Monday, March 27, 2017

Monday, March 27, Night Wall Street Roundup: Stocks, Dollar Cut Losses On Hope Trump Can Move Past Healthcare

By Saqib Iqbal Ahmed 
March 27, 2017

Stocks, the dollar and U.S. long-dated Treasury yields steadied after sharp drops on Monday, as investors hoped U.S. President Donald Trump will be able to bolster the economy despite a defeat over healthcare reform.

Trump's failure to rally enough support from his own party, - which controls both houses of the U.S. Congress, to repeal and replace Obamacare spurred a rush to safe-haven assets such as gold XAU=, the Japanese yen JPY= and the Swiss franc CHF=before nerves steadied.

A dip in risk appetite also dominated Asian and European stock markets, and MSCI's all-country world equity index .MIWD00000PUS was down 0.11 percent. The index, which fell to a near two-week low after Wall Street stocks hit their lowest levels in about six weeks at the open, recovered ground as major U.S. stock indexes trimmed losses.

The Nasdaq Composite .IXIC finished the day positive, while the Dow Jones Industrial Average .DJI ended the day down 0.22 percent, its eighth straight day of declines. [nZXN0RZA2I]

"The market is still cautiously optimistic that the Trump White House will be able to push through many of their pro-business policies, and I think a lot of people are hopeful the Trump rally can continue through at least the middle of the year," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

The S&P 500 .SPX lost 2.39 points, or 0.10 percent, to close at 2,341.59 and the Nasdaq added 11.64 points, or 0.2 percent, to end at 5,840.37.

European shares were hit by losses among miners and banks. Europe's broad FTSEurofirst 300 index .FTEU3 closed down 0.37 percent at 1,479.05.

The U.S. dollar slipped, briefly falling to its lowest since November against a basket of currencies, as investors lost confidence in prospects for a U.S. fiscal spending boost under the Trump administration.

The dollar index .DXY had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak. The index was down 0.42 percent at 99.212.

The weaker dollar helped boost gold. Spot gold XAU= was up 0.87 percent at $1,254.66 an ounce, after hitting a 1-month high of $1,261.03 an ounce earlier in the session. [nL5N1H4439]

U.S. long-dated Treasury yields fell to one-month lows, knocked by growing uncertainty about whether the Trump administration could deliver on its campaign promise to bolster the economy. [nL2N1H4106]

In late trading, benchmark 10-year note price US10YT=RR gained 7/32 to yield 2.3764 percent, down from Friday's 2.4 percent. Yields earlier fell to 2.348 percent, their weakest level in one month.

U.S. 30-year bond prices rose 9/32 US30YT=RR, yielding 2.9848 percent. Earlier, yields slid to 2.96 percent, their lowest since Feb. 28.

"The recent hiccup on the policy front casts serious doubt on the administration's ability to push forward its ambitious policy agenda," said Bruno Braizinha, interest rates strategist at Societe Generale in New York.

Oil, meanwhile, resumed its slide as investors remained uncertain whether producing nations would extend an OPEC-led output cut beyond the end of June in an effort to reduce a global glut of crude.

Brent crude LCOc1 settled down 5 cents, or 0.1 percent, at $50.75 a barrel, and U.S. crude CLc1 settled down 24 cents, or 0.5 percent, at $47.73.

Article Link To Reuters:

OPEC, Non-OPEC To Look At Extending Oil-Output Cut By Six Months

By Vladimir Soldatkin and Rania El Gamal
March 27, 2017

A joint committee of ministers from OPEC and non-OPEC oil producers has agreed to review whether a global pact to limit supplies should be extended by six months, it said in a statement on Sunday.

An earlier draft of the statement had said the committee "reports high level of conformity and recommends six-month extension".

But the final version said only that the committee had requested a technical group and for the OPEC Secretariat to "review the oil market conditions and revert ... in April, 2017 regarding the extension of the voluntary production adjustments."

Oil sector analysts said the lack of an immediate extension could drag on crude prices.

"The dropping of the recommendation to extend cuts in favor of technical review committee is likely to lead to a lot of disappointment and potential further liquidation of long positions by money managers that will put downward pressure on oil prices," said Harry Tchilinguirian, head of commodities strategy at BNP Paribas in London.

It was not immediately clear why the wording had been changed, although a senior industry source said the committee lacked the legal mandate to recommend an extension.

The Organization of the Petroleum Exporting Countries and rival oil-producing nations were meeting in Kuwait to review progress with their global pact to cut supplies.

OPEC and 11 other leading producers including Russia agreed in December to cut their combined output by almost 1.8 million barrels per day (bpd) in the first half of the year. The original deal was to last six months, with the possibility of a six-month extension.

"Any country has the freedom to say whether they do or they don't support (an extension). Unless we have conformity with everybody, we cannot go ahead with the extension of the deal," Kuwaiti Oil Minister Essam al-Marzouq said, adding that he hoped a decision would come by the end of April.

The oil ministerial committee "expressed its satisfaction with the progress made towards full conformity with the voluntary production adjustments and encouraged all participating countries to press on towards 100 percent conformity," the statement said.

The December accord, aimed at supporting the oil market, has lifted crude LCOc1 to more than $50 a barrel. But the price gain has encouraged U.S. shale oil producers, which are not part of the pact, to boost output.

The committee said it took note that certain factors, such as low seasonal demand, refinery maintenance and rising non-OPEC supply had led to an increase in crude oil stocks. It also observed the liquidation of positions by financial players.

"However, the end of the refinery maintenance season and noticeable slowdown in U.S. stock build as well as the reduction in floating storage will support the positive efforts undertaken to achieve stability in the market," it said.

It asked the OPEC Secretariat to review oil market conditions and come back with recommendations in April regarding an extension of the agreement.

"This reaffirms the commitment of OPEC and participating non-OPEC countries to continue to cooperate," the statement said.

Russian Energy Minister Alexander Novak said it was too early to say whether there would be an extension, although the agreement was working well and all countries were committed to 100 percent compliance.

Olivier Jakob, of oil consultancy Petromatrix, said that with the revision of the ministerial committee's statement, it was becoming more difficult to know who was responsible for what in OPEC.

"That is not the best option to provide clarity to the oil markets," Jakob said.

Ellen Wald, a consultant on the global energy industry, said: "I think the market will react negatively to the lack of a clear direction on a rollover for the deal."

'Encouraging Elements'

Before the meeting, Iraqi Oil Minister Jabar Ali al-Luaibi told reporters there were some encouraging elements that suggested the oil market was improving, and that if all OPEC members agreed measures to help price stability, Iraq would support such steps.

"Any decisions taken unanimously by members of OPEC ... Iraq will be part of the decision and will not be deviating from this," Luaibi said.

Iraq's oil production is running at 4.312 million bpd this month, Luaibi said, adding that his country had cut its oil exports by 187,000 bpd so far and would reach 210,000 bpd in a few days.

Compliance with the supply-cut deal was 94 percent in February among OPEC and non-OPEC oil producers combined, Russia's Novak said.

Russia is committed to cuts of 300,000 bpd by the end of April, Novak said.

Novak said he expects global oil stockpiles to decrease in the second quarter of this year.

"The dynamics are positive here, I believe," Novak said, adding that inventories in the United States and other industrialized countries had risen by less than in the past.

Kuwait's oil minister said the market may return to balance by the third quarter of this year if producers comply fully with their production targets.

"More has to be done. We need to see conformity across the board. We assured ourselves and the world that we would reach our adjustment to 100 percent conformity," Marzouq said.

Article Link To Reuters:

Trump Tax Plan Faces Rockier Road After Stinging Healthcare Loss

By Ayesha Rascoe 
March 27, 2017

Following the failure of a healthcare bill backed by President Donald Trump, his administration plans to take a lead role in crafting major legislation to cut taxes with an eye toward meeting an August target date, the White House said on Monday.

Trump's pledge to cut taxes, including a lowering of the rates paid by corporations, was a pillar of his 2016 presidential campaign and provided much of the fuel for the heady stock market rally that followed his Nov. 8 victory.

"Obviously, we're driving the train on this," White House spokesman Sean Spicer told a briefing.

"We're going to work with Congress on this," Spicer said, adding that tax cut legislation is a "huge priority" for the Republican president and "something that he feels very passionately about."

Spicer noted that U.S. Treasury Secretary Steven Mnuchin has talked about August as a target date for tax legislation, but added that the timetable could slip depending on how quickly a consensus could be reached.

Getting a broad tax bill passed by Congress and on Trump's desk for signature into law looks to be no easy feat, especially after intra-party differences last week torpedoed the healthcare legislation he had backed.

Republicans for seven years had promised to dismantle Democratic former President Barack Obama's Affordable Care Act, dubbed Obamacare, and the Trump administration had made it its top priority when he took office in January.

But the effort collapsed on Friday when members of the Freedom Caucus, including the most conservative lawmakers of the House of Representatives, refused to support the bill, which was also backed by House Speaker Paul Ryan.

The stinging defeat alarmed investors who began reassessing the chances for passage of the tax agenda this year. Major U.S. stock indexes opened sharply lower on Monday before paring the lion's share of the losses.

The healthcare failure in Trump's first major legislative initiative showed that keeping Republicans united is a tricky business.

'Trump Is Stuck'

"Trump is stuck, he can't cajole the arch conservatives in the Republican Party and at the same time, my sense is the Democrats don't want to throw him a bone either, so it is going to be difficult," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

"It's going to be very, very difficult," Republican lawmaker Ted Poe of Texas told CNN's "New Day" program.

Poe, who resigned from the Freedom Caucus after the healthcare debacle, said Trump's hope of getting a major infrastructure spending through Congress was no "slam dunk" because of likely opposition from conservatives. Infrastructure spending is another leg of the "pro-growth" Trump strategy.

"It is so easy to sit back, cross your arms, say 'No, not going to support that.' And then what do we have?" Poe said. "... We have to lead. We're the party in power."

Analysts at Bank of America Merrill Lynch said in a research note that a tax bill, "if passed at all, could be a very watered-down version of current proposals."

The White House over the weekend dangled the idea of a compromise tax restructuring that could win support from moderate Democrats. White House chief of staff Reince Priebus on Sunday said such a package could include middle-class tax cuts.

Spicer on Monday remained vague on how much Trump would allow the federal deficit to grow as a result of the tax cuts.

"It's a really early question to be asking at this point," Spicer said.

The U.S. tax code has not undergone a major overhaul since 1986, during Republican former President Ronald Reagan's administration.

Democratic Senator Christopher Coons signaled his party would be open to discussing tax legislation if it was not merely a giveaway to the rich. Democrats fought former President George W. Bush's tax policies for that reason.

"If we have a move toward tax reform that could strengthen manufacturing, strengthen our exports and provide tax relief to the middle-class - not overwhelmingly to the wealthiest - there's a menu for us to start talking about it," the Delaware senator told MSNBC's "Morning Joe" program.

Although winning over Democrats may be tough, the alternative - getting Republicans to vote as a bloc - it could be a hard road in light of the healthcare rebellion by Republican lawmakers.

Despite aggressive lobbying by Trump, Ryan and Vice President Mike Pence, Freedom Caucus members saw too may similarities to Obamacare. Moderates were concerned over the prospect of millions of Americans losing health insurance.

One Republican lawmaker, Representative Tom Cole of Oklahoma, suggested Congress focus first on such things as getting a "realistic budget" done and passing legislation to raise the national debt ceiling.

"And then start on tax reform," Cole told MSNBC's "Morning Joe" program, adding, "But start with real hearings and start in a way that everybody at least at the outset is a potential player."

Article Link To Reuters:

Canada Pot Stocks Surge After Report Of Legalization Date

Government to introduce legislation April 10 week: CBC report; Recreational sales poised to be legalized by July 1, 2018.

By Jen Skerritt and Aoyon Ashraf
March 27, 2017

The frenzy surrounding Canada’s marijuana market intensified Monday after a report the government will unveil plans to legalize sales for recreational use in April.

Prime Minister Justin Trudeau’s government will introduce legislation the week of April 10 to legalize marijuana by July 1, 2018, according to a report from the Canadian Broadcasting Corporation. David Taylor, a spokesman for Justice Minister Jody Wilson-Raybould, declined to comment on the reported timelines. He reiterated a government pledge to unveil a proposed law by spring.

Shares of Canopy Growth Corp., the first Canadian company with a market value of C$1 billion, making it a marijuana unicorn, rose as much as 11 percent intraday in Toronto, the biggest gain since November 2016. Aurora Cannabis Inc. gained as much as 11 percent, Aphria Inc. rose 6.5 percent, and OrganiGram Holdings Inc. jumped 10 percent.

The value of Canada’s pot stocks have soared amid investor optimism that recreational sales, which Canaccord Genuity Group Inc. said in November could reach C$6 billion in sales annually by 2021, may start as early as 2018. Canopy Growth has seen its share price rise more than 300 percent in the past 12 months, while Aurora has climbed more than 400 percent.

In December, the Task Force on Cannabis Legalization and Regulation issued a report that recommends the Canadian government regulate the production of marijuana while the provinces control distribution and retail sales.

Article Link To Bloomberg:

Elon Musk's New Company Could Allow Uploading, Downloading Thoughts

March 27, 2017

Tesla Inc founder and Chief Executive Elon Musk has launched a company called Neuralink Corp through which computers could merge with human brains, the Wall Street Journal reported, citing people familiar with the matter.

Neuralink is pursuing what Musk calls the "neural lace" technology, implanting tiny brain electrodes that may one day upload and download thoughts, the Journal reported. (

Musk has not made an official announcement, but Neuralink was registered in California as a "medical research" company last July, and he plans on funding the company mostly by himself, a person briefed on the plans told the Journal.

It is unclear what sorts of products Neuralink might create, but people who have had discussions with the company describe a strategy similar to space launch company SpaceX and Tesla, the Journal report said.

In recent weeks, Neuralink has also hired leading academics in the field, the Journal reported.

Article Link To Reuters:

Monday, March 27, Morning Global Market Roundup: Stocks Stumble On U.S. Policy Woes; Trumpflation Trades Suffer

By Saikat Chatterjee
March 27, 2017

U.S. stock futures and the dollar fell on Monday while Asian markets struggled as President Donald Trump's failure on healthcare reform raised questions about his ability to push through tax cuts and fiscal spending to boost the economy.

Trump's inability to get enough support from his own Republican party to "repeal and replace" the Obamacare health insurance reforms, a major campaign promise, also spurred a rush to safety assets such as gold XAU= and the Japanese yen JPY=

U.S. stock index futures ESc1 fell 0.7 percent to a six-week low in heavy volume, suggesting a weaker start on Wall Street later in the day.

So-called "Trumpflation trades" -- betting on an extended recovery in the U.S. and global economies and related assets such as commodities -- came under heavy selling pressure.

"Markets have had a good run recently and this is a good opportunity for profit taking across counters," said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong, with about $130 million under management.

But Wong said the selloff is likely to be limited as cashed-up investors waited on the sidelines.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was broadly flat after posting its first weekly decline last week in three weeks.

Japan's Nikkei .N225 fell 1.5 percent as the yen rebounded in the face of renewed U.S. dollar weakness.

Rising U.S. policy uncertainty also raised concerns that a recent pick-up in global business and consumer sentiment, particularly in Asia, would start to fade.

In terms of relative valuations, U.S. stocks are trading well above their historical averages while Asia stocks are still broadly in line despite a recent bounce.

"Any big pull back in markets would be an opportunity for long term investment in a region where potential is still intact,” said Nicholas Yeo, head of China/Hong Kong equities at Aberdeen Asset Management in Hong Kong, part of a team that manages $374 billion in assets as of end-December 2016.

Dollar Stumbles

The dollar fell to a near two-month low against a basket of currencies.

The dollar index was down 0.3 percent at 99.287 .DXY, its lowest since Feb. 2.

It had risen to a 14-year high near 104.00 early in January when expectations for significant stimulus under the Trump presidency were at their peak.

"There isn't much going for the dollar right now and the market will be bracing for its further decline." said Shin Kadota, senior strategist at Barclays in Tokyo.

Fresh off the defeat on U.S. healthcare legislation on Friday, the White House warned rebellious conservative lawmakers on Sunday that they should get behind Trump's agenda or he may bypass them on future legislative fights, including tax reform.

The Republican head of the tax-writing committee in the House of Representatives said he hoped to move a tax bill through his panel this spring.

The euro was 0.45 percent higher at $1.0847 EUR=following a rise to $1.0849, its strongest early December.

U.S. Treasury yields US10YT=RR were trading near one-month lows with ten-year bonds trading near 2.36 percent, its lowest levels since Feb. 28.

Shanghai Futures Exchange copper SCFcv1 slid by 0.7 percent to 46,680 yuan ($6,785) a tonne while Australia's benchmark metals and mining index .AXMM declined as much as 1.7 pct, its lowest since March 14.

Oil prices were broadly flat as investor concerns lingered that OPEC-led supply cuts were not yet reducing record U.S. crude inventories.

U.S. crude CLc1 was trading slightly higher at $48.15 per barrel. [O/R]

Safe-haven gold perked up, rising to $1,253 an ounce.XAU=.

Article Link To Reuters:

Oil Dips As Rising US Drilling Offsets Talk Of An OPEC-Led Cut Extension

By Henning Gloystein
March 27, 2017

Oil prices dipped on Monday as rising U.S. drilling activity outweighed talks that an OPEC-led production cut initially due to end in mid-2017 may be extended.

Prices for front-month Brent crude futures LCOc1, the international benchmark for oil, eased 7 cents from their last close to $50.73 per barrel.

In the United States, West Texas Intermediate (WTI) crude futures CLc1 were down 14 cents at $47.83 a barrel.

Traders said that prices received some support from talks over the weekend between the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, aimed at extending a production cut beyond the middle of the year in order to prop up the market.

"OPEC and non-OPEC decided to get ahead of the game this weekend, announcing they are reviewing whether the output curb deal should be extended," said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore, adding that this had given crude some support.

But the OPEC-led cuts were offset by rising drilling activity and oil production in the United States, which traders said contributed to financial traders reducing their long positions in crude futures to the lowest level since early December.

"The U.S. oil rig count continued its surge ... Since its trough on May 27, 2016, producers have added 336 oil rigs (+106 percent) in the U.S.," Goldman Sachs said in a note to clients.

The U.S. bank said that should the rig count stay at the current levels and the impact of a backlog of previously closed rigs returning to production was considered, then U.S. oil production would rise by 235,000 bpd between the fourth quarter of 2016 and the first half of 2017.

Since mid-2016, U.S. oil production has risen by 700,000 bpd, or 8.3 percent, to 9.13 million bpd, government data shows C-OUT-T-EIA.

Article Link To Reuters:

Russia Needs Data On Oil Supply, Markets To Decide On More Cuts

Country seeks more research before possible cuts extension; Russia sees no output decision before OPEC meets in May: Novak.

By Elena Mazneva, Yousef Gamal El-Din, and Sam Wilkin
March 27, 2017

Russia isn’t ready to support a possible extension of oil-supply cuts into the second half of the year, even as more crude producers acknowledge they will probably need to do so to achieve their goals of balancing the market and firming up prices.

Five members of the Organization of Petroleum Exporting Countries have signaled their support for a possible extension, along with non-member Oman, which joined the deal on output cuts that OPEC and 11 other suppliers reached in December. OPEC’s biggest producer Saudi Arabia has indicated it’s willing to extend the agreement if global stockpiles remain above their five-year average.

Ministers from seven of the 24 countries participating in the cuts deal met Sunday in Kuwait City to monitor compliance. They called on OPEC to present recommendations next month on whether to extend the accord, which took effect in January, beyond its initial six-month term.

Russia needs more time to assess the market, inventories and production in the U.S. and other non-OPEC countries, Russia’s Energy Minister Alexander Novak said in an interview with Bloomberg television. The monitoring committee discussed the option of extending the cuts “but we have decided that in order to make any decision like this or even any recommendations there needs to be a ministerial meeting.” OPEC ministers are due to meet in Vienna on May 25.

Gradual Cuts

Russia has cut its production by 185,000 barrels a day compared with a target of 300,000, Novak said Saturday. It was always the plan to implement the reductions in output gradually, and Russia’s progress has been faster than anticipated, he said on Sunday. Much of Russia’s oil production is in the hands of listed companies, giving the state less control over production than a state-run monopoly such as Saudi Arabian Oil Co., known as Saudi Aramco.

“We are monitoring companies on a weekly basis for their production plans,’’ Novak said. “At the moment, all companies are conforming to their obligations. Companies don’t want to stand out among a group that is conforming.’’

Novak declined to speculate on oil prices, after Russia’s central bank said last week that it saw a risk of oil prices falling to $40 a barrel by the end of this year without an extension in the deal and then staying close to that level in 2018-19. Benchmark Brent crude closed Friday at $50.80 a barrel.

“The Finance Ministry always bases the budget on very conservative numbers,’’ Novak said. “In real life we might see different numbers.’’

Russia will hold an energy dialogue meeting with OPEC in Moscow on May 31, Novak told reporters in Kuwait.

Article Link To Bloomberg:

White House Looks To Democrats On Tax Reform

By Lindsay Dunsmuir and Doina Chiacu
March 27, 2017

Fresh off a defeat on U.S. healthcare legislation, the White House warned rebellious conservative lawmakers that they should get behind President Donald Trump's agenda or he may bypass them on future legislative fights, including tax reform.

The threat by White House chief of staff Reince Priebus to build a broad coalition on tax reform that could include moderate Democrats came as the Republican head of the tax-writing committee in the House of Representatives said he hoped to move a tax bill through his panel this spring.

House Ways and Means Committee Chairman Kevin Brady said his committee had been working on tax reform in parallel with the failed healthcare reform push.

"We've never stopped working," Brady told Fox News' "Sunday Morning Futures with Maria Bartiromo." "We will continue to make improvements."

Brady said the committee planned to move on the bill in the spring. He said he wanted the House blueprint to be the basis for Trump's tax reform plan rather than have competing versions from Treasury and the White House.

Investors on Wall Street worry the healthcare bill's defeat bodes poorly for tax reform. Equities have rallied since Trump's election partly on expectations of tax cuts. Economic growth would be more modest without fiscal stimulus and U.S. equity index futures fell to a six-week low on Sunday.

Both Trump and Priebus have scolded hardline conservatives who rejected legislation backed by the White House to replace the 2010 Affordable Care Act, known as Obamacare.

Speaking on "Fox News Sunday," Priebus held out the possibility of working with moderate Democrats as well as Republicans to pass other aspects of Trump's agenda, such as his proposed budget, the revamp of the tax code and a renewed effort at healthcare reform.

"If we can come up with a bill that accomplishes the goals of the president with Republicans alone, we'll take it and we'll move forward with it," Priebus said.

But he added: "I think it's more or less a warning shot that we're willing to talk to anyone. We always have been and I think more so now than ever."

In an embarrassment for Trump, who had campaigned for the White House on what he said were his skills as a dealmaker, the healthcare bill was pulled from the floor of the House of Representatives on Friday because it failed to draw enough support from within Trump's Republican Party.

Objections from members of the conservative House Freedom Caucus and from moderate Republicans left leaders short of the votes needed for passage, with Democrats unified in opposition.

Trump failed to win over the Freedom Caucus lawmakers despite courting them intensively. Outside conservative groups such as the Club for Growth and Heritage Action for America that are closely aligned with the Freedom Caucus had strongly opposed the Republican healthcare bill and urged lawmakers to reject it.

In a tweet on Sunday morning, Trump lashed out at both the Freedom Caucus and the conservative groups, saying their actions had left "Democrats smiling in D.C."

Priebus said it was a "real shame" that conservative lawmakers decided not to get behind the healthcare bill.

"And I think the president is disappointed in the number of people he thought were loyal to him that weren't," he said.

Middle-Class Tax Cut

Trump has put tax reform at the top of his legislative agenda now that the healthcare bill has failed.

Priebus said Trump was not backing off his view that the tax reform bill needed a border tax. He also said that the measure would include a middle-class tax cut that he said might help to attract votes from moderate Democrats.

In a sign that not everyone in the Freedom Caucus was in line with its approach and a positive signal for Trump as he looked ahead to tax reform, U.S. Representative Ted Poe, a Texas Republican, said he had resigned from the group.

"In order to deliver on the conservative agenda we have promised the American people for eight years, we must come together to find solutions to move this country forward," Poe said in a brief statement. "Saying no is easy, leading is hard."

Senate Democratic leader Chuck Schumer criticized Trump over his handling of the healthcare bill and said Republicans would face roadblocks from conservatives on other issues.

"They're going to repeat the same mistake they made on Trumpcare with tax reform," Schumer told ABC's "This Week."

He urged Trump to go a different path: Reject the Freedom Caucus and work with Democrats.

"If he changes, he could have a different presidency," Schumer said. "He's going to have to tell them he can't work with them and we'll certainly look at his proposals. But it's going to be guided on our values."

Republican Representative Mark Meadows, chairman of the Freedom Caucus, said on Sunday he was optimistic on tax reform and that his group could support a plan that is not revenue neutral.

"So, tax reform and lowering taxes, you know, will create and generate more income," he said. "And so we're looking at those, where the fine balance is. But does it have to be fully offset? My personal response is 'no.'"

Another Freedom Caucus congressman, Jim Jordan, rejected finger-pointing over the collapse of the health bill.

"Instead of doing the blame game, let's get to work," he said on "Fox News Sunday."

Article Link To Reuters:

Trump To Sign Order On Tuesday Easing Energy Regulations

March 27, 2017

President Donald Trump will sign an order on Tuesday aimed at making it easier for companies to produce energy in the United States, administration officials said on Sunday.

Under Trump, the U.S. Environmental Protection Agency is aiming to aggressively roll back Obama-era environmental regulations.

Trump plans to sign the executive order at the EPA to reduce "unnecessary regulatory obstacles that restrict the responsible use of domestic energy resources," a White House official said.

EPA Administrator Scott Pruitt told ABC's "This Week" the order would help reverse the Obama administration's anti-fossil fuel strategy.

Pruitt has publicly doubted the scientific consensus that human actions are the lead cause of climate change. His installation at the EPA last month reinforced the view on both sides of the political divide that America is ceding its position as a leader in the global fight on climate change.

Article Link To Reuters:

The National Slush Fund

By Robert J. Samuelson
The Washington Post
March 27, 2017

There was bound to be a political commotion when the Trump administration released its 2018 budget. After all, it isn’t every day that the White House proposes deep cuts in agency spending: For 2018, the Environmental Protection Agency would be down 31 percent; the State Department, 29 percent; the Department of Education, 14 percent; and the Department of Transportation, 13 percent.

Outrageous, screamed critics. Good programs are being gutted. Surely true. But some ineffective or unimportant programs would also be gutted. The reflexive horror from Congress and (yes) the media to spending cuts reveals a central cause of chronic budget deficits. There’s a bipartisan unwillingness to answer this question: What is government for?

Once upon a time, before World War II, there was a strong consensus for limited government. In 1929, federal spending was 3 percent of gross domestic product; now it is 21 percent. Pay-as-you-go finance also enjoyed broad support. If more government was needed, it had to be covered by higher tax revenues. There was an “unwritten fiscal constitution,” writes Bill White in his book, “America’s Fiscal Constitution.”

According to White, the government traditionally borrowed for only one of four reasons: war, starting with 1812; depression, starting with the Panic of 1819; geographic expansion (Jefferson’s Louisiana Purchase); and preserving the union (the assumption of state debts after the Revolution). “For almost two centuries the president and Congress never planned to incur debt,” White writes, “simply to reduce taxes or to pay for routine annual spending.”

This gradually changed after World War II. The crucial break occurred in the early 1960s when President John F. Kennedy accepted the advice of his economists that tax cuts would spur economic growth, although the budget was already in deficit. The assumption was that continuous strong economic growth would generate the higher tax revenues to pay for new programs.

We went from limited to open-ended government. Any group that could garner the votes got federal aid. Government operated a railroad (Amtrak), promoted “public” TV, subsidized farmers and much more. Spending discipline eroded. The trouble was that the central assumption — that rapid economic growth would automatically finance new government programs — was over-optimistic.

No matter. Consider the contrast between the last half of the 19th and 20th centuries. After Kennedy’s conversion, the federal government ran deficits in every year from 1963 to 1997, except for one (1969). After the Civil War, the response was much different. The debt was a then-staggering $2.7 billion. White reports that the government ran surpluses in every year from 1866 to 1893.

We should revert to the budget’s role as an exercise in political choice, not an instrument of economic policy. That doesn’t mean ignoring economics and trying futilely to balance the budget during recessions. The late economist Herbert Stein argued that when the economy nears “full employment,” the budget should near balance. This remains a good rule of thumb. Well, with the economy near full employment, the deficit exceeds $500 billion.

We need limited government not in the sense of smaller government — that’s impossible — but in the sense of government that is focused and reflects agreed-upon boundaries. What jobs must government do? Who deserves benefits and why?

The standard Washington narrative blames Republicans for the budget stalemate because they reject higher taxes. This is a half-truth. Democrats have stymied candid discussion by ruling out cuts in benefits for Social Security, Medicare and Medicaid. These programs constitute more than half of present federal spending and two-thirds of growth through 2027, projects the Congressional Budget Office. Putting them off-limits squeezes other programs, as Trump’s budget makes clear.

Trump has offered some good and bad choices; but at least he has offered choices. We need to go further. Here’s what we should do.

First, determine how much we need to spend on defense. (At 15 percent of the budget, it’s too little now, in my view.)

Second, begin trimming programs for the elderly by gradually cutting benefits for the affluent and raising eligibility ages. Preserve most, though not all, of the safety net.

Third, eliminate — again gradually — marginal or ineffective programs, from Amtrak to farm subsidies to broadcasting grants. These cuts might not shrink government but would liberate funds for more important programs, such as research and defense.

Fourth, find a new tax (my candidate: a carbon tax) whose slow increase would close the considerable remaining deficits after spending cuts and increases.

The odds that Congress would pass anything like this are negligible. We have used government as a massive slush fund for whatever cause or interest seems popular. The carelessness is now woven into the social and political fabric. We need a leader who can shift public opinion and reconcile Americans to the need for choices, many unpopular. That person is nowhere in sight.

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Trump Economy Needs Wings And Prayers To Soar

By Albert R. Hunt
The Bloomberg View
March 27, 2017

Donald Trump boasts that he has been an economic genius, creating jobs, cutting $12 billion off the national debt and overseeing a soaring stock market in just his first two months.

These claims are largely phony. He may need braggadocio, though, because on the economy he has been dealt a bad hand politically. This problem is likely to be compounded by two actions his first year.

Perversely, the reason he inherited a bad hand politically is that he got a good one economically: low unemployment, moderate growth and the glimmerings of wage gains. If history is any guide, the last 77 months of job growth won't last a whole lot longer.

By contrast, most successful presidents dating back to Franklin D. Roosevelt inherited economies in dire straits and got political credit for reviving them. President Ronald Reagan took over amid the sluggish growth and soaring inflation of the "stagflation" period, while President Barack Obama assumed office at the start of the worst global economic crisis since the Great Depression. Economic conditions got worse on both occasions, with unemployment hitting double digits, before improving markedly to each incumbent's benefit.

Trump, who promised a booming economy with a 4 percent growth rate, was counting on big tax cuts and huge infrastructure spending to create jobs.

But Republican congressional leaders insisted that the first priority was to repeal and replace Obama's signature health-care system. They failed, revealing schisms in Republican ranks, Speaker Paul Ryan's political ineptitude and Trump's inability to pressure or persuade members of Congress.

It essentially wasted the crucial first three months of Republican rule. Legislation for rebuilding roads, bridges and airports has been put off. Whatever materializes is likely to be less ambitious than Trump's campaign promises -- his proposed budget actually cuts infrastructure spending -- meaning it would have less immediate economic impact.

The priority now is tax reform, with individual and corporate reductions and base-broadening to cover some of the lost revenue. Treasury Secretary Steve Mnuchin predicted that tax reform will be "a lot simpler" than health care. The naive newcomer soon will learn that there's a reason there hasn't been an important overhaul of the tax system in over 30 years. With the devastating health-care defeat, look for Trump to focus tax cuts more on the middle class than on making top-rate, supply-side reductions. Ryan's preferred "border adjustment tax" favoring exports is dead.

The other complication for the Trump White House will be the Federal Reserve Board. The term of Chair Janet Yellen, a distinguished Democratic economist appointed three years ago by Obama, expires next Feb. 3. If the economy is slowing at that point, the question of who succeeds Yellen becomes more important, since the Fed under Yellen is starting to raise interest rates to keep growth from speeding out of control.

Already there is speculation, even some lobbying, for her successor. The possibilities include a former Fed governor, Kevin Warsh, along with Glenn Hubbard, dean of the Columbia Business School and a leading Republican economist in the George W. Bush administration. There is also talk that Gary Cohn, a top Trump economic adviser and former president of Goldman Sachs, might be a more accommodating choice from Trump's point of view.

To the extent he has any economic ideology, Trump, the builder, loves low interest rates. Ironically, that puts him closer to the views of Yellen than to the Republican inflation hawks who worry about the potential of low rates to overstimulate growth.

But reappointing Obama's Fed chair would drive Republicans crazy. Yellen, whom Trump blasted during the campaign as an Obama toadie, probably has little interest in staying. If there are any economic dislocations, Trump can be counted on to lash out at the Fed more than any president since Richard Nixon. He has little respect for any institutions and always blames others for problems.

As always, timing will be essential. At the time of both Reagan's and Obama's re-election, the jobless rate was almost the same as when they took office. But both benefited from favorable trends. In Reagan's case, unemployment had dropped sharply after soaring for awhile, enabling him to proclaim "morning in America." Job growth after the 2008 recession made a persuasive case four years later for the strength of "the Obama economy." Direction matters, politically.

Trump could be in good shape if, in three and a half years, he has pulled a trifecta. That would mean he's not tainted by Russian interference in the 2016 presidential election, his family-business conflicts of interest don't cause an open scandal, and he doesn't get into a war. Oh, and presides over a jobless rate no worse than the 4.8 percent he inherited.

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How Not To Die From Loneliness

By Karol Markowicz
The New York Post
March 27, 2017

Turns out American men aren’t just dying lonely deaths — they’re dying from loneliness itself.

And they don’t even realize it.

This month, The Boston Globe’s editors turned to one of their writers, Billy Baker, and asked him to write a story on how “middle-aged men have no friends.” At first insulted, Baker quickly realized he was exactly that man. The way he tells his tale, it’s easy to imagine him as a man in his 60s, decades from the traditional days of making close friends, isolated.

Then he admits: He’s 40.

John T. Cacioppo, author of the book “Loneliness: Human Nature and the Need for Social Connection,” writes that “social isolation has an impact on health comparable to the effect of high blood pressure, lack of exercise, obesity or smoking.” Numerous studies have concluded that loneliness is actually killing men prematurely.

Writing in The New York Times, Dhruv Khullar, a resident physician at Massachusetts General Hospital and Harvard Medical School, noted that “a wave of new research suggests social separation is bad for us. Individuals with less social connection have disrupted sleep patterns, altered immune systems, more inflammation and higher levels of stress hormones. One recent study found that isolation increases the risk of heart disease by 29 percent and stroke by 32 percent.”

Isolation is deadly. So why aren’t we doing anything about it?

For starters, there’s a stigma against admitting loneliness, especially for men, and there’s a whole other taboo against openly wanting to make new friends.

We celebrate lifelong friendships and treat the friends we make earlier in life as more legitimate than the ones that come later. The early friendships are filled with inside jokes, funny stories of crazy nights and that thing that happened that one time that still no one can believe. We know all the background stories, each other’s full biographies. It’s deep, there’s no doubt about it.

It’s also nearly impossible to maintain. The group of friends who hung out until sunrise most weekends in their early 20s will have a hard time keeping it going into their 30s and 40s.

Most friendships end up getting relegated to social media. We like each other’s pictures as a way of staying in touch, but don’t actually make an effort to get together. We fight off screen time inside our families but don’t realize we have friends whose lives we only learn about on Facebook.

We don’t have the time for friendship the way we once did, especially after kids enter the picture. One of Baker’s key points was that he couldn’t go out too much and leave his wife alone with the kids. That difficulty leads to the real key of grown-up friendship success: the couple friends.

When our oldest child started nursery school, my husband and I scoffed at the events the school put together to introduce the parents. Why did we need to have a cocktail hour with a bunch of strangers? We already had plenty of friends.

But we also started noticing that our previously close friend group was starting to fray. People were having children, moving away, pursuing time-consuming careers. It was getting harder and harder to get together with our group, and though we enjoyed our time just the two of us, that’s all we seemed to have after a while.

We started to make a conscious effort to make new friends. It worked. Not every couple we met was a home run, but 100 percent of them excitedly agreed to go out when we asked.

They were craving grown-up interaction, too, though we’re not supposed to say it. We made couple friends to go out with, travel with and generally just hang out with on weekends.

Our old friends remain indispensable to us and the handful of times we all get together each year are some of the best times. But the new friends are important, too.

We expect everything to change as we get older, but we somehow want our friendships to stay exactly as they were. Make an effort to see your old friends, and revel in joyful experiences with them. But don’t forget that in 30 years, your new friends will be your old friends.

Unless, of course, you don’t make them in the first place.

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The Great Firewall Is A Trade Barrier

By Adam Minter
The Bloomberg View
March 27, 2017

The San Francisco-based photo-sharing site Pinterest would seem to rank low on the list of potential threats to China. Beloved by fashion designers, photographers, cooks and hobbyists, the seven-year-old website is a global hub for the sharing of images, trends and ideas on topics ranging from living-room design to what to cook at your Saturday barbecue.

Unfortunately, Pinterest Inc.'s innocuousness couldn't save it from the same fate as other foreign internet companies in China, including Facebook Inc. and Alphabet Inc. (formerly known as Google). Earlier this month, the Chinese government blocked Chinese internet users from accessing the site. And that should make Pinterest of interest to the Trump administration, as well as China.

Pinterest’s troubles aren’t unique. Last year, China excluded thousands of U.S. websites from China, including eight of the 25 most-trafficked global sites. Yet, so far at least, there's been hardly a word of protest out of Washington against these systematic denials of market access. Similar restrictions against U.S. automakers, say, would almost certainly have prompted complaints to the World Trade Organization.

The costs imposed by this policy are adding up. In 2015, the global value of international data flows came to $2.8 trillion, exceeding the global flow of merchandise for the first time. The U.S. economy has benefited more than most from that trade. In 2014, the U.S. exported nearly $400 billion in digital services, accounting for more than half of all U.S. services exports and generating a $159 billion trade surplus in the sector.

Though it's impossible to calculate what Facebook, Google and Twitter Inc. might’ve earned in China's booming internet sector had they been allowed to compete, there's little question that they would have added measurably to that surplus. For example, the New York Times Co., a tiny digital business compared to Facebook, claims to have lost at least $3 million due to the blocking of its website in 2012.

The Chinese government is doubtless aware of the opportunities that online protectionism creates for domestic companies. In June 2009, China blocked Twitter; two months later, Sina Corp. launched a wildly successful knock-off microblog, Weibo, that has thrived for years in the absence of foreign competition. Likewise, when Google announced in May 2010 that it was contemplating the total shutdown of its Chinese offices, the stock of Baidu Inc. -- its leading Chinese competitor and a keen observer and imitator of Google's business -- rallied 16.6 percent in a single day, while smaller rivals enjoyed similar bumps.

Meanwhile, local Chinese versions of Pinterest have flooded China's market since 2012 with middling success. If the recent ban holds, at least one of those companies may enjoy a highly lucrative opportunity to become "China's Pinterest."

Pinterest's options, on the other hand, are limited. The Chinese government is notoriously opaque about why it blocks sites, and there are no formal procedures for appeal. (Mark Zuckerberg's years-long lobbying effort to push Facebook back into China might qualify as the informal process.) That's not just unfair. It's also a likely violation of China's treaty obligations under the World Trade Organization, which requires transparency, due process and non-discrimination in government decisions affecting companies.

The idea of dragging China before the WTO to argue that Great Firewall represents a trade barrier isn't a new idea. The European Union has contemplated such an approach since at least the late 2000s. And late last year, in a move that could lay the groundwork for a case, the Obama administration argued that China's worsening censorship posed a "significant burden" on foreign internet service providers. The next step, though -- a formal complaint and case before the WTO -- is up to the Trump Administration.

Such a case wouldn’t be a slam dunk. China has long cited WTO clauses that give countries room to impose measures to protect public morality and order. Even if it lost the WTO case, the Chinese government would be highly unlikely to abide by the decision in full.

But the WTO recently ruled against a Chinese attempt to invoke public morality as an excuse to restrict the import and distribution of American books, magazines, films and other published material. And any Chinese attempt to ignore WTO rulings would undermine its recent posturing as a champion of free trade. A negotiated settlement -- perhaps integrated into a long-delayed U.S.-China investment treaty -- that opens China to U.S. internet companies while acknowledging China's right to censor selectively (not wholesale) for morality and public order, might be the best outcome for all sides.

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Trump Taps Kushner To Lead A SWAT Team To Fix Government With Business Ideas

By Ashley Parker and Philip Rucker 
The Washington Post
March 27, 2017

President Trump plans to unveil a new White House office on Monday with sweeping authority to overhaul the federal bureaucracy and fulfill key campaign promises — such as reforming care for veterans and fighting opioid addiction — by harvesting ideas from the business world and, potentially, privatizing some government functions.

The White House Office of American Innovation, to be led by Jared Kushner, the president’s son-in-law and senior adviser, will operate as its own nimble power center within the West Wing and will report directly to Trump. Viewed internally as a SWAT team of strategic consultants, the office will be staffed by former business executives and is designed to infuse fresh thinking into Washington, float above the daily political grind and create a lasting legacy for a president still searching for signature achievements.

“All Americans, regardless of their political views, can recognize that government stagnation has hindered our ability to properly function, often creating widespread congestion and leading to cost overruns and delays,” Trump said in a statement to The Washington Post. “I promised the American people I would produce results, and apply my ‘ahead of schedule, under budget’ mentality to the government.”

In a White House riven at times by disorder and competing factions, the innovation office represents an expansion of Kushner’s already far-reaching influence. The 36-year-old former real estate and media executive will continue to wear many hats, driving foreign and domestic policy as well as decisions on presidential personnel. He also is a shadow diplomat, serving as Trump’s lead adviser on relations with China, Mexico, Canada and the Middle East.

The work of White House chief strategist Stephen K. Bannon has drawn considerable attention, especially after his call for the “deconstruction of the administrative state.” But Bannon will have no formal role in the innovation office, which Trump advisers described as an incubator of sleek transformation as opposed to deconstruction.

The announcement of the new office comes at a humbling moment for the president, following Friday’s collapse of his first major legislative push — an overhaul of the health-care system, which Trump had championed as a candidate.

Kushner is positioning the new office as “an offensive team” — an aggressive, nonideological ideas factory capable of attracting top talent from both inside and outside of government, and serving as a conduit with the business, philanthropic and academic communities.

“We should have excellence in government,” Kushner said Sunday in an interview in his West Wing office. “The government should be run like a great American company. Our hope is that we can achieve successes and efficiencies for our customers, who are the citizens.”

The innovation office has a particular focus on technology and data, and it is working with such titans as Apple chief executive Tim Cook, Microsoft founder Bill Gates, Salesforce chief executive Marc Benioff and Tesla founder and chief executive Elon Musk. The group has already hosted sessions with more than 100 such leaders and government officials.

“There is a need to figure out what policies are adding friction to the system without accompanying it with significant benefits,” said Stephen A. Schwarzman, chief executive of the investment firm Blackstone Group. “It’s easy for the private sector to at least see where the friction is, and to do that very quickly and succinctly.”

Some of the executives involved have criticized some of Trump’s policies, such as his travel ban, but said they are eager to help the administration address chronic problems.

“Obviously it has to be done with corresponding values and principles. We don’t agree on everything,” said Benioff, a Silicon Valley billionaire who raised money for Democrat Hillary Clinton’s 2016 campaign.

But, Benioff added, “I’m hopeful that Jared will be collaborative with our industry in moving this forward. When I talk to him, he does remind me of a lot of the young, scrappy entrepreneurs that I invest in in their 30s.”

Kushner’s ambitions for what the new office can achieve are grand. At least to start, the team plans to focus its attention on reimagining Veterans Affairs; modernizing the technology and data infrastructure of every federal department and agency; remodeling workforce-training programs; and developing “transformative projects” under the banner of Trump’s $1 trillion infrastructure plan, such as providing broadband Internet service to every American.

In some cases, the office could direct that government functions be privatized, or that existing contracts be awarded to new bidders.

The office will also focus on combating opioid abuse, a regular emphasis for Trump on the campaign trail. The president later this week plans to announce an official drug commission devoted to the problem that will be chaired by New Jersey Gov. Chris Christie (R). He has been working informally on the issue for several weeks with Kushner, despite reported tension between the two.

Under President Barack Obama, Trump advisers said scornfully, some business leaders privately dismissed their White House interactions as “NATO” meetings — “No action, talk only” — in which they were “lectured,” without much follow-up.

Andrew Liveris, chairman and chief executive of Dow Chemical, who has had meetings with the two previous administrations, said the environment under Trump is markedly different.

After he left a recent meeting of manufacturing chief executives with Trump, Liveris said, “Rather than entering a vacuum, I’m getting emails from the president’s team, if not every day, then every other day — ‘Here’s what we’re working on.’ ‘We need another meeting.’ ‘Can you get us more input on this?’ ”

Kushner proudly notes that most of the members of his team have little-to-no political experience, hailing instead from the world of business. They include Gary Cohn, director of the National Economic Council; Chris Liddell, assistant to the president for strategic initiatives; Reed Cordish, assistant to the president for intergovernmental and technology initiatives; Dina Powell, senior counselor to the president for economic initiatives and deputy national security adviser; and Andrew Bremberg, director of the Domestic Policy Council.

Ivanka Trump, the president’s elder daughter and Kushner’s wife, who now does her advocacy work from a West Wing office, will collaborate with the innovation office on issues such as workforce development but will not have an official role, aides said.

Powell, a former Goldman Sachs executive who spent a decade at the firm managing public-private partnerships, also boasts a government pedigree as a veteran in George W. Bush’s White House and State Department. Bremberg also worked in the Bush administration. But others are political neophytes.

Liddell, who speaks with an accent from his native New Zealand, served as chief financial officer for General Motors, Microsoft and International Paper, as well as in Hollywood for William Morris Endeavor.

“We are part of the White House team, connected with everyone here, but we are not subject to the day-to-day issues, so we can take a more strategic approach to projects,” Liddell said.

Like Kushner, Cordish is the scion of a real estate family — a Baltimore-based conglomerate known for developing casinos and shopping malls. And Cohn, a Democrat who has recently amassed significant clout in the White House, is the hard-charging former president of Goldman Sachs.

Trump’s White House is closely scrutinized for its always-evolving power matrix, and the innovation office represents a victory for Wall Street figures such as Cohn who have sought to moderate Trump’s agenda and project a friendly front to businesses, sometimes in conflict with the more hard-line conservatism championed by Bannon and Chief of Staff Reince Priebus.

The innovation group has been meeting twice a week in Kushner’s office, just a few feet from the Oval Office, largely barren but for a black-and-white photo of his paternal grandparents — both Holocaust survivors — and a marked-up whiteboard more typical of tech start-ups. Kushner takes projects and decisions directly to the president for sign-off, though Trump also directly suggests areas of personal interest.

There could be friction as the group interacts with myriad federal agencies, though the advisers said they did not see themselves as an imperious force dictating changes but rather as a “service organization” offering solutions.

Kushner’s team is being formalized just as the Trump administration is proposing sweeping budget cuts across many departments, and members said they would help find efficiencies.

“The president’s doing what is necessary to have a prudent budget, and that makes an office like this even more vital as we need to get more out of less dollars by doing things smarter, doing things better, and by leaning on the private sector,” Cordish said.

Ginni Rometty, the chairman and chief executive of IBM, said she is encouraged: “Jared is reaching out and listening to leaders from across the business community — not just on day-to-day issues, but on long-term challenges like how to train a modern workforce and how to apply the latest innovations to government operations.”

Trump sees the innovation office as a way to institutionalize what he sometimes did in business, such as helping New York City’s government renovate the floundering Wollman Rink in Central Park, said Hope Hicks, the president’s longtime spokeswoman.

“He recognized where the government has struggled with certain projects and he was someone in the private sector who was able to come in and bring the resources and creativity needed and ultimately execute in an efficient, cost-effective, way,” Hicks said. “In some respects, this is an extension of some of the highlights of the president’s career.”

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