Macro Links Sep 28th – GOP Insurrection
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MACRO LINKS TABLE OF CONTENTS (Click or Scroll Down)
- PUERTO RICO, MEXICO, VENEZUELA CATASTROPHE
- US-CANADA TRADE TENSIONS
- UNFIT, INFURIATED, FUMING, AT WAR
- ALABAMA PRIMARY, GOP INSURRECTION
- TAX PLAN
- DEA CHIEF QUITS
- RUSSIA PROBE, SOCIAL MEDIA
- EUROPEAN POLITICS
- CATALAN AND KURDISH INDEPENDENCE, SAUDI ARABIA
- RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
- MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
- USA ECONOMY DATA, CITIES AND STATES
- DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
- HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
- ENERGY CRUDE OIL, OIL SANDS, SHALE
- POLLUTION, CLIMATE & ENVIRONMENT
- BREXIT, SCOXIT, LONDON, UK ECONOMY
- DACA, TRAVEL BAN, IMMIGRATION, WALL
- GEOPOLITICS, CRIME, TERRORISM
- PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
- PROPAGANDA, CORRUPTION, AUTHORITARIANISM
- TRUMP WORLD
- TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
- SCANDALS, LAWSUITS, FINES, REGULATORY
- SILICON VALLEY, UNICORNS, STARTUPS, VC
- CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
- AIRLINES, SHIPPERS, RAIL, TRANSPORTS
- SCIENCE, NATURE, PSYCHOLOGY
PUERTO RICO, MEXICO, VENEZUELA CATASTROPHE
The Trump administration on Tuesday said there was no need to waive shipping restrictions to help get fuel and supplies to storm-ravaged Puerto Rico, because it would do nothing to address the island’s main impediment to shipping, damaged ports.
The Jones Act limits shipping between coasts to U.S. flagged vessels. However, in the wake of brutal storms, the government has occasionally issued temporary waivers to allow the use of cheaper, tax free or more readily available foreign-flagged ships.
The Trump administration is restricting lawmakers in both parties from visiting storm-ravaged Puerto Rico and the U.S. Virgin Islands aboard military aircraft this weekend in order to keep focused on recovery missions there, according to multiple congressional aides.
Puerto Rico is in the New York Fed’s district despite its location in the Caribbean. In times of economic stress or a natural disaster, Fed regional banks work to ensure that member banks are adequately stocked with cash, and that local banking services are functional.
The earthquake on Sept. 19 killed at least 337 people in central Mexico and injured thousands of others. But it also created another class of victims: the displaced.
They number in the many thousands and count among them the very rich and the very poor, from city dwellers who lived in luxury high-rises to farmers in adobe huts. They include those whose buildings collapsed, but also those whose buildings have been declared structurally unsound and, while standing for now, face the likelihood of demolition. Still others occupy an even less certain place: Their homes are fine save for the fact that they abut a building at risk of collapse.
Some had been overweight, a testament in part to the typical Venezuelan diet: lots of fried and starchy foods, much of it served in dinners that run late into the night. One of them has even heard that she looks better now. She does not feel better. She feels just like the others: weak, defeated, depressed. To them, the narrow faces staring back in the mirror are a cruel and constant reminder of everything they’ve lost in the worst crisis that they, or their country, have ever known.
US-CANADA TRADE TENSIONS
The United States announced Tuesday that it would impose duties on imports of a new jet made by the Canadian jet maker Bombardier, a decision likely to fuel trade tensions between the United States and Canada just as the two countries face off over the future of the North American Free Trade Agreement.
In response to a trade case filed by the American jet maker Boeing, the United States Commerce Department ruled that Bombardier’s CSeries aircraft, a smaller, regional aircraft that entered service last year, had received subsidies of 219.63 percent of the plane’s sales price, and it said it would begin collecting duties equivalent to that amount.
That will more than triple the price of the new jet, chilling Bombardier’s future sales and potentially giving Boeing more space to expand into the market for smaller aircraft.
Bombardier is the largest private employer in Belfast — but many people still refer to the business as Shorts, the pioneering aerospace company that the Canadian group bought in 1989. “Shorts were the best-paid jobs, the best pension, the best conditions,” said John Gillespie, a bus driver who worked for Shorts for several years.
“Obviously if [Bombardier] goes under it affects everything, like pulling a tablecloth, especially in east Belfast. A lot of people work in Shorts and it’s certainly putting money into the local economy. If it goes, then there’s nothing else — Shorts is really the last big employer.”
A final ruling is not expected until early next year, but the US move will increase tensions with Canada and the UK, which both deny any wrongdoing and are threatening to boycott Boeing as a result of the dispute.
The decision could also put at risk some of Bombardier’s 28,000 aerospace jobs, including those at its Belfast operations. The Northern Ireland facility makes wings for several of the company’s aircraft including the C Series, and employs 4,500 people. About 1,000 work on the C Series.
Michael Fallon, UK defence secretary, said Boeing’s stance could prevent it winning lucrative defence contracts in Britain in the future. “We have contracts in place with Boeing for new maritime patrol aircraft and for Apache attack helicopters, and they will also be bidding for other defence work and this kind of behaviour clearly could jeopardise our future relationship with Boeing,” said Sir Michael.
UNFIT, INFURIATED, FUMING, AT WAR
A majority of Americans, including most independent voters, say President Trump is unfit for office, according to a new poll.
Returning from a high-dollar fundraiser in Manhattan on Tuesday evening, an infuriated President Donald Trump watched aboard Air Force One as Fox News called the Alabama Senate primary for Roy Moore against Trump’s favored candidate, Luther Strange.
What ensued was a barrage of angry venting at his political team and Senate Majority Leader Mitch McConnell, who had consolidated establishment GOP support behind Strange. Trump, officials and informal advisers say, felt misled by McConnell and his political team, who encouraged him to endorse and campaign for Strange.
President Donald Trump and his top aides are fuming over Health and Human Services Secretary Tom Price’s use of expensive private jets, with some advisers privately calling for Price’s ouster.
In private, President Trump has taken to physically mocking M&M: Senate Majority Leader Mitch McConnell (slumped shoulders; lethargic body language) and Sen. John McCain (imitating the thumbs-down of his historic health-care vote). Trump is venting about his frustration with what he considers failed leadership by Senate Republicans as he takes his lumps this week in wars with, well, everyone.
President Donald Trump again criticized NFL players who protest police brutality by kneeling during the national anthem, saying that the league is “going to hell” unless it prohibits the behavior.
Joe Theismann, the former Washington Redskins quarterback whose leg was gruesomely broken during a nationally televised game in 1985, called the sport “as violent as it’s ever been.”
“Trust me, these guys hit just as hard,” Theismann said Tuesday. “If you really watch the hits up close, you would not say the game is getting soft.”
President Trump told a bipartisan group of lawmakers he didn’t favor public-private partnerships to finance public works, casting doubt on a pillar of his administration’s infrastructure building plans.
ALABAMA PRIMARY, GOP INSURRECTION
Republicans are confronting an insurrection on the right that is angry enough to imperil their grip on Congress, and senior party strategists have concluded that the conservative base now loathes its leaders in Washington the same way it detested President Barack Obama.
The defeat of Senator Luther Strange, Republican of Alabama, in a primary election on Tuesday night appears to have ushered in a season of savage nomination fights and activist-led attacks on party leaders, especially on Senator Mitch McConnell of Kentucky, the majority leader. Despite enjoying the strong backing of President Trump, Mr. Strange lost by a wide margin to Roy Moore, a firebrand religious activist and former judge, who denounced Mr. Strange as a puppet of the Senate leader.
Mr. Strange’s demise, senior party strategists and conservative activists said Wednesday, makes it likelier that Republican incumbents in the House and Senate will face serious primary challenges in 2018, fueled by anger at the party’s apparent ineptitude at wielding power in Washington. Stephen K. Bannon, Mr. Trump’s former chief strategist and a vehement antagonist of the party establishment, said on Tuesday night that he intends to target Republican senators in Mississippi, Arizona and Nevada for defeat. And that rebellion could spread.
The stunning defeat of President Trump’s chosen Senate candidate in Alabama on Tuesday amounted to a political lightning strike — setting the stage for a worsening Republican civil war that could have profound effects on next year’s midterm elections and undermine Trump’s clout with his core voters.
The GOP primary victory by conservative firebrand Roy Moore over Sen. Luther Strange could also produce a stampede of Republican retirements in the coming months and an energized swarm of challengers.
It marked yet another humiliation for the Washington-based Republican establishment, particularly Senate Majority Leader Mitch McConnell (R-Ky.), whose allies pumped millions of dollars into the race to prop up Strange and reassure his colleagues that they could survive the Trump era.
Republican leaders are especially nervous about primary challenges in Arizona, Nevada and Mississippi — particularly as the party fails to leverage its 52-48 Senate majority to pass any significant legislation. They also fret that Mr Moore will force them to answer questions about parts of their past that they want to move beyond.
Mr Moore was twice elected as Alabama chief justice, but was censured for bringing God into court. He was fired for refusing to remove a statue monument of the Ten Commandments and again years later for not accepting the US Supreme Court ruling allowing gay marriage. He has also suggested that the 2001 terror attacks were divine retribution for permissive attitudes towards sodomy and abortion.
Moore was fully on-board with Trump’s racist “birther” conspiracy, not only when the then-reality TV star was promoting it throughout the 2010s, but even after Trump had concluded he was wrong in Sept. 2016. CNN discovered that as late as December 2016, Moore said, “My personal belief is that he wasn’t [born in America], but that’s probably over and done in a few days, unless we get something else to come along.”
News accounts have delicately phrased the matter by calling Moore a “firebrand.” In reality, he is an insurrectionist. Moore considers a certain brand of theological Christianity to be the sole legitimate legal authority of the United States. He has used his public office to openly defy the country’s actual legal authority. A functioning conservative party would consider respect for law and order a threshold question. Instead, Republicans have dismissed it as a mere inconvenience.
President Trump on Tuesday apparently began deleting his tweets supporting Sen. Luther Strange (R-Ala.) in Alabama’s Senate GOP primary runoff after Strange lost the race to former state Supreme Court Chief Justice Roy Moore.
Trump had tweeted about Strange several times in the days leading up to the primary, including the day of, but those tweets had disappeared as of Tuesday night. The deleted tweets included those he sent the night before the election and the day of the race. A project from ProPublica documents the deleted tweets.
All those deleted messages — even the seemingly innocuous ones pulled back to correct typos — are now at the center of a heated debate over whether Trump is following presidential record-keeping laws.
Legal experts said Trump may be in the clear if he is deleting purely political tweets that aren’t covered by the Presidential Records Act. But it gets tricky because Trump’s White House has stated that his missives from his personal @realdonaldtrump account are official government statements. Of critical importance is whether Trump officials are mirroring Obama’s White House and archiving his deleted tweets.
President Trump said he would look into Tom Price, his secretary of Health and Human Services, who has chartered at least $400,000 in private jet travel.
The St. Simons Island trip was one of two taxpayer-funded flights on private jets in which Price traveled to places where he owns property, and paired official visits with meetings with longtime colleagues and family members. On June 6, HHS chartered a jet to fly Price to Nashville, Tennessee, where he owns a condominium and where his son resides. Price toured a medicine dispensary and spoke to a local health summit organized by a longtime friend. He also had lunch with his son, an HHS official confirmed.
A House of Representatives committee has launched a probe of taxpayer-funded travel by senior Trump administration officials, after a report that Health and Human Services Secretary Tom Price had flown on private jets in the course of his duties.
President Donald Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.
The proposal, which the Republican president said was aimed at helping working people, creating jobs and making the tax code more simple and fair, faces an uphill battle in Congress with Trump’s own party divided and Democrats hostile.
Republicans unveiled sweeping changes to America’s tax code Wednesday in a proposal that dramatically lowers taxes on businesses and many households but remains silent on thorny issues such as how to pay for it all.
The framework, a joint product of the Trump administration and Republican leadership, calls for lowering the corporate rate from 35 to 20 percent. It would also bring down the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.
The plan would collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent and nearly doubles the standard deduction. The child tax credit also would be substantially increased, though it is unclear by exactly how much.
Mr. Trump, smarting from the latest defeat this week of his efforts to dismantle the Affordable Care Act, cast his tax plan as an economic imperative and the fulfillment of a promise to his coalition of working-class supporters to deliver benefits in the form of lower taxes, better jobs and higher wages. But the president offered few details about how working people might benefit from a plan that has explicit and substantial rewards for wealthy people and corporations, including the elimination of taxes on large inheritances and deep reductions in the rates paid by businesses large and small.
Republican leaders on Wednesday proposed slashing tax rates for the wealthy, the middle class and businesses while preserving popular tax deductions that encourage buying homes and giving to charity, hoping to unify the party behind a proposal to revamp the U.S. tax code.
But the nine-page framework they released to kick off negotiations left many key questions unanswered, including how they plan to avoid adding trillions of dollars to the government’s debt. The framework leaned heavily on limiting taxes paid by the wealthiest Americans, such as the alternative-minimum tax, and opposition to these changes from Democrats suggest it will be a battleground as negotiations intensify.
Republicans were also careful not to identify numerous tax breaks they might remove, focusing instead of promises to lower rates so much that President Trump estimated the effort would amount to the biggest tax cut of all time.
If you live in New York, New Jersey or California, President Donald Trump and Congress may not deliver quite as much of a tax cut for you. That’s because Trump’s economic advisers have targeted the federal tax deduction individuals can claim for their state and local taxes. Abolishing that break would generate an estimated $1.3 trillion in revenue that Republican tax writers could use to help offset the steep corporate and individual rate cuts Trump has proposed.
DEA CHIEF QUITS
Chuck Rosenberg, the acting head of the Drug Enforcement Administration, said in an email to staffers on Tuesday that he will step down at the end of the week. He offered no reason for his exit, but he’s publicly rebuked President Trump, and law-enforcement officials told the New York Times that he’s become convinced that the president has little respect for the law.
Rosenberg’s departure is not unexpected, as he was appointed by President Obama in 2015 and is close with fired FBI director James Comey, serving twice as his chief of staff. But as a career Justice Department employee, Rosenberg could have taken another senior position in the agency. He reportedly met with Deputy Attorney General Rod Rosenstein in late July and said he didn’t want to be considered for permanent head of the DEA, or any other position in the Justice Department.
Mr. Trump has injected the White House into law enforcement matters in ways that have made many career officials uncomfortable. The president spoke disparagingly about ongoing criminal investigations into his own associates, encouraged the Justice Department to investigate political rivals including Hillary Clinton and said he would never have nominated Jeff Sessions to be attorney general if he had known Mr. Sessions would recuse himself from an investigation into his associates.
RUSSIA PROBE, SOCIAL MEDIA
Three Americans with significant Russian business connections contributed almost $2 million to political funds controlled by Donald Trump, ABC News has learned.
The timing of contributions coming from US citizens with ties to Russia is now being questioned by investigators for special counsel Robert Mueller, according to a Republican campaign aide interviewed by Mueller’s team.
Donald Trump has implied that Facebook is colluding with the New York Times, major cable networks and the Washington Post against him. The suggestion comes after Facebook agreed last week to give Congress 3,000 political ads from the 2016 election that were linked to Russian actors hoping to influence the campaign. Those ads were previously only released to special investigator Robert Mueller, who is in charge of investigating Russia’s meddling in the 2016 election.
The Senate Intelligence Committee intends to call Google executives to Capitol Hill as part of the panel’s investigation into Russian election meddling, according to three people familiar with the discussions.
The 2016 presidential election wasn’t the first time Russian trolls used Facebook to mess with another country’s political system. And it wasn’t the first time Facebook CEO Mark Zuckerberg offered a weak defense of his company’s role in facilitating Russian online aggression.
Years before Russian trolls organized pro-Trump flash mobs, advertised fake news to tens of millions of Americans, and promoted anti-immigrant hate, they pushed and pushed to get Ukrainian activists suspended from the social network. And it worked, those activists say.
The anti-Ukrainian trolls lodged endless complaints with Facebook, claiming that their anti-Kremlin posts were really hate speech or porn. The social network would dutifully comply with the trolls’ requests.
Reddit could be the next target for federal investigators exploring Russian influence over the 2016 presidential election. A representative from Sen. Mark Warner’s (Va.) office told The Hill that Warner, the ranking Democrat on the Senate Intelligence Committee, is interested in Reddit as a potential tool of Russian social media influence.
Kremlin trolls stole the identity of an authentic U.S. Muslim organization—first to smear John McCain and Hillary Clinton, then to sing her praises.
Sen. James Lankford (R-OK) on Wednesday claimed that Russian “troll farms” and “Internet folks” played a part in amplifying the controversy surrounding NFL players and coaches who knelt during the national anthem as an act of protest.
“We watched even this weekend the Russians and their troll farms and their Internet folks start hashtagging out ‘take a knee’ and also hashtagging out ‘boycott NFL,’” Lankford said during a Senate Homeland Security Committee hearing (Lankford is a member of the panel). Lankford also sits on the Senate Intelligence Committee, which is investigating Russian interference in the 2016 election.
He said Russian actors “were taking both sides of the argument this weekend and pushing them out from their troll farms as much as they could to try to just raise the noise level in America and to make a big issue seem like an even bigger issue as they’re trying to push divisiveness in the country.”
On April 17, one day after Turkish voters passed a controversial measure giving President Recep Tayyip Erdoğan unprecedented control over the country, Trump hopped on the phone to give his friend a verbal pat on the back. The State Department wasn’t thrilled about the referendum. “We look to the government of Turkey to protect the fundamental rights and freedoms of all its citizens,” State Department spokesperson Mark Toner said at the time. But Trump didn’t seem to notice. Erdoğan won, and that was enough for a bit of celebration.
So it’s a little awkward that it seems Trump still hasn’t found time to congratulate German Chancellor Angela Merkel on her victory in Sunday’s elections, which gave her a fourth term at the helm of her country. It’s now been more than 48 hours since the results came in, and the silence from the White House has been deafening.
Emmanuel Macron made a radical pitch on Tuesday to map out Europe’s future, in his first significant intervention on the EU since becoming president in May.
In a near two-hour address at the Sorbonne in Paris, the 39-year-old promised to make the continent more “sovereign, united and democratic” as he combined grandiloquent references to the likes of Marcel Proust and Jean Monnet with a litany of policy initiatives spanning migration, defence and the single market.
A day after Macron delivered his laundry list of a speech, the rest of Europe was busy trying to make sense of his at-times abstract proposals, many of which called for new agencies and structures to be created on top of existing ones. In Berlin, a spokesman for Angela Merkel said the chancellor welcomed the “European passion” and “substance” on display but it was “too early” to comment on what the French president had actually proposed.
Macron didn’t hesitate to triple down on his long-standing Europhile commitments, laying the blame for Euroskepticism at the door of leaders he criticized as too guarded to confront their own public opinions and lay out a clear vision. He made it clear that he wanted France and Germany to lead the major reform push for Europe, inviting renewed criticism that his approach is dismissive of smaller countries’ interests. Along with his grand ideas of where he sees Europe heading, Macron wanted to suggest concrete proposals to illustrate what he means in different fields of European policies. He tried to put a positive spin on his “multispeed” EU idea by insisting that building a “strong and efficient core” would benefit those who might or could only join at a later stage. And Macron chose the opportunity of his European speech to get back in touch with his inner socialist.
Wolfgang Schäuble, a dominant figure in the European Union for more than a decade, will leave his post as Germany’s finance minister, effectively ending a career in international politics that has been marked by his insistence on budgetary penitence for suffering eurozone countries.
Mr. Schäuble’s impending departure leaves a huge gap in European politics. Loved or hated, he has been a force for stability who played a leading role in keeping the eurozone from disintegrating during a debt crisis that began in 2010.
CATALAN AND KURDISH INDEPENDENCE, SAUDI ARABIA
On Sunday, Catalans are set to be asked if they want to be independent. If more than 50 per cent of voters say Yes, the parliament says it will declare independence within 48 hours — regardless of the turnout. “A lot of people had died over the years defending Catalonia . . . This referendum is for them as well as for our future,” says Mr Castellà.
But there is an obstacle that still needs to be overcome: the entire Spanish state. The Spanish courts and the central government say the referendum is illegal. The 1978 constitution says Spain is indivisible. As a result the organisers of the vote, which include much of the elected Catalan government, are breaking the law. Already more than a dozen officials have been arrested.
As Spain’s government tries almost everything it can to stop the independence referendum in Catalonia, the standoff is escalating into a constitutional crisis emblematic of the larger forces tearing at European unity.
With the support of the Spanish judiciary, Madrid has shut down websites and advertising campaigns that have promoted the vote. It has raided the offices of companies that would print the paper ballots. It has sent in thousands of police officers from outside the region, threatening to block polling stations.
Last week, a dozen regional government officials were detained. Spain’s attorney general has warned that scores more could be arrested and prosecuted, including even the leader of Catalonia, Carles Puigdemont. “We are witnessing the worst democratic regression since the death of Franco,” Mr. Puigdemont said in an interview, referring to Gen. Francisco Franco, the dictator whose death in 1975 opened the way for Spanish democracy. “What is happening in Catalonia is very serious.”
Indeed, Catalonia’s standoff has steadily, if quietly, ratcheted up this year as world attention largely focused elsewhere, with pivotal elections taking place in critical European Union states, most recently this week in Germany.
No longer confined to social media and fringe political agitators, the sharp tone has infected mainstream media and the political arena. The deepening rift between the two sides of the debate — fueled by factors peculiar to Spain and its restive region — make the likelihood of finding a resolution to the standoff between Madrid and Barcelona increasingly difficult.
An overwhelming 93% of Kurds voted in favor of independence from Iraq, the Kurdish electoral commission said Wednesday, in a referendum that has provoked backlash from the landlocked region’s neighbors and the central government in Baghdad. Some 72% of 4.58 million eligible voters took part in Monday’s referendum, the commission said.
Western nations, including the U.S., had urged the semi-autonomous Kurdish region to cancel or postpone the vote, predicting it would unleash further chaos in the Middle East. Although the result doesn’t automatically translate into statehood, Kurdish leaders hope it will advance that dream by giving them a mandate to negotiate an amicable separation from the central government in Baghdad over the coming years.
But Iraqi Prime Minister Haider al-Abadi has said there will be no talks between his government and Kurdish leaders after the referendum, and that he won’t recognize its outcome.
While the change does not take effect until next June, the announcement was so abrupt it stunned the country. Many Saudis took to social media on Wednesday to express their joy, or consternation, over the end of the driving ban and to debate what other relaxations might be on the way.
RATES, LIQUIDITY, SYSTEMIC RISK, BALANCE SHEETS
Under current proposals, some are expecting Congress to lower the repatriation tax rate to 10 percent, down from the current rate of more than 30 percent. It’s unclear whether this would be enough to prod companies to bring the money back because 10 percent is still more than the average 3.2 percent rate that big investment-grade companies are paying to borrow money in the bond market.
If corporations do transfer cash back to the U.S., it may not go where lawmakers think it will. To the extent that companies have wanted to build plants or hire more people, they could have already done so. Companies like Apple Inc. and Microsoft Corp. have effectively brought money back home by simply selling dollar-denominated bonds and using the proceeds to execute their grand plans.
What have those grand plans been? Largely buying back shares. This has certainly supported stock valuations, but it hasn’t delivered an obvious boost to Main Street America.
More likely, companies like Apple and Microsoft would most likely buy back at least some of the billions of dollars of bonds they’ve issued, reducing debt that was incurred almost entirely to get around the onerous tax rates. This would actually help boost the values of these bonds because it would send money back to investment firms, which would be forced to redeploy it.
After Russia’s central bank announced it would nationalise a second big bank in three weeks, it claimed last week to have averted a “domino effect” in the sector. Things may not be that simple.
A chance remains that more dominoes will topple among Russia’s privately owned banks. And attention is turning to whether the central bank should have spotted and acted on the problems at Otkritie and B&N Bank earlier — and the extent to which it may itself have been responsible for causing them.
The two bank bailouts have highlighted the strains still being suffered particularly by large, non-state Russian lenders. Collapsing oil prices and western sanctions over Ukraine in 2014 helped push the economy into two years of recession, even as the banking system was still dealing with lingering bad loan issues from the 2008 global crisis.
MACRO OP-EDS, INSIGHT, EVENTS AND TRENDS
The party that once defended the rule of law now defends those who defy court rulings (Moore and Joe Arpaio, for example). You’ll likely see a slew of Bannon-backed GOP primary challengers who will dislodge or bruise Senate and House GOP incumbents. One can now envision circumstances in which the Democrats win majorities in both houses. Even if the Senate remains nominally in GOP hands, it seems that Senate Majority Leader Mitch McConnell’s days as leader are numbered.
There are three major political dynamics at work here — the failure of the Trump and GOP agenda; the descent into paralyzing scandal for the administration; and the replacement of a normal GOP by a fully activated Trump-Breitbart machine that resembles the thuggish right-wing parties in Europe. Throughout it all, Trump divides and deceives, creating false controversy and phony culture wars. Attack the NFL, attack the press, feed the racism.
The larger challenge for Republicans is trying to find a way to govern in the midst of a civil war. The party establishment proved powerless in its efforts to deny Trump the GOP nomination last year, then assumed he could not be elected, then tried to make peace with the fact that he had won. GOP leaders nonetheless held out hope that Trump would be a somewhat malleable president, that he would follow their lead on policy and use the unique megaphone that he has developed to advance the cause.
But that hope was based on two false assumptions: First, that Trump’s agenda was their agenda, that he was as interested in party success as in personal success. Second, that the divisions that had immobilized congressional Republicans long before Trump became a candidate would somehow disappear if the party controlled the White House. They didn’t.
Senator Mitch McConnell, the Republican leader, is not a man who leaves things to chance. But this week, in both policy and politics, Mr. McConnell gambled — and lost big.
Now, a majority leader celebrated for years as a brilliant tactician looks vulnerable — to dissent within his Senate conference and to insurgents from President Trump’s populist wing of the party, who are looking to storm the Senate in 2018. And if Republicans fail to fulfill their next promise — overhauling the tax code — the consequences will be dire.
It requires that ships going from American coast to American coast be American — built, owned, flagged and crewed. That means goods going from the mainland to Puerto Rico, Hawaii, Alaska and Guam, or even from Texas to New England, have to travel on U.S. ships, even if they’re not the most economical transport or readily available.
Why that matters to hurricane relief: Foreign ships in nearby countries can’t zoom over to Puerto Rico with aid supplies. Only U.S. ships can. “A foreign relief shipment to Puerto Rico, they have two choices,” said Scott Miller, an international trade expert with the Center for Strategic & International Studies. “One is to land in San Juan and pay tariffs associated with the Jones Act, or to take shipments to Jacksonville, offload the ship and reload it on a U.S. one.”
Puerto Rican officials have long despised the law, arguing that it makes their food and goods much more expensive than on the mainland. Politicians in Hawaii have argued that ranchers have even resorted to flying cows to the mainland rather than shipping them. Other opponents of the law say it forces New Englanders to pay more for propane, holds up salt supplies to clear snowstorms in New Jersey and raises electricity rates in Florida.
The Communist Party’s survival depends, paradoxically, on relentless, continued economic growth on the one hand and control of information, money flows and ideas on the other. But you can’t achieve the former if you’re practicing the latter. Ultimately, China will be powerless to compete against bitcoin and its successors, since they directly enable a decentralized, censorship-resistant system of exchange that levels the playing field and fosters a global, self-perpetuating pool of unbeatable innovation.
Given the current policy priorities of the Trump administration, the U.S. won’t likely be the winner in this. But neither will China if it continues on its present course.
The age of cryptocurrency will deliver the spoils to countries, businesses and individuals that operate within a system of open access, property rights and free trade – the principles upon which U.S. hegemony was originally built.
“There’s no example of any kind of sustained attack like this on a politician,” Mr. Carter told me last week. “There’s a horde of writers writing jokes about Donald Trump every single night.” (And, he said, he wasn’t even counting the weekly shows like “Saturday Night Live,” “Last Week Tonight with John Oliver” and “Full Frontal with Samantha Bee.”)
This has brought about an abundance of incisive political satire. But it has also come with new complications that threaten to kill the fun, through blowback on the pro-Trump right and the rigid expectations of an anti-Trump audience that wants Resistance TV every night.
Throughout Barack Obama’s eight years as president, Republicans hammered relentlessly at the horrors of debt. In 2011 they took the country to the brink of default because they didn’t want to raise the statutory debt ceiling. Last year candidate Donald Trump repeatedly ripped Mr. Obama for doubling federal debt.
Yet in their drive to overhaul taxes, President Trump and his congressional allies are about to make the trajectory of debt even worse.
Financing tax cuts with deficits isn’t the end of the world: There are economic arguments for doing so, which I will get to. However, Republican leaders aren’t making these arguments. Instead they rely on a far more tenuous case: Lower tax rates will unleash so much new economic activity and thus added tax revenue that, contrary to history and mainstream economic opinion, the debt actually won’t rise much, if at all. It’s a politically convenient face-saver, but it undermines a process Republicans themselves put in place to minimize the abuse of such reasoning.
Before 2009, football players standing for the national anthem wasn’t even a thing. The teams stayed in the locker room until after “and the hoooome of the braaaave,” and then ran onto the field. No one was offended, and no one was on cable news eliciting tears from disrespected military families. But then, the Department of Defense and the National Guard got involved. They began to pay the NFL millions of dollars to have ostentatious flag ceremonies before games. If the waste of taxpayer money isn’t gross enough, grab your barf bag as you learn about the motivation behind the expenditure. The DOD and the National Guard were marketing to sports fans. The concept was that if sports fans saw their favorite athletes standing for the Star Spangled Banner, or saluting the flag, they’d emulate that behavior and become more patriotic themselves. Kind of like the nationalist version of a Nike endorsement contract. I’ll leave open the question of why the U.S. government didn’t also see fit to sponsor other praiseworthy behavior by high-profile athletes, such as living non-violent personal lives, refraining from using illicit substances, and paying taxes.
USA ECONOMY DATA, CITIES AND STATES
“We’re glad the recovery is spreading to a lot of households,” Fed economists said Wednesday. But the Fed was also quick to point out that inequality is getting even worse between the mega rich and everyone else, and between whites and non-whites. The share of America’s income held by the top 1 percent of households reached 24 percent in 2016, a record high.
America’s top 1% now control 38.6% of the nation’s wealth, a historic high, according to a new Federal Reserve Report.
The Federal Reserve’s Surveys of Consumer Finance shows that Americans throughout the income and wealth ladder posted gains between 2013 and 2016. But the wealthy gained the most, driven largely by gains in the stock market and asset values.
The top 1% saw their share of wealth rise to 38.6% in 2016 from 36.3% in 2013. The next highest nine percent of families fell slightly, and the share of wealth held by the bottom 90% of Americans has been falling steadily for 25 years, hitting 22.8% in 2016 from 33.2% in 1989.
New orders for U.S.-made capital goods increased more than expected in August and shipments maintained their upward trend, pointing to underlying strength in the economy despite an anticipated drag on growth from Hurricanes Harvey and Irma.
Some of fast-food’s biggest names, including Burger King, Carl’s Jr., Pizza Hut and, until recently, McDonald’s, prohibited franchisees from hiring workers away from one another, preventing, for example, one Pizza Hut from hiring employees from another.
The restrictions do not appear in a contract that employees sign, or even see. They are typically included in a paragraph buried in lengthy contracts that owners of fast-food outlets sign with corporate headquarters. Yet the provisions can keep employees tied to one spot, unable to switch jobs or negotiate higher pay. A lack of worker mobility has long been viewed as contributing to wage stagnation because switching jobs is one of the most reliable ways to get a raise.
DEALS, MERGERS, IPOs, LBOs, RESTRUCTURINGS
Private trades in Spotify shares are valuing the music streaming company at about $16 billion, according to people familiar with the deals, raising the prospect of a bumper flotation next year. That is around $3 billion higher than in similar trades up until June, the people said, adding strong demand for the shares and rising subscription numbers at the Swedish business meant it could be worth at least $20 billion when it goes public.
The price of bitcoin has increased sixfold in the past year, despite a 25 percent plunge this month triggered by China’s crackdown on digital tokens. Not a week goes by without startups launching new ones to fund everything from dentistry to Las Vegas strip clubs. Even Paris Hilton is tweeting to her 16 million followers about her cryptocurrency investments. If that isn’t a jump-the-shark-moment, what is?
Yet Smith, the No. 1 cryptocurrency trader at online brokerage eToro, shrugs all that off as he plays the markets from his home in Basingstoke, a suburban town west of London. Every day he looks for reasons to buy more bitcoin and other digital tokens — computer programs that use cryptography to create artificial units of value. He doesn’t have much information to size up the prospects of Blackmoon Crypto, Steem, FirstBlood and other coins that have caught his eye, but that’s cool with Smith, a high school dropout and onetime professional video-game player. His portfolio is up 295 percent in the past 12 months.
HEDGE FUNDS, PRIVATE EQUITY, MONEY MGMT
All told, four Man funds collectively managing $12.3 billion are incorporating AI. Assets under management at Man have surged about 77 percent since the beginning of 2014. AHL Dimension fund assets have more than quintupled since then.
The firm has gone from viewing AI with skepticism to making it a cornerstone strategy. Among the company’s biggest expenditures now is computer equipment—along with hiring engineers to keep up with the technological change and the ensuing growth. AI is now not only out of the nuclear bunker but on a pedestal. “It went from a total isolation to ‘OK, you are allowed to sit at dinner with the rest of us, but don’t talk’ to the point where it’s become a part of the family,” Ellis says.
ENERGY CRUDE OIL, OIL SANDS, SHALE
Step aside OPEC, diesel is now driving up oil prices. With industrial activity surging worldwide, the fuel — known in the industry as ultra-low sulfur diesel or ULSD — is enjoying strong demand, accelerating total oil consumption growth in 2017 well above the 10-year average.
And just as demand rose faster than expected, diesel supply was hit, prompting a rapid tightening. First in Europe: the Pernis refinery, owned by Royal Dutch Shell Plc and considered one of the region’s diesel machines, suffered a fire in July and shut down for several weeks. And then in the U.S., where Hurricane Harvey in late August temporarily knocked out a dozen refineries, disrupting both domestic supplies and distant export markets.
“The oil market is currently driven by four letters: It’s ULSD, not OPEC,” said Olivier Jakob, managing director of consultant Petromatrix GmbH.
The combination of strong demand and refinery outages has drained global diesel stocks over the summer, a rare occurrence as inventories usually build from July to September in preparation for a seasonal uptick in demand with the onset of the northern hemisphere winter. A cold spell later this year or in early 2018 could tighten the market even more, triggering another price spike.
POLLUTION, CLIMATE & ENVIRONMENT
To find a sudden warming that’s driven entirely by greenhouse gases, you have to go back 56 million years to the Paleocene-Eocene Thermal Maximum (PETM). At the start of the PETM, a geologically sudden surge of carbon dioxide into the atmosphere caused warming and a large change in the ocean’s pH. It took well over 100,000 years for conditions to return to anything normal. During that time, the extinction rate rose, and many ecosystems were disrupted or shifted by thousands of miles.
But understanding the PETM has proven a challenge, as it’s not clear how much carbon entered the atmosphere or where it came from. A new paper in today’s issue of Nature takes existing information about carbon dioxide levels and isotope ratios and combines them with data on the amount of carbon that dissolved into the oceans. The results provide a new indication of how much carbon entered the atmosphere—10,000 gigatonnes—and suggests volcanoes put it there.
BREXIT, SCOXIT, LONDON, UK ECONOMY
In a series of tweets from the official Twitter account of the prime minister’s office, No 10 said: “Bitterly disappointed by initial Bombardier ruling. The government will continue to work with the company to protect vital jobs for Northern Ireland.”
The European Parliament is preparing a draft resolution that is critical of progress in the Brexit negotiations, particularly on the rights of EU citizens living in the U.K., according to three officials familiar with the text.
DACA, TRAVEL BAN, IMMIGRATION, WALL
Experts on Africa in the Trump administration said they were mystified by the ban on travel from Chad, an American counterterrorism partner in Africa.
GEOPOLITICS, CRIME, TERRORISM
Myanmar authorities displayed on Wednesday the bodies of Hindu villagers they say were killed by Muslim insurgents, victims of a surge of violence in someone else’s fight now playing their part in a propaganda war.
One of the army’s largest storage sties caught fire, setting off tons of explosives. The authorities have blamed a drone for the attack.
PRIVACY, HACKING, CYBERWAR, SURVEILLANCE STATE
New York state’s financial services regulator has issued a subpoena to Equifax Inc demanding it provide more information about the massive data breach the credit-reporting firm disclosed this month, a person familiar with the matter said on Wednesday.
Richard Smith’s abrupt departure as CEO of Equifax on Tuesday hasn’t calmed the criticism of the company’s handling of a massive data breach.
The operator of Sonic Drive-In burger joints acknowledged that its store-payment systems were attacked, leaving some customers’ credit and debit cards numbers at risk.
PROPAGANDA, CORRUPTION, AUTHORITARIANISM
The agency has as many homegrown cases involving suspects possibly inspired by ISIS.
A leading purveyor of fake news in the 2016 presidential election has died outside Phoenix at the age of 38. Casey said the Maricopa County medical examiner performed an autopsy which showed there were no signs of foul play. He said Horner had a history of prescription drug abuse and that “evidence at the scene suggested this could be an accidental overdose.”
Horner was known for writing false stories and disseminating internet hoaxes that often went viral on Facebook and hoodwinked thousands of people. They included a story falsely claiming President Barack Obama was gay and a radical Muslim, and another saying protesters were being paid thousands of dollars to demonstrate at Donald Trump’s campaign rallies.
Yingluck Shinawatra, Thailand’s former prime minister, has been found guilty of criminal negligence and sentenced to five years in prison in a further setback to the country’s best-known populist political clan.
When Donald Trump’s campaign chairman offered private briefings to a Russian oligarch close to President Vladimir Putin last year, he wasn’t only appealing to a superpower, he was pursuing a personal mission: the end to a costly dispute over a failed business deal.
In the latest of several paperwork mishaps, the President’s senior advisor and son-in-law registered to vote in New York with the wrong gender.
It’s not the best look for a major advisor to and son of the president who is the subject of a serious investigation into possible international espionage to get rid of the government agents who are around him all the time, for a couple of weeks during that investigation.
TRADE, PROTECTIONISM, REGULATION, OVERSIGHT
The United States commerce secretary said China’s government needed to do more to allow foreign companies to operate freely and close the trade deficit.
SCANDALS, LAWSUITS, FINES, REGULATORY
The U.S. Securities and Exchange Commission suffered a defeat on Wednesday, as a judge said it failed to prove private equity fund manager Lynn Tilton defrauded investors by hiding the poor performance of assets underlying three debt funds.
Lynn Tilton, whose aggressive management style made her a success on male-dominated Wall Street, won a Securities and Exchange Commission trial she’d spent months fighting to avoid.
Pitino and longtime AD Tom Jurich were placed on unpaid leave, a precursor to being let go in the wake of revelations implicating the men’s basketball program in a federal corruption investigation.
SILICON VALLEY, UNICORNS, STARTUPS, VC
The search giant is changing how it operates its online shopping service, signaling a new willingness to bow to tightening regulatory pressure around the world.
Uber Technologies Inc. on Wednesday confirmed it is shutting down its U.S. auto-leasing business, months after it discovered it was losing 18-times more money per vehicle than previously thought.
SoftBank Group Corp. has overcome a major obstacle to its planned multi billion-dollar investment in Uber Technologies Inc. The Japanese firm agreed to block any attempts to elevate Travis Kalanick, Uber’s controversial former leader, back to the company’s top ranks, according to people familiar with the discussions.
CONSUMER TECH, SOCIAL MEDIA, E-COMMERCE, MOBILE
Apple Inc. hit a production snag with components crucial to its new iPhone X’s facial-recognition system, adding to concerns about extended shortages when sales begin early in November.
Twitter said it would begin testing a new limit of 280 characters, double its current limit, as a concession to users who have been clamoring for changes to the short-messaging service.
Despite heavy spending, Amazon has managed to boost its profitability over the last couple of years, thanks largely to its growing cloud business, and its investments fuel far more than the Echo devices.
AIRLINES, SHIPPERS, RAIL, TRANSPORTS
The developments, interpreted as a sign that the airline is stabilizing its operations, bolstered its shares, which were up 4 percent in London on Wednesday. By announcing the flight cancellations now, the airline will not have to pay any fines it might have had to pay had it waited, and many analysts had viewed the potential acquisition of Alitalia as a bad fit.
SCIENCE, NATURE, PSYCHOLOGY
In another step forward for the rapidly expanding universe of invisible astronomy, scientists said on Wednesday that on Aug. 14 they had recorded the space-time reverberations known as gravitational waves from the collision of a pair of black holes 1.8 billion light years away from here.
It was the fourth time, officially, in the last two years that astronomers have detected such ripples from the cataclysmic mergers of black holes – objects so dense that space and time are wrapped around them like a glove so that not even light can escape.
“Anthony would go for weeks on 25-hour days to get everything done. Every day he would go to bed an hour later than the day before,” remembers Randy Miller, a college friend who worked with him on Ghostrider. “Without a doubt, Anthony is the smartest, hardest-working and most fearless person I’ve ever met.”
Dana Carvey, a cast member from 1986 to 1993 famous for his Ross Perot and George H.W. Bush, feels for Hammond. It is strange to see characters you worked so hard on done by other people. But he’s not surprised by how the switch was handled. At SNL, there’s no time for a sheet cake or a conciliatory lunch to soften the blow of a lost part.
“It’s a little bit like Tom Hanks in ‘A League of Their Own,’ ” Carvey says. “There is no crying in baseball. There is no getting your feelings hurt in show business, because the entire system is based on hurting your feelings.”
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