Tuesday, May 30, 2017

Tuesday, May 30, Morning Global Market Roundup: Greece, Italy Tensions Hit Euro, Asian Stocks, Lift Yen, Gold

By Nichola Saminather 
Reuters
May 30, 2017

Concerns about a Greek bailout, early Italian elections and comments by the European Central Bank chief about the need for continued stimulus all kept the euro under pressure on Tuesday.

European geopolitical fears sapped risk appetite, weighing on Asian stocks and lifting safe havens including the yen and gold, though trading was thin with several markets closed for holidays.

The euro EUR=EBS slid 0.3 percent to $1.1129 in its fourth session of declines.

James Woods, global investment analyst at Rivkin Securities in Sydney, attributed most of the currency's decline on Tuesday to a German press report saying Athens may opt out of its next bailout payment if creditors cannot strike a debt relief deal.

"The bailout payments are necessary to meet existing debt repayments due in July, so if Greece were to forgo this bailout payment the probability of a default would spike, reopening the discussion around a Grexit from the Euro zone," Woods said.

However, he cautioned against reading "too much into it" without more details or confirmation, adding it was unlikely Greece would forego the bailout payment at this stage.

Euro zone finance ministers failed to agree with the International Monetary Fund on Greek debt relief or to release new loans to Athens last week, but did come close enough to aim to do both at their June meeting.

Comments by former Italian Prime Minister Matteo Renzi on Sunday in favor of holding an election at the same time as Germany's in September also pulled the euro lower.

So did a statement by European Central Bank President Mario Draghi reiterating the need for "substantial" stimulus given subdued inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.25 percent with U.S. and British markets closed on Monday.

China, Hong Kong and Taiwan markets are closed for holidays on Tuesday.

Japan's Nikkei .N225 dropped 0.3 percent, dragged down by a stronger yen.

South Korea's KOSPI .KS11 fell 0.5 percent as investors took profits following the market's record-breaking rally this month.

European blue-chip stocks .STOXXE fell 0.2 percent on Monday, with Italy's banking index sliding 3.4 percent, its biggest loss in nearly four months, after two lenders sought help to cover a capital shortfall.

Sterling GBP= retreated 0.15 percent to $1.2818 after British Prime Minister Theresa May's lead over the opposition Labour Party dropped to 6 percentage points in the latest poll to show a tightening race since the Manchester bombing and a U-turn over social care plans.

The dollar declined 0.4 percent to 110.815 yen JPY=.

Japanese labor demand rose to its strongest level in 40 years in April, and retail sales for the month beat expectations to rise 3.2 percent from a year earlier.

The dollar index .DXY, which tracks the greenback against a basket of trade-weighted peers, however, advanced 0.2 percent to 97.659.

Markets are also awaiting economic indicators including French first quarter gross domestic product, German inflation data for May, and U.S. inflation for April later in the session.

In commodities, oil prices retreated, as concerns lingered about whether the extension of output cuts by OPEC and other producing countries will be enough to support prices.

U.S. crude futures CLc1 slipped about 0.1 percent to $49.77 a barrel.

Global benchmark Brent LCOc1 fell 0.4 percent to $52.09.

Gold XAU= advanced 0.1 percent to $1,268.34 an ounce.


Article Link To Reuters:

Strong Start To U.S. Driving Season Supports Oil, But Oversupply Worries Fester

By Henning Gloystein 
Reuters
May 30, 2017

A strong start to the summer driving season in the United States supported U.S. crude prices on Tuesday, but persistent concerns about oversupply continued to fester.

U.S. West Texas Intermediate (WTI) crude futures CLc1 climbed above $50 per barrel early on Tuesday, before dipping back to $49.81, virtually unchanged from their last close.

U.S. demand for transport fuels tends to rise significantly as families visit friends and relatives or go on vacation during the summer months. The so-called summer driving season officially started on the Memorial Day holiday at the start of this week.

"The start of the U.S. driving season ... boosted confidence in the market that stockpiles would start to fall," ANZ bank said.

The American Automobile Association (AAA) said ahead of Memorial Day that it expected 39.3 million Americans to travel 50 miles (80 km) or more away from home over the Memorial Day weekend, the highest Memorial Day mileage since 2005.

Despite this, traders said that ongoing supply concerns were weighing on prices.

U.S. drillers have added rigs for 19 straight weeks, to 722, the highest since April 2015 and the longest run of increases ever, according to energy services firm Baker Hughes (BHI.N).

The glut was also reflected in global markets, where benchmark Brent crude futures LCOc1 were at $52.13 per barrel, down 16 cents, or 0.3 percent.

The main factor for Brent is whether a decision led by the Organization of the Petroleum Exporting Countries (OPEC) to extend a pledge to cut production by around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 will significantly tighten the market to end years of oversupply.

An initial agreement, which has been in place since January, would have expired in June this year, and the production cutback has so far not had the desired effect of substantially drawing down excess inventories.

Goldman Sachs said that oil prices could come under pressure again from 2018 due to rising U.S. and OPEC production.

Goldman said that once OPEC's production growth resumes after its self-imposed cuts, U.S. plus OPEC output would rise by 1 to 1.3 million bpd between 2018 and 2020.

"While we are bullish on near-term prices as inventories normalize (to $55 per barrel WTI) ... 2018-19 futures need to be in the $45-$50 range," the bank said.


Article Link To Reuters:

Iraq May Consider Hedging Crude Production

By Rania El Gamal
Reuters
May 30, 2017

Iraq may look at hedging part of its crude oil production, the head of the OPEC member's oil marketer SOMO said, as a way to protect government revenue against the risk of oil price volatility.

"It is in our strategy in the future that maybe we will consider hedging part of Iraqi crude ... SOMO is floating an idea now and this is yet to be studied," Falah Al-Amri, who is also Iraq's OPEC governor, told Reuters in an interview.

It is not clear what type of hedging might be considered by SOMO. Some organisations, such as Mexican oil monopoly Pemex, seek to ensure oil is sold at a guaranteed fixed price throughout the year, while others, such as Shell and BP, hedge their sales against short term oil price volatility.

Short term hedging helps to smooth price fluctuations between the signing of an oil sales contract and when the oil is delivered and paid for.

"There are a lot of requirements that should be taken first: we need to study hedging carefully and train people, we need to know the best companies involved in hedging ... we still don't understand the hedging process completely," Al Amri said, adding there was no certainty that Iraq would adopt hedging practices.

Al Amri also said SOMO aimed to use methods such as auctions and joint ventures to promote Iraq's oil interests and reduce imports of oil products.

SOMO and Russia's Litasco have set up a joint trading company in Dubai to market crude, joining other Middle Eastern producers that buy and sell oil to boost their incomes.

Last month, SOMO sold its first cargo of Basra Light crude via an auction on the Dubai Mercantile Exchange (DME), which could become a platform for price discovery. DME is now the marketplace for most Omani crude sold in Asia.


Article Link To Reuters:

U.S. Companies No Longer Know Rules Of Game Under Trump

By Axel Bugge 
Reuters
May 30, 2017

Confusion surrounding the trade policies of U.S. President Donald Trump's administration means U.S. companies no longer know the rules of the game, a board member and former CEO of toymaker Hasbro (HAS.O) told an international conference on Monday.

Alan G. Hassenfeld, whose family founded America's second largest toymaker in the 1920s, said: "We thought, you know, if you run a business today you would like to know what the rules of the game are," Hassenfeld at told the Horasis conference, attended by business leaders, politicians and academics to discuss globalization and other challenges for corporations.

"Right now in America we don't know what the rules of the game are. They are changing constantly," said Hassenfeld, a billionaire with a large stake in Hasbro, whose stock has risen 34 percent this year and is now at all-time highs.

Hasbro makes many of its toys outside of the United States and has markets worldwide. Hassenfeld said there was great uncertainty on trade with Trump.

"Right now we don't know whether we are friendly with Mexico, whether we are friendly with Canada, whether we are friendly with China, whether we are friendly with Russia," Hassenfeld said.

Trump has said he wants to renegotiate the North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada to try to win better terms for U.S. workers and manufacturers.

Hassenfeld said the confusing situation had been created by so much "white noise, and smoke, coming out of the White House right now that the most important thing is basically to improve confidence."

Hassenfeld said gridlock in the U.S. Congress on Trump's election promises of fixing healthcare, spending on infrastructure and tax reform was not helping.

"Right now, our Congress and in some cases our courts, are caught up in trying to figure out what they are going to do with the executive branch," he said. "So right now, we are in that - almost twilight zone - that we are really not sure where things are going."

He said Trump's promise of bringing jobs back to America was doubtful. "Even if they (the jobs) did come, we've all learnt how to automate, we're all spending money to innovate."

Hassenfeld was CEO and chairman of Hasbro between 1989 and 2008.


Article Link To Reuters:

History Says Emerging-Market Carry Trade Can Only End In Tears

BofA warns sentiment on EM currencies nearing ‘exuberance’; Trade has handed investors 7.5 percent profit this year.


By Natasha Doff
Bloomberg
May 30, 2017

Investors reaping handsome returns on emerging-market currencies this year might do well to heed a warning once made by Harvard economist Jeffrey Frankel, who likened carry trading to “picking up pennies in front of a steam roller.”

Economic theory -- and history -- suggest the strategy of borrowing where interest rates are low to invest in high-yielding currencies is prone to the risk of a sharp reversal when too many investors pile into the trade. Strategists at Bank of America Merrill Lynch warned last week that sentiment on emerging-market currencies is already reaching “exuberant levels.” Rabobank’s chief currency strategist says now is the time to take profits.

Investors from BlackRock Inc. to Man Group Plc have poured money into emerging-market currencies this year to profit from interest as high as 12 percent compared with rates close to zero in the U.S. and European Union. The strategy has produced an average return of 7.5 percent since the beginning of the year, according to the Bloomberg Cumulative FX Carry Trade Index that tracks eight major currencies against the dollar.



“Carry trades are notorious for risk-off unwinds, especially when positioning is crowded and correlated,” strategists at BofA including David Hauner said in the e-mailed research note. Sentiment “is approaching levels at which a correction is historically frequently followed,” they said.

Hauner and his colleagues based their findings on BofA’s Emerging Market Carry-Sentiment Indicator, which measures the level of investor bullishness by analyzing flows into fixed-income and currency markets. The gauge shows carry sentiment is approaching a level that has historically preceded a correction within four weeks.

South African Showdown


Among the currencies surveyed, the ruble is “by far the most consensus trade” in Eastern Europe, the Middle East and Africa, and BofA is using options to bet the Russian currency will decline amid oil-price fluctuations, according to the note. Meanwhile, the possibility of a “showdown” in South Africa between President Jacob Zuma and his opponents has prompted the bank to short the rand versus Turkey’s lira.

Global emerging-market debt funds have attracted inflows for a 17th straight week this year, taking the total to more than $33 billion, according to EPFR Global data. A BlackRock exchange-traded fund that tracks emerging-market local currency debt has lured more than $2 billion, nearly doubling its size.

Analysts at Goldman Sachs Group Inc. and Barclays Plc say low volatility in developed markets, coupled with a weak U.S. dollar, will continue to support attractive conditions for the carry trade to continue. Emerging-market currencies are “modestly undervalued,” Goldman strategist Kamakshya Trivedi said in an e-mailed note last week, which recommended buying the Mexican peso and South African rand.

The BofA strategists admit that their indicator has been premature in signaling reversals in the past. It jumped the gun on the 2013 taper tantrum, for example, missing a final rally before that year’s currency crash. It’s still too early to call the end of the current bull market, the strategists said.

Still, sentiment could quickly sour if U.S. economic growth pushes up expectations of monetary tightening by the Federal Reserve, or if there is any sign the world’s biggest economy is in trouble, according to John Hardy, head of currency strategy at Saxo Bank A/S. Any indication that China is running into difficulties with its deleveraging plans could also be a trigger, he said.

“The circumstances are unsustainable for the EM carry trade to continue as it has,” Hardy said. “I would recommend taking profits if you are enjoying the fruits of this trade. You want to be the first out, not the last.”


Article Link To Bloomberg:

Nearly $4 Billion Wiped Off Value Of Bitcoin

-- Bitcoin's price has fallen over $520 from the record high hit on Thursday last week.
-- Around $3.4 billion has been wiped off the value of bitcoin since Thursday.
-- Bitcoin experts still see the price rallying after the correction.


CNBC
May 30, 2017

Nearly $4 billion has been wiped off of the value of bitcoin in the past four days after a correction that has seen the cryptocurrency's price fall almost 19 percent from its recent record high.

On May 24, bitcoin hit an all-time high of $2.791.69. But on Monday, the digital currency was trading at an intra-day high of $2,267.73, marking a more than $520 drop or 18.7 percent decline since the record high, according to data from CoinDesk.

"The correction was actually quite brief, the prices today are still higher than that of a week ago," Bobby Lee, CEO of BTCC, a major bitcoin exchange, told CNBC by phone.

"I think the pullback was just a profit taking, a correction from the skyrocketing prices of last week."

Bitcoin's market cap fell from $40.49 billion on Thursday to around $37.08 billion on Monday, a roughly $3.4 billion decline in value.

Last week, Nicola Duke, a technical analyst at analysis platform Forex Analytix, told CNBC that $2,800 could mark a level of resistance where bitcoin pulls back. The analysis appeared to be correct with bitcoin reaching within $9 of the price before falling to the lower levels on Monday.

Still, Lee thinks the correction is temporary and the price rise will continue because "the macro situation hasn't changed".

Some major factors have been supporting bitcoin's major rally this year including:


-- A resolution to the "scaling debate" within the bitcoin community. Transactions were taking longer than ever to process and the broader community was trying to figure out a way to boost the capacity of the bitcoin network. A solution was created and backed by major parties within the community.

-- Start-ups raising funds through a so-called initial coin offering or ICO, which is helping to drive alternative cryptocurrencies.

Longer term, proponents of the digital currency are excited about the prospect of the broader sector which could potentially rival fiat currencies.

Investors appear to currently be positioning for another price rise in bitcoin. Total active margin trading long positions have risen from 18,576.54 bitcoin on Thursday, to 21,168.90 bitcoin on Monday, according to data from CryptoCompare. Margin trading involves borrowing funds in order to buy or sell bitcoin. The rise in long positions shows that traders are expecting a rise in the cryptocurrency.

There is still a lot of bullishness in the market with some calls for the price to reach as high as $6,000 this year.

"There is a lot of fresh liquidity flowing into bitcoin, thanks to a surge in interest among investors in Asia, notably Japan and Korea, coupled with a resolution to the scaling debate. I would not be surprised to see the bitcoin price doubling again to around $6000 by the end of the year," Aurelien Menant, CEO of Gatecoin, a regulated cryptocurrency exchange, told CNBC in a recent interview.


Article Link To CNBC:

Goldman Sachs Panned By Venezuela Opposition Over Alleged Bond Buy

Bank bought $2.8 billion of state oil company’s debt, WSJ says; Lawmaker: Deal is to ‘detriment of Venezuela and its people.’


By Ben Bartenstein
Bloomberg
May 30, 2017

Goldman Sachs Group Inc. was denounced by the head of Venezuela’s legislature over a report that the bank bought $2.8 billion of bonds from that country, potentially helping President Nicolas Maduro’s administration amid accusations of human-rights violations.

The investment bank’s asset management arm paid about $865 million, or 31 cents on the dollar, for bonds issued in 2014 by state oil company Petroleos de Venezuela, the Wall Street Journal reported Sunday, citing five unidentified people familiar with last week’s transaction. Spokesmen for the central bank, which had held the notes, didn’t respond to messages.

“It is apparent Goldman Sachs decided to make a quick buck off the suffering of the Venezuelan people,” Julio Borges, the opposition lawmaker who heads the National Assembly, wrote in a letter to Goldman Chief Executive Officer Lloyd Blankfein and seen by Bloomberg. Congress will investigate the deal, he said. “I also intend to recommend to any future democratic government of Venezuela not to recognize or pay on these bonds.”

Venezuela’s opposition has been urging Wall Street banks not to throw a financial lifeline to Maduro, who’s faced almost two months of public protests while cutting imports of food and medicine to conserve cash and continue bond payments. The nation’s dollar shortage, exacerbated by a collapse in oil prices, has left investors trying to gauge the likelihood that the government can keep servicing its debt.

"We recognize that the situation is complex and evolving and that Venezuela is in crisis," Goldman Sachs said in an emailed response. "We agree that life there has to get better. We made the investment in part because we believe it will."

The investment bank added that it bought the bonds on the secondary market, stressing that it’s not alone in investing in the country.

Last month, lawmakers reached out to big Wall Street firms including Goldman Sachs, asking them not to help the country monetize its $7.7 billion in gold reserves. In an editorial on Friday, Harvard University economist Ricardo Hausmann -- a former planning minister in Venezuela and long-time critic of the current government -- called on JPMorgan Chase & Co. to remove Venezuela from its bond indexes so investors tracking the gauges aren’t compelled to buy those notes.

In his letter, Borges said Goldman Sachs’s deal violates the bank’s own code of conduct and its statement on human rights. A copy of that statement on the firm’s website said its respect for human rights is “fundamental to and informs our business,” and that the firm places a “high priority” on identifying potential issues when deciding whether to do business with a client.

Still, Borges said, the transaction helps Maduro. It’s “a financial lifeline to his authoritarian regime that is systematically violating the human rights of Venezuelans,” the lawmaker wrote in his letter to Blankfein. The “irregular nature” and “absurd financial terms involved” are “to the detriment of Venezuela and its people,” Borges said.

Fintech Advisory Inc., a New York-based investment fund, previously agreed to buy $1.3 billion of PDVSA bonds in a repo transaction providing at least $300 million of cash, Reuters reported in early April.

Goldman Sachs was the seventh-largest holder of PDVSA bonds as of March 31, according to data compiled by Bloomberg. Venezuela’s international reserves rebounded from near the lowest since 2002 last week, gaining more than $700 million to $10.86 billion as of May 25.


Article Link To Bloomberg:

The Economic Fortunes Of Red And Blue States Can Be Tracked Through Their Diverging Credit Scores

The creditworthiness of many red states have been on the decline.


By Quentin Fottrell
MarketWatch
May 30, 2017

A certain number can tell you a lot about a person’s — or even a community’s — financial health.

Residents of most U.S. states that voted for President Donald Trump last November had an average credit score nearly 20 points lower than people in states that voted for his Democratic rival Hillary Clinton, according to this analysis of Experian’s “Premier Aggregated Credit Statistics” using the VantageScore 3.0 credit score model for each zip code in each state. While credit scores don’t necessarily reflect people’s income or debt levels, they do give a bird’s-eye view into people’s ability to repay personal loans, manage their finances and pay off credit cards on time.

Except for Wisconsin, swing states that voted for Barack Obama in the 2012 election and Trump in 2016 had a decline in their average credit score. The swing states of Michigan, Ohio and Pennsylvania all saw a decline in average credit score from 2012 to 2016. In Florida, the average credit score dropped to 672 in 2016 over that period. In Michigan, it fell to 683 from 690 and fell to 694 from 700 in Pennsylvania. The study by LendEdu, a consumer finance comparison site, aggregated credit scores for each zip code and adjusted them for state population size.

The VantageScore 3.0 used in this study runs the gamut from 300 to 850, a numerical scale that is commonly used, but certainly not the only credit-score model used. The lowest score is regarded as deficient and the highest as excellent. Different lenders obviously have different criteria when it comes to loaning money, and may approve borrowers with a mediocre credit score. A high score generally means that the individual in question has been paying their bills on time, or only uses a small percentage of his or her available credit on credit cards.

Other research appears to support this theory. Southern states — Mississippi, Arkansas, Louisiana and Louisiana, which all voted for Trump in 2016 — typically have lower credit scores than the rest of the U.S., personal-finance site ValuePenguin reported. “These regions have the lowest percent of the population with an open credit card or home equity line of credit,” they wrote. “At the same time, credit health in states like Minnesota and North Dakota has exhibited resilience in the face of economic downturn.” North Dakota voted for Trump, but Minnesota voted for Clinton.

ValuePenguin says it’s more revealing to look at the trajectory of credit scores and, from that viewpoint, “the same states appear to be underperforming as compared to the national average.” In South Carolina, 20% of the population was reported as having weak, struggling, or declining credit — defined as having a bill that was 60 days or more overdue — followed by Mississippi (19%), and Alabama, Georgia, Louisiana and Texas (all with 18% declining credit), and Oklahoma, Tennessee and Florida (all with 17%). All of those states voted for Trump in 2016.

Of course, this isn’t the only measure of red and blue states in the run-up to the election. Trump states had the most lackluster job growth in the last two years. Since 2015 there has been a noted drop in jobs growth and more so in red rather than blue states, according to Jed Kolko, chief economist for jobs site Indeed.com, who crunched state Bureau of Labor Statistics. Globalization and technological advancement have restrained growth in U.S.-based manufacturing jobs. At the same time, the technology sector has continued to surge.

The Midwest and South have been gutted by globalization, experts say. “We know that many of the voters who propelled Donald Trump to victory were in rural areas,” Mark Hamrick, Washington, D.C. bureau chief at personal-finance website Bankrate.com, told MarketWatch. “Generally, these are areas of the country, like my own hometown in Kansas, which have seen declining population precisely because of a lack of economic opportunity. By contrast, people are attracted to areas where jobs are available or even plentiful, which tends to reinforce the cycle.”

Red and blue states are connected to the fortunes of the U.S. economy, with perhaps oil-producing states being the major exception. Globalization and technological advancement have restrained growth in U.S.-based manufacturing jobs, Hamrick said. At the same time, the technology sector has continued to surge. The decline in crude oil and commodity prices interrupted the boom in those sectors and regions reliant upon them although we may well have seen the worst of that since prices have rebounded.


Article Link To MarketWatch:

Keeping Kushner Would Make Trump’s Russia Nightmare Permanent

By Eugene Robinson
The Washington Post
May 30, 2017

It’s hard to write about Jared Kushner without going straight to the Icarus cliche — hubris, flying too close to the sun, falling into the sea. I once wrote that he was the only one of President Trump’s close advisers who couldn’t be fired, but Kushner’s father-in-law would be smart to prove me wrong.

It is possible, of course, that Kushner was acting on Trump’s orders when he allegedly suggested setting up a secret communications channel with Moscow using Russia’s secure equipment. In that case, Trump’s reluctance to cut him loose would be understandable — and the Russia scandal would lead directly to the president himself. If not, are family ties keeping Kushner employed at the White House? Or is it Trump’s mounting sense of persecution and his reluctance to let an aggressive media push him around?

Whatever his motivation, Trump is allowing the Russia scandal to become not an extended nightmare but a permanent one. And all the Twitter tantrums in the world won’t make it go away.

It is, of course, ironic that Kushner was originally seen as the benign, socially acceptable face of Trumpism. He and his allies were supposed to constitute the reasonable and responsible faction in the West Wing, as opposed to the alt-right barbarians clustered around Stephen K. Bannon. But while Bannon’s name has not come up publicly in the Russia investigation, at least thus far, Kushner is now reportedly a focus of the FBI probe.

And with good reason. At a December meeting with Russian Ambassador Sergey Kislyak, Kushner reportedly suggested using secure equipment at the Russian Embassy or one of the Russian consulates to open a secret communications channel with the government of strongman Vladimir Putin. This is wrong on so many levels.

First, Barack Obama was still president at the time; while it is normal for an incoming administration to have informal meet-and-greets with foreign officials, Kushner’s proposal was so inappropriate that Kislyak was said to be stunned. Second, the idea of using only Russian communications equipment for the proposed dialogue suggests the Trump administration had something to hide from U.S. intelligence agencies. Third, there is the obvious question of what Kushner wanted to talk about that couldn’t be discussed through existing channels.

With someone so close to Trump in the crosshairs, special counsel Robert S. Mueller III has every reason to examine any relationships between the Trump campaign and Russian officials or oligarchs in minute detail — and also to look closely at any Russia connections the Trump and Kushner family business empires might have.

The White House should thus be settling in for a long siege. The good news, from Trump’s point of view, is that his senior aides are discussing how to set up a “war room” to handle communications about the scandal, theoretically letting the rest of the administration get on with governing. The bad news is that Kushner has been involved in those discussions — when instead he should have been cleaning out his office.

Even setting the scandal aside, it is clear that Kushner gradually emerged as the most powerful of Trump’s senior advisers — and is not doing a very good job. His fingerprints were not on the health-care disaster; and while he hasn’t made relations between Israelis and Palestinians any better, he hasn’t made them any worse. But he has shown absolutely no sense of how to turn intention into legislation. And his instincts are so out of tune that he reportedly advised Trump that firing FBI Director James B. Comey would be a sure political win, rather than the equivalent of opening the gates of hell.

Trump is said to be angriest at Kushner about something else: Kushner’s sister, Nicole Meyer, was caught on video trying to lure Beijing investors into participating in a Kushner Companies condominium project in New Jersey by holding out the prospect of immigration visas that could lead to permanent residence in the United States.

Yet Kushner remains. And no communications strategy, however brilliant, has a chance of succeeding so long as Trump has access to his Twitter account.

“Whenever you see the words ‘sources say’ in the fake news media, and they don’t mention names,” Trump tweeted Sunday amid a morning rant, “it is very possible that those sources don’t exist but are made up by fake news writers. #FakeNews is the enemy!”

Wrong. We don’t fabricate sources and these days we don’t have to look hard to find them. Right now they’re talking about Jared Kushner — and have nothing nice to say.


Article Link To The Washington Post:

The Fed May Finally Be Getting Nervous About The Stock Market

By John Crudele
The New York Posts
May 30, 2017

The Fed said something that was even more important than addressing a rate hike in last Wednesday’s communiqué. It said “vulnerabilities appeared to have increase for assets valuation pressures.”

The Fed never speaks in plain English. But that means the Fed is getting nervous about bubbles (and it’s about time) in places like the stock market.

And that’s not surprising, because the Fed’s actions in keeping interest rates so low for so long have forced millions of people into the stock market who wouldn’t otherwise be in it.

It took a while. Remember, it was in 1996 that former Fed Chairman Alan Greenspan, who is most responsible for our country’s financial problems, warned of “irrational exuberance” in stocks. Four years later, the dot-com bubble eventually did pop and investors lost a lot of money.


Article Link To The New York Post:

ObamaCare Must Either Die Or Take Over Completely

By Post Editorial Board
The New York Post
May 30, 2017

Democrats are crowing over the Congressional Budget Office projection that the House-passed health-care bill would leave 23 million fewer Americans with insurance as of 2027 than if ObamaCare stayed intact — while ignoring the fact that ObamaCare can’t remain intact.

That is, the CBO guesstimates are comparing the GOP bill to a fantasy.

We’ve written before of how insurers are fleeing the ObamaCare exchanges because they’re losing too much money. If the law goes unchanged, the nation will soon start seeing “insurance deserts” where no one’s offering exchange coverage. The CBO doesn’t account for that.

Nor for the fact that premiums in the individual market have doubled since 2013, when ObamaCare started kicking in. Few beneficiaries feel the full impact, because taxpayer subsidies shield them from the hikes. But there’s just no room in the federal budget to keep increasing the subsidies forever.

That’s not on the CBO’s radar, either — except insofar as it admits the House bill would save $119 billion over 10 years.

The GOP effort to roll back ObamaCare isn’t perfect, but it’s an effort to get the system onto some sustainable path, without further roiling the insurance market.

More and more Democrats recognize that ObamaCare isn’t working: It hasn’t broadened coverage as much as promised, nor reined in costs. But their answer is to mess with everyone’s insurance.

Rep. Keith Ellison (D-Minn.), No. 2 on the Democratic National Committee, led a Thursday rally of House Democrats calling for “Medicare for all” — that is, replacing all health insurance with a single, taxpayer-funded system of coverage.

Days earlier, the California Democratic Convention booed Tom Perez, the DNC chairman, for refusing to endorse that single-payer system. It’s what Bernie Sanders and other progressives have always wanted, and it’s increasingly what the party’s base demands.

But it’s madness: Where the ObamaCare law only inflicted direct pain on the 8 million Americans whose old policies it canceled, single payer would mess with the coverage that now works pretty well for a solid majority of the country — employer-provided policies.

ObamaCare is inherently unstable; the country will have to either retreat from it or go even further along the socialized-medicine path. If you want any hope of keeping your doctor and your insurance, don’t go with the “double down” team.


Article Link To The New York Post:

Record-Breaking FTSE 100 Shrugs Off Terror And Elections

By Cecile Vannucci
Bloomberg
May 30, 2017



A terror attack and looming election are not enough to stop the rally in British mega-cap shares. The FTSE 100 Index has climbed 4.8 percent this month, one of the best gains among developed-market equities and a much bigger advance than its largest European peers. A recovery in EasyJet Plc and Vodafone Group Plc propelled the benchmark gauge to a fresh record on Friday.


Article Link To Bloomberg:

Angela Merkel’s Lament

A difference on climate doesn’t mean a U.S. retreat from Europe.


By Review & Outlook
The Wall Street Journal
May 30, 2017

Angela Merkel’s declaration on the weekend that Germany and continental Europe will have to depend more on themselves is being portrayed as the Donald Trump -inspired end of American leadership in Europe. But if that’s true, and we have heard this dirge before, the erosion of U.S. leadership hardly began with Mr. Trump. It started under Barack Obama, whose failure to lead was too often reinforced by his main partner in Europe, Mrs. Merkel.

“All I can say is that we Europeans must really take our destiny into our own hands,” the German leader told a crowd during a re-election campaign event at a beer tent in Bavaria. “The times in which we can fully count on others are somewhat over, as I have experienced in the past few days.”

That was widely perceived as the German Chancellor’s reaction to last week’s NATO and G-7 summits, when the new U.S. President challenged NATO members to spend more on defense and refused to sign on to the climate-change policies of the other six leaders.

Mrs. Merkel seemed especially miffed about Mr. Trump’s decision not to embrace the Paris climate accord that Mr. Obama signed in his final year as President. “The whole discussion about climate has been difficult, or rather very unsatisfactory,” Mrs. Merkel told reporters. “Here we have the situation that six members, or even seven if you want to add the [European Union], stand against one.’

But wait. Since when is a difference of opinion on climate policy a signal of U.S. retreat from Europe? And why is Mr. Trump’s reluctance to sign on to Paris—he says he’ll decide whether to leave the accord this week—a failure of leadership? Mrs. Merkel’s comments suggest that she is most upset because Mr. Trump declined to follow her lead on climate.

Mr. Trump should decline if he wants to fulfill his campaign promises to lift the U.S. economy. Mrs. Merkel’s embrace of green-energy dogmas has done enormous harm to the German economy. She reacted to the Fukushima meltdown by phasing out nuclear power, and her government has force-fed hundreds of billions of dollars into solar and wind power that have raised energy costs. As Der Spiegel once put it, electricity is now a “luxury good” in Germany.

It’s not surprising that Mrs. Merkel and the Europeans should want to shackle the U.S. with similarly high energy costs, and Mr. Obama was happy to oblige. But Mr. Trump was elected on a promise to raise middle-class incomes, and domestic energy production is essential to that effort. Mrs. Merkel doesn’t care if Mr. Obama committed the U.S. to Paris without any Congressional approval, but Mr. Trump has to take that into account.

The U.S. natural-gas fracking revolution also has the benefit of reducing fossil-fuel emissions by reducing reliance on coal. To the extent that U.S. energy production can supplant Russian natural-gas supplies to Europe and keep the price of oil low, it also undermines Vladimir Putin’s influence at home and abroad.

As for fading U.S. leadership in Europe, we wish the German Chancellor had prodded Mr. Obama to do more after Russia snatched Crimea from Ukraine. We’re still waiting for the Germans to support arming Ukraine to impose higher costs on Russia’s military incursions. Then there’s the failure of the U.S. and Europe to stop the Syrian civil war, which contributed to Brexit by sending millions of refugees into Europe without border controls.

Mr. Trump is undiplomatic, and sometimes rude, as he showed when he shoved aside Montenegro’s prime minister at the NATO summit. This behavior is embarrassing for most Americans, and Mr. Trump’s lack of basic knowledge about the economics of trade is dangerous.

But then Mr. Trump has abandoned his campaign bluster that NATO is obsolete, and he signed onto the G-7 communiqué language vowing to resist protectionism. The President’s challenge to Europe to spend more on its own defense may be precisely the leadership the alliance needs. That’s especially true for Germany, which spends a mere 1.2% of GDP on the military and whose public takes an increasingly pacifist view of global conflict, in contrast to the British and French.

Mrs. Merkel’s German opponents claim she is too accommodating to Mr. Trump, and her weekend remarks are in part a bow to that domestic politics. She is generally pro-American and an admirable leader. Mr. Trump shouldn’t overreact to her weekend comments any more than Europe should overreact to some of his. The Atlantic alliance might even benefit from more such candid talk on both sides.


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'Atlanticist' Merkel Rams Home Frustration With Trump After Summits

By Paul Carrel and Andreas Rinke 
Reuters
May 30, 2017

German Chancellor Angela Merkel underlined her doubts about the reliability of the United States as an ally on Monday but said she was a "convinced trans-Atlanticist", fine-tuning her message after surprising Washington with her frankness a day earlier.

In a speech in Berlin, Merkel showed how seriously she is concerned about Washington's dependability under President Donald Trump by repeating the message she delivered a day earlier that the days when Europe could completely count on others were "over to a certain extent".

She made those comments, which sent shock waves through Washington, after Trump criticized major NATO allies over their military spending and refused to endorse a global climate change accord at back-to-back summits last week.

"Recent days have shown me that the times when we could rely completely on others are over to a certain extent," Merkel said.

While she made clear Berlin and Washington would "of course" remain close partners, Merkel stuck to her language from Sunday.

"We also know that we Europeans must really take our fate into our own hands," she added, underlining Europe's frustration with Trump on climate policy in particular.

The American tycoon-turned-president backed a pledge to fight protectionism at the end of a summit of the G7 group of wealthy nations on Saturday. But he refused to endorse the climate pact, saying he needed more time to decide.

Merkel added that ties with the United States were of "paramount importance", but she otherwise stuck to the thrust of her Sunday message, when she spoke in a packed Munich beer tent.

"It became clear at the G7, when there was no agreement with the USA, how long and rocky this path would be," Merkel said at a conference on sustainable development. "I think it was good not to gloss over the differences."

"National Blinkers"

Merkel indirectly warned Trump he risked isolating the United States: "Anyone who today puts on national blinkers and no longer has eyes for the world around him is, I am convinced, ultimately out on a limb."

Her spokesman, Steffen Seibert, told reporters Merkel felt it was right to flag differences in Germany's ties with the United States in order to maintain healthy relations.

"Because trans-Atlantic relations are so important to this chancellor, it is right from her viewpoint to speak out honestly about differences," he said, stressing that the trans-Atlantic ties "are a firm pillar of our foreign and security policy"

Interior Minister Thomas de Maiziere stressed Germany's "excellent" security ties with the United States.

Nonetheless, Merkel's plans to meet Indian Prime Minister Narendra Modi and Chinese Premier Li Keqiang this week reflect Berlin's willingness to work with other countries if Washington proves problematic on climate and trade policy.

German Foreign Minister Sigmar Gabriel said the West had become weaker as Washington increasingly put U.S. interests first. He said Trump's administration, for example, was unlikely to do much to tackle the causes of the migrant crisis - climate change, wars and persecution.

He referred to the "loss of the U.S. as an important nation" and said that while it was important to maintain dialogue with Washington, Europe needed to become stronger and Germany needed to be more prepared to work with its EU peers.

Juergen Hardt, the German government's coordinator for transatlantic policies, said Trump's administration was irritating foreign allies.

"Never before has there been so much uncertainty about the political course, and so many contradictions in the president's statements, four months after the inauguration of a new U.S. president," Hardt told Reuters.

"That weakens America and irritates its partners," said Hardt, the foreign policy expert in parliament for Merkel's conservative Christian Democrats.


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The ‘Business Case’ For Paris Is Bunk

The climate accord is a boon—yet pulling out would be unfair?


By Cliff Forrest
The Wall Street Journal
May 30, 2017

As President Trump weighs whether to withdraw from the Paris Agreement on climate change, some have tried to present a “business case” for why the U.S. should stay in. An economic windfall would come with the early and aggressive investment in alternative energy that the accord mandates, or so the argument goes. The Paris Agreement’s backers have told a very incomplete story and reached the wrong conclusion.

The economic merits of the Paris Agreement take on a different air when more fully considered. Climate-change advocates’ bizarre premise is that economic gains will come from restricting access to the most abundant, reliable and affordable fuel sources. Never mind that this defies the experience of many European nations that have invested heavily in renewable energy. After “Germany’s aggressive and reckless expansion of wind and solar,” for example, the magazine Der Spiegel declared in 2013 that electricity had become “a luxury good.” Apparently this time will be different.

There are a few interesting hypocrisies to consider as well. The commercial interests that strongly support the Paris Agreement typically have created programs to exploit, game or merely pass through the costs of the climate-change agenda. Many also maintain a green pose for marketing purposes. The classic example of this rent-seeking behavior was Enron, which in 1996 purchased Zond Energy Systems (now GE Wind) to complement its gas pipeline. Enron then set about lobbying its way to green-energy riches. It seems that Paris backers hope for a sudden public amnesia about the many businesses that use government to push out smaller competitors.

Green companies also argue that, beyond economic benefits, their ability to slow climate change helps contribute to the public good. To my knowledge, none declare a measurable impact on climate from their businesses or their desired policies.

Mr. Trump should keep in mind that the people calling for him to stick with the Paris Agreement largely did not support him during the campaign. Few would like to see him succeed now. As for his strongest supporters, they’re the ones who will take the hit if he breaks his promise to withdraw.

Some countries have threatened to punish the U.S. if it pulls out of the accord. Rodolfo Lacy Tamayo, Mexico’s undersecretary for environmental policy and planning, said in an interview with the New York Times: “A carbon tariff against the United States is an option for us.” Countries imposing costs on their own industries through the Paris Agreement complain that they are at a disadvantage if the U.S. doesn’t do the same. Apparently they didn’t receive the talking points describing green energy as an economic boon for everyone involved.

So which is it? Does the Paris Agreement spur a U.S. economy otherwise unprepared to succeed in the 21st century? Or is the U.S. maintaining economic advantage by not subjecting itself to the accord’s arduous requirements?

Mr. Trump’s obligation is to do what is in America’s best interest. Rejecting a confused and costly international agreement, with questionable benefits to climate, should be a slam dunk. Don’t take my word for it: Just study the other side’s arguments.


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