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Saturday, April 29, 2017

week ending Apr 29

Another Rate Hike By June? - The probability of another rate hike for the Fed’s policy meeting in June continues to tick higher, according to futures data, but no change in rates is expected at next week’s FOMC meeting. Fed funds futures are currently pricing in a 75% probability that the central bank will lift the Fed funds futures on June 14, according to CME data as of yesterday (Apr 26). By contrast, the probability for a hike at the May 4 meeting is just 4%.From the perspective of inflation pressures, recent data suggests that the Fed isn’t behind the proverbial eight ball. Inflation has picked up a bit over the past year or so, but the latest numbers point to pricing pressure that’s still moderate. Notably, core CPI nudged lower to a 2.0% year-over-year rate in March (red line in chart below), the softest pace in over a year and in line with the Fed’s inflation target. Meanwhile, there’s minimal sign of an upside bias in the implied inflation forecast via the Treasury market, based on the yield spread between nominal and inflation-indexed securities. The 5- and 10-year maturities remain comfortably below the Fed’s 2% target at the moment.Average hourly earnings are running modestly hotter these days, which some monetary hawks say is a reason to continue squeezing policy. Wages are up 2.7% through March in year-over-year terms, close to the highest level in eight years. But the rebound follows several years of unusually low wage gains and so it’s reasonable to argue that the firmer trend reflects a normalizing process rather than a new inflation threat.The policy sensitive 2-year Treasury yield appears to agree. As of yesterday, the 2-year rate inched down to 1.28%, which is modestly below the recent high of 1.40%, based on daily data via The current inflation profile suggests that the Federal Reserve has the luxury to raise rates at a slow pace, but there may be other reasons why the central bank is eager to lift yields. Michael Boskin, an economics professor at Stanford and the former chairman of President George H. W. Bush’s Council of Economic Advisers, recently outlined the rationale: Unprecedented long-term monetary stimulus and massive spikes in public-debt burdens have left governments poorly equipped to manage the next economic downturn when – not if – it arrives. The next recession probably will not be as bad as the last one, but advanced economies will be far better prepared for it if they undergo gradual monetary-policy normalization and fiscal consolidation in the meantime.

Why shrinking the Fed balance sheet may have an easing effect --Manmohan Singh -  Federal Reserve policy makers have recently started discussing when to start gradually reducing their $4.5tn balance sheet. Minutes of their March meeting suggest “that a change to the Committee’s reinvestment policy would likely be appropriate later this year.” This is a subject that the Fed has approached cautiously, out of concern that any decision to shrink the balance sheet would be seen as a tightening of monetary policy. I argue that in fact, unwinding may not be tantamount to tightening.Why? First of all, because letting the balance sheet shrink would release “good” collateral such as US Treasury securities, while reducing the excess reserves that commercial banks keep on deposit at the Fed. These deposits came about when the Fed bought up trillions of dollars in securities in a bid to keep long-term interest rates low, a strategy known as quantitative easing. Many of the securities were bought from non-bank financial firms, (i.e., pension funds, insurers, asset managers) which stashed the proceeds at depository institutions. Those banks in turn deposited money at the Fed, where it earned interest (only banks can earn interest on excess reserves.) Non-banks are likely to reuse good collateral, rather than sizeable deposits at banks that have remained idle. As we have argued in earlier posts, there may not be a one-to-one relation between policy rate hikes and the unwinding of central bank balance sheets. New regulations instituted to make the financial system safer require banks to hold more “high quality liquid assets”. Both US Treasuries and excess reserves count as high quality liquid assets. But that’s where the similarity ends.Good collateral, when pledged, is constantly reused in a process that is similar to money creation that takes place when banks accept deposits and make loans. That is why good collateral and excess reserves are very different in their implications for market functioning. The relation between the two may not even be positive—i.e., presently, US Treasuries in the hands of the market, with reuse, is likely to lubricate markets, while excess reserves (or money) has remained idle in recent years.Increasing the availability of good collateral also creates incentives for the reuse of other, less desirable collateral. Most collateral in the markets is exchanged (for money) as a portfolio of securities, rather than as individual securities. Research suggests that at present, the collateral reuse rate is below two, on average, down from about three times before the Lehman crisis. The reuse rate is unlikely to bounce back since collateral does not flow in a vacuum but needs bank balance sheets to move. However, private sector balance sheets remain clogged by deposits, a byproduct of QE. Assuming no changes in regulations (e.g., leverage ratio), a lower level of deposits will allow collateral reuse to increase, as balance sheet space at banks becomes more available.

A conversation about the Fed’s balance sheet -  Alexandra Scaggs - The Federal Reserve must have reasons it wants to shrink its balance sheet, but officials haven’t been terribly clear about them. In fact, I wrote in the latest Weekend FT about some of the compelling arguments against reducing the size of its holdings, citing prominent academics (including Ben Bernanke!) who said it might make sense to change the balance sheet’s composition instead of its size. But rather than addressing those arguments publicly, officials have mostly just assumed it’s necessary:As the Fed pushes ahead with plans to shrink its stock of about $2.5tn of Treasuries and $1.8tn of mortgage-backed securities to “normal”, it is puzzling that officials haven’t provided a compelling case for why the move is either necessary or desirable…In fairness, Fed officials have urged caution. Boston Fed President Eric Rosengren said on Wednesday that officials should move slowly to avoid jolting markets, and should consider purchasing more securities in a downturn.But Mr Rosengren’s argument assumes the desirability of shrinking the balance sheet in the first place — without articulating much of a reason. Neither have the rest of his colleagues.More explanation from the Fed is needed — and it seems more explanation from me might be helpful, too. The best arguments against reducing the central bank’s Treasury holdings turn on details that the column didn’t have room for, and the explanation of that led to some interesting debates with readers and commenters.  So rather than boring you all with excessive sourcing, I’ve decided to present these debates as a fictionalised dialogue between an imaginary sceptical Alphaville reader and myself. If any real-life sceptical readers have questions or arguments, feel free to add them in the comments. You say the Fed shouldn’t assume that it needs to shrink its balance sheet. This idea just makes me uncomfortable. Where’s the benefit in that?  Harvard professors Robin Greenwood, Sam Hanson and Jeremy Stein say a large Fed balance sheet could promote financial stability. That’s because it could help fulfill some of the special demand for “financial claims that are safe, short-term, and liquid—i.e., claims that share many of the core attributes of traditional money”. And it would keep that demand from being directed into private-sector alternatives, which are less safe.

Merrill: "Fed to take a breather" -- The consensus view is that the Fed will hike two more times this year (probably in June and September), and then announce a changed to the balance sheet policy at the December FOMC meeting (slow down reinvestment). Merrill Lynch economists think that the Fed will move slower. A few excerpts from a Merrill Lynch note today: Fed to take a breather Fed officials have been preparing the market for a change to the balance sheet policy. This is consistent with the Fed’s larger communication strategy – slowly hint at policy changes and test the market reaction. ... In our view, the Fed is still prioritizing interest rate normalization over the balance sheet. Moreover, we think that the Fed would like to bring rates to at least a range of 1.25 – 1.50% (two more hikes) before shrinking the balance sheet. We believe it is a tall order for the Fed to deliver two more hikes and change the balance sheet policy before yearend, leaving us to argue that balance sheet reduction is a story for early 2018. Our expectation has been for the Fed to skip the June meeting and hike in September and December ... our central scenario is as follows. June: the data are not quite strong enough to pull the trigger and the Fed hints at a later date for changing the balance sheet policy. September: the Fed hikes and offers more details on the reinvestment policy. December: another hike and a formal plan for the balance sheet is released. March: they announce the change to balance sheet policy in the statement, effective April [2018]

Chicago Fed "Slower Economic Growth in March" -- From the Chicago Fed: Chicago Fed National Activity Index Points to Slower Economic Growth in March Led by slower growth in employment-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to +0.08 in March from +0.27 in February. Two of the four broad categories of indicators that make up the index decreased from February, and one category made a negative contribution to the index in March. The index’s three-month moving average, CFNAI-MA3, decreased to +0.03 in March from +0.16 in February, but remained positive for the fourth consecutive month. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.    This suggests economic activity was somewhat above the historical trend in March (using the three-month average).

Chicago Fed: Economic Growth Slowed in March - "Index Points to Slower Economic Growth in March." This is the headline for today's release of the Chicago Fed's National Activity Index, and here is the opening paragraph from the report:Led by slower growth in employment-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to +0.08 in March from +0.27 in February. Two of the four broad categories of indicators that make up the index decreased from February, and one category made a negative contribution to the index in March. The index’s three-month moving average, CFNAI-MA3, decreased to +0.03 in March from +0.16 in February, but remained positive for the fourth consecutive month. [Link to News Release] The previous two months were revised downward. The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth. The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity.

"It's All About Oil Now": Citi Charts The Biggest Risk To The Global Reflation Trade -- Despite today's surge in global equities, which may be as much driven by the France relief rally as the unwind of recent hedges, the latest attempt to reignite the reflation rally is fading as US Treasury yields have given up on much of the overnight move, following two weaker than expected "soft data" reports, the CFNAI and Dallas Fed, released earlier today. However, while today's soft data disappointed, there real reasons are to be found elsewhere. First, as Citi itself points out, discussing its own economic surprise index, Citi’s ESI has slumped and the underlying data has also turned down, and adds that in both cases, this has occurred at levels where previous post 2009 data cycles have turned over. This also goes back to the previously discussed record divergence between soft and hard data (which has been closing fast in recent days), and where the hard data is struggling to follow the lead of the stronger soft numbers, "bonds at least are still following the hard evidence."But there is another, more troubling factor when looking forward, and one which may be a far greater hindrance to the reflation trade in general as well as interest rates in particular.Recall what Eric Peters said two weeks ago: “Pretty much everything that happened in 2016 can be explained by two things; China and oil prices,” he said. “Literally, that’s it. China’s stimulus-induced rebound and the oil price recovery is all that mattered."Well, as we noted recently, the China reflation trade is now fading as a result of the collapse in China's credit impulse.Which leaves only oil in the driver seat for the future of the reflation trade. And it is here that a flashing red sign has emerged. As Citi's Jeremy Hale wrote over the weekend, "inflation indicators have also turned lower.Key industrial commodities like iron ore and copper have breached supports, Chinese inflation surprises peaked in February and our US ISI will drop sharply in April after the March CPI miss. Oil prices are holding up helped by OPEC supply restraint so far. But the correction to the overshoot in medium term break-evens relative to oil continues.

US Q1 GDP Estimates Run The Gamut Ahead Of Friday’s Report -- The probability that a recession has started is virtually nil at the moment, but it’s debatable if low macro risk will deliver robust growth in the preliminary estimate of first-quarter US GDP release that’s due on Friday. Projections are wide ranging for what the Bureau of Economic Analysis will report at the end of the week. On the low end of the spectrum is a 0.5% estimate for Q1 output via the Atlanta Fed’s GDPNow model (as of Apr. 18) – a sharp slowdown from the 2.1% increase in last year’s Q4. By contrast, the New York Fed’s 2.7% econometric estimate (Apr. 21) sees a moderate pickup in economic activity. Recent surveys of economists are roughly in the middle of those two outliers. This month’s estimate via The Wall Street Journal, for instance, calls for a 1.4% advance, based on the average forecast. The average in CNBC’s Rapid Update survey (Apr. 21) is a bit lower at 1.0%.The public’s opinion of the US economy remains upbeat, but Gallup noted recently that its US Economic Confidence Index has been dipping lately. “Economic confidence is back to where it was shortly after President Donald Trump won the election in mid-November, when the index hit +4 due to surging Republican optimism,” the survey firm reported last week, based on data for the week ending Apr. 16.Yesterday’s surge in the US stock market, however, holds out the possibility that economic sentiment will perk up again. The S&P 500 jumped more than 1% yesterday, moving close to its record high, suggesting that animal spirits may reviving. But an old debate endures, namely: Will the real economy catch up with rosy expectations? Hope springs eternal (again) in the stock market, but the latest business survey numbers from Markit Economics leaves room for doubt. The implied GDP growth rate for Q1 is expected to dip to 1.7% in Friday’s update, based on the Composite PMI, and the slide is on track to persist in Q2, based on the preliminary figures for the current quarter.

Why the GDP Report Could Make U.S. Growth Look Rosier Than It Is -- On Friday the government will release data that’s widely expected to show slow growth in U.S. output in the first quarter. Now—even before its release—there’s evidence output growth was even slower than this estimate will convey.The Commerce Department’s Bureau of Economic Analysis won’t incorporate into its growth estimates recently revised U.S. retail sales data that were made public Wednesday. Instead, these revisions will be incorporated next month, when the BEA updates its first-quarter estimates of gross domestic product, the government’s broadest measure of the economy’s output.The downward revisions to the retail-sales data suggest consumer spending was weaker in the first quarter than previously estimated. But the revisions didn’t come through soon enough to incorporate into the upcoming report. Using the new figures could subtract two-tenths of a percentage point from the “headline” figure in Friday’s GDP report, said Ben Herzon, economist with the private forecasting firm Macroeconomic Advisers. Economists polled by The Wall Street Journal are expecting 1% growth, at an annual rate, in overall GDP, based on the previous retail figures.  The old retail figures showed so-called core retail sales–which exclude autos, gasoline and building materials–grew at a 4.1% annual rate in the first quarter. The new data show core sales grew at a 3.2% rate, Mr. Herzon said. These core sales data are used to estimate consumer spending, which is a major input in the GDP report.  The Census Bureau, the BEA’s sister data-gathering agency, releases data on retail sales every month based on a limited sampling. Then, each spring, it revises the figures going back months and years, based on an annual survey and tweaks to account for seasonal factors.  Usually, that annual revision comes out just after the government’s initial estimate of first-quarter GDP. This year it came out earlier, but still too late to incorporate into the GDP report. Kyle Brown, chief of the BEA branch on consumer spending, said the agency determined it would be cutting it too close to rewrite Friday’s GDP report using the new figures. Rewriting the report based on the new figures would have increased the chance for error, he said. “Yesterday when we got the file we notified everybody and decided that we’re going to hold off with that and bring it in next month like we typically do,” Mr. Brown said. “We make a determination with each piece of data independently as to whether or not we have time to bring it in and verify the estimates and go through the whole process.”

 BEA: Real GDP increased at 0.7% Annualized Rate in Q1 --From the BEA: Gross Domestic Product: First Quarter 2017 (Advance Estimate)Real gross domestic product (GDP) increased at an annual rate of 0.7 percent in the first quarter of 2017, according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2016, real GDP increased 2.1 percent. The increase in real GDP in the first quarter reflected positive contributions from nonresidential fixed investment, exports, residential fixed investment, and personal consumption expenditures (PCE), that were offset by negative contributions from private inventory investment, state and local government spending, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased   The deceleration in real GDP in the first quarter reflected a deceleration in PCE and downturns in private inventory investment and in state and local government spending that were partly offset by an upturn in exports and accelerations in both nonresidential and residential fixed investment. The advance Q1 GDP report, with 0.7% annualized growth, was below expectations of a 1.1% increase. Personal consumption expenditures (PCE) only increased at a 0.3% annualized rate in Q1, down from 3.5% in Q4.   Residential investment (RI) increased at a 13.7% pace. Equipment investment increased at a 9.1% annualized rate, and investment in non-residential structures decreased at a 22.1% pace.

Q1 GDP Advance Estimate: Real GDP Drops to 0.7%, Disappoints Forecast - The Advance Estimate for Q1 GDP, to one decimal, came in at 0.7% (0.69% to two decimal places), a significant decrease over 2.1% in the Q4 Third Estimate and a decline from 1.4% in Q1 2016 GDP. had a consensus of 1.2%.Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 0.7 percent in the first quarter of 2017 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2016, real GDP increased 2.1 percent.The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The "second" estimate for the first quarter, based on more complete data, will be released on May 26, 2017. [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.39%.

Economy off to a slow start for 2017 - The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 0.7% annual rate in the first quarter, weak even by the post-recession average annual growth rate of 2.1% and far below the U.S. historical average of 3.1%. Nonetheless, this is consistent with another pattern we’ve seen in the recent data– the first-quarter numbers are often unusually weak. Since 2010, first-quarter real GDP growth averaged 1% at an annual rate, compared with 2.4% for the other three quarters. We get a smoother impression using year-over-year growth, which for 2017:Q1 came to 1.9%, close to the recent average.The new data caused only a slight bump up to 8.4% in our Econbrowser Recession Indicator Index. The index uses today’s release to form a picture of where the economy stood as of the end of 2017:Q4.  GDP-based recession indicator index. The plotted value for each date is based solely on information as it would have been publicly available and reported as of one quarter after the indicated date, with 2017:Q4 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index, and which were sometimes not reported until two years after the date.But a look at the individual components of GDP suggests that more is going on than the usual seasonal sluggishness. Consumption growth was very weak, and inventories were a significant drag. The latter component is particularly volatile and subject to revision.Residential fixed investment finally made the kind of positive contribution I’d been expecting. But an even bigger boost came from nonresidential fixed investment. One factor here is that oil-related investment is making a comeback with the price of oil back in the neighborhood of $50.Overall, this is consistent with the impression that while soft data such as sentiment surveys suggested that U.S. growth might be accelerating, support from hard data just doesn’t seem to be there so far. Even so, I do not see a reason to be overly alarmed by the first-quarter report.

 First-Quarter U.S. Growth – At A Glance -The U.S. economy expanded in the first quarter at a seasonally adjusted annual rate of 0.7%, the Commerce Department said Friday, the weakest performance since the opening months of 2014. Gross domestic product, a broad measure of economic output, had advanced 2.1% in the fourth quarter of 2016. The slowdown wasn’t entirely unexpected–economists had forecast a 1% pace of growth to start the year. Here’s what happened. First-quarter GDP growth frequently looks soft, a possible by-product of measurement issues. The Bureau of Economic Analysis has tried to correct the problem with seasonal adjustments but some economists believe it remains, understating growth in the first quarter and overstating it later in the year. The underlying trend, though, has been undisturbed through the latest expansion: annual growth around 2%. Compared with the same period one year earlier, GDP advanced 1.9%. Consumer confidence soared following President Donald Trump’s election, but spending hasn’t matched sentiment. Personal-consumption expenditures advanced a measly 0.3% in the first quarter, the slowest pace since the end of 2009. Consumers contributed 0.23 percentage point to the headline GDP number. The pullback may be temporary as warm weather damped demand for home heating—service spending advanced at the slowest pace in four years. Much of the weakness, however, stemmed from a drop in spending on durable goods, a reflection of plateauing auto sales. U.S. business investment has been a missing ingredient through much of the expansion. In the first quarter, nonresidential fixed investment advanced a healthy 9.4%. Spending on mining exploration, shafts and wells soared 449%, a record gain and a reflection of stabilizing commodity prices. Economists are hoping the pace of overall investment continues to lift the economy alongside corporate tax cuts and infrastructure spending promised by the Trump administration. U.S. government spending weighed on the economy in the first quarter. The sometimes volatile measure was dragged down by defense spending declining at a 4% pace. Defense is one measure the Commerce Department has struggled to smooth out with seasonal adjustments, so a quick reversal may be in order. Perhaps more troubling, state and local spending fell at a significant 1.6% pace. The housing sector offered some much-needed support for the economy in the first quarter, with residential fixed investment rising at a 13.7% pace. Home-building and sales have both picked up early in 2017 amid steady job creation and low mortgage rates. Residential investment contributed 0.5 percentage point to the quarter’s growth rate. Inventories were a drag on GDP. The change in private stockpiles lopped 0.93 percentage point from the headline number, a big hit that could easily be reversed. Inventories are a notoriously volatile number and it’s often difficult to tell if they changed because businesses slowed production or consumers increased demand.

US GDP Tumbles To Just 0.7%, Lowest In Three Years On Worst Personal Consumption Since 2009 - The Atlanta Fed was right once again, and slashing its forecast over the past 3 months today the BEA confirmed that in the first quarter US economic growth tumbled to just 0.7%, down from 2.1% in the last quarter and below the 1.0% expected, and the lowest print in three years going back all the way to Q1 2014. Broken down by components, the disappointing number reflected increases in business investment, exports, housing investment, offset by a big slowdown in consumer spending. The increase in business investment reflected increases in both structures and equipment, notably a significant increase in mining exploration, shafts, and wells.These positive contributions were offset by decreases in private inventory investment, state and local government spending, and federal government spending.The increase in exports reflected an increase in nondurable industrial supplies and materials, notably petroleum. Also on trade, imports, which are a subtraction in the calculation of GDP, increased in the first quarter of 2017But the biggest culprit was the consumer spending print, which rose at just 0.23% annualized, the lowest increase since 2009, and reflected an increase in services offset by a decrease in motor vehicles and parts. Elsewhere, looking at PCE, prices rose 2.6% Q/Q, above the 2.3% expected, and higher than last month's 2.0%. Core PCE rose 2.0%, in line with expectations. Food prices increased in the first quarter following a decrease in the fourth quarter of 2016. Energy prices increased in the first quarter of 2017 following a larger increase in the fourth quarter of 2016. Excluding food and energy, prices increased 2.3 percent in the first quarter of 2017, compared with an increase of 1.6 percent in the fourth quarter of 2016.

This Is What Americans Spent The Most Money On In The First Quarter -- As discussed earlier, it was an abysmal quarter for the US economy, pressured by what is traditionally the strongest economic driver, responsible for 70% of GDP growth: US consumer spending. At 0.23% annualized, it was the worst print going back to 2009. But that doesn't mean that Americans stopped spending completely, quite the contrary. According to the BEA's "goalseeked" models, even as retail sales tumbled, as Obamacare continued to drain disposable income away from other discretionary purchases, Americans - who spent far less on cars, clothing and housing in the first quarter than in Q4 - were scrambling to buy... recreational vehicles!? And another observation: if it wasn't for spending on RVs, consumption would have posted its first contraction since the financial crisis. Go figure.

Plunge in Election-Related Spending Dents U.S. GDP Growth: Chart - Growth in U.S. personal consumption expenditures in the first quarter of 2017 was slowest since 2009, according to figures released Friday by the Commerce Department. A big reason for that was the second-largest contraction in spending by nonprofits in 57 years of data. According to monthly consumption data through February, the drag seems to owe to a sharp decline in spending by professional advocacy groups, which always surges during U.S. presidential elections, and hit a record high in November.

Q1 GDP: Investment --First, the soft Q1 GDP data is part of a recent trend of weak first quarters, and was mostly due to weak PCE and inventory adjustment - no worries. It was pretty clear that PCE would be weak in Q1 (see two-month method). However investment was solid. The first graph below shows the contribution to GDP from residential investment, equipment and software, and nonresidential structures (3 quarter trailing average). This is important to follow because residential investment tends to lead the economy, equipment and software is generally coincident, and nonresidential structure investment trails the economy.In the graph, red is residential, green is equipment and software, and blue is investment in non-residential structures. So the usual pattern - both into and out of recessions is - red, green, blue. The dashed gray line is the contribution from the change in private inventories.Residential investment (RI) increased at a 13.7% annual rate in Q1.  Equipment investment increased at a 9.1% annual rate, and investment in non-residential structures increased at a 22.1% annual rate.On a 3 quarter trailing average basis, RI (red) is unchanged,  equipment (green) is also unchanged, and nonresidential structures (blue) is slightly positive.I'll post more on the components of non-residential investment once the supplemental data is released. I expect investment to be solid going forward, and for the economy to continue to grow.The second graph shows residential investment as a percent of GDP. Residential Investment as a percent of GDP has generally been increasing, but is only just above the bottom of the previous recessions - and I expect RI to continue to increase for the next few years. Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.  The third graph shows non-residential investment in structures, equipment and "intellectual property products".  Investment in equipment - as a percent of GDP - picked up a little.  Investment in nonresidential structures - as a percent of GDP - had been moving down due to less investment in energy and power, and is now picking up again.
Still no worries.

Quick note re GDP Q1 report: Keep your eye on the trend --Jared Bernstein -- The economy grew at a slow rate of 0.7 percent in the first quarter of this year, according to this morning’s GDP report. But that low number–headlines stressed that it’s the slowest rate in three years–should be largely discounted. The underlying trend growth rate of the economy remains a moderate, and pretty steady, 2 percent.  There’s been a problem with seasonality in Q1 data of late, and growth rates for the quarter appear to be somewhat biased down. Also, January and February were unseasonably warm, so people spent less on heating (otoh, there was more building than we’d have expected). The best way to control for this problem, as well as smooth out some of the noise in the annualized quarterly data, is to look at year-over-year trends. That way, if GDP levels in Q1s are biased down, this approach will factor that bias out (since they’ll be biased in each Q1). As you see in the figure, we’re right on trend. A few observations:

  • –Business investment growth was strong last quarter, but part of that was driven by a huge 22% (quarterly, annualized) jump in buildings, which may be a weather effect, as noted above.
  • –I’m putting consumer spending, which comprises 70% of GDP, on my watchlist. Nothing dramatic, and the 0.3% annualized rate in Q1 is not going to stick, but it has decelerated a bit of late. As I wrote earlier this month, slower job and real wage growth, the latter a function of faster inflation, looks to me to be taking a small bite out of that key component.
  • –Price growth remains quiescent. The PCE deflator, yr/yr, is up 2% and the core PCE, the Fed’s preferred gauge, is up 1.7%, where it has been for the past year.
  • –In other words, nothing in this report should lead the Fed to worry about capacity constraints creating price pressures.
  • –And, ftr, nothing in here, or anything else I’ve seen, not just today, but in my life, should lead anyone to believe that Trump’s one-pager tax “plan” will take real GDP growth from its trend growth rate of 2% to 3%. To be clear, there will be strong quarters down the road, and administration officials will say foolish things about them. But keep your eye on the trend.

Q1 Real GDP Per Capita: -0.05% Versus the 0.7% Headline Real GDP -  The Advance Estimate for Q1 GDP came in at 0.7% (0.69% to two decimals), down from 2.1% in the Third Estimate of Q4 GDP. With a per-capita adjustment, the headline number is lower at -0.05% to two decimal points.  Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED seriesPOPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale.The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 10.1% below the pre-recession trend.

ECRI Weekly Leading Index: Lowest Since Early December -  Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 143.2, down 1.0 from the previous week and the lowest since December 9th. Year-over-year the four-week moving average of the indicator is now at 7.19%, down from 7.92% the previous week. The WLI Growth indicator is now at 5.9, also down from the previous week. ECRI's latest headline article features presentation at the Levy Economics Institute’s 26th Annual Hyman P. Minsky Conference, where Lakshman Achuthan focuses on economic growth over three radically different time frames: Two millennia, the 21st century and the near-term cyclical outlook over the next couple of quarters. Read more.  Below is a chart of ECRI's smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is above where it was at the start of the last recession.

Treasury Sells $34 Billion In 5Y Paper In Ugly, Tailing Auction At Lowest Yield Since November --After yesterday's stellar 2Y auction, moments ago the Treasury sold $34 billion in 5 Year paper in what can only be described as a quite ugly auction.The high yield printed at 1.875%, which maybe because it was the lowest stop since November's 1.76%, drew far less bidside interest than yesterday's auction. It also tailed by 0.7bps to the 1.875 When Issued.The internals were just as ugly, with the Bid To Cover slumping to 2.34 from last month's 2.37 and the 6 month average of 2.45.Indirects took down 57.3%, well below the 6 month average of 63.5%, and the lowest since July 2016. With Directs expressing little interest too, it meant Dealers were stuck taking down 37.4% of the final allotment, the highest since last July. It is unclear what changed so notably in the past 24 hours, but whatever it was it appears to have spooked bidders and certainly foreign buyers.

The Story in TIC Data Is That There Is Still No (New) Story - Brad Setser - The basic constellation in the post-BoJ QQE, post-ECB QE world marked by large surpluses in Asia and Europe but not the oil-exporters has continued. Inflows from abroad have come into the U.S. corporate debt market—and foreigners have fallen back in love with U.S. Agencies. Bigly. Foreign purchases of Agencies are back at their 05-06 levels in dollar terms (as a share of GDP, they are a bit lower).And Americans are selling foreign bonds and bringing the proceeds home. The TIC data doesn’t tell us what happens once the funds are repatriated. Foreign official accounts (cough, China and Saudi Arabia, judging from the size of the fall in their reserves) have been big sellers of Treasuries over the last two years. As one would expect in a world where emerging market reserves are falling (the IMF alas has stopped breaking out emerging market and advanced economy reserves in the COFER data, but believe me! China’s reserves are down a trillion, Saudi reserves are down $200 billion, that drives the overall numbers). But the scale of their selling seems to be slowing. As one would expect given the stabilization of China’s currency, and the fall off in the pace of China’s reserve sales. Broadly speaking, I think the TIC data of the last fifteen years tells three basic stories—I am focusing on the debt side, in large part because there isn’t any story in net portfolio equity flows since the end of the .com era. The U.S. current account deficits of the last fifteen years have been debt financed. The first is the period marked by large inflows into Treasuries, Agencies, and U.S. corporate bonds: broadly from 2002 to 2007. It turns out—and you need to use the annual surveys to confirm this—that all the inflows into Treasuries and Agencies were from foreign central banks. The inflow into U.S. corporate bonds then was not. It was coming from European banks and the offshore special investment vehicles of U.S. banks. And it was mostly going into asset backed securities. The second phase was essentially marked by foreign demand for U.S. Treasuries only. That phase lasted from 2008 to roughly 2012 or 2013. A large part of that demand—the bulk of it in fact—came from foreign central banks. Reserve accumulation remained high until 2013. But the private flows—the ones that in the past had gone into the U.S. corporate debt market—went away. And the U.S. needed less financing, as its post-crisis current account deficit stayed around 3 percent of GDP. The most recent phase started in 2014. It really seems to coincide with the start of ECB QE. But broadly speaking it reflects the combined impact of ECB QE, Japanese QQE, and Fed normalization. This led to big shift in the currency composition of official bond purchases, as I’ve previously discussed; central banks basically stopped buying dollar bonds and started buying euro bonds.

Debt/GDP and growth --Jared Bernstein -- I was just on a tax panel this AM with my pal Maya MacGuineas. Maya suggested that high debt levels lead to lower economic growth.Using Richard Kogan’s data on debt as a share of GDP and real GDP/working-age person (which is closer to productivity growth than GDP growth, but seems like a relevant metric here; you get the same results with GDP/person) back to the beginning of time (1792!), here are two scatterplots.The first plots debt/GDP against this growth measure and the second plots the change in debt/GDP against the same growth measure. Both are largely random plots.To be clear, this is, of course, nothing approaching conclusive evidence that there’s no relationship between debt levels and growth. Establishing that sort of causality would require a lot more than a few scatters; you’d need control variables and a way to partial out “endogeneity,” meaning the mechanical aspects of this relationship. For example, the economy hits a bump, growth falters, and debt begins to rise, say due to offsetting, counter-cyclical fiscal policy. Then growth picks up along with higher debt levels, enforcing a positive correlation. But I do believe these figures should prevent one from asserting that public debt erodes growth in the US case. At times it may do so, and others, not. Learning more about those dynamics is what we should be doing, IMHO.

Partisan Divide Over Economic Outlook Worries Ben Bernanke -  NYTimes Ben Bernanke, former chairman of the Federal Reserve, in 2016. When the economy becomes politicized, according to Mr. Bernanke, the result is bad policy. Credit T.J. Kirkpatrick/Bloomberg Ben Bernanke is worried. The former chairman of the Federal Reserve, who can offer his thoughts freely now that he is three years out of office, is not anxious about the objective, actual state of the economy. Rather, he is worried that Democrats and Republicans view the health of our nation completely differently. To Democrats, things look dour indeed. To Republicans, things are rosy and looking better all the time. “There is this kind of partisan coloring,” Mr. Bernanke told me last week in a rare interview while on a trip to Manhattan from Washington, where he lives. “It is really striking,” he said. “The election result completely reversed people’s views of the state of the economy. Republicans who thought that we were in a dystopia now think things look great, and Democrats, the opposite. And it shows that it isn’t all based on an objective assessment of the economy.” Mr. Bernanke’s assessment is supported by recent research: A series of new surveys and polls show direct evidence that your politics increasingly define your view of the economy. Just this month, the University of Michigan’s monthly survey of consumer sentiment diverged in an unprecedented way: Republicans are convinced that the economy is surging, while Democrats are concerned about an imminent recession. To Mr. Bernanke, when the economy — as well as the basic statistics that undergird it — becomes politicized, the result is bad policy. “A lot of the emotion is not really susceptible to nuanced policy arguments,” he said, shaking his head.

Republicans hope to avert shutdown, enter the week unclear on details (CNN) House Republicans return from spring recess to a jam-packed week needing to keep the government's lights on before a Friday funding deadline and unsure if there will be time to make substantial progress on President Donald Trump's priority to repeal and replace Obamacare. "I don't think the budget's fully baked yet. ... But that will consume us next week," one Republican member told CNN on Saturday. With the spending deadline looming and pressure coming from the White House to put a legislative victory on the scoreboard in the first 100 days, House Republicans will have their hands full next week. But members say their leadership was short on specifics during a private conference call with Republican members Saturday in part because of fear that the call could be leaked. "They were short on detail, and they didn't take any questions because they said they had to assume the call was being recorded by somebody, and it would get leaked," the member said. "It was so content-free, it was embarrassing." Two lawmakers who were on the call said that the leadership's goal was to vote on the spending bill by Friday, which leaves little room for error. "The bottom line was that we hope to get approps done by Friday and are making progress," a lawmaker told CNN. "We will whip the bill next week and, if possible, vote on Friday." Another Republican said they were still confident there wouldn't be a government shutdown, but added "it's always a possibility when you are dealing with a very raucous caucus." House leaders ran the call while Energy and Commerce Chairman Greg Walden of Oregon, a key player in the health care talks, and Appropriations Chairman Rodney Frelinghuysen of New Jersey chimed in to brief the conference on their respective issues. During the brief call, which members said lasted just over 15 minutes, Speaker Paul Ryan of Wisconsin told members that while health care remains a priority and he encouraged members to continue discussions, ensuring the government is funded is central to the week's agenda. Ryan added that the Appropriations Committee has been working closely with the White House to ensure that "wherever we land will be a product the President can and will support." Given the importance of the two issues for the Republican conference, some lawmakers on the call said they were a bit put off that so little was discussed. One member said that Republicans in the conference were so widely surprised by how little was actually decided that one colleague texted him to joke: "Oh, wow, I didn't think we would get that deep in the weeds. Now my head hurts."

Trump Administration Begins Quiet Preparations For Government Shutdown - Even as Donald Trump is desperate to show to the US population, and especially his voter base, some actual achievement before his first 100 days run out next weekend, prompting him to tell AP that he will unveil a "tremendous" tax ut plan next week (recall he did the same in February), the Trump administration is quietly preparing for the possibility of a government shutdown, even though the president and his staff believe one is unlikely to occur.  With the Senate reconvening on Monday and the House of Representatives on Tuesday after a two-week recess, lawmakers will have only four days to pass a spending package to keep the government open beyond April 28, when funding expires for numerous federal programs. "I think we want to keep the government open," Trump said on Thursday, adding he thinks Congress can pass the funding legislation and perhaps also a revamped healthcare bill.Trump's wish may be problematic: as a reminder, the government will shut down midnight on April 28 if Congress cannot agree on a spending bill. As reported over the past week, the measure hit various snags over Trump's demands to include funding for Trump’s border wall and a debate over money for an ObamaCare insurer subsidy program, both programs which virtually assure the spending bill will not pass. As a result, the Office of Management and Budget (OMB) has begun to coordinate with government agencies to plan for a possible shutdown. “While we do not expect a lapse, prudence and common sense require routine assessments will be made,” OMB Director Mick Mulvaney said in a statement. The office set up a phone call to go over the agencies’ shutdown plans, which could include steps such as furloughs for federal workers.  The OMB said the plans were reviewed ahead of a possible shutdown last December and are unlikely to be revised.  To be sure, Congress can avoid a full-blown shutdown if it passes a short-term spending measure to keep the government open while negotiations over a broader funding deal continue, but even that process has been put into question."I think we're in good shape," President Trump said when asked about the possibility of a shutdown. “We remain confident we’re not going to have a shutdown,” White House press secretary Sean Spicer told reporters at a separate off-camera briefing, calling the preparation “required steps” for the federal agencies and departments

What Happens If The Government Shuts Down --Saturday, April 29, marks what may be a bittersweet anniversary for the Administration: it is President Trump's 100th day in office. It could also mark Day 1 of a government shutdown if Congress doesn't pass a spending bill authorizing funding, or if the president doesn't sign it before then. This is a risk the GOP will be eager to avoid, although in recent days chatter has again picked up as a result of Trump's insistence to add wall funding in the spending bill. Asnoted earlier today, there is virtual unanimity among Democrats to oppose any bill that budgets for a wall, and since passing a new Continuing Resolution would require 60 votes in the Senate, at least some Democratic support is needed.So while it remains at best a moderate risk factor - Goldman's latest estimate puts it at about 1-in-3 chance - the question of what happens if the government does shut down at midnight on Saturday is starting to percolate. Here are some thoughts from Citi.  First, threats of a shutdown are more common than actual shutdowns. The last one occurred in October 2013, and the one prior to that was 1995/96. Those that last have an impact on the economy. In 1995/96 the government shut down for 21 days. In 2013, for 16 days. But not all shutdowns are impactful. During the Reagan administrations, there were a total of 8 shutdowns with the maximum lasting 3 days. What happens in a shutdown?

  1. Details of which government functions stop are determined by the Office of Management and Budget.
  2. If it looks like a shutdown will occur, White House budget office works with federal agencies to determine which federal functions and employees are “essential” or "excepted." The White House has latitude in how broadly it defines "excepted."
  3. Agencies and services considered non-essential close. Federal workers will be furloughed without pay. The Federal Government employs over 4-million individuals, so this can be hundreds of thousands of workers affected. Congress may decide after the shutdown to pay them for the time off. Financial disruption is one concern.
  4. "Emergency personnel" continue to be employed, including the active duty military, federal law enforcement agents, doctors and nurses working in federal hospitals, and air traffic controllers. For the Department of Defense, at least half of the civilian workforce, and the full-time, dual-status military technicians in the US National Guard and traditional Guardsmen (those on Title 32 status) are furloughed without pay. Members of Congress continue to be paid, because their pay cannot be altered except by direct law.

 Trump's push to fund wall may be delayed as government shutdown looms | Reuters: U.S. President Donald Trump indicated an openness on Monday to delaying his push to secure funds for his promised border wall with Mexico, potentially eliminating a sticking point as lawmakers worked to avoid a looming shutdown of the federal government. Trump, in a private meeting with conservative media outlets, said he may wait until Republicans begin drafting the budget blueprint for the fiscal year that starts on Oct. 1 to seek government funds for building a wall along the U.S.-Mexico border, the White House confirmed. Trump, whose approval ratings have slid since he took office, is facing a Friday deadline for Congress to pass a spending bill funding the government through September or risk marking his 100th day in office on Saturday with a government shutdown. "Now the bipartisan and bicameral negotiators can continue working on the outstanding issues," Senate Democratic leader Chuck Schumer said in a statement on Monday night. Earlier on Monday, Schumer reiterated an assertion made last week that bipartisan negotiations in Congress were going well until the White House began demanding money for the wall as a condition for accepting a funding bill. Although Republicans control both chambers of Congress, a funding bill will need 60 votes to clear the 100-member Senate, where Republicans hold 52 seats, meaning at least some Democrats will have to get behind it. If no spending measure covering April 29 to Sept. 30 is in place before 12:01 a.m. (0401 GMT) on Saturday, government funds will halt and hundreds of thousands of the country's several million federal employees will be temporarily laid off.

Democrats open to more border security money to avoid funding standoff - Top congressional Democrats have strongly pushed back against approving any money for President Donald Trump's proposed border wall with Mexico as part of a must-pass government funding bill. At the same time, Democratic leaders restated their openness Monday to providing some money for other types of border security improvements, suggesting a possible way out of the contentious standoff. Facing a Friday deadline to keep the government open, congressional and administration negotiators are searching for ways to resolve their differences over what was a central campaign promise of Trump's. Notably, Republicans on the Hill and many top White House officials are not outright demanding that a down payment on the border wall -- which could cost tens of billions of dollars over time -- be made now. Providing some money for border security -- personnel or equipment designed to crack down on illegal crossings -- but not for the wall itself, could provide a face-saving way for both sides to end for now their dispute on the issue and could clear the way for the massive government bill to pass both chambers ahead of Friday. For instance, Treasury Secretary Steve Mnuchin speaking in the White House briefing room Monday declined to say if the President would insist on border wall funding in a final bill saying only that "the President is working hard to keep the government open and addressing various issues." And when Press Secretary Sean Spicer was asked if Trump specifically expected there to be funding for the border wall in the funding bill, he didn't lay down the gauntlet and instead replied, "I don't want to get ahead of the negotiations they are ongoing. But the President's priorities have been very clear from the beginning."

Congress scrambles to wrap up deal averting government shutdown | Reuters: The U.S. Congress moved closer to a deal to avoid a government shutdown at the stroke of midnight on Friday, as negotiators worked to clear away remaining disputes in a massive spending bill. House of Representatives Speaker Paul Ryan told reporters on Wednesday that he hoped there would be no need to pass a short, stopgap bill continuing spending at current levels and that a measure funding the government through September will instead be enacted in time for the midnight Friday deadline. "We're getting really close," Ryan, a Republican, said, adding that negotiators were "getting down to the last, final" areas of disagreement. Earlier this week, Republican President Donald Trump backed off his demand that the bill, which would spend around $1 trillion for an array of federal programs this year, include money for the "big, beautiful, powerful wall" he wants built along the U.S.-Mexican border. That signature campaign proposal is seen by most Democrats and many Republicans as an ineffective way of securing U.S. borders. The Trump administration likely will seek money for the wall in legislation funding the government for the fiscal year starting Oct. 1, but lawmakers are likely to balk again. And some Democrats, who had insisted the legislation contain guarantees that the Trump administration continue healthcare subsidies for millions of low-income people enrolled in Obamacare, no longer appear willing to slow down the legislation for this. They are banking that Trump will decide on his own to back that program, at least for now. Meanwhile, Senate Majority Leader Mitch McConnell, a Republican from the coal mining state Kentucky, threw his weight behind a plan Democrats were insisting on to make a healthcare program for coal miners permanent. It was still unclear if Ryan would go along.

Mulvaney On Latest Government Shutdown Status: "I'm Not Sure What's Happening" --Earlier this week, courtesy of Trump's latest flip-flop on the border wall, it looked as though a path had been cleared for a bi-partisan funding bill to be passed that would avert a government shutdown starting Friday night. That said, it seems that Democrats may actually be eager to force a government shutdown after all.  As budget director Mick Mulvaney explained to CNN last night, after giving in on border wall funding, something Dems defined as a critical issue to avert a shutdown, Democrats have apparently gone radio silent.  Tapper:  "And there will be an agreement, you think?" Mulvaney:  "I hope so.  Here's what concerns me.  We informed the democrats yesterday that we were not going to insist, for now, on bricks and mortar [for the border wall].  We're going to move that discussion to September of this year for fiscal year 18.  And we thought that was going to get a deal done. And we've not heard anything from them today.  So, now i'm not so sure what is happening.  I'd be curious to ask the democrats where they stand on a shutdown right now because we thought we had a deal as of yesterday."

Trump on shutdown: Obamacare subsidies can stay for now | McClatchy Washington Bureau: With barely two days to go before the federal government would run out of money, lawmakers remained at odds Wednesday over a few details, although one major sticking point between the White House and Democrats was resolved, reducing the likelihood of a shutdown on Friday. Chiefly, the White House confirmed that payments owed to health insurers under President Barack Obama’s Affordable Care Act will continue, said House Minority Leader Nancy Pelosi, D-Calif., who spoke twice Wednesday with White House Chief of Staff Reince Priebus. Trump had threatened to withhold the payments as a gambit to force Democrats to the bargaining table on a health care bill, and they hailed the retreat. Republicans are likely to need Democratic help to pass the short-term spending bill, as many conservatives have traditionally declined to vote for similar spending measures.The break came after Pelosi and White House Budget Director Mick Mulvaney clashed over the measure in a call Tuesday night, an aide familiar with the conversation said, speaking on the condition of anonymity in order to discuss negotiations. It also came after House Speaker Paul Ryan, R-Wis., said Wednesday that the spending bill wouldn’t include the Obamacare language that Democrats wanted in exchange for their support of the measure.Pelosi told Mulvaney that Democratic negotiators want the payments in the short-term spending resolution. But the aide said Mulvaney had made it clear that, absent congressional action on the measure, the administration would cease making payments. In a statement earlier in the day, Pelosi pointed out that Mulvaney was a “chief architect” of the last government shutdown. 

Dems issue shutdown threat over ObamaCare repeal vote | TheHill: House Democrats will oppose a short-term spending bill if Republican leaders attempt to expedite an ObamaCare repeal bill this week, Rep. Steny Hoyer (D-Md.) warned Thursday. Hoyer, the Democratic whip, spoke with House Majority Leader Kevin McCarthy (R-Calif.) Thursday morning to warn him of the Democrats' position. The threat is significant because GOP leaders will likely need Democratic votes to pass a short-term spending bill in the face of opposition from conservatives historically opposed to government funding bills."If Republicans announce their intention to bring their harmful TrumpCare bill to the House Floor tomorrow or Saturday, I will oppose a one-week Continuing Resolution and will advise House Democrats to oppose it as well,” Hoyer said in an email. “Republicans continue to struggle to find the votes to pass a bill that will kick 24 million Americans off their health coverage, allow discrimination against those with pre-existing conditions, and impose an age tax on older Americans. That's why they are trying to jam it through the House before their Members can hear from the American people this weekend about their opposition to this horrible legislation.” The Democrats’ move comes as bipartisan negotiators in both chambers are getting closer to an agreement on an omnibus spending bill to prevent a government shutdown. If Congress doesn’t act before midnight Friday night, much of the federal government would shut down. Republicans are eying a short-term spending bill, known as a continuing resolution or CR, to buy time for the negotiators to iron out the remaining sticking points — a temporary extension that was expected to pass easily with bipartisan support. But Republican leaders, still licking their wounds from a failed ObamaCare repeal-and-replace effort last month and hoping to get President Trump a big victory within his first 100 days, are trying to rally the GOP support for a newly released version of the healthcare overhaul. That vote could come as early as this week. 

Exclusive: 'If There's a Shutdown, There's a Shutdown,' Trump Says — President Donald Trump downplayed the severity of a potential government shutdown on Thursday, just two days shy of a deadline for Congress to reach a spending deal to avert temporary layoffs of federal workers. "We'll see what happens. If there's a shutdown, there's a shutdown," Trump told Reuters in an interview, adding that Democrats would be to blame if the federal government was left unfunded. Congress has until 12:01 a.m. ET on Saturday to pass a bill to fund the government or face a shutdown, which would temporarily lay off hundreds of thousands of federal workers. Republicans introduced a bill on Wednesday to fund government operations at current levels for one more week, giving them time to finish negotiations with Democrats on the plan for the rest of the fiscal year ending Sept. 30. Trump said a shutdown would be a "very negative thing" but that his administration was prepared if it was necessary. In a wide-ranging interview, he defended the one-page tax plan he unveiled on Wednesday from criticism that it would increase the U.S. deficit, saying better trade deals and economic growth would offset the costs. "We will do trade deals that are going to make up for a tremendous amount of the deficit. We are going to be doing trade deals that are going to be much better trade deals," Trump said. Trump also said it would be unfair to offer a debt bailout to Puerto Rico, a U.S. territory, because it was unfair to people in U.S. states. As part of the budget negotiations, Democrats have called for financial support to prop up Puerto Rico's Medicaid program covering health insurance for the poor, but many Republicans are opposed to the idea. "I don't think that's fair to the people of Iowa, and I don't think it's fair to the people of Wisconsin and Ohio and North Carolina and Pennsylvania that we should be bailing out Puerto Rico for billions and billions of dollars," Trump said. " No I don't think that's fair." 

House Passes Stopgap Spending Bill Averting Government Shutdown; Senate Next -- The US House of Representatives passed a one week stopgap spending bill to keep the government funded through next Friday, as lawmakers continue work to finish legislation that extends funding through the rest of the fiscal year. Next, the bill will go to the Senate, which is also expected to clear the vote later today, and then send it to President Trump for his signature. It remains unclear just how Dems and GOP will agree on a long-term spending bill over the next 7 days if they were unable to do so as of today, especially with Trump conceding in virtually all controversial items such as the Wall along the Mexican border. However, we do know that Democrats may now hold government hostage, passing weekly bills to ensure that Republicans do not pass some version of Obamacare repeal, although as reported earlier today, even that effort appears to be too loft for House republicans at this moment.

Government Shutdown Averted For 7 Days: Senate Passes Stopgap Spending Bill --One hour after the House of Representative passed the a stopgap spending bill in a 382-30 vote, moments ago the US Senate likewise voted the measure through; the bill which gives the government a week before this specatcle has to be repeated again unless a full spending bill is enacted, now goes to Trump for signing later today. The Senate's low-drama vote came after Senate Minority Leader Chuck Schumer (D-N.Y.) blocked a deal on passing the stopgap measure over concerns about the remaining hurdles in the larger deal.But Schumer signaled on Friday morning that Democrats were willing to back the one-week stopgap bill as they try to lock down an agreement."We’re willing to extend things for a little bit more time in hopes that the same kind of progress can continue to be made," Schumer told reporters.  Negotiators are still ironing out a final agreement even as lawmakers prepare to leave Washington until early next week. Schumer noted Friday that negotiators stayed up past 1 a.m. making a "good deal of progress." The measure will keep the government open through May 5 and give lawmakers more time to reach a larger agreement on an omnibus bill that would include funding for the rest of the fiscal year, which ends Sept. 30.  "The legislation should pass today, and it will carry us through next week so that a bipartisan final agreement can be reached and so that members will have time to review the legislation before we take it up," Senate Majority Leader Mitch McConnell (R-Ky.) said from the Senate floor, cited by The Hill.

Trump signs one-week funding bill to avoid shutdown | TheHill: President Trump has signed a stopgap spending bill to avert a government shutdown, the White House announced Friday evening. The measure funds the government through May 5, giving lawmakers more time to reach an agreement on an omnibus spending bill that would carry through the rest of the fiscal year ending Sept. 30. The legislation easily cleared both chambers earlier Friday; the Senate approved the measure by voice vote after the House voted 382-30 to pass it. If the measure had not been adopted, the government would have shutdown at midnight right as the Trump administration entered its 100th day. Republican and Democratic negotiators will need to iron out a number of wrinkles in the spending deal when they return to Washington next week, including disputes over healthcare for miners and debt assistance for Puerto Rico. Trump publicly accused Democrats of fomenting a shutdown crisis by making those demands, especially after the White House dropped its request that money for his proposed border wall be included in the measure.

Donald Trump summons entire Senate to White House briefing on North Korea -- The entire US Senate will go to the White House on Wednesday to be briefed by senior administration officials about the brewing confrontation with North Korea. The unusual briefing underlines the urgency with which the Trump administration is treating the threat posed by Pyongyang’s continuing development of nuclear weapons and missile technology. It follows a lunch meeting Trump held with ambassadors from UN member states on the security council on Monday where he emphasised US resolve to stop North Korea’s progress. “The status quo in North Korea is unacceptable and the council must be prepared to impose additional and stronger sanctions on North Korean nuclear and ballistic missile programs,” Trump said at the meeting. “North Korea is a big world problem, and it’s a problem we have to finally solve.” On Friday the US secretary of state, Rex Tillerson, is due to chair a security council foreign ministers’ meeting on the issue in New York, at which the state department said he would call once more for the full implementation of existing UN sanctions or new measures in the event of further nuclear or missile tests. A brief history of nuclear near-misses “This meeting will give the security council the opportunity to discuss ways to maximise the impact of existing security council measures and to show their resolve to response further provocations with appropriate new measures,” said Mark Toner, state department spokesman. Senators are to be briefed by the defence secretary, James Mattis, and Tillerson on Wednesday. Such briefings for the entire senate are not unprecedented but it is very rare for them to take place in the White House, which does not have large secure facilities for such classified sessions as Congress. 

Tillerson, Mattis, Coats Call North Korea "Urgent National Security Threat", Prepared To Act --Following President Trump's North Korea briefing, Secretary of State Rex Tillerson, Secretary of Defense James Mattis, and Director of National Intelligence Dan Coats have issued a joint statement making it very clear where America goes next...Past efforts have failed to halt North Korea's unlawful weapons programs and nuclear and ballistic missile tests. With each provocation, North Korea jeopardizes stability in Northeast Asia and poses a growing threat to our allies and the U.S. homeland.   North Korea's pursuit of nuclear weapons is an urgent national security threat and top foreign policy priority. Upon assuming office, President Trump ordered a thorough review of U.S. policy pertaining to the Democratic People's Republic of Korea (DPRK).Today, along with Chainnan of the Joint Chiefs of Staff Gen. Joe Dunford, we briefed members of Congress on the review. The president's approach aims to pressure North Korea into dismantling its nuclear, ballistic missile, and proliferation programs by tightening economic anctions and pursuing diplomatic measures with our allies and regional partners. We are engaging responsible members of the international community to increase pressure on he DPRK in order to convince the regime to de-escalate and return to the path of dialogue. We will maintain our close coordination and cooperation with our allies, especially the Republic of Korea and Japan, as we work together to preserve stability and prosperity in the region.

The Drumbeats Don’t Add Up to Imminent War With North Korea — President Trump summoned all 100 members of the Senate for a briefing by his war cabinet on the mounting tensions with North Korea. An American submarine loaded with Tomahawk missiles surfaced in a port in South Korea. Gas stations in the North shut down amid rumors that the government was stockpiling fuel. Americans could be forgiven for thinking that war is about to break out. But it is not. The drumbeat of bellicose threats and military muscle-flexing on both sides overstates the danger of a clash between the United States and North Korea, senior Trump administration officials and experts who have followed the Korean crisis for decades said. While Mr. Trump regards the rogue government in the North as his most pressing international problem, he told the senators he was pursuing a strategy that relied heavily on using China’s economic leverage to curb its neighbor’s provocative behavior. Recent American military moves — like deploying the submarine Michigan and the aircraft carrier Carl Vinson to the waters off the Korean Peninsula — were aimed less at preparing for a pre-emptive strike, officials said, than at discouraging the North Korean leader, Kim Jong-un, from conducting further nuclear or ballistic missile tests. “In confronting the reckless North Korean regime, it’s critical that we’re guided by a strong sense of resolve, both privately and publicly, both diplomatically and militarily,” Adm. Harry B. Harris Jr., the Pentagon’s top commander in the Pacific, told the House Armed Services Committee on Wednesday. “We want to bring Kim Jong-un to his senses,” he said, “not to his knees.” There are other signs that the tensions fall short of war. Mr. Kim continues to appear in public, most recently at a pig farm last weekend. South Koreans are not flooding supermarkets to stock up on food. There is no talk of evacuating cities and no sign the United States is deploying additional forces to South Korea. Nor is the American Embassy in Seoul advising diplomats’ families to leave the country.

U.S. says strategy on North Korea centers on sanctions, open to talks | Reuters: The Trump administration said on Wednesday it aimed to push North Korea into dismantling its nuclear and missile programs through tougher international sanctions and diplomatic pressure, and remained open to negotiations to bring that about. The U.S. stance, which appeared to signal a willingness to exhaust non-military avenues despite repeated warnings that "all options are on the table," came in a statement following an unusual White House-hosted briefing for the entire U.S. Senate followed by a briefing to the House of Representatives.The statement from Secretary of State Rex Tillerson, Defense Secretary Jim Mattis and Director of National Intelligence Dan Coats described North Korea as "an urgent national security threat and top foreign policy priority." North Korea's growing nuclear and missile threat is perhaps the most serious security challenge confronting President Donald Trump, who has vowed to prevent North Korea from being able to hit the United States with a nuclear missile - a capability experts say Pyongyang could have some time after 2020. "The President’s approach aims to pressure North Korea into dismantling its nuclear, ballistic missile, and proliferation programs by tightening economic sanctions and pursuing diplomatic measures with our allies and regional partners," the statement said. "The United States seeks stability and the peaceful denuclearization of the Korean peninsula. We remain open to negotiations towards that goal. However, we remain prepared to defend ourselves and our allies." U.S. lawmakers have been seeking a clear White House strategy following repeated North Korean missile tests and fears it could conduct a sixth nuclear bomb test. But some lawmakers on both sides went away dissatisfied. 

Trump Warns There Is A Chance Of "A Major, Major Conflict" With North Korea -- While emoting sympathy for Kim Jong Un's situation, President Trump told Reuters, during a lengthy interview ahead of his 100th day in office, that he'd "love to solve things diplomatically," but warned that "there is a chance that we could end up having a major, major conflict with North Korea." Putting a somewhat human face on the North Korean leader, President Trump had an interesting response when asked by Reuters if he considered North Korean leader Kim Jong Un to be rational..."He's 27 years old. His father dies, took over a regime. So say what you want but that is not easy, especially at that age. "I'm not giving him credit or not giving him credit, I'm just saying that's a very hard thing to do. As to whether or not he's rational, I have no opinion on it.I hope he's rational." And that is perhaps why he still holds out hope for a path that avoids the military option..."We'd love to solve things diplomatically but it's very difficult,"  Emphasizing the possibility of new sanctions, and in particular leverage from China.. "I have established a very good personal relationship with President Xi""I believe he is trying very hard. He certainly doesn’t want to see turmoil and death. He doesn’t want to see it. He is a good man. He is a very good man and I got to know him very well." Still, as Reuters notes, just a day after he and his top national security advisers briefed U.S. lawmakers  declaring North Korea "an urgent national security threat and top foreign policy priority;"  and one day before Secretary of State Rex Tillerson will press the United Nations Security Council on sanctions to further isolate Pyongyang over its nuclear and missile programs, it's clear where this could lead... "There is a chance that we could end up having a major, major conflict with North Korea. Absolutely."

Deadly Game: Donald Trump and Kim Jong Un Risk Nuclear War - SPIEGEL ONLINE: With prospects growing that North Korean dictator Kim Jong Un could soon have long-range nuclear missiles at his disposal, Donald Trump is threatening a military response. Suddenly nuclear war seems possible, but how great is the threat of escalation?Rehearsals for the apocalypse have long been underway. Every two months, always in the early afternoon, the sirens begin wailing in Seoul. Cars and buses come to a halt, civil defense officials take up their positions at busy intersections and volunteers wearing yellow armbands guide pedestrians into the nearest shelter, of which there are hundreds in the South Korean capital. The army, too, is prepared. Highways between Seoul and the border at the 38th parallel are lined with watchtowers and every few kilometers, heavy, concrete barriers hang above the road. Should war break out, explosive charges would drop the barriers onto the roadway, blocking the way to attackers. Beaches on the coast are likewise outfitted with tank traps and barbed wire -- all in an effort to protect the southern half of the Korean Peninsula from the poor yet heavily armed north. The facilities are defensive in nature, but the South Korean military also has an attack plan, abbreviated as KMPR, which stands for Korea Massive Punishment and Retaliation. The details are secret, but the first scenes of a new Korean war would look more or less as follows: Before North Korea could attack, the South would seek to eliminate its opponent's missile launch sites with cruise missiles of its own while anti-aircraft defenses would shoot down those rockets that evaded the initial strikes. Before North Korea could set its infantry in march, the plan calls for South Korean special forces to infiltrate Pyongyang and liquidate dictator Kim Jong Un. When South Korea's defense minister spoke publicly for the first time about these plans last September, it was primarily of interest to Asian military experts. Now, though, the scenarios described seem disturbingly realistic. The Korean Peninsula hasn't been this close to military conflict since 2006, the pro-Chinese government newspaper Global Times recently wrote in Beijing. From a global perspective, the situation could hardly be more sensitive. In Pyongyang, Kim Jong Un is a dictator who appears prepared to wage war to ensure his regime's survival, one which could result in hundreds of thousands, or even millions, of casualties. On the other side of the world, in Washington, D.C., sits Donald Trump, a democratically elected president who knows little about the world but who, in addition to the nuclear codes, also possesses a Twitter account that he tends to use imprudently. He has also shown, in both Syria and Afghanistan, that he isn't shy about deploying cruise missiles and massive bombs. 

Tillerson Seeks to Boost Pressure on North Korea at UN Meeting --  U.S. Secretary of State Rex Tillerson will use his first visit to the UN Security Council to try to show North Korea that the world is united against its ambition of developing nuclear weapons and the missiles capable of delivering them.But in a sign of how limited the options are for dealing with Pyongyang, no new resolution or economic sanctions are expected to be considered at the Friday meeting, which Tillerson will chair.The gathering caps a flurry of U.S. activity this week aimed at injecting urgency into resolving the threat posed by North Korea’s nuclear and missile programs, both banned under United Nations resolutions. President Donald Trump has said he’s fed up with decades of failure by U.S. presidents from both parties to stop the program. He’s called on China to rein in its neighbor and sent an aircraft carrier battle group and nuclear submarine to the region.Trump said he sees the chance of a “major, major conflict” with North Korea over its nuclear program, though he prefers a diplomatic solution, according to an interview with Reuters. In the UN meeting, Tillerson is expected to take a less bellicose posture, underscoring the difficulty of confronting an economically and politically isolated country that has the power to inflict heavy casualties on Seoul, just 35 miles (56 kilometers) south of its border.Tillerson has signaled that direct talks with North Korea could be possible -- if Pyongyang is willing to discuss steps it can take toward giving up the nuclear program it has vowed never to abandon. “North Korea’s pursuit of nuclear weapons is an urgent national security threat and top foreign policy priority,” Tillerson said Wednesday in a joint statement with Defense Secretary James Mattis and Director of National Intelligence Dan Coats. “The United States seeks stability and the peaceful denuclearization of the Korean peninsula. We remain open to negotiations towards that goal.”

Jimmy Carter asked to steer clear of North Korea rapprochement - FT - The Trump administration has privately asked Jimmy Carter, the former US president who previously served as an envoy between Washington and Pyongyang, not to attempt any rapprochement that could hurt efforts to put pressure on Kim Jong Un’s regime.  Brian Hook, a senior state department official, personally made the request to Mr Carter last weekend at the Nobel Peace Prize winner’s home in Georgia. The meeting came after the former president requested a briefing on the White House’s hardening stance towards North Korea’s nuclear programme, according to one person familiar with the nature of the talks.The meeting with Mr Carter came four days before Donald Trump took the rare step of inviting all 100 US senators to the White House for a security briefing on North Korea. The plea to Mr Carter signalled concern that the former president could complicate US policy towards Pyongyang; he has forced previous administrations to change tack, including in 1994 when Bill Clinton had been considering launching a military strike against North Korea. Tensions in the Korean peninsula remain acutely high as the US sends warships and a submarine to the area, while urging China to significantly step up pressure on Mr Kim to abandon his nuclear and missile programmes. Pyongyang has responded with bellicose rhetoric and detained a US citizen, a move some experts see as an attempt to secure a bargaining chip. Dennis Wilder, a former White House Asia adviser, said North Korea was probably trying to find a US envoy who would come to negotiate the release in what would be a propaganda coup.  “By doing so, they attempt to draw a sharp contrast between the US administration and other prominent Americans willing to talk directly with them without preconditions,” Mr Wilder said, in an indirect reference to the talks with Mr Carter.

Exclusive: Trump spurns Taiwan president's suggestion of another phone call | Reuters: U.S. President Donald Trump on Thursday spurned the Taiwanese president’s suggestion that the two leaders hold another phone call, saying he did not want to create problems for Chinese President Xi Jinping when Beijing appears to be helping efforts to rein in North Korea. In a White House interview, Trump brushed aside the idea after Taiwanese President Tsai Ing-wen told Reuters on Thursday she would not rule out talking directly again to the U.S. president, an act certain to incense China. The status of self-ruled Taiwan is possibly the most sensitive issue between Washington and Beijing. “Look, my problem is I have established a very good personal relationship with President Xi. I really feel that he is doing everything in his power to help us with a big situation,” Trump told Reuters, referring to signs that China may be working to head off any new missile or nuclear test by Pyongyang, Beijing’s neighbor and ally. “So I wouldn’t want to be causing difficulty right now for him,” Trump added. “I think he’s doing an amazing job as a leader and I wouldn’t want to do anything that comes in the way of that. So I would certainly want to speak to him first.”

Elites Are Orchestrating A Global Catastrophe: "There Are Many Things The President Does Not Know" - Following the money is always the key and crucial element to determining the “probable cause/modus operandi” regarding to globalist actions.  Although there are many who believe that President Trump is the panacea to all our problems, even they may perhaps admit that there are forces other than the President that drive our country, as well as the world.  The shadowy cabal of globalists, Bilderbergers, bankers, and other secretive organizations bent on a “union” of totalitarian control are almost too numerous to count. There are many things the President does not know.  This is intentional on the part of the moneyed interests that control the very fabric of our society.  The interests are corporate, political, and religious: a three-level tier of control over all the facets of human society.  Just as one individual person cannot “dominate” one of these sectors, the sectors themselves cannot dominate.  They are forced into a symbiotic relationship rooted in commensalism, where each of these “parasites” benefits the other two. The problem lies in the fact that these interests are elitists who believe in the forced imposition of their philosophies upon the masses.  They also believe in “culling the herd,” and maintaining a servile population at minimum levels to carry out all menial labor and industrial production (the Deltas and Epsilons of Huxley’s Brave New World) as they direct.  Patiently these elitists have been awaiting the day when their “1984” society is a reality, crafting and shaping it all along throughout the decades. The numbers of humanity pose a problem, because they cannot effectively eradicate all necessary without a large-scale plague or a war, and after such an event, the planet itself might be unsustainable. The key question for them: how to kill off about 6 to 6 ½ billion people without destroying the world? The most efficient way would be with a limited nuclear war that destroyed enough key targets to minimize postwar effectiveness of the major powers, in a manner that does not irradiate most of the warring nations.  The key to the entire equation is to take down the United States.  The EMP (Electromagnetic Pulse) is the weapon of choice.  This would paralyze all the infrastructure, leading to (as so eloquently outlined in the book “One Second After”) mass die-offs and the reduction of populations to pre-industrial societies.

Trump gives Pentagon authority to set troop levels - CNN -- President Donald Trump has delegated the authority to set official troop levels in the fight against ISIS in Iraq and Syria to Secretary of Defense James Mattis, the Pentagon said Wednesday."At the request of Secretary of Defense Mattis, the president has delegated force management authority to the secretary," Pentagon spokesman Maj. Adrian Rankine-Galloway told CNN Wednesday.A US senior defense official told CNN that the decision concerning troop levels was communicated via an internal policy memo April 20.The current deployment numbers have not been changed."This delegation of authority does not change the force management levels for Iraq and Syria," Rankine-Galloway said, adding that the move "does not portend a change in our mission in Iraq and Syria to defeat ISIS.""Our strategy remains to work by, with and through local forces and to conduct all operations in Iraq with the approval of the government of Iraq," he added.He did say the change "enables military commanders to become more agile, adaptive and efficient in supporting our partners."Troop specifications have historically served as a political marker to define the scale of US military involvement in places like Iraq, but military officials see the numbers as arbitrary, forcing military commanders to artificially split units and use contractors to meet the caps. The practice of designating personnel ceilings dates back at least to the Vietnam War, according to the Government Accountability Office. Under the Obama administration, troop levels were set by the White House. Staff were deeply involved in setting its limits compared to previous administrations, according to multiple current and former officials, and made frequent adjustments. I

The Rise of the Generals | The American Conservative- Pat Buchanan - Has President Donald Trump outsourced foreign policy to the generals? So it would seem. Candidate Trump held out his hand to Vladimir Putin. He rejected further U.S. intervention in Syria other than to smash ISIS. He spoke of getting out and staying out of the misbegotten Middle East wars into which Presidents Bush II and Obama had plunged the country. President Trump’s seeming renunciation of an anti-interventionist foreign policy is the great surprise of the first 100 days, and the most ominous. For any new war could vitiate the Trump mandate and consume his presidency. Trump no longer calls NATO “obsolete,” but moves U.S. troops toward Russia in the Baltic and eastern Balkans. Rex Tillerson, holder of Russia’s Order of Friendship, now warns that the U.S. will not lift sanctions on Russia until she gets out of Ukraine. If Tillerson is not bluffing, that would rule out any rapprochement in the Trump presidency. For neither Putin, nor any successor, could surrender Crimea and survive. What happened to the Trump of 2016? When did Kiev’s claim to Crimea become more crucial to us than a cooperative relationship with a nuclear-armed Russia? In 1991, Bush I and Secretary of State James Baker thought the very idea of Ukraine’s independence was the product of a “suicidal nationalism.” Where do we think this demonization of Putin and ostracism of Russia is going to lead? To get Xi Jinping to help with our Pyongyang problem, Trump has dropped all talk of befriending Taiwan, backed off Tillerson’s warning to Beijing to vacate its fortified reefs in the South China Sea, and held out promises of major concessions to Beijing in future trade deals.

American Imperialism Leads the World Into Dante’s Vision of Hell - Before the Tomahawk missiles start flying between Moscow and New York, Americans had better educate themselves fast about the forces and the people who claim that Russia covered up a Syrian government gas attack on its own people. Proof no longer seems to matter in the rush to further transform the world into Dante’s vision of Hell. Accusations made by anonymous sources, spurious sources and outright frauds have become enough. Washington’s paranoia and confusion bear an uncanny resemblance to the final days of the Third Reich, when the leadership in Berlin became completely unglued. Tensions have been building since fall with accusations that Russian media interfered with our presidential election and is a growing threat to America’s national security. The latest WikiLeaks release revealed the tools the CIA uses for hacking. One theory is that the CIA’s own contract hackers were behind Hillary Clinton’s email leaks and not Russians. The U.S. has a long reputation of accusing others of things they didn’t do and planting fake news stories to back it up in order to provide a cause for war. The work of secret counterintelligence services is to misinform the public in order to shape opinion, and that’s what this is. The current U.S. government campaign to slander Russia over anything and everything it does bears all the earmarks of a classic disinformation campaign, but this time is even crazier. Considering that Washington has put Russia, China and Iran on its anti-globalist hit list from which no one is allowed to escape, drummed-up charges against them shouldn’t come as a surprise. But accusing the Russians of undermining American democracy and interfering in an election is tantamount to an act of war, and that simply is not going to wash.  This time, the United States is not demonizing an ideological enemy (USSR) or a religious one (al-Qaida, ISIS, etc.). It’s making this latest venture into the blackest of propaganda a race war, the way the Nazis made their invasion of Russia a race war in 1941, and that is not a war the United States can justify or win.

Debunking Trump’s Casus Belli -- Philip Giraldi, The American Conservative -- Wars and rumors of wars have been dominating news cycles of late. No one should be surprised that there is a “former intelligence officer” subculture that is particularly noticeable in the Washington, DC, area. We stay in touch, communicate regularly, have lunches to discuss the “old days,” and sometimes organize to raise objections to some of the foreign follies pursued by the U.S. government. Though we often try to stay under the radar, making personal but discreet contact with sympathetic congressmen and journalists, we sometimes work together to get letters to the editor or articles placed in national publications. More rarely we appear on television or radio to discuss our own perspectives on current events.There is an additional element that helps shape our perceptions—namely, that many of us are in contact with friends who are still in harness with the Intelligence Community or who are working as post-retirement contractors. Though current employees generally are highly cautious about what they are doing, and we are acutely aware that it is not a good idea to ask anything specific, frustration over specific governmental policies and actions is occasionally vented.Recently, with the cruise missile attacks on a Syrian airfield, there has been a considerable loosening of the normal restraints that employees exercise regarding their duties. Even more than the invasion of Iraq, which was viewed skeptically by many in the community, the decision by President Trump to retaliate with force against Damascus has been met with dismay among many of those closest to the action in the Middle East.  Many officers have expressed frustration and anger over what has taken place—not to challenge national-security policy, which they leave up to the politicians, but because they are perceiving a tissue of lies, as in Iraq. They have expressed their concerns in very specific ways to former fellow officers and friends. For the first time, people on the inside of the process are really talking. And we have been listening, astonished at the level of anger.

The Rise of the Generals -- Pat Buchanan, The American Conservative- - Has President Donald Trump outsourced foreign policy to the generals? So it would seem. Candidate Trump held out his hand to Vladimir Putin. He rejected further U.S. intervention in Syria other than to smash ISIS. He spoke of getting out and staying out of the misbegotten Middle East wars into which Presidents Bush II and Obama had plunged the country. President Trump’s seeming renunciation of an anti-interventionist foreign policy is the great surprise of the first 100 days, and the most ominous. For any new war could vitiate the Trump mandate and consume his presidency. Trump no longer calls NATO “obsolete,” but moves U.S. troops toward Russia in the Baltic and eastern Balkans. Rex Tillerson, holder of Russia’s Order of Friendship, now warns that the U.S. will not lift sanctions on Russia until she gets out of Ukraine. If Tillerson is not bluffing, that would rule out any rapprochement in the Trump presidency. For neither Putin, nor any successor, could surrender Crimea and survive. What happened to the Trump of 2016? When did Kiev’s claim to Crimea become more crucial to us than a cooperative relationship with a nuclear-armed Russia? In 1991, Bush I and Secretary of State James Baker thought the very idea of Ukraine’s independence was the product of a “suicidal nationalism.” Where do we think this demonization of Putin and ostracism of Russia is going to lead? To get Xi Jinping to help with our Pyongyang problem, Trump has dropped all talk of befriending Taiwan, backed off Tillerson’s warning to Beijing to vacate its fortified reefs in the South China Sea, and held out promises of major concessions to Beijing in future trade deals.

Trump: I said NATO was obsolete 'not knowing much about NATO' - President Donald Trump says he referred to NATO as "obsolete" during his presidential campaign because he didn't know "much" about the organization at the time since he was new to politics. Trump recalled in an interview with the Associated Press on Friday that when he was first asked about the North Atlantic Treaty Organization by CNN's Wolf Blitzer, he was caught off guard because he "wasn't in government" so never had to learn about the US-led defense alliance. "People don't go around asking about NATO if I'm building a building in Manhattan, right?" Trump said, according to the AP's transcript. "So they asked me, Wolf ... asked me about NATO, and I said two things. NATO's obsolete — not knowing much about NATO, now I know a lot about NATO — NATO is obsolete, and I said, 'And the reason it's obsolete is because of the fact they don't focus on terrorism.' You know, back when they did NATO there was no such thing as terrorism." Trump reiterated that NATO was "obsolete" in January, in an interview conducted with the Times of London and Bild newspapers published just three days before he took office. That interview prompted an immediate reaction from German Chancellor Angela Merkel, who told reporters in Berlin that Europeans had "our destiny in our own hands."  "I will continue to work to ensure that the 27 member states work together effectively and, above all, in a forward-looking way," she said, adding that Trump's positions had "been known for a while."

Donald Trump’s first 100 days: The madder he gets, the more seriously the world takes him --  The more dangerous America’s crackpot President becomes, the saner the world believes him to be. Just look back at the initial half of his first 100 days: the crazed tweeting, the lies, the fantasies and self-regard of this misogynist leader of the Western world appalled all of us. But the moment he went to war in Yemen, fired missiles at Syria and bombed Afghanistan, even the US media Trump had so ferociously condemned began to treat him with respect. And so did the rest of the world. It’s one thing to have a lunatic in the White House who watches late night television and tweets all day. But when the same lunatic goes to war, it now emerges, he’s a safer bet for democracy, a strong President who stands up to tyrants (unless they happen to be Saudis, Turks or Egyptians) and who acts out of human emotion rather than cynicism. How else can one account for the extraordinary report in The New York Times which recorded how Trump’s “anguish” at the film of dying Syrian babies had led him to abandon “isolationism”? Americans like action, but have typically confused Trump’s infantile trigger finger with mature decision-making. What else is there to think when a normally sane US columnist like David Ignatius suddenly compares Trump to Harry Truman and praises his demented President for his “flexibility” and “pragmatism”? This is preposterous. A madman who goofs off at something he doesn’t like on CNN is just plain wacky. A man of unsound mind who attacks three Muslim countries – two of which were included in his seven Muslim nation refugee ban – is a danger to the world. Yet the moment he fires 59 missiles at Syria after more than 60 civilians die in an apparent chemical attack which he blames on Assad – but none after far more are massacred by a Syrian suicide bomber – even Angela Merkel takes leave of her senses and praises Trump, along with the Matron of Downing Street, Signora Mogherini and sundry other potentates. Hasn’t someone cottoned on to the fact that Trump is now taking America into a shooting war?

Donald Trump has ‘dangerous mental illness’, say psychiatry experts at Yale conference -- Donald Trump has a “dangerous mental illness” and is not fit to lead the US, a group of psychiatrists has warned during a conference at Yale University. Mental health experts claimed the President was “paranoid and delusional”, and said it was their “ethical responsibility” to warn the American public about the “dangers” Mr Trump’s psychological state poses to the country.  Speaking at the conference at Yale’s School of Medicine on Thursday, one of the mental health professionals, Dr John Gartner, a practising psychotherapist who advised psychiatric residents at Johns Hopkins University Medical School, said: “We have an ethical responsibility to warn the public about Donald Trump's dangerous mental illness.” Dr Gartner, who is also a founding member of Duty to Warn, an organisation of several dozen mental health professionals who think Mr Trump is mentally unfit to be president, said the President's statement about having the largest crowd at an inauguration was just one of many that served as warnings of a larger problem.“Worse than just being a liar or a narcissist, in addition he is paranoid, delusional and grandiose thinking and he proved that to the country the first day he was President. If Donald Trump really believes he had the largest crowd size in history, that’s delusional,” he added.Chairing the event, Dr Bandy Lee, assistant clinical professor in the Yale Department of Psychiatry, said: “As some prominent psychiatrists have noted, [Trump’s mental health] is the elephant in the room. I think the public is really starting to catch on and widely talk about this now.”

Trump on presidency: 'I thought it would be easier' | TheHill:  LISTEN: Trump talks to @Reuters about missing his old life and how he thought his new job would be easier. — Reuters Top News (@Reuters) April 28, 2017 President Trump reflected Thursday on life inside the White House, remarking that he thought being president would be easier compared to his past business experience. "I loved my previous life. I had so many things going," Trump said during an interview with Reuters. "This is more work than in my previous life. I thought it would be easier."Trump remarked to Reuters about the "little cocoon" that comes with security surrounding a president, lamenting "I like to drive ... I can't drive anymore." 

Senate Democrats Discuss Doubling Down on Losing Strategy of Suing Trump on Emoluments - naked capitalism, Jerri-lynn Scofield - You can virtually always rely on certain Democrats to double down on a losing strategy: in this case, dreaming up grounds for another doomed lawsuit against Trump for violating the U.S. Constitution’s emoluments clause.The Hill reported yesterday:Senate Democrats are exploring a lawsuit against President Trump on the grounds that his vast business empire has created conflicts of interest that violate the Constitution.Now, regular readers are well aware of the conflicts between Trump’s business holdings and the emoluments clause of the U.S. Constitution, which I discussed in two previous posts, US Constitution’s Emoluments Clause: a Nothingburger for Trump (December) and Law Profs Sue Trump, Alleging Violation of the Emoluments Clause (January).To recap briefly, the emoluments clause– found in Article 1, Section 9 of the Constitution– of that document says: No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.Indeed, as I first wrote in December,  “The clause, on its face, appears to pose a real problem for President Trump, whose companies continue to do business with foreign governments or entities controlled by them.”And again, permit me to repeat myself :  “Just because something’s unconstitutional, doesn’t mean that any such unconstitutional activity will necessarily be prevented, precluded, or punished.”Why? Well, the short answer is that the Constitution is quite specific in outlining remedies for violations.  In the case of the emoluments clause, the remedy would be impeachment.  In my December post, I discussed the basics of impeachment, because at that time, many otherwise sane and sensible people were suggesting that was a real possibility– despite the majorities Republicans hold in both houses of Congress.Now, I haven’t made any scientific survey of where opinion stands on the likelihood of impeachment, but it seems to me that calls for same have diminished as it dawned on those braying for Trump’s removal that to succeed in that project that would leave us with a President Pence.

The Rich Are Living Longer and Taking More From Taxpayers --We’re living longer and longer. Well, some of us.  Age 100 is now an imaginable goal for young people around the world with good health care. The average woman in Japan is already living to 87. Yet many Americans are dying younger and younger. Based on the latest year of data, the Society of Actuaries last fall dropped its life expectancy estimates for 65-year-olds in the U.S. by six months. The health of middle-aged non-Hispanic white Americans is deteriorating fastest. The result of these trends, according to a new study, is a widening gap between wealthier and poorer Americans. The richest people in the U.S. aren’t just getting several years of extra life, they’re also reaping a financial reward for their longevity – courtesy of the U.S. taxpayer. These trends will be crucial as the new administration and Congress consider any changes to Social Security, Medicare, and other programs. Even tweaks to these programs, from the retirement age to benefit formulas, could affect the rich and poor very differently. The researchers, a group of 13 prominent economists and health policy experts 1 , tried to figure out how long Americans can expect to live based on their income, focusing on earnings in midcareer, from 41 to 51, and using Social Security data.The results are stark. In 1980, a 50-year-old man in the wealthiest fifth of the income distribution could expect to live five years longer than a 50-year-old man in the lowest-income group. By 2010, the gap between them had jumped to 12.7 years.  In other words, the poorest fifth of 50-year-old American men can now expect to live just past 76, six months shy of the previous generation. The richest 50-year-olds should make it almost to 89, seven years longer than their parents’ generation.One important result of this 13-year life expectancy gap: Social Security and other government programs, such as Medicare, are becoming a much better deal for well-off Americans. As wealthier people live longer, they can expect to collect much more from Social Security over their lifetimes than the poor. This chart shows the growing gap, based on the present value of benefits to a 50-year-old looking ahead, and using 2009 U.S. dollars to account for inflation.

What Trump Tax Plan? Key Senate Panel Has Not Even Seen It -  RIP BAT - the Border Adjustment Tax, which was floated in November under a proposal from Paul Ryan and which met with fierce resistance, is effectively dead. According to Bloomberg, Trump’s "tremendous" tax plan to be revealed next week likely won’t include the controversial border-adjusted tax.To be sure, White House Budget Director Mick Mulvaney said that Trump’s position on the border-adjusted tax is still under discussion, however he added that administration officials are grappling on how well that portion of Ryan’s plan would contribute to economic growth. The border-tax concept is estimated to raise more than $1 trillion in revenue over 10 years; without that the plan would be unable to achieve revenue-neutrality, which in turn makes the entire budget reconciliation process seem untenable absent substantial revenue increases elsewhere. In any case, absent more deferrals, Trump is expected to release a tax plan for individuals and businesses next week that may not include every component that will go into final legislation, Bloomberg notes. The plan, which Trump said will be released Wednesday, will contain the administration’s priorities, although it was not clear what those are since every day the Trump administration appears to be flipflopping on every major issue depending on what feedback it gets from various Goldman economists. Adding to the confusion, Mulvaney, in an interview with Bloomberg Television, provided few details of Trump’s plan, saying it’s aimed at providing 3% annual growth. “We’re trying to backfill from there,” he said -- by incorporating tax policy that would provide for that ambitious growth target. Again, it was not clear how such a pace of growth could be achieved. The Consensus outlook for 2017 GDP is 2.2%. Mulvaney also raised the possibility that the plan might not be revenue-neutral, meaning that it might provide for only temporary tax cuts that would have to expire after 10 years. “Deficits are not driving the discussion,” he said. An odd statement coming from a man who was notorious for making deficits the only part of the discussion.

Trump To Order Corporate Tax Rate Cut To 15%, Load Up To $2 Trillion In Extra Debt -- Ahead of Trump's much anticipated tax announcement on Wednesday, the WSJ reports that the president has ordered his (mostly ex-Goldman) White House aides to accelerate efforts to create a tax plan "slashing the corporate rate to 15% and prioritizing cuts in tax rates over an attempt to not increase the deficit" which means that without an offsetting source of revenue, Trump is about to unleash the debt spigots, a proposal which will face fierce pushback from conservatives as it is nothing more than a continuation of the status quo under the Obama administration, and may well be DOA.The WSJ adds that during an Oval Office meeting last week, "Trump told staff he wants a massive tax cut to sell to the American people" and that it was "less important to him if the plan loses revenue."Hoping to add a sense of dramatic urgency - after all his 100 day deadline hits on Saturday - Trump told his team to “get it done,” in time to release a plan by Wednesday.Translation: Trump's massive tax cut will be funded by debt, and as a result, will be at best temporary as it will be in breach of the revenue constraints in the reconciliation process; at worst it will never happen as it will now require Democrat votes.Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn are scheduled to meet Tuesday to discuss Mr. Trump’s tax proposals with Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan, Senate Finance Chairman Orrin Hatch and House Ways and Means Chairman Kevin Brady of Texas. The meeting comes in advance of a Wednesday announcement by Mr. Trump about his principles for tax policy. While Trump promised to cut corporate rates to 15% from 35%, with the BAT now out of the picture, there aren’t enough business tax breaks that could be repealed to offset the fiscal cost, meaning such a move would increase budget deficits, the WSJ notes. Roughly, each percentage-point cut in the tax rate lowers federal revenue by $100 billion over a decade, so a 20-point cut would cost the government $2 trillion, according to the congressional Joint Committee on Taxation.

Trump Tax Plan Latest: Lobbyists Fear "Big Nothing Burger" -- The buzz is beginning to build around Trump's tax plan and what Americans can expect (and perhaps more notably, should not expect) to hear tomorrow. After seemingly punting on the Border Wall funding, Citi notes that Politico has published an article detailing what is currently expected of the Trump tax plan:What's In...

  • "Marquee policy ideas are expected to include infrastructure spending and achildcare tax credit"
  • "Expected to tout a corporate rate of 15%"

What's Out...

  • "Not likely to include the border adjustment tax… The border adjustability provision is crucial to the House Republican plan, and Trump’s opposition would force tax writers back to the drawing board because they were counting on it to generate revenue to fund other tax cuts."
  • "Not expected to include details on ways to offset new spending, or deep tax cuts - though, internally, the White House remains divided as to how much it should address the deficit in tax reform."

In addition to this, Citi points out that House Ways & Means Committee Chairman Kevin Brady has just published a fresh interview on his website exposing some details. Most notably positive was on the corporate tax rate, Brady said:"I think we can get close to 15 or certainly at 20, and which makes us very, very competitive worldwide."Brady did not mention the border adjustment tax in this interview. Remember, Brady is still scheduled to meet with Trump, Mnuchin, Cohn, Ryan, McConnell and Hatch to discuss the tax plan today. The timing was never provided.Finally, one lobbyist talking to Politico, seemed to sum things up rather well..."We will be disappointed on Wednesday when we see that this is the big announcement... They should not be building this up for a big nothing burger."

Trump’s 15% Corporate Tax Push Sets Stage for Clash With Ryan --  President Donald Trump’s plan to slash the corporate tax rate to 15 percent is setting up a showdown with House Speaker Paul Ryan, who has called for a tax plan to pay for itself. Trump intends to lay out broad tax principles on Wednesday, including cutting the federal corporate tax rate to 15 percent from 35 percent and calling for consideration of a child-care tax credit, a senior administration official said. A corporate rate that low would make it difficult to find ways to increase revenue or eliminate deductions to offset it -- that means a plan wouldn’t be revenue-neutral, or permanent.  The Ryan-backed House GOP blueprint released in June calls for replacing the 35 percent rate with a 20 percent rate applied to companies’ domestic sales and imported goods, while exempting their exports. Ryan has questioned whether a 15 percent rate can realistically be paid for, and he and Kevin Brady, chairman of the tax-writing House Ways and Means Committee, have said they’re committed to revenue neutrality.The Urban-Brookings Tax Policy Center estimates that cutting the corporate rate to 20 percent would lower federal tax revenue by $1.8 trillion over a decade, while cutting it to 15 percent would decrease revenue by $2.4 trillion. “It’s hard to imagine you’re going to make that revenue-neutral,” Roberton Williams, an expert with the Tax Policy Center, said referring to a 15 percent corporate rate.“It’s a big number. The kind of changes you’d need to make to claw that much money back are not consistent with the kinds of things Trump has talked about,” Williams said. “They’d have to do something that raises taxes elsewhere.”It’s unclear what kind of revenue raisers Trump’s plan will include. He isn’t likely to endorse a border-adjusted tax in Wednesday’s plan, a senior administration official said last week. The border-adjusted tax is a centerpiece of the House GOP plan because it’s estimated to raise $1.1 trillion over a decade, helping to pay for individual and corporate tax cuts. Trump hasn’t called for doing away with corporate deductions for interest, as laid out in the House plan -- that would raise an estimated $1.2 trillion over a decade. Instead Trump and senior officials have touted the economic growth that would result from the cuts.

 Trump’s opening bid for tax reform is more tax cuts and loopholes for the rich – EPI  - Today, President Trump is set to unveil a proposal that serves as his opening bid for the upcoming debate over tax “reform.” Unsurprisingly, the president is proposing straightforward tax cuts for the rich, which will need to be temporary because they will increase the federal budget deficit. It’s being reported that the centerpiece of the proposal is a cut to the rate faced by both corporations and “pass-throughs” to 15 percent, accompanied by the claim that the tax cuts will pay for themselves (“pass-throughs” are businesses that pay no direct taxes but whose owners pay individual taxes on the dividends and other income they receive from the business). There are three important things to note about these proposed changes.First, they would clearly be a windfall to already-rich households. The incidence of corporate tax cuts falls disproportionately on owners of businesses and other capital, and this type of income is incredibly concentrated at the top, with the top 1 percent alone claiming 53 percent of it in 2013. Second, these tax cuts will not trickle down. There is simply no payoff to low- and middle-income families from cutting the corporate tax rate. We’ll touch on this more in an upcoming paper, but briefly, corporate tax cuts are terribly inefficient fiscal stimulus relative to nearly any other tax cut or spending increase. And the textbook channel through which they boost long-run growth—boosting savings—will not materialize. The U.S. and global economies are glutted with savings, so boosting incentives to save helps nothing.

White House unveils dramatic plan to overhaul tax code in major test for Trump -- On Wednesday, Trump issued a one-page outline for changes to the tax code, pinpointing numerous changes he would make that would affect almost every American. He wants to replace the seven income tax brackets with three new ones, cut the corporate tax rate by more than 50 percent, abolish the alternative-minimum tax and estate tax, and create new incentives to simplify filing returns. But the White House stopped short of answering key questions that could decide the plan’s fate. For example, Trump administration officials didn’t address how much the plan would reduce federal revenue or grow the debt. They also didn’t specify what income levels would trigger the new system for paying individual income taxes. (Jhaan Elker/The Washington Post) The goal, White House officials said, was to cut taxes so much and so fast that it led to immediate economic growth, creating more jobs and producing trillions of dollars in new revenue and wealth over the next decade. Despite its brevity — it was less than 200 words and contained just seven numbers — the document marked the most pointed blueprint Trump has presented Congress on any matter. “This is about economic growth, job creation, America first, and that’s what [Trump] cares about,” White House National Economic Council Director Gary Cohn said. “Our tax plan is a big leg of that stool. It’s a big leg. And in many respects, he thinks it’s the most important leg.” The plan now must navigate a legislative and political gantlet on Capitol Hill that has killed numerous other efforts to rework the tax code. 

White House Proposes Slashing Tax Rates for Individuals and Businesses — President Trump on Wednesday proposed sharp reductions in both individual and corporate income tax rates, reducing the number of individual income tax brackets to three — 10 percent, 25 percent and 35 percent — and easing the tax burden on most Americans, including the rich. The Trump administration would double the standard deduction, essentially eliminating taxes on the first $24,000 of a couple’s earnings. It also called for the elimination of most itemized tax deductions but would leave in place the popular deductions for mortgage interest and charitable contributions. The estate tax and the alternative minimum tax, which Mr. Trump has railed against for years, would be repealed under his plan. As expected, the White House did not include in its plan the border adjustment tax on imports that was prized by House Republicans. However, it did express broad support for switching to a so-called territorial tax system that would exempt company earnings abroad from taxation but would encourage companies to maintain their headquarters in the United States. The plan would include a special one-time tax to entice companies to repatriate cash that they are parking overseas. Mr. Trump also signaled support for changes to the tax code that would help families with child-care costs. His plan also would end the 3.8 percent tax on investment income that was imposed by the Affordable Care Act. Trump administration officials called the blueprint one of the largest tax cuts and broadest overhauls of the tax system in history. “We want to move as fast as we can,” Steven T. Mnuchin, the Treasury secretary, said at an event in Washington as the White House planned an afternoon rollout of its principles for what it bills as the first overhaul of the tax code in three decades. “This bill is about creating economic growth and jobs.” He vowed it would be “the biggest tax cut and the largest tax reform in the history of our country,” in line with Mr. Trump’s grandiose portrayal. But there was no expectation that the White House would elucidate how the deep cuts would be financed, and administration officials are cognizant of the challenges of pushing through a proposal that could dramatically add to the national debt.

The 7 Key Elements of the White House Tax Plan - Here are the most important changes in the tax plan proposed Wednesday by President Trump.

  • The number of tax brackets for individuals is reduced from seven to three: 10 percent, 25 percent and 35 percent. That lowers the top rate by nearly 5 percentage points, easing the tax burdens on most Americans, including the rich. The Trump administration did not say where those brackets begin and end.
  • Currently, individuals can deduct $6,350 and married couples can deduct $12,700 from their taxable income. Mr. Trump’s plan would double the standard deduction. That is intended to put more money in the pockets of the average taxpayers who do not itemize their deductions. It has the added benefit of simplifying the preparation of tax returns for more people.
  • The alternative minimum tax makes it harder for very rich individuals to game the tax system and pay less tax. It is an aggravating tax for the well-to-do, what Treasury Secretary Steven T. Mnuchin called a “complicated” additional system of taxation. The provision cost Mr. Trump an additional $31 million in federal income taxes in 2005, and now he wants to kill it.
  • Under the plan, the top federal capital gains rate is cut from 23.8 percent to 20 percent. This is achieved by eliminating a 3.8 percent tax that is used to fund the Affordable Care Act. The reduction is meant to create greater incentives for people to invest.
  • What some Republicans called the “death tax” dies under the Trump plan. According to the Tax Foundation, America’s inheritance tax as of 2014 is the fourth highest in the world. Although the administration said that the tax was a burden on farmers and small businesses, critics of Mr. Trump will likely complain that he is helping his family and rich friends.
  • Mr. Trump wants to eliminate all individual tax deductions except for those that relate to mortgage interest and charitable giving. Those are two of the most popular. However, these could become unnecessary to most taxpayers because of the much higher standard deduction. State and local taxes would no longer be deductible, a concern for people in high-tax states.
  • Lowering the corporate tax rate from 35 to 15 percent is one of the most aggressive moves in the plan. The administration says it gets the rate down to where it is for most other industrialized nations. The Tax Foundation says this will reduce revenues by $2 trillion over 10 years and it is not clear that it will generate enough economic growth to compensate for that. The plan also calls for a special one-time tax—though the rate was not disclosed—to entice companies to bring back money they made overseas.

Trump Tax Cuts To Add As Much As $7 Trillion In Debt -- While today's "tremendously" vague one-page summary of Trump's tax plan had barely any detail - it did not even include the income ranges for the three personal income tax brackets - it did contain enough information for the CRFB to be able to score it, and calculate how much it would cost, or in other words assuming little or no offsetting revenues, this is how much additional debt it would add to the existing upward trajectory in US national debt. While it is in a way amusing that after 8 years and $10 trilion in debt accumulated under the Obama administration, US sovereign debt suddenly matters, we admit that the CRFB's findings are troubling. This is how the CRFB phrased it: "the White House released principles and a framework for tax reform today. We applaud the President's focus on tax reform, but the plan includes far more detail on how the Administration would cut taxes than on how they would pay for those cuts. Based on what we know so far, the plan could cost $3 to $7 trillion over a decade– our base-case estimate is $5.5 trillion in revenue loss over a decade. Without adequate offsets, tax reform could drive up the federal debt, harming economic growth instead of boosting it."  The framework proposes a number of specific changes including: consolidating and reducing individual income tax rates to 10, 25, and 35 percent; doubling the standard deduction; cutting the business tax rate to 15 percent on both corporations and pass-through businesses; repealing the Alternative Minimum Tax (AMT) and estate tax; repealing the 3.8 percent investment surtax from the Affordable Care Act ("Obamacare"); moving to a territorial tax system; and imposing a one-time tax on money held overseas. The plan also includes some vaguer proposals, including "providing tax relief for families with child and dependent care expenses" and eliminating "targeted tax breaks that mainly benefit the wealthiest taxpayers."

“I am the king of debt. I do love debt. I love debt.” – Menzie Chinn - That’s a quote from candidate Donald J. Trump in May 2016. And today, he re-affirmed his predelictions, in his tax “sketch”. According to the Committee for a Responsible Federal Budget, the ten year central projection is for a cost of $5.5 trillion, resulting a $6.2 trillion augmentation to the debt. There is of course a tremendous amount of uncertainty because, well, there are no details. The Treasury secretary has stated the tax cut will be paid for by economic growth. I simply do not know of any model that will deliver sufficient growth to make this plan revenue neutral. For those interested in dynamic scoring, read CBO as well as this discussion of the G.W. Bush Treasury report of 2006. This plan seems so ill-prepared, so ill-conceived, and so implausible, that a cynical person might think the main objective of releasing this sketch is to divert attention from other issues.

What about Trump’s plan to cut the corporate tax rate? - That is the topic of my latest Bloomberg column, and here is one part of my argument:  This argument for a corporate tax cut — “let’s borrow more now while rates are relatively low” — is remarkably like the argument that Keynesians have been using for more government infrastructure spending for years. The main difference is that here the spending would be done by private corporations rather than the federal government. You may or may not believe the private expenditures will be more socially valuable than the government expenditures, but if you think we can afford one kind of stimulus we probably can afford the other. And as I said, the private rate of return on investment probably is higher than the government’s borrowing rate, even if you think that government spending would yield higher returns yet.  Of course that argument does not require unemployed resources.  On the micro side, I find it amusing when people suggest that the rate of return on government infrastructure is high, but that corporations have nothing better to do than to sit on their cash.  It is hard to have it both ways!  Imagine arguing that biomedical R&D through the NIH yields high returns, but that pharma investment to commercialize the resulting drugs or devices does not.  National parks aside, most government investment is in inputs, and thus for it to have a high marginal rate of return someone on the output side has to have a high marginal rate of return as well. Here is another part of my argument:The pessimist might wonder whether companies would take their windfall and invest it at all. Many companies might simply hold the gain in money management accounts. In this scenario, the tax plan probably won’t be worth passing, as American companies would have nothing useful to do with the free resources, even when given a nudge to invest. That should induce a fairly panicky response, including radical deregulation of business and fiscal austerity on entitlements, but I don’t see critics of the tax plan following up on this view consistently. There is much more at the link, and do note my rather significant caveats on the plan.  And here is Kevin Williamson on the plan.

Actual U.S. Corporate Tax Rates Are in Line with Comparable Countries – CBPP -- Various GOP tax plans propose to dramatically lower the top corporate tax rate, arguing that the U.S. rate is one of the highest in the world and that it makes U.S. companies “uncompetitive.”  But these comparisons are misleading.  Rather than focusing on the top “statutory” corporate rate, they should focus on what companies actually pay.  Plus, they should focus on large, high-income countries, which companies are likely to view as similar to the United States in terms of being attractive places to locate and invest for reasons not related to the tax system.  When taking into account tax breaks and loopholes that corporations use to lower their taxes, U.S. corporate tax rates are well below the 35 percent top statutory rate and are in line with corporate tax rates in similar countries.  The Treasury Office of Tax Analysis estimates:[1]

  • The average corporate tax rate on profits from new investments made in the U.S. is 24 percent; the average corporate rate on profits from new investments made by companies in other “Group of Seven” (G-7) industrialized, democratic countries, weighted by the size of their economies, is 21 percent.  This measure of tax rates is useful when considering how corporate taxes affect companies’ decisions about where to make new investments.
  • The share of worldwide profits that U.S. multinational corporations pay in U.S. and foreign income taxes is about 28 percent; the average for companies headquartered in other G-7 countries, weighted by the size of their economies, is 29 percent.  This measure of tax rates that a multinational might face on its income from all countries is useful for considering how corporate taxes might affect where multinationals choose to reside for tax purposes.  (See chart.)

 Trump's tax cut proposal shines light on MLPs | Reuters: The Trump administration's proposal to slash tax rates on so-called pass-through businesses would deliver a windfall to investors in master limited partnerships and could offer a much-needed lift to this niche segment of the energy market. The tax plan outline released on Wednesday by U.S. President Donald Trump would sharply slash business taxes and discount the rate on overseas corporate profits brought back into the United States. The proposed changes include a cut to the top tax rate on pass-through businesses to 15 percent from the current rate of up to 36.9 percent. Pass-throughs get that name because taxes are not paid by the business itself but pass through to their owners' individual taxes, at that rate. The change would largely benefit owners of private businesses, but U.S. stock market investors holding shares of master limited partnerships, or MLPs, would receive the same treatment. MLPs build the pipelines and storage tanks and are a common corporate structure in the oil and gas infrastructure sector. "If the average rate (for MLP investors) is in the 30s, reducing it to 15 percent would be tremendously attractive," Robert Willens, president of tax and accounting advisory firm Robert Willens LLC, said on Wednesday. He said if the cuts come through they would make MLPs "the most attractive investment from a tax point of view." Mike Bresson, a tax partner with the law firm Baker Botts in Houston said Trump's proposed change would enhance an already-superior tax structure enjoyed by MLPs. "They're talking about giving MLPs the same 15 percent tax rate that corporations get, so that would actually expand the benefits of MLPs over corporations," Bresson said.

Trump Tax Reform: White House Plan Is Pure Politics | - The White House unveiled the bare outlines of a plan to revamp the U.S. tax codeon Wednesday, touting the proposal as the "biggest tax cut" in history but offering few fresh specifics about how the overhaul would work or how it would be paid for.The proposal, which the White House promised would be the "the biggest individual and corporate tax cut in American history," was strikingly short on details, from how much the goodies President Donald Trump is dangling would cost to how his Administration plans to patch the hole it would blow in the budget. That's an especially pressing question given how zealous many Republican lawmakers have been in the recent past about keeping legislation revenue-neutral.The cornerstones of Trump's proposal are reductions in both the individual and corporate tax rates. The number of individual income tax brackets would be trimmed from seven to three brackets of 35%, 25% and 10%. Families would see the standard deduction doubled, effectively eliminating taxes on the first $24,000 of a couple's income and receive tax relief for childcare. While most tax deductions would be scrapped, the two most popular—the mortgage-interest deduction and charitable deductions—would be preserved, Administration officials said.Under the plan, the corporate tax rate would be slashed from 35% to 15%. Companies would also pay a special one-time tax—the amount was not specified—to repatriate foreign earnings.  Markets rose at the prospect of broad tax relief. But the enthusiasm might be misplaced if traders are expecting the one-page statement of principles the White House distributed Wednesday to become law anytime soon. The Committee for a Responsible Federal Budget estimated the plan could cost between $3 trillion and $7 trillion. Its base-case estimate, $5.5 trillion, would be 20% of U.S. GDP. "Even if tax cuts could generate more growth than estimated," the group wrote, "no plausible amount of economic growth would be able to pay for a substantial portion of the tax plan."

Cohn And Mnuchin Made It Through Their Big Tax Reform Prank Without Losing Composure Once -- After months of working diligently on the tax reform package that markets have anxiously awaited since inauguration day, Treasury Secretary Steve Mnuchin and Trump economic advisor Gary Cohn stepped out in front of a crowd of political journalists Wednesday and pulled off the most flawless practical joke in White House history. After handing out a maddeningly vague and curiously formatted one-page bullet-point list to the room, Mnuchin and Cohn went on to assure the assembled press that they could say basically nothing about the plan that the administration has teased all week, other than the fact that it would slash taxes on families and businesses (15 percent for corporations and pass-throughs), lower the debt-to-GDP ratio and spur economic growth beyond 3 percent. And they said all this without breaking a smile. Here are some of the details they tossed into the hastily prepared joke document:

  • Reducing the 7 tax brackets to 3 tax brackets of 10%, 25% and 35% [no cutoffs given]
  • Providing tax relief for families with child and dependent care expenses [no further details]
  • Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers [“]
  • Territorial tax system to level the playing field for American companies [no idea]
  • Eliminate tax breaks for special interests [uhh]

Reporters seemed to take the bait, asking serious questions of Mnuchin and Cohn as the duo dissembled and ad-libbed. After all, Mnuchin had said that morning, “We’ll get into details when we release the plan later today.” When pressed for specifics at the press conference, Mnuchin said, “When we have agreement we will release the details.” And all with a straight face!The Tax Foundation fell for it too. “Sorry, friends,” the group’s director of federal projects tweeted. “We cannot model this. Definitely not enough detail.” Citi analystschimed in: “Buy the rumor, sell the news.”Though it would have been excruciating to watch two deeply experienced Goldman Sachs alumni actually, seriously stand behind a p lan one-seventh of the length of Trump’s purely speculative campaign proposal and too vague for even the most tax-cut-friendly think tank to analyze, we’re glad to see them do so for comic effect. SNL couldn’t come close to touching such a perfectly deadpan performance.

Trump’s Tax Plan Hits First Land Mine: Blue State Republicans - President Donald Trump’s pledge to repeal Obamacare ran into a Republican buzz saw. Now, his ambitious proposal to cut taxes is again encountering GOP opposition -- from lawmakers in Democratic-leaning states. Within a day of Trump’s top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin releasing a dozen bullet points outlining the administration’s tax goals, at least three House Republicans criticized one of the key provisions -- eliminating the deductibility of state and local taxes -- estimated to raise $1.3 trillion over a decade. The largest beneficiaries of the tax break are in New York, New Jersey and California, all relatively high-tax blue states, which eat up more than a third of the nationwide benefits, according to the nonpartisan Committee for a Responsible Federal Budget. “I think it’s very important that it remain in the code,” said Representative Leonard Lance, a New Jersey Republican. “I am going to fight to keep it.” Lance said New Jersey has high property taxes that make the provision important for his constituents. He added that a push to eliminate that tax break was scuttled in the last big rewrite of the tax code in 1986. The state and local tax deduction is just one of the proposals that could provoke a titanic fight among Republicans as the White House tries to get its plan off the ground. The broader GOP fight is likely to focus on cost and how to pay for the individual and corporate tax cuts, if at all. There are 28 House Republicans from New York, New Jersey and California -- more than GOP leaders can afford to lose on a tax bill without Democratic votes.Ditching the deduction would raise federal tax revenue by $1.3 trillion over 10 years, according to the Tax Policy Center, which found that 90 percent of that increase would be paid by taxpayers who earn $100,000 or more. Dropping it from the bill would make it even more difficult to ensure that tax reform is revenue neutral, or doesn’t add to the deficit. Revenue neutrality is needed to make a tax overhaul permanent under budget reconciliation rules in the Senate. 

Trump is undermining his own treasury secretary - Larry Summers - President Trump’s tax proposals were rolled out yesterday by Treasury Secretary Mnuchin and NEC Director Cohn. For reasons of long run budget health, fairness and economic impact, I think they are extraordinarily ill-advised. I am certain that the substantive concerns I have will be extensively addressed in the debates to come.As I read about the proposals and thought back over the tax discussions of the last year, I found myself feeling sympathetic to Mnuchin. Some of the most difficult moments for any Cabinet officer comes when the president fails to respect his department’s desire to do serious policy work, when political circumstance forces the repudiation of his major past statements, and when he has to out of loyalty support absurd propositions. All three of these things happened to Secretary Mnuchin this week.By all accounts the Treasury was on a path working with other agencies to come forth by June with a set of tax reform proposals. Treasury officials were shocked when the president, speaking in the Treasury building, announced last Friday that the administration would unveil its tax plan today. There was no time for specification of a proposal, let alone consultation on its merits, estimates of its revenue impact, or evaluations of its economic impact. Instead the treasury secretary was asked to lend his prestige and that of his department to a one page document that would have been judged skimpy on detail if it were a campaign proposal. I can only imagine how demoralized the Treasury tax staff — a group that rightly prides itself on its professionalism and analytic seriousness — must be.Mnuchin has stated on multiple occasions that the administration’s tax proposals would not favor the rich. Whatever its other virtues, distributional neutrality is not a feature of the plan announced yesterday. Indeed, between massive corporate rate cutting, big tax cuts for the highest income individual taxpayers, elimination of the estate tax and other incentives, it is a certainty that the vast majority of the benefits of the plan will go to a very small fraction of tax payers. Mnuchin also stated last week, in what appeared to be a scripted interview, that tax cuts would be so good for growth that they would come very close to paying for themselves. This of course is the famous Laffer curve idea. In the context of an economy with 4.5 percent unemployment, it is absurd. Ronald Reagan asserted that tax cuts could pay for themselves during his campaign but his Treasury Department was far too serious to ever make such a statement. His administration recognized that large tax cuts would raise deficits unless offset by spending cuts. So did the George W. Bush Administration. So have House and Senate Republicans. So has every reputable economist who has addressed the subject in the last several decades.

We Know What Causes Trade Deficits - Joe Gagnon - On March 31, President Donald Trump ordered a study of the causes of the US trade deficit that will focus on trade barriers and unfair trade practices in foreign countries. Economists, however, broadly agree that trade barriers do not cause trade deficits. A country can have a trade deficit only if it is borrowing on net from the rest of the world. Trade barriers have only minor effects on borrowing and lending decisions. They can reduce imports in affected industries, but they cause the exchange rate to appreciate to bring about offsetting changes in other imports and exports. Massive purchases of US and other bonds by some foreign governments—a form of lending also known as currency manipulation—were the largest factor behind the record global trade imbalances leading up to the Great Recession, with fiscal deficits in some countries also playing an important role. At present, currency manipulation is only a minor factor, and imbalances are down from their peaks. The threat of future currency manipulation, however, may well be providing an implicit “dollar put” that has the effect of encouraging excessive private lending that supports the trade deficit.1 A US fiscal expansion, which some expect, is not appropriate at this point and would widen the trade deficit. It is important to stipulate that trade is not a zero-sum game in which imports are losses and exports are wins. Trade in both directions carries abundant advantages, which  a forthcoming Policy Brief by Gary Hufbauer and Zhiyao (Lucy) Lu estimates to be worth around $2 trillion in additional income for the US economy (an earlier 2003 analysis estimated the amount at $1 trillion). Reducing the trade deficit by reducing overall trade would throw the baby out with the bathwater. Moreover, moderate temporary trade deficits are not necessarily a bad thing, as explained by Gary Hufbauer. Right now, however, the US trade deficit already exceeds a sustainable level and is poised to widen further in coming years. Action to narrow the deficit would be beneficial if it can be taken without harmful side effects. The key point is that action on the financial side will be more effective and less distortionary than action on the trade policy side, such as tariffs, duties, and quotas.

Donald Trump and the Repercussions of Renegotiating Trade Deals -- One of Donald Trump's biggest concerns seems to be international trade, particularly the free trade deal that was negotiated between the United States, Canada and Mexico back in 1994.  Here's what he had to say about NAFTA shortly after taking control of the Oval Office: A recent analysis on the Liberty Street Economics website by Mary Amiti and Caroline Freund at the Federal Reserve Bank of New York shows us the interesting relationship between U.S. exporters and the current tariff levels on products sent to Mexico and suggests that things may well be better off for American companies if Mr. Trump were to leave well enough alone. As we know, countries often impose or raise tariffs on imports to discourage consumers from consuming imported goods, a methodology used to protect domestic industries.  The imposition of tariffs on goods often leads to international appeals of trading unfairness/protectionism to various trading organizations such as the World Trade Organization.  The WTO has set up a Dispute Settlement Body to resolve trade disputes as shown here:  Here is a screen capture showing some of the recent trade disputes that the WTO is dealing with:Let's look at some background data first to help us put the trade issue into perspective. Since the three nations signed the North American Free Trade Agreement (NAFTA) which became effective on January 1, 1994, the U.S. share of trade with Mexico has done this: Mexico's share of trade has risen to 14 percent of total imports and exports, with imports and exports looking like this in 2016: Here is what the share of trade with Canada looked like in 2016: By way of comparison, the share of trade with China in 2016 looked like this: While there is a trade deficit with Mexico totalling $63.19, the trade deficit with China is nearly 550 percent higher at $347.04 billion. As well, the U.S. trade deficit with China is 3087 percent higher than the trade deficit with Canada which totalled only $11.24 billion. So, as you can see, there are far bigger "fish to fry" when it comes to international trade fairness issues. 

EU trade chief comes calling : European Trade Commissioner Cecilia Malmström will wake up in Washington this morning for her first visit since the Trump administration took office — and as signals emerge that transatlantic trade talks might be in defrost mode. Malmström’s staff told Morning Trade she is in town at the invitation of the Association of Women in International Trade, to receive their woman of the year award; but she’s also lined up meetings with Commerce Secretary Wilbur Ross, Senate Majority Whip John Cornyn (R-Texas), Senate Finance Chairman Orrin Hatch (R-Utah) and Senate Finance Ranking Member Ron Wyden (D-Ore.). “From her side, the commissioner will brief U.S. counterparts on the goals and ambitions of EU trade policy, including the ‘Trade for All’ strategy,” a Commission spokesman said in a statement. “A main pillar of the EU's trade agenda is the commitment to the WTO to strengthen global rules of trade, and promoting openness, fairness and common values through negotiations of trade agreements.” A TTIP thaw? The visit comes as reports surfaced over the weekend that the Trump administration may be more open to reviving Transatlantic Trade and Investment Partnership talks, which Malmström herself had declared to be in the freezer. “The three big [economies] that are the sources of our trade deficit outside of [the North American Free Trade Agreement] are China, Japan and Europe. So it is logical that ... one should focus on Europe,” Commerce Secretary Wilbur Ross said in an interview with the Financial Times on Sunday.

Trump Supposedly [Hearts] an FTA...With Europe - Has the maximally unpredictable Donald Trump, who you'd think sees any sort of multilateral FTA as a giveaway to foreigners (who steal jobs through unfair trade practices), changed his mind? Remember, this guy actually kept one of few campaign vows in extricating the US from the Trans-Pacific Partnership enlargement negotiations. However, a brace of news reports now suggest that he is willing to negotiate an FTA...with the European Union.Yes, that very same EU he encourages its members to leave from the UK to France he now wants his country to sign a trade deal with if reports are to be believed. The way the current story goes, Trump originally wanted an FTA with Germany during Chancellor Merkel's recent trip to Washington, DC. However, she rebuffed him by saying that any US-Germany deal must involve the whole EU. (Being an A1-ignoramus, Trump likely does not recognize that trade deals negotiations involving EU members have been assigned to the European Commission.) To this Trump supposedly said he will consider it. What's more, Trump is said to be putting the EU next in the queue ahead of the UK European Union leavers: A source close to the White House was quoted as saying that there had been a "realisation" in the Trump administration that a trade deal with the EU - allowing the tariff-free exchange of goods and services - was more important to U.S. interests than a post-Brexit deal with Britain.   "Ten times Trump asked her (Merkel) if he could negotiate a trade deal with Germany," the newspaper quoted a senior German politician as saying. "Every time she replied, 'You can't do a trade deal with Germany, only the EU'," the politician said. "On the eleventh refusal, Trump finally got the message, 'Oh, we'll do a deal with Europe then.'" Trump, who has repeatedly criticised the EU, had welcomed Britain's 2016 vote to leave the bloc and said he would work hard to get a quick bilateral trade deal done. But wait, it gets more interesting. Chancellor Merkel is tacitly going along with this version of events by encouraging it to play out:

Trump Slaps Duty on Canadian Lumber, Intensifying Trade Fight -   U.S. President Donald Trump intensified a trade dispute with Canada, slapping tariffs of up to 24 percent on imported softwood lumber in a move that drew swift criticism from the Canadian government, which vowed to sue if needed. Trump announced the new tariff at a White House gathering of conservative journalists, shortly before the Commerce Department said it would impose countervailing duties ranging from 3 percent to 24.1 percent on Canadian lumber producers including West Fraser Timber Co. “We’re going to be putting a 20 percent tax on softwood lumber coming in -- tariff on softwood coming into the United States from Canada,” Trump said Monday, according to a tweet by Charlie Spiering, a White House correspondent for Breitbart News. A White House official confirmed the comment.The step escalates an economic battle among neighboring countries that normally have one of the friendliest international relationships in the world. It follows a fight over a new Canadian milk policy that U.S. producers say violates the North American Free Trade Agreement.“Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!” Trump said in a tweet Tuesday morning. “It has been a bad week for U.S.-Canada trade relations,” U.S. Commerce Secretary Wilbur Ross said in a statement Monday, adding “it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States." He said the Commerce Department “determined a need” because of unfair Canadian subsidies to the lumber industry to impose “countervailing duties of roughly one billion dollars.”

Trump Warns Canada "We Will Not Stand For This", Vows Has Not "Changed Position On The WALL" --Unable to engage in trade war with China - allegedly because he needs Beijing on his side as he tries to diffuse the North Korean situation - Trump has launched a trade war with Canada instead, and after announcing a 20% tariff on softwood lumber on Monday night, Trump followed up this morning with a tweet moments ago in which he lashed out at America's northern neighbor, saying "Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!"Or, as some summarized it far more simply nearly 20 years ago, "blame Canada."The Tuesday tweet echoed comments Trump made last week, when he called the dairy issue a “disgrace,” and blamed it on NAFTA. “What they’ve done to our dairy farm workers is a disgrace. It’s a disgrace,” the president said last week. The criticism of the tax is the latest in Trump’s criticisms of free trade agreements, which he railed against on the campaign trail.The milk had previously been duty-free until Canada put the import tax in place.In a separate tweet, Trump took offense with the categorization of his shift on the wall with Mexico, where as reported overnight he said he was willing to wait for funding until September instead of pushing for initial funding ahead of Friday, tweeting "Don't let the fake media tell you that I have changed my position on the WALL. It will get built and help stop drugs, human trafficking etc." Perhaps he is right, although if he can't get funding now, one wonders how he will be able to succeed in 5 months when relations between Republicans and Democrats will be even more on edge.

Trump Tells Foreign Leaders That Nafta Can Stay for Now — President Trump told the leaders of Mexico and Canada on Wednesday that he would not immediately move to terminate the North American Free Trade Agreement, only hours after an administration official said he was likely to sign an order that would begin the process of pulling the United States out of the deal. In what the White House described as “pleasant and productive” evening phone calls with President Enrique Peña Nieto of Mexico and Prime Minister Justin Trudeau of Canada, Mr. Trump said he would quickly start the process of renegotiating Nafta — not abandon it, as he said he would do during the 2016 presidential campaign if he could not rework the deal to his satisfaction.  “It is my privilege to bring NAFTA up-to-date through renegotiation,” Mr. Trump said in a statement issued by the White House at 10:33 p.m. “I believe that the end result will make all three countries stronger and better.” The announcement appeared to be an example of Mr. Trump’s deal-making in real time. It followed a day in which officials signaled that he was laying the groundwork to pull out of Nafta — a move intended to increase pressure on Congress to authorize new negotiations, and on Canada and Mexico to accede to American demands.It was not clear whether the president would still sign an executive action to authorize renegotiation of Nafta, which he once called the worst trade deal ever signed by the United States. Washington must give Canada and Mexico six months’ notice before exiting the trade agreement, which came into force in 1994. Any action to that effect would start the clock. But the prospect of the United States’ pulling out obviously alarmed the Canadian and Mexican leaders and prompted their calls to the White House.

Trump Changes Mind On NAFTA, Decides Not To Terminate Treaty; Loonie, Peso Soar  -- President Trump assured a sleepless night for currency traders when in the span of just a few hours, he appeared to change his mind on NAFTA by 180 degrees, and shortly after White House officials disclosed that the president was contemplating an executive order to exit NAFTA, perhaps in days, late on Wednesday Trump told the leaders of Canada and Mexico on Wednesday that he will not terminate the NAFTA treaty at this stage, but will move quickly to begin renegotiating it with them, a White House statement said. The White House had been considering an executive order exiting NAFTA as early as Trump's 100th day in office on Saturday, Politico reported n Wednesday, but there was a split among his top advisers over whether to take the step. As Reuters first reported, the White House said Trump spoke by telephone with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau and that he would hold back from a speedy termination of NAFTA, in what was described as a "pleasant and productive" conversation. "President Trump agreed not to terminate NAFTA at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries," a White House statement said. Having tumbled earlier in the day, when the news of Trump's NAFTA pullout first emerged, both the Mexican and Canadian currencies spiked in Asian trading after Trump said the U.S. would stay in NAFTA for now. The U.S. dollar dropped as much as 0.6% against the loonie and 1% against the peso.

NAFTA talks after Trump's turnaround: What each country wants - President Donald Trump said Thursday he’s going to start talks “very soon” with Canada and Mexico to improve the North American Free Trade Agreement — a day after his aides said he was thinking of withdrawing completely. But sitting down at the negotiating table won’t be easy. Each country wants something from the others. And the three-way negotiation could lead to months of give and take over everything from lumber subsidies to immigration policy. Story Continued Below Trump also will have to work within the complex negotiating structures set out by law — and appease the many competing American interest groups that will be jockeying for a good deal for themselves. Here's POLITICO's look at what each country wants as Trump tries to make a deal with the U.S. neighbors to the north and south — after insulting both in recent weeks.

What Gary Cohn And Steve Mnuchin Really Said About Trump's Canadian "Trade War" --For the past two days everyone has been scrambling to try to figure out the reasoning behind Trump's latest flip-flop on NAFTA.  Speculation and rumors behind the controversial flip, which is sure to annoy some of his most ardent supporters, have ranged from Trump being convinced by Wilbur Ross that it would result in massive jobs losses in key battleground states to very convincing calls directly to Trump from Mexican President Pena Nieto and Canadian Prime Minister Justin Trudeau.  But, a new revelation from the Wall Street Journal seems to suggest that former Goldmanites Gary Cohn and Steve Mnuchin, the globalist faction of Trump's White House, have been pulling the strings on trade behind the scenes from day 1. Per the WSJ, the conventional story behind Trump's NAFTA flip goes something like this:As rumors spread of the possible action, Mexican President Enrique Peña Nieto called the president urging him not to pull out of the accord. “Let me think about it,” Mr. Trump said. Within a half hour a call came in from Canadian Prime Minister Justin Trudeau with a similar request. After the talks, Mr. Trump was convinced “they’re serious about it and I will negotiate rather than terminate,” the president said in an interview with The Wall Street Journal on Thursday.Meanwhile, Sonny Perdue—the agriculture secretary who took office two days earlier—and Commerce Secretary Wilbur Ross met with Mr. Trump and showed him a map indicating the states where jobs would be lost if the pact collapsed, according to a person familiar with the matter. Many were farm and border states that voted heavily for Mr. Trump.Those conversations, along with a flood of calls to the White House from business executives, helped steer Mr. Trump away from an idea that some of his own advisers feared was a rash and unnecessary threat to two trading partners who fully expected to renegotiate the agreement anyway.  But despite the illusions of a last-minute flip-flop, at least one senior bank executive in Toronto confirmed to the WSJ that Gary Cohn and Steve Mnuchin, both former Goldmanites and now serving as Chair of the White House National Economic Council and as Treasury Secretary, respectively, have been reassuring Canadian businesses executives for weeks that there would be "no significant Nafta changes."

The Next Trade War: Trump Threatens To Terminate "Horrible" Trade Deal With South Korea -Two days after launching a trade war with Canada by imposing tariffs on lumber imports, one day after nearly terminating NAFTA (but stopping just shy after an alleged phone call from the leaders of Mexico and Canada), Trump has finally turned his attention to the one nation whose GDP consists of roughly 60% net trade, and which we said several months ago, is far more likely to be punished for trade malpractice than China: South Korea.Speaking to Reuters and WaPo, Trump - who earlier also told Reuters that a "major, major" conflict with North Korea is possible - Trump sharply criticized the U.S.-Korea Free Trade Agreement, known as Korus, the latest version of which was ratified in 2011 and said that he will "renegotiate or terminate" the "horrible" free trade deal. Next week marks an anniversary for Korus and triggers a review period to potentially renegotiate or ratify a new version of the agreement.“It’s a horrible deal. It was a Hillary Clinton disaster, a deal that should’ve never been made,” Trump said. “It’s a one-way street.”“We’ve told them that we’ll either terminate or negotiate,” Trump said. “We may terminate.”Trump added: “I will do that unless we make a fair deal. We’re getting destroyed in Korea.”On his trip to Asia last week, Vice President Pence said to an audience of business leaders in Seoul that the United States was looking to “reform” the Korus agreement because U.S. businesses “face too many barriers to entry, which tilts the playing field against American workers and American growth.”The president explained that the process of termination of Korus is simpler than with the North American Free Trade Agreement. “With NAFTA, we terminate tomorrow; if we did, it ends in six months. With the Korean deal, we terminate and it’s over.” Trump also said he wants South Korea to pay for the recent $1 billion deployment of the U.S. Terminal High Altitude Area Defense, or THAAD battery, a missile defense system deployed to South Korea to protect against accidental North Korean launches, and to antagonize China.

Trump to order a study on abuses of U.S. trade agreements | Reuters: President Donald Trump will sign an executive order on Saturday seeking to identify any problems caused by the nation's existing trade agreements, including an examination of U.S. involvement in the World Trade Organization, a top trade official said. Commerce Secretary Wilbur Ross said his department would work to issue a report in 180 days outlining challenges with these trade deals and possible solutions. Ross singled out the World Trade Organization as an entity that may need to make some changes, although he cautioned that the administration had not made any decisions yet. "There's always the potential for amending organization's charters like the WTO, particularly when you're in the position we are," he said. "We're the number one importer in the whole world." Ross raised concerns that the WTO is too bureaucratic and does not hold meetings often enough. He also argued that the WTO has an "institutional bias" in favor of exporters and against countries that are being "beleaguered by inappropriate imports." Remaking U.S. trade relations has been a top priority for Trump, who has argued that the United States has been treated unfairly in international trade. Trump said on Thursday that he had been prepared to terminate the North American Free Trade Agreement (NAFTA) with Canada and Mexico, but backed off after calls from the leaders of those two countries. The effects of NAFTA on the U.S. economy will also be examined in the new study.

Trump Administration Begins Probe Into Aluminum Imports' "National Security Threat" -- Having slapped Canadian softwood with tariffs, and begun investigating steel imports last week, it appears - as Commerce Secretary Wilbur Ross promised - the Trump administration has shifted its focus to aluminum imports. Specifically, as AP reports, Washington has begun an investigation into whether aluminum imports are jeopardizing national security.Commerce Secretary Wilbur Ross says the president will sign a memo ordering him to determine the impact of rising aluminum imports. High-purity aluminum is used in a number of defense applications, including military planes and the armor-plating of military vehicles.Ross says there is only one American smelter that produces high-purity, aerospace-quality aluminum.He says, "It's very, very dangerous, obviously from a national defense point of view, to only have one supplier of an absolutely critical material."This is the president's second such move. He initiated an investigation into steel imports last week.The investigation could lead to tariffs on aluminum imports. Ironically, just as with lumber, and steel... Prices for the commodity have been surging recently (despite a broad-based commodity selloff worldwide).

WikiLeaks releases top-secret CIA documents as US considers charges against Julian Assange --WikiLeaks has leaked what it calls a 31-page user manual for a device allegedly used by the CIA to spy on people from their televisions and smartphones. The device, code named “Weeping Angel”, hit the headlines last month when WikiLeaks claimed the CIA had built the software to exploit vulnerabilities in Samsung products which would allow them to turn any phone or smart TV into a listening device. The group described the software as something out of George Orwell’s 1984.The newly released CIA documents appear to corroborate the earlier claims about the capabilities of the system. ​WikiLeaks famously published 250,000 State Department cables and US military logs from Iraq and Afghanistan in 2010 which led to the arrest and imprisonment of Chelsea Manning, a US soldier who acted as a whistleblower.Concerns have been raised about smart TVs' security. The microphone is always on and the device is always connected to the internet, making it easier for third parties to hack into and take them over as recording device. Immediately prior to the release of the documents, CNN reported that US authorities were considering seeking the arrest of WikiLeaks’ founder Julian Assange.Mr Assange is currently in the Ecuadorian embassy in London to avoid extradition over accusations of rape in Sweden. He claims the US government is using the allegations as a proxy and will immediate extradite him if he steps foot on Swedish soil.

As U.S. Preps Arrest Warrant for Assange, Glenn Greenwald Says Prosecuting WikiLeaks Threatens Press Freedom for All - Democracy Now video & transcript - Pulitzer Prize-winning journalist Glenn Greenwald responds to reports that the Trump administration has prepared an arrest warrant for WikiLeaks founder Julian Assange. Attorney General Jeff Sessions confirmed the report at a news conference Thursday. Last week, CIA chief Mike Pompeo blasted WikiLeaks as a "hostile intelligence service," in a stark reversal from his previous praise for the group. Pompeo made the remarks last week at the Center for Strategic and International Studies in his first public address as CIA director. Pompeo went on to accuse WikiLeaks of instructing Army whistleblower Chelsea Manning to steal information. He also likened Julian Assange to a "demon" and suggested Assange is not protected under the First Amendment. It’s been nearly five years since Julian Assange entered the Ecuadorean Embassy in London seeking political asylum, fearing a Swedish arrest warrant could lead to his extradition to the United States. Greenwald’s story for The Intercept is "Trump’s CIA Director Pompeo, Targeting WikiLeaks, Explicitly Threatens Speech and Press Freedoms."

Trump Team Turns On Wikileaks Co-Founder Julian Assange -- naked capitalism - Jerri-Lynn here: Last week, CNN, the Washington Post, and other news outlets reported that the Department of Justice Department is mulling whether to file charges against Wikileaks founder Julian Assange. We’ve posted links analyzing the likelihood that this prosecution– if it indeed occurs– would survive a certain First Amendment challenge. I’ve elected not to post yet on this issue as I thought that until charges are actually brought and details emerge, any thoughts I might produce would be highly speculative and premature. The issue certainly bears close attention and I’m posting this Real News Network interview with Glen Ford, so that the commentariat has a chance to discuss this threat. Glen is a distinguished radio-show host and commentator. In 1977, Ford co-launched, produced and hosted America’s Black Forum, the first nationally syndicated Black news interview program on commercial television.  Ford co-founded the Black Commentator in 2002 and in 2006 he launched the Black Agenda Report. Ford is also the author of The Big Lie: An Analysis of U.S. Media Coverage of the Grenada Invasion.

H-1B visa issue: US accuses Infosys, TCS, Cognizant of violating norms, cornering lion's share of visas: The US has accused top Indian IT firms TCS and Infosys of unfairly cornering the lion’s share of H-1B visas by putting extra tickets in the lottery system, which the Trump administration wants to replace with a more merit-based immigration policy. At a White House briefing last week, an official in the Trump administration said a small number of giant outsourcing firms flood the system with applications which naturally ups their chances of success in the lottery draw. “You may know their names well, but like the top recipients of the H-1B visa are companies like Tata, Infosys, Cognizant — they will apply for a very large number of visas, more than they get, by putting extra tickets in the lottery raffle, if you will, and then they’ll get the lion’s share of visas,” the senior official said, according to transcript of the briefing posted on White House website. Responding to a follow up on why Indian companies were singled out for a mention, the White House response said Tata Consultancy Services, Infosys and Cognizant were the top three recipients of H-1B visas.“And those three companies are companies that have an average wage for H-1B visas between US $60,000 and US $65,000 (a year). By contrast, the median Silicon Valley software engineer’s wage is probably around US $150,000,” the official said. He said contracting firms that are not skills employers, who oftentimes use workers for entry-level positions, capture the lion’s share of H-1B visas. “And that’s all public record.” All the three Indian firms refused to comment on the US administration comment. The official said H-1B visas presently were awarded through random lottery with about 80 percent of H-1B workers being paid less than the median wage in their fields. “Only about 5 to 6 percent, depending on the year, of H-1B workers command the highest wage tier recognised by the Department of Labour, there being four wage tiers. And the highest wage tier, for instance, in 2015, was only 5 percent of H1B workers,” he said.

How Trump and Turnbull dealt a double whammy to Indian techies - For a while this year it seemed like US-based Indian techies were kicking up a fuss over nothing. Their highly publicised panic that the newly minted President Donald Trump would abruptly cancel their work visas appeared melodramatic. After all, the travel ban saga in January laid bare the dysfunction the White House was displaying in executing the most basic of its election pledges – Trump had bragged that the failed immigration curbs imposed on seven Muslim-majority nations would be in place on “day one” of his tenure. And besides, such sweeping changes on a complex visa regime could wreak havoc on the country’s financial and technology titans. Can India’s IT sector thrive in world of Uber and Trump? Sushma Swaraj, India’s foreign minister, was so confident the White House would make no change to the H-1B visa that in March she declared that Indian nationals working in the US had “nothing to worry about”. The H-1B visa – held by some one million people – is meant for skilled workers. The minister’s jittery compatriots in Silicon Valley and elsewhere in the US proved to be more prescient, however, as Washington this week finally announced its plans to reform its visa regime for skilled workers. To add salt to New Delhi’s wounds, within 36 hours of the US announcement, its key allies Australia and New Zealand also unveiled plans for similar visa clampdowns.

US considers banning laptops on flights from UK airports - Guardian -- The Trump administration is considering barring passengers flying to the US from UK airports from taking laptops into the cabins, sources have told the Guardian. The proposed ban would be similar to one already imposed on travellers from several Middle Eastern countries. British officials understand that their US counterparts are looking at extending the ban – which prevents any electronic devices larger than a smartphone being taken as carry-on luggage – to flights from Europe. One Whitehall source suggested to the Guardian that although it was not certain that the ban would be extended to the UK, the US was considering doing so. The US government unexpectedly imposed the ban in late March for flights from 10 airports in the Middle East. Passengers must stow their devices in checked-in baggage on flights from the affected airports in Egypt, Jordan, Kuwait, Morocco, Qatar, Turkey, Saudi Arabia and the United Arab Emirates. All are close US allies and none are covered by the Trump administration’s attempts to ban travellers from six other mostly Muslim nations. Hours after sending a “confidential” edict from the US Transportation Safety Administration (TSA) to airlines, the Trump administration hastily arranged a press briefing to explain that the ban had been imposed after “intelligence” emerged that terrorists favoured “smuggling explosive devices in various consumer items”. The TSA directive is understood to be valid until 14 October. 

Ivanka Trump: Allowing refugees ‘has to be part of the discussion’ but won’t be enough | TheHill: First daughter Ivanka Trump on Wednesday expressed openness to allowing Syrian refugees into the U.S. but said that alone won't be enough to solve the crisis. "I think there is a global humanitarian crisis that's happening and we have to come together and we have to solve it," Trump told NBC's "Today." Asked whether that includes opening the borders to Syrian refugees, Trump responded, "That has to be part of the discussion, but that's not going to be enough in it of itself." President Trump signed an order earlier this year that included a temporary suspension of the refugee resettlement program and a block on nationals from six majority-Muslim countries from entering the U.S. for 90 days. The president argued the policy was necessary to protect national security. Last month, a federal judge in Hawaii put a nationwide block on the president's order.

How Trump Is Upending the Conventional Wisdom on Illegal Immigration -- Obamacare remains the law of the land. So does NAFTA. Tax reform exists only as pixels in a tweet. Infrastructure ain’t happening. Five months after the Republicans won united control of Congress and the presidency, it seems uncertain whether one-party Washington can avoid a government shutdown over a budget dispute.Yet as Day 100 of his presidency nears, President Donald Trump can take credit for one huge accomplishment, an accomplishment more central to his election campaign than any of the unfulfilled pledges above. Illegal immigration into the United States has slowed dramatically. The Department of Homeland Security reports that illegal crossings across the southern border plunged 40 percent in the first month of the Trump presidency, the steepest decline in illegal migration since the recession of 2009. Illegal immigration by family groups with children has dropped by over 90 percent.This accomplishment may or may not prove enduring. It was not brought about by any decisive policy change. Trump’s wall is not funded. No new enforcement measures have been put in place. People eligible for President Obama’s delayed action continue to receive work authorization. While arrests of illegal aliens inside the country have accelerated under Trump, actual deportations are running at a slower pace than in the first quarter of 2016. Orders to ban travel from some Muslim-majority countries were widely publicized, but quickly halted by the courts—and in any case, do not seem very relevant to overwhelmingly Catholic Latin America. This spring’s immigration turnabout was unexpected, to put it mildly, by most participants in the immigration debate. For years, the predominant view has been that migration flows—legal or not—are powered by deep tidal currents beyond the control of mere human governments.

Judge Blocks Trump Effort to Withhold Money From Sanctuary Cities -- A judge in San Francisco on Tuesday temporarily blocked President Trump’s efforts to starve localities of federal funds when they limit their cooperation with immigration enforcement, a stinging rejection of his threats to make so-called sanctuary cities fall in line.The judge, William H. Orrick of United States District Court, wrote that the president had overstepped his powers with his January executive order on immigration by tying billions of dollars in federal funding to immigration enforcement. Judge Orrick said only Congress could place such conditions on spending.The ruling, which applies nationwide, was another judicial setback for the Trump administration, which has now seen three immigration orders stopped by federal courts in its first 100 days. And as with the rulings halting his two temporary bans on travel from several predominantly Muslim countries, the president’s own words were used against him.Though Justice Department lawyers argued in the case that the government did not intend to withhold significant amounts of money, the judge noted that the president and Attorney General Jeff Sessions had suggested the punishment could be far greater. “If there was doubt about the scope of the order, the president and attorney general have erased it with their public comments,” Judge Orrick wrote.

San Francisco Judge Blocks Trump's Sanctuary City Executive Order To our complete 'shock,' a federal judge in San Francisco has just blocked Trump's Executive Order intended to withhold funding from communities that limit cooperation with U.S. immigration authorities.  U.S. District Judge William Orrick issued the temporary ruling moments ago after San Francisco and Santa Clara County argued that it threatened billions of dollars in federal funding. The decision will stay in place while the lawsuit moves through court.Ironically, an attorney for the Justice Department, Chad Readler, downplayed the usefulness of the Executive Order admitting at a recent court hearing that it only applied to a limited set of grants that amounted to less than $1 million nationally and possibly no San Francisco funding at all. Meanwhile, for the first time we learn that the DOJ, at oral argument, contended the sanctuary cities EO was toothless--merely an exercise of Trump's "bully pulpit"... At oral argument, DOJ contended the sanctuary cities EO was toothless--merely an exercise of Trump's "bully pulpit."

Cruz: Breaking up 9th Circuit Court ‘a possibility’ - Sen. Ted Cruz (R-Texas) says that breaking up the 9th U.S Circuit Court of Appeals is “certainly a possibility.” “The 9th Circuit is the largest federal court of appeals,” he said Thursday on “The Jack Riccardi Show.” “I think that’s a topic I can easily see the [Senate] Judiciary Committee taking up, and we’ll have to see whether we have to votes to do that or not.”Cruz added that California’s inclusion in the court’s jurisdiction has given it a liberal tilt. “I think many of the Western states are weighted down by California,” the 2016 GOP presidential candidate said. “California has a ton of very liberal, left-wing judges that they put on the 9th Circuit. I think a lot of the other Western states would love to be freed from that corrosive left-wing influence.” President Trump said Wednesday he has “absolutely” considered proposals to break up the 9th Circuit after earlier that day slamming its “ridiculous rulings” against him. “There are many people that want to break up the 9th Circuit,” he said, accusing people of going "judge shopping" there. “It’s outrageous.” “Everybody immediately runs to the 9th Circuit,” Trump added of cases against his administration. “Because they know, that’s like, semi-automatic.” The 9th Circuit earlier this year blocked Trump's executive order barring immigration from certain Muslim-majority countries and banning all Syrian refugees from the U.S. Earlier Wednesday, Trump railed against the 9th Circuit over a judge blocking his order withholding funds from sanctuary cities. 

U.S. chief justice alarmed at Trump administration immigration case stance (Reuters) - U.S. Chief Justice John Roberts took issue on Wednesday with the Trump administration's stance in an immigration case, saying it could make it too easy for the government to strip people of citizenship for lying about minor infractions. Roberts and other Supreme Court justices indicated support for a deported ethnic Serb immigrant named Divna Maslenjak over her bid to regain her U.S. citizenship after it was stripped because she falsely stated her husband had not served in the Bosnian Serb army in the 1990s after Yugoslavia's collapse. Roberts seemed particularly concerned that the government was asserting it could revoke citizenship through criminal prosecution for trivial lies or omissions. He noted that in the past he has exceeded the speed limit while driving. If immigrants failed to disclose that on a citizenship application form asking them to list any instances of breaking the law, they could later lose their citizenship, the conservative chief justice said. "Now you say that if I answer that question 'no,' 20 years after I was naturalized as a citizen, you can knock on my door and say, 'Guess what, you're not an American citizen after all?'" Roberts asked Justice Department lawyer Robert Parker. Roberts described the administration's interpretation as inviting "prosecutorial abuse" because the government could likely find a reason for stripping citizenship from most naturalized citizens. "That to me is troublesome to give that extraordinary power, which, essentially, is unlimited power, at least in most cases, to the government," Roberts added.

Stop Calling Him ‘Dr.’: The Academic Fraud of Sebastian Gorka, Trump’s Terrorism ‘Expert’ --Early on a mustache-twirling villain emerged as the face of the Trump White House. With the mannerisms of a pompous English B-movie baddy, Sebastian Gorka is to Donald Trump what the Sheriff of Nottingham was to King John. The malevolent sidekick.  Dr. Gorka styles himself as the crusading academic. A Kissinger for our troubled times. The brilliant scholar of terrorism who has taught at elite colleges and published groundbreaking research. He often reminds the imbeciles of the press that as a man of great learning only he truly comprehends the threat of Muslims.  But experts have listened to Gorka’s advocacy of the Muslim ban, attacks on the media and sterling defence of Trump’s “well-oiled’ administration and wondered how could such a well trained academic make such baseless and ignorant claims about topics he purports to be an expert on? In March he became embroiled in a remarkable spat with a Republican National Security consultant, Michael S. Smith. Gorka is flailing widely – tilting at enemies real and imagined. I started digging and it didn’t take long to find out that Gorka is a fraud – a charlatan of the most brazen hue – a snake-oil salesman whose supposed Ph.D dissertation would have never passed muster in America or Britain and to put the cherry on the cake was approved by an fraudulent panel of examiners. The polar opposite of Lt. Gen H.R. McMasters’ celebrated dissertation awarded by UNC Chapel Hill.   His dissertation – Content and End-State-based Alteration in the Practice of Political Violence since the End of the Cold War: the difference between the terrorism of the Cold War and the terrorism of al Qaeda: the rise of the “transcendental terrorist, was long on Islamophobia and the unsubstantiated claims of the polemicist but short on theory, evidence or academic rigor. The only formally qualified examiner for Gorka’s Ph.D. on a panel packed with personal friends was an extreme right-wing Hungarian MEP who recently advocated putting pigs heads on a fence on the Hungarian border to keep out Muslims.

Government costs could rise $2.3 billion without Obamacare payments: study | Reuters: The U.S. government's costs could increase by $2.3 billion in 2018 if Congress and President Donald Trump decide not to fund Obamacare-related payments to health insurers, according to a study released Tuesday by the Kaiser Family Foundation. The payments amount to about $7 billion in fiscal year 2017 and help cover out-of-pocket medical costs for low-income Americans who purchase insurance on the individual insurance exchanges created by the Affordable Care Act, often called Obamacare. Trump has threatened to withhold the payments to force Democrats to the negotiating table on a healthcare bill to replace Obamacare. He has also said he will fund the subsidies if Democrats agree to funding for his proposed border wall with Mexico as part of efforts to pass a government funding bill this week and avert a shutdown. Democrats have rejected the conditional offer. If no deal is made, parts of the federal government will shut down at 12:01 am on Saturday. The payments are the subject of a pending Republican lawsuit that was appealed by the Obama administration and put on hold when Trump took office. The government could save $10 billion by revoking the payments, Kaiser said. But insurers that remain in the market would have to hike premiums nearly 20 percent to cover their losses, Kaiser found, so the government would have to spend $12.3 billion on tax credits to help pay for Americans' premium costs - a net increase of 23 percent on federal spending on marketplace subsidies. The projection assumes that insurers remain in the marketplace next year. Health policy experts have said without the payments, many insurers could not afford to stay in the market and will likely exit, which would leave some U.S. counties without an insurer.

GOP Health Care Bill Picks up ‘a Few’ Moderate Supporters - House leadership secured the support of a few moderate holdouts for their health care bill during a late-night meeting Wednesday. Those moderate’s votes would bring the bill closer to passage, but by how much remains unclear. If support comes together quickly, there could be a vote as soon as Friday. House Republican leaders had huddled with a group of mostly moderate lawmakers in a closed-door meeting late Wednesday night in an effort to find an agreement on the GOP plan to repeal and replace the 2010 health care law. House Majority Leader Kevin McCarthy, R-Calif., said the two-hour meeting convinced a few more members to back the bill. “We’re walking through the amendment for everybody, explaining where it is,” he said Wednesday night. “We got a few more to yes tonight — yeah, a couple moderates, so that was good.” The idea of a Friday vote on the bill if the votes could be secured was floated as a possibility, members said before the meeting. McCarthy said after that there were no plans yet for a vote Friday but he didn't explicitly rule it out. Republican Conference Chairwoman Cathy McMorris Rodgers said it has “yet to be determined” whether the House would vote on the health care bill Friday. Asked if was clear yet whether the votes were there to pass it, the Washington Republican said, “We’re just working on it. Working on the language, posting language.”

 Trump administration to defend contraception mandate required under Affordable Care Act  - President Donald Trump promised religious groups he would reverse the Obama administration's requirement that employers provide birth control to their employees under the Affordable Care Act. But his Justice Department indicated Monday that it's continuing to fight religious groups who are suing over the contraception mandate. The Justice Department has asked the U.S. Court of Appeals for the Fifth Circuit for an additional 60 days to negotiate with East Texas Baptist University and several other religious schools and nonprofit groups objecting to a requirement to which they are morally opposed. Several religious groups are dismayed and confused by the Trump administration's move, including the Little Sisters of the Poor — a group of nuns — that fought the mandate for several years but expected an immediate reprieve under the GOP president. They believed either the Justice Department would halt its appeal in the case or the administration would seek a rules change from the Department of Health and Human Services. Trump promised during the campaign that he'd side with the mandate's opponents, indicating to Catholic leaders that as president he would ensure the requirement was lifted. "I will make absolutely certain religious orders like The Little Sisters of the Poor are not bullied by the federal government because of their religious beliefs," Trump wrote in a letter to the Catholic Leadership Conference. The fight over whether employers with religious objections to birth control should have to pay for it emerged as one of several high-profile battles involving President Barack Obama's sweeping 2010 health care law. The law requires employer-sponsored health coverage to include certain preventive services - the Obama administration interpreted that to include all FDA-approved contraception.

Trump's Second Obamacare Repeal Attempt On The Edge Of Collapse --Exactly one month after Trump was humiliated by his own party, when in the last moment the House failed to get the number of votes to pass a Republican healthcare bill due to holdouts from the conservative Freedom Caucus, the president's second attempt to repeal Obamacare before his first 100 days in office run out, appears on the edge of failure. However, whereas the latest effort succeeded in appealing to the conservatives who caused the first vote to be pulled in the last moment, this time is the moderates who are about to pull the plug on Trump's second attempt to overhaul Obamacare.  As a reminder, in order to appeal to conservatives, the revised bill was negotiated by centrist Rep. Tom MacArthur (R-N.J.) and conservative Rep. Mark Meadows (R-N.C.) and is meant to allow states to opt out of some of ObamaCare’s requirements which however could result in people losing their current health coverage or facing much higher premiums. While the changes, aimed at winning over conservatives, proved successful in the process the new bill might have lost just as many centrists. According to the latest roll call by The Hill, at least 21 Republicans have said they would vote no on the revised GOP healthcare bill. Only 23 votes are required to kill the bill. The "no" votes include Reps. Patrick Meehan (Pa.), Ryan Costello (Pa.), Barbara Comstock (R-Va.), Jaime Herrera Beutler (Wash.) and John Katko (N.Y.), all centrists who had reservations about the previous ObamaCare repeal bill that was pulled from a floor vote last month because of a lack of GOP support. The Hill adds that on top of that, a trio of usually reliable Republicans — Foreign Affairs Committee Chairman Ed Royce (Calif.), Adam Kinzinger (Ill.) and Mario Diaz-Balart (Fla.) — said that they were undecided on the new bill after saying they were yes votes on the earlier legislation. “I’m absolutely undecided,” Diaz-Balart, a member of the GOP whip team, told The Hill. “I was a yes before, but there are a lot of red flags” with the revised bill.

Republicans Fail In Second Attempt To Repeal Obamacare -If Trump was hoping to at least vote on Obamacare repeal before his first 100 days are up, he was up for more disappointment.Late on Thursday night, House Majority Leader Kevin McCarthy confirmed that, as expected, the GOP leadership would not bring up a revised ObamaCare repeal bill to the floor this week, after it became clear Thursday night that the 216 GOP votes needed to pass the healthcare bill had not materialized. At least 21 Republicans had come out against the bill, with many more undecided. Leaders can only afford 22 GOP defections.After a two-hour meeting in Speaker Paul Ryan office in the Capitol, McCarthy told reportersthat the GOP had again failed to whip enough support for the bill: "we are not voting on healthcare tomorrow or Sunday."He promptly then downplayed the adverse healthcare development, saying leaders had been discussing the short-term stopgap funding bill to avert a government shutdown. “We’ve been making great progress, and when we have the votes we’ll vote on it."Just not yet.So yes, another embarrassing failure for the President and House speaker. But what makes this one unique is that as Bloomberg notes, House republicans appear to be getting wise to the Senate's trickery:Several moderate Republicans are visibly frustrated about the renewed push to pass the bill after leaders made changes aimed at winning over conservatives."We’ve been through this before,” Republican Representative Charlie Dent of Pennsylvania said Thursday. "The business model around here is to load the bill up, make it as conservative as possible, send it to the Senate and have the Senate clean it up and send it back, and the very people who are placated on the first launch won’t be there on the final. And that dog ain’t hunting anymore."

Republicans deny Trump one last chance at a 100-day victory and punt on healthcare again -- Even after bringing conservative Republicans on board with the revised American Health Care Act, Republican leadership was unable to garner enough support to bring the bill to the floor this week. An amendment released Tuesday night, written by moderate Rep. Tom MacArthur, appeared to placate conservatives who did not think the original bill went far enough in its repeal of Obamacare, the law formally known as the Affordable Care Act. But pushback from moderates seems to have stalled the bill. After the amendment was released, the White House pushed for a vote on Friday or Saturday, making a last-minute play for a signature legislative win in President Donald Trump's first 100 days, but House leadership on Thursday night said a vote would not happen until next week at the earliest. New provisions would allow states to apply for a waiver that would exempt their insurance markets from certain regulations created by Obamacare if they could prove it would lower costs. Health-policy experts say the waiver could have negative consequences for people with preexisting conditions and allow insurers to offer plans that cover fewer health needs. (Read more about the amendment »)The tweak was enough to get the conservative House Freedom Caucus officially on board with the bill, which could mean support from about 20 representatives who opposed the original AHCA.  But the amendment may have alienated more moderate members of the Republican caucus and could leave the AHCA short of the votes it needs to pass. Up to 22 Republicans can vote against the bill for it to pass through the GOP-controlled chamber.

The AHCA Does Not Materially Improve ObamaCare, and MacArthur Waivers Don’t Materially Improve the AHCA - Cato Institute - The most remarkable thing about Rep. Tom MacArthur’s (R-NJ) amendment to the House leadership’s American Health Care Act is how little the conservative House Freedom Caucus got in exchange for supporting an ObamaCare-lite bill they had previously opposed.The MacArthur amendment would allow states to apply for waivers that would:

  1. Exempt their individual and small-group insurance markets from ObamaCare’s “essential health benefits” coverage mandates as early as 2018;
  2. Allow insurers in those markets to consider the health status of previously uninsured applicants (if the state sets up some more direct form of subsidy for people with pre-existing conditions, either within or outside the commercial market) as early as 2019; and/or
  3. Allow states to loosen ObamaCare’s “community rating” price controls as they apply to age early as 2020.

These waivers may never happen. They certainly won’t happen in time to save consumers from the AHCA’s rising premiums, or to save Republicans from the inevitable backlash against the AHCA. But even if they did happen, they would increase the penalties ObamaCare imposes on insurers who offer quality coverage for the sick, and thereby accelerate ObamaCare’s race to the bottom. The opt-out concept is not irredeemable. But the MacArthur amendment would require dramatic changes to make it even a modest step toward ObamaCare repeal.

Trump DOJ to Continue FCPA Focus: More Smoke and Mirrors? - naked capitalism by Jerri-lynn Scofield - Those of us with an interest in legal issues have been trying to read the tea leaves to get some sense of how aggressive the Department of Justice (DoJ) under Attorney General Jeff Sessions will be in pursuing corporate and white-collar crime. The recent lackluster DoJ record notwithstanding, please recall that the during the George W. Bush administration, the DoJ seriously pursued corporate and white collar crime violations, and indeed went after C-suite types (e.g., Adelphia, Enron, WorldCom) , some of whom drew serious prison time for their crimes.   Vacancies will of course slow the course of effective prosecutions, at least in the short-term. As I wrote last month in Trump Fires Preet Bharara and 45 Other US Attorneys, Media Hysteria Ensues, Trump asked most sitting US attorneys– all of whom are political appointees– to resign. This practice has been customary since Janet Reno served as attorney general under Bill Clinton (and dates, in a more informal form, to the Reagan administration), Yet so far, the Trump administration has failed to line up replacements. As this Washington Post piece discusses, this failure is having an unfortunate effect on prosecutorial business as usual: A month after dismissing federal prosecutors, Justice Department does not have any U.S. attorneys in place. Oops! Although I should point out that although the lack of US attorneys may slow the progress of individual investigations and prosecutions, these attorneys are more worker bees, rather than the queen bee, and don’t themselves set overall DoJ policy (informal or otherwise). So the key issue yet to emerge is what the DoJ’s policy with respect to corporate and white collar prosecutions will be. What I want to discuss here is last week’s speech by Acting Principal Deputy AssistantGeneral  Attorney General Trevor McFadden, affirming that the DoJ would continue “to vigorously enforce” the Foreign Corrupt Practices Act (FCPA). Before turning to discussing that speech– one of two McFadden delivered last week on the same subject– I want to credit the WSJ article that drew my attention to it, The Morning Risk Report: DOJ Stays the Course on FCPA. This piece  quoted various legal authorities to suggest that Trump’s DoJ would more or less continue the recent trend of FCPA enforcement policy.

How Trump’s Pick for Top Antitrust Cop May Shape Competition — Makan Delrahim, the nominee for chief antitrust cop at the Justice Department, was 10 when his family immigrated to the United States from Iran as Jewish political refugees. Unable to speak English, he struggled to keep up in school. He worked afternoons and weekends at his father’s gas station near Los Angeles until college. As a young Senate staff member years later, Mr. Delrahim found those early experiences had laid the foundation for his conservative views.“I came to realize that my values identified with the conservative viewpoints of personal responsibility, hard work, respect for individual rights and appreciation of a limited role of government,” Mr. Delrahim, 47, said in his first interview since being nominated last month by President Trump for assistant attorney general for antitrust.On Wednesday, Mr. Delrahim will have his confirmation hearing for the Justice Department position, where these views will be closely scrutinized by Congress. If he is confirmed — and he is expected to be — his philosophies will help shape the corporate competition landscape for the next few years, at a time when mega-mergers like AT&T’s $85 billion acquisition of Time Warner and Bayer’s $56 billion purchase of Monsanto are on the docket. In the interview with The New York Times, Mr. Delrahim declined to address AT&T’s purchase of Time Warner, which is now undergoing regulatory review, or other large deals, saying he would “examine any matter according to evidence and economic analysis.” But he gave other hints of how he might act as the department’s top antitrust official. Specifically, Mr. Delrahim, a former lobbyist, said he would not go after a company just because it was big, and would do so only if there were violations of antitrust law. “Just like any other industry, if there is wrongdoing, we would investigate,” Mr. Delrahim said. But “federal laws should not be used as a fishing expedition by government.”

Is It Time to Break Up Google? - NYT - In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: Microsoft. Exxon Mobil, General Electric, Citigroup and Shell Oil are out and Apple, Alphabet (the parent company of Google), Amazon and Facebook have taken their place.They’re all tech companies, and each dominates its corner of the industry: Google has an 88 percent market share in search advertising, Facebook (and its subsidiaries Instagram, WhatsApp and Messenger) owns 77 percent of mobile social traffic and Amazon has a 74 percent share in the e-book market. In classic economic terms, all three are monopolies.We have been transported back to the early 20th century, when arguments about “the curse of bigness” were advanced by President Woodrow Wilson’s counselor, Louis Brandeis, before Wilson appointed him to the Supreme Court. Brandeis wanted to eliminate monopolies, because (in the words of his biographer Melvin Urofsky) “in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people.” We need look no further than the conduct of the largest banks in the 2008 financial crisis or the role that Facebook and Google play in the “fake news” business to know that Brandeis was right. While Brandeis generally opposed regulation — which, he worried, inevitably led to the corruption of the regulator — and instead advocated breaking up “bigness,” he made an exception for “natural” monopolies, like telephone, water and power companies and railroads, where it made sense to have one or a few companies in control of an industry. Could it be that these companies — and Google in particular — have become natural monopolies by supplying an entire market’s demand for a service, at a price lower than what would be offered by two competing firms? And if so, is it time to regulate them like public utilities?

FCC Chief Poised to Roil Capital With Net Neutrality Rollback - When the U.S. Federal Communications Commission voted two years ago to impose net neutrality regulations over internet service providers, Ajit Pai was in the Republican minority and issued a 67-page dissent. Pai is now chairman of the agency and about to begin the counterattack he’s long anticipated, moving to end the FCC’s strong legal authority over broadband providers and sparking a debate that pits old-line telecom companies against Silicon Valley upstarts. “We’re in for a big fight here,” said Gene Kimmelman, president of the Public Knowledge policy group that supports the rule. With the earlier annulment by Congress of a broadband privacy rule for internet users, “It’s an explosive environment,” Kimmelman said. Pai is scheduled to speak Wednesday on "The Future of Internet Regulation" in Washington before a group that opposes net neutrality and is expected to outline his plans for replacing the current regulations. Pai could ask the FCC to vote as soon as its May 18 meeting to begin considering ways to reverse the FCC’s claim to strong authority over companies’ web practices, Senator Ed Markey, a Massachusetts Democrat, said in a new conference on Wednesday. “It makes no sense,” Markey said. “We cannot keep the promise of net neutrality openness and freedom without the rules that ensure it."

What killing net neutrality means for the internet | TheHill: The controversial Obama-era net neutrality rules are on the chopping block, and both sides in the fight agree rolling back the rules will shake up the internet landscape. The rules set restrictions on internet service providers that prevent them from prioritizing web traffic and slowing down content. Supporters say it created a level internet playing field. But the broadband industry sees the rules as over-regulation. Federal Communications Commission Chairman Ajit Pai on Tuesday unveiled his plans for rolling back net neutrality. His proposal would let internet service providers voluntarily promise to uphold net neutrality principles by including them in their terms of service with customers. The FCC would also hand oversight of those companies to another agency: the Federal Trade Commission (FTC). Undoing net neutrality would mean big changes for how customers access the internet, the plans and services that broadband companies provide, and how web companies reach their consumers. Here are 4 ways the internet will change if Pai gets his way on net neutrality:

  • 1. More free data plans.  Under the changes, mobile broadband providers would be able to let consumers access certain content without using up their data plans. The FCC could still decide to keep some rules on free data deals, but that's unlikely under Pai.
  • 2. Internet fast lanes. Without the net neutrality rules, consumer groups and smaller internet companies fear broadband providers could offer faster internet speeds to companies that pay up, and slow down those don't or can't pony up.
  • 3. More challenges for the little guy. Net neutrality critics say that without the rules, the playing field will favor established or dominant companies — big service providers such as Charter Communications, which acquired Time Warner Cable, or web giants like Google. Only established companies will be able to compete in the new environment, they fear, with deep pockets to get into internet fast lanes and the money to cut deals for content to package in their data plans.
  • 4. A new regulator for telecoms. Under Pai’s proposal, broadband companies like AT&T, Comcast and Verizon would no longer be regulated by the FCC. The chairman wants to remove their designation as “common carriers” which allowed his agency to regulate them like public utilities. Undoing that would cede authority over broadband providers back to the Federal Trade Commission (FTC).

Trump Administration Distances Itself From Blackstone CEO Stephen Schwarzman Amid Call For Recusal -- Wisconsin Democratic Sen. Tammy Baldwin became the first federal lawmaker to call for Blackstone CEO Stephen Schwarzman to recuse himself from helping to shape Trump administration policy that affects Schwarzman’s private equity firm. Another influential Democrat joined in — and the White House, under fire Friday, began to distance itself from the billionaire adviser, just a day after Schwarzman touted the Trump administration's regulatory efforts to Blackstone's investors. The Donald Trump administration now argues that even though Schwarzman chairs the White House Strategic and Policy Council — the members of that panel are appointed by Trump — the Blackstone CEO is not working for the White House in any official capacity, and is merely operating his own outside group. The criticism, call for recusal and abrupt moves by the White House followed an International Business Times report that detailed how Schwarzman’s White House panel is overseeing regulatory, energy and infrastructure policies that could enrich Blackstone.  In December, Trump’s transition team announced the creation of the Strategic and Policy Forum, whose members “will be called upon to meet with the President frequently to share their specific experience and knowledge” and “to provide direct input to the President” on policy matters. Trump himself appointed the members of the panel and named Schwarzman as chair. The group has convened meetings at the White House;  Cabinet officials have presented policies to the group for review. Trump and Schwarzman led a session of the Strategic and Policy Forum at the White House earlier this month. Facing mounting questions about the intersection between Trump administration policies and Blackstone's business, White House officials Friday asserted to IBT that the Strategic and Policy Forum is not a White House or Trump-linked organization. Instead, a White House spokeswoman asserted that the forum operates unofficially, as merely an informal, Schwarzman-organized group — one of a number of outside groups the White House routinely meets with.

Pentagon Inspector General Launches Investigation Of Michael Flynn --  Moments ago, AP reported that Trump's embattled former national security advisor Michael Flynn had been warned not to accept foreign government payments in 2014. April 27, 2017As CNN details, former national security adviser Michael Flynn was warned by the Defense Intelligence Agency in 2014 against accepting foreign payments as he entered retirement. "These documents raise grave questions about why General Flynn concealed the payments he received from foreign sources after he was warned explicitly by the Pentagon," said Rep. Elijah Cummings, the top Democrat on the House oversight committee, in a statement. "Our next step is to get the documents we are seeking from the White House so we can complete our investigation. I thank the Department of Defense for providing us with unclassified versions of these documents."This follows a report from earlier this week according to which the House overnight Committe said there was no evidence Flynn properly disclosed payments for his foreign lobbying connected to Turkey and Russia, and noted that Flynn likely broke the law on overseas payments. As The Washington Post reported, Jason Chaffetz (R-Utah) and ranking member Elijah Cummings (D-Md.) said they believe Flynn neither received permission nor fully disclosed income he earned for a speaking engagement in Russia and lobbying activities on behalf of Turkey when he applied to reinstate his security clearance, after viewing two classified memos and Flynn's disclosure form in a private briefing Tuesday morning. "Personally I see no evidence or no data to support the notion that General Flynn complied with the law," Chaffetz told reporters following the briefing. "He was supposed to get permission, he was supposed to report it, and he didn't," Cummings said.

Spicer: Obama administration responsible for Flynn's security clearance - Former national security adviser Michael Flynn’s security clearance was granted by the administration of former President Barack Obama, White House press secretary Sean Spicer said, shifting the blame away from the current White House for the legal troubles Flynn faces for his past dealings with foreign governments. The Defense Department’s inspector general announced Thursday that it has launched an investigation into Flynn’s activities after retiring from the military in 2014, which included lobbying work for the Turkish government and a paid speech delivered at an event celebrating RT, a propaganda outlet of the Russian government. The Pentagon investigation of Flynn comes as separate inquiries in the House and Senate, as well as at the Department of Justice, look into Russian meddling in last year’s presidential election and into ties between Trump associates and the Kremlin. Story Continued Below Flynn, a retired lieutenant general and head of the Defense Intelligence Agency under Obama, resigned just weeks after Trump took office following reports that he had misled Vice President Mike Pence and others about the nature of conversations he had had with Russia’s ambassador to the U.S. “General Flynn was a career military officer who maintained a high level security clearance throughout his career in the military. His clearance was last reissued by the Obama administration in 2016 with full knowledge of his activities that occurred in 2015,” Spicer said at Thursday’s press briefing. “Obviously there's an issue that, as you point out, the Department of Defense inspector general is looking into. We welcome that. All of that clearance was made during the Obama administration and apparently with knowledge of the trip that [Flynn] took.”

Citing health issues, Jason Chaffetz takes immediate leave from Congress – but his scandals loom - Twelve days after inside sources first asserted that Jason Chaffetz was being blackmailed by Russia and the FBI was onto him, and five days after Chaffetz announced that he won’t run for reelection and may not even finish out his current term, Chaffetz is now taking immediate leave from Congress and citing health issues as the reason. He insists he’ll be back, but considering the manner in which this is playing out, that’s far from certain.Chaffetz has announced this evening that he’s having immediate foot surgery and will therefore need to step away from Congress for a period of three to four weeks (CNN). But he acknowledges that this is to correct a prior surgery that he had twelve years ago, making it sound like this an elective procedure that he could have chosen to have at any time. So why is he choosing right now? Chaffetz is the chair of the House Oversight Committee, which just yesterday decided to finally kick its Trump-Russia investigation into high gear, tackling the issue of Michael Flynn’s foreign payments and the Trump White House’s refusal to cooperate. Politically speaking, this is the least ideal time for Chaffetz to be stepping away. And come to think of it, Congress just finished a multi-week recess; why didn’t he have his foot surgery at the start of the break? That is, unless Chaffetz doesn’t want to be in Congress during this crucial time for his own committee’s investigation into Trump-Russia. 

Trump and Congress Use Congressional Review Act to Roll Back 14 ‘Midnight’ Rules; More to Follow? -- I wish to discuss how congressional Republicans and Trump are using the Congressional Review Act (CRA)– enacted as part of Newt Gingrich’s Contract with America Advancement Act of 1996– to roll back regulations drafted in the waning days of the his predecessor’s administration. As I wrote in my first post on this issue, Republicans to Use CRA to Roll Back ‘Midnight’ Rules and Benefit Oil Companies, the CRA allows rules finalized during the past 60 session days to be overturned, by a simple majority vote in both houses on a CRA resolution of disapproval, using expedited procedures, followed by a presidential signature. If the president vetoes the CRA resolution, the regulation could still be rescinded if a 2/3 majority in each house votes to override the presidential veto. Crucially and importantly, once the regulation has been successfully voided, the regulatory agency is barred from reviving the rule in “substantially the same form”– forever–in the absence of new legislative authority.  Now, as I pointed out in that earlier post, the 1996 legislation had only been used once before to roll back a regulation– an Occupational Safety and Health Administration (OSHA) ergonomic rule squelched early in George W. Bush’s administration. Yet just because CRA authority hadn’t so far been extensively used, doesn’t mean it wasn’t there to be used. If agencies had paid more attention to CRA’s deadlines during the electoral cycle and completed their necessary rule-makings more quickly in 2016, the CRA may not have come into play at all (more on this below). As just one example– discussed at greater length in my January post, as well as other posts linked within– the Securities and Exchange Commission (SEC) had tarried in its Dodd-Frank rule-making efforts, and its resource extraction issuers rule– forcing disclosure of payouts (ahem, bribes) made to secure benefits– was one of first measures to end up on the CRA chopping block.  So far, 14 rules have been rolled back, covering a variety of issue, including abortion funding, drug testing, education performance, environmental protection, government procurement, gun control, internet privacy, land use, retirement plans, and teacher preparation. And just last week, Press Secretary Sean Spicer took the administration’s latest a victory lap for its ’s CRA record, in his April 19 press briefing:

Remember Those Temporary Officials Trump Quietly Installed? Some Are Now Permanent Employees -- Last month, ProPublica revealed that the Trump administration had installed hundreds of political appointees across the federal government without formally announcing them.The more than 400 officials were hired in temporary positions for what the White House calls “beachhead teams.” Government hiring rules allow them to have those positions for up to eight months.Now some of them are getting permanent federal jobs, oftentimes with little or no public notice.A review of federal agencies’ staffing lists, obtained through Freedom of Information Act requests and department websites, found the Trump administration has made at least 25 of its beachhead hires permanent. The White House and federal agencies don’t have to make public hires that don’t require Senate confirmation.At least five of the new permanent staffers are former lobbyists or consultants now working at the agencies they once sought to influence.“At the bare minimum, we need to know their names since they are public officials shaping policy,” said Max Stier, the CEO of the Partnership for Public Service, a nonpartisan group that advises new administrations on smooth transitions.Take the Department of Homeland Security’s new chief of staff, Kirstjen Nielsen. She was a White House aide to President George W. Bush from 2003 to 2007 and then lobbied Homeland Security as president and general counsel at the Civitas Group. She then founded her own Washington firm, Sunesis Consulting, in 2012 that advised “senior domestic and foreign government officials” on disaster preparedness issues, according to her online biography.She joined DHS’ beachhead team one day after President Donald Trump’s inauguration and her hiring has now been made permanent, according to the DHS website. 

Trump and Putin: Democrats go after Republicans in new ads | McClatchy Washington Bureau: A Democratic group is pressuring a trio of House Republicans to support an independent inquiry into President Donald Trump’s possible ties to Russia, launching radio ads in the lawmakers’ districts that feature the sound of a Russian voice laughing. “That’s the sound of the Russians and Vladimir Putin laughing at us,” a narrator says. “Because they’re getting away with undermining our democracy.” The ads – which target Rep. Martha McSally, R-Ariz., Rep. Will Hurd, R-Texas, or Rep. John Katko, R-N.Y. – ask why the lawmakers won’t support an “independent investigation” into the connection between the GOP president and foreign leaders. The minute-long spot cites former National Security Adviser Michael Flynn’s resignation and payments that Paul Manafort, Trump’s former campaign manager, reportedly received from a pro-Russian political party in Ukraine as proof an investigation is necessary. “Ha ha, the joke’s on you, America,” a Russian voice says at the ad’s conclusion. The ads are being funded by American Bridge 21st Century Foundation, a Democratic firm specializing in opposition research on Republicans. It’s spending $140,000 on the ads, according to an ad-buying source.

Obama's $400,000 Wall Street Speech Is Completely In Character: Ask all the bankers he jailed for fraud. - The rumors are true: Former President Barack Obama will receive $400,000 to speak at a health care conference organized by the Wall Street firm Cantor Fitzgerald. It should not be a surprise. This unseemly and unnecessary cash-in fits a pattern of bad behavior involving the financial sector, one that spans Obama’s entire presidency. That governing failure convinced millions of his onetime supporters that the president and his party were not, in fact, playing for their team, and helped pave the way for President Donald Trump. Obama’s Wall Street payday will confirm for many what they have long suspected: that the Democratic Party is managed by out-of-touch elites who do not understand or care about the concerns of ordinary Americans. It’s hard to fault those who come to this conclusion. Obama refused to prosecute the rampant fraud behind the 2008 Wall Street collapse, despite inking multibillion-dollar settlement after multibillion-dollar settlement with major firms over misconduct ranging from foreclosure fraud to rigging energy markets to tax evasion. In some cases, big banks even pleaded guilty to felonies, but Obama’s Justice Department allowed actual human bankers to ride into the sunset. Early in his presidency, Obama vowed to spend up to $100 billion to help struggling families avert foreclosure. Instead, the administration converted the relief plan into a slush fund for big banks, as top traders at bailed-out firms were allowed to collect six-figure bonuses on the taxpayers’ dime. Nothing forced Obama to govern this way. Had he truly believed that prosecuting bankers for obvious criminal fraud would cause an economic collapse, Obama would, presumably, have tried to radically reshape the financial sector. He did not. His administration’s finance-friendly policies damaged the economic recovery and generated a new cohort of Trump voters. As Nate Cohn of The New York Times has demonstrated, nearly one-fourth of Obama’s white working-class supporters in 2012 flipped for Trump in 2016. Racism and misogyny were surely part of Trump’s appeal, but not all two-time Obama voters turned to Trump out of bigotry alone. 

Are Republicans Trying To Eliminate Activist Investors? Bill To Replace Dodd-Frank Could Silence Shareholders - Appalled by a Bloomberg Markets Magazine cover story that linked American steel company Nucor Corp. to pig iron suppliers in Brazil who used slave labor, an investment firm with a stake in Nucor called for corrective action. Their mechanism: a shareholder resolution. The proposal appeared on Nucor’s 2009 proxy statement prior to a yearly shareholder meeting — and 27 percent of the company’s shareholders voted in favor it. Nucor stalled at first, but within a year, the steelmaker told the stakeholding company, Domini Social Investments LLC (now Domini Impact Investments) that it had begun requiring its manufacturers to sign an agreement with a group of nongovernmental organizations, including a pledge to break ties altogether with the suppliers using forced labor. The tool behind Domini’s ability to pressure Nucor will soon be out of reach to all but a hardly-existent portion of investors if a new bill becomes law. The CHOICE Act, sponsored by Texas Rep. Jeb Hensarling, who chairs the House Financial Services Committee, would replace Dodd-Frank — and sharply raise the ownership threshold for shareholders who can file proposals. Under current Securities and Exchange Commission rules, investors must own 1 percent or $2,000 worth of a publicly-traded company’s market capitalization for a continuous year. Hensarling’s bill would get rid of the $2,000 standard altogether, mandating that shareholders own 1 percent of the company for three years, according to a committee memo describing the bill. It would also raise the vote percentage needed for investors to resubmit their proposals the following year, and prohibit the filing of proposals on behalf of other investors. That 1 percent may seem miniscule, but Nucor’s current market cap, for example, is around $19 billion. In order to file a proposal under Hensarling’s CHOICE Act, an investor would have to hold $190 million in shares of the firm. The committee approved the bill in September and planned to hold a hearing on it Wednesday morning.

Dems reject capital-for-deregulation trade — Democrats drew a line in the sand Wednesday, opposing a provision in a GOP bill that would allow banks to comply with fewer rules in exchange for holding more capital. The provision is central to the Financial Choice Act, which has been put forward by House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Tex. The bill would provide a regulatory off-ramp for banks that have an average leverage ratio of at least 10%.

GOP lawmaker confident Dodd-Frank repeal bill will advance in House - A top House lawmaker said Thursday he expects to advance his bill to eliminate the 2010 Dodd-Frank financial reforms in the House, despite any legislative fights. Jeb Hensarling, the chairman of the House Financial Services Committee, told reporters Thursday there was also broad agreement with his counterparts in the Senate and at the White House on his bill to repeal and replace the regulatory reform laws. The chairman, however, stopped short of naming the specific policies that all three parties agreed upon. Instead, the Texas Republican said both of his counterparts -- Mike Crapo, the chairman of the Senate Banking Committee and Treasury Secretary Steven Mnuchin -- were supportive he put his Financial Choice Act forward this week, and that many of the administration's principles on financial reform "mirror" provisions of the bill. A top priority for the Trump administration is to drive economic growth through tax reform and by loosening regulations. "I anticipate there will be great similarity in their approach and our approach," said Hensarling, referring to a regulatory review Mnuchin and his staff are conducting to identify regulations that could be stifling economic growth. That review, which was commissioned by President Trump, is due in June. "I continue to carry on very healthy conversations with the administration and my Senate counterpart." Crapo lauded Hensarling's bill as a "positive move away from government micromanagement." "Getting our regulatory system right is a critical issue, and it is an imperative that we are all engaged in determining the proper regulatory structure for our financial system," he said Thursday at a conference hosted by Women in Housing and Finance.

House Dems employ new strategy to block GOP Dodd-Frank overhaul — Democrats are fearful that a Dodd-Frank Act rewrite in the House has more legs than in the last Congress and want to elevate the issue publicly in hopes of blocking it. In an unusual move by the minority, Democrats on the House Financial Services Committee called an additional hearing on the Financial Choice Act, which was authored by chairman Jeb Hensarling, R-Tex., and is scheduled for a vote on Tuesday.

Committee Democrats Call for an Additional Hearing on the Wrong Choice Act | U.S. House of Representatives: Today, at the only scheduled committee hearing to review Chairman Hensarling's Wrong Choice Act, House Financial Services Committee Democrats, led by Ranking Member Maxine Waters (D-CA), submitted a letter to the Chairman requesting an additional hearing in order to thoroughly analyze how the legislation would impact consumers, investors, and the American economy. "Following the worst financial crisis since the Great Depression, this Committee held 41 public hearings related to financial reform prior to the passage of the House version of the Dodd-Frank Wall Street Reform and Consumer Protection Act," the lawmakers wrote. “Mr. Chairman, while Democrats may not always agree with your policy proposals, we should all agree that the American public deserves nothing less than full transparency, accountability, and debate of the matters before this Committee.” In the letter, the Democratic Members urged Chairman Hensarling to schedule at least one additional hearing given the scope and extent of the proposed legislative changes. The lawmakers stressed that Committee Members deserve an opportunity to comprehensively examine the effects of the legislation on the American economy. The letter was unanimously signed by every Democratic Member of the House Committee on Financial Services. For more on how Chairman Hensarling’s legislation is the Wrong Choice for America, click here. The full text of the letter is below:

Breaking Up the Big Wall Street Banks Is Back in the Headlines -  Pam Martens - This recent attention has been fueled by reports that Gary Cohn, former President of Goldman Sachs who now heads Donald Trump’s National Economic Council, met privately this month with members of the Senate Banking Committee and indicated he would be open to the restoration of a modernized version of the Glass-Steagall Act. (Mr. Cohn did not refute those reports.)  The problem with the newspaper debate today is that almost no one has their facts straight. On April 13, John Authers correctly wrote at the Financial Times that “The continuing yearning for Glass-Steagall shows that the world (not just the US) has not come to terms with the crisis of 2008. Justice has not been seen to be done; remedies to prevent a repeat have not been seen to be applied. Dodd-Frank has failed to instill confidence.” All that is absolutely true. But Authers also bizarrely states that “Bringing back Glass-Steagall would not alter the scale of today’s financial institutions.”The Financial Times journalist is apparently not aware that the hundreds of trillions of dollars of derivatives sitting on the books of the biggest Wall Street banks would not exist but for the insured deposits providing the ballast and credit rating. Next came the Washington Post’s Editorial Board on April 19, which went with the headline: “A Depression-era law could get a new life under Trump. Here’s what it should look like.” But the article made the preposterous claim that “The actual causal link between the repeal of Glass-Steagall and the financial crisis is a matter of great dispute…because the investment firms whose failures triggered the panic, Bear Stearns and Lehman Brothers, had never been subject to the law.” The multiple errors in the above sentence are symbolic of a general lack of public understanding of the financial crisis. Every Wall Street firm was “subject to the law” until its 1999 repeal. Bear Stearns collapsed in March 2008 – long before the real panic set in during September of that year. Lehman Brothers was not only subject to the Glass-Steagall Act but it benefitted dramatically from its repeal by engaging in insured-deposit banking.

Big banks will always be too big, Glass-Steagall or not - Bank Think - A bipartisan group of senators has reintroduced legislation to establish a modern Glass-Steagall framework. It is unclear whether the bill will gain any traction, especially in an environment that favors deregulation, not a return to more restrictive limits. What is more puzzling is how, based on my data, a 21st-century version of the Depression-era limitations on bank activities will do little to meet the goals laid out by its proponents.The 21st Century Glass-Steagall Act of 2017 — a bill sponsored by Sens. Elizabeth Warren, D-Mass., John McCain, R-Ariz., Maria Cantwell, D-Wash., and Angus King, I-Maine — would require federally insured institutions to primarily take deposits and make consumer and commercial loans. The bill attempts to stop taxpayer bailouts by segregating deposit-taking institutions from financial institutions engaged in higher-risk financial activities.But if the law were to pass, after required divestitures today’s largest financial institutions would still be “too big to fail,” and the two largest investment banks would likely increase their systemic importance. Under the legislation, deposit-taking institutions would be prohibited from (or being affiliated with any firms providing) investment banking, broker-dealer services, swaps dealing, futures dealing, hedge fund ownership, prime brokerage services, and issuing or investing in structured financial products. Bank holding companies would be forced to divest ownership in affiliates engaging in prohibited activities and required to sell prohibited investments and relinquish nonapproved derivative positions.  To get an idea of the financial landscape under the Glass-Steagall Act of 2017, I estimated the potential impact of the law on the 10 largest U.S. bank holding companies using data from December bank holding company reports. I measured the law’s impact in two ways. First, I analyzed its likely effect on holding company balance sheets by assuming that holding companies divest prohibited assets. In a second approach, I estimated the share of holding company revenues that accrue from prohibited activities.

Trump memos call for review of systemic designation - President Trump will sign two presidential memorandums on Friday that zero in how regulators would resolve big banks and supervise companies that pose a risk to the broader financial system. The first memo calls for a closer look at the Federal Deposit Insurance Corp.’s orderly liquidation authority that allows it to temporarily stabilize an insolvent megabank and sell it off. The other memo asks Treasury Secretary Steven Mnuchin not to designate any more firms as systemically important while he reviews the process used by the Financial Stability Oversight Council.

Elizabeth Warren on Big Banks and Their (Cozy Bedmate) Regulators – NYT - Gretchen Morgenson  -   With the Wells Fargo’s phony account-opening scandal still making headlines, and the company’s stock underperforming its peers, it’s a good bet the bank’s brass will have some explaining to do.How could such pernicious practices at the bank be allowed for so long? Why didn’t the board do more to stop the scheme or the incentive programs that encouraged it? And where, oh where, were the regulators? Wells Fargo’s management has conceded making multiple mistakes over many years; it also says it has learned from them. In a meeting this week with reporters at The New York Times, Timothy J. Sloan, Wells Fargo’s chief executive, said the bank had made substantive changes to its structure and culture to ensure that dubious practices won’t take hold again.But there’s a deeper explanation for why Wells Fargo’s corrosive sales practices came about and continued for years. And it has everything to do with the bank-friendly regulatory regime in Washington and the immense sway that institutions like Wells Fargo have there. This poisonous combination contributes to a sense among giant banking institutions that they answer to no one.  The capture of our regulatory and political system by big and powerful corporations is real. And it is a central and disturbing theme in the new book by Senator Elizabeth Warren, Democrat of Massachusetts. “This Fight Is Our Fight” contains juicy but depressing anecdotes about how our most trusted institutions have let us down. It also shows why, years after the financial crisis, big banks are still large, in charge and, basically, unaccountable for their actions. “In too many of these organizations, there are rewards for cheating and punishments for calling out the cheaters,” Ms. Warren said in an interview Wednesday. “As long as that’s the case, the biggest financial institutions will continue to put their customers and the economy at risk.” Ms. Warren’s no-nonsense views are bracing. But they are also informed by a thorough understanding of how dysfunctional Washington now is. This failure has cost Main Street dearly, she said, but has benefited the powerful.

There's more to bank regulation than higher capital -- The debate about the safety and soundness of the U.S. banking system has lately focused largely on one indicator of a bank’s health: capital. Capital does play a fundamentally critical defensive role as a loss-absorption buffer during periods of stress. A key lesson from the crisis is how unsafe a dearth of capital can prove to be. So it should not be surprising that policymakers have focused on capital adequacy in a variety of pending and already-enacted policies — from the heightened capital threshold in Rep. Jeb Hensarling’s Financial Choice Act, to the “total loss-absorbing capacity” rules, to the bevy of stress tests performed in the years since the crisis. Capital requirements have continued to dominate the post-crisis discussion as part of a common objective to defeat “too big to fail.” But that debate tends to leave out all the other factors examiners use to gauge institution strength, therefore sidestepping a holistic approach to safety and soundness regulation.  Capital is not the only reason for bank failures; at times it is not even the primary reason. Wachovia, one of the largest banks supervised by my former employer, the Office of the Comptroller of the Currency, came close to failure before being rescued by Wells Fargo. However, Wachovia appeared to be a liquidity failure, a traditional run on the bank, and not due primarily to deficiencies in capital. Wachovia is a good reminder that lack of liquidity is typically the primary driver of large bank failures. U.S. regulators implementing a post-crisis regime — which includes the Dodd-Frank and revised Basel standards — have opted for “super-equivalent” capital and liquidity requirements, resulting in U.S. banks holding historically high amounts of both. Yet many regulators, academics and lawmakers continue to recommend even higher requirements, just as the new administration is embarking on policies promoting more robust economic growth and a reduction in regulatory constraints. 

The state, inequality and the politics of economic ideas: three blind spots in shadow banking - Shadow banking has become a systemic pillar of global finance. A typical map shows a complex network of shadow entities such as highly levered off-balance-sheet vehicles, broker-dealers, private equity firms, money market funds or hedge funds. Yet (large) regulated banks also moved in the shadows, driven by a combination of yield, regulatory and tax arbitrage in order to engage in securitisation (or transformation of loans into securities that could be traded) and repo markets (wholesale markets where financial institutions raise funding using securities as collateral). Shadow banking has proved to be extremely dangerous. Between 2007 and 2011, it wreaked havoc with global finance and the fiscal sustainability of the nation-state. A solid consensus now connects the Lehman crisis and the European sovereign debt crisis to runs on shadow banking. Yet the growing literature on shadow banking – spanning from economics to law and political science  – shares three blind spots: the state, inequality and the politics of economic ideas. In a recent interdisciplinary forum we tried to speak to these critical but ignored facets of shadow banking. The growth factors of shadow banking are to be found at both ends of the social inequality spectrum. At one end is a narrow population of cash-rich actors spawning giant pools of money and seeking safe returns. At the other end one finds a growing demand for credit by a cash-poor general population experiencing downward mobility and/or stagnant incomes. In this world, shadow banking institutions are allowed to behave as rentiers, as central bank policies extending financial safety nets to shadow banks amount to a form of regulatory rent. These safety nets are, then, not the apolitical, straightforward mechanisms economists cast them to be. Instead, they are problematic forms of institutional layering generated by specific political choices about how to manage state–market relations in general and credit allocation in particular. The most effective economic solution to redress this structural imbalance is not so much the better regulation of shadow banking (an increasingly elusive task given global arbitrage opportunities). It is macroeconomic policies that redistribute wealth on a massive scale.

State Banking Regulators Sue Feds Over Fintech Charter Proposal – National Law Journal - State banking regulators are taking the Office of the Comptroller of the Currency to court over its proposal to establish a special-purpose national bank charter for financial technology companies.In the lawsuit filed Wednesday in federal district court in Washington, D.C., the Conference of State Bank Supervisors, which represents state-chartered banks nationally, claims that the OCC’s charter proposal violates the National Bank Act and other federal banking laws.In the lawsuit, which appears to be the first filed against the OCC over the proposal, the state banking regulators accuse the OCC of overstepping its authority under the National Bank Act. The state regulators claim the comptroller’s office, led by Thomas Curry, lacks authority to create a special-purpose charter without approval from Congress."When the OCC has attempted to issue a charter to entities that would not carry on the 'business of banking,' the courts have struck down those efforts,” wrote the CSBS’ attorneys in the suit. In its draft fintech charter, published in March, the OCC proposed to charter fintech companies in the “business of banking,” but will not include institutions that receive deposits. The CSBS claims in its lawsuit that the federal banking agency should receive express statutory authorization to take such an action. “The reason why we felt the need to weigh in on this issue the way we did is we saw significant harm to the marketplace and for consumers,” Margaret Liu, deputy general counsel for CSBS, told The National Law Journal.

State regulators sue OCC over fintech charter | American Banker   — After raising vociferous objections to the Office of the Comptroller of the Currency’s plans to offer a fintech charter, state regulators on Wednesday sued the federal agency, arguing it lacks the legal authority. “The OCC’s action is an unprecedented, unlawful expansion of the chartering authority given to it by Congress for national banks,” John Ryan, the president and CEO of the Conference of State Bank Supervisors, said in a press release. “If the OCC is allowed to proceed with the creation of a special purpose nonbank charter, it will set a dangerous precedent that any federal agency can act beyond the legal limits of its authority.” The suit, filed in U.S. District Court for the District of Columbia, lays out the state regulators’ fundamental complaint that they've had from the beginning against the OCC’s charter, namely that the agency does not have statutory authority to create a special-purpose charter. Citing the National Bank Act, the bank supervisor group argued that the OCC has the authority to charter only those firms engaged in the “business of banking." The agency would need “specific congressional approval” to create a charter for nondepository institutions, as the OCC plans to do, the group said. “The OCC’s proposed action ignores Congress, seeks to preempt state consumer protection laws, harms markets and innovation, and puts taxpayers at risk of inevitable fintech failures,” Ryan said. Beyond the CSBS, a number of state regulators have been vocally opposed to the fintech charter, including New York's superintendent for financial services, Maria T. Vullo. They have argued that the charter would preempt their authority to impose consumer protection requirements, such as usury caps, on fintech companies that might obtain the national charter. 

Ethereum Surges To All Time High As SEC Considers Ether-based ETF --Yesterday holders of bitcoin got an unexpected, if pleasant surprise courtesy of the SEC which announced that two months after deciding against a bitcoin ETF, it would review its decision, suggesting that after several failed attempts, Bitcoin may surge even more soon should the long-awaited Bitcoin-based ETF be ultimately approved. Whether or not it is a good thing for the cryptocurrency in the long-run to get such approval, which would expose bitcoin to the vagaries of volatile retail money flows and even greater volatility, is yet to be determined, but the price of bitcoin liked it, and earlier today it rose to near record highs, rising above $1,300 just shy of all time highs.Then today, in similarly favorable news for holders of Bitcoin's smaller peer, Ethereum, it was revealed that the SEC had quietly begun the process of considering whether to approve an exchange-traded fund for the cryptocurrency ethereum. Recall that ethereum exploded higher at the end of February when it was revealed that a consortium of venerable corporations including JPM, Intel, Microsoft and many others, had created a blockchain alliance based on the ether technology.In same ways, whereas bitcoin has been seen as the more venerable, if "renegade" cryptocurrency, ether has developed the reputation of the smaller, better-behaved relative, one which is backed by major banks and corporations, which in the past has distanced itself from bitcoin due to limitations associated with its specific blockchain technology.While ether and bitcoin are similar, they are also very different. First of all, none of the big Chinese exchanges lists ether for trading (which means it is only a matter of time before they do) sending it into orbit as the traditional Chinese bubble stampede does. Second, the two biggest ether exchanges are Coinbase and Kraken, both regulated.

Denial-of-service, web app attacks plague banks -- Cybercriminals who hack banks are mainly taking aim at their web servers and websites, according to Verizon’s latest Data Breach Investigation Report. The report, issued Thursday, covers 19,035 breaches (in which data has been accessed and maybe stolen) and 40,000 incidents (in which a breach occurs but investigators couldn’t confirm whether data was taken — an example might be a denial-of-service attack in which a website is shut down but nothing is stolen). Almost a quarter of breaches in Verizon’s latest Data Breach Investigation Report affected financial organizations. The report covered more than 19,000 breaches and 40,000 other kinds of events. Adobe StockThe report found in the world at large a significant rise in ransomware in 2016 — 50% more than in 2015. Cyberespionage attacks were also more frequent in 2016, especially in government and manufacturing. Almost a quarter of breaches in the report affected financial organizations.In financial services, distributed denial-of-service attacks — in which bad actors flood a website with so many connection attempts that it fails — were the most prevalent type of incident in 2016, according to the report, which counted 445 of them. “People are targeting the denial-of-service attack to bring down the bank,” said Dave Hylender, senior risk analyst at Verizon and one of the authors of the report. Verizon’s researchers don’t know the hackers’ motivations.Four years ago, a group aimed such an attack at dozens of banks to protest a YouTube video about the Prophet Mohammed. Today, some of these attacks could be done as a camouflage for more serious breaches — distract the IT department with a website shutdown so that no one will see you hack into a credit card database, perhaps.The second most common type of cybercrime against banks cited in the report was web app attacks, which occurred 376 times in 2016. Verizon defines a web app attack as any incident aimed at a web application. This includes exploiting code-level vulnerabilities in the application as well as thwarting authentication mechanisms. Payment card skimming came in third, with 53 incidents reported. Verizon researchers have seen a decrease in ATM skimming and an increase in gas pump skimming, which might be related to the fact that the card networks have given fuel pump owners an extra year to comply with EMV, making the pumps attractive to criminals who want to get the most out of their magnetic stripe card skimmers.

The future of DDoS attacks looks scary. Blockchain will protect us -- Distributed-denial-of-service attacks are not only becoming massive in scale, but more sophisticated in their makeup. This is in large part due to the expansion of the digital world in which we live. With an ever-increasing number of unsecured devices connected to one another, the potential for cyber-attackers to overwhelm any organization is a clear and present danger.Last year, the biggest recorded DDoS attack was launched against, a website owned by a leading cybersecurity guru, who presumably had somewhat sophisticated cyber-defenses. The real-world threat is unmistakable. New applications of machine learning and the internet of things are expanding the volume of digital communication nodes to monitor for intrusion. This increases the risk of hackers gaining entry without detection. Our increasingly cashless society is drawing would-be attackers who are intent on causing massive disruptions in consumer finance. Just look at the recent elections for an example of how criminals used the data custody chain to manipulate the news on social media. The intrusions that interfered with the integrity of information released to the public were not fully revealed until after the damage was done. An adequate measure of defense for such a complex stream of layers might seem out of reach. Banks are already fighting an uphill battle against cyber-threats; some 25% of banks rank insufficient technical tools as a leading deficiency in their fight against DDoS attacks. But the blockchain offers promise as a resource.   Imagine if an adversary could manipulate upstream financial data used in a bank’s — or also an online consumer’s — downstream decision-making, and go undetected or undetectable for a period of time. In a world where banks are looking to embrace the benefits of machine learning, data manipulation could have a very severe impact on the machine learning decision-making process. But blockchain provides a tamper-proof chain of custody for any record; if data is tampered with, blockchain provides an audit trail to identify who manipulated the data.

 JPMorgan defection underscores tough blockchain choices - The news that JPMorgan Chase left the R3 blockchain consortium speaks to the challenges ahead for any group that aims to get thousands of financial institutions to agree on a shared set of technologies and principles. “This just shows the experimental stage blockchain and distributed ledger technology is at right now,” observed Chris Skinner, chairman of the Financial Services Club, a networking group for senior executives in Europe. “There may well be multiple distributed ledger systems in financial services over the next decade. Then we will be working on interoperability and standards between ledgers. It reminds me of the old discussions of standards. ‘Sure, we got standards. Which one do you want?’  ”The original blockchain was created to track the movement of bitcoin, a digital currency, without the need to trust a centralized third party. The basic concept – a set of shared data that multiple connected parties agree on as valid – has been enthusiastically embraced by the financial services industry. Many bankers and technologists say it will help them handle things like securities trades, payments and contracts in a faster, simpler, more efficient and cheaper way than they do today. But agreement as to exactly what that distributed ledger should look like does not yet exist.   Several models have attracted adherents: the IBM-led Linux Foundation Hyperledger Project, which is building a blockchain built on the open-source Hyperledger Fabric, has 122 members, including Wells Fargo, BBVA, JPMorgan Chase, the Bank of England, the Federal Reserve Bank of Boston, and American Express. The Enterprise Ethereum Alliance, which is building a blockchain based on the Ethereum protocol, has more than 30 financial services and technology members including JPMorgan Chase and Intel. R3, which is creating a “blockchain-inspired” distributed ledger called Corda, has 84 members, including Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Royal Bank of Scotland, State Street, and UBS.

Where Do Banks Fit in the Fintech Stack? --Lael Brainard at The Fed - By now, we've all heard estimates of the thousands of fintech companies that have launched in the past few years and the billions of investment dollars that are flooding into this sector.7 But for all of the talk of "disruption," I want to underscore an important point: More often than not, there is a banking organization somewhere in the fintech stack. Just as third-party app developers rely on smartphone sensors, processors, and interfaces, fintech developers need banks somewhere in the stack for such things as: (a) access to consumer deposits or related account data, (b) access to payment systems, (c) credit origination, or (d) compliance management.8 For instance, account comparison services rely on access to data from consumers' bank accounts. Savings and investment apps analyze transactions data from bank accounts to understand how to optimize performance and manage the funds consumers hold in those accounts. Digital wallets draw funds from payment cards or bank accounts. Marketplace loans most often depend on loan origination by a bank partner. And payment innovations often "settle up" over legacy payment rails, like the automated clearinghouse system.9 In short, the software stacks of almost all fintech apps point to a bank at one layer or another. So as fintech companies and banks are catching up to the interconnected world, the various players are sorting out how best to do the connecting. Much of the work so far has been focused on the technical challenges, which are notable. Most banks' core systems are amalgams of computing mainframes built decades ago before the Internet or cloud computing were widely available and, in many cases, stitched together over the course of mergers and consolidations.10 It takes a lot of investment to securely convert that infrastructure to platforms that can operate in real-time with ready access for Internet-native third-party developers.   But important policy, regulatory, and legal questions also demand attention. And that is where the smartphone analogy loses its power. On balance, bank activities are much more highly regulated than smartphones. Those regulations enable consumers to trust their banks to secure their funds and maintain the integrity of their transactions. While "run fast and break things" may be a popular mantra in the technology field, it is ill suited to an arena where a serious breach could undermine confidence in the payments system. Indeed, some of the key underpinnings of consumer protection and safety and soundness in the banking world--that consumers should be exceptionally careful in granting account access, that in certain conditions banks could be presumed to bear liability for unauthorized charges, and that banks can be held responsible for ensuring that service providers and vendors do right by their customers--sit uneasily alongside the requisites of openness, connectivity, and data access that enable today's app ecosystem.11 For instance, before entering an outsourcing arrangement, a bank is expected to consider whether the service provider's internal processes or systems (or even human error at the outside party) could expose the bank and its customers to potential losses or expose the bank's customers to fraud and the bank to litigation; whether the service provider complies with applicable laws and regulation; and whether poor performance by that outside party could materially harm the bank's public reputation.

Feds delay prepaid card rule by 6 months | TheHill: The Consumer Financial Protection Bureau (CFPB) is postponing new rules for prepaid cards, the latest delay for the controversial Obama-era regulations. The prepaid rules will be delayed by six months to give industry more time to comply with the changes, according to Tuesday's edition of the Federal Register. They are now slated to go into effect on April 1, 2018. Similar to gift cards, prepaid cards allow consumers to store money to spend later. But they often come with high fees.The CFPB's 1,700-page rule is intended to give consumers who used prepaid cards more protections. It would require industry to provide easy-to-read disclosures about late fees and other charges. These disclosures would be posted online. The prepaid rules would also give consumers a 21-day grace period before being hit with late fees. And card issuers would be prohibited from targeting low-income people who cannot afford to repay debts. The rules have long sparked pushback from industry since the consumer agency first announced plans for the regulations nearly five years ago, but they weren't finalized until last October. Industry groups fought to limit the prepaid cards covered under the rule. But consumer advocates also pressured the CFPB to crack down on what they see as abuses by prepaid card issuers, calling on the agency to ban late fees and overdrafts. The CFPB delayed the prepaid rule Monday.

CFPB to hold May 10 field hearing on small business lending -- The CFPB will hold a field hearing on small business lending in Los Angeles, CA on May 10, 2017.  The announcement, which took the form of a posting on the events page of the CFPB’s website, contains only the usual statement that the hearing will feature “remarks from Director Cordray, as well as testimony from community groups, industry representatives, and members of the public.” Since the CFPB typically holds field hearings in conjunction with announcing a related development, it might announce a development involving the CFPB’s rulemaking to implement Section 1071 of Dodd-Frank.  Section 1071 amended the ECOA to require financial institutions to collect and maintain certain data in connection with credit applications made by women- or minority-owned businesses and small businesses such as the race, sex, and ethnicity of the principal owners of the business. In its annual fair lending report issued earlier this month, the CFPB stated that it had “begun to explore some of the issues involved in the rulemaking, including engaging numerous stakeholders about the statutory reporting requirements.”  Also, at the recent House Financial Services Committee hearing at which Director Cordray appeared, Chairman Hensarling criticized the CFPB for not proceeding more quickly to issue a regulation to implement Section 1071.

  Federal regulator ratchets up effort to regulate tribal lenders, suing four in California -- The Consumer Financial Protection Bureau launched another salvo Thursday in its battle against the tribal lending industry, which has claimed it’s not subject to regulation by the agency. The federal regulator sued four online lenders affiliated with a Native American tribe in Northern California, alleging they violated federal consumer protection laws by making and collecting on loans with annual interest rates starting at 440% in at least 17 states.  In a lawsuit filed Thursday in U.S. District Court in Chicago, the bureau alleged that Golden Valley Lending, Silver Cloud Financial and two other lenders owned by the Habematolel Pomo of Upper Lake tribe violated usury laws in the states and thereby engaged in unfair, deceptive and abusive practices under federal law. "We allege that these companies made deceptive demands and illegally took money from people’s bank accounts. We are seeking to stop these violations and get relief for consumers,” CFPB Director Richard Cordray said in a prepared statement announcing the bureau’s action.Since at least 2012, Golden Valley and Silver Cloud offered online loans of between $300 and $1,200 with annual interest rates ranging from 440% to 950%. The two other firms, Mountain Summit Financial and Majestic Lake Financial, began offering similar loans more recently, the bureau said in its release. Lori Alvino McGill, an attorney for the lenders, said in an email that the tribe-owned businesses plan to fight the CFPB and called the lawsuit “a shocking example of government overreach.” “The CFPB has ignored the law concerning the federal government’s relationship with tribal governments,” said McGill, a partner at Washington, D.C., law firm Wilkinson Walsh & Eskovitz. “We look forward to defending the tribe’s business.”

CFPB’s ‘project catalyst’ failed. Fintech deserves better - After the financial crisis, a new agency was created with the promise of taking on Wall Street, but in a new and different way. Seemingly innocuous in name, the Consumer Financial Protection Bureau promised to be a 21st-century, data-driven agency. Its culture was to be based on technology, creativity and change. It would avoid the paralysis of a typical regulatory agency, adopting a startup culture that embraced the agency’s guiding principles: “Serve. Lead. Innovate.”   Embedded within this innovative agency was a select group of individuals who were solely dedicated to promoting financial innovation. Borrowing from the secretive, highly innovative labs in Silicon Valley — like Facebook’s Area 404 or Google X — the CFPB created Project Catalyst. Project Catalyst was designed to allow the CFPB to collaborate with startups, nonprofits and banks to test new products that foster innovation. Last year, Project Catalyst established a process for innovators to seek a statement from the agency, called a no-action letter, which allow for a financial innovation to go to market without fear of enforcement.What was designed to be a first-of-its-kind success story for financial innovation, has instead been the exact opposite. When it comes to Project Catalyst’s no-action letter policy, the CFPB has become at worst a punch line, and at best a cautionary tale. The CFPB’s no-action letters are non-enforceable and non-transferrable, and they can be revoked at any time. It is little wonder that a total of zero no-action letters have been granted since the policy was announced last year. In short, the program has been a flop. Of course, the failure of Project Catalyst is not for a lack of trying. Really, the story of Project Catalyst is that of an agency colliding with the cold realities of the laws and rules that govern what agencies can and cannot do to promote innovation.  In the age of handheld banking apps, digital currencies and online marketplace lending, updating archaic regulations is a difficult task. Not only do the regulators move too slowly, but they typically do not like what they do not understand. Thus, the inherent nature of our nation’s financial regulatory framework not only impedes innovation, but also bans agencies from being more flexible.

Courts are new weapon of choice for banks looking to shift policy — Financial services companies and groups are increasingly willing to take the regulatory regime to court in an effort to fight back against enforcement orders and new initiatives — and so far, they appear to be succeeding.  Two more players joined the fray on Wednesday, with the Conference of State Bank Supervisors suing to stop the development of a new fintech charter while Ocwen Financial pushed back against the Consumer Financial Protection Bureau by challenging its constitutionality.

Incredible shrinking bank populations | American Banker -- The number of U.S. banks has fallen by 24% since the end of 2010, a result of mergers, failures and a dearth of de novo activity. Here are the 10 states with the biggest declines as a percentage of total banks headquartered in the state, according to Federal Deposit Insurance Corp. data. (slide show)

Wells Fargo scandal: Where was the board? -  Wells Fargo's board of directors received "regular" reports since 2005 warning that most of the bank's internal ethics hotline complaints and firings were linked to sales violations.  That's according to a recent investigation by the nation's federal bank regulator. The same Office of the Comptroller of the Currency report also revealed that as early as 2010 there were some "700 cases of whistleblower complaints" about Wells Fargo's sales tactics. Wells Fargo's board of directors "was never informed of 700 whistleblower complaints," a spokesman for the board told CNNMoney.  Still, the OCC findings raise questions about whether Wells Fargo's board of directors, which is charged with helping to safeguard the bank's "integrity and reputation," did enough to monitor a sales culture that had run amok. A verdict on the board's handling of the scandal could be delivered on Tuesday when Wells Fargo (WFC) shareholders vote on whether to re-elect directors at the bank's annual meeting in Florida. Several prominent shareholder watchdog groups are recommending Wells Fargo investors reject many of the bank's board members over their handling of the scandal. A number of large pension funds are heeding that advice, including the New York City Comptroller and the California State Teachers' Retirement System (CalSTRS).  "This scandal was the result of a serious oversight failure by Wells Fargo's board, and the directors responsible need to be held accountable," NYC Comptroller Scott Stringer said in a statement.

Wells Fargo and the Failure of Boards and Regulators – In September 2013, on the fifth anniversary of the peak of the 2008 financial crisis,The Economist decided that one of the interesting ways to revisit the crisis was by focusing on its “winner”: Wells Fargo, the bank that wasn’t bailed out and came out stronger than ever.The Economist spared the bank no compliments, arguing that it weathered the crisis “[s]imply by remaining solvent, a tribute to years of careful management.” The prestigious weekly also highlighted Wells Fargo’s winning formula: “[t]o increase the success of its desultory credit-card operations, it need only entice more customers already using its multiple other services.”  Fast-forward to April 2017, to another report concerning Wells Fargo’s way of managing and incentivizing its employees: “Aided by a culture of strong deference to management of the lines of business (embodied in the oft-repeated ‘run it like you own it’ mantra), the Community Bank’s senior leaders distorted the sales model and performance management system, fostering an atmosphere that prompted low quality sales and improper and unethical behavior.”  The report goes further, detailing the damage created by this culture: “Trends in the data show, perhaps not surprisingly, that as sales goals became harder to achieve, the number of allegations and terminations increased and the quality of accounts declined.” It also describes the failure of control mechanisms: “Several common themes—again, substantially related to Wells Fargo’s culture and structure—hampered the ability of [corporate control] organizations to effectively analyze, size and escalate sales practice issues.” And it explains how the culture turned personal: “These [sales goals] reports were ultimately discontinued in 2014 after the Community Bank hosted ‘Leadership Summits’ in which regional leaders recommended changing or eliminating Motivators [the sales goals reports] due to the culture of shaming and sales pressure they perpetuated.”

Tears, shouts and a police escort: The scene at Wells' annual meeting — For those who arrived at the Sawgrass Marriott on Monday, a day before it hosted the Wells Fargo annual meeting, the venue offered all the charm of a luxury getaway.  But the mood quickly turned early Tuesday morning when shareholders of the embattled Wells arrived on the premises. A chaotic scene unfolded at its annual meeting as investors and activists spoke out against the board, at times yelling or choking back tears.Shortly after the meeting began, longtime community activist Bruce Marks interrupted the proceedings, demanding to hear from each of the company’s board members, who were all in attendance. Marks, the CEO of Neighborhood Assistance Corp. of America, called on directors to turn around in their seats in the front of the large and mostly packed convention hall and openly discuss their role in phony-accounts scandal.“Come on, you guys are here,” Marks said. “Tell us what you know and when you knew it!”For several minutes, Chairman Stephen Sanger and CEO Tim Sloan, who were both onstage, urged Marks to quietly sit down so that the meeting could proceed under regular order.“Bruce, we’re not going to follow the rules that you make up,” Sloan said.Marks refused and, during a brief recess, was physically removed from the meeting by law enforcement and security officers. Sanger told attendees that Marks physically accosted members of the board during the break. Sanger’s account was disputed by shareholders later on during the meeting. The interaction set the tone for what ended up being a raucous annual meeting, a kind of event that’s typically a sleepy affair at most companies in most years. But this annual meeting — which ran for nearly three hours — was the first since the San Francisco company agreed in September to pay $190 million to settle charges that 5,300 employees wrongfully created more than 2 million unauthorized accounts.

Wells Fargo Shakes Up Washington Lobbying After Accounts Scandal - Wells Fargo is making big changes in how it deals with lawmakers and regulators in Washington after top executives were savaged during congressional inquiries into the bank's fraudulent-accounts scandal. David Moskowitz, an executive vice president, will run an expanded government-relations and public-policy group, the San Francisco-based bank said in a statement Thursday. Wells Fargo will add staff in Washington and move more public-policy functions into the new office, the company said.Jon Campbell, who previously headed government relations, will continue to lead some of Wells Fargo's philanthropic efforts, the bank said. Anita Eoloff, a longtime Washington lobbyist for the lender, is retiring. The government-relations role will be two rungs below Chief Executive Officer Timothy Sloan instead of the previous three.  "Wells Fargo looks forward to continuing to work with lawmakers and helping demonstrate to them how we are building a better bank," said Hope Hardison, who heads the bank's chief administrative office. Moskowitz will report to that office.  When then-Wells Fargo CEO John Stumpf tried last year to explain how company employees came to create as many as 2 million accounts without customer approvals, it led to heated exchanges with lawmakers on both sides of the aisle in the House and Senate. Stumpf stepped down shortly after the hearings and has had millions of dollars in pay clawed back. The changes come as the bank continues to take hits over the scandal and awaits the outcome of multiple government investigations. Shareholders' displeasure with the furor and Wells Fargo's response came to a head this week, when investors narrowly voted to back 15 board members after tense exchanges at the bank's annual meeting in Florida.

Regulators approve Wells Fargo’s revised living will — Regulators have approved the latest iteration of Wells Fargo’s 2015 living wills, ending the restrictions they imposed on the embattled bank in December after it failed for a second time in a row to file a credible bankruptcy plan. In a statement issued Monday, the Federal Deposit insurance Corp. and Federal Reserve announced they had been convinced by the bank’s plan for simplifying its structure and taking steps to ensure that certain critical services would continue to work for different arms of the financial institution during a failure.

Goldman Got Burned by These Debts in Rare Trading Miss --  Goldman Sachs Group Inc.’s fixed-income revenue was so unexpectedly weak in the first quarter that last week’s earnings report left the stock tumbling and Wall Street buzzing over what happened. Part of the answer is now emerging. Traders got burned by a constellation of souring debts tied to a coal-mining giant and struggling mall retailers, as well as wagers linked to the U.S. dollar, according to people familiar with the matter. The bank incurred tens of millions of dollars in losses on companies including Peabody Energy Corp. and Energy Future Holdings Corp. Borrowings from retailers including Rue 21 Inc., Gymboree Corp. and Claire’s Stores Inc. also stung, the people said. The behind-the-scenes losses contributed to a disappointing profit, announced April 18, that left analysts and shareholders puzzling about what went wrong. The firm’s fixed-income desks handling bonds, currencies and commodities generated $1.69 billion in revenue, about $340 million below estimates and barely higher than a year earlier, which was the worst first quarter in at least a decade. Chief Executive Officer Lloyd Blankfein blamed the “operating environment,” but it was the same one that had helped every major U.S. rival post double-digit increases. Deputy Chief Financial Officer Marty Chavez told analysts that clients were less active in trading commodities, currencies and credits amid low volatility in some markets. Goldman also has a different mix of clients, he said, with competitors boasting larger lending books and more corporate customers. But for some investors, the comments on credit became a point of confusion as rivals including Bank of America Corp. and Morgan Stanley cited it as an area of strength. Under partner Adam Savarese, who heads Goldman Sachs’s distressed-debt desk, the bank loaded up on borrowings from energy companies and other beaten-down names, the people said, asking not to be named discussing the bank’s trading. Some positions ended up incurring losses, hurting the unit’s revenue growth.

You Brought This Dystopian Panopticon On Yourselves, Goldmanites - It’s safe to say that Goldman Sachs is the bank of over-achievers. The average Goldmanite, we can assume, not only reminded high school teachers they’d forgotten to collect homework, but offered to collect and grade it as well. So it’s fitting that, as Lloyd Blankfein and company roll out a new feedback and monitoring system that seems to draw equal inspiration from Jamie Dimon Ray Dalio’s book of Principles and a Black Mirror episode, Goldman employees have no one to blame but themselvesCalled Ongoing Feedback360+, the initiative follows Goldman Sachs’s redesign of its annual review processes last year, Chief Executive Officer Lloyd Blankfein said in a note to employees on April 13 that was also signed by co-presidents David M. Solomon and Harvey Schwartz. Employees then asked for more frequent and timely interactions, Blankfein said. Like Bridgewater and now JPMorgan employees, Goldmanites will have the privilege of sending and receiving a constant stream of live-action criticism concerning every aspect of their workaday lives in lieu of simple once-a-year evaluations. Though such a system might sound oppressive and unsettling, some members of the 70 percent of those who survive Bridgewater for more than two years seem to like it. Anyway, it may be less accurate to say that Goldman is treating its flock like Bridgewater employees than it is Goldman technologies: “The same approach that we take to our revenue-producing businesses, we have to apply to our investment in people,” [Goldman’s head of human capital management Edith] Cooper said. “That means taking a look and saying ’can we do this better?’”   Happy feedbacking, Goldmanites. Feel free to let us know how the app is working.

A Whistle Was Blown, but Who Was Listening? - Gretchen Morgenson, NYT - The Securities and Exchange Commission calls itself the whistle-blower’s advocate. But one participant in the agency’s lauded whistle-blower program isn’t so sure. He is Michael J. Lutz, an accounting specialist who raised his hand in early 2013 when he was at Radian Group, the giant mortgage insurer. At the time, Radian was still weathering the subprime crisis; it had insured loads of soured mortgages, and Mr. Lutz believed the company was lowballing the amount it might have to pay in claims on the loans. Mr. Lutz, 31, worked at Radian’s headquarters in Philadelphia verifying that the company’s internal accounting controls were effective. This task is also known as Sarbanes-Oxley testing, named for the Enron-era legislation that bolstered the penalties for accounting fraud. Radian was required to set aside reserves against potential losses on bad loans, and Mr. Lutz reckoned that his employer was materially understating those amounts. The company was looking to raise capital through a stock offering, and the lower the reserves, the better the company’s earnings would appear. When Mr. Lutz voiced his concerns to his superiors, he said he was told to stand down. “I felt like I was on an island,” Mr. Lutz told me in a phone interview. “This big-insurance-company-versus-this-little-guy is a very lonely and difficult situation to be in. But I felt I had no other choice. I was doing my job and doing what was right.” After an investigation of Mr. Lutz’s allegations, Radian concluded that he was wrong: Its reserves had been appropriate. But, for the whistle-blower, the damage was done. Indeed, Mr. Lutz said that before he made an issue of the company’s reserves, he had been thriving at Radian. Soon, he said, he was disinvited from meetings. After Radian investigated his allegations, the company outsourced Mr. Lutz’s job and those of others in his group. Then Radian gave him a choice: He could take a new position auditing the company’s information technology systems, or he could resign and receive approximately $75,000 in severance. That sounded fine, until he scrutinized the deal. To receive the money from Radian, he had to sign a document stating that he had not filed a complaint against the company with any local, state or federal agencies. Another stipulation: Accepting the severance would bar him from receiving any “monetary damages or any other form of personal relief” in connection with an investigation or proceeding involving the company.

World Stocks Hit All Time High, S&P Futures Rise To Within 1% Of Record --After yesterday's violent gap up in stocks across the globe in response to the "expected" outcome from the French election, today the risk on sentiment has continued if to a lesser extent, with stocks in Europe, Asia all rising while S&P futures point to a higher open. Yen, gold decline, while the euro traded as high as 1.09 this morning before fading some gains; oil is up modestly.While today's surge may have been more muted, world stocks hit a new record high on Tuesday, with investors still cheering Macron's victory in the first round of the French presidential election, supported by speculation about U.S. tax reform and the overnight report that Trump has conceded on the border wall, eliminating a government shutdown as a potential risk. As shown below, the MSCI All World Index has jumped to a new all time high, boosted by strong Asian markets.MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6%, hovering near its highest level since June 2015 hit earlier in the session, on its fourth straight day of gains. Japan's Nikkei rose more than 1 percent to a three-week high aided by a weaker yen. South Korea's also advanced 0.7 percent to its highest level since April 2015. China equities climbed from a three-month low on speculation that a selloff over concerns of a regulatory crackdown were overdone. Australia and New Zealand were closed for Anzac Day.European stocks hovered near a 20-month high, with the Dax flirting with all time highs. The Stoxx Europe 600 index edged 0.2% higher after jumpin 2.1% on Monday to the highest since August 2015, with property and technology shares helping to underpin a global rally. French shares pulled back 0.1 percent, having risen 4.1 percent on Monday in their biggest daily gain since August 2012. Futures on the S&P 500 added 0.1 percent. The index climbed 1.1% Monday to within 1% of its all-time closing high.These gains helped push MSCI's world stocks index to a fresh all-time high after chalking up its biggest rise since shortly after Britain's vote last June to leave the European Union.

The market ‘sits on a powerful time bomb’ as French election gooses risk-on assets -  Stocks are up around the world, and risk-off assets are taking a hit after centrist Emmanuel Macron won the first round of France’s presidential election. These days, however, bursts to the upside are typically met with raised eyebrows from those waiting to pounce on the blow-off top they’ve been watching for during every leg up in this relentless market. Will this one disappoint like so many before?   Perhaps, but evidence is mounting that the end is near. Wolf Richter of the Wolf Street blog says the market “sits blithely on a powerful time bomb” and “no one knows the full magnitude, but it’s huge.” The time bomb he’s referring to is the explosive growth of margin debt, a trend that eventually leads to a bloodbath.   Timing the when, of course, isn’t easy.  But as it stands now, margin debt, as reported by the NYSE, just surged to a record high of $528 billion. That’s not including loads of unreported margin, or “shadow margin,” that Richter says could put the total figure somewhere near $800 billion. “Margin debt is in an uncanny relationship with the stock market,” he says. “It soars when stocks soar and crashes when stocks crash. They feed on each other.” Which brings us to our chart of the day, from Doug Short of the Advisor Perspectives blog. Clearly, the stock market has become crazy leveraged. And, also clearly, that often leads to big losses when it starts to fall apart.

Why are hedge funds raising their bets against US shopping malls -- Betting big on Amazon and selling the shares of traditional retailers has been a blockbuster trade for some time.Now, a small but growing number of hedge funds are wagering that the next leg of the woes afflicting bricks and mortar retailers in the US will unfold dramatically for those shopping mall owners who have largely so far been considered immune.The level of bets against some of the largest US mall operators has been rising steadily this year. Simon Property Group, the biggest US real estate investment trust with a market capitalisation of $52bn, for example, has the largest amount of shares lent out to short sellers since 2011, according to Markit data. While SPG’s share price has fallen 5.5 per cent this year, the level of short interest — anticipating a pronounced drop in value — represents a bet worth just over $1bn. Here the Financial Times dissects the anatomy of this trade. Aren’t investors already aware of the difficulties of US mall operators? For some yes, but for others far less so. Concern about the health of smaller regional mall operators has seen their share prices already fall sharply.  Recent data on the US retail sector has been bleak, with the number of bankruptcies during the first quarter of 2017 already eclipsing the total for 2016, according to the restructuring adviser AlixPartners.  But the troubles of smaller operators contrast sharply to the share price performances of the largest prime mall owners in the US, Simon Property Group and GGP. That reflects an assumption that their businesses should remain largely immune from the malaise affecting large parts of the country’s retail sector. At the same time, investors have been attracted by the dividends paid out by large Reits.

Retailers are going bankrupt at a record pace - Retailers are filing for bankruptcy at a record rate as they try to cope with the rapid acceleration of online shopping. In a little over three months, 14 chains have announced they will seek court protection, according to an analysis by S&P Global Market Intelligence, almost surpassing all of 2016. Few retail segments have proven immune as discount shoe-sellers, outdoor goods shops and consumer electronics retailers have all found themselves headed for reorganization. Meanwhile, America's retailers are closing stores faster than ever as they try to eliminate a glut of space and shift more business to the web. S&P blamed retailer financial struggles on their inability to adapt to rising pressure from e-commerce. Urban Outfitters Chief Executive Officer Richard Hayne said as much on a conference call with analysts last month. There are just too many stores, especially those that sell clothing, he said. "This created a bubble, and like housing, that bubble has now burst," said Hayne. "We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate." Jim Elder, S&P Global Market Intelligence's director of risk services, wrote that first-quarter results suggest there's no quick recovery in sight. Sears Holdings Corp., Bon-Ton Stores Inc. and Perfumania Holdings Inc. are among the most vulnerable in the coming year, according to an S&P analysis of public retail companies. Sears acknowledged in a March filing that there is "substantial doubt" about its future. Fitch named retail chains including Nine West Holdings, Claire's Stores and children's clothing outlet Gymboree Corp. in a study late last year. (Representatives from Bon-Ton, Perfumania, Nine West and Claire's didn't immediately respond to requests for comment.) Department stores, electronics retail and apparel shops are at highest risk, according to S&P. The food and home improvement segments are safest. Apparel retail has been particularly hard hit, with The Limited, Wet Seal, BCBG Max Azria and Vanity Shop of Grand Forks each seeking court protection in 2017. The latest victim was Payless Inc., which filed for bankruptcy April 4 and said it would shutter 400 stores.

S&P: These Ten Retailers Will File For Bankruptcy Next -- Three weeks ago, we reported that Fitch had put together a list of 8 retailers who were likely next in line to file for bankruptcy. The rating agency speculated that distressed legacy "bricks and mortar" outlets such as 99 Cents Only, rue 21, Gymboree and True Religion would follow what has already been a historic surge in retailers filing for Chapter 11 protection and/or shuttering stores. The Fitch list is below: Putting this list in context, over the weekend we presented a chart from Credit Suisse showing that on an annualized basis, some 8,640 - or more - stores would be closed in 2017, the highest number on record. And it's only just beginning. Taking a cue from their peers at Fitch, analysts at S&P Global Market Intelligence likewise released a list of 10 publicly traded retailers they consider most at risk of default within the next 12 months. As the WSJ notes, the firm’s analysis is based on industry factors, such as intensity of competition and barriers to entry, as well as company-specific metrics. Here’s S&P’s ranking, courtesy of the WSJ:

  • 1. Sears Holdings Corp. - Sears has been buying time by making cost-saving maneuvers that include the sale of its Craftsman brand and the closure of 150 stores. On Friday, the retailer said it would shutter 92 Kmart pharmacies and 50 Sears Auto locations this year. Sears “is determined to remain a viable competitor in retail and we are taking all necessary actions to improve our performance,” said a spokesman for the company.
  • 2. DGSE Companies Inc. The Dallas-based seller of precious metals and jewelry has been struggling with declining sales. It has a market value of about $43 million. Following a leadership change in December, the company said it “eschewed the unsuccessful strategies of recent years” and expects to post a profit in the first quarter for the first time in four years.
  • 3. Appliance Recycling Center of America Inc. The recycler and seller of household appliances, with about 18 retail locations under the ApplianceSmart banner, has a market value of less than $10 million.
  • 4. The Bon-Ton Stores Inc. The department store chain, with dual headquarters in Milwaukee, Wis., and York, Pa., reported a $63 million loss in 2016 and expects comparable sales to decline in 2017. It operates about 263 stores. Although it had more than $2.5 billion of revenue last fiscal year, it has a $13 million market value.
  • 5. Bebe Stores Inc. The mall-based women’s apparel chain, which was popular for its fitted clothing in the early 2000s, has suffered from declining foot traffic and a consumer shift toward more subtle styles. Last week, the company said it would close its remaining 168 locations and only sell online.
  • 6. Destination XL Group Inc. The chain sells men’s big and tall apparel in about 344 stores.
  • 7. Perfumania Holdings Inc. The specialty retailer, which sells perfumes and fragrances, has been facing dwindling foot traffic to its stores in malls and tourist-dependent areas. The company has a market cap of about $14 million.
  • 8. Fenix Parts Inc. A small reseller of automotive parts reclaimed from damaged vehicles. It has a market value of less than $25 million.
  • 9. Tailored Brands Inc. Tailored Brands, which primarily sells men’s apparel, has been struggling amid increased competition from several e-commerce players. Comparable sales at Men’s Wearhouse, the company’s largest brand, fell 2.2% in the fourth quarter and are expected to decline in fiscal 2017. Shares are down nearly 50% this year. The S&P’s analysis is “extremely misleading” because it “does not take into account debt maturities and our first debt maturity is not until 2021,” a company spokeswoman said.
  • 10. Sears Hometown and Outlet Stores Inc. The retailer, which was spun off from Sears Holdings in 2012, closed 160 stores in fiscal 2016 as part of an effort to cut costs. As of Jan. 28, the company or its independent dealers and franchisees operated a total of 1,020 stores. It had $2 billion in revenue last fiscal year, but has lost money for three straight years.

Wolf Richter: Private Equity in the Thick of Bricks and Mortar Retail Implosion - naked capitalism - Yves here. As Wolf alludes in this post, one of the reason so many real world retailers are hitting the wall so hard is that private equity leverage and asset stripping made them particularly vulnerable. While the losses to online retailers would have forced some downsizing regardless, the fact that so many are making desperate moves in parallel is in large measure due to the fact that the tender ministrations of their private equity overlords have made them fragile.Eileen Appelbaum and Rosemary Batt, in their landmark book Private Equity at Work, described a real estate looting strategy that as of 2014 had already ruined some formerly viable retail and restaurant chains. As we summarized their observations:For instance, one way that private equity overlords enrich themselves at the expense of the businesses they acquire is by taking real estate owned by the company, spinning it out into another entity (owned by the PE fund and to be monetized subsequently) and having the former owner make lease payments to its new landlord.To make this picture worse, the PE firms typically “sell” the real estate at an inflated price, which justifies saddling the operating business with high lease payments, making the financial risk to the company even higher. Of course, those potentially unsustainable rents make the real estate company look more valuable to prospective investors than it probably is.Eileen Applebaum provided examples of how this worked (and regularly left bankruptcies in its wake) in an interview with Andrew Dittmer.Now here is the cute part. First, remember that the private equity fund manager makes out regardless of whether their investors do well, since nearly 2/3 of their total fees are not related to performance. We’ve posted on how private equity fund managers get rich on management fees alone. And if the deal goes bad, what happens? The end result to the private equity investors depends on how much cash was returned, between the real estate sale and any positive cash flows afterward, before the company goes bust. It could turn out to be pretty profitable to a bit of a turkey.The real losers are the lenders to the retailer. And who might they be? Increasingly they are the very same investors as in the private equity funds. Private equity fund managers offer credit funds, which lend in large measure to private equity deals.

Number of U.S. bank branches to shrink 20 percent in five years: real estate report | Reuters: The number of bank branches in the United States will shrink by as much as 20 percent in five years, according to a report from commercial real estate firm JLL. This reduction comes as banks are looking for ways to cut costs and to encourage their customers to embrace mobile banking technology rather than completing basic transactions within a physical branch. The U.S. banking industry could save as much as $8.3 billion annually if it trimmed the number of branches and downsized the average bank branch from 5,000 to 3,000 square feet, JLL found. U.S. banks have reduced their footprint by around 8 percent since the financial crisis, from 97,000 branches to roughly 90,000.

Another Day, Another Ocwen Motion: This Time, It's Constitutional -- Ocwen Financial Corporation opened a second line of attack against its regulatory enemies Wednesday morning, filing motions that request an early decision in a court case that could declare the Consumer Financial Protection Bureau unconstitutional — and, in turn, invalidate a federal lawsuit that the CFPB filed against Ocwen last week.After submitting motions for restraining orders against state-level cease-and-desist orders in Massachusetts and Illinois yesterday, the West Palm Beach, Fla.-based firm set its sights on the federal government today, seeking a court ruling that would declare the CFPB to be unconstitutional.Ocwen’s motions have some precedent. Back in October, in the case of PHH Corp. v. Consumer Financial Protection Bureau, three judges on the D.C. Circuit Court of Appeals ruled that the CFPB — an independent federal bureau created in the wake of the financial criss and recession in 2010 — had an unconstitutional structure, citing the president’s inability to fire its director, as well as the general unchecked power of the position.Many Republicans have called for the ouster of current CFPB director Richard Cordray, but despite controlling the White House, their hands are tied: As the Boston Globe pointed out, the director — and ally of progressive Massachusetts Sen. Elizabeth Warren, who helped form the CFPB — can’t be removed until his term elapses in 2018 unless President Trump can illustrate that Cordray exhibited “inefficiency, neglect of duty, or malfeasance” in office.According to the National Law Review, the D.C. Circuit is set to rehear the PHH v. CFPB case on May 24, but an even earlier ruling could pay serious dividends for Ocwen. The beleaguered company faces a federal lawsuit in which the CFPB alleges rampant problems in its mortgage servicing operations, including the improper handling of escrow accounts, illegal foreclosures, and shoddy record-keeping. Were a court to deem the CFPB to be unconstitutional, Ocwen says, the case should rightfully be thrown out.

 Big banks take on ultimate omnichannel challenge: Mobile mortgages -- The way Bank of America’s John Schleck tells it, bringing mortgage applications to mobile devices — a new frontier for banks like B of A, CIBC and others — is simply the natural follow-up to doing it with car loans. Schleck, an online sales executive at B of A, points out that the bank "mobile-optimized" its auto loan application in 2016, an experience it plans to enhance this summer by making it possible for consumers to shop for a car on the mobile app. Once they find a vehicle they like, they can then apply for a loan and get approved on the same platform. Customers will be able to complete 85% to 90% of the process on the app, he says. Mortgages are admittedly trickier, but the opportunity is undeniable. A recent Accenture survey of more than 4,000 North American consumers found that one in five completed their mortgage purchase without using a digital channel at all. For the average consumer, no other transaction is as time-consuming, paper-intensive or nerve-wracking as the process of taking out a home loan. It typically takes weeks and requires a raft of forms. The development of mobile mortgage solutions, then, is a kind of ultimate test of banks' commitment to omnichannel strategies. This is so not only because of the difficulty involved in bringing such a complex transaction to mobile devices but also because, unlike with digital card applications, which can yield an approval decision in seconds, loan officers are still a critical component of the mortgage process. "We're going after making anything that customers want to do available in any channel that they want," Michelle Moore, Bank of America's head of digital, said about the company's efforts to develop a mobile mortgage offering for its 22 million active mobile users. It plans to launch the platform later this year.

A GSE risk we can no longer ignore: Doing nothing -- The GSEs have repaid their original $185 billion advance to Treasury, plus another $70 billion in funds to taxpayers. Significant reforms have been made to the old “private gain, public loss” GSE model, including an end to no-documentation loans resulting from new mortgage regulations, significant credit risk-sharing, a wind-down of the GSEs’ portfolios and the development of the Federal Housing Finance Agency into a strong regulator.  Congress should try to reach consensus on GSE reform, but we should not wait indefinitely for Congress to act. Last month, the Community Home Lenders Association proposed a comprehensive reform plan that would not require congressional approval. This proposal builds on the reforms already in place, removes the taxpayer risk of Treasury continuing to advance cash to the mortgage giants, and relies on the expertise of the FHFA and Treasury to implement the plan. The housing finance system should be rebuilt around the principle of full and competitive access to the secondary market, not dominance by Wall Street banks, as well as consumer access to mortgage credit. Our plan starts with a no-brainer. The FHFA, with the support of Treasury, should use its authority under the 2008 Housing and Economic Recovery Act of 2008 to suspend GSE dividend payments to Treasury, allowing Fannie and Freddie to build a modest capital buffer. FHFA Director Mel Watt has referred to the GSEs’ lack of capital as “the most serious risk” facing the companies. Enabling the GSEs to build a buffer would avoid a further Treasury advance. But note that a buffer should not be conflated with the notion of a complete GSE recapitalization.Secondly, and consistent with the 2008 HERA statute, the FHFA — as the GSEs’ conservator — should develop a capital restoration plan to show how the GSEs could emerge from conservatorship. We believe the best approach for such a plan is a utility model — with taxpayers protected through capital to absorb losses, risk sharing to reduce direct GSE risk, strong underwriting of loans and counterparty risk, and fees to compensate for the federal government backstop. Treasury must then amend the Preferred Stock Agreement, setting in motion the process of recapitalization. Unlike some other reform proposals, we are focused on protecting small and midsize lender access through specific provisions to address the risks of control of GSE loans by the large Wall Street banks. Fannie and Freddie should be preserved, not replaced or supplanted by the large vertically integrated banks that can use their securitization powers to dominate the mortgage origination market. Such an outcome would be anti-competitive — bad for consumers and bad for small lenders.

Lawmakers increasingly optimistic about reform of Fannie Mae, Freddie Mac — While lawmakers have grown increasingly pessimistic about the chances to significantly revamp the Dodd-Frank Act, they are hopeful that housing finance reform — which has bedeviled Congress for the past nine years — may finally have a shot at enactment.Speaking Thursday before the Women in Housing and Finance group, Senate Banking Committee Chairman Mike Crapo conceded that regulatory reform was a tough lift given ongoing partisan tensions, but signaled that may not be the case with reform of Fannie Mae and Freddie Mac.

Fannie Mae announces new programs to break through student loan roadblock -- Confirming what sources told HousingWire yesterday, Fannie Mae this morning announced a significant expansion of its student loan cash-out refinance program and introduced new policies to help borrowers with student loan debt get qualified for mortgage loans.“We understand the significant role that a monthly student loan payment plays in a potential home buyer’s consideration to take on a mortgage, and we want to be a part of the solution,” said Jonathan Lawless, vice president of customer solutions at Fannie Mae. “These new policies provide three flexible payment solutions to future and current homeowners and, in turn, allow lenders to serve more borrowers.”The level of student debt in the U.S. has spiraled over the last decade to $1.4 trillion, effectively locking out millions of potential homebuyers from the market. The new Fannie Mae programs address specific roadblocks that these borrowers face, providing a jump-start to a whole generation of homebuyers.Fannie Mae’s new solutions include:

  • Student loan cash-out refinance: Offers homeowners the flexibility to pay off high interest rate student debt while potentially refinancing to a lower mortgage interest rate.
  • Debt paid by others: Widens borrower eligibility to qualify for a home loan by excluding from the borrower’s debt-to-income ratio non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else.
  • Student debt payment calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.

The new student loan cash-out refinance option expands a program Fannie Mae rolled out with SoFi in November. Lawless said the overwhelmingly positive reaction to that program convinced Fannie Mae to broaden its scope. “We were really testing market reception and we got a lot of interest from consumers and a lot form interest from lenders who wanted to have access to this same type of program. The market reception was such that we were really confident this was needed,” Lawless said.

Fannie Introduces "Innovative Solutions" Allowing Student-Debt-Laden Millennials To Buy A Home -- So what do you do when a massive student loan bubble results in crippling leverage for an entire generation of your population rendering them financially unqualified to obtain mortgage financing and their 'God-given right' to a slice of the 'American Dream'?  Well, you simply change the rules to allow mortgage lenders to ignore all that pesky student debt...anything less would simply be evil and potentially racist, sexist and all sorts of other -ist words. Luckily, Fannie Mae is right on top of the issue and has just released new rules allowing millennial borrowers to, among other things, simply exclude student loans, credit cards and auto loans that are "paid by someone else"...wink wink...when applying for a new mortgage.  As an added benefit, taxpayer subsidized mortgage loans can also now be used to repay student debt...Hooray for taxpayers! Fannie Mae announced new policies that will help more borrowers with student debt qualify for a home loan. These innovations address challenges and obstacles to homeownership due to a significant increase in student loan debt over the past decade and provide access to credit for qualified borrowers. The new solutions give homeowners the opportunity to pay down student debt with a mortgage refinance, allow borrowers to exclude non-mortgage debt paid by others as part of the loan application process, and make it more likely for borrowers with student debt to qualify for a mortgage loan by allowing lenders to accept student debt payments included on credit reports.

    • Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high interest rate student debt while potentially refinancing to a lower mortgage interest rate.
    • Debt Paid by Others: Widens borrower eligibility to qualify for a home loan byexcluding from the borrower’s debt-to-income ratio non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else.
    • Student Debt Payment Calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.

12 cities still grappling with high foreclosures - Slide 1 of 14 - National foreclosure activity is at an 11-year low. There were more than 83,000 foreclosure filings nationwide in March, down 77% from a record 367,000 in September 2010. But some cities have yet to fully recover. Here's a look at the 12 cities with the highest foreclosure rates during March, according to Attom Data Solutions. (slideshow)

Freddie Mac: Mortgage Serious Delinquency rate declined in March, Lowest since May 2008 -- Freddie Mac reported that the Single-Family serious delinquency rate in March was at 0.92%, down from 0.98% in February.  Freddie's rate is down from 1.20% in March 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the lowest serious delinquency rate since May 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".  Although the rate is still declining, the rate of decline has slowed.  Maybe the rate will decline another 0.2 to 0.4 percentage points or so to a cycle bottom, but this is pretty close to normal.

Fannie Mae: Mortgage Serious Delinquency rate declined in March, Lowest since Feb 2008 --Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.12% in March, from 1.19% in February. The serious delinquency rate is down from 1.44% in March 2016.This is the lowest serious delinquency rate since February 2008.These are mortgage loans that are "three monthly payments or more past due or in foreclosure".   The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.Although the rate is declining, the "normal" serious delinquency rate is under 1%.    The Fannie Mae serious delinquency rate has fallen 0.32 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will not be below 1% until this Summer.

MBA: Mortgage Applications Increase in Latest Weekly Survey - From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey - Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 21, 2017.... The Refinance Index increased 7 percent from the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index increased 0.1 percent compared with the previous week and was 0.4 percent higher than the same week one year ago... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.20 percent, from 4.22 percent, with points increasing to 0.37 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990.

U.S. 30-year mortgage rates rise from 5-month lows: Freddie Mac | Reuters: U.S. 30-year mortgage rates rose in the latest week, rebounding from five-month lows in step with a rise in bond yields, following the first round of the French presidential election on Sunday, according to mortgage finance agency Freddie Mac (FMCC.PK) on Thursday. The borrowing cost on 30-year mortgages, the most widely held type of U.S. home loan, averaged 4.03 percent in the week ended April 27, up from the prior week's 3.97 percent, it said. The benchmark 10-year Treasury yield US10YT=RR had risen earlier this week as investors scaled back their safe-haven bond holdings on expectations centrist Emmanuel Macron would beat anti-EU Marine Le Pen in the French presidential run-off on May 7. In early Thursday trading, the 10-year Treasury yield was down over 1 basis point at 2.296 percent after hitting a two-week peak at 2.350 percent on Wednesday, Reuters data showed. "Despite recent swings in mortgage rates, the housing market continues to show signs of strength," Freddie Mac's chief economist Sean Becketti said in a statement.

FHFA House Price Index Up 0.8% Nominally in February - The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for the most recent month. Here is the opening of the report:U.S. house prices rose in February, up 0.8 percent from the previous month, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). The previously reported lack of change in January was revised upward to a 0.2 percent increase. [Link to report]  The chart below illustrates the HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

Black Knight: House Price Index up 0.8% in February, Up 5.7% year-over-year --Note: Black Knight uses the current month closings only (not a three month average like Case-Shiller or a weighted average like CoreLogic), excludes short sales and REOs, and is not seasonally adjusted. From Black Knight: Black Knight Home Price Index Report: U.S. Home Prices Hit New Peak in February, Rising 0.8 Percent for the Month, Up 5.7 Percent Year-Over-Year

• Nationally, home prices rose 0.8% for the month and gained 5.7% on a year-over-year basis
• U.S. home prices hit a new, post-crisis high in February, with the national HPI hitting $268K, surpassing the previous peak set in June 2006
• February marked 58 consecutive months of annual national home price appreciation
• Home prices in six of the nation’s 20 largest states and 14 of the 40 largest metros hit new peaks in February

The year-over-year increase in this index has been about the same for the last year. Note that house prices are just above the bubble peak in nominal terms, but not in real terms (adjusted for inflation). 

 Case-Shiller: National House Price Index increased 5.8% year-over-year in February  -- S&P/Case-Shiller released the monthly Home Price Indices for February ("February" is a 3 month average of December, January and February prices).  This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. From S&P: S&P Corelogic Case-Shiller National Home Price NSA Index Sets Fourth Consecutive All-Time High The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8% annual gain in February, up from 5.6% last month and setting a 32-month high. The 10-City Composite posted a 5.2% annual increase, up from 5.0% the previous month. The 20-City Composite reported a year-over-year gain of 5.9%, up from 5.7% in January.
Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In February, Seattle led the way with a 12.2% year-over-year price increase, followed by Portland with 9.7%. Dallas replaced Denver in the top three with an 8.8% increase. Fifteen cities reported greater price increases in the year ending February 2017 versus the year ending January 2017..Before seasonal adjustment, the National Index posted a month-over-month gain of 0.2% in February. The 10-City Composite posted a 0.3% increase, and the 20-City Composite reported a 0.4% increase in February. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase. The 10-City Composite posted a 0.6% increase and the 20-City Composite reported a 0.7% month-over-month increase. Sixteen of 20 cities reported increases in February before seasonal adjustment; after seasonal adjustment, 19 cities saw prices rise.
The first graph shows the nominal seasonally adjusted Composite 10, Composite 20 and National indices (the Composite 20 was started in January 2000). The Composite 10 index is off 7.2% from the peak, and up 0.6% in February (SA). The Composite 20 index is off 4.8% from the peak, and up 0.7% (SA) in February. The National index is 2.1% above the bubble peak (SA), and up 0.4% (SA) in February. The National index is up 38.0% from the post-bubble low set in December 2011 (SA). The second graph shows the Year over year change in all three indices. The Composite 10 SA is up 5.1% compared to February 2016. The Composite 20 SA is up 5.8% year-over-year. The National index SA is up 5.7% year-over-year.

Home prices in 20 U.S. cities accelerate for a fifth month -- Home prices in 20 U.S. cities accelerated in the year through February for a fifth month, while nationwide property values also picked up, according to S&P CoreLogic Case-Shiller data reported Tuesday. The 20-city property values index climbed 5.9% from February 2016 (the forecast was 5.8%), the fastest since July 2014, after increasing 5.7% in the year through January. The national home-price gauge rose 5.8% in the 12 months through February. The seasonally adjusted 20-city index advanced 0.7% from a month earlier (matching the Bloomberg survey median). While mortgage rates have eased in recent weeks after a post-election surge, housing affordability is being crimped by lingering inventory shortages and wage growth that's been slower to pick up than property values. At the same time, steady labor-market progress and healthier household balance sheets help explain why Americans are still propelling demand for the industry even as home prices are on a tear. "There are still relatively few existing homes listed for sale and the small 3.8-month supply is supporting the recent price increases," David Blitzer, chairman of the S&P index committee, said in a statement. "Housing affordability has declined since 2012 as the pressure of higher prices has been a larger factor than stable-to-lower mortgage rates." All 20 cities in the index showed year-over-year gains, led by a 12.2% increase in Seattle and a 9.7% advance in Portland, Ore. After seasonal adjustment, Seattle had the biggest month-over-month rise at 1.9%, followed by Dallas with a 1.2% increase. Home prices were unchanged in Tampa. 

 Home Prices Rose 5.8% Year-over-Year in February, 32-Month High (NSA) -- With today's release of the February S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.7% month over month. The seasonally adjusted year-over-year change has hovered between 4.2% and 5.8% for the last twenty-five months. Today's S&P/Case-Shiller National Home Price Index.(Nominal) reached another new high. The Real S&P/C-S HPI is at its post-recession high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.7% from the previous month. The nonseasonally adjusted index was up 5.9% year-over-year. had forecast a 0.8% MoM seasonally adjusted increase and 5.7% YoY nonseasonally adjusted for the 20-city series. Here is an excerpt of the analysis from today's Standard & Poor's press release. “Housing and home prices continue to advance,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “The S&P Corelogic Case-Shiller National Home Price Index and the two composite indices accelerated since the national index set a new high four months ago. Other housing indicators are also advancing, but not accelerating the way prices are. As per National Association of Realtors sales of existing homes were up 5.6% in the year ended in March. There are still relatively few existing homes listed for sale and the small 3.8 month supply is supporting the recent price increases. Housing affordability has declined since 2012 as the pressure of higher prices has been a larger factor than stable to lower mortgage rates." [Link to source] The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.

Real House Prices and Price-to-Rent Ratio in February --  It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 2.1% above the previous bubble peak. However, in real terms, the National index (SA) is still about 14.4% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now just over 5%. In February, the index was up 5.8% YoY. In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 in January 2000, the price would be close to $280,000 today adjusted for inflation (40%).  That is why the second graph below is important - this shows "real" prices (adjusted for inflation). first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through January) in nominal terms as reported.In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to October 2005 levels, and the CoreLogic index (NSA) is back to September 2005.  The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.In real terms, the National index is back to April 2004 levels, the Composite 20 index is back to December 2003, and the CoreLogic index back to February 2004. In real terms, house prices are back to late 2003 / early 2004 levels.  In real terms, and as a price-to-rent ratio, prices are back to late 2003 / early 2004  - and the price-to-rent ratio maybe moving a little more sideways now.

Zillow Forecast: "The national Case-Shiller index is projected to climb 5.9 percent year-over-year in March" -- The Case-Shiller house price indexes for February were released this morning. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close. From Svenja Gudell at Zillow: March Case-Shiller Forecast: The Home Price Party Rages On  Home prices are expected to continue to climb in March, but the pace of month-over-month growth is expected to slow, according to Zillow’s March Case-Shiller forecast. The national Case-Shiller index is projected to climb 5.9 percent year-over-year in March, following a 5.8 percent gain in February. Month-to-month, the national index is expected to be up a seasonally adjusted 0.3 percent in March, following a 0.4 percent monthly gain in February. Annual growth in the smaller 10- and 20-city indices is also expected to slow slightly: The 10-city forecast is for a 5.1 percent gain in annual growth for March, following 5.2 percent annual growth in February. And the 20-city index is projected to gain 5.7 percent in March, below its 5.9 percent annual gain in February. The 10-city index is forecast to climb a seasonally adjusted 0.7 percent in March from February, following 0.6 percent monthly growth between January and February. Growth in the 20-city index is expected to hold steady on a seasonally adjusted, month-over-month basis, rising 0.7 percent in March as it did in February.Zillow’s March Case-Shiller forecast is shown below. These forecasts are based on today’s February Case-Shiller data release and the March 2017 Zillow Home Value Index. The March S&P CoreLogic Case-Shiller Indices will not be officially released until Tuesday, May 30.  The year-over-year change for the Case-Shiller national index will probably increase in March.

New home sales unexpectedly rise to highest level since July - Purchases of new homes unexpectedly increased in March to an eight-month high, indicating housing demand remained strong at the start of the spring buying season, Commerce Department data showed Tuesday. Single-family home sales increased 5.8% to a 621,000 annualized pace (the median forecast called for a 584,000 rate). The February reading was revised to a 587,000 pace from a previously estimated 592,000. The median sale price of a new house rose 1.2% from March 2016 to $315,100. The supply of homes shrank to 5.2 months from 5.4 months; there were 268,000 new houses on the market at the end of March. Steady job growth and improving wages are continuing to drive demand, building on last year's new home sales that were the strongest since 2007. While mortgage costs remain above pre-election levels, they're becoming less of a curb on the market, with the average 30-year fixed rate falling last week to the lowest since November. Still, lean inventories and rising prices may restrain any gains. Rise in demand was led by a 16.7% gain in the West, which had the fastest sales pace since 2007; the South and Northeast also saw gains, while purchases slowed in Midwest. 

March New Home Sales Jumps, Surprises Forecasts - This morning's release of the March New Home Sales from the Census Bureau came in at 621K, up 5.8% month-over-month from a revised 587K in February. Seasonally adjusted estimates for December and January were also revised. The forecast was for 583K. Here is the opening from the report:Sales of new single-family houses in March 2017 were at a seasonally adjusted annual rate of 621,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.8 percent (±15.5 percent)* above the revised February rate of 587,000 and is 15.6 percent (±15.0 percent) above the March 2016 estimate of 537,000.The median sales price of new houses sold in March 2017 was $315,100. The average sales price was $388,200. [Full Report] For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed's FRED repository here. We've included a six-month moving average to highlight the trend in this highly volatile series.

New Home Sales increase to 621,000 Annual Rate in March -- The Census Bureau reports New Home Sales in March were at a seasonally adjusted annual rate (SAAR) of 621 thousand.  The previous three months combined were revised up significantly. "Sales of new single-family houses in March 2017 were at a seasonally adjusted annual rate of 621,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 5.8 percent above the revised February rate of 587,000 and is 15.6 percent above the March 2016 estimate of 537,000."  The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.  Even with the increase in sales over the last several years, new home sales are still fairly low historically. The second graph shows New Home Months of Supply.  The months of supply declined in March to 5.2 months.   The all time record was 12.1 months of supply in January 2009.  This is now in the normal range (less than 6 months supply is normal).  "The seasonally-adjusted estimate of new houses for sale at the end of March was 268,000. This represents a supply of 5.2 months at the current sales rate."  Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. The third graph shows the three categories of inventory starting in 1973.

New Home Sales Jump, Tied For Highest Since 2008 As Median Selling Price Rebounds== Confirming the strong housing data reported earlier by Case-Shiller which showed the fastest pace of home price appreciation since 2014, moments ago the Census reported that New Home Sales rose 5.8% in March to an annual pace of 621K units, just shy of the highest print going back to January 2008, and solidly beating expectations of a 585K print.   Unlike existing home sales, new home sales are benefiting from an increase in the supply of homes for sale. New home inventories increased 1.1% in March. While analyst agree that the underlying trend in new home sales is positive, some had expected a modest decline in sales after February's gain. What was notable is that price jumped as both Median and Average home prices rose to the highest level of 2017.

A few Comments on March New Home Sales --New home sales for March were reported at 621,000 on a seasonally adjusted annual rate basis (SAAR).  This was well above the consensus forecast, and the three previous months combined were revised up significantly. This was a strong report. Sales were up 15.6% year-over-year in March.  However, January, February and March were the weakest months last year on a seasonally adjusted annual rate basis - so this was an easy comparison. So far the increase in mortgage rates has not negatively impacted new home sales. This graph shows new home sales for 2016 and 2017 by month (Seasonally Adjusted Annual Rate).  Sales were up 15.6% year-over-year in March.For the first three months of 2017, new home sales are up 12.0% compared to the same period in 2016.And here is another update to the "distressing gap" graph that I first started posting a number of years ago to show the emerging gap caused by distressed sales.  Now I'm looking for the gap to close over the next several years.The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through March 2017. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.
Following the housing bubble and bust, the "distressing gap" appeared mostly because of distressed sales.   The gap has persisted even though distressed sales are down significantly, since new home builders focused on more expensive homes. I expect existing home sales to move more sideways, and I expect this gap to slowly close, mostly from an increase in new home sales.  However, this assumes that the builders will offer some smaller, less expensive homes. If not, then the gap will persist.

New Home Prices -- As part of the new home sales report, the Census Bureau reported the number of homes sold by price and the average and median prices. From the Census Bureau: "The median sales price of new houses sold in March 2017 was $315,100. The average sales price was $388,200." The following graph shows the median and average new home prices.  During the housing bust, the builders had to build smaller and less expensive homes to compete with all the distressed sales.  When housing started to recovery - with limited finished lots in recovering areas - builders moved to higher price points to maximize profits. The average price in March 2017 was $388,200, and the median price was $315,100.  Both are above the bubble high (this is due to both a change in mix and rising prices).  The second graph shows the percent of new homes sold by price.  Almost 7% of new homes sold were under $150K in March 2017.  This is up from late last year, but down from 30% in 2002.  In general, the under $150K bracket is going away.    The $400K+ bracket has increased significantly.  I'll break that bracket up in the future. A majority of new home in the U.S. are in the $200K to $400K range.

Home Ownership Rate: YoY First Positive Reading Since 2006 -  Over the last decade, the general trend has been consistent: The rate of home ownership continues to decline. The Census Bureau has now released its latest quarterly report with data through Q1 2017. The seasonally adjusted rate for Q1 is 63.6 percent, down fractionally from 63.7 in Q4 2016. The nonseasonally adjusted Q1 number is also 63.6 percent, fractionally above the Q2 number and its highest since Q4 2015. The Census Bureau has been tracking the nonseasonally adjusted data since 1965. Their seasonally adjusted version only goes back to 1980. Here is a snapshot of the nonseasonally adjusted series with a 4-quarter moving average to highlight the trend.

NAR: Pending Home Sales Index decreased 0.8% in March, up 0.8% year-over-year --From the NAR: Pending Home Sale Dip 0.8% in MarchThe Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 0.8 percent to 111.4 in March from 112.3 in February. Despite last month's decrease, the index is 0.8 percent above a year ago.  The PHSI in the Northeast decreased 2.9 percent to 99.1 in March, but is still 1.8 percent above a year ago. In the Midwest the index declined 1.2 percent to 109.6 in March, and is now 2.4 percent lower than March 2016.Pending home sales in the South rose 1.2 percent to an index of 129.4 in March and are now 3.9 percent above last March. The index in the West fell 2.9 percent in March to 94.5, and is now 2.7 percent below a year ago.  This was below expectations of a 0.4% decrease for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in April and May.

Trump Announces 20% Tariff On Canadian Softwood Lumber Imports -- Speaking during a first of its kind meeting dedicated only to members of the U.S. conservative media, including Breitbart News, OANN and Daily Caller, President Trump told reporters to expect a 20% tariff on softwood lumber coming into Canada.“We’re going to be putting a 20 per cent tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada,”  tweeted Charlie Spiering of Breitbart Media. TRUMP: “We’re going to be putting a 20% tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada" According to Trey Yingst of OANN, Trump explained that “Canada has treated us very unfairly” and also threatened a tax on Canada’s dairy industry. The tariffs have been anticipated since last week when Trump launched a barrage of criticism against Canada’s dairy, energy and lumber sectors. As Global News adds, the expected announcement from the U.S. Commerce Department on countervailing duties, a type of import tax meant to counter a subsidized export, is just the latest in the ongoing Canada-U.S. softwood row, which stretches back to the 1980s. The dispute largely stems from the fact most Canadian lumber is harvested on government-owned land while American lumber comes mainly from private land. The American lumber lobby has long accused Canadian governments of allowing companies to cut wood for less than market prices, which they say is an unfair subsidy.

Trump slaps stiff 20% taxes on US home builders – expect higher home prices and 1,000s of construction job losses - There are a lot of news reports today about Trump’s decision to impose stiff tariffs on American companies (homebuilders) who buy Canadian lumber, here is a sample: “Trump slaps first tariffs on Canadian lumber,” “Tariff on Canadian lumber sends a stern message,” “Trump Administration To Impose 20 Percent Tariff On Canadian Lumber,” and “Trump slaps duty on lumber from Canada.” In each case, those news reports miss a few very critical points: a) Canadian lumber doesn’t pay the tariff, b) Canadian lumber companies won’t pay the tariff, and c) American lumber-buying companies (mostly homebuilders) will pay the tariff, which will be passed along to home buyers in the form of higher new home prices. Therefore, it’s more accurate to report that Trump has just slapped stiff 20% tariffs (lumber taxes) on the American people, not Canada.  I’ve taken the liberty of making some edits to the New York Times article “In New Trade Front, Trump Slaps Tariffs on Canadian Lumber” to reflect more accurately the viewpoint of the American consumer and American lumber-buying companies (homebuilders), and expose tariffs for what they really are: price-raising, job-killing, prosperity-destroying trade policies that involve the government-sanctioned “legal plunder” of Americans (home buyers and home builders in this case) by domestic producers (domestic lumber producers): New Title: “In New Trade Front, Trump Slaps Stiff Tariffs Import Taxes on American Home Builders Buying Canadian Lumber” — The Trump administration announced on Monday that it would impose new tariffs taxes on American companies that purchase Canadian softwood lumber imports, escalating a longstanding conflict with America’s second-largest trading partner. The Commerce Department determined that Canada had been improperly generously subsidizing the sale of American companies who buy softwood lumber products to the United States from Canada, and after failed negotiations to keep lumber prices internationally competitive, Washington decided unfairly to retaliate against American lumber buyers with tariffs of 3 percent to 24 percent. The penalties (taxes) imposed on Americans will be collected retroactively on imports dating back 90 days.

New home buyers will pay for that new Canadian lumber tariff - Apr. 25, 2017: Who's really going to end up paying for the new Trump tax on Canadian lumber? New home buyers in the U.S. The Trump administration announced Monday plans to impose duties of up to 24% on most Canadian lumber, charging that lumber companies there are subsidized by the government. Canadian lumber makes up about 30% of the U.S. market. The tax is expected to hike the price of lumber used in home building by an average of 6%, according to the National Association of Home Builders, the trade group for the U.S. industry. "For builders, it'll increase the cost of construction by about $3,000 on the average home, which unfortunately will be passed on to consumers," said Jerry Howard, CEO of the group. Canadian producers say they're confident that U.S. buyers will have to keep buying their lumber, even with the higher prices. "They rely on imports," said Steve Rustja, a vice president at Canadian lumber company Weston Forest. "Who is going to end up paying for it? Ultimately it'll be the U.S. consumer." Builders argue that higher prices will translate into a slowdown of construction activity that could cost 8,000 U.S. jobs and $500 million in lost wages. But U.S. lumber producers argue that Canadian lumber companies get unfair support from the Canadian government, which owns most of the land on which the trees are harvested. "The duties are an essential step to make sure we don't lose more jobs," 

April Consumer Confidence Slips but Remains Strong - The latest Conference Board Consumer Confidence Index was released this morning based on data collected through April 13. The headline number of 120.3 was a decrease from the final reading of 124.9 for March, a downward revision from 125.6. Today's number was below the consensus of 122.5.Here is an excerpt from the Conference Board press release."Consumer confidence declined in April after increasing sharply over the past two months, but still remains at strong levels," said Lynn Franco, Director of Economic Indicators at The Conference Board. "Consumers assessed current business conditions and, to a lesser extent, the labor market less favorably than in March. Looking ahead, consumers were somewhat less optimistic about the short-term outlook for business conditions, employment and income prospects. Despite April's decline, consumers remain confident that the economy will continue to expand in the months ahead." The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

Michigan Consumer Sentiment: April Final Continues Positive Trend - The University of Michigan Final Consumer Sentiment for April came in at 97.0, up fractionally from the March Final reading of 96.9. had forecast 98.0.Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer sentiment continued to travel along the high plateau established following Trump's election, with only minor deviations from its five month average of 97.4. There was widespread agreement among consumers on their very positive assessments of the current state of the economy as well as widespread disagreement on future economic prospects. Although the partisan divide has slightly narrowed in recent months, it still reflects a very pessimistic economic outlook among Democrats and a very optimistic outlook among Republicans. The partisan divide on the Expectations Index was 51.0 points in April (61.4 vs. 112.4), down from last month's 63.1 (59.4 vs. 122.5), with Republicans moderating their optimism more than Democrats reduced their pessimism. Selective perception of news is the driving force behind the partisan divide. Favorable economic developments were cited by nearly all Republicans in April, while three-quarters of Democrats reported hearing negative news about the economy. It is of some interest to note that the Expectations Index among self-identified Independents, who may be less susceptible to traditional political ideologies, rose to a very favorable 91.3 in April, up from March's 85.8 and well above the pre-election October reading of 73.1. The level of optimism among Independents, who account for 42% of all consumers, points toward continued growth in consumer spending in 2017 at about a 2.5% pace. Nonetheless, the partisan extremes will continue to add uncertainty and instability to consumer spending during the year ahead. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

US Consumers Tap Out: Credit Card Defaults Surge To 4 Year High And It's Getting Worse --Two weeks ago, when JPMorgan launched Q1 earnings season, we noted that while the results were generally good, one red flag emerged: the company's credit card charge offs rose to just shy of $1 billion, the highest in four years. It wasn't just JPM: all other money-center banks reported similar trends, so we decided to look into it.What we found was not pretty. According to the latest data from the S&P/Experian Bankcard Default Index, as of March 2017, the default rate on US credit cards had jumped to 3.31%, an increase of 13% from a year ago, and the highest default rate since June 2013.This is how S&P/Experian explained the recent 5 consecutive month surge in bank card default rates:The bank card default rate recorded a 3.31% default rate, up nine basis points from February. Auto loan defaults came in at 1.00%, down five basis points from the previous month. The first mortgage default rate came in at 0.75%, up one basis point from February and reaching a one-year high.The National bank card default rate of 3.31% in March sets a 45-month high. When comparing the bank card default rate among the four census divisions, the bank card default rate in the South is considerably higher than the other three census divisions. Upon further analysis to the South's three census regions, East South Central – comprised of Kentucky, Tennessee, Alabama, and Mississippi – has the highest bank card default rate.

"The Retail Bubble Has Now Burst": A Record 8,640 Stores Are Closing In 2017 -- The devastation in the US retail sector is accelerating in 2017, and in addition to the surging number of brick and mortar retail bankruptcies, it is perhaps nowhere more obvious than in the soaring number of store closures.  While the shuttering of retail stores has been a frequent topic on this website, most recently in the context of the next "big short", namely the ongoing deterioration in the mall REITs and associated Commercial Mortgage-Backed Securities and CDS, here is a stunning fact from Credit Suisse:"Barely a quarter into 2017, year-to-date retail store closings have already surpassed those of 2008." According to the Swiss bank's calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression.

Vehicle Sales Forecast: Sales close to 17 Million SAAR in April -- The automakers will report April vehicle sales on Tuesday, May 2nd. Note: There were 26 selling days in April 2017, down from 27 in April 2016. From WardsAuto: U.S. Forecast: Mild Sales, Growing Inventory  The report puts the seasonally adjusted annual rate of sales for the month at 17.1 million units, well above last month’s 16.5 million, but below year-ago’s 17.3 million.The monthly volume will be 3.1% below last year. Beyond one fewer selling day, Easter occurred in April this year, unlike 2016, possibly delaying sales for some shoppers in the second half of the month. ...Sluggish sales in March left inventory levels high, with LV stock of 4.15 million units at month-end.  The forecasted April inventory level sits at 4.16 million units, resulting in a fourth straight month above the 4 million mark. The only time this previously happened was in 2004, when five consecutive months surpassed that level. Looks like a decent month for vehicle sales, but overall sales are mostly moving sideways.

Mobile industry loses its bid to stop Berkeley’s cellphone warning law  - On Friday, a federal appeals court ruled in favor of the City of Berkeley, allowing the city to keep its law that requires radiation warning signs in all cellphone stores within the city limits. The CTIA, the cellphone industry trade group, sued the city to stop the law from taking effect by asking a lower court to impose a preliminary injunction. The group argued that forcing retailers to display the warning (pictured below) constituted compelled speech, which violates the First Amendment. After the district court didn't impose the injunction, the CTIA appealed to the 9th US Circuit Court of Appeals.  The 9th Circuit concluded that Berkeley's disclosure "did no more than alert consumers" to FCC safety disclosures. The CTIA went to great lengths to try to stop this law from being enacted. It even hired Ted Olson, a former solicitor general under the George W. Bush administration, to argue on its behalf.  The case can now be appealed further to a full panel of 9th Circuit judges, or it could be appealed up to the Supreme Court.  The city seemed to feel the need to educate cellphone customers about exactly what kind of radiation all phones release. Specifically, one of the primary ways that radiation from a phone is measured is through something called the "Specific Absorption Rate" (SAR)—in other words, how fast a given amount of energy is absorbed by the human body, measured in watts per kilogram. Since 1996, the FCC has required that all cell phones sold in the United States not exceed a SAR limit of 1.6 watts per kilogram (W/kg), as averaged over one gram of tissue. On most phones, the SAR value for a given handset is not at all obvious. On the iPhone 6S Plus—the author's phone—for instance, the information is buried four menus deep. Even then, I still have to click yet another link.

U.S. trade deficit widens in March: An early look at U.S. trade patterns in March shows a 1.4% widening in the nation's trade deficit. The trade gap in goods--services are excluded--widened to $64.8 billion in March from $63.9 billion in February, the government said Thursday in its advanced report ( ). This widening of the deficit only partially reversed a sharp narrowing in February. The goods deficit totaled $68.6 billion in January. The U.S. trade deficit often gyrates in the first quarter depending on the date of the Chinese lunar new year, a long but annually shifting holiday during which most of the country's business shuts down. The U.S. has a bigger trade deficit with China than any other country, by far. The full trade report, which includes services, will be released next week. Wholesale inventories, meanwhile, slipped 0.1% in March and retail inventories rose 0.4%, according to advanced data. The government issues the advanced data to make it easier to estimate gross domestic product. The widening in the trade deficit may subtract a bit from gross domestic product in the first quarter. The government will release that report on Friday. Economists surveyed by MarketWatch suspect that the economy decelerated to a 1% annual growth rate in the first quarter from a 2.1% rate in the prior three-month period. The size of the trade deficit is mostly tied to changes in exports and imports of goods. Trade patterns involving services such as financial advice or help-desk support rarely change much from month to month.

Chemical Activity Barometer increases in April --  Note: This appears to be a leading indicator for industrial production. From the American Chemistry Council: Economic Indicator Marks Strong Opening to Second Quarter; Up More Than Five Percent Over Last Year: The Chemical Activity Barometer (CAB), a leading economic indicator created by the American Chemistry Council (ACC), marked the second quarter by posting a robust 5.6 percent year-over-year gain, suggesting continued growth through year-end 2017.  The barometer posted a 0.4 percent gain in April, following three successive months of upward revisions to the monthly data. All data is measured on a three-month moving average (3MMA). On an unadjusted basis the CAB climbed 0.2 percent in April.

March Headline Durable Goods Orders Worse Than Forecast - The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:New orders for manufactured durable goods in March increased $1.6 billion or 0.7 percent to $238.7 billion, the U.S. Census Bureau announced today. This increase, up three consecutive months, followed a 2.3 percent February increase. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders increased 0.1 percent. Transportation equipment, also up three consecutive months, drove the increase, $2.0 billion or 2.4 percent to $83.3 billion. Download full PDF  The latest new orders number at 0.7% month-over-month (MoM) was below the consensus of 1.2%. The series is up 4.5% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at -0.2% MoM, which was below the consensus of 0.4%. The core measure is up 4.6% YoY.If we exclude both transportation and defense for an even more fundamental "core", the latest number is down 1.3% MoM and up 6.4% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It increased 0.2% MoM and is up 3.0% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.

US durable goods orders rose 0.7% in March vs. 1.2% increase expected  -New orders for key U.S.-made capital goods rose less than expected in March, but a second straight monthly increase in shipments suggested business investment accelerated in the first quarter amid a recovering energy sector. The Commerce Department said on Thursday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.2 percent last month after an upwardly revised 0.1 percent gain in February. Shipments of these so-called core capital goods rose 0.4 percent after jumping 1.1 percent in February. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. Economists polled by Reuters had forecast core capital goods orders rising 0.5 percent last month after a previously reported 0.1 percent dip. March's modest increase suggests some loss of momentum in the manufacturing sector after recent strong growth. Manufacturing, which accounts for about 12 percent of the U.S. economy, is being underpinned by the energy sector revival. Energy services firm Baker Hughes said last Friday that U.S. oil rigs totaled 688 in the week ending April 21, the most in two years. U.S. drillers have added oil rigs for 14 straight weeks and shale production in May was set for its biggest monthly increase in more than two years. Business spending on equipment is expected to have accelerated from the fourth-quarter's annualized 1.9 percent growth pace and will likely be one of the few bright spots when the government publishes its advance first-quarter GDP estimate on Friday. Last month, orders for machinery slipped 0.2 percent, but shipments increased 0.7 percent. Orders for primary metals rose in March as did shipments of these products. Electrical equipment, appliances and components orders and shipments also increased last month. There were, however, declines in orders for fabricated metal products and computers and electronic products. 

Dallas Fed: "Texas Manufacturing Expansion Continues" in April --From the Dallas Fed: Texas Manufacturing Expansion Continues - Texas factory activity increased for the 10th consecutive month in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, moved down three points to 15.4, suggesting output growth continued but at a slightly slower pace this month.Other measures of current manufacturing activity also indicated continued expansion in April. The survey’s demand indicators saw upward movement, with the new orders and growth rate of orders indexes edging up to 11.5 and 5.1, respectively. The shipments index also moved up, rising three points to 9.5. The capacity utilization index fell slightly but stayed positive for a 10th month in a row, coming in at 11.5. Perceptions of broader business conditions improved again. The general business activity index held steady at 16.8, and the company outlook index inched down but remained positive at 15.1. Labor market measures indicated employment gains and longer workweeks in April. The employment index posted a fourth consecutive positive reading and remained unchanged at 8.5. Eighteen percent of firms noted net hiring, compared with 9 percent noting net layoffs. The hours worked index fell three points to 5.9. Based on the regional surveys released so far, it appears the ISM index will be solid again in April - but down from March.

Richmond Fed Manufacturing: Continued Optimism in April -  Today the Richmond Fed Manufacturing Composite Index decreased 2 points to 20 from last month's 22. had forecast 16. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 19.7, indicates expansion. The complete data series behind today's Richmond Fed manufacturing report (available here), which dates from November 1993.  Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

Kansas City Fed: Regional Manufacturing Activity "Expanded at Slow Pace" in April - From the Kansas City Fed: Tenth District Manufacturing Activity Expanded at a Slower PaceThe Federal Reserve Bank of Kansas City released the April Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity expanded at a slower pace with solid expectations for future activity.“We came down a bit from the rapid growth rate of the past two months,” said Wilkerson.  “But firms still reported a good increase in activity and expected this to continue.”  The month-over-month composite index was 7 in April, down from the very strong readings of 20 in March and 14 in February.  The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.  Activity in both durable and nondurable goods plants eased slightly, particularly for metals, machinery, food, and plastic products.  Most month-over-month indexes expanded at a slower pace in April.  The production, shipments, and new orders indexes fell but remained positive, and the employment index edged lower from 13 to 9.  In contrast, the new orders for exports index increased from 2 to 4.  Both inventory indexes fell moderately after rising the past two months.  The Kansas City region was hit hard by the decline in oil prices, but activity is expanding again.This was the last of the regional Fed surveys for April. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Regional Fed Manufacturing Overview: April Update -  Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. Regional manufacturing surveys are a measure of local economic health and are used as a representative for the larger national manufacturing health. They have been used as a signal for business uncertainty and economic activity as a whole. Manufacturing makes up 12% of the country's GDP. The other 6 Federal Reserve Districts do not publish manufacturing data. For these, the Federal Reserve’s Beige Book offers a short summary of each districts’ manufacturing health. The Chicago Fed published their Midwest Manufacturing Index from July 1996 through December of 2013. According to their website, "The Chicago Fed Midwest Manufacturing Index (CFMMI) is undergoing a process of data and methodology revision. In December 2013, the monthly release of the CFMMI was suspended pending the release of updated benchmark data from the U.S. Census Bureau and a period of model verification. Significant revisions in the history of the CFMMI are anticipated."   Here is a three-month moving average overlay of each of the five indicators since 2001 (for those with data). The latest average of the five for April is 19.8, down fractionally from last month's 19.9.

Chicago PMI Up in April, Highest Since January 2015 -  The Chicago Business Barometer, also known as the Chicago Purchasing Manager's Index, is similar to the national ISM Manufacturing indicator but at a regional level and is seen by many as an indicator of the larger US economy. It is a composite diffusion indicator, made up of production, new orders, order backlogs, employment, and supplier deliveries compiled through surveys. Values above 50.0 indicate expanding manufacturing activity.The latest report for Chicago PMI came in at 58.3, a 0.6 point increase from last month's 57.7. forecast 56.4.Here is an excerpt from the press release:“The April Chicago report showcased another impressive month, with firms reporting solid growth. Rising demand and firm production led to a pick-up in hiring by firms. Although the employment indicator has been bumpy, in and out of contraction, if the current month’s rise is sustained, it could provide a boost to the labor market,” said Shaily Mittal, senior economist at MNI Indicators. [Source] Let's take a look at the Chicago PMI since its inception.

Philly Fed: State Coincident Indexes increased in 45 states in March --From the Philly FedThe Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for March 2017. Over the past three months, the indexes increased in 45 states, decreased in three, and remained stable in two, for a three-month diffusion index of 84. In the past month, the indexes increased in 45 states and decreased in five, for a one-month diffusion index of 80. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:  The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Weekly Initial Unemployment Claims increase to 257,000 --The DOL reported: In the week ending April 22, the advance figure for seasonally adjusted initial claims was 257,000, an increase of 14,000 from the previous week's revised level. The previous week's level was revised down by 1,000 from 244,000 to 243,000. The 4-week moving average was 242,250, a decrease of 500 from the previous week's revised average. The previous week's average was revised down by 250 from 243,000 to 242,750.
emphasis added
The previous week was revised down. The following graph shows the 4-week moving average of weekly claims since 1971.

Cracking the Mystery of Labor's Falling Share of GDP - Noah Smith - Economists are very worried about the decline in labor’s share of U.S. national income. One reason they’re concerned is because when less of an economy’s wealth flows to workers, it exacerbates inequality and increases the risk of social instability. But another reason is that this trend throws a wrench in economists’ models. For decades, macroeconomic models assumed that labor and capital took home roughly constant portions of output -- labor got just a bit less than two-thirds of the pie, capital slightly more than one-third. Nowadays it’s more like 60-40.Economists are therefore scrambling to explain the change. There are, by my count, now four main potential explanations for the mysterious slide in labor's share. These are: 1) China, 2) robots, 3) monopolies and 4) landlords.The China hypothesis basically says that the opening of the Chinese and Indian economies, combined with the invention of globalizing technologies like the internet and containerized shipping, dumped a flood of low-cost labor onto the world market, allowing multinationals to shop around for cheap workers while raising their profits. This view received some support from a 2013 paper by Michael Elsby, Bart Hobijn and Asegul Sahin, who found that the trade and manufacturing sectors had the biggest declines for labor income.One problem with this theory is that, according to Chinese statistics, labor’s share has been falling there, too. From China’s perspective, opening the country to trade brought in a flood of new capital, so capital’s income share should have been the one to fall. This chips away at the globalization explanation, assuming those Chinese government numbers can be trusted.The robots hypothesis says that as technology gets cheaper, employers are substituting machines for workers. A 2013 paper by Lukas Karabarbounis and Brent Neiman found that costs of capital goods have been getting cheaper, and concluded that companies are substituting technology for human labor. This fits with other research showing adverse effects on wages from the adoption of new technologies like industrial robots.  But there are problems with this thesis as well…

Inclusive growth requires maintenance of full employment – Brookings One reason for growing inequality is high rates of joblessness among those without much education. If you don’t have a job, your income plummets. And while unemployment insurance or other benefits can replace some of that income, it can’t fill all of the hole. So if we want more broadly shared prosperity, we need to look at what’s happening in the labor market. One problem is that when people look at the labor market, they often come to the wrong conclusion. They see well-paid jobs in manufacturing or elsewhere disappearing. They conclude that there are simply not enough jobs to employ everyone who wants to work. Their implicit view of the world is that there are a fixed number of jobs and that it will be impossible to supply everyone with a reasonable livelihood. Economists call this “the lump of labor” fallacy. This way of thinking is a fallacy because the number of jobs in the economy depends on how much people are spending and investing, that is on the total demand for goods and services. Instead of one or two pairs of jeans, we may want a pair for every different occasion. In his book on economic growth in the U.S., Robert Gordon explains how as recently as a century and a half ago, it would have been unusual for most people to have had more than one or two outfits. Now our closets are jammed with clothes. And don’t forget about services. Even if we don’t need more cars or cell phones or blue jeans we may want to enjoy greener parks and cafes with exotic food or have access to better education, health care, transportation, and a cleaner environment.

Former Workers at Elon Musk’s SolarCity Allege Employment Abuses, Improper Installations-- No company is more emblematic of the residential solar industry’s rollicking ride than SolarCity, with its recognizable fleet of green and white trucks, vast army of salespeople and installers, and its headline-grabbing chairman, Elon Musk, whose electric car company Tesla acquired SolarCity last November, several months before reporting in securities filings that the solar company had shed 3,000 jobs in 2016. SolarCity, which is based in San Mateo, built its name on a zero-down financing model that leveraged investor dollars and federal tax credits to finance a rapid expansion that has yet to produce positive returns. Its big vision captured the imagination of environmentalists like Bill McKibben, who wrote a 2015 New Yorker article that quoted chief executive officer Rive proclaiming that his goal was to get solar on a rooftop “every three seconds.” The climate crisis seemed to demand that kind of vision and scale of operation.  At SolarCity, crews are provided with “panel pay,” a bonus system that incentivizes speed by paying installers for every panel they install if that rate is higher than their hourly wage. According to Estrada, the rapid pace led to leaky roofs when holes drilled to secure the panels weren’t properly sealed, requiring return visits after customers complained.  It is impossible to know whether the company’s incentive system led to sloppy workmanship, but complaints of roof leaks following SolarCity installations do appear on the Better Business Bureau’s website. Homes outfitted with solar are required to pass muster with city building inspectors.  Estrada claims he was asked by supervisors to accept bonuses in exchange for not reporting overtime. Because of the pace of work, he was unable to get time off to be with his family, he says. In 2016, he quit, before the company began laying off workers. SolarCity declined to comment for this story.

Researchers link meeting corporate earnings goals to worker injuries - A recently published research paper finds that corporate managers will sacrifice workers’ safety in order to meet investor earnings expectations.The paper authored by Judson Caskey, an associate professor of accounting at UCLA, and N. Bugra Ozel, an assistant professor of accounting at the University of Texas at Dallas, was published in the February issue of the Journal of Accounting and Economics.Caskey and Ozel, find strong evidence showing that when corporations are in danger of not meeting earnings expectation benchmarks set for them by Wall Street, corporate managers will try to lower costs by increasing employees’ workload and cutting back on safety-related expenditures.Doing so increases the number of job related injuries or illnesses by between 10 percent and 15 percent.Earnings benchmarks are set by Wall Street analysts to help investors determine whether to buy or sell stock in companies.“We know that firms try to meet earnings benchmarks because the benchmarks have implications for the firms,” said Ozel. “If firms do not meet these benchmarks, then investors punish them, and stock prices go down significantly after a miss of earnings expectations. That gives managers incentive to use the tools they have to ensure they are going to perform at least to the expectations.” Among the tools that management uses “to ensure that they are going perform at least to the expectation” is their ability to control expenditures.

Workers who really do ‘support our troops’ are getting their wages slashed -- Government officials often pay lip service to “supporting our troops.” But some of the people who literally do that vital work have just been badly shortchanged.For at least the third time in two years, the National Guard Bureau has awarded a contract for military family services to a lowball bidder. For the third time, that bid was based on plans to cut workers’ pay by about a third on average, and in some cases by half. These pay levels are so low that they may not be legal, according to a complaint filed Monday with the Labor Department.And for the third time, these sudden wage cuts have led to mass resignations, leaving few workers available to help prepare military families for deployment, reintegration into civilian life, and the financial and psychological stresses that can come with both.“They’ve devalued not only us but the services we give to military families across the country,” said Kevin McDonnell, a veteran and contract worker whose hourly wages fell from $24.85 to $14.02. McDonnell is one of about 400 people employed by the military’s Family Assistance Centers, which connect families with legal, financial and psychological resources inside and outside the military. Center workers help families plan budgets and understand health benefits. They do crisis intervention, providing referrals for families dealing with suicide, substance abuse and post-traumatic stress disorder. And they develop relationships with local organizations that offer free or discounted services to military families.

Middle Class Contracted in U.S. Over 2 Decades, Study Finds –  - Middle-class Americans have fared worse in many ways than their counterparts in economically advanced countries in Western Europe in recent decades, according to a study released Monday by the Pew Research Center. What is more, as Mr. McCabe’s experience suggests, the authors of the Pew study found a broader contraction of the American middle class, even as the ranks of the poor and the rich have grown. “Compared with the Western European experience, the adult population in the U.S. is more economically divided,” said Rakesh Kochhar, associate director for research at Pew. “It is more hollowed out in the middle. This speaks to the higher level of income inequality in the United States.” For example, between 1991 and 2010, the proportion of adults in middle-income households fell to 59 percent from 62 percent, while it rose to 67 percent from 61 percent over the same period in Britain and to 74 percent from 72 percent in France. Households that earned from two-thirds to double the national median income were defined as middle income in the Pew study; in the United States that translated into annual income of $35,294 to $105,881, after taxes, in 2010. A shrinking middle class is not necessarily cause for alarm, if the reason for the contraction is that more people are moving up the income ladder, said David Autor, a professor of economics at the Massachusetts Institute of Technology. The proportion at the top did rise, but so did the proportion at the bottom, rising to 26 percent from 25 percent. That is much more worrisome, said Mr. Autor, who was not involved with the Pew study. Moreover, the middle-income group was smaller — and the groups at either extreme larger — in the United States than in any of the 11 Western European countries studied. And incomes in the middle rose faster in Europe than they did in the United States, according to Pew. Median incomes in the middle tier grew by 9 percent in the United States between 1991 and 2010, compared with a 25 percent gain in Denmark and a 35 percent increase in Britain. The United States, including the middle class, has a higher median income than nearly all of Europe, even if the Continent is catching up. The median household income in the United States was $52,941 after taxes in 2010, compared with $41,047 in Germany and $41,076 in France. And while inequality may be widening, the proportion of households in the upper-income strata rose to 15 percent from 13 percent.

The fading American dream: Trends in absolute income mobility since 1940 – Science -  Full text - Abstract:  We estimated rates of “absolute income mobility”—the fraction of children who earn more than their parents—by combining data from U.S. Census and Current Population Survey cross sections with panel data from de-identified tax records. We found that rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. Increasing GDP growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s. However, distributing current GDP growth more equally across income groups as in the 1940 birth cohort would reverse more than 70% of the decline in mobility. These results imply that reviving the “American dream” of high rates of absolute mobility would require economic growth that is shared more broadly across the income distribution.

Economic mobility has nearly halved since 1940 -  The probability for children to attain a higher income than their parents has dropped dramatically - from more than 90% for children born in 1940 to 50% for children born in the 1980s - according to a new study analyzing U.S. data. Results reveal that restoring economic mobility would require, in part, more equal economic redistribution. The "American Dream" promises that hard work and opportunity will lead to a better life, and that even those born to low-income families can "rise above the ranks" with sufficient effort. Despite much interest in economic mobility, however, studying it over generations remains challenging, mainly because of the lack of large, high-quality datasets in the U.S. linking children to their parents. To overcome these gaps in data, Raj Chetty et al. took a sophisticated approach that combines data from United States Census and Current Population Survey with tax records, adjusting for inflation and other confounding variables. They found that the fraction of children earning more than their parents fell from 92% in the 1940 birth cohort to 50% in the 1984 birth cohort. Economic mobility fell most sharply in the industrial Midwest (e.g., Indiana, Illinois), while the smallest declines occurred in states such as Massachusetts, New York, and Montana. One possible explanation would be that the GDP growth rate has declined over more recent decades; yet when the researchers modelled the 1980s cohort with the same GDP growth rate seen in the 1940s, absolute mobility only rose from 50% to 62%. In contrast, when the researchers modelled the 1980s cohort with the same economic distribution seen in the 1940s, the rate of absolute mobility rose to 80%. Together, these simulations show that increasing GDP growth without changing the current distribution of growth would only have modest effects on rates of absolute mobility, the authors say.

Its Awesome Being Poor Today! - Barry Ritholtz -- You are not poor; income inequality is a myth; the middle class is doing just fine.That seems to be the message coming from numerous right-leaning think tanks, websites and authors.I was reminded of this yet again over the weekend when I saw another attempt at telling the poor how lucky they are to be alive today. The title of the piece in question says it all: “You Are Richer than John D. Rockefeller.” Note that last time out, the poor were told they were richer than France’s Louis XIV, debunked by us here; our previous debunking of the richer-than-Rockefeller meme is here.There are any number of ways to expose the fallacy of this claim, but I really want to focus on one of them: the role of luck in personal success or failure.Wealth, as we have observed before, is a relative concept. We measure our economic well being by looking at our peers, not at different eras in time or geographies far away from us. The second point is that we can measure wealth in a variety of ways that are not simply based on income or financial assets: health, education, leisure time, lifespan and personal security. Next, if we do indulge in one of these time-travel thought experiments, we must acknowledge that time is bi-directional. Thus, the richer-than-Rockefeller argument implies that the wealthiest people today should be willing to switch places with a poor person a century or two in the future, when presumably we will all live longer, healthier, happier lives with technology we can’t even imagine today — and on and on. It is a most dubious proposition.

Inundated with gunshot victims, Chicago doctors and nurses face ‘compassion fatigue’ -- Delicately, with the heaviness of someone who's had dozens of these conversations, trauma surgeon Mamta Swaroop told the mother her son was dead. What followed, she said, was a jolting scream. The kind that pierces your bones and never leaves you. "She fell onto my chest and just kept shrieking and crying. Crying and shrieking," Swaroop said. "I walked out and looked around. There were so many patients and nurses who had their head down and were wiping their tears. And you could just hear her shrieks, still, down the entire hallway."  The past 14 months have been the most violent in at least two decades. More than 4,300 people were shot in Chicago in 2016 and more than 760 were killed, according to data collected by the Tribune. So far this year, at least 915 people have been shot — with the homicide total reaching 166 through mid-April, according to the data. Nurses and physicians in Chicago's trauma units say they feel these shootings in their souls. Day after day, they work 12-hour shifts without enough resources to handle the shooting victims. When their shifts end, it isn't the body disfigurement or the gore that haunts them when they get home. It's witnessing despair. A child who suffers a life-altering head injury. A mother who loses her first-born son.Over time, some caretakers become numb. Researchers call the condition compassion fatigue: a mixture of burnout and traumatic stress. Local physicians and nurses say they haven't lost their compassion, but some say they've been in situations where they try to isolate their emotions in an attempt to distance themselves from the grief they witness each day.  Perhaps that's because caretakers fear they can't do enough to save their patients, researchers say, or because the patients they do help are sent right back into the violent neighborhoods they came from."It's devastating to see that over and over. You lose hope. You ask, 'When is it going to stop?' And no matter how hard you work and how good you do your job, (the shooting victims) just keep rolling through the door,"

USDA to ease school meal standards | TheHill: Newly minted Agriculture Secretary Sonny Perdue is expected to unveil a new rule Monday aimed at giving schools more flexibility in meeting federal nutrition standards for school lunches. The U.S. Department of Agriculture (USDA) announced Friday that Perdue and Sen. Pat Roberts (R-Kan.) will make the announcement at the Catoctin Elementary School in Leesburg, Va., where they are expected to eat lunch with the students. Republicans have long been trying to dial back the standards that became a pillar of former first lady Michelle Obama’s initiative to curb childhood obesity in the U.S. Roberts introduced legislation with Sen. Debbie Stabenow (D-Mich.) last year to give schools two more years to meet new reductions on sodium, but the bill never passed. Renewed efforts to ease the federal standards came as disappointing news to some advocates. The American Heart Association was quick to push back. In a statement, the group’s CEO, Nancy Brown, said the current standards are already working and that 99 percent of schools are in compliance. “Improving children’s health should be a top priority for the USDA, and serving more nutritious foods in schools is a clear-cut way to accomplish this goal,” she said.

Broke Chicago Schools Seek Court Help as Pension Bill Comes Due (Bloomberg) -- Chicago’s debt-ridden schools are running out of options. The nation’s third-largest school district -- whose credit rating has tumbled well into junk -- must make a $721 million pension payment by June 30 and officials are scrambling to find the funds. Ending the year early, canceling summer school, and slashing classroom spending are all possible, the Chicago Board of Education said in connection with a lawsuit that’s seeking to wrest more cash from Illinois. “They’re trying any way they can to try to make the state provide more funding,” said Daniel Solender, head of municipals at Lord Abbett & Co., which manages about $19 billion of debt. A local judge Friday dealt a blow to the schools’ lawsuit against Governor Bruce Rauner and the state board of education, which challenges funding practices that have made the district the only one in Illinois that pays most of its pension costs. Cook County Judge Franklin Valderrama rejected the board’s assertion that the funding system is discriminatory to the heavily minority-student district, though he gave Chicago until May 26 to file an amended complaint, the Chicago Sun-Times reported. Escalating pension bills are the crux of the financial squeeze that’s threatening the solvency of the school system. For years it has been draining reserves, shortchanging its pensions and borrowing to pay bills. Its retirement system is short by $9.6 billion, and this year’s required payment will eat up 13 percent of the district’s operating budget. Chicago covers a far greater share of its teachers’ pension contributions than the rest of Illinois’s schools, which receive more state aid. For the year that started July 1, Chicago’s will spend about $1,891 per student on teacher pensions, while other districts only spend about $86, according to Chicago officials. Illinois kicks in about $32 per Chicago student, while other districts get $2,437, the district said in court documents.

New warning: Schools face ‘mini-recession’ tied to pension costs -- Superintendent Deborah Bettencourt took the unusual step in April of sending an email to Folsom Cordova Unified families and staff warning that the school district faces two years of red ink. Schools throughout California are entering an “uncertain economic period,” Bettencourt said in a rare budget email blast. She said her district foresees a $3.8 million deficit after July 1. And she said the district can’t give raises to teachers unless Gov. Jerry Brown finds more money for schools in his May budget revision. “I feel like we’re coming back into another mini-recession, at least for school districts,” Bettencourt said in an interview. For the past several years, teachers and staff across California saw pay increases, and schools began a flurry of hiring to reduce class sizes and restore programs they had slashed during the recession. But school districts say those heady years of budget growth are ending. Besides Folsom Cordova, districts in Carmichael, Davis and Sacramento are projecting budget deficits. They identify two chief reasons: Districts must increase contributions starting July 1 to the California State Teachers Retirement System and the California Public Employment Retirement System. Increases in CalSTRS payments are part of 2014 legislation that outlined a long-term funding plan. CalPERS recently took a more conservative view of future investment returns. And Gov. Jerry Brown is proposing a smaller increase than expected in a cautious January budget plan

Teachers Continue Lawsuit Against State For Underfunded Pensions -- As Gov. Matt Bevin mulls whether to call a special session to deal with the state’s ailing pension system and tax structure, a class action lawsuit brought against the state by aggrieved teacher pensioners continues to make its way through the court system. The Teachers Retirement Legal Fund argues that state leaders have broken the law by not setting aside enough money for the Kentucky Teachers Retirement System, which manages the pensions of about 141,000 school system retirees. Randy Wieck, a history teacher at DuPont Manual High School in Louisville, said that the state needs to come up with a way to fully fund its “actuarially required contribution”— the amount required for the state to adequately fund the pension system. “The gas tax could be raised, there’s phone taxes, all kinds of user fees,” Wieck said. “They need to begin to honor the actuarially required contribution.” Legislatures and governors have for nearly two decades signed off on budgets that set aside less money than necessary to keep the pension systems from losing money and selling off assets. According to a recent Pew Charitable Trusts study, in 2015 KTRS had about 51 percent of the money it needed to write checks to retirees in the future. The fund for most state workers — Kentucky Retirement Systems non-hazardous — only had 23 percent. The study ranked Kentucky’s as the second-worst funded pension systems in the country.

A new wave of state bills could allow public schools to teach lies about climate change -- Legislation proposed across the country since Donald Trump’s election threatens to bring climate change denial into the classroom under the guise of “academic freedom.” Currently, six states have legislative measures pending or already on the books that would allow anti-science rhetoric, including the rejection of global warming, to seep its way into schools’ curricula. While these types of proposals have become fairly routine in certain states, some of the most recent crop have advanced farther than in the past. Senate Bill 393 in Oklahoma, for example, would permit teachers to paint established science on both evolution and climate change as “controversial.” The “controversy,” however, doesn’t really exist — more than 97 percent of actively publishing, accredited climate scientists agree that global warming trends over the past century are directly attributable to human activity. And some teachers might already be misleading students. Since its initial proposal in early February, the bill passed out of the Senate and into the House, where it circumvented the House Education Committee and now heads for a full House vote. “It’s important to note that this exact bill in Oklahoma has been proposed in the past seven times, and it’s only this year, at a time when there’s federal policy that’s egregiously anti-science, that the bill made it so far,” said Lisa Hoyos, the director of Climate Parents, a Sierra Club–affiliated organization that supports climate change education. In fact, the bill’s sponsor, Republican Sen. Josh Brecheen, has introduced similar legislation every year since 2011. He’s said he wants “every publicly funded Oklahoma school to teach the debate of creation vs. evolution.” A bill similar to Oklahoma’s is currently working its way through the Texas Legislature. And Florida has two bills pending aimed at letting local residents object to the use of certain instructional materials, such as textbooks that teach human-induced climate change, in public schools.

What the latest assaults on science education look like - Since 2014, more than 60 anti-science bills have been filed in state legislatures all over the country. These bills are worded as “academic freedom” bills, but they really are efforts to present foundational science as controversial. For example, evolution is the animating principle of modern biology, but these laws attempt to allow creationism and evolution to be debated in a science classroom as though they had equal scientific basis. There is no scientific basis to creationist thinking. So far this year, nine legislative efforts aimed at undermining the teaching of evolution and/or climate change have been introduced in state legislatures:

  • Texas House Bill 1485, introduced Feb. 2, supposedly offers science teachers the academic freedom to teach “the scientific strengths and scientific weaknesses of existing scientific theories” covered in the state science standards,” including “climate change, biological evolution, the chemical origins of life, and human cloning.” No vote has been scheduled yet.
  • Oklahoma Senate Bill 393, which was passed by the chamber, encourages teachers to teach “scientific controversies” and protects them if they do. Essentially, this would give teachers the freedom to teach nonscientific principles as equivalent to actual science.
  • South Dakota Senate Bill 55 died in a state House committee earlier this year after passing the Senate; it would have allowed teachers to essentially teach anything they want as science as long as they used certain language.
  • Indiana Senate Resolution 17, which targets the teaching of evolution in public schools, passed the state Senate in a 40-to-9 vote in February. It ostensibly urges the state Department of Education “to reinforce support of teachers who choose to teach a diverse curriculum.”
  • Alabama Senate Joint Resolution 78 passed in committee. Glenn Branch, deputy director of the National Center on Science Education, said if it becomes law that it would “send a strong signal that the state legislature approves of Alabama’s public school teachers presenting supposed alternatives to evolution, to climate change, and to any of the material covered in the newly revised state science standards.” He said it could possibly spark litigation over the science curriculum.
  • In Florida, two textbook challenges have been making progress in the legislature this year. House Bill 989 passed the Florida House on Friday by a 94-to-25 vote, while the companion Senate Bill 1210 passed the Senate Appropriations Committee, 16 to 0. Both bills give taxpayers the right to object to the use of instructional materials in the public schools, though climate change and evolution are obviously two of the key targets of the legislation.
  • In Iowa, House File 480, referred to the House Education Committee on March 1, seeks to require teachers in Iowa’s public schools to include “opposing points of view or beliefs” to accompany any instruction relating to evolution, the origins of life, global warming or human cloning.
  • In Idaho, the House of Representatives voted 56 to 9 on March 24 to adopt Senate Concurrent Resolution 121, which finalizes a decision by lawmakers to delete five standards — which discuss climate change and human impact on the environment — from a proposed new set of state science standards for Idaho. The House Education Committee had voted in February to nix the five standards because they supposed failed to present “both sides of the debate,” and the Senate Education Committee did the same thing shortly after.

Spying on Students: School-Issued Devices and Student Privacy - EFF (full report). Students and their families are backed into a corner. As students across the United States are handed school-issued laptops and signed up for educational cloud services, the way the educational system treats the privacy of students is undergoing profound changes—often without their parents’ notice or consent, and usually without a real choice to opt out of privacy-invading technology. Students are using technology in the classroom at an unprecedented rate. One-third of all K-12 students in U.S. schools use school-issued devices.1 Google Chromebooks account for about half of those machines.2 Across the U.S., more than 30 million students, teachers, and administrators use Google’s G Suite for Education (formerly known as Google Apps for Education), and that number is rapidly growing.3 Student laptops and educational services are often available for a steeply reduced price, and are sometimes even free. However, they come with real costs and unresolved ethical questions.4 Throughout EFF’s investigation over the past two years, we have found that educational technology services often collect far more information on kids than is necessary and store this information indefinitely. This privacy-implicating information goes beyond personally identifying information (PII) like name and date of birth, and can include browsing history, search terms, location data, contact lists, and behavioral information. Some programs upload this student data to the cloud automatically and by default. All of this often happens without the awareness or consent of students and their families.In short, technology providers are spying on students—and school districts, which often provide inadequate privacy policies or no privacy policy at all, are unwittingly helping them do it.

UConn professor sends out an email with a link to PORN | Daily Mail Online: A philosophy professor at the University of Connecticut appears to have accidentally sent out a mass email to his class with a link to a pornographic video.The email sent by Professor Keith Simmons Wednesday morning listed homework instructions and readings for Philosophy 1102.A screenshot posted in a UConn Facebook group shows the seemingly innocuous email said: 'Each question comes with hints that you'll find helpful.'Underneath that line is a link to a YouPorn video 'PJ Girls Sexy 18 Year Old Morgan Strips And Spreads Her Teen P*** Wide Open.'  Around 15 minutes later, Professor Simmons sent out a second email saying: 'please ignore the previous email, which seems to have been infected by a bad link,' according to The Tab.   University spokesperson Stephanie Reitz told the website in statement: 'The university has been made aware of this matter and is in the process of reviewing it. It would be premature to draw any conclusions about what occurred until the university completes that review. We of course take the matter very seriously.'

Seven Years Of College Down The Drain - Last week’s Beige Book highlighted labor shortages for both skilled and unskilled workers, but perhaps employers are asking too much from certain applicants.That’s the upshot from a report conducted by the Rockefeller Foundation and Edelman Intelligence, which surveyed C-suite executives, human resource officers, and individuals aged 18 to 26 about the entry-level job market. While the majority of employers (69%) screen entry-level job candidates for a bachelor’s degree, almost half (49%) of college graduates didn’t believe they had to attend college to acquire the skills needed for their job. In fact, most college graduates (86%) said they are learning skills outside of their college degree.Now this isn’t to undercut the credibility or value of a college degree, but only a little over one-third of millennials actually have one. Therefore, employers need to update their screening techniques to focus on an applicants’ fit within the company culture rather than depending heavily on a bachelor’s degree to help hire and retain millennials.Note from Nick:  How many of your coworkers have a college degree?  If the answer is “Most” or “all”, you might assume that most American adults have one.  At that would be…  Wrong.  Today Jessica reviews the actual role of the 4-year degree in US labor markets.  No surprise: many employers are “Doing it wrong”.We often hear about the bloated student debt crisis, but how many millennials actually have a college degree? It may be fewer than you think. A little over a third (36.1%) of 25 to 34 year olds had at least a bachelor’s degree as of 2015, according to the Census Bureau. Still above those older than 25 overall at 32.5%, but slightly lower than 35 to 44 year olds (36.3%). More data here if you’d like to see the report.

U.S. Student Loan Implosion -- The Consumer Federation of America recently put out a press release that reports that they've found that 1.1 million student loan borrowers in the United States have gone 270 or more days without making payments on their Federal Direct Student Loans, with more than $137 billion worth of the loans issued by the U.S. government now qualifying as being in default by that standard.  Data from the CFA's press release has made the rounds among multiple news outlets, but we have a pretty basic question: Are those big numbers? They certainly seem like big numbers, what with all the millions and billions being thrown about, but how do these numbers fit into the bigger U.S. government-issued student loan story?  We decided to dig down into the press release's details to find out. Let's start with the biggest numbers, where we discover that $137 billion worth of Federal Direct Student Loans are in default, against the larger total of $1.3 trillion worth of Federal Direct Student Loans that have been issued through the end of December 2016. Here, we calculate that the percentage of student loans that have gone 270 or more days without having had a payment made upon them represents about 11% of the total amount borrowed. That means that some 1.1 million people whose student loans require that they make some sort of scheduled payment went more than 9 months without making any. To tell if that's a big number or not requires that we put that number into some kind of context. Here, we'll draw on the U.S. Federal Reserve's data for the delinquency rates on loans and leases issued by all commercial banks in the U.S., where for the fourth quarter of 2016, we find that the total delinquency rate is 2.04%. That value had previously peaked at 7.4% back in the first quarter of 2010, following the bottoming of the Great Recession. But another important thing to consider is that delinquency rate would include all private-sector issued loans and leases that have payments that are past due, including those that have gone without payment for much less than 270 days. That figure tells us that the default rate of 11% for Federal Direct Student Loans is, to put it in Trumpian terms, "Yuge!" Going by the standard of simple delinquency, the WSJ reported back in April 2016 that 40% of student loan borrowers were delinquent on their scheduled student loan payments, meaning that they were at least 15 to 31 days behind.

The student loan crisis is fueled by a weak labor market - The student debt crisis in the United States continues to escalate. Over the past 17 years, the outstanding student loan balance has nearly quadrupled, reaching $1.4 trillion, and between 2000 and 2011 alone, default rates—the share of student loans more than 270 days overdue—doubled. The rise of the nontraditional borrower is the most common narrative to explain why student debt loads and defaults are surging. Yet this explanation, while important, isn’t the whole story. It turns out that the health of the labor market also could be to blame.A new paper by New York University Stern School of Business economists Holger M. Mueller and Constantine Yannelis explores this labor-market dimension. The two researchers examine administrative data on individual borrowers’ student loans linked to deidentified tax records and zip-code level data on home prices drawn from online real estate company Zillow Group, Inc. Citing earlier research on the connection between drops in housing prices and local employment, Mueller and Yannelis investigate how massive declines in home prices during the Great Recession led to large drops in employment and corresponding rising student loan defaults over that same period.The researchers find that falling home prices during the Great Recession were responsible for up to 32 percent of the growth in student loan defaults. What’s more, low-income borrowers appeared to be most sensitive to the change in home prices, probably because they faced the largest earning plunges, had the smallest savings cushions, and, as a result, may not have been able to continue repaying their loans. Defaulting on student loans certainly is the worst-case scenario because these loans cannot be discharged through declaring bankruptcy, yet the state of the labor market can have other pernicious effects on young graduates with debt too. In the wake of the Great Recession, job-hopping significantly decreased, leaving several young workers (and college graduates) trapped in low-wage jobs with a duty to service their student debt instead of searching for new opportunities to grow their income. To make matters worse, even a typically high-paying college major didn’t guarantee high earnings post-graduation during the Great Recession. As a consequence, more and more college graduates have accepted jobs in low-paying industries or been underemployed, which ostensibly increases the burden of student debt and affects long-term economic well-being.

The U.S. Makes It Easy for Parents to Get College Loans -- Repaying Them Is Another Story: Millions of U.S. parents have taken out loans from the government to help their children pay for college. Now a crushing bill is coming due. Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government. Student loans made through parents come from an Education Department program called Parent Plus, which has loans outstanding to more than three million Americans. The problem is the government asks almost nothing about its borrowers' incomes, existing debts, savings, credit scores or ability to repay. Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times. As of September 2015, more than 330,000 people, or 11% of borrowers, had gone at least a year without making a payment on a Parent Plus loan, according to the Government Accountability Office. That exceeds the default rate on U.S. mortgages at the peak of the housing crisis. More recent Education Department data show another 180,000 of the loans were at least a month delinquent as of May 2016. "This credit is being extended on terms that specifically, willfully ignore their ability to repay," says Toby Merrill of Harvard Law School's Legal Services Center. "You can't avoid that we're targeting high-cost, high-dollar-amount loans to people who we know can't afford to repay them."The number of Americans with federal student loans, including through programs for undergraduates, parents and graduate students, grew by 14 million to 42 million in the decade through last year. Overall student debt, most of it issued by the federal government, more than doubled to $1.3 trillion over that period. 

Democratic state attorneys general decry student loan rework by Republicans | Reuters: U.S. Education Secretary Betsy DeVos has been reworking student lending since her appointment in February, raising concerns among Democrats that she will undo former President Barack Obama's overhaul of college financial aid. On Monday, 21 state attorneys general, all Democrats, wrote to Republican DeVos decrying her decision to end the Education Department's work on reforming loan servicing, steps intended to ensure that borrowers understand their outstanding debt and repayment options. "We should be looking for ways to ease the burden of student debt, not enabling the student loan servicing industry to manipulate and exploit students," New York Attorney General Eric Schneiderman said in a statement. Under Democrat Obama, much of the $1.3 trillion business of student lending was moved from banks and other companies to the federal government. Four companies still handle servicing the loans. Last year the department began working on restrictions as well as incentives to ensure those servicers follow the law. In March, the Consumer Federation of America reported that $137 billion in student loans were in default. In an April 11 memo announcing she was stopping reform efforts, DeVos, appointed by President Donald Trump, wrote the process had been riddled with "moving deadlines, changing requirements and a lack of consistent objectives." "We now find ourselves in a situation where we must promptly address not only these shortcomings but also any other issues that may impede our ability to ensure borrowers do not experience deficiencies in service," DeVos wrote, according to a version published on the department website.The department did not immediately respond to a request for comment on the letter from the attorneys general.

Sexual abuse in nursing homes, care facilities is little-discussed epidemic - Sexual abuse of residents in long-term care facilities, assisted-living centers and nursing homes is a largely hidden problem nationwide. It hides behind reporting systems that fail to catalog such complaints separately from other forms of abuse that afflict the elderly and disabled. It hides behind business incentives that drive facility owners to conceal abuse. It hides behind apathy and the reluctance of family, friends and visitors who know or suspect something has happened but don’t want to get involved. It hides behind the failure to believe victims. “People don’t even think that an older person would be sexually assaulted, would be raped, would be a victim,” said Edwin Walker, once the head of Missouri’s former department on aging and now a deputy assistant secretary at the federal Administration on Aging. Yet inspection reports, regulatory notices and court documents describe many instances of sexual abuse of long-term care residents. One federal program has cataloged more than 20,000 complaints of sexual abuse at long-term care facilities over 20 years — a rate of nearly three such complaints a day. That disturbing total, however, is incomplete. It ignores, for example, cases in which one resident sexually assaults another resident. Truth is, no one knows how much of this goes on. That leaves regulators, advocates and prosecutors struggling to prevent abuse and respond when it happens.

Single-payer health care bill passes 1st hurdle at California Capitol - Senate Bill 562 passed the Senate Health Committee 5-1. It now advances to the Senate Appropriations Committee to face tough questions about how Californians would fund a single-payer health care system.It was a sea of red tee shirts as supporters of SB 562 packed the Senate Health Committee to show their frustration with the current health care system.“Too many people are not able to get the care they need because of their payment situation,” said Dr. Lynn Marie Morski with the Veterans Administration in San Diego. “Too many people are saddled with jobs that they don't want because they are stuck with that insurance.” “I already get single-payer health care through Medicare,” Grass Valley resident Doug Holmen said. “Why can’t we get Medicare for all instead of all this greed going on?” All 39 million Californians would be covered under SB 562, which would eliminate co-pays and insurance deductibles. That’s something that appeals to Thorild Urdal, a labor and delivery nurse from Berkeley, who participated in the march. She said the current health care system is not working. “These patients, if they do have chronic conditions and they lose their health care after pregnancy, they will come back in worse condition to the emergency room -- which we’re still going to pay for,” Urdal said.   Grass Valley resident Jerry Martin is critical of insurance companies. “It's a big waste,” he said. “They don't do anything at all for health care except shuffle papers.”   But, the California Association of Health Care Plans contends that millions of Californians would suffer under the single-payer plan. “There is no way to afford it here in California without massive tax increases,” agency President and CEO Charles Bacchi said. “Secondly, we're concerned that it will restrict access to care, as wait times increase and the access to specialists go down -- as we've seen in other single-payer countries.”

Key Republican blasts Trump's mental health pick | TheHill: President Trump’s pick to tackle the nation’s addiction and mental health crises won praise from advocates, but a top Republican is blasting the choice. The president on Friday tapped Elinore McCance-Katz to serve as the first assistant secretary for mental health and substance use, a job within the health department created by last year’s 21st Century Cures Act. If the Senate confirms the post, she will take over duties as head of the Substance Abuse and Mental Health Services Administration (SAMHSA), overseeing the office and coordinating with other federal agencies. Yet her nomination sparked harsh criticism from the Republican congressman who created the position, which could complicate he nomination. “Dr. McCance-Katz served as Chief Medical Officer at the very time SAMHSA was under investigation for multiple failed practices and wasteful spending,” Rep. Tim Murphy (R-Pa.) said in a statement.“She was the key medical leader when the agency actively lobbied against any change or accountability, including when the Energy and Commerce Committee, indeed the entire Congress, was aiming to fix our nation's broken mental health system by passing the most transformational mental health reforms in a half century.” McCance-Katz supports medication-assisted treatment to help those with an addiction, and brings with her a background in both clinical and administrative work, advocates said. “She is very aware that addiction is a chronic brain disease. ... She is passionate about quality patient care and very knowledgeable about addiction and the health effects of addictive disease,” said Kelly Clark, American Society of Addiction Medicine’s president, noting McCance-Katz is a member. Several advocates expressed hope the nominee would work on integrating physical and behavioral health and help increase quick intervention to ensure both disorders are caught early.

Thousands of Obamacare Customers Left Without Options as Insurer Bolt --Tens of thousands of customers who get their health insurance through the Affordable Care Act marketplaces could lose their coverage for 2018. Several insurers have already decided not to offer marketplace coverage next year amid financial risk and Republican stop-and-go efforts to replace the law. Their exits mean that customers in certain counties could be left with no plans to choose from. And that number could still grow, as other major insurers are still deciding if they’ll offer plans next year, and how much customers will have to pay if they do. More than 12 million people have enrolled in individual marketplace plans this year. Customers in states such as Idaho, Maryland and Oregon have long been able to choose between several companies. But many other states have seen options dwindle.  For people who do get their health insurance through Obamacare marketplaces, coverage options tend to be significantly affected by whether the marketplace is run by a state or by the federal government. Customers in states that fully run their own marketplaces tend to have the most options. In 2017, 11 states, plus the District of Columbia, run state-based marketplaces, taking responsibility for all aspects—including infrastructure, plan regulation and customer outreach. Seventy-seven percent of customers in these states had a choice among four or more insurance companies. Five other states run state-based marketplaces but rely on for infrastructure. The remaining 34 state marketplaces are mainly or entirely run by the Department of Health and Human Services. In these federally run marketplaces, only 29 percent of 2017 customers had four or more insurer options.

America’s Health Care Costs Are Crushing the Economy -- Last week, my article took a closer look at the debt burden that Americans are struggling under that will soon have a significant impact on their spending habits despite the fact that we have a Federal Reserve crowing about how we’ve approximately reached full employment and that wage growth is sitting at 2.7% on an annualized basis.We are seeing more and more Americans reporting that it is difficult to pay their monthly premiums, copays and deductibles.The Kaiser Family Foundation (KFF) revealed that insurance premiums soared 213% since 1999 for family coverage purchased through an employer, while wages grew by only 60% and inflation is up 44%.In fact, health care spending now accounts for more than 17% of the U.S. economy compared to less than 9% in 1980.Even with insurance coverage, more adults are struggling with health care expenses. A recent survey by the KFF revealed that 43% of adults with health insurance struggled with affording their deductibles, while approximately one-third are having difficulty affording their premiums and copays. Both responses are up from their 2015 levels. What’s more, the push for more Americans to have insurance coverage has resulted in an increase in what workers are paying for deductibles. In 2016, more than one-half of workers with single-coverage health plans paid a deductible of $1,000 or more compared to 31% of workers in 2011. The average deductible now sits at $1,221, up 63% from 2006.

Congress nears deal on help for miners | TheHill: Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that he wants a long-term fix for miners' healthcare benefits in the next government funding bill, moving Congress closer to a deal on the issue. “I’m in favor of a permanent fix on miners' healthcare. It’s my hope that that will be included in the final package,” McConnell told reporters Tuesday after meeting with the GOP caucus. The question of what to do about the government-backed healthcare benefits for coal miners has complicated congressional spending debates in the past. McConnell’s endorsement is significant because he had previously supported temporary fixes but had never backed a long-term legislative solution. The healthcare fund, administered by the United Mine Workers of America (UMWA), will be in trouble at the end of the month unless Congress acts. Senators on the finance and spending panels, as well as lawmakers representing coal country, said earlier Tuesday they expect to include a fix for miner healthcare benefits in legislation to fund the government through the fall.

Why Mexican immigrants are healthier than their US-born peers --  The “Hispanic health paradox” was first identified in 1980, in the Hispanic health and nutrition examination survey. Results of the survey were compared with a second part of the survey, which looks at all Americans. Of all Hispanic groups, people from Mexico have some of the best health compared with the rest of Americans. For example, Mexicans have lower rates of high blood pressure, cardiovascular disease and most cancers than the general US population.  But, by the second or third generation, people of Mexican descent do not seem to have any health advantage over other Americans. This suggests that the paradox depends on cultural factors, such as physical activity, eating habits and family support.  At the time of my study, about 75% of the 131 homes in Los Duplex were occupied by Mexican tenants. Most were recent immigrants who worked in a nearby poultry processing plant. As part of my research, I collected family health histories and self-assessments of health, which were generally positive. I also found that Mexicans in Los Duplex approached health and healing by drawing on both traditional and mainstream medicine.  Mexican immigrants in Los Duplex cared for and supported each other physically, emotionally and financially. Strong social networks help migrants cross the border and find jobs in the US. They also help spread knowledge of medical resources and traditional practices, which together form a holistic system of healthcare. The Mexican families in my study had a relatively easy time accessing the mainstream medical system of Athens. But mainstream medicine was seen as a last resort. Immigrants reported that traditional Mexican health practices can often prevent or resolve problems before they require medical attention. Such practices promoted keeping calm, staying active and maintaining a positive attitude, to consuming traditional foods and herbal remedies. Most Mexican women routinely cooked meals for their families made with beans and corn tortillas (the traditional Mexican staple foods), as well as meat and vegetables. Food was prepared fresh with a variety of seasonings, like onion, garlic, mint, chillies, cumin, and oregano. These add micronutrients and antioxidants, as well as flavour. Although children consumed sweets and fizzy drinks, which could be bought in the neighbourhood, meals were usually served with homemade drinks made from fresh fruit.

Cherokee Nation Files Lawsuit Against Big Pharma Over Opioid Epidemic --Late last week, lawyers representing the Cherokee Nation filed a lawsuit against major pharmaceutical companies, claiming they have pumped dangerous painkillers into Native American communities in Oklahoma. The Washington Post obtained a copy of the court filing and reported that the companies are accused of breaking laws by failing to prevent the diversion of pain pills to the black market.”Specifically, the suit claims the corporations “turned a blind eye to the problem of opioid diversion and profited from the sale of prescription opioids to the citizens of the Cherokee Nation in quantities that far exceeded the number of prescriptions that could reasonably have been used for legitimate medical purposes.” With the markets bursting with pain pills, the drugs quickly found their way onto the black market. Lawyers for the Cherokee Nation posit that the companies bear some of the responsibility for that “opioid diversion.”The claim the opioid crisis has caused the Cherokee Nation to incur “increased spending on law enforcement, medical facilities, drug treatment centers and foster and adoption programs,” thePost reported.Attorneys hope that by filing the suits in tribal court, they will be able to gain quicker access to records that could show distinct negligence on the part of major drug companies. The suit names McKesson, Cardinal Health, and AmerisourceBergen, which together control 85% of prescription drug distribution in the United States. Walgreen’s and CVS are also included in the suit.

America's Opioid Death Crisis May Be A Lot Worse Than We Thought - America’s ongoing opioid crisis is no secret. With thousands dying from prescription painkiller overdoses each year — nearly as many as traffic deaths — even the U.S. government has been forced to take action. As awareness of the epidemic continues to grow, further hazards of the pharmaceutical class of drugs are being revealed — including potentially higher numbers of deaths caused by their use. According to a recent report from CBS, opioids are often the factor in deaths caused by infections like pneumonia.  CDC field officer Victoria Hall explained that “Opioid medications — codeine, hydrocodone (including Vicoprofen), oxycodone (Oxycontin, Percocet), morphine and others” can cause respiratory complications.“Opioids at therapeutic or higher than therapeutic levels can impact our immune system, actually make your immune system less effective at fighting off illness,” she said, adding that because opioids are sedatives, they can cause breathing to become slower and more shallow, which makes the person less likely to cough. Hall says this makes “it easier for something like a pneumonia to really set in.”Complicating matters, Hall found in a recent analysis that when individuals die of an infection worsened by opiate abuse, the cause of death listed on their death certificate often only cites the infection — not the drugs. She presented her findings at a CDC meeting this week. Hall and a colleague reviewed Minnesota’s unexplained death database and found 59 cases where opioids were involved. Twenty-two of those cases were not reported to the state’s opioid surveillance because “the involvement of drugs hadn’t been listed on the death certificate,” CBSnoted.“We found if you have [a] really profound infectious disease, like really bad pneumonia, that may be the only thing written on the death certificate,” she said. “And thus it’s not going to get picked up in opioid surveillance.” Still, “[p]neumonia was listed as a cause of death in 54 percent of the unexplained drug-related cases, the researchers found.

Elephant tranquilizer makes lethal entry into opioid crisis - SFGate: A substance used to tranquilize elephants that is 100 times more potent than the drug that killed Prince is presenting a new and difficult challenge in the nationwide opioid epidemic. The exotic and toxic sedative named carfentanil has been linked in recent weeks to fatal overdoses in Illinois, Colorado, Wisconsin and Minnesota. "We have never seen death like we do now," said Tom Synan, head of the Hamilton County Heroin Coalition in Ohio, which was among the first spots to discover a string of carfentanil deaths during a week in which the county's overdoses more than doubled. On Monday, a Virginia man pleaded guilty in a drug distribution case after selling $100 of carfentanil-laced heroin to a 21-year-old found dead by her mother on the bathroom floor of their Fairfax County home. Three cases in Anne Arundel and Frederick counties this month mark the first carfentanil-related fatalities in Maryland, alarming local health and law enforcement officials already in a state of emergency combating the opioid crisis. The difficult-to-detect substance is so powerful that an amount equivalent to a few grains of salt can be deadly. It requires more aggressive treatment than a typical opiate overdose to reverse. First responders are getting burned out answering back-to-back overdose calls rising because of carfentanil and other synthetic opioids, and they worry about falling ill after exposure while answering calls. The drug is so new that some medical examiners don't have the tools to detect it in autopsies. "It shows how callous these drug dealers are," Synan said. "It has no human use whatsoever, and they're putting it out on the street and wreaking havoc." 

The National Blues - Kunstler - While the news waves groan with stories about “America’s Opioid Epidemic” you may discern that there is little effort to actually understand what’s behind it, namely, the fact that life in the United States has become unspeakably depressing, empty, and purposeless for a large class of citizens. I mean unspeakably literally. If you want evidence of our inability to construct a coherent story about what’s happening in this country, there it is.I live in a corner of Flyover Red America where you can easily read these conditions on the landscape — the vacant Main Streets, especially after dark, the houses uncared for and decrepitating year by year, the derelict farms with barns falling down, harvesters rusting in the rain, and pastures overgrown with sumacs, the parasitical national chain stories like tumors at the edge of every town.You can read it in the bodies of the people in the new town square, i.e. the supermarket: people prematurely old, fattened and sickened by bad food made to look and taste irresistible to con those sunk in despair, a deadly consolation for lives otherwise filled by empty hours, trash television, addictive computer games, and their own family melodramas concocted to give some narrative meaning to lives otherwise bereft of event or effort.These are people who have suffered their economic and social roles in life to be stolen from them. They do not work at things that matter. They have no prospects for a better life — and, anyway, the sheer notion of that has been reduced to absurd fantasies of Kardashian luxury, i.e. maximum comfort with no purpose other than to enable self-dramatization. And nothing dramatizes a desperate life like a drug habit. It concentrates the mind, as Samuel Johnson once remarked, like waiting to be hanged.On display in the news reports about the mystery of the opioid epidemic is America’s neurotic reliance on supposedly scientific “studies.” Never before in history has a society studied so much and learned so little — which is what happens when you resort to scientizing things that are essentially matters of conduct. It rests on the fallacy that if you compile enough statistics about something, you can control it. Opioid addiction is just another racket, a personal one, in a culture of racketeering that is edging toward truly epochal failure, for the simple reason that rackets are dishonest, and pervasive dishonesty is at odds with reality, and reality always has the final say. The eerie thing about reading the landscape of despair is that you can see the ghosts of purpose and meaning in it. The ghosts of commerce are also plainly visible in the bones of Main Street. These were businesses owned by people who lived in town, who employed other people who lived in town, who often bought and sold things grown or made in and around town. Every level of this activity occupied people and gave purpose and meaning to their lives, even if the work associated with it was sometimes hard. Altogether, it formed a rich network of inter-dependence, of networked human lives and family histories.

107 cancer papers retracted due to peer review fraud  -- The journal Tumor Biology is retracting 107 research papers after discovering that the authors faked the peer review process. This isn’t the journal’s first rodeo. Late last year, 58 papers were retracted from seven different journals— 25 came from Tumor Biology for the same reason.It’s possible to fake peer review because authors are often asked to suggest potential reviewers for their own papers. This is done because research subjects are often blindingly niche; a researcher working in a sub-sub-field may be more aware than the journal editor of who is best-placed to assess the work.But some journals go further and request, or allow, authors to submit the contact details of these potential reviewers. If the editor isn’t aware of the potential for a scam, they then merrily send the requests for review out to fake e-mail addresses, often using the names of actual researchers. And at the other end of the fake e-mail address is someone who’s in on the game and happy to send in a friendly review.Fake peer reviewers often “know what a review looks like and know enough to make it look plausible,” said Elizabeth Wager, editor of the journal Research Integrity & Peer Review. But they aren’t always good at faking less obvious quirks of academia: “When a lot of the fake peer reviews first came up, one of the reasons the editors spotted them was that the reviewers responded on time,” Wager told Ars. Reviewers almost always have to be chased, so “this was the red flag. And in a few cases, both the reviews would pop up within a few minutes of each other.” It’s not always the authors providing the reviews. "There is some evidence that so-called third-party language-editing services play a role in manipulating the reviewing process,” said a spokesperson for Springer, the company that published Tumor Biology until this year. Scientists who work in a language other than English may use editing services to polish their papers before submitting to a journal, and some of these services can be unethical and predatory, says Wager.

“Superman Is Not Coming”: Erin Brockovich on the Future of Water - Come take a ride on America's toxic water slide: First stop: Flint, Michigan, where two years later, people are still contending with lead-laced water, which was finally detected by the EPA in February 2015 with the help of resident Lee Anne Walters. Next stop: California, where hundreds of wells have been contaminated with 1,2,3-TCP, a Big Oil-manufactured chemical present in pesticides. Travel to the East to see the significant amounts of 1,4-dioxane, an industry solvent stabilizer that continue to pollute the waters belonging to North Carolina's Cape Fear River Basin. In New York and Pennsylvania, residents are contending with outbreaks of waterborne Legionnaires' disease (the bacteria grow easily in water distribution systems and often hide in the biofilm of aging pipes). Meanwhile, in June 2016, kids in Hoosick Falls, New York, protested in the streets with placards around their necks that featured PFOA (Perfluorooctanoic acid, a man-made chemical used in Teflon) levels to denote how much has infiltrated their blood through tainted water. Drop to Houston, Texas, where high levels of hexavalent chromium, the cancer-causing chemical made infamous by Erin Brockovich, are turning up in tap water while thousands of fracking poisons overrun imperiled communities and Indigenous reservations. And, to add to the cesspit, just four days after Trump was sworn in, he sanctioned the $3.8 billion, 1,170-mile Dakota Access Pipeline (DAPL) that will create underground contamination. Yes, indeed, the story of water in America is dirty and deep. The tale took a toxic turn in the 1930s, during the dawn of the chemical industry, when many horrifying toxins were first being introduced into our landscape. Quality reports on what flows out of American faucets today read like a description for liquid cancer. "Houston. We. Have. A. Problem," says environmental activist Erin Brockovich in reference to the nation's water supply. Brockovich should know. She's been at it for more than 25 years, ever since her investigation uncovered that Pacific Gas & Electric was poisoning the small town of Hinkley, California, by adding the cooling water biocide Chromium 6 Cr(VI) into the water supply for more than 30 years. The adverse health effects associated with Cr(VI) exposure include occupational asthma, eye irritation and damage, perforated eardrums, respiratory irritation, kidney damage, liver damage, pulmonary congestion and edema, upper abdominal pain, nose irritation and respiratory cancer.

1.2 million children in the US have lead poisoning. We’re only treating half of them. We’ve long known that despite all our efforts to clean up lead, we have a serious problem with lead poisoning in American children — it’s an egregious and preventable public health issue that just won’t go away. And it seems the problem is even worse than we thought. Researchers at the Public Health Institute reported Thursday in the journal Pediatrics that the overall number of children with elevated blood lead levels as of 1999-2000 in the US was 1.2 million, or double what the Centers for Disease Control and Prevention had reported. (The number is likely even higher now, since testing rates have only declined since 2000.) These kids who are never tested or reported to the CDC also aren’t receiving treatment. Some states are doing much worse than others, according to the researchers. In the 11 states in dark blue on the map below, including Arizona and Florida, more than 80 percent of children with lead poisoning were not tested by their pediatricians or local health departments. For the other 28 states with data (in medium and light blue), anywhere from 40 to 60 percent of lead-poisoned children weren’t tested.   As for the 12 states in gray, researchers were unable to determine how many cases of lead poisoning were missed, because these states don’t share any data with the CDC.  So how are we failing to account for so many lead-poisoned children?  The answer (as well as the solution) is pretty straightforward. We don’t test enough children for lead, and as a result, lead poisoning cases in the US go undetected. If doctors were to test more children and if states were to mandate testing for more at-risk populations, then more children suffering from lead poisoning would get the treatment they so desperately need. It might also mean we’d get more serious about dealing with the threat of lead itself.

Q&A: Hawaii reassures tourists after brain parasite cases (AP) — A California couple on their honeymoon and two people who drank a homemade herbal beverage are among the rising number of victims in Hawaii falling ill with a potentially deadly brain parasite. After the newlyweds' plight with rat lungworm disease recently got attention online, the couple and some experts accused Hawaii of failing to adequately warn tourists and residents of the danger they can face. Tourism officials say the disease is rare and there's no need to cancel vacation plans. "It never occurred to us that our honeymoon would be two weeks in paradise to return home with worms in our brains," Ben Manilla of San Francisco said in an email after spending a month in the hospital, undergoing several operations and suffering complications. Hawaii has seen the same number of infections so far this year that it will often get annually. Eleven cases have been confirmed — six on Maui and five on the Big Island. A roundworm parasite found in rodents causes the disease affecting the brain and spinal cord. When rodents expel the larvae of the worm, they can be ingested by snails, slugs, crabs and frogs, then passed to people. The disease is prevalent in Southeast Asia and tropical Pacific islands and has been seen in Africa, the Caribbean and the U.S. It's rare, and most people completely recover without treatment, according to the U.S. Centers for Disease Control and Prevention. 

Worsening heatwaves are turning dehydration into chronic kidney disease epidemics -- By 10 am in the sugarcane fields outside the town of Tierra Blanca in El Salvador, the mercury is already pushing 31°C. The workers arrived at dawn: men and women, young and old, wearing thick jeans, long-sleeved shirts and face scarves to prevent being scorched by the sun’s rays. They are moving quickly between rows of cane, bending, reaching, clipping and trimming in preparation for harvesting the crop in the weeks to come.  Gulping only the thick air, the workers won’t stop until noon, when their shift is over.   Among them is 25-year-old Jesús Linares. . Blood tests revealed that Linares was in the early stages of chronic kidney disease. It’s a familiar story here in the Bajo Lempa region, where recent studies suggest that up to 25 per cent of its nearly 20,000 inhabitants have chronic kidney disease. Across El Salvador, kidney failure is the leading cause of hospital deaths in adults. But while chronic kidney disease is most commonly caused by hypertension and diabetes, two-thirds of patients in Bajo Lempa don’t have either of those conditions, and the cause of their illness remains uncertain.Scientists have identified certain key themes. The majority of people with the unexplained disease are men, and it strikes predominantly in hot, humid regions where people are engaged in strenuous outdoor labour: farming, fishing or construction work. Dehydration, which seems an obvious factor, causes acute kidney disease that is easily reversed by drinking water, rather than this chronic form. This has left two burning questions: what causes this new form of kidney disease, and will it be likely to spread as the world gets warmer?Meanwhile, in El Salvador over the last two decades, more and more patients have arrived at clinics and hospitals, often taxing them to their limit. Many people, unable to get treatment, simply return to their homes to die. “This is really a silent massacre,” says Ramón García-Trabanino, a Salvadoran kidney specialist.

Why the Menace of Mosquitoes Will Only Get Worse - The outbreak began so slowly that no one in Dallas perceived it at first. In June 2012, a trickle of people began showing up in emergency rooms broiling with fever, complaining that their necks were stiff and that bright lights hurt their eyes. The numbers were initially small; but by the middle of July, there were more than 50 victims each week, slumping in doctors’ offices or carried into hospitals comatose or paralyzed from inflammation in their brains. In early August, after nine people died, Dallas County declared a state of emergency: It was caught in an epidemic of what turned out to be West Nile virus, the worst ever experienced by a city in the United States. By the end of the year, 1,162 people had tested positive for the mosquito-borne virus; 216 had become sick enough to be hospitalized; and 19 were dead. West Nile was not new to the United States. It had been a minor summer threat since August 1999, when it made 17 people sick in New York City. That was the virus’s first entry into the country, and it expanded through it thereafter. It landed in Dallas in 2002, sickening 202 people and killing 13. When it moved on toward the West Coast, epidemiologists in the city thought West Nile would no longer be a threat. And events seemed to prove them right: Each year, there were just a handful of cases. In 2011, the year before the epidemic, there was only one.  After the last cases were recorded in the final days of 2012,Dr. Robert Haley and a team of researchers studied the episode. Right away, they could see the geography of the illness: Victims were clustered in affluent ZIP codes where many owners had walked away from overmortgaged mansions. Haley and his team knew that there would be abandoned swimming pools and potted plants there — perfect places for mosquitoes to breed unbothered. But the financial crisis was four years old in 2012. The homes had been neglected for years without triggering an epidemic; no matter how many mosquitoes bred in the summer, the deep cold that blankets central Texas a dozen days every winter would knock the bugs down again. Except, Haley remembered, it had not been very cold that year.  The investigators downloaded federal weather data for each year since West Nile first arrived in Texas and plotted the metrics against the case counts. The epidemic year was an outlier on every measure, with the warmest winter, the warmest spring and the heaviest early rainfall in 10 years. It had been a freak weather event, and mosquitoes benefited from it. The insects survived the winter, so there were more of them to start with. They woke sooner, spilled out earlier from their winter hiding places and bit people in greater numbers than in any other year, transmitting so much virus that it made many people gravely ill.

 Exclusive: Vomitoxin makes nasty appearance for U.S. farm sector | Reuters: A fungus that causes “vomitoxin” has been found in some U.S. corn harvested last year, forcing poultry and pork farmers to test their grain, and giving headaches to grain growers already wrestling with massive supplies and low prices. The plant toxin sickens livestock and can also make humans and pets fall ill. The appearance of vomitoxin and other toxins produced by fungi is affecting ethanol markets and prompting grain processors to seek alternative sources of feed supplies. Researchers at the U.S. Department of Agriculture first isolated the toxin in 1973 after an unusually wet winter in the Midwest. The compound was given what researchers described as the “trivial name” vomitoxin because pigs were refusing to eat the infected corn or vomiting after consuming it. The U.S. Corn Belt had earlier outbreaks of infection from the toxin in 1966 and 1928. A vessel carrying a shipment of corn from Paraguay is due next month at a North Carolina port used by Smithfield Foods Inc, the world's largest pork producer. The spread of vomitoxin is concentrated in Indiana, Wisconsin, Ohio, and parts of Iowa and Michigan, and its full impact is not yet known, according to state officials and data gathered by food testing firm Neogen Corp. In Indiana, 40 of 92 counties had at least one load of corn harvested last fall that has tested positive for vomitoxin, according to the Office of Indiana State Chemist's county survey. In 2015 and 2014, no more than four counties saw grain affected by the fungus.

Pesticide maker tries to kill risk study -- Dow Chemical is pushing a Trump administration open to scrapping regulations to ignore the findings of federal scientists who point to a family of widely used pesticides as harmful to about 1,800 critically threatened or endangered species. Lawyers representing Dow, whose CEO is a close adviser to Trump, and two other manufacturers of organophosphates sent letters last week to the heads of three of Trump's Cabinet agencies. The companies asked them "to set aside" the results of government studies the companies contend are fundamentally flawed. Dow Chemical wrote a $1 million check to help underwrite Trump's inaugural festivities, and its chairman and CEO, Andrew Liveris, heads a White House manufacturing working group. The industry's request comes after EPA Administrator Scott Pruitt announced last month he was reversing an Obama-era effort to bar the use of Dow's chlorpyrifos pesticide on food after recent peer-reviewed studies found that even tiny levels of exposure could hinder the development of children's brains. In his prior job as Oklahoma's attorney general, Pruitt often aligned himself in legal disputes with the interests of executives and corporations who supported his state campaigns. He filed more than a dozen lawsuits seeking to overturn some of the same regulations he is now charged with enforcing. Pruitt declined to answer questions from reporters Wednesday as he toured a polluted Superfund site in Indiana. A spokesman for the agency later told AP that Pruitt won't "prejudge" any potential rule-making decisions as "we are trying to restore regulatory sanity to EPA's work." The letters to Cabinet heads, dated April 13, were obtained by The Associated Press. As with the recent human studies of chlorpyrifos, Dow hired its own scientists to produce a lengthy rebuttal to the government studies. Over the past four years, government scientists have compiled an official record running more than 10,000 pages indicating the three pesticides under review — chlorpyrifos, diazinon and malathion — pose a risk to nearly every endangered species they studied.

China’s pesticide drones ‘a godsend’ for struggling farmers amid labour shortage | South China Morning Post: Farmers in northern China have employed drones over their orchards this month to make up for rising labour shortage, and achieving remarkable increases in productivity in the process, the state news agency reported. About a dozen unmanned aerial vehicles sprayed pesticide on apple trees in Ji county, Shanxi province at the rate of about 10 minutes per orchard, or 15 times the efficiency of manual labour.Each drone carried a tank of the bug spray in its belly, and flew over paths calculated and operated by remote control. “I have trudged in the dirt my whole life, and I have never seen anything like this,” Liu Xinzhu, a 60-year-old farmer told Xinhua. Liu’s son had found a job in city, and his wife is not healthy enough for labour intensive work. Liu alone could not take care of his one-acre apple orchard. “The drones are a godsend,” he added. Liu Xinzhu, a scientist with the Ministry of Agriculture, said the drones’ operating cost were significantly lower than hiring farm labour.Farm wages have increased over the years as most young people left villages to seek work in the city. Spraying his one hectare orchard by drones cost more than 1,000 yuan (US$145) less than a farm worker, Liu said. Using the machines also prevented accidental inhaling of toxic pesticide. Some government experts believe that the market potential for agricultural drones on the mainland could reach 100 billion yuan per year. 

If the Syngenta-ChemChina farming mega-merger happens, just three countries will control much of the world’s agriculture - An agricultural mega-merger is about to ordain China as a new global leader in genetically-modified food.  First floated in 2016, a $43 billion deal that would merge Chinese state-owned agriculture company, ChemChina, and Swiss-owned seed company, Syngenta, promises to recast the world’s second largest economy as a biotech titan. The proposed deal is just one of three potential farm mergers that, if approved by regulators, will create the biggest farm-business oligopoly in world history and concentrate agricultural power to three countries: the US, Germany, and China. The ChemChina-Syngenta merger is on the cusp of becoming official as regulators in the European Union and the United States this month gave nods of approval. (Mergers between Bayer and Monsanto, and DuPont with Dow Chemical, are also being reviewed by regulators.)If the ChemChina-Syngenta deal is solidified, it will mark a major moment for China, which lacks enough arable land to grow the crops necessary for feeding a burgeoning population that’s consuming more meat and dairy products as its middle class expands. By using GM seeds, the country of 1.3 billion people hopes it will be able to use what arable land it does have more efficiently. The seeds have been engineered to endure harsher drought conditions, ward off pests, and produce higher crop yields, according to Science Magazine.That could wind up having a significant impact in China, which relies heavily on food imports from other countries. China currently imports more soybeans than any other nation in the world, for example, and is the seventh largest importer of corn.Still, such a power play by the world’s second-largest economy isn’t a for-sure winner in the short-term. Consumers in China, much like those in Europe, remain skeptical of GM food, which is rooted in a general distrust of Chinese government food safety claims. That’s partially because of scandals that have rocked the country in recent years, including one of tainted baby formula in 2008 and exploding watermelons in 2011. Those incidents weren’t enough to halt Chinese ambitions, though. In 2014, the government published remarks by Chinese president Xi Jinping that signaled tacit approval of investing more and more in biotechnology, including the production the GM foods.

Europe's meat and dairy farming vulnerable as climate change worsens water scarcity - study | Reuters: - Water scarcity half a world away caused by climate change could push up prices for meat and diary products in Europe by disrupting supplies of soybean, which is widely used as feed for livestock, researchers said Wednesday. The European Union sources most soybean from outside the 28-nation bloc - mainly from Argentina, Brazil and the United States, according to an EU-funded study by Dutch-based NGO Water Footprint Network (WFN). But 57 percent of soybean imports are from regions that are highly vulnerable to water scarcity, exposing Europe to possible shocks in supply, said Ertug Ercin, the study's co-author. "The highest risk that the European meat and dairy sector will face due to climate change and weather extremes lies outside its borders," he said in a statement. About two thirds of the global population already live in areas experiencing water scarcity at least one month a year, according to the United Nations. The problem is set to intensify with global warming, which is expected to affect rain patterns and cause more frequent droughts, the U.N. Food and Agriculture Organization (FAO) says. Water in soybean farming areas could become insufficient leading to lower production and higher prices, which would push up costs of meat and dairy products in Europe, Ercin said. Imports of other products like rice, sugar cane, cotton, almonds, pistachios and grapes could be similarly affected, according to the report. 

Climate change deepening Horn of Africa's hunger crisis, Oxfam says | Reuters: - Climate change is making drought and humanitarian disasters worse in the Horn of Africa, Oxfam said on Thursday, ahead of a major climate march in Washington to coincide with the first 100 days of the Trump administration. About 12 million people in Ethiopia, Kenya and Somalia are at risk of hunger due to recurring droughts, the U.N. Food and Agriculture Organization (FAO) says, with Somalia at risk of slipping into famine for the second time in six years. "Climate change is a real and current problem in East Africa. What were previously once in a life time droughts now come around more often," Nigel Tricks, Oxfam's regional director told the Thomson Reuters Foundation. "For the first time, scores of camels and donkeys which are typically hardy animals are dying off and the lives of pastoralists, which revolve around their animals have been greatly disrupted." Thousands are expected to attend the People's Climate March in Washington on Saturday, which hopes to match the success of a 300,000-strong rally in New York in 2014, the largest single protest ever held on the topic of climate change.A small group of activists in the Kenyan coastal town of Kilifi will take part in a sister march, along with others in Australia, Brazil, Greece, Ivory Coast, Uganda and Zambia. East Africa is experiencing its third year of very low rainfall, coupled with above average temperatures, which are part of a trend that began in the 1980s, Oxfam said. Seven of the last ten years have seen chronic droughts in East Africa due to poor or failed rains, it said "The march is to fight for our environment by creating more awareness on conservation," Noel Baraka, director of Kilifi-based Kenya Action Network, which campaigns on climate change, told the Thomson Reuters Foundation by phone. People are hungry and cattle are dying in Kilifi due to drought, he said, which started to bite last year. Eastern and southern Africa were hard hit in 2016 by drought exacerbated by El Nino - a warming of sea-surface temperatures in the Pacific Ocean - that wilted crops, slowed economic growth and drove food prices higher. 

Big Cotton is planting the seeds for more subsidies - Agricultural special interests have decades of practice in raiding the public purse, and it is only getting worse. Here is a case in point: cotton producers are canvassing Capitol Hill to lobby for access to a highly lucrative new set of subsidy programs. Those programs, called Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC), were first enacted in the 2014 farm bill as a replacement for the costly Direct Payments program.  As part of a trade dispute settlement with Brazil, Congress agreed that cotton would not be covered by these two programs, which are available for major crops like corn and wheat, and minor crops like oil seeds (canola, mustard seed, etc.). PLC and ARC pay substantial subsidies to growers when prices for their crops or overall revenues fall below a predetermined trigger level.  Both the price and revenue levels that trigger payments are high relative to their long-run averages. And like many newly-minted government programs, taxpayers have been stuck with a much higher bill than was advertised when they were originally introduced. Moreover, as part of the dispute settlement with Brazil the cotton lobby was allowed to design its own new subsidy program, an insurance program called the Stacked Income Protection program (STAX).  Under the STAX program, cotton producers could sign up for federal insurance coverage that pays out for revenue losses below preset levels based on the county where the farm was located. So why are cotton growers lobbying for even more taxpayer-backed insurance on top of the already-generous STAX program?  The answer is surprisingly simple.  First, many cotton growers have complained that they have to pay premiums to participate in the STAX program while producers of corn, wheat and other commodities pay nothing to benefit from the new price and revenue subsidy programs.   Second, and most importantly, cotton yields and prices have been sufficiently high over the past couple of years to prevent the STAX program from delivering any substantial subsidy payments to the growers. The cotton industry has now come to Congress, not to mention the USDA administrators in North Texas where cotton is grown, with a simple message: STAX is not working and cotton needs help.  Notably, their call to action comes at a time when cotton prices are close to ten-year highs and cotton growers are planning to expand production by about 20 percent.

'Flawed' dam may threaten St. Louis area – KSDK  - Glasgow, Montana, population 3,300, is best known for two things: Peace and quiet. But not far away, holding back one of the biggest reservoirs in the world and sitting on the Missouri River, is the Fort Peck Dam. At 21,000 feet long and 250 feet high, it's almost 80 years old and counting."I believe it's the most hazardous dam in North America," Dr. Bernard Shanks said.Dr. Shanks is a former land and wildlife advisor to the Governors of California and Arizona and has been studying the dams on the Missouri River for more than four decades. He said the problem starts with how the Fort Peck Dam was built. The Army Corp of Engineers, the caretakers of the dam, describe it this way."The dam itself was constructed out of hydraulic fill, which is basically a slurry of mud and water pumped from both downstream and upstream of the dam location," Darin McMurry, the Fort Peck Dam operations manager, explained."It's not a safe methodology to build dams," Shanks said.He said the technique makes them more likely to collapse: suddenly and catastrophically. In fact, it's something that happened during the dam's construction in 1938."One hundred and thirty-five men were caught in it. Eight of them died," Shanks said.And six were never found. Their bodies lost in the walls of the dam where they remain today."It was a dramatic illustration of a fundamental weakness in this dam,” he added.And when other hydraulic fill dams collapsed, like in California in the 1970s, he says the industry began moving away from hydraulic filling. That's why Shanks is raising the red flag. If a dam this big were to fail, he said there would be deadly consequences downstream."It would make the damage from 9/11 look like a drive-by shooting," Shanks said.Shanks said a Fort Peck failure could lead to a domino-like collapse of all five downstream dams on the way to St. Louis. This sort of cascade dam failure has happened a number of times in locations around the world. "Along the way, that much water would wash out probably dozens of bridges, railroad bridges, highways, pipelines," he said.

The trees that make Southern California shady and green are dying. Fast. - LA Times - The trees that shade, cool and feed people from Ventura County to the Mexican border are dying so fast that within a few years it’s possible the region will look, feel, sound and smell much less pleasant than it does now. “We’re witnessing a transition to a post-oasis landscape in Southern California,” says Greg McPherson, a supervisory research forester with the U.S. Forest Service who has been studying what he and others call an unprecedented die-off of the trees greening Southern California’s parks, campuses and yards.  Botanists in recent years have documented insect and disease infestations as they’ve hop-scotched about the region, devastating Griffith Park’s sycamores and destroying over 100,000 willows in San Diego County’s Tijuana River Valley Regional Park, for example. McPherson’s is the first survey to quantify and assess the big picture. It’s not a pretty one. His initial estimate is that just one particularly dangerous menace — the polyphagous shot hole borer beetle — could kill as many as 27 million trees in Los Angeles, Orange, Riverside and San Bernardino counties, including parts of the desert. That’s roughly 38% of the 71 million trees in the 4,244 square mile urban region with a population of about 20 million people. And that insect is just one of the imminent threats. “Many of the trees we grow evolved in temperate climates and can’t tolerate the stress of drought, water restrictions, higher salinity levels in recycled water, wind and new pests that arrive almost daily via global trade and tourism, local transportation systems, nurseries and the movement of infected firewood,” he said.

Sierra Snowpack Bigger Than Last Four Years Combined -- New NASA data show that snowpack in Tuolumne River Basin—a major source of water for San Francisco and California’s Central Valley—is currently greater than that of the four previous years combined. NASA’s Airborne Snow Observatory (ASO) measured snowpack in the Tuolumne Basin of the Sierra Nevada at 1.5 cubic kilometers (1.2 million acre-feet) as of April 1, 2017. That’s enough snow to fill the Rose Bowl (in Pasadena, California) nearly 1,600 times. The maps above show snow-water equivalents (in meters of liquid water) across the Tuolumne River Basin as measured by the ASO team in 2015 and 2017. Snow-water equivalent (SWE) is an estimate of how much water you would get if all of the snow melted at once. Dark blue areas indicate the deepest snow and most water, while light blue to white areas have much less snow. Turn on the image comparison tool to see the changes, or click here to download an animation of SWE from 2014 to 2017. “In such a huge snow season, the data available from ASO will provide critical guidance for water managers as we enter into the peak melt season later this spring,” said Frank Gehrke, chief of the California Cooperative Snow Surveys at the California Department of Water Resources. Snowpack across California in 2017 is close to the largest total on record. ASO data from Tuolumne measured the snowpack there to be twice the volume present in April 2016, and 21 times larger than in 2015, the lowest on record. The combined April 1 snow water equivalent of 2013 through 2016—when California was in an intense drought—add up to just 92 percent of the 2017 total. According to reports from the California Department of Water Resources, the state as a whole received 175 percent of the average rain and snowfall for fall and winter; it saw 160 percent of the average snowfall. In much of the Central Sierra, snow lies 8 meters (25 feet) deep, and in some high mountain basins, it is deeper than 24 meters (80 feet). Water managers estimate that as much as 36 million cubic kilometers (29 million acre-feet) of water is now stored in the mountains across the state.

California says oceans expected to rise higher than thought -- New climate-change findings mean the Pacific Ocean off California may rise higher, and storms and high tides hit harder, than previously thought, officials said. The state's Ocean Protection Council on Wednesday revised upward its predictions for how much water off California will rise as the climate warms. The forecast helps agencies in the nation's most populous state plan for climate change as rising water seeps toward low-lying airports, highways and communities, especially in the San Francisco Bay Area. Discoveries that ice sheets are melting increasingly fast in Antarctica, which holds nearly 90 percent of the world's ice, largely spurred the change.  As fossil-fuel emissions warm the Earth's atmosphere, melting Antarctic ice is expected to raise the water off California's 1,100 miles (1,770 kilometers) of coastline even more than for the world as a whole.Gov. Jerry Brown has mandated that state agencies take climate change into account in planning and budgeting. The council's projections will guide everything from local decisions on zoning to state action on whether to elevate or abandon buildings near the coast and bays. In the best-case scenario, waters in the vulnerable San Francisco Bay, for example, likely would rise between 1 foot and 2.4 feet (one-third to three-fourths of a meter) by the end of this century, the ocean council said.However, that's only if the world cracks down on climate-changing fossil-fuel emissions far more than it is now.The worst-case scenario entails an even faster melting of Antarctic ice, which could raise ocean l evels off California a devastating 10 feet by the end of this century, the state says. That's at least 30 times faster than the rate over the last 100 years.

Sea-level rise in California could be catastrophic, study says - SFGate: A state-commissioned report on climate change released Wednesday raises the stakes for fighting global warming, offering a clearer and, in some cases, more catastrophic picture of how much sea levels will rise in California. The Bay Area will see the ocean swell as much as 3.4 feet by 2100 if significant action isn’t taken, the report says. The scientists who produced the study pegged the prospect of that outcome at 67 percent. Tougher action on greenhouse gases would mean a lesser rise of up to 2.4 feet, the study says. The scope of the likely rise is largely in line with earlier estimates, but not completely. One worst-case scenario says ocean levels could rise 10 feet by century’s end, which would swamp countless homes, roads, harbors and even airports along the coast. “We have learned that the potential for a higher sea level is greater than we thought,” said Gary Griggs, a professor of Earth sciences at UC Santa Cruz and one of seven climate experts who prepared the report.The 71-page document was requested by the California Natural Resources Agency and the California Ocean Protection Council, in collaboration with the governor’s office, to help state and local officials plan for rising seas. The report, an update of a 2013 state analysis, lays out expected ocean levels through 2150 for a number of locations and scenarios varying with the amount of greenhouse gas emissions globally.

Climate change is looming catastrophe for California, Brown says --Global warming is a looming catastrophe for California, the nation and the world, but few people — politicians and the general public alike — want to talk about it, Gov. Jerry Brown told a San Francisco conference on climate change Thursday. Though no one can say when — or even if — a worst-case environmental disaster could occur, that’s no reason to avoid the discussion, he added. “If it’s possible, we need to talk about it,” the governor told the standing-room-only crowd at the opening session of the 15th annual Navigating the American Carbon World conference. Focusing on the future, particularly one with a potential for disaster, isn’t something most people are particularly good at doing, he said. Reports that the West Antarctica Ice Sheet is melting rapidly and warnings that the level of San Francisco Bay could rise by as much as 10 feet in the next century are getting far less attention than they deserve. Most politicians believe the only real catastrophe is losing an election, Brown said. “Greenhouse gases are still being generated and they’re growing,” Brown said. “We have to stop using carbon for our prosperity. Stopping carbon is like stopping a heroin addiction.”

New India coastal law will hurt environment, fishermen's livelihoods - activists | Reuters: - Planned changes to India's coastal zone law to allow reclaiming land from the sea and the use of thousands of miles of coastal land for commercial purposes will damage the environment and affect the livelihoods of millions of fishermen, activists say. The Marine Coastal Regulation Zone notification proposes to lift the ban on reclamation of seabed land for commercial purposes, allow tourism in ecologically sensitive coastal areas and the building of new coastal roads. Fishermen are opposed to the plans, which will impact the coastal ecology and hurt livelihoods, said T. Peter, general secretary of the National Fisherworkers' Forum. "Any relaxation of the (law) will lead to more commercial development, which will affect the lives and livelihoods of the fishing community," he said. "We appeal to the government not to encroach on our rights, and to take the informed consent of the fishing community for any changes," he told the Thomson Reuters Foundation. The forum will spearhead demonstrations across the country from next month, he said. A spokesman for the environment ministry did not respond to a question on when the new law will come into effect. India's coastline is more than 7,500 km (4,660 miles) long, and about 4 million people make a living from fishing and related activities. More than half of them live on less than $1.25 a day, according to official data.

India’s food-water-energy nexus: disaster or opportunity? India has always been an agrarian society and continues to be so despite the impressive advances in IT and other employment sectors. Agriculture and related activities still provide nearly 60% of the total employment. Food production has gone up from about 50 million tonnes per year in the 1950s to over 250 million tonnes per year in the recent decade with a corresponding four-fold increase in the yield in terms of kg of total grains per acre. But food availability per person per year has only grown from 145 kg to about 190 kg over this period because the seemingly significant increase in food production is partially offset by the rapid growth in population. The averages over such a large population can be misleading since they hide many externalities such as poverty and gender issues that limit access to food and the gobbling up of agricultural land for urbanisation. Also, mostly unseen are the impacts of agriculture and fertiliser use on soil health and water quality. But much more insidious is the impact on water quantity itself, due to the fact that the area under irrigation has grown from under 20% in the 1950s to just over 50% at present. The Green Revolution got India out of the stark poverty and hunger by the 1970s, though malnutrition is still a serious issue. The seasonal monsoon predictions used to correspond well to the total grain production with excess and deficit in grain production directly corresponding to the excess and deficit in the summer monsoon rainfall. The Kharif (summer) season used to produce more than twice the tonnage of grains than the Rabi (winter) season during the nascent years of independent India but now the two seasons are nearly equal in grain production. This again may seem like something to celebrate. But this feat is accomplished by overexploiting groundwater for irrigation.Subsidised electricity is driving unfettered groundwater mining even during good monsoon years. Water tables are dropping at alarming rates in nearly all parts of India and water availability per person has dropped precipitously as well. If these are not bad enough, the monsoon itself has trended down by over 10% over several decades and the extremes in monsoon have grown by nearly four-fold. Electricity use for pumping groundwater is a double-edged sword; while facilitating abundant grain production, its own production requires water in hydroelectric power plants or can contribute to air pollution from coal power plants. Air pollution now causes over a million premature deaths each year in India.

India's 2017 monsoon rains seen at average levels: weather office | Reuters: India's crucial monsoon rains are expected to be of an average amount in 2017, the weather office said on Tuesday, easing concerns over farm and economic growth in the world's leading producer of an array of agricultural goods. The monsoon is the lifeblood for India's farm-dependent $2 trillion economy and nearly two thirds of India's 1.3 billion people depend on agriculture for a living. Monsoon rains this year are expected to be 96 percent of the long-term average, K. J. Ramesh, director general of the state-run India Meteorological Department, told a news conference. India's weather office defines average, or normal, rainfall as between 96 percent and 104 percent of a 50-year average of 89 cm for the entire four-month season beginning June. The monsoon delivers about 70 percent of India's annual rainfall, critical for growing crops such as rice, sugar cane, corn, cotton and soybeans because nearly half of the country's farmland lacks irrigation. "We expect normal climatological distribution of rains and we also expect the trend of higher agricultural production and economic growth to continue," Ramesh said. Monsoon rains will arrive on the southern tip of Kerala state by around June 1 and retreat from the western state of Rajasthan by September, the department said. "The monsoon forecast is reassuring given all southern states in India are seeing a water crisis ... A good, well-distributed monsoon will keep food inflation risk on the lower side and give RBI the elbow room to ignite growth by keeping liquidity accommodative," said Rupa Rrege Nitsure, group chief economist at L&T Finance Holdings. 

Hong Kong has a monumental waste problem – BBC - Hong Kong may be clean on the surface, but its public services are straining to keep a lid on its rubbish. Despite attempts to clean up its act, the region produced 3.7 million tonnes of municipal waste in 2015 – the highest figure for five years. It has already cycled through 13 landfill sites, which are now being repurposed as parks, golf courses, and sportsgrounds, with just three sites remaining open. At this rate, it will only be a matter of a few years before those too begin to overflow. “If Hong Kong continues in this way, we will reach breaking point by 2020,” says Chan – an estimate supported by Hong Kong’s own Environmental Protection Department. Chan is both an environmental scientist and a politician for the Neo Democrat Party of Hong Kong, experience that has given him an unparalleled view of the social, economic and technological difficulties of saving the city from this deluge. “We are moving in the direction of unsustainable urbanisation,” says Chan. And that could be a warning for other countries, as more and more people feel the lure of city living – meaning that environmentalists across the world will be watching Hong Kong’s next steps closely. With around seven million people, crammed into an area of 2,000 square kilometres (772 sq miles), Hong Kong is currently the fourth most densely populated place in the world (after its neighbour, Macau, and Singapore and Monaco). With space at such a premium, there is precious little room to build new landfill sites.

Activist Kuki Gallmann Shot At Her Kenyan Ranch -- Conservationist Kuki Gallman discusses the need to save migratory birds on April 9, 2006. Kuki Gallman, the Italian-born author and nature conservationist, was shot and injured in an ambush at her Kenyan ranch on Sunday morning. The 73-year-old was surveying her Laikipia property when herders reportedly shot her in the hip and stomach. The herders were searching for pasture as Kenya suffers an intense drought, local police chief Ezekiel Chepkowny said, according to The Associated Press. She was airlifted to a hospital in Nairobi and emerged from surgery in stable but critical condition, Gallman’s friends and family say.Herders have said they need land from Gallman’s 139-square-mile conservancy to graze their livestock. Authorities believe some of them recently set fire to a retreat on Gallman’s property favored by her late son. A Kenyan citizen and author of bestseller I Dreamed of Africa, Gallman has been raising funds to rebuild the retreat and improve security on her land.Sveva Gallman, Gallman’s daughter, told NPR earlier this month that while they’ve always allowed herders to graze their animals on the land, more herders from far away have showed up with thousands of cattle and increased tensions. She suspects that some of the livestock is owned by wealthy politicians.Gallman hasn’t been the only target of violence in the Laikipia region. Herders are suspected of killing British rancher and safari company founder Tristan Voorspuy, who was shot to death while inspecting his lodges.At least four police officers have been shot and injured during confrontations with herders in the region, Kenyan outlet Daily Nation reported.In February, Kenyan President Uhuru Kenyatta declared the country’s drought a national disaster. The Red Cross says 2.7 million people risk starvation. 

Scientists Consider Brighter Clouds to Preserve the Great Barrier Reef - MIT Technology Review -- For the last six months, researchers at the Sydney Institute of Marine Science and the University of Sydney School of Geosciences have been meeting regularly to explore the possibility of making low-lying clouds off the northeastern coast of Australia more reflective in order to cool the waters surrounding the world’s biggest coral reef system.   During the last two years, the Great Barrier Reef has been devastated by wide-scale bleaching, which occurs as warm ocean waters cause corals to discharge the algae that live in symbiosis with them. Last year, as El Niño events cranked up ocean temperatures, at least 20 percent of the reef died and more than 90 percent of it was damaged. The Australian researchers took a hard look at a number of potential ways to preserve the reefs. But at this point, making clouds more reflective looks like the most feasible way to protect an ecosystem that stretches across more than 130,000 square miles, says Daniel Harrison, a postdoctoral research associate with the Ocean Technology Group at the University of Sydney. “Cloud brightening is the only thing we’ve identified that’s scalable, sensible, and relatively environmentally benign,” he says.They’re one of several research groups that have started to explore whether cloud brightening, generally discussed as a potential tool to alter the climate as a whole, could be applied in more targeted ways. All the scientists involved stress that the research is in its infancy. No one has tested a system for cloud brightening at all, much less in geographically focused applications.  British scientist John Latham first proposed the idea as a potential way of controlling global warming in Nature nearly 30 years ago. The theory is that fleets of ships could spray tiny salt particles, generated from sea water, toward the low-lying marine clouds that hug the coasts of several continents. That would provide the nuclei needed to induce additional droplet formation, expanding the total surface area of the clouds. The resulting dense, white clouds should reflect more heat back into space. A 2012 study led by Latham at the University of Manchester found that the approach could offset the heating that would result if carbon dioxide doubled in the atmosphere.

New study: global warming keeps on keeping on -- As humans continue to dump heat-trapping gases like carbon dioxide into the atmosphere, the Earth continues to warm. In fact, it has been warming for decades and we now routinely hit temperatures that are 1°C (about 2°F) above the temperatures from 100 years ago.But despite what we may expect, temperatures across the globe don’t rise little by little each year in a straight line. Rather, temperature changes are a bit bumpy. They go up and they go down somewhat randomly as they increase. Think of a wiggly line superimposed on a straight rising line.A great depiction of the behavior is seen from the NASA data, shown below. Each black mark is the Earth’s temperature for a given year. The red line is calculated from 5-year averages of the black data marks and is much smoother than the black line. As you move from left to right, you pass from the year 1880 to the most recent year (2016), which is shown in the very upper right corner. Careful observation of the graph shows that the last three years (2014, 2015, and 2016) were all record-breakers. It makes you wonder, what the chances are that global warming has sped up?  Well this is a question that can be tested with statistics, and a new paper out in Environmental Research Letters did just that. In the study, the authors ask a few important questions. First, can the latest three years, all of which were record-setting, tell us whether the rate of warming has changed? Also, can the years that preceded those (which were cooler than the trend) tell us whether the rate of warming had slowed? The authors found that using the NASA temperatures, the likelihood of seeing a trend as low as, or even lower than what was observed during the 2001–2014 period was 74%. The likelihood of seeing the actual 2000–2012 temperatures was 96%. In other words, it’s very likely that a time period with a trend as low as observed would occur just by chance, given a constant warming rate. They repeated the analysis for another climate dataset (HadCRUT4) and found again, it’s not unusual to expect the temperatures we actually saw over these periods. The figure below shows five different sets of temperature data; they are all telling this same story of uninterrupted rise over the past four decades or so.

Arctic climate warming higher and faster than expected - A new international report shows that Arctic temperatures are rising higher and faster than expected, and the effects are already being felt around the world. “The Arctic's climate is shifting to a new state," warns the report."This transformation has profound implications for people, resources and ecosystems worldwide."The Snow, Water, Ice and Permafrost in the Arctic assessment was written by more than 90 scientists from around the world who compiled the latest northern research on how climate change is affecting the Arctic ice and ecosystems.It's part of the Arctic Monitoring and Assessment Program of the Arctic Council, which represents eight circumpolar countries. Among the findings in this year's report:

  • The Arctic Ocean could be largely free of sea ice in the summer as early as 2030 or even before that.
  • Arctic temperatures are rising twice as fast as the temperatures in the rest of the world. In the fall of 2016 mean temperatures were 6 degrees higher than average.
  • Thawing permafrost that holds 50% of the world's carbon is already affecting northern infrastructure and could release significant amounts of methane into the atmosphere.
  • Polar bears, walruses and seals that rely on ice for survival are facing increased stress and disruption.
  • Changes in the Arctic may be affecting weather as far away as Southeast Asia.

Arctic thaw quickening threatens trillion-dollar costs: report | Reuters: The Arctic's quickening thaw is melting the permafrost under buildings and roads from Siberia to Alaska, raising world sea levels and disrupting temperature patterns further south, an international study said on Tuesday. The frigid region's shift to warmer and wetter conditions, resulting in melting ice around the region, may cost the world economy trillions of dollars this century, it estimated. The report by 90 scientists, including United States experts, urged governments with interests in the Arctic to cut greenhouse gas emissions. U.S. President Donald Trump doubts that human activities, led by use of fossil fuels, are the main driver of climate change. "The Arctic is warming faster than any other region on Earth, and rapidly becoming a warmer, wetter and more variable environment," according to the study, which updates scientific findings from 2011. "Increasing greenhouse gas emissions from human activities are the primary underlying cause," they wrote in the study commissioned by the Arctic Council grouping the United States, Russia, Canada, Sweden, Denmark, Norway, Finland and Iceland. Arctic warming could have cumulative net costs from 2010-2100 of between $7 trillion and $90 trillion, it said, with harm exceeding benefits such as easier access for oil and gas exploration and shipping, it said. The period 2011-2015 was the warmest since records began in 1900. Sea ice on the Arctic Ocean, which shrank to a record low in 2012, could disappear in summers by the 2030s, earlier than many earlier projections, it said.

Huge Arctic report ups estimates of sea-level rise - Nature - The Arctic is warming more than twice as fast as the rest of the planet, suggests a huge assessment of the region. The warming is hastening the melting of Arctic ice and boosting sea-level rise.The report, compiled by more than 90 scientists, documents the myriad changes already under way across the Arctic because of climate change — from declining sea ice and melting glaciers to shifting ecosystems and weather patterns. From 2011 to 2015, the assessment finds, the Arctic was warmer than at any time since records began around 1900 (see 'Arctic warming').Sea ice continues to decline, and the extent of snow cover across the Arctic regions of North America and Eurasia each June has halved as compared to observations before 2000.The findings come from the Snow, Water, Ice, and Permafrost in the Arctic report, a comprehensive assessment compiled every few years by the Arctic Monitoring and Assessment Programme, the scientific body that reports to the governments that make up the Arctic Council, a forum for issues affecting the region. The last assessment came out in 2011. “The take-home message is that the Arctic is unravelling,” says Rafe Pomerance, who chairs a network of conservation groups called Arctic 21 and was a deputy assistant secretary of state for environment and development under US President Bill Clinton. “The fate of the Arctic has to be moved out of the world of scientific observation and into the world of government policy.”

Extreme Arctic Melt Could Increase Sea Level Rise Twice as Fast as Previously Estimated - Extreme Arctic melt could increase global sea level rise twice as fast as previously estimated and cost the world economy between $7 trillion and $90 trillion by 2100, a new analysis shows. The assessment from the Arctic Monitoring and Assessment Program projects that increased ice melt in the Arctic could contribute to an overall 20 to 29 inches of global sea level rise over the next century—nearly double the minimum estimates provided by the UN Intergovernmental Panel on Climate Change. The Arctic warmed faster than any other region on earth between 2011-2015 and the assessment speculates that the Arctic Ocean could be ice-free in the summer by 2040. "The Arctic is continuing to melt, and it's going faster than expected in 2011," Lars-Otto Reiersen, head of the Arctic Monitoring and Assessment Program (AMAP) which prepared the report, told Reuters. "Multi-year ice used to be a big c onsolidated pack. It's almost like a big thick ice cube versus a bunch of crushed ice. When you warm the water, the crushed ice melts a lot quicker."

 Scientists keep upping their projections for how much the oceans will rise this century - A report by a leading research body monitoring the Arctic has found that previous projections of global sea level rise for the end of the century could be too low, thanks in part to the pace of ice loss of Arctic glaciers and the vast ice sheet of Greenland.It’s just the latest in a string of cases in which scientists have published numbers that suggest a grimmer picture than the one presented in 2013 by an influential United Nations body, the Intergovernmental Panel on Climate Change.The new Snow, Water, Ice and Permafrost in the Arctic report presents minimum estimates for global sea level rise by the end of the century, but not a maximum. This reflects the fact that scientists keep uncovering new insights that force them to increase their sea level estimates further,   “Because of emerging processes, especially related to the Greenland ice sheet and the Antarctic ice sheet, it now looks like the uncertainties are all biased positive,” Colgan said. The assessment found that under a relatively moderate global warming scenario — one that slightly exceeds the temperature targets contained in the Paris climate agreement — seas could be expected to rise “at least” 52 centimeters, or 1.7 feet, by the year 2100. Under a more extreme, “business as usual” warming scenario, meanwhile, the minimum rise would be 74 centimeters, or 2.4 feet. The report bluntly contrasts its sea level findings with a previous 2013 report from the U.N. Intergovernmental Panel on Climate Change, which had put the “likely” low end sea level rise number for these two scenarios at 32 centimeters (about 1 foot) and 45 centimeters (1.5 feet) for the period between 2081 and 2100. That global body — whose high end sea level rise number for the year 2100 was just shy of one meter, or 3.2 feet — has often seen its assertions on sea level rise faulted by scientists for being too conservative. “These estimates are almost double the minimum estimates made by the IPCC in 2013,”

Rising sea to displace 500,000 New Orleans area residents, study says  - A study published this week predicts that sea level rise will push hundreds of thousands of people out of U.S. coastal cities such as New Orleans. It says the population will boom in nearby inland cities such as Austin.The University of Georgia study is considered the first detailed look at how inland cities might be affected by sea level rise. It estimates more than than 500,000 people will flee the seven-parish New Orleans area by 2100 due to sea level rise and the problems that come with it, including frequent flooding and greater exposure to storm surges. That's more than one third of metro New Orleans's current population.The study predicts that about two thirds of coastal Louisianans will move to higher ground but still within the state. The rest are seen as bound for Texas and, to a much lesser extent, Mississippi and Georgia.These inland refuges might want to plan ahead for the challenges that come with steeply rising populations, said Mathew Hauer, the study's lead author. "We tend to think of sea level rise as just a coastal issue," he said Wednesday (April 19) after his findings were published in the journal Nature Climate Change. "But a lot of people will have to move inland if we don't do adaptive management."Across the United States, the study estimates, 13 million people will be displaced by sea level rise under a scenario in which some efforts are taken to mitigate the impacts of sea level rise. The biggest draw, it predicts, will be Austin, gaining 600,00 to 800,000 people on top of the metro area's current estimated population of 2.1 million. Other inland cities likely to grow substantially include Orlando, Fla., Atlanta and Phoenix. These cities will likely need more power, water, schools, roads and other infrastructure, Hauer said. Some expected landlocked destinations such as Las Vegas and Riverside, Calif. are already struggling to manage rapid growth and dwindling water supplies.

Sobering visualizations reveal how sea level rise could transform cities in your lifetime   - Until recently, it seemed that we would be able to manage global warming-induced sea level rise through the end of the century. It would be problematic, of course, but manageable, particularly in industrialized nations like the U.S.However, troubling indications from the Greenland and Antarctic Ice Sheets show that melting is taking place faster than previously thought and that entire glaciers — if not portions of the ice sheets themselves — are destabilizing. This has scientists increasingly worried that the consensus sea level rise estimates are too conservative.With sea level rise, as with other climate impacts, the uncertainties tend to skew toward the more severe end of the scale. So, it's time to consider some worst-case scenarios. Recently, the National Oceanic and Atmospheric Administration (NOAA) published an extreme high-end sea level rise scenario, showing 10 to 12 feet of sea level rise by 2100 around the U.S., compared to the previously published global average — which is closer to 8 feet — in that time period.  The research and journalism group Climate Central took this projection and plotted out the stark ramifications in painstaking, and  terrifying, detail.  The bottom line finding? "By the end of the century, oceans could submerge land [that's] home to more than 12 million Americans and $2 trillion in property," according to Ben Strauss, who leads the sea level rise program at Climate Central.  Here's what major cities would look like with so much sea level rise:

Giant Waterfall in Antarctica Worries Scientists --  Scientists poring over military and satellite imagery have mapped the unimaginable: a network of rivers, streams, ponds, lakes and even a waterfall, flowing over the ice shelf of a continent with an annual mean temperature of more than -50C.  In 1909 Ernest Shackleton and his fellow explorers on their way to the magnetic South Pole found that they had to cross and recross flowing streams and lakes on the Nansen Ice Shelf.  Now, U.S. scientists report in the journal Nature that they studied photographs taken by military aircraft from 1947 and satellite images from 1973 to identify almost 700 seasonal networks of ponds, channels and braided streams flowing from all sides of the continent, as close as 600km to the South Pole and at altitudes of 1,300 meters.  And they found that such systems carried water for 120km. A second research team reporting a companion study in the same issue of Nature identified one meltwater system with an ocean outflow that ended in a 130-meter wide waterfall, big enough to drain the entire surface melt in a matter of days.  In a world rapidly warming as humans burn ever more fossil fuels, to add ever more greenhouse gases into the atmosphere, researchers expect to observe an increase in the volume of meltwater on the south polar surface. Researchers have predicted the melt rates could double by 2050 . What isn't clear is whether this will make the shelf ice around the continent—and shelf ice slows the flow of glaciers from the polar hinterland—any less stable.  "This is not in the future—this is widespread now, and has been for decades," said Jonathan Kingslake , a glaciologist at Columbia University's Lamont-Doherty Earth Observatory, who led the research.

Trump's climate cuts could result in half-billion extra tons of CO2 in the air - President Donald Trump's planned climate change policies could lead to an extra half a billion tons of greenhouse gases in the atmosphere by 2025, according to a new analysis. That is equal to the annual electricity emissions of 60 percent of U.S. homes.Climate Advisers, a Washington consultancy, predicts that U.S. carbon emissions, which have been falling, will begin to flatten or increase by 2020 if the Trump administration succeeds in repealing the Clean Power Plan and other Obama-era regulations.In other words, decisions made today will have a delayed effect—but a prolonged one."We found that the 'Trump Effect' really begins to bite into the U.S. emissions trajectory in 2025—since many of the factors influencing today's emissions trajectory can't be reversed quickly," the report said.The analysis assumes that some regulations are more vulnerable than others to rollbacks. The Clean Power Plan to curb carbon emissions from power plants, methane rules covering the oil and gas industry and a handful of efficiency regulations are "highly vulnerable" in the consulting firm's view, either because they're high profile or because they haven't been fully implemented. If these are the only rules the Trump administration is able to repeal, it would erase 332 million metric tons of carbon pollution cuts, Climate Advisers projected. If, however, the Trump administration succeeds also in eliminating "moderately vulnerable" rules—those controlling landfill emissions, potent refrigeration gases such as HFCs and several energy efficiency standards—another 229 million tons of projected emissions cuts would not happen, the report finds.

Future Atmospheric CO2 Scenarios -  Energy and climate watchers will be aware that growth in global fossil fuel (FF) combustion has paused. Real enthusiasts will also be aware that growth in cement production has paused too. Why then has atmospheric CO2 continued to rise? The starting point is to appreciate that FF+cement emissions are running at close to 10 GtC per annum while removal by terrestrial and oceanic sinks is running at around 5 GtC per annum. Thus, for so long as emissions are in excess of removal, atmospheric CO2 will continue to rise. In this post I lay out two scenarios for future consumption of FF: 1) Business as Usual and 2) Austerity, where consumption is reduced to 6 GtC per year. In the latter, CO2 continues to rise through 2050. The inset chart comes from the Carbon Dioxide Information Analysis Centre (CDIAC) part of the U.S. Department of Energy (DoE) located at Oak Ridge National Laboratory. The data presented here are from the 2016 budget. Let me begin by deconstructing the data used to compile the inset chart up top. At this point it is worth noting that the sum of sources (Fossil fuels etc) and the sum of sinks (Ocean sink etc) balance exactly. That is because the land sink is not measured but is used as a balancing item, i.e. it is the difference between emissions and CO2 removed by the oceans and that which remains in the atmosphere. I may return to this in a separate post.  Even though emissions have all but stopped rising they are still running at close to 10 GtC / annum and this is approximately double the rate of removal (Figure 6). And so, for so long as emissions exceed the sinks, atmospheric CO2 will continue to rise and will continue to do so until a new equilibrium between emissions and sinks is reached. In simple terms this would mean reducing emissions by at least 50% from current values just to stop CO2 rising. In order for CO2 atmosphere to fall, the sinks need to exceed emissions. In reality it will need to be substantially higher than 50% since the rate of removal is proportional to the partial pressure of CO2 in the atmosphere and the rate of removal will slow as CO2 in the atmosphere falls. I now want to imagine two future scenarios. One with business as usual (BAU) (Figures  9 and 10) and the other called Austerity since it involves slashing our use of FF (Figure 11 and 12). The most striking thing to emerge from this exercise is that by implementing draconian cuts in fossil fuel use we end up with 450 to 476 ppm CO2 in 2050 compared with 498 ppm in the BAU scenario. These differences are largely immaterial for climate change.

New reports say Canada’s oil, gas methane emissions higher than previously thought - —Two new reports from environmental groups say methane emissions in Canada’s oil and gas sector are higher than previously thought, as debate continues on how urgently they need to be reduced.The David Suzuki Foundation partnered with St. Francis Xavier University on a study that found methane emissions from oil and gas sites in British Columbia to be 2.5 times higher than previously reported.  “Our finding is quite staggering,” said Ian Bruce, director of the Suzuki Foundation’s science and policy department.“B.C.’s methane pollution problem, and certainly Canada’s, is much bigger than previously estimated by government and industry.” The peer-reviewed findings, drawn from measures at over 1,600 well pads in the Montney shale gas formation in northeastern B.C., estimate that operations in the region leak and intentionally release more than 111,800 tonnes of methane annually.“This is a concern because methane is a very potent greenhouse gas, 84 times more potent than carbon dioxide over a 20-year period,” said Bruce.He said the effects of methane means its important for the federal government to return to its original timeline for reducing those emissions, rather than the at least three-year delay it recently made after pressure from industry.Meanwhile, an Environmental Defence report highlighted data produced by GreenPath Energy Ltd. for the Alberta government that shows methane emissions in that province are 60 per cent higher than previously thought.GreenPath surveyed 676 oil and gas wells on 395 sites across much of Alberta’s gas producing regions and found the number of pumps and controllers on sites that could leak methane was much higher than expected. Using the updated figure, GreenPath concluded that the five gas-producing areas it studied would have 489,951 annual tonnes of methane emissions from those devices, compared with a 2014 report that showed 306,213 tonnes of methane emissions a year from unreported venting in 2010 for all of Alberta.

Bloomberg editors on new climate website: Climate change “is fundamentally an economic story” -- Bloomberg recently announced the creation of a new website that will provide audiences with important reporting on the economic and business implications of climate change. The move comes at a time when big businesses around the world are urging governments to take action as they increasingly recognize the reality and the risk of climate change.On April 20, the Huffington Post reported that “Bloomberg, the titan of business and financial journalism, is adding a site devoted to climate science and the future of energy to its sprawling news empire.” The website,, will serve as “a hub for coverage of how rising global temperatures are changing the planet and moving financial markets.”Bloomberg’s Sustainability Editor Eric Roston explained the decision, stating, “Climate change is fundamentally an economic story, it’s an economic problem. … It’s naturally a business story and it’s naturally a concern to rationally minded executives in any sized enterprise.” And Jared Sandberg, senior executive editor in Bloomberg’s digital division, said, “[Climate change is] the mother of all risk. … If you have intelligence agencies around the world identifying climate change as one of the great, destabilizing forces, there’s a massive risk to contend with for any business and any investor behind it.” The Huffington Post added that Climate Changed would give Bloomberg “a leg up” over its competitors, particularlyThe Wall Street Journal: “The Rupert Murdoch-owned newspaper’s hard-line conservativism appears to have bled over from the opinion pages to the news section. A study published in 2015 by researchers at Rutgers University, the University of Michigan and the University of Oslo found that from 2006 to 2011, the Journal’s news reporting rarely mentioned threats or effects of climate change, compared with the country’s other leading broadsheet newspapers.”

US business schools failing on climate change -- Although sustainability is a growing theme in business school curricula, it’s still relatively new – and relatively uncommon. Business schools have been slow to change and adapt.For our research, we studied 51 of the hundreds of business programs in the U.S. We found that when an introductory sustainable business course is offered, it often remains an elective in the business school curriculum. Only a few business schools offer minors, majors, certificates or graduate degrees in sustainability management or sustainable business.The 51 schools in our study are actually at the forefront of training students in environmental sustainability – that is, compared to the majority of business schools, which do not offer sustainability coursework at all. What we found is that even these schools are doing a poor job of preparing their students for the future.We analyzed the reading lists of 81 introductory sustainable business courses, which resulted in a final list of 88 different readings. Since sustainability is still an emerging discipline in business education, we found limited overlap in the readings or authors assigned to students. Across the syllabi, there was only 20 percent overlap in readings – very little consensus as to what should actually be taught.We also found that the majority, or 55 percent, of sustainability readings assigned to business students took a weak sustainability position. The readings take a business-as-usual approach that makes small gradual improvements, pointing to examples such as the printing ink industry’s move to soy- and water-based inks. This supports a “do less bad” approach to sustainability, a far cry from what science tells us is needed.The readings communicated two reasons for adopting sustainability practices: either the business benefits of sustainability (i.e., increased innovation, competitiveness and profitability) or the need to do what is required by law (i.e., meeting labor, emissions or pollution regulations).  Only 29 percent of the readings assigned in our study acknowledged the scientific need for adopting sustainability practices.

March for Science: Protesters gather worldwide to support 'evidence' -- Crowds massed in the US capital and around the world Saturday to support science and evidence-based research — a protest partly fueled by opposition to President Donald Trump's threats of budget cuts to agencies funding scientists' work. At the main March for Science, demonstrators gathered at Washington's National Mall to hear speakers laud science as the force moving humanity forward, and rail against policymakers they say are ignoring fact and research in areas including climate change.  "Today we have a great many lawmakers — not just here but around the world — deliberately ignoring and actively suppressing science," one of the event's speakers, TV host and scientist Bill Nye, told a rain-soaked crowd from a stage. "Their inclination is misguided and in no one's best interest. Our lives are in every way improved by having clean water, reliable electricity and access to electronic global information." Besides the Washington march, organizers said more than 600 "satellite" marches were taking place globally in a protest timed to coincide with Earth Day.

Trump will ramp up action on executive orders this week: reports | TheHill: President Trump is planning to sign executive orders this week on energy and the environment, Reuters reported Sunday, citing a White House official. "This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production and reduced unnecessary burden on energy producers," the official told Reuters. Axios said Sunday that by the end of the week, Trump will have signed at least 32 executive orders — the most in the first 100 days of an administration since World War II. A White House source previewed the actions expected to come from Trump this week, including:

  • an order "Improving Accountability and Whistleblower Protections at the Department of Veterans Affairs"
  • review of Designations under the Antiquities Act
  • an order implementing an "America-First Offshore Energy Strategy"
  • and an order "Promoting Agriculture and Rural Prosperity in America."

The president is expected to sign on Wednesday an order regarding the 1906 Antiquities Act, which gives presidents the ability to make areas of land and water federal and to designate them as national monuments, Reuters added. On Friday, he will sign an order related to his administration's "America First" energy policy, Reuters added. Last month, the president signed a wide-ranging executive order to start the process of rolling back former President Barack Obama's aggressive climate change agenda, promising the measure would create jobs in the fossil fuel industry.

 Trump successes may limit environmental riders in funding bill -  A Trump administration rolling back environmental actions and Congress quashing Obama-era regulations, combined with a packed legislative calendar, may mean few environmental riders in the upcoming government funding bill. “Riders seem like small potatoes compared to what’s coming down the pike,” William Yeatman, a senior fellow at the free-market Competitive Enterprise Institute, told Bloomberg BNA. His group isn’t lobbying for any environmental riders, he said. Another factor that may limit environmental riders is the need to garner Democratic votes to pass the measure to keep the government funded beyond April 28. Despite that, environmental groups are still preparing to battle any riders that would target environmental protections, doing so this year without a friendly White House ready to veto any poison pills. “Our playbook, our strategy doesn’t change because we’re still fighting the same fight,” Kirin Kennedy, the Sierra Club’s associate legislative director for lands and wildlife, told Bloomberg BNA. “It just intensifies.” The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, founder of Bloomberg L.P. Bloomberg BNA is an affiliate of Bloomberg L.P. Details on riders will be available soon because government funding runs out after April 28. House and Senate appropriations staff told Bloomberg BNA that even though no funding legislation has been introduced yet, their goal is still to get a bill out of Congress by that deadline, potentially with money for the rest of the fiscal year.

EPA to Shut Down Open Data Service Friday - —the U.S. government's largest civilian-linked data service, storing crucial information on climate change , life cycle assessment, health impact analysis and environmental justice—could face shut-down this Friday, according to people familiar with the plan.  "Last week, after numerous conversations with the U.S. Environmental Protection Agency's Office of Environmental Information (OEI), and various technical contractors who support them, we were notified that funding is not available to continue operation U.S. EPA's flagship Open Data Web service," wrote open data scientist Bernadette Hyland—the CEO and co-founder of 3 Round Stones, a platform for publishing data on the web—in a Medium post on Sunday.  A screenshot taken from the site this morning around 7:50 a.m. shows a popup announcing the Friday shutdown.  Hyland noted in her post that the U.S. EPA Open Data Service website, which has been publicly available since 2016, provides human- and machine-readable information for more than 4 million EPA-regulated facilities, from dry cleaners to nuclear power plants. The critical service contains linked open data on 30 years of toxic releases into the environment maintained by the EPA Toxics Release Inventory Program, she wrote.  Hyland detailed how the EPA contacted her Fredericksburg, Virginia-based company and said, "We need to be ready to turn-off the EPA Open Data web service by noon on April 28, 2017—the last day of the current continuing resolution. If Congress does not pass a budget, we will be facing a government shutdown and won't be able to give technical direction to continue any work."   Reports of the EPA Open Data web service going dark spread wide Monday morning, prompting online backlash and efforts to quickly copy the data.

EPA quietly asked the public which clean air rules to cut, and industry answered loudest -  A utility lobbyist called on regulators to do less work monitoring greenhouse gas emissions. An oil and gas lobbyist praised the Trump administration’s retreat from safeguards and urged federal rulemakers to limit regulations on carbon emissions and smog. A lobbyist for wood-product manufacturers complained about the “ever-tightening” public health standards for ozone pollution and asked regulators to change the permitting process. Those were just some of the requests made by industry advocates during a conference call Monday, when the Environmental Protection Agency held the first of several sessions to ask the public which rules should be eliminated under President Donald Trump’s executive order instructing agencies to slash regulations. The three-hour call, held by the Office of Air and Radiation, focused on clean air and ozone pollution rules.In March, EPA Administrator Scott Pruitt announced plans to hold the public hearings, but environmental advocates say the agency scheduled the events with little notice, in some cases just days in advance. “New meetings appear on a website that the EPA has set up to coordinate the process, so unless you check it every day, it is easy to miss when a new hearing is announced,” Andrew Wetzler, deputy chief program officer at the Natural Resources Defense Council, wrote in a blog post ahead of Monday’s call. “All of this is made worse by the fact that EPA staff are offering only limited slots for in-person comments. In fact, some of the meetings aren’t public at all.”

Trump to Launch Unprecedented Attack on National Monuments - President Trump is poised to threaten more than 1 billion acres of national monument protection in a devastating and unprecedented attack on America's public lands and oceans. Trump is expected to issue an executive order April 26 calling for a review of every national monument that's been protected by presidential proclamation since 1996. His goal is to turn these natural and cultural wonders over to special interests, including mining and logging industries. Trump reportedly has the stunning Bears Ears and Grand Staircase-Escalante national monuments in Utah at the top of his hit list. "This is a frightening step toward dismantling the protection of some of America's most important and iconic places: our national parks and monuments," said Kierán Suckling, executive director of the Center for Biological Diversity . "Trump's tapping into the right-wing, anti-public-lands zealotry that will take us down a very dangerous path—a place where Americans no longer have control over public lands and corporations are left to mine, frack , clear-cut and bulldoze them into oblivion. It starts with Bears Ears and Grand Staircase and only gets worse from there." More than 50 national monuments are at risk, including vast marine areas in the Pacific and Caribbean. Congress gave the president the authority to designate national monuments on federally owned land under the Antiquities Act of 1906 for the express purpose of protecting important objects of historic and scientific importance.  "President Trump is clearly doing the bidding of the Utah congressional delegation, who are without question the most aggressive federal lawmakers seeking to seize, dismantle and privatize America's public lands," Suckling added.

Trump to issue new order calling into question two decades of national monument designations -- President Trump will sign an executive order Wednesday instructing the Interior Department to review national monument designations his three predecessors have made over the past 21 years, according to administration officials and GOP lawmakers, a move that could upend protections that previous presidents have put in place in Utah and elsewhere across the country. Presidents of both parties have invoked their executive authority under the 1906 Antiquities Act to provide safeguards for federal lands and waters. But some of these moves — including Barack Obama’s designation of the 1.35 million-acre Bears Ears National Monument in December and Bill Clinton’s 1996 declaration of the Grand Staircase-Escalante National Monument, both in Utah, have sparked fierce criticism from Republicans.  Members of Utah’s congressional delegation started lobbying Trump shortly after his November win to take unilateral action to undo the designation for Bears Ears, which they said should have been protected instead through legislation. While the White House has not yet indicated whether it would remove protections for the new monument, a White House official said in an email Monday that Trump was seeking to ensure the Antiquities Act has not been abused at times. “Past administrations have overused this power and designated large swaths of land well beyond the areas in need of protection,” said the official, who spoke on the condition of anonymity in advance of the formal announcement. “The Antiquities Act Executive Order directs the Department of the Interior to review prior monument designations and suggest legislative changes or modifications to the monument proclamations.”

Trump orders review of national monuments, vows to ‘to end these abuses and return control to the people’ -- President Trump signed an executive order Wednesday instructing Interior Secretary Ryan Zinke to review any national monument created since Jan. 1, 1996, that spans at least 100,000 acres in a move he said would “end another egregious use of government power.”Referring to the 1906 law that empowers a president to take unilateral action to protect cultural, historic or natural resources on federal land that is under threat, Trump declared, “The Antiquities Act does not give the federal government unlimited power to lock up millions of acres of land and water, and it’s time that we ended this abusive practice.”The sweeping review — which Trump predicted would “end these abuses and return control to the people, the people of all of the states, the people of the United States” — could prompt changes to areas designated not only by former president Barack Obama but also by George W. Bush and Bill Clinton. Speaking to reporters Tuesday evening, Zinke suggested he would keep an open mind as he scrutinized past monument designations and that in and of itself the order would not repeal any existing monuments. “I’m not going to predispose what the outcome is going to be.” But Trump indicated that he was eager to change the boundaries of a 1.35-million acre national monument Obama declared in December in Utah, Bears Ears, and that he wanted governors and those living near these sites to have the ultimate say over how it’s managed. He noted several opponents of recent Antiquities Act designations, including Sen. Orrin G. Hatch (R-Utah) and GOP Govs. Gary R. Herbert of Utah and Paul LePage of Maine, saying, “Today we are putting the states back in charge.”

An Attack on One Monument is an Attack on All: Donald Trump’s Attack on National Parks, Public Lands and Oceans -- The executive order is an attack on America’s national parks, public lands and oceans.

  • National parks and public lands and waters help define who we are as a nation. Attempts to revoke or change the fabric of national monuments is an assault on our nation’s historical, cultural and natural heritage.The review will encompass about two dozen monuments created over the past two decades, and this action is a setup to try to undermine one of the nation’s most important conservation tools.
    The Antiquities Act was signed by President Teddy Roosevelt in 1906 to safeguard and preserve U.S. public lands and cultural and historical sites for all Americans to enjoy.  Sixteen presidents – eight Republicans and eight Democrats - have used this authority to protect places from the Grand Canyon to Acadia to Papahānaumokuākea in the Northwestern Hawaiian Islands.  The Act also helps tell a more complete story of our nation, protecting sites from Stonewall to Birmingham to Cesar Chavez.
  • The executive order is part of a larger effort to sell off America’s public lands and waters for fossil fuel development.
  • There’s no doubt that a number of the national monuments targeted by the review hold resource potential that the oil & gas industry wants to access.  
  • Opening these special areas to development would threaten cultural and natural resources that could never be replaced.  Our national parks, public lands and waters protect a shared history and culture that are worth more than the minerals beneath them.
  • Groups like the American Petroleum Institute have made clear they see the Antiquities Act as a threat to oil & gas development. And, in the case of Bears Ears, the Western Energy Alliance has confirmed industry’s interest in drilling.   
  • A 120-day review (or 45 days, in the case of Bears Ears), makes a mockery of the decades of work that local communities have invested to protect these places for future generations.

Perry Says Trump Should Renegotiate, Not Exit, Paris Accord - Energy Secretary Rick Perry became the latest senior member of President Donald Trump’s administration to publicly advocate for staying in the Paris climate accord, saying the U.S. should renegotiate the deal and push European nations to take on a larger share of emissions reductions. “I’m not going to tell the president of the United States to walk away from the Paris accord,” Perry said at the Bloomberg New Energy Finance conference in New York on Tuesday. “I will say that we need to renegotiate it.” The remark puts Perry among a small group of Trump advisers who favor sticking with the landmark United Nations agreement, which the president vowed to scrap during his campaign. The debate has largely played out behind closed doors, with environmental chief Scott Pruitt and top strategist Steve Bannon pushing for a pullout while White House adviser Jared Kushner and Secretary of State Rex Tillerson advocate sticking with the deal. The White House has said it will decide by next month what to do with the deal involving more than 190 nations struck in the French capital in 2015. New York Attorney General Eric Schneiderman joined a group of 14 state attorneys in urging Trump to reconfirm U.S. involvement in the Paris deal, saying fighting pollution is a public health matter. “If the Trump Administration refuses to uphold its legal obligation to New Yorkers’ public health and environment, I am prepared to use every tool in my power to protect our people and our state,” Schneiderman said in a statement.

Mining group to support pulling out of Paris after meeting with Pruitt - POLITICO: A coal mining industry group's board of directors voted on Tuesday to press President Donald Trump to withdraw from the Paris climate change agreement — just one day after EPA Administrator Scott Pruitt met with the group's leadership to discuss the accord, two sources told POLITICO. Pruitt personally attended a meeting of the National Mining Association's executive committee on Monday to lay out his concerns with the Paris accord. A National Mining Association spokesman strongly denied that Pruitt urged the group to publicly support pulling out of the agreement, despite a source telling POLITICO that he did. Trump has often aligned himself with coal miners, promising to revive the industry that has suffered sharp job losses over the past decade as the U.S. appetite for the energy source has waned. Just last month, Trump went to the EPA's headquarters with a group of coal miners to sign an executive order rolling back President Barack Obama's regulation curbing carbon emissions from power plants. Pruitt has emerged in recent weeks as one of the administration's leading critics of the 2015 Paris deal, calling it a "bad deal for America" in a recent interview. An EPA spokesman confirmed Pruitt attended the NMA meeting, saying that he "discussed the problems with the Paris agreement.”

Oil, tech giants tell Trump to stay in Paris deal | TheHill: Oil giants BP and Shell and a group of utilities and tech companies are pushing President Trump to stay in the Paris climate deal. In a letter sent to Trump on Wednesday, the firms said the deal benefits U.S. companies by putting them on an even playing field with foreign competitors, creates jobs through clean energy work and minimizes the risks climate changes poses to them. “We believe that as other countries invest in advanced technologies and move forward with the Paris agreement, the United States can best exercise global leadership and advance U.S. interests by remaining a full partner in this vital global effort,” the companies wrote. Companies signing the letter included foreign firms like BP and Shell, gas and electricity provider National Grid, California utility PG&E, tech giants Google, Intel and Microsoft, Walmart, General Mills and others. The letter comes as the White House mulls continued involvement in the Paris climate deal, an international agreement reached during the Obama administration to cut global greenhouse gas emissions. Most companies that have taken a position on the deal have urged the U.S. to stay in it, though some coal companies are pushing Trump to leave the pact. Wednesday’s letter, organized by the Center for Climate and Energy Solutions, presents a similar message other companies have delivered to the White House: the Paris deal gives the U.S. the chance to influence international climate work and energy markets. The firms say that leverage protects companies, which will already be looking for opportunities to take advantage of a global economy focused on tackling climate change.

Trump advisers to discuss whether U.S. stays in Paris climate pact: official | Reuters: White House advisers and Trump administration officials will meet on Thursday to discuss whether the United States should remain in the Paris climate agreement, a White House official said on Wednesday. The meeting, which will include member of the National Economic Council and cabinet officials such as Environmental Protection Agency Administrator Scott Pruitt and Energy Secretary Rick Perry, was scheduled for 1:30 P.M. EDT (1730 GMT) after being postponed earlier this month. The administration is expected to make a decision on whether to remain a party to the deal by the time leaders of the Group of Seven wealthy nations meet in late May, but members of President Donald Trump's inner circle are divided on whether to stay or go. The accord, agreed by nearly 200 countries in Paris in 2015, would limit planetary warming in part by slashing carbon dioxide and other emissions from the burning of fossil fuels. As part of the deal, the United States under Trump's predecessor President Barack Obama committed to reducing its emissions by between 26 and 28 percent below 2005 levels by 2025. During the 2016 presidential election campaign Trump described climate change as a hoax that was stifling policies to improve economic growth and said he would consider "cancelling" the Paris agreement. He later said he was open to staying if the U.S. got better terms. Trump's advisers have taken different positions on the decision. Pruitt joins Trump adviser Steve Bannon in opposing the Paris agreement. Trump's other close advisers, daughter Ivanka Trump and husband Jared Kushner have sided with Secretary of State Rex Tillerson, who said the U.S. should remain part of the agreement.

Trump advisers likely to meet in May on Paris climate pact | Reuters: Trump administration officials will likely meet in May to reach a final decision on whether the United States should stay in the Paris climate deal, after holding an initial meeting on Thursday at the White House, an administration source said. The group of advisers, which includes Secretary of State Rex Tillerson, Energy Secretary Rick Perry, and national security adviser H.R. McMaster, was on track to make the decision before a Group of Seven summit on May 26, the source said. President Donald Trump made canceling the Paris agreement part of his 100-day plan for energy policy. He later said he was open to staying in the pact if Washington got better terms. Tillerson, the former head of Exxon Mobil Corp and Perry have said the country should remain in the agreement. McMaster shares that view, a source outside the administration said. Opponents of the pact include Environmental Protection Agency chief Scott Pruitt, the former attorney general of oil-producing Oklahoma, and White House chief strategist Steve Bannon. Nearly 200 countries struck the Paris agreement to limit climate change by cutting carbon dioxide emissions and making investments in clean energy. Many companies such as BP Plc and Microsoft Corp have urged the United States to stay in the agreement to protect their competitiveness. In addition, a group of nine Republican lawmakers urged Trump to stick to the pact, but to weaken the U.S. pledge to cut greenhouse gas emissions. Representative Kevin Cramer of oil-producing North Dakota and eight other Republican House of Representatives members sent a letter to Trump urging him to use the country's "seat at the Paris table to defend and promote our commercial interest, including our manufacturing and fossil fuel sectors."

Secretary Perry Celebrates Successful Completion of Petra Nova Carbon Capture Project -- Secretary of Energy Rick Perry took part in a ribbon-cutting ceremony today to mark the opening of Petra Nova, the world’s largest post-combustion carbon capture project, which was completed on-schedule and on-budget. Funded in part by the U.S. Department of Energy (DOE) and originally conceived as a 60-megawatt electric (MWe) capture project, the project sponsors expanded the design to capture emissions from 240 MWe of generation at the Houston-area power plant, quadrupling the size of the capture project without additional federal investment. During performance testing, the system demonstrated a carbon capture rate of more than 90 percent. At its current level of operation, Petra Nova will capture more than 5,000 tons of carbon dioxide (CO2) per day, which will be used for enhanced oil recovery (EOR) at the West Ranch Oil Field. The project is expected to boost production at West Ranch from 500 barrels per day to approximately 15,000 barrels per day. It is estimated that the field holds 60 million barrels of oil recoverable from EOR operations.

Perry orders grid plan to boost coal, nuclear - Energy Secretary Rick Perry is taking steps to make sure that struggling coal and nuclear power plants don’t close prematurely, in the Trump administration’s latest effort to bolster energy jobs. Perry issued a memo late Friday directing his chief of staff to begin a 60-day review of how regulations, tax policy and the federally overseen electric markets, which incentivize power plant development, may be forcing coal and other power plants to close faster than expected. “We are blessed as a nation to have an abundance of domestic energy resources, such as coal, natural gas, nuclear and hydroelectric, all of which provide affordable baseload power and contribute to a stable, reliable and resilient grid,” Perry said in a memo obtained by Bloomberg. Perry added that experts have “highlighted the diminishing diversity of our nation’s electric generation mix and what that could mean for baseload power and grid resilience.”

 Republican Cracks Emerge in Trump's Coal-Heavy Energy Plan  -- For all Donald Trump’s efforts to revive coal, market forces and some of his own supporters are vying to write their own version of America’s energy future.  Divisions persist among the president’s supporters -- and even within his own cabinet -- about whether to continue subsidies for wind and solar power, enact a carbon tax, remain party to the Paris climate accord and plenty of other issues that will shape the U.S. energy landscape.“Seventy five percent of Trump supporters like renewables and want to advance renewables,” Debbie Dooley, a Tea Party organizer and solar energy activist, said at a Bloomberg New Energy Finance conference in New York on Monday. “The conversation has changed. You have to have the right message. Talk about energy freedom and choice. The light bulb will go off.” Trump may be resolutely committed to fossil fuels, but the economic reality is renewables are now among the cheapest sources of electricity. Wind and solar were the biggest sources of power added to U.S. grids three years running, becoming key sources of jobs in rural America. That’s created clean-energy constituencies in North Carolina, Texas and other parts of the country that supported Trump in November. Still, there are enough members of Trump’s cabinet who deny the basic science of global warming that there is little, if any, chance the administration will enthusiastically support clean energy. Instead, the debate is likely to hinge on whether the president will try to actively reverse market forces allowing wind and solar to flourish. That tug-of-war will play out in the weeks to come at the White House, in corporate board rooms and at economic summits in Italy and Germany. On Tuesday, U.S. Energy Secretary Rick Perry will shed light on the debate at the Bloomberg New Energy Finance gathering, which also will feature Myron Ebell, an avowed climate-change denier who headed Trump’s Environmental Protection Agency transition team. Ebell said global warming and the advantages of clean power are largely a myth perpetuated over the last half century by financiers and scientists he dubbed the “climate industrial complex.”

GOP-Backed Measure Would Let Coal Companies Transfer Cost Of Sick Miners To U.S. Taxpayers- Profitable coal companies may get a bailout in the government spending bill that lawmakers are trying to pass next week, and it could place Congress at the brink of a shutdown. Under a new measure being floated in the House, companies like Consol Energy would be able to shift their obligations to cover the health care costs of retired coal miners on to the federal government, which already pays for other retirees’ coverage. The measure, pushed by Rep. Tim Murphy (R-Pa.), could jeopardize efforts to finalize a separate provision that would permanently fund health benefits for retired United Mine Workers. Those benefits, which pertain only to mine workers who worked for now-bankrupt companies, are set to expire in a matter of days. There remains a dispute over how to pay for a permanent fix. But the Murphy text, lawmakers warn, could complicate those already difficult negotiations as Congress tries to keep the government funded this week. “Consol is probably one of the premier coal companies we’ve ever had in West Virginia and I’m very appreciative of all they’ve done, all the good jobs they’ve provided,” Sen. Joe Manchin (D-W.Va.) told HuffPost on Thursday. “But this bill, the way it’s been configured, the way it’s been worked, is not a place for that right now because they still have a viable company, an ongoing company.”Manchin said the current measure to permanently fix health benefits for United Mine Workers and their widows is “truly a bill that protects orphans.”“These are people who were left behind, their companies went bankrupt, they left the system,” he said. “There’s no way to get any type of payment.”But if Murphy’s language is attached to the current miner fix, Manchin warned, it would make Democrats and possibly a number of Republicans abandon ship.

Canadian looks to ban US coal shipments -- Canadian Prime Minister Justin Trudeau is being prodded by one of his country's regional heads to retaliate against President Trump's tariffs on Canadian lumber by imposing a ban on U.S. coal. British Columbian Premier Christy Clark pressed Trudeau on Wednesday to enforce a trade ban on shipments of thermal coal, also called steam coal, at its terminal in Vancouver in response to the Trump administration's 24 percent tariffs on Canadian softwood lumber imposed Tuesday. "I told British Columbians that I would use every tool at our disposal to ensure we get a fair deal on softwood lumber," Clark said in an open letter to Trudeau. "Friends and trading partners cooperate," but "clearly, the United States is taking a different approach," she said. Clark said U.S. coal producers rely on the terminal in Vancouver to ship coal to Asia, with a record of more than 6 million tons shipped last year. The U.S. lacks the capacity to move its own coal on the Pacific coast, making the ban an effective retaliatory response to the lumber tariff. On Friday Washington state will release an environmental impact statement on a proposed coal terminal for Asian shipments. Clark also said that steam coal is one of the most carbon-dioxide producing fuels, and banning its shipment would help Canada and the province meet its commitments to reduce greenhouse gas emissions. Most scientists blame the emissions for raising the Earth's temperature, resulting in more severe weather, floods and drought. Clark pointed out that over the past five years most of the U.S. proposals to build its own coal terminals have been rejected for environmental and ecological reasons.

The Green Revolution Is Coming – Is Trump On Board? -- To make room for higher defense spending, the President's proposed 2018 budget slashes research and development (R&D) spending at many federal agencies. It eliminates ARPA-E (the energy venture capital fund), and cuts R&D spending by 52 percent at the National Oceanographic and Atmospheric Administra-tion (NOAA), by 20 percent at the Environmental Protection Administration (EPA), by 17 percent at the Na-tional Institutes of Health (NIH), by 10 percent at both the Department of Energy (DOE), and the U.S. Geo-logical Survey (USGS) and by 6 percent at National Aeronautics and Space Administration (NASA). No word yet from National Science Foundation (NSF), National Institute of Standards and Technology (NIST) or the U.S. Department of Agriculture (DOA).  In the utility and energy sectors, the public will benefit if deregulation lifts burdens on business that do not produce commensurate benefits to the public. The resulting savings, if any, can be passed on to consumers in the form of lower prices. On the other hand, these new savings can be used to expand the business and hire more employees. That’s the theory anyway. We believe that the new regime in Washington will have a minor impact on the domestic energy and utility sectors. Utilities could extend the lives of aging coal fired power generating facilities, especially those where environmental retrofits would be uneconomic or impractical. Nevertheless, we do not expect a rush to construct new coal plants. The economics simply aren't there. Domestic natural gas is too cheap, as is wind power throughout much of the Midwest, from the Dakotas down to Texas. And lifting environmental restrictions on the U.S. natural gas industry will keep production costs low--making the competitive ad-vantage over coal even greater. The new rules, however, could protect the already thin margins of power producers insofar as they could avoid near term, environmental control costs.Killing off tax subsidies to renewables might slow their installations but renewable costs have come down so far that many projects could compete with or without subsidies.

Concentrated solar power in the USA: a performance review – A review of concentrated solar power (CSP) plants operating in the US reveals that they are costly, heavily-subsidized, generally performing below expectations and no more efficient than utility-scale PV plants. The need to jump-start them in the morning can also require the burning of substantial quantities of natural gas. And although CSP’s sole advantage over PV is that it can store energy for re-use only one of the plants considered has built-in storage capacity. As discussed in the earlier concentrated solar power in Spain post , however, it is unlikely that enough storage could be installed at a CSP plant to provide more than short-term load-following capability when the sun is not shining. (Inset: Ivanpah Unit 2 tower catches fire, May 2016).  This review originated from a comment posted by correspondent “Thinks Too Much” (T2M) on the Blowout Week 172 thread which bewailed the lack of publicity being given to the poor performance of the Crescent Dunes CSP plant. After further exchanges T2M sent me a copy of a spreadsheet he had painstakingly constructed from the EIA’s Electricity Browser monthly data, which, supplemented by Wikipedia data on the Genesis plant I have used to develop the data presented here. So a thank you and a hat tip to T2M.The locations of the six CSP plants reviewed (Mojave, Solana, Genesis and the three units at Ivanpah – Crescent Dunes is discussed later) are shown in Figure 1. Installed capacities are Mojave 250 MWe, Solana 250 MWe, Genesis 250MWe and Ivanpah 392 MWe (126 + 126 + 133). Nameplate capacities (MWp) are about 10% higher. Only the Solana plant  has storage capability (reported to be 1.68GWh), but no details are available on its performance. Mojave, Genesis and Solana are “parabolic trough” plants and Ivanpah and Crescent Dunes “solar tower” plants. Additional details on CSP plant design are given in the “concentrated solar power in Spain” post post linked to in the introduction.

Are there three times as many solar energy jobs as coal jobs? – Politifact - As a candidate and as president, Donald Trump has championed the cause of coal mining. But critics of the coal industry have countered that Trump and other supporters of coal are overlooking an energy sector with an even bigger impact on jobs -- solar energy.In a Chicago Tribune op-ed published on April 20 -- two days before Earth Day -- Rep. Brad Schneider, D-Ill., took issue with Trump’s environmental priorities. At one point in the op-ed, he wrote, "More than 260,000 Americans are employed by the domestic solar industry — three times as many workers as employed by the entire coal mining industry."We had previously looked at whether there are more people employed in the U.S. solar-energy industry than in the oil industry. (There aren’t.) But the comparison with the coal industry was new to us, so we decided to take a look. When we contacted Schneider’s office, they cited two sources, one for each number in the statement.The first number -- 260,000 U.S. solar workers -- stems from the 2016 edition of the National Solar Jobs Census, which is published by the Solar Foundation, a nonprofit organization aligned with the solar industry. We confirmed that, according to the foundation’s calculations, there were 260,077 solar workers in the United States in 2016. The second number -- unstated in the op-ed, but equaling 87,000 workers employed in coal mining, if you do the math -- actually overstates the number of mine workers. According to the Energy Information Administration, a part of the federal Energy Department, the number of people working at coal mines was 65,971 in 2016. The actual ratio between the two numbers would be almost four-to-one.

Appalachian Power president says company is looking toward renewables  -- When Chris Beam, the new president of Appalachian Power, talks about economic development, he brings a message that may not be very popular among the coal-focused political leadership in West Virginia.  Giant businesses Appalachian would like to lure to the state as its future power customers — the Amazons and Googles of the world — make it very clear that when they are scouting locations for facilities like new data centers, they have to go somewhere that can guarantee them a power supply that is generated from 100 percent renewable sources.  “At the end of the day, West Virginia may not require us to be clean, but our customers are,” Beam said. “So if we want to bring in those jobs, and those are good jobs, those are good-paying jobs that support our universities because they hire our engineers, they have requirements now, and we have to be mindful of what our customers want.”  Beam, 48, took over in early January as president of Charleston-based Appalachian. The company serves about 1 million customers in Southern West Virginia, Tennessee and Virginia. A Wheeling native, Beam said he understands coal’s longtime role in West Virginia’s economy and culture, but he also realizes he’s running Appalachian in the middle of historic changes in the electric power industry across the nation.  The rise of cheap natural gas from shale reserves along with the plummeting drop in renewable sources like wind and solar have cut coal’s share of U.S. electricity generation from more than one-half to about a third over the last few years. Appalachian and other power producers have closed a large number of coal plants, shifted others to gas and increasingly embraced renewable options.

'Flickers' and 'stray voltage': Why these Iowans really, really hate wind power -- Tom Stewart can see about a dozen wind turbines within a mile of the farmhouse he's lived in since he was 15.What bothers the 72-year-old farmer most about the turbines owned by MidAmerican Energy are the constant "flickers" that pervade his home periodically each year.  Imagine, he says, someone flipping a light on and off, on and off — for an hour straight. It's like living with a strobe light, he says."You get about 23 flickers a minute," Stewart said, though it has reached 40 a minute more recently.Added to that is the noise, which, he said, "sounds like an airplane is coming in to land."  “It's distracting, and it affects you," said Stewart, who lives in his family home with his wife. Jennifer and Brent Bower hear talk about a wind farm expansion near their dairy cows in Ida County, and, frankly, they're worried. Brent Bower is reading articles and research and talking with as many experts as possible about "stray voltage" that could emanate from the massive turbines and electric cables buried in the ground. Stray voltage occurs when electricity isn't properly grounded, and it can be a serious problem in dairies, shocking animals standing on the floor, touching a waterer or other equipment. It can affect dairy cows' appetites and significantly hurt milk production, the Bowers said.  Brent Bower has spent significant time and money updating his dairy's wiring and equipment to avoid the problem.But with three neighbors willing to host turbines, the Bowers fear it could hurt — or possibly end — their business.The Bowers have received reports from consultants indicating stray voltage problems for neighbors of wind farms in Wisconsin and Iowa. But a University of Wisconsin expert says a large wind farm is a "very unlikely source of stray voltage" since it has no direct connection to the local distribution system or farm wiring.

Oil and Mining Giants Detail Road Map to Reduce Carbon by Half -- A group of companies and non-profit agencies that includes energy giants Royal Dutch Shell Plc and BHP Billiton said global greenhouse gas emissions could be cut in half by 2040 without impeding economic development, in part by converting grids to use mostly renewable power. The declining costs of wind, solar and batteries will make it possible within 15 years to build power networks that get as much as 90 percent of their power from renewable sources while providing electricity at a cost that’s competitive with fossil-fuels, according to a report released Tuesday by the Energy Transitions Commission, a group of energy companies, investors and non-profit organizations including the Rocky Mountain Institute. The study’s details will be outlined Tuesday at the Bloomberg New Energy Finance Future of Energy Summit in New York and presents a road map toward meeting the Paris climate agreement aimed at keeping global warming well below 2 degrees Celsius. It comes as U.S. President Donald Trump is weighing whether to meet a campaign promise of pulling out of the Paris accord.  “The really good news is the potential on renewable electricity,” Adair Turner, chairman of the Energy Transitions Commission, said in an interview. “It is really credible to say we can decarbonize electricity.” Converting grids to green power and running cars and heating buildings on electricity would account for half of the emission cuts outlined in the report, which details how to slash carbon from 36 gigatonnes a year to 20 gigatonnes by 2040. The group said governments and companies must boost investments in hydrogen, bioenergy, waste heat and carbon-capture technologies, which would reduce emissions in aviation, shipping and heavy industries.

U.S. power demand flatlined years ago, and it's hurting utilities -- Electric utilities have been doing everything they can to preserve their bottom line from conducting multi-billion mergers to snapping up more profitable natural gas businesses. Their trouble lies in one thing they can’t control: demand. Power consumption in the U.S. has stalled for the last decade, breaking the link the industry has enjoyed with economic growth. For more than a century after Thomas Edison invented the light bulb in the 1870s, electricity demand rose steadily, boosting utility profits in the process. The lull couldn’t have come at a worse time for the industry, which is already struggling with the end of their historic monopolies. Power-sipping appliances, LED lighting and a shift away from heavy industry all have contributed to the slowdown, and that’s forcing traditional generators from Duke Energy Corp. to Southern Co. to re-examine how they can make money. “Efficiency cuts utilities’ revenues and not their costs, and this is a big problem,” said Amory Lovins, chief scientist and co-founder of the Rocky Mountain Institute, a non-profit clean energy research group based in Colorado. “The whole business model is upside down.” Utility executives, policymakers and industry financiers are discussing the trends at BNEF’s annual summit in New York this week. Power sales have remained steady since 2010 as the U.S. economy expanded an average of 2.1 percent, according to government data compiled by the London-based research arm of Bloomberg LP. Government forecasters at the Department of Energy don’t see a significant rebound anytime in the years to come. 

Gigantic Wind Turbines Signal Era of Subsidy-Free Green Power - Offshore wind turbines are about to become higher than the Eiffel Tower, allowing the industry to supply subsidy-free clean power to the grid on a massive scale for the first time. Manufacturers led by Siemens AG are working to almost double the capacity of the current range of turbines, which already have wing spans that surpass those of the largest jumbo jets. The expectation those machines will be on the market by 2025 was at the heart of contracts won by German and Danish developers last week to supply electricity from offshore wind farms at market prices by 2025. The fact that developers such as Energie Baden-Wuerttemberg AG and Dong Energy A/S are offering to plant giant turbines in stormy seas without government support show the economics of the energy business are shifting quicker than anyone thought possible — and adding competitive pressure on the dominant power generation fuels coal and natural gas. “Dong and EnBW are banking on turbines that are three to four times bigger than those today,” said Keegan Kruger, analyst at Bloomberg New Energy Finance. “They will be crucial to bringing down the cost of energy.”

China wasted enough renewable energy to power Beijing for an entire year, says Greenpeace -- The amount of electricity wasted by China’s solar and wind power sectors rose significantly last year, environment group Greenpeace said in a research report published on Wednesday, despite government pledges to rectify the problem. Greenpeace said wasted wind power still rose to 17 per cent of the total generated by wind farms last year, up from 8 per cent in 2014. The amount that failed to make it to the grid was enough to power China’s capital Beijing for the whole of 2015, it added. Wasted wind generation in the northwestern province of Gansu was 43 per cent of the total generated last year, it said. Solar curtailment rates across China rose 50 per cent over 2015 and 2016. More than 30 per cent of available solar power in Gansu and neighbouring Xinjiang failed to reach the grid. In an earlier report Greenpeace said total solar and wind investment between now and 2030 could reach as much as US$780 billion.  But, rising levels of waste had cost the industry as much as 34.1 billion yuan ($4.95 billion) in lost earnings over the 2015 to 2016 period, it said on Wednesday.  China produced 12.3 billion kilowatt-hours (kWh) of solar power in the first quarter of 2017, up 31 per cent year-on-year but accounting for just 1.1 percent of total generation over the period, according to official data on Monday. Wind rose to 62.1 billion kWh, 4.3 per cent of the total, but was dwarfed by the 77.9 per cent share occupied by thermal electricity.

China to erect fewer farms, generate less solar power in 2017 -- China, home to the world’s largest installations of solar farms, will install fewer panels in 2017, taking a breather for the first time in five years, amid arrears in government subsidies and bottleneck problems with the country’s power grids, analysts said. Chinese solar farms will add between 26 and 28 gigawatts (GW) of power generating capacity this year, with their share of the global market shrinking to 33 per cent from 44 per cent in 2016, according to forecasts by IHS Markit. Worldwide installations would grow by a mere 1.3 per cent to between 79 and 85GW this year, a far cry from last year’s 35 per cent surge, owing mostly to reduced volume from China, IHS said. Chinese companies erected 34.5GW of solar farms last year, of which two-thirds, or 22GW, were done in the first half as developers rushed to complete their projects ahead of a June 30 government deadline to reduce subsidies on clean energy. A further cut to tariffs is on schedule for projects that are not completed by June 30 this year.

China to boost non-fossil fuel use to 20 percent by 2030: state planner | Reuters: China aims for non-fossil fuels to account for about 20 percent of total energy consumption by 2030, increasing to more than half of demand by 2050, its state planner said on Tuesday, as Beijing continues its years-long shift away from coal power. In a policy document, the National Development and Reform Commission (NDRC) said carbon dioxide (CO2) emissions will peak by 2030 and total energy demand will be capped at 6 billion tons of standard coal equivalent by 2030, up from 4.4 billion tons targeted for this year. The NDRC said it wants to increase oil and underground natural gas storage facilities, but it did not give any further details. The statement largely reiterated previous pledges contained in five-year plans and other policy documents and aimed at boosting wind and solar power usage.

China March coal output up 1.9 pct, first year-on-year gain in two years -- China’s coal output rose 1.9 percent in March compared with the same month a year earlier, its first year-on-year gain in at least two years, suggesting miners are ramping up production to take advantage of rising prices. Miners produced 300 million tonnes of coal in March, the National Bureau of Statistics said on Monday, though for the first quarter output dipped 0.3 percent from a year earlier to 809.23 million tonnes. “Coal production will grow faster in following months as policy makers put a strong emphasis on securing supplies,” said Zhang Min, Zibo-based coal analyst with China Sublime Information Group said.Supply tightened last year amid a mounting crackdown on illegal mining as work safety regulators reported an increasing number of accidents from coal mines. China's top coal producing region Shanxi province launched a new campaign against illegal mining last month. Prices have gained more than 25 percent since the start of this year. The most active thermal coal futures prices hit a five-month high of 644.8 yuan on April 6.

Historic Day in Britain: First Coal-Free Day Since 1882 -- April 21, 2017, will go down as a significant day in the dying days of the fossil fuel era. For the first time since the renewable revolution in 1882, Britain went a full day without using dirty coal to generate electricity. The UK's energy provider, the National Grid, called it a "watershed" moment and it is seen as a significant step towards the UK Government's plans to phase out coal generating power plants by 2025.  Just two years ago, the fossil fuel accounted for 23 percent of the UK's electricity generation, and last year it was six percent. "To have the first working day without coal since the start of the industrial revolution is a watershed moment in how our energy system is changing," said Cordi O'Hara of the National Grid .  The move was welcomed by environmentalists. "A decade ago, a day without coal would have been unimaginable and in 10 years' time our energy system will have radically transformed again," said Hannah Martin of Greenpeace UK . "The direction of travel is that both in the UK and globally we are already moving towards a low carbon economy ." And further evidence that the UK is helping push the growth of renewables globally has been documented by a new report from Renewables UK , which estimated that the value of the UK renewables products and services exported to some countries in 2016 was a whopping £2 billion. Even Big Oil now expects renewables to be the fastest-growing sector over the next 20 years, with BP believing renewables will increase by seven percent per year.  Britain is not alone in phasing out coal, either. Earlier this month, a coalition of European energy companies announced that there would be no new coal plants built throughout the European Union after 2020.

Britain's long transition from coal holds lessons for China: Kemp | Reuters: Britain’s last deep coal mine closed on Friday, bringing the curtain down on an industry that once employed more than 1 million miners at over 3,000 collieries. Coal helped Britain become the first modern industrial power, fuelling her factories, steel works, ships and railways in the 19th century, when the country became famous as the workshop of the world (“Energy transitions”, Smil, 2010). Contemporary observers believed Britain’s imperial might was bound up with the future of her mines, and their inevitable depletion worried them as much for its political as its business implications. “Coal is almost the sole necessary basis of our material power (and) gives efficiency to our moral and intellectual capabilities,” British economist William Stanley Jevons warned (“The Coal Question: An Inquiry Concerning the Progress of the Nation and the Probable Exhaustion of Our Coal Mines” Jevons, 1866). “England’s manufacturing and commercial greatness ... is at stake in this question, nor can we be sure that material decay may not involve us in moral and intellectual retrogression.” Jevons wrote starkly. For Jevons and many of his contemporaries, abundant, cheap and high-quality coal was what made Britain more powerful than her rivals in continental Europe and the United States. But the 20th century has seen a steadily move away from coal. Britain’s pits could not compete with lower cost rivals overseas and coal has been gradually replaced by gas, oil, nuclear and now wind in the energy mix.

Beijing Eyes Nuclear Power Markets From Belt and Road Initiative - As Beijing’s interest in renewable and non-traditional sources of energy grows, Chinese companies are demonstrating their interest in untapped nuclear energy markets, according to new reports emerging from the region. Nuclear power investments in Silk Road countries could amount to a $580 billion market, Wang Shoujun, the chairman of China National Nuclear Corp. (CNNC) told reporters on Monday. “About 72 countries have been or are planning to develop nuclear power, among which 41 are along the Belt and Road route, and most of them are still in the earliest stages of nuclear power development,” the business man observed. “We estimate that if their nuclear energy were raised to reach development levels comparable to those of the U.S. or Japan, it would spawn a market worth [$580 billion].” Chinese President XI Jinping proposed the Belt and Road Initiative in 2013, envisioning the unification of 65 countries in Asia, Europe, and Africa along ancient trade routes between the nations.The Ministry of Environmental Protection has confirmed 36 operational nuclear reactors in China, with 20 more under construction. By the end of the decade, 58 million kilowatts of Chinese energy demand will be satiated by nuclear power. The National Nuclear Safety Administration (NNSA) and the International Atomic Energy Agency (IAEA) tested the safety of China’s nuclear power program last year. Both groups found the country’s nuclear and radiation safety to be in accordance with international standards.

Russia to build 2 nuclear power plants in Iran -- Russian experts will help the Atomic Energy Organization of Iran (AEOI) construct two new nuclear power plants in the country’s southern city of Bushehr, according to Iran’s Energy Minister Hamid Chitchian. “The contract has been signed between the AEOI and Russia, and includes building two 1,000-megawatt nuclear power plants, the construction of which is about to start,” said Chitchian. The minister added that the construction of a third joint power plant with Russia, with the capacity of 1,400 MW, has already begun. Following a decade of total economic isolation energy-hungry Iran is eager to start building power plants and update its energy infrastructure. Russian companies are likely to be among the preferred bidders.

Radioactive material stolen in Mexico; search on: officials (Reuters) - An unknown amount of stolen radioactive material has prompted an alert in nine Mexican states, the head of national emergency services said on Monday. The alert and search for the stolen material covers the states of Jalisco, Colima, Nayarit, Aguascalientes, Guanajuato, Michoacan San Luis Potosi, Durango and Zacatecas, according to a post on Luis Felipe Puente's Twitter account. Puente encouraged people with information about the stolen material to report it but added: "don't open it."  Stolen or lost radioactive material has on several occasions been reported in Mexico, most recently early last year when a container of radioactive substance used for industrial X-rays, a method of non-destructive testing, was taken along with a car.

Theresa May would fire UK’s nuclear weapons as a ‘first strike’, says Defence Secretary Michael Fallon -- Theresa May would fire Britain’s nuclear weapons as a ‘first strike’ if necessary, the Defence Secretary has said. Michael Fallon said the Prime Minister was prepared to launch Trident in “the most extreme circumstances”, even if Britain itself was not under nuclear attack. The statement came as the Conservatives continued to exploit Labour divisions on the retention of the Trident deterrent, to warn of the “very dangerous chaos” if Jeremy Corbyn becomes prime minister. Yesterday, the Labour leader suggested Trident renewal might not be in Labour’s election manifesto – only to be corrected within hours by party colleagues. Speaking to BBC Radio Four’s Today programme, Mr Fallon said voters tempted by Labour had been left “completely unsure as to what would actually happen to our nuclear deterrent”. But he went further, marking out a clear divide between the parties when asked if Ms May was ready to use Trident as a “pre-emptive initial strike”. “In the most extreme circumstances, we have made it very clear that you can’t rule out the use of nuclear weapons as a first strike,” Mr Fallon said. Asked in what circumstances, he replied: “They are better not specified or described, which would only give comfort to our enemies and make the deterrent less credible. “The whole point about the deterrent is that you have got to leave uncertainty in the mind of anyone who might be thinking of using weapons against this country.” Mr Fallon also insisted that critics of Trident – including senior military figures who have ridiculed the idea that it is an effective deterrent – were “absolutely wrong”. “It deters day and night every single day of every single year,” the Defence Secretary insisted.

OOGA Ohio Oil and Gas Association : Energy In Depth Releases Compendium Demonstrating Health Benefits of Fracking -- Ahead of Earth Day, and as anti-fossil fuel activists prepare to 'march for science,' Energy In Depth is releasing a new compendium demonstrating that air quality improvements across the country can be traced directly back to fracking. [Attachment] The report - Compendium of Studies Demonstrating the Safety and Health Benefits of Fracking - houses dozens of scientific studies that show how the increased use of natural gas for electricity generation, made possible by the shale revolution, is the reason for dramatic decreases in air pollution across the board. This, in turn, has provided substantial health benefits for Americans. In addition to the compendium, EID unveiled a new microsite, - a one-stop shop for anyone looking for information about shale development and public health. 'This new compendium and health microsite provides the overwhelming scientific evidence that our increased use of natural gas, thanks to fracking, has delivered immense health benefits for families across the country,' said Jeff Eshelman, executive vice president of Energy In Depth. 'Activists who are supposedly 'marching for science' this weekend should stop denying the science that clearly shows shale development has led to cleaner air and lower greenhouse gas emissions.' EID's compendium includes data from 23 peer-reviewed studies, 17 government health and regulatory agencies, and reports from 10 research institutions that clearly demonstrate:

  • Increased natural gas use - thanks to hydraulic fracturing - has led to dramatic declines in air pollution. The United States is the number one oil and gas producer in the world andit has some of the lowest death rates from air pollution. Numerous studies have shown that pollution has plummeted as natural gas production has soared.
  • Emissions from well sites and associated infrastructure are below thresholds regulatory authorities consider to be a threat to public health - that's the conclusion of multiple studies using air monitors that measure emissions directly.
  • There is no credible evidence that fracking causes or exacerbates asthma. In fact, asthma rates and asthma hospitalizations across the United States have declined as natural gas production has ramped up.
  • There is no credible evidence that fracking causes cancer. Studies that have measured emissions at fracking sites have found emissions are below the threshold that would be harmful to public health.
  • There is no credible evidence that fracking leads to adverse birth outcomes. In fact, adverse birth outcomes have decreased while life expectancy has increased in areas that are ramping up natural gas use.
  • Fracking is not a credible threat to groundwater. Study after study has shown that there are no widespread, systemic impacts to drinking water form hydraulic fracturing.

The company behind the Dakota Access pipeline is in another controversy - The same company that built the controversial Dakota Access oil pipeline has twice spilled drilling fluids in two pristine Ohio wetlands this month while constructing a $4.2 billion natural gas pipeline that will stretch from Appalachia to Ontario, Canada. The drilling fluid — a mudlike substance used to lubricate and cool equipment — is not toxic. But the Ohio state Environmental Protection Agency and environmental groups were worried that the larger of the two spills, which covered a vast area the size of 8½ football fields, could smother aquatic life in the wetlands. Energy Transfer Partners notified the Ohio EPA that it spilled as much as 2 million gallons of drilling mud and cuttings from underground on April 13, affecting an area 1,000 feet long and 500 feet wide south of the town of Navarre. And on April 14, it spilled 50,000 gallons of the same fluids, affecting a smaller area of 30,000 square feet near Mifflin Township more than 100 miles away.Both incidents happened during the construction of the Rover pipeline, a 710-mile project that includes 207 sensitive water crossings. Energy Transfer was drilling horizontally under the crossings. The spills aren’t the only spots of controversy for the Rover pipeline. Last year, the Federal Energy Regulatory Commission referred the company to its enforcement division for possible penalties after Energy Transfer Partners bought and then demolished a house that dated back to 1843 and which was under consideration for inclusion in the National Register of Historic Places.  FERC said that “Rover demolished the structure with no prior notice or forewarning” even though “Commission staff identified the Stoneman House as an issue of concern early-on during the pre-filing process.” FERC said “Rover had intentionally and adversely affected the historic property.”   Energy Transfer Partners has also been in the political limelight. Its chief executive Kelcy Warren has given heavily to Republican candidates and political action committees. Its board of directors included Rick Perry, who resigned Dec. 31 after he was nominated to become energy secretary. And Donald Trump was an investor, but his lists of stock holdings indicate that he sold his shares.  The company has asserted that there is no danger from the spills. It said in a statement that the drilling mud is made of bentonite and “is a nontoxic, naturally occurring material that is safe for the environment.”  But the Ohio state EPA said the spill posed a danger to some of Ohio’s last surviving wetlands. “Discharges of bentonite mud and other material into waters of the state (including wetlands) can affect water chemistry, and potentially suffocate wildlife, fish and macroinvertebrates,” said Ohio EPA spokesman James Lee.

Rover Pipeline Construction Leaks Raise Questions of Contamination -- Cleanup is under way in Stark County where millions of gallons of drilling material spilled into a wetland during the construction of a natural gas pipeline. The pipeline construction crew shot 2 million gallons of drilling mud into a wetland.  Ohio Oil and Gas Association’s Shawn Bennett assures that the mud, which is used to borrow a hole for the pipe, does not pose a public health risk.“It’s a non-toxic component that is used in shampoo, deodorant, toothpaste and kitty litter,” Bennett said.But Melanie Houston with the Ohio Environmental Council says that wetland is supposed to protect a wide array of species.“The effects that it has is the potential to smother out any aquatic life,” Houston said. There’s no word yet on the exact impact on the wetlands or its aquatic life. The Ohio Environmental Council would like to see an investigation into this spill.

Rover Pipeline Causing Issues In Richland Co, Company Speaks- The construction of the Rover Pipeline has made it's way to Richland County, but recently a spill caused issues for a local wetland.  Last week, the Rover Pipeline construction caused 50,000 gallons of drilling fluid to spill into a local wetland off of Pavonia East Rd. in Mifflin Township.   This local spill was part of Rover's estimated 2 million gallons of drilling fluid pollutants into wetlands "adjacent to" the Tuscarawas River last week, according to a violation filed by the Ohio Environmental Protection Agency (EPA).Local resident, Kathy Wolfe, told WMFD that the spill occurred within her and her husband's 480-acre property which is located within Richland and Ashland counties.  Wolfe mentioned that she was told by her Rover land agent, Mitch Phillis, that it was a frack-out spill and that it was 'no big deal, it's just mud'.   Alexis Daniel, PR & Communication Specialist for Energy Transfer, released a statement to WMFD that stated: "The Rover Pipeline project team would like to provide an update on the inadvertent release of “drilling mud” that occurred as part of our construction activities in Ohio.The drilling mud, which is a non-toxic, naturally occurring material that is safe for the environment was being used to help facilitate horizontal directional drills in Ohio. Due to the subsurface conditions and other environmental conditions of the locations, the drilling mud was able to migrate through naturally occurring fractures in the soils and reach the surface. It is important to note this is a common and normal component of executing directional drilling operations, there will be no impact to the environment and the release of the drilling mud is being managed and mitigated in accordance with the previously approved and certificated Horizontal Directional Drilling Contingency Plan on file with the Federal Energy Regulatory Commission (FERC) and the Ohio Environmental Protection Agency (OEPA)."

Ohio pipeline project's early messes don't inspire confidence --Just in time for Earth Day, the company that only recently began skewering Ohio with a $4 billion natural-gas pipeline has racked up a brace of environmental blunders. Or maybe, as the Rover Pipeline suggests, it’s Earth’s fault. Rover reported to the Ohio Environmental Protection Agency that it had an “inadvertent release” of about 2 million gallons of drilling mud into a Stark County wetland on April 13, and another one of 50,000 or so gallons into a Richland County wetland a day later. The mud, a mixture of water and bentonite clay, is used as a lubricant in drilling. Rover’s parent company, Energy Transfer Partners of Dallas, stressed in an occasionally redundant but expertly spun email that bentonite clay is “naturally occurring,” “nontoxic” and “safe.” “There will be no impact to the environment,” it reads. Bentonite clay, the statement notes, “is used in a variety of household products.”  Which is true. Among its uses, bentonite clay puts the clump in clumping cat litter. But this misstep involved more than a cat box’s worth of bentonite clay. The clay sludge in question could fill three Olympic swimming pools.Here’s how the company says it happened: “Due to the subsurface conditions and other environmental conditions of the locations, the drilling mud was able to migrate through naturally occurring fractures in the soils and reach the surface.” So Earth did it, in cahoots with the environment.  No one should be surprised that construction of the pipeline, which started only recently, has led to screw-ups. Rover has not hidden the fact that it is in a hurry. Hemorrhaging a few million gallons of muck into some wetlands is one thing. Hemorrhaging money is quite another.  Once finished, the pipeline will slice through 713 miles of West Virginia, Ohio, Pennsylvania and Michigan. The larger of the two spills coated 500,000 square feet of a wetland beside the Tuscarawas River, or about the area taken up by five Wal-Mart stores.

 Local anti-fracking group hopes third time's the charm for charter -- For the third year in a row, the Athens County Bill of Rights Committee will seek to put the question of turning the county into a charter form of government to voters in November. As with the other initiatives, this charter proposal doubles as an effort to keep oil and gas horizontal hydraulic fracturing (fracking) out of Athens County, through the use of local water for fracking operations. It also would prohibit fracking waste-injection wells, of which Athens County already has several in operation. This past September, for the second year in a row, the Ohio Supreme Court ruled that a proposed anti-fracking charter amendment for Athens County would not appear on the county’s general election ballot. The amendment, in addition to setting up a charter form of government, would have outlawed fracking waste injections wells in Athens County, as well as the use of county water resources for oil and gas drilling activities in Athens County and elsewhere. The latter provision would substantially curtail any future local fracking, which uses an immense amount of water. So far, the deep-shale oil and gas boom hitting other parts of eastern Ohio in recent years hasn’t extended into Athens County, and it’s an open question whether it ever will. The same Supreme Court decision also tossed out similarly crafted charter amendment petitions for Meigs and Portage counties. The high court did the same thing the previous year to charter amendment petitions for Athens, Meigs and Fulton counties, but for different reasons. Both years, the cases reached the Supreme Court (and before that, lower courts) after appeals of decisions by county boards of elections and the state Secretary of State rejecting the petitions.

Ohio's natural-gas production soared during a down year nationally - In a year when the country’s natural-gas production went down, Ohio’s went up — way up. The 2016 results, part of a government report issued this week, show that Ohio passed West Virginia to become the nation’s sixth-largest gas producer. Ohio also had the largest percentage increase of any of the top states. Ohio energy companies produced 1,465 billion cubic feet of gas, up from 1,015 billion in 2015, according to the Energy Information Administration. (The figures are from a report on “marketed production” of gas; they are slightly different from figures issued by the Ohio Department of Natural Resources.) The growth is notable because last year was difficult for many people in the energy business. Low prices for oil and gas and cost-cutting led to a pervading sense of gloom among producers. Nearly all of Ohio’s gas comes from the Utica and Marcellus shale formations, which are deep below ground and accessible through horizontal drilling and hydraulic fracturing, or fracking. A few positive factors helped to cancel out the negative ones for Ohio. First, several pipelines and processing sites came online, which allowed producers to move some of the pent-up gas supply to market. “In Ohio, we certainly have had a lot of gas behind pipe that was waiting on connections,”  Second, Ohio had the good fortune that many of its gas wells turned out to be prolific, with eye-popping output. Many of the top wells were in the eastern Ohio counties along the Ohio River, such as Belmont and Monroe. The United States produced 28,296 billion cubic feet, down from 28,753 billion the prior year.

Ohio and Pennsylvania increased natural gas production more than other states in 2016 - EIA - After reaching a record high of 79 billion cubic feet per day (Bcf/d) in 2015, U.S. marketed natural gas production fell to 77 Bcf/d in 2016, the first annual decline since 2005. Texas, the state with the most natural gas production, fell by 2.5 Bcf/d, while Ohio and Pennsylvania each increased by about 1.2 Bcf/d. EIA measures natural gas production in three different ways. Gross withdrawals are the full volume of compounds extracted at the wellhead, which includes all natural gas plant liquids and nonhydrocarbon gases after oil, lease condensate, and water have been removed. Marketed natural gas production excludes natural gas used for repressuring the well, vented and flared gas, and any nonhydrocarbon gases. Dry natural gas production is marketed production minus natural gas plant liquids. Pennsylvania and Ohio had the two largest annual natural gas production increases from 2015 to 2016, reflecting higher production from the Utica and Marcellus shale plays, which have accounted for 85% of the U.S. shale gas production growth since 2012. Production in Pennsylvania and Ohio has accounted for an increasing share of total U.S. natural gas production in recent years, growing from less than 2% in 2006 to 24% in 2016.  Pennsylvania surpassed Louisiana in 2013 to become the second-highest natural gas producing state, behind Texas. Although both states had higher production in 2016, Ohio surpassed West Virginia last year to become the seventh-highest natural gas-producing state. The increased productivity of natural gas wells in the Marcellus Shale and Utica Shale is a result of ongoing improvements in precision and efficiency of horizontal drilling and hydraulic fracturing occurring in these regions.  Louisiana, West Virginia, and North Dakota also increased their natural gas production in 2016. Louisiana’s increase was the first annual increase since 2011, while West Virginia and North Dakota have had 13 and 8 consecutive years of natural gas production increases, respectively.

Ohio, Pennsylvania saw biggest natural gas production increases in 2016 -- Ohio and Pennsylvania each increased natural gas production by approximately 1.2 Billion cubic feet per day (Bcf/d) in 2016, the largest annual natural gas production increases from 2015 to 2016 for any U.S. state, according to a recent report released by the U.S. Energy Information Administration. These increases came about despite an overall decrease in U.S. natural gas production. Marketed natural gas production, which excludes natural gas used for repressuring the well, vented and flared gas and any nonhydrocarbon gases, fell from 79 Bcf/d in 2015 to 77 Bcf/d in 2016. Texas, the state with the highest natural gas production levels, decreased production by 2.5 Bcf/d. The increases in Ohio and Pennsylvania were mostly a result of increased production from the Utica and Marcellus shale plays, which have made up 85 percent of U.S. shale gas production growth since 2012. Pennsylvania and Ohio’s share of total U.S. natural gas production has grown from under two percent in 2006 to 24 percent in 2016. In 2013, Pennsylvania surpassed Louisiana to become the state with the second highest natural gas production behind Texas. Ohio became the seventh highest natural gas producing after surpassing West Virginia last year. Louisiana, West Virginia, and North Dakota also increased their natural gas production in 2016. The increase in Louisiana was the state’s first annual increase since 2011, while West Virginia and North Dakota have seen annual for the past 13 and eight consecutive years respectively. The EIA’s Short-Term Energy Outlook projects that natural gas production will increase in both 2017 and 2018 as natural gas prices rise. 

 E&P companies doubling down on Marcellus / Utica in 2017 CAPEX plans.  As a group, the nine natural gas-focused exploration and production companies that were analyzed in our Piranha! market study are forecasting a 62% increase in capital spending in 2017 compared with 2016, a significantly higher percentage gain than their oil-focused and diversified counterparts. The driver of accelerated investment is the expected completion of natural gas infrastructure that will boost takeaway capacity from the Marcellus and Utica shales, the operational focus of eight of the nine gas-weighted E&Ps.  Expanded access to Canadian, Midwestern, Gulf Coast and export markets should significantly boost realizations and margin. Production growth by the nine E&Ps, which slowed to 4% in 2016 after a 19% rise in 2015, is expected to accelerate to 10% in 2017 and to rise rapidly in 2018 and beyond. Today we continue our analysis of U.S. E&P capital spending and production trends by taking a deep dive into the investment strategies of the natural gas-weighted peer group. U.S. oil and natural gas E&P companies, anticipating continuing low crude oil and natural gas prices, have been reshaping their portfolios to focus on a half-dozen top-notch resource plays whose production economics can hold up even if prices were to soften further. The biggest of these asset purchases and sales grab the headlines, but countless other, smaller-bite deals are having profound effects too. Taken together, this piranha-like devouring of E&P assets in the Permian, the SCOOP/STACK and other key production areas is transforming who owns what in the plays that matter most, and positioning a select group of E&Ps for success.

Fearful parents demand schools near gas pipeline release evacuation plans - Behind closed doors at Rose Tree Media school headquarters in Delaware County, the “safety summit” brought together district and township leaders, first responders, officials from Sunoco Logistics, and even Homeland Security to draw up school evacuation plans in the event of a catastrophic explosion or leak from the impending Mariner East 2 pipeline.  Not in the room — barred from attending, in fact — were the people whose growing anxiety and anger prompted the summit: a coalition of more than 2,700 elementary school parents and allies who fear their children won't be able to get out of harm's way should disaster strike the pipeline as it carries 275,000 barrels of natural gas liquids daily through their densely populated suburbs. A tight lid was kept on the late March confab. In a statement, Rose Tree Media Superintendent James Wigo joined other attendees in insisting that releasing evacuation details would “compromise student safety,” for instance in a school shooting. “Think about the horrors of a potential sniper situation.” The secrecy has further inflamed the Middletown Coalition for Community Safety, which continues to add members in Delaware and Chester Counties, through which Mariner 2 will soon pass. It formed in August after parents learned the pipeline would come within 650 feet of Rose Tree Media’s Glenwood Elementary, attended by 430 children. The group tried to stop Middletown Township from granting easements near the school, but lost. Since then, it has pressed Rose Tree Media and the West Chester Area School District for answers about student safety, while sounding the alarm at other schools along the route. According to risk assessments commissioned by the coalition, a vapor-cloud leak can spread 1,800 feet in three mintues, and ignition of the gas can produce a fireball with a blast radius up to 1,100 feet that would burn until the pipeline is fully purged. As many as 40 Pennsylvania schools would be in the potential "blast zone" if the line were to explode near them. Thousands of houses and facilities such as nursing homes also adjoin the route, but coalition founder Eve Miari said that worries about the schools have trumped other issues. “An elementary school is sort of like the heart center of the community," she said. "It’s where we send our babies."

Salem couple unswayed on Mariner East 2 pipeline project as Spectra explosion anniversary nears - When the Pintos bought property along Route 819 and built a house on it over 50 years ago, they were aware of an existing 8-inch pipeline running beneath their land. But they said they never imagined two additional pipelines, both more than double in size, would follow. The hotly debated Mariner East 2 pipeline project received the final permits necessary for construction in February from state regulators after five public meetings and 29,000 public comments. Construction already has started. The 20- and 16-inch pipelines will be able to carry 275,000 barrels of liquid natural gas a day and cross 270 properties over 36 miles in Westmoreland County as the Mariner East 2 cuts 350 miles from Ohio and West Virginia to refineries near Philadelphia. The new pipelines will run parallel to the existing Mariner East 1 line. More than 4 miles of Mariner East 2 will traverse Salem. With the one-year anniversary of the Spectra pipeline explosion approaching this week, some township residents fear catastrophe is inevitable. Others are not so concerned. Spectra Energy's 30-inch natural gas pipeline near the intersection of Routes 22 and 819 ruptured and sparked a massive explosion on April 29. The blast left one man severely burned, incinerated a home and damaged others, charred 40 acres of farmland, melted portions of a highway and negatively impacted the energy futures market.

Range Recalls 'Incredibly Creative Solution' for Marcellus/Utica 'Problem'  -- On March 9, 2016, the Ineos Intrepid – a new class of LNG vessel – embarked on a nearly 4,000-mile voyage across the Atlantic Ocean to Ineos' ethane cracker in Rafnes, Norway. As Ineos noted at the time, never before had shale gas produced in the United States been shipped to Europe.  "It was an incredibly creative solution to what was at one time viewed as a problem – what to do with our ethane," recalled Jeff Ventura, Range Resources' president and CEO. "In Texas and in Oklahoma, there was infrastructure in place in to process wet gas. When we were getting started in Pennsylvania, there wasn't." When it was establishing its foothold in the Marcellus during the mid-2000s, Range needed to find a home for the natural gas liquids (NGL) produced from its acreage in Washington County, Pa., in order to justify the economics of operating there. The company considered various proposals for tackling its "ethane problem." Given the lack of NGL pipeline takeaway capacity, the company considered shipping the ethane via rail and barge but found that approach unsatisfactory. Instead, it opted for the processing route. "In order for that product to become profitable, the gas would need to be processed," explained Curt Tipton, Range's vice president of Marcellus development "There were no chemical companies (that could take the ethane and use it as a feedstock) – and no real option to separate out the ethane so that the methane ("dry gas") could make its way to customers on the other end of natural gas-ready pipelines. Without the ability to remove ethane, you can't produce the gas." Since February 2016 Sunoco Logistics has delivered up to 70,000 barrels per day (bpd) of ethane from Washington County in southwestern Pennsylvania eastward to its Marcus Hook Industrial Complex via the Mariner East 1 pipeline. Previously a conduit for shipping refined products from east to west, Sunoco Logistics' Mariner East 1 is being paired with a parallel pipeline – Mariner East 2 – that will raise the system's total takeaway capacity to 345,000 bpd. According to Sunoco Logistics' website, Mariner East 2 should go into service later this year.

PennEast Pipeline 'Would Cause Massive Increase in Climate Pollution' -- A study released Wednesday found that, if built, the controversial PennEast Pipeline for fracked gas could contribute as much greenhouse gas pollution as 14 coal-fired power plants or 10 million passenger vehicles—some 49 million metric tons per year.  The analysis, conducted by Oil Change International, showed that federal regulators are poised to rubber-stamp the PennEast Pipeline based on a woefully inadequate climate review that ignores the significant impact of methane leaks and wrongly assumes that gas supplied by the project will replace coal .  The Federal Energy Regulatory Commission (FERC) is facing a growing backlash across the country over its routine approval of gas pipeline projects that endanger communities and the climate . Today's study comes on the heels of a federal court hearing in which a judge slammed FERC's shallow and dismissive review of the climate impact of the Sabal Trail gas pipeline in the Southeast.  The new analysis counters FERC's final environmental impact statement for the PennEast project released in early April. It applies a methodology recently developed by Oil Change International to calculate the climate impact of gas pipelines from the Appalachian Basin. In contrast to FERC, the Oil Change methodology reflects the evolving analysis of methane leakage and the full lifecycle of pollution that pipelines cause from fracking well to smokestack.  "Our analysis shows that the PennEast Pipeline would cause a massive increase in climate pollution," said Lorne Stockman, lead author of the study and Oil Change International senior research analyst. "The only way FERC can conclude otherwise is by ignoring both science and economics. The PennEast pipeline is not needed, communities don't want it and it will deepen reliance on fossil fuels that we can't afford to burn."

Is the northeast natural gas market no longer pipeline capacity constrained? - Natural gas production growth in the U.S. Northeast—the primary driver of U.S. production growth in recent years—has slowed dramatically in the past few months, up no more than 1 Bcf/d year-on-year, compared with growth in increments of 3 and 4 Bcf/d in previous years. Despite the slowdown, the regional balance continues to lengthen, with supply growth outpacing demand. Yet, regional gas prices, specifically at key supply hubs, which previously were struggling under the weight of oversupply coupled with limited access to growing demand markets, are strengthening. Is this the beginning of the end of takeaway constraints and distressed supply pricing in the region? Or will constraints reemerge this summer? Today, we provide an update of Northeast gas supply/demand balance. Ever since the Marcellus Shale first took off in late 2009-10, the Northeast region has been marching toward becoming a full-fledged supplier of natural gas in the U.S. At first it grew practically unconstrained, targeting the region’s own gas-thirsty winter premium markets. By 2014, the Northeast was meeting its own regional demand through the lower-demand shoulder and summer months, but regional demand continued to outpace supply in the winter months. Then the winter of 2015-16 marked another milestone. It was the first time Northeast produced enough to meet all of its winter demand and then some. Now, dynamics are once again shifting. Regional production growth has slowed to a crawl, relatively speaking. At the same time, the region has been dealt two consecutive mild winters that have dampened demand. On the other hand, the region has added more takeaway capacity that, with production flattening out, is less constrained. What does this all mean for the Northeast gas market? We wrote about the evolving balance about a year ago in One Step Closer and looked at the fundamentals again in November 2016 in Still They Ride. We’ve since also blogged about the expansion of Tallgrass Energy’s Rockies Express Pipeline (REX) in It’s Been a Long Time Coming. But with another winter behind, injection season well under way and more takeaway capacity on the way, it’s time again to revisit the balance.

Duke Study Finds Fracking Isn't Contaminating Groundwater - Daily Caller -- Duke researchers collaborated with other scientists from Ohio State University, Pennsylvania State University, and Stanford University to sample water from 112 drinking wells in northwestern West Virginia over a three-year period. They sampled 20 drinking water wells before fracking began in the area to compare. Duke’s new research matches the findings of other scientific studies from regulatory bodies, academics, and the U.S. Geological Survey (USGS) which determined that fracking hasn’t contaminated ground or drinking water. Even the Environmental Protection Agency (EPA), which wants to regulate fracking using groundwater contamination as an excuse, still hasn’t found any groundwater contamination after five years of study. Environmentalists responded to these studies, saying, “millions of Americans know that fracking contaminates groundwater and for the EPA to report any differently only proves that the greatest contamination from the industry comes from its influence and ownership of our government.”Myths about fracking are so widespread that the USGS actually maintains a “Myths and Misconceptions” section of its website to debunk them.  Up to 96 percent of wastewater from fracking is from naturally occurring salts and brines, not artificial fracking fluids, another study published by Duke University concluded. Duke researchers found that between 92 and 96 percent of wastewater coming out of fracking wells was comprised of naturally occurring brines and salts, which were extracted along with the gas and oil. Only about 4 to 8 percent of the wastewater included man-made chemicals.

West Virginia groundwater not affected by fracking, but surface water is -- Fracking has not contaminated groundwater in northwestern West Virginia, but accidental spills of fracking wastewater may pose a threat to surface water in the region, according to a new study led by scientists at Duke University."Based on consistent evidence from comprehensive testing, we found no indication of groundwater contamination over the three-year course of our study," said Avner Vengosh, professor of geochemistry and water quality at Duke's Nicholas School of the Environment. "However, we did find that spill water associated with fracked wells and their wastewater has an impact on the quality of streams in areas of intense shale gas development.""The bottom-line assessment," he said, "is that groundwater is so far not being impacted, but surface water is more readily contaminated because of the frequency of spills."The peer-reviewed study was published this month in the European journal Geochimica et Cosmochimica Acta.The Duke team collaborated with researchers from The Ohio State University, Pennsylvania State University, Stanford University and the French Geological Survey to sample water from 112 drinking wells in northwestern West Virginia over a three-year period.Twenty of the water wells were sampled before drilling or fracking began in the region, to provide a baseline for later comparisons.Samples were tested for an extensive list of contaminants, including salts, trace metals and hydrocarbons such as methane, propane and ethane. Each sample was systematically analyzed using a broad suite of geochemical and isotopic forensic tracers that allowed the researchers to determine if contaminants and salts in the water stemmed from nearby shale gas operations, from other human sources, or were naturally occurring.

Study: Fracking didn’t impact West Virginia groundwater, but wastewater spills pollute streams - Fracking the Marcellus Shale did not pollute groundwater in northwestern West Virginia, but wastewater spills did contaminate surface water, according to a new study from Duke University. The report adds to an increasing body of work pointing to greater risks from fracking wastewater transport and treatment, than from the process itself. The study was unique in that it monitored drinking water wells and surface water over three years, a longer time period than previous research on the impact of fracking on drinking water. The study also used multiple methods of determining the source of the pollution, and was able to draw on baseline water quality data. “Based on consistent evidence from comprehensive testing, we found no indication of groundwater contamination over the three-year course of our study,” said Avner Vengosh, professor of geochemistry and water quality at Duke’s Nicholas School of the Environment. ”However, we did find that spill water associated with fracked wells and their wastewater has an impact on the quality of streams in areas of intense shale gas development.”Vengosh says the study results are dissimilar from previous research in Northeast Pennsylvania where the methane found in drinking water wells was connected to fracking. The peer-reviewed study was published recently in Geochimica et Cosmochimica Acta, a European journal. It adds to a growing body of academic research focused on the impacts of shale gas drilling, which requires high pressure water, mixed with chemicals, to be injected deep below the surface to break up the shale rock to release the gas trapped within it. Although industry says the practice is safe, concerns have grown over how often the practice can lead to groundwater contamination in areas where residents rely on well water.Vengosh said differences in geology and industry practices can play a role. And although three years is longer than previous studies, Vengosh said ground water moves very slowly, so results may be different 10 or 15 years from now.”You need to do the science,” he said. “There’s no way to avoid the science and come to a conclusion. And you have to do it in a really thorough way to determine the source of contamination.”Vengosh said the baseline data, gathered from drinking water wells before shale gas drilling occurred nearby, boosts their confidence in the results. A total of 112 water wells were sampled over three years, with 20 sampled before drilling or fracking occurred.

Increased Oil and Natural Gas Production Could Result from Data on Low Frequency Tremors Discovered by NETL During Hydraulic Fracturing -- When researchers from the Department of Energy's (DOE) National Energy Technology Laboratory (NETL) set up new monitoring capabilities at active Marcellus Shale hydraulic fracturing sites in Pennsylvania and West Virginia to better understand seismic activity, they discovered that low frequency tremors occur, which they believe could be useful to optimize oil and natural gas production from unconventional shale. Abhash Kumar, a contractor at NETL who developed the new surface seismic monitoring capability along with Erich Zorn, an intern with NETL in the Oak Ridge Institute for Science and Education (ORISE), explained that hydraulic fracturing has revolutionized the Nation's energy security requirements as well as hydrocarbon production capabilities. 'It's a well-established exploration technique to stimulate production of oil and natural gas from unconventional formations such as shale and tight gas sands, commonly referred as 'tight oil',' he said. 'The injection of water or other fluids during hydraulic fracturing helps enhance permeability of the reservoir rock, increasing the rate of flow of the hydrocarbons. Surface seismic monitoring of hydraulic fracturing is an important tool to evaluate the effectiveness of reservoir stimulation.' Kumar and Zorn, mentored by NETL researcher Richard Hammack and Professor William Harbert of the University of Pittsburgh, collected seismic data that indicated the presence of low frequency seismic emissions during hydraulic fracturing. 'Our analyses confirmed seismic events lasting between 30 to 60 seconds in duration with significant concentration of energy at lower frequencies.' Kumar said. 'During various stages of hydraulic fracturing, long period events were found to occur most frequently when the pumping pressure and slurry rate were at maximum levels. That suggests that they may play a significant role in the reservoir stimulation.'

Gas storage field leak capped in rural southwestern Indiana  — Officials say a natural gas leak from an underground storage field in rural southwestern Indiana has been capped. Citizens Energy Group says a well drawing gas from the storage area near the Greene County town of Worthington failed during maintenance work Tuesday evening. High-pressure gas was escaping Wednesday and the leak was reported capped later in the day. No fire or injuries occurred. The Indianapolis-based utility said escaping gas had prompted the evacuation of seven nearby homes and the closure of a state highway. It said the loss of gas won't impact service to customers.

Enbridge's Great Lakes Pipeline Has Spilled 1 Million Gallons Since 1968 -- Enbridge Energy Partners ' aging Line 5 pipeline , which runs through the heart of the Great Lakes, has spilled more than 1 million gallons of oil and natural gas liquids in at least 29 incidents since 1968, according to data from the federal Pipeline Hazardous Materials Safety Administration obtained by the National Wildlife Federation .  Built in 1953, the 645-mile, 30-inch-diameter pipeline carries petroleum to eastern Canada via the Great Lakes states. As it travels under the Straits of Mackinac, a narrow waterway that connects Lake Michigan and Lake Huron, Line 5 splits into twin 20-inch-diameter, parallel pipelines.  Line 5 opponents fear that a spill in the Great Lakes, which contains 21 percent of the world's surface fresh water, would be an ecological disaster. Notably, the straits' strong currents reverse direction every few days and a spill would quickly contaminate shoreline communities miles away.  Enbridge is behind a number of major spills, most notoriously in 2010 when an Enbridge line spilled more than 800,000 gallons into the Kalamazoo River in Michigan—creating the biggest inland oil spill in U.S. history .  "We have a pipeline system with a history of problems running through our country's largest source of surface freshwater, and it happens to be operated by the company responsible for one of the largest inland oil spills in North America," said Mike Shriberg, executive director for the National Wildlife Federation's Great Lakes "This pipeline system places the Great Lakes and many local communities at an unacceptable risk. The state of Michigan needs to find an alternative to this risky pipeline to protect our drinking water, health, jobs and way of life."  The National Wildlife Federation has released a new interactive map showing what has spilled from Enbridge's pipeline system, the repair methods that have been used, and how leaks and defects are being discovered.

North American E&Ps seen likely to post modest Q1 growth as natural gas output grows - Coming off a two-year period of belt-tightening the first-quarter earnings of some North American exploration-and-production companies are expected to reflect the first signs of new gas production growth, but that growth is conditional upon the basins where the producer operates and the individual company's economic circumstances going into the quarter. In addition, the quarterly results are apt to show a continuation of the trend of producers increasingly focusing on basins with better economic returns -- chiefly oilier and more liquids-rich plays -- while downplaying efforts in the drier gas basins. US drilling activity has been on the upswing, particularly in the Permian Basin of West Texas and southeastern New Mexico, the hottest oil and gas play in the country. Producers in recent months have flocked to the Permian, which boasts some of the highest initial production (IP) rates for oil and gas of any basin in the country. The Permian hovers around a 30-day average oil IP rate of 600 b/d, and for the gas the IP rate is closer to 1,400 Mcf/d, according to Platts Analytics.Crude-focused producers such as Anadarko Petroleum are expected to post strong Q1 results as a result of investments in the oil-rich Permian as well as the DJ Basin of Colorado, another oily province. Anadarko said last month it expected a 25% increase in oil sales volumes over the prior year. Meanwhile, some gas producers could see production growth in the quarter as well. Appalachian producers operating in the liquids-rich portions of the basin -- chiefly the southwestern Marcellus and Utica plays -- are largely expected to increase drilling and production in the quarter compared with the same period last year. Appalachian producer Range Resources also provided guidance that it would increase its capital expenditures to $1.150 billion versus $513 million in 2016, while the producer estimated it would increase its production for full-year 2017 to 2.07 Bcfe/d versus 1.54 Bcfe/d in 2016.  To drill a well in the Marcellus costs around $6 million with a gas IP rate of 10,000 Mcf/d, according to Platts Analytics. Producers drilling in the Utica Shale in eastern Ohio have mentioned gas IP rates around 20,000 Mcf/d with a well cost around $10.6 million.  Chesapeake Energy, which operates in a number of basins across the country, is expected to drill and produce less oil and gas than last year, largely as a result of the sale of some of its non-core assets, such as the Barnett Shale of North Texas last year, according to its most recent guidance.

U.S. natural gas prices soften, market eyes big hedge fund longs: Kemp (Reuters) - Hedge fund managers have accumulated a near-record bullish position in U.S. natural gas futures and options as gas stocks have remained at a modest level despite an exceptionally mild winter. Hedge funds and other money managers have boosted their net long position in the two main futures and options contracts for seven consecutive weeks by a total of 1,313 billion cubic feet. By April 18, fund managers had accumulated a net position equivalent to 3,511 billion cubic feet, the highest for three years, according to data published by U.S. Commodity Futures Trading Commission. Fund managers show a strong bullish bias, with long positions outnumbering short positions by 4.3:1, up from a recent low of 2.2:1, and the highest ratio since February 2014. Funds have reacted to signs of tightness in the gas market as a result of sluggish production, strong exports and a structural increase in gas demand from new combined-cycle power plants. Working gas stocks have finished the winter around 380 billion cubic feet, or 15 percent, below the same point last year even though temperatures have been slightly warmer. But the concentration of long positions has increased the risk of a sharp correction if funds try to take profits following the recent increase in prices. The correction may already be underway with both flat prices and the calendar spreads under pressure in recent sessions. Futures prices for gas delivered to Henry Hub in June 2017 have fallen from a recent high of $3.33 per million British thermal units on April 7 to $3.19 on April 21. And the calendar spread between June 2017 and June 2018 has dropped from 53 cents on April 6 to just 27 cents on April 21. FU The sustained increase in gas prices is likely to cause power producers to run their gas-fired units for fewer hours this summer and increase the utilisation of coal plants. Higher U.S. gas prices have already made it more economically attractive to run coal-fired units despite their lower efficiency and flexibility. U.S. coal shipments by rail have risen by 18 percent so far this year compared with the same period in 2016, according to the Association of American Railroads ( ).  Some of the increase in shipments reflects the clearing of excess stocks at power plants that built up between 2014 and 2016. However, some of the increase likely reflects plans to run coal-fired units for more hours during the summer of 2017 to meet air-conditioning demand.

EIA Reports Natural Gas Inventories Rise 74 Bcf, Prices Still Advance: The latest Energy Information Administration (EIA) natural gas storage data recorded a build of 74 Billion Cubic feet (Bcf) for the week ending April 21st following an increase of 54 Bcf last week. The increase was slightly higher than consensus forecasts of a 72 Bcf gain and this was also the largest build since the middle of October 2016.  There will also be concerns over net build seen in stocks during April which is likely to be higher than that seen for April 2016. There is also the strong probability of a substantial net build during May on seasonal grounds. Stocks overall are 14.1% below the year-ago figure, but 15.8% above the five-year average from 15.4% last week. There was an increase in stocks across all regions on the week with the East recording the largest gain, although stocks here are still 29.2% below the levels seen last year. Stocks are below year-ago levels in all regions while Midwest stocks are 30.2% higher than the 5-year average.  Natural gas prices dipped at the end of last week, but did find support on approach to the $3.10 per mBtu area and prices moved to highs around $3.25 on Wednesday.In this context, prices have been broadly resilient despite a weaker trend in crude prices over the past few days.  Weather conditions are likely to drive moderate demand for gas over the next week with generally cool conditions in the Central and Western areas triggering limited demand for heating demand while hot conditions in parts of the South will drive early demand for air-conditioning.

Europe lures rare diesel cargoes from U.S. East Coast | Reuters: U.S. East Coast refineries are stepping up exports of diesel despite a regional deficit of the fuel as strong overseas demand, particularly in Europe, is proving more profitable. Two tankers carrying 60,000-tonne cargoes of diesel have been booked in recent days out of New York Harbor to go to Northwest Europe, traders said. The two vessels, River Shiner and Two Million Ways, were chartered by Swiss-based trading house Trafigura [TRAFG.UL] and will load fuel sold by Delta Air Lines Inc's refiner subsidiary Monroe Energy, near Philadelphia. They are expected to top up their cargo in New York before sailing to Europe, an East Coast trader said. The BP-chartered, 37,000-tonne Arctic Breeze is nearing its destination - Sete port in southern France - after loading a diesel cargo this month at the Kinder Morgan terminal in New York, according to traders and Reuters shipping data. At least one other 37,000-tonne tanker has been booked on the transatlantic route, traders said. U.S. Gulf Coast refineries have become a powerhouse of distillate exports amid a rise in demand from Latin America and West Africa due to refinery outages there. While Europe historically relies on a steady stream of diesel from the U.S. Gulf Coast, the rise in competition has led to a marked drop in that region's diesel exports to Europe.The U.S. East Coast typically imports middle distillates, including diesel and heating oil, to meet regional demand. Over the past year, the region imported an average of around 180,000 barrels per day of distillates, according to the U.S. government's Energy Information Administration. 

Senate advances bill to let FPL customers pay fracking costs | Tampa Bay Times: Florida Power & Light's quest to have customers pay for natural gas fracking projects in other states overcame a key hurdle Tuesday as the Senate Rules Committee passed the controversial measure and overlooked opposition from residential and commercial customers. The proposal, SB 1238 by Sen. Aaron Bean, R-Fernandina Beach, now goes to the Senate floor. A similar measure in the House, HB 1043, has made it through one of three committees in that chamber. The goal of the legislation is to overturn a Florida Supreme Court ruling last year that found the Public Service Commission exceeded its authority when it gave FPL permission to charge customers up to $500 million for investing in an Oklahoma-based fracking company in 2015. Although the company predicted the project would save customers millions in fuel costs, it resulted in a loss of $5.6 million in the first year. The Rules Committee adopted a series of amendments proposed by Sen. Jack Latvala, R-Clearwater, who opposes the measure, and approved the modified bill on a bipartisan vote of 7-3. Latvala said the bill will "for the first time make the ratepayers pay for exploration" and "allow the utilities to charge a rate of return on that exploration cost." He asked Bean if customers pay if the well produces a "dry hole — so all the risk is with the ratepayers and not with the company?" Bean responded: "That is correct" and added that the projects won't be exploratory because "it is highly likely that there is natural gas," he said. Latvala countered: "That is still exploration." 

Gulf of Mexico crude oil production hits all-time high. The Permian may be grabbing most of the energy headlines lately, but a noteworthy share of crude oil production growth the U.S. experiences over the next two or three years is sure to come from the Gulf of Mexico. There, far from the Delaware Basin land rush and the frenzy to build new Permian-to-wherever pipelines, a handful of deepwater production stalwarts are completing new wells — at relatively low cost — that connect to existing offshore platforms. Taken together, these projects are expected to increase the Gulf’s output by more than 300 Mb/d by the end of 2018. Today we look at the Gulf’s under-the-radar growth in oil output and the prospects for continued expansion there.  In 2016, U.S. crude oil production averaged 8.9 million barrels/day (MMb/d), according to the Energy Information Administration (EIA), with offshore production in the Gulf of Mexico (GOM) contributing 1.6 MMb/d—or 18.2%—of the total.  On an annual basis, that is an all-time high record level of offshore Gulf production!     As shown in Figure 1, GOM production was up to 1.75 MMb/d in January 2017, more than 300 Mb/d above GOM production when the Deepwater Horizon tragedy struck. and less than a fraction of a percentage point below the all-time record high for GOM hit in September 2009. There is a pretty good chance that record will fall in the next month or so. EIA expects 2017 GOM production to keep growing, increasing to 1.9 MMb/d in 2018. Admittedly, that’s an increase of only 300 Mb/d from 2016, which might not be groundbreaking news, but it sure puts the kibosh on any suggestion that production off the coasts of Texas, Louisiana, Mississippi and Alabama is dead in the water. It’s not—by a long shot.

US Shale (And US Gulf Of Mexico) Too Much For OPEC -- Bloomberg -- may be confused, but Bloomberg certainly is not, calling it like it is -- simply put, US shale is eating Saudi Arabia's lunch. OPEC's four-month experiment with production curbs has failed. More worryingly, the strength of shale's rebound suggests that OPEC faces a long-term struggle against this new source of supply in an industry where technological advances are the norm and today's niche play becomes the next decade's global standard. Total U.S. crude production has risen by more than 550,000 barrels a day in the 20 weeks since OPEC decided to cut output, according to weekly Department of Energy data. Much of that increase has come from shale formations. If this rate of growth -- a little under 30,000 barrels a day of new supply each week -- continues, U.S. output could top its recent peak of 9.61 million barrels a day shortly after OPEC meets on May 25 to consider its next move. That is bad enough for OPEC producers, but the picture just gets worse for them each month. The DoE publishes a monthly outlook and its views on domestic production are evolving rapidly -- and not in a way that suits OPEC.  Its latest forecast, published on April 11, pegs U.S. oil production at 9.24 million barrels a day by July. That is half a million barrels a day higher than it was forecasting for that month in November 2016, just before OPEC decided to restore output restraint. Its outlook for December 2017 has increased by 700,000 barrels a day over the same period.

Trump to sign offshore orders as 100th day in office, shutdown near --Ahead of his 100th day in the White House on Saturday, President Trump is expected this week to unveil details of major policy initiatives, including executive orders aimed at expanding oil and natural gas drilling in federal waters and an outline of his tax reform goals. The week will also be complicated by ongoing negotiations with Congress to keep the federal government from shutting down on Friday, as occurred in 2013. "So we expect a massive increase in military spending," Priebus said Sunday on NBC's "Meet the Press." "We expect money for border security in this bill. ... And it ought to be, because the president won overwhelmingly and everyone understands that building the border wall ... was part of it." On Friday, as those spending negotiations may still be ongoing, Trump is expected to sign "several" executive orders on energy, the White House said Sunday. "This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production, and reduced unnecessary burden on energy producers," the White House said in a statement. The orders will include calls to redo the Obama administration's schedule for offshore lease sales and attempt to reverse Obama's prohibitions on drilling in Arctic and Atlantic waters. One order will call for the administration to redo the 2017-2022 federal offshore leasing plan, which was finalized by the Obama administration in November and currently includes 10 sales in the Gulf of Mexico and one in Alaska's Cook Inlet over those five years, but does not include sales in the Chukchi and Beaufort seas, which were removed from the plan before it was finalized. A proposed Atlantic lease sale had been removed from the plan in March 2016.

Trump aims to expand U.S. offshore drilling, despite low industry demand | Reuters: U.S. President Donald Trump signed an executive order on Friday to extend offshore oil and gas drilling to areas that have been off limits - a move meant to boost domestic production but which could fall flat due to weak industry demand for the acreage. The order could open up swathes of the Atlantic, Pacific and Arctic oceans, as well as the U.S. Gulf of Mexico, that former President Barack Obama had sought to protect from development after a huge BP (BP.L) oil spill in 2010. "We're opening it up....Today we're unleashing American energy and clearing the way for thousands and thousands of high-paying American energy jobs," Trump said as he signed the order. Trump had campaigned on a promise to do away with Obama-era environmental protections that he said were hobbling energy development without providing tangible benefits, pleasing industry and enraging environmental advocates. But the executive order, called the America-First Offshore Energy Strategy, comes as low oil prices and soaring onshore production have pushed industry demand for offshore leases near their lowest level in years, raising questions over the impact. A Reuters review of government data showed the amount of money that oil companies spent in the central Gulf of Mexico's annual lease sale dropped more than 75 percent between 2012 and 2017. Dollars bid per acre and the percentage of acreage receiving bids both declined more than 50 percent. The figures were similar in the western Gulf of Mexico, the only other zone that got offers for leases during that period, according to the figures from the U.S. Bureau of Ocean Energy Management.

People are willing to pay a lot to prevent another BP-like oil spill - According to a paper published in the journal Science on Thursday, Americans are willing to pay $17.2 billion to prevent another BP Deepwater Horizon oil spill. Thanks to a team of scientists who conducted a six-year study into the effects of the 134-million-gallon spill, we now have a more accurate picture of the devastating consequences—and also how desperately we want to reduce our dependency.  To relate the true damages of an oil spill of this magnitude, researchers set out to equate the damage in monetary terms, as so often we view natural resources as permanent and limitless. In order to arrive at the $17.2 billion figure, scientists surveyed households across the country to see how much they’d be willing to pay to avoid similar spills in the future. Along with asking participants these questions, the study authors included detailed accounts of the damage already done to beaches, animals, marine life, and marshland. As one of the paper’s authors, Kevin Boyle, explained to Virginia Tech News, “This is proof that our natural resources have an immense monetary value to citizens of the United States who visit the Gulf and to those who simply care that this valuable resource is not damaged.” Commissioned by the U.S. National Oceanic and Atmospheric Administration one month after the 2010 spill, the long-awaited study can now give us some insight into the actual dollar value of devastating the environment. What they also found was an overwhelming public willingness to put hard-earned cash into prevention funds. According to the survey, the majority of households said they’d willingly pay $153 each for prevention measures. Adding up all the reported figures led researchers to the $17.2 billion total.  Here's a link to the Science article.

Massive Natural Gas Deposit Discovered In The Gulf Coast Basin- Technological advancements have just pushed the boundaries of recoverable oil and gas in the U.S. further, according to an announcement by the U.S. Geological Survey. The agency reported that two formations in the Gulf Coast Basin may contain as much as 304.4 trillion cubic feet of natural gas plus 1.9 billion barrels of natural gas liquids, making the area the largest untapped continuous gas deposit in the country. The two formations—Haynesville and Bossier—also contain some 4 billion barrels of crude, according to mean estimates, the USGS also said in a press release. It bears noting, however, that these are mean estimates of the reserves contained in the two formations. For gas, the range runs from 37.1 trillion cu ft to 223.5 trillion cu ft for Bossier, and from 96.3 trillion cu ft to 341 trillion cu ft for Haynesville. Still, even the minimum estimates are impressive, and could theoretically push gas prices even lower. Meanwhile, the EIA said in a recent report that natural gas will surpass coal as the top power generation fuel this summer – some good news on the demand side. Gas, the authority expects, will account for 34 percent of generation fuels, versus 32 percent for coal. As good as this is—the third summer in a row that power plants in the U.S. will use more gas than coal—the summer 2017 estimate is lower than the 36 percent that gas accounted for last summer.

The US Geological Survey may have found the largest untapped natural-gas deposit in the country - Technological advancements have just pushed the boundaries of recoverable oil and gas in the U.S. further, according to an announcement by the U.S. Geological Survey. The agency reported that two formations in the Gulf Coast Basin may contain as much as 304.4 trillion cubic feet of natural gas plus 1.9 billion barrels of natural gas liquids, making the area the largest untapped continuous gas deposit in the country. The two formations—Haynesville and Bossier—also contain some 4 billion barrels of crude, according to mean estimates, the USGS also said in a press release. Technological advancements have just pushed the boundaries of recoverable oil and gas in the U.S. further, according to an announcement by the U.S. Geological Survey. The agency reported that two formations in the Gulf Coast Basin may contain as much as 304.4 trillion cubic feet of natural gas plus 1.9 billion barrels of natural gas liquids, making the area the largest untapped continuous gas deposit in the country.   The two formations—Haynesville and Bossier—also contain some 4 billion barrels of crude, according to mean estimates, the USGS also said in a press release.   The USGS has been reassessing a lot of oil and gas deposits across the U.S., noting how new exploration and extraction technologies have been “a game-changer” for the industry. Indeed, the last assessment of the Haynesville and Bossier formations was conducted seven years ago, and oil and gas technology has undergone major evolution since then.  It bears noting, however, that these are mean estimates of the reserves contained in the two formations. For gas, the range runs from 37.1 trillion cu ft to 223.5 trillion cu ft for Bossier, and from 96.3 trillion cu ft to 341 trillion cu ft for Haynesville. Still, even the minimum estimates are impressive, and could theoretically push gas prices even lower.

Golden Pass LNG cleared to export-  The Golden Pass LNG terminal on the Texas Gulf Coast was cleared by the Department of Energy Tuesday to begin exporting up to 2.21 billion cubic feet of gas per day.  Located outside Sabine Pass, the Golden Pass terminal was built to import LNG from abroad in 2009. But following the boom in domestic gas production through hydraulic fracturing and horizontal drilling, Golden Pass, a joint venture between Qatar Petroleum, ExxonMobil and ConocoPhillips, shifted gears.  The approval adds to a growing list of LNG export terminals under development in the United States. Cheniere Energy began exporting last year from its Sabine Pass terminal in Louisiana. As of January, there were seven facilities under construction and another four that had been approved but not yet begun construction, according to the Federal Energy Regulatory Commission. “This announcement is another example of President Trump’s leadership in making the United States an energy dominant force,” U.S. Secretary of Energy Rick Perry said in a statement Tuesday. “This is not only good for our economy and American jobs but also assists other countries with their energy security.” There has been no announcement on when the export facility will be completed. But Golden Pass is estimating construction will provide 45,000 direct and indirect jobs over five years, along with another 3,800 direct and indirect jobs over the next 25 years when the facility becomes operational.

US DOE clears way for LNG exports by Golden Pass into uncertain global market - Against a backdrop of a seemingly glutted global LNG market and continued concerns about the impact on US natural gas prices, the Department of Energy on Tuesday turned thumbs up on a plan by Golden Pass Products to export domestically produced LNG to countries that do not have a free trade agreement with the US. With the DOE nod, Golden Pass is authorized to send out the equivalent of 2.21 Bcf/d of gas from a terminal to be developed near Sabine Pass in Jefferson County, Texas. Platts Analytics' Bentek Energy expects that global LNG markets will remain oversupplied through 2022 based on the current slate of forecast LNG export projects. Further, Platts Analytics expects that global gas prices will not support incremental spot supply during this oversupply period, which could discourage the signing of new LNG supply contracts. According to DOE, the Golden Pass order brings to 19.2 Bcf/d the total LNG exports to non-FTA countries authorized to date from planned and operational facilities in Texas, Louisiana, Florida, Georgia and Maryland. "These projects, if built, would position the United States to be the dominant LNG exporter in the world," said DOE in a statement. Clearance for the construction and operation of LNG export terminals is left to the Federal Energy Regulatory Commission, while DOE makes a national interest determination that looks largely at the expected impact of an export on the US economy and consumers. 

Developing new liquefaction capacity in an era of LNG oversupply -  In only three years, the international liquefied natural gas (LNG) market has undergone a major transformation. The old order, founded on long-term, bilateral contracts with LNG prices linked to crude oil prices, is being replaced by a more-fluid, more-competitive paradigm. That’s good news for LNG buyers, who are benefiting from a supply glut and lower LNG prices—the twin results of slower-than-expected demand growth in 2014-15 and the addition of several new liquefaction/LNG export facilities in Australia and the U.S. But the new paradigm poses a challenge for facility developers: How do they line up commitments for new liquefaction/LNG export capacity that will be needed a few years from now in a market characterized by LNG oversupply and rock-bottom prices? Today we begin a two-part series that considers the hurdles developers face and which types of projects may have the best prospects. When the first wave of U.S. liquefaction plants and LNG export facilities was in early stages of development a while back, LNG buyers and marketers were willing to enter into long-term, take-or-pay contracts for significant amounts of liquefaction capacity. These Sales and Purchase Agreements (SPAs) provided the financial underpinning for multibillion-dollar projects like Cheniere Energy’s Sabine Pass LNG facility in southwestern Louisiana, where three liquefaction trains already are operating, a fourth is gearing up to run, and a fifth is nearing completion (see Train Kept A-Rollin’). Banks and other lenders had confidence that these projects, backed by 20- or 25-year SPAs signed by creditworthy counterparties, would generate the revenue needed to pay off what their developers had borrowed. In the past few years, however, many of the fundamentals governing the international LNG market have shifted, and developers of a prospective second wave of U.S. liquefaction/LNG export projects will need to be creative in lining up the commitments (and the financing) required to make their projects a go. Most important, perhaps, the old order, with its bilateral deals and oil-linked prices, continues to be undone. In fact, Cheniere’s Sabine Pass LNG contributed to this undoing by offering LNG pegged to the price of U.S. natural gas: the sum of 115% of the Henry Hub gas price plus a flat liquefaction fee.

Cheniere ships LNG to Poland as Europe seeks less reliance on Russian gas | Fuel Fix: The U.S. is set to ship its first shale gas to a member of the former Soviet bloc as Europe seeks to cut its dependence on fuel from Russia. Poland’s state-owned PGNiG SA bought a spot liquefied natural gas cargo from Cheniere Energy Inc.’s Sabine Pass plant for delivery in June to the nation’s Baltic Sea import terminal, the first such contract for Central and Eastern Europe, it said Thursday. No LNG has been shipped to northern Europe since Sabine Pass started exports more than a year ago. Poland may offer a new outlet for Cheniere, which said it’s targeting emerging markets as new production facilities from Australia to the U.S. lead to a glut of the fuel. Poland’s Law & Justice government has sought to cut the nation’s dependence on Russia’s Gazprom PJSC for more than two-thirds of gas supplies, stating it has no plan to extend a long-term supply contract beyond 2022 and plans new infrastructure including a pipeline to Norway. The deal comes after PGNiG opened an LNG trading office in London in February and “proves Poland is a gateway for American LNG to central and eastern Europe,” Chief Executive Officer Piotr Wozniak said in a statement. The agreement is historic and “commercially attractive,” Polish Prime Minister Beata Szydlo said in an interview with TVP Info television on Thursday, without being more specific on pricing.

Distillate export boom keeps U.S. refiners busy: Kemp - (Reuters) - U.S. refiners have become a powerhouse of distillate exports, causing the supply-demand balance for fuels from the middle of the barrel to tighten in the United States despite a very warm winter.Exports of distillate fuel oil rose to a record 1.4 million barrels per day (bpd) in the week ending April 14, according to the U.S. Energy Information Administration.So far this year, exports have averaged almost 1.1 million bpd, during what is normally a seasonal lull, and will likely accelerate over the summer months.The result is that U.S. stocks of distillates, such as home heating fuel and diesel fuel, have emerged from the end of winter looking somewhat tight despite heavy levels of refinery processing.Distillate stocks stood at 148 million barrels on April 14, which was 19 million barrels above the 10-year average but 13 million barrels below the level at the corresponding point in 2016 ( have been tightening against both the prior-year level and the 10-year average since the start of February and only high levels of refinery processing have kept them from drawing down even further ( so, stocks have fallen by almost 15 million barrels since the start of 2017 compared with an average decline of about 10 million barrels and a build of more than 2 million barrels in 2016 ( have fallen even though heating demand has been 2 percent lower than in 2016 and 17 percent below the long-term average because of the unusually mild weather across the country this winter ( distillate is being exported to Mexico, Brazil and other countries in Latin America and the Caribbean, where ageing local refineries are struggling to keep up with growing demand.Smaller volumes have also been shipped to markets in Europe, according to U.S. customs data analysed by the EIA.Exports are set to remain strong given the chronic shortage of distillate refining capacity across Central and South America.But U.S. domestic distillate consumption is also forecast to rise again in 2017 after falling significantly in 2016 and 2015 which will tighten the supply-demand balance even further.  EIA forecasts that domestic consumption will rise by 70,000 bpd in 2017 and another 120,000 bpd in 2018 (“Short-Term Energy Outlook”, EIA, April 2017).Hedge funds and other money managers have responded by building one of the largest bullish positions in distillate since crude oil prices crashed in the middle of 2014.

Icahn's oil refiner reports plunge in biofuels bill in first quarter | Reuters: Biofuels compliance expenses for CVR Energy's refining unit fell to the lowest level in almost five years during the first quarter, the company said on Thursday, as the U.S. government weighs an overhaul of its renewable fuels policy. The cost of compliance credits required by the Renewable Fuel Standard (RFS) have fallen sharply in recent months, driven in part by a proposal to alter the regulation by shifting the blending burden away from refiners to fuel terminals. The proposal was made in February by Carl Icahn, the majority owner of CVR Energy and an informal adviser to President Donald Trump on regulation. The White House is considering it. CVR said it spent $6.4 million on the compliance credits in the quarter. That was down 85 percent from last year, the company said on a conference call with investors to discuss quarterly earnings. CVR attributed the decline in part to lower prices. Renewable fuel credit prices averaged about 53 cents in the first three months of 2017, about one-third lower than the prior-year, Oil Price Information Service data show. CVR declined to explain in greater detail the full reasons for the sharp reduction. "We don't discuss our market activity," Chief Executive Officer Jack Lipinski said, when asked by an analyst on the call about how to square the low first-quarter expenses with CVR's projections of a full-year cost of $170 million. The first-quarter tab was CVR's lowest since the second quarter of 2012, a review of Securities and Exchange filings showed. CVR positioned itself to slash regulatory costs by deferring the purchase of some $186 million worth of credits it needed to satisfy its biofuels requirements at the end of 2016, the company said in filings in February. Lipinski and Icahn have argued that the U.S. renewable fuels program unfairly punishes independent refiners by pushing them into a highly speculative credit market.

Maiden Bakken oil cargo to Asia ships out, with more to come | Reuters: The first ever reported export of North Dakota's crude oil to Asia left port last month, according to a shipping document seen by Reuters on Wednesday, in what is expected to be the first of numerous cargoes once the key Dakota Access pipeline starts moving oil in May. Swiss-based Mercuria Energy Trading S.A. loaded more than 600,000 barrels of Bakken crude, as well as some Mars Sour crude, in late March off the coast of Louisiana onto the very large crude carrier (VLCC) Maran Canopus, destined for Singapore, according to the bill of loading and ship tracking data. The burgeoning appetite for U.S. crude among Asian refiners could be a boon for Bakken crude, especially when the Dakota pipeline starts up. That line can carry 470,000 barrels per day of oil from North Dakota's Bakken play to the Gulf, the starting point for the lion's share of U.S. oil exports. At least two Asian refiners told Reuters that they are interested in Bakken light crude because of the products it can yield through refining. "There seems to be increasing demand for light quality crude in Asia," said Michael Cohen, head of energy commodities research at Barclays. "I think with Dakota Access coming online, it makes the pipeline route from the Bakken to the Gulf Coast more economical." Mercuria could not immediately be reached for comment. With the start of Dakota Access (DAPL), Bakken producers such as Hess Corp and Continental Resources for the first time will have a direct route to export terminals on the Gulf Coast, better connecting them to international markets.

Texas oil and gas industry in ‘new cycle of expansion’ -- The oil and gas industry, after suffering through the worst downturn in at least three decades, is embarking on “a new cycle of expansion” as companies send dozens of new rigs into Texas oil fields, drill hundreds of more wells and hire thousands of workers. The rig count is up 80 percent in Texas over the first quarter last year. Drilling permits have doubled, to 1,300. And state oil and gas employment has risen by 9,000 from the trough in September, according to Texas Petro Index, a monthly report on the state’s oil and gas activity released this week. Energy companies have added jobs in Texas for five consecutive months, according to the Texas Workforce Commission, while manufacturing, which is tied closely to the state’s oil and gas industry, added a record number of jobs in February. Meanwhile, a recent survey by the Federal Reserve Bank of Dallas found oil and gas executives upbeat, reporting increases in oil and gas production, drilling equipment needs, capital expenditures and salaries and benefits, and expecting an even better 2018.

Permian Basin oil production and resource assessments continue to increase - Crude oil production in the Permian Basin is expected to increase to an estimated 2.4 million barrels per day (b/d) in May, based on estimates from EIA’s Drilling Productivity Report. Between January 2016 and March 2017, oil production in the Permian Basin increased in all but three months, even as domestic crude oil prices fell. As production in other regions fell throughout most of 2015 and 2016, the Permian provided a growing share of U.S. crude oil production.  With rising oil prices over the past year, the Permian continues to be attractive to drillers, as reflected in rising rig counts. As of April 21, 2017, the number of rigs in the Permian Basin reached 340, or 40% of the 857 total oil- and natural gas-directed rigs operating in the United States. The Permian rig count reached as high as 568 in late 2014 before falling to a low of 134 in spring 2016. The land area over the Permian Basin covers more than 75,000 square miles in 43 counties of western Texas and southeastern New Mexico. However, more than half of the rigs that have been added in the Permian are concentrated in just five counties: Reeves, Loving, Midland, and Martin counties in Texas and Lea County in New Mexico. Oil production from these five counties averaged 882,000 b/d as of November 2016 and accounted for approximately 42% of total Permian Basin oil production (2.1 million b/d) in that month. As more rigs continue to be moved to these counties, production from these areas is expected to continue to increase, which will drive the increases in total Permian production.  Recent geological surveys have further explored the resources contained in the Permian Basin. In November 2016, the U.S. Geological Survey (USGS) estimated that technically recoverable tight oil and shale gas resources in the Midland Basin portion of Texas’ Permian Basin (specifically the Wolfcamp shale formation) could exceed 20 billion barrels of oil, 16 trillion cubic feet of natural gas, and 1.6 billion barrels of hydrocarbon gas liquids. The technically recoverable resource estimate for tight oil in the Midland is higher than any previous USGS assessment of tight oil resources in any domestic resource basin.

Railroad Commission rejects ranchers’ appeal to reconsider Hilcorp enhanced oil recovery project – The Railroad Commission of Texas, the state’s oil and gas regulator, rejected on Tuesday an appeal from a Gulf Coast water conservation district to block several injection wells, which local cattle ranchers fear will pollute their groundwater supply. For years, the Texana Groundwater District has been fighting Houston-based Hilcorp Energy over an enhanced oil recovery project in Jackson County that will recover 60 million barrels of oil from an 80-year-old oilfield. Hilcorp is injecting wastewater — a by-product of fracking — and carbon dioxide underground to help force oil to the surface. Locals say unplugged and poorly plugged wells riddle the oilfield, where they have found leaks and spills of chemicals in years past. The ranchers and farmers in the area wanted the commission to require groundwater monitoring as a condition of the project, but the commission opted to let Hilcorp run its own groundwater monitoring program.Ranchers like Johnny Dugger, who relies on a well to bring water to hundreds of cattle on his land, say their concerns have been sidelined by a regulatory agency that consistently favors industry interests. Dugger and others have said they support the project, but on the condition that the groundwater be independently monitored. The Railroad Commissioners, all of whom accept hundreds of thousands of campaign donations from the oil and gas industry, have said those donations do not affect their impartiality.

Exxon released 10 million pounds of air pollution in Texas - ExxonMobil has lost a legal fight against environmentalists in its home state of Texas over air pollution at one of the oil giant's oldest refineries. A Texas court ordered Exxon (XOM) on Wednesday to pay $20 million in fines for pollutants released into the air at the Baytown, Texas refining and chemical plant outside of Houston. U.S. District Judge David Hittner cited "serious" violations that resulted in the release of about 10 million pounds of pollutants into the atmosphere. The judge ruled in favor of the Sierra Club and Environment Texas Citizen Lobby, finding Exxon violated the Clean Air Act 16,386 times between October 2005 and September 2013. The court found that Exxon enjoyed $14.2 million in economic benefits by delaying the installation of infrared imaging and other monitoring improvements at the facility, which makes everything from jet fuel to plastic. "Today's decision sends a resounding message that it will not pay to pollute Texas," Neil Carman, clean air program director for the Sierra Club's Lone Star Chapter, said in a statement. "We will not stand idly by when polluters put our health and safety at risk." In addition to the civil penalties, Exxon has also been ordered to pay the environmental groups' legal and expert fees.

 How Rising Sand Prices and Supply Concerns Threaten Producer Profitability - The techniques used to wring increasing volumes of crude oil, natural gas and natural gas liquids (NGLs) out of shale continue to evolve, and as they do, producers are facing mounting costs for securing frac sand and for disposing of produced water from the wells. These costs are squeezing producer profits, and—in an era of sustained low hydrocarbon prices—sometimes even flip production economics from favorable to unfavorable. Today we continue our surfing-themed series on sand costs and water-disposal expenses with a look at how sand use in shale plays has evolved—and how these changes affect the bottom line.  In Part 1 of this blog series, we discussed how the trend toward much longer laterals and high-intensity well completions has significantly increased the volume of frac sand being used, with some individual well completions using enough sand to fill 100 railcars or more. We also noted that an even bigger concern for many producers is the rising cost of disposing of produced water—that is, the water that emerges with hydrocarbons from these supersized wells. As we said in Tales of the Tight Sand Laterals, freeing the vast amounts of oil, gas and NGLs trapped in shale and tight sands requires horizontal drilling to access the long, horizontal layers where the trapped hydrocarbons reside, and proppant (natural sand, ceramics and resin-coated sand) that, when forced out of the horizontal portion of wells at high pressure (using water and other fluids), fracture openings in the surrounding shale/tight sands. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas, NGLs and produced water to flow into the well bore.

 Demand and the Frac Sand Example - A nice lively example of shifts in demand comes from the demand for sand used in hydraulic fracking operations. As the Wall Street Journal recently reported, "Latest Threat to U.S. Oil Drillers: The Rocketing Price of Sand: The market for a key ingredient in fracking is again surging," A couple of years ago, the USGS published "Frac Sand in the United States—A Geological and Industry Overview,"  with a section on "Frac Sand Consumption History" contributed by Donald I. Bleiwas. The report includes this useful figure, in which the bars show the metric tons of sand used for fracking (measured on the left axis); the numbers above the bars show the number of horizontal drilling rigs in operation in the US during any given week of the year; and the line shows the value of the sand (right axis). The basic lesson is fracking is up and it is using a lot more sand. If you look a little more closely at the years from 2010 to 2012, you can see that the number of horizontal drilling rigs rose from 822 to 1,151, but the quantity of sand being used more than doubled.  This data can be updated a bit. According to the Baker Hughes North American Rotary Rig Count, the number of horizontal rigs dropped in 2015 and stayed fairly at this lower level in 2016, as the price of oil dropped, but more recently the number of horizontal rigs is rising again.  For an update through 2016 on production levels and price, the USGS publishes an annual fact sheet on various minerals. Fracking sand falls into the category of "Industrial Sand and Gravel," of which more than 70% is used for fracking. Here's the relevant table from the 2017 factsheet. Thus, back in 2012 there was about 50 million tons of total sand production, with about 70% of it going to fracking. By 2014, output of sand had doubled--mostly due to increased demand from fracking. The price per ton rose from $52 in 2010 to $106 per ton in 2014. Then output and price sagged in 2015 and 2016. The Wall Street Journal story reports rising prices for sand this year. It also notes: "In Louisiana, Chesapeake Energy Corp. recently pumped a record 50.2 million pounds of sand into a horizontal well roughly 1.8 miles long, piquing the interest of some rivals who are now weighing whether they can do the same." And here's a figure showing quantities of sand being used in different fields. No world-changing lessons here. The higher prices for sand don't seem likely to make much difference in the quantity of fracking, least for now, because sand is a fairly small slice of the overall cost. Environmental concerns are being already being raised in some US locations about the extent of sand-mining, and those concerns are likely to become more acute as the demand for fracking sand rises. But my guess is that if it becomes difficult to increase the supply of fracking sand, then those doing the fracking will either find ways to economize on sand or will figure out some alternative substances that would fill a similar purpose.

Buffalo Pipeline Leaks 19,000 Gallons of Crude Oil on Farmland in Oklahoma -   The Buffalo Pipeline, owned by Houston-based Plains All American Pipeline, L.P. , leaked approximately 450 barrels, or roughly 18,900 gallons, of crude oil onto farmland in Kingfisher County, Oklahoma last week. Wheat farmer and cattle rancher Steve Pope told local TV station KFOR that he has lost an estimated 120 acres of pasture and wheat crop from the spill.   The National Response Center on Sunday listed "internal corrosion" of the pipeline as the likely cause of the discharge. Plains All American Pipeline released a statement about the spill: "On Friday, April 21, 2017, Plains All American Pipeline, L.P. experienced a crude oil release on our Buffalo Pipeline, near Loyal, Okla. We are following our emergency response plan, and our staff is working with regulators and affected landowners. Our current priorities are to ensure the safety of all involved and limit the environmental impact of the release.  The oil spill happened less than 1,000 feet from the nearby Cooper Creek, which feeds into the Cimarron River, but the spill was contained on Pope's fields. Cleanup is underway at the site of the leak.  Pope expressed concerns about the damage from the spill as well as President Trump 's proposed budget cuts to the U.S. Environmental Protection Agency ( EPA ), now led by former Oklahoma Attorney General Scott Pruitt . "What bothers me is we keep seeing the EPA being cut so much," Pope told KFOR.  "A lot of the regulations that have been put on the oil companies are there for a reason.."

State braces for protests during hearings on Keystone XL pipeline - The Nebraska Public Service Commission is setting aside five days in August to take comments on the proposed route of the Keystone XL oil pipeline. TransCanada has filed for approval of the route from north-central to southeast Nebraska. The routing of the Dakota Access pipeline led to protests and arrests in North Dakota. Governor Pete Ricketts says they’ll prepare for similar trouble here. “Certainly we want to protect people’s free speech rights and allow them to be able to protest but we also have to do it in a way that is protesting lawfully and that’s not what we saw in North Dakota,” Ricketts says. “We saw people violating private property rights, trespassing, and in some cases, it started to turn violent.” Ricketts says there are concerns about protesters from elsewhere joining in. “There’s certainly going to be people in Nebraska with legitimate concerns about the pipeline and they’ll want to express those, but if we have people coming in from out-of-state, those are the ones that can end up being dangerous,” Ricketts says. “They really don’t care about the local Nebraskans. They’re there for a political agenda.” Ricketts says oil pipelines like Keystone XL are still needed to fuel the economy. “We want to be responsible stewards of the land but we can’t shut down fossil fuels or our society would come to a screeching halt,” the governor says. “We really have to watch out for these radical environmentalists who are coming in from outside the state. These are the people who are typically going to be causing more problems, not the people from inside the state who really want to express their concerns about the pipelines.”

Newspaper Owned By Fracking Billionaire Leaks Memo Calling Pipeline Opponents Potential “Terrorists” - Steve Horn – The U.S. Department of Homeland Security (DHS) has published a report titled, “Potential Domestic Terrorist Threats to Multi-State Diamond Pipeline Construction Project,” dated April 7 and first published by The Washington Examiner. The DHS field analysis report points to lessons from policing the Dakota Access pipeline, saying they can be applied to the ongoing controversy over the Diamond pipeline, which, when complete, will stretch from Cushing, Oklahoma to Memphis, Tennessee. While lacking “credible information” of such a potential threat, DHS concluded that “the most likely potential domestic terrorist threat to the Diamond Pipeline … is from environmental rights extremists motivated by resentment over perceived environmental destruction.”  The Washington Examiner is owned by conservative billionaire Philip Anschutz, a former American Petroleum Institute board member. His company, Anschutz Exploration Corporation, is a major oil and gas driller involved in the hydraulic fracturing (“fracking”) in states such as Wyoming, Colorado, and New Mexico. In his story, Paul Bedard, the Examiner columnist who published the document , did not explain how he obtained the document marked “Unclassified / For Official Use Only,” and the memo is not up on the DHS website. The DHS also did not respond to multiple requests for comment, nor did Fox News 13 in Memphis, which also ran a story on the memo.  Anschutz, a major Republican Party donor, formerly owned the company Pacific Energy Partners,which was sold to Lehman Brothers and then immediately to Plains All American for $2.4 billion in 2006.  The DHS report isn’t the only sign of backlash against pipeline opponents unfolding in the Sooner State.  On February 28, the Oklahoma House of Representatives passed HB 1123, which was introduced by Republican Rep. Scott Biggs and sets harsh mandatory punishments for trespassing and a list of other crimes related to “critical infrastructure.” In the most severe scenario, citizens could receive a felony sentencing, $100,000 fine, and/or 10 years in prison if their actions “willfully damage, destroy, vandalize, deface or tamper with equipment in a critical infrastructure facility.”

Trump Signs Executive Order Targeting National Monuments, Could Open Up Lands for Oil and Gas Development - President Trump signed an executive order Wednesday ordering a review of the Antiquities Act and national monuments on more than 100,000 acres. The review enables the Department of Interior to examine whether any of the monument designations have led to a "loss of jobs, reduced wages and reduced public access." "The Antiquities Act does not give the federal government unlimited power to lock up millions of acres of land and water," President Donald Trump said during a brief ceremony today flanked by Vice President Mike Pence and Sec. of the Interior Ryan Zinke. He added that it was "time to end this abusive practice." The 1.35-million acre Bears Ears National Monument in Utah is one of the first targets for review. The monument was created by President Obama last year and has sparked major controversy between Republican lawmakers and conservationists. Utah Gov. Gary Herbert and Utah's congressional delegation led by Congressmen Rob Bishop and Jason Chaffetz and Senators Orrin Hatch and Mike Lee have launched a campaign to abolish national monument. More than 270 million acres of American land and waters are potentially at risk—an area two and a half times the size of California. GOP lawmakers have accused President Obama, who designated more monuments than any other president, of abusing the Antiquities Act to protect land from fossil fuel development. "By potentially rolling back safeguards for lands and waters that are currently protected from destructive development for generations to come, Trump is carving up this beautiful country into as many corporate giveaways for the oil and gas industry as possible," said Diana Best of Greenpeace USA . "People in this country who cannot afford the membership fee at Mar-a-Lago want safe water they can drink and public lands for their communities to enjoy."

Trump wants to make it easier to drill in national parks. We mapped the 42 parks at risk (Vox) It’s no secret that oil and gas companies are on the hunt for new places to drill. But the quest for more fossil fuels could heat up in places you might not expect: our national parks.With President Donald Trump’s executive order on energy, federal agencies are now reviewing all rules that inhibit domestic energy production. And that includes regulations around drilling in national parks that, if overturned, could give oil and gas companies easier access to leases on federal lands they’ve long coveted."This opportunity is unique, maybe once in a lifetime," Jack Gerard, president of the American Petroleum Institute lobby group, told Reuters. It could also put some of America’s most pristine and ecologically sensitive areas at risk of oil spills, ground contamination, and explosions.  There are currently more than 500 active oil and gas wells spread across 12 national parks, as you can see in the map below. In 2015, drilling on federal lands made up nearly a fifth of overall US production.  If you’re wondering why it’s legal to drill in national parks in the first place, it’s due to a little-known set of rules called the “9B regulations.”   Introduced in 1978, the 9B rules manage issues of “split estate,” or instances where the federal government owns the surface land but private individuals and companies own the mineral rights below ground. As Nicholas Lund, a senior manager at the National Parks Conservation Association, told Vox, these well rights often predate the parks. “A lot of the reasons these wells exist is because when the federal government purchased the park, they weren’t able to obtain the well,” he said. “Either the owners refused to sell them the subservice area or the government set park boundaries that included oil and gas in it.” The rules were last updated in 2016 and include a number of basic safety and environmental measures to mitigate the impact of drilling in national parks. But now, under the Trump administration, those safeguards are at risk of being watered down or repealed, shifting the burden to protect national parks to environmental watchdogs. And 30 additional national parks with split estate situations could be opened for drilling in the future.

Trump is expected to sign orders that could expand access to fossil fuels    - After moving last month against Barack Obama’s efforts to limit fossil fuel exploration and combat climate change, President Trump will complete his effort to overturn environmental policy this week, signing two executive orders to expand offshore drilling and roll back conservation on public lands. On Wednesday, Mr. Trump signed an executive order directing his interior secretary, Ryan Zinke, to review national monuments designated by previous presidents under the Antiquities Act of 1906, aiming to roll back the borders of protected lands and open them to drilling, mining and logging. The president is then expected to follow up on Friday with another executive order aimed at opening up protected waters in the Atlantic and Arctic Oceans to offshore drilling. The order would direct Mr. Zinke to revisit an Obama administration plan that would have put those waters off limits to drilling through 2022. Friday’s order is also expected to call for the lifting of a permanent ban on drilling in an area including many of those same waters — a measure Mr. Obama issued in December 2016 in a last-ditch effort to protect his environmental legacy from his drilling-enthusiast successor. The moves — just before Mr. Trump’s 100th day in office — would begin to fulfill a central campaign promise to unleash a wave of new oil and gas drilling and create thousands of jobs in energy. The reality is more complicated, experts in the law, policy and economics of energy said. The orders are not likely to lead either to significant new energy development or to job creation in the near future. With oil prices around $50 a barrel and production already glutting world markets, few oil companies are making plans to expand into costlier, riskier offshore drilling. 

Anadarko Crashes To 7-Month Lows; Shuts 3,000 Wells In Colorado After Explosions -- Anadarko shares are down over 7% to 7-month lows following a home blast near a vertical well operated by the company causing it to shut all its vertical wells in northwestern Colorado while it investigates the cause of the blast, which killed two people.As's Irina Slave reports, the number of wells in the area that the company operates is more than 3,000, with a combined output of 13,000 net barrels of oil per day.Anadarko has tasked local field personnel to check the production equipment at the wellheads and the underground lines that connected them. The local Frederick-Firestone Fire Protection District is meanwhile conducting its own investigation, and told Bloomberg that the proximity of the oil well to the home where the blast occurred is one aspect to be considered, adding that the cause for the explosion has yet to be identified. There is no threat to other homes in the vicinity, the authorities said. Anadarko, which is reporting Q1 2017 financial results at the end of the month, last booked a net loss of $3.07 million for the fourth quarter of 2016, on revenues of $7.87 million. Now,some analysts are again expecting a loss: Seaport Global Securities expects the company to report a net loss of $0.41 per share, which is an improvement of the company’s earlier forecast for Anadarko, which saw it posting a net negative $0.44 per share for the first quarter of the year.The company plans to boost onshore oil production by 13 percent this year from last, when it was 31 percent lower than the 2015 output. Over the medium term, Anadarko projects a minimum 600,000 bpd from its DJ Basin and Delaware Basin acreage, provided prices stay between $50 and $60 a barrel. In 2016, this output totaled 287,000 bpd, and this year’s production rate is set at 360,000 bpd.

As Firestone investigation continues, state won't shut down other operators' older wells - Not only is the Frederick-Firestone Fire Protection District investigating the cause of a deadly blast at a Firestone home last week, but the Colorado Oil and Gas Conservation Commission and an international petroleum company have confirmed their involvement in the probe. Fire investigators, police and environmental consultants as well as oil and gas crews continue to look for clues in the rubble at 6312 Twilight Ave., where the blast and fire killed two men in the basement and a woman was seriously burned. Meanwhile, construction workers continue work on future apartments behind the neighborhood. Less than 200 feet from the southeast corner of the house sits a vertical oil and gas well owned by Anadarko Petroleum Corporation. It has since been shut off among more than 3,000 of the company's older wells in response to the tragedy, according to the company Wednesday. On Thursday, state officials said the company's decision was voluntary, and therefore the state will not require other oil and gas operators in Colorado to shut their wells. Boulder County commissioners called for other operators to shut vertical wells in their county.Matt Lepore, the commission's director, said in a press briefing that the Oak Meadows neighborhood has been deemed safe from methane and hydrocarbon gases, based on an environmental investigation. But he said a consultant on Wednesday conducted follow-up testing for gases in the soil surrounding the rubble of the home. Those findings have not yet been released. Similarly, the Frederick-Firestone Fire Protection District has not yet released an origin or cause of the deadly explosion, and the multi-agency investigation led by the local fire district is ongoing. Lepore said the commission's role "is limited to our jurisdiction, which would not include all of the aspects of the investigation."

Lawmakers: Conclusions Shouldn't Be Drawn From Explosion Development – After the house explosion in Firestone that prompted company Annadarko to close more than 3,000 vertical wells, CBS4 looked into regulations regarding development and proximity to wells. The fatal April 17 blast in the Weld County town happened near a gas well, and its cause is still under investigation. There are currently no state laws regulating how far away developers should build homes from a gas well, and lawmakers in Colorado are cautioning that not enough is known about the explosion to draw any conclusions at this point. Those on both sides of the oil and gas debate agree that the explosion shouldn’t be used to further any political agenda. While the state controls setbacks for oil and gas developers — new wells can’t be drilled within 500 feet of a house — local governments determine how far a new house can be built from an existing well. In the case of the Firestone incident, the well was present about 22 years before the house was built. While Republicans and Democrats disagree on how far apart wells and houses should be, at this point neither side is suggesting the state should make decisions about where housing developments should be built. “When it comes to figuring out land use, nobody better knows that then the local residents, and they’re the ones who should make the decision. Not the Colorado Oil & Gas Conservation Commission, not the state legislature,” said Republican state Sen. Jerry Sonnenberg, who represents Sterling. Even if the investigation into the house explosion finds the gas well is to blame, CBS4 Political Specialist Shaun Boyd said there isn’t really any more time for new legislation during this Colorado legislative session. There are only two weeks left before it wraps up.

Oil And Gas Industry Power Builds Wells Near Schools In Colorado, Trumping Environmental Concerns - International Business Times - The political power of the oil and gas industry has been on display in Colorado this Spring. When an explosion earlier this month incinerated two men in a Colorado home near an aging oil well, the catastrophe could have prompted lawmakers to pass an initiative forcing the oil and gas industry to site such wells farther away from schools. But it was too late: Only days before the disaster, Republican lawmakers bankrolled by fossil fuel industry corporations had killed the bill to do just that. The legislation passed Colorado’s Democratic-controlled House just after a University of Colorado study suggested a possible link between child cancer rates and proximity to oil and gas sites. Despite that, the Republican-controlled upper chamber voted the measure down — only months after the state Senate GOP was raking in five- and six-figure checks from major oil and gas corporations operating in the state. An International Business Times review of campaign finance data found that individual and corporate donors from the oil and gas industry pumped more than $738,000 into Colorado Republican senators’ election fund during the 2016 election cycle, which immediately preceded GOP lawmakers’ move to kill the setback bill. In total, oil and gas industry donations comprised nearly a third of all the cash the fund pulled in during the election. The donations included a $45,000 contribution from Anadarko, whose well exploded in mid-April and which this week said it is shutting down 3,000 vertical wells across northeastern Colorado.  IBT reviewed campaign finance records compiled by the nonpartisan National Institute on Money in State Politics. Those records showed that the hundreds of thousands of dollars from the oil and gas industry flowed to the Senate Majority Fund, whose website says it is “dedicated to retaining a Republican majority in the Colorado Senate.” In all, since the 2014 election when the GOP took back the Colorado Senate, the oil and gas industry has delivered $1.1 million to the Senate Majority Fund, and a total of $1.25 million to Colorado Republican Party committees. Over the same period, oil and gas interests gave just $16,235 to Democratic Party committees in the state.

Oil Pipeline Spills 1,050 Gallons Into North Dakota Tributary - A pipeline in western North Dakota spilled an estimated 756 gallons of oil and 294 gallons of saltwater, a drilling byproduct, into a tributary of the Little Missouri River, the Associated Press reports. The spill was discovered April 22, approximately 5 miles southwest of the city of Marmarth and was reported that same day, the North Dakota Department of Health announced . The spill originated from a buried three-inch pipeline operated by Oklahoma City-based Continental Resources . The spill polluted a 14-mile stretch of Little Beaver Creek but did not reach the larger waterway. "At the time of the release there was a high-enough flow in the Little Missouri that it was actually pushing water back up into Little Beaver Creek, so that prevented any from getting into the Little Missouri," Health Department environmental scientist Bill Suess explained to the AP. Suess said that the cause of the leak is unknown, with excavation work still underway. More than three-fourths of the discharge has been cleaned up as of Sunday. He added that the thick consistency of the oil causes it to clump together in the water and form balls that float down the river, making it "pretty easy to collect."  There were no immediate indications of damage to wildlife or livestock, the AP said.

Oil pipeline spill pollutes North Dakota tributary - — A 1,050-gallon oil pipeline spill in western North Dakota polluted a tributary of the Little Missouri River but was prevented from flowing into the larger waterway by its fast-moving current, a state Health Department official said Tuesday. An estimated 756 gallons of oil and 294 gallons of saltwater, a drilling byproduct, leaked from a pipeline in Bowman County operated by Oklahoma City-based Continental Resources. The spill was discovered Saturday about 5 miles southwest of Marmarth, and more than three-fourths of the mess had been cleaned up as of Sunday. Health Department environmental scientist Bill Suess was traveling to the site Tuesday and didn’t have an update on cleanup. Continental Resources spokeswoman Kristin Thomas didn’t immediately respond to a request for comment. The company reported the spill Saturday and state officials went immediately to the site, which is in a remote area with little access, according to the Health Department, which announced the spill Monday afternoon. There was no danger to the public due to the delay, as no one lives in the area and anyone wishing to swim or fish in the creek would have been warned away by company and state officials at the scene, Suess said. The cause of the leak was unknown, with excavation work still underway.   The spill polluted a 14-mile stretch of Little Beaver Creek. The company believes fewer than 50 gallons made it into the water, with the Health Department estimating about double that, Suess said. “At the time of the release there was a high-enough flow in the Little Missouri that it was actually pushing water back up into Little Beaver Creek, so that prevented any from getting into the Little Missouri,” Suess said. The Little Missouri is a tributary of the Missouri River. 

Greenpeace gatecrashes Credit Suisse shareholder meeting | Reuters: Activists from environment group Greenpeace gatecrashed Credit Suisse's annual shareholder meeting on Friday to protest against the Swiss bank's dealings with companies behind the Dakota Access Pipeline (DAPL). Greenpeace unfurled a banner criticizing the crude oil pipeline from the stadium ceiling during the speech of Chief Executive Tidjane Thiam, with two people on wires holding the banner. "I am a democrat and a great believer in freedom of expression," Thiam said. "I will continue my speech. Everyone has a right to express their views." The banner was lifted back up around 15 minutes later. Credit Suisse, Switzerland's second-biggest bank, said in April it was not involved in project financing for the DAPL. "Allegations that Credit Suisse is the biggest lender to DAPL are false and are firmly rejected by the bank," it said. "Credit Suisse has business relationships with companies undertaking the construction and operation of the pipeline." The 1,172-mile (1,885-km) Dakota Access line running from North Dakota to Illinois drew international attention in 2016 after the Standing Rock Native American tribe sued to block completion of the final link, saying it would desecrate a sacred burial ground. Environmentalists also argued that potential leaks along its length would risk poisoning the water supply for some 17 million Americans.

Feds Say It's Too Dangerous To Share Dakota Access Oil Spill Report | The Huffington Post: A federal agency won’t release a study about the potential effects of a Dakota Access Pipeline oil spill because it claims information in the report could put lives at risk. The U.S. Army Corps of Engineers made the claim while rejecting a Freedom of Information Act request from MuckRock, a journalism website that collects and publishes government documents. MuckRock’s co-founder Michael Morisy had requested in March a copy of an Army Corps environmental assessment that looked at the possible impact of a pipeline leak on Lake Oahe in North Dakota.“The referenced document contains information related to sensitive infrastructure that if misused could endanger people’s lives and property,” said Army Corps lawyer Damon Roberts in a denial letter that MuckRock published Tuesday.Rather than editing out sensitive details, Roberts withheld all materials related to the request. “I understand exempting some details, but knowing the impact of a natural disaster should be public,” Morisy told HuffPost. “I was very disappointed.” MuckRock plans to appeal the Army Corps’ decision, Morisy said. The assessment’s existence was mentioned in an internal Army Corps memo about the controversial 1,172-mile pipeline, which will carry North Dakota crude oil through South Dakota and Iowa to Illinois.The memo mentioned that several documents were withheld from the public and from representatives of a Native American tribe that has objected to the project “because of security concerns and sensitivities.”

Here is the real toxic future we face if we allow fracking to continue - The environmental effects of shale gas are varied—wide ranges of importance and risk level. First, many say that the burning of natural gas emits fewer greenhouse gases per unit of energy than burning alternative energy sources like oil or coal; however this may not necessarily be true when observing the full life cycle of natural gas, especially taking extraction into account. Second, another key environmental impact is the amount of water needed to access shale gas through hydraulic fracking. Estimates vary, but one study from Duke University found that 250 billion gallons of water was used to extract unconventional shale gas and oil from hydraulically fractured wells in the United States from 2005 to 2014. During the same period, the fracked wells generated about 210 billion gallons of wastewater. Injecting such vast amounts of water into the earth can also cause minor earthquakes, but greater magnitude ones could occur if there is a pre-stressed fault in the same location. Another environmental impact is the risk of “slickwater” (a blend of water and added chemicals to improve viscosity) containing harmful chemicals and contaminating water under the ground or migrating upwards through aquifers. This contamination at the development and production stages is extremely dangerous—deep groundwater has a much higher salinity than shallow groundwater, which is fresh, and the two do not mix naturally. In the process of drilling one must be aware of the various aquifers present so the fresh groundwater does not become contaminated by the deeper saline water. The construction of wells in the development stage is the most common method for groundwater and ecosystem contamination when poorly built. A poorly constructed dam gives large potential for fluids to contaminate groundwater and the surrounding environment through fractures in the rock. These are just a few of many plausible negative environmental consequences of extracting shale gas, but some of the most significant environmental impacts even arise from the construction of wells, including accidental spills of oils, drilling muds, and potentially toxic “slickwater.” Besides strictly environmental impacts, there are social ones too. The need for large volumes of water over short time periods for hydraulic fracking can cause stress at the coldest, driest, and most critical times of the year for communities surrounding fracking sites. There also can be spills associated with storing, mixing and pumping slickwater, meaning there is a chance chemicals involved in slickwater could infiltrate groundwater and the soil, causing potential health issues. Drilling rigs running all day and night create noise heard up to 4km away, and volatile organic compounds which contribute to smog can leave odors up to 600m from a fracking platform.

Top Trump adviser calls for reviving controversial natural gas project on Oregon’s coast -  A top adviser to President Trump on Thursday appeared to throw the administration’s support behind a controversial proposed liquefied natural gas terminal in Oregon that had been rejected by regulators during the Obama administration.“The first thing we’re going to do is we’re going to permit an LNG export facility in the Northwest,” said Gary Cohn, director of the National Economic Council. “Just think of the transport time from the Northwest to Japan versus anywhere else. Then we’ve got to put facilities on the East Coast to get from the East Coast to Germany.” “The one place we’re going to permit in the Northwest, it’s been turned down twice already,” Cohn said in comments at the Institute of International Finance, in which he called the opportunity for exporting liquefied natural gas “enormous.” Although Cohn did not name a specific project, the White House confirmed Thursday that Cohn was referring to the proposed Jordan Cove LNG export terminal, which would be located in Oregon’s Port of Coos Bay. That’s where Veresen, the Calgary-based company whose subsidiary is proposing the project, wants to construct two 160,000-cubic-meter storage tanks and other facilities that would receive natural gas from a pipeline, compress it into a liquid for transport, and then pipe it out to tanker ships for sale abroad. It isn’t clear what Cohn meant by saying that “we’re going to permit” the project, because final approval rests with the Federal Energy Regulatory Commission (FERC), an independent agency. FERC turned down Jordan Cove, as well as the proposed 232-mile Pacific Connector Gas Pipeline that would link to it, in a unanimous decision in March 2016. The agency found that the project would be “inconsistent with the public interest,” chiefly because the pipeline would have significant “adverse effects on landowners,” many of whom did not approve it and could have their properties disturbed or otherwise affected through eminent domain if it were to be built. Because the export terminal would not serve a purpose without the pipeline to connect to it, it was rejected as well.

Oregon lawmakers consider banning "fracking" by oil and gas drillers - The Oregon House passed a bill Tuesday that would place a 10-year ban on fracking, or hydraulic fracturing, by those drilling for oil or natural gas in the state. The bill is symbolic at this point, as no one is actually using the controversial technique in Oregon. But it has been employed in the past and could be again if developers look to exploit coal bed methane reserves that are potentially spread through Western Oregon, including much of the Willamette Valley. Hydraulic fracturing involves injecting millions of gallons of fluid into wells under pressure to fracture rock formations and prop open the fissures, which allows gas and oil to flow more freely. The fluid is typically a mixture of water, sand and other chemicals, and the technique is used in shale and coal bed methane formations to make them more permeable - and ultimately more profitable places to drill. Along with horizontal drilling techniques, fracking is responsible for the natural gas and oil drilling boom that has upended the U.S. energy market. But it is a highly controversial practice that opponents link to groundwater contamination, massive water consumption and the triggering of earthquakes in states where it has been used extensively. Rep. Ken Helm, D-Beaverton, called House Bill 2711 a precautionary measure. He introduced legislation in 2015 that would have directed the Oregon Department of Geology and Mineral Industries to develop tighter rules around hydraulic fracturing. But the bill never passed, and the rulemaking was estimated to cost $750,000. Since the Legislature is doing everything on the cheap this session, he said he reintroduced the bill with the 10-year moratorium and no rulemaking.

U.S. oil poised as next swing producer – INTERVIEW - Oil prices have taken a wild ride in recent years, and nobody knows exactly where they will settle.Some market analysts, though, have a better idea than others.Brent Berarducci of Blacklion Capital Management, namely, is one unique to the oil and gas financial market.His boots have been on the ground (as well as 30,000+ feet in the air) and now his hands are handling cash.As the principal and manager for Texas-based Blacklion, he works to close the disparity between those in the oil field and those in finance. While discussing topics ranging from depressed rig counts, sustained anemic demand, OPEC, and President Trump, Berarducci offered up some unconventional insights into what’s really going on in oil and gas markets today. Key takeaways from the conversation include:

  • America is poised to become the world’s swing producer
  • OPEC is really good at marketing
  • President Trump won’t make things worse
  • Rig count data isn’t a reliable indicator of market health anymore
  • Demand remains weak as global economies recover from the 2008 financial crisis
  • Why high storage levels aren’t impacting prices more is kind of a mystery

Drilling costs rise as U.S. oil, gas activity picks up: Kemp (Reuters) - U.S. oil and gas drilling costs have started to rise in response to a surge in activity and are set to increase further as the slack in the rig market declines.Drilling costs increased by 7 percent between November 2016 and March 2017, according to preliminary data on producer prices from the U.S. Bureau of Labor Statistics.The increase has offset only a small part of the 34 percent slump between March 2014 and November 2016 ( it is the first sustained gain in three years for drilling prices, which are now rising year-on-year for the first time since November 2014.Drilling prices are classified under the North American Industry Classification System (NAICS) code 213111 for “establishments primarily engaged in drilling oil and gas wells for others on a contract or fee basis”.Drilling prices do not include the cost of hydraulic fracturing, which is classified separately under NAICS code 213112, and where the previous decline in prices and subsequent recovery have been more muted.Drilling costs have a strong cyclical component and track changes in drilling activity with an average lag of two to three months ( number of rigs drilling for oil and gas hit a cyclical low at the end of May 2016 but has more than doubled since then ( rebound is the fastest for at least a quarter of a century, according to rig counts published by oilfield services company Baker Hughes.The number of active rigs has risen from a low of 404 at the end of May 2016 to 857 on April 21 and is still gaining by an average of 10-20 per week ( prices will likely keep rising in the next few months as the lagged effect of past increases in the rig count filters through and rigs continue to be added.Cost inflation for drilling as well as other inputs into the exploration and production process will likely put upward pressure on breakeven prices for U.S. shale firms.Many shale producers report breakeven costs significantly below $50 per barrel but those costs are likely to rise as service companies push through price increases. Service companies have repeatedly warned that the severe cost compression that occurred between 2014 and 2016 was unsustainable, and drilling costs would need to rise during any sustained recovery.

Oil service costs could rise 15 percent this year, Wood Mac says - As crude prices stabilize and drilling rigs dig into shale plays again, oil field service costs are beginning to rise back up. That could squeeze drillers’ margins later this year. Energy research firm Wood Mackenzie believes oil field service costs could jump 15 percent this year overall, with prices for some equipment and services possibly rising as high as 40 percent, it said in a recent report. Though oil field service companies aren’t likely to charge the same prices they got in 2014, before oil prices collapsed, they will probably get back market pricing power, Wood Mackenzie said. Oil explorers all “voice the best intentions to keep a laser eye on costs,” said Jackson Sandeen, senior research analyst at Wood Mackenzie. “But continued productivity and drilling efficiency gains over 2016 will be difficult to achieve as operators pivot to a more aggressive development mode.” The firm estimates U.S. oil companies will hike spending 60 percent this year on average, but drillers expect service prices to rise on average 10 percent to 20 percent, even though service companies forecast 15 percent to 40 percent price increases this year. Oil fields in which companies can pump crude profitably below $40 a barrel will still turn a profit even with service cost inflation. But the more active oil plays in West Texas will likely see the biggest increases in oil field service prices, Wood Mackenzie said.

 Alberta Warns Trump Of Retaliation If Energy Sanctions Begin - Alberta Premier Rachel Notley warned U.S. President Donald Trump that he would face thewrath of the northern nation’s many allies if the freshman president begins employing energy trade restrictions with Canada.Notley is currently in China, negotiating her country’s trade policies with the Asian giant. She told reporters that she did not know what was meant by Trump’s comments about what Canada has done to its American neighbor with the energy, softwood lumber, and dairy industries."Canada, what they've done to our dairy farm workers, is a disgrace. It's a disgrace,” Trump said before signing a memorandum about investigation the national security implications of importing foreign steel.Trump also criticized NAFTA in general, calling it a “disaster”, adding that that “included in there is lumber, timber, and energy. We’re going to have to get to the negotiating table with Canada very, very quickly”"We're not exactly sure what it is he was referring to,'' Notley said in a conference call Monday, according to The Huffington Post."The leadership of the U.S. administration is going to find that they have a lot of their own stakeholders reminding them how much they need Canadian energy,'' she said.Figures from 2016 show that 41 percent of all American crude imports, or 3.3 million barrels per day, came from Canada.

Pipeline Leaks Crude Oil Into Canadian Creek, Any of Four Energy Companies Could Be Responsible -- A busted pipeline spilled crude oil into a Strathcona County creek in Alberta, Canada on Saturday. The amount spilled is currently unclear. The unnamed creek, near 17th Street and Baseline Road, flows directly into the North Saskatchewan River but Alberta Energy Regulator spokesperson Monica Hermary told CBC News that crews managed to contain the leak before it reached the river. Four Canadian energy companies including Imperial Oil— Exxon Mobil Corp.'s Canadian unit—could be responsible for the spill, Hermary said. The companies—Imperial Oil, Gibson Energy, Inter Pipeline and Pembina Pipeline—have since shut in and de-pressurized their pipelines after the spill was reported and are helping with cleanup. A team of Imperial Oil workers discovered the leak during routine maintenance. A company spokesperson said the crude oil did not match Imperial Oil products when tested but is leading the response to the incident. "The current process, in addition to obviously recovering the oil, is determining where the source of the crude is," the spokesperson said. "In other words, who the responsible party is. Then we would transition the recovery efforts to that company."  CBC reported that the spill occurred along a pipeline right-of-way near the boundary between Strathcona County and Sherwood Park, a strip of industrial land where a number of pipelines operate.

Pollution From Canada’s Oil Sands May Be Underreported | Climate Central: Canadian scientists have found that the standard way of tallying air and climate pollution from Alberta’s oil sands vastly understates pollution levels there — by as much as 4.5 times, according to a Canadian government study published Monday. The study shows that air samples collected using aircraft may be a more accurate way to tally air and climate pollution from oil and gas production than using industry estimates. Accurate accounting of the oil and gas industry’s pollution is critical for scientists to understand how fossil fuel production affects the climate and to find ways to cut the pollution to address air quality and climate change, said Allen Robinson, director of the EPA-funded Center for Air, Climate and Energy Solutions at Carnegie Mellon University, who is unaffiliated with the study. Both the U.S. and Canadian governments rely on energy companies’ self-reported emissions estimates in order to count all the pollution from oil and gas operations. Few actual pollution measurements are taken. If official tallies underestimate the actual emissions, climate models will likewise underestimate the extent to which fossil fuel pollution is contributing to climate change, Robinson said. The Canadian research shows that the energy industry has been underreporting its emissions and it highlights the challenges the industry faces in accurately estimating emissions from very complex equipment.

Oil and Gas Giants Flee Canada’s Tar Sands - A growing number of American oil and gas giants are divesting themselves of their Canadian tar sands holdings.  In the latest move, Chevron is reportedly looking to sell its 20 percent stake in the Athabasca Oil Sands project, located in Alberta. The company has been in talks with investment banks about the sale, which could net Chevron $2.5 billion,a source told Reuters. Chevron is the second biggest oil producer in the U.S. The month of March saw three companies — two of them American — divest some of their tar sands assets.  ConocoPhillips signed a deal worth $13.3 billion in March to divest a good part of its Canadian assets. The Houston-based oil and gas giant agreed to sell its interests in Foster Creek Christina Lake oil sands partnership in northeast Alberta and the majority of its gas assets in the Western Canada deep basin in Alberta to Cenovus, a Canadian company. The company will retain its interests in two other Alberta tar sands projects.  Divesting itself of part of its tar sands assets “improves our underlying financial and portfolio metrics, which will drive free cash flow generation and returns,” Ryan Lance, ConocoPhillips chairman and CEO, said of the deal during a press conference. Marathon Oil is another American oil and gas giant to sell its interests in Canada’s tar sands. In early March, the company signed an agreement to sell its Canadian subsidiary, which includes its 20 percent interest in the Athabasca Oil Sands project, for $2.5 billion. At the same time, the company announced an agreement to acquire about 70,000 net surface acres in the Permian basin, located in Texas and New Mexico, for $1.1 billion. Divesting of its tar sands assets while acquiring holdings in the Permian basin “are transformative milestones that will further align our portfolio with our strategy,” said Marathon Oil President and CEO Lee Tillman. Shell also sold some of its tar sands assets in March, including reducing its interests in AOSP from 60 percent to 10 percent. The British–Dutch multinational sold part of its interests in the Athabasca project to a subsidiary of Canadian Natural Resources Ltd. for $8.5 billion.

Mexico's Pemex will look to repeat new hedging program | Reuters: Mexican state-owned oil company Pemex will consider repeating a recently instituted hedging program in future years, as it looks to firm up its balance sheet and avoid the need for surprise budget cuts, a top executive said late on Tuesday. Petroleos Mexicanos [PEMX.UL], as the company is officially known, reported on Tuesday that it has hedged its output through December, the first time it has done so in 11 years, as an insurance policy against volatile oil prices. The oil hedging program, which will run from May to December and guarantees a price of $42 per barrel for up to 409,000 barrels per day, will cost the company $133.5 million. "It's important to give the market certainty that faced with drops in oil prices Petroleos Mexicanos won't have to cut its budget," Chief Financial Officer Juan Pablo Newman told Reuters in an interview. Last year, Pemex implemented about 100 billion pesos ($5.8 billion) in spending cuts, following cuts of some 62 billion pesos in 2015 due to falling crude prices. The new Pemex hedge is separate from a much larger oil price hedge undertaken by the finance ministry. Asked if Pemex would look to implement another hedging program after the current one expires in December, Newman said that company had found a mechanism that "could be adjusted to market conditions to continue with this effort." Long used as a cash cow by Mexico's government, Pemex now contributes less than a fifth of federal revenue, down from more than a third a few years ago.

Oil, natural gas industry beyond North America picking up steam: Schlumberger CEO -  The long-awaited bottoming of the two-plus-year oil and natural gas industry downturn has finally reached beyond North America, with gradual recovery this year before accelerating into 2018, the CEO of oil services giant Schlumberger said Friday. While North American investment will be up as much as 50% this year, most of the world's production comes from other arenas. And, "we're heading toward a third year of significant underinvestment," Paal Kibsgaard said during a quarterly earnings conference call. Lack of funding on such a wide scale "increases the likelihood of a medium-term supply deficit, as produced reserves are not replaced in sufficient volumes," Kibsgaard said. During the first quarter, Schlumberger began to reactivate idle equipment in the North American onshore, which started its own recovery late in 2016 as a steadily increasing rig count increased demand for services and equipment in unconventional plays. The equipment re-activations will accelerate for the rest of the year, with all idle capacity back in the field during the fourth quarter, Kibsgaard said. North American land is also the one area likely to increase E&P investments this year, although investment levels in Middle East and Russia are also expected to remain "resilient" this year, he said. But a close look at recent data clearly shows the depletion rate of proved and developed reserves is "rapidly accelerating" in several key non-OPEC countries, Kibsgaard said.

Cuadrilla To Begin Shale Drilling In “Couple Of Months” -- British unconventional exploration company Cuadrilla plans to start the drilling stage of its shale gas exploratory plans in northwest England within the next “couple of months,” company CEO Francis Egan said this week. Egan welcomed the UK’s High Court decision dismissing two claims made against Secretary of State for Communities and Local Government Sajid Javid’s approval of planning for Cuadrillla’s Preston New Road site. Last year, the company had its planning application denied by the local Lancashire councillors, but that was overruled by Javid, following a recommendation to approve from the council’s planning officers. The CEO, who a number of times expressed frustration with the lengthy permit application process, is “very pleased” with the outcome. “Work continues on the construction of the exploration site and we look forward to move to the drilling stage of our operations within the next couple of months,” he added.

Canary Islands battles two-mile oil slick after ferry crash | Reuters: Emergency teams in the Canary Islands raced on Saturday to contain a three-kilometer oil slick caused by a ferry crashing into underwater fuel pipes, the regional government said in a statement. The regional government activated emergency plans to control and clean up the nearly two-mile spill around Las Palmas de Gran Canaria and Telde, the two main towns on the Spanish resort island of Gran Canaria, the regional government said. No one at the emergency services or government could be reached for further comment on Saturday. The ferry crashed into a pier where the pipes were located late on Friday after suffering a technical fault that caused a power cut, a spokesman for operating company Naviera Armas on Saturday.

Exxon asked for a waiver to resume drilling in Russia. Trump said no -- The Trump administration rejected Exxon Mobil’s request to resume an oil drilling project in Russia that is currently blocked by US sanctions, a tangible reminder that American policy toward Moscow has yet to change as much as some observers in both countries had expected.   Shooting down Exxon’s request allows the White House to dodge a pair of political hand grenades: the raging controversy over Trump’s ties to Russia, which are currently being investigated by Congress and the FBI, and the lingering question of whether an administration whose top diplomat is former Exxon CEO Rex Tillerson will be able to impartially decide matters related to the oil giant.  In a statement Friday, Treasury Secretary Steven Mnuchin said the department “will not be issuing waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current Russian sanctions.”  Exxon originally put in a request for the waiver, which would’ve allowed it to resume a joint venture with Russian oil giant Rosneft in the summer of 2015, but it was rejected at that time. According to the Wall Street Journal, Exxon began to pursue the application again in March, about a month after Tillerson was narrowly confirmed as secretary of state. The State Department was one of multiple agencies that had a say in the waiver, but Tillerson wasn’t involved in this decision — he’s recused himself from any issues that involve Exxon for two years, and he no longer has stock in the company. The former Exxon chief executive developed a close relationship with Rosneft and the Kremlin during deals that he struck with Rosneft between 2011 and 2013.The Trump administration’s rejection of the waiver — which would have provided a financial boost to Moscow, given how much the Russian economy has been hammered by Western sanctions — comes amid new and growing tensions with the Kremlin.

Chevron loses landmark tax case on transfer pricing - Multinational companies operating in Australia have been put on notice after Chevron on Friday lost a landmark tax case that is expected to have implications for the loans that overseas groups use to fund their activities in the country. The Federal Court of Australia dismissed an appeal by Chevron against an earlier ruling that found mostly in favour of the Australian Taxation Office’s claim that the US energy group owed A$340m ($256m) in tax, penalties and interest after using an inter-company loan to finance a large gas project off the coast of Western Australia. The Chevron litigation underlines an intensifying crackdown on corporate tax avoidance, which has left companies across the world reporting a significant increase in disputes over so-called transfer pricing — internal transactions within groups that are meant to be done on an arm’s length basis. The Chevron case — a rare example of a transfer pricing dispute reaching the courts — highlighted the prominent role played by inter-company loans in reducing corporate tax bills. Multinationals have clashed with revenue authorities for decades over the pricing of such loans — which determine how far profits can be shifted to low-tax countries — but in recent years the number of challenges to these arrangements have increased. The crackdown on corporate avoidance has been particularly marked in countries that have faced a public backlash over claims that multinationals are not paying their “fair share” of tax. There has been particular concern in Australia about energy groups. The Australian Tax Office, which said it was “heartened” by the outcome of the Chevron case, added that the federal court’s decision “has direct implications for a number of cases” it is “currently pursuing in relation to related-party loans, as well as indirect implications for other transfer pricing cases”. 

Australian Government ‘Encouraged’ By Steps To Avert Gas Crisis -- The Australian government said it was “encouraged” on steps taken to avert a gas crisis after meeting on April 19 with producers and the energy market operator, but it held out the threat of regulatory steps to address any supply shortages. Australia’s energy market operator and east coast liquefied natural (LNG) gas exporters updated Prime Minister Malcolm Turnbull on measures taken since a March meeting to discuss a domestic gas crunch expected to emerge from 2019. Since then, companies like France’s Engie SA and Origin Energy, have sealed deals to ensure gas supply to power plants at peak times, easing some short-term concerns about shortages that have already helped to trigger blackouts.”While this progress is encouraging, a lot more needs to be done,” Prime Minister Turnbull said in a statement following talks. “The government remains concerned that the east coast export LNG operators have not yet clearly articulated how Australian households and businesses will get adequate supply at reasonable prices,” he said.

Australia to put export controls on LNG to protect domestic supply - Natural Gas | Platts News Article & Story: The Australian government is planning to block LNG exports if there isn't adequate supply of gas domestically, Prime Minister Malcolm Turnbull announced on ABC Radio Thursday morning local time. Exactly how the mechanism will work is not clear yet, but comes in response to concerns that the eastern seaboard of the country could face gas shortages by the end of the decade. It follows meetings between the Federal Government and top executives from the country's gas companies in recent weeks, during which two of the three east coast LNG exporters -- Australian Pacific LNG and Queensland Curtis LNG -- committed to being net suppliers to the domestic market. Santos, the operator of the third east coast LNG exporter, Gladstone LNG, on Thursday said, that moving forward, it will supply more gas into the domestic market than it purchases for its share of LNG exports. "Santos will seek clarification of how the new policy will work in practice in order to understand from the government the terms on which it is proposing to introduce this mechanism and how proposals that have been put to the government to address the domestic market situation are being considered," it said in a statement in response to the announcement.

Australia's LNG export control plans raise alarms in Queensland - The Australian government's decision to enforce export controls on LNG to protect domestic supply has raised concerns among Queensland LNG exporters, which have international contractual commitments for more than 25 million mt, mainly with northeast Asian buyers. Exactly how the mechanism will work is not clear yet, but the government is planning to block LNG exports if there is not adequate supply of gas domestically, Prime Minister Malcolm Turnbull announced on ABC Radio Thursday morning local time. The move comes in response to concerns that the eastern seaboard of the country could face gas shortages by the end of the decade, but the risk of a lengthy supply deficit in the region is still low. "Out to around 2021, we do not think a gas shortage is likely," said Matt Howell, senior research analyst, Australasia upstream oil and gas, with Wood Mackenzie."Supply from the CSG-LNG projects and other existing producers should be available to fill any demand/supply shortfall. However, that is not to say that there might not be short-term shortages in periods of high demand or if there are supply disruptions." The risk of gas shortages increases post-2021, Howell said, and alternative sources of supply will need to be developed to prevent a shortage from occurring as existing supply drops off. 

LNG stocks held by key Japanese power utilities hit 4-year low at end Jan -- LNG stocks held by 10 major Japanese power utilities fell to 1.61 million mt at the end of January, the lowest level since January 2013, as the key utilities consumed the largest volume of LNG since March 2011, data released by the Ministry of Economy, Trade and Industry this week showed. Their combined stock levels have remained below 2 million mt since June 2016, according to the METI data. The average stock level over fiscal 2015-16 (April-March) was 2.22 million mt. In January, the key power utilities consumed 5.49 million mt of LNG as cold weather pushed up demand for heating. It was the largest monthly consumption recorded since March 2011. Japan LNG import data released by the Ministry of Finance in February showed that Qatar and Australian imports grew more than 20% year on year in January. Japan also received three cargoes from the US in January. In addition to power utilities, Japanese gas utilities also burned more LNG this winter. Tokyo Gas and Osaka Gas both said they chalked up record daily gas supply volumes near the end of January. Separate METI data released earlier in April showed Japan’s gas utilities held 1.83 million mt of LNG in stock at the end of January.

Argentina's Push to Mimic Permian Success Faces Long Road - Argentina’s Vaca Muerta, one of the largest shale formations outside of North America, offers tons of promise for the country’s energy future. Just don’t hold your breath waiting for it. Energy Minister Juan Jose Aranguren, billionaire investor Paolo Rocca and bullish Morgan Stanley economists all predict lightning fast growth in the region, comparing it to the Eagle Ford and Permian basins in the U.S., oil and natural gas-saturated plays that have spurred billions in revenue. The reason: Vaca Muerta offers Argentina, which has struggled for years with rampant inflation, an economic lifeline for the future. Still, before the field reaches its potential, gas and oil pipelines need to be built, roads, train lines and power networks need upgrading, and drilling costs that run 30 percent or more higher than in the U.S. need to drop, industry insiders say. “It’s all about building momentum, and that will take years,” “If the costs come to where we want them, this will happen.” Argentine President Mauricio Macri will meet with oil and gas executives in Houston on Wednesday as he seeks to drum up investment in Vaca Muerta. So far, the shale play is luring about $4 billion a year, when about $15 billion of annual spending is needed, Emilio Jose Apud, a board member at state-run YPF SA, told Telam news agency on Monday. The average drilling and completion cost of a horizontal well in Vaca Muerta was $11.2 million as of 2015, compared with $6.5 million to $7.8 million in the Eagle Ford, the U.S. Energy Information Administration said in a report in February. YPF said it’s now spending about $8.2 million to drill a horizontal well in the region, and Shell pegs it at little under $10 million.

Nigeria aims to reduce fuel imports further, eyes LPG: oil minister - The Nigerian government is working on a long-term plan to replace the use of refined oil products with LPG in a bid to further reduced fuel imports, which have become a drain on the country's dwindling foreign exchange earnings, Oil Minister Emmanuel Kachikwu said Friday. Speaking in a webcast, Kachikwu said that while the government has been able to stabilize fuel supplies after it cut the subsidy on imported gasoline in May 2016 that allowed marketers to sell on the domestic market at a capped price of Naira 145/liter, the country's downstream oil sector still faced numerous challenges. "We need to move away from white products to LPG...which is the byproduct of the gas that we have an abundance of," said Kachikwu. "So we need to begin to look long term and how we build pipelines for LPG, so we can take LPG to the closest points for cars to reduce [gasoline] consumption."Nigeria has the world's ninth largest proven gas reserves, at 187 Tcf, but a lack of key infrastructure means the bulk of the 8.0 Bscf/d of gas currently produced -- estimated at 3.5 Bscf/d -- is exported while the remainder is either utilized in oil fields or flared. Nigeria sets aside 450,000 b/d of its share of the crude produced jointly with foreign oil partners, but government officials and the country's oil industry auditors NEITI have previously called for the scrapping of the allocation and the government to export the volume to raise revenue. The four state-owned oil refineries, with a combined nameplate capacity of 445,000 b/d, have never been able to run consistently to provide the country with enough products. 

Chevron to sell Bangladesh gas fields to Chinese consortium | Reuters: Chevron Corp is selling its three Bangladesh gas fields, worth an estimated $2 billion, to a Chinese consortium as the U.S. oil and gas group looks to shed non-core assets this year. The deal, if completed, would mark China's first major energy investment in the South Asian country, where Beijing is pumping in billions of dollars in a race with New Delhi and Tokyo for influence. The gas fields, which account for more than half of the total gas output in Bangladesh, are being sold to Himalaya Energy, Chevron said. Himalaya is owned by a consortium comprising state-owned China ZhenHua Oil and investment firm CNIC Corp. CNIC, set up in Hong Kong in 2012, is a government investment platform that focuses on supporting Chinese companies' overseas investment. Reuters reported in February that ZhenHua Oil had signed a preliminary deal with Chevron to buy the Bangladesh natural gas fields. "The agreement is for the sale of Chevron's Bangladesh companies, which hold our interests in Bangladesh," a company spokesman told Reuters by email on Monday. "The value of the transaction is not being disclosed and we are not at liberty to share the details of the agreement." A ZhenHua spokesperson confirmed the agreement, adding that the closing of the deal would depend on approval from China’s Ministry of Commerce. Chevron sells its entire output from the Bangladesh fields -- 16 million tonnes a year of oil equivalent -- to state oil company Petrobangla under a production-sharing contract.

Russia cuts 250,000 b/d, to comply with oil output deal by end-Apr -  Russia has lowered its oil output by 250,000 b/d from its October level and will reach its full commitment of a 300,000 b/d cut by the end of the month, Energy minister Alexander Novak said Friday. "We're fulfilling the obligation to gradually cut the output by Russia," Novak told reporters during a visit to Tokyo. "Today, we see a 250,000 b/d cut, and in line with the plans which we announced earlier, the level of 300,000 b/d will be reached by the end of April and we'll keep that level until the end of the agreement.""There are no decisions yet and each country is currently studying this issue independently," Novak said. "The possibility to extend the agreement was envisaged by the December agreement but the final decision is to be later." The OPEC secretariat is currently studying the impact of the cuts and how an extension might affect the oil market in the second half of the year. It will unveil its findings May 24 to a monitoring committee overseeing the deal composed of OPEC members Kuwait, Algeria and Venezuela, along with non-OPEC Russia and Oman. He added that no decision had yet been made on extending the OPEC/non-OPEC deal, under which OPEC agreed to cut 1.2 million b/d and 11 non-OPEC countries led by Russia committed to a 558,000 b/d cut from January through June. Ministers from deal participants will meet in Vienna May 25 to review the agreement. Novak said Russia was "in daily contact" with OPEC countries.

Russia's Oil Cuts Won't Be So Easy If OPEC Deal Is Extended -- For Russian oil companies, the historic agreement to boost prices by cutting output in conjunction with the Organization of Petroleum Exporting Countries was an easy win. Extending the deal will be less straightforward. Cuts so far this year came alongside the traditional seasonal stagnation in Russian production, meaning the country made relatively few sacrifices in exchange for an increase in crude prices of more than 10 percent. For the powerful Russian oil bosses who plan to discuss the OPEC accord with Energy Minister Alexander Novak this week, a decision by the government to extend the cuts beyond June would stymie plans to boost output, creating many more headaches than the initial agreement.“It was not a surprise and not a big deal to have production going down in the first half of the year,” James Henderson, a Russian oil expert at the Oxford Institute of Energy Studies, said by phone. “When you go into the second half it’s a different story. All thoughts of production growth this year go out of the window.”After two years of low oil prices and competition for market share, OPEC and Russia made a surprise agreement late last year on the first coordinated production cuts in more than a decade. While the deal lifted international crude futures above $58 a barrel in January -- double the level a year earlier -- stubbornly high inventories and rising U.S. production have dragged prices back toward $50. That’s prompted producers to consider extending the curbs beyond their initial six-month term.Novak will hold talks with Russian oil companies this week before his meeting with OPEC and non-OPEC counterparts in Vienna on May 25. The minister said on April 21 that the issue of whether to prolong the deal was “ under discussion” within Russia and would depend on “the market situation by the time when the current half-year agreement expires.”Analysts predict Russia will double down and prolong the cuts, despite the problems it could cause for its largest  producers.

Will Russia Join The OPEC Cut Extension? - WTI and Brent stabilized on Tuesday after a week of steep losses. Market sentiment has shifted notably in a bearish direction over the past six trading days. The realization that the OPEC deal, nearing the end of its fourth month, is falling short on balancing the market is weighing on crude prices. Stephen Schork of the Schork report put it more bluntly on Tuesday: “OPEC has failed miserably in its endeavour to balance the oil market.” The flip side is that because the market still seems woefully oversupplied, extending the OPEC cuts seems like more of a sure bet. OPEC’s monitoring committee formally recommended an extension, although no final decision has been made.   Russia still needs to come on board with the OPEC extension, and at this point, Russia is likely the most pivotal participant in determining whether or not the cuts are extended for another six months. But Russian officials said they wouldn’t commit until the official meeting at the end of May. The problem for Russia is that the initial agreement corresponded with winter months in Russia, when output typically falls. That made agreeing to the cuts easy. But the six-month extension will overlap with the Russian summer, which usually sees an uptick in production. Moreover, Russian oil companies have a handful of fields that they intend to bring online in the second half of the year. In other words, the extension will be much harder to agree to than the initial agreement.. OPEC’s lower production has led to a smaller premium for Brent oil over Middle Eastern grades. Heavy crude from the Middle East, now in lower supplies, has become scarcer, allowing oil from the North Sea to find its way to Asia. “Crude is trading like a game of musical chairs,” Richard Fullarton, founder of London-based commodity hedge fund, Matilda Capital Management, told Bloomberg. “If OPEC extends cuts then more Brent and WTI will head to the east.” Meanwhile, Russia is also grabbing Asian market share from Saudi Arabia, reclaiming the number one spot for supplier to China.  Oil could hit low-$60s, but not $70. One of the world’s largest oil traders, Vitol, said that it foresees oil moving up into the low-$60s per barrel this year, but not any higher.

OPEC panel recommends six-month extension of oil output cuts: source | Reuters: An OPEC and non-OPEC technical committee recommended that producers extend a global deal to cut oil supplies for another six months from June, a source familiar with the matter said, in an effort to clear a glut of crude that has weighed on prices. The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers originally agreed to cut production by 1.8 million barrels per day (bpd) for six months from Jan. 1 to support the market. Compliance numbers were also reviewed at the meeting in Vienna on Friday that comprised of officials from countries monitoring adherence to agreed output levels, namely OPEC members Kuwait, Venezuela, Algeria and non-OPEC Russia and Oman. Overall compliance with pledged cutbacks stood at 98 percent in March, a source said. Two sources said the rate in March represented an increase from February's level. Oil prices still declined on Friday, with Brent crude trading below $52 a barrel LCOc1 on concerns that increasing U.S. production and high inventories would thwart the efforts by OPEC and its allies to curb supplies. The committee's recommendation that the supply cut deal be extended was not a surprise, after oil ministers from top exporter Saudi Arabia and Kuwait gave a clear signal on Thursday that producers planned to prolong the accord. Russian Energy Minister Alexander Novak said on Friday a decision on extending the pact had not yet been taken, but would be discussed with OPEC on May 24. OPEC ministers plus their non-OPEC counterparts are scheduled to meet on May 25.

OPEC heads for failure as crude shipments overwhelm cut rhetoric --  Reuters: Is it yet time to call the crude oil output cuts by OPEC and its allies a failure? Certainly there is an increasing disconnect between the rhetoric of OPEC and other producers cutting output on the one hand and the reality of a well-supplied crude oil market and mixed signals on the level of global inventories on the other. The Organization of the Petroleum Exporting Countries and other producers, including Russia, have been touting the high compliance with the agreement to reduce output by 1.8 million barrels per day (bpd) from January to June. It now appears that OPEC and its allies are moving to prolong the deal for another six months, with consensus building for an extension, which is likely to be announced at a meeting scheduled for May 25. If the success of the deal is to be judged purely by prices, then an argument could be made that it has at least led to crude finding a floor above $50 a barrel. Global benchmark Brent crude spent the second half of last year mainly between $40 and $50 a barrel, before being lifted after the OPEC and allies agreement was announced at the end of November.. But Brent is once again testing the bottom of the post-agreement range, dropping to as low as $51.42 a barrel on Monday, as scepticism mounts over the ultimate effectiveness of the OPEC measures. Perhaps more important for determining the longer-term price outlook is to look at the amount of oil available and the levels of inventories.  It's here that the main evidence of the failure of the OPEC agreement is to be found. Global oil shipments by tanker are at a record high in April, according to vessel-tracking data compiled by Thomson Reuters Supply Chain and Commodity forecasts. As of Tuesday, the data shows that an average 50.3 million barrels per day (bpd) of crude is being shipped in April, up from the previous record 46.1 million bpd in January. The data excludes crude moved by pipelines, but it's extremely unlikely that pipeline supplies have been cut by more than seaborne cargoes have increased. The data also show that Saudi Arabia, which undertook to make the largest output cut among those producers party to the November deal, is actually increasing tanker shipments in recent months, to levels well above those that prevailed late last year. The kingdom is expected to ship 8.29 million bpd in April, up from 7.94 million bpd in March, 7.73 million bpd in February and 7.83 million bpd in January.

Iraq says will comply with any OPEC oil production deal extension - Oil | Platts News Article & Story: Iraq believes it would be acceptable for the OPEC-led production cut deal to be continued in its current form, oil minister Jabbar al-Luaibi said Thursday. The producer group meets on May 25 to decide whether to extend the landmark agreement that came into force in January. Luaibi was tight-lipped on whether OPEC's second-largest producer would seek an exemption as it attempted last year in the run-up to the OPEC and non-OPEC deal before coming on board. Instead, Luaibi said Iraq should be aligned with OPEC and that the country would be in line with OPEC's final decision in May in a strong show of support that OPEC is singing with one voice.In the same vein, Luaibi stressed that Iraq is in "full compliance" with the OPEC-led deal to cut its production, playing down claims that it is the most non-compliant member. Speaking at the International Oil Summit in Paris, Luaibi then toned down his approach, saying Iraq had "reached 97% of its obligation," whereby it has agreed to slash crude output by 210,000 b/d over the six-month period. The deal calls for the group to cut 1.2 million b/d from October levels, while 11 non-OPEC producers, led by Russia, agreed to cut 558,000 b/d. Iraq, which has disputed secondary source estimates of its output, produced 4.40 million b/d in March, down slightly from February's 4.41 million b/d, according to secondary sources. Iraq did not self-report a March figure but said in February it produced 4.57 million b/d. The country appears to be the most non-compliant OPEC member in the deal, as its quota is 4.351 million b/d.

Why Kurdish Oil Is a Wild Card for Markets -- If Iraq’s Kurdish territory were a country, it would probably qualify for OPEC membership. It wouldn’t even be the smallest member, given its production of about 600,000 barrels of oil per day. That’s an impressive achievement for a landlocked enclave that started exploring only a decade ago. The region’s potential is greater still, though it faces political, military and economic challenges to expanding its output.The semi-autonomous Kurdistan Regional Government says the area’s reserves could total 45 billion barrels, more than Nigeria’s, and Kurdish crude is generally cheap to extract. When foreign investors tramped into the region’s oil fields after the fall of Saddam Hussein’s regime, the crude was so abundant it seeped from the ground beneath their feet. Tony Hayward, former BP Plc boss turned wildcatter, called Iraqi Kurdistan “one of the last great frontiers” in the oil and gas industry as his new company Genel Energy Plc started prospecting there in 2011. Ashti Hawrami, natural resources minister for the KRG, has spoken of increasing exports to 1 million barrels a day or more. Early discoveries prompted a rush of foreign investment, and by 2014 the Kurdish capital Erbil was a boomtown. The area attracted oil majors including Exxon Mobil Corp., Chevron Corp. and Total SA. Norway’s DNO ASA pumps the most oil there: more than 110,000 barrels a day at the Tawke field, in partnership with Genel.  Iraq’s Kurds have long chafed against control by Arab-led governments in Baghdad, and they’ve been developing their hydrocarbon industry to enhance their self-sufficiency. Kurdish authorities began offering oil contracts to foreign investors in 2007, against Baghdad’s wishes. The central government then barred companies working with the Kurds from operating in other parts of the country. Baghdad also threatened to sue anyone buying Kurdish crude. When it did just that in Texas in 2014, a U.S. judge blocked a tanker from unloading its cargo of Kurdish oil. The stakes rose that same year when Kurdish forces, defending against the encroachment of Islamic State, occupied oil facilities in the disputed province of Kirkuk. That’s left Baghdad in control of less than half of Kirkuk’s oil.

Why the crude rally has fizzled, continued: Market analysis series - This is the second of a three-part look at why oil prices have failed to rally despite OPEC’s best efforts at managing supply cuts. Read part 1 here. So, why is everyone so bullish? Many oil analysts take as a fait accompli that OPEC-led production cuts thus far are key to balancing the crude market. If this is the case, though, why hasn’t it happened yet? But the bulls say give it time. In the long run, the market will balance. Everyone knows what Keynes said about the long run (that we are all dead). That the market is prime for a rally has become gospel truth. But isn’t something so paradigmatic just a little bit risky? “Oil prices will get better, and you can take that to the bank,” David Purcell, head of macro research at Tudor, Pickering and Holt, said at a recent Dallas conference. “The market is under-supplied, inventories are back to normal levels by the end of the year, and if you guys don’t drill the Permian too fast, we’re okay,” Purcell said. But drilling too fast is just what drillers have been doing. According to Platts Analytics RigData, active Permian horizontal rigs now stand at 280, 40% of all US horizontal drilling. The number of US horizontal rigs will likely break above 700 soon, revisiting a number last seen in April 2015, when Permian rigs made up just 25% of the total.While Credit Suisse analysts earlier this month conceded that both Atlantic Basin and Asia-Pacific crude markets are suffering from oversupply — widening price discounts for Asian grades like Russia’s ESPO Blend and Qatar’s Al-Shaheen can attest to that — they also say that it is too early to ditch the idea that just because prices have struggled, the market isn’t rebalancing. In fact just two weeks ago, they suggested doubling down. A key factor to that call, which by now may be considered yesterday’s news, was the risk of supply disruption out of Libya after that country announced a fresh force majeure on exports from its Zawiya terminal.

US shale oil rebound shakes OPEC - The Barrel Blog: Even with oil prices hovering around the $50/b mark, the US rig count has increased rapidly while E&P companies continue to record substantial reductions in well drilling costs. The increase in new well oil production per rig demonstrates the extraordinary gains the shale drillers have made. In April 2014, new well oil production per rig on the Bakken was recorded at 492 barrels and on the Eagle Ford at 463 barrels. In April this year, the figures are 1,067 barrels and 1,448 barrels, respectively. Moreover, US E&P companies remain confident they can continue to eke further efficiencies out of their seemingly ever-evolving factory-mode production processes. However, not all is well. A large part of reductions in well costs came about as a result of the crunch in drilling activity post-2014, when the oil price fell from its heady three-digit heights. The lack of demand for drilling resulted in over-capacity in the oil services sector, which led to a fall in the prices charged for oil services and also a contraction in the sector’s capacity. As activity rebounds and the rig count rises, the oil services sector will also start to tighten and, indeed, US oil services costs are now forecast to rise about 20% this year. Even if US drillers can continue to deliver efficiency gains, they will have to battle this countervailing price pressure.Much depends on the oil services sector’s ability to re-establish its former capacity, but there is little short-term motivation to do so, as service providers will be keen to re-establish the margins they formerly enjoyed. As a result, forecasts that US crude production will return to the record levels of the 1970s in 2018 may well only be realized if oil prices move above $60/b. This, in turn, would appear to depend on an extension of OPEC’s production cuts into the second half 2017, and probably beyond, a prospect which will test the resolve of the organization’s non-OPEC partners. 

Oil prices falter as hedge funds stop buying: Kemp (Reuters) - Hedge funds have tempered their bullishness towards crude oil as the short-covering rally that gripped the market since the end of March ran its course.Hedge funds and other money managers increased their net long position in the three major futures and options contracts linked to Brent and WTI by 8 million barrels in the week to April 18 ( managers have increased their net long position for three consecutive weeks by a total of 140 million barrels but the latest increase was much smaller than in the two previous weeks ( showed little appetite to increase bullish long positions further, though they continued to close out bearish short positions established earlier in March.Funds actually reduced long positions by 2 million barrels, though this was offset by a reduction in short positioning of 10 million barrels, according to an analysis of data published by regulators and exchanges.The ratio of long to short positions climbed to 5.8:1 up from a recent low of 3.7 on March 28 though it was still well below the peak of 10.3 set back on Feb. 21 ( rally in oil prices between March 27 and April 12 was driven by short-covering as much as the establishment of fresh long positions.But most of those short positions had been closed out by April 11 and certainly by April 18 limiting further upward price momentum.By April 18, hedge funds had reduced short positions in NYMEX WTI to just 63 million barrels, down from a peak of 117 million barrels three weeks earlier ( minimum hedge fund short positioning in NYMEX WTI over the last two years has been around 45-55 million barrels.So with few short positions left to be covered, the rally in Brent and WTI prices ran out of steam around the middle of April. Both flat prices and calendar spreads have been softening as the short-covering cycle is completed and amid growing doubts about whether OPEC’s output cuts are draining crude oil stocks.

WTI/RBOB Tumble After Surprise Crude, Gasoline Builds -- After dropping to a $48 handle, WTI bounced off its 200DMA, but remains well down from last week's levels before the DOE-reported surprise gasoline build. The initial kneejerk reaction lower in WTI/RBOB after API reported an unexpected crude build and yuuge gasoline build. API

  • Crude +897k (-1.75mm exp)
  • Cushing -1.971mm
  • Gasoline +4.445mm (+500k exp)
  • Distillates -36k

Following last week's surprise DOE reported build in gasoline inventories, API reports a huge build (bioggest in 3 months) and a surprise crude build (even as Cushing saw a big draw - the biuggest since feb 2014) Prices are well down from last week's API/DOE data prints, but bounced higher today into the API print. This initial reaction was a push lower in both WTI  and RBOB...

Oil traders’ confidence shaken by slow impact of supply cuts - Earlier bullishness gets a reality check as global crude inventories remain high - Oil traders banking on a sustained market recovery in 2017 are growing impatient. As the price of Brent crude falls towards $50 a barrel, Opec, energy analysts and some of the most powerful banks in the commodities sector are urging traders to maintain their composure. After a production cut deal between the cartel and rivals such as Russia was agreed late last year, prices began 2017 $10 a barrel higher and hedge funds quickly amassed record bets backing the push to end the biggest slump in more than a decade. Confidence has since been shaken as evidence that the cuts are working takes longer than anticipated to materialise. Global crude inventories remain stubbornly high and, crucially, the US shale industry has been reinvigorated by the run up in prices last year. “The premature bullishness we saw in early 2017 has had a reality check,” says David Fyfe, chief economist at oil trader Gunvor Group. “The market has been a bit spooked by persistently high stocks.”

WTI/RBOB Jump On Largest Crude Draw In 2017 Offset By Major Product Build, Rising Production - WTI/RBOB prices were at the lows of the day after last night's huge surprise inventory data from API, but kneejerked higher after DOE reported a surprisingly large crude draw (the biggest since Dec 2016. However, it's clear that refineries are on fire as gasoline and distillates inventories surged by the most in at least 3 months. US crude production rose once againto its highest since August 2015. DOE:

  • Crude -3.64mm (-1.75mm exp) - biggest since 2016
  • Cushing -1.203mm
  • Gasoline +3.369mm (+500k exp) - biggest in 3 months
  • Distillates +2.651mm (-1mm exp) - biggest since first week of Jan

As Bloomberg notes, the U.S. refining system is absolutely on fire: up another 347,000 barrels a day last week to 17.3 million barrels a day processing. It's huge. And that explains the major builds in products (gasoline/distilates) and surprise draw in crude... Crude stocks fell -3.6 million bbl to 529 million bbl last week, a faster draw down than normal at this time of year.As Reuters adds, crude stocks tightened last week by about -5.7 million bbl compared with 2016 and -7.6 million bbl compared with 10-yr average.  Crucially, as Bloomberg's Javier Blas details: Saudi Arabia cutting production? Not much, if you believe the U.S. oil imports figures. Last week, the U.S. bought from the kingdom 1.19 million barrels of oil, up from 1.18 million barrels the previous week. Imports from Kuwait and Iraq also rose last week. So far, OPEC cuts are not really translating into lower U.S. imports from key players in the Middle East.

 U.S. crude supplies post biggest weekly fall of the year, down 3 weeks in row - Oil futures turned higher Wednesday after U.S. government data revealed that crude supplies fell a third week in a row, by their largest weekly amount of the year. Prices for petroleum products, however, fell on the back of unexpected inventory increases for gasoline and distillates.June West Texas Intermediate crude tacked on 47 cents, or 1%, to $50.03 a barrel on the New York Mercantile Exchange. It was trading lower at about $49.28 before the supply data. June Brent crude on London’s ICE Futures exchange traded at $52.24 a barrel, up 14 cents, or 0.3%. The U.S. Energy Information Administration showed that domestic crude supplies fell 3.6 million barrels for the week ended April 21. That was the largest weekly decline so far this year. Crude stockpiles also posted declines in each of the previous two weeks. The American Petroleum Institute late Tuesday reported a rise of 897,000 barrels for crude supplies, while analysts polled by S&P Global Platts forecast a fall of 1 million barrels. The headline crude number “stands in sharp contrast” to the rise reported by industry group, API, Chris Kettenmann, chief energy strategist at Macro Risk Advisors. The 1.2 million-barrel draw at the storage hub in Cushing, Okla., is “another net positive in the report.” But “the glaring net build in gasoline refined products” and rise in the lower 48 states crude production is “enough to keep us cautious on oil prices in the near term,” said Kettenmann. “We would not buy the knee-jerk rally on the print.” The EIA reported a rise of 21,000 barrels a day in lower 48 states output to total 8.722 million barrels a day. Gasoline stockpiles rose by 3.4 million barrels, while distillate stockpiles were up 2.7 million barrels last week, according to the EIA. The S&P Global Platts survey had forecast declines of 1.1 million barrels for gasoline and 1.8 million barrels for distillates, which include heating oil. 

Oil prices rise after big draw in U.S. crude inventories | Reuters: Oil prices rebounded from earlier losses on Wednesday after data showed a larger-than-expected falloff in U.S. crude inventories, a salve for investors after several days of declines founded on worries about the slow pace of global efforts to reduce a glut. The U.S. Energy Department said crude stocks dropped 3.6 million barrels last week, more than double what was expected, juicing some buying in the market. [EIA/S] U.S. crude futures have slipped in six of the last seven days, as investors have grown impatient with high inventories after last year's landmark deal by the world's major oil producers to cut output. The U.S. government data counters Tuesday's report from industry group the American Petroleum Institute that showed an unexpected build in inventories. However, gasoline and distillate stockpiles grew, while U.S. production and imports increased, so the path for higher prices remains tentative, analysts said. U.S. West Texas Intermediate (WTI) was up 37 cents at $49.93 per barrel, while Brent crude, the international benchmark, was up 11 cents to $52.21 a barrel by 11:31 a.m. EDT. The gains in oil prices were offset by a drop in reformulated blendstock gasoline prices, which dropped by 1.3 percent to $1.5999 a gallon after gasoline inventories rose sharply. Refining capacity utilization rose to 94.1 percent, highest since November 2015. That boosted gasoline inventories at 241 million barrels, or about where inventories were at this time in 2016, which sapped refining margins.

Record U.S. refinery runs fail to lift crude oil prices: Kemp (Reuters) - U.S. refineries processed a record volume of crude last week, making a small dent in the country’s bloated crude stocks but resulting in a big build-up of refined product inventories.U.S. refineries have ramped up crude processing by 1 million barrels per day (bpd) over the last four weeks and 2 million bpd over the last nine weeks, according to the U.S. government's Energy Information Administration.Refineries processed an average of almost 17.3 million bpd of crude in the week to April 21, a record for any time of year and coming well in advance of the summer driving season.Crude throughput was almost 1.4 million bpd higher than during the corresponding week in 2016 and nearly 2.5 million bpd higher than the 10-year seasonal average.Refiners are responding to robust domestic demand and strong exports of gasoline and distillates, which have resulted in margins above last year’s levels (“Distillate export boom keeps U.S. refiners busy”, Reuters, April 25). Heavy processing so early in the year has started to pull down U.S. crude stockpiles much earlier than normal.Commercial crude stocks are still almost 20 million barrels higher than at the same point in 2016, but the year-on-year surplus is down from about 36 million barrels at the start of April.Crude stocks are now around 49 million barrels higher than at the start of the year, compared with a build of 57 million barrels in 2016 and a 10-year average of 42 million barrels.But the extraordinary rate of crude processing has also led to a rise in gasoline and distillate stocks, which has led some analysts to question whether it is sustainable.Gasoline stocks are at a record for the time of year and distillate stocks have started rising when they would normally be falling.U.S. refiners are exporting record volumes of distillates to Latin America; rare cargoes have been exported from the East Coast to Europe (“Europe lures rare diesel cargoes from U.S. East Coast”, Reuters, April 26). Gasoline exports are also running well above year-ago levels as refiners and traders try to clear some of the surplus by sending it overseas.The United States has become an increasingly important refining hub for the western hemisphere and Atlantic basin thanks to cheap domestic crude and investment in sophisticated equipment. But it is not clear whether such high levels of processing can be sustained for many more weeks without crushing refinery margins.

WTI/RBOB Tumble As Market "Runs Out Of Patience With OPEC" -- Just as we warned yesterday following the EIA inventory and production data release, the exuberance over the crude draw was misplaced (due to the surge in product builds and almost unprecedented refining activity along with continued resurgent oil production). Saudi imports continue to show no sign of the OPEC cuts and asone anylst noted "the market looks like it wants to turn lower, maybe it has run out patience waiting for OPEC"As a reminder, U.S. crude inventories declined 3.6m bbl in EIA data Wednesday, but gasoline, distillate stockpiles grew by a combined 6m bbl, and U.S. production also grew for 10th week. As Bloomberg reports, WTI, Brent deepen declines and erase Wednesday’s post-EIA rally as market’s focus switches to big builds in gasoline and distillate inventories, rather than the crude draw.“The gasoline numbers took the edge off the headline,” in EIA data Wednesday, says Jasper Lawler, senior market analyst at London Capital Group."In the last couple of days we’ve had two afternoon attempts to reverse the downtrend and both have heavily been sold into.""The market looks like it wants to turn lower, maybe it has run out patience waiting for OPEC" The result is clear...

Oil prices are tanking, now at a 4-week low - U.S. oil prices fell below $49 a barrel on Thursday amid deteriorating gasoline futures and a higher dollar in the wake of the European Central Bank's latest interest rate decision.  Benchmark Brent and U.S. crude futures both fell more than 2 percent in late morning trade, extending losses to drop below their 200-day moving averages. Both contracts have fallen in 6 of the last 8 sessions, with only moderate gains on positive days.  The decline accelerated after the ECB left interest rates at zero percent, nudging the dollar higher. A stronger greenback makes dollar-denominated commodities like oil more expensive to holders of other currencies, discouraging buying. News that Libya had restarted two of its main oil fields after protests also added to selling pressure. Libya is one of two exporters exempt from OPEC's production cuts aimed at reducing a global oversupply of oil. That compounded weakness in the energy complex after the U.S. government reported a large build in gasoline inventories as refiners pumped a record amount of crude into facilities last week. This comes amid relatively weak gasoline demand.

Oil prices felled by Libyan oil restart and weak gasoline demand | Reuters: Crude prices were slightly lower after a volatile session on Thursday, as the restart of two key Libyan oilfields and concerns about lackluster gasoline demand fed concern over whether major oil producers can alleviate the glut of global inventories. Libya's Sharara and El Feel oilfields, which can produce nearly 400,000 barrels per day (bpd), returned to production after protests blocking pipelines ended. U.S. gasoline futures led the energy complex lower in choppy trading, at one point hitting its lowest level seasonally in eight years after data on Wednesday showed inventories rose by the most in nearly three months. Brent crude LCOc1 settled down 14 cents a barrel at $51.68. U.S. light crude CLc1 was down 37 cents to $49.25 a barrel. “Gasoline is kind of keeping crude from going up very much," said James Williams, president of energy consultant WTRG Economics in London, Arkansas. U.S. gasoline RBc1 tumbled almost 2 percent to $1.559 a gallon. "Gasoline is leading the way lower with ample stocks, lower demand compared to last year, and an increase in gas(oline) stocks on the east coast," said Anthony Headrick of CHS Hedging. “For the last four weeks gas demand is down 1.8 percent from last year.” Global crude oil inventories have remained high, in part because of increased production from the United States. At 9.27 million bpd it is at its highest since August 2015, according to government data.

Oil prices extend losses on supply concerns --  Crude prices fell more than 1 percent on Thursday as the restart of two key oilfields in Libya pumped more crude into an already bloated market. U.S. gasoline futures also led the complex lower, falling to the lowest in at least eight years for this time of year after inventories rose by the most in nearly three months and demand remained weak. Benchmark Brent crude was down 19 cents at $51.63 a barrel by 2:35 p.m ET (1735 GMT), nearly 9 percent below this month's peak. U.S. light crude ended Thursday's trade 65 cents, or 1.3 percent, lower at $48.98, having fallen to a fresh four-week low. Libya's 300,000 barrels per day (bpd) Sharara oilfield and 90,000 bpd El Feel oilfield have restarted after the end of protests that had blocked pipelines there, a Libyan oil source and local official said.Libyan crude production stood at 491,000 bpd on Thursday, but the OPEC member was targeting 800,000 bpd soon and 1 million to 1.1 million bpd by August, the chairman of state oil firm NOC said on the sidelines of an industry event in Paris. The news of the Libyan restarts helped push Brent below its 200-day moving average (MA) at $51.29 a barrel, a key technical support. "The 200-day had been a bullseye and today we fell through it. So to me that could be a bullish omen," said Anthony Headrick, energy market analyst at CHS Hedging. U.S. gasoline tumbled almost 3 percent to $1.5458 a gallon, the lowest since at least 2009 for this time of the year. 

Gasoline Demand Concerns Pressure Oil Prices - Now that the Organization of the Petroleum Exporting Countries (OPEC) has provided more certitude that an extension of the 1.2 million barrel per day coordinated cut is in the works, the market has shifted its worries to a glut in petroleum products. Although other concerns plague the market, such as a rising dollar, growing U.S. crude output, and material production from Libya coming back online, the main driver of uncertainty is the state of U.S. gasoline demand. For the second week in a row, the Energy Information Agency (EIA) reported a substantial build in U.S. gasoline inventories. For the week ending April 21, gasoline stocks rose by 3.4 million barrels. Demand for finished motor gasoline fell slightly week over week to 9.206 million barrels per day, but the 4-week average was down about 2 percent versus the same period last year. In anticipation of the summer driving season – when gasoline demand peaks – refiners have ramped up production to record levels, processing 17.3 million barrels per day at a seasonally high utilization rate of 94.1 percent, for the week ending April 21. At the same time imports of finished gasoline have been unusually high over the last two weeks – at 916,000 barrels per day for the week ending April 21 and 843,000 barrels per day during the previous week. Since Wednesday’s EIA data release, gasoline futures on the NYMEX and ICE have been trading down about 2 percent and 1.5 percent, respectively. Lower demand expectations for gasoline drag down oil prices as traders predict a reduction in refinery output, which would lead to growing stockpiles of crude. While waning gasoline consumption may be pressuring oil prices, the fact that crude inventories have been falling has provided some support. For the week ending April 21, the EIA reported a larger than expected drop in crude inventories of 3.6 million barrels. At Cushing, OK – the delivery point for the WTI contract – inventories fell by 1.2 million barrels for the week ending April 21. Looking at the larger economic picture in the United States, it would seem that the “Trump Trade,” which was staked on optimism around changes to policy that would boost business and employment growth, has lost steam. Now that the first 100 days have passed – with no legislative victories to claim – it appears that consumer confidence and other economic gauges are destined to continue flat-lining or fall. This implies a weak outlook for gasoline demand, which is highly correlated to GDP and employment growth.

OilPrice Intelligence Report: Crude Drawdowns Can’t Save Oil Prices: Oil prices got walloped this week on growing concerns that U.S. shale is coming back too quickly, offsetting the progress made by OPEC. Meanwhile, disrupted Libyan production could come back online, taking one of the few reasons to be bullish away. WTI briefly sank below $49 per barrel on Thursday, but regained a bit of ground at the start of trading on Friday.. U.S. refiners processed a record volume of crude oil last week, according to the EIA. With maintenance season over and refiners ramping up to meet summer demand, they are pulling crude oil out of storage. U.S. inventories dropped by 3.6 million barrels, the largest drawdown in quite a while. But that did very little for oil prices, which dropped sharply this week. One reason the data could be a little misleading: gasoline stocks actually jumped much higher, so all that refining is resulting in gasoline heading into storage. Goldman Sachs’ head of commodities, Jeff Currie, said that OPEC is likely to extend its deal for another six months. That could result in WTI trading between $55 and $60 for the rest of this year, which is a "substantial upside, given we are trading at roughly $49.50", Currie said on Bloomberg TV.. The IEA said on Thursday that the oil industry discovered a record low amount of oil in 2016, logging just 2.4 billion barrels in new discoveries. Also, the volume of oil given final investment decisions in 2016 amounted to 4.7 billion barrels, the lowest level in 70 years. The result could be a supply shortage towards the end of the decade, the IEA warned. In fact, the IEA has repeatedly warned about the pending shortfall, which would lead to higher prices and much more volatility by 2020.    Although there is conflicting news about what is going on in Libya, Reuters reports that several key oil fields in Libya are restarting operations, including the Sharara field that has a capacity of 300,000 bpd. That news could have been a big reason for the 1.6 percent sell off of WTI and Brent on Thursday. To be sure, there were separate reports that the Sharara field remained shut and Libyan production was still at a 7-month low at 490,000 bpd. Needless to say, Libyan production will likely seesaw for the foreseeable future, and conflicting reports will be likely.

 U.S. Oil Rig Count Increases For 15th Straight Week --The number of active oil and gas rigs in the United States rose by 13 on Friday, according to oilfield services provider Baker Hughes. The total oil and gas rig count in the US now stands at 870 rigs, or 450 above the count a year ago.Oil rigs increased by 9, while gas rigs bumped up 4. This week marks the fifteenth straight build for oil rigs (+175 or +33.5% since January 13). While gas rigs haven’t enjoyed the same persistently ascending trajectory week to week, they have climbed 10 of the last fifteen weeks, for a total gain of 35 (+25.7%). The largest three-week gain in the number of active oil rigs in the US over the last decade was April 1, 2011. The rig count spiked 26 that week, for a total of 76 rigs gained over a three consecutive-week period. WTI spot price that day was $107.55. Total number of active oil rigs that week: 877.So far this year, traders have watched, mostly likely in horror, at the tug of war between OPEC’s efforts to “rebalance” the market, and U.S. shale’s efforts to take full advantage of that rebalancing effort. For every depressing API or EIA report about the lackluster results of the global inventory drawdown efforts, and for every rig count report that shows U.S. Shale keeps picking up steam, OPEC’s obedient compliance to the cuts and talks of an extension appeases at least enough of the masses to generally keep oil above $50. Many have cautioned U.S. Shale drillers that bringing too much on too quickly could keep prices depressed, or depress them to a greater degree. The chart below, looking at the weekly price (Fridays) of WTI and the rig count over the last decade does show a pretty tight correlation to price (lower correlation is seen when price swings are sharp and dramatic), but also shows that the price of WTI pulls along the rig count, and not the other way around—at least not long term.

Baker Hughes U.S. Rig Count Rises by 13 - U.S. oil and natural gas producers brought online 13 rigs in the past week, sending Baker Hughes' (BHI) rig count up to a total of 870 units. Nine oil rigs were added week over week, while the number of natural gas rigs rose by four, according to the Houston oilfield services provider. Meanwhile, just as President Donald Trump signed an executive order calling for a review of America's offshore drilling policies, Baker Hughes reported the U.S. offshore count fell by three this week. The offshore count, now at 17 overall, is down eight rigs year over year. Industry analysts don't expect Trump's executive order to have a meaningful impact on offshore rig counts for at least two years as much of the Arctic and Atlantic oceans would require extensive seismic testing and geological studies for operators to determine where profitable reserves can be drilled. All told, the U.S. land rig count is now up 450 rigs from a year ago when it stood at 420, Baker Hughes data showed. Oil rigs are up 365 in the past year, while natural gas rigs have climbed by 84 and miscellaneous rigs are up one. Contrary to the recent trend, the Permian Basin of West Texas and New Mexico did not see the largest weekly gain, adding just two rigs. South Texas' Eagle Ford Shale oil and natural gas play for the second consecutive week saw the largest uptick in drilling activity with five new rigs coming online. Still, the Permian has of late been the dominant force behind increased drilling activity as strategic operators have bolstered acreage in the play to inevitably ramp production in the most lucrative of U.S. oil basins.   Out of the 870 active U.S. land rigs, 342 are focused on the Permian, according to Baker Hughes' data. By comparison, the basin with the nearest level of activity to that of the Permian is the Eagle Ford with 83 rigs online. Overall, the U.S. land rig count's first-quarter average of 719 units was 27% above fourth quarter numbers, Stephens oilfield services analysts Christopher Denison and Brooks Braden said in a recent research note. And the firm expects the count to increase another 20% quarter over quarter in the second frame.

Oil Shortage Feared by 2020 as Discoveries Fall to Record Low - —Global oil discoveries fell to a record low in 2016, the International Energy Agency says, raising fresh concerns about the potential for a petroleum-supply shortage as soon as 2020.  The IEA—a Paris group that monitors energy trends for oil-dependent places like the U.S. and Europe—is stepping up its warnings about historically low oil-industry investment during the latest price downturn. Oil companies and producing nations curtailed spending by hundreds of billions of dollars during the price rout, resulting in the fewest new conventional oil projects being sanctioned in 2016 since the 1940s, the IEA said. The group’s assessment, shared with The Wall Street Journal ahead of a full investment report to be released in July, represents its most comprehensive study yet of how the downturn has already negatively affected spending. The IEA doesn’t forecast oil prices, but any shortage would likely cause significant crude-price increases. Don’t expect output from U.S. shale producers to fill the void, the IEA said. American shale production is expected to grow by 2.3 million barrels a day or more over the next five years, but that isn’t enough to make up for declining output elsewhere. The IEA also doesn’t expect global oil demand to stop growing any time soon, potentially turning the current glut of oil into a dearth. “The key question is how long can the surge in U.S. shale supplies make up for the declining pace of growth elsewhere?” said IEA executive director Fatih Birol. “We are worried about historically low discoveries and new projects.” A new “boom-and-bust cycle” looks increasingly likely if conventional projects—generally defined as anything that uses traditional methods to extract oil, unlike shale—don’t receive greater investments, Mr. Birol said. In 2016, oil discoveries amounted to just 2.4 billion barrels of potential oil, the lowest since the IEA’s records began in 1950. That is down from 6.4 billion barrels of discoveries in 2013, when oil prices were consistently above $100 a barrel and 16.3 billion barrels in 2010, the IEA said. The global oil industry greenlighted projects amounting to over 4.8 billion barrels of oil in 2016, down from 21.2 billion barrels in 2014.

Can An OPEC Extension Push Oil To $60? -- It now seems quite likely that OPEC will agree to an extension of November’s production cut agreement at their May meeting. The question facing analysts and market watchers is how much a cut extension will impact the market going forward, and whether it will deliver the boost in prices that OPEC is hoping for. In November, the agreement was a boon to the price, sending WTI north of $50, only for prices to fall a few months later. The impact of the deal, which was publicized for months beforehand and enjoyed blanket coverage from all major market media outlets, was significant but temporary. Inventory reports in February caused the price to crash back down, and apart from a brief swing upwards after U.S. missile strikes in Syria, an event which had analysts crowing over the return of the risk premium, prices have slumbered near $50, far below where OPEC needs them to be. Undoubtedly, OPEC is hoping an extension of cuts will have a more lasting effect, delivering true stability to markets and lifting prices up to $60. The level several OPEC members have indicated they want prices to rest over the long-term, in order to balance their budgets. But a string of bearish signs have pushed the price below $50, and barring another bout of “geopolitical risk,” it seems only significant changes in fundamentals will deliver the boost OPEC needs. The impact of the first round of cuts was blunted in part due to the ramp-up in production during the fourth quarter of 2016. Huge inventories were reported in the U.S. early in 2017, though there were declines in OECD inventories according to the IEA, evidence that the OPEC and non-OPEC cuts totaling 1.8 million bpd were having some effect, despite low compliance from non-OPEC states. American inventories were expected to fall, boosting price in the short-term. Instead, unexpectedly high gasoline inventories pushed the price to its lowest point in weeks in mid-April, despite simultaneous drops in the crude supply. The decline of about 1 million barrels was less than analysts predicted. American inventories are falling, which bode well for a price recovery if OPEC does decide to extend cuts. Yet the effect may not be immediate enough for OPEC to declare victory in June, as rising production in the fourth quarter of 2016 in OPEC and outside of OPEC in early 2017 basically obviated the cumulative effect of the cuts.

King Scales Back Austerity Plan That Set Saudis Grumbling --  Saudi Arabia’s King Salman restored bonuses and allowances for state employees, scaling back an austerity program that generated criticism among citizens accustomed to generous state handouts. The government said the perks canceled in September were reinstated because higher-than-expected revenue helped to drive down the budget deficit. Minister of State Mohammed Alsheikh said in a statement to Bloomberg that the injection of more money was expected to stimulate economic growth, but others said the kingdom’s rulers were responding to the discontent the cutbacks created. The decision “constitutes a step back in terms of forging a new social contract that no longer offers the Saudi public cradle-to-grave welfare,” said James M. Dorsey, a Saudi specialist and senior fellow in international studies at Nanyang Technological University in Singapore. It suggests the government is worried that its economic overhaul plan hasn’t been accepted “by segments of the population who have the most to lose from diversification and streamlining of the economy, including the bureaucracy,” he said. In his decrees Saturday night, King Salman also pressed on with a government shakeup that has installed his children in key positions. Prince Abdulaziz bin Salman was named Minister of State for Energy Affairs, while Prince Khalid bin Salman was appointed envoy to Washington. Additionally, Ibrahim AlOmar, a former chief executive of National Shipping Co., was appointed governor of the Saudi Arabian General Investment Authority.  The government has not said how much the bonuses were worth, but an estimated two-thirds of all working Saudis are public sector employees.

Saudi Arabia reverses austerity measure and reinstates benefits -- Saudi Arabia’s King Salman bin Abdulaziz reversed one of the kingdom’s most contentious austerity measures on Saturday, reinstating benefits to civil servants and military personnel. In dozens of royal decrees, King Salman also reshuffled the cabinet, appointing his son, Prince Khaled bin Salman, as ambassador to the US. The reinstatement of benefits to civil servants after six months underlines the limits of reform in the kingdom, where the ruling family must be seen to provide for the people in return for loyalty to the state. “The royal order returns all allowances, financial benefits and bonuses to civil servants and military staff,” the decree said. Last year’s move, which affected the take-home pay of two-thirds of working Saudi nationals, was the most severe measure taken to limit government spending in a time of low oil prices. It had an instant impact on consumer confidence and business sentiment. The reversal was also regarded as politically damaging to Mohammed bin Salman, the powerful 31-year-old deputy crown prince, who is leading the kingdom’s economic reform drive. Officials said the reinstatement of benefits was made possible by a better than expected fiscal situation after two years of cost-cutting to combat the sustained fall in oil prices. Mohammed al-Tuwaijri, the deputy economy minister, said on state television that the first quarter deficit was SR26bn ($7bn), compared with SR54bn projected at the beginning of the year.

Analysis: No sign of oil policy reversal from Saudi Arabia after royal decrees -  Saudi King Salman's surprise decrees over the weekend that reinstated allowances and bonuses for public sector employees and military personnel is not a sign that the much heralded Vision 2030 economic reforms are being put aside, according to analysts and Saudi observers. But nor is the policy reversal evidence of any return to the kind of government largesse that some Saudis had become used to. Rather, the changes amounted to a recognition of a need to correct a year of austerity measures that hit too hard, as the kingdom struggled to adapt to lower oil prices.The king on Saturday also appointed several government officials seen as close to Vision 2030 champion and Salman's son, Deputy Crown Prince Mohammed bin Salman, which would appear to cement the ambitious economic reform plan. "Vision 2030 might be detoured from time to time but it represents Plans A, B and C for the government," said Matthew Reed, vice president at Washington-based Middle East consultancy Foreign Reports. "Most Saudis recognize the system needs fixing, that there is fat to cut. But last year, when state finances looked grim, Riyadh cut to the bone when it suspended benefits and bonuses. It was probably too deep," he added. 

If Saudi Future’s So Bright, Why Can’t These Banks Find Buyers? -- Saudi Arabia is about to cast off its oil-dependence, build brand-new industries and open its economy to foreign investment, according to the government. That might make it a good time to buy into a Saudi bank. And substantial stakes in two of them are up for sale.But in both cases, it’s international lenders who are seeking to get out -- and there are no big-name global banks eager to buy, according to analysts and people familiar with the transactions; what interest there is comes from local or regional groups. That reflects concerns about prospects under Saudi Arabia’s ambitious reform program, as Deputy Crown Prince Mohammed bin Salman cuts back the government spending that’s traditionally buoyed the economy.One result of austerity is the worst growth since the world recession of 2009, and it’s forecast to slow further this year. New construction projects are scarce, and payments to builders got held up last year. That’s hurting banks that lend to them, including the two on the market. Royal Bank of Scotland Group Plc has reportedly been seeking for years to sell its 40 percent stake in Alawwal Bank, while Credit Agricole SA is considering a sale of its 31 percent stake in Banque Saudi Fransi, according to people familiar with the matter.Control of the banks isn’t on offer, and that’s one issue for buyers. But another is that banking is “basically the final stopping point you find of all the risks in the Saudi economy,” said Crispin Hawes, London-based managing director at Teneo Intelligence. “They all crystallize in the loan books of domestic banks.” So, even if there’s a “very good case” for investment in some industries, that’s less true in banking, Hawes said.

 Outrage After At Least 5 EU Nations Elect Saudi Arabia On UN Women's Rights Council -  In what may have been the biggest trolling of the United Nations in recent history, Saudi Arabia was elected via secret ballot in the UN Economic and Social Council to the 45-member UN Commission on the Status of Women last week. According to Reuters, twelve other countries were also elected by the council in Geneva to serve for a four-year term, ending in 2022: Algeria, Comoros, the Democratic Republic of the Congo, Ghana, Kenya, Iraq, Japan, South Korea, Turkmenistan, Ecuador, Haiti and Nicaragua.The news promptly sparked mocking and ridicule. UN Watch, a human rights organization monitoring the performance of the United Nations, strongly condemned the appointment of Saudi Arabia to post,citing Riyadh’s poor women’s rights record and widespread gender inequality.“Electing Saudi Arabia to protect women’s rights is like making an arsonist into the town fire chief. It’s absurd,” Hillel Neuer, the UN Watch chief, said. Every Saudi woman “must have a male guardian who makes all critical decisions on her behalf, controlling a woman’s life from her birth until death. Saudi Arabia also bans women from driving cars,” Neuer added.

Exclusive: Trump complains Saudis not paying fair share for U.S. defense | Reuters: President Donald Trump complained on Thursday that U.S. ally Saudi Arabia was not treating the United States fairly and Washington was losing a “tremendous amount of money” defending the kingdom. In an interview with Reuters, Trump confirmed his administration was in talks about possible visits to Saudi Arabia and Israel in the second half of May. He is due to make his first trip abroad as president for a May 25 NATO summit in Brussels and could add other stops. "Frankly, Saudi Arabia has not treated us fairly, because we are losing a tremendous amount of money in defending Saudi Arabia,” he said. Trump’s criticism of Riyadh was a return to his 2016 election campaign rhetoric when he accused the kingdom of not pulling its weight in paying for the U.S. security umbrella. "Nobody’s going to mess with Saudi Arabia because we’re watching them," Trump told a campaign rally in Wisconsin a year ago. “They’re not paying us a fair price. We’re losing our shirt.” The United States is the main supplier for most Saudi military needs, from F-15 fighters to control and command systems worth tens of billions of dollars in recent years, while American contractors win major energy deals. The world's top oil exporter and its biggest consumer have enjoyed close economic ties for decades, with U.S. firms building much of the infrastructure of the modern Saudi state after its oil boom in the 1970s. Saudi officials could not immediately be reached for comment on Trump's latest comments.

IMPORTANT CORRECTION TO The Nerve Agent Attack that Did Not Occur - In my earlier report released on April 18, 2017 titled The Nerve Agent Attack that Did Not Occur: Analysis of the Times and Locations of Critical Events in the Alleged Nerve Agent Attack at 7 AM on April 4, 2017 in Khan Sheikhoun, Syria, I misinterpreted the wind-direction convention which resulted in my estimates of plume directions being exactly 180° off in direction. This document corrects that error and provides very important new analytic results that follow from that error.When the error in wind direction is corrected, the conclusion is that if there was a significant sarin release at the crater as alleged by the White House Intelligence Report issued on April 11, 2017 (WHR), the  immediate result would have been significant casualties immediately adjacent to the dispersion crater.The fact that there were numerous television journalists reporting from the alleged sarin release site and there was absolutely no mention of casualties that would have occurred within tens to hundreds of meters of the alleged release site indicates that the WHR was produced without even a cursory low-level review of commercial video data from the site by the US intelligence community. This overwhelmingly supports the conclusion that the WHR identification of the crater as a sarin release site should have been accompanied with an equally solid identification of the area where casualties were caused by the alleged aerosol dispersal. The details of the crater itself unambiguously show that it was not created by the alleged airdropped sarin dispersing munition.These new details are even more problematic because the WHR cited commercial video as providing information that it used to derive its conclusions that there was a sarin attack from an airdropped munition at this location. As can be seen by the corrected wind patterns in the labeled photographs on the next page, the predicted direction of the sarin plume would take it immediately into a heavily populated area. The area immediately adjacent to the north northwest of the road is may not be populated, as there was likely heavy damage to those homes facing the road from a bombing attack that occurred earlier at a warehouse to the direct east of the crater (designated on map below). However, houses that were immediately behind those on the road would have been substantially shielded from shock waves that could have caused heavy damage to those structures.

Boris Johnson’s foreign policy in Syria is based on wishful thinking -- There is nothing surprising in Boris Johnson saying that it would be difficult for the UK not to join US military action in Syria against President Bashar al-Assad’s forces in response to a chemical weapons attack. Since the Second World War British governments have been trying to strengthen the UK’s status as the most important military ally of the US. But after 9/11 this obeisance became more craven and knee-jerk, despite producing failed British military ventures in Iraq and Afghanistan. With the Trump administration in power in the US, these British efforts to prove to Washington the usefulness and reliability of its links to the UK have become ever more desperate. Britain’s departure from a major alliance like the EU, and likely confrontation with it over the terms of Brexit, is bound to make Britain less of a power in the world. It therefore needs to foster closer relations with Trump’s America along with an unsavoury list of countries such as Turkey, Saudi Arabia and Bahrain. This may be a little more dangerous than it looks because nobody quite knows what the Trump foreign policy will amount to in Syria and Iraq. Is it, for instance, going to confront Iran and tear up the nuclear agreement with Tehran? Has it reverted to giving priority, at least nominally, to getting rid of Assad? These questions are worth thinking about, if only so as not to repeat the ill-thought-out flippancy with which British governments plunged into such dangerous places as Basra in southern Iraq in 2003 where it ended up signing a humiliating truce with the Mehdi Army Shia militia.

As Conflict Rages On, Russia Lands Oil Deals In Syria -- Russia’s brazen confidence in its victory in propping up Syrian President Bashar Al Assad’s once-failing regime grows day by day, as evidenced by Moscow’s latest oil deals with the Syrian government.Sputnik news reports that Russian Deputy Prime Minister Dmitry Rogozin visited Damascus in November to get the ball rolling on the fossil fuel deals. “We already started with some of the companies after his visit … the Syrian market is free now for Russian companies to come and join and to play an important part in rebuilding Syria and investing in Syria," Assad said, according to a report last week. “The process of signing the contracts, the final, let's say, steps of signing the contracts is underway.”This isn’t the first we have heard of Russia’s interest in Syria’s fossil fuel resources. In February, Dmitry Sablin, a lawmaker from the Duma, confirmed that Assad had greenlighted Moscow’s energy projects in the country."With regard to oil and gas production, he said that neither Iran nor China have companies with a worldwide reputation in this field, as Russia has, so in the oil and gas production, he [Assad] sees only the work of Russian companies," Sablin said. To be fair, Iran’s “worldwide” reputation was likely maimed due to six years of international sanctions against the nation’s oil sector, which were only lifted in January of last year. As the world’s largest energy consumer, China is occupied with making sure locally produced fuel remains available for domestic use. Beijing’s foreign efforts have been focused on securing access to reserves in African countries, such as Angola, Nigeria, and Sudan.

US Deploys Troops Along Syria-Turkey Border - Just three days after Turkish warplanes killed at least 20 US-backed Kurdish fighters along the Turkey-Syria border as well as several Kurdish peshmerga troops on Mount Sinjar in northwestern Iraq, footage posted by Syrian activists showed the US has deployed troops and APCs in the contested region, in a move that could potentially drag the US in a conflict where it already finds itself mediating between two so-called US ally forces in the proxy war against Syria. The Turkish airstrikes also wounded 18 members of the U.S.-backed People's Protection Units, or Y.P.G., were criticized by both the U.S. and Russia. The YPG is a close U.S. ally in the theatrical fight against the Islamic State (whose real purpose is destabilizing the Assad regime); it is seen by Ankara as a terrorist group because of its ties to Turkey's Kurdish rebels. The problem is that Turkey is also an ally of the US, although over the past two years relations between Turkey and all western NATO allies have deteriorated substantially for numerous familiar, and extensively discussed in the past, reasons.On one hand, further clashes between Turkish and Kurdish forces in Syria could potentially undermine the U.S.-led war on the Islamic State group. On the other, it risks taking an already unstable situation in Syria and escalating it substantially, should Turkey again find itself invading Turkey and/or Iraq. Which is why the US appears to have deployed troops along the border: to serve as a deterrent to further Turkish attacks.

Reddit Allows “Syrian Rebel” Group To Promote Al-Qaeda Affiliates  -- An investigation has revealed that terror groups operating out of Syria have taken to Reddit, utilizing the online messageboard as a forum for individuals who support Islamic terror groups operating inside Syria. Disobedient Media has determined that the subreddit r/SyrianRebels lists at least one moderator who appears to support extremist-aligned groups in Syria and has recently announced that they will host an "Ask Me Anything" session with a senior Al-Qaeda militant in charge of media outreach for the terror group. Reddit has refused to remove the subreddit, claiming that it does not violate their site's rules. The front page of r/SyrianRebels sports a number of posts that are anti-Assad and support the contention that the Syrian government was behind the April 4th chemical weapons attack in Khan Shaykhun, Syria. They also feature several articles from the Atlantic Council. Disobedient Media has previously noted that the Atlantic Council is a think tank which has in the past taken money from special interests in return for pushing specific policy objectives that benefit their donors.Multiple members of the subreddit's moderating team appear to be either supporters or members of groups within Syria who have ties to Islamic extremist groups fighting in the country's civil war. Several moderators espouse support for the Syrian White Helmets, who Disobedient Media has tied to war crimes committed by rebel groups in Aleppo and other areas of Syria. Another supports the Al Bunyan al Marsous Operations Room, a coordinated organization of rebels in Daraa, Syria. Observers have noted that members of the Al Bunyan al Marsous Operations Room include Hay’at Tahrir al Sham, who have been described by BBC News as being Al-Qaeda's latest incarnation in Syria. The subreddit has also linked to their own dedicated Telegram channel. Telegram has been reported to be a favorite medium of communication for jihadists due to its encrypted messaging system and has been criticized for hampering anti-terror units in their efforts to combat extremists.

Somehow The US Has Killed 70k ISIS Fighters - Twice As Many As It Says Exist --  In June 2014, around the time ISIS was making headlines across the world, the Wall Street Journal reported that the terror group had 4,000 fighters in Iraq. In September 2014, the CIA released an estimate claiming ISIS had between 20,000 and 31,500 fighters combined in both Iraq and Syria, including 15,000 who were foreign fighters. Almost half were foreign fighters? That’s some organic uprising taking place in Syria.   One month before the CIA’s estimate, the Syrian Observatory for Human Rights (SOHR)released an estimate of their own that placed ISIS’ membership at well over 50,000 fighters in Syria, alone (including 2 0,000 non-Syrians.) But SOHR is run by one man who owns a clothing shop in Coventry, England. He was once quoted as saying “I came to Britain the day Hafez al-Assad died, and I’ll return when Bashar al-Assad goes.” This bias is rarely reported in the corporate media, which regularly cites SOHR.Regardless of the exact numbers, the U.S.-led re-intervention into Iraq had already begun in June 2014 (before these estimates had been released.) Understandably, the total number of ISIS fighters in Iraq and Syria has fluctuated somewhat — it has both increased and decreased over time — since the U.S. began a bombing campaign in both countries that was supposedly designed to “degrade and destroy” them. But they left the terrorists’ $50 million a month oil revenue completely intact. That’ll show them. For some reason, the U.S. decided to leave this task to the Russians, who targeted ISIS’ lucrative source of revenue on America’s behalf (only for a NATO member to shoot down their jets in response).The number of ISIS fighters supposedly killed by the U.S.-led coalition has also been somewhat disputed. At the end of last year, U.K. Defense Secretary Michael Fallon estimated that the coalition had killed a whopping 25,000 fighters during the campaign. However, a senior military official told CNN at around the same time that the Pentagon’s conservative estimate was that the U.S. air campaign had killed a staggering 50,000 ISIS fighters.In its most recent published numbers, the Pentagon claims to have killed over 70,000 militants since June 2014 while only killing a mere 229 civilians. That’s an alleged hit rate of over 99 percent.  Of course, we know this to be a false estimate. I’m not just referring to the ludicrously low number of civilians killed; the idea that the U.S. killed 70,000 ISIS militants is so outlandish it begs the question: What would actually remain of a terror group that initially had 30,000 fighters, if a total of 70,000 fighters (more than double their estimated membership) were killed just for good measure?

How North Korea gets its oil from China: lifeline in question at U.N. meeting | Reuters: As the United Nations Security Council decides whether to tighten the sanctions screws on North Korea, the country's increasingly isolated government could lose a lifeline provided by state-owned China National Petroleum Corp (CNPC). For decades, the Chinese oil giant has sent small cargoes of jet fuel, diesel and gasoline from two large refineries in the northeastern city of Dalian and other nearby plants across the Yellow Sea to North Korea's western port of Nampo, five sources familiar with the business told Reuters. Nampo serves North Korea's capital, Pyongyang. CNPC also controls the export of crude oil to North Korea, an aid program that began about 40 years ago. The sources said the crude is transported through an ageing pipeline that runs from the border town of Dandong to feed North Korea's single operational oil refinery, the Ponghwa Chemical factory in Sinuiju on the other side of the Yalu river, which splits the two nations. The plant makes low-grade gasoline and diesel, the Chinese sources said. The five people outlined previously unreported details about CNPC's deals with Pyongyang and how it came to dominate that business, giving insight into the two countries' relationship and what's at stake as decades of close ties sour badly because of growing concerns about North Korea's missile programs and development of nuclear weapons. U.S. Secretary of State Rex Tillerson will press the U.N. Security Council on Friday to swiftly impose stronger sanctions in the event of further provocations by the reclusive state, including a long-range missile launch or sixth nuclear test.

China Seeks Help to Find Oil, Gas in South China Sea -- The Chinese government is looking to foreign businesses to help find oil and natural gas under the South China Sea. Last week, China’s state-operated China National Offshore Oil Corporation made an appeal for foreign help. Yet China expects to meet resistance because other countries dispute Chinese territorial claims to much of the sea. In addition, observers say any oil and gas discoveries might not be very profitable. The company said it wants to work with foreign businesses in exploring for fossil fuels in 22 areas south of the country’s coast. When combined, that represents more than 47,000 square kilometers of territory. The governments in Taiwan and Vietnam also claim those waters. Foreign oil companies are now studying the Chinese offer, which closes in September. Experts say the companies may be worried that any work they do for China could hurt their ability to work for other countries. And they say the companies may also be worried that any oil or gas they find could be claimed by China’s neighbors.

In China, rural rich get richer and poor get poorer | South China Morning Post: Researchers have warned about a growing wealth gap in rural areas, posing further challenges as Beijing makes poverty alleviation a top priority. An annual report by the Chinese Academy of Social Sciences (CASS) found that although the wealth gap between different regions is narrowing, inequality between different income groups is expanding. The annual disposable income for rural residents averaged 12,363 yuan (US$1,797) last year, a 6.2 per cent increase over the previous year, but not every group of rural residents fared equally well. The annual disposable income for high-income groups increased by 9.8 per cent last year, and by 8.4 per cent for the middle-low group. However, the amount decreased by 2.6 per cent for low-income groups, the report said. President Xi Jinping has pledged to wipe out poverty, or annual incomes lower than 2,300 yuan, by 2020. Xi even made himself a delegate in Guizhou – where much of the population lives under the poverty line – to the party’s 19th national congress to show he attaches high importance to the issue. Du said the report clearly showed the wealth gap among rural residents was expanding, which cast doubt on whether the wealth gap between urban and rural residents was narrowing. The income ratio between rural and urban residents dropped from 1: 3.33 in 2015 to 1:2.72 last year. But Du said having such a wide gap in incomes among rural residents made comparing average rural and urban incomes less meaningful. 

Chinese money market fund becomes world’s biggest - A money market fund set up by a Chinese tech company as a repository for leftover cash from online spending has emerged as the world’s biggest, with $165.6bn under management.Alibaba’s four year old Yu’e Bao fund — the name translates as leftover treasure — has overtaken JPMorgan’s US government money market fund, which has $150bn.The rapid growth of the fund highlights the pervasive role played by China’s tech groups in people’s lives — and simultaneously in disrupting state-controlled industries such as finance.Alibaba’s payments affiliate, Ant Financial, moved into fund management when it spotted the growing piles of cash in its customers’ accounts that are used to pay for everything from coffee to taxis to fridges.By sweeping the money into a fund, much like US and UK brokers did with client funds in the 1980s and 1990s, Ant Financial was able to offer a return on surplus funds. The fund pays 3.93 per cent.Alastair Sewell, head of fund and asset manager ratings at Fitch Ratings, said that while a similar disruption had been expected globally “to date we have not seen similar arrangements from the likes of the Googles and Facebooks of the world”.The scale of the fund allows Ant to negotiate better rates with banks, said Peter Alexander, managing director of China consultancy Z-Ben Advisors — and has proved so attractive that customers have responded by taking their money out of bank accounts and placing it in their Alipay digital wallets.“Because Ant have so many individual accounts they are able to have the power to negotiate with banks, and because the duration is very short, they also have high liquidity,” he said.

Xi Jinping summons China’s financial watchdogs in rare move, warning them to watch out for risks | South China Morning Post: In an unusual move, President Xi Jinping on Wednesday summoned the country’s finance industry watchdogs and ordered them to take stock of financial risks and uphold regulatory vigilance, reflecting his deep concern about dangers facing China’s economy. “We must not neglect a single risk factor or ... hidden danger,” Xi was quoted as saying by Xinhua. “Safeguarding financial security is a strategic and fundamental matter for China’s social and economic development.” Xi’s remarks, made at a “group study meeting” of the 25-member Politburo of the Communist Party, come as Beijing cracks down on the financial industry, runs after tycoons, addresses stock market irregularities and reins in off-balance-sheet operations of banks.Xi is trying to reduce risks in the financial sector that could lead to crisis or even social disorder ahead of a key party conference this autumn, taking a lesson from the stock market rout in the summer of 2015 that wiped out trillions of yuan in value and undermined Beijing’s credibility. “This is such a politically important year that the Chinese leadership wants no outbreak of any financial risks,” said Larry Hu, chief China economist of Macquarie Securities in Hong Kong. At the meeting, Zhou Xiaochuan, governor of the People’s Bank of China, Guo Shuqing, chairman of China Banking Regulatory Commission, and Liu Shiyu, chairman of China Securities Regulatory Commission, reported on financial risk controls in their realms. 

China's Xi Jinping urges restraint on North Korea issue on call with Donald Trump -  President Xi Jinping called for restraint when dealing with North Korea during a telephone call with President Donald Trump, Chinese state media reported Monday, amid speculation that Pyongyang could soon carry out a sixth nuclear test. The official broadcaster CCTV quoted Xi as telling Trump that China strongly opposed North Korea's nuclear weapons program, which are in violation of United Nations Security Council resolutions, and hoped "all parties will exercise restraint and avoid aggravating the situation" on the Korean Peninsula. The Trump administration has warned that all options, including a military strike, are on the table to halt North Korea's ambitions of developing a nuclear-tipped missile that could reach the U.S. mainland. However, U.S. officials have told The Associated Press that the military response isn't likely. Trump has reportedly settled on a strategy that emphasizes increasing pressure on Pyongyang with the help of China. "Only if all sides bear the responsibilities they're supposed to bear and come together, can the nuclear issue on the peninsula be resolved as quickly as possible," Xi told Trump, according to CCTV. The phone call, which took place Monday morning Beijing time, came as South Korean officials warned there is a chance that the North will conduct a nuclear test or a maiden intercontinental missile launch around the founding anniversary of its military on Tuesday. Trump has pressed Xi to exert greater pressure against North Korea, given China's status as the country's sole economic lifeline and major ally. Monday's call is the second time that the two leaders have spoken by telephone since meeting in Florida earlier this month.

Opinion: a look at how China truly views potential war, as tensions rise over North Korea | South China Morning Post: It is a striking thing when war metaphors take a physical form. On April 14, a succession of beautiful days in the Yanbian Korean autonomous prefecture was broken by the arrival of immense dark clouds, heavy rain and flashes of lightning. The suddenly apocalyptic weather coincided with the arrival of rumours that the US military might engage in pre-emptive strikes on nearby North Korea. As the rain lashed down outside his dusty shop, a bookseller in Yanji asked me if I thought April 15 would mark all-out war on the peninsula, and if that meant China would soon be dealing with a new cross-border government under South Korean control. I wanted to tell him that war on the Korean peninsula would result in utter carnage, but I thought it was better left unsaid, and quickly left for Shenyang. The impact on China in any given conventional or nuclear Korean War scenario is typically dire. And in spite of the hours of talks supposedly dedicated to the issue between Chinese and US leaders and officials, there is very little information presented from these events that helps us to understand China’s options in such a nightmare scenario.In dealing with North Korea, do Chinese strategists and thinkers see the United States and South Korea (along with Japan) as the main problem, and Pyongyang as an asset to manage? Or is Pyongyang the main culprit in stoking tensions again to the brink of war? In assessing Chinese discourse on North Korea, we clearly need to go beyond statements and press briefings made at China’s foreign ministry and via Global Times editorials. The writings of security academics in China can provide a good barometer for the issue.

China's Shift on N.Korea Brings Big Risks and Opportunities - The Chosun Ilbo (English Edition) -  China's state-run Global Times in an editorial a few days ago said a military intervention by Beijing would be "unnecessary" if the U.S. chooses to launch a surgical strike against North Korea's nuclear weapons facilities. The comments are being interpreted as tacit approval of a pre-emptive strike by the U.S. against North Korean targets, though the paper added that Beijing would ensure that North Koreans do not suffer a humanitarian catastrophe. That is a remarkable shift in China's position, since its troublesome alliance pact with North Korea from 1961 binds the two countries to help each other if one side comes under attack. In effect, the comments appear to be an ultimatum to Pyongyang against conducting another nuclear test. If North Korean leader Kim Jong-un pushes ahead with the test regardless, the chances are now much higher that the trigger-happy Trump administration will launch some kind of surgical strike on its nuclear facilities. Something seems to have happened when U.S. President Donald Trump met Chinese President Xi Jinping on April 7, and now Beijing appears is reviewing its North Korea policy. The Chinese government was also apparently shocked at the crude public assassination in Kuala Lumpur in February of Kim's half-brother Kim Jong-nam, who was under Chinese protection.Already Beijing seems to be turning off North Korea's oil supply. "As the upcoming nuclear test could potentially be hazardous to Northeastern China, sanctions imposed by Beijing within the United Nations framework will increase, thus dramatically decreasing the amount of petroleum exported to North Korea," as the Global Times put it. 

North Korea Warns China Of "Catastrophic Consequences" For Siding With U.S. - Having repeatedly threatened the annihilation of its neighbor to the south, and most recently warning of a "super-mighty preemptive strike" against the US, one day after it emerged that Pyongyang appeared to have resumed activity at its Punggye-ri Nuclear test site, North Korea asked China not to step up anti-North sanctions, warning of "catastrophic consequences" in their bilateral relations. Pyongyang issued the warning through commentary written by a person named Jong Phil on its official Korean Central News Agency (KCNA), which was released Saturday.  As South Korea's Yonhap news agency writes, it's rare for Pyongyang's media to level criticism at Beijing, though the KCNA didn't directly mention China in the commentary titled "Are you good at dancing to the tune of others" and dated Friday. The commentary instead called the nation at issue "a country around the DPRK," using North Korea's official name, the Democratic People's Republic of Korea. "Not a single word about the U.S. act of pushing the situation on the Korean peninsula to the brink of a war after introducing hugest-ever strategic assets into the waters off the Korean peninsula is made but such rhetoric as 'necessary step' and 'reaction at decisive level' is openly heard from a country around the DPRK to intimidate it over its measures for self-defense," the commentary's introduction in English read.  "Particularly, the country is talking rubbish that the DPRK has to reconsider the importance of relations with it and that it can help preserve security of the DPRK and offer necessary support and aid for its economic prosperity, claiming the latter will not be able to survive the strict 'economic sanctions' by someone."Then, the KCNA commentary warned that the neighbor country will certainly face a catastrophe in their bilateral relationship, as long as it continues to apply economic sanctions together with the United States."If the country keeps applying economic sanctions on the DPRK while dancing to the tune of someone after misjudging the will of the DPRK, it may be applauded by the enemies of the DPRK, but it should get itself ready to face the catastrophic consequences in the relations with the DPRK," it said.

North Korea Arrests US Citizen, Threatens To Sink US Aircraft Carrier As Japan Deploys Warships -- A third US citizen has been arrested and remains in custody in North Korea, according to South Korean news agency Yonhap. A man, a Korean-American professor in his 50s, identified by the surname Kim, had been in North Korea for a month to discuss relief activities and was detained at Pyongyang International Airport just as he was leaving North Korea, the agency reported.  The man was a former professor at Yanbian University of Science and Technology (YUST), Yonhap said, citing unnamed sources. YUST, a university in neighboring China, has a sister university in Pyongyang. An official at South Korea's National Intelligence Service said it was not aware of the reported arrest. The reason for his arrest is still unclear, and there has been no comment from the US authorities so far. South Korea’s spy agency, the National Intelligence Service, said it “was not aware” of Kim’s arrest, according to Yonhap.  North Korea, which has been criticized for its human rights record, has in the past used detained Americans to extract high-profile visits from the United States, with which it has no formal diplomatic relations. North Korea already holds two Americans. Ahn Chan-il, director of the World North Korea Research Center in Seoul, said that the North "seems to be intending to use professor Kim as leverage in negotiations" amid the current bad relations between the two countries. Meanwhile, one day after North Korea lashed out at its biggest supporter in the region China, threatening Beijing with "catastrophic consequences" for siding with the U.S. over sanctions, North Korea said on Sunday it was ready to sink a U.S. aircraft carrier steaming toward the Korean penninsula to demonstrate its military might, as two Japanese navy ships joined a U.S. carrier group for exercises in the western Pacific.

North Korea fails in another ballistic missile test, hours after China warns UN meeting that military action would lead to ‘bigger disasters’ | South China Morning Post: North Korea test-fired a ballistic missile Saturday in apparent defiance of a concerted US push for tougher international sanctions to curb Pyongyang’s nuclear weapons ambitions. The latest launch, which South Korea said was a failure, came just hours after US Secretary of State Rex Tillerson warned the UN Security Council of “catastrophic consequences” if the international community - most notably China - failed to pressure the North into abandoning its weapons programme. Military options for dealing with the North were still “on the table”, Tillerson warned in his first address to the UN body. It was likely a medium-range KN-17 ballistic missile, the Associated Press reported, citing an unidentified US official. Analysts say the KN-17 is a new Scud-type missile developed by North Korea. The North fired the same type of missile April 16, just a day after a massive military parade where it showed off its expanding missile arsenal, but US officials called that launch a failure. Some analysts say a missile the North test fired April 5, which US officials identified as a Scud variant, also might have been a KN-17. US officials said that missile spun out of control and crashed into the sea. The launch ratchets up tensions on the Korean peninsula, with Washington and Pyongyang locked in an ever-tighter spiral of threat, counter-threat, and escalating military preparedness. US President Donald Trump, who has warned of a “major conflict” with North Korean leader Kim Jong-un’s regime, said the latest test was a pointed snub to China - the North’s main ally and economic lifeline.

China clamps down on excess steel as Japan decries Trump 'protectionism' | Reuters: Twenty-nine Chinese steel firms have had their licenses revoked as Beijing kept up its campaign to tackle overcapacity in the sector and days after U.S. President Donald Trump said he would open a probe into cheap steel exports from China and elsewhere. Analysts say the revocations were unlikely to be a direct response to Trump's plan, but rather a part of China's reform measures aimed at reducing surplus steel capacity that many estimate at around 300 million tonnes, about three times Japan's annual output. The official China Daily said Washington's move to investigate steel imports could trigger a trade dispute between the United States and its trading partners. In Japan, the world's second-biggest steel producer after China, the head of its steelmakers' group expressed concern over Trump's protectionist policy. "We are greatly concerned over Trump's protectionism, although we hear he has softened his tone on some issues with a grasp of reality," Japan Iron and Steel Federation chairman Kosei Shindo told a news conference on Monday. China's Ministry of Industry and Information Technology released a list on Monday of 29 firms that will be removed from its official register of steel enterprises. Most have already stopped producing steel, but some had illegally expanded production or violated state closure orders. "It's all enveloped in this strategy to improve the financial condition of the industry which has been weighed down by excess capacity for some time, partly as a result of inefficient operations," China is aiming to shed between 100 million to 150 million tonnes of excess capacity over the 2016-2020 period. It also plans to shut around 100 million tonnes of low-grade steel production by the end of June.

The Government Seems to Have Disregarded the Immense Dislocation That Demonetisation Caused - Prime Minister Narendra Modi’s November 8 announcement declaring that Rs 500 and Rs 1000 notes would cease to be legal tender was a move unanticipated in the annals of financial history. The Reserve Bank of India was left powerless and red-faced. Forced to amend the rules over 60 times in next two months, the RBI – in effect – demonstrated how poorly planned and shoddily executed the move was. Furthermore, the shocking empowerment of PayTM, at the expense of the National Payments Corporation of India, an umbrella organisation for all retail payments system, was a clear case of private players benefiting at the expense of national systems. The front-page ads by the company with Modi’s photograph gave the image of a country fully in the grips of crony capitalism, a country where companies were making money out of policy decisions skewed in their favour rather than good design or better service. There was a brief flurry of justification that this was a move to help India become a “cashless” society. This too has been laid to rest, not least because the new Rs 2,000 note makes it even easier to store large amounts in cash. The continuing ads on television about “remonetisation” make it clear that the economy has not yet bounced back from the body blow.

India, Pakistan to Become Full Fledged SCO Members -- The meeting of the Council of Foreign Ministers of the Shanghai Cooperation Organization (SCO) member states wrapped up in Astana on April 21. The participants confirmed the unanimous decision to grant full-fledged membership to India and Pakistan at the SCO Astana summit on June 8-9, 2017. The SCO was established in 2001 as a multi-purpose regional organization active in three main fields: economic, military-political and humanitarian. The SCO members now are Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Afghanistan, Pakistan, India, Iran, Mongolia and Belarus are the SCO observer-countries, while Azerbaijan, Turkey, Sri Lanka, Armenia, Cambodia and Nepal are dialogue partners. Although Russia and China are the most important SCO members, the organization operates by consensus.Since its formation, it annually brings together heads of states to discuss regional security issues and inter-regional cooperation. The SCO is gradually moving to the establishment of an economic integration union, including the creation of a free trade zone, bank and fund for development and strengthening of transport cooperation. The Asian Infrastructure Investment Bank, Silk Road Fund and Silk Road Economic Belt projects have been launched to this end. Since its establishment, the SCO has concluded several wide-ranging agreements on security, trade and investment, connectivity, energy, the SCO Bank, culture, etc.  Membership of India will add significant heft and muscle to the SCO, particularly in the backdrop of the global economic slowdown. India is the fastest expanding global economy today with an annual GDP growth of 7.5 percent. It represents the third largest economy ($8 trillion dollars) in PPP terms and 7th largest ($2.3 trillion dollars) in nominal dollar terms.The Pakistani economy is the 24th-largest in the world in terms of purchasing power and the 41st-largest in terms of nominal GDP (World Bank). It is ranked among the emerging and growth-leading economies, and is backed by one of the world's largest and fastest-growing middle classes. Granting New Delhi and Islamabad the status of full SCO member states in the near future will make the organization a global (Trans-Asian) political structure. It will boost the group’s potential and provide a fresh impetus to further securing its role on the regional and international arena. The accession will bring together three largest and most powerful Eurasian states and four nuclear powers. With the integration of new members, the group will unite 50 percent of Eurasian territory, 43 percent of the population on the planet and 24 percent of global GDP. Just think about it! The SCO will become a regional organization covering the widest land area with the biggest population in the world.

Panama Verdict; US-India H1B Dispute; Trump NSA in South Asia - What are the implications of the split Pakistan Supreme Court verdict recently announced in Panama Case filed against Prime Minister Nawaz Sharif by PTI Chief Imran Khan, JI Chief Siraj ul Haq and AML chief Shaikh Rasheed? Why did 3 out of 5 judges not vote to disqualify Mr. Sharif from holding office under Articles 62 and 63 of the Pakistan constitution? Has the Prime Minister not committed perjury, a felony in Pakistani law, by offering multiple conflicting explanations for the source of funds used to buy London flats? Does the Joint Investigation Team (JIT) appointed by the Supreme Court have the independence and the skill set to find credible evidence of wrongdoing by Mr. Sharif? Will Nawaz Sharif survive the JIT and serve out his term scheduled to end in mid-2018?  Why has President Donald J. Trump tightened H1B temporary work visa requirements with an executive order calling for "Buy American, Hire American"? How will it impact India, the biggest beneficiary of the lion's share of the 85,000 US H1B visas issued each year? Are these visas being abused to bring in lower paid foreign workers to replace American workers? How will India respond? Will the Indian government retaliate against US products/services imported by India as suggested by the Indian trade minister Nirmala Sitharaman? How will India deal with similar other restrictions on temporary work visas recently announced by Australia, New Zealand and other industrialized nations?  What took President Trump's National Security Advisor General H.R. McMaster to Afghanistan, India and Pakistan? Why did Mr. Trump announce his request for increased US aid to Pakistan just prior to General McMaster's South Asia trip? Did General McMaster threaten Pakistan to "cooperate or else" as being reported by the Afghan and the Indian media?  Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Ali H. Cemendtaur and Riaz Haq (

In "Spectacular Heist" Dozens Of Heavily-Armed Robbers Steal $40 Million From Paraguay Vault --In what has been dubbed a "spectacular heist" reminiscent of any number of B-rated Hollywood action movies, an army of heavily armed robbers, estimated between 50 and 60, targeted the cash storage facility of a Prosegur SA security vault in Paraguay's Ciudad del Este, stealing as much as $40 million. During the three-hour long theft, the dozens of assailants who used grenades, explosives and military assault rifles, killed one police officer, injured another and left three civilians wounded. According to Fox News, the robbers blew open one of three vaults, they said. The remaining two were not accessed.  According to media reports, the assault was carried out with a wide array of weapons, including AK 47s, C4 explosives, infrared weapons, snipers and even anti-aircraft guns and a helicopter. Police sources told Ultima Hora the robbers had between five and eight vehicles at their disposal, with which they closed the perimeter in a 600-yard radius almost an hour ahead of time.After snatching the loot, the thieves then managed to get away without a glitch. The violent robbery started around midnight and ended after 3 a.m., neighbors said. It has left the city in a state of panic, especially because none of the robbers has been caught. Schools were closed Monday.Numerous  witnesses said they heard the heavily armed men speaking in Portuguese, leading to speculation that they could be members of the First Command of the Capital (PCC), one of the largest criminal groups in Brazil.

Brazil's fiscal deficit hits record high in 1st quarter - (Xinhua) -- Brazil's fiscal account registered a record high deficit of 18.29 billion reals (5.75 billion U.S. dollars) in the first quarter of 2017, the country's Treasury Department said on Thursday. The figure is the worst since the Treasury Department stated measurements in 1997. In March, the deficit reached 11.06 billion reals (3.48 billion U.S. dollars), also a record high and up 40.1 percent year-on-year The account includes a large deficit in the social security system, which rose from 29 billion to 40 billion reals (9.12 billion to 12.6 billion U.S. dollars) in the first quarter of 2017. The deficit has been the main reason why the government proposed a bill for an extensive reform. However, the terms of the bill are controversial and the unions has called a full strike against the reform. Brazil continues to grapple with its worst recession which has lasted for more than two years.

Brazil Paralyzed by Nationwide Strike, Driven by a Familiar Global Dynamic of Elite Corruption and Impunity - Just over one year ago, Brazil’s elected President, Dilma Rousseff, was impeached – ostensibly due to budgetary lawbreaking – and replaced with her centrist Vice President, Michel Temer. Since then, virtually every aspect of the nation’s political and economic crisis – especially corruption – has worsened.Temer’s approval ratings have collapsed to single digits. His closest political allies – the same officials who engineered Dilma’s impeachment and installed him in the presidency – recently became the official targets of a sprawling criminal investigation. The President himself has been implicated by new revelations, saved only by the legal immunity he enjoys. It’s almost impossible to imagine a presidency imploding more completely and rapidly than the unelected one imposed by elites on the Brazilian population in the wake of Dilma’s impeachment.The disgust validly generated by all of these failures finally exploded this week. A nationwide strike, and tumultuous protests in numerous cities, today has paralyzed much of the country, shutting roads, airports and schools. It is the largest strike to hit Brazil in at least two decades. The protests were largely peaceful, but some random violence emerged. The proximate cause of the anger is a set of “reforms” that the Temer government is ushering in that will limit the rights of workers, raise their retirement age by several years, and cut various pension and social security benefits. These austerity measures are being imposed at a time of great suffering, with the unemployment rate rising dramatically and social improvements of the last decade, which raised millions of people out of poverty, unravelling. As the New York Times put it today: “The strike revealed deep fissures in Brazilian society over Mr. Temer’s government and its policies.”

BBVA taps blockchain to make fast international payments - Blockchain may finally be moving out of the lab and into the marketplace. Banco Bilbao Vizcaya Argentaria SA, Spain's No. 2 lender, has executed its first cross-border payments through a system based on the software that supports bitcoin, the company announced Friday. Using a program built by Ripple, a San Francisco firm, BBVA has transferred about 50 euro-denominated payments to Mexico from Spain in seconds. Such transactions normally take up to four days to clear, the bank said. BBVA plans to use Ripple's distributed ledger offering to provide corporate customers a quicker and cheaper way to pay overseas suppliers and execute other international transactions, said Alicia Pertusa, head of the lender's Digital Transformation in Investment Banking unit. Processing payments on Ripple costs, on average, 81 percent less than the correspondent banking network that's been used to send payments around the world for decades, according to the company. Ripple also lets companies track their payments like a FedEx package and see precisely how much it will cost to complete the transfer. The current method, which relies on the 40-year-old Swift messaging system, is incapable of providing either of these services. It's also too rudimentary to convey details on what payments are for. This dearth of data has forced companies to maintain costly accounting operations to reconcile their overseas transactions. Financial institutions are striving to turn expectations around distributed ledger technology into reality. . Nasdaq has been using blockchain to process and record trades of privately-held shares. And R3, a New York-based consortium of more than 80 financial institutions, including Barclays Plc, Credit Suisse Group AG and HSBC Holdings Plc, has released its source code so developers can build applications for Corda, its distributed ledger platform. Four-year-old Ripple is betting the international payments system, which processes more than $20 trillion in transactions annually, is ripe for an overhaul. The company has formed partnerships with Bank of America Corp., UBS Group AG, and Standard Chartered Plc, among other firms. Last May, employees at Banco Santander SA's U.K. division started using Ripple's cross-border payment app internally. 

Canada's Housing Bubble Explodes As Its Biggest Mortgage Lender Crashes Most In History --Call it Canada's "New Century" moment.We first introduced readers to the company we said was the "tip of the iceberg in Canada's magnificent housing bubble" nearly two years ago, in July 2015 when we exposed a major problem that we predicted would haunt Home Capital Group, Canada's largest non-bank mortgage lender: liar loans in particular, and a generally overzealous lending business model with little regard for fundamentals. In the interim period, many other voices - most prominently noted short-seller Marc Cohodes - would constantly remind traders and investors about the threat posed by HCG.Today, all those warnings came true, when the stock of Home Capital Group cratered by over 60%, its biggest drop on record, after the company disclosed that it struck an emergency liquidity arrangement for a C$2 billion ($1.5 billion) credit line to counter evaporating deposits at terms that will leave the alternative mortgage lender unable to meet financial targets, and worse, may leave it insolvent in very short notice. As part of this inevitable outcome, one which presages the company's eventual disintegration and likely liquidation, Bloomberg reports that the non-binding rescue loan with an unnamed counterparty will be secured by a portfolio of mortgage loans originated by Home Trust, the Toronto-based firm said in a statement Wednesday. Home Capital shares dropped by 61% in Toronto to the lowest since 2003, dragging down other home lenders. Equitable Group Inc. fell 17 percent, Street Capital Group Inc. fell 13 percent, while First National Financial Corp. declined 7.6 percent. In short, the Canadian mortgage bubble has finally burst.

 Crashing Canadian Mortgage Lender Bailed-Out By 321,000 Retired Ontario Healthcare Workers -- With Canada's housing bubble imploding amid the collapse of the country's largest mortgage lender, it was no surprise that a bailout had been orchestrated, and now we know the source of the $1.5 billion 'loan' - 321,000 retired healthcare workers in Ontario. As we noted yesterday, the stock of Home Capital Group cratered by over 60%, its biggest drop on record, after the company disclosed that it struck an emergency liquidity arrangement for a C$2 billion ($1.5 billion) credit line to counter evaporating deposits at terms that will leave the alternative mortgage lender unable to meet financial targets, and worse, may leave it insolvent in very short notice. As part of this inevitable outcome, one which presages the company's eventual disintegration and likely liquidation, Bloomberg reports that the non-binding rescue loan with an unnamed counterparty will be secured by a portfolio of mortgage loans originated by Home Trust, the Toronto-based firm said in a statement Wednesday. Home Capital shares dropped by 61% in Toronto to the lowest since 2003, dragging down other home lenders. Equitable Group Inc. fell 17 percent, Street Capital Group Inc. fell 13 percent, while First National Financial Corp. declined 7.6 percent. In short, the Canadian mortgage bubble has finally burst.And now we know the source, as Bloomberg reports that Healthcare of Ontario Pension Plan (HOOPP) is the lender behind Home Capital Group's C$2 billion loan ($1.5 billion) to shore up liquidity, according to people familiar with the matter.The Toronto-based pension plan is said to have given the struggling Canadian mortgage lender the loan to shore up liquidity as it faces a run on deposits amid a probe by the provincial securities regulator. Home Capital has retained RBC Capital Markets and BMO Capital Markets to advise on “strategic options” after it secured the loan, according to a statement Thursday. Home Capital didn’t identify the lender.HOOPP, which represents more than 321,000 healthcare workers in Ontario, was not immediately available to comment. HOOPP President and Chief Executive Officer Jim Keohane sits on Home Capital’s board and is a shareholder. Home Capital’s external spokesman Boyd Erman declined to comment.

Canada's Largest Non-Bank Mortgage Lender Is Collapsing -- The largest non-bank lender of mortgages in Canada is in the midst of an unparalleled existential crisis, and some are wondering whether the lender’s troubles are the canary in the coal mine for a Canadian housing bubble.Home Capital Group’s shares fell by 65 per cent on Wednesday, on news the company had secured a $2-billion line of credit to keep it running. The very fact it needed such a loan appeared to spook investors.  The same day, credit rating agency DBRS downgraded Home Capital’s debt to BB, from BBB (low), saying that $2-billion loan is too expensive for Home Capital to handle. Investors are heading for the exits. The company has lost nearly $600 million in deposits in recent weeks, the Financial Post reports. Its shares saw some bounce-back on Thursday, trading at $6.82, up 14 per cent from the previous day's close, as of 11:30 am ET. But the company's stock price is down more than 78 per cent since the start of the year.  Home Capital’s public troubles began in 2015, when the company announced it had severed ties with 45 mortgage brokers who had allegedly falsified information on mortgage applications.  The company later estimated some 10 per cent of the value of the loans on its books were linked to brokers accused of falsifying information.But that investigation led Home Capital into hot water. The Ontario Securities Commission earlier this month accused the company's leadership of issuing "materially misleading statements" about its investigation into the alleged mortgage fraud. The company’s chief financial officer, Robert Morton, was removed from his position following the OSC’s allegations, and the company’s founder, Gerald Soloway, will be stepping down from its board. But more worrying may be the chatter among market observers, some of whom are wondering whether this might be a sign of bigger problems in Canada’s overheated housing markets.

Kremlin says Ukraine is pushing away breakaway region with power cut | Reuters: Kremlin spokesman Dmitry Peskov said on Tuesday that the Ukrainian government's decision to cut power supplies to the breakaway region of Luhansk amounted to a rejection of the territory. "It's another step by Ukraine on the road to rejecting territory," Peskov told a conference call with reporters. A Russian official said earlier on Tuesday that Moscow would step in and supply the region, which is controlled by pro-Russian separatists, with electricity.

Using Fiscal Policy to Drive Trade Rebalancing Turns Out To Be Hard --  Brad Setser -- The idea behind “fiscally-driven external rebalancing” is straightforward. If countries with external (e.g. trade) surpluses run expansionary fiscal policies, they will raise their own level of demand and increase their imports. More expansionary fiscal policies would generally lead to tighter monetary policies, which also would raise the value of their currencies. And if countries with external (trade) deficits run tighter fiscal policy, they will restrain their own demand growth and thus limit imports. Firms in the countries with tighter fiscal policies and less demand will start to look to export to countries with looser fiscal policies and more demand.This logic fits well with IMF orthodoxy: the IMF generally finds that fiscal policy has a significant impact on the external balance, unlike trade policy.*But it often encounters opposition, as it implies that the fiscal policy that is right for one country can be wrong for another. Many Germans, for example, think they need to run fiscal surpluses to set a good example for their neighbors. Yet the logic of using fiscal policy to drive external trade adjustment runs in the opposite direction. To bring its trade surplus down, Germany would need to run a looser fiscal policy. The positive impact of such policies on demand in Germany (and other the surplus countries) would spillover to the global economy and allow countries with external deficits to tighten their fiscal policies without creating a broader shortfall of demand that slows growth.So one implication of using fiscal policy to drive trade rebalancing is that there is no single fiscal policy target (or fiscal policy direction) that works for all countries. Budget balance for example isn’t always the right goal of national fiscal policy. Some countries need to run fiscal deficits to help bring their external surpluses down. That idea certainly encounters resistance. And as practical matter, the IMF’s latest estimates show that Europe hasn’t used fiscal policy to help facilitate its own internal adjustment.**

Central Banks Ponder What to Do With All Their Assets -- Major central banks stocked up on trillions of dollars of government bonds and other assets since the financial crisis to support lending and growth, pushing their balance sheets to unprecedented levels. With advanced economies now recovering, policy makers have started to phase out their most aggressive stimulus measures. A big question hanging over financial markets: What will central banks do with their massive securities portfolios? Any move to shrink their balance sheets has risks, economists say, and a misstep could endanger the economic recovery. But keeping a big balance sheet may be risky, too. The Federal Reserve’s balance sheet has roughly quintupled to $4.5 trillion, or around a quarter of U.S. gross domestic product, from about 7% before the crisis. The Bank of England’s balance sheet has undergone a similar expansion. The value of assets held by the European Central Bank has more than doubled to around 36% of GDP. For the Bank of Japan, the balance sheet and the size of the nation’s economy are roughly equal. The Fed started raising interest rates more than a year ago, but has yet to elaborate plans for its portfolio of U.S. Treasury and mortgage-backed securities. Fed officials cleared up one big question at their March policy meeting, agreeing they would likely begin shrinking the balance sheet later this year, according to minutes released April 5.But how fast the Fed moves, and how far, remained undecided, the minutes showed. Some economists say the Fed and other central banks might hold on to much of their portfolios for decades. “I doubt whether the big increase in balance sheets will be fully reversed at all,” says David Miles, a former Bank of England policy maker who is now a professor at Imperial College in London. Unlike with interest-rate hikes, the effects of selling assets are uncertain. When former Fed Chairman Ben Bernanke indicated in 2013 that the central bank might slow its bond purchases, that sent long-term interest rates sharply higher. 

Macron and neo-fascist Le Pen advance to run-off in French presidential elections -- In a historic collapse of the two-party system that has ruled France since the May–June 1968 general strike, the candidates of the Socialist Party (PS) and The Republicans (LR) were eliminated in the first round of the French presidential elections. Ex-PS Economy Minister Emmanuel Macron will face Marine Le Pen of the neo-fascist National Front (FN) in the May 7 run-off.  According to official Interior Ministry figures, Macron obtained 23.55 percent of the vote to Le Pen’s 22.32 percent. LR candidate François Fillon obtained 19.88 percent, and Jean-Luc Mélenchon of the Unsubmissive France movement, backed by the Stalinist French Communist Party (PCF), obtained 19.01 percent of the vote.  PS candidate Benoît Hamon received only 6.12 percent of the vote. This is a historic collapse of a leading European social-democratic party comparable only to the disintegration of Greece’s Pasok party, after it imposed economically suicidal European Union (EU) austerity measures in the wake of the 2008 Wall Street crash. The PS government’s deep austerity measures, its imposition of a state of emergency suspending basic democratic rights and its overtures to the FN under President François Hollande have discredited the party.  Fillon and Hamon both endorsed Macron, calling on voters to choose him in order to prevent Le Pen from winning the presidency. Hamon called his defeat a “deep wound,” a “moral defeat,” and “historic punishment” imposed by voters on the PS, for the second time in 15 years. In 2002, PS candidate Lionel Jospin was eliminated by right-wing candidate Jacques Chirac and the FN’s Jean-Marie Le Pen, Marine’s father.

Macron vs. Le Pen: The key storylines in France’s presidential runoff - WaPo -- On Sunday, French voters proved that the pollsters do get it right sometimes. With ballots still being counted, independent centrist Emmanuel Macron and far-right leader Marine Le Pen, the pair that led in pre-election polls, were projected to face each other in a head-to-head runoff in two weeks.Macron is the clear favorite in the second round, but Le Pen, who has been preparing for this moment for years, should not be written off. Here's a quick primer on what happened and what's to come: The outsiders won. In a country whose politics have been long dominated by establishment center-left and center-right parties, neither candidate from those two camps made it to the second round. That's the first time this has happened in the history of the Fifth Republic.The next leader of the country will either be a 39-year-old former banker who has never been elected to high office or the scion of a political movement still intimately tied to a history of neo-fascism, racial bigotry and Holocaust apologia.The failure of the center-left — the current president, Socalist François Hollande, was so unpopular that he didn't run for reelection, and his replacement, Benoît Hamon, came in fifth — is part of a wider European trend. Frustrated with the status quo, angry about immigration and skeptical of the European Union, the center-left's traditional working-class base has drifted to populist parties across the continent. Hamon was upstaged by the far-left's Jean-Luc Mélenchon, who galvanized voters with strident attacks on prevailing capitalist orthodoxy.The center-right candidate, Francois Fillon, was once the front-runner, but his campaign foundered amid allegations of graft and nepotism that may yet see him go to prison.Fillon and other defeated candidates urged their supporters to vote for Macron and against the far-right and Le Pen, whom Hamon called an “enemy of the Republic.” But right-wing voters could turn toward Le Pen, whose rhetoric on Islam, immigration and the European Union may appeal more than Macron's optimistic liberalism, and many disgruntled Mélenchon supporters may sit out the runoff altogether (more on that later). The vote is yet another sign that the West's mainstream parties will need to redefine themselves or face electoral disaster.

Macron And Le Pen Move To The 2nd Round: What Happens Next, According To Goldman And Citi - Most of the results are in, and while it remains close, Macron will likely be the winner of the first French presidential round and is set to face Marine Le Pen in the second round. What does that mean for various asset markets and the bigger macro picture?  Here are two forecasts, just released from Goldman and Citi. First, Goldman Sachs:

  • Emmanuel Macron will face Marine Le Pen in the run-off of the Presidential election on May 7, according to exit polls. We maintain our view that mainstream candidate Mr. Macron will likely win the French Presidential election.
    • We expect the ECB to maintain its existing refinancing facilities (namely the fixed-rate full allotment (FRFA) and the emergency liquidity provision (ELA) via the Bank of France) in the coming weeks, to sustain market functioning and continuity of pricing in the systematically relevant market segments. In the face of a politically-induced spread widening, this is also likely to be accommodated through its asset-purchase programmes, as long as it proves to be temporary.
  • We think the equity market has already largely priced the outcome and concerns about the elections have not prevented European equities and the CAC 40 from performing well on an absolute basis since the beginning of the year (+5% YTD for both).
  • relief for the FTSE MIB, French and Italian banks and a very minor relief for the CAC 40. That said, as this has largely been the central expectation priced into the markets, we would expect any rally to be modest. French domestic stocks and the CAC 40 have not underperformed significantly as of late, and we do not expect them to rally materially following today's results, or after the second round of the election.
  • In rates space, French bonds had incorporated some political risk premium, and traded more idiosyncratically. We expect the 10-year OAT-Bund spread to narrow by as much as 15bp on short covering, to around 50-55bp – or within 1 standard standard deviation above our macro-econometric model measure of 'fair value'. We would expect the daily correlation with German Bunds to remain somewhat below the 90% observed since the beginning of the ECB's PSPP on account of residual uncertainties in the run-up to the second round. We would expect a similar re-pricing in intra-EMU spreads in the periphery markets….
  • Our FX analysis suggests that a sizeable decrease (to close to 0 percent) in the probability that investors assign to Ms. Le Pen becoming President, or to a break-up of the Euro area, that is close to its lows in July 2014 could push the EUR higher versus the USD and the JPY, pushing EUR/USD close to 1.13. .

And here is Citi's take:

  • Polls were right: preliminary results show Macron and Le Pen through to the second round: According to partial estimates based on votes counted social liberal Emmanuel Macron (~24%) and Far Right Marine Le Pen (~22%) are through to the second round of the French presidential election to be held on 7 May. Fillon and Mélenchon are joint third (~20%), while Hamon came in a distant fifth place with ~6%. We expect Macron to win the second round and to become the next French president, on the basis that the candidate closest to the centre of the political spectrum has the best chance to win.
  • Narrow gap between the top four candidates: The gap between the top two candidates is ~2pp, while the gap between second and third/fourth place was 2pp, meaning that the top four are within the four points indicated by the average of polls before the election. These small margins imply potential risks in terms of legitimacy.
  • Turnout was on the low side: Estimates of turnout are around 77%, compared to the 79.5% in the first round in 2012 and 83.8% in 2007.
  • Declarations of support from defeated candidates are important: Fillon has announced his support for Macron (on the grounds that voters should do not abstain, and vote against Le Pen and therefore in favour of Macron). Hamon is also supporting Macron while Mélenchon has not said anything yet, but seems unlikely to support the National Front.

‎The margin of victory for Macron in the second round is likely to be sizeable – Our calculations show that the likely gap between the finalists in the second round could be around 25% (62.5% vs. 37.5%), assuming that Le Pen could convince around 35% of undecided voters to cast a ballot in her favour. Even if Le Pen managed to convince 100% of the 6.2mn of undecided voters (according to the various scenarios tested for the second round), Le Pen would still fail to defeat Macron and create a surprise in the second round.

Le Pen Calls Parties in France ‘Completely Rotten’ as They Unite to Fend Her Off – NYT — A day after mainstream parties were dealt a heavy defeat in the French presidential election, the far-right leader Marine Le Pen, one of the two candidates to advance to a runoff, condemned the parties’ calls to unite against her and support her rival, the independent centrist Emmanuel Macron. Ms. Le Pen’s statement on Monday denouncing “the old and completely rotten Republican Front” — the coalition of mainstream parties allied against her — sums up her challenge in the May 7 runoff. So far, not a single rival party has called for its voters to support Ms. Le Pen. And she has no plausible major reservoir of votes to add to the 21.3 percent she received in the first round of voting, though she is expected to gain some voters from the defeated center-right candidate François Fillon. Perhaps in an effort to broaden her appeal to voters from outside the far-right National Front’s traditional constituencies, Ms. Le Pen announced on Twitter on Monday that she was temporarily stepping down as the party’s leader so she could run as a candidate for “all the French.” “Tonight, I am not the president of the National Front, I am the presidential candidate, the one who wants to gather all the French around a project of hope, of prosperity, of security,” she said in an interview on French television. Most of Ms. Le Pen’s rivals have gathered around the effort to defeat her. Only one major candidate has resisted calls to unite against her: Jean-Luc Mélenchon, the firebrand hard-left candidate who came in fourth and who has pointedly refused to support Mr. Macron, saying instead that he would seek the opinion of his supporters through his website. Similarly, traditionalist Roman Catholic organizations that backed Mr. Fillon refused to endorse Mr. Macron on Monday. Some of Ms. Le Pen’s advisers said, in interviews with French news media on Monday, that they were hoping to lure some of the supporters of the defeated Mr. Mélenchon, whose populist program bore similarities to that of Ms. Le Pen: hostility to the European Union, NATO and the forces of globalization, and a forgiving attitude toward Russia’s president, Vladimir V. Putin.

France’s major parties want to block Marine Le Pen – but don’t expect a repeat of 2002 - It’s down to two. In the second round of the French presidential elections on May 7, the far-right Marine Le Pen faces a run-off with the centrist independent Emmanuel Macron. Many comparisons have been made to 2002, when Marine’s father Jean-Marie Le Pen made it through to the second round against Jacques Chirac. But the social and political context in 2017 is very different to 2002. Although Macron is the favourite to win the presidency by a long margin, with around 60% of the vote to Le Pen’s 40%, and both candidates of the centre-left and centre-right have called on their voters to back him, the “Republican front” against Marine Le Pen is likely to be thinner on the ground than many predict. In 2002, Le Pen’s presence in the second round was widely viewed as a shock, an unexpected breakthrough at a time when the French model of integration and assimilation seemed to be working, heralding a rainbow nation.Le Pen’s second place in 2002 brought that crashing down, revealing that the reality in France was more nuanced and not everyone hailed the prominent role of second- and third-generation immigrants in French sport and culture. Leading the national mood, the left-wing daily newspaper Libération, a distinct and vociferous critic of Le Pen and the Front National (FN) since the party’s inception in 1972, filled the front page with the historic one-word headline “Non”. In 2017, instead of attacking the Le Pens the day after the first round, the paper chose to celebrate Macron’s narrow first round victory. 

Le Pen's father criticizes her presidential campaign as she steps back from party | Reuters: French far-right veteran Jean-Marie Le Pen said on Tuesday his daughter Marine, who faces centrist Emmanuel Macron in a May 7 presidential runoff, should have campaigned more aggressively for Sunday's first round, following the example of Donald Trump. With 7.5 million votes, Marine Le Pen beat the National Front party's previous election record on Sunday but failed to pip pro-EU Macron to the first place. The intervention by her father follows her announcement on Monday that she plans to step back from day-to-day management of the far-right party he founded ahead of the runoff and marks the latest tussle between the two of them over its future direction. "I think her campaign was too laid-back. If I'd been in her place I would have had a Trump-like campaign, a more open one, very aggressive against those responsible for the decadence of our country, whether left or right," 88-year-old Jean-Marie Le Pen told RTL radio. The two have been at odds since Marine Le Pen launched moves to clean the National Front's image of xenophobic associations in the run-up to the campaign for the 2017 presidency. Jean-Marie Le Pen shocked the world in 2002 by qualifying for the second round of the presidential election and then went on to lose in a landslide to conservative Jacques Chirac. He was frequently accused of making xenophobic and anti-Semitic statements and Le Pen expelled him from the party in 2015, though as the party's founder he remains a well-known figure and represents a body of opinion in the party.In another sign of his influence, the National Front has borrowed about 6 million euros from a political fundraising association he heads. Marine Le Pen's decision to take a leave of absence from the day-to-day management of the party appeared to be an attempt to portray herself as being above the narrow world of National Front politics and broaden her appeal to the wider electorate ahead of the crucial runoff vote. 

Emmanuel Macron offers the patriotic antidote to nationalism – FT - Discard the familiar labels. Emmanuel Macron has broken the mould of French politics. The En Marche! leader says his second-round presidential contest with the National Front’s Marine Le Pen presents instead a choice between patriotism and nationalism. He is right. This insight should resonate well beyond France. The dividing line that now matters in rich democracies lies between patriots and nationalists.Populist insurgents across Europe have obscured the distinction. Citizens, they pretend, must choose between fealty to the nation and a wrecking globalism. The flag waving has destabilised mainstream parties of right and left. Some on the right have sought to ride the nationalist tiger. Hence British prime minister Theresa May’s unfortunate assertion that citizens of the world are citizens of nowhere. On the left, the common mistake has been to disavow any display of allegiance as xenophobia.Mr Macron, the insider-outsider of European politics, has met the populists head on. Defying Mrs May’s binary choice, he proclaims himself an internationalist and a proud citizen of France. We have been here before. Surveying the forces that plunged Europe into war during the 1930s, the writer George Orwell saw the same blurring of lines. Patriotism, he wrote, is a positive emotion celebrating national institutions, traditions and values. It is open and optimistic. Nationalism is an altogether darker force, rooted at once in superiority and paranoia.  Patriots have no quarrel with the choices made by others. Nationalists look for enemies, framing international relations as a zero-sum game. The thoughts of the nationalist, Orwell observed, “always turn on victories, defeats, triumphs and humiliations”. He might have been talking about today’s Europe. Nationalists across the continent have destabilised the postwar liberal order by peddling the politics of exclusion and vilification. Petty tyrants such as Hungary’s Viktor Orban exult in their illiberalism. Poland is in the grip of a nationalist party that openly repudiates the values of the EU — though it of course insists on holding on to its access to generous Brussels funding. Beppe Grillo’s anti-European Five Star Movement in Italy threatens to overturn the ancien regime in collaboration with the far-right Northern League.

Complacency threatens Macron in France’s unhappy democracy - France 24: Hailed as a victory for hope, Emmanuel Macron’s strong showing in the first round of France’s presidential election belies the deep frustration and despondency expressed by voters, many of whom vow to shun the decisive run-off against Marine Le Pen. It is often said of France’s two-round presidential election that it allows voters to choose first with their heart and then with their head. But for many taking part in this year’s momentous election, picking a candidate has proven to be both a heartbreaker and a headache. The rock star’s welcome that Macron received from swooning fans at his “victory” party on Sunday jarred with the lack of enthusiasm displayed by a large number of voters who cast ballots in his name. In Paris, where a third of the vote went to Macron, many felt they had been "taken hostage" and "pressured by opinion polls" into casting a "useful” but “half-hearted” vote for the former economy minister. Laura Buathier, a 27-year-old web designer, and her friend Alexis Bodet, 29, summed up the general mood in Belleville, a bastion of the left in eastern Paris. While he voted for leftist firebrand Jean-Luc Mélenchon “with his heart”, she backed Macron “out of fear”, desperate to avoid an unpalatable run-off between two candidates she could not bear.

Fitch cuts Italy's debt rating; cites weak growth, political risk | Reuters: Ratings agency Fitch downgraded Italy's sovereign debt on Friday, citing the country's sluggish economic growth, fiscal slippage, weak government, banking problems and political risk ahead of elections due in 2018. Fitch cut Italy's sovereign credit rating to 'BBB' from 'BBB+', a move that could put further pressure on its borrowing costs which have already been rising in recent months. The outlook for the rating is now stable, it said. The agency had put the euro zone's third largest economy on watch in October with a negative outlook ahead of a referendum on constitutional reforms intended to streamline lawmaking which was lost by former Prime Minister Matteo Renzi. Renzi then resigned to make way for what Fitch described as "a weakened interim government," led by his former foreign minister Paolo Gentiloni. "Italy's persistent track record of fiscal slippage, backloading of consolidation, weak economic growth and resulting failure to bring down the very high level of general government debt has left it more exposed to potential adverse shocks," Fitch said. "This is compounded by an increase in political risk and ongoing weakness in the banking sector, which has required planned public intervention in three banks since December," it added.

Greece calls for debt relief as bailout talks resume in Athens -- Greece’s prime minister held out for a commitment from lenders to debt relief on Tuesday (25 April), and said he was confident new talks in Athens over a long-stalled bailout review would reach a deal by a 22 May target. Talks over reforms in the energy and labour market and pension cuts and income tax increases have dragged on for months, mainly due to differences between EU lenders and the International Monetary Fund over fiscal targets. Athens and the lenders reached a preliminary deal this month in Malta on key elements of reforms to produce savings worth 2% of gross domestic product.Tsipras, who faces national elections in 2019 and whose popularity is sagging, said the country would legislate the additional measures sought by its lenders but implementing them was contingent on securing further debt relief. “We will obviously legislate (the measures) in order to secure a deal on debt relief,” Greek Prime Minister Alexis Tsipras told ANT1 television. “They won’t be implemented … unless we get a solution on debt.” He added that a sovereign government had the right to back out of a deal if its interlocutors did not respect it. Greece wants to conclude the bailout review as soon as possible to qualify for inclusion in the European Central Bank’s quantitative easing programme and return to bond markets. “Our aim is to conclude the bailout review and immediately after that to return to markets,” Tsipras said. He was speaking two days after the seventh anniversary of Greece’s call for international aid to avert bankruptcy. Tsipras said the return to markets should be “sustainable” and not a “one-off”, to help it emerge from crisis by 2018, when its third bailout expires. He added the country aimed to reach a deal by 22 May, when eurozone finance ministers are expected to discuss the Greek issue. 

Will the IMF Bail Out Greece Again? -- Greece is on the hook for a €7 billion debt repayment in July, but may not be prepared to meet the obligation. If Europe doesn't agree to come to an alternative agreement, the IMF may step in and bail them out again. This, according to the New York Times, which writes:As the International Monetary Fund approaches the seventh anniversary of the contentious Greek bailout, it is torn over whether to commit new loans to a nearly bankrupt Greece.The fund has been criticized for overcommitting financial resources to the European debt crisis.Yet the I.M.F. has an obligation to lend to countries that are in financial need as well as to safeguard global financial stability.Ostensibly, the role of the IMF is to safeguard global financial stability and it therefore would rather continue to throw money into the black hole of Greece than let it default. What this amounts to economically is a grand case of  wealthier governments propping up overly indebted poorer countries against any standard of financial prudence. And since no government acquires its wealth in the first place, the IMF acts as a mechanism of wealth transfer. As the New York Times observes:For example, the €30 billion the fund lent to Greece in 2010 was 30 times more than the sum of Greece’s financial contribution to the fund as a member, which is called a quota. The loan is one of the largest in the history of the fund, which was formed in 1944. Of course, this money above and beyond Greece's own "quota" came from the taxpayers of other countries, who don't get any benefit at all out of the IMF's wealth transfer scam. As we near Greece's repayment date, we are going to get nothing from the press about the Western taxpayers on the hook for the Greece bailout — and neither are we going to hear anything about the creation of debt by central banks which makes these debt crises a reality in the first place. Instead, we are going to get a surface debate about whether Europe or the IMF should compromise over Greece's dire and never ending problem.

IMF says Greece needs to dig even deeper -- The International Monetary Fund had a sobering message for Greece this weekend: Even if the country secures debt relief from its European creditors -- a question that is by no means assured with bailout talks still deadlocked -- the nation still needs even more painful economic overhauls than currently planned. Seven years into an economic crisis and another near-term financial emergency looming, that is a message no Greek wants to hear and a key reason why the IMF is also urging Germany and Athens' other European creditors to give the country hope in the form of real debt relief. The country's "fiscal and structural reforms...pension reforms, tax reforms, are only a down payment," said Poul Thomsen, IMF's European department chief and Greece's original bailout architect, on the sidelines of the fund's semiannual meeting of finance ministers and central bankers. To bring the country's unemployment and income levels back to precrisis rates will take "deep structural reforms, many of which are not yet on the books," he said. The jobless rate is currently at 22% and half of all the youth labor force are without work. "This is a long-term project," he said. Mr. Thomsen, along with IMF Managing Director Christine Lagarde, met with Finance Minister Euclid Tsakalotos over the weekend ahead of a return of the fund to Athens next week. Although bailout talks continue, the fund hasn't been involved in emergency financing for the country in three years, and future funding from the IMF is an open question.Fund officials worry the Greece's existing efforts are stretching the nation's political and social limits to their breaking point. The country has already endured a series of political crises and government changeovers over the bailout years. Another could be coming, analysts say, as the government faces debt due in the coming months that it can't cover without additional help from outside creditors. 

Weak cooperatives and high input costs hike Greek food prices – In Greece, cooperatives play a limited role in the food supply chain. Combined with rising overhead costs, this has contributed to the erosion of local farmers’ incomes, while emptying the wallets of consumers. Faced with an unprecedented economic crisis since 2008, Greek consumers have seen their purchasing power dramatically decreased. At the beginning of the crisis in 2008, 11.2% of Greeks reported shortages in basic goods but, seven years later, this figure rose to 22.2%. According to the latest Eurostat data, Greece is the third poorest member of the EU followed by Bulgaria (34.2%) and Romania (22.7%). However, food prices have not followed the same trend. Due to a number of factors, ranging from high input costs to a lack of response from cooperatives, final product prices have tended to rise.This is explained by a number of factors. Input costs for Greek farmers have increased more rapidly than production value. In total, farmers spend approximately €5.1 billion on input costs in order to be able to produce. Giannis Tsiforos, an agri-food expert at Gaia Epixeirein, a consultancy which brings together farmers, the IT and banking sectors, told that energy and animal feed expenditure makes up 60% of input costs for Greek farmers. “Unfortunately, in Greece, we have the most expensive diesel compared to other EU countries. In 2015, the return of the oil excise duty to farmers was abolished as part of the bailout programme,” Tsiforos said, adding that energy costs will remain high despite the fall in oil prices. Animal feed is another issue. Most of it comes from imported protein crops, especially soybeans, he remarked. “We have not been able to use our own protein crops to meet the need for imports and so the animal feed costs remain high,” Tsiforos said.

Greece financial crisis - PENSIONERS to be hit as debt reaches £268BN  -- Germany and the International Monetary Fund (IMF) have failed to make an agreement over the conditions of a new bail out package. And while the country's debt bubble continues to mount, as it tries to cope with the migrant crisis from 2015, its citizens are being penalised. Thousands of hungry, cold and desperate pensioners have taken to the streets of the country to protest at Prime Minister Alexis Tsipras handling of the debt crisis.The latest figures show Greece’s debt stands at 179 per cent of its gross domestic product (GDP), or about £268billion (€315bn). Currently the country owes about €216bn euros to the European Stability Mechanism, a permanent agency, based in Luxembourg, which replaced the temporary European Financial Stability Facility. That body had guaranteed €544.05bn to a variety of member states. Representatives of the Greek government flew to Washington last week to discuss their options at the IMF and World Bank Spring conference. But they failed to reach a conclusive agreement after the IMF disputed figures and Germany called for more cuts. Now Jean-Claude Juncker, who earns more than €300,000-a-year, says he is softening on his hardline approach to making the country impose far reaching cuts on the vulnerable. But he has refused to absolutely exercise any influence on former French finance minister Christine Lagarde who runs the IMF. 

Sudden Death For Greek Widows' Pensions: New Criteria, Cuts To Push 1000s More Into Poverty -- The implementation of the Greek pension reform of 2016, will lead to the sudden death of incomes for widows, and as KeepTalkingGreece reports, will push a large portion of population further into poverty. Widows’ pensions will be cut down to 50% of the deceased’s pension and new more restrictive age-based criteria will go into effect this month. According to so-called Katrougalos Law, a widow is entitled to receive a pension for the rest of her life, if she was at least 55 years old at the time of the spouse’s death.

  • If the surviving spouse was below this age limit, the pension is given initially for three years. Then it is interrupted and is granted again after the surviving spouse reaches the age of 67.
  • If the age of 55 in not completed within three years, the pension is cut and never granted again.

The state keeps in its pockets all the pension contribution paid by the deceased. Exemptions are for widows with underage children until they reach 18th year of age and students until they reach the 14th year of age. Widows receive the pension independently of their age until the children/students reach the age limit.

"This Is A Coup": Masked Men Storm Macedonia Parliament - Live Feed - Supporters of the movement "For The Common Macedonia" stormed the Macedonian parliament and attacked the deputies of the parliamentary majority, following a vote for a new speaker. In addition, journalists were detained in the press center of the Parliament. Live Feed: The attack injured several members, including the leader of the opposition SDSM party, Zoran Zaev. "This is a coup," shouted the deputies of VMRO-DPMNE party of former Prime Minister Nikola Gruevski, reports BREAKING: Barricades broken through journalists attacked by masked men!#Skopje #Macedonia #Coup— Glorious Leader (@seirdotmk) April 27, 2017MPs jumping to save their life #Macedonia The 'coup' follows the Macedonian opposition leader's calls for an end to a political deadlock that has left parliament unable to elect a speaker for three weeks. As AP reports, Zoran Zaev suggested a new speaker could be elected outside normal procedures, an idea immediately rejected by the conservative party as an attempted coup.Macedonia has been without a government since December, when former Prime Minister Nikola Gruevski's conservative party won elections, but without enough votes to form a government.Coalition talks broke down over ethnic Albanian demands that Albanian be recognized as an official second language. A quarter of Macedonia's population is ethnic Albanian. Zaev secured the cooperation of another ethnic Albanian party, giving him 69 of parliament's 120 seats. But President Gjorge Ivanov refused to hand him the mandate to form a government.

ECB Keeps Rates Unchanged, Says Ready To Expand QE If Outlook Worsens; Euro Slides - There was no surprise in the ECB's monetary policy statement released moments ago, in which the central bank kept all three of its rates unchanged as expected, however it did confirm that QE is intended to to run "until the end of December 2017, or beyond, if necessary," and in a surprise addition added that "if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration."The Euro appeared surprised by the bolded text and promptly dropped 20 pips to fresh session lows of 1.088. Full release below:

Core Eurozone Inflation Surges To 4 Year High As CPI Nears ECB Target --Mario Draghi's job just became a little more difficult, because one day after the head of the ECB surprised markets with a more dovish statement than expected stressing risks for European inflation, on Friday morning Eurostat reported that Euro zone inflation rose by more than expected to the European Central Bank's target and core inflation increased to its highest level in four years. Inflation in the 19 countries sharing the euro was 1.9 percent year-on-year, Eurostat estimated, up from 1.5 percent in March and just short of the four-year high of 2.0 percent recorded in February. The print was also above the 1.8% consensus estimate, even though German inflation data released on Thursday which also came in hotter than expected had prepared markets for a potential stronger figure for the bloc.The April print (released before the month is even over) was also just shy of the ECB's medium-term target for inflation of 2 percent.Overall inflation was higher primarily because of a 7.5% rise in energy prices and of 2.2% for unprocessed food. Prices for food, alcohol and tobacco went up by 1.5% in April, slightly lower than the 1.8% figure for March. In the services sector, the largest in the euro zone economy, prices rose by 1.8 percent in April, compared with 1.0 percent in March.Core inflation, excluding volatile prices of energy and unprocessed food and which the European Central Bank monitors even more closely, jumped to 1.2% year-on-year in April from 0.8% in March, above market expectations of 1.0 percent. The core level was at its highest level since September 2013.

Brussels demands EU citizens in UK for five years get permanent right to stay as Brexit stance toughens | The Independent: The EU has toughened its Brexit negotiating stance as two of the bloc’s most senior figures head to Downing Street to meet Theresa May. A new sentence in the European Council’s draft negotiating guidelines to be approved at a summit this weekend, indicates Brussels will demand all EU citizens who have lived in the UK for five years acquire permanent residence rights.The hardening of language is all the more significant because EU figures are demanding the European Court continue to guarantee EU citizens’ rights after Brexit, despite Ms May’s plans to make ending the Luxembourg court’s influence an election pledge. The new paragraph in the guidelines relating to EU citizens emerged in the last 24 hours and states that guarantees of rights given by the UK must be “effective, enforceable, non-discriminatory and comprehensive, including the right to acquire permanent residence after a continuous period of five years of legal residence.” The document then adds: “Citizens should be able to exercise their rights through smooth and simple administrative procedures.” The Independent first reported the Downing Street visit by top EU figures earlier this week, with officials saying it would be used by Mr Juncker to officially present Mr Barnier as the front-man in Brexit talks, due to begin after the British general election. 

This is why Theresa May and Marine Le Pen are more similar than you think  Most of us in the UK recognise Marine Le Pen for the racist, nationalist demagogue she is. However what we are failing to see is the stark resemblance between her divisive campaign tactics and those of our own Prime Minister Theresa May. Both May and Le Pen’s election campaigns are couched in the language of threat, creating a sense of fear and panic. Le Pen’s campaign hinges on halting “uncontrollable immigration”; Theresa May talks about “unsustainable levels” of immigration and the need to “take back control of our borders”. Importantly, this rhetoric implies that the current immigration situation is out of control, causing people to believe there is imminent danger to their way of life. In her victory speech on Sunday, Le Pen pledged to end “mass immigration and the free circulation of terrorists”. May and Le Pen present themselves as the great defenders, using language and slogans appropriate to wartime. Le Pen’s manifesto pledges to put the “defence of the nation at the heart of political decisions”; and May’s new campaign slogan is: “strong, stable leadership in the national interest”. In using such language they present themselves as protectors against the threat of immigration, and importantly they also validate false narratives of xenophobia. Both campaigns are seeped in nationalistic fever: May directly cites national interest in her slogan, and Le Pen’s second round slogan is simply: “Choose France”. What is cleverly unspoken, yet deliberately implied, is that this is white-national interest. In France, French people who are not white are viewed as the children of immigrants and not as French citizens. The politics and language of exclusion and othering has been fine-tuned by Le Pen’s Front National along with anti-Semitism and Islamophobia.

Why Brexit will bring a boom in lobbying --  In the wake of Brexit, lobbyists will swarm London, just as over 30,000 of them have swarmed Brussels over the years. As a member of the European Union, the UK deferred significant chunks of its law making to EU institutions, from the environment and agriculture to health, trade and banking. Now that the UK is “taking back control” of its laws, London will be the place to be to try and influence the laws and regulation that will affect businesses.  The EU lobbying industry, whose size exceeds €39 billion, will be significantly disrupted by Brexit. Lobbying is a strategic tool used by firms to influence laws that are potentially unfavourable to their bottom line from being passed and pushing through legislation that will boost their profits. As well as changing the industry’s landscape in Brussels, Brexit will also have knock-on effects on the level of political engagement by companies in the UK.  The UK government’s lobbying register, which woefully covers less than 4% of the 4,000-plus lobbyists in the UK’s £2 billion lobbying industry, reveals that the number of registered lobbyists increased from 117 in 2015 to 150 by December 2016. The number of lobbying contracts also surged from 664 in the first half to 704 in the second half of 2016, after the Brexit vote. Clearly, the corporate sway is already in gear. Businesses are in desperate need of advice on government relations; hence some law firms have created specialised Brexit units to cope with the demand while some former government officials have taken up lobbying jobs to help firms shape UK policy. Meanwhile, British lobbyists in Brussels are finding it difficult to get jobs in the aftermath of Brexit, perhaps due to the expected waning influence of the UK in European matters. Consequently, these lobbyists may return to a booming lobbying market at home.

Labour printed thousands of leaflets urging people to vote on wrong day -  Thousands of Labour election leaflets were allegedly pulped after being printed with the wrong date. The "flying start" leaflets should have been posted through letterboxes in key seats in London this weekend. But the delivery was cancelled because the leaflets wrongly urged people to vote Labour on May 4 — the date of the local elections. There are no local elections in London this year — and the general election is on June 8. "None have gone out," said a source. "I think they were taken for pulping before being even loaded."

Poorest Households Pay More In Taxes Than The Richest 10%, New Figures Reveal | The Huffington Post: Britain’s poorest households pay more of their incomes in taxes than the very richest, official figures reveal today.   The latest release from the Office for National Statistics shows the poorest 10% of households fork out 42% of their income in taxes – including VAT and council tax.Conversely, the richest 10% pay 34.3% - according to analysis by the Equality Trust.Today’s figures also show that average income for the richest fifth of households is £84,700 – more than 12 times greater than the poorest fifth (£7,200