Monday, July 10, 2017

Frontier Comm. (Symbol $FTR) And Peregrine Pharma. ($PPHM) Are Two Easy Stocks To Sell Short After Reverse Splits Today -- FTR @ $16; +/- .75; PPHM @ $4.60; +/- .30

Monday, July 10, Morning Global Market Roundup: Asia Firms On Wall Street Cheer After U.S. Jobs Data Beats Forecasts

By Nichola Saminather 
July 10, 2017

Asian stocks rose on Monday thanks to a robust Wall Street performance at the end of last week, while the U.S. dollar extended gains made after much stronger than expected June employment data.

European stock markets were also poised for a more positive start, with financial spreadbetter CMC Markets expecting Britain's FTSE 100 and Germany's DAX to open up 0.4 percent each, and France's CAC 40 to start the day 0.3 percent higher.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent while Japan's Nikkei rose 0.7 percent.

Australian stocks were up 0.3 percent and South Korea's KOSPI added 0.2 percent.

Hong Kong's Hang Seng gained 1 percent, though China's bluechip shares were flat.

On Friday, Wall Street closed higher after U.S. jobs growth beat forecasts. However, a lag in wage increases led investors to bet wage data would limit the extent of the Federal Reserve's hawkishness.

The Nasdaq led gains with a 1 percent jump, while the S&P 500 added 0.6 percent and the Dow Jones Industrial Average rose 0.4 percent.

"Strong headline growth, amid poor wage growth, is seemingly a perfect storm for equities," Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

"Looking ahead, traders will continue to watch fixed income like a hawk for further knock-on effects into foreign exchange and equities," particularly with speeches by Fed Chair Janet Yellen and Governor Lael Brainard due this week, Weston added.

The 10-year U.S. Treasury yield hit a two-month high of 2.398 percent on Friday. It was at 2.3909 on Monday.

The dollar inched up 0.2 percent to 114.135 yen early on Monday, extending Friday's 0.6 percent jump on the jobs data.

"The solid jobs report gives us more reason to expect the Fed to announce that it's prepared to start trimming its balance sheet," said Mitsuo Imaizumi, Tokyo-based chief foreign exchange strategist for Daiwa Securities.

"By contrast, the Bank of Japan is nowhere near a policy exit, and it's taking steps that weaken the yen," he said.

The dollar index, which climbed 0.2 percent on Friday, was little changed at 96.028 on Monday.

The euro was fractionally lower at $1.1402 on Monday, extending Friday's 0.1 percent decline.

The Group of 20 meeting in Hamburg over the weekend did not have much impact on markets on Monday.

At the meeting, the world's leading economies broke with the U.S. on climate policy and U.S. President Donald Trump and his Chinese counterpart Xi Jinping agreed to work together on North Korea's nuclear threat and bilateral trade. Trump also discussed forming a cyber security unit to guard against election hacking with Russian President Vladimir Putin, though he later backtracked from that position.

In commodities markets, oil crept higher on Monday after sliding on Friday on a report showing U.S. crude production rose last week, just as OPEC exports hit a 2017 high, rekindling concerns about a supply glut.

U.S. oil rose 0.8 percent to $44.59 a barrel on Monday, making up some of Friday's 2.8 percent loss.

Global benchmark Brent also advanced 0.8 percent to $47.10, following Friday's 2.9 percent slide.

Gold inched down 0.2 percent to $1,210.92, close to the four-month low touched on Friday as the dollar surged and demand for risk assets rose.

Article Link To Reuters:

Oil Recovers Some Losses But Market Still Under Pressure

By Henning Gloystein
July 10, 2017

Oil prices recovered some losses on Monday after a 3 percent fall in the previous session, but markets remain under pressure from high drilling activity in the United States and ample supplies from producer club OPEC.

Brent crude futures, the international benchmark for oil prices, were at $47.08 per barrel, up 37 cents, or 0.8 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $44.60 per barrel, up 37 cents, or 0.8 percent.

Traders said the higher prices were reflected opportunistic buying following Friday's steep fall, but added that overall market conditions remain weak.

Brent prices are 17 percent below their 2017 opening despite a deal led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production from January.

ANZ bank said on Monday that the market "continued to focus on the increasing (U.S.) drilling activity and higher production."

U.S. energy firms added seven oil drilling rigs last week, marking a 24th week of increases out of the last 25 and bringing the total count up to 763, the most since April 2015, Baker Hughes energy services company said on Friday.

U.S. oil production has risen over 10 percent since mid-2016 to 9.34 million barrels per day (bpd).

The rising U.S. output comes as supplies from OPEC also remain ample despite a pledge by the group to cut production between January this year and March 2018.

OPEC exported 25.92 million barrels per day (bpd) in June, 450,000 bpd more than in May and 1.9 million bpd more than a year earlier.

Article Link To Reuters:

Here's Why Battered Oil Could Soon Go From 'Sizzle' Right Back To 'Fizzle'

By Stephanie Landsman
July 10, 2017

The analyst who accurately called 2015's crude collapse is making a new prediction.

Tom Kloza of the Oil Price Information Service suspects the oil market will heat up this summer. Then, it will do something that could cost traders a lot of money.

"I do think this is a summer of sizzle," Kloza told "Futures Now" recently. "Here in the summer with very, very high usage of gasoline, diesel, jet fuel — you name it. I think it'll prop up crude oil. The problem comes with the fall fizzle."

He argued that demand is rising right now for the commodity, as more consumers spend money on travel and vacations.

But as of Friday's close, it doesn't seem to be reflected in the market. Crude fell by 2.8 percent, closing at $44.23 a barrel. The day's activity was driven by concerns that U.S. output is too high, and OPEC exports are climbing.

Kloza's comments also come just a few days after the AAA, which uses his firm's data, found the average price nationally for unleaded dropped to the lowest level so far this year: $2.23 a gallon.

As the summer progresses, Kloza predicted WTI (West Texas Intermediate) crude oil's range will be between $42 and $50 a barrel, and that will bring prices at the pump higher.

"You have to worry when you get into August and the closer you get to the [fall] equinox. That's when I think you run into real problems with crude," cautioned Kloza. "I'd be a seller when it gets closer to $50 on WTI and maybe $52 on Brent."

By autumn, Kloza forecasts, refineries will run less and more oil will be coming online from the Permian Basin in North America. Those are the catalysts to help push crude prices lower.

While traders may suffer, it could spell relief at the fuel pumps for consumers.

"We think that oil will be lower in the first quarter of 2018 compared to the third quarter of 2017," Kloza added.

Article Link To CNBC:

Good News Can't Stop Oil Market's Bad Mood As Short-Sellers Rule

Net-long position rises, but mostly due to decline in shorts; ‘Sentiment still seems extremely bearish’: Citigroup’s Evans.

By Alex Nussbaum
July 10, 2017

Even good news can do little to dispel the prevailing pessimism in the oil market.

Hedge funds paused a swift increase last month in wagers on declining West Texas Intermediate crude prices. But there was little conviction behind a price rise, as futures shook off a report of declining U.S. stockpiles to finish last week 3.9 percent lower.

“Sentiment still seems extremely bearish," Tim Evans, a Citigroup Global Markets analyst, said in a telephone interview Friday. “We’re responding to every bit of bearish news, but we’re ignoring or seeing a limited reaction to any bullish news."

Oil futures are down 18 percent this year as investors doubt efforts by the Organization of Petroleum Exporting Countries and its partners to ease a global supply glut. While prices plunged last week after Russia was said to oppose deeper cuts, the market was quick to ignore a decrease in U.S. crude stockpiles to the lowest level since January.

A closer look at the WTI wagers from hedge funds shows that the bears have been a lot more active than the bulls. Bets on a rally haven’t had a weekly increase of more than 5 percent for more than two months. Meanwhile, sharp moves in bets on a decline have set the tone.

Money managers’ net-long position on WTI rose 12 percent to 149,951 futures and options as of July 3, mainly because short-sellers retreated, according to a weekly U.S. Commodity Futures Trading Commission report released Friday. While longs rose by less than 1 percent to 316,447 contracts, shorts fell 7.8 percent to 166,496. In the previous three weeks shorts almost doubled, reaching their highest point in almost a year.


The latest numbers suggest that the gains in oil prices before last week’s slump were largely a short-covering rally, in which those betting on a decline take advantage of low prices to buy securities they had borrowed and sold when prices were higher, according to Citigroup’s Evans.

“You didn’t see a lot of long accumulation," he said. “It may be an indication that we reached a level where those traders are just willing to take profits."

Investors also gave gasoline and diesel a break, reducing their net-short positions on both, the CFTC report showed.

WTI fell 2.8 percent on Friday to settle at $44.23 a barrel in New York. Brent, the global benchmark, dropped 2.9 percent to $46.71.

Adding to the gloom, Saudi output increased in June by the most in almost a year, according to a Bloomberg survey. In the U.S., shale drillers keep adding rigs, and production has risen for most of the year. Worries about a global supply glut have kept futures below $50 a barrel for the past six weeks.

Even hedge fund manager Andy Hall, who’s taken an optimistic tone on oil for months, capitulated to the bearish mood. In a recent investor letter, the oil market legend said the global crude market has “materially worsened" and prices may be stuck around $50 a barrel or below.

Summer Boost

The more bullish tilt in hedge fund wagers wasn’t all about short-covering, though, said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. The summer driving season in the U.S. is moving into high gear, which should increase demand for oil, Lynch said in a telephone interview. Hurricane season in the Gulf of Mexico is also looming and political tensions over North Korea and Qatar may also have convinced speculators that prices could rebound.

“Although the fundamentals still aren’t great, most of the possible news is likely to be bullish," Lynch said.

Evans also saw the potential for a turnaround. “The most common cycle is that major rallies start with short-covering from an oversold condition," he said. “That’s an early stage in a bull market."

But for now, the bears seem to be winning.

“Until we start to really eat into the inventory numbers, until production slows and looks like demand is catching up, if not outstripping supply growth, we’re going to keep seeing this negative bias," said Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management in Seattle, which oversees $142 billion in assets.

Article Link To Bloomberg:

As Brexit Challenge Looms, Embattled PM May Vows To Fight On

By William James 
July 10, 2017

Britain's Theresa May will promise to fight on as prime minister and pursue bold domestic reform despite her diminished authority in a speech this week relaunching her leadership after 12 tumultuous months in power.

As her minority government prepares to start the difficult task of passing Brexit through parliament, May will remind Britons of her promise to build a fairer society, seeking to repair a reputation damaged by an ill-judged snap election.

Almost one year on from her first day as Prime Minister -- a job she took on in the chaotic aftermath of Britain's shock referendum vote to leave the European Union -- May will urge voters and political opponents to help her "tackle the injustice and vested interests that threaten to hold us back".

"My commitment to change in Britain is undimmed," May will say on Tuesday according to advanced extracts from her speech.

May called the unscheduled election on June 8 in an attempt to cash in on high poll ratings and win support for her plan to make a clean break with the EU in 2019.

But the gamble backfired when voters stripped her of a majority in parliament and forced her party into a deal with a small Northern Irish party to prop up a minority government.

"In this new context, it will be even more important to make the case for our policies and our values, and to win the battle of ideas both in Parliament as well as in the country," May will say.

May's ability to carry on as prime minister and drive divisive Brexit legislation through parliament with only a fragile majority behind her has been persistently questioned since the election.

The first stage of the Brexit process will come later this week when a key piece of legislation, which translates EU law into British law, is presented to parliament.

On Sunday, a lawmaker from the pro-EU Liberal Democrats, Britain's fourth largest party, said he thought Brexit might not happen because the divisions over how to achieve it were too great.

But May's position seems secure for now, with colleagues preferring to see her start Brexit talks rather than topple her and risk the whole government collapsing -- a scenario that could let a resurgent opposition Labour Party into power.

Employment Report

May will make the appeal for national backing at the launch of a report into how the government should protect workers affected by a shift to different employment models, including the 'gig economy' championed by the likes of Uber and Deliveroo.

The report is a key element of May's plan, announced a year ago, to address dissatisfaction expressed at the EU referendum by millions of working class Britons who felt left behind by capitalism and disenchanted with the political system.

May was criticized by opponents last month for setting out an unambitious legislative agenda for the next two years, unveiling a program shorn of flagship social reforms and heavily focused on delivering Brexit.

In Tuesday's speech, she will seek to refute the idea that her lack of a majority in parliament and the huge workload generated by Brexit will limit the government's reform ambition.

"At this critical time in our history, we can either be timid or we can be bold," May will say. "We will act with an unshakeable sense of purpose to build the better, fairer Britain which we all want to see."

Article Link To Reuters:

Wall Street Sours On $9 Billion Mechanism For Green Projects

Yieldco shares largely haven’t recovered from turbulent 2015; Pension funds seek to acquire operating wind and solar farm.

By Brian Eckhouse
July 10, 2017

Wall Street investors have gone cold on one of the main mechanisms banks invented to fund the green-energy revolution.

The business structure, known as the yieldco, feeds dividends from operating solar and wind farms to investors. Yieldcos raised $7.9 billion in public equity in 2014 and 2015 but only $1 billion since then, according to Bloomberg New Energy Finance.

The shift is further fallout from the collapse of yieldco promoter SunEdison Inc. and has changed the way clean-energy developers finance themselves. In years past, they started yieldcos to buy projects once they were operating, recycling the capital into new installations. Now, they’re turning to a large and deepening pool of buyers -- insurance companies and pension funds -- to provide funding and sometimes take control of income-producing assets.

“The idea of a you-have-to-have-a-virtuous circle -- that idea that you’re hooked at the hip between the public markets and growth -- is dead,” Mike Garland, chief executive officer of the San Francisco-based yieldco Pattern Energy Group Inc., said in an interview. “The market is saying, “‘Come to us last, not first.’ When we started, it was ‘Come to us first.”’

Yieldcos first emerged in 2013, when the largest U.S. independent power producer, NRG Energy Inc., launched NRG Yield Inc. The parent formed the yieldco to hold operating wind and solar farms that it had built or acquired. Revenue from those assets funded dividends.

Pattern Energy and NRG Yield are projected to pay 12-month dividend yields of 6.4 percent and 6.5 percent respectively, according to data compiled by Bloomberg. That’s about three times higher than the average 2.1 percent yield of 500 companies on the Standard & Poor’s index.

The yieldco structure became a major growth engine for renewables, spawning at least eight yieldcos in North America and similar entities in the U.K. and continental Europe. Investors liked the story: support the growth of clean-energy while also reaping dividends that flow from electricity sales guaranteed by long-term contracts. And because the yieldcos promised to buy more and more projects, the dividends would only grow.

Fading Appeal

But headwinds -- most prominently the run-up to SunEdison’s bankruptcy in April 2016 -- stopped at least three other would-be yieldcos from forming and have forced others to eschew public markets for private fundraising. SunEdison had relied on its two yieldcos to finance its dizzying multi-continent buying-binge, thrusting them into turmoil and introducing doubt that the companies would be able to grow fast enough to pay rising dividends. The company’s struggles contributed to a broad renewables slump that made it more difficult to raise funds from the public equity markets.

As the business case for yieldcos has lost favor, a new group of buyer has emerged: pension funds and insurance companies hungry for wind and solar farms’ steady revenues. And the green bond market has boomed. Issues of bonds linked to environmental projects is set to surpass $100 billion this year more than 10 times the scale of the market in 2012, according to BNEF.

“The yieldco market got very heated,” Barry Gold, the New York-based head of Orix Infrastructure & Renewable Energy, said in an interview. “But we all know how things work in the financial markets: if a door closes, someone opens a window somewhere.”

Several yieldco owners see the writing on the wall. SunEdison, Abengoa SA and First Solar Inc. are trying to distance themselves from the units they created. Mark Widmar, First Solar’s chief executive officer, described the company’s 8Point3 Energy Partners LP yieldco as “a dormant vehicle basically.”

Pattern, meanwhile, is continuing as an owner of clean-energy projects -- the original intent of yieldcos -- but is now pushing into development. It recently bought a stake in an affiliated private company that feeds it projects, and it recruited Canada-based Public Sector Pension Investment Board to buy almost 10 percent of its stock.

“We’re short renewables in the U.S. -- and we want more,” Patrick Samson, a Montreal-based managing director at PSP Investments, said in an interview. “My pensions need long-term cash flows.”

Institutional investors are indeed emerging as a heavy of renewables M&A:

-- Alberta Investment Management Corp. in February agreed to buy one of the largest U.S. private solar companies, sPower, alongside AES Corp.
-- John Hancock Life Insurance Co. in March said it will buy a 49-percent stake in a clean-energy portfolio owned by Exelon Corp.
-- Activist investor Paul Singer may pressure NRG to sell its yieldco, potentially to capture institutional interest in wind and solar farms.

“Why not just sell to a pension fund?” said Jigar Shah, chief executive officer of clean-energy investor Generate Capital Inc. and a former SunEdison CEO. “There are literally hundreds of them that want these assets.”

Wind and solar farms typically have utility contracts that ensure consistent revenue streams, which neatly dovetail with the long-dated liabilities that insurers and pension fund managers accrue. For endowments, solar and wind investments help satisfy their heightened sustainable targets.

“The concept of pooling operational renewable-energy assets and selling to private investors will outlive the yieldco,” said Daniel Shurey, a New York-based analyst at BNEF, said by email. “The term ‘yieldco’ is going extinct.”

Article Link To Bloomberg:

Why Bitcoin Is Booming

It’s become a trusted alternative when fiat money’s value is corrupted by politics.

By John O. McGinnis and Kyle W. Roche
The Wall Street Journal
July 10, 2017

Who says only the government can make money? This year the value of the private currency bitcoin has climbed to unprecedented levels, while at the same time becoming far less volatile than in previous periods of rapidly increasing demand. Bitcoin has reached these new benchmarks despite news that might have depressed its value, such as the Securities and Exchange Commission’s rejection of a fund permitting small traders to invest in bitcoin on the stock market.

The SEC action prompted obituaries, but bitcoin is thriving. A prime reason is the distrust many citizens have in their government’s currency. They want to use bitcoin as a hedge or an alternative mechanism of payment and transfer when government currency doesn’t efficiently perform such basic functions. It’s no surprise that millennials, many of whom understand the digital currency much better than their baby-boom forbears, are investing in bitcoin at far greater rates.

All modern fiat currencies depend on trust in a government for their value and stability. Some governments have institutions, like the U.S. Federal Reserve, that inspire substantial trust, but others have monetarily oppressive regimes many citizens want to bypass. Argentina continually debased its currency until last year. China puts burdensome restrictions on transferring its currency out of the country. Both countries have seen substantial trading in their respective bitcoin exchanges.

Unlike national currencies, bitcoin does not depend on a regime that can be corrupted by politics. With bitcoin, trust is required not in government but in the decentralized order of those who verify bitcoin transactions—the so-called miners. They maintain what is popularly known as the “blockchain”—a public ledger on the internet of all bitcoin transactions, which accounts for the ownership of every bitcoin in existence.

The innovation of bitcoin is creating a decentralized process to update the blockchain as new transactions in bitcoin occur. Anyone with internet access can attempt to update the blockchain by employing substantial computer power to solve a mathematical problem. The miner who succeeds in solving the problem gets the rights to add a block of recent transactions to the blockchain. In return for this work, the successful miner is paid in newly minted bitcoin, the number of which is fixed by a pre-existing algorithm. This process is repeated every 10 minutes or so, assuring an accurate record of all bitcoin transactions.

Bitcoin miners serve another important role. As with any currency, sometimes the rules governing bitcoin’s operation need to be tweaked. With fiat, governments pass laws or issue administrative decrees. With bitcoin, new code is adopted when the community of miners reaches a consensus on the change.

Bitcoin miners sometimes disagree about how best to meet the demands of the market, as shown by a current dispute about the optimal size of each block. But the genius of bitcoin is that because miners are paid in bitcoin, their incentives are strongly aligned with bitcoin’s value. Government officials, by contrast, might not face such strong incentives to maintain the value of their national currency. In developing nations, sometimes those interests include taking valuable property in exchange for an abuse of their power. In developed ones, job retention, promotion, and ideological perspectives can all distort official behavior. Money has been described as a social contract, but politicians charged with enforcing that contract often have incentives to advance their own interests or those of particular political factions at the expense of their legal duties.

Bitcoin’s creation of order without centralized law is not unknown to society. Social norms often regulate behavior without the benefit of formal law. Rules of etiquette tell people how to behave at the table without causing offense. But while order without law is possible without software, software can improve its enforcement. One might ignore a social convention, but it is impossible to ignore the operation of an algorithm that tells the world whether you own a bitcoin.

To continue to flourish, bitcoin does not have to become a more stable store of value than the U.S. dollar. It can climb the rungs of respectability by prevailing over less trustworthy currencies. It is already gaining strength and stability by competing successfully against monetarily oppressive regimes and helping poor immigrants in the developed world remit money to their relatives back home. As bitcoin gains stability, it can become even more competitive because even the best fiat money is subject to political risks.

National and international crises will continue to fuel bitcoin’s rise. The instability caused by problems with the euro, Brexit and the many Western democracies’ growing ratio of debt to gross domestic product threatens the value of even established currencies. Bitcoin is likely to succeed so long as the value of other moneys rests on politics.

Article Link To The WSJ:

Buyout Firm Apollo To Buy Golf Course Operator ClubCorp For $1.1 billion

By Greg Roumeliotis
July 10, 2017

Private equity firm Apollo Global Management LLC (APO.N) said on Sunday it had agreed to acquire ClubCorp Holdings Inc (MYCC.N), one of the largest owners and operators of private golf and country clubs in the United States, for $1.1 billion.

The deal comes three months after ClubCorp announced the retirement of is CEO Eric Affeldt and said it had decided not to pursue a "strategic transaction," after efforts to explore a sale did not result in any offer for the entire company.

However, the Dallas-based company had kept the strategic review committee of its board of directors in place, and had yet to announce Affeldt's successor. It has struggled to turn a profit, as its strategy of boosting its golf club memberships through promotions, refurbishments and acquisitions has proved costly.

Apollo said it will pay $17.12 per share in cash for ClubCorp, a 30.7 percent premium over its closing price on Friday, but less than the 12-month high of $17.50 the shares reached in February, on investor expectations that a sale process first reported by Reuters in January would be successful.

ClubCorp also declared on Sunday a one-time dividend of 13 cents per share to be paid later this month. It said the sale to Apollo is expected to close in the fourth quarter of 2017.

Founded in 1957, ClubCorp operates more than 200 properties, including golf and country clubs, business clubs and sports clubs across the United States, Mexico and China, serving more than 430,000 members.

In May, the company reached a settlement with activist investor FrontFour Capital Group LLC to add two independent directors to its board. FrontFour had called for exploring several options, including a sale.

ClubCorp has been a serial acquirer in the golf course industry, buying dozens of courses in the last three years. It has sought to buy locally owned golf courses and refurbish them by adding or improving amenities such as up-scale dining and event rooms.

KSL Capital, another private equity firm, acquired ClubCorp for $1.8 billion in October 2006 and took it public in 2013.

Jefferies LLC and Wells Fargo acted as financial advisers ClubCorp and Simpson Thacher & Bartlett LLP is its legal counsel. Citigroup is acting as lead financial adviser to Apollo, with RBC Capital Markets LLC, Barclays, Credit Suisse and Deutsche Bank also advising. Paul, Weiss, Rifkind, Wharton & Garrison LLP is Apollo's legal counsel.

Article Link To Reuters:

Dow And S&P 500 Haven’t Been This Disconnected Since 2003

S&P 500 and the Dow set to gain about 8% so far in 2017, while the Nasdaq is on track for a year-to-date climb of 13.4%.

By Mark DeCambre
July 10, 2017

A pair of typically closely correlated equity benchmarks haven’t been seeing eye to eye, lately.

The Dow Jones Industrial Average DJIA, +0.44% and the S&P 500 index SPX, +0.64% the most popular stock-market gauges, usually move in lockstep, displaying what is known as a positive correlation. But in recent trade, the equity indicators have seen the lowest level of correlation since 2003, according to data from WSJ Market Data Group, tracking a 20-day rolling average of the benchmarks over the past 15 years (see chart below):

A reading of 0.00 describes no relationship between two assets, while 1.00 means assets are perfectly aligned, moving in the same direction at the same time.

A 15-year average of the Dow and the S&P 500 shows that the relationship is nearly perfect at 0.9557. However, the rolling 20-day period shows a stark erosion of that relationship, with a reading of 0.4655. marking the lowest level of correlation between the S&P and the Dow industrials since Aug. 4, 2003.

What’s behind the recent mini trend?

Some market participants point to the recent downturn in the tech sector, which began in earnest around June 8 after many of the biggest names in the sector touched recent highs, including Inc. AMZN, +1.41% Nvidia Corp. NVDA, +2.29% and Netflix Inc. NFLX, +2.69% only to stage a sharp retreat.

The tech slide, which represents some of the largest publicly traded companies by market value, has weighed on the broader stock market, hitting the tech-laden Nasdaq Composite Index COMP, +1.04% more severely than its peer equity gauges.

But the S&P 500 also has been influenced by the recent tech slump because that sector represents 22% of the S&P 500’s weighting. So, moves in tech tend to outweigh shifts in other sectors including health-care and financials.

Technology shares in the Dow account for 20% of the Dow but because the blue-chip gauge is price-weighted—meaning companies with higher prices hold outsize influence over its direction—trading in Intel Corp. INTC, +0.74% Visa Inc. V, +0.72% (considered a technology name in the Dow), Cisco Systems Inc. CSCO, +0.59% Apple Inc. AAPL, +1.02% Microsoft Corp. MSFT, +1.30% and International Business Machines Corp. IBM, +0.38% don’t hold as much sway as, say, Goldman Sachs Group Inc. GS, -0.62% Boeing Co. BA, +0.44% or 3M Co. MMM, +0.75% which all boast share prices of at least $200.

Investors also have been shifting from tech into banks, like Goldman, as the Federal Reserve looks set to continue to lift interest rates and normalize monetary policy, which should underpin gains for the banking sector. The collapse in the tech sector also has reflected investors’ concerns about valuations following a record run that had pushed prices to records, making the group vulnerable to a sudden downturn.

Against that backdrop, the broad-market S&P 500, with a little over 500 components, has lost its connection with the Dow, which tracks 30 companies.

Over the 20-day period since June 8, the Nasdaq Composite has declined 3.4%, while the S&P 500 is off just 0.8% and the Dow boasts a gain of 0.9%, according to FactSet data.

But that disconnect isn’t likely to be a permanent one. Indeed, over the past year, returns for the S&P 500 are more in sync, with the S&P 500 and the Dow set to gain about 8% so far in 2017, while the Nasdaq, despite its recent slump, is on track for a year-to-date climb of 13.4%.

“The disconnect is probably due to the tech stocks because some of the biggest companies are tech stocks but not many of them are in the Dow Jones,” said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

Article Link To MarketWatch:

Tesla Rolls Out Its First Model 3, And It’s Elon’s

Musk flipped the switch on the production line, beginning a new era for electric cars. But it’s a long road to mass production.

By Tom Randall
July 10, 2017 

It’s finally here: The Model 3, Tesla’s $35,000 electric gamechanger. A single black Model 3 rolled off the production line Friday with a serial number all its own, kicking off a company-defining six months. The car will belong to Elon Musk, Tesla’s CEO and co-founder, who shared images of it on Twitter over the weekend.

Tesla has already taken in roughly half a billion dollars in Model 3 deposits, at $1,000 apiece, and its proposed ramp-up schedule would have it rivaling well-established U.S. market peers like BMW and Mercedes by year’s end. The only thing standing between Tesla and being the world’s first mass-market electric carmaker is proving it can build, deliver, and service enormous numbers of these vehicles—without sacrificing quality.

One down, millions more to go.

The production acceleration will be slow at first. Tesla plans to hand over the keys to 30 cars at a launch celebration on July 28. It then envisions building 100 cars—less than three a day—for the month of August, according to a series of Twitter posts by Musk last week. September will bring another 1,500 cars, and the ramp will build to a rate of 20,000 cars a month by December, Musk said. It’s an aggressive schedule that will more than double Tesla’s total production rate in six months, and then quintuple it by the end of next year.

If Tesla achieves all of Musk’s targets, it will build more battery-powered cars next year than all of the world’s automakers combined in 2016. U.S. sales under Musk’s 2018 targets would significantly outpace the BMW 3 Series and the Mercedes C-Class, the best-selling small luxury cars in the country.

Tesla, by tradition, delivers the first new car off the line to the first customer to pay full price once the car officially goes on sale. Musk’s collection includes the first Tesla Roadster and the first Model X—but not the first Model S. That trophy belongs to Tesla board of directors member Steve Jurvetson, who told the Chicago Tribune in 2010 that he scored the first of Tesla’s flagship sedans by writing out a check just before a board meeting and tossing it across the table. The right to the first Model 3 was won by board member Ira Ehrenpreis, who then gifted it to Musk for his 46th birthday, on June 28.

Here’s what we know about what might be coming next:

The rollout begins. Key handoffs will begin in California and move east, focusing first on employees of Tesla and Musk’s SpaceX rocket company, then on other U.S. reservation holders who stood in line before the car’s unveiling some 15 months ago. People who place new orders today won’t receive their cars until the middle of next year, according to Tesla’s website.

The carmaker will be taking things slowly at first, as it looks to avoid the disastrous rollout of the Model X, which was marred by mis-aligned body panels, software glitches, problems with the falcon wing doors and spaceship-like seats, and a fleet-wide recall tied to a seatbelt issue. (These faults have largely been addressed, and the Model X is now the fourth best-selling luxury SUV in the U.S.)

There’s tremendous demand for the Model 3 among Tesla’s 30,000 employees—most of whom are unable to afford the pricier Model S and Model X. Musk is putting that interest to use, releasing the first several thousand Model 3s to employee reservation holders. Any problems identified during the early rollout can be quickly addressed at the factory.

Features are being stripped down.
Over the past few months, Musk has consistently tried to downplay expectations for new features. The car that rolled off the production line on Friday shouldn’t stray far from the original prototype unveiled in March 2016. There will only be one display—the car’s 15-inch touchscreen—with no additional gauges or heads-up-display projected at the windshield.

Additionally, the dual-motor all-wheel drive and high performance versions of the Model 3 will be delayed for six to nine months to keep initial production as simple as possible.

New Aero wheels are coming
. Tesla was granted a patent on June 6 for this new aerodynamic wheel face, one of two designs that the company has deployed on the test cars seen driving around the country in recent months. (The other design is shown in the production car above).

Tesla briefly offered Aero wheels for the Model S in 2013, but they were considered unattractive by many consumers and were quickly pulled from the market. At the time, Tesla said they could boost the car's range by 3 to 4 percent.

How far is Tesla going with Autopilot for the launch?
Last October, Musk set some wild timelines for full self-driving capabilities in the Tesla fleet. The company upgraded the hardware suite of its full line-up of cars to eight surround cameras, 12 ultrasonic sensors, a forward radar, and a massively powerful new computer. He said it was all the hardware that will be needed for driverless transport. By the end of 2017, Musk said, he hoped to demonstrate a cross-country trip without any driver interaction.

So far, Tesla hasn’t backed off those predictions. For the past nine months, it’s been charging customers an extra $3,000 for an option called “Full Self-Driving Capability.” However, the software still hasn’t been released to make any new features available, and to date, the pricey option adds no additional functionality.

Musk has dropped a number of hints that those features will start rolling out around the launch of the Model 3. In January, I asked him at what point “Full Self-Driving Capability” will depart from the “Enhanced Autopilot” features. His response, via a post on Twitter: “3 months maybe, 6 months definitely.” Six months would coincide with the July launch.

Tesla has yet to release a detailed list of the Model 3’s specs, features, and pricing, more of which will be revealed at the car’s launch party on July 28. Here’s what has been disclosed so far: 

-- The Model 3 goes from zero to 60 miles per hour in 5.6 seconds, according to a spec sheet Tesla published in May. That’s faster than the base model BMW 3 Series and the Mercedes-Benz C Class, the leading cars in the compact luxury space.
-- The car will be able to drive at least 215 miles on a single charge, with options to upgrade to a bigger battery. Last year, Musk said the company will push for even greater range.
-- The roof is an almost continuous sheet of glass that stretches from the front of the car to the rear to give riders a sense of openness. The layered glass is designed to block UV rays and manage heat.
-- All Model 3s will come equipped with hardware for Tesla’s Autopilot features and high-speed Supercharging. Customers will have to pay to use them, though pricing hasn’t been made public.
-- The Model 3 will have two trunks with about 14 cubic feet of combined storage space, and the rear seats will fold down to accommodate longer items. That’s comparable to other cars in its class but less than half the storage volume of the Model S sedan.
-- The body is made of a mix of lightweight aluminum and cheaper steel, primarily the latter.
Tesla’s signature touch-screen control panel will be flipped on its side and shrunk from 17 inches to 15 inches. It handles everything from navigation to speed.
-- The traditional instrument panel under the dash is gone entirely.
-- The car is designed to fit five adults comfortably, in part by pushing the front passengers forward to provide more legroom in the back seat.
-- Rear-wheel drive is standard, with a future option for dual-motor all-wheel drive.
-- Reservation holders who want all-wheel drive or other delayed options will be able to defer their purchase without entirely losing their place in line.
-- The number of Tesla’s high-speed charging stations will double by the end of the year to 10,000. Slower destination chargers will jump from 9,000 to 15,000.

The era of the Model 3 has begun. Now it’s time for Tesla to really get to work.

Article Link To Bloomberg:

Trump Stumps South Korean Markets More Than Any Missile Tests

By Dahee Kim and Cynthia Kim
July 10, 2017

For years, investors in South Korea have become accustomed to belligerence and regular missile tests from the country's hostile northern neighbor, but now there's a new factor in their regional risk assessments - U.S. President Donald Trump.

Jolts to financial markets from North Korea's military provocations are frequent but were until recently contained by an implicit expectation that global diplomatic efforts could limit Pyongyang's aggression.

Now, however, there is as much market anxiety about Trump's unrestrained Tweets and a hawkish White House response as there is about North Korean agitations.

Since Trump's election in November, price reactions to North Korean long-range missile tests in credit and currency derivatives, typically used by traders to hedge geopolitical risk, have been distinctly sharper.

"Trump has moved markets and China more within months than (Barack) Obama in eight years," said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ.

The reclusive North Korea has conducted five nuclear tests and a series of missile launches in defiance of U.N. resolutions for decades as it is still at war with South Korea after the 1950-53 conflict ended in a truce, not a peace treaty.

Before Trump's election, missile tests came with such regularity that markets learned to shrug them off.

This year, the options market shows the cost of insuring investments against North Korean-related risks has surged, with 3-month protection against a drop in the won, for example, reaching a high of 231 basis points in mid-April, double the levels six months earlier.

This spike came as the U.S. diverted a warship towards the Korean Peninsula and showed off its strike capability in Syria, which it conducted just as Trump met with his Chinese counterpart, Xi Jinping.

The cost of owning the option to sell the won in April was the highest it had been since August 2015, when the two Koreas were in a tense military standoff.

"It's the Trump-on-stage reaction," a currency trader in Seoul said. "Trump's hard line approach, and his past crazy comments on everything from the Mexico-wall to Syria policies have created a whole new range of uncertainties for traders investing here."

Pricing In Trump

Despite heightened geopolitical tensions, South Korea's main asset markets have performed well this year with the won KRW=KFTC and Kospi stock benchmark .KS11 up 4.6 percent and 17.4 percent, respectively, on robust exports and an upbeat outlook on second quarter corporate earnings.

The cost of hedging, however, is where investors have felt the pain: options to sell Korean won for dollars were perversely more expensive after Trump's November presidential victory than when North Korea conducted its fifth nuclear test two months earlier.

The premium on three-month options to sell the won had hovered around 100 basis points for years before Trump took office, and barely budged even when then U.S. President Obama issued a stern warning to Pyongyang following a missile test in April 2016.

"Financial markets have become more sensitive to the U.S. stance with more hard line policies under Trump, compared to when the Democrats were in power," Shim Hyun-soo, a senior fund manager with the quantitative management team of Kyobo AXA Investment Managers, said.

In other derivatives markets, the spread on South Korea's 5-year credit default swap KRGV5YUSAC=MG--the contracts that offer investors protection against default on debt--reached a 10-month high of 60 basis points on April 17.

Market pricing of expected volatility in the won KRWVOL has also been on the rise, with the one-month implied volatility hitting 13.2 percent in April, the highest in five years.

"During the Obama administration, the markets didn't care much about the North. Everyone knew the Kim Jong Un regime wouldn’t do anything stupid for real as it could really be the beginning of the end," said Jeon Seung-ji, a Seoul-based currency analyst at Samsung Futures.

"North Korean risks are no longer a 'half-day-slip', mainly because markets are not sure how Washington would handle them," Jeon said.

Article Link To Reuters:

Trump’s Trade Trap

By Robert J. Samuelson
The Washington Post
July 10, 2017

President Trump’s foreign policy, such as it is, rests on a massive and apparently indestructible contradiction. Trump wants the United States to remain the “essential” nation, the best embodiment of Western ideals of freedom and democracy, while at the same time deliberately alienating many of our traditional allies, whose support the United States desperately needs. American leadership becomes difficult, if not impossible.

It is hard to straddle this contradiction, because it reflects a basic misunderstanding of the American “greatness” that Trump so avidly pursues. To Trump, this greatness is mainly measured in economic terms: the number of added jobs; the trajectory of wages; the rate of economic growth. It is a nostalgic and unrealistic yearning for the economic dominance the United States enjoyed in the 1950s and 1960s.

The truth is that American greatness then and later was never about dollars and cents alone. Prosperity was a means to an end, not an end in itself. The greater objective was to promote democracy and mixed economies, with power divided between the market and government. To advance this vision, the United States advocated open trade and provided a military umbrella. The latter created a geopolitical shield against instability.

Trump sees the costs of these programs as showing that past U.S. leaders were willing to sacrifice the interests of ordinary Americans to meaningless global cooperation. U.S. officials negotiated horrible trade deals; American workers lost their jobs to imports; our putative allies didn’t pick up their fair share of military spending. These “allies” were rivals, not partners.

Although there was some truth to these complaints, they were (and are) fundamentally misleading. The notion that Americans simply abandoned their own interests for Japan’s, Germany’s or South Korea’s — to select a few obvious countries — is counterfactual. Americans thought, correctly, that their embrace of a generous approach to the world exemplified “enlightened self-interest.” Our economic and political interests were served by a prosperous and increasingly democratic global system.

As “grand strategy,” the post-World War II American conception of the world order largely succeeded. The global economy grew richer. A wealthier Europe established stable democracies. The Soviet Union collapsed. America benefited from all of this. There was no World War III. The memory of World War II, coming so soon after World War I, discredited the U.S. isolationism of the interwar period. This backlash was the incubator of postwar U.S. foreign policy.

Now there’s a new era. What role can the United States play? Often, Trump seems of two minds. Last week in Europe, he warned of the dangers of a nuclear-armed North Korea and pledged to remain faithful to America’s ideals of freedom and liberty. But as Trump has surely discovered, running an outward-looking, internationalist foreign policy is hard when your domestic policy is nationalist and inward-looking. Abroad, the balancing act has backfired.

A recent Pew Research Center poll of 40,448 respondents in 37 countries finds a big drop in favorable views of the United States. At the end of Barack Obama’s presidency, 64 percent of foreign respondents viewed the United States favorably; now that’s 49 percent. Respondents were asked whether they had “confidence” that the U.S. president would “do the right thing” in world affairs. In Germany, only 11 percent thought Trump would; Obama’s rating had been 86 percent. In Mexico, 5 percent backed Trump, down from Obama’s 49 percent. Only in Russia and Israel did Trump outscore Obama.

As a result, it’s harder for Trump to lead internationally. Foreign leaders can more easily oppose him without suffering adverse domestic political consequences. He has made it even harder by antagonizing other countries by withdrawing from the Paris agreement on climate change. There was no need; all the pact’s goals are voluntary.

Of course, if your policies aim mainly to increase exports and jobs, none of this matters. But here, too, Trump’s approach may fail. He quit the Trans- Pacific Partnership — a trade agreement with 11 other Pacific Rim nations; many economists consider this a blunder, because Asian economies are among the fastest-growing. And last week, Europe and Japan announced they’re negotiating a trade agreement that covers 40 percent of world trade and excludes the United States. Being outside these agreements would weaken U.S. exports. Further, the European Union warns it might retaliate against the United States if Trump restricts Europe’s steel exports.

What we’re witnessing is extraordinary: a voluntary surrender of power and influence. Trump may believe that trade and environmental issues can be kept separate from geopolitical matters, such as North Korea’s nuclear program. On the contrary, history suggests that trade and geopolitics go hand in hand. To deal with North Korea, Trump needs allies to make economic sanctions tougher or to support military action. He has precious few because he has been so careless in abdicating responsibility for the global trading system.

Article Link To The Washington Post:

Mnuchin Dismisses Idea Of 40 Percent Top Tax Rate For The Rich

Treasury chief says tax plan to be made public in September; Says White House is ‘sensitive’ to high-tax state worries.

By Ros Krasny
July 10, 2017

The White House is “absolutely committed” to getting its tax overhaul proposal through Congress by the end of the year -- and that plan won’t include a 40 percent tax rate for the richest Americans, Treasury Secretary Steven Mnuchin said.

“Our plan is to have a full-blown release of the plan in the beginning of September, with being able to vote and getting this passed before the end of the year,” Mnuchin said on ABC’s “This Week” on Sunday.

The “objective” of the proposal is still that no one in the middle class will have a tax increase, Mnuchin said. “We’re finalizing the details of the plan, so there’s certain issues that are still on the table.”

Mnuchin said there’s no consideration being given to a plan reported by the website Axios last week that the top personal tax rate should be 40 percent or more. The idea was being pushed by Trump adviser Stephen Bannon, Axios said.

“I have never heard Steve mention that,” Mnuchin said. “It’s very clear, kind of, we have a proposal out there that the administration has put out, with a top rate of 35 percent where we reduce and eliminate almost every single deduction.”

He added that the administration is aware of the concerns in high-tax states, where taxpayers could have no tax reductions as well as fewer deductions.

“We’ve heard a lot of feedback from New York, California, New Jersey, Connecticut, Illinois, and I think we want to be sensitive to those states and those economies as we shape the plan,” Mnuchin said.

Mnuchin said administration officials are meeting with House and Senate leadership “every week” about crafting its proposal. “We probably met with 300 or 400 different business leaders, outsiders, think tanks,” he added.

Mnuchin spoke after returning from the Group of 20 meeting in Hamburg. He dodged a question about whether President Donald Trump had accepted President Vladimir Putin’s denial of Russian interference in the 2016 U.S. election.

“Why would President Trump broadcast exactly what he said in the meeting?” Mnuchin said, adding that Trump is focused on “strategically negotiating” with Putin.

Article Link To Bloomberg:

Trump’s America First Policy Proves To Be An Immovable Object At G-20

Doctrine that underpins president’s foreign policy is more durable than some of his European counterparts had hoped.

By Peter Nicholas
The Wall Street Journal
June 10, 2017

Through marathon meetings and dinners at the Group of 20 summit, various world leaders sought to coax America’s new president to accept core tenets of the internationalist order they embrace, including commitment to free trade and tough environmental regulation.

He barely budged. In his second foreign trip, President Donald Trump largely held firm to the nationalist principles that were central to his campaign identity, suggesting that the America First doctrine that underpins his foreign policy is more durable than some of his European counterparts had hoped.

German Chancellor Angela Merkel, speaking Saturday at the close of the summit, said the ideological gulf has proved tough to bridge. Talking about the back-and-forth with the Trump administration over the summit’s joint statement, the German chancellor said: “The negotiations on the climate issue reflected dissent—everyone against the United States of America. And that the negotiations on the trade issue were especially tough was also a result of the United States taking certain positions.”

Still bristling over Mr. Trump’s decision to withdraw from the Paris climate accord, one French official said that an aim in drafting the joint statement was to ensure that the U.S. “is clearly identified as being alone.”

If anything, Mr. Trump’s two forays overseas have shown that some leaders are bending toward his positions, not the reverse.

The statement, for example, carried language about America helping other countries use “fossil fuels more cleanly and efficiently.” A European Union official conceded the reference to “these kind of energy sources is not something we like.”

But the White House liked it. Trump officials cast the wording as a victory for a president who still sees a place for oil and gas drilling.

“We got language in there that is consistent with the speech the president gave when he announced the decision to withdraw from the Paris accord,” one senior White House official said Saturday.

So it went with trade.

Mr. Trump has long complained that past trade deals favored other nations at the expense of the U.S., resulting in large trade deficits. The final statement bore a distinctly Trumpian ring, stressing the importance of “reciprocal and mutually advantageous trade.”

The White House was happy with it. When the subject of trade came up a few months ago at a meeting of finance officials from the 20 leading countries, “it was kind of 19-1—me being the one,” Treasury Secretary Steven Mnuchin recalled.

Far from showing that his views have shifted, Mr. Trump used the three-day trip to deliver the clearest vision he’s offered to date of his world view: a commitment to preserving western civilization. He held up the West as the standard all should reach.

The location he chose for that message was Poland, home to a socially conservative government that has at times antagonized European partners.

“The fundamental question of our time is whether the West has the will to survive,” Mr. Trump said. “Do we have the confidence in our values to defend them at any cost? Do we have enough respect for our citizens to protect our borders?”

As he did in Belgium in his first foreign trip in May, Mr. Trump called on NATO countries to pay their share of maintaining the alliance.

Thousands of Poles cheered him: “Donald Trump! Donald Trump!”

It made an impression. “Poland was so terrific to me,” he said at an event Saturday showcasing a women’s entrepreneurial fund that was his daughter Ivanka’s brainchild.

Mr. Trump did give a long-sought endorsement of NATO mutual defense measures in his Poland speech, but he also showed in his meeting with Vladimir Putin that he is intent on finding ways to work with Russia, as he has vowed to do since early in his campaign.

If Europe is wary of Mr. Trump, his core voters are likely to be reassured, analysts said. The Donald Trump speaking at Warsaw’s Krasinski Square was the one they remember from red-state rallies.

“He wants to show at least his domestic base that he’s true to all of the principles that he enunciated during the election campaign,” said Angela Stent, a government professor at Georgetown University.

Still, European leaders aren’t giving up on the idea that they can bring Mr. Trump around to their views.

One diplomat at the summit said Mr. Trump is something of a “work in progress” and that officials need to exercise patience in dealing with him.

As president, Mr. Trump is getting more of a firsthand look at how his internationalist counterparts actually work.

The women’s fund championed by his daughter might be one example. It is run by the World Bank, a symbol of the sort of multilateral institution Mr. Trump has at times scorned. Different countries are ponying up millions of dollars to get the fund up and running—to Ivanka Trump’s delight.

Mr. Trump heaped praise on World Bank President Jim Yong Kim at an event formally rolling out the fund on Saturday.

He also showed he’s willing to challenge Mr. Putin, who has been a pariah among many European leaders partly because of Russia’s 2014 intervention in Ukraine and support for Syrian leader Bashar al-Assad.

In their two-hour meeting Friday, Mr. Trump told Mr. Putin that Americans aren’t happy about Russian interference in the 2016 campaign. “I strongly pressed President Putin twice about Russian meddling in our election. He vehemently denied it. I’ve already given my opinion.....,” Mr. Trump tweeted Sunday morning. “We negotiated a ceasefire in parts of Syria which will save lives. Now it is time to move forward in working constructively with Russia!”

Earlier in the week, Mr. Trump equivocated on whether Russia was solely responsible for election meddling. Other countries could have done it, too, he said, though he didn’t specify which ones.

In an account Mr. Putin gave Saturday, Mr. Trump pressed him on the issue repeatedly. “He allocated a great deal of attention to this,” the Russian president said.

Mr. Trump’s third foreign trip comes later this week, when he travels to Paris to mark Bastille Day.

That visit could also test Mr. Trump’s principles, as he meets French officials wary of him moving in a protectionist direction.

“We have sent a message to Americans that if there are unilateral measures from the U.S. we will react and react very quickly,” one French official said.

Article Link To The WSJ:

Trump's G-20 Ends With Few Prizes, Little Consensus On Goals

President’s team says climate disagreement not contentious; Other 19 nations write blueprint that largely cuts him out.

By Toluse Olorunnipa and Nick Wadhams
July 10, 2017

Ahead of his first G-20 summit, Donald Trump took to Twitter to weigh in on his concerns.

From bad trade deals (“the worst’’) to North Korea’s nuclear ambitions (“this nonsense’’) to steel dumping (“don’t like’’), Trump highlighted what he’d hit head-on in Hamburg.

The problem for the U.S. president: he comes home from the Group-of-20 summit with little concrete progress on those issues, while the differences between himself and the rest of the world are greater than ever.

Trump got lectured on trade by China and France and won platitudes from other nations -- but no evident progress -- on North Korea. The starkest difference was on climate: the G-20’s final statement called the 2015 Paris accord “irreversible.” Trump abandoned the pact last month.

In his first sit-down with Russia’s Vladimir Putin, Trump’s twin concerns, Iran and Ukraine, were barely touched upon as the two agreed on a Syrian cease-fire, details to come. On North Korea, meetings between Trump and the leaders of South Korea, Japan and China ended without a clear consensus about how to curb North Korea’s nuclear ambitions. The words “North Korea” are not in the final communique.

This leaves Trump, weakened at home by the swirling congressional and FBI probes into his campaign, in danger of being undermined abroad as well, with a limited ability to rally world leaders to his most important causes, experts said.

One Against The World

“A big message of it is this 19-versus-one frame,’’ said Thomas Wright, director of the Center on the United States and Europe at the Brookings Institution in Washington. “They are quite isolated.’’

Trump didn’t go home totally empty-handed, though, and his team seemed upbeat when briefing reporters on Air Force One on the return flight. He did seem to be getting the peculiar art of global summitry down on this trip -- less scowling, more back-slapping -- and some foreign delegations said Trump’s team was more engaged in the work of crafting a final statement, even if the outcome put stark differences on display.

“The #G20Summit was a wonderful success and carried out beautifully by Chancellor Angela Merkel,” Trump tweeted from Air Force One on the ride home.

Linking Trump’s earlier stop in Poland to the G-20, national security adviser H.R. McMaster said the trip represented “a recognition by us, one, that America First doesn’t mean the rest of the world last, or America First doesn’t mean America alone, and it means peace, prosperity and the rule of law.”

‘Stirring Affirmation’

In Poland, the president “gave a stirring affirmation of our values and why it’s important for us to understand who we are and be determined to protect our values,” he said. Trump’s Warsaw speech raised eyebrows by twinning stifling government bureaucracies with terrorism as threats to western civilization.

And top economic adviser Gary Cohn said that even talks on climate -- one of the sharpest area differences between Trump and other leaders -- were “not a situation where there was contentious discussion.”

Trump also reserved his right to impose steel tariffs as a way to fight back against other nations, including China, dumping too much steel into the marketplace. In summit parlance, the G-20 recognized the right of countries to use “limited trade defense instruments” -- also known as tariffs. Language about a “level playing field” and “reciprocal” trade in the final communique also could have come straight from Trump.

Trump’s most significant achievement at the G-20 came during a two-plus-hour meeting with Putin, where the two leaders struck an agreement for a cease-fire in part of Syria -- “a major, major success,” said Treasury Secretary Steven Mnuchin. But even that meeting yielded controversy, with both sides offering competing narratives about how much Trump pressured Putin on suspected Russian meddling in the U.S. election last year.

“I strongly pressed President Putin twice about Russian meddling in our election. He vehemently denied it.” Trump said in a tweet. “Now it is time to move forward in working constructively with Russia.”

Trump added that “he negotiated a ceasefire in parts of Syria,” and discussed forming an impenetrable Cyber Security unit with Putin.

No Glowing Orbs

Among the many bilats, trilats and pull-asides, one thing Trump didn’t do was to take questions from the traveling news media, as is typical of U.S. presidents at the G-20, or to give formal remarks at the end of the meeting. Trump also didn’t hold a news conference on his week-long trip in May to Saudi Arabia, Israel, the Vatican, Belgium, and Italy.

The president largely avoided the cringe-worthy moments that marked May’s G-7 outing and trip to the Middle East, though social media exploded over a photo of his daughter, Ivanka Trump, sitting in his seat at the G-20 table, flanked by China’s Xi Jinping and Britain’s Theresa May.

Trump’s friendlier personal approach, despite significant policy differences, could pay off for him in the future, said Judy Dempsey, a senior fellow at Carnegie Europe, part of the Carnegie Endowment for International Peace.

“Memories are short. These multilateral meetings are huge,’’ she said. “You can do fantastic networking.’’

On trade, Trump also found himself the target of thinly veiled barbs from other world leaders voicing concern about the protectionist policies that he has embraced -- including from Xi, who accused “developed nations” of engaging in unfair trade practices.

During a working lunch on trade, Trump told the gathered world leaders that he would always defend the American worker, according to a western diplomatic official familiar with the closed-door session.

Multilateral World

French President Emmanuel Macron challenged Trump’s view that the U.S. is losing out on trade, telling the U.S. president that it doesn’t make sense to talk about bilateral trade balances in a multilateral world, the official said.

Brandishing an Apple iPhone, which is designed in the U.S., assembled in China and sold around the world, Macron told reporters Saturday that it’s a “profound mistake’’ to judge the benefits of trade through the prism of deficits or surpluses -- something Trump does regularly.

It is trade where Trump’s relations with world leaders are mostly likely to further deteriorate, and most dramatically, especially if the U.S. goes forward with a proposal for tariffs, quotas or a combination of both on steel imports, citing national security grounds. A decision could come any time -- and that would mean any goodwill from Hamburg would be shattered, said Wright of Brookings.

“All of this will be for naught, if in a week’s time he imposes these steel tariffs,’’ he said.

Article Link To Bloomberg: