Monday, June 5, 2017

Monday, June 5, Morning Global Market Roundup: Oil Jumps On Mideast Tensions, London Attacks Hurt Sterling; Stocks Subdued

By Nichola Saminather
June 5, 2017

The dollar inched up from a seven-month low hit after U.S. jobs growth in May missed expectations, while sterling fell after the attacks in London that killed at least seven people and wounded 48, just days before Thursday's national election.

Oil jumped after Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed their ties with Qatar on Monday, accusing the wealthy Gulf Arab state of supporting terrorism.

The coordinated move dramatically escalates a simmering dispute over Qatar's support for the Muslim Brotherhood, the world's oldest Islamist movement, and affects some of the world's biggest oil and gas exporters.

Global benchmark Brent> LCOc1 advanced 1.1 percent to $50.48 a barrel. U.S. oil CLc1 also climbed 1 percent to $48.17.

Qatar is the biggest supplier of liquefied natural gas (LNG) and a major seller of condensate - a low-density liquid fuel and refining product derived from natural gas.

Geopolitical risks kept Asian stocks subdued on Monday, despite U.S. stocks rising to record highs on Friday.

The dollar index, which tracks the greenback against a basket of six major peers, was up almost 0.1 percent at 96.78 after sinking on Friday to its lowest level since the U.S. presidential election in November.

U.S. nonfarm payrolls increased 138,000 in May, severely undershooting the forecast of 185,000, suggesting the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent.

The number of jobs created in March and April was revised down by 66,000 from earlier reports.

The dollar gained 0.1 percent to 110.58 yen JPY=D4, after losing 0.8 percent on Friday.

The U.S. 10-year Treasury bond yield was at 2.1678 on Monday, having plunged from Thursday's close of 2.217 before the jobs data was released.

"The reaction in the 10-year yield implies that the market sees a third rate hike in 2017 as diminishing although still a very real possibility," James Woods, global investment analyst at Rivkin Securities in Sydney, wrote in a note.

After attackers rammed a van into pedestrians on London Bridge and stabbed revellers in nearby bars on Saturday in the third terrorist attack in Britain in the last three months, Prime Minister Theresa May said Thursday's national election would go ahead.

Police shot dead the three male assailants in London's Borough Market within eight minutes of receiving the first emergency call. They arrested 12 others, and raids are continuing, police said.

May is expected to resume campaigning on Monday for a vote which polls show is much tighter than previously predicted. A close election could throw Britain into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.

Sterling GBP=D3 fell as much as 0.3 percent before paring the losses to trade down 0.2 percent at $1.2864 on Monday.

"Today and tomorrow, I am guessing that sterling will move in a range ahead of the UK election, as I think no one can accurately forecast the outcome," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

"Brexit has taught us not to believe polls, and not to take aggressive positions ahead of UK events."

The euro EUR=EBS fell 0.1 percent to $1.1271 on Monday, holding on to most of Friday's 0.6 percent gain. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was slightly lower.

Japan's Nikkei .N225 reversed earlier losses to climb 0.1 percent as the yen surrendered some of its gains.

Chinese shares .CSI300 fell 0.5 percent, with news of service-sector activity rising in May at the fastest pace in four months failing to lift sentiment.

Australian shares slid 0.8 percent and South Korea's KOSPI .KS11 was little changed.

Taiwan shares .TWII bucked the trend, hitting their highest level since 2000 for a second straight session.

On Friday, all three major Wall Street indexes .DJI .SPX .IXIC hit all-time highs, with gains in technology and industrial stocks more than offsetting the subdued jobs report.

Gold XAU= rose to a six-week high on Monday, driven by the weaker dollar. It was last steady at $1,279.90 an ounce.

Article Link To Reuters:

Oil Bears Can't Count On Libya As Expat Exodus Hinders Recovery

Output won’t rise much above 1 million barrels a day: WoodMac; OMV says security must improve before it can send expats back.

By Sam Wilkin and Salma El Wardany
June 5, 2017

The rapid increase in Libya’s oil production is heading toward a hard ceiling.

Crude output in the politically fragmented country has more than doubled in the past year to exceed 800,000 barrels a day, according to the state-run National Oil Corp., as fighting and labor unrest at ports and fields have subsided. But with foreign staff of international companies staying away, analysts from Energy Aspects Ltd. to Wood Mackenzie Ltd. say Libya’s ability to pump more oil will soon reach a limit -- and won’t be enough to upset an oversupplied market.

“You’ve got a cumulative buildup of technical issues, shortages of equipment, and increasingly reports of damage to facilities,” Richard Mallinson of London-based Energy Aspects said by phone. The North African country will struggle to push production above 900,000 barrels a day in the coming months, he said. “Without bringing in the expertise to carry out deeper maintenance, there’s only so much local teams are able to do.”

Libya was exempted from output cuts that the Organization of Petroleum Exporting Countries and allied producers agreed to in an effort to curb a global glut and support prices. The nation has announced plans to boost production to 1.3 million barrels a day by the end of the year. Output and exports collapsed after the 2011 revolt against former leader Moammar Al Qaddafi, when the country with Africa’s largest crude reserves pumped about 1.6 million barrels a day.

‘Decaying Infrastructure’

While Libyan workers have been able on their own to boost oil production since 2011, the nation also requires foreign contractors and service providers, NOC Chairman Mustafa Sanalla said by phone on June 1. The departure of most of these contractors due to concerns for their safety “had some effect on maintaining and increasing our production,” he said.

The recent increase in Libyan supply has offset some of OPEC’s cuts, though the country is unlikely to pump more than 1 million barrels a day without new investment, Bernstein Ltd. analysts including Neil Beveridge said in a June 2 emailed note. “With decaying infrastructure and a fragile peace, there are clear downside risks to Libyan production,” they said.

Libya’s output capacity has atrophied after six years of intermittent fighting that led most foreign oil workers to stay clear of the place. While local employees have continued to pump crude when security allows, they’ve been unable to keep up with maintenance or repair facilities damaged by looting or attacks, due to a shortage of equipment and training, Mallinson of Energy Aspects said.

“We can’t send any expats into Libya right now -- the security situation doesn’t allow it,” OMV AG Chief Executive Officer Rainer Seele said in a May 11 Bloomberg television interview. The Vienna-based company, which has stakes in several fields in Libya, can pump at about half of its capacity using only local employees, he said. “If we would like to increase to the maximum capacity, of course we need to have the security situation to bring back our expats.”

The amount of oil that can be produced without expatriate staff “varies significantly from project to project,” said Martijn Murphy, an analyst at Edinburgh-based consultant Wood Mackenzie. For the country as a whole, it would be a “considerable achievement” to push output above 1 million barrels a day on a sustainable basis, he said.

Foreign workers in the country have been targets in the past for extremists and kidnappers. Islamic State militants raided an oil field in March 2015, killing eight Libyan guards and kidnapping nine foreigners. Unidentified gunmen kidnapped three foreign oil workers last September, holding them for two months before releasing them.

Local employees too run severe risks as they continue to produce and export crude. A worker at the Mediterranean port of Ras Lanuf recalled that his team had to suspend loading the first oil tanker to call at the terminal in almost two years, when fighting between rival militias engulfed the port on Sept. 18.

The tanker Seadelta moved offshore, and the employee, who asked not to be identified out of concern for his safety, said he spent the night hiding in a warehouse with his co-workers. He and his team returned to work the next day and soon had the vessel on its way to Italy carrying 781,000 barrels of crude.

“The security and political situation still hangs on a knife edge,” said Murphy of Wood Mackenzie.

Article Link To Bloomberg:

Big Oil, Small U.S. Towns See New Reward In Old Production Technique

By Ernest Scheyder
June 5, 2017

Amid the frenetic activity of American shale oilfields recovering from a two-year recession sit a handful of oil towns that seemed impervious as many producers went into bankruptcy and the economy around them sank.

Occidental Petroleum Corp and a few other oil producers with wells near this town on New Mexico's border with Texas steadily pumped low-cost oil through the downturn, using a technique that has been heralded worldwide as a way to reduce carbon emissions and boost oil output.

"When everyone else in the oil industry was going down, Oxy kept working," said Joshua Grassham, vice president of Lea County State Bank and a Hobbs Chamber of Commerce board member. The city of 35,000 rests on the Permian oilfield, the largest oilfield in the United States.

This way of drilling brings with it a sweetener for the oil industry to keep crude flowing: a tax credit that helps insulate these wells in a downturn, and could triple in size if Congress approves a new measure this summer.

Such a move could extend by decades the producing life of hundreds more wells, increasing oil supply which would be a drag on prices. To date, the technique has been employed only at conventional oilfields, rather than on shale deposits. Some firms are studying how to put the technique to work in shale drilling, too.

The drilling method harnesses the carbon dioxide produced during the extraction of oil or from power plants, and forces it back into the fields. That boosts the pressure underground and drives more oil to the surface.

Their success could be replicated in oilfields across the United States if Congress approves the measure, which already enjoys broad bipartisan support. While the Trump administration has yet to say whether it supports the tax credit increase, the measure could also be a boon to the coal industry, which Trump wants to revitalize.

The technique, one of several so-called enhanced oil recovery (EOR) strategies used to prolong the productive lifespan of oilfields and increase output, underpins around five percent of U.S. oil output, or about 450,000 barrels per day, according to energy consultancy Advanced Resources International.

EOR can help firms to produce between 30 percent and 60 percent of all the oil held in a reservoir. That's far more than the 10 percent usually recovered from initial traditional drilling, according to the Department of Energy.

The existing credit has provided a financial lift for Occidental, Denbury Resources Inc and oil producers with ready access to the gas. Exxon Mobil Corp and Chevron Corp also use the technique on some of their oil fields. None detail their tax savings from the credit, but since the it was first offered in 2008, companies have collected at least $350 million in the credits, according to Internal Revenue Service figures.

In Hobbs, Occidental not only kept a 200-person workforce intact during the oil-price downturn - when tens of thousands of workers were laid off in the shale patch - it also invested $250 million to expand operations during that period, according to its public filings.

That meant Hobbs and nearby Seminole, Texas, where Hess Corp has its own carbon dioxide injection facility, didn't suffer the extreme financial pain felt by shale towns, such as Williston, North Dakota, and other shale producing communities in 2015 and 2016.

"Oxy's investment in the carbon project was a huge economic boost to our area," Grassham said.

Some of the carbon dioxide, a greenhouse gas, comes from naturally occurring reservoirs that are a low-cost source for Occidental. Others get the gas piped from power plants that burn coal. Power companies hope the technique can help them avoid higher carbon emissions.

The company spends about $18 to $25 per barrel to collect oil from its enhanced oil recovery operations. In contrast, its shale-focused well costs are lower - $16 to $19 per barrel. But because EOR wells pump consistently for decades, their value to the company over time exceeds shale wells, whose production quickly tapers off.

Across Texas and New Mexico, Occidental runs one of the world's largest fleet of enhanced oil recovery projects, injecting 2 billion cubic feet of carbon dioxide each day into wells that first produced oil nearly a century ago.

"We had a very large, stable carbon dioxide EOR business in our portfolio during the downturn," said Jody Elliott, president of Occidental's American operations. "That helped."

Partly because of its carbon facilities, Occidental was able to raise its dividend during the downturn. Today, executives are using the profits from the carbon business to grow its shale business across the Permian, the largest acreage holding in the region.

"These two businesses play very well off of each other," Elliott said.

Tax Change?

Congress is expected this summer to debate extending an existing tax credit that could pave way for wider use. The proposed Carbon Capture Utilization and Storage Act would boost the credit to $35 per metric ton of carbon dioxide, up from $10 per ton today.

The legislation failed to move forward during last year's heated presidential campaign, but supporters say it will be reintroduced soon. "We want to make sure that we show a strong commitment so we continue to develop these technologies," said North Dakota Senator Heidi Heitkamp, a Democrat and the bill's lead sponsor.

Electricity generator NRG Energy Inc earlier this year opened a $1.04 billion carbon capture facility at a Texas coal-fired power plant, using its carbon dioxide emissions to extract crude from a 1930s-era oilfield.

Expanding the credit could, supporters hope, encourage more coal-fired power plants to follow NRG's lead by capturing and selling carbon to oil producers. Most oilfields are not located near carbon dioxide supplies, so the tax credit also could spur the build-out of carbon pipelines.

Environmentalists, including the Sierra Club, like the process because it traps carbon underground, preventing it from contributing to greenhouse gas emissions.

"You'll put more carbon in the ground than oil that is produced," said Vello Kuuskraa, president of consultancy Advanced Resources International, which studies enhanced oil recovery and carbon storage.

Oxy is considering investing another $550 million in its Hobbs operation in the next several years to further expand its carbon facilities.

"During all these oil industry downturns, those carbon wells keep people working," said Grassham.

Article Link To Reuters:

Herbalife Raises Profit Forecast, Tops Key FTC Threshold

By Subrat Patnaik
June 5, 2017

Nutritional supplement maker Herbalife Ltd (HLF.N) on Sunday raised its current-quarter adjusted profit forecast and said it exceeded a key threshold under its agreement with the U.S. Federal Trade Commission.

Herbalife now expects adjusted profit of 95 cents-$1.15 in the second quarter ending June 30, compared to the 88 cents-$1.08 percent it expected earlier.

However, the company said it expected sales to fall by 6-2 percent due to the transition to the new FTC rules in the U.S. along with softness in its Mexico business. Herbalife had earlier expected sales to fall by 4.5-0.5 percent.

The Los Angeles-based company also said that 90 percent of sales in the United States in May were documented purchases by consumers, exceeding the 80 percent threshold called for in its agreement with FTC.

"These figures should put an end to any questions regarding demand for our nutrition products and the strength of our go-to-market business model," Chief Executive Richard Goudis said.

Herbalife, which has been accused by billionaire investor William Ackman of being a pyramid scheme, agreed to pay $200 million and change the way it does business to avoid being labeled as such by regulators.

In December 2012, hedge-fund manager William Ackman unveiled a $1 billion short position against Herbalife in a withering, hours-long presentation.

Ackman has accused the company of being an illegal pyramid scheme numerous times, and even starred in a recent documentary about Herbalife called "Betting on Zero" to explain his position. But as it stands, he is losing out.

Article Link To Reuters:

America May Have Ditched TPP, But It Hasn't Ditched Asia

The Asia-Pacific region is refusing to let the pact die, even leaving the door open for a change of heart by Washington.

The National Interest
June 5, 2017

President Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP) trade deal was thought to have killed the Asia-Pacific trade pact. But the region is refusing to let the pact die, even leaving the door open for a change of heart by Washington, while an alternative pact pushed by China builds momentum.

Trump’s January 23 executive order to withdraw the United States from the twelve-nation free-trade pact was one of his first acts as president, fulfilling a campaign promise.

“We’re going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country,” Trump said at an Oval Office ceremony attended by union leaders.

Comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—and previously the United States—the TPP aimed to create the world’s biggest free-trade zone, with a collective population of eight hundred million people. The free-trade zone would have accounted for 40 percent of global economic output.

The accord had been viewed as part of the Obama administration’s “pivot” to Asia, helping to maintain U.S. economic influence over the region in the wake of China’s emergence as Asia’s biggest economy. It also contrasted with the sixteen-nation Regional Economic Comprehensive Partnership, which includes China but excludes the United States.

However, with Democrats—including former presidential candidate Hillary Clinton—also opposed to the TPP, Trump’s withdrawal was potentially a formality since it was unlikely to win passage through Congress.

The initial reaction from the rest of the TPP was mixed, with Japanese prime minister Shinzo Abe describing the pact as “meaningless” without U.S. participation. Yet Japan, Australia and New Zealand have slowly worked to build consensus around a so-called “TPP eleven,” minus the world’s biggest economy.

Pushing Forward

During an Asia-Pacific Economic Cooperation ministerial meeting in Hanoi, New Zealand hosted a meeting of the TPP eleven that pledged to push forward with the pact. Only Japan and New Zealand have ratified the trade agreement, which followed five years of negotiations.

While at different stages in their considerations, the TPP eleven members “are united in the process and want to get to a place where there is something we can agree to collectively, for leaders then to agree,” New Zealand trade minister Todd McClay told the New Zealand Herald.

Japan’s economic and fiscal policy minister, Nobuteru Ishihara, told reporters that “the eleven countries’ commitment has been explicitly affirmed. I don’t expect the U.S. will rejoin the deal so easily, but Japan will continue to work…to return it to TPP membership.”

In a statement, the TPP eleven ministers opened the door to Washington’s eventual reentry, pledging to “launch a process to assess options to bring the comprehensive, high quality agreement into force expeditiously, including how to facilitate membership for the original signatories.”

The grouping also offered the prospect of new members, such as China, saying they “underlined their vision for the TPP to expand to include other economies that can accept the high standards of the TPP.”

“These efforts would address our concern about protectionism, contribute to maintaining open markets, strengthening the rules-based international trading system, increasing world trade, and raising living standards,” the ministers stated.

Japan plans to host a meeting of TPP eleven negotiators in July, with an agreement eyed for the Asia-Pacific Economic Cooperation Economic leaders’ summit planned for Vietnam in November. The Regional Economic Comprehensive Partnership members also plan on announcing a deal at the same conference.

Pros And Cons

However, not all TPP eleven members are convinced that the pact has a future without the United States. While Australia, Chile, Japan, New Zealand and Peru are seen favoring a new deal, other members such as Malaysia, Singapore and Vietnam have expressed doubts about its value minus its largest potential economy.

“We will need to ensure that our interests remain protected and the benefits derived from it still outweigh the costs,” Malaysian trade minister Mustapa Mohamed said.

Mexico and Japan are also both under pressure to do bilateral deals with the United States, under Trump’s “America First” trade agenda.

Yet even without U.S. involvement, the TPP is still seen offering significant benefits. For example, New Zealand expects annual tariff savings of NZ$220 million (US$155 million), compared to its original estimate of NZ$270 million.

“It is still significant savings for us—and that it is the first free-trade agreement for us with Japan, Mexico, Peru and Canada,” McClay said.

Even the poorest member, Vietnam, could benefit from the removal of tariffs, such as Australia’s 9.5 percent tariff on imported swimwear. Fortuitously for the communist-ruled state, the new agreement would remove previous obligations such as allowing verifiably independent trade unions.

Japan’s Abe has invested considerable political capital in the TPP, which is considered part of his “third arrow” structural-reform program under “Abenomics.” Australia’s trade minister, Steven Ciobo, has also been a staunch advocate, citing the need to “capture the gains contained within the TPP.”

“With the U.S. withdrawing, the metrics around the TPP have changed. However, there’s a strong desire for this to still happen,” he said.

“So we’ve got to do the methodical approach to realize the benefits.”

No Going Back

U.S. Trade Representative Robert Lighthizer told the Hanoi meeting that the Trump administration would not be returning to the TPP anytime soon.

“The United States pulled out of the TPP and it’s not going to change that decision. That does not mean we will not engage in this region,” Lighthizer said at a news conference in Hanoi.

“The president made a decision, that I certainly agree with, that bilateral negotiations are better for the United States than multilateral negotiations,” he added.

Instead, Washington has pushed for a bilateral trade deal with Japan that might match the gains of the TPP.

The prospects of such a deal appear limited though, with Japan’s deputy prime minister Taro Aso telling reporters that Tokyo would be happier to make concessions as part of a multilateral pact.

“In a bilateral deal . . . you can’t get back what you lose from a compromise with the United States,” he said.

In the meantime, Trump has promoted a bilateral trade deal with China, while also recently touting deals worth “billions of dollars” with Vietnam during a White House visit by Vietnamese prime minister Nguyen Xuan Phuc.

Played Like A Violin

Commenting on the Trump administration’s withdrawal from TPP and its courting of Beijing to counter the threat from North Korea, Japan’s Nikkei newspaper said China was “playing Trump like a violin.”

“Listen closely and you can hear the tune of the Xi Jinping Doctrine,” the financial daily said, arguing that Beijing had taken advantage of “back channel” links to the Trump administration while focused on eliminating U.S. influence from the region.

“To counter China's ambitions in Asia, former U.S. President Barack Obama advocated for a ‘rebalance’ of U.S. power to Asia and pushed the Trans-Pacific Partnership free-trade agreement,” the Nikkei’s Katsuhiko Meshino said.

“Trump has since pulled the U.S. out of the TPP and is now counting on China to deal with North Korea. The Trump administration has also publicly said it will consider China's positions in its many South China Sea disputes. It's not difficult to hear that violin playing.”

However, Jesper Koll, chief executive of WisdomTree Japan Hedged Equity Fund, said Trump had become “much more of a pragmatist than an ideologue.”

“America has made it clear that if Japan wants to lead multilateral trade agreements, together with Australia and New Zealand, please go ahead—that’s not obstructionist, it’s just ‘Welcome to the new world,’” Koll said. “If you think America is going to lead a room of twenty countries sitting together, no, they have no patience for that. But is America going to be in the way? The answer is absolutely not.”

Asked about the prospects for a U.S.-Japan trade deal, the Tokyo-based economist said: “We know that the negotiations between Japan and the U.S. on the trade front went well; we know there’s a lot of goodwill—not just between Abe and Trump, but also between [U.S. Vice President] Pence and Aso, and [U.S. Commerce Secretary] Wilbur Ross and his counterpart.”

“So for all intents and purposes, it’s realistic to assume that the U.S.-Japan bilateral trade relationship will become the gold standard for future bilateral deals that America is going to be doing,” Koll said.

In the meantime, the TPP eleven are pressing ahead, with or without America, while the Regional Economic Comprehensive Partnership slowly advances. For the Trump administration though, conceding ground to others, including China, appears less of a concern than playing to the heartland.

Article Link To The National Interest:

Obamacare Repeal Sinks Into Tedious Talking Points

Republicans have a cynical new verb, "to Upton." It means writing laws to deflect criticism instead of helping citizens.

By Albert R. Hunt
The Bloomberg View
June 5, 2017

In defending the unpopular and flawed House bill to replace Obamacare, a common Republican refrain is that it fully protects health-insurance coverage for people with pre-existing medical conditions.

"Under this bill, no matter what, you cannot be denied coverage if you have a pre-existing condition," insisted House Speaker Paul Ryan, a talking point echoed by President Donald Trump.

Nervous Republican congressional candidates will clamor to make the same argument. Take Karen Handel, the Republican locked in a tight Georgia special-election contest to replace Tom Price, who left Congress to become Trump's secretary of health and human services. "No one can be denied insurance because of pre-existing conditions," she says on the stump.

Such duplicity! People with pre-existing conditions cannot be denied coverage outright but, as the Congressional Budget Office just reported, many of them would face huge increases in the cost. Anticipating such bad news, Ryan rushed the bill through the House last month before the CBO analysis was released on May 24.

The Affordable Care Act, unpopular since it was enacted by President Barack Obama and a Democratic Congress in 2010, is gaining backing as the Republican alternative takes shape. But one constant has been public support for some Obamacare provisions, including overwhelming approval of the rule that premiums can't vary based on medical history or health status.

This guarantee costs money, which is why Republicans are trying to dilute it.

The House bill permits states to get waivers from coverage rules under certain circumstances. The CBO estimates that states that are home to half the U.S. population would do that, and that the effect would be to raise the cost of coverage for those with pre-existing conditions, in some cases considerably.

The bill also allows insurers charge higher premiums to people who let coverage lapse for 63 days. The Kaiser Family Foundation estimates that 6.3 million people with pre-existing conditions have such gaps in a year, sometimes after they lose a job.

The architects of the House bill, realizing the political danger, set aside $100 billion over 10 years for states to subsidize insurance costs for people whose medical history drives up their premiums. But these "high-risk pools," health experts say, have a mixed record. Kaiser and others estimate that they would cover less than one-third of the potential additional costs for those with pre-existing conditions.

To pick up votes for the House bill from nervous colleagues, Michigan Republican Fred Upton added $8 billion over five years to help people with pre-existing conditions. This was a political ploy; it's a drop in the bucket compared to the need.

Further, the bill's separate slashing of Medicaid spending would clobber some of this group. Among low-income adults benefiting from Obamacare's expanded Medicaid coverage, almost 30 percent have mental illness or substance-abuse disorders like opioid addiction.

In 2009, Senate Democrats passed the Affordable Care Act with no Republican votes. Two committees, however, had spent six months on the measure. The Senate Finance Committee held dozens of hearings and there were scores of hours of negotiations with Republicans that ultimately were unsuccessful.

By contrast, Senate Republicans now have 13 members meeting in secret to hammer out the Senate version of an Obamacare replacement. They are toying with a full rewrite of the House bill, but party consensus is elusive. More likely are minor modifications to the House plan, such as stretching out effective dates beyond election years and adding a little money. They then would take this directly to the Senate floor this summer, without hearings or public testimony, and try to pass it with Republican votes alone.

Under rules of this procedure, the bill has to be analyzed by the CBO. Since the differences from the House bill would be minor, the CBO findings won't be much better for Republicans.

But there's a catch. Any changes adopted by the full Senate don't have to be analyzed by the CBO. Thus, sources close to these deliberations say, the plan would include cosmetic changes that would provide talking points to deflect criticism -- much as Upton's tweaks did for his House colleagues (there's even a cynical new legislative verb now in use, "to Upton"). The leadership then would try to persuade or pressure the handful of Republican moderates and health care experts to go along in order to achieve a political win.

Not so long ago, one of the Senate's foremost health-care experts had a warning for Democrats as they prepared to pass Obamacare:

"Thumbing their nose at the American people by ramming through a partisan bill would be the same thing as going to war without asking Congress' permission," he said. "You might technically be able to do it, but you'd pay a terrible price in the next election."

That was Tennessee Republican Lamar Alexander in 2009. Today he's one of those 13 Republicans hunkered down in the Capitol.

Article Link To The Bloomberg View:

Labour’s Late Surge May Be An Illusion

British polls are often wrong.

By John Fund 
The National Review
June 4, 2017

Britons are soldiering on after the terrorist attack that claimed seven innocent lives on Saturday. My friend Mary Toman, an investment banker, has lived in London and is there now for her daughter’s wedding. “After Londoners knew of the attacks there were still loads of people on the street, walking around like nothing had happened which makes a statement that the British won’t be cowed,” she told me in an e-mail. “A Brit fearful of attack is not seen as a true Brit. A very strong part of their culture.”

Of course, what goes for the man on the street isn’t always true in politics. Conservatives are panicking at some polls that show the race between their prime minister Theresa May and Labour Party leader Jeremy Corbyn closer than ever. The election is being held this Thursday, and there are signs it has dramatically tightened since April, when May held up to a 20-point lead. There’s no way of knowing if recent terror attacks will affect the electorate.

Admittedly, the polls are all over the map. The Survation survey conducted for the Mail on Sunday newspaper gives the Conservatives 40 percent of the vote and Labour 39 percent. As recently as May 21, the Survation poll had the Tories up by 12 points over Labour.

Other polls show a mixed picture. YouGov gives Conservatives a 42 percent–to–38 percent lead, and ORB has a nine-point lead. Two other pollsters show a clear Tory lead — 11 points in the ICM survey and 12 in ComRes survey.

Of course, British polls are notorious for being error-prone of late. In the 2015 general election, none of them predicted the Conservatives under David Cameron would win an outright majority of seats in Parliament. They also missed a late surge of voters supporting Brexit in the June 2016 referendum. Polls over a long period of time have tended to overestimate Labour’s strength and underestimate the Tories’. Some call this the “shy Tory” effect, with voters taking a conservative stance reluctant to directly tell pollsters that fact. For example, Internet polls had the 2016 referendum results correct. It was the telephone polls that were significantly off.

Theresa May knows all this, but that didn’t stop her from what the Daily Mail called “going nuclear” in attacking Corbyn. She accused him of not being willing to use Britain’s nuclear Trident missile deterrent if he had to and preparing to usher in pro-union policies that could bring another round of strikes similar to the 1978–1979 “Winter of Discontent” that was so disruptive it is credited with contributing to Margaret Thatcher’s victory a few months later.

Outwardly, May’s approach to both the terrorist attack and the election is to “keep calm and carry on.” But behind the scenes, she is no doubt nervous that Corbyn appears to have shucked some of his “loony Left” persona and been an effective communicator.

If she is worried about a last-minute Labour surge, she should take comfort in some history. Last year, Charles Moore, the official biographer of Margaret Thatcher, published a fascinating account of her state of fright in the week prior to the 1987 election, which was held 30 years ago this week.

"If May is worried about a last-minute Labour surge, she should take comfort in some history."

A few days before that vote, a couple polls saw the lead of Thatcher’s Conservatives falling to four points. This set off a mini-panic at 10 Downing Street. Moore talked to several witnesses who said Thatcher was uncharacteristically defeatist.

According to one onlooker, in a meeting with a group led by her party chairman, Norman Tebbit, she was “almost hysterical, with her arms sweeping everywhere.”

“Her eyes flashed: hatred shot out of them, like a dog about to bite you,” another said.

And she wasn’t the only one to become paranoid: “Norman, listen to me,” said David Young, a close Thatcher confidant, to Tebbit, shaking him by the shoulders. “We’re about to lose this f***ing election, you’re going to go, I’m going to go, the whole thing is going to go!”

Eventually, someone in the room summoned the courage to tell Thatcher and Young to shut up. A new, improved round of advertising was approved, and it turned out the “poll shock” was a wobble, not a trend. A final poll for the TV program Newsnight forecast a hung parliament, one in which no party had a majority. Even the BBC exit poll had the same forecast. In the end, it wasn’t even close. Thatcher’s Conservatives won 42 percent of the vote versus only 31 percent for Labour, good for a sizable majority. Thatcher herself never lost an election, only being forced from office in 1990 by an internal coup against her among Conservative members of Parliament.

Theresa May is no Margaret Thatcher, though she has a similar ability to tightly control her bureaucracy and work longer and harder than anyone in government. I suspect that despite last-minute polling jitters, May will be returned to office with a good majority. But the campaign has revealed some of her weaknesses — a superficial knowledge of business and economic issues, a willingness to engage in unseemly policy U-turns, and an excessive focus on secrecy.

If May heads back to 10 Downing Street, she would be well served to understand just why she ever had trouble defeating Jeremy Corbyn, and thus reevaluate her approach to both politics and policy.

Article Link To The National Review:

Jihad Returns To Britain

The U.K. is waking up to the ideological nature of the Islamist threat.

By Review & Outlook
The Wall Street Journal
June 5, 2017

Saturday’s terror attack in the heart of London, Britain’s third murderous assault in 72 days, poses a difficult choice for free societies: Do more to contain this internal Islamist insurgency now, or risk a political backlash that will result in even more draconian limits on civil liberties.

Islamic State claimed responsibility late Sunday, and the operation that killed seven and wounded 48 bore the hallmarks of recent jihadist atrocities. The London Bridge area and nearby Borough Market are packed with bars and restaurants popular with tourists and young people. The three alleged perpetrators rammed a van into pedestrians, then began stabbing people before police shot them.

Prime Minister Theresa May said Saturday’s attack wasn’t directly linked to the suicide bombing committed by Salman Abedi at a pop concert in Manchester last month. But the three attacks in succession show why governments must target the threat at its roots, in self-isolating Muslim communities that reject mainstream values and create homegrown or Islamic State-inspired radicals like Abedi.

On this front, Mrs. May is well ahead of many of her European counterparts. The Prime Minister in a speech Sunday morning outlined a new counterterror strategy that puts ideology and Muslim integration at the forefront. The trio of recent attacks in Britain, she said, were “bound together by the single evil ideology of Islamist extremism.”

Mrs. May went on to call for a battle of ideas against Islamism and tough love for British Muslims who have failed to confront radicals in their mosques and community centers. Said the Prime Minister: “We need to live our lives not in a series of separated, segregated communities, but as one truly United Kingdom.”

Mrs. May suggested this would involve “difficult and often embarrassing conversations” with the Muslim community, and she is right. This has to include an end to political coddling of so-called soft Islamist groups and imams who treat candor about the Islamist threat as anti-Muslim or refuse to identify radicals in their midst.

The one misstep in an otherwise clear-eyed speech is Mrs. May’s suggestion to outsource surveillance of jihadist online speech to social-media platforms. This line is popular among Western leaders because it provides an excuse for their failure to defend the need for Big Data surveillance and threat analysis following Edward Snowden’s National Security Agency thefts.

Silicon Valley companies such as Facebook and Google bear some of the blame because they joined the fashionable campaign against the NSA’s metadata collection. And by all means Facebook, Twitter and other social media need to police their sites against the promotion of violence and jihad. If they refuse, politicians will eventually do it for them because Western publics will not allow mass murder to become a new normal.

But that’s all the more reason for governments to revive the use of Big Data and surveillance to prevent attacks to avoid even worse intrusions on civil liberties. As attacks continue, so will political pressure for measures such as quarantines and mass preventive arrests of people on terror watch lists.

On that score the U.S. is no exception. President Trump responded to the London attack in a typically heavy-handed way with a tweet urging “the courts” to restore his travel ban. But the anti-antiterror left needs to realize that hostility to surveillance and honest debate about jihad will make such bans inevitable if attacks continue—and Mr. Trump won’t be the only politician pushing them.

Article Link To The Wall Street Journal:

President Trump To Launch Push For Infrastructure Investment

Focus on infrastructure could help Mr. Trump find common ground with members of Congress.

By Ted Mann and Michael C. Bender
The Wall Street Journal
June 5, 2017

President Donald Trump will launch a new campaign this week aimed at fulfilling his pledge for $1 trillion of infrastructure investment, hoping to capitalize on lawmakers’ support for rebuilding the nation’s transportation systems at a time when his tax and health legislation are in flux.

Mr. Trump will begin with a White House event Monday announcing a push to privatize air-traffic control across the U.S., in what backers say could be a catalyst for improving speed and fuel efficiency across the aviation industry.

From there, the president will campaign for reviving infrastructure along the Ohio River, then meet with mayors and governors in the White House, followed by a speech at the Transportation Department on Friday.

The White House still hasn’t said how it plans to pay for the federal government’s share of the projects, and officials said a more detailed proposal will come at an unspecified later date. But Mr. Trump’s top economic adviser said the administration aims to encourage states and cities to bear much of the burden.

“We want to talk to them and make sure we’re partnering with them to make sure that they can use their tax dollars as efficiently,” White House National Economic Council Director Gary Cohn told reporters Friday. “We can be a good partner with them in helping them to enhance their infrastructure projects.”

Shifting the discussion to infrastructure could mean the best chance for Mr. Trump to find common ground with members of Congress who object to other elements of his agenda, given the broad agreement that the nation’s roads, bridges, rails and water facilities are in disrepair. It would, however, mean finding a way to live up to campaign pledges that many believe are irreconcilable—investing $1 trillion in infrastructure, but doing so with funds raised almost entirely from the private sector.

The infrastructure push is “encouraging,” said Scott Rechler, a real-estate developer and former official at the Port Authority of New York and New Jersey who consulted with Mr. Trump’s transition team. “They should have started with this, since it’s one area with a level of bipartisan support.”

But Mr. Rechler, a Democrat whose own real-estate company has financed infrastructure like sewers and utilities in public-private partnerships with local government, said the administration’s plans should recognize that private financing won’t be able to replace federal funding in fixing some critical areas—from railroads to crumbling damswhere investors can’t turn a profit.

“It’s not free,” Mr. Rechler said. “At some point or another someone’s going to have to pay for this.”

In remarks to reporters last week, presidential advisers made clear they will be attempting to pair the president’s pledge to renew critical infrastructure with a shift of responsibility for some of the costs from federally funded grant programs to state and municipal taxpayers.

Some city and state officials say that they are already strapped for funds and worry about having to shoulder large additional costs.

“Voters in L.A. have done their part by passing the boldest and largest transportation measure in our nation’s history,” Los Angeles Mayor Eric Garcetti said. “And I expect Congress to act across party lines, and finalize a budget that provides direct funding for infrastructure projects that will improve quality of life for millions of people.”

The administration has called for spending $200 billion on infrastructure projects over 10 years, saying that infusion of federal money could help trigger roughly $1 trillion worth of total funding thanks to a surge in private investment.

Still, after nearly six months in office, the administration hasn’t said how it will pay for the federal government’s share of that investment, and hasn’t put forward legislation that would show exactly how it plans to spur private investment.

Senior administration officials didn’t say if Mr. Trump would put forward his own proposals for raising the funds for an infrastructure package or defer to Congress, saying that is “something we are currently debating inside the White House.”

An infrastructure proposal fleshed out with actual details will be ready “when the president tells us it should be ready,” a senior administration official said.

The administration has been most specific about its desire to cut regulation and permitting that can delay the start of new infrastructure projects. Mr. Trump has seized on a flow chart provided by Mr. Cohn’s deputy, DJ Gribbin, that shows how the permitting process for a new highway can involve up to 16 federal agencies.

Mr. Cohn said Friday that the administration would like to shrink the permitting schedule for such projects from as much as 10 years to “two or less.”

“The cost of infrastructure goes up dramatically as time goes on in the approval process, capital is tied up, it has people waiting for permits, and the amount of paperwork and the amount of fees that you just encumbered while you’re going through the approval process is enormous,” Mr. Cohn said.

Those comments would find agreement among some Democrats as well, and echo some of the Obama administration’s efforts to “fast-track” selected major capital projects by speeding environmental approvals.

Article Link To The Wall Street Journal:

Saudi-Led Alliance Moves To Blockade Qatar Over Iran Tensions

Saudi, U.A.E., Egypt and Bahrain sever ties with Qatar; Countries suspend air, sea travel; Saudis shut land border.

By Alaa Shahine and Zaid Sabah
June 5, 2017

Four Arab countries led by Saudi Arabia cut diplomatic ties with Qatar and moved to close off access to the Gulf country, escalating a crisis that started over its relationship with Iran and its support of the Muslim Brotherhood.

The governments of Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said in statements they will suspend air and sea travel to and from Qatar. Saudi Arabia will shut land crossings with its neighbor, according to the official Saudi Press Agency, potentially depriving the emirate of imports.

The move by the energy-rich Gulf Arab countries comes after U.S. President Donald Trump recently visited Saudi Arabia. The kingdom and the U.A.E. want to stamp out potential threats to a united front against Iranian influence in the Middle East. The two countries are prodding Qatar to end its support for Islamist movements such as the Muslim Brotherhood and Hamas.

“The Saudi-U.A.E. campaign kicked into high gear on Monday with the kingdom, the Emirates, Bahrain and Egypt breaking off diplomatic relations with Qatar, ” said James M. Dorsey, a Gulf specialist and senior fellow in international studies at Nanyang Technological University in Singapore. “It’s reminiscent of a similar failed effort by Gulf states in 2014, but this time round sets the bar far higher.”

Brent crude rose as much as 1.6 percent to $50.74 a barrel on the London-based ICE Futures Europe exchange, before paring gains to 1.1 percent by 11:58 a.m. Singapore time. Heightened tensions between Saudi Arabia, the world’s biggest crude exporter, and Iran typically draw market attention to the Strait of Hormuz, through which the U.S. Department of Energy estimates about 30 percent of seaborne oil trade passes.

After Trump’s visit to Riyadh, the state-run Qatar News Agency carried comments by Qatari ruler Sheikh Tamim bin Hamad Al Thani criticizing mounting anti-Iran sentiment, with the U.S. president and King Salman singling out Iran as the world’s main sponsor of terrorism. Qatari officials quickly deleted the comments, blamed them on hackers and appealed for calm. Saudi Arabia and the U.A.E. accused Qatar of trying to undermine efforts to isolate the Islamic republic.

Saudi Arabia cited Qatar’s support of “terrorist groups aiming to destabilize the region,” including the Muslim Brotherhood, Islamic State and al-Qaeda. It accused Qatar of supporting “Iranian-backed terrorist groups” operating in the kingdom’s eastern province as well as Bahrain.

Saudi Arabia, along with Bahrain and the U.A.E., gave Qatari diplomats 48 hours to leave.

Article Link To Bloomberg:

Stock Market Bracing For Potentially The Most Explosive Stretch Of Trading This Year

By Sue Chang and Mark DeCambre
June 5, 2017

The stock market could face its most turbulent week of trading so far this year, with a trio of potentially destabilizing events on deck: former FBI director James Comey’s testimony, the U.K. election, and the ECB monetary-policy meeting. The trifecta, coming nearly all simultaneously on June 8, threaten to derail U.S. equities’ record-setting run.

“The hurricane season is forecast to start earlier than normal this year for the Trump administration as a perfect storm of events is converging,” said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners.

Comey, who was fired by President Trump early last month, on Thursday will testify before the Senate Intelligence Committee on Russia’s role in the U.S. presidential election as well as whether he was pressured to drop a probe on possible collusion between Trump’s campaign and Russian officials.

“The Comey testimony appears to be the second act in the latest drama on Capitol Hill and we think this installment only makes the road that much longer to meaningful tax reform and fiscal stimulus,” Charlie Ripley, investment strategist at Allianz Investment Management, told MarketWatch.

Stocks have set numerous records over the past months on expectations that Trump will usher in a more business-friendly era through tax cuts and ramped-up fiscal spending.

Aside from Comey’s Senate appearance, former Federal Bureau of Investigation director Robert Mueller is overseeing a federal investigation into Russian interference in the 2016 presidential election that could possibly lead to criminal indictments against those in Trump’s inner circle.

Across the Atlantic, the British will head to the polls in a snap election to pick their representatives to the House of Commons. Prime Minister Theresa May’s Conservative Party currently has a 17-seat working majority but as support for the Conservatives wanes, the outcome of the election could reshape the U.K. Parliament and lead to greater uncertainty as the country negotiates its way out of the European Union.

On the same day in Tallinn, Estonia, the European Central Bank could set off tremors of its own if it unexpectedly announces a policy shift to wean Europe from its massive stimulus program at its monetary policy meeting.

Economists at Deutsche Bank believe that while the ECB is not yet ready to announce an exit from its quantitative easing regime next week, it could telegraph that a tapering is imminent in a bid to prepare the markets.

Even without the political cliffhangers, the market is entering a rough patch as summer doldrums set in.

Stocks have recorded a median decline of 0.79% in the two-week period between May 30 and June 13 over the past 10 years, according to data from Bespoke Investment Group.

Since 1950, June is among the worst months for stocks with only August and September having worse average returns as the chart from Ryan Detrick, senior market strategist for LPL Financial, shows.


Nonetheless, there are reasons for investors to take heart.

“June historically has been a weak month for equities, but the catch is some of the worst drops have taken place when the S&P 500 index was beneath its 200-day moving average to start the month. When the S&P 500 has been in a bullish trend—above this long-term trendline—June has been higher 59% of the time versus 33% when starting below,” Detrick wrote in a recent note.

Stocks kicked off this month firmly above the 200-day moving average, suggesting that any pickup in volatility could be a buying opportunity, he added.

Indeed, the market has been extremely resilient with even poor economic data failing to dampen investors’ appetite for stocks.

The U.S. added 138,000 new jobs last month, below the 185,000 increase projected by economists in a MarketWatch survey, while the unemployment rate fell to 4.3%, the lowest level since 2001, the Labor Department said Friday.

The tepid number, however, sparked speculation that the Federal Reserve may stop after just one more interest rate hike this year rather than the two widely expected. The Fed could increase rates as early as middle of this month when the Federal Open Market Committee convenes.

All major indexes closed at records for a second session in a row on Friday with the S&P 500 SPX, +0.37% rising 1% for the week while the Dow Jones Industrial Average DJIA, +0.29% added 0.6% and the Nasdaq COMP, +0.94% rallied 1.5%.

Article Link To MarketWatch:

Trump Ignores The Messy Reality Of Global Warming -- And Makes It All About Him

By Robert J. Samuelson 
The Washington Post
June 5, 2017

There was no need for President Trump to withdraw the United States from the Paris climate agreement to achieve his goal of overturning the Obama administration’s global warming policy. This had already occurred through court rulings and executive orders, which effectively halted higher vehicle fuel economy standards (up to 54.5 miles per gallon) and ended the Clean Power Plan program, which pushed electric utilities to shift away from coal. Moreover, national commitments to slash emissions made in Paris are voluntary. Countries can modify or ignore them. There is no enforcement or penalty for missing targets.

Under the Paris accord, countries made these commitments based on their own circumstances and political judgment. The United States pledged to cut greenhouse gas emissions by 26 percent to 28 percent from 2005 levels by 2025. The European Union promised to reduce emissions by 40 percent from 1990 levels by 2030. China said that its carbon dioxide (CO2) would peak by 2030 and that, by the same year, renewable fuels would represent about 20 percent of its energy use.

But as noted, none of these goals was binding. There was little, if any, loss of national sovereignty. The Trump administration could have accepted what it liked (presumably, cheap natural gas with lower CO2 emissions) and rejected what it didn’t (say, the tougher vehicle fuel mileage standards). To make the same point slightly differently: Trump’s actions were mostly symbolic and political. They were grandstanding, intended to impress his core supporters.

This distorts the climate debate in a dangerous and deceptive way. It’s become all about Trump, when it should be about the inherent difficulty of regulating the global climate. The main practical consequence of Trump’s stubborn stance is to offend (needlessly) the nearly 200 other countries that support the Paris accord. Trump’s foreign policy seems to be a calculated effort to lose the United States as many friends in the world as possible. It’s madness, a new strain of isolationism.

It also sends the wrong message: If only Trump would come to his senses, we could get on with the serious business of solving climate change. Trump is allegedly the big obstacle — his apparent unwillingness to admit human-induced warming — just as greedy oil companies were before him (most big oil firms now seem to have shifted). The truth is more complicated.

We can’t predict the exact degree of warming. Still, the direction is clear. Even if the Paris accord were fully implemented and all countries met their commitments — now impossible outcomes — emission levels would remain high, just lower than they would otherwise be, says Kelly Levin of the World Resources Institute, an environmental group. Although warming would slow, temperatures would continue rising.

Here’s why.

Growing concentrations of carbon dioxide and other greenhouse gases in the atmosphere are the culprits. They increase temperatures by trapping heat close to the surface. The emissions come mostly from the burning of fossil fuels (oil, coal, natural gas). Even if emission amounts decline, they’re still adding to CO2 concentration levels — just at a slower rate. Because concentration levels matter, warming proceeds.

To stop this process requires replacing most fossil fuels — a daunting and perhaps impossible task. People won’t surrender their vehicles, air conditioners and computers. It’s true that wind and solar have made huge gains, but they started from low bases. With or without Paris, fossil fuels remain the foundation for modern civilization. According to data from the U.S. Energy Information Administration, fossil fuels accounted for 83 percent of world energy in 2015, down only slightly from 85 percent in 1990.

Based on present technology and knowledge, we don’t know how to solve global warming. There is no obvious way to eliminate our pervasive dependence on fossil fuels without plunging the world into a prolonged depression and inviting widespread civil strife.

This is not an excuse for fatalism — doing nothing — nor an exoneration of Trump’s casual dismissal of the Paris accord. Global warming exemplifies what economists call a “collective action” problem: Unless all major nations cooperate, little can be done. A U.S. carbon tax (as often suggested by this writer) would be a good start. It would favor energy efficiency and renewables, as well as reduce chronic budget deficits.

But what we most need is honesty, which is scarce. The right dismisses global warming as a fake problem; the left can’t acknowledge that, as yet, there are no viable solutions. We need to keep searching and hope that something turns up.

Article Link To The Washington Post:

Trump Is Finding It Easier To Tear Down Old Policies Than To Build His Own

By Jenna Johnson, Juliet Eilperin and Ed O'Keefe
The Washington Post
June 5, 2017

Builder-turned-president Donald Trump has in many ways made good on his promise to be a political wrecking ball.

Last week, he withdrew the United States from the Paris climate accord. He has worked to roll back dozens of health, environment, labor and financial rules put in place by former president Barack Obama, and he scrapped a far-reaching trade deal with Asia as one of his first acts in office.

But he and his fellow Republicans have made little progress in building an affirmative agenda of their own, a dynamic that will be on display when Congress returns this week with few major policies ready to advance.

Voters are still waiting for progress on the $1 trillion package of infrastructure projects Trump promised, the wall along the Southern border he insisted could be quickly constructed and the massive tax cuts he touted during the campaign. Even debate over health-care reform is largely focused on eliminating key parts of the Affordable Care Act and allowing states to craft policies in their place.

After being the “party of no” during the Obama years, Republicans are trying to figure out what they want to achieve in this unexpected Trump era — beyond just rolling back what Obama did.

“We are in an ugly era of people who do not understand what the legislative branch is even for,” said Andy Karsner, who served as assistant secretary of energy for efficiency and renewable energy in the George W. Bush administration and is now based in California, working with entrepreneurs as managing partner of the Emerson Collective.

The Trump administration and Republican leadership in Congress, Karsner said, “have no skill set, they have no craftsmanship. They have no connection to the time when people passed legislation.”

Trump’s aides fervently push back at the idea that the president is not already in building mode. Marc Short, Trump’s director of legislative affairs, rattled off a list of things the president has built so far: A better job environment with fewer regulations, relationships with fellow foreign leaders and U.S. lawmakers, a budget and a plan for overhauling health care, along with nominating Neil M. Gorsuch to the U.S. Supreme Court. The administration plans to rollout a number of infrastructure projects this week and tackle tax reform this fall, along with getting started on building the Southern border wall, he said.

“The American people elected him president, in part, to undo much of the damage that President Obama did to our economy,” Short said.

But even some Republicans have raised questions about what the party now stands for, as opposed to what it is against.

Asked during a recent interview for a Politico podcast what the Republican Party stands for now, Sen. Ben Sasse (R-Neb.) responded: “I don’t know.”

Sasse said that both parties are “intellectually exhausted” and too focused on winning the next election, prompting them to get caught up in day-to-day fights instead of looking to the future. Later, Sasse was asked to give one word to describe the Republican Party, and he said: “Question mark.”

Short said the Republican Party stands for keeping the country secure and freeing businesses so the economy can boom and taxpayers can keep more of their money. He added that the president has been slowed by congressional Democrats who dragged their feet in approving the cabinet and continue to obstruct Trump’s agenda.

Josh Holmes, a former chief of staff to Senate Majority Leader Mitch McConnell (R-Ky.), said the appearance that Trump and Republicans are only focused on reversing Obama-era executive actions stems from the fact that “there’s a lot to do there.”

“The one thing that I think is underappreciated is the extent to which the entire Obama agenda in the last term was executed through executive order. Much of what President Trump was elected to do was roll that back,” Holmes said. “To the extent that a lot of this is focused on that, that’s the way you handle it. Most administrations, there are legacies left by signature legislative accomplishments — and [Obama] had health care and Dodd-Frank, but he basically spent six and a half years doing nothing from a legislative perspective.”

Holmes, like many other Republicans, stressed that it’s early in Trump’s term, and he was encouraged to see the president focus on American taxpayers and improving the economy in announcing his decision to leave the Paris agreement on Thursday. That sort of focus will help rally support for tax reform, he said.

“I would be concerned if the trajectory didn’t improve. In the next couple of months, you don’t need signature accomplishments, but you need progress towards it,” Holmes said. “I think tax reform is critically important for this administration — critically important. They’ve got to get it right.”

For many Democrats, all they see in Trump and his fellow Republicans is a bulldozer. Senate Minority Leader Charles E. Schumer (D-N.Y.) said in a statement that the past six months have shown that “the hard right, which has enveloped the Trump administration, is seasoned at being negative but can’t do anything positive.”

Republicans have used the Congressional Review Act to nullify 14 rules enacted by the Obama administration. Before this year, it had only been used successfully once in 20 years. If Trump and Republicans had not reversed these rules, then companies applying for federal contracts would have had to disclose their labor violations; coal mines would have had to reduce the amount of debris dumped into streams; telecommunications companies would have had to take “reasonable measures” to protect their customers’ personal information; individuals receiving Social Security payments for disabling mental illnesses would have been added to a list of those not allowed to buy guns; states would have been limited in the drug-testing they could perform on those receiving unemployment insurance benefits; certain hunting practices would not have been allowed on national wildlife refuges in Alaska; and states could have set up retirement savings plans for those who don’t have the option at work.

Short said the fact that Trump was able to use the Congressional Review Act more than a dozen times when it had only been used once before is “a pretty significant accomplishment” and one that he says will benefit the economy by billions of dollars each year.

“We look at that as one of the biggest accomplishments,” he said.

Sen. Jeff Flake (R-Ariz.) recently touted this rollback of Obama-era regulations while visiting a nuclear power plant in Tonopah, Ariz., bragging that Republicans were able to “reach back into the old administration and pull some of the regulations and start fresh.”

Within agencies, the Trump administration has also worked to scrap regulations that it says hindered businesses.

At the Environmental Protection Agency, the administration has revoked several Obama-era policies aimed at reducing pollution and confronting climate change. Trump has signed an executive order to open up oil and gas drilling in the Atlantic and Arctic oceans, while Interior Secretary Ryan Zinkehas signed a secretarial order to revisit drilling plans in two reserves in Alaska.

Trump has directed the Labor Department to reverse Obama-era rules imposing restrictions on major banks and investment advisers, and the department’s Office of Health and Safety Administration has also rolled back multiple regulations aimed at fostering worker protections. These include the delay of a rule requiring employers report worker injury and illness records electronically so they can be posted online, and the cancellation of a directive allowing a union official to accompany an OSHA inspector as an employee representative into a nonunion shop.

Multiple agencies have jettisoned or played down policies aimed at fostering LGBT rights. The Department of Housing and Urban Development revoked guidance for a rule requiring that transgender people stay at the sex-segregated shelter of their choice, while the Health and Human Services department has removed questions about sexual orientation from two of the surveys it conducts. The Justice and Education departments, moreover, withdrew guidance issued last year that instructed school districts to provide transgender students with access to facilities that accord with their chosen gender identity.

And while Republicans continue to try to repeal the Affordable Care Act, the Trump administration has begun to unwind aspects of the legislation through executive action, including no longer enforcing a fine for those who do not have health insurance, broadening exemptions for the contraception mandate and encouraging states to file waivers with the Centers for Medicare and Medicaid Services.

Trump has also proposed significant budget cuts, including reducing the State Department budget by 33 percent, the Environmental Protection Agency by 31 percent, the departments of Agriculture and Labor by 21 percent each, the Department of Health and Human Services by 18 percent, the Commerce Department by 16 percent and the Education Department by 14 percent.

Sen. Richard Blumenthal (D-Conn.) said that career employees at the EPA and departments of Labor and State have told him that Trump’s “destroy not build” approach is causing harm that could last for decades.

“They see their life’s work crumbling, because they see a president taking a sledgehammer to really complex aspects of policy,” he said. “They realize there’s pros and cons and conflicting interests, and they’ve tried to reach compromises that he just impulsively destroys because it was a good campaign slogan.”

Article Link To The Washington Post:

Apple Will Face 4 Challenges This Week That Could Fundamentally Alter Its Future

-- Software developers build the apps that make Apple products useful, and next week is its annual conference for them.
-- To keep them happy and engaged with its platforms, Apple will have to address challenges with Siri, content, the Mac, and China.

June 5, 2017

Considering its role as the world's most valuable public company, Apple reveals remarkably little about the strategy that has catapulted it to an $800 billion valuation.

Next week is a rare exception: The annual Apple Worldwide Developers Conference, where coders and app makers gather to make preparations for the next versions of Apple's operating systems.

This year's confab could be particularly important to investors. CEO Tim Cook has set an ambitious goal to double the company's services revenue — which includes the App Store — by 2020. Developers, the people who build those apps, are key to getting there.

Apple knows how to court them. It has invested heavily in education efforts around coding — including coding game Swift Playgrounds and the revamped Genius Bar — and the App Store has paid out $70 billion to developers since it launched in 2008, according to Apple.

To keep those developers engaged, here are four challenges that Apple will have to address.

1. Making Siri competitive

Last year, consumer technology writer Walt Mossberg asked why Siri seems "so dumb." An (albeit non-scientific) test by last month came to a similar conclusion: The Google Assistant answers most questions better than Siri.

Apple is reportedly preparing a smart home speaker with Siri, which may or may not debut next week. (Apple almost never confirms products ahead of launch).

But for a speaker like that to take off, the development around Siri might need to improve, said John Forrester, chief marketing officer at Inbenta, which makes virtual agents and assistants for enterprises.

With many development platforms to choose from, it's up to Apple to woo developers to make something for Siri, Forrester said. Many developers today like the App Store, Forrester said, because they can easily monetize their work. The same goes for chat-based artificially intelligent bots, he said.

Forrester, who has previously worked for companies like Samsung and Microsoft, said that Apple has a big advantage in that it is known for sleek industrial design, and aligned with luxury brands like Hermes.

"When you look at three major players, Apple and Google have a great record of courting developers. They work well them."-Jonathan Frankel, Founder of smart home system Nucleus
Apple is also known for its focus on user experience, which could make the rumored speaker easier to use than Alexa, which often requires you to awkwardly ask it to summon a skill before you can do tasks. That could be augmented by Apple's recent investments in automation.

"When you are talking to someone, you give it a name. I think it's weird that Google Home doesn't have one. We have customers that have avatars, that's more important in some cultures," Forrester said.

"It's going to be important that as Siri learns — if it's a platform to make it more intelligent — that it won't be hidden commands. Just part of the persona," he added. "I think that's really important. The bar is really raised for Apple to really wow us."

2. Content, including AR and VR

Developers also need to have a clear understanding of the rest of Apple's services strategy to know where and how they can plug into it.

For instance, last year's WWDC event included a big upgrade to Apple Music, foreshadowing the release of content like original series "Planet of the Apps" and Tribeca Film Festival movie "Clive Davis: The Soundtrack of Our Lives." This year's updates to platforms like tvOS could foreshadow what's to come for Apple in the video space.

Apple has also been widely rumored to be planning new augmented or virtual reality capabilities in the next iPhone. If it wants users to take advantage of those capabilities, it's going to have to start showing developers how to build apps and experiences that take advantage of them.

"Apple will announce iOS 11 and bring new capabilities to iPhones and iPads," wrote Gene Munster, venture capitalist at Loup Ventures. "The question is: how much will iOS 11 tell us about Apple's ambitions in augmented reality?"

3. Some Mac love

Apps are built on Macs — and even Apple admits that its attention to Mac upgrades has been lackluster.

Meanwhile, Apple continues to pour resources into the iPad, and says it's still bullish on it. But it's not powerful enough to do serious programming.

With refreshed MacBooks and iPads expected at the event, Apple would do well to more clearly define the different use cases for each, and prove to developers that it's still serious about the Mac.

4. Addressing China

One of the top questions clients ask Bernstein's Sacconaghi about Apple is "What is happening in China?" The resulting "investment controversy" has become known as Apple's "China Problem."

Warren Capital estimates that iPhone sales in China fell 14 percent from the year-ago period in April.

"There is no doubt that the iPhone is not selling well in China currently," Longbow analyst Shawn Harrison wrote in a recent research note. "Domestic [manufacturers] are taking share, particularly Huawei. However, many people are waiting for the new iPhone."

But another issue is that one of Apple's main value propositions — an easy-to-use, integrated software system — holds less appeal in China.

Ben Thompson, the author and founder of Stratechery, explained last month. "The fundamental issue is this: unlike the rest of the world, in China the most important layer of the smartphone stack is not the phone's operating system. Rather, it is WeChat."

In fact, WeChat received about 29 percent of all the time spent in mobile apps in China on an average day last month, according to data in Mary Meeker's 2017 Internet Trends report published last week.

"Naturally, WeChat works the same on iOS as it does on Android. That, by extension, means that for the day-to-day lives of Chinese there is no penalty to switching away from an iPhone," Thompson wrote.

Last year's WWDC event provided clear appeals to the Chinese market, including iMessage apps, and "Scribble" written characters in messages — convenient for writing Chinese characters. Building out these resources could be key for Apple, Thompson wrote.

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Stock Futures: Apple Plays Catch-Up; Does The Nasdaq Need A Break?

June 5, 2017

Futures for the Dow Jones industrial average, S&P 500 index and Nasdaq 100 held near record levels early Monday. Apple (AAPL) reportedly is set to unveil a digital assistant device akin to the Amazon (AMZN) Echo and the Google Home from Alphabet (GOOGL).

On Friday, the Dow Jones industrial average, S&P 500 index and Nasdaq composite all hit all-time highs. Early Monday morning, S&P 500 futures fell nearly 0.1% vs. fair value Sunday evening. Dow industrials and Nasdaq 100 futures were fractionally lower.

Meanwhile, oil futures rose more than 1% overnight after Saudi Arabia, Bahrain, the United Arab Emirates and Egypt cut ties with Qatar over its relationship with Iran and support for the Muslim Brotherhood.

The Nasdaq composite is now 5% above its 50-day moving average. While that isn't a specific warning sign for investors, over the last several months the tech-heavy index has made short-term tops whenever it has risen that far above the 50-day.

The last time was on March 1. After that, the Nasdaq moved sideways for several weeks. That gave time for the 50-day line to catch up — the Nasdaq found support in mid-April — and for new stock consolidations to form.

Even with the sideways action, the Nasdaq has still risen for the last seven months and 10 of the last 11. A lot of the credit for that run comes from Apple and the FANG internet stocks Facebook (FB), Amazon, Netflix (NFLX) and Google parent Alphabet.

Apple begins its annual Worldwide Developers Conference on Monday. Apple is rumored to be working on a voice-activated digital device powered by its Siri personal assistant. While Apple was a leader with its introduction of Siri years ago, but over the years Amazon and Google have made big strides in hardware and software.

Apple is expected to unveil iOS 11, its latest operating system ahead of its 10th generation smartphone expected later this year. I also could refresh its Mac computers and introduce a new Apple TV set-top box.

Apple shares have been consolidating for the past three weeks near record highs. That's too short to be actionable. The stock is well extended from buy points or follow-on entries.

As for the FANG stocks, Facebook has been consolidating for more than four weeks. If it gets to five weeks, it would have a proper flat base. But shares closed Friday right at all-time levels.

Amazon, Netflix and Alphabet all hit record highs last week, with Amazon closing above 1,000 for the first time.

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