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Trump says pharma ‘getting away with murder,’ stocks slide


By Caroline Humer and Rodrigo Campos

U.S. President-elect Donald Trump on Wednesday said pharmaceutical companies are “getting away with murder” in what they charge the government for medicines, and promised that would change, sending drugs stocks sharply lower.

The benchmark S&P 500 index slipped into negative territory after his remarks at a news conference spooked investors. The Ishares Nasdaq Biotech ETF (IBB.O) dropped 4 percent at its session low and was on track for its largest daily percentage drop since late June. [nL4N1F14CH]

“When the president-elect says we’re going to negotiate drug pricing, you have to take that seriously, but at the same this is a complicated issue because there’s not going to be clarity on drug pricing reform anytime soon,” said Brad Loncar, manager of the Loncar Cancer Immunotherapy ETF (CNCR.O). “When somebody that high profile says something that negative, people do not want to invest in it.”

Trump has blasted other industries for charging the government too much, particularly defense companies, but has made only a few public statements about drug pricing since being elected. He briefly mentioned Lockheed Martin Corp (LMT.N) and Ford & Co (F.N), and United Technologies Corp (UTX.N) during the Wednesday news conference and promised a border tax for companies producing products for U.S. consumers outside the United States.

After his promise to bring down drug spending, the ARCA pharmaceutical index fell 2 percent as Pfizer Inc (PFE.N) gave up 2.6 percent and Johnson & Johnson (JNJ.N) fell 1 percent. Biotech Gilead Sciences Inc (GILD.O) fell 2.3 percent.

The drug industry has been on edge for two years about the potential for more government pressure on pricing after sharp increases in the costs of some life-saving drugs drew scrutiny in the press and among lawmakers. The government is investigating Medicaid and Medicare overspending on Mylan NV’s (MYL.O) allergy treatment EpiPen, for instance.

David Katz, chief investment officer at Matrix Asset Advisors in New York, said negative comments on drug pricing trigger selling both from algorithms and investors who suffered from share drops when Democrat Hillary Clinton campaigned against healthcare cost increases.

Options traders’ expectation for near-term volatility in shares of Health Care Select Sector SPDR Fund (XLV.P) jumped to a one-month high.

Trading volume in the healthcare fund’s options jumped to 52,000 contracts, more than twice the average daily volume, with bearish/defensive bets dominating, according to options analytics firm Trade Alert data.

Trump’s campaign platform included allowing the Medicare healthcare program to negotiate with pharmaceutical companies, which the law currently prohibits. He has also discussed making it easier to import drugs at cheaper prices.

We are going to start bidding. We are going to save billions of dollars over time,” Trump said.

Medicare, which covers more than 55 million elderly or disabled Americans, spent $325 billion on medicines in 2015.

Industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA President Stephen Ubl said “Medicines are purchased in a competitive marketplace where large, sophisticated purchasers aggressively negotiate lower prices.”

He said the industry is “committed to working with President-elect Trump and Congress to improve American competitiveness and protect American jobs.”

Daniel O’Day, CEO of Roche Pharmaceuticals, a division of Roche Holding AG(ROG.S), said in an interview on the sidelines of the JP Morgan conference that the company focuses on innovation and investing in research.

Price increases over the past several years have been “responsible” and in the range of low to mid single digits, he said.

Mylan CEO Heather Bresch said it was premature to respond to Trump’s comments, when she was asked during an investor presentation at the JP Morgan Healthcare conference in San Francisco. She said the industry should relook at how healthcare is set up as the government repeals the Affordable Care Act.

Trump said he plans to repeal the Affordable Care Act, or Obamacare, and replace it at about the same time. The news helped shares of hospitals, which are nervous about losing government payments for medical services. It hurt some health insurers, like Anthem Inc. (ANTM.N), which sell plans on the government-run health insurance exchanges.

Healthcare ETFs including the Health Care Select Sector SPDR Fund (XLV) (XLV.P) and the iShares Nasdaq Biotechnology ETF (IBB) drew their highest trading volume since Nov. 10, after the election. (GRAPHIC link here: tmsnrt.rs/2jEkkJH)

The healthcare sector .SPXHC was the largest drag on the S&P 500 .SPX and the Nasdaq 100 .NDX while all major U.S. stock indexes were lower in mid-afternoon trading on Wall Street.

(Reporting by Caroline Humer, Rodrigo Campos and Lewis Krauskopf in New York, Deena Beasley in San Francisco and Ankur Banerjee and Natalie Grover in Bengaluru; Editing by Chizu Nomiyama and David Gregorio)
Published at Wed, 11 Jan 2017 19:33:44 +0000

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Tillerson ducks Exxon climate change allegations


Tillerson: Sanctions harm U.S. businesses 'by their design'
Tillerson: Sanctions harm U.S. businesses ‘by their design’

 Tillerson ducks Exxon climate change allegations


Rex Tillerson just doesn’t want to talk about whether oil giant Exxon misled the public on climate change.

It was a major bone of contention during his questioning at Thursday’s confirmation hearing for secretary of state.

Exxon is currently being investigated for allegedly misleading the public about what it knew of climate change decades ago. And Tillerson led Exxon as CEO for 10 years.

Citing recent investigative journalism exposés, Democratic Senator Tim Kaine asked Tillerson whether Exxon ignored internal research going back to the 1970s on the impact of burning fossil fuels on the climate, and funded organizations that spread misinformation about the growing scientific consensus.

“Since I’m no longer with ExxonMobil, I’m in no position to answer on their behalf,” said Tillerson, who resigned as CEO at the end of 2016 to prepare for the confirmation hearings.

Noting the 42 years Tillerson spent at Exxon, Kaine asked whether Trump’s pick for secretary of state lacks the knowledge to respond — or is simply refusing to answer.

“A little of both,” Tillerson said, prompting laughs from the audience.

Kaine, Hillary Clinton’s 2016 running mate, said he had a “hard time believing” Tillerson lacked the knowledge.

Tillerson’s refusal to defend Exxon’ (XOM)climate change history stood in stark contrast with his willingness to explain other actions taken by the company he worked at for four decades.

Tillerson hearing secretary state

The back-and-forth between Tillerson and Kaine highlighted the awkwardness of Trump nominating an Exxon man who could be representing America as its key emissary on climate issues. As secretary of state, Tillerson would have the power to negotiate a U.S. exit from the Paris climate agreement and even give the controversial Keystone XL pipeline a green light.

Tillerson’s hearing was interrupted several times by outburst from protesters who urged the senators to vote against his confirmation.

While Trump has said that “nobody really knows” if climate change is real, Tillerson is not a skeptic.

During the hearing, Tillerson said he came to the conclusion years ago that “the risk of climate change does exist and the consequences could be serious enough that action should be taken.”

Asked if human activity is contributing to climate change, Tillerson said the “increase in greenhouse gas concentration in the atmosphere is having an effect.” However, he added that “our ability to predict that effect is very limited.”

Seeking to ease conflict of interest concerns, Tillerson has reached an ethics agreement that would require him to sell the $54 million in Exxon stock he owns. Exxon will also cash out Tillerson’s $181 million retirement package and put it in a trust that can’t invest in the company.

Kaine asked Tillerson if he is subject to a confidentiality agreement that continues to be enforced that would limit his ability to answer questions, such as the ones on climate change.

“To my knowledge I have no such confidentiality agreement in place, but I would have to consult with counsel,” Tillerson said.

Climate activists were quick to seize on Tillerson’s evasive answers.

“We need a secretary of state who acknowledges that the climate crisis requires bold action, not an oil industry CEO who is dedicated to spreading misinformation,” May Boeve, executive director of climate activist group 350.org, said in a statement.

During the hearing, Kaine read from a 1982 letter uncovered by Inside Climate News that was written by an Exxon scientist.

“Over the past several years a clear scientific consensus has emerged regarding the expected climatic effects of increased atmospheric CO2,” Roger Cohen, Exxon’s former director of theoretical and mathematical sciences laboratory, wrote in the letter.

Cohen noted the “consensus is that a doubling of” carbon emissions from pre-industrial revolution levels would cause a rise in temperatures that would “bring about significant changes in the earth’s climate.”

Tillerson refused to answer the questions about whether Exxon downplayed or obscured the climate research.

“The question would have to be put to ExxonMobil,” he said.

For its part, Exxon said in a statement that it rejects “long-discredited conspiracy theories that attempt to portray legitimate scientific observations and differences on policy approaches as climate denial.”

Exxon said that it provides funding to a “broad range of groups that support free market solutions.” However, the company said it discontinued funding to groups when they took “extreme positions that were distracting from the important discussions on climate policy and/or not supported by science.”

“We do not fund climate denial,” Exxon said.

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Wall Street hates the Volcker Rule. Will Trump kill it?


The Volcker Rule Explained
The Volcker Rule Explained

Wall Street hates the Volcker Rule. Will Trump kill it?


Big banks shouldn’t act like hedge funds by making dangerous bets that can ruin the economy.That’s the principle behind the Volcker Rule, a controversial part of the post-crisis Wall Street reform. The rule prohibits banks like Goldman Sachs or JPMorgan from making risky wagers with their own money and bans them owning big stakes in hedge funds or private-equity firms.

The banks hate it. Wall Street has bitterly complained about the Volcker Rule for years, arguing it’s overly complex and does more harm than good. With Republicans gaining control of Congress and the White House, this key part of Dodd-Frank financial regulation could soon be weakened or be placed on the chopping block.

The rule was named after legendary Federal Reserve chairman Paul Volcker, who came up with the idea and fought hard to include it in Dodd-Frank.

But recently, the push to defang the Volcker Rule received support from an unlikely source: the Federal Reserve itself, which is also the chief regulator of the big banks.

Staffers at the Fed studied whether it was easy to buy and sell bonds during times of stress, a critical feature for the smooth functioning of financial markets, known as liquidity. The December 22 research paper found that the 2015 implementation of the Volcker Rule had a harmful effect on corporate bond liquidity.

Firms subject to the Volcker Rule become “less willing to provide liquidity during stress times,” the paper concluded.

It’s a critical finding, especially considering the 2008 financial crisis was worsened by a liquidity crunch.

“That Fed report really does give ammunition to opponents of the Volcker Rule,” said Bloomberg Intelligence financial policy analyst Nathan Dean.

Deregulation hopes lift bank stocks

While the Fed research was conducted by staffers, policymakers don’t often oppose their own staff findings.

“This is the regulator dropping bread crumbs to Congress to act,” said Thomas Michaud, CEO of Keefe, Bruyette & Woods, an investment bank that specializes in financial services.

Michaud said the 2008 meltdown has resulted in too much “heavy regulation” and “penalties” for banks.

“All you need is to move it into neutral to have a positive effect. It’s a lot like my golf game — It just needs to be less bad,” he said.

Investors are betting that’s exactly what will happen. Hopes of deregulation, in addition higher interest rates and tax cuts, have sent bank stocks skyrocketing since Donald Trump’s victory.

Morgan Stanley (MS) stock has surged 26% since the election, while Goldman Sachs’s (GS) huge rally accounts for nearly one-quarter of the Dow’s post-election gains. These are just two of the big banks that would benefit from Congress defanging the Volcker Rule.

Volcker backers: Don’t forget Bear Stearns

Defenders of financial reform warn against the Volcker Rule disappearing.

“Hedge fund-like gambling should not be permitted in the banking space,” said Marcus Stanley, policy director at Americans for Financial Reform, a nonprofit coalition pushing for Wall Street accountability.

He pointed to the infamous Bear Stearns hedge fund division that imploded in 2007 after making bad bets on real estate. The failure triggered a loss of confidence and heavy losses for Bear Stearns. Less than a year, later Bear was the first Wall Street firm to collapse during the financial crisis.

“We are very concerned about the repeal or dialing back of the Volcker Rule,” said Stanley.

GOP blueprint calls for Volcker Rule repeal

If the Volcker Rule does get watered down, it would likely be part of a broader rewriting of Dodd-Frank.

The Financial Choice Act, a key bill championed by House Financial Services Chairman Jeb Hensarling, calls for repealing the Volcker Rule entirely.

Analysts say the bill wouldn’t get through Congress as currently written, but it serves as a key blueprint for efforts to rewrite Dodd-Frank.

Its success could hinge on whether Democrats are willing to negotiate. Elizabeth Warren and other champions of Wall Street reform could impede such a bill by choosing to filibuster.

Liberal groups are already signaling they will fight to keep the Volcker Rule.

The Progressive Change Campaign Committee told CNNMoney that overturning the rule would be “blatant proof that Trump favors corporate profits at the expense of American working families.”

Trump could choose not to enforce Volcker Rule

Of course, big banks wouldn’t object to getting rid of the Volcker Rule.

“We’re not specifically pushing for the elimination of it, although it’s fine if that happens,” Francis Creighton, head of Wall Street lobbying group Financial Services Roundtable, told CNNMoney.

Creighton complained that the Volcker Rule has led to “massive costs inside financial institutions that make it harder to serve customers.”

He said concerns about banks betting with their own money — a practice known as proprietary trading — have been resolved by “punishing” capital rules that make these types of trades unattractive.

“Prop trading is gone. We’re not looking for it to come back,” Creighton said.

Wells Fargo (WFC)CEO Tim Sloan specifically cited the Volcker Rule as one of many parts of financial regulation he wants Trump to dial back.

“You kind of scratch your head and say, ‘Is there really a lot of added benefit to that?” Sloan said last month.

Even if Congress doesn’t kill Dodd Frank, Trump could undermine it by picking regulators who choose not to enforce it.

“You could unravel the Volcker Rule by just downgrading enforcement of it,” said Stanley.

 CNNMoney (New York)First published January 9, 2017: 12:49 PM ET

Published at Mon, 09 Jan 2017 18:32:15 +0000

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Republican senators urge Trump to embrace findings on Russia hacking


Republican senators urge Trump to embrace findings on Russia hacking

By Ginger Gibson

Two senior Republican senators urged President-elect Donald Trump to punish Russia in response to U.S. intelligence agencies’ conclusion that President Vladimir Putin personally directed efforts aimed at influencing the outcome of the November election.

In a joint appearance on NBC’s “Meet the Press” on Sunday, Republican Senators Lindsey Graham and John McCain said evidence was conclusive that Putin sought to influence the election – a point that Trump has refuted repeatedly by arguing it might be impossible to tell who was responsible.

“In a couple weeks, Donald Trump will be the defender of the free world and democracy,” Graham said. “You should let everybody know in America, Republicans and Democrats, that you’re going to make Russia pay a price for trying to interfere.”

Both senators said they remain unsure if they will support Trump’s pick for secretary of state, former Exxon Mobil Corp (XOM.N) Chairman and CEO Rex Tillerson, who has been criticized for his close ties to Putin. The Senate Foreign Relations Committee is scheduled to hold a hearing on Wednesday to consider Tillerson’s nomination.

Three U.S. intelligence agencies released a joint report on Friday that concluded that Putin directed efforts to help Trump’s electoral chances by discrediting his Democratic rival Hillary Clinton.

Hackers penetrated the Democratic National Committee’s email server and separately stole emails from John Podesta, who chaired Clinton’s campaign. The emails were then posted online and used to embarrass Clinton, including by Trump who frequently used the content as political ammunition.

Russia was trying to undermine public faith in the democratic process, damage Clinton, making it harder for her to win and harm her presidency if she did, the unclassified report said.

McCain said he supports continued investigations into the hacks.

“We need to come to grips with it and get to the bottom of it and overall come up with a strategy in this new form of warfare that can basically harm our economy, harm our elections, harm our national security,” he said.

Trump, whose views on Russia are out of step with his party, has repeatedly dismissed claims that the Russians were trying to help him, arguing that the charges against Russia are the product of his political opponents trying to undermine his victory.

On Friday, after receiving his intelligence briefing, Trump did not squarely address whether he was told of the agencies’ belief Russia carried out the hacking.


Instead, he said: “Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organizations” including the DNC.

On Saturday, Trump wrote on Twitter that having a better relationship with Russia is a “good thing.”

“Only ‘stupid’ people or fools, would think that is bad!” he tweeted. “We have enough problems around the world without yet another one. When I am President, Russia will respect us far more than they do now and both countries will, perhaps, work together to solve some of the many great and pressing problems and issues of the WORLD!”


(Reporting by Ginger Gibson; Editing by Mary Milliken)
Published at Sun, 08 Jan 2017 14:00:00 +0000

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Older Americans at risk as Congress takes ax to Obamacare


A man sits at a health insurance enrollment event in Cudahy, California March 27, 2014.REUTERS/Lucy Nicholson

Older Americans at risk as Congress takes ax to Obamacare

By Mark Miller | CHICAGO

Anyone nearing retirement – or already retired – should pay very close attention to the doings of the 115th Congress that was sworn in this week.

Repeal of President Barack Obama’s Affordable Care Act (ACA) tops the agenda for Republicans, who will control the White House as well as both houses of Congress when Donald Trump takes office on Jan. 20. That will place a heavy financial toll on millions of older Americans who do not have access to employer-sponsored insurance or Medicaid, and who are too young to enroll in Medicare. But repeal of the ACA will also raise the cost of Medicare for current and future enrollees.

The details surrounding the repeal of what became known as Obamacare – and how it will be replaced, if at all – are unknown. But it is clear that Republicans, rather than fix the existing system’s problems, intend to gut the most important social insurance legislation since the passage of Medicare and Medicaid in 1965.

And this is despite the fact that a strong majority of Americans actually like what the ACA has brought them. Last year, 77 percent of adults in marketplace plans, and 88 percent of those who received Medicaid coverage under the ACA expansion, were either very or somewhat satisfied with their coverage, according to polling by the Commonwealth Fund, a foundation focused on healthcare research.

For older Americans, ACA repeal will mean higher premiums and out-of-pocket costs. Most Republican proposals that have been circulated loosen or eliminate restrictions on higher policy prices for older buyers. The program’s income-related tax subsidies, which aim to make premiums affordable for middle- and lower-income households, likely would be replaced by a flat tax credit that shifts costs to enrollees. Some repeal-and-replace plans also weaken the current ban on covering people with pre-existing conditions.


The ACA, enacted in 2010, typically is not considered retirement-related legislation, but it has made a big difference for millions of workers in the critical years leading up to retirement.

Despite the improving economy, many older Americans have never fully recovered from the Great Recession (reut.rs/2iIf86F). Before the ACA, it was near impossible for jobless older workers to find quality insurance in the individual insurance market. Insurers were permitted to charge much higher premiums for older customers than for young. Coverage of catastrophic health events, such as cancer or a stroke, was weak or absent entirely.

In 2013, before ACA coverage fully kicked in, 14 percent of workers aged 55-64 were uninsured. The percentage dropped to 9.1 in 2016, meaning there were 3.1 million previously uninsured people who now had health insurance. Adults in this age bracket have the lowest uninsured rates of any age group, Commonwealth reports. The foundation’s research also finds that the ACA helps people bridge coverage gaps when they temporarily lose employer-based insurance.

“If you think about what the world looked like prior to the ACA for people who had to retire early or didn’t have an employer plan, really their only option was the individual insurance market,” said Sara Collins, vice president of Commonwealth.

Repeal of the ACA would also have a direct impact on Medicare spending and costs to beneficiaries.

Full repeal would increase Medicare spending by $802 billion from 2016 through 2025, according to the Congressional Budget Office (CBO), primarily by restoring higher payments to health providers and Medicare Advantage plans. That would lead to higher Part A (hospitalization) deductibles and copayments, and higher premiums and deductibles in Part B (outpatient services).

Repeal also would worsen the long-range outlook for the Part A trust fund. Prior to the ACA, Medicare’s trustees projected the fund would lack revenue to meet all its expenses starting this year; the law’s cost savings and new taxes pushed that date back to 2028.


Congress may also take up conservative Medicare reform proposals that could hit the pocketbooks of future retirees.

Premium support, an idea long advanced by House Speaker Paul Ryan, would replace today’s defined set of promised Medicare benefits with an annual voucher that enrollees would use to buy health insurance in a market exchange. Competing plans could include traditional Medicare and plans offered by commercial insurance companies. The impact on premiums would depend on the specifics of whatever program might be enacted.

Meanwhile, conservative think tank the Heritage Foundation has proposed raising the eligibility age for Medicare from 65 to “at least 68” over a period of 10 years, and then indexing it to life expectancy. Unless they are still working, these folks would rely on whatever replaces the ACA for health insurance.

It all adds up to a period of frightening uncertainty about coverage and cost over the next few years for people close to retirement, and possible higher Medicare costs for those already in retirement.

One thing it does not sound like is a formula to make healthcare great again.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Matthew Lewis)

Published at Thu, 05 Jan 2017 14:12:59 +0000

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Obama’s Twilight Moves Against Israel May Foreshadow Move to UN Sec’y Gen

By Unsplash from Pixabay

Obama’s Twilight Moves Against Israel May Foreshadow Move to UN Sec’y Gen

By: David Haggith | Thu, Dec 29, 2016

President Obama’s UN declaration that Israeli settlements are illegal says this duck isn’t lame. It was not the finale of his closing months as president but the prologue to years ahead, pushing his legacy to where it can be carried out at the UN. Congressional leaders say Obama is already plotting further action against Israel before he leaves office, according to the Washington Free Beacon.

The Simon Wiesenthal Center put Obama’s refusal to veto the UN resolution at top of its annual list of anti-Semitic acts. The resolution (#2334) states that Israel’s settlement activity “has no legal validity and constitutes a flagrant violation under international law,” and calls for an end to all construction beyond the boundaries that existed in 1967 prior to the Six Day War.

It is highly unusual for an outgoing president to initiate a major change in diplomatic relations that runs directly opposed to the direction the incoming president has already said he will take. Trump had insisted that Obama not move the US in this direction. So, the wild ride of the 2016 presidential campaign has become even wilder after the campaign.

Secretary of State John Kerry kicked the conflict with Israel up a notch with his own speech when he said,

If the choice is one state … Israel can either be Jewish or democratic…. It cannot be both, and it won’t ever really be at peace. ~ The Washington Examiner

In defending the Obama administration against critics of it UN move, Kerry also said,

Critics “failed to recognize that this friend, the United States of America, has done more to support Israel than any other country. This friend that has blocked countless efforts to delegitimize Israel, cannot be true to our own values, or even the stated democratic values of Israel and we cannot properly protect and defend Israel if we allow a viable two-state solution to be destroyed before our own eyes.”

And then he took the battle even higher when he said,

Washington could not “protect or defend” the country should Tel Aviv continue to balk at two-state peace plans with Palestinians. His comments drew swift and sharp rebuke from Israeli Prime Minister Benjamin Netanyahu, who chided Mr. Kerry by saying Israelis did “not need to be lectured” about peace by the outgoing administration, while President-elect Donald Trump weighed in even before the speech was given with a strong support for Mr. Netanyahu and Israel, and vowing his incoming administration would take a sharply different approach. It was an … extraordinarily public division between two longtime allies, one that could have lasting and incalculable consequences for the Israeli-Palestinian conflict and Washington’s traditional role as an honest broker and the main outside power in the Middle East peace process. ~ The Washington Times

President Obama divides and conquers

Senator Chuck Schumer (D-NY) says he fears Obama’s actions have emboldened extremists on both ends. While Netanyahu is digging back with moves to withdraw diplomatic relations with nations that approved the resolution and to withdraw UN funding, and Palestinians are pushing forward with moves to force a two-state solution, Obama’s moves have initiated a diplomatic international war. The US congress, with some bipartisan support, has indicated it could cut off all UN funding in retaliation against the UN. Trump has indicated the same thing. While UN members that cut off funding lose their voting privileges, the United States is the UN’s biggest supporter, so cutting of UN funding will have serious implications at the UN if it happens.

Congress could also choose to expel diplomats of nations that backed the resolution from the US, as Israel did, which may include stripping Palestinians of diplomatic privileges. It may also be more supportive of Trump’s initiative to move the US embassy in Israel from Tel Aviv to Jerusalem.

“The disgraceful anti-Israel resolution passed by the UNSC was apparently only the opening salvo in the Obama administration’s final assault on Israel,” Sen. Ted Cruz (R., Texas) told the Free Beacon…. “President Obama … should remember that the United States Congress reconvenes on January 3rd, and under the Constitution we control the taxpayer funds they would use for their anti-Israel initiatives…,” Cruz said, expressing his desire to work with the incoming Trump administration to reset the U.S. relationship with Israel.

The Free Beacon, quoted above, also reported that one congressional member has said,

Members on both sides of the aisle are furious, so our response will be swift and forceful…. With a Trump administration in place, any nation that seeks to delegitimize the Jewish state will need to answer to the United States.

So, a powerful conflict between the US and the UN with fighting terms such as we have not seen before is likely on. Trump will find he has a congress that is ready to push back and Trump’s statements of unequivocal support for Israel and pressure on Palestinians have been clear. However, Obama may have greatly widened a split in Democrats, which traditionally have been as pro-Israel as Republicans. Even liberals like Ted Kennedy were solidly on Israel’s side at every juncture.

Our alliance with Israel is an alliance based on common democratic ideals and mutual benefit. We must never barter the freedom and future of Israel for a barrel of oil — or foolishly try to align the Arab world with us, no matter what cost. ~ Ted Kennedy

The congressional divide began to materialize when Netanyahu, in the opinion of many (to the delight of Republicans and disdain of Democrats) poked the Democratic president in the eye by sidestepping him in a unique move to take his Iranian petition of concerns directly to congress. Until Netanyahu’s highly unusual move, Israel had worked long and hard to stay out of US politics in order to do all it could to maintain bipartisan support for Israel.

As a result of Netanyahu’s agreement to accept Speaker Boehner’s speech invitation, sixty Democrats, including presidential candidate Bernie Sanders, VP candidate Tim Kaine, and  likely future presidential candidate Elizabeth Warren boycotted that congressional meeting. Senior senator Sen. Patrick Leahy from Bernie’s home state, called Netanyahu’s speech a “tawdry and high-handed stunt.” Charlie Rangel, who was was a Democratic representative from New York at the time, tweeted, “Bibi: If you have a problem with our POTUS’s foreign policy meet me at AIPAC but not on the House floor.”

Netanyahu and Obama both denied that this incident had damaged their relationship and Israel’s bipartisan support in the US, but anyone could plainly see their body language the icy barrier that had frosted its way between the two from that point forward.

Now, Obama has tapped the wedge a little deeper, knowing full well that Democrats in congress wish to oppose Trump wherever they can anyway. This may be a divide-and-conquer move that will further imperil the once fully bipartisan congressional support Israel has long enjoyed. Many, even in Israel, worried that Netanyahu had poisoned relations with the president by that move. Some in Israel now say this appears to be payback time … to the extent that the White House has formally denied that it is.

As for Trump, he tweeted, “Stay strong Israel. January 20th is fast approaching!”

The Israeli ambassador to the US responded to Trump’s various statements by saying that Israel…

was very heartened that President-Elect Trump was against this move at the UN Security Council — that he wants to work closely with Israel moving forward to strengthen this alliance….. I do not think there will be daylight between the US and Israel, and we look forward to having that conversation and seeing what we can do to reverse this resolution. ~ Fox News

Once Trump is president, backing Israel 100% is one campaign pledge he seems likely to keep. Notes, the Washington Examiner,

White evangelicals, who supply about a third of the Republican vote in presidential elections, are more than twice as likely than Jews to believe God gave Israel to the Jewish people. Only Orthodox Jews are slightly more likely to believe this.

Many liberal Jewish organizations, on the other hand, side with Obama, believing the only way for Israel to move forward at this juncture is to negotiate a two-state solution with the Palestinians. One thing is certain, cracks are deepening all over the American political landscape regarding support for Israel and how it is best shown, but Christian conservatives would like to quickly repair the growing divide in Israel’s best interest:

“Our hope at Faith and Freedom Coalition is that reasonable Democrats like Sens. Menendez, Schumer, Manchin, Casey and others will reject these feckless flailings of an expired political regime on its way out of office,” said Tim Head, executive director of a pro-Israel Christian conservative group. “These latest antics at the U.N. are little more than the waning afterglow of a setting foreign policy agenda that soon will be corrected and discarded. But it will take a unified effort by Republicans and Democrats alike to rehabilitate the global reputation of the United States.” ~ The Washington Examiner

That may prove to be a bit naive or wishful at best because Netanyahu’s approach already badly grated on Democrats, and Netanyahu has only become even outspoken against the Democratic president in the aftermath of this UN resolution. (As Schumer said, positions are becoming more extreme on both sides.)

Netanyahu’s Obamabattle

The Israelis claim they will present solid proof to the new Trump administration after the inauguration that the Obama administration took a very active role in forming the new UN Security Council resolution. Pushing the issue defiantly, Israeli Prime Minister Benjamin Netanyahu says,

We have no doubt that the Obama administration initiated it, stood behind it, coordinated its versions and insisted upon its passage.

Israel claims it has “ironclad” information from Arab sources about the Obama administration’s overt efforts to push this agenda in the UN. Reports in a couple of Middle Eastern newspapers seem to corroborate Netanyahu’s claims, according to the Times of Israel:

An Egyptian paper published what it claims are the transcripts of meetings between top US and Palestinian officials that, if true, would corroborate Israeli accusations that the Obama administration was behind last week’s UN Security Council resolution condemning Israeli settlements. At the same time, a report in an Israeli daily Tuesday night pointed to Britain helping draft the resolution and high drama in the hours leading up to the vote, as Jerusalem tried to convince New Zealand to bury the Security Council measure. In a meeting in early December with top Palestinian negotiator Saeb Erekat, US Secretary of State John Kerry told the Palestinians that the US was prepared to cooperate with the Palestinians at the Security council, Israel’s Channel 1 TV said, quoting the Egyptian Al-Youm Al-Sabea newspaper. Also present at the meeting according to the report were US National Security Adviser Susan Rice, and Majed Faraj, director of the Palestinian Authority’s General Intelligence Service. White House national security council spokesman Ned Price on Wednesday told the Times of Israel that no such meeting took place. “The ‘transcript’ is a total fabrication,” he said…. Israel fears that Kerry, who is slated to give a speech Wednesday on the subject, will then lay out his comprehensive vision for two-state solution at a Paris peace conference planned for January.

An article in the Israeli Daily Ha’aretz, however states that…

Britain Pulled the Strings and Netanyahu Warned New Zealand It Was Declaring War: A call from Netanyahu to Putin triggered a real drama at the UN HQ just one hour before the vote.

And a more recent Times of Israel report states,

UK officials have stepped up in recent days to say the resolution was theirs, not the White House’s. The Jewish Chronicle quoted an unnamed senior British political source Thursday saying that by the time the text reached the 15-member body, it was “in effect a British resolution.” A day earlier, The Guardian reported Britain “played a key behind-the-scenes role” in ensuring the resolution passed. Another British source told the Chronicle that the “yes” vote for the resolution was part of UK Prime Minister Theresa May’s new strategy toward Israel, according to which the Jewish state’s friends have to take a stand against settlements to garner favor with the Palestinians.

In response, Netanyahu has cancelled a meeting he had scheduled with Theresa May — a move which the British called in their usual understated way, “disappointing.”

As Netanyahu waits for the Trump administration to take the reins in the US before he divulges his own information about the Obama administration, Netanyahu is taking the battle to other nations. One alternative Israeli news site has given an extensive but unconfirmed report that states Vice President Biden called Ukrainian President Petro Poroshenko to put diplomatic pressure on Ukraine to vote in the security counsel for the resolution. Biden’s office acknowledges the phone call but denies that anything was said about the UN resolution.

The Ukrainian vote has set Ukrainian relations with Israel reeling. Ukraine has a large Jewish population. Even its new prime minister, Volodymyr Groysman, is Jewish, but his first official state visit with Israel next week was just cancelled by Israel.

If Israel is right that Obama intentionally rammed this resolution through the UN in his twilight days as president, Obama has effectively stripped Trump of any ability to reverse this action. Reversing it would require getting China, Russian and others on the Security Council who have long wanted something like this to withhold their own Security Council veto on any measure put forward by the US to rescind the resolution. There is almost zero chance of getting Russian AND China to backpedal on this. Obama has effectively eliminated any possibility for Trump to repair the damage this does to Israel.

Is Obama preparing to become Secretary General of the UN?

An Israeli spokesman warned that last week’s anti-Israel U.N. resolution may be only the beginning. David Keyes, spokesman for Prime Minister Benjamin Netanyahu, said his government is concerned that the Obama administration is scrambling to put its stamp on Israeli foreign policy before President-elect Donald Trump takes office…. We actually believe this may be the first of another series of pushes before the Obama administration leaves office…. Mr. Netanyahu fears that Secretary of State John Kerry may seek a Security Council resolution to enshrine the administration’s vision for an Israeli-Palestinian accord before Mr. Trump takes office. ~ The Washington Times

On January 15th seventy nations will converge in Paris to discuss the Israeli-Palestinian conflict. Kerry will be there, and there is no question that his seventy-minute speech this week set the table for his plans at that summit.

While a move by Obama to gain the Secretary General position at the UN would be a major blow to Angelina Jolie’s aspirations, I think there is evidence Obama is moving in that direction now that he has no hope of any political power as high as he has become used to.

Given how Obama’s trans-Pacific trade pact set to strip the US of sovereignty by handing many trade regulatory powers to the UN, I believe Obama was using his final months of the presidency to diminish US presidential powers and increase UN powers in order to prepare the way for a move to becoming UN Secretary General. He needed to diminish US powers while he could in order to create a more powerful international position for himself in the future.

These moves with Israel also strengthen the UN’s hand in pushing Israel further on border issues. Obama has made it clear that resolving the Israelie-Palestinian conflict is a major legacy item for him. With his days now too short in the presidency to accomplish much, he needs to push power to the UN if he is to continue working on that legacy issue. By getting this resolution passed by the Security Council now, Obama has reduced some of Trump’s veto power over what the UN can impose on Israel in the future. The resolutions, for example, strengthens the UN General Assembly’s ability to place sanctions on Israel that don’t need to go through the security council and are, therefore, not something Trump would be able to veto. They also give the UN a firm basis for taking Israel to international court at the Hague if any further settlement activity continues.

Other twilight maneuvers by Obama

Besides his actions with Israel and the UN and those upcoming meetings about Israel, Obama has by executive order locked out major areas of the Arctic for oil drilling in a move that is seen as likely irreversible by Trump because of how congress long ago wrote up the law that allows this executive action. (It would take an act of congress to override the president’s move to designate these lands as perpetually off the table for oil drilling.)

Obama is expected to expand sanctions against Russia for what Obama claims are its interference in the US presidential election. Trump can likely pull that back apart once he’s in office.

The Obama administration has dismantled the legal framework Trump could have used for vetting Muslim immigrants. (Not sure how easily Trump can reinstate that or put something better in its place.)

Trump, of course, is all atwitter about Obama’s end-of-term efforts to cut off his options:

Doing my best to disregard the many inflammatory President O statements and roadblocks. Thought it was going to be a smooth transition — NOT!

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David Haggith

David Haggith
The Great Recession Blog

David Haggith

My path to writing this blog began as a personal journey. Prior to the start of this so-called “Great Recession,” my ex-wife had a family home that was an inheritance from her mother. I worked as a property manger at the time, and near the end of 2007, I could tell from rumblings in the industry that the U.S. housing market was on the verge of catastrophic collapse. I urged her to press her brothers to sell the family home before prices dropped. The house went on the market and sold right away — and just three months before Bear-Stearns and others crashed, taking the U.S. housing market down for the tumble. Her family sold at the peak of the market.

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Recommended article: The Guardian’s Summary of Julian Assange’s Interview Went Viral and Was Completely False.
Published at Thu, 29 Dec 2016 17:34:18 +0000

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Will Trump Bring Inflation to America’s Shores?


Will Trump Bring Inflation to America’s Shores?

By: Stefan Gleason | Wed, Dec 28, 2016

Something is brewing in the economy. Since the election of Donald Trump, interest rates have spiked, copper prices have surged, and various sectors of the stock market have swung “bigly” on speculation of what “Trumponomics” will bring.

Scores of triumphant Republican commentators are already painting a bullish picture of the Trump economy. The GOP – which will control the White House, Congress, and most state governments – has a rare opportunity to implement a pro-growth agenda.

Republicans squandered their last great window of opportunity. George W. Bush and his Congressional allies grew government spending at a faster clip than the economy and saddled the country with trillions of dollars in new debt.

It’s too early to tell whether Republicans will finally get serious about fiscal responsibility. No one knows exactly how Donald Trump will govern or how the economy will perform under his presidency. But one trend that is now being signaled by markets is a pick-up in inflation.

Bonds and Base Metals Are Signaling Future Inflation

The yield on the benchmark 10-year Treasury note spiked from 1.9% on Election Day to as high as 2.5% by Christmas. For the bond market to move that far that fast is unusual. In fact, it was the sharpest yield surge in 15 years.

What may be worrying the bond market is the potential for the government’s borrowing needs to grow under the Trump presidency. Rising debt means rising credit risk and inflation risk, which means higher bond yields.

“Trumpflation is coming,” declares Forbes columnist Kenneth Rapoza.

The president-elect proposes a combination of tax cuts and spending increases that could swell the deficit. The Committee for a Responsible Federal Budget claims that Trumponomics will add $5.3 trillion to the federal debt over 10 years.

Of course, Trump disputes that figure. He says that faster rates of economic growth will add to federal revenues and pay for the tax cuts. It’s possible. But you have to be a committed optimist to believe the deficits won’t grow at all over the next four years.

At the core of Trump’s domestic spending agenda is an ambitious infrastructure program. Stocks related to building and construction have boomed since Trump’s election win. So, have the prices of palladium and copper. These economically sensitive industrial metals moved in the opposite direction of gold and silver post-election.

Inflationary and Deflationary Forces Competing with Each Other

Are rising base metals indicating rising inflation dead ahead? Or does the recent slump in gold prices suggest disinflationary pressures to come?

Let’s take a step back and consider the larger trends. Gold and silver prices still show positive gains for 2016. The recent selloff occurred as a result of a rising U.S. Dollar Index and investor optimism on the prospects for the Trump economy. Base metals tend to benefit from optimism, while precious metals tend to thrive more on pessimism.

The early stage of a rising inflationary trend tends to be associated with positive things such as rising demand for raw materials, new job creation, and increased economic output. Only later do concerns over rising price levels and rising interest rates cause investors to react fearfully and seek the protection of precious metals.

Gold and silver would also be expected to perform well when economic indicators start turning down and investors seek safe havens from cyclical assets.

Trump May Use Government to Stimulate Growth If Free Market Doesn’t

If a recession starts in the months ahead, it’s unlikely that Donald Trump would be the sort of president who takes a hands-off approach and lets the economic downturn run its course. After all, he made bold promises to the effect of being “the greatest jobs president that God ever created.”

Hypo Needle

If his grandiose job growth touts don’t materialize through the free market, expect President Trump to try to generate jobs by other means. He’ll go to Congress for new stimulus measures. He might instruct government agencies to embark on new spending and hiring spree. He could even pressure the Federal Reserve to better fulfill its “full employment” mandate by pumping out more cash into the economy.

Then there’s Trump’s trade policies. He vows to pull the U.S. out of the Trans-Pacific Partnership and raise new import tariffs. Those tariffs could well help protect U.S. manufacturing jobs. But they will also make imported goods more expensive for U.S. consumers.

Some worry the forthcoming Trump administration could pursue a high-stakes trade and currency war with China and other major exporters. Trump has repeatedly accused Beijing of being a currency manipulator. He has said in so many words that he favors a weaker dollar to make U.S.-produced products more competitive in the international marketplace.


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A weaker dollar tends to exert inflationary pressures in the economy. So far, however, the post-election trend in the dollar versus foreign currencies is up. The dollar can gain against other fiat currencies while still losing value against hard assets.

But gold bugs and “Trumpflation” forecasters will be looking for the dollar index to reverse course and confirm the other signals markets are giving for rising inflation during the Trump years ahead.

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Stefan Gleason

Stefan Gleason
Money Metals Exchange

Stefan Gleason

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

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Published at Wed, 28 Dec 2016 17:02:50 +0000

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Just how far will Trump go on China and Mexico?


America's complicated, critical trade relations with China
America’s complicated, critical trade relations with China

China and Mexico have been put on notice once again: President-elect Donald Trump’s new trade team doesn’t like how they deal with America.

Peter Navarro, the economist tapped to to lead Trump’s newly created White House Trade Council, directed a documentary titled: “Death by China: How America lost its manufacturing base.”

And Commerce Secretary nominee and hedge fund billionaire Wilbur Ross once supported TPP, or the Trans-Pacific Partnership, because he believed it would isolate China economically.

“China…could be heading for some difficulties if the Trans-Pacific Partnership gets approved,” he said in August 2015. Ross has also said negotiating a new trade deal with Mexico is a Day 1 priority for the Trump team.

The two also co-authored a paper where they called China “the biggest trade cheater in the world.”

Now, the president-elect is said to be considering a 10% tariff on all imports or changes to tax policy that could possibly level the playing field.

China and Mexico are among America’s top three trade partners (along with Canada). There’s concern that a tough stance would cause those countries to retaliate with similar measures and spark a trade war.

Remember: America imports lots of everyday items. The top imports from China this year are cell phones and laptop computers, according to Panjiva, a firm that tracks global trade data. From Mexico, it’s cars.

Some see Trump’s trade team as protectionist — putting up hurdles on other countries to shield U.S. businesses.

“They want to get rid of existing trade agreements [and] put up tariffs…Those are all protectionist moves,” says Douglas Holtz-Eakin, president of the American Action Forum, a right-leaning think tank.

A lot will depend on the details.

“If they come in with a 5% [tariff], that’s very different than 35%,” says Derek Scissors, a China expert at the American Enterprise Institute. Scissors also thinks the response from Mexico and China will depend a lot on whether the Trump team takes specific action against those nations or does something across the board on all countries.

At the end of the day, Trump wants U.S. companies to bring production and jobs back to America. Navarro and Ross appear to be considering at least two main options to accomplish that.

One involves taxes, the other tariffs. It’s unclear if Navarro and Ross would use both or just one or even explore others. Here’s an explanation of the two main options:

us china trade

Option A: Put up tariffs on other countries.

Trump’s transition team is floating the idea of a 10% across-the-board tariff on all imports from all countries, sources told CNN.

Several trade experts say tariffs would raise prices on goods in America and risk U.S. jobs that depend on trade.

However, Trump’s team emphasizes that they’re using the threat of tariffs to get better trade deals — they just haven’t said what a better deal looks like. So it’s unclear if the tariff talk is more bark than bite.

“The tariff is not an end game, it’s a strategy — a strategy to renegotiate trade deals,” Navarro told CNNMoney earlier this year. “Tariffs wouldn’t put U.S. jobs at risk.”

Option B: Use taxes to make trade fair

The other leading idea is a border adjustment tax (BAT). It’s different from a tariff, which only affects imports. The BAT affects imports and exports. But it may serve the same purpose of making trade fairer for America.

“If you think about it from a policy and objective standpoint it’s addressing a lot of the same trade issues that were brought up on the campaign trail,” says Bill Methenitis, director of global trade at tax consulting firm EY.

In its simplest form, a BAT makes it more expensive for U.S. firms to import goods and less expensive to export by giving companies a tax adjustment.

However, the U.S. imports far more than it exports and this would many of the goods on the shelves of Walmart (WMT) and Best Buy (BBY) more expensive.

But those in favor of this strategy bet that it will increase the value of the U.S. dollar because foreign companies will buy more American goods and fewer foreign goods will be sold here.

A stronger dollar will in turn make it cheaper to buy goods from overseas so it will cancel out any price increases on goods available in Walmart and Best Buy. In theory, you wouldn’t see any difference in your grocery bill.

But of course, the dollar trades in the free market and there’s no guarantee the dollar reacts that way. Some experts say the BAT won’t get passed because the World Trade Organization would oppose it.

“There would potentially be big winners and losers,” says Paul Ashworth, chief U.S. economist at Capital Economics.

 CNNMoney (New York)First published December 23, 2016: 1:28 PM ET

Published at Fri, 23 Dec 2016 18:28:34 +0000

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Heading off a housing crisis for U.S. seniors


A sign advertising a home for sale at a reduced price is shown in Pacifica, California December 31, 2008.REUTERS/Robert Galbraith

Column: Heading off a housing crisis for U.S. seniors

By Mark Miller | CHICAGO

Debates about improving America’s infrastructure typically focus on projects like bridges, roads, railroads and power grids. But with President-Elect Donald Trump calling for $1 trillion in infrastructure spending over the next 10 years, here is an item that should be added to that list: affordable housing for seniors.

By 2035, one of every three U.S. households will be headed by someone aged 65 or older, according to a new study by the Harvard Joint Center for Housing Studies (JCHS) – an increase of a whopping 66 percent to 50 million households. Households headed by people aged 80 and older will increase at the fastest rate – more than doubling to 16 million.

We are not ready for this dramatic transformation – not even close, the Harvard researchers conclude.

Wealthier people will have the means to adapt their housing to fit their needs – although signs suggest few are laying the groundwork for that. Less than 5 percent of homes have elements such as zero-step home entrances, single-floor living and wide halls and doorways that can accommodate wheelchairs, according to JCHS.

But the biggest problem will be a bulging population of low-income seniors.

The number of seniors earning less than 80 percent of their area median income will nearly double by 2035, to 27 million, according to the report. These households will face enormous challenges paying for housing and supportive services, with housing expenses sapping resources bad needed for food and healthcare.

JCHS defines any housing cost higher than 30 percent of income as a “burden,” and the number of burdened households will rise sharply over the coming two decades: by 2035, some 8.6 million people will be paying more than half their income for housing.

“Our shifting demographic outlook really brings with it a lot of housing needs that we haven’t figured out how to fill,” said Jennifer Molinsky, a senior research associate at JCHS and the report’s lead author.


Along with affordability, there will be a huge need for housing that is physically accessible as the number of older Americans with disabilities and dementia soars. Social isolation is another concern, especially as baby boomers move into their eighties and beyond. The country’s over-80 population is forecast to double by 2035 to 24 million; 70 percent of

that growth will take place after the year 2025.

The demographic trends driving these numbers have been evident for decades. But a problem that once seemed far off in the future is now on our doorstep, argues Linda Couch, director of housing policy and priorities at Leading Age, an association representing 6,000 aging services agencies. “We’re at a moment where we have to decide how we are going to address the housing needs of seniors,” she said.

The federal government provides rental assistance to low-income seniors through public housing, housing choice vouchers and subsidized affordable housing, but only a third of eligible seniors receive help due to funding problems. “The waiting lists are very long,” Couch said.

The U.S. Department of Housing and Urban Development (HUD) has a program – known as Section 202 – that funds development of rental housing for very low-income elderly households, but funding has been falling since 2008, and Congress has not appropriated any new funding for housing unit construction under the program since fiscal year 2011.


The JCHS report recommends increasing the amount of accessible housing units for disabled seniors, and creating programs to help older owners shoulder housing cost burdens, such as property taxes and utility bills. It also calls for increased subsidies to older renters, and strengthened ties between housing and delivery of community-based healthcare services.

Leading Age is calling for a major housing investment – perhaps the advocates should call it infrastructure – of $600 million in fiscal 2018. A new HUD-administered housing fund would be the initial source of dollars that could leverage tax credits and state and local resources to help fund nonprofit development for very-low income seniors.

Leading Age also advocates expansion of the existing Low-Income Housing Tax Credit, which provides dollar-for-dollar tax credits for investments in affordable housing. The group also is pushing for creation of a “special purpose voucher” that would provide rental assistance to low-income seniors.

Good ideas, all – and they should be put in motion now, before the senior housing crisis is in full bloom. Says Couch: “The challenges of an aging population are upon us – no longer in the future. How we address these needs will be a true test of our moral character.”

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Matthew Lewis)

My Trading Journal: 30 Day Trading Journal

Published at Wed, 21 Dec 2016 12:11:50 +0000

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Trump taps Exxon CEO Tillerson as top U.S. diplomat

ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo


UPDATE 2-Trump taps Exxon CEO Tillerson as top U.S. diplomat

By Steve Holland

President-elect Donald Trump announced Exxon Mobil Corp’s Rex Tillerson as his choice for secretary of state on Tuesday, praising the business leader as a successful international dealmaker who has led a global operation.

Tillerson’s experience in diplomacy stems from making deals with foreign countries for the world’s largest energy company, although questions have been raised about the oil executive’s relations with Russia.

“He will be a forceful and clear-eyed advocate for America’s vital national interests, and help reverse years of misguided foreign policies and actions that have weakened America’s security and standing in the world,” Trump said in a statement.

Tillerson said he shared Trump’s “vision for restoring the credibility of the United States’ foreign relations and advancing our country’s national security.”

Trump picked Tillerson, 64, after the Texan was backed by several Republican establishment figures including former Secretary of State James Baker, former Secretary of State Condoleezza Rice and former Defense Secretary Robert Gates, the transition official said.

Their support is seen as key to helping Tillerson get past a possibly contentious Senate confirmation battle likely to focus on his relationship with Russian President Vladimir Putin.

In 2013, Putin bestowed a Russian state honor, the Order of Friendship, on Tillerson, citing his work “strengthening cooperation in the energy sector”.

Trump judged in making the pick that Tillerson could adequately address questions about his relations with Russia, an official said.

Lawmakers from both major parties have raised questions about Tillerson and former U.N. Ambassador John Bolton, who has been mentioned as a possible No. 2 State Department official and who has voiced hawkish views on Iraq and Iran.

Separately, a source close to the transition said Trump had chosen former Texas Governor Rick Perry as his nominee for energy secretary, with an announcement expected soon. Perry met Trump on Monday at Trump Tower in New York.

Republicans and Democrats said Tillerson, who is president of Exxon Mobil Corp, would be asked about his contacts with Russia, having met Putin several times. He won fresh praise from Moscow on Monday.

Senator John McCain, a leading foreign policy voice and the 2008 Republican candidate for president, told Reuters in an interview: “I have concerns. It’s very well known that he has a very close relationship with Vladimir Putin.”

There has been controversy over the role alleged Russian cyber hacking may have had on the outcome of the Nov. 8 presidential election, in which Trump defeated Democrat Hillary Clinton.



While busily filling out his Cabinet, Trump is seeking to answer questions about how he will separate himself from his far-flung business empire before taking over the presidency on Jan. 20.

He had planned a news conference on Thursday to lay out the details but delayed it until Tuesday due to what aides said was the crush of picking people to serve in his administration.

In a series of late-night tweets on Monday, Trump said he would be leaving his business before Jan. 20 so he can focus full-time on the presidency and that he would leave his two sons, Donald Trump Jr and Eric Trump, to manage it.

He did not mention his daughter, Ivanka, who has been a central player in Trump’s business affairs and who is said to be considering a move to Washington to help her father.

“No new deals will be done during my term(s) in office,” Trump said.

He said he would hold a press conference “in the near future to discuss the business, Cabinet picks and all other topics of interest. Busy times!”

Trump chose Tillerson over 2012 Republican presidential nominee Mitt Romney, who had famously criticized Trump during the party’s fight for a nominee this year. Trump called Romney to tell him he had decided to choose someone else for the job.

“It was an honor to have been considered for secretary of state of our great country,” Romney said in a Facebook posting on Monday night.

“My discussions with President-elect Trump have been both enjoyable and enlightening. I have very high hopes that the new administration will lead the nation to greater strength, prosperity and peace.”

(Reporting by Steve Holland; Editing by Mark Heinrich)
Published at Tue, 13 Dec 2016 13:09:32 +0000

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Trump calls fighter jet costs ‘out of control’


Trump says this fighter jet is too expensive

Published at Mon, 12 Dec 2016 16:45:16 +0000

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Reckless Economists

By Fotoworkshop4You from Pixabay

Reckless Economists

By: Bob Hoye | Fri, Dec 9, 2016

The following is part of Pivotal Events that was published for our subscribers December 1, 2016.

Signs of The Times

“Dallas Mayor Admits Police Pension Pushing City Toward ‘Fan Blades Of Municipal Bankruptcy'”

“Shady real estate investments, marked down.”

– Zero Hedge, November 21.

“Investors are ditching bonds at the fastest rate in 3 years.”

– Business Insider, November 22.

“Gallup: Percent Republicans that believe that the US economy is ‘getting better’ jumped from 16% just prior to the election to 49% after the election.”

– Zero Hedge, November 24.

“Trump is meeting with an ex-bank CEO who wants to abolish the Federal Reserve and to return to the gold standard.”

– Business Insider, November 29.

“Krugman: Trump is the ‘worst man we could have made president’.”

– Business Insider, November 29.


It is uncertain if Krugman knew about the discussion of a gold standard. Possibly not, as he would have become apoplectic and unable to comment. The “ex-bank CEO” is John Allison who recently retired as president of the Cato Institute. Our comment on a convertible dollar has been that it “manages” the ambition of government. This contrasts with the long-running promotion that a committee of experts must have a fiat currency so they can “manage” the economy. In so many words, a convertible currency disciplines predatory bureaucracy.

The Republican platform in the 1980 election included the constraint and honesty of a gold standard. A serious attempt was made, but was derailed by the serious recession that began in 1981. Also, Democrats had the majority in both houses.

With their strongest position since 1928, the Republicans have a mandate for reform. That would be towards a civil service and administration bound by constitutional norms. It is almost startling to think that immigration agencies would obey their own regulations.

Other interesting news is the sharp decline in the November post on the satellite global temperature. This set a big high with the 2015-2016 El Nino and the drop is steeper than the one following the last strong El Nino in 1989. It is now plunging at the fastest pace on the 28-year record.

A few months ago, climatologist Roy Spencer updated the chart. This showed the decline needed a significant plunge to resume the 18-year flat trend. It looked a long way, but it is almost there now.

The main forces acting to restore the flat-lining trend are that the El Nino weather-event is over and the Solar Minimum, which is a climate event, continues. November 22nd and 23rd set two “zero” days, making 25 for the year. The last cyclical minimum clocked 260 “spotless” days in 2009 and 51 days in 2010.

Inspired by experts, the overbearing state needs to maintain the front of omniscience as well as the endless funding. More and more people are becoming indifferent to its climate propaganda. A cool winter could spread skepticism.

And we all know that state funding relies upon the perpetual financial bubble. The plunge in long-dated Treasuries since July is serious. The crash in Municipal bonds is worse. The bond bubble is in the early stages of a profound deflation.


We have had two reasons for the firming dollar. One is the chart pattern and the other will be debt service into New York payable in US dollars. Now, there is another reason. The Republican majority will redirect the Federal Reserve from reckless speculation to prudence. This could be disquieting to interventionist economists. They could eventually be reduced from rent-seekers to real job seekers. How many reckless economists can The New York Times hire a columnists?

On the chart, the DX needed to rise through the 20-Week ema, which was accomplished on October 1st at 95.5. At the 101 level now, there is resistance at the 102 level. Our longer-term target has been 112.

With firming commodities, the Canadian dollar has recovered from 73.59 in early November to 74.50. Getting above the 20-Week ema at 75.35 would be constructive.

Precious Metals

There are some cross-currents, which can be fun if you are a white-water kayaker. In the financial markets, it can be an intellectual challenge.

With the intent of making financial speculation perpetual, central bank recklessness became unlimited. Market distortions are without precedent and we all know about reversion to the mean. As in central bank practices. The most distorted market is that for interest rates.

Politics and finance can never be separated and history is working on a profound change. People are taking political power from the “experts” into their own hands, which is constructive. This will also involve the equivalent in finance. The confection of a national currency has been to serve the state, not the markets. On the Great Reformation, the public will “privatize” national currencies by forcing convertibility. Gold has always provided the best choice.

A complete reformation will include making the senior currency convertible into gold.

In anticipation of this, one would not buy gold or Treasuries. It will take a few years.

As part of the last Great Reformation, in 1717 Isaac Newton put England on to a bi-metallic standard. This became a simple gold standard.

In the meantime, the prospect of a firming dollar prevents us from getting excited about a possible outstanding rally for gold in US dollars. The same holds for silver, making this another ideal time to avoid fundamental studies that “prove” there is a “concerning” shortage of silver.

As noted last week, gold stocks relative to the bullion price will need to end the decline that began in early August.

Using HUI/Gold, the worst was 142 in early November. The next low was 144 and at 150 now, breaking above 155 would be constructive. Getting above the 50-Day at 163 would set the uptrend. With some technical improvement in this indicator, one could begin to accumulate gold stocks. Lightening up on the hot coal and base metal stocks would also be timely.

We had this cartoon drawn in December 2008. Emotions were so high that a newspaper editor suggested leaving our names off.

International Socialism Establishes a Puppet Government

“[Obama] issued executive orders, and his administrative state issued tens of thousands of pages of new regulations that took on the force of law. He called it ‘rule by pen and phone’.”

– Wall Street Journal, November 15, 2016.

The Forgotten Man

Obama stomping on the Constitution

The image of Obama stomping on the Constitution is compelling and was painted by Jon McNaughton in 2010.

Link to December 2, 2016 Bob Hoye interview on TalkDigitalNetwork.com: http://www.howestreet.com/2016/12/02/us-canada-post-promising-gdp-numbers/
Listen to the Bob Hoye Podcast every Friday afternoon at TalkDigitalNetwork.com

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Bob Hoye

Bob Hoye
Institutional Advisors

Bob Hoye

The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance.

Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.

Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.

Copyright © 2003-2016 Bob Hoye

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Published at Fri, 09 Dec 2016 10:55:08 +0000

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Exxon CEO is now Trump’s secretary of state favorite -transition official


ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo



ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015. REUTERS/Daniel Kramer/File Photo

Exxon CEO is now Trump’s secretary of state favorite -transition official

By Steve Holland | GRAND RAPIDS, MICH.

Exxon Mobil Corp Chief Executive Officer Rex Tillerson emerged on Friday as President-elect Donald Trump’s leading candidate for U.S. secretary of state, a senior transition official said.

Trump met Tillerson on Tuesday and may talk to him again over the weekend, the official said. Trump appears to be in the final days of deliberations over his top diplomat with an announcement possible next week.

Tillerson’s favored status was revealed as former New York Mayor Rudy Giuliani formally withdrew from consideration for secretary of state.

The transition official, who spoke on condition of anonymity, said Tillerson, 64, had moved ahead in Trump’s deliberations over 2012 Republican presidential nominee Mitt Romney, who has met Trump twice, including at a dinner in New York.

But the official said Romney was still under consideration for the job, along with John Bolton, a former U.S. ambassador to the United Nations; U.S. Senator Bob Corker of Tennessee, and retired Navy Admiral James Stavridis.

Giuliani’s withdrawal came after he was fully vetted by the Trump transition team for his overseas business ties in what was described by the Trump official as an “intense” effort by lawyers and accountants.

Giuliani, who runs a global consulting firm, was given a clean bill of health, with Trump’s aides concluding his business interests would not pose a risk to his confirmation.

Should Tillerson be nominated, his business ties, too, will come under scrutiny. Exxon Mobil has operations in more than 50 countries and boasts that it explores for oil and natural gas on six continents.

In 2011, Exxon Mobil signed a deal with Rosneft, Russia’s largest state-owned oil company, for joint oil exploration and production. Since then, the companies have formed 10 joint ventures for projects in Russia.

In 2013, Russian President Vladimir Putin awarded Tillerson his nation’s Order of Friendship.

But U.S. sanctions against Russia for its incursion into Crimea cost Exxon Mobil dearly, forcing it to scrap some projects and costing it at least $1 billion in losses. Tillerson has been a vocal critic of the sanctions.

Trump has spoken of wanting warmer relations with Moscow, which has sparked concerns in Congress that he could lift or loosen some of the sanctions on Russia.

Tillerson has been chairman and CEO of Exxon Mobil since 2006. He is expected to retire from the company next year.

Should Tillerson be nominated, climate change could be another divisive issue. The company is under investigation by the New York Attorney General’s Office for allegedly misleading investors, regulators and the public on what it knew about global warming.

(Reporting by Steve Holland and James Oliphant; Editing by Leslie Adler and Lisa Shumaker)



Published at Sat, 10 Dec 2016 01:34:14 +0000

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Trump sold stocks, but what about his hedge fund millions?


Donald Trump is Time’s Person of the Year

Trump sold stocks, but what about his hedge fund millions?


Donald Trump no longer owns any stocks.

He sold all of them in June, he says, because he was worried about conflicts of interest.

“I don’t think for me to be owning stocks when I’m making deals for this country that maybe will affect one company positively and one company negatively — I just felt it was a conflict,” Trump said Wednesday on NBC’s “Today” show.

But here’s the catch: Trump wasn’t just invested in stocks. He also had his millions invested in hedge funds. The same conflict of interest concerns apply to hedge funds as well.

The Trump transition team did not respond to CNNMoney’s repeated requests for clarification on whether Trump also sold his hedge funds.

Trump’s potential hedge fund problem

If he hasn’t sold, Trump’s decisions as president will almost certainly affect the performance of his hedge fund holdings too.

In fact, they already have. Here’s one example: According to his latest financial disclosure in May, Trump is invested in three hedge funds run by John Paulson, a major donor to his campaign and the Republican Party this year.

Paulson is famous for making a lot of money during the financial crisis. He was one of the few investors who recognized the U.S. housing market was in a major bubble. He bet that a lot of Americans wouldn’t be able to pay their mortgages — and he was right. He made billions when the rest of Wall Street and Main Street suffered huge losses, or were wiped out, in the 2008-09 crash.

But Paulson has struggled in recent years. Bloomberg reported that the Paulson Partners Fund, which Trump was invested in (and may still be), was down 22% between January through September.

However, Paulson’s fortunes may be looking up again since Trump was elected. Some of his funds have had a major uptick and he can thank Trump for that.

Two of his big investments, Fannie and Freddie stocks, are up 150% since Trump appointed Steve Mnuchin as his Treasury Secretary. One of the first things Mnuchin did after his nomination was to go on Fox Business and say, “We’ve got to get them out of government control.”

The stocks jumped. Paulson made money. So did Trump, if he still owns those hedge funds.

Paulson had bet big on Fannie (FNMA) and Freddie (FMCC)(known officially as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation). The government took control of Fannie and Freddie during the crisis. Most of the profits Fannie and Freddie receive go directly to the U.S. Treasury. But Trump’s nominee for Treasury Secretary wants to change that so that profits would flow to shareholders instead of the government.

Stocks soar 150% thanks to Trump

“Mnuchin was a business partner of Paulson’s. The connections seem really close,” says Jeff Hauser, executive director of the Revolving Door Project, a watchdog group.

Trump is planing a major announcement December 15 on what he will do with his business empire when he is sworn in as president. Whether he will discuss his hedge fund holdings isn’t clear. Typically, presidents put their investments into a blind trust that someone else controls. Or they do what President Obama did and invest only in “plain vanilla” government bonds and index funds like the S&P 500.

“Trump just needs to liquidate everything. There’s just no way to balance these things out,” says Hauser.

Verifying that Trump really did sell all his stocks is difficult. His last financial disclosure came in May 2016 — a month before Trump says he sold his stocks.

Trump isn’t required to submit another disclosure to the Office of Government Ethics until May 2018.

Back in May, Trump disclosed that he owned 100 individual company stocks, including Apple(AAPL, Tech30), Microsoft (MSFT, Tech30), Pepsi (PEP)and GE (GE). It sounds like a lot, but his stock holdings added up to a mere $10 million — a small fraction of his overall business empire that he says is worth billions.

Trump reported up to $85 million invested in hedge funds in his May disclosure, according to a CNNMoney analysis.

Here are Trump’s hedge fund holdings and the amount in each (according to his May 2016 disclosure):

1. BlackRock Obsidian Fund: $25 million to $50 million.

(BlackRock (BLK) CEO Larry Fink is one of 16 CEOs on a new economic advisory team for Trump.)

2. Paulson Credit Opportunities: $1 million to $5 million.

(John Paulson was a major campaign donor to Trump and the Republican Party in 2016.)

3. Paulson Advantage Plus: $1 million to $5 million.

4. Paulson Partners: $1 million to $5 million.

5. AG Diversified Strategies: $1 million to $5 million.

6. AG Eleven Partners: $1 million to $5 million.

7. Midocean Credit Opportunities Fund: $1 million to $5 million.

8. Advantage Advisers Xanthus Fund: $1 million to $5 million.

Trump’s total hedge fund holdings: $32 million to $85 million.

 CNNMoney (New York)First published December 8, 2016: 4:24 PM ET

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Published at Thu, 08 Dec 2016 21:24:27 +0000

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Trump’s top oilman: Dakota tribes being used by ‘fringe’


Protesters stand strong despite blizzard

Trump’s top oilman: Dakota tribes being used by ‘fringe’


Thousands of Native Americans and activists have braved blizzard conditions to protest against the building of the Dakota Access Pipeline near tribal lands.

Harold Hamm, a billionaire oilman and President-elect Donald Trump’s top energy adviser, doesn’t seem to believe the protests were authentic. He even questioned the motivations behind the efforts to stop the construction of the controversial pipeline.

“Let me tell you, they are being used, they are being taken advantage of,” Hamm said of the tribes. “I hate to see it,” he said on Thursday at the Platts Global Energy Outlook Forum in Lower Manhattan.

Hamm, a shale oil pioneer and CEO of Continental Resources (CLR), insists he doesn’t “have a dog in this hunt.” He notes that Continental “has no oil” on the Dakota Access Pipeline.

However, Continental could benefit indirectly from the pipeline because the company mainly pumps oil from the Bakken, where the Dakota Access Pipeline originates. Continental even made this point to investors in a recent presentation, noting that the price gap between its Bakken crude and more expensive forms of oil should decrease due to “increased pipeline capacity.”

Hamm didn’t shy away from expressing his support for the pipeline.

“My goodness, that’s a pipeline that is certainly needed. It brings the best, highest quality crude oil from the Bakken to the population centers,” said Hamm.

Since the summer, the Standing Rock Sioux tribe members and their allies have fought against the building of the $3.7 billion Dakota Access Pipeline.

The 1,172-mile pipeline from Energy Transfer Partners hopes to reshape the landscape of U.S. crude oil supply by transporting crude from the oil-rich Bakken Formation in North Dakota through the Midwest.

But tribal leaders argue that the pipeline, which would carry 470,000 barrels of oil a day, threatens the Standing Rock Sioux tribe’s environmental well-being and would destroy sacred tribal sites.

The Standing Rock Sioux tribe won a victory on Sunday when the U.S. Army Corps of Engineers said it would seek alternative routes for the pipeline. But the victory is tentative as Energy Transfer Partners (ETP)said it would fight to continue to build the pipeline.

North Dakota Sen. John Hoeven said in a recent statement that Trump has expressed his support for the Dakota Access Pipeline.

dakota pipeline protests

Hamm, who on Thursday shot down talk that he could be Trump’s energy secretary, said he’s been in contact with Standing Rock Sioux Tribal Chairman Dave Archambault.

“I think he sees it coming to an end,” Hamm said. “I think they realize there’s been some fringe aspects that have come to be involved that are not serving them well. That needs to come to an end.”

CNNMoney (New York)First published December 8, 2016: 5:48 PM ET

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Published at Thu, 08 Dec 2016 22:48:30 +0000

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Trump win creates ‘considerable’ uncertainty, Fed’s Dudley says


William Dudley, President of the New York Federal Reserve Bank, speaks at Brooklyn College in the Brooklyn borough of New York, March 7, 2014.REUTERS/Keith Bedford/File Photo

Trump win creates ‘considerable’ uncertainty, Fed’s Dudley says

By Jonathan Spicer | NEW YORK

The U.S. election of Donald Trump has created “considerable” uncertainty over the policies he will pursue so it is too soon for the Federal Reserve to judge whether its plan for gradual interest rate hikes needs adjusting, one of the most influential Fed policymakers said on Monday.

In a speech that stepped well into fiscal policy, including a nod to rising debt levels and a prescription for more predictable actions from Washington, New York Fed President William Dudley painted a fairly benign picture of the current U.S. economy.

He cited firming wage growth and said he expects further improvement in both the labor market and in pushing inflation a bit higher toward a Fed target of 2 percent.

“Assuming the economy stays on this trajectory, I would favor making monetary policy somewhat less accommodative over time by gradually pushing up the level of short-term interest rates,” said Dudley, a permanent voter on monetary policy and a close ally of Fed Chair Janet Yellen.

“There is still considerable uncertainty about how fiscal policy will evolve over the next few years. At this juncture, it is premature to reach firm conclusions,” he told a breakfast of the nonprofit Association for a Better New York, without mentioning the president-elect by name.

Since last month’s election of the Republican Trump as president, stocks, bond yields and the dollar have all risen. Dudley called this a “tightening” in market conditions, but not one that concerns him since it appears to be driven by expectations of more government spending that should boost the economy.

If that happens, and if the U.S. central bank, in response, raises rates more than currently expected, he said the investor reaction is “appropriate,” though he would wait to adjust monetary policy expectations as the fiscal picture becomes clearer, he added.

Trump was elected on a platform of infrastructure spending, tax cuts, cuts to government regulations, and the renegotiation or halting of international trade agreements. The election, which shocked pollsters, has only hardened already high expectations that the Fed will raise rates a quarter-percentage point to 0.5-0.75 percent on Dec. 14.

Less clear is how aggressively the central bank will continue to tighten policy next year.

Wading into the debate over what policies the Republican-controlled White House and Congress should pursue, Dudley said “monetary policy could use an assist from fiscal policy,” given low rates are unlikely to get too much higher before the next economic downturn.

It is “important that the United States retains sufficient fiscal capacity so that fiscal policy can support the economy when the next cyclical downturn does occur,” said Dudley, noting that debt service costs will nearly double over the next decade.

The Fed policymaker repeated that he backs “automatic” fiscal stabilizers like higher unemployment compensation when the jobless rate rises. It has fallen to 4.6 percent.

Dudley, a dovish member of the core Fed policymakers, said the economy is now “in reasonably good shape” and that he expects it to grow at a 1.8 percent rate or slightly more in 2017.

(Editing by Jeffrey Benkoe)

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Published at Mon, 05 Dec 2016 18:19:11 +0000

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WRAP UP 1-Trump should not spend like economy in crisis -Fed officials


St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015.REUTERS/Lucas Jackson/File Photo – RTX2TY27

WRAP UP 1-Trump should not spend like economy in crisis -Fed officials

By Howard Schneider | PHOENIX

Federal Reserve officials cautioned on Monday that the incoming Trump administration’s economic plans should not be cast as if the economy is in crisis, but instead be designed to help the economy’s long-run prospects.

The comments reflected a developing debate within the Fed over the impact of president-elect Donald Trump’s leadership of a Republican-controlled government.

Fed officials worry there is risk that overly aggressive fiscal, tax and other changes could become inflationary given the economy’s current strength.

That could force the Fed into more rapid interest rate increases and possibly raise the risk of recession. Yet there is also potential, officials feel, for well-designed tax, regulatory and infrastructure spending to boost the country’s lagging productivity.

Properly designed and executed policies to boost infrastructure, modify regulations for some industries and overhaul the tax code “may have some impact … if they are directed towards improving medium-term U.S. productivity growth,” St. Louis Fed President James Bullard said in remarks in Phoenix at a luncheon sponsored by Arizona State University.

But “these policies should not be viewed as countercyclical measures,” Bullard said. “The economy is not in recession today.”

“An infrastructure plan would be terrific, that would be good,” Chicago Federal Reserve bank president Charles Evans said in Chicago. “I think corporate tax rationalization would be a huge improvement.”

Yet he agreed: “you don’t need explicit stimulus” with the jobless rate already so low.


Fed officials are typically reluctant to give specific advice to the elected officials who set government spending and debt levels, in part to preserve their own political independence.

But in recent months they have become more voluble on the subject. They feel fiscal policy in the critical early years after the 2007-09 financial crisis was out of sync with what the country required, set too tight at a time when the country needed, and the Fed was pushing to achieve, higher growth.

Trump’s victory, coupled with the election of a Republican-controlled House and Senate, has turned that debate on its head: elected officials may be pushing to stimulate the economy at a time when the Fed is beginning to raise interest rates and sees the economy approaching full employment.

The dilemma would be resolved, Fed officials suggested, if the new administration’s policies focus on efforts that revive productivity growth, and do not amount to spending for spending’s sake.

“If you put the right public capital in place it could improve productivity and you would have a higher trend growth rate,” Bullard said in comments that have been echoed across the Fed.

In remarks in New York, Fed vice chair and New York Fed President William Dudley recommended Congress and the administration set rules that could help in the next crisis with programs that automatically boost spending in a downturn.

Such automatic stabilizers “would kick in to support incomes,” Dudley said, which “should lead workers to be less fearful about losing their jobs, and businesses to be less concerned that demand for their products might fall precipitously.”

(Additional reporting by Ann Saphir in Chicago and Jon Spicer in New York; Editing by David Chance, Paul Simao and Meredith Mazzilli)

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Published at Mon, 05 Dec 2016 20:44:49 +0000

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Donald Trump doubles down on 35% tax for businesses that ship jobs out of U.S.


Trump: Companies won’t leave U.S. ‘without consequences’

 Donald Trump doubles down on 35% tax for businesses that ship jobs out of U.S.


Fresh off saving 800 Carrier factory jobs from being off-shored to Mexico, President-elect Donald Trump is renewing his threat against companies that move their operations to foreign countries.

In a series of tweets Sunday morning, Trump pledged to lower corporate taxes across the board. But he also said he would charge a hefty 35% tax for “any business that leaves our country for another country, fires its employees, [or] builds a new factory or plant in the other country, and … sell[s] its product back into the U.S.”

Trump argued that those companies deserve “retribution.” He said businesses that want to offshore jobs have been “forewarned.”

It’s a carrot-and-stick promise that Trump has made before. But after scoring a big political victory with Carrier, the debate about how — and whether — politicians should stop U.S. companies from shifting operations across the border has kicked into high gear.

Many economists and investors optimistic about Trump’s plan focus on the “carrot” part: the potential for big tax cuts and a roll back in regulations on businesses.

Businesses have for years been urging Washington to lower its 35% corporate tax rate. Trump wants to make that rate 15%. He has also pledged to reduce regulations on several industries, most notably Wall Street and coal power.

On the other hand, some economists have expressed concern about the “stick”: Trump’s protectionist trade policies, which could hurt economic growth.

Many of the opponents of the 35% tax include conservatives, who argue that Trump is picking winners and losers.

For example, the Wall Street Journal editorial page last week railed against Trump’s tax proposal for offshorers, arguing that politicians shouldn’t interfere with companies’ business decisions to maximize their profits. When companies make good business decisions, sometimes the pain of laying off American workers is outweighed by the benefits of increasing profits, paying more in taxes and hiring more Americans in other parts of the (growing) business.

Additionally, the 35% tax would raise prices for Americans. Even if Trump imposes his promised tariff on foreign goods, the 35% tax could make foreign items more attractive.

Others have said Trump is incentivizing other companies to play a game of offshoring chicken.

To stay in the United States, Carrier received $7 million in tax breaks. Other businesses looking for similar deals might threaten to ship their jobs overseas too.

It’s also unclear how such a tax would be enforced. Carrier parent company United Technologies(UTX), for example, went forward with its plans to shift 1,300 jobs to Mexico even as it struck the deal to keep the 800 Indiana factory workers’ jobs at home.

 CNNMoney (New York)First published December 4, 2016: 9:05 AM ET
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Published at Sun, 04 Dec 2016 14:06:10 +0000

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Obama’s gift to Trump: A ‘pretty solid’ economy


Jobless rate hits lowest level since 2007

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Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton/File Photo

People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton/File Photo

Public and Private Sector Payroll Jobs: Carter, Reagan, Bush, Clinton, Bush, Obama

by Bill McBride on 12/02/2016 01:00:00 PM

 By request, here is another update of an earlier post through the November 2016 employment report including all revisions.  And, yes, I will post these graphs during the next Presidential term.
NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I’ll just stick to the beginning of each term.

Note: We frequently use Presidential terms as time markers – we could use Speaker of the House, or any other marker.

Important: There are many differences between these periods. Overall employment was smaller in the ’80s, however the participation rate was increasing in the ’80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

First, here is a table for private sector jobs. The top two private sector terms were both under President Clinton.

The third best growth for the private sector is Obama’s 2nd term.

Reagan’s 2nd term saw about the same job growth as during Carter’s term.  Note: There was a severe recession at the beginning of Reagan’s first term (when Volcker raised rates to slow inflation) and a recession near the end of Carter’s term (gas prices increased sharply and there was an oil embargo).

Term Private Sector
Jobs Added (000s)
Carter 9,041
Reagan 1 5,360
Reagan 2 9,357
GHW Bush 1,510
Clinton 1 10,884
Clinton 2 10,082
GW Bush 1 -811
GW Bush 2 415
Obama 1 1,921
Obama 2 9,4881
146 months into 2nd term: 9,901 pace.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term, and President Obama is in the final months of his second term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early ’80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Private Sector PayrollsClick on graph for larger image.

The first graph is for private employment only.

The employment recovery during Mr. G.W. Bush’s (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush’s second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush’s two terms.

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,921,000 more private sector jobs at the end of Mr. Obama’s first term.  Forty six months into Mr. Obama’s second term, there are now 11,409,000 more private sector jobs than when he initially took office.

Public Sector Payrolls A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010.

The public sector grew during Mr. Carter’s term (up 1,304,000), during Mr. Reagan’s terms (up 1,414,000), during Mr. G.H.W. Bush’s term (up 1,127,000), during Mr. Clinton’s terms (up 1,934,000), and during Mr. G.W. Bush’s terms (up 1,744,000 jobs).

However the public sector has declined significantly since Mr. Obama took office (down 334,000 jobs). This has been a significant drag on overall employment.

And a table for public sector jobs. Public sector jobs declined the most during Obama’s first term, and increased the most during Reagan’s 2nd term.

Term Public Sector
Jobs Added (000s)
Carter 1,304
Reagan 1 -24
Reagan 2 1,438
GHW Bush 1,127
Clinton 1 692
Clinton 2 1,242
GW Bush 1 900
GW Bush 2 844
Obama 1 -708
Obama 2 3741
146 months into 2nd term, 390 pace

Looking forward, I expect the economy to continue to expand through the two months of Mr. Obama’s presidency, so I don’t expect a sharp decline in private employment as happened at the end of Mr. Bush’s 2nd term (In 2005 and 2006 I was warning of a coming down turn due to the bursting of the housing bubble – and I predicted a recession in 2007).

For the public sector, the cutbacks are over.  Right now I’m expecting some further increase in public employment during the last months of Obama’s 2nd term, but obviously nothing like what happened during Reagan’s second term.

Below is a table of the top four presidential terms for total non-farm job creation.

Currently Obama’s 2nd term is on pace to be the 3rd best ever for private job creation.  However, with very few public sector jobs added, Obama’s 2nd term is only on pace to be the fifth best for total job creation.

Note: Only 374 thousand public sector jobs have been added during the forty six months of Obama’s 2nd term (following a record loss of 708 thousand public sector jobs during Obama’s 1st term).  This is about 25% of the public sector jobs added during Reagan’s 2nd term!

Top Employment Gains per Presidential Terms (000s)
Rank Term Private Public Total Non-Farm
1 Clinton 1 10,884 692 11,576
2 Clinton 2 10,082 1,242 11,312
3 Reagan 2 9,357 1,438 10,795
4 Carter 9,041 1,304 10,345
5 Obama 21 9,488 374 9,862
Pace2 9,901 390 10,291
146 Months into 2nd Term
2Current Pace for Obama’s 2nd Term

The last table shows the jobs needed per month for Obama’s 2nd term to be in the top four presidential terms. Right now it looks like Obama’s 2nd term will be the 3rd best for private employment (behind Clinton’s two terms, and ahead of Reagan) and probably 5th for total employment.

Average Jobs needed per month (000s)
for remainder of Obama’s 2nd Term
to Rank Private Total
#1 698 857
#2 297 731
#3 -66 467
#4 -224 242

Read more at http://www.calculatedriskblog.com/2016/12/public-and-private-sector-payroll-jobs.html#rca2UGtL2fzlu2g5.99

by Bill McBride on 12/02/2016 01:00:00 PM

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