffalo Growth Fund (BUFGX.O) who has not yet made a decision on whether to buy Snap shares.

Still, Snap proponents argue a more limited user base lends it more loyalty and opportunity for the company to make money.

Snap, which is going public at a much earlier stage in its development than Twitter or Facebook, saw its loss widen to $514.64 million in 2016 from $372.89 million a year earlier. While not rare for a young company to be unprofitable, it is less common for an unprofitable company only five years old to ask for as whopping a valuation as Snap is aiming for.

With Snap's estimated valuation expected to be around 49 times revenue, and Facebook's being 27 times, the IPO aspirations "stress how much Snap’s post-IPO growth must exceed Facebook’s to compensate for its lack of short-term profitability" said Magnan at Duff & Phelps.

Snap generates most of its revenue from advertising and will pay Google $2 billion over the next five years to use its cloud computing services.

Investors have also raised concerns over Snap's first of its kind three-share class structure, which gives no voting rights to IPO investors. Snap's co-founders Evan Spiegel and Bobby Murphy will have the right of ten votes for every share, and existing investors will have one vote for each of their shares.

"Evan is going to have to earn Wall Street’s trust. If he does that, the ownership issue goes away," said Nabil Elsheshai, senior research analyst for Thrivent Financial in Minneapolis.

The company's marketing roadshow will take place in London, New York, Boston and San Francisco. Snap is expecting to price its IPO after the U.S. market closes on March 1, according to a confidential document seen by Reuters.

Snap said in a filing on Thursday it expected to raise as much as $3.2 billion from the offering of 200 million Class A shares. The offering is expected to be priced between $14 and $16 per share.

Even at the low end of that expected valuation range, Snap would be the largest tech offering since Alibaba's IPO in 2014, and after last year's paucity of tech listings, its public launch will be closely watched.

Selling shareholders, who include Spiegel, Murphy and former Sony CEO Michael Lynton, will sell 55 million shares in total. If the IPO prices on the higher end of the current range, Spiegel and Murphy would both make $256 million on the IPO and Lynton would make $878,000.

Early Snap investors venture firm Benchmark Capital Partners would reap $171 million from the offering if it prices at the top of the range.

Snap will have about 1.16 billion shares outstanding after the offering and list on the New York Stock Exchange under the symbol SNAP.

Snap said it expected to use proceeds of about $2.1 billion for general corporate purposes and to acquire businesses, among other things.

Snap, which launched in 2012 with an app that sends disappearing messages, rebranded itself last year as a camera company and started selling $130 video camera glasses.

Morgan Stanley & Co LLC, Goldman Sachs & Co, JP Morgan Securities LLC, Deutsche Bank Securities Inc, Barclays Capital Inc and Credit Suisse Securities (USA) LLC are among the underwriters to the IPO.

Article Link To Reuters:

With Samsung Chief In Jail, One-Time Mentor Seen Taking Charge

By Se Young Lee and Miyoung Kim
February 17, 2017

The arrest of Samsung Group scion Jay Y. Lee on bribery charges could hamper decisions on strategic investments and acquisitions at the sprawling conglomerate, insiders and former executives say, even with a strong leadership bench at its many businesses.

Although business at flagship Samsung Electronics (005930.KS) is humming along, big calls will need to be made and the man most likely to be called upon to make them is Choi Gee-sung, the No.2 lieutenant at Samsung Group and a mentor to Lee.

"Choi is very experienced and has done a good job. He is the one best placed to manage group-level affairs in Lee's absence," said one Samsung insider.

While Samsung Electronics is still smarting from the debacle of its exploding Galaxy Note 7 smartphone batteries, its semiconductor business is in rude health. Its share price is up around 60 percent in the past year.

But the wide-ranging probe, part of a corruption scandal that led parliament to impeach South Korean President Park Geun-hye, has been a major distraction for the country's largest conglomerate, or chaebol.

"Everything has virtually stopped," said a second executive at Samsung Group's powerful strategy office that Choi heads. "We're mainly focusing on the prosecutor's investigation (into Lee and Samsung)... We'll be running an emergency plan and everything will be under Choi's control for now."

But some others say even Choi's role could be limited and Samsung may have to rely more on each affiliate's top management, with Choi also under investigation by special prosecutors.

"Since we've decided to dismantle group strategy office, Choi's role is likely to gradually decrease, although we can't say for how much and when," another Samsung executive said.

A fourth group insider said: "We have a system in place with professional management teams, so in terms of the day-to-day operations things should be fine."

None of the Samsung individuals wanted to be identified due to the sensitivity of the matter.

"It's not like Samsung businesses will grind to a halt. There are many smart people at the company," said Kim Yong-serk, a former Samsung Electronics executive who is now a professor at Sungkyunkwan University.

But arrest of Lee, 48, will have an impact on longer-term investment decisions at the sprawling conglomerate.

"Samsung presidents are evaluated on an annual basis, so they can't make bold bets about the future. They need a chairman for that," Kim said.

Samsung declined to comment on its management plans or Choi's role.

Beating Apple

When Samsung Electronics still trailed Nokia in mobile phones - just five years ago - Choi, then CEO, set his sights on a different rival.

"Competition is coming from elsewhere. There's a company more profitable than us and we should change our target," he told Reuters in January 2012, referring to Apple Inc (AAPL.O).

That year, Samsung ended Nokia's 14-year domination of the mobile market, ultimately also overtaking Apple as the world's biggest smartphone maker.

In a Samsung career spanning more than three decades, Choi has worked in all the main businesses, from semiconductors and home appliances to TVs and telecoms, before taking over as chief executive.

As head of strategy, 66-year-old Choi has acted as Jay Y. Lee's mentor and been closely involved in preparing the path for him to take over from his father, who was incapacitated by a heart attack in 2014.

Under Choi's guidance, Lee has moved closer to succeeding his father in a well-choreographed long-term plan, including a restructuring of the conglomerate to cement the Lee family's control.

However, that plan included a controversial $8 billion merger of two Samsung units that has been central to prosecutors' case against the group, and Lee.

Prosecutors accuse Samsung of paying bribes totaling 43 billion won ($37.74 million) to organizations linked to South Korean President Park Geun-hye's friend, Choi Soon-sil, to secure government backing for the merger.

Choi Gee-sung and his deputy Chang Choong-ki were quizzed by prosecutors over their role in the deal.

Step Up For 'Mr Chip,' Too?

Lee's absence, ahead of what could be a lengthy trial, could also see a bigger role for Kwon Oh-hyun, Samsung Electronics' vice chairman and current CEO.

Known as "Mr Chip", Kwon has overseen the growth of Samsung's component business, which now generates much of the firm's profits.

"Kwon is very practical manager. Like many Samsung managers in the component business, he doesn't feel comfortable (in the limelight)," said an executive who worked with him.

Kwon, who studied electrical engineering at Seoul National University and at Stanford, cemented Samsung's position in memory chips and expanded the contract chip manufacturing business, producing chips that power the Apple iPhone.

But, for all the experience and qualities these senior managers bring, Lee's absence will still be felt.

Lee had been instrumental in seeking to drive growth through new businesses, including signing off on South Korea's biggest outbound deal: an $8 billion acquisition of U.S. auto electronics maker Harman International Industries (HAR.N).

"The biggest problem is that Lee is the one who sets the direction of Samsung as a whole," the fourth group insider said.

"He doesn't get into every business decision, but he's the one who has to sign off on major investments or acquisitions... That's why he can't easily be replaced."

Article Link To Reuters:

The Cover-Up In Search Of A Crime

How different is Flynn’s call from Obama’s ‘After my election, I have more flexibility’?

By Charles Krauthammer 
The National Review
February 17, 2017

It’s a Watergate-era cliché that the cover-up is always worse than the crime. In the Mike Flynn affair, we have the first recorded instance of a cover-up in the absence of a crime.

Being covered up were the December 29 phone calls between Flynn and the Russian ambassador to Washington. The presumed violation was Flynn negotiating with a foreign adversary while the Obama administration was still in office and, even worse, discussing with Sergey Kislyak the sanctions then being imposed upon Russia (for meddling in the 2016 elections).

What’s wrong with that? It is risible to invoke the Logan Act, passed during the John Adams administration, under which not a single American has been prosecuted in the intervening 218 years. It prohibits private citizens from negotiating with foreign powers. Flynn was hardly a private citizen. As Donald Trump’s publicly designated incoming national-security adviser, it was perfectly reasonable for him to be talking to foreign actors in preparation for assuming office within the month.

Worst case: He was telling Kislyak that the Trump administration might lift sanctions and therefore, comrade, no need for a spiral of retaliations. How different is this from what Barack Obama told Russian president Dmitry Medvedev, on an inadvertently open mic, during his 2012 reelection campaign? “This is my last election,” he said. “After my election, I have more flexibility.”

Flynn would have been giving the Russians useful information that might well have contributed to Russia’s decision not to retaliate. I’m no Russophile. But again: What’s wrong with that? Turns out, the Trump administration has not lifted those sanctions. It’s all a tempest in an empty teapot.

The accusations of misbehavior by Flynn carry a subliminal echo of a longstanding charge against Richard Nixon that he interfered in the Paris peace talks in October 1968 to prevent his Democratic opponent from claiming a major foreign-policy success on the eve of the presidential election.

But that kind of alleged diplomatic freelancing would have prolonged a war in which Americans were dying daily. The Flynn conversation was nothing remotely of the sort. Where’s the harm?

The harm was not the calls but Flynn’s lying about them. And most especially lying to the vice president, who then went out and told the world Flynn had never discussed sanctions. You can’t leave your vice president undercut and exposed. Flynn had to go.

Up to this point, the story makes sense. Except for one thing: Why the cover-up if there is no crime? Why lie about talking about sanctions? It’s inexplicable. Did Flynn want to head off lines of inquiry about other contacts with Russians that might not have been so innocent? Massive new leaks suggest numerous contacts during the campaign between Trump associates and Russian officials, some of whom were intelligence agents. Up till now, however, reports the New York Times, there is “no evidence” of any Trump-campaign collusion or cooperation with Russian hacking and other interference in the U.S. election.

Thus far. Which is why there will be investigations. Speculation ranges from the wildly malevolent to the rather loopily innocent.

At one end of the spectrum is the scenario wherein these campaign officials — including perhaps Flynn, perhaps even Trump — are compromised because of tainted business or political activities known to the Russians, to whom they are now captive. A fevered conspiracy in my view, but there are non-certifiable people who consider it possible.

At the benign end of the spectrum is that the easily flattered Trump imagines himself the great deal-maker who overnight becomes a great statesman by charming Vladimir Putin into a Nixon-to-China grand bargain — we jointly call off the new Cold War, join forces to destroy the Islamic State, and reach a new accommodation for Europe that relieves us of some of the burden of parasitic allies.

To me, the idea is nuts, a narcissistic fantasy grounded in neither strategy nor history. But that doesn’t mean Trump might not imagine it — after all, he maintains that if we had only stayed in Iraq to steal its oil, we wouldn’t have the Islamic State. And if this has indeed been his thinking about Russia, it would make sense to surround himself with advisers who had extensive dealings there.

I believe neither of these scenarios, but I’m hard put to come up with alternatives. The puzzle remains. Why did Flynn lie? Until we answer that, the case of the cover-up in search of a crime remains unsolved.

Article Link To The National Review:

Sorry Media -- This Press Conference Played Very Different With Trump’s Supporters

By Michael Goodwin
The New York Post
February 17, 2017

Maybe it’s not a coincidence that Barnum & Bailey is folding its tents this year. After all, how could the circus possibly compete with Donald Trump?

The president proved once again that he is the greatest show on earth. Lions and tigers and elephants are kids’ stuff next to his high wire act.

Next time, the White House ought to sell popcorn.

Amid feverish reports of chaos on his team and with Democrats fantasizing that Russia-gate is another Watergate, Trump took center stage to declare that reports of his demise are just more fake news.

Far from dead, he was positively exuberant. His performance at a marathon press conference was a must-see-tv spectacle as he mixed serious policy talk with stand-up comedy and took repeated pleasure in whacking his favorite pinata, the “dishonest media.”

“Russia is a ruse,” he insisted, before finally saying under questioning he was not aware of anyone on his campaign having contact with Russian officials.

Trump’s detractors immediately panned the show as madness, but they missed the method behind it and proved they still don’t understand his appeal. Facing his first crisis in the Oval Office, he was unbowed in demonstrating his bare-knuckled intention to fight back.

He did it his way. Certainly no other president, and few politicians at any level in any time, would dare put on a show like that.

In front of cameras, and using the assembled press corps as props, he conducted a televised revival meeting to remind his supporters that he is still the man they elected. Ticking off a lengthy list of executive orders and other actions he has taken, he displayed serious fealty to his campaign promises.

Sure, sentences didn’t always end on the same topic they started with, and his claim to have won the election by the largest electoral college margin since Ronald Reagan wasn’t close to true.

Fair points, but so what? Fact-checkers didn’t elect him, nor did voters who were happy with the status quo.

Trump, first, last and always, matches the mood of the discontented. Like them, he is a bull looking for a china shop. That’s his ace in the hole and he played it almost to perfection.

The immediate impact of his performance is likely to calm some of the jitters among Republicans in congress and supporters elsewhere, especially after the beating he took in the last few days.

On Monday night, Trump suddenly removed Gen. Michael Flynn, his national security adviser, over circumstances that still are not entirely clear. And on Wednesday, his nominee for Secretary of Labor, Andrew Puzder, withdrew after Republicans said he didn’t have the votes to be confirmed.

Combined with courts blocking his immigration and refugee order, unflattering leaks of confidential material from intelligence agencies and numerous demands for investigations into any Russian connections, Trump’s fast start suddenly hit a wall.

Just three weeks into his term, Democrats, in and out of the media, smelled blood. Many already were going for the kill.

They won’t get it, at least now. Trump bought himself time yesterday.

Yet those determined to bring him down won’t give up, and the insidious leaks of secret material suggest some opponents are members of the permanent government who are willing to use their position and the media to undermine him.

Indeed, the most serious leaks seem to vindicate a warning that Democratic Sen. Chuck Schumer made in early January after Trump criticized leaders of the spook agencies.

“Let me tell you, you take on the intelligence community, they have six ways from Sunday at getting back at you,” Schumer told an interviewer. “So even for a practical, supposedly hard-nosed businessman, he’s being really dumb to do this.”

That incredible statement reflects what a dangerous game rogue agents are playing. The world is on fire yet the president is the target of partisan revenge in his own government. It’s a scandal and it’s outrageous, but it’s a fact that Trump must confront.

Finding the leakers and prosecuting them, which he promises to do, is part of the solution.

Another part comes Saturday, when Trump takes his solo act to Florida for a massive public rally. It’s smart for him to get out of Washington and soak in the enthusiasm of the populist movement he leads.

He should do it regularly, and also hold smaller, town-hall style forums where ordinary citizens can ask him questions in more intimate settings. Any way he can speak directly to the American people and hear from them democratizes his presidency and reduces the power of big biased media and the Washington establishment.

Yet the only sure and lasting way to keep ahead of the lynch mob is by producing results. Success will be Trump’s savior.

And nothing says success like jobs, jobs, jobs. Getting the economy to reach lift-off speed is essential so it can deliver the good-paying jobs and prosperity that he promised and the nation needs.

While Republican honchos in congress say they’re getting ready to move on tax cuts and replacing ObamaCare, nothing will happen without presidential leadership. That means Trump’s fate is in his own hands and he must keep himself and his White House team focused on delivering an economic revival.

If he does that, the lynch mob will be left holding an empty rope.

Article Link To The New York Post:

The Spectacle Of Trump Acting Presidential

By Jonathan Bernstein
The Bloomberg View
February 17, 2017

Donald Trump's first presidential press conference today was ... something else. He ranted, he raved; he denied he was ranting and raving, which is even more bizarre than actually ranting and raving. He bragged again about his (unimpressive, flukish) 306 electoral votes. He repeatedly brought up, unsolicited, his election opponent and repeated his campaign points against her, something essentially unheard of among post-election, let alone sworn-into-office, presidents (they might, as Trump did, dwell on problems they inherited, but personal campaign attacks are normally immediately forgotten the second the networks call the election). He got major and minor factual things totally wrong.

Then there was the bit about how a "nuclear holocaust would be like no other." And the bit in which he awkwardly (to say the least) asked a black reporter to set up a meeting with the Congressional Black Caucus for him.

He gave incredibly convoluted answers about press leaks, news stories, and his firing of former National Security Advisor Michael Flynn -- apparently we are to believe that the leaks were accurate, the news stories about them were not (something about the tone of reporters), and Flynn had to go because he didn't give an accurate answer to Vice President Michael Pence about something that didn't matter because Flynn didn't do anything wrong anyway. No, none of that makes sense.

Or, as British pundit Alex Massie put it:

"None of us have ever seen anything like this before."

So what's going on here (and by the way, Trump does deserve credit for holding a proper and wide-ranging press conference; it's slightly late compared with other presidents, but add the bilateral opportunities and he's at or ahead of the pace recent presidents have set)?

For one thing, we're seeing something that isn't new, but that we haven't seen since Ronald Reagan: A president who has his own version of facts, a version which his staff can't or won't get him to give up, and so they have to clean up after him. That actually happened earlier today when UN Ambassador Nikki Haley corrected what the president said in his last press appearance, reassuring everyone that the United States still supported a two-state solution in the the Middle East.

The difference between Trump and Reagan is that Reagan had clear overall policy preferences, which everyone in his administration was well aware of, so when he got things wrong in public it didn't really lead to all that much internal confusion (and Reagan during most of his presidency had a solid White House staff structure available to translate for him). What does Trump really believe, if anything, on Russia and Israel and China? No one, including the State Department and other foreign policy and national security portions of the executive branch, has any idea. He keeps talking about "a deal" as if foreign policy was a one-time negotiation over a TV contract or bankruptcy procedure. Foreign policy isn't like that.

As far as Trump himself? It's a dangerous game to read into the president's moods and motivations and body language, but he's practically begging everyone to try. The striking thing about today's appearance was that Trump began with an uninspired reading of a prepared statement, but then really picked up steam during a (very long) back and forth with the press corps. It's hard not to imagine that this is how Trump always imagined the presidency. Indeed, it's hard not to imagine that Trump believes that the portions of the presidency that are for show, the meetings with CEOs and the Oval Office photos with foreign leaders and the press conferences, are the essential core of the job. Not, for example, carefully reading briefing papers in order to figure out what tough questions to ask those who are briefing him, or dealing with the details of policy choices.

Granted, that's all speculative and could easily be wrong. What is clear, however, is Trump is nowhere closer to demonstrating even vaguely adequate levels of knowledge of public policy and how the government works than he was during the campaign, which makes him a very dangerous man in the presidency.

Speaking of speculation: A lot of people are going to tell you either that today's wild press conference was a horror show that will destroy him with voters, or that no matter what the press thinks this was the Trump that people like and the reason he won the election. Try to ignore all of that. Single presidential appearances (in midday, when normal people are at work or otherwise occupied) don't change anything. In fact, even multiple presidential appearances don't do much; for the most part, those who don't like Trump won't like what they learn of today's press conference, and those who do like him will like it.

Given that he's unpopular (at record lows for a new president, but only modestly unpopular overall), more people likely will dislike than like what they see. Long-term change will happen based on events. It won't matter what kinds of nonsense Trump gives about the jobs situation he inherited or about what he's doing about it; what will matter is whether the job market stays strong, gets stronger, or reverses. The same with every other area of policy. And it won't matter whether or not Trump calls his White House a "fine tuned machine"; what will matter is whether it remains factionalized and each faction runs to the press with stories about their rivals and the president, or not. It will matter whether he sheds staff every few weeks.

And it will matter whether the scandals fizzle out or grow larger.

This part of the presidency? He can do some damage when he gets his own policies wrong, and he can probably remind some on-the-fence voters what they like about him, but it's the substance of the presidency which matters. For the former reality star, this was just more show business.

Article Link To The Bloomberg View:

Trump Family’s Elaborate Lifestyle Is A ‘Logistical Nightmare’ -- At Taxpayer Expense

By Drew Harwell, Amy Brittain and Jonathan O'Connell
The Washington Post
February 17, 2017

On Friday, President Trump and his entourage will jet for the third straight weekend to a working getaway at his oceanfront Mar-a-Lago Club in Palm Beach, Fla.

On Saturday, Trump’s sons Eric and Don Jr., with their Secret Service details in tow, will be nearly 8,000 miles away in the United Arab Emirates, attending the grand opening of a Trump-brand golf resort in the “Beverly Hills of Dubai.”

Meanwhile, New York police will keep watch outside Trump Tower in Manhattan, the chosen home of first lady Melania Trump and son Barron. And the tiny township of Bedminster, N.J., is preparing for the daunting prospect that the local Trump golf course will serve as a sort of northern White House for as many as 10 weekends a year.

Barely a month into the Trump presidency, the unusually elaborate lifestyle of America’s new first family is straining the Secret Service and security officials, stirring financial and logistical concerns in several local communities, and costing far beyond what has been typical for past presidents — a price tag that, based on past assessments of presidential travel and security costs, could balloon into the hundreds of millions of dollars over the course of a four-year term.

Adding to the costs and complications is Trump’s inclination to conduct official business surrounded by crowds of people, such as his decision last weekend to host Japanese Prime Minister Shinzo Abe for a working dinner while Mar-a-Lago members dined nearby.

The handful of government agencies that bear the brunt of the expenses, including the Defense and Homeland Security departments, have not responded to Washington Post requests for data laying out the costs since Trump took office.

But some figures have dribbled out, while others can be gleaned from government documents.

Trump’s three Mar-a-Lago trips since the inauguration have probably cost the federal treasury about $10 million, based on figures used in an October government report analyzing White House travel, including money for Coast Guard units to patrol the exposed shoreline and other military, security and staffing expenses associated with moving the apparatus of the presidency.

Palm Beach County officials plan to ask Washington to reimburse tens of thousands of dollars a day in expenses for deputies handling added security and traffic issues around the cramped Florida island whenever Trump is in town.

In New York, the city is paying $500,000 a day to guard Trump Tower, according to police officials’ estimates, an amount that could reach $183 million a year.

This month, The Post reported that Secret Service and U.S. embassy staffers paid nearly $100,000 in hotel-room bills to support Eric Trump’s trip to promote a Trump-brand condo tower in Uruguay.

“This is an expensive way to conduct business, and the president should recognize that,” said Tom Fitton, president of the conservative group Judicial Watch, which closely tracked President Barack Obama’s family vacation costs and said that it intends to continue the effort for the Trump administration.

“The unique thing about President Trump is that he knows what it costs to run a plane.” Fitton added, noting that Trump should consider using the presidential retreat of Camp David, a short helicopter ride from the White House, or even his golf course in Northern Virginia. Of Mar-a-Lago, Fitton said, “Going down there ain’t free.”

For Trump, the costs come with an additional perk: Some of the money flows into his own pocket. While Trump has removed himself from managing his company, he has refused to divest his ownership, meaning that he benefits from corporate successes such as government contracts.

The Defense Department and Secret Service, for instance, have sought to rent space in Trump Tower, where leasing a floor can cost $1.5 million a year — though neither agency has disclosed any details. In addition, Trump’s travel to his signature properties while trailed by a press corps beaming images to the world allows the official business of the presidency to double as marketing opportunities for his brand.

The White House did not address broader concerns of the costs and potential conflicts inherent in Trump’s early travels. But White House spokeswoman Stephanie Grisham told The Post this week that Trump is always working, even when he has left Washington behind.

“He is not vacationing when he goes to Mar-a-Lago,” Grisham said. “The president works nonstop every day of the week, no matter where he is.”

Trump’s frequent travel belies his repeated criticism of Obama as a “habitual vacationer” enjoying taxpayer-funded golf getaways. It also comes after his own promises: He told the Hill newspaper in 2015, “I would rarely leave the White House because there’s so much work to be done.”

Presidential families have for decades been guaranteed round-the-clock protection, no matter the expense or destination. Every presidency has brought new operational challenges and lifestyle habits, from George W. Bush’s frequent stays at his remote ranch in Texas to Obama’s annual trips to Martha’s Vineyard and his native state of Hawaii. Judicial Watch estimated that Obama-related travel expenses totaled nearly $97 million over eight years.

But based on the first four weeks, Trump’s presidency appears on track to cost hundreds of millions of dollars more.

The burden is especially acute for the Secret Service, the presidential protection force that has endured years of budget short­ages, low morale and leadership shake-ups, including the announcement this week that its director, Joseph Clancy, is stepping down.

Agents are now tasked with guarding multiple homes and protecting Trump’s four adult children, including the globe-trotting sons running the family business and daughter Ivanka, whose family recently moved into a Northwest Washington neighborhood.

“There was an anticipation of how stressful it was going to be on the agency, but the harsh reality is that the stress is just overwhelming,” said Jonathan Wackrow, a 14-year Secret Service employee who served in Obama’s detail and now works as executive director of the risk-mitigation company RANE.

Even veteran agents, Wackrow said, are feeling the pressure of the “monumental” task, including manning high-security perimeters in Washington, Florida and New York, along with protecting family members’ private-business travel across three continents.

“It’s a logistical nightmare,” Wackrow said. Agents are “at severe risk of burnout, and the very last thing you want is to have your agents burned out.”

A Secret Service spokesman said the agency is equipped to handle the demands of a Trump presidency. “Every administration presents unique challenges to which the Secret Service has effectively adapted,” according to an agency statement. “Regardless of location . . . the Secret Service is confident in our security plan.”

Experts and local officials have pointed to security and logistical concerns surrounding Mar-a-Lago, the lavish estate that Trump turned into a club in 1995 and now calls the “Winter White House.”

Club members pay $200,000 to join — a fee that has doubled since his election — and $14,000 a year to belong, giving them access to the beach, tennis courts, a spa and, now, on occasional weekends, to the president.

But Rep. Lois Frankel (D-Fla.), who represents Palm Beach, said Mar-a-Lago is a poor choice for a president’s long-term home: an exposed oceanfront club on a narrow, busy island, where traffic problems were already routine.

“Mar-a-Lago is no Camp David,” Frankel said. “It’s not set up with the intention or the forethought of keeping the president safe.”

The challenges for Mar-a-Lago as a presidential home were apparent from pictures posted on social media last weekend by club guests — including close-up images of the presidential limousine and a picture of a military official carrying the nuclear “football.”

In one Instagram video recorded Friday night outside Mar-a-Lago, a woman fawns as men with earpieces inspect under the hood of a line of cars heading into the club, “The Secret Service is so hot.”

The weekend brought the presidential entourage to two other Trump properties, as Trump and Abe golfed 27 holes at the president’s courses in Jupiter and West Palm Beach. The events meant global publicity for the Trump brand — and even more security complications.

The federal and local governments have spent considerable sums to help safeguard the sprawling estate on items big and small.

In advance of Trump’s Super Bowl weekend trip to Mar-a-Lago, the Secret Service paid for a bevy of security costs, including more than $12,000 for tents, portable toilets, light towers and golf carts, purchase orders show.

The bills have racked up outside the club, too. Palm Beach County Sheriff Ric Bradshaw said Trump’s 25 days in the county since the election have cost local taxpayers about $60,000 a day in overtime police payments.

Local officials said the U.S. Coast Guard has run round-the-clock shoreline patrols alongside Mar-a-Lago when the president is in town. A Coast Guard spokesman declined to share costs or specifics, citing security concerns.

The Town of Palm Beach recently implemented a “presidential visit seasonal traffic mitigation plan” in hopes of stemming the island’s worsening traffic woes. Running every weekend until May, the plan includes a town order demanding sanitation and public-works crews leave the island every Friday by 3 p.m.

Local officials usually learn only a few days in advance that the president is coming, said Kirk ­Blouin, the town’s director of public safety. “We plan as if he is going to be here most weekends,” Blouin said, “because otherwise it’s too hard to plan.”

Overseas travel by Trump’s adult sons is adding to the burden on taxpayers.

Eric Trump and his security detail flew this month to the Dominican Republic, during which the president’s son met with developers proposing a Trump-brand luxury resort. Purchase orders showing government expenditures for that trip are not yet available, but records show that Secret Service officials traveled there in advance to scope out the area — staying at the five-star, oceanfront AlSol Del Mar hotel at a cost of $5,470.

After this weekend’s trip to Dubai — during which early Secret Service hotel bills have already surpassed $16,000, records show — the Trump brothers will travel to Vancouver, B.C., for the Feb. 28 grand opening of another Trump-brand skyscraper.

The State Department has declined to provide details related to its expenditures for Trump family travel around the world, including the participation of embassy staffers when Eric Trump and Don Trump Jr. travel on behalf of the family business.

The best public estimate for the full cost of Trump’s presidential getaways may come from a U.S. Government Accountability Office report in October, which estimated that a four-day trip for President Obama cost taxpayers more than $3.6 million.

During that Presidents’ Day weekend trip in 2013, Obama flew to Chicago to give an economic speech, then to Palm City, Fla., to golf with Tiger Woods and the owner of the Houston Astros baseball team.

That money went toward operating aircraft flown in from 10 states — including Air Force One, which costs an estimated $200,000 an hour to fly — as well as assorted watercraft, military working dogs, rental cars, hotel rooms and a Coast Guard rescue helicopter.

The trip drew the ire of many Republicans in Congress, including Sen. John Barrasso (R-Wyo.), who requested that the GAO review Obama’s costs. Asked whether Barrasso would file a similar request for Trump’s trips, his spokeswoman said equating the two presidents’ trips would be “misleading at best.”

“Former President Obama flew to Florida for the express purpose of a golf lesson and a round of golf with Tiger Woods. President Trump was in Florida with the Prime Minister of Japan,” Barrasso’s press secretary, Laura M. Mengelkamp, said in a statement. “Regardless, every level of the federal government needs to be mindful of the way it spends taxpayer dollars.”

In November, when Trump spent a weekend at his Trump National Golf Club in Bedminster, N.J., the 8,000-resident township received just 48 hours’ notice demanding an all-hours security detail of six police officers from its 16-officer force.

Township officials have begun preparing for the possibility that Trump will make up to 10 visits this year, including a potentially extended summer stay for the first lady. Officials there offered a projection, based on seven Trump trips, that could cost the township more than $300,000.

“Bedminster is a small municipality with a small police force and a small budget,” Mayor Steven E. Parker (R) wrote in a letter asking for federal help in recouping security costs. “We want to welcome President Trump with open arms, but we don’t wish to burden our taxpayers disproportionately for these visits.”

Article Link To The Washington Post:

How Could Things Get Worse For Trump?

By Eugene Robinson
The Washington Post
February 17, 2017

President Trump is flailing like a man who fears he’s about to go under, and he hasn’t even been in office a full month. His instinct is to flee to the warmth and comfort of his political base — but he will learn that while presidents can run, they can’t hide.

Trump’s administration faces two acute, interlocking crises: serious questions about his campaign’s contacts with official and unofficial representatives of the Russian government, which U.S. intelligence agencies believe made concerted efforts to help Trump win the election; and appalling levels of dysfunction in the White House that make self-inflicted wounds the rule rather than the exception.

The president’s response has been to rant on Twitter and schedule a campaign-style rally Saturday in Florida — both of which may boost Trump’s morale but will do nothing to make his problems go away.

It is unclear whether Trump is trying to fool the nation or fool himself. Witness one of the angry tweets he sent out Thursday morning: “The Democrats had to come up with a story as to why they lost the election, and so badly (306), so they made up a story — RUSSIA. Fake news!”

Let me take a moment to unpack the misinterpretations, distortions and contradictions jammed into those two sentences.

“The Democrats had to come up with a story” refers to Trump’s claim that the Russia allegations are nothing more than a tantrum by Democrats upset that Hillary Clinton did not win as they had expected. That is ridiculous. The Democratic Party is focused on rebuilding at the grass-roots level and finding new leadership. Democrats I’ve spoken to have as much criticism as praise for Clinton and the campaign she ran.

Trump’s phrase “they lost the election, and so badly” ignores the facts. Clinton did comfortably win the popular vote, after all. And Trump’s electoral margin was historically quite modest.

The part about how Democrats “made up a story — RUSSIA” is absurd. It was U.S. intelligence agencies, not the Democratic Party or the Clinton campaign, that made the finding that Russia meddled in our election with the aim of boosting Trump’s prospects. If anything, the chief Democrat at the time — President Barack Obama — reacted too mildly.

And the tweet ends with what has become Trump’s favorite way to dismiss anything he’d rather not hear: “Fake news!” But why would his national security adviser, Michael Flynn, step down over inauthentic news reports? In other tweets Thursday morning, Trump attacked “low-life leakers” in the intelligence community — thus essentially confirming that leaked information about the Russia connection is genuine, not “fake.” Not even a president can have it both ways.

The idea that Russian President Vladimir Putin played a big role in putting Trump in the White House presents such a grave challenge to our democracy that even reluctant Republicans in Congress will have to investigate. The FBI is already probing reported contacts between the Trump campaign and Russian intelligence officials. We must, and I believe will, learn the truth.

This sort of crisis would test any White House. Based on its performance so far, it may drown Trump’s.

Who is in charge? Chief of Staff Reince Priebus has yet to establish any reasonable sense of order or any effective process for making decisions. Chief strategist Stephen K. Bannon and senior adviser Stephen Miller constitute a competing power center and were responsible for the shoddily drafted travel and refugee ban that was blocked by the courts. Counselor Kellyanne Conway goes on television and speaks confidently for the administration but increasingly is out of the loop — as when she said that Trump had “full confidence” in Flynn just hours before his dismissal. Press secretary Sean Spicer struggles daily to reconcile Trump’s pronouncements with objective reality.

No communications director has been hired. Who would take the job?

Among Trump’s inner circle, only senior adviser Jared Kushner, Trump’s son-in-law, seems to be having a relatively positive impact. Yes, this administration has reduced me to applauding nepotism.

Last weekend we saw Trump and his brain trust learning details of an ominous geopolitical development — a new North Korean missile test — as the president hosted a dinner party for Japanese Prime Minister Shinzo Abe on a terrace at Mar-a-Lago, surrounded by diners who belong to the posh club. Within range of prying eyes, Trump and party used the flashlight apps on their cellphones to read incoming documents.

Trump said Thursday that his administration was running like “a fine-tuned machine.” A crash-test simulator, perhaps?

I guess things could be worse. Don’t ask me how.

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