Friday, May 12, 2017

Dollar Heads For Strongest Week This Year On Fed Hike Bets

By Jemima Kelly
May 12, 2017

The dollar traded near a three-week high on Friday, on track for its strongest week this year, as robust producer price and labor market data bolstered expectations that the Federal Reserve will raise U.S. interest rates again in June.

A rally to 14-year highs for the dollar, inspired by the election of U.S. President Donald Trump, has fizzled out since the start of this year. The currency has fallen as much as 5 percent as the pro-growth measures Trump had promised have been called into question.

But despite a wobble earlier in the week after Trump's abrupt firing of FBI Director James Comey - which was suspected to have been driven by political motives - the dollar was up around 1 percent for the week against its broad index .DXY, after reaching a three-week high on Thursday.

That, said analysts, was partly the result of a broad market focus shift away from politics and back towards monetary policy. With investors now pricing in an 80 percent chance of a Fed rate hike next month, while other central banks continue to ease policy, that could drive the dollar higher.

"Although the market now fully prices in a June hike, there’s way too little tightening priced thereafter, in our view," said BNP Paribas currency strategist Sam Lynton-Brown, in London.

"Currency investors have flipped to a net short position in the dollar... We think that position is vulnerable to an unwind, as market focus shifts from politically driven risk-on or risk-off (sentiment) to monetary policy divergence."

The euro, which hit a six-month high above $1.10 at the start of the week on relief that the centrist Emmanuel Macron had beaten the far-right Marine Le Pen to become French president, was trading flat at $1.0865 EURO=, down 1.2 percent since Monday - its worst week in six.

Data released on Thursday showed new applications for U.S. jobless benefits unexpectedly fell last week while producer prices rebounded in April, pointing to a tightening labor market and rising inflation.

More U.S. indicators are due later on Friday, including retail sales and the consumer price index for April. VENOUS

The dollar was flat at 113.81 yen JPY=, down from its eight-week high of 114.38 yen reached earlier in the week.

The dollar has gained more than 4 percent in the three weeks since the first round of the France's presidential elections, with the yen slipping as risk aversion receded.

Yet some analysts say that despite expectations for a Fed rate increase, uncertainty about U.S. growth momentum and concern about the political implications of Trump's dismissal of Comey could limit the scope for near-term gains for the dollar.

"The dollar will probably trade in a 112 yen to 115 yen range for a while," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo, adding that it will probably take some time for the greenback to break above 115 yen.

Article Link To Reuters:

Obamacare's Crushing Cost To Some Families: 49 Percent Price Hike Since 2014, Premiums Of $14,300

-- Average premiums for eHealth's individual plans have spiked 39 percent since 2014.
-- Family premiums have increased by 49 percent since 2014.
-- The average four-member family will spent over $14,300 on premiums this year.

By Dan Mangan 
May 12, 2017

When Maggie Rikard first started buying Obamacare health plans in 2014, the Washington state housewife was paying a premium of about $375 per month for a plan that had a $2,500 deductible.

Three years later, Rikard's premiums have spiked to $471 per month — a 25 percent increase — and her deductible is now up to $5,000.

But that's still lower than what Rikard would have been charged if she had stayed in her prior plan, which her former insurer said would cost $600 per month in 2017.

"I literally picked the cheapest plan there was" on eHealth's online insurance brokerage platform, said Rikard.

The plan's provider network does not include doctors she prefers. But she said that if she needs to she would go to her preferred doctor and pay the extra cost, since the high deductible of her plan would require her to do so anyway for covered doctors.

"I think it's awful," the 60-year-old Rikard said of the price hikes she has experienced in recent years.

She's echoed by Karen Poulter, a 51-year-old molecular biologist from California, who this year saw her health insurance premium jump 20 percent.

She now pays almost $618 per month for a plan that has a $4,000 deductible and — because of health problems that include migraines and endometriosis — her prescription drug costs out of pocket are about $400 each month.

"That's the major cost I have to pay each year," Poulter said of her insurance premiums and out-of-pocket health charges. "That's where much of my cash goes."

Without Aid, Customers Feel The Pinch Of Price Hikes

Rikard and Poulter aren't alone in feeling the pinch from insurance in the Obamacare era.

The two women and millions of other Obamacare customers who do not qualify for financial aid to lower the cost of their health insurance — or who opt not to apply for such assistance — pay the full cost of coverage for their plans.

While the Republican Obamacare replacement bill pending in Congress would increase the number of people who would qualify for subsidies, the bill is also expected to increase average premiums over the next two years higher than they would be under Obamacare.

New data shows just how high the cost has already gotten for people who don't qualify for subsidies now.

In the report, eHealth found that individual premiums for insurance plans sold through its marketplace, or exchange, rose to an average of $378 per month in 2017 — an 18 percent increase from 2016's open enrollment season.

Since 2014, the average premiums for individual coverage have jumped 39 percent, eHealth found.

That year, 2014, was the first for new Affordable Care Act rules mandating designs of insurance plans, which included a set of minimum health benefits that plans had to include, as well as a guarantee that sicker customers could not be charged more than healthier people.

The average deductibles for individual plans on eHealth now are nearly $4,500, the company said. A deductible represents how much a customer must pay out of pocket for health services not completely covered by their plan.

"It's hard to not be entirely sympathetic with them, because they're paying for coverage that they can't possibly use." -- Scott Flanders, CEO of eHealth

Premiums for plans covering families increased even higher in 2017 — 20 percent higher than the prior year. The average for families selecting plans was $997 per month this year, which is 49 percent higher than in 2014, eHealth said.

The average deductible for a family plan sold on eHealth is now $8,322.

In 2017, the average premium for a plan covering a family of four is more than $14,300 annually — or $1,195 per month, the company said.

Scott Flanders, CEO of eHealth, said, "Anyone who still needs proof that health insurance costs are out of control should take a look at our 2017 Price Index Report."

"Middle-income Americans who purchase coverage on their own and do not qualify for subsidies under current law are straining under the burden of costs like these," Flanders said.

Flanders told CNBC that eHealth regularly does outreach to customers to gauge their experience buying coverage. And he routinely hears complaints about rising costs.

"It's hard to not be entirely sympathetic with them, because they're paying for coverage that they can't possibly use" in many cases, Flanders said, referring to the high deductibles often seen in the plans. "And they're not being subsidized, yet they are subsidizing others, and they're being priced out of the marketplace."

"Many of them are retirees living on fixed incomes," he said. "They've just been flabbergasted by these massive increases in premiums."

Obamacare, beginning in 2014, required nearly all Americans to have some form of health insurance coverage or pay a tax penalty. To facilitate compliance with that rule, the Affordable Care Act offered funding for states to expand their Medicaid programs to cover more poor adults than they had been covering.

The ACA also authorized the creation of government health exchanges, such as the federally run, and state-run marketplaces, to sell private plans to individuals and families who did not have insurance through a job, Medicare, Medicaid or other sources.

To help people who purchased plans on the exchanges, the ACA also offered federal tax credits, or subsidies, to lower the monthly premiums of those plans. But those subsidies are only available to people whose household income is between 100 percent and 400 percent of the federal poverty level, or $20,420 to $81,680 annually for a family of three.

Out of the 12.2 million people who selected an Obamacare plan during open enrollment for 2017 on one of the government exchanges, 10.1 million, or 83 percent, qualified for an advanced premium tax credit that lowered their monthly premium.

Those premiums, on average, had a dramatic effect — reducing premiums.

Federal data shows that while the average premium for a so-called silver plan sold on grew from $302 per month last year to $385 per month this year — a 27.5 percent increase — the average premium actually paid by a subsidized customer remained the same from year to year: $101 per month.

And while the average price of all plans spiked by 32 percent, from $290 per month to $383, the average actual premium paid by subsidized customers did not change. It was still $106 per month. The lack of change in actual money paid by customers reflects the fact that Obamacare subsidies adjust upward as premium prices rise.

But unsubsidized customers are bearing the full brunt of price hikes. More than 2 million people who did not qualify for subsidies made plan selections on government exchanges this year. And millions more bought plans outside of the exchanges. Only customers of plans sold on the exchanges can get subsidies.

Double-Digit Price Hikes Ahead For 2018

And already this year, there are signs that prices for unsubsidized customers could get even steeper.

In Maryland, the insurer CareFirst has requested premium price increases in 2018 ranging from 45.2 percent to 57.10 percent. In the District of Columbia, CareFirst has asked for a 39.6 percent rate increase for Obamacare plans.

In Connecticut, Anthem is asking for a 33.8 percent increase in plans sold on and off the state-run health exchange. ConnectiCare is asking for price hikes of more than 20 percent for plans sold outside the exchange and premiums that are 15 percent higher for plans sold on the exchange.

The Republican Obamacare replacement bill, known as the American Health Care Act, would allow subsidies to be used to purchase plans both on the government exchanges and outside of them. That would include plans sold on eHealth and other web brokers including GoHealth and GetInsured, as well as conventional brokers and through insurance companies directly.

The AHCA would also increase income limits for subsidy eligibility but phase out the value of the subsidies for incomes between $75,000 and $115,000.

And instead of having the subsidy value be tied to income levels and price of coverage, the AHCA would offer flat amounts as subsidies, ranging from $2,000 per year for people age 29 and younger to $4,000 for people age 60 and older.

Under the GOP bill, some people would get more financial assistance than they do now, but others would get less. Analysts have found that older, lower-income people in rural areas could pay far more for their insurance under the Republican plan than they do now under Obamacare.

The AHCA also would allow insurers to charge older customers up to five times the amount they charge younger customers. Obamacare currently sets that ratio at 3-to-1.

Flanders, the CEO of eHealth, said the adjusted ratio under the Republican plan better reflects how much older customers cost insurers than does the Obamacare ratio.

Flanders also said, "We're enthusiastic for AHCA for young people."

"It's certain to increase the number of younger enrollees, which is just critical to the stability of the system," Flanders said.

AHCA, if passed into law, is expected to lower premium costs for younger customers, whose participation in insurance pools is crucial to offsetting the cost of older customers.

"Where I think ACHA falls short is funding for older Americans," Flanders said. "In my view, in eHealth's view, the system would be more fair if there were more funding for people over 50."

The Republican bill is currently pending in the Senate, where it potentially could be amended to change the subsidy formula.

Article Link To CNBC:

Oil Rises On Expectations Of Extended OPEC-Led Production Cut

By Henning Gloystein
May 12, 2017

Oil prices rose on Friday as traders expected OPEC-led production cuts to extend beyond the middle of this year, and as U.S. crude inventories fell to their lowest levels since February.

International Brent crude futures LCOc1 were at $50.96 per barrel on Friday, up 19 cents, or 0.37 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.01 per barrel, up 18 cents, or 0.38 percent.

"Crude prices could be poised for recovery," U.S. investment bank Jefferies said in a note.

"Net length (in open crude oil futures positions) is at its lowest level since November 2016, which could support a significant price rally if OPEC does extend production cuts," Jefferies added.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have pledged to cut output by almost 1.8 million barrels per day (bpd) during the first half of the year.

OPEC and the other participating producers are scheduled to meet on May 25 in Vienna, Austria, to decide whether to extend the cuts and, potentially, agree a deeper reduction.

Jefferies said it expected an extension.

The bank also said that a fall by 5.3 million barrels in U.S. crude inventories C-STK-T-EIA this week to 522.5 million barrels was "providing some fundamental support for prices".

Based on the lower U.S. inventories and the expectation of an extended production cut, this week has seen the market stabilize, including a recovery of Brent back above $50 per barrel, following steep price falls last week.

Despite this, analysts warned that markets remained well supplied.

Norwegian consultancy Rystad Energy said that "U.S. oil production has gained significant momentum" and that there was "limited downside risk in the short-term."

Rystad said that "U.S. Lower 48 (all states excluding Alaska and Hawaii) oil production is set to expand by an additional 390,000 bpd from May 2017 to December 2017 assuming a WTI price of $50 per barrel."

U.S. crude oil production C-OUT-T-EIA has already risen by over 10 percent since its mid-2016 trough, to more than 9.3 million bpd, close to levels of top producers Russia and Saudi Arabia.

"OPEC/NOPEC have no choice but to extend the production cut deal just to maintain the present status quo against the increase in (U.S.) production and returning (OPEC) members, Libya and Nigeria," said Jeffrey Halley, senior market analyst at futures brokerage OANDA.

A weekly report by Baker Hughes (BHI.N) monitoring U.S. rigs drilling for new production is due on Friday.

Article Link To Reuters:

Here’s Why OPEC Might Just Let The Deal On Oil Output Cuts Collapse

Cartel’s ‘current strategy is not working,’ says ETF Securities’ Shah

By Myra P. Saefong
May 12, 2017

Oil traders largely expect the Organization of the Petroleum Exporting Countries to agree later this month to extend a production-cut agreement into the second half of 2017, but at least one analyst is very skeptical.

After all, the “current strategy is not working,” Nitesh Shah, commodity strategist at ETF Securities, wrote in a blog post Thursday.

He said that the most “credible options” for OPEC’s next move would be to either agree on a deeper cut or let the deal collapse. “The latter options seems the most likely outcome.”

OPEC members and some major non-OPEC oil producers agreed to reduce their collective output by 1.8 million barrels a day under a six-month agreement that began on Jan. 1.That pact is set to expire in June and OPEC is expected to make a decision on whether to extend it when members meet in Vienna on May 25.

Strong compliance with the cuts helped oil prices CLM7, -0.04% LCON7, -0.06%climb in February to their highest levels since the summer of 2015 but year-to-date, they have lost roughly 10%.

“The efforts of OPEC members with assigned quotas are being undermined” by growth in supply from OPEC members who don’t have quotas, as well as non-OPEC members who are part of the deal but aren’t sticking to it, and “rapid growth in supply from other countries, most notably the U.S.,” said Shah.

U.S. crude-oil production climbed to 9.31 million barrels a day for the week ended May 5, up from 8.77 million barrels a day at the end of 2016, according to data from the Energy Information Administration.

Read: OPEC got a dose of bad news from EIA’s outlook on oil production, prices

Meanwhile, in a monthly report released Thursday, OPEC raised its forecast for 2017 oil-production growth from countries outside of OPEC by more than 60%.

OPEC “repeating the same strategy for another six months will do little to shore up oil prices,” Shah said.

“OPEC nations have given up market share and have barely reaped any price gains,” he said. “Given that consensus expectations are for a simple deal extension (i.e. that is what is currently priced-in), following the status quo is unlikely to be met with a positive price response.”

If OPEC is “serious about getting the market to balance, it will have to cut deeper in order to ‘shock’ the market and drive prices higher,” said Shah.

But it would be a difficult to reach an agreement on a “bolder move,” with the “smaller and more financially-constrained members reluctant to give up more volume,” he said.

And if the cartel can’t reach an agreement for a deeper cut, the “default option,” said Shah, would be to do nothing and let the deal collapse.

And that’s exactly what he believes will happen. The meeting this month is likely to “surprise on the downside with a lack of agreement,” he said.

Under that scenario, WTI oil prices could fall close to $40 a barrel, which he sees as the “structural floor for oil prices, set by the break-even price of U.S. shale-oil production.”

Article Link To MarketWatch:

Nordstrom's Comparable Sales Miss Deepens Department-Store Gloom

By Sruthi Ramakrishnan
May 12, 2017

Nordstrom Inc on Thursday became the latest department store operator after Macy's and Kohl's to report weaker-than-expected quarterly same-store sales, underscoring the industry's struggle to attract customers amid a slump in demand for apparel and a shift to shopping online.

Nordstrom's shares, which closed down 7.6 percent at $46.21 in regular trading, fell nearly 4 percent after the bell on Thursday.

Department stores are struggling with declining mall traffic as well as tough competition from online retailers and off-price stores. They have tried to cope by cutting costs through store closures, managing inventory better and squeezing more out of their real estate.

Nordstrom reported a 0.8 percent decline in its comparable-store sales for the first quarter ended April 29, compared with flat sales expected by analysts polled by research firm Consensus Metrix.

The first-quarter reports from Macy's Inc and Kohl's Corp were the first by department store operators and the disappointing sales numbers weighed on the sector.

Macy's shares fell as much as 17.4 percent during regular trading to levels last seen in 2011. Kohl's shares initially rose after the company's profit topped expectations, but soon reversed course and closed down nearly 8 percent.

Shares of J.C. Penney Co Inc, which reports results on Friday, also closed 7.4 percent lower.

Macy's net sales declined for the ninth straight quarter, while Kohl's sales dropped for the fifth quarter in a row. Even sales at the retailers' stores open for at least a year tumbled much more than analysts were expecting in the February-April quarter.

However, Nordstrom's first-quarter sales managed to edge past analysts' average estimate.

Macy's inventory was up 4.2 percent, which in part led to a bigger-than-expected drop in its profit. In contrast, Kohl's inventory dropped 2.3 percent, helping the company's profit beat analysts' expectations.

Nordstrom's inventory jumped 1.6 percent.

Q2 Improvement?

Macy's said it expects sales trends to improve from the current quarter, helped by the store closures, changes to its promotional marketing and a revamp and expansion of product lines in categories such as beauty, jewelry and furniture and mattresses.

But analysts were skeptical.

"We view these initiatives positively, however they are not enough to offset the challenging environment and changing consumer shopping habits," Jefferies analyst Randal Konik said in a note.

Kohl's efforts to speed up its supply chain, stock stores to suit local tastes, and use in-store merchandise to fill online orders helped keep inventories low and boost margins, Chief Executive Kevin Mansell said on a conference call.

That helped Kohl's profit of 39 cents per share easily beat analysts' estimate of 29 cents, according to Thomson Reuters I/B/E/S.

However, sales at the retailer's stores open at least a year fell 2.7 percent, much steeper than the 1.1 percent drop analysts polled by research firm Consensus Metrix had expected.

Macy's same-stores sales, including sales in departments licensed to third parties, fell 4.6 percent, also steeper than the 3.5 percent drop analysts has expected.

As a result, the company's profit sank 39 percent to $71 million. Macy's earned 24 cents per share on an adjusted basis, well below the 35 cents analysts on average had expected.

Macy's net sales fell 7.5 percent to $5.34 billion, missing the average analyst estimate of $5.47 billion.

Article Link To Reuters:

Mexico Says It Called Trump's Bluff When He Eyed NAFTA Exit

By Mitra Taj
May 12, 2017

Mexico said on Thursday it had called U.S. President Donald Trump's bluff over his suggestion he only decided to stay in the North American Free Trade Agreement as a favor to the leaders of Mexico and Canada after they asked him to renegotiate the deal.

However, Mexico's government said it had sent a very different message to the United States during a crisis over NAFTA's future late last month, when Trump considered starting the six-month process for withdrawing from the accord.

"The message was: if you guys think we're going to start negotiations with the trigger pulled on a U.S. exit in six months, forget about it!" Mexican Economy Minister Ildefonso Guajardo told an audience at the Mexico Business Forum.

"If you do that, just get out already - because there's no way we're negotiating under those conditions," he said.

Guajardo said talk of the United States preparing to leave NAFTA was likely part of a strategy to press Congress to approve Trump's pick for U.S. trade representative.

While Mexico and Canada helped change Trump's mind, so did members of his cabinet, U.S. lawmakers and U.S. producers that would be hurt by a U.S. exit from NAFTA - showing the limits to Trump's unilateral moves, the minister argued.

Guajardo said the plan to trigger a U.S. withdrawal of NAFTA was done "in desperation, which occurs very frequently these days in those parts" - an apparent jab at the way Trump has rolled out some of his key policy proposals.

Mexico's ties with the United States have been strained by Trump's repeated pledge to dump NAFTA if he cannot secure better terms for U.S. workers and industry in a renegotiation.

The rhetoric has encouraged efforts by Mexico to diversify its economy away from dependence on the United States.

Guajardo said Mexico was tightening trade ties with China, deepening deals to get better market access to markets in Brazil and Argentina, making progress on a free trade deal with Jordan and updating an agreement with the European Union.

If the United States did withdraw from NAFTA in a "worst-case scenario," it would not necessarily mean the end of the deal, Guajardo said. Mexico and Canada could opt to make it the framework for their trade relationship, he said.

Article Link To Reuters:

U.S., China Reach Deals On Access For Beef, Financial Services

By Ayesha Rascoe 
May 12, 2017

The United States and China will expand trade in beef and chicken and increase access for financial firms, as part of a plan to reduce the massive U.S. trade deficit with Beijing, U.S. Commerce Secretary Wilbur Ross said on Thursday.

The deals are the first tangible results of trade talks that began last month after U.S. President Donald Trump and Chinese President Xi Jinping met in Florida to discuss cooperation between the world's two largest economies.

The countries have agreed that China will allow U.S. imports of beef no later than July 16. By that same deadline, the United States said it would issue a proposed rule to allow Chinese cooked poultry to enter U.S. markets, Ross told reporters at a briefing.

Beijing will also allow U.S.-owned card payment services to begin the licensing process in a sector where China's UnionPay system has had a near monopoly. Foreign-owned firms in China will also be able to provide credit rating services.

Trump pledged during his presidential campaign that he would stop trade practices by China and other countries that he deemed unfair to the United States.

The talks with China are latest in a series of actions since Trump took office in January aimed at remaking U.S. international trade relations.

"This will help us to bring down the deficit for sure," Ross said. "You watch and you'll see."

Ross said there should be an impact on China's trade surplus with the United States by the end of the year.

The United States also signaled that it was eager to export more liquefied natural gas (LNG), saying China could negotiate any type of contract, including long-term contracts, with U.S. suppliers.

It is unclear exactly how much these new deals will increase trade between the two countries.

China had conditionally lifted its longstanding import ban on American beef last year, but few purchases have been made. The ban was imposed in 2003 due to a case of bovine spongiform encephalopathy (BSE), or mad cow disease, in Washington state.

U.S. credit card operators Visa Inc (V.N) and MasterCard Inc (MA.N) have yet to be independently licensed to clear transactions in China, despite a 2012 WTO ruling mandating that Beijing open the sector.

Article Link To Reuters:

Aetna Says Sayonara To ObamaCare

The exchanges lose another insurer, not that Democrats will admit it.

By Review & Outlook
The Wall Street Journal
May 12, 2017

For all the media think pieces about the nature of truth in the Trump era, Democrats have their own alternative facts about ObamaCare. To undermine the GOP case for repeal and replace, they claim the entitlement is working beautifully. But then what about the latest insurance giant to dump its ObamaCare ballast?

Aetna said on Wednesday that it will withdraw individual market plans in Nebraska and Delaware, meaning it will participate in zero exchanges in 2018. Last week the insurer bolted from Iowa and Virginia, and the four states were the last vestiges of its original ObamaCare expansion to 15 states. Even as the rest of its business is performing handsomely, Aetna expects to lose about $200 million on ObamaCare this year, on top of writedowns nearing $700 million between 2014 and 2016.

Humana has also left the exchanges altogether, Anthem is edgy, and the familiar problem is ObamaCare’s structural undertow. Despite subsidies and mandates, the regulations are too restrictive and insurers aren’t allowed to profitably sell products that can attract enough people to square the economics.

The white flag is especially notable because Aetna led ObamaCare’s industry cheering section in 2009 and 2010 and was once inclined to accept the exchanges as temporary loss leaders to support the mission of universal coverage. In the chaos of the law’s early years, liberals insisted everything would be fine by now.

In a hilarious letter Tuesday, all 48 Senate Democrats instructed Republicans “to discourage the ongoing effort by the Administration to destabilize the health-care marketplace, which could lead to rising insurance premiums for all.” Could? ObamaCare is already doing a fine job of raising costs and reducing choices.

In Maryland, CareFirst Blue Cross Blue Shield is requesting average premium increases for 2018 as high as 58.8% and cautioned that “we think we are in the beginning” of a “spiral,” when prices must increase so rapidly that the market collapses. In Connecticut the number of participating insurers will fall next year to two from five, and they’re proposing average rate increases of 15.2% and 33.8%.

Liberals are hailing Blue Cross Blue Shield of Tennessee’s decision to sell coverage in the 16 counties around Knoxville, a region that Humana, the only insurer this year, will leave in 2018. That averted a crisis, but the company advised regulators that it would require “a higher-than-average margin” to participate. Insurance isn’t worth much if nobody can afford it.

The GOP’s American Health Care Act includes tools that can mitigate some of the damage, and over time nurture a richer, more liquid insurance market. The failure to pass the reform this spring has contributed to business uncertainty, but there’s still time to provide more stability—though it is running out fast.

If Congress can’t find a reform majority, then Democrats will flip their all-is-well narrative without a second thought and blame Republicans for every last horror story. The GOP will have no answer heading into the midterms.

Over the longer term, a Republican failure to stand up a market-based ObamaCare replacement means the status quo of ever-more government, and there’s another warning in the Aetna news: In the first quarter, revenue from taxpayers exceeded revenue from its commercial business for the first time since the company was founded in 1853.

Article Link To The Wall Street Journal:

Why James Comey Had To Go

The FBI head’s sense of perfect virtue led him to ignore his own enormous conflicts.

By Kimberley A. Strassel
The Wall Street Journal
May 12, 2017

Testifying last week before the Senate Judiciary Committee, James Comey recalled a moment that should have held more significance for him than it did. At the height of the presidential campaign, President Obama’s attorney general, Loretta Lynch, had chosen to meet with Bill Clinton on an airport tarmac. That, said the now-former FBI director, “was the capper for me.” Hillary Clinton’s emails were being probed, but Ms. Lynch was too conflicted to “credibly complete the investigation.” So Mr. Comey stepped in.

Donald Trump and senior Justice Department leaders might appreciate the impulse. According to Democrats and the media, Attorney General Jeff Sessions is too conflicted to recommend sacking Mr. Comey; the Trump administration is too conflicted to name a successor; the entire Justice Department and the Republican Congress are too conflicted to conduct true oversight.

Entirely missing from this narrative is the man who was perhaps the most conflicted of all: James Comey. The FBI head was so good at portraying himself as Washington’s last Boy Scout—the only person who ever did the right thing—that few noticed his repeated refusal to do the right thing. Mr. Comey might still have a job if, on any number of occasions, he’d acknowledged his own conflicts and stepped back.

Deputy Attorney General Rod Rosenstein’s memo to Mr. Sessions expertly excoriated Mr. Comey’s decision to “usurp” Ms. Lynch’s authority and his “gratuitously” fulsome July press conference. But Mr. Comey’s dereliction of duty preceded that—by his own admission. Remember, he testified that the Lynch-Clinton meeting was but the “capper.” Before that, he told lawmakers, “a number of things had gone on which I can’t talk about yet that made me worry the department leadership could not credibly complete the investigation.”

We don’t know what these things were, but it seems the head of the FBI had lost confidence—even before TarmacGate—that the Justice Department was playing it anywhere near straight in the Clinton probe. So what should an honor-bound FBI director do in such a conflicted situation? Call it out. Demand that Ms. Lynch recuse herself and insist on an appropriate process to ensure public confidence. Resign, if need be. Instead Mr. Comey waited until the situation had become a crisis, and then he ignored all protocol to make himself investigator, attorney, judge and jury.

By the end of that 15-minute July press conference, Mr. Comey had infuriated both Republicans and Democrats, who were now universally convinced he was playing politics. He’d undermined his and his agency’s integrity. No matter his motives, an honor-bound director would have acknowledged that his decision jeopardized his ability to continue effectively leading the agency. He would have chosen in the following days—or at least after the election—to step down. Mr. Comey didn’t.

Which leads us to Mr. Comey’s most recent and obvious conflict of all—likely a primary reason he was fired: the leaks investigation (or rather non-investigation). So far the only crime that has come to light from this Russia probe is the rampant and felonious leaking of classified information to the press. Mr. Trump and the GOP rightly see this as a major risk to national security. While the National Security Agency has been cooperating with the House Intelligence Committee and allowing lawmakers to review documents that might show the source of the leaks, Mr. Comey’s FBI has resolutely refused to do the same.

Why? The press reports that the FBI obtained a secret court order last summer to monitor Carter Page. It’s still unclear exactly under what circumstances the government was listening in on former Trump adviser Mike Flynn and the Russian ambassador, but the FBI was likely involved there, too. Meaning Mr. Comey’s agency is a prime possible source of the leaks.

In last week’s Senate hearing, Chairman Chuck Grassley pointed out the obvious: The entire top leadership of the FBI is suspect. “So how,” Mr. Grassley asked, “can the Justice Department guarantee the integrity of the investigations without designating an agency, other than the FBI, to gather the facts and eliminate senior FBI officials as suspects?” Mr. Comey didn’t provide much of an answer.

All this—the Russia probe, the unmasking, the leaks, the fraught question of whether the government was inappropriately monitoring campaigns, the allegations of interference in a presidential campaign—is wrapped together, with Mr. Comey at the center. The White House and House Republicans couldn’t have faith that the FBI would be an honest broker of the truth. Mr. Comey should have realized this, recused himself from ongoing probes, and set up a process to restore trust. He didn’t. So the White House did it for him.

Colleagues describe Mr. Comey as an honorable man. The problem seems to be that his sense of perfect virtue made him blind to his own conflicts and the mess he had made. New leadership at the FBI is a chance for a fresh start.

Article Link To The Wall Street Journal:

A Political Axe Murder

The James Comey firing is hard to account for using traditional logic and reason.

By Charles Krauthammer
The National Review
May 12, 2017

It was implausible that FBI director James Comey was fired in May 2017 for actions committed in July 2016 — the rationale contained in the memo by Deputy Attorney General Rod Rosenstein.

It was implausible that Comey was fired by Donald Trump for having been too tough on Hillary Clinton, as when, at that July news conference, he publicly recited her various e-mail misdeeds despite recommending against prosecution.

It was implausible that Trump fired Comey for, among other things, reopening the Clinton investigation eleven days before the election, something that at the time Trump praised as a sign of Comey’s “guts” that had “brought back his reputation.”

It was implausible that Trump, a man notorious for being swayed by close and loyal personal advisers, fired Comey on the recommendation of a sub-cabinet official whom Trump hardly knew and who’d been on the job all of two weeks.

It was implausible that Trump found Rosenstein’s arguments so urgently persuasive that he acted immediately — so precipitously, in fact, that Comey learned of his own firing from TVs that happened to be playing behind him.

These implausibilities were obvious within seconds of Comey’s firing and the administration’s immediate attempt to pin it all on the Rosenstein memo. That was pure spin. So why in reality did Trump fire Comey?

Admittedly, Comey had to go. The cliché is that if you’ve infuriated both sides, it means you must be doing something right. Sometimes, however, it means you must be doing everything wrong.

Over the last year, Comey has been repeatedly wrong. Not, in my view, out of malice or partisanship (although his self-righteousness about his own probity does occasionally grate). He was in an unprecedented situation with unpalatable choices. Never in American presidential history had a major party nominated a candidate under official FBI investigation. (Turns out the Trump campaign was under investigation as well.) Which makes the normal injunction that FBI directors not interfere in elections facile and impossible to follow. Any course of action — disclosure or silence, commission or omission — carried unavoidable electoral consequences.

Comey had to make up the rules as he went along. He did. That was not his downfall. His downfall was making up contradictory, illogical rules, such as the July 5 non-indictment indictment of Clinton. A series of these, and Comey became anathema to both Democrats and Republicans. Clinton blamed her loss on two people. One of them was Comey.

Comey had to make up the rules as he went along. He did. That was not his downfall.

And there’s the puzzle. There was ample bipartisan sentiment for letting Comey go. And there was ample time from Election Day on to do so. A simple talk, a gold watch, a friendly farewell, a Comey resignation to allow the new president to pick the new director. No fanfare, no rancor.

True, this became more difficult after March 20, when Comey revealed that the FBI was investigating the alleged Trump–Russia collusion. Difficult but not impossible. For example, just last week Comey had committed an egregious factual error about the Huma Abedin e-mails that the FBI had to abjectly walk back in a written memo to the Senate Judiciary Committee.

Here was an opportunity for a graceful exit: Comey regrets the mistake and notes that some of the difficult decisions he had previously made necessarily cost him the confidence of various parties. Time for a clean slate. Add the usual boilerplate about not wanting to be a distraction at such a crucial time. Awkward perhaps, but still dignified and amicable.

Instead we got this — a political ax murder, brutal even by Washington standards. (Or even Roman standards. Where was the vein-opening knife and the warm bath?) No final meeting, no letter of resignation, no presidential thanks, no cordial parting. Instead, a blindsided Comey ends up in a live-streamed O.J. Bronco ride, bolting from Los Angeles to be flown, defrocked, back to Washington.

Why? Trump had become increasingly agitated with the Russia-election investigation and Comey’s very public part in it. If Trump thought this would kill the inquiry and the story, or perhaps even just derail it somewhat, he’s made the blunder of the decade. Whacking Comey has brought more critical attention to the Russia story than anything imaginable. It won’t stop the FBI investigation. And the confirmation hearings for a successor will become a nationally televised forum for collusion allegations, which up till now have remained a scandal in search of a crime.

So why did he do it? Now we know: The king asked whether no one would rid him of this troublesome priest, and got so impatient he did it himself.

Article Link To The National Review: