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reality is only those delusions that we have in common...

Saturday, May 12, 2018

week ending May 12

Fed to raise rates in June, then September - WSJ survey - Latest survey results from the Wall St Journal on 60 economists :

  • 98% of respondents see a rate hike in the Fed's June meeting
  • Average probability of a move pegged at 85%
  • 76% of respondents see the next rate hike that follows will be in September
  • Average probability of a move in September pegged at 64%
  • 19% of respondents say that the Fed will move in December instead of September for a third rate hike this year

I believe three rate hikes is very much a given at this point, the real question is whether or not the market believes it is possible for the Fed to raise rates four times without causing concerns to the yield curve and the more recent case of emerging markets. More on the survey here.

 "Central Banks Are The Market" & Nomi Prins Warns "It Can't Go On Forever" - Two time best-selling book author Nomi Prins says the rescue policies of the 2008 financial crisis are still with us today. Prins is out with a brand new book called “Collusion: How Central Bankers Rigged the World.”The enormity of our current global debt problem is caused by central bankers. Prins explains, “It is huge... "The debt is between two and a half to three times global GDP, which is an historical high.  Debt to GDP throughout the developed world is higher than it has ever been, and it continues to grow.  Why?  Because money continues to be conjured up and rendered cheap for the participants at the top of the financial system.  The banks, the major corporations, the people who make money out of that, and it hasn’t washed down to the rest of the economy.  This is why most people feel this anxiety about another potential financial crisis, but also about what happens every day in their own pocketbooks. So, it is worse.  These central banks today, 10 years after the financial crisis occurred, that was supposed to be an emergency situation.  They have $21 trillion worth of conjured money in return for debt assets, stocks and corporate bonds around the world.  If they pulled that plug, if they were to take down any of the $21 trillion, even a little bit . . . it would begin to create a major rupture in the financial system.  This is why I say the central banks are the market.  Without them, the markets would be nowhere near these highs. If they pulled their help and subsidies, the market would plummet really quickly.”  Prins admits this has gone on for longer than most believed possible, but says it can’t go on forever. How does it all end?  Prins, who was a former top Wall Street banker, says, “We will eventually get a crash because, at some point, the amount of quantitative easing, or conjured money to buy assets out of the market to pump up the...financial system, will come to this head where even though these major central banks are continuing to dump money in.  There will be ruptures at the bottom of the economy . . . even though they are borrowing cheap money, they just can’t make enough money to service very cheap debt.  Consumers, who are at all-time debt highs, don’t have enough to continue to service their debt.  When these things happen at the same time in terms of lack of payments, delinquencies and defaults, then money will be taken out of the stock markets to plug the gap, and then the stock market comes down.

U.S. Rate Hikes Hit Rest of World Just as Hard, Fed Paper Says - Federal Reserve officials often like to say their mandate is to conduct monetary policy for the U.S. first and foremost. Amid a sell-off in emerging markets, a new study conducted by researchers at the central bank suggests higher interest rates at home have as big an effect abroad as they do here. “The foreign spillovers of higher U.S. interest rates are large, and on average nearly as large as the U.S. effects," Fed economists Matteo Iacoviello and Gaston Navarro wrote in a paper published Monday on the central bank’s website. “A monetary policy-induced rise in U.S. rates of 100 basis points reduces GDP in advanced economies and in emerging economies by 0.5 and 0.8 percent, respectively, after three years,” they wrote. “These magnitudes are in the same ballpark as the domestic effects of a U.S. monetary shock, which reduce U.S. GDP by about 0.7 percent after two years.” The pair found that higher U.S. rates slow other advanced economies primarily through their effects on exchange rates and trade. Emerging economies, on the other hand, were more affected via so-called financial fragility channels -- a concept that encompasses things like current account balances, foreign reserves, inflation and external debt. MSCI’s index of shares of companies based in emerging markets fell Monday to the lowest level since December as the U.S. dollar extended nearly a month of gains.. “On the dark side, these responses seem to be large, to the point that they suggest that foreign economies -- especially vulnerable, emerging economies -- may react to U.S. monetary shocks more so than the U.S. economy itself,” they wrote.

Fed Chair Powell To Emerging Markets: You Are On Your Own - Over the weekend, when commenting on the ongoing rout in emerging markets, Bloomberg published an article titled "Rattled Emerging Markets Say: It's Over to You, Central Bankers." Well, overnight the most important central banker of all, Fed Chair Jay Powell responded to these pleas to "do something", and it wasn't what EMs - or those used to being bailed out by the Fed - wanted to hear.As Powell explained, speaking at a conference sponsored by the IMF and Swiss National Bank in Zurich, the Fed's gradual push towards higher interest rates shouldn’t be blamed for any roiling of emerging market economies - which are well placed to navigate the tightening of U.S. monetary policy. In other words, with the Fed's monetary policy painfully transparent, Powell's message to EM's was simple: "you're on your own."Arguing that the Fed's decision-making isn’t the major determinant of flows of capital into developing economies (which, of course, it is especially as the Fed gradually reverses the biggest monetary experiment in history) Powell said the influence of the Fed on global financial conditions should not be overstated, despite Bernanke taking the blame five years ago for the so-called taper tantrum."There is good reason to think that the normalization of monetary policy in advanced economies should continue to prove manageable for EMEs,” Powell said, adding that “markets should not be surprised by our actions if the economy evolves in line with expectations.”Powell added that the Fed can help "foster continued financial stability" as policy normalization continues by communicating "our policy strategy as clearly and transparently as possible to help align expectations and avoid market disruptions." Alas, that's not what markets cared about, or wanted to hear, and instead Powell's unwillingness to suggest a slowdown in the Fed's tightening plans, EMs be damned, were enough to propel the dollar to new highs...

As US Dollar & Interest Rates Rise, All Heck Breaks Loose in Emerging Market Currencies  - Argentina’s peso is now in free-fall even though the Central Bank raised its interest rate three times last week to a stunning 40% to halt the plunge. Inflation is 25% and might get worse. And on Tuesday, the government began begging the IMF for a bailout to help deal with its currency crisis that is morphing into a dollar-denominated-debt crisis. Investors are ruing the day. The daily chart below shows the cliff-dive Argentina’s peso has undertaken. Since early February, the ARS has fallen 16%, and since late April 11%, most of it over the last eight trading days, despite the efforts by the central bank to stem the fall by selling scarce foreign exchange reserves and by jacking up its policy rate to 40%. This morning, the currency is at a new record low of 22.68 ARS to the USD. Seen the other way around, 1 peso is now worth just 4.4 cents:  But it’s not just Argentina. Former Federal Reserve Vice Chairman Stanley Fischer said on Wednesday that the turbulence from the rising dollar and from rising US interest rates that make the dollar more attractive hit emerging markets “a little more quickly than I had anticipated, and now that one sees it, one sees a couple of countries…which are closer to being in trouble and having to take strong policy measures.”He didn’t specify which “couple of countries,” but one of them clearly is bond-investor darling, Argentina.Will the situation be “stabilized,” he wondered. “Well, it requires a lot of people to do the right thing at the right time, and the right time is pretty soon for many of them.” So OK, maybe it won’t be “stabilized.” Among the other standouts, the Mexican peso has fallen 12.5% since February 20, half of that since April 19, to 19.56 pesos to the USD on Wednesday evening. Looking at it the other way, this daily chart shows the value of the MXN in USD, where 1 peso has fallen to just 5.1 cents: The Brazilian real has dropped 12% against the dollar since the end of January:  The Turkish lira has dropped 13% against the USD since early February: The Russian ruble has dropped 11.5% since early February, despite the surge in the price of oil since then:   Other emerging-market currencies have not been hit as much. For example, the Indian rupee and the Indonesian rupiah are both down a little over 5% since early February. And clearly, there are going to be some bounces in the future, of the type that have already occurred, visible in the charts above.

Fed banks targeted by new bill from Sen. Kamala Harris - Democratic Senator Kamala Harris on Thursday upped the pressure on the U.S. central bank to make its leadership more diverse, introducing legislation to compel the Federal Reserve's 12 regional banks to interview at least one woman and one minority candidate when they search for a new chief. The bill, the Diverse Leadership Act, would also require regional Fed banks to report to the Senate Banking Committee, the House Financial Services Committee and the Fed's Office of the Inspector General within 60 days of appointing a new president, providing demographic details on the pool of candidates they considered for the vacancy. "It's long past time the Federal Reserve do more to guarantee that their heads of the table reflect those they serve," Harris, of California, said in a statement. The proposal is similar to a measure first put forward in the House of Representatives in 2016 by Ohio Democrat Joyce Beatty. In both cases, sponsors have compared the proposal to the National Football League's Rooney Rule, named after former Pittsburgh Steelers owner Dan Rooney, which requires NFL teams to interview minority candidates for head coaching and other top jobs. Though the bill might struggle to get backing in a Congress currently controlled by Republicans, it points to the growing attention paid to the way Fed policymakers are chosen. 

 Key Measures Show Inflation increased YoY in April - The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning: According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.9% annualized rate) in April. The 16% trimmed-mean Consumer Price Index also rose 0.2% (1.9% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report. Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.2% (2.7% annualized rate) in April. The CPI less food and energy rose 0.1% (1.2% annualized rate) on a seasonally adjusted basis.  Note: The Cleveland Fed released the median CPI details for April here.  Motor fuel was up 43% annualized in April.

New Indicator: Underlying Inflation Gauge - Economists at the NY Federal Reserve Bank introduced a new measure of trend inflation in September 2017, the Underlying Inflation Gauge (UIG), meant to complement the current standard measures. Investors and policymakers alike have an interest in the behavior of inflation over longer time periods. The trend component of inflation is not an observed measure and a proxy measure is required to calculate it. To calculate trend inflation, transitory changes in inflation must be removed such as volatile components or specific items. Core CPI, which is the most widely used and accepted form of estimating trend inflation, only focuses on price components. The UIG derives trend inflation from a large set of data that extends beyond price variables. Additionally, it has shown higher forecast accuracy than traditional core inflation measures.  Here is the latest from the NY Fed:  The UIG derived from the “full data set” increased from a currently estimated 3.15% in March to 3.20% in April.  The “prices-only” measure increased from 2.23% in March to 2.29% in April. The twelve-month change in the April CPI was +2.5%, a 0.1 percentage point increase from the March reading. The UIG measures currently estimate trend CPI inflation to be approximately in the 2.3% to 3.2% range, with the prices-only measure modestly below the actual twelve-month change in the CPI. As we have noted recently, the rise in the full-data-set UIG compared to the prices-only measure is being driven principally by survey measures of manufacturing and nonmanufacturing activity. The latest full set UIG for April is 3.20% while the prices-only measure is 2.29%. Current Headline CPI is now 2.46% and Core CPI is 2.14%.

Early Q2 GDP Forecasts From Merrill Lynch: Downward revisions to inventories this week leaves 1Q GDP tracking a tenth lower to 2.2% for 1Q GDP. We are tracking 3.2% for 2Q. [May 11 estimate]. And from the Altanta Fed: GDPNow The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in thesecond quarter of 2018 is 4.0 percent on May 9, unchanged from May 3. [May 9 estimate]From the NY Fed Nowcasting Report The New York Fed Staff Nowcast stands at 3.0% for 2018:Q2. [May 11 estimate]CR Note: These early estimates suggest real annualized GDP in the 3% to 4% in Q2.

US Posts Biggest Budget Surplus In History -- Exactly one month ago, when the Treasury reported its latest monthly budget deficit, we noted that Federal spending surged in March, rising 7% from $392.8BN from a year prior to $420BN, the second highest monthly government outlay on record, and with tax receipts disappointing, it meant that the March budget deficit of $208.7 billion was 18% higher than $176.2BN deficit recorded last March, and was the biggest March budget deficit in US history. Fast forward to today when anyone who took this one month and extrapolated it as an indication of US economic health got the shock of a lifetime, when the US posted its largest monthly budget surplus on record in April, and the highest Federal Government Receipts ever - at just over half a trillion dollars - which the Congressional Budget Office said reflected stronger economic activity over the past year. In many ways, April was a mirror image of March: unlike March, Federal receipts in April soared to $510 billion, 12% or $54.8BN more than April 2017, and the highest Federal receipts not just for an April but any month in history (although of that surge, approximately $20BN was due to one additional day of collections in April 2018.  For those wondering if the culprit was tax repatriation, the answer is no: net corporate income taxes totaled $42.2BN in April and $120.8BN so far in fiscal 2018, 7 months into the year. The latter is down $39.2BN (24.5%) from the corporate taxes collected at this time last year; overall gross receipts were down 14% to $159.1BN while refunds up 53% to $38.3BN. as corporations become an increasingly less relevant source of government funding. Meanwhile, on the spending side, outlays increased by a more modest 8.4% to $296 billion, the latest monthly budget statement  reported.

Trump calls on Congress to pull back $15 billion in spending, including on Children’s Health Insurance Program -- President Trump is sending a plan to Congress that calls for stripping more than $15 billion in previously approved spending, with the hope that it will temper conservative angst over ballooning budget deficits. Almost half of the proposed cuts would come from two accounts within the Children’s Health Insurance Program (CHIP) that White House officials said expired last year or are not expected to be drawn upon. An additional $800 million in cuts would come from money created by the Affordable Care Act in 2010 to test innovative payment and service delivery models. Those are just a handful of the more than 30 programs the White House is proposing to Congress for “rescission,” a process of culling back money that was previously authorized. Once the White House sends the request to Congress, lawmakers have 45 days to vote on the plan or a scaled-back version of it through a simple majority vote. If approved by Congress, the reductions would represent less than 0.4 percent of total government spending this year. Rep. Mark Walker (R-N.C.) said in an interview that conservatives were given assurances from the White House that this package would be the first of several, and he said lawmakers were anxious to get started on the cuts. “I hope it’s never painted that this is just symbolic or a political gesture,” Walker said. “We think it’s very legitimate.” A senior administration official said Democrats should recognize that much of this package represents untapped accounts and that cutting the money would create savings without affecting operations. 

US Navy resurrects Second Fleet in Atlantic to counter Russia - BBC News: The US Navy has said it will re-establish its Second Fleet, as Russia becomes more assertive. Chief of Naval Operations Adm John Richardson said the fleet, disbanded in 2011, would oversee forces on the US East Coast and North Atlantic. He said the National Defense Strategy, published earlier this year, made it clear that the era of great power competition had returned. The strategy makes countering Russia and China a priority. The fleet, which was disbanded for cost-saving and structural reasons, will be based in its previous home - Norfolk, Virginia. "Our National Defense Strategy makes clear that we're back in an era of great power competition as the security environment continues to grow more challenging and complex," Adm Richardson said in an announcement on board the USS George H W Bush at Norfolk. "That's why today, we're standing up Second Fleet to address these changes, particularly in the north Atlantic." The re-establishment of the US Second Fleet is part of a wider strategy of re-orientating the US armed forces towards a world of renewed big power competition and away from the counter-insurgency campaigns they have been fighting over recent decades. 

White House and ex-intelligence chiefs push torture veteran as CIA director - With a public nomination hearing scheduled today before the Senate Intelligence Committee, supporters of Gina Haspel as the next director of the US Central Intelligence Agency have begun advancing the argument that concerns about her role in the agency’s torture program are outweighed by her record in running anti-Russia operations.Haspel appeared on Capitol Hill Monday for a series of meetings with US Senators, particularly Democrats, whose votes on her nomination are believed to be in play. Among them was West Virginia’s Joe Manchin, who has joined with Republicans in supporting previous Trump nominees, and Dianne Feinstein of California, the former Democratic chair of the Senate Select Committee on Intelligence, who previously said she had discussed the torture issue with Haspel and praised her performance as CIA deputy director.Last week, Haspel reportedly offered to withdraw her nomination over concerns that the Trump administration was not going to assure her unqualified support after it became aware of chat logs from a CIA instant messaging system that reportedly exposed Haspel’s enthusiastic support for the torture program initiated by the agency in the wake of the September 11, 2001 attacks.During that period, Haspel took charge of a CIA “black site” in Thailand known as “Cat’s Eye,” where Abu Zubaydah and Abd el-Rahim al-Nashiri were taken after being kidnapped by CIA operatives. Both men were waterboarded at the site—Zubaydah 83 times—and were subjected to sleep deprivation, confinement in small boxes and being repeatedly slammed into a wall. The torture left both of them severely damaged, both psychologically and physically, while producing no known intelligence. In addition to overseeing the torture in Thailand, Haspel played a key role in the decision to shred videotapes made of the torture sessions, which was ordered by her then-superior, Jose Rodriguez, the director of the National Clandestine Service in 2005.

Gina Haspel, nominee to head CIA, sought to withdraw over questions about her role in agency interrogation program - WaPo - Gina Haspel, President Trump’s nominee to become the next CIA director, sought to withdraw her nomination Friday after some White House officials worried that her role in the interrogation of terrorist suspects could prevent her confirmation by the Senate, according to four senior U.S. officials.Haspel told the White House she was interested in stepping aside if it avoided the spectacle of a brutal confirmation hearing on Wednesday and potential damage to the CIA’s reputation and her own, the officials said. She was summoned to the White House on Friday for a meeting on her history in the CIA’s controversial interrogation program — which employed techniques such as waterboarding that are widely seen as torture — and signaled that she was going to withdraw her nomination. She then returned to CIA headquarters, the officials said.  Taken aback at her stance, senior White House aides, including legislative affairs head Marc Short and press secretary Sarah Huckabee Sanders, rushed to Langley, Va., to meet with Haspel at her office late Friday afternoon. Discussions stretched several hours, officials said, and the White House was not entirely sure she would stick with her nomination until Saturday afternoon, according to the officials who spoke on the condition of anonymity to discuss internal deliberations. Trump learned of the drama Friday, calling officials from his trip to Dallas. He decided to push for Haspel to remain as the nominee after initially signaling he would support whatever decision was taken, administration officials said.

Mastermind Behind 9/11 Attacks Wants To Chime In On Haspel CIA Confirmation - The mastermind behind the September 11, 2001 terrorist attacks on the United States wants to weigh in on the confirmation of CIA Director nominee Gina Haspel, offering to provide legislators with six paragraphs of testimony about his interrogations. Al Qaeda leader Khalid Shaikh Mohammed asked military judge James Pohl for permission to share "six paragraphs" of testimony about Haspel with the Senate Intelligence Committee. Mohammed was captured in 2003 and waterboarded by the CIA over 180 times, while Haspel ran a "black site" in Thailand in 2002 which employed enhanced interrogation techniques.On Monday, Mr. Mohammed submitted a request to the judge overseeing pretrial hearings in that case, Army Col. James Pohl, Colonel Poteet said. While the file is not public on the commissions docket, Colonel Poteet said it consisted of an expedited motion for permission to provide the information to the committee about Ms. Haspel.The motion, Colonel Poteet said, included an attachment, titled, “Additional Facts, Law and Argument in Support,” containing “six specific paragraphs of information” from Mr. Mohammed that his client thinks the Intelligence Committee should know. After Mr. Mohammed raised the idea, his defense lawyers agreed that the information was important, Colonel Poteet said.-New York TimesHaspel came under fire in March, after reports in the New York Times and ProPublica reported Haspell's involvement in the black site, as well as the decision to destroy 92 videotapes of the enhanced interrogation of Abu Zubaydah, a suspected al-Qaeda leader.  Mohammed joins Democrats in trying to sink Haspel's nomination, after several Democratic senators have demanded that the Trump administration declassify more i nformation about her role in the program.

Gina Haspel: As If Nuremberg Never Happened - Nothing will say more about who we are, across three American administrations—one that demanded torture, one that covered it up, and one that seeks to promote its bloody participants—than whether Gina Haspel becomes director of the CIA. Haspel oversaw the torture of human beings in Thailand as the chief of a CIA black site in 2002. Since then, she’s worked her way up to deputy director at the CIA. With current director Mike Pompeo slated to move to Foggy Bottom, President Donald Trump has proposed Haspel as the Agency’s new head. Haspel’s victims waiting for death in Guantanamo cannot speak to us, though they no doubt remember their own screams as they were waterboarded. And we can still hear former CIA officer John Kiriakou say: “We did call her Bloody Gina. Gina was always very quick and very willing to use force. Gina and people like Gina did it, I think, because they enjoyed doing it. They tortured just for the sake of torture, not for the sake of gathering information.” It was Kiriakou who exposed the obsessive debate over the effectiveness of torture as false. The real purpose of torture conducted by those like Gina Haspel was to seek vengeance, humiliation, and power. We’re just slapping you now, she would have said in that Thai prison, but we control you, and who knows what will happen next, what we’re capable of? The torture victim is left to imagine what form the hurt will take and just how severe it will be, creating his own terror. I met my first torture victim in Korea, where I was adjudicating visas for the State Department. The man I spoke with said that under the U.S.-supported military dictatorship of Park Chung Hee he was tortured for writing anti-government verse. He was taken to a small underground cell. Two men arrived and beat him repeatedly on his testicles and sodomized him with one of the tools they had used for the beating. They asked no questions. They barely spoke to him at all. Though the pain was beyond his ability to describe, he said the subsequent humiliation of being left so utterly helpless was what really affected his life. It destroyed his marriage, sent him to the repeated empty comfort of alcohol, and kept him from ever putting pen to paper again.

McCain Sides With Democrats Urging Senate To Reject Haspel CIA Nomination - Sen. John McCain (R-AZ) has come out against Gina Haspel, President Trump's nominee to be CIA director, who is seeking to fill the seat left vacant by Secretary of State Mike Pompeo. Haspel came under fire in March, after reports in the New York Times and ProPublica reported Haspell's involvement in the black site, as well as the decision to destroy 92 videotapes of the enhanced interrogation of Abu Zubaydah, a suspected al-Qaeda leader.  McCain reasoned she shouldn't get the job despite being "a patriot who loves our country." "Like many Americans, I understand the urgency that drove the decision to resort to so-called enhanced interrogation methods after our country was attacked. I know that those who used enhanced interrogation methods and those who approved them wanted to protect Americans from harm. I appreciate their dilemma and the strain of their duty,” McCain said in a Wednesday statement. “But as I have argued many times, the methods we employ to keep our nation safe must be as right and just as the values we aspire to live up to and promote in the world.” McCain, who was tortured as a POW during the Vietnam War, says that while he believes Haspel “is a patriot who loves our country and has devoted her professional life to its service and defense... However, Ms. Haspel's role in overseeing the use of torture by Americans is disturbing. Her refusal to acknowledge torture’s immorality is disqualifying,” he continued. “I believe the Senate should exercise its duty of advice and consent and reject this nomination." McCain joins Congressional Democrats and Mohammed in urging his Senate colleagues to vote against Haspel. 

Elderly Retired CIA Analyst Dragged from Senate Hearing for Exposing Gina Haspel’s War Crimes — (video) Retired CIA analyst and outspoken antiwar activist, Ray McGovern, who chaired the National Intelligence Estimates and prepared the President’s Daily Brief, was forcibly removed from the United States Senate Intelligence Committee hearing Wednesday as Gina Haspel, the nominee for director of the CIA, was answering questions about her record of torture. McGovern is a highly decorated CIA analyst who received the Intelligence Commendation Medal at his retirement. He has since become an outspoken antiwar and anti-police state activist and returned the medal in 2006 in protest to the CIA’s involvement in torture. McGovern is also a veteran of the Vietnam war which adds to his already high level of credibility in speaking out against the system. During the hearing, McGovern demanded that Haspel answer the questions asked of her about the torture of terrorism suspects at a CIA black site in Thailand. In response to the interruption, the capitol police were called in to drag McGovern out. As the video shows, within only seconds, he was swarmed by police who shoved him out the door and into the lobby. He was then thrown to the ground as he pleaded with officers not to hurt his dislocated shoulder. As the struggle to subdue the elderly McGovern continued, police repeatedly yelled, “Stop Resisting,” to which he replied, “I am not.” Before McGovern was forcibly removed by police, Haspel was interrupted by another protester. This time, it was a lone woman, wearing a red t-shirt and shouting “Bloody Gina!” and “you are a torturer!” She was also removed by police 

North Korea releases American prisoners ahead of summit with Trump - The North Korean regime headed by Kim Jong-un handed over three American prisoners to US Secretary of State Mike Pompeo at the conclusion of talks in Pyongyang yesterday, as a sign of “good faith” ahead of talks with President Donald Trump. Trump hailed the prisoner release as another step forward in his administration’s push to bring North Korea under US influence and transform the balance of forces in East Asia to the strategic and military detriment of China.The three prisoners, all Americans of Korean background, were arrested in North Korea on allegations of espionage. Kim Dong-chol, a Christian missionary in his 60s, was arrested in 2015 and sentenced to 10 years hard labour in a typical North Korean show trial. Tony Kim, who was working at the privately-operated, largely Christian-funded Pyongyang University of Science and Technology (PUST), was arrested in April 2017. Kim Hak-song, another Christian missionary who claimed he intended to establish an experimental farm at PUST, was arrested in May 2017. Pompeo reported that the men are in reasonable health.According to a tweet sent by Trump, Pompeo and Kim Jong-un agreed on a still undisclosed date and venue for a meeting of the US and North Korean leaders. The talks will most likely take place next month at the “Peace House” building on the North-South Korean border, where Kim and South Korean President Moon Jae-in held a summit on April 27. The two Koreas signed a declaration committing to cultural and economic cooperation; the signing of a formal peace treaty to end the 1950-53 Korean War; and, “through complete denuclearisation, a nuclear-free Korean peninsula.”

 US offers to help rebuild N Korea economy if it denuclearises - BBC News: America will help rebuild North Korea's economy if it agrees to give up its nuclear weapons, US Secretary of State Mike Pompeo has said. The US would be "prepared to work with North Korea to achieve prosperity on the par with our South Korean friends", he told reporters on Friday. Mr Pompeo, who has just returned from Pyongyang, said he had "good" talks with North Korean leader Kim Jong-un. Mr Kim and President Donald Trump will meet in Singapore on 12 June. The two leaders, who had previously exchanged insults and threats, made the announcement after landmark talks between North and South Korea in April."If chairman Kim chooses the right path, there is a future brimming with peace and prosperity for the North Korean people," he said after Friday's talks in Washington with South Korean Foreign Minister Kang Kyung-wha. Mr Pompeo urged Pyongyang to take "bold action to quickly denuclearise". 

Iran's Rouhani warns Trump of 'historic regret' over nuclear deal - BBC News: Iranian President Hassan Rouhani has warned that the US will face "historic regret" if Donald Trump scraps the nuclear agreement with Tehran. Mr Rouhani's comments come as the US president decides whether to pull out of the deal by a 12 May deadline. Mr Trump has strongly criticised the agreement, calling it "insane". The 2015 deal - between Iran, the US, China, Russia, Germany, France and the UK - lifted sanctions on Iran in return for curbs on its nuclear programme. France, the UK and Germany have been trying persuade the US president that the current deal is the best way to stop Iran developing nuclear weapons. The UN also warned Mr Trump not to walk away from the deal. However, he has threatened that the US will "withdraw" from the deal on 12 May - the end of a 120-day review period - unless Congress and European powers fixed its "disastrous flaws". In remarks carried live on Iranian state television on Sunday, President Rouhani said: "If America leaves the nuclear deal, this will entail historic regret for it." He warned Iran had "a plan to counter any decision Trump may take and we will confront it". Iran insists its nuclear programme is entirely peaceful and says it considers the deal non-renegotiable. Last week, Israel revealed "secret nuclear files" which it said showed Iran had run a clandestine nuclear weapons programme before 2003, and had secretly retained the technological know-how, in breach of the agreement. Iran branded Israeli Prime Minister Benjamin Netanyahu a liar and said the documents he produced were a rehash of old allegations already dealt with by the International Atomic Energy Agency (IAEA), the UN's nuclear watchdog. But US Secretary of State Mike Pompeo said the documents were authentic and showed the 2015 Iran nuclear deal was "built on lies".

In Saudi Arabia, Pompeo calls Iran 'the greatest sponsor of terrorism in the world' - Secretary of State Mike Pompeo, on his first trip to the Middle East as America’s top diplomat, sought to muster support Sunday for a more robust international response to what U.S. officials see as a growing threat emanating from Iran. Speaking to reporters in Saudi Arabia, Iran’s main regional adversary, Pompeo said the multi-party agreement reached in 2015 to curb Tehran’s nuclear program did not do enough to contain the Islamic Republic. “In fact, Iran has only behaved worse since the deal was approved,” he said. The former CIA director cited Iran’s support for the “murderous” government of Syrian President Bashar Assad and also accused the country of arming Houthi rebels in Yemen who have repeatedly targeted Saudi cities with ballistic missiles — a charge denied by Tehran. “Iran destabilizes this entire region," Pompeo said, standing alongside his Saudi counterpart in Riyadh. “It is indeed the greatest sponsor of terrorism in the world, and we are determined to make sure it never possesses a nuclear weapon.” President Trump has said he will decide by May 12 whether to pull out of the agreement negotiated by the Obama administration and unilaterally reimpose U.S. sanctions related to Iran’s nuclear program. U.S. diplomats have been meeting with other parties to the accord, including France and Germany, to try to negotiate supplementary agreements to address Trump’s concerns. But in Brussels on Friday, Pompeo warned European leaders that Trump is unlikely to stay in the deal “absent a substantial fix.”

Kerry is quietly seeking to salvage Iran deal he helped craft — John Kerry’s bid to save one of his most significant accomplishments as secretary of state took him to New York on a Sunday afternoon two weeks ago, where, more than a year after he left office, he engaged in some unusual shadow diplomacy with a top-ranking Iranian official.He sat down at the United Nations with Foreign Minister Javad Zarif to discuss ways of preserving the pact limiting Iran’s nuclear weapons program. It was the second time in about two months that the two had met to strategize over salvaging a deal they spent years negotiating during the Obama administration, according to a person briefed on the meetings.With the Iran deal facing its gravest threat since it was signed in 2015, Kerry has been on an aggressive yet stealthy mission to preserve it, using his deep lists of contacts gleaned during his time as the top US diplomat to try to apply pressure on the Trump administration from the outside. President Trump, who has consistently criticized the pact and campaigned in 2016 on scuttling it, faces a May 12 deadline to decide whether to continue abiding by its terms. Kerry also met last month with German President Frank-Walter Steinmeier, and he’s been on the phone with top European Union official Federica Mogherini, according to the source, who spoke on the condition of anonymity to reveal the private meetings. Kerry has also met with French President Emmanuel Macron in both Paris and New York, conversing over the details of sanctions and regional nuclear threats in both French and English. The rare moves by a former secretary of state highlight the stakes for Kerry personally, as well as for other Obama-era diplomats who are dismayed by what they see as Trump’s disruptive approach to diplomacy, and who view the Iran nuclear deal as a factor for stability in the Middle East and for global nuclear nonproliferation. The pact, which came after a marathon negotiating session in Vienna that involved Iran and six world powers, lifted sanctions in return for Iran stopping its pursuit of nuclear weapons.

 John Kerry Tries To Salvage Iran Deal Behind Trump's Back; Secretly Meets With Top Iran Official - Obama's Secretary of State, John Kerry and a group of his former State Department officials, have been busy unofficial diplomats in recent weeks. While President Trump prepares to pull the plug on the infamous Iran deal, Kerry has been sneaking around the world trying to salvage the pact he presided over ahead of its May 12 renewal deadline, the Boston Globe reported Friday. John Kerry’s bid to save one of his most significant accomplishments as secretary of state took him to New York on a Sunday afternoon two weeks ago, where, more than a year after he left office, he engaged in some unusual shadow diplomacy with a top-ranking Iranian official.He sat down at the United Nations with Foreign Minister Javad Zarif to discuss ways of preserving the pact limiting Iran’s nuclear weapons program. It was the second time in about two months that the two had met to strategize over salvaging a deal they spent years negotiating during the Obama administration, according to a person briefed on the meetings. -Boston GlobeKerry has also met with leaders from Europe, including German President Frank-Walter Steinmeier, EU official Federica Mogherini and French President Emmanuel Macron in both Paris and New York, where they discussed sanctions and regional nuclear threats in both French and English. This type of "rogue" diplomacy is very rare for a former Secretary of State. As The Globe notes, the effort to salvage the Iran deal "highlight the stakes for Kerry personally, as well as for other Obama-era diplomats who are dismayed by what they see as Trump’s disruptive approach to diplomacy, and who view the Iran nuclear deal as a factor for stability in the Middle East and for global nuclear nonproliferation."

Pompeo defends 'muscular' US diplomacy on North Korea and Iran - New US Secretary of State Mike Pompeo on Friday defended the "muscular diplomacy" practiced by President Donald Trump as a way to solve thorny global issues "peacefully, without ever firing a shot."Speaking before of a group of American diplomats at the State Department, Pompeo outlined his vision for US foreign policy at a time of "many challenges.""These times are turbulent. The demands are for strong leadership. It is essential that our team does that, and counter the threats that we face with courage and strength," he said."Fortunately, we have a president who believes in muscular diplomacy as well, one that makes full use of the instruments of national power to advance, first and foremost, vital American interests and values."The hawkish Pompeo had promised a more "vicious" intelligence operation when he took over as chief of the Central Intelligence Agency last year, making unapologetically menacing statements toward North Korea and Iran.On Friday, he explained his view that a firm diplomatic hand "increases our chances of solving problems peacefully without ever firing a shot."   As an example, he cited the "enormous diplomatic effort to continue to keep the pressure on North Korea and bring them to the negotiating table, to a place where we can successfully eliminate the threat from Kim Jong Un's nuclear arsenal."Pompeo met Kim over Easter weekend in Pyongyang, ahead of an expected summit between the North Korean leader and Trump, who said Friday that a date and location would be announced soon.In the Middle East, where Pompeo traveled on his first trip abroad, he said "strong diplomatic efforts" were needed "to prevent Iran's destabilizing behavior in Syria, in Yemen, and across the region." In a week, Trump is expected to decide whether the US should remain in the nuclear deal reached with Tehran. The Republican leader has threatened to withdraw from the multinational accord.

Giuliani: Trump is ‘committed to’ regime change in Iran - Rudy Giuliani pushed for regime change in Iran on Saturday, saying President Donald Trump is “as committed to regime change as we are.” It's “the only way to peace in the Middle East” and “more important than an Israeli-Palestinian deal,” Giuliani, Trump’s newest attorney in the ongoing Russia probe and a former mayor of New York City, told reporters after giving a speech to the Iran Freedom Convention for Democracy and Human Rights in Washington.The speech was hosted by the Organization of Iranian-American Communities, a group that aims to promote democracy in the Islamic Republic and was supportive of the December protests there. At one point in his speech, Giuliani, who has served as an informal adviser to Trump and was under consideration to be his secretary of state, pretended that his notes were the Iran nuclear deal, ripping them up and spitting on them.The White House is considering the future of the Iran nuclear agreement struck between Iran and the U.S., five other countries and the European Union. During the December protests in Iran, Trump tweeted that it was “TIME FOR CHANGE!”, adding “the great Iranian people have been repressed for many years.” “Iran is failing at every level despite the terrible deal made with them by the Obama Administration,” Trump tweeted on Jan. 1. “The great Iranian people have been repressed for many years. They are hungry for food & for freedom. Along with human rights, the wealth of Iran is being looted. TIME FOR CHANGE!” As a congressman, Mike Pompeo, now secretary of state, wrote in a Fox News op-ed “Congress must act to change Iranian behavior, and, ultimately, the Iranian regime.” His predecessor at State, Rex Tillerson, also voiced explicit support for regime change, telling CNN, “we always support a peaceful transition of power.” A top State Department official later said the administration was not pursuing regime change.

Fate of Iran nuclear deal at stake as UK foreign secretary heads to Washington - The fate of the Iran nuclear deal remained in the balance on Monday as the British foreign secretary, Boris Johnson, was in to Washington for a series of meetings with the Trump administration in an attempt to keep the agreement intact. Trump, a fierce critic of the deal, has until 12 May to decide if he will again waive sanctions against Iran in exchange for limitations on its nuclear ambitions. In January, the last time he signed off on the pact, the president warned that it faced a “last chance”. Trump has called for stricter measures, including curbing Iran’s access to ballistic missiles. Speaking to CBS on Sunday, Britain’s ambassador to the US, Sir Kim Darroch, said: “The message we are hearing from all contacts in this administration is that although the president’s views on the deal are very clear and have been out there for months and months, and in fact for years, that a final decision hasn’t been taken.”On Saturday, however, the Observer revealed that aides to Trump hired an Israeli private intelligence firm to conduct a “dirty ops” campaign against key negotiators from the Obama administration in an attempt to undermine the deal.Johnson was not scheduled to meet Trump in Washington, but was expected to meet vice-president Mike Pence and the national security adviser, John Bolton, a foreign policy hawk who has long criticised the deal. The foreign secretary was also expected to appear on the Fox & Friends morning news show on Monday, his office confirmed. Trump is known to watch the programme avidly.  Johnson is the last representative of the so-called “EU three” – France, Germany and Britain, key allies in negotiating the deal in 2015 – to meet administration figures before the deadline. The German chancellor, Angela Merkel, and the French president, Emmanuel Macron, have lobbied Trump directly.

Iranian president: We will ‘remain committed’ to nuclear deal if Trump pulls out - President Hassan Rouhani of Iran claimed the Middle Eastern power “will continue to remain committed” to the multinational nuclear agreement the Obama administration brokered in 2015 — even if President Donald Trump terminates U.S. involvement in the deal later this week. “We are not worried about America’s cruel decisions ... We are prepared for all scenarios and no change will occur in our lives next week,” Rouhani said Monday in a speech broadcast live on state television and reported by Reuters. “If we can get what we want from a deal without America, then Iran will continue to remain committed to the deal. What Iran wants is our interests to be guaranteed by its non-American signatories ... In that case, getting rid of America’s mischievous presence will be fine for Iran.” Trump seems poised to withdraw from the deal on Saturday, when a decision is due on whether to extend a suspension of sanctions against Iran — fulfilling a campaign trail pledge and satisfying hawkish Republicans in Congress who have long opposed the atomic agreement. "It was insane. Ridiculous. It should have never been made," Trump said late last month, warning that Iranian officials are “going to have big problems, bigger than they've ever had before” if they restart their nuclear program. “If they want to make sure that we are not after a nuclear bomb, we have said repeatedly that we are not and we will not be,” Rouhani said Monday. “But if they want to weaken Iran and limit its influence whether in the region or globally, Iran will fiercely resist.” Rouhani’s announcement comes as Vice President Mike Pence is set to meet Monday with U.K. Foreign Secretary Boris Johnson — the third European ally to descend upon Washington, D.C., in recent weeks in an attempt to persuade U.S. officials to maintain the pact with Britain, China, France, Germany, Iran and Russia. 

Trump announces plans to pull out of Iran nuclear deal despite pleas from European leaders - The United States “will withdraw” from the international nuclear deal with Iran and will reinstate economic sanctions against Tehran, President Trump announced Tuesday. Trump’s decision, announced at the White House, follows the failure of last-ditch efforts by Britain, France and Germany to convince him that his concerns about “flaws” in the accord could be addressed without violating its terms or ending it altogether. “We cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement,” Trump said in remarks at the White House. He called the agreement “a great embarrassment to me as a citizen and all citizens of the United States.” The action makes good on Trump’s campaign pledge to undo an accord negotiated under his predecessor, President Barack Obama. Obama considered the agreement his signature foreign policy accomplishment, calling it the best way to head off the near-term threat of a nuclear armed Iran and a potential opening toward better relations with Tehran after more than three decades of enmity. In his remarks Tuesday, Trump said the deal did no such thing.

President Trump Announcement on Iran Nuclear Deal C-SPAN

President Donald J. Trump is Ending United States Participation in an Unacceptable Iran Deal - White House screed on Iran sanctions

Frequently Asked Questions Regarding the Re-Imposition of Sanctions Pursuant to the May 8, 2018 National Security Presidential Memorandum Relating to the Joint Comprehensive Plan of Action (JCPOA) - U.S. Treasury briefing on Iran sanctions

Background Briefing on President Trump's Decision To Withdraw From the JCPOA - State Department briefing on sanctions

Trump Pulls US Out Of "Unacceptable, Defective" Iran Deal; Obama Slams Decision As "So Misguided" --Summary: Statement on the Iran Nuclear Deal: https://t.co/O3SpryCKkc — Donald J. Trump (@realDonaldTrump) May 8, 2018 

  • President Trump is withdrawing the U.S. from the 2015 nuclear deal with Iran
  • Trump is reinstating sanctions on Iran, but didn't explain how that will play out
  • The deal "should have never never been made," the president says
  • Trump says the Iran deal negotiated by the Obama administration failed to protect America's national security, but he didn't give any examples
  • Iran's ballistic missile program feature strongly in Trump's remarks, even though this activity wasn't covered under the original agreement
  • Trump cited Iran's involvement in other regional conflicts, including Yemen and Syria
  • While his statement started out using the harshest possible language to describe the Iranian regime, he softened his tone to talk about the Iranian people
  • The president cited "evidence" from Israel to back his claims on Iran's activity
  • Trump compared his actions today to the ongoing negotiations with North Korea to bring an end to that country's nuclear program
  • Rouhani, commenting on Trump's announcement, says Iran can achieve benefits of the JCPOA with five countries. He said that the country is prepared for enrichment IF NEEDED in three weeks
  • "The EU is determined to act in accordance with its security interests and to protect its economic investments" in Iran, EU foreign policy chief Mogherini said. The bloc signals it won't shy away from a showdown with Trump
  • Former US President Barack Obama called Trump's decision "so misguided."
  • UN Secretary General Antonio Guterres calls on other nations to preserve Iran deal.

Trump’s Obnoxious Nuclear Bombshell - As expected, Trump pulled the U.S. out of the JCPOA earlier this afternoon and announced the resumption of sanctions on Iran: Trump’s statement on the withdrawal was filled with the usual false and discredited assertions about the agreement that its opponents have been using for years. Opponents of the deal have never have credible arguments on their side, and so they have had to resort to lying about the deal’s provisions, changing the goalposts for what the deal was supposed to do, and confuse the issue by bringing up issues unrelated to the agreement. Trump repeated some version of all three of these attacks in his unpersuasive bid to justify an obnoxious and irrational decision. The dishonesty of Trump’s statement began with the opening sentence: “Today, I want to update the world on our efforts to prevent Iran from acquiring a nuclear weapon.” Iran isn’t pursuing a nuclear weapon, it definitely hasn’t been pursuing one for at least 15 years, and it cannot pursue one so long as it complies with the requirements of the JCPOA. Iran has been complying with the terms of the deal from the start. Trump could not cite a single Iranian violation of the agreement to justify U.S. withdrawal because it doesn’t exist. Iran can’t acquire a nuclear weapon as long as the deal is in place, and the only effort Trump is making is to try to destroy the very thing that ensures that Iran’s nuclear program remains peaceful. By reneging on U.S. obligations and withdrawing, Trump is trying to wreck the most rigorous and significant nonproliferation agreement in decades. If he succeeds in wrecking it, he would make Iranian nuclear weapons more likely than if he had done nothing. Trump then brings up irrelevant and tangential issues that no nonproliferation agreement would ever address. He complains about Iranian missile development and foreign policy, and bemoans the fact that an agreement specifically focused on the nuclear issue failed to include things that could never have been included in it. Trump faults the JCPOA because it has not ushered in regional peace, as if any arms control or nonproliferation agreement has ever achieved such a thing:

Trump Violates the Iran Nuclear Deal — Ignoring U.S. and Israeli Generals Who Support It -So he’s finally done it. Having spent the past three years denouncing the Iran nuclear deal as “horrible,” “disastrous,” and “insane,” Donald Trump arrived in the Diplomatic Room of the White House on Tuesday afternoon to formally announce that “the United States will withdraw from the Iran nuclear deal” and would “begin reinstituting U.S. nuclear sanctions on the Iranian regime.”“This will make America much safer,” the president declaimed, jabbing his fingers at the assembled reporters.Guess who’s celebrating the president’s decision to violate a nuclear nonproliferation agreement signed by the United States less than three years ago? His new national security adviser, John Bolton, a former paid speaker for an Iranian ex-terror group who has long been obsessed with “regime change” in Tehran; the crown prince — and de facto ruler — of Saudi Arabia, Mohammed bin Salman, who claims Iran’s supreme leader “makes Hitler look good”; and the prime minister of Israel, Benjamin Netanyahu, who constantly compares the Islamic Republic to the so-called Islamic State.Don’t be fooled:  Even card-carrying hawks who hate the Islamic Republic think Trump is mad to pull out of the Joint Comprehensive Plan of Action, or JCPOA, as the nuclear deal is officially known. Because guess who won’t be celebrating? The entire U.S. military establishment: Defense Secretary James Mattis, who says he has read the text of the nuclear agreement three times and considers it to be “pretty robust”; Chair of the Joint Chiefs of Staff Gen. Joseph Dunford, who says, “Iran is adhering to its JCPOA obligations” and a U.S. decision to quit the deal “would have an impact on others’ willingness to sign agreements”; the head of U.S. Strategic Command, Gen. John Hyten, who says, “Iran is in compliance with JCPOA” and argues “it’s our job to live up to the terms of that agreement”; and the head of U.S. Central Command, Gen. Joseph Votel, who says the nuclear deal is “in our interest” because it “addresses one of the principle threats that we deal with from Iran.”

Trump Ends The Nuclear Deal With Iran – What’s Next? - With a very belligerent speech Trump nixed the nuclear deal with Iran. He also lied a lot in it. Neither is a surprise. The United States only keeps agreements as long as they are to its short term advantage - just ask native Americans. One can never count on the U.S. to keep its word. Trump will reimpose U.S. sanctions on Iran because:

  • The nuclear deal was negotiated by the Obama administration and thus must be bad;
  • Israel wants to keep Iran as the boogeyman;
  • the Zionists and right wing nuts in the U.S. want the U.S. to attack Iran;
  • MAGA - Trump needs Iran as enemy of the Gulf states to sell more U.S. weapons.

Three European countries, Britain, France and Germany, were naive enough to think they could prevent this. The EU3 offered the U.S. to put additional sanctions on Iran for other pretended reason - ballistic missiles and the Iranian engagement in Syria. I was disgusted when I first read of the plan. It was obvious from the beginning that it  would only discredit these countries AND fail. Luckily Italy and some eastern European countries shot the effort down at the EU level. They were not willing to sacrifice their credibility over the issue. The nuclear agreement was signed and should be followed by all sides. They pointed out that there was no guarantee from Trump that any additional European effort would change his view. Over the last weeks some last EU3 attempts to influence Trump were made. They were in vain:On Friday, Pompeo organized a conference call with his three European counterparts. Sources who were briefed on the call told me Pompeo thanked the E3 for the efforts they had made since January to come up with a formula that will convince Trump not to pull out of the nuclear deal — but made it clear the President wants to take a different direction.  Iran will largely stick to the nuclear deal if the EU effectively defends it and does not hinder Iranian deals with European companies. If the EU fails to do so the nuclear agreement will be null and void. Iran will leave the deal. The neoliberal Rouhani government that agreed to the deal will fall and the conservatives will be back. They will defend Iran's sovereignty at all costs.

Mnuchin Reveals Trump's Iran Deal Gamble: "The Objective Is To Enter Into A New Agreement" -- One of the growing concerns resulting from Trump's decision to pull the US out of the Iran deal, is that oil - and gasoline - prices will jump so much, now that anywhere between 200kb/d and 700kb/d in Iran exports is taken out of the market, they will offset most benefits to US consumers from the Trump tax cuts. We covered this topic three weeks ago in "Rising Gas Prices Threaten To Wipe Out Trump's Tax Cut Benefits."Incidentally, that's just one of the less severe complications that could emerge over the next 6 months as the full extent of the new Iran sanctions is rolled out.  As we reported earlier, Trump said the U.S. would levy the “highest level” of sanctions against Iran—including the punishment of Western companies and banks if they continue to do business with the country—as Washington pulled out of the Iranian nuclear accord.And while new contracts are banned, companies and banks will have 90 days or 180 days to wind down their ties before risking penalties.“Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States,” Trump said, envisioning a complete paralysis of the Iranian economy. As the WSJ summarizes, financial or business activities outlawed by Aug. 6, Treasury said, include exports of airplanes and parts, dollar transactions, trade in gold and other metals, sovereign debt and auto-industry deals. By Nov. 4, sanctions ban oil purchases, dealings with Iran’s ports and shipping industry, any ties to its insurance sector and dealings with the central bank.But is the president really willing to alienate any of the countless European and global states that will continue trading with Iran, especially since the latest sanctions cover every major aspect of Iran’s economy, most importantly banning oil exports from the country, but also hitting the financial sector and the automotive and aviation industries. That's the big question.

 Follow the Money: Three Billionaires Paved Way for Trump’s Iran Deal Withdrawal -- President Donald Trump has just fulfilled a campaign pledge to tear up the Obama administration’s signature foreign policy achievement, a multilateral agreement constraining Iran’s nuclear enrichment (Joint Comprehensive Plan of Action or JCPOA). In doing so, the president went against the advice of, among many others, his secretary of defense, House Foreign Affairs Committee Chairman Ed Royce (R-CA), Washington’s three most important European allies, and almost-two thirds of Americans who believe that the U.S. should not withdraw from the deal, according to a CNN poll released on Tuesday morning.Trump appears absolutely determined to undo as much of what Barack Obama accomplished as possible. In addition, the sheer perversity of his personality may well explain today’s action. But it may also be useful to follow the apochryphal advice that Watergate’s famous “Deep Throat” offered to Bob Woodward and Carl Bernstein in All the President’s Men, particularly in the unbelievably corrupt swamp of the Trump era.Indeed, today’s unpopular announcement may have been exactly what two of Trump’s biggest donors, Sheldon Adelson and Bernard Marcus, and what one of his biggest inaugural supporters, Paul Singer, paid for when they threw their financial weight behind Trump. Marcus and Adelson, who are also board members of the Likudist Republican Jewish Coalition, have already received substantial returns on their investment: total alignment by the U.S. behind Israel, next week’s move of the U.S. embassy in Israel to Jerusalem, and the official dropping of “occupied territories” to describe the West Bank and East Jerusalem.

The Morning After: How The World Reacted To Trump's Withdrawal From The Iran Nuclear Deal - This following summary, prepared by Bloomberg, includes reactions from governments and companies in Europe and Asia, market impact and views from analysts. 

MARKET/PRODUCER/SUPPLY REACTIONS:

Blowing Up The Iran Nuclear Deal - This is probably Donald Trump’s biggest mistakes, his refusal to certify Iran’s compliance with the JCPOA nuclear deal with Iran and his fullout abrogation of it by announcing the reimposition of full economic sanctions against Iran, although we had not fully undone those sanctions anyway.  An immediate victim in the US of this action will be Boeing workers who were to benefit from a $3 billion contract Boeing had with Iran, now cancelled by order of the US government.  Needless to say, Trump has simply lied repeatedly about this matter, claiming the Iranians are not in compliance, when the IAEA and all other parties to the agreement say they are.  Trump has strutted some reports stolen by Israeli intelligence, but those show almost nothing we already did not know, most particularly that Iran did have a covert nuclear weapons program prior to 2003 that it shut down. Two conflicting points come out, one suggesting bad things happening, one suggesting maybe not so bad.  The bad is that Trump appears by all reports to simply have no plan beyond reimposing sanctions.  Apparently he and his advisers think they can topple the regime, that economic unhappiness by Iranian citizens frustrated at failing to get much in the way of economic benefits from the JCPOA will rise up and overthrow the regime. But the more likely reaction will be for Iranians to move to support the regime against this clearly unwarranted and hostile act by the US.  Of course apparently the Israeli and Saudi governments might like to have us engage in military action against Iran, which would be truly disastrous, but that does not seem to be in the works anytime soon.  Anyway, it appears that aside from undoing yet another thing Obama did (lots of criticizing Obama and Kerry in his announcement), he really seems not to know what to do next.  What I really wonder is if he truly believes his own lies that the Iranians have not been keeping to the deal.

Iran – Let’s (Not) Make a Deal - Ilargi: I know the U.S. hasn’t followed the law in 100 years, but let’s review the Iran Deal. A “Deal” with a foreign nation is supposed to be, for 200 years has been, and legally must be, a “Treaty”. Treaties under U.S. law are unique, as they are NOT to be brokered by the Congress and are a point of contention if Congressmen get involved, as you can imagine special deals and/or information leaks could damage the negotiating position.This is one of the few things Congress doesn’t do. However, the deal, brokered by the President, is presented to the Senate and only the Senate, which is supposed to be the older, more stable house, and once upon a time when Americans were adults and the Senate was chosen by the State governments, this was true. Even with a Democratic election of Senators representing the people and not the States, (which is what the House is supposed to be) it’s the best we have.So when Obama arranged the Iran “Deal”, he knew and did so against 220 years of history exclusively BECAUSE he knew the Senate would never approve an honest-to-God, legal “Treaty.” Worse, it was part of the reason the “Deal” was effectively secret, not overseen by anyone, and even John Kerry when asked what was in it said, “I don’t know.” You don’t know??? You’re the Secretary of State presumably brokering the deal. Who’s above you in the food chain that you’re not allowed to know? That was an interesting disclosure that the media – of course – never followed up on. He also said, as the deal was never signed, it was “not legally binding.” Okay, yes, if the Senate does not approve it, making it therefore a “Treaty”, then it’s just a gentleman’s handshake verbal agreement and not binding. So…Iran therefore did NOT agree to stop weapons development, and certainly as proven did not agree to continue to use the U.S. petrodollar.

Leaked Doc Reveals White House Planning "Regime Change" In Iran - It appears Rudy Giuliani wasn't lying.   Just a few days after the former NYC mayor and latest member of President Trump's unexpectedly let it slip that "we got a president who is tough, who does not listen to the people who are naysayers, and a president who is committed to regime change [in Iran]", the Washington Free Beacon has obtained a three-page white paper being circulated among National Security Council officials with drafted plans to spark regime change in Iran, following the US exit from the Obama-era nuclear deal and the re-imposition of tough sanctions aimed at toppling the Iranian regime.  The plan, authored by the Security Studies Group, or SSG, a national security think-tank that has close ties to senior White House national security officials, including - who else - National Security Adviser John Bolton, seeks to reshape longstanding American foreign policy toward Iran by emphasizing an explicit policy of regime change, something the Obama administration opposed when popular protests gripped Iran in 2009, writes the Free Beacon, which obtained a leaked copy of the circulating plans.The regime change plan seeks to fundamentally shift U.S. policy towards Iran and has found a receptive audience in the Trump administration, which has been moving in this direction since Bolton—a longtime and vocal supporter of regime change—entered the White House.It deemphasizes U.S military intervention, instead focusing on a series of moves to embolden an Iranian population that has increasingly grown angry at the ruling regime for its heavy investments in military adventurism across the region. -Free Beacon

“Iran Is Completely Different! This US-Led Regime Change Will Work Out Fine!” Caitlin Johnstone - There’s a running gag in the comic strip Peanuts in which a balding depressive child named Charlie Brown is talked into trying to kick a football by his sadistic neighbor, Lucy. That gag always pops into my mind when Trump supporters assure me that US-led regime change in Iran will be completely different from Afghanistan, Iraq, or Libya.The Washington Free Beacon has published a report on a three-page paper “being circulated among National Security Council officials” which explicitly outlines a strategy for effecting regime change in Iran. The plan was authored by a DC think tank called Security Studies Group, whose leadership has advanced some unbelievably stupid conspiratorial narratives about Muslim Americans, and which has ties to National Security Advisor John Bolton, who has openly promised Iranian regime change before 2019.The plan reportedly “seeks to reshape longstanding American foreign policy toward Iran by emphasizing an explicit policy of regime change” by stirring up unrest and working to “assist an already aggravated Iranian public” to “topple the hardline ruling regime through a democratization strategy that focuses on driving a deeper wedge between the Iranian people and the ruling regime.”And from what I can tell Trump’s base seems to be mostly fine with this. The fact that the plan doesn’t put American soldiers in harm’s way combined with the fact that Iran does not have a secular government seems to prevent any objection in the greater MAGA crowd from pursuing a strategy which looks essentially identical to that which was pursued in Libya and Syria. The Iranian Mullahs have got to go, they tell me. The people of Iran want freedom and democracy. This time it will be completely different. Lucy’s gonna let us kick the football for sure.

US Public Support For Iran Deal Reaches All-Time High - Since the implementation of the Iran Deal, especially Conservative Americans have been in strong opposition to the lifting of sanctions against the Middle Eastern state.It had been one of Trump’s electoral pledges to either renegotiate or abandon the heavily criticized agreement between Iran, the members of the UN Security Council and Germany.As Iran rejected any renegotiations, the president soon favored to nix the agreement and reimpose sanctions, and this week President Trump officially withdrew from the Iran agreement. As Statista's Patrick Wagner notes, through the so-called snapback mechanism, a whole battery of sanctions will immediately come into effect again.However, as this graphic shows, President Trump does not have a lot of public support for his decision... Since its implementation, citizens increasingly favored the agreement, reaching an all-time high before Donald Trump abandoned it. Is this just more #RESISTance? We wonder just how many of those survey respondents know anything about the actual deal? And what suddenly accounts for the surge in support in the last few weeks?

US Moves To Cut Off Iran From Global Economy -- Six years after SWIFT cut ties with Iranian banks during the last round of Western sanctions on the Persian nation, on Thursday afternoon the U.S. took another step toward cutting Iran off from the global economy when the US Treasury announced it was levying sanctions on a financing network and accusing the country’s central bank of helping funnel U.S. dollars to the blacklisted elite military unit of the Iranian Revolutionary Guard known as the Quds Force, the WSJ reported.Acting together with the United Arab Emirates, the US Treasury said that it had sanctioned six individuals and three "front companies engaged in a large-scale currency exchange network that has procured and transferred hundreds of millions" of dollars to Iran's elite military force; overnight Israel’s government blamed the the same Quds Force for rocket attacks from Syria Wednesday night, an action that triggered massive retaliatory strikes by Israel’s military against Iranian targets in Syria, escalating the risk of a wider regional war.In Washington, Treasury Secretary Steven T. Mnuchin accused "the Iranian regime and its Central Bank" of misusing banking access in the UAE to acquire US dollars to fund the IRGC-QF's "malign activities, and to arm its "regional proxy groups." The new sanctions also ban US individuals and entities from doing business with the currency network.Mnuchin alleged that the sanctioned entities had concealed the acquisition of funds and transfers: "We are intent on cutting off IRGC revenue streams wherever their source and whatever their destination."“Countries around the world must be vigilant against Iran’s efforts to exploit their financial institutions to exchange currency and fund nefarious actions of the IRGC-QF and the world’s largest state sponsor of terror,” Mnuchin also said.Specifically, the Treasury accused an Iranian company, Jenah Aras Kish, of being a front for the Quds Force, and said the firm received oil revenues from Central Bank of Iran accounts and gave that money to couriers who exchanged it for millions of U.S. dollar notes in the U.A.E. through two Iranian firms, Khedmati & Co. and Rashed Exchange.

European powers condemn Trump’s cancellation of Iran nuclear treaty -- The Trump administration’s withdrawal from the 2015 Iranian nuclear treaty has revealed deep and explosive divisions between Washington and its imperialist allies in Europe. Governments and major media outlets across Europe were virtually unanimous in condemning Trump’s action, calling for the treaty to be preserved, and vowing to defend their business interests against Trump’s threats to impose the “highest level of economic sanctions against Iran.”German Chancellor Angela Merkel, British Prime Minister Theresa May and French President Emmanuel Macron issued a joint statement defending the Joint Comprehensive Plan of Action (JCPoA), the Iranian treaty’s official name, against Trump. In the statement, the three leaders note “with regret and concern” the US withdrawal from the deal and “emphasise our continuing commitment to the JCPoA.” So long as Iran continues to abide by the restrictions on its nuclear program posed by the JCPoA, they add, “we, the E3, will remain parties to the JCPoA.”While demanding that Iran continue to submit to International Atomic Energy Agency monitoring of its nuclear program, Berlin, London and Paris called on Washington not to impose new sanctions: “Iran should continue to receive the sanctions relief it is entitled to whilst it remains in compliance with the terms of the deal.”They also pledged to address “major areas of concern” raised by Washington, primarily focused on demanding that the Iranian regime slavishly comply with US and EU foreign policy in the Middle East. These concerns include “shared concerns about Iran’s ballistic missile program and its destabilising regional activities, especially in Syria, Iraq, and Yemen.” European Union (EU) foreign policy chief Federica Mogherini echoed these positions, hailing the United States as “our closest partner and friend” but indicating the EU, which is a signatory to the treaty, would continue to support it as long as Iran stayed in compliance with it. She declared, “As we have always said, the nuclear deal is not a bilateral agreement and it is not in the hands of any single country to terminate it unilaterally.”

Europeans scramble to save Iran nuclear deal but face new concerns over U.S. sanctions — European leaders opened a diplomatic push Wednesday to salvage the Iran nuclear accord without the United States, starting direct talks with Tehran and considering how to maintain business ties in the face of Washington opposition. “The deal is not dead,” said French Foreign Minister Jean-Yves Le Drian, speaking on France’s RTL radio. “There’s an American withdrawal from the deal, but the deal is still there.” French President Emmanuel Macron — Europe’s leading interlocutor as it sought to persuade Trump not to abandon the deal — spoke with Iranian President Hassan Rouhani by phone Wednesday. “The French president emphasized the willingness of France to continue enforcing the Iran nuclear agreement in all respects,” said a statement from the Elysee Palace. “He underlined the importance that Iran do the same.” Those sentiments were shared in other capitals backing the 2015 accord: Brussels, London, Berlin, Moscow and Beijing. Rouhani has ordered his diplomats to engage with their European counterparts. However, he and other moderates who support the accord, and diplomacy more generally, are under pressure from staunch conservatives who have long opposed it.   Administration officials who filled in the gaps of Trump’s announcement made clear that the United States plans a full return to pre-deal sanctions, with the potential for new measures, and that there is no plan to issue waivers or allow allies or favored companies to circumvent their full effect.  That means European companies and others that have moved into Iran since the deal took effect will have to choose between shutting down operations there or continuing to do business in defiance of the United States — and risk their access to the much larger U.S. market.

Europe punches back after Trump’s Iran decision— European leaders on Wednesday began drawing up plans to preserve the Iran nuclear accord, in defiance of President Donald Trump's Tuesday decision to abandon what he called the "rotten" agreement.   The possible action includes legislation that would block Washington from punishing European companies that continue to do business with Iran. It reflects Europe’s deep frustration with Trump’s withdrawal from the 2015 deal despite the pleas of its top leaders. Trump’s move not only removes the U.S. from the nuclear pact but raises the specter of American sanctions on European companies that have embarked on business ventures in Iran. On Wednesday, European leaders began to fight back.  European Union officials scrambled in Brussels Wednesday to pull together legislation aimed at defending European companies from Washington's new crackdown on Iran. Such legislation would likely mirror EU action to deflect a 1996 U.S. embargo against Cuba as well as U.S. sanctions against Libya and Iran. That EU response, which included appeals to the World Trade Organization, ultimately yielded a political agreement with Washington that effectively shielded European companies from enforcement action by the U.S. EU officials were also considering new incentives to persuade Tehran to stick with the deal despite the U.S. withdrawal, including through European Investment Bank financing. While such money might be limited, it would help blunt the impact of Trump’s efforts to block Iran’s access to Western capital markets. Europeans officials were taken aback by Trump’s decision to fully reinstate all previous U.S. nuclear-related sanctions against Iran. The move showed no sympathy for European companies that struck business deals in Iran on the belief that the nuclear agreement was accepted international policy, endorsed and affirmed by the United Nations Security Council. “With Trump’s announcement he didn’t go half way, he didn’t go a quarter of the way, he went all the way,” said one senior EU official.  The official noted a Tuesday tweet by the new U.S. ambassador to Germany, Richard Grenell, instructing German companies to “immediately” unwind their business dealings in Iran.

Twitter Troll Sent to Germany as Trump’s Ambassador Instantly Offends Nation With Tweet -  Richard Grenell, the new U.S. ambassador to Germany, formally took up his post in Berlin on Tuesday and immediately got to work as Donald Trump’s representative by offending the German people with a tweet.  As @realDonaldTrump said, US sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately.— Richard Grenell (@RichardGrenell) May 8, 2018   Grenell’s inaugural Twitter address to his hosts, a stern command to German companies doing business in Iran to obey the American president’s decision to sabotage the nuclear arms control agreement that opened the way for Western investment, or face U.S. sanctions, did not go over well.As Germany’s leading financial daily, Handelsblatt, reported, the tweet drew thousands of comments, “many of them from angry Germans basically telling the ambassador, a longtime critic of the Iran deal, to butt out.” Among the more temperate replies to Grenell’s tweeted threat was one from Wolfgang Ischinger, a former German ambassador to the United States, who advised the novice diplomat to avoid issuing “instructions” to his hosts.

Has Europe Rebelled? -- Washington’s current foreign-policy practice is a bit reminiscent of the golden era of the Ottoman Sublime Porte, in the sense that any visit by a leader of a vassal state is seen as nothing more than an opportunity for a public demonstration of his willingness to serve the great sultan or, in the modern context, to do the bidding of the master of the White House. The visitor must also wear a big grin and speak passionately about how happy he is to have been given the opportunity to kiss the Sultan’s slippers. Or, to put it in the language of today, to be impressed with the leadership of the US and personally inspired by the energy of the American president.. The other heads of states that come to Washington, including EU leaders and even some African presidents, act like insolent upstarts, who — from the standpoint of imperial tradition — do not stand to attention, tend to offer their flattery without fervor or exuberance, and, most importantly, do not race off to fulfill the wishes of the leaders of the empire. The meeting between German Chancellor Angela Merkel and US President Donald Trump on April 27, 2018 served only to confirm that Washington does not need allies who have their own national interests: all allies must be guided by the concept of the unipolar hegemony of the US. Anyone who is uncomfortable with this is relegated to the circle of those who are seen as unfriendly to the White House. The Washington Post makes it clear that Germany falls into this latter camp: “Angela Merkel is becoming Europe’s weakest link.” That article points out how serious the differences are between the two countries’ ruling factions. Both Germany’s political elite, and as well as the German population as a whole, are characterized very disparagingly: “German passivity is deeply ingrained. Berlin’s political class lacks strategic thinking, hates risk and has little spunk. It hides behind its ignominious past to justify pacifism when it comes to hard questions about defense and security issues.” The general decrepitude of the Bundeswehr and its equipment are criticized and mocked in the discussion of Germany’s refusal to take part in the missile attack on Syria carried out by the US, Britain, and France. And then the article even alleges that Germany’s Syrian policy has actually abetted the wrong side by granting asylum to almost a million refugees fleeing that country, thus supposedly allowing Bashar al-Assad to continue fighting.

    Merkel: "Europe Can No Longer Rely On The US To Protect It" - With Europe having failed to prevent Donald Trump from withdrawing from the Iran nuclear deal despite sending both Macron and Merkel to Washington in an attempt to persuade him, the tension between Europe and the US has escalated, and on Thursday morning, Merkel said that Europe can no longer rely on US "to protect it." "It’s no longer the case that the United States will simply just protect us. Rather, Europe needs to take its fate into its own hands, that's the task of the future," Chancellor Angela Merkel said on Thursday in a speech commending French President Emmanuel Macron at prize ceremony in Aachen, Germany.Then again, this is Germany, the same nation which only has 4 fully-functioning Eurofighter jets in operation.Merkel also says that "we will make progress” together with France on banking union and capital markets union, though “these are difficult discussions", and commented that German differences with France "don’t separate us, rather they always bring us back together."Merkel's view on the fraying relationship with the US echoes the earlier statement of the President of the European Commission Jean-Claude Juncker, who said during a Thursday address that Washington "had lost vigor, and because of it, in the long term, influence," suggesting that Europe should take over the US' role as global leader.Meanwhile, further breaking away with the unilateral action employed by Trump, the High Representative of the EU for Foreign Affairs and Security Policy Federica Mogherini stressed that the bloc reserved the right to act in its security interests, calling on the international community to preserve the JCPOA. Donald Trump announced on Tuesday, that US was withdrawing from the JCPOA, which is also known as the Iran nuclear deal, causing a major backlash among the European allies of the US. He also promised to re-impose the highest level of economic sanctions against Tehran in response to the development of the nuclear program. So far Europe has stressed it is business as usual when it comes to one of its key oil suppliers, and the deal remains in place, no matter what Trump says or does.

    If Europe Wants to Remain on the World Stage, It Must Resist Trump on Iran - The US will rely at first on the reimposition of economic sanctions on Iran to force it to comply with US demands and hopefully bring about regime change in Tehran. But, if this does not work – and it will almost certainly fail – then there will be a growing risk of military action either carried out directly by the US or through “green-lighting” Israeli airstrikes. Iran is for the moment reacting cautiously to Trump’s denunciation of the 2015 accord, portraying itself as the victim of arbitrary action and seeking to spur the EU states into taking practical steps to resist imposing draconian sanctions along the lines of those that were imposed before 2015. Even if this does not happen, it will be important for Iran that the Europeans should only grudgingly cooperate with the US in enforcing sanctions, particularly on Iranian oil exports. A problem for the US is that Trump has made the Iranian nuclear deal negotiated by Barack Obama the issue on which he will test the limits of US power which he had pledged to expand. But the agreement is internationally popular and is seen to be working effectively in denying Iran the ability to develop a nuclear device. The US is therefore becoming self-isolated, with full support only from Israel and Saudi Arabia, in the first weeks of a crisis that could go on for years. Already Trump’s determination to sink the deal forever has involved marginalising and humiliating France, Germany and UK. They had pleaded for it to be preserved but made more palatable to the US by separate agreements on ballistic missiles and other issues. Trump seems to have enjoyed the procession of European leaders from Emmanuel Macron to Boris Johnson asking for compromise, only to go away empty-handed. If the European leaders now go along with sanctioning Iran, there will be even less reason for Trump to take their views seriously in future. They have already seen their attempt to appease him on climate change fail to produce anything, so they either have to accept that they have less influence and a reduced role in the world or make a serious attempt to preserve the nuclear accord. 

    China "Regrets" Trump's Decision, Vows To Protect Iran Nuclear Deal --In the aftermath of Trump's withdrawal from the Iran nuclear deal, the emerging geopolitical axes - at least when it comes to the ongoing global proxy conflict involving Syria/Iran/Israel/Saudi Arabia, i.e. the Middle East - has made some notable changes.On one hand, there is the core axis of the US, Israel, Saudi Arabia, the UAE and Qatar, all of which are jousting for dominance with Iran, are eager to see the Iranian government and economy crash and burn (in some cases, literally) and have and will vocally back any move out of Washington that is adverse to Iran/Syria.On the other hand, there is Russia which has firmly backed both the Iran and Syrian regimes, while also providing weapons and supplies to the two financially-strapped governments.In the middle is Europe: unwilling to side with Trump and abrogate the Iran nuclear deal - after all, Europe gets much of its oil imports courtesy of Tehran while many European countries are currently branching out in Iran in hopes of finding more marginal clients, yet also unwilling to formally back Rouhani/Assad whom Trump has branded "terrorist."But what about the biggest and arguably most important emerging superpower, China, which until recently had held a very low profile when it comes to Iran? Well, overnight, perhaps prompted by the ongoing trade war with the US, Beijing decided there is no longer a need to stay mute, and as Xinhua reported,  voiced regret over President Donald Trump's decision to pull the United States out of the Iran nuclear deal and vowed to "safeguard" the agreement."China regrets this decision made by the US," foreign ministry spokesman Geng Shuang said during a press briefing on Wednesday. Geng said China will maintain "normal economic and trade exchanges" with Iran despite Trump's decision to withdraw from the 2015 accord and reimpose sanctions on Tehran.

    India Ducks Stand on Trump and Iran, Wants All Sides to ‘Engage Constructively’ - When sanctions against Iran were lifted in January 2016, India had described the international nuclear deal as a “triumph of diplomacy”. Over two years later, US president Donald Trump’s unilateral “withdrawal” from the nuclear deal and reinstatement of sanctions has led New Delhi to advise “all parties” to “engage constructively” to address the Iran nuclear deal.On Tuesday, Trump announced from the White House in Washington that the US was withdrawing from the 2015 Joint Comprehensive Plan of Action (JCPOA) and reinstating the “highest level of economic sanctions”. “Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States,” he added.A day later, India issued a cautiously worded statement in response, without really passing judgment or naming names .“India has always maintained that the Iranian nuclear issue should be resolved peacefully through dialogue and diplomacy by respecting Iran’s right to peaceful uses of nuclear energy as also the international community’s strong interest in the exclusively peaceful nature of Iran’s nuclear programme,” said Raveesh Kumar, the ministry of external affairs spokesperson.  He noted that “all parties should engage constructively to address and resolve issues that have arisen with respect to the JCPOA”.

    Angry Iran likely to launch hacks against U.S. businesses, experts say - U.S. banks, utilities and airports may want to buckle up for retaliatory Iranian cyberattacks following the U.S. pullout from a nuclear accord with Iran, cyber researchers said Wednesday. Iran has a history of unleashing its hackers at moments of geopolitical tension and has displayed a willingness to deploy broadly destructive attacks.“It’s American businesses that are likely to bear the brunt of that,” said Levi Gundert, a former Secret Service agent who is vice president of threat intelligence at Recorded Future, a Somerville, Massachusetts, cybersecurity firm. Iran’s state-run hacking efforts operate in a pyramid structure with some 50 groups of contractors with specialization in various types of malicious code, Gundert said. When the religious leadership of Iran seeks a quick response to international pressure, they sometimes put together teams of skilled hackers who are less ideologically aligned with the devout Islamic regime. “Those folks aren’t necessarily the ones they trust the most,” Gundert said, and the impact of their attacks “could be a little messier.”

    Turkey Says It Will Retaliate If US Temporarily Halts Weapon Sales -- Turkey will retaliate if the US enacts a proposed law that would halt weapons sales to the country, foreign minister Mevlut Cavusoglu said on Sunday. Lawmakers in the US House of Representatives released details on Friday of a $717 billion annual defence policy bill, including a measure to temporarily halt weapons sales to Turkey. In an interview with broadcaster CNN Turk, Cavusoglu said the measures in the bill were wrong, illogical and not fitting between the NATO allies. “If the US imposes sanctions on us or takes such a step, Turkey will absolutely retaliate,” Cavusoglu said. “What needs to be done is the US needs to let go of this.” The proposed US National Defense Authorization Act, which is several steps from becoming law, would ask the Defense Department to provide Congress with a report on the relationship between the US and Turkey, and would block the sale of major defence equipment until the report was complete. Turkey plans to buy more than 100 of Lockheed Martin’s F-35 Joint Strike Fighter jets, and is also in talks with Washington over the purchase of Patriot missiles. Turkey signed an agreement with Russia in December to buy S-400 surface-to-air missile batteries as part of Ankara’s plans to boost its defense capabilities amid threats from Kurdish and Islamist militants at home and conflicts across its borders in Syria and Iraq. The move to buy S-400s, which are incompatible with the NATO systems, has unnerved NATO member countries, which are already wary of Moscow’s military presence in the Middle East, prompting NATO officials to warn Turkey of unspecified consequences. Cavusoglu dismissed the warnings, saying Turkey‘s relations and agreements with Russia were not an alternative to its ties with the West and accused the United States of trying to control Turkey‘s actions. “Turkey is not a country under your orders, it is an independent country…Speaking to such a country from above, dictating what it can and cannot buy, is not a correct approach and does not fit our alliance,” he said. 

     Bolton pushing to eliminate White House cyber job - Politico - President Donald Trump’s national security team is weighing the elimination of the top White House cybersecurity job, multiple sources told POLITICO — a move that would come as the nation faces growing digital threats from adversaries such as Russia and Iran. John Bolton, Trump’s hawkish new national security adviser, is leading the push to abolish the role of special assistant to the president and cybersecurity coordinator, currently held by the departing Rob Joyce, according to one current and two former U.S. officials with direct knowledge of the discussions. .The sources spoke on condition of anonymity because of the sensitive nature of deliberations about internal White House operations. Cybersecurity experts and former National Security Council officials expressed alarm at the idea of eliminating the job, saying it would undo much of the progress the U.S. has made on cyber efforts and send the wrong message about U.S. priorities in the digital domain. The coordinator — a post created at the beginning of the Obama administration — leads a team of NSC staffers who manage federal cyber strategy on everything from election security to encryption policies to digital warfare. Bolton’s deputy, Mira Ricardel, supports the idea of eliminating the coordinator role, according to two of the sources. “She’s thinking about whether to simply pick up the [cyber] function on her own,” said one of the former U.S. officials, who added that the odds were “60-40” that the White House would eliminate the job. 

    Trump Tricks Trade Partners into Dangerous Game - Der Spiegel -  Donald Trump is extremely familiar with gambling. Before becoming the president of the United States, Trump was a real estate magnate with casino properties in gambling cities like Atlantic City, Las Vegas and elsewhere. And he's never dropped the gaming mentality. Indeed, playing his foes against each other is what got him into the White House in the first place. In the dispute over steel and aluminum tariffs, Trump proved again this week that he sees politics in much the same way as he does casinos: as a big game in which he wants to write the rules and be the croupier at the same time. Trump already abandoned the playing field of the World Trade Organization (WTO), with its clear provisions for tariffs and procedures for resolving disputes, back at the end of March. At the time, he threatened the European Union and other trading partners with high tariffs on steel and aluminum if they didn't voluntarily reduce their exports to the U.S. He issued an ultimatum, which he extended by a month this week.Trump is also using the carrot-and-stick approach in his relations with China. He ultimately threatened billions in tariffs against the country, but then dispatched a delegation this week to negotiate with Beijing. The president has disparaged the WTO, but his administration has also lodged its own complaints with the WTO's dispute settlement court as part of his trade tiff with adversaries. As erratic as all that may seem, it would be inaccurate to view Trump's activities as irrational. . "Trump's economic premises may be wrong, but going by his own logic, he is playing the game skillfully," . The president's declared goal is that of reducing the U.S. current account deficit from its 2017 level of more than $466 billion. In particular, the U.S. imports more goods from places like China, Japan, Germany and the EU than it exports in return. The sources of the trade deficit are varied and complex, but Trump is intent on addressing the problem primarily via trade policy. He wants to force his partners to lower import tariffs for products from the U.S. or to limit their exports to America through quotas. To achieve that, Trump is sowing discord among trading partners and he is attempting to negotiate bilaterally, thus undermining the WTO. 

    Donald Trump declares trade war on China -- No sovereign power could accept the humiliating demands being made by the US. The Trump administration has presented China with an ultimatum on trade. That is what the US’s “draft framework” for the trade talks with Chinese officials in Beijing last week actually is. China could not accede to its demands. The US administration is either so foolish that it does not understand this or so arrogant that it does not care. This may be a decisive moment for relations between the world’s two greatest powers.The US side demands the following “concrete and verifiable actions”.China is to reduce the US-China trade imbalance by $100bn in the 12 months beginning June 1 2018, and by another $100bn in the 12 months beginning June 1 2019.China should also immediately eliminate all “market-distorting subsidies” conducive to excess capacity. It will strengthen intellectual property and eliminate technology-related requirements for joint ventures.“Furthermore, China agrees to . . . cease the targeting of [US] technology and intellectual property through cyber operations, economic espionage, counterfeiting and piracy. China also agrees to abide by US export control laws.”Moreover, China will withdraw requests for World Trade Organization c onsultations relating to tariff actions on intellectual property. “In addition, China will not take any retaliatory action . . . in response to actions taken or to be taken by the US, including any new US restrictions . . . China immediately will cease all retaliatory actions currently being pursued.”

    US-China tech wars threaten global sector disruption -- Banned component sales. A blocked $142bn chip takeover. Fresh concessions demanded on a second chip deal. If this is just the warm-up, analysts say the US-China tech wars look likely to severely disrupt the global tech sector on both sides of the Pacific.Such disputes are rooted in US anxiety over China’s tech power and the methods it employs to amass it. They are set to intensify with Washington’s Section 301 investigation into the alleged Chinese theft of US intellectual property and practice of forcing technology transfers from foreign investors. Early strikes have hit at hardware companies, including smartphone and telecoms equipment maker Huawei, which has served as a lightning rod for US fears about Chinese snooping and state largesse, and rival ZTE. Huawei denies its technology is used for surveillance. As US pressure escalates, proposals published this week call for barring US agencies from using technology from Huawei or ZTE and a ban on the US military contracting vendors that work with either. All this threatens, in the words of one consultant, to wreak “economic carnage”.

    Chinese Vice-Premier Liu He to go to Washington to continue talks to avert a trade war - Trade talks aimed at averting a US-China trade war will resume in Washington next week, the White House announced on Monday.  China’s Vice-Premier Liu He will visit the US capital “to continue the discussions with the president’s economic team”, White House press secretary Sarah Huckabee Sanders said. Word of the visit by Liu, China’s top economic adviser, came three days after a US delegation led by Treasury Secretary Steven Mnuchin left Beijing after two days of talks that produced no apparent consensus, leaving open the possibility that punitive tariffs on US$50 billion worth of imports from China would take effect in the coming weeks.  In last week’s talks, the United States demanded that China cut the trade deficit the US faced by at least US$200 billion by the end of 2020. The US said its trade deficit with China was US$375.2 billion last year. Additionally, the US called on China to halt state subsidies for industries under its “Made in China 2025” plan. In the meantime, China’s trade surplus with the US continues to expand, growing by US$6.76 billion – or nearly 44 per cent month on month – to US$28.78 billion in April, according to Chinese customs data released on Tuesday.The surplus with the US was US$22.19 billion in April, up from US$15.43 billion in March. In the first four months of this year, the surplus with the US amounted to US$80.4 billion. The figure for the same time last year was US$70.9 billion, according to calculations based on official data. China’s overall trade surplus was US$28.78 billion in April, a stronger rebound than expected after a surprise US$4.9 billion deficit in March.In US dollar terms, China’s exports grew 12.9 per cent last month, compared with the same time last year. At the same time, imports rose 21.5 per cent year on year, faster than the 14.4 per cent increase in March and 16 per cent growth forecast. Analysts said the opening round of talks in Beijing last week served only to communicate each side’s position.

     China′s trade gap with the US widens despite tariffs threat - China's trade surplus with the United States surged 43 percent in April, compared with the previous month, to reach $22.9 billion, according to data released by the Chinese Customs Office on Tuesday.That led to a widening trade gap in the first four months of 2018, climbing to $80.4 billion from about $71 billion in the same period last year.The massive imbalance in bilateral trade between the world's two biggest economies will likely reinforce US President Donald Trump's determination to continue taking a tough stance toward Beijing. Trump has regularly said current trade practices are unfair and hurting American companies and jobs, and has threatened to impose import tariffs to the tune of $150 billion on Chinese goods. Beijing has vowed to retaliate with tariffs of its own, saying a quick resolution of the surplus problem was "not realistic."  The April surge in the US-China trade gap was partly the result of rebounding Chinese exports in April, rising 12.9 percent from a year earlier and bouncing back from a 2.7 percent drop in March.Imports also showed strong growth, surging 21.5 percent year-on-year, and suggesting its domestic demand remains resilient despite rising corporate borrowing costs and cooling property investment.China's imports from the US climbed 11.6 percent between January and April, which however wasn't enough to offset a 13.9-percent rise in exports to that country.The headline news comes as Washington and Beijing are preparing for another high-level meeting on trade relations, scheduled for next week. Trade representatives from the two sides already met last week, but the talks ended without an agreement. According to media reports, the Trump administration has raised the demand that China lowers its current annual trade surplus of about $379 billion by around $200 billion. In addition, the US president wants sharply lower import tariffs for US goods and a cut in Chinese state subsidies for advanced technologies.

    U.S. and China each say the other is wrecking the WTO -- China and the United States blamed each other on Tuesday for risking the destruction of the World Trade Organization, with Beijing’s ambassador decrying U.S. hostage-taking and Washington’s envoy calling China’s claims “Alice in Wonderland”. The headquarters of the World Trade Organization (WTO) are pictured in Geneva, Switzerland, April 12, 2017. REUTERS/Denis Balibouse U.S. Ambassador Dennis Shea, addressing the WTO’s General Council for the first time, began by attacking the judges of the WTO’s Appellate Body, whom he blamed for a “steadily worsening rupture of trust”. “Something has gone terribly wrong in this system when those charged with adjudicating the rules are so consistently disregarding those very rules,” Shea said, according to a copy of his remarks provided to Reuters. The United States has vetoed new appointments to the Appellate Body, causing a crisis at what is effectively the supreme court of world trade. Shea said the judges had over-stepped their authority and had broken the rules by failing to observe a 90-day timetable for judging appeals. Many experts say the delays are caused by ever-more complicated disputes piling up in a congested system. Chinese Ambassador Zhang Xiangchen, who had put the issue on the agenda, began by warmly welcoming “our new colleagues, especially Dennis”. But the cordial opening gave way to criticism of the “dangerous and devastating” U.S. actions. “By taking the selection process as a hostage, the U.S. is abusing the decision-making mechanism of consensus,” Zhang said. The U.S. veto, along with steel and aluminum tariffs and a threat to put $50 billion of tariffs on Chinese goods for alleged intellectual property theft, had systematically challenged the WTO’s fundamental principles, he said. “Any one of these, if left untreated, will fatally undermine the functioning of the WTO. But the reality is that the WTO is currently confronted with ‘three hard blows’,” Zhang said. 

    US trade war claims China’s ZTE as first victim – The US trade war against China has claimed its first major victim with the telecom firm ZTE announcing that the “major operating activities of the company have ceased.”The announcement, which came in a statement issued to the Hong Kong stock exchange late on Wednesday, is the result of a seven-year ban imposed by the Trump administration on sales of US components to the company last month, claiming it had breached the terms of a settlement of a deal over the company’s sales to Iran and North Korea.The company operates on a global scale, doing business in more than 160 countries with over 74,000 employees. It generated revenues of $17 billion last year and recorded a profit of more than $700 million. It is the fourth largest smartphone vendor in the US and also supplies equipment for phone and telecommunications networks.It is one of the largest suppliers of telecommunications equipment supporting networks across Africa and in the Middle East, a business which could now be wiped out. The wireless carrier MTN, which provides networks to 220 million people in 22 countries across Africa, said it was assessing contingency plans given its exposure to ZTE in its networks. Telstra, the biggest Australian telecom firm, said it would no longer carry its own-branded smartphones made by ZTE because it could not guarantee supply. ATT, the major distributor of ZTE phones in the US has said it is assessing the impact of the ban.

    Exclusive: China ramps up checks on U.S. pork imports in potentially costly slowdown (Reuters) - China has ramped up inspections of pork shipped from the United States, importers and industry sources said, the latest American product to be hit by a potentially costly slowdown at Chinese ports in the past couple of weeks. Some trade experts said they believe Beijing is sending a defiant warning to Washington in response to sweeping U.S. trade demands made on China last week. The stepped-up checks have even hit China’s WH Group Ltd (0288.HK), the world’s largest pork company and owner of Smithfield Foods in the United States, and come amid increasing scrutiny of other U.S. farm goods, including fruit and logs. Ports are opening and inspecting every cargo that arrives, said Luis Chein, a director at WH Group, China’s top importer of U.S. pork. That compares with inspections carried out only “randomly” in the past, he told Reuters, significantly lengthening the time product stays at the port. The Chinese imports account for only about 2 percent of WH Group sales. China’s General Administration of Customs, which oversees food imports, did not respond to a fax seeking comment. “The President has been clear that China needs to treat U.S. agricultural products more fairly, and we are troubled by reports that China continues to impose unjustified restrictions on U.S. products,” said a U.S. Agriculture Department spokesman. Increased checks on U.S. products are “not terribly surprising,” said Even Rogers Pay, an agriculture analyst at China Policy, a Beijing-based consultancy. “In a situation where trade tensions are high, China will enforce every possible regulation on its books. It makes strategic sense to do so at this point,” she said. Late on Monday, China’s customs agency announced it was stepping up quarantine checks on apples and logs from the United States after detecting pests in imports of the products at Chinese ports. 

    China Draws Up a Shopping List of American Goods to Avoid - China likely will offer to import more U.S. goods during negotiations in Washington next week as the two sides see one of the best ways to avert an all-out trade war is for Beijing to buy American. Sufficient progress was made when a senior U.S. delegation went to Beijing last week, say the two sides, that China is dispatching its chief economic envoy, Liu He, to Washington in the days ahead, though China hasn’t confirmed his arrival date. Mr. Liu is expected to come with a shopping list of sorts, specific ideas for purchases designed to narrow the two country’s vast trade imbalance. Chinese officials expressed willingness to work with the U.S. to reduce the trade gap during last week’s talks, but they didn’t agree to the U.S. demand that China cut its trade advantage by $200 billion by the end of 2020. Last year the U.S. ran a $375 billion merchandise trade deficit with China and a $337 billion shortfall when counting services. Settling the dispute is taking on a degree of urgency as the tensions between Washington and Beijing are already affecting trade flows between the two nations. Since the U.S. first threatened tariffs on Chinese imports in January, U.S. exports have faced growing hurdles when entering the Chinese market: automobiles are being held up at Chinese customs, pork exports are facing tough new inspections, and farm goods, including soybeans and other farm products, are threatened to be hit with retaliatory tariffs. Reducing the trade imbalance is an area both nations have chosen as a priority. President Donald Trump associates the deficit with lost U.S. jobs. Beijing officials say they need to cut China’s reliance on exports as a way to build a modern economy focused more on consumption.

    Mexico pushes for a full NAFTA deal --Top trade officials from the U.S., Mexico and Canada enter their second day of high-level talks at the Winder Building today, as they face heightened pressure to strike an agreement in principle in the next couple of weeks. But pressure or no pressure, Mexico wants to reach a fully renegotiated NAFTA instead of a preliminary deal on a few issues, Mexican Economy Minister Ildefonso Guajardo said Monday.  “We do not have in these following days the luxury of working on one item,” Guajardo said at the close of his bilateral meeting with U.S. Trade Representative Robert Lighthizer. “We need to work simultaneously on all the items that are pending.” Mexico is seeking a complete deal “because otherwise, there will not be room to balance the different outcomes you need to make this a great deal for the three countries,” Guajardo said. The three countries have yet to reach an agreement on several contentious topics including investor-state dispute settlement, labor provisions and the so-called sunset clause.“I think Ambassador Lighthizer has been extremely clear on many of the positions for the U.S., and we are trying to find also for the U.S. to understand where we are on different items,” Guajardo said. Mexico, meanwhile, rolled out its counterproposal Monday to the United States’ latest demands on rules of origin for autos, which negotiators will discuss at length this week. Guajardo’s push for a complete rewrite comes amid intense deadline pressure. Time is running out for any renegotiated deal to make it through Congress this year, on one hand, and on the other, Mexico and Canada will soon be forced to pay tariffs on steel and aluminum if they do not reach some sort of agreement with the U.S. by June 1.  Lighthizer will meet with Canadian Foreign Minister Chrystia Freeland this morning, after their meeting was postponed on Monday afternoon. A trilateral meeting has not yet been confirmed, but talks are expected to continue as needed this week. Pro Trade’s Sabrina Rodriguez has more here.

    US to separate all families charged with illegal border crossing - The Trump administration announced a policy of unprecedented cruelty in its persecution of immigrant families Monday. Family groups caught crossing the U.S. border without authorization will be immediately broken up, with the parents detained and prosecuted for illegal entry while their children are taken away from them.Enforcement of the new policy was triggered by a memorandum sent out last Friday by the secretary of the Department of Homeland Security, Kirstjen Nielsen, directing both Immigration and Customs Enforcement and the Border Patrol to refer all suspected border crossers to the Justice Department for prosecution under a federal statute that prohibits illegal entry.“Those apprehended will be sent directly to federal court under the custody of the US Marshals Service, and their children will be transferred to the custody of Health and Human Services’ Office of Refugee Resettlement,” a DHS official said in elaborating the policy.Publicly announcing the policy in a speech to a police conference in Scottsdale, Arizona, Attorney General Jeff Sessions declared, “If you are smuggling a child, then we will prosecute you and that child will be separated from you as required by law. If you don’t like that, then don’t smuggle children over our border.”By “smuggling,” Sessions was referring to parents bringing their children with them as they flee the violence-torn, poverty-stricken countries of Central America, seeking refuge in the United States. The vast majority of family groups detained at the US border come from Guatemala, El Salvador and Honduras, where right-wing, military-backed regimes and gangs involved in the US-fueled drug trade hold sway, with the approval and assistance of Washington..

    Border-Jumpers Face Criminal Prosecution, Seizure Of Children After DHS Mandate - A new directive by the Trump administration has paved the way for the criminal prosecution of every migrant caught jumping the US-Mexico border, as opposed to civil deportation proceedings employed in most cases up until now.Department of Homeland Security (DHS) Secretary Kirstjen Nielsen issued the directive last week, announcing that DHS will refer those entering the country illegally for criminal cases.Illegal entry into the United States is a misdemeanor crime, however attempts to sneak back in after a prior deportation are a felony which DHS says needs to be enforced.“DHS will enforce the immigration laws as set forth by Congress,” said a Homeland Security official via the Washington Times.The move will be a major test for federal prosecutors and courts, who could see their caseloads surge as they deal with what could be thousands of new cases each month.But it’s likely to thrill Border Patrol agents who had begged for the government to impose serious consequences on illegal immigrants, for whom crossing the border, getting deported and trying again is just a part of their way of life. -Washington TimesOn Monday morning, Attorney General Jeff Sessions reinforced the DOJ's new push at curbing illegal immigration, telling a Scottsdale, Arizona law enforcement conference that those entering  the country illegally with children will be subejct to separation. "If you are smuggling a child then we will prosecute you, and that child will be separated from you as required by law," said Sessions. "If you don't like that, then don't smuggle children over our border."

    Jeff Sessions Says Border Agents Will Separate Undocumented Kids from Their Families - Attorney General Jeff Sessions offered a full-throated endorsement Monday of separating parents and children when they cross the U.S.-Mexican border illegally, adding "If you don't like that, then don't smuggle children over our border." Sessions spoke at a law enforcement conference in Arizona and warned of the "massive influx of illegal aliens across our Southwest Border," even though — as President Donald Trump himself has pointed out — the number of unauthorized border crossings has fallen sharply in recent years. Sessions said that separating children and parents who illegally cross the border is just an extension of the common practice of separating any other children from their parents during an arrest. The policy ostensibly wouldn't apply, for example, to people who enter the United States and apply for asylum through the proper channels. But this argument omits the fact that in crossing the border, families have often done no harm to anyone — which makes separating them seem particularly cruel. These families frequently undergo significant trauma and hardship before making it here and do so knowing the great risks they face. And even if Sessions has no sympathy for the parents who knowingly violate American immigration law, the policy can further stress and traumatize the children, who came across the border through no fault of their own. NBC News found that a reported 700 children have been separated from their families while crossing the border since October 2017. 

    Feds Say 1,475 Migrant Children Placed in Homes Are Missing  - Federal officials lost track of nearly 1,500 migrant children last year after a government agency placed the minors in the homes of adult sponsors in communities across the country, according to testimony before a Senate subcommittee Thursday.The Health and Human Services Department has a limited budget to track the welfare of vulnerable unaccompanied minors, and realized that 1,475 children could not be found after making follow-up calls to check on their safety, an agency official said.Federal officials came under fire two years ago after rolling back child protection policies meant for minors fleeing violence in Central America. In a follow-up hearing on Thursday, senators said that the agencies had failed to take full responsibility for their care and had delayed crucial reforms needed to keep them from falling into the hands of human traffickers.“You are the worst foster parents in the world. You don’t even know where they are,” said Democratic Sen. Heidi Heitkamp of North Dakota. “We are failing. I don’t think there is any doubt about it. And when we fail kids that makes me angry.”Since the dramatic surge of border crossings in 2013, the federal government has placed more than 180,000 unaccompanied minors with parents or other adult s ponsors who are expected to care for the children and help them attend school while they seek legal status in immigration court.

    Trump close to wiping out TPS program for immigrants | TheHill: With the end of Temporary Protected Status (TPS) for 56,000 Hondurans earlier this month, the nearly 30-year-old immigration program is essentially dead. TPS had survived under several Republican and Democratic administrations, which mainly used the program as a pressure valve to allow Central American and Caribbean immigrants to live and work in the United States, often sending remittances home. But the Trump administration says the program has been abused, allowing people to stay in the United States long after crisis conditions have ended in their home countries.The Trump administration has ordered the end of TPS for over 300,000 immigrants. The Department of Homeland Security (DHS) has so far ordered the end of TPS benefits to all but about 7,000 people from four countries, nearly booting the entire TPS population. Under the program, immigrants from countries that have suffered a natural or man-made disaster are allowed to live and work in the United States while their home country recovers. When ending the TPS status, the Trump administration has given the immigrants time to leave the country. The wind-down periods have ranged from a year to 18 months for people from El Salvador, Haiti, Honduras, Nicaragua, Nepal and Sudan whose TPS designations have been terminated. Previous administrations interpreted TPS rules to allow beneficiaries to stay in the United States as long as their return would imply a significant burden on their home countries. But the Trump administration has used a stricter interpretation, ending TPS based on countries' recovery from the original disaster that triggered their designation. 

     Trump’s ‘America First’ agenda on drug pricing could backfire around the world - President Donald Trump wants Americans to get lower prices for medicines — and the rest of the world may pay for it. His "America First" message on drugs at home, coupled with pro-pharmaceutical industry policies abroad, could lead to higher costs for patients around the world — without making drugs more affordable for those in the U.S. Trump on Friday plans to deliver his long-promised speech on how to lower drug costs, addressing an industry he has in the past accused of "getting away with murder." Global health officials worry he will also target practices that keep medicines affordable in other countries.  Amid rising trade tensions between the U.S. and key trading partners, Trump and top administration officials have repeatedly blamed high U.S. prices in part on foreign countries that take advantage of the significant U.S. investment in medical research without paying their fair share. Many nations, including wealthy European ones, negotiate or regulate drug prices to keep them lower than what Americans typically pay. “As part of President Trump’s bold plan to put American patients first, HHS is focused on solving a number of the problems that plague drug markets, including … foreign governments free-riding off of American investment in innovation,” Health and Human Services Secretary Alex Azar recently said. He added that high drug prices can leave crucial medicines out of reach.

    Tax Cuts Still Don’t Seem to Be Helping Workers - Have corporate tax cuts made American workers better off, at least in terms of pay? It’s still pretty hard to see in government employment data.Let’s be clear: It’s still too early to judge the success of the Tax Cuts and Jobs Act, which President Donald Trump signed into law in December. The important test will be whether it leads companies to do more investment in coming years, boosting the economy’s longer-term growth potential.That said, the Trump administration has made a big deal out of the tax reform’s effect on workers’ wages, and companies have played along by citing it in their decisions to give raises. So it’s worth seeing whether this is reflected in the aggregate data. When I checked a couple months ago, I found pretty much zero evidence that companies were increasing wages any more than they otherwise would have. Now that we have data from two more jobs reports, let’s take another look. Overall, wage gains do not appear to have accelerated. From December through April, average hourly earnings increased at an annualized pace of 2.3 percent, significantly slower than in 2017. Here’s a chart showing the annualized gain for each month:

    Trump administration preparing green light to child labor - The US Department of Labor is moving to lift longstanding restrictions on hazardous work by teenagers in nonagricultural employment. The agency gave notice of a proposed rule under the title, “Expanding Apprenticeship and Employment Opportunities for 16 and 17-Year Olds Under the FLSA.”   Despite the Orwellian language about “expanding opportunities” for young workers, the proposed new rule is really about expanding the opportunity for employers to exploit teenagers as low-wage labor, while dramatically increasing the risks that these children will be exposed to, as they operate heavy equipment and dangerous tools like chainsaws for much longer periods of time.  The abstract of the new rule, published May 9 as part of a semi-annual announcement of ongoing rule-making and rescissions across the entire federal government, notes that the Secretary of Labor issues “Hazardous Occupations Orders” (HOs) as “the means by which the Secretary declares certain occupations to be particularly hazardous” for young workers. The abstract goes on to say, “In this Notice of Proposed Rulemaking, the Department will consider whether certain HOs as well as the conditions that apply to the employment of all apprentices and student learners in hazardous occupations, should be updated to reflect the current economic and work environments and to allow for safe and meaningful apprenticeship opportunities and student-learner programs.” Translated from bureaucratic jargon, this means that the Department of Labor is preparing to allow younger workers to work at hazardous occupations for much longer periods of time each day they are employed.

    Trump Vows (Again) To Lower Drug Prices But Skeptics Doubt Much Will Change - President Donald Trump, armed with the expertise of staff seasoned in the ways of the drug industry, unveiled his blueprint to address sky-high drug prices Friday afternoon, promising that increasing industry competition will help Americans save at the pharmacy counter. Many of the proposals Trump’s team can accomplish administratively — and some are already in motion — but for others, Trump said, he plans to work with Congress. The administration’s blueprint proposes 50 actions to reduce what Americans pay for drugs, including giving Medicare more power to negotiate drug prices, Secretary of Health and Human Services Alex Azar said.  Azar said he wants to make drug prices more transparent, as well. For example, he said the Food and Drug Administration should require pharmaceutical companies to disclose drugs’ list prices in their direct-to-consumer television ads. Dr. Jeremy Greene, a professor and health policy expert at Johns Hopkins Medicine, said he was puzzled by how much control the agency would have over requiring drug prices as part of advertising. “The FDA has had nothing to do with price, especially in advertising,” Greene said. “There have been prominent court cases over whether pharmacies can or cannot advertise based on drug prices.” Regardless, Trump called the plan “the most sweeping action in history to lower the price of prescription drugs to the American people.”  On a separate note, Trump told the audience that “right-to-try is happening,” a nod to congressional efforts to expand access to experimental medications for people with life-threatening conditions. Trump’s proposals target reducing the out-of-pocket costs for older Americans enrolled in Medicare — but experts say that amounts to more show than substance. “There’s a difference between reducing the pain people feel associated with out-of-pocket costs at the pharmacy counter and reducing the actual national spend on prescription drugs,” said Allan Coukell, senior director for health programs at the nonpartisan Pew Charitable Trusts. While 80 percent of Americans say the cost of drugs is unreasonable, 1 in 4 people report having difficulty paying for drugs, according to Kaiser Family Foundation polling. And the government is paying more, too. Medicare’s drug spending grew nearly 90 percent from 2006 to 2015, with an annual average growth rate of 7.6 percent, according to Pew.

    Drug Industry Dodges Its Worst Fears in Trump’s Plan to Lower Prices -- President Donald Trump’s plan to lower U.S. drug prices avoids some of the harshest steps that the pharmaceutical industry and the network of companies that distribute its products feared. Calling his proposal the most sweeping attempt in U.S. history to lower drug prices, Trump wants to increase competition for medicines, cut list prices and reduce patients’ out-of-pocket costs. Yet it also preserves -- and in some cases expands -- the role of the pharmacy middlemen the administration has blamed for many problems with drug costs. “We’ll have much lower prices at the pharmacy counter and it’ll start taking effect immediately,” Trump said in a speech in the White House Rose Garden on Friday. “We’re also increasing competition and reducing regulatory burdens so drugs can be gotten to the market quicker and cheaper.” Few of the steps proposed by the administration would take immediate effect. The 44-page document is laid out as topics for discussion and contains more than 100 questions about what the administration should do. Industry stocks gained after the speech. “It’s going to be months for the kind of actions that we need to take here,”said Health and Human Services Secretary Alex Azar, Trump’s top health official. “It took decades to erect this very complex, interwoven system. I don’t want to over-promise that somehow on Monday there’s radical changes. There’s a deep commitment.” Azar added: “This is the possible restructuring of a major part of the economy. One doesn’t do that lightly.” Nowhere in the proposal does the administration call for two policies the industry most feared: having the government directly negotiate prices and allowing the importation of prescription drugs from overseas. Trump had previously backed both of those ideas, promising to use the government’s buying power to get better deals. 

    Report shows NSA tripled its domestic surveillance operations in 2017 -A US intelligence agency report released on Friday revealed that the National Security Agency (NSA) collected 534 million records of phone calls and text messages made by Americans last year, more than triple the amount gathered in 2016. The revelations come five years after the leaking of documents by whistleblower Edward Snowden, who first revealed the US government’s mass electronic surveillance operations.The sharp increase from 151 million recorded interactions from 2016 points to deep-seated anxiety amongst the American ruling class over historic and ever widening economic inequality, political instability, and growing social unrest. As the capitalist state slides deeper and deeper into crisis, it increasingly must resort to police state measures to maintain its rule. The growth in surveillance occurs within the context of the re-emergence of working class resistance to declining living standards.In addition to spying on US citizens, the agency monitored record numbers of foreign individuals living outside the United States. The NSA targeted these individuals through a warrantless internet surveillance program, known as Section 702 of the Foreign Intelligence Surveillance Act, renewed by Congress earlier this year. The number of targets increased from 106,469 in 2016 to its current level of 129,080. This number has risen from 89,139 since 2013, a 45 percent spike.The NSA’s illegal surveillance operations expanded rapidly after the still unexplained events of September 11, 2001 which were used to launch illegal wars against Afghanistan and Iraq. The agency first became the subject of controversy over illegal wiretapping in 2005 and again in 2013 when Snowden’s revelations concerning mass electronic surveillance sparked major public outcry.  The latest figures prove the fraudulent character of Obama’s so-called “reform” of the NSA in 2015, which was presented to the public as a measure to curtail the agency’s bulk telephone records spying program. The legal modifications by the Obama administration, drafted by and for the military-intelligence apparatus, actually served to expand the illegal and unconstitutional operations of the NSA.

    The NSA Managed to Collect 500 Million US Call Records in 2017 Despite Targeting Just 40 People -- In the first full year of the Trump administration, the National Security Agency really went all out in efforts to surveil Americans. According to a new report released Friday, the agency sucked up more than 534 million US phone records in 2017, three times the amount it collected in 2016. The report from the Office of the Director of National Intelligence revealed the agency has been undeterred in his pursuit of metadata from phone calls and text messages, which it gathers from telecommunications providers like Verizon and AT&T, even with the passage of laws in recent years designed to curb the invasive practice.Metadata from collected from phone records do not reveal the content of a given conversation, but it tells the NSA basically everything else about the interaction. It reveals the phone numbers involved, the time contact is made, and how long a call was or how many characters were exchanged in text messages.While it might not seem like much, metadata can be quite revealing. The information itself is supposedly anonymous, but it can easily be used to identify an individual. The information can also be paired with other publicly available information from social media and other sources to paint a surprisingly detailed picture of a person’s life.Given the agency’s habit of occasionally misinterpreting the language of laws to serve its own ends, it’s quite possible the NSA found itself some wiggle room in the USA Freedom Act to continue its operations, though the government insists that isn’t the case. Timothy Barrett, a spokesman at the Office of the Director of National Intelligence, told Reuters the government “has not altered the manner in which it uses its authority to obtain call detail records.” The agency also has the ability to collect records en masse with just a few requests. In 2017, the NSA obtained orders, as required by the USA Freedom Act, to target 40 individuals. The couple dozen authorizations allowed the agency to collect the more than 500 million call detail records from telecom providers, as the requests allow the NSA to access metadata from every single person a target has been in contact with.

     Trump’s latest shot at the press corps: ‘Take away credentials?’ - President Trump has mused privately during his nearly 16 months in office about revoking reporters' press credentials, according to multiple people familiar with his comments.On Wednesday, he brought it up publicly, tweeting "take away credentials?" as a question. If he intended to provoke a reaction, he succeeded. Some journalists expressed outrage at the idea. Others dismissed it as typical Trump bloviating. The White House Correspondents' Association, which represents the press corps, expressed concern about the tweet. "Some may excuse the president's inflammatory rhetoric about the media, but just because the president does not like news coverage does not make it fake," the association's president, Margaret Talev, said. "A free press must be able to report on the good, the bad, the momentous and the mundane, without fear or favor. And a president preventing a free and independent press from covering the workings of our republic would be an unconscionable assault on the First Amendment." Key words: "Would be."  The White House has historically been permissive about press passes, erring on the side of greater access, even for obscure, partisan or fringe outlets. There are no indications that Trump is actually taking steps to change that.

    Trump’s Lies Hit Critical Mass: Even His Media Supporters Are Bolting -- Pam Martens ---In the past few days, two reliable media enablers of Donald Trump have veered off script with stinging rebukes of the President’s epic pattern of lies. The question is – what took them so long. Editorials in the foreign press dating back as far as a year ago recognized that Trump’s insatiable need to lie rendered him unfit for the presidency of the United States. Since April of last year the Los Angeles Times has been running a series of forensic editorials attempting to explain what it is in Trump’s personality that would explain “his moral vacuity and his disregard for the truth, as well as his stubborn resistance to sensible advice.” The editorials have been headlined: “Our Dishonest President,” “Why Trump Lies,” and “Enough is Enough,” to mention just three.The Washington Post determined that Trump’s lies are so vast that they must be chronicled in a database. That database now lists more than 3,001 lies or misleading claims since Trump took the oath of office on January 20, 2017.  Last Thursday, two previously reliable media supporters of Trump spoke out. The editorial page of the Wall Street Journal published a scorching online editorial on Trump’s equivocations on the hush money payment to porn star Stormy Daniels. It read in part:“Mr. Trump’s public deceptions are surely relevant to his job as President, and the attempted cover-up has done greater harm than any affair would have. Mr. Trump asked Americans, not least his supporters, to believe his claims about the payments. They were false and conveniently so in putting the onus on Mr. Cohen. Now, as more of the story has emerged, he wants everyone to believe a new story that he could have told the first time.“Mr. Trump is compiling a record that increases the likelihood that few will believe him during a genuine crisis—say, a dispute over speaking with special counsel Robert Mueller or a nuclear showdown with Kim Jong Un. Mr. Trump should worry that Americans will stop believing anything he says.”Also on Thursday, Neil Cavuto of Fox News said on his show: “So let me be clear Mr. President, how can you drain the swamp if you’re the one who keeps muddying the waters. You didn’t know about that $130,000 payment to a porn star – until you did. Said you knew nothing about how your former lawyer, Michael Cohen, handled this until acknowledging today you were the guy behind the retainer payment that took care of this.” (See video below.)

    FBI Chaos: Comey Caught In Lie Over Flynn Investigation; Anti-Trump "Lovebird" Lisa Page Quits --Quite a bit of FBI-related news broke late Friday;

    • A newly unredacted section of a House Intel Committee report reveals that former Deputy FBI Director Andrew McCabe told Congressional investigators that the FBI had virtually no case against Mike Flynn
    • The same report reveals that James Comey contradicted himself during a recent interview with Bret Baier
    • Comey, McCabe and then-Deputy Attorney General Sally Yates and Principal Deputy Assistant Attorney General Mary McCord gave the committee "conflicting testimony"
    • Anti-Trump FBI "Lovebird" Lisa Page (with whom Peter Strzok was having an affaird) has flown the coop, tendering her resignation on Friday
    • One of Comey's closest confidants, former FBI top lawyer James A. Baker also resigned Friday

    A newly unredacted version of the House Intelligence Committee's final report on Russia was released on Friday, containing bombshell revelations stemming from the Congressional testimony of former FBI and DOJ officials Andrew McCabe and James Comey.For starters, the redacted section of the report covers up the fact that former deputy director Andrew McCabe told Congressional investigators the FBI had virtually no case against former National Security Advisor Mike Flynn.McCabe also says that former FBI Director James Comey spearheaded the "ambush" of Flynn at the White House - in which two FBI agents, one of whom was Peter Strzok dropped in unannounced to interrogate him.  Compare the fully redacted version that came out last week to the mostly unredacted version that came out today. Do you see what DOJ/FBI tried to cover up? McCabe said they hadn't substantiated anything against Flynn, and the ambush of Flynn at the WH was directed by Comey. pic.twitter.com/6Fc9U3kVwM— Sean Davis (@seanmdav) May 4, 2018   McCabe told the committee that "The two people who interviewed [Flynn] didn't think he was lying[.]" as well as "[N]ot [a] great beginning of a false statement case." “Deputy Director McCabe confirmed the interviewing agent’s initial impression and stated that the 'conundrum that we faced on their return from the interview is that although [the agents] didn’t detect deception in the statements that he made in the interview … the statements were inconsistent with our understanding of the conversation that he had actually had with the ambassador,'” the report states.

    Why the Justice Department Is Defiant – WSJ - The feud that has simmered for months between Congress and the Justice Department erupted this week into a cage match. That’s because the House is homing in on the goods. Until this week, Deputy Attorney General Rod Rosenstein and fellow institutionalists at the department had fought Congress’s demands for information with the tools of banal bureaucracy - resist, delay, ignore, negotiate. But Mr. Rosenstein took things to a new level on Tuesday, accusing House Republicans of “threats,” extortion and wanting to “rummage” through department documents. A Wednesday New York Times story then dropped a new slur, claiming “Mr. Rosenstein and top FBI officials have come to suspect that some lawmakers were using their oversight authority to gain intelligence about [Special Counsel Bob Mueller’s ] investigation so that it could be shared with the White House.” Mr. Rosenstein isn’t worried about rummaging. That’s a diversion from the department’s opposite concern: that it is being asked to comply with very specific - potentially very revealing - demands. Two House sources confirm for me that the Justice Department was recently delivered first a classified House Intelligence Committee letter and then a subpoena (which arrived Monday) demanding documents related to a new line of inquiry about the Federal Bureau of Investigation’s Trump investigation. The deadline for complying with the subpoena was Thursday afternoon, and the Justice Department flouted it. As the White House is undoubtedly monitoring any new congressional demands for information, it is likely that President Trump’s tweet Wednesday ripping the department for not turning over documents was in part a reference to this latest demand.Republicans also demand the FBI drop any objections to declassifying a section of the recently issued House Intelligence Committee report that deals with a briefing former FBI Director James Comey provided about former national security adviser Mike Flynn. House Republicans say Mr. Comey told them his own agents did not believe Mr. Flynn lied to them. On his book tour, Mr. Comey has said that isn’t true. Someone isn’t being honest.

    Rumors of War: Mueller and Trump Prepare for Battle - The very first rule of any competent litigator is, "Never ask a question unless you already know the answer." One assumes Robert Mueller is as competent a litigator as they come in public service. If that is the case, last week's leak of some 48 questions Mueller has for Trump would be enough to make anyone else in Trump's position run up a tree and hide.In other words, to use an idiom made famous in The Godfather, Mueller and Trump are "going to the mattresses": They are preparing for war.Yup. It's on, and no one is ready for it. We're all pretty beat up by now; the blinding, grinding havoc that is the Trump Syndicate's passage through history has left its mark on us all, and not for the good. Those who have been shouting, "This is not normal!" are beginning to get a little hoarse. It was inevitable; friction makes a callus. All that is about to change, because "normal" is about to take a long walk off a short pier. No one has ever witnessed anything like what is about to happen. Richard Nixon, once he finally saw the writing on the wall, had the decency to quit. Donald Trump is no Nixon, and the cataclysm squatting just over the horizon will be, to use a gentle euphemism, unique. Consider the battlefield as it stands.

    Giuliani says Trump doesn’t have to comply with a Mueller subpoena and could invoke the Fifth Amendment - WaPo - President Trump would not have to comply with a subpoena issued by the special counsel investigating Russian interference in the 2016 presidential election and could invoke the Fifth Amendment if he does sit down with him, one of his lawyers said Sunday. “We don’t have to” comply with a subpoena, Rudolph W. Giuliani, the former New York mayor who recently joined Trump’s legal team, said in an interview on ABC News’s “This Week.” “He’s the president of the United States. We can assert the same privileges other presidents have.” Giuliani’s claims comes less than a week after The Washington Post reported that special counsel Robert S. Mueller III, who is seeking to interview Trump, had raised the possibility of subpoenaing the president during a meeting this year. Trump has shaken up his legal team in recent days, seeking to take a more aggressive response to the probe that has engulfed much of his presidency.During his interview Sunday with George Stephanopoulos, Giuliani repeatedly assailed Mueller’s probe, questioning why he would “walk him into a prosecution for perjury,” referring to the president, by letting Trump sit for an interview. Trump has publicly said he would speak to Mueller, but Giuliani said he was not prepared so far to make that happen.“Not after the way they acted,” Giuliani said. “I came into this case with the desire to do that, and they keep convincing me not to do that.”The uncertainty regarding whether Trump will sit for an interview with Mueller, which has played out both in public comments made by the president and his legal team as well as behind-the-scenes wrangling, could ultimately make its way to the Supreme Court if it is not resolved. Giuliani acknowledged that Trump may well wind up testifying. When asked whether he is confident that Trump will not invoke his Fifth Amendment right against self-incrimination, Giuliani said: “How can I be confident in that?”

    Mueller Rejects Trump Request To Answer Questions In Writing: CBS --Contrary to reports that President Trump is considering benching his newest attorney, former New York City Mayor Rudy Giuliani, following a series of disastrous and revealing interviews last week, Giuliani just confirmed to CBS News during an interview with correspondent Paula Reid that Special Counsel Robert Mueller has rejected the Trump legal team's request to answer investigators' questions in a written format. That contradicts claims (also made by Giuliani last week) that it would be at least a few weeks before Trump's legal team would have any insight into Mueller's decision. Trump's team had been pushing for Mueller to accept written questions to help the president - whose tendency toward embellishment has been well-documented - avoid a perjury trap. If Trump does assent to being interviewed, the questioning likely wouldn't take place until after his historic summit with North Korean leader Kim Jong Un.  Giuliani told Reid that he and the president's legal team continue to be in communication with the special counsel, but that he wants to have a better sense of the facts before engaging in formal negotiations about a possible interview.Giuliani said Mr. Trump's team also wants some issues to be off-limits, although he wouldn't elaborate on which ones, and they want a time limit for the interview.In addition, Giuliani also told Reid he'd want to know whether the interview would become public, and whether they would have the chance to issue a rebuttal to anything alleged by the special counsel.If they can come to an agreement on the terms of an interview, Giuliani says he would like to wait until after the North Korea summit to prepare Mr. Trump.  If negotiations are not successful and Mr. Trump is subpoenaed, he will fight it, Giuliani said. The case would likely end up at the Supreme Court.

    Comey Says He's "Shocked, Disappointed And Disgusted" With Giuliani's Attacks On Mueller - Just days after an unredacted section of a House Intel Committee report revealed a whole new set of lies and distortions promulgated by senior officials at the FBI during the tenure of former Director James Comey, the "A Higher Loyalty" author was back making the media rounds. But this time he focused his anger on a former colleague: Former New York Mayor and US Attorney Rudy Giuliani.In an interview with Bloomberg News, Comey said he is "disappointed and disgusted" with Republican attacks on Special Counsel Robert Mueller's Russia investigation - a comment that was clearly directed at Giuliani, given his widely publicized anti-Mueller media blitz last week (during which he famously divulged some information that deviated from the White House's message). Giuliani, echoing a now-famous line frequently tweeted by Trump, blasted the Mueller probe as a witch hunt that has overreached from its original purpose of investigating whether the Trump campaign colluded with Russia."The special counsel so far seems to think that Comey is Moses," Giuliani said. "And I happen to think Comey is Judas."The former prosecutors also suggested that Comey may have intentionally lied to Mueller about his interactions with Trump to create a "perjury trap" for the president. Comey had most recently taken umbrage over Giuliani's comment likening the FBI agents who carried out the Michael Cohen raids to "stormtroopers", which Comey claimed was tantamount to calling them nazis. Of course, Giuliani denied that this was his intent."They’re not just criticizing the investigators," Comey said Tuesday in an interview with Bloomberg News. "They’re attacking the entire institutions of justice, and that’s what makes this unprecedented in my experience."Comey, 57, a longtime Republican who was fired a year ago by Trump, said he no longer considers himself a member of the party."I’m shocked, disappointed and disgusted," Comey said of the GOP. "I don’t know what it stands for honestly, and it’s going to have to answer those questions."

    FBI Refuses To Pursue Personal Strzok-Page Texts; Grassley Goes Nuclear - The FBI is refusing to pursue work-related text messages and emails sent on the personal devices of Peter Strzok and Lisa Page - the FBI "lovebirds" discovered to harbor extreme political bias for Hillary Clinton and against Donald Trump while actively involved in cases against each candidate during the 2016 US election. Clinton was of course exonerated by the FBI despite overwhelming evidence of criminal conduct, while Trump's entire presidency has been tainted by the spectre of unproven Russian collusion. Over 50,000 text messages between Strzok and Page were discovered by the Department of Justice's internal watchdog, the Office of Inspector General (OIG), leading to their removal from special counsel Robert Mueller's Russia investigation - which has since devolved into trying to embarrass the President over allegedly paying a porn star not to discuss consensual sex. Of note, Page tendered her resignation on Friday.In a Wednesday letter to the Senate Judiciary Committee, FBI Director Christopher Wray said that the FBI was not "obligated" to collect all communications between employees, and would not be pursuing communications Strzok and Page sent to each other on their personal devices. In response, Committee Chairman Chuck Grassley (R-IA) went nuclear - reminding Wray in a Friday letter cc'd to Deputy Attorney General Rod Rosenstein and Dianne Feinstein (D-CA) that "Although, as your letter notes, the FBI is not "obligated" to collect all communications between employees, it is obligated to collect and preserve federal records."  Grassley goes on to note that previously released text messages between Strzok and Page "show substantial reason to believe government work was performed on non-government systems during the course of a high-profile investigation," and that those communications could prove vital to the Committee's investigation.

    Stormy Daniels Lawyer's Bombshell Claim: Putin-Linked Oligarch Paid Cohen $500K For "Hush" Payment - Michael Avenatti, the lawyer (and former Michael Rahm opposition researcher) handling adult film star Stormy Daniels' multiple lawsuits, is doing his best to steal the spotlight from Trump's cancellation of the Iran nuclear deal, because on an otherwise quiet Tuesday evening, Avenatti has published a report alleging that Trump long-time lawyer and fixer, Michael Cohen - who testified under oath that the funds for a $130,000 "hush money" payment to Daniels came from a loan he took against his home - may have in reality been reimbursed for the payment by none other than Viktor Vekselberg, a Russian oligarch with close ties to Russian President Vladimir Putin. Avenatti learned that Vekselberg sent a $500,000 payment to Essential Consultants LLC just 75 days after Cohen used the same company to pay Daniels her $130,000.  If Vekselberg's name sounds familiar, that's probably because the New York Times reported last week that the Russian billionaire, and head of the Russian Renova conglomerate, was stopped at a New York-area airport, searched and questioned by the FBI while entering the US earlier this year. The interrogation, the Times said, was linked to the Mueller probe.  While the sum that Vekselberg paid Cohen is far larger than what he paid Daniels, Avenatti claims that some of the money may have been intended as a "hush money" reimbursement. If this is true, it would contradict President Trump's admission that Cohen received money through his retainer agreement with the president that offset his payments to Daniels, which Trump was ignorant of at the time. Avenatti lays out these claims in a 7-page executive summary he released today titled "Project Sunlight", and which list this and other allegations of potential impropriety by Cohen.

    Michael Cohen Took Cash From Russian Oligarch After Election  - The Daily Beast can confirm that Donald Trump’s personal lawyer Michael Cohen received hundreds of thousands of dollars from a company connected to Russian oligarch Viktor Vekselberg.The allegations were initially made Tuesday by Michael Avenatti, porn actress Stormy Daniels’ lawyer, and confirmed by a source familiar with the matter.“How the fuck did Avenatti find out?” the source asked The Daily Beast.According to a dossier published by Avenatti on Tuesday evening, “Vekselberg and his cousin Mr. Andrew Intrater routed eight payments to Mr. Cohen through a company named Columbus Nova LLC beginning in January 2017 and continuing until at least August 2017.”The funds, Avenatti suggested, may have been used to reimburse Cohen for the $130,000 payment made to Daniels in exchange for her silence about an alleged affair with Trump. Intrater was also a donor to the Republican National Committee, on which Cohen served as a deputy finance chairman. In June 2017, Intrater donated $35,000 to a joint fundraising committee for the RNC and Trump’s reelection campaign. He also gave a quarter-million dollars to Trump’s inaugural committee. (Previously, Intrater gave only to Democrats like Gov. Bill Richardson and Sen. Ted Kennedy.)

    AT&T Paid Cohen Up To $600,000 For "Insight" On Time Warner Merger - When Stormy Daniels' lawyer Michael Avenatti first leaked wire transfer records showing that corporations including AT&T, Novartis, Korea Aerospace and Viktor Vekselberg's Columbus Nova had paid hundreds of thousands in "consultant" fees to Donald Trump's personal attorney Michael Cohen (which, it turns out, while frowned upon are perfectly legal in the Washington swamp, just as it is legal to "donate" millions to a Clinton charity to buy influence), we congratulated Cohen for having the sheer temerity to hustle major corporations into believing he knew something he did not (as all his brand new clients would soon find out). Then overnight, we learned that Cohen's corporate hustling was even more remarkable than initially reported, with the WaPo reported that AT&T paid Cohen up to $600,000 for "insights" - about $400,000 more than that alleged by Michael Avenatti - and asked him to specifically look into its proposed $85 billion merger with Time Warner Inc as it sought government antitrust approval.  As the WaPo adds "It is unclear what insight Cohen — a longtime real estate attorney and former taxi cab operator — could have provided AT&T on complex telecom matters."The unstated message, naturally, is that AT&T "sponsored" Cohen to influence Trump to fast-track the merger; instead AT&T's plan backfired dramatically and while AT&T may or may not have bribed sponsored Trump's attorney, Trump's DOJ remains engaged in a bitter fight seeking to block the proposed megamerger. In other words, had AT&T simply burned the $600,000, it would have had a higher return on its investment.Actually it was even worse, because instead of getting a favorable outcome on its investment, all AT&T got was to testify to Robert Mueller about the money: as reported previously, AT&T and pharma giant Novartis, another Cohen "client", said this week that they provided information about their dealings with Trump’s lawyer to special counsel Robert Mueller III last year. Cohen is also under investigation by prosecutors in New York for possible bank fraud and campaign finance violations.

    Trump Tells Lawyers He "Didn't Know Anything" About Cohen Payments - Rudy Giuliani has struck again. Time Magazine reported Wednesday afternoon that President Trump told Giuliani and his lead personal attorney, Jay Sekulow, that he wasn't aware of the "consulting fees" paid by several corporations and one Russian oligarch to Michael Cohen - payments that were publicly revealed last night by Stormy Daniels' lawyer Michael Avenatti. And once again, Giuliani's poorly phrased on-the-record comments appear to have opened the door to criminality on the part of President Trump and/or Cohen, his former personal attorney.Did Trump direct Cohen to accept payments from AT&T and Novartis (the former of which is suing Trump's Department of Justice to stop it from blocking its merger with Time Warner."I have no idea, I doubt it," said Giuliani.Asked if the President directed Cohen to accept payments from companies like Novartis and AT&T, Guiliani said, "I have no idea. I doubt it." Guiliani believes the news helps Trump’s legal team because it feeds the impression that the investigations are moving far from Russian interference."They are chasing rainbows," Guiliani said. "This is yet another irrelevant thing that is made into a big thing." A definitive "no" would've been a much better answer from a lawyer who is supposed to be defending Trump's best interests.

    Treasury Launches Probe How Cohen's Bank Records Were Leaked To Stormy Daniels' Lawyer - When we commented earlier on the latest document leak involving Stormy Daniels' lawyer and former Rahm Emanuel opposition researcher, Michael Avenatti, who "somehow" had gotten access to Michael Cohen's wire transfer documents obtained by Richard Mueller as part of his investigation into Russian collusion, we asked just how it was possible that this critical piece of Mueller's probe had been strategically leaked to the man who is now leading the legal charge against President Trump.It appears we were not the only ones to ask that question because less than a day after Avenatti unveiled he had access to Cohen's bank records......  the WaPo reported that the Treasury Department’s inspector general has begun an investigation whether and how the confidential banking information for Essential Consultants LLC, the company controlled by President Trump’s personal attorney, was leaked.Rich Delmar, counsel to the inspector general, said that in response to media reports the office is “inquiring into allegations” that Suspicious Activity Reports on Cohen’s banking transactions were “improperly disseminated.” For those who missed yesterday's main event, here is another recap from WaPo: On Twitter, Avenatti circulated a dossier that purports to show that Cohen was hired last year by the U.S.-based affiliate of a Russian company owned by Viktor Vekselberg, a Russian business magnate who attended Trump’s inauguration and was recently subjected to sanctions by the U.S. government. The affiliate, New York investment firm Columbus Nova, confirmed the payment, saying it was for consulting on investments and other matters, but denied any involvement by Vekselberg. When he was reached by WaPo, Avenatti predictably refused to disclose his source: “The source or sources of our information is our work product, and nobody’s business,” Avenatti said. “They can investigate all they want, but what they should be doing is releasing to the American public the three Suspicious Activity Reports filed on Michael Cohen’s account. Why are they hiding this information?”

    Avenatti Exposed: Stormy's Lawyer May Face Disbarrment, Legal Action As Past Catches Up - After appearing on CNN 59 times to claim the moral high ground over President Trump's alleged decade-old affair with Daniels, skeletons in Avenatti's closet are now beginning to pour out.Questions have emerged over who's funding Avenatti, how he was privy to Trump attorney Michael Cohen's bank records - and how exactly did he obtain banking transactions for two men also named Michael Cohen, who he wrongly accused in a seven-page "dossier" released this week. Other questions have come to light over a bankrupt coffee chain Avenatti left in smoldering ashes with $5 million in unpaid taxes to the IRS, an alleged $160,000 owed for unpaid coffee, and over 45 lawsuits filed in connection with the failed venture. As outlined in a legal complaint seeking Avenatti's disbarment, the balding provocateur "bought a company out of bankruptcy and then used it for a "pump and dump" scheme to deprive federal and state taxing authorities of millions of dollars," which left over $5 million in unpaid taxes to the IRS. According to Dempsey, Avenatti was supposed to bankroll the deal through his company, Global Baristas, but didn't have the funds - instead borrowing $2 million at an "exorbitant" 15% to close on the transaction. The actor sued to get out of the partnership after he claimed "Avenatti concealed the Loan and the Security Agreement from Dempsey."

    How Michael Cohen, Denied Job in White House, Was Seen as Its Gatekeeper - After paying off a pornographic film actress and doing other tasks to help his boss win the presidency, Michael D. Cohen was surprised to find that the doors to the White House were mostly closed to him.Mr. Cohen did not land a hoped-for job in President Trump’s administration — he imagined himself as chief of staff — and in January last year he left the Trump Organization, where he had long served as the in-house fixer without a clear portfolio. But he managed to turn what looked like an exile into a lucrative opportunity.Armed with the self-appointed title of “personal attorney” to the president, Mr. Cohen, who had served as a personal-injury lawyer and owned a taxi business, became seen as the man who could help others gain access to the seat of power that had been denied to him. Major corporations including AT&T, Novartis and the law firm Squire Patton Boggs collectively paid him over $2 million for advice about navigating the suddenly foreign terrain of Mr. Trump’s Washington. Most of the arrangements remained a secret until Tuesday, when details first appeared in an account released by Michael Avenatti, the lawyer for Stephanie Clifford, the actress who was paid $130,000 to keep quiet about her alleged affair with Mr. Trump and is now suing to be released from the agreement. The New York Times confirmed many of Mr. Avenatti’s disclosures through a review of financial records.  On Wednesday, additional details emerged. Novartis, the Swiss drug maker, said it had paid Mr. Cohen $1.2 million after he approached the company early last year promising insights into Mr. Trump’s views on health care. AT&T, which has been pursuing a major corporate merger, said it had paid him $600,000 for advice on regulatory matters.Both companies also disclosed that they had been contacted last November by investigators for the special counsel, Robert S. Mueller III, who is examining Russian interference in the 2016 election.

    First Republic: Meet the Bank at the Center of the Michael Cohen Scandal --Pam Martens - It’s about a six-minute drive from Donald Trump’s luxurious Mar-a-Lago resort in Palm Beach, Florida to the palm-lined street where First Republic Bank has a branch to service the super wealthy. It is not known if Donald Trump has an account at this branch, but according to Trump’s Federal financial disclosure report, he maintains a checking account at First Republic Bank. Unfortunately for Trump, Michael Cohen, his personal attorney, also maintains an account with First Republic Bank. Cohen had his home, office, hotel room and safety deposit box raided by the FBI on April 9 and has been the subject of titillating news reporting every evening since over his wire of $130,000 as hush money to porn star Stormy Daniels, who alleges an affair with Trump. The wire was sent from Cohen’s Essential Consultants LLC account at First Republic Bank. The bank caters, almost exclusively, to the super wealthy.  According to company reports, its deposits have grown from $18 billion in mid 2010 to $68.9 billion as of December 31, 2017. The FDIC reports that 100 percent of its deposits are domestic – meaning it has no foreign money. That is now being called into question as a result of the nightly media appearances by Stormy Daniels’ attorney, Michael Avenatti. According to Avenatti, $500,000 that came into Cohen’s First Republic Bank account is tied to the Russian oligarch, Viktor Vekselberg, now on a U.S. sanctions list and closely tied to Russian president Vladimir Putin. The $500,000 came from a U.S.-based company, Columbus Nova, which has denied any corporate ties to Vekselberg. However, those clever folks at Think Progress, used the Wayback machine to access the Columbus Nova website as of January of 2017 where Columbus Nova is listed as a subsidiary of Renova Group, Vekselberg’s Russian company. The people and businesses who have direct or indirect connections to Cohen’s account at First Republic are starting to mount up. They include AT&T, which has confirmed paying Cohen $600,000 for advice, and the giant Swiss pharmaceutical company, Novartis, which has admitted to transmitting $1.2 million to the Cohen account in order to seek “insights” on Trump. Both AT&T and Novartis confirmed to the New York Times that they had been contacted last November “by investigators for the special counsel, Robert S. Mueller III….” According to a report by CNN yesterday, also questioned by Mueller’s team was Vekselberg – the Russian oligarch tied to the $500,000 that found itself in Michael Cohen’s Essential Consultants LLC account at First Republic Bank.

    Did Morgan Stanley Smith Barney File a Suspicious Activity Report on Michael Cohen’s Account?  - There’s a guy in Manhattan who’s sleeping about as well as Michael Cohen these days. That’s the broker at Morgan Stanley Smith Barney who opened the brokerage account for Donald Trump’s lawyer, Michael Cohen. According to a document posted at the Twitter page of Michael Avenatti, the lawyer for porn star Stormy Daniels, this fellow may have some explaining to do to the Feds if he didn’t file a Suspicious Activity Report (SAR) with the U.S. Treasury’s Financial Crimes Enforcement Network, known on the street as FinCEN.Avenatti’s document shows the following regarding a Morgan Stanley Smith Barney account:“From  July 13, 2017 through  September  8,  2017,  Mr. Cohen deposited three checks in the amounts of $505,000,  $250,000, and $250,000 in his Morgan  Stanley account.“Each deposit was remitted from an account held at First Republic Bank in the name of Essential Consultants, LLC.”Essential Consultants LLC is the account from which Cohen made the payment of $130,000 in hush money to Stormy Daniels. It is also the account that was receiving over $3 million in corporate funds, including more than $1.6 million from two foreign companies and a company linked to the Russian oligarch Viktor Vekselberg, now on a U.S. sanctions list and closely tied to Russian president Vladimir Putin. Brokers on Wall Street are required to thoroughly understand the “Know Your Customer” rule. That means they must thoroughly understand how the client is earning the money he is depositing into the account to make sure it is coming from a legitimate source. FinCEN guidelines require that a Suspicious Activity Report must be filed where funds are suspected of involving any of the following circumstances: “Involves funds derived from illegal activity or is intended or conducted in order to hide or disguise funds or assets derived from illegal activity (including, without limitation, the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any Federal law or regulation or to avoid any transaction reporting requirement under Federal law or regulation;

    How A Porn Star Can Take Down A President - Despite the well-earned criticism of Rudy Giuliani for his first interview as President Trump’s new counsel, the fact is that Giuliani was given a daunting task.The legal team had clearly concluded that (with the raid on Trump’s personal counsel, Michael Cohen) it could no longer factually or legally defend the president’s prior blanket denial of an affair or knowledge of the agreement with porn star Stormy Daniels. Giuliani failed in the pivot rather spectacularly and might have done the impossible in making Cohen look competent in comparison. Giuliani later corrected his statements, and Trump went public to rebuke him to “get his facts straight.” Trump added the general advice to “learn before you speak. It’s a lot easier.”The danger, however, is far greater than a lawyer learning about a case live on television like some legal reality show. The problem for Trump is that the Daniels controversy could supply the obstruction case that has long evaded special counsel Robert Mueller.In a Sunday interview on ABC’s This Week, Giuliani continued to search for terra firma. At one point, Giuliani was reduced to insisting that while he could no longer assert facts as counsel, “I can prove it’s rumor. But I can’t prove it’s fact. Yet. Maybe we will.”    Somewhere in there is a good defense lost in bad delivery.Giuliani was continuing to try to advance a line of defense called the “irrespective test” under the Federal Election Commission (FEC) rules that allow for a finding that an expenditure is personal if it’s “any commitment, obligation or expense of a person that would exist irrespective of the candidate’s election campaign.” It is a valid defense, and it is particularly familiar to White House counsel Donald McGahn, who was an FEC commissioner. But the legal legacy of the Trump administration is a litany of self-inflicted wounds. Trump insisted recently that you cannot obstruct a case if there is no underlying crime. In truth, that is no easy feat, but Trump is making an impressive effort.

    Congress Releases All 3,500 "Russian" Facebook Ads - Public Health Warning: Reading these ads can cause you to become a "Russian operative" and has been known to bend your mind to vote against "the most qualified candidate ever." It has been more than a month since Republicans on the House Intel Committee officially ended the probe into alleged Russian interference in the 2016 election, and roughly a week since they released an unredacted version of their investigative report that revealed more lies told by top FBI officials.So it's understandable that Democrats on the Intel committee are chomping at the bit to revive the anti-Russia hysteria. And in their latest attempt, Democrats have finally released all of the more than 3,500 Russian-bought Facebook ads that purportedly swayed the 2016 vote in Trump's favor. Of course, anti-Russia sentiment, which seemed ubiquitous just six short months ago, has more recently faded from view as the public has realized that there's "no 'there' there," as FBI special agent Peter Strzok said in a tweet to his mistress.  But after seeing the ads, which are sorted by the time during which they ran, it's impossible to believe the Russians didn't have something to do with it. After all, instead of running ads that blatantly supported President Trump, most of the ads we found supported progressive causes like Black Lives Matter and gay rights - causes which President Trump unambiguously supports, right?

    House Democrats Lie In Fundraising Emails -- Congressional Democrats are now lying to their supporters about the Russia investigation in an effort to pump up their fundraising efforts ahead of the midterm elections.The Democratic Congressional Campaign Committee (DCCC) sent out a pair of fundraising emails on Monday that claimed if they got enough signatures, President Donald Trump would be “forced” to interview with special counsel Robert Mueller.“If we can gather 1,000,000 signatures, it will FORCE Trump to cooperate with the investigation once and for all,” read one email. (That’s false.)“We need to gather 1 MILLION signatures for Robert Mueller to FORCE Trump to testify,” read another email. “We’re the only ones left who can help Robert Mueller.” (Also false.)“Democrats can’t claim a moral high ground on telling the truth when their congressional campaign arm is often lying,” commented BuzzFeed reporter Dominic Holden, who first pointed out the misleading emails. “If Democrats care so much about ‘the truth,’ they should practice it in their emails,” he added.

    Schneiderman Falls, Vance to Investigate --Pam Martens ~   Last evening two highly respected reporters at the New Yorker published the accounts of four women concerning the sitting New York State Attorney General Eric Schneiderman’s physical and psychological assaults on them. Schneiderman announced his resignation as the state’s top cop three hours after the article was published. The reporters on the story are Jane Mayer, one of the most accomplished investigative reporters in the U.S., and Ronan Farrow, a recent recipient of the 2018 Pulitzer Prize for Public Service for his series of articles on movie producer Harvey Weinstein’s history of sexual assaults on numerous women. The accounts of the four women involving Schneiderman are nothing short of horrifying.  Two of the women, Michelle Manning Barish and Tanya Selvaratnam, went on the record using their names.  The abuse three of the women describe they endured while continuing in the relationship with Schneiderman paints a portrait of battered woman syndrome – a condition where women blame themselves or believe their abuser when he says he is sorry. The account by Barish suggests that Schneiderman was unfit to serve as New York State Attorney General and that there are very likely more women still to come forward. Not boding well for the women of New York is the CNN report last night that the Manhattan District Attorney, Cyrus Vance, has opened an investigation into the assault allegations against Schneiderman. Vance is not particularly known for his ability or willingness to prosecute sex crimes by powerful men.

    Schneiderman's shocking departure doesn't get banks off the hook -- The rapid implosion of Eric Schneiderman, New York’s attorney general, is a potentially significant turn of events of the financial industry — but banks shouldn’t be breathing a sigh of relief just yet.  Schneiderman announced his resignation from office just hours after The New Yorker published a story detailing alleged violence against several women he’d dated. The AG denied the claims in a statement Monday night, but said he was stepping down because the allegations “will effectively prevent me from leading the office’s work at this critical time.” He took office in 2011.  Yet even as Schneiderman faces a public reckoning for his reported abuse, he leaves in his wake several high-profile actions against the country’s major banks, including two large settlements this spring with Royal Bank of Scotland and UBS for the sale of toxic mortgage securities in the run-up to the financial crisis. Here’s a look back at how Schneiderman has made his mark on the ways financial institutions do business.The banking industry should now be watching closely to see who fills his shoes, given the prominence and power of the office. “New York is not only a financial center, but it's also a media center,” said Dennis Kelleher, president and chief executive of advocacy group Better Markets. “Not only does its attorney general bring enforcement actions, but they have a bright light to shine on illegal activities going on in the markets, which alerts other state regulators around the country to get active.” The role may take on outsize importance in coming years, as the Trump administration and its financial regulators in Washington adopt a friendlier tone toward the industry and pursue deregulation.  In Albany, the search for Schneiderman’s replacement is already on. New York Solicitor General Barbara Underwood will serve as acting attorney general in the interim, as state lawmakers consider names to fill the rest of the AG’s term through the end of the year. Schneiderman was up for reelection in November, raising questions about who might run in his place. Democrats are scheduled to nominate a candidate by May 23. But early chatter is not necessarily shaping up well for the financial industry. Several names familiar to bankers are said to be on the shortlist, including Preet Bharara, the former U.S. attorney for the Southern District of New York, and Ben Lawsky, former head of the New York State Department of Financial Services.  Both have garnered reputations as aggressive Wall Street enforcers eager to punish bank misdeeds.

    Banking Fraternity Felons – Except for Goldman Sachs – Pam Martens - Three years ago this month the U.S. Department of Justice brought felony charges against two of the largest Wall Street banks, JPMorgan Chase and Citigroup, for their involvement in rigging foreign currency markets. On the same date, two foreign banks, Barclays PLC and the Royal Bank of Scotland (RBS), were charged with felonies in the same matter. A fifth bank, UBS, was charged with a felony for its role in rigging the interest rate benchmark known as Libor. All five banks pleaded guilty to the charges. Somehow, Goldman Sachs slipped through the Justice Department’s net. It was never charged with a felony by the Justice Department. Now, three years later, the Federal Reserve and the New York State Department of Financial Services (DFS) have imposed a combined modest fine of $109.5 million against Goldman Sachs for essentially the very same conduct that resulted in Citigroup and JPMorgan Chase becoming felons and paying much steeper fines. The Fed’s consent order with Goldman Sachs is slim on details but the DFS consent order describes dozens of instances where Goldman traders shared customer information and/or overtly attempted to manipulate the foreign currency market over a period of about 5 years from 2008 to early 2013. (Read the explicit examples here.) The press release from the DFS sounds extremely similar to the charges leveled by the Justice Department against Citigroup and JPMorgan on May 20, 2015. The DFS stated: “The DFS investigation found that from 2008 to early 2013, Goldman foreign exchange traders participated in multi-party electronic chat rooms, where traders, sometimes using code names to discreetly share confidential customer information, discussed potentially coordinating trading activity and other efforts that could improperly affect currency prices or disadvantage customers. This improper activity sought to enable banks and the involved traders to achieve higher profits from execution of foreign exchange trades, sometimes at customers’ expense… Why was the foreign exchange case against Goldman relegated to the Federal Reserve (the U.S. central bank that is known for its coziness with Wall Street) and the DFS, a state agency, instead of being handled by the Justice Department’s criminal enforcement division that has the power to level felonies?

    Capital proposals a ‘win-win,’ Fed's Quarles says -- Federal Reserve Vice Chairman for Supervision Randal Quarles said Friday that proposed changes to the agency’s supplemental leverage ratio rules and stress testing regime would make the financial system safer without a material reduction in overall capital retention. In a speech delivered at the Hoover Institution in Stanford, Calif., Friday afternoon, Quarles said that recent criticisms of the Fed’s proposals to revise the enhanced supplementary leverage ratio have centered on the assertion that the proposal would lead to heightened risk in the financial system by reducing the system’s ability to weather shocks.  The Fed and the Office of the Comptroller of the Currency issued that proposal despite the dissent of Fed Gov. Lael Brainard and without the Federal Deposit Insurance Corp. But Quarles said the design of the plan is to eliminate the perverse incentive of banks constrained by the leverage ratio to take on riskier assets, which could potentially reduce unnecessary risks in the financial system.“The proposed change simply restores the original intent of leverage requirements as a backstop measure to risk-based capital requirements,” Quarles said. “As we have seen, a leverage requirement that is too high favors high-risk activities and disincentivizes low-risk activities.” He went on to say that the plan — in conjunction with another proposal to institute a stress capital buffer in the Fed’s stress testing regime — would effectively achieve those risk reductions without changing the overall capital allocation in a meaningful way.

    House should 'immediately pass' Senate reg relief version: ICBA --— The Independent Community Bankers of America called on the House Monday to “immediately pass” the Senate's bipartisan regulatory relief package rather than delay reforms with further debate and legislative maneuvering.The group made its plea in a petition signed by over 10,000 community bank employees. The Senate passed its bill, sponsored by Banking Committee Chairman Mike Crapo, R-Idaho, in March after extensive negotiations between Republicans and supportive Democrats produced a moderate relief package that can pass both chambers."We, the undersigned community bankers, directors, employees and customers from across the nation, respectfully urge the U.S. House of Representatives to immediately pass legislation to provide community banks with regulatory relief," the petition said.House members had expressed interest in expanding the package with more relief provisions, but changes to the bill could threaten Democratic support in the Senate.

    House will move ahead on Senate reg relief bill: Speaker - — Congressional leaders have a deal to enact a Senate bill easing the 2010 financial regulations but also to consider separate House measures to provide additional relief, House Speaker Paul Ryan said Tuesday.  “I had a good meeting with [Senate Majority Mitch McConnell] over the break on this and so we’ve got an agreement to be moving different pieces of legislation," Ryan said during a press conference.  Ryan said the House "will be moving the Dodd-Frank bill," signaling that his chamber will pass as-is the bill reforming provisions of the 2010 law, which passed the Senate in March with support from moderate Democrats.

    Three questions as House reg relief vote nears | American Banker - Any remaining industry fears that the House GOP would go to the mat on regulatory relief — trying to expand the Senate’s moderate Dodd-Frank Act reforms — appeared to evaporate Tuesday with Speaker Paul Ryan’s comments that his chamber will pass the Senate version. But even though the bipartisan Senate deal appears poised for passage, there are still lingering questions about where the reg relief process goes from here. Chief among them is how far lawmakers will go to pass additional piecemeal bills to deliver more relief to banks. Ryan briefly discussed an agreement with Senate leaders to let their bill move forward in the House unimpeded, but that would also involve “moving in the Senate a package of bills that we think will actually add to this that the [House] Financial Services Committee has acted on as well.”It is also still unclear when the House will take its vote on the Senate bill, with Ryan only saying “not this week.”  Below are three key questions about where regulatory relief stands:

    • When will the House vote on the Senate’s bill? House passage of the Senate reg relief bill, sponsored by Senate Banking Committee Chairman Mike Crapo, R- Idaho, hit a roadblock this spring when House GOP leaders like Financial Services Committee Chairman Jeb Hensarling, R-Texas, vowed they would not “rubber-stamp” the Senate version. But ongoing resistance by Senate lawmakers, especially moderate Democrats who helped push the legislation forward, raised questions about whether a modified bill could sustain another vote in the upper chamber.
    • How likely is it that Congress can enact additional reg relief? The Senate bill, S 2155, was a compromise between Crapo and a core of moderate Democrats, who agreed to targeted changes to Dodd-Frank. Those included raising the asset threshold at which banks are considered “systemically important” from $50 billion to $250 billion, plus numerous changes aimed at helping community banks and credit unions.  While that legislation is now primed to pass as is, there could be opportunity for the House to push for additional measures. Hensarling had previously outlined about 30 provisions that he would like to see in the legislative mix.
    • How split will House Democrats be over the Crapo bill? The Senate’s bill sparked a bitter debate between Democrats in the chamber that could repeat itself in the House. Democratic senators who backed Crapo’s bill found themselves attacked by the party’s progressive wing. “What does it say about Washington that Republicans and Democrats can't come together to support commonsense gun reforms or solutions for working families — but can come together to deregulate big banks on the 10th anniversary of the start of the 2008 financial crisis?” Sen. Elizabeth Warren said on the floor of the Senate March 14.

    Why have three regulators when one will do? - Citizens Financial Group plans to combine its two banking charters into a single national bank in a bid to cut regulatory expenses.The $158 billion-asset company asked regulators for permission this week to merge Citizens Bank (a national charter) and Citizens Bank of Pennsylvania (a state charter). If the Office of the Comptroller of the Currency approves, the combination would take place in January.It would remove the Federal Deposit Insurance Corp. and Pennsylvania state regulators from among Citizens’ primary regulators, helping the company cut costs. “The consolidation is a result of discussions that have occurred among senior management of Citizens over time, given that it will improve operational efficiencies, simplify the organizational structure and align Citizens more closely to its peers,” Frank Quaratiello, a company spokesman, said in an email Thursday. A research note issued earlier in the day by Jason Goldberg of Barclays reported Citizens' charter consolidation plan. The move would also improve the capital ratios of Citizens Financial Group and the company’s liquidity by removing liquidity restrictions placed on Citizens Bank of Pennsylvania, according to the holding company’s application.

    Don’t give rainmakers a free pass on bad behavior - Morgan Stanley has landed smack in the crosshairs of the #MeToo movement. The bank failed to act on knowledge that one of its top financial advisers had allegedly harassed and beaten women over many years. As a consequence, the bank has taken a reputational hit.What got the investment bank in this mess is a trap endemic to many industries, including banking: looking the other way when top performers misbehave. Too often, the way many Wall Street firms resolve sexual harassment involves protecting the perpetrators and the firm. Though settlements are paid, the men who engaged in the behavior or the men who were in positions to have taken action tend to go unpunished. But looking the other way ultimately erodes trust in the industry.   In the case of Morgan Stanley, the bank gave Douglas Greenberg, a successful broker and a member of the bank’s elite “Chairman’s Club,” a pass for too long. The bank missed multiple opportunities to challenge him for a documented history of aggressively threatening former wives and girlfriends. A New York Times investigation found pervasive knowledge by others at the bank of Greenberg’s bad behavior for years. And yet, he reportedly kept on advising and kept on threatening women outside of the bank with abuse. The bank only fired him in April — after the NYT report came out.The bank fell smack into the trap of giving Greenberg the iconic status of “rainmaker” since he obviously drove in significant revenue from his clients over the years. There is an erroneous, but unspoken, tendency to overlook the bad behavior of high-performing producers.

    Have the Biggest U.S. Banks Become Less Complex? – NY Fed - The global financial crisis, and the ensuing Dodd-Frank Act, identified size and complexity as determinants of banks’ systemic importance, increasing the potential risks to financial stability. While it’s known that big banks haven’t shrunk, the question that remains is: have they simplified? In this post, we show that while the largest U.S. bank holding companies (BHCs) have somewhat simplified their organizational structures, they remain very complex. The industries spanned by entities within the BHCs have shifted more than they have declined, and the countries in which some large BHCs have entities still include numerous “secrecy” or tax-haven locations. While BHC size is essentially unidimensional (measured in terms of assets), complexity is a multidimensional concept, which in the system established to address global systemically important banks is considered as a combination of balance sheet and derivatives exposures and the number of distinct entities in the organization. Following Avraham, Selvaggi, and Vickery (2012) and Cetorelli and Goldberg (2014), we focus here on organizational complexity, as measured by the number of subsidiaries owned by a BHC and the span of a BHC across industries (including nonbank industries) and countries. These factors are important. Diversification in business lines and countries can add value and contribute to financial stability. However, greater complexity along these dimensions, all else equal, can make a failing bank harder to resolve—an issue contributing to systemic risk and the “too complex to fail” problem. Our data, from bank regulatory filings on the Federal Reserve’s form FR-Y6, are discussed in detail in a previous Liberty Street Economics post.

    Postal banking should be a dead letter | American Banker - Unlike fine wine, bad ideas do not get better with age. After the U.S. Postal Service’s inspector general four years ago proposed adding small-dollar lending to its job description, new legislation would make it so. Sen. Kirsten Gillibrand’s Postal Banking Act would add a bank branch to each of the nation’s 30,000 post offices. The IG proposal was an attempt to help clear up the post office’s woeful financial picture, projecting an additional $8.9 billion in annual revenues for the cash-strapped agency. Gillibrand, however, has even grander goals — wiping out payday lenders “overnight.”Either way, the idea is a dead letter. The proposal would put the livelihoods of many Americans in the hands of a government agency with zero experience in underwriting loans and that cannot even balance its own books while putting taxpayers at risk of further bailouts. Financial services are best provided in a competitive, private and free marketplace so they can openly and efficiently benefit customers. Community banks and other financial institutions already offer low-cost financial services to underserved communities to help them break away from the debt cycle of payday lenders. According to the FDIC, 88% of banks offer small-dollar loans and 81% offer free counseling to underserved consumers.

    New Loan Sharks Enter The Credit Card Business - A while back, a writer (whose name and story details I unfortunately don’t remember) was researching the credit card business and tried to figure out how card issuers decide which customers to pursue. To this end he created a series of fake personas ranging from an affluent straight-arrow who always pays her bills on time to a white-trashy guy with impulse control issues and a history of multiple defaults and late payments.The findings? Impulse-control-issues guy was deluged with card solicitations while straight arrow’s mailbox was relatively empty. Credit card companies, it turned out, make most of their money by extending credit to people who will be frequently late (thus generating massive late fees) and who are likely, when they do make a payment, to choose the minimum and let their balances accrue at double-digit interest rates. Customers who pay off their modest monthly balance are relatively unprofitable for the card companies and are therefore not as attractive.Why bring this up, other than because it’s always fun to pick on such obvious villains? Because two uber-villains are now eyeing the business: Goldman, Wells Fargo Look to Credit Cards for Bigger Returns:  Two of the biggest U.S. banks, Goldman Sachs Group Inc.and Wells Fargo & Co., are on the brink of piling into credit-card lending, seeking a share of the $183 billion in fees and interest tied to the product.Goldman Sachs is weighing the move as part of a push into consumer finance with its Marcus online lender, Chief Financial Officer Marty Chavez said during a conference call with analysts last month. Wells Fargo plans to resume targeting U.S. non-customers with mailed credit-card offers later this year and began accepting new applicants from outside affiliates in 2016.  The firms have pressing reasons to jump into card lending. Goldman is looking for a business that promises attractive returns even if the bank doesn’t win a large share, Chavez said. And for Wells Fargo, entering a market rich with fees is even more important after a Federal Reserve order crimped its business plans amid customer abuses in retail banking.

    Corporate America Is Staring Down a $4 Trillion Wall of Refinancing - Corporate America partied like never before on cheap money over the past decade, and now comes the hangover. Companies will need to refinance an estimated $4 trillion of bonds over the next five years, about two-thirds of all their outstanding debt, according to Wells Fargo Securities. This has investors concerned because rising rates means it will cost more to pay for unprecedented amounts of borrowing, which could push balance sheets toward a tipping point. And on top of that, many see the economy slowing down at the same time the rollovers are peaking. “If more of your cash flow is spent into servicing your debt and not trying to grow your company, that could, over time, if enough companies are doing that, lead to economic contraction,”   “A lot of people are worried that could happen in the next two years.” These concerns seem to be leaking into the market. A Bloomberg Barclays gauge of average corporate bond spreads has surged to a seven-month high since reaching an all-time low in early February. This has happened at the same time as 10-year Treasury yields have inched toward 3 percent. About $3 trillion of the debt coming due is rated investment grade, and mostly in notes in the lowest rungs above high-yield junk -- in the BBB group from S&P Global Ratings or the Baa bucket from Moody’s Investors Service. The rest is in high-yield corporate debt and leveraged loans. The high-grade bond market in the U.S. has the lowest credit-quality mix since the 1980s, according to New York-based research firm CreditSights Inc. “Most companies in this universe really need to refinance,”

    Is it time to start worrying about consumer credit? | American Banker podcast --Household debt is higher than ever, and delinquencies in credit cards and unsecured personal loans are edging upward. Bruce Van Saun, chairman and CEO of Citizens Financial, shares his views on the market and the business opportunities there.

    Banks caught in crossfire of gun debate. It won't end well - Nice bank you’ve got there. It’d be a shame if something happened to it.   That’s the crux of an alleged threat made by Michael Piwowar, a Republican commissioner at the Securities and Exchange Commission, to Citigroup executives, according to a report by Bloomberg News on Friday.  The bank was there to talk about its derivatives business, but Piwowar wanted to talk about Citi’s recent decision to restrict business with gun sellers, according to Bloomberg: "Shortly after the Citigroup executives arrived at his office, Piwowar, according to people familiar with the matter, began castigating them for straying into social policy. Glowering and speaking emphatically, he reminded them that Citigroup was given billions in government bailout money after the financial crisis. In what some of the executives took as a thinly veiled threat, Piwowar said he knew Citigroup wanted the SEC to ease regulations on derivatives and proprietary trading, and suggested they might have trouble finding the votes on the Republican-led commission.” The incident is just the latest volley in an increasingly heated battle over gun control, where banks are under growing pressure from both sides. Just this week, Senate Democrats sent a letter to 11 banks, including JPMorgan Chase and Wells Fargo, calling on them to follow the lead of Citi and Bank of America, both of which have taken actions to restrict relationships with gun sellers that don’t agree to certain terms.  Republicans, meanwhile, are alarmed by Citi and BofA’s actions. That bodes poorly for banks that are hoping for further deregulatory action by the Trump administration, especially when it comes to the Volcker Rule, which bans proprietary trading. . Sen. John Kennedy, R-La., meanwhile, used banks' actions on guns to lobby Majority Leader Mitch McConnell against a bill to ease the Volcker Rule. “I bring this specific bill to your attention out of serious concern for the direction that America's biggest banks are trending when it comes to the Second Amendment," Kennedy wrote. "I do not believe that Congress should reward big banks for their offensive actions."

    Why bank CEOs are speaking out on guns, DACA and global warming - Bank CEOs have historically not seen much upside in commenting on such polarizing topics as gun control, global warming and immigration. No matter what side of the debate they came down on, they were bound to anger at least some customers, employees and investors, so why take the risk and speak out?  But times are changing. CEOs such as JPMorgan Chase’s Jamie Dimon, Bank of America’s Brian Moynihan, Citigroup’s Michael Corbat and Goldman Sachs’ Lloyd Blankfein are now taking stands on big, public-policy issues in part because key stakeholders expect them to. Many employees — especially millennials — prioritize working for firms that are committed to workplace diversity and are seen as caring about the environment. And many of today’s socially conscious investors are demanding that banks limit their exposure to industries that they believe are causing societal harm, no matter how profitable the relationships with, say, gun manufacturers and coal-mining firms might be.The election of Donald Trump as president has only raised the level of CEO activism. While these captains of industry have supported much of Trump’s economic agenda — tax cuts and regulatory relief, in particular — they have been deeply troubled by the president’s refusal to denounce white supremacists, his equivocation on gun violence, his rejection of climate science and his stance on immigration. To be sure, there are economic arguments to be made for some of the positions bank CEOs have staked out. For example, shortly after Trump took office and issued an executive order to ban immigrants from certain predominantly Muslim countries, Blankfein said in an email to Goldman Sachs employees that, for the firm to be successful, “our men and women must reflect the communities and cultures in which we operate."

    Warren Buffett, Charlie Munger Slam Bitcoin Again, Resort To Elementary School Insults -- Billionaire investor and Berkshire Hathaway’s Chairman and CEO Warren Buffett reiterated his negative stance towards cryptocurrencies at the annual meeting of his company Saturday, May 5. Buffet repeated his idea that cryptocurrencies will come to a “bad ending,” and claimed that Bitcoin (BTC) is "probably rat poison squared," according to CNBC.In response to a question on Buffet’s view of cryptocurrencies raised by an attendee from Ukraine, the “Oracle Of Omaha” has made yet another anti-crypto statement. According to Buffet, Bitcoin is not a “productive” asset, unlike land or corporate shares. As a result, investors’ demand for it is the only price-determining factor, making digital currency a handy tool for “charlatans,” Buffet said.The billionaire investor claimed that cryptocurrency community is in for a “bad ending” after the “euphoria wears off.”Berkshire Hathaway’s Vice Chairman Charlie Munger echoed Buffet’s criticism of cryptocurrency investment, albeit in much harsher terms:"Someone else is trading turds and you decide I can't be left out."Earlier in February, Munger called Bitcoin “totally asinine” and argued that people get involved in crypto ”because everybody wants easy money.” 87-year-old Buffet is known for his skepticism towards cryptocurrencies. The billionaire investor has made repeated statements claiming that Bitcoin is neither a currency, nor a way of investing. In October 2017, Buffet claimed that Bitcoin had entered the “bubble territory,” and is “going to implode.”

    White House looks to extend Mick Mulvaney's CFPB tenure - The White House is dragging out the nomination of a permanent director for the Consumer Financial Protection Bureau to ensure that acting CFPB Director Mick Mulvaney calls the shots at the agency until the end of the year or longer, according to sources.President Trump is expected to name J. Mark McWatters, the chairman of the National Credit Union Administration, as his CFPB nominee close to June 22, according to sources familiar with the situation. McWatters' nomination has long been rumored, but waiting until late June would also maximize the tenure of Mulvaney, who has moved aggressively to reshape the agency. Under the Federal Vacancies Reform Act, Mulvaney can only serve for six months — a deadline up in late June — unless a permanent successor is nominated. Once that nomination is made, however, the acting appointee can stay in office as long as it is pending, a period that could extend for months.  That would leave Mulvaney in office at least for the remainder of the year given likely Senate delays in approving any CFPB nominee. It might also provide incentive for Democrats to try and move faster on a McWatters nomination, given their opposition to Mulvaney's agenda.  If the White House fails to name a permanent director by the June deadline, it could face a legal challenge to Mulvaney's appointment. Meanwhile, if a permanent director is nominated but not confirmed by the end of the year, and the Senate changes hands in a Democratic wave in the midterm elections, it is unclear how the administration would proceed. "If they want to keep Mulvaney there, the best thing to do is to nominate a permanent director before the end of June, but they have to move somebody who they could confirm before November because the Democrats could freeze the nomination,"

    Meet Mick Mulvaney's 'politicos': Six senior staff remaking the CFPB - The public face of the Trump administration's makeover of the Consumer Financial Protection Bureau has been acting Director Mick Mulvaney. But he is by no means working alone. Like a baseball manager who brings aboard his own coaching staff, Mulvaney has stocked the agency with a critical mass of political appointees, making good on his December promise to pair political staffers with senior career officials at the agency.A number of the political appointees have close ties to House Financial Services Committee Chairman Jeb Hensarling, R-Tex., while others have represented banks in lawsuits filed by the bureau under former Director Richard Cordray. These GOP leaders have been tasked with running the day-to-day operations of the CFPB. They shadow the associate directors of top divisions at the agency, many of whom had previously answered to Cordray.The CFPB has never been through a political transition before, and the double layer of bureaucracy means the political appointees, rather than career CFPB staff, are the ones interacting directly with Mulvaney.Mulvaney, who currently holds two jobs in the Trump administration — CFPB chief and White House budget director — immediately drew fire from critics for embedding political appointees at the agency. But the head of the bureau can effectively hire whomever he or she wants.The appointees serve as liaisons to Mulvaney and are known inside the agency simply as "politicos," several sources said, but they do not appear on the CFPB's organizational chart. The CFPB declined to comment for this story.As acting director, Mulvaney has just two months left that he can run the agency if the White House has not nominated a permanent director by that time. But the senior staffers he has hired for the agency can stay on after he has departed, several former CFPB officials said. Here is a who's who of political appointees answering to Mulvaney and what they are doing at the agency:

    Mulvaney guts CFPB’s student lending office - Mick Mulvaney on Wednesday announced a restructuring of the Consumer Financial Protection Bureau that will strip the agency's student lending office of all functions except consumer education.The CFPB's acting director said in an email to staff that he also plans to hire more political appointees and create an office of cost-benefit analysis staffed by economists that report directly to him.  The moves are part of the Trump administration's efforts to enact policy changes at the agency while sidelining key offices and employees perceived as loyal to Mulvaney's predecessor, Richard Cordray, who is now running for governor of Ohio.   Seth Frotman, the student loan ombudsman and assistant director for the Office for Students and Young Consumers, will have his office folded into the agency's financial-education unit, essentially working on pamphlets and web content about student loans, rather than examining complaints that could be referred to the CFPB's enforcement division. The change to the student lending office comes as Republicans are pressuring the CFPB to drop a lawsuit against student loan servicer Navient, formerly part of Sallie Mae, for alleged systemic failures in processing loan payments and failures to enroll borrowers in less expensive repayment plans.The move brought immediate criticism from Senate Democrats. Sen. Sherrod Brown said Wednesday that Mulvaney should not dissolve the student loan division and called for President Trump to quickly nominate a permanent head to replace the acting director.  “Mick Mulvaney has defaulted on his obligation to help the thousands of Americans who are struggling with unfair student loans," Brown said in a statement, noting that 3,000 student loan borrowers default every day. "The President should quickly nominate a Director with bipartisan support and a track record of strong consumer advocacy.”

    Trump attack on Cordray shows Ohio governor race may turn on CFPB -  The Consumer Financial Protection Bureau remains deeply divisive inside the Beltway, and this year’s gubernatorial race in Ohio may show just how far that partisan divide extends.  Democratic nominee Richard Cordray, the agency’s former director, won his primary against Dennis Kucinich and several other contenders by a wide margin Tuesday night. Cordray has already built a platform around his six-year tenure at the agency, in addition to his time as the state’s attorney general. The December video ad announcing his candidacy kicks off with a clip of former President Obama asserting that “Americans are better off because of what Rich has done as our consumer watchdog.”   Now the former CFPB director’s experiences in Washington are likely to be put center stage as the race heats up. Observers got an early taste Wednesday morning for what might lay ahead, when President Trump tweeted to congratulate Cordray’s Republican opponent Mike DeWine, calling the former CFPB chief a “socialist” who was a “big failure in [his] last job.” Cordray soon shot back, touting the $12 billion in relief he returned to consumers during his time at the agency. The state’s Republican Party chair, Jane Timken, also slammed Cordray after the primary results rolled in, describing him in a Tuesday night statement as one of Democrats’ “far-left ideologues … who have aligned themselves with Elizabeth Warren and the so-called ‘resistance.’ ”  Warren, the Massachusetts senator and founder of the CFPB, joined Cordray on the campaign trail last month, helping to bolster his support among progressive voters ahead of the primary.

    CFPB's payday rule cuts states off at the knees - Since its inception, the Consumer Financial Protection Bureau has consistently hurt the consumers it purportedly protects. And while acting Director Mick Mulvaney has worked diligently and miraculously to improve this agency, the sins of CFPB’s past continue to torment our republic today. During the Obama administration, the CFPB went beyond its stated purpose of leveling the regulatory playing field and became a tool of the political left to issue rules based on partisan ideology and to impose crippling financial penalties that some courts later ruled to be unreasonable and excessive. As a former Member of Congress and as the attorney general of Louisiana, I have witnessed the abuse of power in a plethora of fields by the executive branch. Each one has renewed my passion and support for the separation of powers. But it seems the CFPB’s incessant capricious decision-making and abuse of authority have fueled my fire for federalism even more.  One of the CFPB’s most egregious offenses is its short-term, small-dollar lending rule, which has allowed federal bureaucrats to usurp successful state laws and regulations governing lending. For the economic liberty of our people and the sovereignty of our states, Congress must use its powers under the Congressional Review Act to combat this federal encroachment. So last year, I joined many other attorneys general in petitioning congressional leaders to take action. And we were not alone in the cause. The CFPB’s own estimates are that out of the 1.4 million comments received on their proposed rule, over 1 million were opposed to the rule. However, our voices were silenced by the CFPB and its unilateral decision to impose this one-size-fits-all standard created in the backrooms of D.C. This CFPB rule was levied without sufficient input from the states, it interfered with existing state consumer protection laws and lending standards, and it severely restricted the availability of short-term credit to communities most in need of credit options. Ensuring citizens have options to obtain credit when traditional avenues through financial institutions are unavailable is a critical issue in my state and across our nation.

    House repeals CFPB's indirect auto lending guidance — The House on Tuesday repealed controversial 2013 guidance by the Consumer Financial Protection Bureau that allowed it to go after indirect auto lenders. The vote was a big win for Republicans trying to rein in the agency. The House passed the repeal 234-175, using the Congressional Review Act, a process that gives Congress 60 legislative days to overturn a rule with a simple majority vote. The guidance was recently deemed a rule by the General Accountability Office, which gave Republicans the opportunity to repeal what they have long called an overreach by the agency. Specifically, critics say the CFPB’s guidance was a roundabout way of going after auto dealers when the Dodd-Frank Act restricts the agency from doing so. The guidance essentially said indirect auto lenders would be cited for unintentional discrimination for loans that were "marked up" at partnering dealerships.  “This was absolutely trampling upon the sacred ground of Dodd-Frank,” House Financial Services Committee Chairman Jeb Hensarling said on the chamber floor before the vote. “Dodd-Frank says, ‘Bureau, thou shalt not regulate auto dealers,’ but they attempted to do it. So, that was sin No. 1.” Sen. Pat Toomey, R-Pa., kick-started the effort to use the review act to kill the guidance, a move he started discussing more than a year ago. The legislation, introduced by Sen. Jerry Moran, R-Kan., passed the Senate last month on a 51-to-47 vote. Rep. Lee Zeldin, R-N.Y., led the same effort in the House. The repeal now awaits President Trump’s signature.

    Auto lending scrutiny: Will states pick up where CFPB left off? -  U.S. auto lenders may be tempted to breathe easy as Congress prepares to strike down a missive from the Consumer Financial Protection Bureau that they had viewed as regulatory overreach. But lenders would be well advised to keep up their guard, since states — particularly blue ones — are taking steps of their own to crack down on what they see as abusive lending practices.  On Thursday, Credit Acceptance Corp., a subprime auto lender based in Southfield, Mich., disclosed in its quarterly earnings report that New York officials are looking into whether it discriminated against certain borrowers. Also under review is the question of whether the firm provided inaccurate information in the course of a supervisory examination.The investigation of Credit Acceptance by the New York State Department of Financial Services comes on the heels of demands for information from the company by authorities in Massachusetts, Maryland and Mississippi.  The Trump administration’s efforts to undo Obama-era financial regulatory policies has gotten far more press attention than various piecemeal steps state authorities have taken in the opposite direction.  But for some lenders, the latter trend may prove to be more consequential than the former.  During a conference call with analysts on Friday, Douglas Busk, a senior vice president at Credit Acceptance, did not comment on the deregulatory push in Washington. But he did suggest that there has been a shift in state capitals toward tougher regulation. He said that during the last four years, Credit Acceptance has disclosed at least seven state and federal government probes in its securities filings. Subprime auto lenders have been facing stepped-up regulatory pressure for several years following a post-recession boom during which credit standards weakened. For example, Santander Consumer Holdings USA, a Dallas-based lender that is largely owned by the Spanish banking giant, last year paid $26 million to settle allegations from attorneys general in Massachusetts and Delaware that it knowingly provided loans to borrowers who could not afford the monthly payments.

    Musk Hung Up on NTSB Chief in Testy April Call About Tesla Probe - Just weeks before Elon Musk held his fractious conference call with Wall Street analysts, he hung up on Washington’s top transportation accident investigator.Robert Sumwalt, the chairman of the National Transportation Safety Board, called the feisty builder of new-age cars and rockets on April 11 to tell him that blog posts by Tesla Inc. casting blame on the driver of a Model X for a fatal crash had gone too far. The NTSB had earlier warned Tesla not to make statements about the accident while it was being investigated by the board.Sumwalt then said he was taking the unusual step of kicking the company’s representatives off the investigation.“Best I remember, he hung up on us,” Sumwalt told attendees of the International Society of Air Safety Investigators’ Mid-Atlantic Regional Chapter dinner Thursday. It was his first public comments on the exchange.In the speech, Sumwalt had been discussing the NTSB’s long-time practice of enlisting companies and other government agencies to assist its investigations and praised the cooperation it received from Southwest Airlines Co. following an engine failure that killed a passenger on April 17. After the conversation between Sumwalt and Musk, the company took the initiative and issued a statement saying it “withdrew” from the probe. Only later on April 12 did the NTSB issue a release saying it had actually removed the car manufacturer.

    CFPB's union ready to battle Mulvaney as job cuts loom - The union representing employees at the Consumer Financial Protection Bureau is already battling plans by acting Director Mick Mulvaney to restructure the agency — and is preparing for a bigger fight if he moves to cut jobs. The union has not yet heard that there are concrete plans for layoffs, called “reduction in force” in government-speak, but it is worried such efforts are in the works. "NTEU will fight legislative and agency proposals that would starve the CFPB of the resources and personnel necessary to do the job as required by statute," said Tony Reardon, president of the National Treasury Employees Union. "The agency should not undercut that mission by pressuring employees to leave or refusing to use the revenue it is entitled to use in order to force a downsizing." The union has already stalled some of Mulvaney’s other plans. He announced in February that he wanted to move the fair-lending office out of the division of supervision and enforcement and effectively downgrade it to part of the director's division. But Mulvaney said Wednesday he is still negotiating with the union over the move. The union was only formerly notified of the changes in April, and said the process would take several months, according to Reardon. 

    CFPB warns Nationstar Mortgage that RESPA penalty may be coming -Nationstar Mortgage may face a Consumer Financial Protection Bureau enforcement action over alleged violations of the Real Estate Settlement Act and other regulations, the Mr. Cooper parent company said. The potential enforcement action against Dallas-based Nationstar is based on "alleged violations of the Real Estate Settlement Procedures Act, the Consumer Financial Protection Act and the Homeowners Protection Act," according to the company's latest 10-Q filing with the Securities and Exchange Commission. Last week, the lender and servicer reported net income of $160 million for the first quarter of 2018 The alleged violations stem from a 2014 examination. RESPA regulates consumer costs and fees in real estate transactions. The Homeowners Protection Act is a 1998 law pertaining to private mortgage insurance cancellation. The Consumer Financial Protection Act is the law that created the CFPB and dictates oversight of fair lending laws, among other provisions. The bureau notified Nationstar it was considering the enforcement action through its "Notice and Opportunity to Respond and Advise" process, through which investigated parties can present their position to the bureau before the CFPB decides whether to proceed with an enforcement action. 

    Warren Buffett’s Mortgage Companies Engage in Alleged Discrimination Against Minority Borrowers, Violating Fair Housing Act -- Trident Mortgage Co. helps more families buy homes in Philadelphia and neighboring Camden, New Jersey, than any other company, but it primarily serves one demographic: white people.That is no coincidence: Trident employs a nearly all-white team of mortgage consultants, and all of Trident’s offices are in white neighborhoods, where it makes the overwhelming majority of its loans to white homebuyers.It’s a division of Berkshire Hathaway Inc., the giant holding company led by Warren Buffett, which has dramatically expanded its mortgage brokerage portfolio in recent years,reporting nearly 28,000 loans worth $7.3 billion last year.“I originally paid little attention to HomeServices,” Buffett wrote in his most recent shareholder letter, referring to Berkshire Hathaway’s real estate brokerage operation, HomeServices of America Inc., which controls Trident and two other mortgage companies. Then, he said, its “growth exploded.”The potential for more growth clearly caught the eye of the octogenarian investor, who ranks third on Forbes’ 2018 billionaires list.“Despite its recent acquisitions, HomeServices is on track to do only about 3% of the country’s home-brokerage business in 2018,” he added. “That leaves 97% to go.” But as they’ve become major players in cities across America, Berkshire Hathaway’s affiliated mortgage companies have followed a consistent pattern. Government lending data reviewed by Reveal from The Center for Investigative Reporting shows the companies direct their lending toward white borrowers and white neighborhoods, even in population centers such as Philadelphia where a majority of residents are people of color.

    Seven accused of taking homes worth $12M from the living and dead -- A ring of thieves illegally took ownership of more than 40 homes across South Florida in a multimillion-dollar plan — even stealing properties that belonged to the dead, authorities say. Group members used fraudulent notary signatures to get the properties, then they lived in the homes, sold them or rented them, arrest reports said. The group picked not only the homes of unaware property owners, but also those from the estates of 18 dead people, the Broward Sheriff's Office said. Because of that, deputies dubbed their investigation "Operation Tomb Raider." The ring, which operated under various company names, is facing more than 600 felony charges that include grand theft and identity theft. It allegedly used quit-claim deeds and powers of attorney to take ownership of the homes. All told, the homes were worth nearly $12 million. They were concentrated in west Broward County, in cities such as Coral Springs, Tamarac, Lauderhill, Parkland and Weston. The Sheriff's Office investigation is the latest South Florida case where investigators say homes were illegally taken without owners' consent. Squatting in foreclosed homes reached a fever pitch in the earlier part of this decade. Many homes were left empty because banks couldn't keep up with the foreclosure proceedings after many homeowners found themselves owing more on homes than the homes were worth. 

    HUD Secretary Ben Carson to be sued for suspending Obama-era fair-housing rule - MSN - Fair-housing advocates planned to file a lawsuit early Tuesday against the U.S. Department of Housing and Urban Development and HUD Secretary Ben Carson for suspending an Obama-era rule requiring communities to examine and address barriers to racial integration. The 2015 rule required more than 1,200 communities receiving billions of federal housing dollars to draft plans to desegregate their communities — or risk losing federal funds. After nearly 50 years of inaction, the rule was seen as a belated effort by HUD to enforce the landmark civil rights legislation of the 1968 Fair Housing Act, which compelled communities to use federal dollars to end segregation in residential neighborhoods. The 2015 rule, developed over a six-year period, required every community receiving HUD funding to assess local segregation patterns, diagnose the barriers to fair housing and develop a plan to correct them. Most communities were supposed to submit their plans to HUD every five years, beginning in 2016. Communities without HUD-approved plans would no longer receive federal housing dollars. Carson, who has long criticized federal efforts to desegregate American neighborhoods as “failed socialist experiments,” suspended the rule in January, allowing local and state governments to continue receiving HUD grants without compliance with the full requirements of the Fair Housing Act. The lawsuit alleges Carson unlawfully suspended the 2015 rule by not providing advance public notice or opportunity for comment, according to a draft obtained by The Washington Post. The agency said local jurisdictions must continue to promote fair housing but granted communities until at least 2024 in most cases to do so, according to a three-page notice published in the Federal Register. 

    The Trump Administration Is Making it Easier to Evade Housing Desegregation Law, Triggering Civil Rights Lawsuit -- The Trump administration has illegally suspended a rule that requires local governments to show they’re working to reduce housing segregation, according to a lawsuit filed Tuesday against the U.S. Department of Housing and Urban Development and its secretary, Ben Carson. HUD announced in early January that it would delay enforcing the rule. Civil rights advocates say the delay is an effective end to federal fair housing oversight over billions of dollars to be doled out to local governments for at least the next six years. They have also accused HUD of reducing the amount of support it offers local communities in implementing the desegregation rule, effectively sabotaging its success. “Decades of experience have shown that, left to their own devices, local jurisdictions will simply pocket federal funds and do little to further fair housing objectives,” reads the complaint, which was filed by the Lawyers’ Committee for Civil Rights Under Law; the American Civil Liberties Union; the NAACP Legal Defense and Educational Fund; Public Citizen; the Poverty & Race Research Action Council; and the law firm Relman, Dane & Colfax. The rule in question is called Affirmatively Furthering Fair Housing, or AFFH, and was finalized in 2015. It was designed to more effectively implement the integration mandates of the Fair Housing Act, a landmark civil rights statute passed a half-century ago to eradicate discrimination and segregation in housing. While jurisdictions that receive federal HUD funds have long had to certify that they are indeed working to reduce government-sponsored segregation, for decades HUD did little to ensure real steps were actually being taken.  In the complaint, which was filed in the U.S. District Court for the District of Columbia, the lawyers credit the AFFH rule with spurring commitments by local governments over the last two years to provide more help for African-Americans facing eviction from their homes, to revamp zoning laws to be more inclusive of people with disabilities, and to build more low-income housing in affluent areas.

    Black Knight Mortgage Monitor for March - Black Knight released their Mortgage Monitor report for February today. According to Black Knight, 3.73% of mortgages were delinquent in March, up from 3.62% in March 2017. The increase was primarily due to the hurricanes. Black Knight also reported that 0.63% of mortgages were in the foreclosure process, down from 0.88% a year ago.This gives a total of 4.36% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Home Prices See Strongest Start to Any Year Since 2005; San Jose’s 12-Month Growth Greater than Median Prices in Half of 100 Largest Markets “At the national level, home prices rose 1.24 percent since the start of 2018, with both January and February having their strongest respective single-month growth rates in 13 years,” said Graboske. “As of the end of February, home prices had risen 6.65 percent from a year ago, a metric that continues to increase. The rate of appreciation has accelerated by 42 basis points over the past six months and by 72 basis points over the past 12 months. This acceleration, combined with a nearly 40 basis point increase in the prevailing 30-year fixed interest rate during that same time frame, is creating a tighter affordability climate. We have now seen monthly increases in the national median home price for 27 of the past 28 months, and annual gains for 70 consecutive months. The month’s data also showed the continued impact of rising mortgage interest rates on the population of borrowers who could both likely qualify for and gain a rate benefit from refinancing. There are now nearly 2 million fewer refinance candidates than there were entering 2018, a 46 percent decline. The total number of refinance candidates now stands at 2.3 million, the fewest since November 2008, when interest rates were above 6.0 percent. Additionally, the incentive for borrowers to refinance in order to lower their interest rates is all but non-existent among mortgages originated in the past five years. Of the nearly 28 million borrowers with 30-year mortgages originated in 2012 or later, fewer than 45,000 have 75 basis points of interest rate incentive to refinance while also meeting broad-based eligibility requirements. This graph from Black Knight shows the 90 default activity in the hurricane impacted states.
    From Black Knight:

    • Prior to the 2017 hurricanes, Texas and Florida accounted for approximately 15% of all default activity for the last 5+ years
    • The post-hurricane surge in defaults drove that share as high as 50% in November 2017; it has since subsided to roughly one in five defaults coming from the two states
    • Default activity (which includes borrowers temporarily missing payments associated with forbearance plans) spiked from 51K in Q3 2017 to 184K in Q4
    • Default activity remained elevated in January and February as well, with 65K defaults in Q1 2018 as a whole
    • As of March, default volumes for Texas and Florida declined to 14,4K, only ~1K above the long-term (2000-2005) March average for the two states

    Mortgage delinquency rates down annually, a sign of a healthy economy  - Despite an especially strong hurricane season last year, the national mortgage delinquency rate fell on an annual basis, signaling a healthier economy, according to CoreLogic's Loan Performance Insights Report. About 4.8% of mortgages nationwide were in some stage of delinquency in February, marking a 0.2 percentage point decline from a year ago. The foreclosure inventory rate also fell 0.2% year-over-year in February, dipping from 0.8% to 0.6%. The foreclosure inventory rate has held steady at this reading since August 2017, the lowest level seen since it was also 0.6% back in June 2007. "Overall delinquency rates fell in the U.S. over the past year, driven by a long run of stringent underwriting, higher employment and wages," Frank Martell, president and CEO of CoreLogic, said in a press release. "At the same time, our CoreLogic U.S. Home Price Index showed a 6.4% increase in home-price appreciation for the 12 months, which ended in February 2018. These factors bode well for the fortunes of both homeowners and mortgage servicers," he said. The share of early-stage delinquencies, describing loans that are 30-59 days past due, hit 2.1% in February, an uptick from 2% a year ago. The rate of mortgages that were 60-89 days past due remained unchanged at 0.7% on an annual basis, but did decline 0.1% from January. Delinquency rates varied by state as factors like natural disasters took a toll on affected areas, namely Texas and Florida. Still, impacts from Hurricanes Harvey and Irma weren't enough to negatively impact the national trend of decreasing delinquencies. 

    More jumbo mortgage products, fewer government offered in April - Mortgage credit availability was unchanged in April, as originators tightened their government lending programs but made more jumbo offerings available.The Mortgage Credit Availability Index was 177.9 for April, the same as it was in March but down from 183 one year ago, the Mortgage Bankers Association said. The last time the MCAI was this low was in February 2016, when the index value was 177.8. This index is calculated by the MBA using loan program data in Ellie Mae's AllRegs Market Clarity database.

     Mortgage Rates Back at 4-Year Highs Ahead of Inflation Data -- Mortgage rates moved higher today as bond markets braced for impact from several upcoming events.  Bonds dictate rates, and as investor demand for bonds falls, rates rise.Investors were faced with the challenge of bidding at an auction of 10yr Treasury notes today.  In an environment where the Treasury is ramping up issuance in order to pay for fiscal initiatives, buyers want to see lower and lower prices before committing.  Lower prices mean higher yields for investors and higher rates for consumers.  The 10yr auction ended up going fairly well, but only after rates had already moved higher in the morning.  In other words, the auction confirmed that rates needed to rise. The other hurdle to clear will be tomorrow's Consumer Price Index--a key inflation report that can have an immediate impact on the bond market.  If inflation is lower than expected, rates could recover.  But if it's as strong as expected (or higher), rates could easily continue higher.   That would be unfortunate as today's rate sheets are very close to being the worst in more than 4 years, depending on the lender.

    Average mortgage rates stay level on steady economic growth - Mortgage rates were unchanged over the past week, but appear to be headed higher with a robust summer home sales season expected, according to Freddie Mac. The 30-year fixed-rate mortgage averaged 4.55% for the week ending May 10, remaining unchanged from last week. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.05%. "The minimal movement of mortgage rates in these last three weeks reflects the current economic nirvana of a tight labor market, solid economic growth and restrained inflation. As we head into late spring, the demand for purchase credit remains rock solid, which should set us up for another robust summer home sales season," Sam Khater, Freddie Mac's chief economist, said in a press release.

    MBA: Mortgage Applications Decrease Slightly in Latest Weekly Survey, Refi Index lowest since 2008 -- From the MBA: Mortgage Applications Slightly Decrease in Latest MBA Weekly Survey Mortgage applications decreased 0.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 4, 2018. ... The Refinance Index decreased 1 percent from the previous week to its lowest level since October 2008. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index increased 0.4 percent compared with the previous week and was 3 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.78 percent from 4.80 percent, with points decreasing to 0.50 from 0.53 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

    Homeowners are bullish on prices, while buyers may find there's no inventory - Americans are bracing for houses to get costlier. In a recent survey, 64 percent said they're anticipating an increase in property values during the next year, according to findings from Gallup.(Click on graphic to enlarge.) That's the highest share since the housing bubble in the mid-2000s, when 70 percent were predicting price levels to soar. Optimism levels vary depending on which pocket of the country you find yourself. Nearly 80 percent of Americans in the West forecast a pricier real estate market in the next year, compared with 64 percent in the South, 58 percent in the East and 56 percent in the Midwest. The biggest takeaway? "People are very positive about the housing market," said Frank Newport, editor-in-chief at Gallup. Despite rising prices, Americans want in.To that point, 45 percent of non-homeowners say they plan to buy a house in the next five years. However, just 22 percent of homeowners in that same time period anticipate selling. Such an imbalance between supply and demand could explain in part why property values are on the rise, Newport said.Of course, while rising home prices are great if you're a homeowner looking to sell, that trend isn't fabulous if you're in the market. Accumulating enough for a down payment becomes that much more of a stretch.For example, the growth of student loan debt already poses a major barrier to homeownership for many Americans. More than 80 percent of people ages 22 to 35 with student debt who haven't bought a house yet blame their educational loans, according to the National Association of Realtors.

    America’s Housing Crisis Is Spreading To Smaller Cities - “Have you considered the racket and the lights and the crowds and the traffic, and everything that’s going to happen to those of us who live here?” It is a familiar sight in America: the public meeting, the angry residents, the housing developer trying to explain himself over the boos. “Take the money you’ve got and get out of here,” one person shouts. A chant begins: “Oppose! Oppose! Oppose!” Except this is not San Francisco or L.A. or Boston. It is Boise, Idaho. And it is a preview of the next chapter in the housing crisis. Rising rents, displacement and, yes, NIMBYism are spreading from America’s biggest cities to those in its middle tier. Last year, according to an Apartment List survey, the fastest-rising rents in the country were in Orlando, Florida; Reno, Nevada; and Sacramento, California. Another survey, by RentCafe, found exactly one city with a population greater than 500,000 ― Las Vegas ― in the top 25. Small cities are starting to face the same challenges as larger ones. Renting a two-bedroom apartment in Jacksonville, Florida, requires earning at least $18.63 per hour ― $10.53 more than the state minimum wage. In Tacoma, Washington (pop. 211,000), a property management company is evicting low-income residents so it can flip their building into luxury units. Boise, where downtown condos are going for $400,000, was the seventh most unequal city in America in 2016, a jump from 79th place just five years earlier. And it’s only going to get worse. As the poor get pushed inward from the coasts and as young workers seek out the few affordable places left, they will arrive in America’s smaller cities ― which may not be ready to take them.

    California and solar panels -- Kevin Erdmann -  Apparently, California has passed a new law requiring homes to have solar panels.  Even if solar is becoming a viable energy source, I suspect that decentralized rooftop panels are not the optimal form of energy production.  Centralized, efficient solar farms are probably the long term form that will end up being the most productive.  This seems like the sort of thing that tends to be popular but doesn't work in practice, like Mao Zedong's backyard furnaces.  Maybe something like Tesla's solar tiles can become practical, since they serve a double purpose.  But, for the purposes of this post, I am agnostic about the idea, and I will argue that even if the solar panels are completely useless, they are still an improvement over the status quo in California housing.

    Leading Index for Commercial Real Estate Increases in April --Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing. From Dodge Data Analytics: Dodge Momentum Index Moves Higher in April The Dodge Momentum Index jumped 6.1% in April to 163.0 (2000=100) from the revised March reading of 153.7. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. Both components of the Momentum Index moved higher in April, with the commercial component up 6.3% and the institutional component up 5.8%. Over the last two months the commercial portion of the Momentum Index has posted the most aggressive growth, fueled by continued low vacancy rates for commercial buildings as well as the potential benefits from the tax cuts passed in December. The gains for the institutional component, while healthy, have been more moderate reflecting the ebb and flow of public funding for larger education and public building projects. This graph shows the Dodge Momentum Index since 2002. The index was at 163.0 in April, up from 143.7 in March. According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further growth in 2018 and into 2019.

    Hotels: Occupancy Rate "dips" Year-over-Year, On Pace for Record Year -- From HotelNewsNow.com: STR: US hotel results for week ending 28 April: The U.S. hotel industry reported mixed year-over-year results in the three key performance metrics during the week of 22-28 April 2018, according to data from STR.
    In comparison with the week of 23-29 April 2017, the industry recorded the following:
    • Occupancy: -0.6% to 69.8%
    • Average daily rate (ADR): +2.3% to US$130.40
    • Revenue per available room (RevPAR): +1.7% to US$91.05
    The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average

    Hotels: Occupancy Rate increases Year-over-Year, On Pace for Record Year --From HotelNewsNow.com: STR: US hotel results for week ending 5 May - The U.S. hotel industry reported positive year-over-year results in the three key performance metrics during the week of 29 April through 5 May 2018, according to data from STR.
    In comparison with the week of 30 April through 6 May 2017, the industry recorded the following:
    • Occupancy: +0.5% to 68.2%
    • Average daily rate (ADR): +2.7% to US$130.14
    • Revenue per available room (RevPAR): +3.3% to US$88.77
    The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.  The red line is for 2018, dash light blue is 2017 (record year due to hurricanes), blue is the median, and black is for 2009 (the worst year since the Great Depression for hotels).  The occupancy rate, to date, is slightly ahead of the record year in 2017 (2017 finished strong due to the impact of the hurricanes). Data Source: STR, Courtesy of HotelNewsNow.com

    Consumer debt rising, but not as fast for mortgage loans -- While consumer debt is growing overall, borrowers are exhibiting more caution when it comes to mortgage loans.Consumers are expected to generate a collective $4 trillion in overall debt by the end of the year and currently owe more than 26% of their income to nonhousing debt, which is up from 22% in 2010, according to LendingTree. Still, consumer lending patterns indicate mortgage borrowers, specifically, are more responsible.When comparing mortgage debt to other types of debt, things like auto loan or credit card debt are growing at a pace of about 7% annually, compared to just over 2% for housing-related debt. The trend of better mortgage borrowing habits is also reflected in the falling loan delinquency rate for mortgage borrowers, which has been dropping for 19 consecutive quarters, according to TransUnion. The serious delinquency rate for mortgage borrowers fell from 2.07% to 1.76% year-over-year in the first quarter. Though people have exhibited more conservative attitudes toward mortgage lending since the housing bubble burst, consumer debt overall has been growing since 2013. The economy has been getting stronger though, prompting wages and income to rise. This will hopefully help consumers better manage and pay down their debt.

    US consumer borrowing up $11.6 billion in March - Americans increased their borrowing by $11.6 billion in March as a big increase in the category that covers auto and student loans offset the largest monthly drop in credit card borrowing in more than five years. The Federal Reserve says the March increase in total debt was below the $13.6 billion increase in February and was the smallest monthly gain since September. Borrowing for student and auto loans rose a solid $14.2 billion, the third straight month of $14 billion-plus gains. However, borrowing in the category that covers credit cards fell for a second straight month, dropping $2.6 billion following a decline of $514.5 million in February. The March contraction in credit card debt was the biggest since a $4.4 billion fall in December 2012. Consumer borrowing trends are closely monitored for clues they can provide about the willingness of consumers to borrow more to support their spending. Consumer spending accounts for 70 percent of economic activity. A sharp slowdown in consumer spending in the first three months of the year contributed to slower growth in the overall economy, as measured by the gross domestic product. The GDP grew at a 2.3 percent annual rate in the January-March quarter. But analysts believe signs are pointing to stronger consumer spending in the current April-June quarter and are forecasting that GDP will rebound to around 3 percent in this quarter. The borrowing gains pushed the monthly consumer debt total to a fresh record of $3.87 trillion. The monthly borrowing report does not include mortgages or any other debt secured by real estate such as home equity lines of credit. 

    For The First Time Since August 2008, Credit Card Debt Hits A Plateau - While many celebrated the record high US household wealth in the latest data from The Fed, what most missed was a record $1.0 trillion of credit card/revolving loans, a record $1.3 trillion of auto loans, and a record $1.5 trillion of student loans.  As we previously noted, among these, credit card and auto loans, in particular, have been experiencing accelerating delinquencies, but the very gradual increase in aggregated Net Charge-Offs has allayed any economist concerns about the state of the US consumer. But, a modest scratch below the surface, and a surprising discovery emerges. While the larger U.S. banks that dominate credit card issuance have focused on prime and super prime consumers post the Great Financial Crisis (GFC), and have enjoyed a prolonged period of low charge off rates concurrent with the Fed’s almost decade long ZIRP (Read more detailed breakdown here.), the charge-off rates among the nation's smaller banks, those outside the Top 100, have seen the charge-off rates soar. And now, based on this month's consumer credit data from the Fed, which saw an unexpectedly small increase in consumer credit of only $11.5BN, below the $15.2BN expected, and down from $13.6BN last month, it appears this reality is starting to hit home, as March consumer credit rose at the slowest pace since September... as outstanding credit card borrowings unexpectedly declined by $2.6BN, the most since the end of 2012, after a drop of just over $500MM last month. As the chart below shows, the two consecutive months of credit card deleveraging means that the until recently relentless increase in revolving credit appears to have again hit a plateau. The last time this happened? August of 2008 (the sharp move in December 2015 was simply a data revision). The results are consistent with first-quarter data that showed household spending cooled following a strong run of gains. All that dis-saving (and credit-card-debt engorgement) managed to spike consumer confidence to near record highs...

    Credit card use at all-time high, and debt highest in years - Credit card use is higher than ever, debt levels are their highest in years, and delinquencies have ticked up, according to data TransUnion released Tuesday at the Card Forum in Miami.But there is no cause for alarm yet, according to Paul Siegfried, senior vice president and credit card business leader at TransUnion.  For one thing, there is a “race to quality,” he said. Growth in new card accounts accelerated in very creditworthy consumer segments — by 4.9% among the “super prime” set and 3.2% in “prime plus." Growth in the number of cards granted to subprime and near-prime consumers slowed 2.7%. Overall, the number of credit card accounts in use in the first quarter of 2018 was 416.5 million, up 2.6% from a year earlier. For another, underemployment still exists, and the economy is still recovering, so some delinquencies are to be expected, Siegfried. “Total employment is not in a robust zone. If incomes are not going up and employment is not going up, we would expect to see some growth in delinquencies,” Siegfried said. The delinquency rate for the quarter was 1.78%, up from 1.69% in the same quarter last year but close to the 2012 rate of 1.77%.And though the average debt per borrower is at its highest point in six years, $5,472, this, too, is in an acceptable range, Siegfried said.“If you look at total consumer debt as a percentage of income, this is what I would consider to be an average time,” he said. “If you were to see that number going dramatically up and unemployment numbers not changing, that might be alarming. We see the employment numbers improving.”New accounts for auto loans, mortgages and personal loans were all higher in the first quarter of 2018 than in the same period in 2017.This year, TransUnion analysts saw a notable change in hurricane regions. In the first quarter of 2017, 1,800 mortgages were under forbearance, meaning the lender is not looking for payment right away or has granted a grace period of a few months. In the first quarter of 2018, 164,000 mortgages were under forbearance.Overall, Siegfried sees all the numbers in the new report as strong.  “The lenders are very diligent with their processes; they're far more sophisticated than they were 20 years ago,” he said. “They tend to manage the business closely.”

     After The Party... The Hangover: The State Of America's Debt Slaves - Total consumer credit rose 5.1% in the first quarter, compared to a year earlier, or by $184 billion, to $3.824 trillion (not seasonally adjusted), according to the Federal Reserve. This includes credit-card debt, auto loans, and student loans, but not mortgage-related debt. That 5.1% year-over-year increase isn’t setting any records – in 2011, year-over-year increases ran over 11%. But it does show that Americans are dealing with the economy and their joys and woes the American way: by piling on debt faster than the overall economy is growing. The chart below shows the progression of consumer debt since 2006. In line with seasonal patterns for first quarters, consumer credit (not seasonally adjusted) edged down from Q4, as the spending binge of the holiday shopping season turned into hangover, an annual American ritual: Note how the dip after the Financial Crisis – when consumers deleveraged mostly by defaulting on those debts – didn’t last long. Over the 10 years since Q1 2008, consumer debt has now surged 47%. Over the same period, the consumer price index has increased 16.9%:Auto loans and leases for new and used vehicles rose by 3.8% from a year ago, or by $41 billion, to $1.118 trillion.It was one of the smaller increases since the Great Recession: The peak year-over-year jumps occurred at the peak of the new vehicle sales boom in the US in Q3 2015 ($87 billion or 9%). However, the still standing records were set in Q1 and Q2 2001 near the end of the recession, with each quarter adding around $93 billion, or 16%, year-over-year.Loan balances are impacted by prices of vehicles, number of vehicles financed, the average loan-to-value ratio, duration of prior loans (when they’re paid off), and other factors. So this chart is not necessarily a reflection of how many new and used vehicles were sold.The green line in the chart indicates the old data. In September 2017, the Federal Reserve implemented a big adjustment of consumer credit data going back through Q4 2015. This adjustment was based on survey data collected every five years. So routine. The adjustments hit auto-loan balances disproportionately, knocking them down by $38 billion retroactively for Q4 2015. To show the distortive effect of the adjustment – and to show that it wasn’t the collapse of the car business – I added the old data in green.

    Michigan Consumer Sentiment: May Preliminary Unchanged - The University of Michigan Preliminary Consumer Sentiment for May came in at 98.8, unchanged from the April Final reading. Investing.com had forecast 98.5. Surveys of Consumers chief economist, Richard Curtin, makes the following comments:Consumer sentiment remained unchanged in early May from the April survey. The Expectations Index gained 1.1 points and the Current Conditions Index fell 1.6 points--both were statistically insignificant changes. What is likely to capture attention, however, are the small uptick in near term inflation expectations, the downward slippage in income expectations, and the expected stabilization of the national unemployment rate at decade lows. The data will thus provide some additional points for both sides in the debate about the timing and number of future interest rate hikes. Eight-in-ten consumers anticipated interest rate hikes during the year ahead, and fewer consumers anticipated further declines in the unemployment rate--although all of the shift was toward the expectation of a stable unemployment rate rather than an increased rate. Consumers have a remarkable track record for anticipating changes in the actual unemployment rate, as shown in the accompanying chart. Overall, the data are consistent with a growth rate of 2.7% in real personal consumption from the second half of 2018 to first half of 2019. [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.

    Merrill: "Retail spending stalls again" --A few excerpts from a Merrill Lynch research note: Retail spending stalls againAccording to BAC aggregated credit and debit card data, retail sales ex-autos declined 0.1% mom seasonally adjusted in April. This suggests that the better momentum in consumer spending seen in March failed to carry over to start the second quarter. We saw two headwinds for the consumer in April: weather and higher gasoline prices. We find evidence that unseasonably cold weather conditions likely played a role in holding back consumer activity. Specifically, the Midwest and the Northeast experienced below average temperatures ...Higher gasoline prices also likely dampened overall consumer spending. According to the Energy Information Administration, retail gasoline prices jumped 6.4% mom in April as crude oil prices rose on negative supply shock and solid global demand. This led to a surge in spend at gasoline stations and a shift away from other categories. ......Bottom line: Retail spending softened in April. The weather impact should prove temporary but rising gasoline prices is likely to persist, eating away some of the positive impact from higher after-tax wages seen post tax reform. CR Note: Retail sales for April are scheduled to be released on Tuesday, May 15th. The consensus is retail sales increased 0.3% in April.

    BLS: CPI increased 0.2% in April, Core CPI increased 0.1% -- From the BLS:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in April on a seasonally adjusted basis after falling 0.1 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.The indexes for gasoline and shelter were the largest factors in the seasonally adjusted increase in the all items index, although the food index increased as well. The gasoline index increased 3.0 percent, more than offsetting declines in other energy component indexes and led to a 1.4-percent rise in the energy index. The food index rose 0.3 percent, with the food at home index rising 0.3 percent and the index for food away from home increasing 0.2 percent.The index for all items less food and energy rose 0.1 percent in April. ... The all items index rose 2.5 percent for the 12 months ending April; this figure has been mostly trending upward since it was 1.6 percent for the period ending June 2017. The index for all items less food and energy rose 2.1 percent for the 12 months ending April.  This was slightly lower than the consensus forecast of a 0.3% for CPI, and a 0.2% increase in core CPI.

    Consumer Price Index: April Headline at 2.46% - The Bureau of Labor Statistics released the April Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.46%, up from 2.36% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.14%, up from the previous month's 2.12% and above the Fed's 2% PCE target. Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in April on a seasonally adjusted basis after falling 0.1 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.The indexes for gasoline and shelter were the largest factors in the seasonally adjusted increase in the all items index, although the food index increased as well. The gasoline index increased 3.0 percent, more than offsetting declines in other energy component indexes and led to a 1.4-percent rise in the energy index. The food index rose 0.3 percent, with the food at home index rising 0.3 percent and the index for food away from home increasing 0.2 percent.The index for all items less food and energy rose 0.1 percent in April. The shelter index rose 0.3 percent, with other indexes mixed. The indexes for household furnishings and operations, personal care, tobacco, medical care, and apparel all increased in April, while those for used cars and trucks, new vehicles, recreation, and airline fares all declined.The all items index rose 2.5 percent for the 12 months ending April; this figure has been mostly trending upward since it was 1.6 percent for the period ending June 2017. The index for all items less food and energy rose 2.1 percent for the 12 months ending April. The food index increased 1.4 percent, and the energy index rose 7.9 percent. [More…]Investing.com was looking for a 0.2% MoM change in seasonally adjusted Headline CPI and 0.1% in Core CPI. Year-over-year forecasts were 2.5% for Headline and 2.2% for Core. The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.

    CPI Misses Despite Rising Energy, Shelter Costs As Used Car Prices Plunge Most In 9 Years -- Following yesterday's 'disappointing' miss in producer prices, headline consumer price inflation met expectations at +2.5% YoY - above PPI for the first time since Dec 2016 - as energy and shelter costs surge. While CPI YoY met expectations, CPI MoM missed, rising just 0.2% (vs +0.3% expectations) after dropping 0.1% MoM in March. However, Core CPI missed expectations as apparel and used car prices are slumping... The index for all items less food and energy increased 0.1 percent in April. The index for household furnishings and operations rose 0.5 percent in April, the largest increase since April 2015, and the personal care index increased 0.7 percent.The apparel index rose 0.3 percent in April after declining in March, and the tobacco index increased 1.3 percent. The medical care index rose 0.1 percent in April, with the hospital services index rising 0.2 percent, the prescription drugs index increasing 0.1 percent, and the physicians' services index unchanged. The indexes for education and for alcoholic beverages also rose in April. The index for used cars and trucks fell 1.6 percent in April, the largest decline since March 2009. The recreation index fell 0.4 percent, the largest decline since December 2009. The index for airline fares fell 2.7 percent in April, and the new vehicles index declined 0.5 percent. The index for motor vehicle insurance fell 0.2 percent, the first monthly decline since April 2017. The index for communication also declined 0.2 percent in April.Bloomberg’s chief U.S. economist Carl Riccadonna wrote in a note today, the tone of the May FOMC statement and subsequent Fedspeak signals a sanguine outlook among officials regarding the prospect of inflation settling near the central bank’s 2% objective over the medium term. And a closer inspection of the CPI helps to explain why policy makers’ confidence is well placed: The pickup in inflation over the past few months appears to be overstated, and cell phone contracts are largely to blame. However, Shelter- and Rent-Inflation are picking up again...

    Over the past year, the CPI was boosted largely by rising prices for essentials  - The Fed thinks the economy is like the fairy tale of Goldilocks, where everything is “just right.” But for workers, it’s more like the scene in “Through the Looking-Glass,”where Alice must run faster and faster just to remain in the same place.  Every month the Bureau of Labor Statistics publishes reams of data on the Consumer Price Index (CPI), with details on the prices of hundreds of items that consumers buy, from rent to soap. Items that consumers spend a lot of money on — such as housing, food, energy and health care — are given more weight in the CPI than items like postage stamps and clocks. It’s small comfort to know that the price of whiskey has fallen 3.4% in the past year (the largest decline ever) if your rent has gone up 3.4% in that same period. You can try to drown your sorrows, but that won’t satisfy the landlord. One of the more useful tables published in the CPI shows which items had the biggest impact on consumers’ wallets in the past year. It shows the relative contribution to the CPI from the 3.4% rise in rents and the 3.4% decline in whiskey, and from all the other items in the CPI. If you add up all the contributions, they equal 2.5%. Over the past year, the CPI was boosted largely by rising prices for essentials. Here’s the list of the items that pushed the CPI higher:

    • • Shelter: prices up 3.4%, contributing 1.12 percentage points, almost half of the total 2.5% rise in the CPI.
    • • Gasoline: prices up 13.4%, contributing 0.5 percentage point.
    • • Car insurance: prices up 9%, contributing 0.22 percentage point.
    • • Food away from home: prices up 2.5%, contributing 0.15 percentage point.
    • • Hospital services: prices up 4.5%, contributing 0.1 percentage point.
    • • Tuition and child care: prices up 1.9%, contributing 0.06 percentage point.
    • • Food at home: prices up 0.5%, contributing 0.04 percentage point.
    • • Prescription drugs: prices up 2.7%, contributing 0.04 percentage point.
    • • Water and sewer: prices up 3.1%, contributing 0.04 percentage point.
    • • Electricity: prices up 1.2%, contributing 0.03 percentage point.

    Those 10 items (out of some 300) contributed 2.3 percentage points of the 2.5% increase. In other words, those 10 necessities were responsible for almost all the increase in the CPI. If you are living paycheck-to-paycheck, which of those items can you forgo or cut back on? Not many.

    U.S. Import Prices Rise Less Than Expected, Export Price Growth Tops Estimates- Import prices in the U.S. increased by less than expected in the month of April, according to a report released by the Labor Department on Friday, although the report also showed stronger than expected export price growth. The Labor Department said import prices rose by 0.3 percent in April after edging down by a revised 0.2 percent in March. Economists had expected import prices to climb by 0.5 percent compared to the unchanged reading originally reported for the previous month. The increase in import prices was partly due to a significant rebound in prices for fuel imports, which surged up by 1.3 percent in April after plunging by 2.4 percent in March. Petroleum prices jumped by 1.6 percent during the month, more than offsetting a 4.4 percent slump in natural gas prices. Excluding fuel imports, prices for non-fuel imports edged up by 0.2 percent in April after inching up by 0.1 percent in March. The Labor Department said higher prices for non-fuel industrial supplies and materials, consumer goods, and automotive vehicles more than offset declining prices for foods, feeds, and beverages. Meanwhile, the report said export prices increased by 0.6 percent in April after rising by 0.3 percent in March. Export prices had been expected to rise by another 0.3 percent. The stronger than expected export price growth came as prices for non-agricultural exports climbed by 0.7 percent in April after coming in unchanged in the previous month. A 1.5 percent jump in prices for non-agricultural industrial supplies and materials drove the increase in prices for non-agricultural exports. On the other hand, the report said prices for agricultural exports tumbled by 1.2 percent in April after spiking by 3.2 percent in March. The Labor Department said lower prices for soybeans, nuts, and wheat drove the decrease in prices for agricultural exports.

    April Producer Price Index: Final Demand Up 0.1% MoM -- Today's release of the April Producer Price Index (PPI) for Final Demand came in at 0.1% month-over-month seasonally adjusted, down from last month's 0.2%. It is at 2.6% year-over-year, down from 3.0% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.2% MoM, down from the previous month and is up 2.3% YoY NSA. Investing.com MoM consensus forecasts were for 0.2% headline and 0.2% core.  Here is the summary of the news release on Final Demand:  The Producer Price Index for final demand rose 0.1 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in March and 0.2 percent in February. (See table A.) On an unadjusted basis, the final demand index increased 2.6 percent for the 12 months ended in April.   In April, the index for final demand services advanced 0.1 percent, and prices for final demand goods were unchanged. The index for final demand less foods, energy, and trade services edged up 0.1 percent in April after increasing 0.4 percent in March. For the 12 months ended in April, prices for final demand less foods, energy, and trade services advanced 2.5 percent. More…  The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this (older) overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

    Producer Price Growth Slows As Food Prices Tumble - Having reached its highest in 6 years in March, Producer Price inflation slowed notably in April for both the headline and core datasets, pushing 10Y Yield back below 3.00%.Headline PPI printed +3.0% last month and was expected to print +2.8% YoY in April but instead slowed more notably to +2.6% YoY - the lowest rate on inflation since December. Core PPI also slowed notably from +2.7% YoY in March to +2.3% YoY in April.   Under the covers, it was food prices that weighed heaviest with a 1.1% price drop year-over-year Services: A major factor in the April advance in prices for final demand services was the index for machinery, equipment, parts, and supplies wholesaling, which climbed 0.9 percent. The indexes for services related to securities brokerage and dealing (partial), residential real estate loans (partial), airline passenger services, and wireless telecommunication services also moved higher. In contrast, prices for traveler accommodation services fell 3.2 percent. The indexes for health, beauty, and optical goods retailing; legal services; and apparel wholesaling also decreased.   Goods: Among prices for final demand goods in April, the index for tobacco products jumped 2.6 percent. The indexes for carbon steel scrap; search, detection, navigation, and guidance systems; pharmaceutical preparations; diesel fuel; and prepared poultry products also increased. Conversely, prices for fresh and dry vegetables fell 17.8 percent. The indexes for chicken eggs, beef and veal, residential electric power, and basic organic chemicals also moved lower.    And Final Demand - Foods, dropped 0.3% YoY - its first YoY drop since Feb 2017

    Update: Framing Lumber Prices Up Sharply Year-over-year, At Record Prices --Here is another monthly update on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs - and now prices are well above the bubble highs.This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through March 2018 (via NAHB), and 2) CME framing futures. Right now Random Lengths prices are up 22% from a year ago, and CME futures are up about 51% year-over-year. There is a seasonal pattern for lumber prices. Prices frequently peak around May, and bottom around October or November - although there is quite a bit of seasonal variability.  
    Rising costs - both material and labor - will be headwinds for the building industry this year.

    US March wholesale inventories revised lower - Reuters - U.S. wholesale inventories increased less than initially estimated in March amid declines in the stocks of motor vehicles and a range of other goods. The Commerce Department said on Wednesday wholesale inventories rose 0.3 percent instead of the 0.5 percent gain it reported last month. Stocks at wholesalers increased 0.9 percent in February. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - rose 0.4 percent in March. The government reported last month in its advance estimate of first-quarter GDP that inventory investment added 0.43 percentage point to the economy’s 2.3 percent annualized growth pace during that period. A report last week showed inventories at manufacturers increased 0.3 percent in March after rising 0.4 percent in February. Wholesale auto inventories fell 0.2 percent in March after declining 0.4 percent in February. There were also decreases in inventories of professional equipment, drugs, apparel and groceries. Wholesale petroleum stocks were unchanged. Sales at wholesalers increased 0.3 percent in March after surging 1.1 percent in February. Sales of motor vehicles fell 1.6 percent in March after increasing 1.2 percent in the prior month. At March’s sales pace it would take wholesalers 1.26 months to clear shelves, unchanged from February. 

    Weekly Initial Unemployment Claims at 211,000, 4-week average lowest since 1969  -- The DOL reported:In the week ending May 5, the advance figure for seasonally adjusted initial claims was 211,000, unchanged from the previous week's unrevised level of 211,000. The 4-week moving average was 216,000, a decrease of 5,500 from the previous week's unrevised average of 221,500. This is the lowest level for this average since December 20, 1969 when it was 214,500. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.  The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

    BLS: Job Openings Increased in March to New Series High - From the BLS: Job Openings and Labor Turnover SummaryThe number of job openings increased to 6.6 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.4 million and 5.3 million, respectively. Within separations, the quits rate was little changed at 2.3 percent and the layoffs and discharges rate was unchanged at 1.1 percent. ... The number of quits edged up to 3.3 million in March. The quits rate was 2.3 percent. The number of quits edged up for total private and was unchanged for government. Quits increased in other services (+71,000). The number of quits increased in the Midwest region.  The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.  This series started in December 2000.Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. .  Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.Jobs openings increased in March to 6.550 million from 6.078 in February.The number of job openings (yellow) are up 16.8% year-over-year. Quits are up 6.3% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits"). Job openings are at the highest level since this series started, and quits are increasing year-over-year. This was a strong report. ‘

    Job Openings Soar By 472,000 To All Time High 6.6 Million -One month after the number of US job openings reported by the JOLTS unexpectedly tumbled by 176,000 led by food service and construction workers, all it took was a month of revised data to set the seasonally-adjusted, statistically inferred US labor market back on track, and according to the latest JOLTS report, in March the number of job openings soared by 472,000, from 6.078 million to a record 6.550 million, the highest number of vacant jobs on record.... and the biggest cumulative 3-month increase in job openings in history. The number of job openings increased for total private jobs (+439,000), and edged up for government.According to the BLS, job openings increased in a number of industries, with the largest increases in professional and business services (+112,000), construction (+68,000), and transportation, warehousing, and utilities (+37,000). The number of job openings increased in the Northeast and Midwest regions.Yet while job openings jumped, the number of total hires posted a modest decline from a revised 5.511 million in February to 5.425 million in March. The number of hires was little changed for total private and for government. Hires decreased in finance and insurance (-32,000).The other closely watched category, the level of quits - which indicates workers' confidence they can leverage their existing skills and find a better paying job - continued last month's increase, and in March rose to 3.344MM from 3.208MM, just shy of the all time high hit at the start of the century, suggesting workers were feeling quite confident about demand for their job skills than the previous month. The number of quits edged up for total private and was unchanged for government. Quits increased in other services (+71,000). The number of quits increased in the Midwest region.And with a total 5.3 million separations (a 3.6% rate), this means that there were 1.6 million layoffs and discharges in March, virtually unchanged from February. The layoffs and discharges rate was 1.1 percent in March.  The number of layoffs and discharges was little changed for total private and for government. Layoffs and discharges decreased in health care and social assistance (-35,000). The number of layoffs and discharges was little changed in all four regions.

    March JOLTS report: powerful further evidence of a taboo against raising wages - The March JOLTS report this morning is powerful further evidence that raising wages (or training new workers) has become a taboo. Just about everyone thinks that, faced with a worker shortage, "rational" employers will offer higher wages to fill the empty skilled positions. This in turn will draw more marginal potential workers into open unskilled positions. That's the theory, anyway. What is really happening -- as so breathtakingly shown this morning -- is that by and large employers will refuse to raise wages, and then complain about their unfilled job openings. As Exhibit "A," I give you job openings (blue) vs. actual hires (red) in this morning's report: As a refresher, unlike the jobs report, which tabulates the net gain or loss of hiring over firing, the JOLTS report breaks the labor market down into openings, hirings, firings, quits, and total separations. Not only has hiring been flat for the last 10 months, but it was higher than today's level in November 2015, January 2016, and January 2017. Meanwhile job openings have skyrocketed by 20% since January 2017, and 25% since the end of 2015! This can only be considered a "skills mismatch" for the wages you want to pay, and if you refuse to train workers without existing matching skills. Incidentally, Paul Krugman may be ready to embrace the idea of a taboo against raising wages, although for now he is plumping for the "employers are afraid of getting stuck with a highly paid workforce when the next recession comes" hypothesis. The problem with that particular hypothesis, though, is that such skittish employers -- a lot of them anyway -- won't bother to post new job openings, since they know they would need to raise wages to fill them. The big spike in openings in this morning's report suggests instead that employers are refusing to get the message.

    Black Unemployment Is at an All-Time Low, But … - The unemployment rate among black Americans fell to 6.6 percent in April, according to today’s jobs report from the Bureau of Labor Statistics — the lowest such rate on record.The record in this case only goes back to 1972, and the overall unemployment rate (available back to 1948) was lower in the late 1960s and early 1950s than it is now. But the gap between the black unemployment rate and the overall rate has been shrinking, so 6.6 percent may well be the lowest rate ever for black people.Now, 6.6 percent is still an anomalously high unemployment rate compared to every other major racial and ethic group in the U.S. The rate in April was 4.8 percent for Hispanics, 3.6 percent for whites and 2.7 percent for Asian-Americans. Still, it’s progress, and it’s worth celebrating, as President Donald Trump did in characteristic fashion earlier this year:Somebody please inform Jay-Z that because of my policies, Black Unemployment has just been reported to be at the LOWEST RATE EVER RECORDED!— Donald J. Trump (@realDonaldTrump) January 28, 2018 Saying that black unemployment is this low “because of my policies” may seem a bit much, given the rate has simply kept falling at about the same rate that it had for the six years before Trump was elected. Still, it has kept falling, which is important. Just as recessions have been worse (in terms of the unemployment rate rise) for blacks than for everybody else, really long expansions appear to be comparatively better for blacks as they bring people into the workforce who had been struggling to gain a foothold. So prolonging the recovery seems to be especially good for black people, and I think it’s fair to say that the policies of this administration and Congress have on balance been aimed at prolonging the expansion (with the likely side effect of a future fiscal crunch, but whatever). 1 So I will not begrudge the president a little credit.

    The U.S. Is Not at Full Employment—Don’t Believe the Trump Administration’s Hype to the Contrary -  Marshall Auerback - There is a general consensus that the U.S. economy is close to full employment, given that one of the most commonly used measures (based on nonfarm payroll data from the Bureau of Labor Statistics) indicates an unemployment rate that has fallen to 3.9 percent.As good as that figure appears to be, it is troubling that wage growth for the majority of Americans remains tepid, hardly what an observer would expect if the labor markets were as tight as implied by that number. And in fact, if one digs into the data a bit more closely, it does bring to mind the old expression commonly attributed to Mark Twain about “lies, damned lies, and statistics.”The problem with these employment statistics (or “damned lies,” depending on one’s perspective) is that they could well be overstating the current strength of the U.S. economy, which is problematic given that U.S. consumers are already seeing their discretionary income squeezed by interest rate hikes (higher credit card servicing, more expensive mortgages) and higher energy prices.  A longstanding problem relating to our economic measurements such as employment is that U.S. policymakers see much of the employment data at the same time that the public does, and they are forced to make decisions based on these estimates. The bottom line is that what most people want to get out of unemployment data is not only what the current number is and if it’s getting better or worse recently, but also what it means for policy. Will interest rates continue to be raised? Will there be more cuts in government spending? As far as the policy response to the current employment situation, policy is largely based on the less comprehensive measures calculated (based on volatile monthly employment data), reported (sent out to the public and policymakers alike at the same time, even though it’s often subject to significant revision later)—meaning that, in spite of the bests efforts of the people working at the Bureau of Labor Statistics (BLS), our monetary and fiscal officials are a bit like the proverbial pilot flying without a full complement of engines or navigational equipment.

    US Postal Service Loses $1.4 Billion, Burns Through $62 Billion In Past Decade - With the US Postal Service recently in the crosshairs in the on again/off again feud between the world's most powerful man, US President Donald Trump and the world's richest man, Amazon CEO Jeff Bezos, today's otherwise boring earnings release by the USPS got some additional scrutiny by the investing public. The report had some good, but mostly bad news, because whereas revenue increased modestly in the quarter, largely thanks to a 5% jump in package volume - thanks Amazon - even as mail volumes declined by 2.1%, expenses soared by 5.7% in the quarter, mostly as a result of unsustainable increases in retiree health benefits, which surged by $766 million. The result: a total quarterly loss of $1.3 billion.“Despite growth in our package business, our financial results reflect systemic trends in the marketplace and the effects of an inflexible, legislatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford,” Postmaster General and CEO Megan J Brennan complained. Some additional details:

    • Total revenue of $17.5 billion for the second quarter ended March 31, 2018: an increase of $235 million, or 1.4% Y/Y, as shipping and packages revenue grew by $445 million, or 9.5% while First-Class and Marketing Mail revenue fell by a combined $181 million. The trends observed in previous quarters persisted as growth in package volume grew by 69 million pieces, or 5.0% (Amazon), while snail mail volumes declined by another 700 million pieces, or 2.1%, compared to the same quarter last year.
    • The total "controllable loss" for the quarter was $656 million, compared to controllable income of $12 million in Q2 last year. This was driven by a $236 million increase in the cost of retiree health benefits due to changes in actuarial assumptions and a $364 million increase in compensation expenses due to additional hours incurred to support the labor-intensive package business as well as contractual wage adjustments. Additionally, transportation expense grew by $155 million due to highway contract rate inflation as well as higher fuel costs.
    • Total operating expenses were $18.8 billion for the quarter, an increase of $1.0 billion, or 5.7 percent, compared to the same quarter last year. In addition to the controllable expenses referenced above, unfunded retirement and retiree health benefits grew by a combined $766 million due to changes in actuarial assumptions. Workers' compensation expense declined by $658 million compared to the same quarter last year, resulting primarily from changes in interest rates.

    Ford forced to stop all F-150 production because of supplier fire -- Ford suspended all production Wednesday of its profit-driving F-150 pickup, the nation's best-selling vehicle for more than 35 years, because of a "black swan" parts shortage. The production halt was caused by a fire May 2 at a parts factory in small-town Michigan that rippled through the North American auto industry but hit Ford hardest. Production at General Motors, Fiat Chrysler and Mercedes also was disrupted. "The impact on everybody else is going to pale compared to Ford," . "For Ford, this is potentially enormous." Joe Hinrichs, Ford executive vice president and president of Global Operations, acknowledged in a briefing late Wednesday, "We have to rebuild the whole supply chain." F-150 trucks make up a multibillion-dollar brand that drives profits for the Dearborn-based automaker. An analyst recently calculated that the enterprise value of the F-Series trucks is greater than that of Ford overall. Nearly 900,000 were sold in 2017 at an average cost of $46,000. And January through April sales are up 4% from the same time last year. This week, the truck side of the Ford Kansas City Assembly Plant in Missouri shut down and about 3,400 workers went home because of the parts shortage caused by the fire at Meridian Magnesium Products in Eaton Rapids, said Kelli Felker, Ford spokeswoman.

    Jobs in Reverse Gear; Halting Export Orders; Sowing New Seed Worries -- New employment figures show signs of potential turmoil in the transportation and logistics sector. Trucking companies hit the brakes hard on hiring in April, WSJ Logistics Report’s Jennifer Smith writes, slashing 5,500 jobs from the month before on a seasonally-adjusted basis. The pullback raises questions about the direction of capacity growth in a freight market marked by sky-high demand and tight constraints on roads and rails. Trucking companies have flexed their new financial muscle by scaling up orders for big rigs, but the jobs numbers back up statements by some carriers that they are having a tough time getting new workers behind the wheel. Companies focused on e-commerce aren’t facing that problem: Couriers and warehouse operators added a combined 12,300 jobs last month. Hiring in trucking had been growing, but the recent figures suggest the sector’s trends may not be built for the long-haul.  American agriculture exporters can already see the deterioration of U.S.-China trade relations in their order books. Chinese importers have canceled purchases of corn and cut orders for pork while dramatically reducing soybean purchases in the past month and scaling back orders for sorghum, a grain used in animal feed. The WSJ’s Jacob Bunge and Jesse Newman report the chill in agriculture trade comes ahead of threatened tariffs from Beijing, and it is sending jitters through a U.S. Farm Belt that has been sending trade missions to China for years to cultivate the market. There was little in trade talks in Beijing last week to suggest a thaw in trans-Pacific trade relations. The U.S. asked China to cut its trade surplus by $200 billion, the WSJ's Lingling Wei reports, while Chinese officials urged Washington to ease national-security reviews of Chinese investments. American farm groups expect the stronger message to come as their exports dwindle.

    What India Can Teach the US About a Federal Job Guarantee -- Jerri-lynn Scofield - Last month, Bernie Sanders announced he would soon propose a federal job guarantee program. Jamie Galbraith wrote a piece in The Baffler last week, debunking criticisms of the program– which weren’t confined to the usual suspects on the right. Some criticisms of a federal job guarantee focus on the costs and purported difficulties of administering such a  program.  Dean Baker wrote in The Daily Beast…The proposal calls for the program to be administered at the state and local level. This also presents issues (many of these governments have serious corruption problems), but even using state and local employment as a denominator, we would still be talking about doubling current levels. It requires some serious faith in government to think that this sort of leap in employment levels can be well-managed if done in a short period of time. It doesn’t help that many of these workers will have little education and job experience.   India has for more than a decade had a rural jobs guarantee program in place, for unskilled workers. If India can succeed in designing and implementing  such a policy, why can’t the US? Economist Jayati Ghosh wrote this assessment of The Mahatma Gandhi National Rural Employment Guarantee Act of 2005 (MGNREGA) in The Guardian in 2015:It was a historic legislation based on two interlinked goals: ensuring livelihood security to rural residents by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work; and using the programme to mobilise existing surplus labour in the countryside, to unleash productive forces and generate more economic growth in rural areas.The treatment of employment as a right of citizens that must be delivered by the state involved a crucial reversal of the underlying basis of public delivery in India, which has mostly been driven by a paternalistic view of the state as delivering “gifts” to the people.The jobs provided  a minimum wage– which varies by Indian state (the current per diem rate in the state of West Bengal, for example, is  176 INR–  a bit less than USD 3).  Employment must be provided within five km of the worker’s home. Roughly 70% of India’s population still lives in the countryside, according to the Business Standard (2013 figures). The jobs are unskilled labor and one program priority priority is infrastructure: e.g., roads, canals, ponds, wells. Over to Ghosh again for a synopsis of the program’s positive effects:

    Ford Flat Rock workers halt production after worker mangled in machinery - Ford workers at the Flat Rock assembly plant south of Detroit halted production on the second shift early Friday morning when a worker was trapped in machinery and her legs crushed. The company tried to resume production and extend the shift from 10 hours to 10.7 in the aftermath of the emergency line shut down at the plant that employs 3,500.The United Auto Workers and the local news media have suppressed details of the incident; however, workers reported on Facebook that the second shift of nearly 1,500 refused company demands for a resumption of production and walked out of the plant in horror and disgust. Workers contacted by the World Socialist Web Site Autoworker Newsletter said they anticipate a union-company cover-up at perfunctory safety meetings when they get to work on Monday.The United Auto Workers has enabled a continuing assault on jobs, wages, work rules and safety conditions since the auto industry restructuring under the Obama administration in 2009. At Flat Rock Assembly there is no local contract in place, giving the company a free hand to impose changes at will in job classifications and descriptions, work rules and safety regulations. The automakers have reaped record profits through an influx of lower-paid, second tier, temporary and part-time workers who are instructed by the UAW to keep their mouths shut.

    The Supreme Court is poised to make forced arbitration nearly inescapable - The Supreme Court will soon decide whether employers can lawfully require workers to sign mandatory arbitration agreements that include class and collective action waivers. A ruling in NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris will have significant impacts on working people. If the Court sides with employers and the Trump administration, it is likely that the majority of workers in this country will be required, as a condition of employment, to sign away their right to pursue workplace disputes on a collective or class basis. In fact, available data suggest that it may take only six years for more than 80 percent of workplaces to adopt mandatory arbitration with class and collective action waivers. Last year, EPI commissioned a survey that found that 53.9 percent of nonunion private-sector employers already have mandatory arbitration procedures'; the use of mandatory arbitration agreements grew by more than 600 percent between 1994 and 2017. Using the growth rates between the two surveys to forecast future expansion suggests that by 2024, more than 80 percent of private sector, non-union establishments will adopt mandatory arbitration with class and collective action waiver of employment disputes, if the Court finds that such agreements are lawful.1 That will leave more than 85 million workers subject to mandatory arbitration agreements with class and collective action waivers. This means that the vast majority of workers will be forced to sign away their right to act with their colleagues to resolve workplace disputes—as well as their right to go to court for these matters. As a result, even if many workers face the same type of issue at work, each individual worker will be forced to hire their own lawyer, and resolve their dispute out of court, behind closed doors, with only their employer and a private arbitrator.

    Every Illinoisan Owes $11,000 for Pensions With No Fix in Sight - Three years ago today, the Illinois Supreme Court struck down the state’s attempt to cut its employees’ pension benefits to chip away at a retirement-system debt that’s swelled to almost $11,000 for every man, woman and child. Since then, Illinois’s credit rating was downgraded to the verge of junk, its bonds have tumbled and its largest city -- Chicago -- was stripped of its investment-grade status by Moody’s Investors Service. And Republican Governor Bruce Rauner and the Democrat-led legislature have made no real progress toward a new plan that doesn’t violate the state constitution’s ban on reducing benefits. “Illinois failure to address its pension crisis has resulted in further deterioration of the state and cities’ financial condition, exorbitantly high borrowing costs, and an inability to address other critical needs at the state and local level,” said Laurence Msall, president of the Civic Federation, a Chicago nonprofit that tracks state and municipal finances. “Time is not your friend when your liabilities are compounding and your revenues are not.” The funding shortfall across Illinois’s five retirement systems climbed to $137 billion by last June, a jump of about $17.8 billion since 2015, after the government for years failed to made adequate contributions. That pension deficit -- more than four times larger that its debt to general-obligation bondholders -- is adding hundreds of millions of dollars in costs to Illinois’s budget each year as the government plows more money in to catch up.  

    Ex-Con Who Calls Black People 'Negroes' Skyrockets to Top of West Virginia Poll After Racist Campaign Ad -- Republican voters in West Virginia's primary race to choose a candidate to face Democratic U.S. Senator Joe Manchin appear to be getting ready to choose a conservative former convict who calls Black people "negroes" and Asians "China people." Don Blankenship, a divorced 68-year old coal baron who was convicted after 29 people died in one of his mines spent a year in jail for conspiracy before running for the U.S. Senate. He's now in first place among three Republicans vying for the GOP nomination in Tuesday's West Virginia primary election. In this campaign ad Blankenship uses the phrase "China people" and refers to the family of Transportation Secretary Elaine Chao, who was born in Taiwan and is married to Senate Majority Leader Mitch McConnell, his "China family." He also calls McConnell "cocaine Mitch," apparently a reference to cocaine being found aboard a ship owned by a company founded by Chao's father.

    Detroit exits bankruptcy, but conditions remain bleak --The city of Detroit exited bankruptcy last Monday, April 30, ending direct supervision by the federal courts and Michigan state government. While hailed by the Democratic Party establishment as a “comeback” story and the restoration of home rule, the move brings no benefits to the city’s workers, youth and elderly, who still live in the poorest major city in America.The delusional comments appearing in the national media about Detroit’s revitalization are based upon the re-development of a small portion of downtown Detroit while conditions for the majority of workers in the city continue to worsen. In the same week bankruptcy status ended, 17,000 residents who cannot afford to pay their water bills were threatened with shutoff unless they agree to payment plans that carry additional interest expenses, putting them further in debt.Virtually every day the local press carries news articles on the horrendous social conditions facing workers and young people stemming from poverty, including the lack of available and affordable housing, conditions of police violence, child abuse and drug addiction. Ending Detroit’s financial oversight by the state is not a sign of health, but demonstrates that Republican Governor Rick Snyder is sufficiently confident that Democratic Mayor Mike Duggan, the multimillionaire former Wayne County prosecutor and hospital executive, and Detroit’s City Council will continue to carry out measures of economic austerity against the working class.

    How Criminals Steal $37 Billion a Year from America’s Elderly -- As the scheme progressed, Jones, who was legally blind and lived alone in a two-story house in Moss Bluff, Louisiana, depleted her savings, took out a reverse mortgage and cashed in a life insurance policy. She didn’t tell her family, not even the sister who lived next door. Scammers often push victims to keep promised winnings a secret, says an investigator who helped unravel this sinister effort to exploit an 82-year-old woman. Her family didn’t realize something was wrong until she started asking to borrow money, a first for a woman they admired for her financial independence. But by then it was too late, says Angela Stancik, one of Jones’s granddaughters. Jones had lost all of her life savings—hundreds of thousands of dollars.About one week after calling Stancik at the family business in Ganado, Texas, to borrow $6,000, Jones committed suicide.That was May 4, 2010. When family members went to her home, they found a caller-ID filled with numbers they didn’t recognize and three bags of wire transfer receipts in her closet. Jones had $69 left in her bank account. Some 5 million older Americans are financially exploited every year by scammers like the ones who targeted Jones. The elderly are also suffering at the hands of greedy, desperate or drug addicted relatives and friends, among others. The total number of victims is increasing as baby boomers retire and their ability to manage trillions of dollars in personal assets diminishes. One financial services firm estimates seniors lose as much as $36.5 billion a year. But assessments like that are “grossly underestimated,” according to a 2016 study by New York State’s Office of Children and Family Services. For every case reported to authorities, as many as 44 are not. The study found losses in New York alone could be as high as $1.5 billion.

    Black activist jailed for his Facebook posts speaks out about secret FBI surveillance -- Rakem Balogun thought he was dreaming when armed agents in tactical gear stormed his apartment. Startled awake by a large crash and officers screaming commands, he soon realized his nightmare was real, and he and his 15-year-old son were forced outside of their Dallas home, wearing only underwear. Handcuffed and shaking in the cold wind, Balogun thought a misunderstanding must have led the FBI to his door on 12 December 2017. The father of three said he was shocked to later learn that agents investigating “domestic terrorism” had been monitoring him for years and were arresting him that day in part because of his Facebook posts criticizing police. “It’s tyranny at its finest,” said Balogun, 34. “I have not been doing anything illegal for them to have surveillance on me. I have not hurt anyone or threatened anyone.” Balogun spoke to the Guardian this week in his first interview since he was released from prison after five months locked up and denied bail while US attorneys tried and failed to prosecute him, accusing him of being a threat to law enforcement and an illegal gun owner. Balogun, who lost his home and more while incarcerated, is believed to be the first person targeted and prosecuted under a secretive US surveillance effort to track so-called “black identity extremists”. In a leaked August 2017 report from the FBI’s Domestic Terrorism Analysis Unit, officials claimed that there had been a “resurgence in ideologically motivated, violent criminal activity” stemming from African Americans’ “perceptions of police brutality”. 

    Fighting the Fees That Force Prisoners to Pay for Their Incarceration - This past January, prisoners in Florida went on strike to protest what they called modern-day slavery in the state's prisons. As of March, not only had the Florida Department of Corrections not responded to the demand for paid labor and improved living conditions, it had also placed some of the prisoners who were demanding fair wages into solitary confinement. As Heather Ann Thompson, author of Blood in the Water: The Attica Prison Uprising of 1971 and Its Legacy succinctly said on Democracy Now!, "If you do not treat people as human beings they will eventually erupt." The fight is far from over.   Florida is one of five states where prisoners receive no money for their work, forcing families to cough up money for food and necessities. Florida is also one of 43 states that charge prisoners for their so-called "stay" behind bars, according to the Brennan Center for Justice. This egregious injustice disproportionately targets African Americans, who fill a third of Florida's prisons, although they only make up 17 percent of the state's overall population. While the movement to end money bail has gained steam across the nation, the burgeoning fight against the exorbitant "pay-to-stay" fees charged by prisons and jails has yet to enter the public eye in the same way. The incarcerated person's family is often the first to feel the heat. Gregory Diatchenko served 34 years in a Massachusetts prison and has had his fair share of debt due to the costs added to a prison sentence. Diatchenko, who is now working as a janitor, juvenile legal advocate and activist, told Truthout he was once sent to the hole because he asked for an extra roll of toilet paper. He also said that besides the obvious behemoths -- medical bills, telephone calls -- there are many little-known fees that add to the burden of pay-to-stay.

    Minn. children’s mental health facilities forced to adapt or cut back to stay open - Nearly a dozen residential treatment centers for children who suffer from mental illness are scrambling to find new funding after receiving word this week that they're no longer eligible for federal Medicaid dollars. Some of the centers are changing their model of care in order to stay open. Paying for children's mental health treatment in Minnesota has long been something of a balancing act. Since Medicare and Medicaid began more than a half century ago, the federal government has generally avoided covering care at big institutions. But in 2001, the Centers for Medicare and Medicaid Services made an exception. The agency began allowing children in Minnesota who are eligible for Medical Assistance to receive treatment at large facilities — defined as those with more than 16 beds. Now, that exception has ended. The move means that 11 centers in Minnesota, Wisconsin and South Dakota that care for 580 children are no longer getting federal funds. Volunteers of America runs three of those facilities — all in the Twin Cities metro. CEO Paula Hart said the children there usually have nowhere else to turn. "The young people that we serve in these settings are very high need. Almost 100 percent of them have experienced significant trauma in their lives," Hart said. 

    Feedback: Noble Charter Schools Story Hit A Nerve - NPR - Earlier this month, we posted a story about discipline practices inside Noble Network of Charter Schools, which educates approximately one out of 10 high school students in Chicago. One former teacher quoted in the piece described some of the schools’ policies as “dehumanizing.” The story was shared widely on social media, and drew responses from Noble employees — both current and former — and other education advocates.In an email to staff days after publication, Noble president Constance Jones Brewer wrote that unspecified parts of the story were “exaggerated or plainly false.” At least two principals sent messages encouraging their teachers to ignore the piece.However, several teachers indicated the story aligned with their experiences. One current teacher reached out via an anonymous email, then agreed to talk if we protected their identity to avoid retaliation. The teacher related recent incidents of students receiving “unfair” detentions, including one case of a student punished for requesting makeup work. The teacher echoed what others had told us: That Noble enforces its discipline policies by sending auditors to observe teachers interacting with their classes. The audits are focused purely on discipline. “We DO NOT get audited from Noble to assess our ability to teach, only on our ability to control and get our students to submit to authority,” the teacher told us. “Noble schools want all the submissive and compliant kids or those that are very impressionable,” this teacher texted. “But kids on the South & West Sides (of Chicago) aren’t like that. You don’t survive in those neighborhoods that way. So what do the kids do? They fight the system and act just the opposite of what Noble wants. “One student says it best, ‘When you treat us like animals, what do you think we are gonna act like?’”

    Dozens of classes without teachers at Flint, Michigan, high school --Over the course of the 2017-2018 school year at Southwestern Academy high school in Flint, Michigan, dozens of classes have been without teachers for months at a time. Parents have largely been kept in the dark about the chronic shortage of teachers even though many of the students will not receive credit for the classes without teachers.Jake, a 16-year-old junior, described the startling situation at his school to the WSWS, “Many of my friends have classes without teachers. I have one. The administration just tells us to go to the library, and then when we get there, we just pretty much do whatever we want.”When asked why the classes do not have teachers, Jake answered, “The administration tells us they are sick, but no one believes them. I think some have quit.” Jake said that he knew for sure that a few of the teachers left to work at Hamady Community High School, another school in Flint.  Jake expressed concern about the shortage of teachers and the future of his school. “I don’t like what’s happening. I was very close to a few of the teachers who left; they were the good ones. I think it’s crazy that the administration won’t tell the students or parents what is going on.”     “There are more security guards than teachers at this point. I’m in high school, in ninth grade, but they send me to the eighth grade class in my second hour because there is no teacher.” When asked what class she was supposed to be in, she said she couldn’t remember because it was so long ago.  Chad noted that he is missing a teacher in his sixth hour: “I think it’s supposed to be English, but I don’t know. We just sit around on our phones for the hour or talk or something instead. It’s so messed up that they told us so late that they aren’t going to get teachers. There isn’t much to do about it now that it’s almost summer.” Two friends waiting to be picked up after school, Jada and Josh, explained that the school administration blames the students for the low teacher enrollment. “They say the teachers leave because we don’t behave. It’s always made out to be our fault,” Jada complained.

    Charter schools and funding - In the Public Interest has published a new report (pdf) on the impact of charter schools and public school funding in CA: In a first-of-its-kind analysis, this report reveals that neighborhood public school students in three California school districts are bearing the cost of the unchecked expansion of privately managed charter schools. In 2016-17, charter schools cost the Oakland Unified School District $57.3 million, the San Diego Unified School District $65.9 million, and Santa Clara County’s East Side Union High School District $19.3 million. The California Charter School Act currently doesn’t allow school boards to consider how a proposed charter school may impact a district’s educational programs or fiscal health when weighing new charter applications. However, when a student leaves a neighborhood school for a charter school, all the funding for that student leaves with them, while all the costs do not.

    After union betrayal in Arizona, teacher militancy continues to build across US --Tens of thousands of US teachers have struck and protested across many states so far this year, defying state anti-strike laws and their own unions. The eruption of statewide strikes in West Virginia, Oklahoma and Arizona has exposed the universal and stark nature of the crisis facing the nation’s 3.1 million teachers and some 50 million elementary and secondary students and their parents. These events have also revealed the anti-working-class character of the unions, which have worked hand-in-glove with both big business parties to suppress opposition to austerity and corporate-backed “school reform.” Last week, the Arizona Education Association (AEA) shut down the strike by nearly 60,000 teachers and backed the Republican governor’s budget that ignored teachers’ main demands for significant wage improvements for themselves and other school employees, as well as the restoration of more than $1 billion in school funding cuts over the last decade. This followed same pattern as the union betrayals in West Virginia and Oklahoma. The eruption of protest has emerged after decades of a well-funded war against public education by the for-profit education industry and Wall Street and implemented by Democrats and Republicans at every level of government. They have been accompanied by the handouts of trillions of dollars of tax cuts to the oil and gas industries, General Motors, Amazon and other corporate interests. While these policies are epitomized by billionaire heiress and current Education Secretary Betsy DeVos who has made the destruction of public schools her life’s work, they entirely predate her appointment. Charter schools and other forms of school privatization were promoted in the 1990s by former Democratic President Bill Clinton, followed by Republican George W. Bush’s No Child Left Behind, which pushed charters as a remedy for schools failing national tests. But it was the administration of Democrat Barack Obama, a supporter of the hedge fund group Democrats for Education Reform and of Wall Street more generally, which implemented the most far-reaching attacks.

    Educators struggle in US continues in aftermath of union betrayal in Arizona -- The wave of strikes and protests by educators in the United States is continuing. Just days after the Arizona Education Association (AEA) called off the strike by nearly 60,000 teachers in the southwestern US state, new struggles have emerged from California and Colorado, to North and South Carolina. More than 53,000 university service workers, nurses and other hospital workers began a three-day strike Monday at ten University of California (UC) campuses, medical centers and research labs across the state. The UC workers are demanding a six percent annual raise, a freeze on health care premiums and an end to the contracting out of jobs.Also on Monday, 900 teachers in Pueblo, Colorado walked out to demand pay increases after working without a contract for more than a year. Less than two weeks ago, thousands of teachers in the state, which is run by the Democratic Party, carried out sickouts and rallied in the state capitol in Denver to demand improved wages and pensions and the restoration of a decade of school funding cuts.On May 15, 30,000 school bus drivers, custodians, special education assistants, cafeteria workers and other support staff employed by the Los Angeles Unified School District are expected to launch a one-day strike in the second largest school district in the United States.Thousands of teachers throughout North Carolina are expected to demonstrate on May 16 in Raleigh, as the state legislature begins its session. Teachers in neighboring South Carolina have called for a May 19 demonstration at the state capitol in Columbia to protest low pay, high class sizes, excessive testing and lack of preparation time.

    Pueblo teachers launch Colorado's first teachers' strike in 24 years - A sea of teachers and their supporters descended on their district’s administration building Monday afternoon, a wave circling around the block while chanting and holding signs. Pueblo teachers stayed out of school on Monday, launching the first teachers’ strike in Colorado in nearly a quarter-century, as they urged Pueblo City Schools District 60 leaders to agree to a 2 percent pay increase and better benefits. Teachers from schools across the city said they don’t want the strike to last forever. But they’ll stick it out until the district agrees to the raise recommended by a third-party fact-finder. “I got into teaching because I understand its value to society,” East High School teacher Michael Lonsberry said. “You can’t have a solid chance at a successful, productive and satisfying life without education.” Teachers carried signs and chanted “Pueblo schools are under attack. What do we do? Stand up. Fight back,” and “Get up, get down, Pueblo is a union town!”  The district closed all schools Monday. Leaders are looking to see which schools they’ll be able to open as the week progresses. The district sent out a letter apologizing to families, saying it was “disappointed” in the situation. “We’re not trying to be malicious,” said Goodnight Elementary art teacher Donna Gonzales. “We’re not trying to stop graduation. We’re not trying to mess with kids’ grades.”  The district’s teachers were paid an average of $47,617 during the 2017-18 school year, according to the Colorado Department of Education. The average Colorado teacher was paid $52,728. The National Education Association’s 2018 report said the average pay nationwide in 2017 was $59,660.

    ‘Our Students Deserve Better’: Teacher Strike Hits Colorado - On May 7, teachers in Colorado’s Pueblo District 60 went on strike after the state’s Department of Labor and Employment declined to intervene in a dispute over salaries and school funding. It’s the first teacher strike in Colorado since 1994.The strike came just days after teachers from over two dozen Colorado schools descended upon the capitol on April 26 and 27, demanding higher pay, increases in school funding, and secure retirement plans.Corey Kern, the deputy executive director of the Denver Classroom Teachers Association, told Shadowproof that Colorado teachers are frustrated with their situation and were inspired by recent strikes in West Virginia and Oklahoma.Teacher pay in Colorado ranked 31st in the nation last year, with an average annual salary of $51,810. That’s 15 percent lower than the national average.But these numbers also conceal an important fact: Colorado teacher salaries differ widely from district to district. For example, in Pueblo, where the strike is taking place, the average teacher salary is $47,617. Many teachers in rural districts are only making around $30,000 a year. These statistics become much more troubling when compared against the backdrop of Colorado’s housing market. Denver teachers make more than the annual state average, taking home about $54,500 a year, but according to a study done by the brokerage firm Redfin, Denver is the least affordable housing market for teachers in the entire country.

    First teachers' strike in Colorado since 1994 now in third day - About 1,000 teachers and paraprofessionals in Pueblo, Colorado continued their walkout for the third day on Wednesday. For Colorado educators who are fighting the effects of years of de-funding public education alongside their counterparts across many states, “Teacher Appreciation Week”—observed this week throughout the US—rang particularly hollow this year. This is the first strike in the state since 1994 and the first ever for Pueblo, where teachers had worked without a contract since last August. On Tuesday, nearly 1,000-strong, educators and their supporters picketed the District 60 administration building and held a lively rally. And on Wednesday several hundred teachers protested at Mineral Place Park. Carrying signs including “On strike for my students,” “Support Public Education,” “Do you work your best when you work for peanuts?” and “Highly qualified, poorly paid,” the teachers were also joined by many students. “We would rather be in school. Sometimes you don’t always want to be there, but for these teachers who pour everything into us, we should show our support and pour everything into them as well,” said Palo, a sophomore. The Colorado Education Association (CEA), the Colorado Paraprofessional Education Association (CPEA), and two administrators from District 60 addressed the Wednesday rally, all parties hypocritically claiming they “supported” the educators. The fact is the district is adamant in refusing to budge from its Friday offer; a miniscule one-time bonus of roughly $1,000 per teacher for this school year, and a cost of living adjustment of 2.5 percent and a monthly stipend of $50 next year to supposedly offset skyrocketing health care premiums. These scraps were previously rejected by the rank and file in two separate votes.

    Colorado Democrats slash teacher and public employee pensions - Late on Thursday night, Democratic State Governor of Colorado John Hickenlooper signed into law sweeping cuts to teacher and public employee pensions that will have a devastating impact on the lives of hundreds of thousands of workers.The bill cutting the state’s Public Employees’ Retirement Association (PERA) was rushed through the Democratic Party-controlled House on the final legislative night of the year, by a vote of 34-29. It includes the following measures:

    • The retirement age will be raised by six years, from 58 to 64, for future teachers, and from 60 to 64 for future public employees.
    • Current teachers will be forced to contribute an extra two percent of their salaries toward their retirement, from 8 to 10 percent.
    • For the next two years, the two percent annual cost-of-living adjustment to pensions will be frozen. For a retired worker on a pension of $25,000, this is a reduction of $500 each year. After the two years, the cost-of-living adjustment will be set at 1.5 percent—below the rate of inflation—and can be reduced further.
    • School boards and local government agencies, which have already been starved of $8.6 billion in funds by the Democratic state government over the past nine years, will be made to contribute an additional 0.25 percent to pensions from their existing budgets, which will contribute to further layoffs and cuts to school programs.

    Hickenlooper boasted about the cuts in a press conference on Thursday night. “Everyone gave,” he said. “You talk about a difficult compromise. The retired state workers made compromises. The active workers made compromises...” He declared that while it was important to “strike while the iron was hot,” further cuts could be in store: “If there is another step, that can always be done.”  In a press conference the same evening, Republican Senate Majority Leader Chris Holbert personally praised Democratic House Majority leader KC Becker and representative Dan Pablon as “great minds” for their work in passing the bill.

    Billionaire Bloomberg and union chief Weingarten join forces to undermine teachers’ struggle -- Readers of USA Today, one of the largest-circulation newspapers in the United States, opened a recent issue to see an unusual joint op-ed column from Michael Bloomberg and Randi Weingarten. Bloomberg, with a net worth of more than $50 billion, is the seventh-wealthiest individual in the US. He is also the former three-term mayor of New York City. Weingarten, the president of the American Federation of Teachers (AFT), was previously the president of its New York affiliate, the UFT (United Federation of Teachers).  Over Bloomberg’s first two terms in office, Weingarten was responsible for negotiating the contracts covering 80,000 New York City teachers. But why have Bloomberg and Weingarten chosen this moment for their essay, and to whom is it addressed? They explain, in part, in their very first paragraph: “Never before has there been so much labor unrest in America’s public schools. Teachers, understandably angry about low pay and harmful cuts in education resources, have organized statewide walkouts in West Virginia, Kentucky and Oklahoma. …” Though they feign sympathy for the teachers, Bloomberg and Weingarten are in fact alarmed by this development. As their whole column makes clear, they would like to see the militant struggles brought to an end. They are worried that the rank-and-file actions initiated independently of both the AFT and the National Education Association (NEA) may get out of the control of the unions, which have so far—in West Virginia, Oklahoma and most recently Arizona—managed to betray the courageous and determined teachers. The op-ed piece is addressed, not to teachers or any other section of workers, but to the political representatives of the ruling class, in which Bloomberg in particular occupies a prominent place. 

    Republicans Meet Striking Teachers’ Demands by Raising Taxes On the Working Class -- Teachers in deep-red states like Arizona, Kentucky, and Oklahoma may have won concessions from their Republican-controlled state governments, but there’s a catch.In various states where teachers walked out in protest of steep cuts to K-12 public education dating back to the start of the Great Recession, state lawmakers partially acquiesced to educators’ demands for additional funding. However, while many teachers were calling on states to get the extra revenue needed from corporate welfare and the wealthy, Republican legislators opted instead to implement regressive tax increases that disproportionately harm working people. As Vox recently reported, legislatures in Arizona, Kentucky, Oklahoma, and West Virginia all chose to raise taxes on working class residents as opposed to taking a bite out of the sizable corporate tax breaks written into state law. In Arizona, where lawmakers lost out on roughly $5 billion in corporate tax breaks since 1993, when accounting for inflation, the Republican-controlled legislature recently agreed to put an additional $600 million toward teacher pay and education funding. However, the promised revenue is coming from higher property taxes on homeowners in low-income school districts, and an additional new car registration fee.  Teachers in Kentucky, who mobilized in the thousands multiple times at the state capitol in Frankfort, had to swallow a tough pill of supporting an education funding bill that provided additional support to public schools by raising taxes on the poor and cutting them for the rich by implementing a flat tax. According to Vox, the top tax rate in Kentucky used to be six percent for the wealthiest, although that rate has been cut to five percent, with the poorest Kentuckians’ income tax rates also being raised to five percent.  Oklahoma is home to some of the most generous tax breaks for the oil & gas industry. However, Oklahoma’s Republican legislature and governor decided to fund teachers’ demands by raising the gasoline tax on both unleaded and diesel — which will hit lower-income Oklahomans harder than the state’s richest — and increasing the cigarette tax (the Truth Initiative reports that 72 percent of cigarette smokers are in low-income communities). And in West Virginia, the state that kicked off the national movement of teacher strikes and walkouts, state lawmakers alluded to making cuts to general services and Medicaid in order to generate the revenue needed to meet teachers’ demands.

    Damning report shows Portland Public Schools disregard of sexual misconduct over decades - Portland Public Schools fielded report after report that educator Mitch Whitehurst engaged in sexual misconduct with students, starting the very first year of his 32-year career, a damning investigation released Thursday says. District officials' failure to stop him and the district's lack of improvement in training and protocols to this day indicates an urgent need for Oregon's largest school district to overhaul how it handles sexual misconduct, the report says. In fall 2017, the Portland school board hired a team of investigators, hand-picked for their expertise, to examine how district employees treated Whitehurst. The board did so in response to an August 2017 Oregonian/OregonLive investigation, "Benefit of the Doubt: How Portland Public Schools helped an educator evade allegations of sexual misconduct." The investigative team interviewed more than 100 people and had access to thousands more records than The Oregonian did. It found evidence school administrators and school police knew Whitehurst was a problem from almost the very beginning. Yet he went on to work at more than a half dozen schools. Investigators also found additional student victims not previously known to the public, called out specific officials by name for their inadequate actions, and determined that the district and law enforcement should have stopped Whitehurst's abuse earlier. District practices and priorities to this day lead to chronic underreporting of sexual misconduct, investigators found. Children suffer from a school district culture where employees look for reasons not to act and stick to the bare minimum of what they feel is required of them, investigators found.

    Teens Cyberbully Themselves As A New Type Of Self-Harm - NPR - During the stressful teen years, most adolescents experience emotional highs and lows, but for more than 20 percent of teenagers, their worries and sad feelings turn into something more serious, like anxiety or depression. Studies show that 13 percent to 18 percent of distressed teens physically injure themselves via cutting, burning or other forms of self-harm as a way to cope with their pain. Recent research and clinical psychologists now suggest that some adolescents are engaging in a newer form of self-aggression — digital self-harm. They're anonymously posting mean and derogatory comments about themselves on social media.    Child psychologist Sheryl Gonzalez-Ziegler of Denver says it's a growing problem among teens whom she counsels. One recent client, an adolescent girl, told Gonzalez-Ziegler that she anonymously cyberbullied herself because, as a gay teen, she felt vulnerable and exposed."She set up ghost accounts on Instagram and posted mean comments about herself, saying things like, 'I think you're creepy and gay' and 'Don't sit next to me again,' " Ziegler says."She said these things because she feared being mocked by her peers," the psychologist explains. "She thought their teasing wouldn't be so bad if she beat them to the punch."According to a survey published late last year in the Journal of Adolescent Health, teens are bullying themselves online as a way to manage feelings of sadness and self-hatred and to gain attention from their friends. For the study, 5,593 middle and high school students from across the U.S., ages 12 to 17, completed a series of questionnaires that asked about their experiences with digital self-harm and cyberbullying.

    Rich parents are using doctor’s notes to help kids cheat the SATs  -- Last month on a springy Saturday afternoon in a tony Long Island town, Kim Gronich picked up her teen daughter from the ACTs. The high school junior was upset that she hadn’t answered all of the questions on the standardized test, which has a time limit of 3 hours and 35 minutes.  “She’s coming up against all of these kids who bought extra time from a doctor’s note. It’s outrageous and it’s rampant,” says Gronich, who is considering filing a lawsuit against her daughter’s school for helping so many get special treatment. “The other kids are there for hours more … These are the children who are cheating and getting away with it.”When it comes to getting into top colleges, well-heeled parents will do anything to give their kids a leg up on the competition. An increasingly common tactic is getting kids extra time on the ACTs and SATs because of a psychological diagnosis that may or may not be legitimate. Previously, the testing companies alerted colleges when students received extra time, but they stopped doing so in 2003, opening the door for abuse.“Parents with means will stop at nothing to get their kid into college — that’s what they do,” says Miriam Kurtzig Freedman, an education lawyer and staunch opponent of the accommodation abuse.The ACT says roughly 5 percent of students taking the test receive accommodations, most commonly for extra time. Prior to 2003, it was less than 2 percent. The College Board, which administers the SATs, along with the PSATs and AP exams, says it’s also seen an uptick in accommodations in recent years — from 1.4 percent in 2012 to 3 percent last year.  Ed Colby, senior director of media and public relations for the ACT, says some parents are concerned that “some students who [have] wealthy parents can pay a doctor to say the student has a disability.” But, he continues, “If we receive documentation from a doctor, we trust that documentation — unless there’s some reason not to.”

    Black student reported to YPD for napping in dormitory common room -- Yale Police officers on Monday evening interrogated a black graduate student, Lolade Siyonbola GRD ’19, for more than 15 minutes, after a white graduate student reported Siyonbola to the police for sleeping in the HGS common room. “You’re in a Yale Building and we need to make sure that you belong here,” one of the officers said to Siyonbola, according to a video of the incident Siyonbola posted to Facebook. The incident gained significant traction on social media after Siyonbola posted two videos on Facebook on early Tuesday morning — one of her interactions with the white student and another of her interactions with the police. As of Tuesday evening, a video showing her interacting with police has garnered more than 324,000 views, 5,300 reactions, and 9,000 comments. Over 6,000 people have shared it. In the video, Siyonbula accused the police of harassing her. “I deserve to be here; I paid tuition like everybody else; I am not going to justify my existence here,” Siyonbola told one of the police officers on video after she was asked to “sit tight” while they verified her student information. “I am not going to be harassed.” A YPD supervisor told Siyonbola in the video that the investigation into her student status was “protocol.”

    53,000 workers begin three-day strike at California universities and hospitals -Nearly 53,000 healthcare, technical, service and research workers represented by the American Federation of State and Municipal Employees (AFSCME) across 10 University of California (UC) campuses are beginning a three-day strike today, which is scheduled to conclude on Wednesday. Nurses represented by the California Nurses Association (CNA) and health care administrators represented by the University Professional and Technical Employees (UPTE) union will join them Tuesday and Wednesday in a sympathy strike.In mid-April AFSCME-represented workers voted overwhelmingly in favor of a strike, rejecting the UC’s last offer of 3 percent yearly wage increases and a prorated, lump-sum payment of $750. The union is demanding a 6 percent yearly increase, a freeze on health-care premiums, and the elimination of contracting out positions.AFSCME is the UC’s largest employee union, representing more than 24,000 staff, who include food service, groundskeepers, and janitorial staff across 10 UC campuses, five medical centers, and numerous clinics and research laboratories throughout California. One week after AFSCME authorized the strike vote, UC nurses throughout California voted by 98 percent to engage in a sympathy strike in solidarity with AFSCME workers on Tuesday and Wednesday. Comments on the CNA social media pages called for an expansion of the strike to other sections of nurses and across the country with comments that “Kaiser nurses should stand with them” and “Florida needs to follow.” The UPTE, an affiliate of the Communication Workers of America (CWA), announced a sympathy strike following the CNA vote and urged its membership to remain within the limited framework. “UPTE is not striking for the purposes of changing its own terms and conditions of employment,” a union statement read. “It is very important that our members continue to work as scheduled on May 7, and not commence any strike activity until May 8.”

    University of California three-day strike ends without any resolution for workers --On Wednesday, a three-day strike by 24,000 service workers of the American Federation of State, County and Municipal Employees (AFSCME) in the University of California (UC) system came to a close. Drawing mass support by other sections of the workers and students at UC schools, the health and service workers now face the systematic efforts of the union to isolate their struggles and push a sell-out contract in close coordination with the university administration.The strike attracted an additional 29,000 UC nurses and administrative workers from the California Nurses Association (CNA) and University Professional (UPTE) union, respectively, who overwhelmingly voted to carry out a sympathy strike alongside AFSCME workers on Tuesday and Wednesday. A significant number of students and educational faculty offered additional support by posting on social media, canceling class and joining the picket line. The demands of the strike—a 6 percent yearly wage increase, a freeze to health insurance premiums, and an end to contracting out positions to lower-paid part-time and temporary staff—expose the circumstances that confront UC workers and workers around the United States and the world, including the attack on working conditions and stagnant wages combined with rising living expenses and health care costs.

    NYC New School worker-students strike against poverty wages -- Some 850 worker-students at the New School for Social Research in New York City went on strike Tuesday to protest the lack of a contract. The strikers, teaching assistants (TAs) and research assistants (RAs), set up picket lines at three entrances to the school, which is located in lower Manhattan’s Union Square. The workers are members of the Student Employees at the New School union (SENS), an affiliate of the United Auto Workers (UAW).In addition to taking classes as students, they have an exhausting workload as teachers and researchers, for which they are paid poverty pages in one of the least affordable cities in the world. RAs and TAs are paid for 20 hours of work per week, while the actual hours they log may be far more than that. A worker-student may receive a stipend of only $6,000 a year.  It is virtually impossible to live on these wages. In the most unequal of American cities, the New School pays its president, David Van Zandt, a base salary of $696,681, with total compensation reaching $2,081,584. Although no details have been released, the union announced in a leaflet that the university administration, after much delay, made an offer that fails to address the worker-students’ demands for increases in wages, tuition remission, health care and childcare benefits.The National Labor Relations Board (NLRB) ruled last May that the New School worker-students had the right to unionize. Following a legal challenge to the decision filed by the university, the students took a vote in July 2017 and by a margin of 502 to 2 decided to join the union. The UAW deliberately limited the impact of the strike by timing it for the period after classes had finished and finals had begun. With the support of more than 300 faculty members, the union is seeking to apply pressure on the administration by disrupting grading.

    Tyler Cowen, Koch Brothers Funding, Mercatus Center, George Mason University, and Academic Freedom -  Jerri-lynn Scofield -  It’s not exactly breaking news to assert that  big donors– such as the Koch Brothers– spend money to manipulate  public policy. Some expenditures take the form of political contributions, while other funding seeks to shape the production and dissemination of ideas– either through the media or in academia. Last week, documents released during discovery in a lawsuit filed against George Mason University provide a window into the details of how this influence is exerted. The suit was filed by the activist group Unkoch My Campus, and out to compel George Mason University (GMU) to release donor agreements, citing Virginia public disclosure laws. Emails and supporting documentation are found here. The NYT (here and here), WaPo, Truthout all featured coverage last week of the disclosures. I found Truthout most useful for distilling the salient points about donor influence at the recently renamed Antonin Scalia Law School, following a $30 million anonymous donation. I’ll address the law school situation first. The Truthout account discusses the role of the Federalist Society for Law and Public Policy Studies– the rightwing organisation that has had an outsize impact on judicial selection for decades, most recently in the appointment of Neal Gorsuch to the Supreme Court– in how the law school will use its windfall: Some further details from the Grey Lady story, What Charles Koch and Other Donors to George Mason University Got for Their Money: Emails disclosed by the university show that Federalist Society officials were also involved in hiring discussions and had suggested a student for admission. In turn, a professor at the law school wrote the society asking for help securing recommendations for prestigious federal judicial clerkships for students active in the society. As is far from unusual in such situations, the problem only arose with the cover-up, When asked by the faculty what conditions applied to this anonymous donation, the provost tried to obfuscate. Over to Truthout:The emails between donors and the law school that were disclosed on Monday tell a different story.

    Student debt just hit $1.5 trillion - America’s student loan problem just surpassed a depressing milestone. Outstanding student debt reached $1.521 trillion in the first quarter of 2018, according to the Federal Reserve, hitting $1.5 trillion for the first time. Though the marker is somewhat arbitrary, it offers a reminder of how quickly student debt has grown—jumping from about $600 billion 10 years ago to more than $1.5 trillion today—and that the factors fueling the increase aren’t likely to disappear any time soon.“People pay attention to milestones,” said Mark Kantrowitz, a financial aid expert. When student debt surpassed $1 trillion in 2012, “it definitely caused a shift in coverage of student loans in the news media,” he said. In theory, that helps raise awareness of the issue for student advocates, lawmakers and, in particular, borrowers when considering what college to attend. But Kantrowitz added, “What’s more important is the impact on individual borrowers.” And they are feeling it. College graduates leave school with about $37,000 in debt on average, according to Kantrowitz’s data, a sum that can be bearable for many, given that the average starting salary for a new college graduate last year hovered around $50,000. But a large share—as many as one in six college graduates, Kantrowitz estimates—will leave school with debt that exceeds their income. That will make it challenging for those borrowers to pay off their loans on a standard 10-year repayment plan, he said. But the borrowers likely suffering the most from our increasingly debt-reliant college finance system are the students who leave school with debt, but no degree or a degree worth little in the labor market. Economists and advocates have pointed to thefor-profit college industry, which has been accused of using inflated job placement and graduation rates to lure borrowers to take on debt, as a major source of these borrowers’ challenges.

    Iowa Bans Most Abortions As Governor Signs ‘Heartbeat’ Bill -- Iowa Gov. Kim Reynolds signed one of the country's most restrictive abortion bills into law on Friday.The so-called "heartbeat" legislation bans abortions once a fetal heartbeat has been detected, at about six weeks of pregnancy. Exceptions are made in cases of rape, incest or medical emergency.Republican state lawmakers worked late into the night this week to push the measure forward. During Tuesday's debate in the Statehouse, Rep. Sandy Salmon said, "A baby has become something we can throw away. This bill says it's time to change the way we think about unborn life."The bill passed the state House on Tuesday and the state Senate early Wednesday. Then it landed on Reynolds' desk. "I understand that not everyone will agree with this decision," Reynolds said in a written statement. "But if death is determined when a heart stops beating, then doesn't a beating heart indicate life? For me, it is immoral to stop an innocent beating heart."

    How Medicaid work requirements can exempt rural whites but not urban blacks - When the Trump administration announced it would allow states to institute Medicaid work requirements, policy experts warned that it could lead to racial discrimination. A proposal in the Michigan legislature that would exempt some counties from the requirement suggests how this could happen.In Michigan, as the Detroit Free Press’s Nancy Kaffer noted, state lawmakers are pushing a plan that would require Medicaid recipients (with exceptions for the disabled, elderly, and a few other selected populations) to work or search for work at least 29 hours each week. If they fail to meet the work requirement, they could lose Medicaid coverage for a full year.But the Michigan plan comes with a twist: People who live in counties with higher unemployment rates — above 8.5 percent — are exempted from the requirement. That is likely to lead in practice, as Kaffer observes, to rural whiter counties, where unemployment is higher, getting a break from these work requirements while urban areas with a higher share of black residents would still be subjected to them. Which means that black Medicaid enrollees would be more likely to lose their health insurance. Whatever the intent, that appears to be the practical effect. George Washington University’s Sara Rosenbaum warned me about this possibility when the Trump administration first said it would approve Medicaid work requirements: Rural areas, more likely to be white, could have fewer job opportunities, less robust transportation, and fewer social support services, all things that might lead a state to provide an exemption from the work requirement. The result, intentional or not, is that black people on Medicaid — because they are more likely to live in urban areas, where those grounds for exemption are less likely to be found — could face a higher burden under these waivers. The Michigan plan — which passed the state Senate, though Republican Gov. Rick Snyder’s office has criticized it, leaving its future in doubt — seems like Exhibit A of the risk that Rosenbaum was describing. Let’s look at a few choice Michigan counties to illustrate.

    Why States Should Not Be Allowed to Alter the ACA with Waivers - CMS is allowing states to seek waivers to alter parts of the ACA. According to Republicans, state government knows better than the federal government the needs of its citizens and can design a better healthcare plan for them. Michigan along with Kentucky and another state have applied for waivers. Michigan and Kentucky have been approved. The Michigan bill has made it through the Republican legislature and will go to the governor to be signed (hopefully vetoed). The troublesome part of Michigan State Senate Bill 0897 (2018) can be found in SEC. 107B.  […] This is a relief valve for “counties” with high unemployment. In effect if Michigan counties have a high unemployment rate (8.5% or above), the unemployed workers in that county can have Medicaid until such time as the Unemployment Rate drops to 5%. Then the workers are expected to seek employment to be eligible for Medicaid. Ok, that should cover Detroit, Flint, Saginaw, Muskegon, etc. high unemployment rate. which exceeds 8.5%. Or does it qualify them? The issue with SEC 107B is the word “Counties.” By using solely the word counties, SEC 107B does not make an exception for townships, villages, or cities. For example, Wayne County has an unemployment rate of 5.5% and not 8.5% or greater. As a result, Detroit which does have an unemployment rate greater than 8.5% does not qualify because it is not a county. Neither would the other Michigan cities in other counties with low unemployment rates qualify.

    Louisiana: 20,000 nursing home residents face eviction as state legislature slashes Medicaid --Tens of thousands of Louisiana’s poorest and most vulnerable residents were notified this week that their Medicaid benefits could be cut off on July 1, if budget cuts passed by the Louisiana House of Representatives become law. Included in this figure are more than 20,000 nursing home residents who would face eviction. Thousands more who suffer from mental or physical disabilities, and who reside in group homes or receive home health care aid, would also see their benefits eliminated and face homelessness.The Louisiana Nursing Home Association has stated that if the proposed cuts go through, it could lead to the closure of most nursing homes in the state, which would mean those residents with private insurance would also face eviction. As many as 25,000 nursing home employees could also lose their jobs as a result of the cuts.The House bill eliminates $648 million from the state budget, including $538 million from health care programs. If it is approved by the State Senate, Louisiana would ultimately face a reduction of $1.8 billion dollars in its health care budget because it would no longer qualify for over $1 billion in federal funds, according to the Times-Picayune. Both houses of the state legislature are controlled by the Republican Party, while Governor John Bel Edwards is a Democrat. Four major Medicaid programs are scheduled for elimination under the House budget plan. This would include programs that offer substance abuse and mental health treatment. The majority of the cuts would come from the Medicaid Long Term Care Special Income Level Program, which provides Medicaid services to elderly and disabled residents whose incomes range from $750 to $2,250 a month. Approximately 80 percent of Louisiana nursing home residents are beneficiaries of this program. The House budget would end benefits for anyone who earns more than $750 per month or $9,000 annually.

    "Death Spiral": Obamacare Premiums May Soar As Much As 91% Next Year - Residents of Maryland and Virginia face double-digit percentage increases in premiums for individual Obamacare plans in 2019, according to rate requests made by insurers. The largest hikes are being sought by CareFirst, which is seeking a 64% increase in Virginia, and a whopping 91% increase in Maryland for its PPO. Other insurers are following suit in the two states, with Kaiser requesting hikes of 32% and 37% respectively, followed by CareFirst's HMO offering.In Maryland, CareFirst wants to raise rates by 91 percent on a plan covering 15,000 people, Insurance Commissioner Al Redmer Jr. said. If approved, premiums for a 40-year-old could reach $1,334 a month. –Bloomberg  That's over $16,000 per year for an individual plan in a state with an average personal income of $59,524.

    Pharma and healthcare companies brace for Trump shake-up - President Donald Trump is expected to outline his plans as early as this week to implement new regulations designed to lower drug prices in the US, reported the Financial Times.One of the proposals under consideration would effectively ban drug rebates, according to two people familiar with the president's upcoming remarks.If enacted, such a policy threatens to plunge the industry into a period of uncertainty and to scramble the business models of pharmacy benefits managers such as Express Scripts, CVS's Caremark and UnitedHealth's Optum, the news source said. In a speech last week, FDA commissioner Scott Gottlieb raised the possibility that giving rebates could effectively be outlawed.Such a policy could be achieved through regulatory changes and would not require new legislation or an executive order from Trump, according to one source briefed on the proposal. "This is the single biggest legislative action that could make a difference in bringing down drug prices," commented Michael Rea, chief executive of Rx Savings Solutions, adding "it helps remove the complexity and chaos that has fuelled unsustainable price increases and allows an actual free market to take hold."

    Hospitals in US sound alarm on impending chemotherapy shortages -- Hospitals in the US are warning of an impending shortage of life-extending chemotherapy drugs caused by manufacturing issues at large drugmakers. Two types of chemotherapy, known as vincristine and etoposide, are in short supply, according to several hospitals, as drugmakers including Pfizer and London-listed Hikma Pharmaceuticals struggle to meet demand. Vincristine is mainly used to treat leukaemia, while etoposide is an ingredient in several chemotherapy regimens for a range of common cancers. A dearth of chemotherapy would be the latest drug shortage to hit the US, the world’s largest and most profitable healthcare market, raising fresh questions over whether drugmakers are doing enough to maintain supplies of critical medicines. Pharmaceutical companies, including Baxter, struggled to supply saline during the recent flu season, while hospitals are also running low on morphine and other injectable painkillers used during surgery. Hospitals said the shortages of chemotherapy had not yet resulted in patients being denied drugs. But they warned oncologists could be forced to put cancer sufferers on less effective or more toxic alternatives if they were unable to guarantee supplies for the full duration of a treatment.

    20% of Inmates in California Jails on Psychotropic Medications - naked capitalism Yves here. The original title of this article at Kaiser Health News was Use Of Psychiatric Drugs Soars In California Jails. One reason to bring the story to reader attention is that I am skeptical of the premise that the drugs are always being administered as a result of prisoner needs. For instace, while many people take anti-depressants, it’s hard to see a jail going to the trouble of making sure an inmate in jail, who is typically there for a short stay, gets his supply of Prozac. But a schizophrenic is an entirely different proposition. In other words, I wondered if any readers were in a position to sanity check the thesis of the article, that the rise in the level of drug administration is the result of more mentally ill people being on the street, and therefore winding up in jail, plus better diagnosis. The article does mention that drugs can also be used to manage unruly inmates but downplays that as a contributing factor. The reason for my reservation is that now that what used to be “boys will be boys” behavior is now treated as grounds for pulling out the prescription pad, it isn’t hard to imagine that a lot of this “better screening” is similarly about making life easier for the people in charge.The number of jail inmates in California taking psychotropic drugs has jumped about 25 percent in five years, and they now account for about a fifth of the county jail population across the state, according to a new analysis of state data.The increase could reflect the growing number of inmates with mental illness, though it also might stem from better identification of people in need of treatment, say researchers from California Health Policy Strategies(CHPS), a Sacramento-based consulting firm. Amid a severe shortage of psychiatric beds and community-based treatment throughout the state and nation, jails have become repositories for people in the throes of acute mental health crises. Contributing to the problem in California is that county jails received a large influx of inmates from state prisons to jails as a result of a federal court order to ease prison crowding. In 2011, the U.S. Supreme Court ordered California to reducethe prison population because of overcrowding linked to poor medical and mental health care that it said constituted cruel and unusual punishment.

    Opioid distributor apologizes for shipping large volumes of painkillers to West Virginia -– A top executive with a major pharmaceutical distributor apologized Tuesday for his company’s failure to stop sending painkillers to two West Virginia pharmacies but later said he did not believe his firm’s actions contributed to the nation’s opioid epidemic. Cardinal Health’s Executive Chairman George Barrett said the distributor agrees that too many prescription pills have been shipped across the country, and he lamented that decisions made by his company to keep shipping pills to two pharmacies that have been the focus of a congressional investigation. “Those decisions allowed the two pharmacies to continue to receive certain volumes of hydrocodone and oxycodone from Cardinal Health for longer than I think they should have, based on what I have since learned about the circumstances surrounding those pharmacies,” Barrett told a House subcommittee. “With the benefit of hindsight, I wish we had moved faster and asked a different set of questions,” Barrett said. “I am deeply sorry we did not.” Executives from the five distributors — Cardinal Health, Miami-Luken, the McKesson Corp., AmerisourceBergen Corp. and H.D. Smith Wholesale Drug Co. — faced tough questions for nearly three hours from members of the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations. The panel is investigating how millions of prescriptions flooded into West Virginia, many of them in small rural communities, feeding the opioid epidemic in one of the hardest-hit states in the nation. Congressional investigators found that, between 2007 and 2012, distributors sent more than 780 million hydrocodone and oxycodone into West Virginia, which roughly equals 433 pills for every man, woman and child in the state, congressional investigators say. During that time, 1,728 West Virginians fatally overdosed on those two drugs.Investigators discovered that a single pharmacy in Mount Gay-Shamrock, population 1,779, received more than 16.5 million hydrocodone and oxycodone pills between 2006 and 2016. In nearby Williamson, population 2,900, distributors sent almost 21 million opioids to two pharmacies during that same period.

    The Projected Improvement in Life Expectancy -- Here is something different, but it is important when looking at demographics ... The following data is from the CDC United States Life Tables, 2014 by Elizabeth Arias.In 2014, the overall expectation of life at birth was 78.9 years, a 0.1-year increase from 2013. Between 2013 and 2014, life expectancy at birth increased by 0.1 year for both males (76.4 to 76.5) and females (81.2 to 81.3) and for the black (75.5 to 75.6) and white (79.0 to 79.1) populations. Life expectancy at birth increased by 0.2 years for the Hispanic (81.9 to 82.1) and non-Hispanic black (75.1 to 75.3) populations. Life expectancy at birth remained unchanged for the non-Hispanic white population (78.8)...[The following] summarizes the number of survivors out of 100,000 persons born alive by age, race, Hispanic origin, and sex for 2014. ... In 2014, 99.4% of all infants born in the United States survived the first year of life. In contrast, only 87.6% of infants born in 1900 survived the first year. Of the 2014 period life table cohort, 58.1% survived to age 80 and 2.1% survived to age 100. In 1900, 13.5% of the life table cohort survived to age 80 and only 0.03% survived to age 100. Instead of look at life expectancy, here is a graph of survivors out of 100,000 born alive, by age for three groups: those born in 1900-1902, born in 1949-1951 (baby boomers), and born in 2014. There was a dramatic change between those born in 1900 (blue) and those born mid-century (orange). The risk of infant and early childhood deaths dropped sharply, and the risk of death in the prime working years also declined significantly. The CDC is projecting further improvement for childhood and prime working age for those born in 2014, but they are also projecting that people will live longer.The second graph uses the same data but looks at the number of people who die before a certain age, but after the previous age. As an example, for those born in 1900 (blue), 12,448 of the 100,000 born alive died before age 1, and another 5,748 died between age 1 and age 5.

    Ebola's Back! Congo Outbreak Sees 21 Cases, 17 Deaths In Last Month - The Democratic Republic of Congo has been alerted to an outbreak of Ebola.  In the past five weeks, there have been 21 cases of the infection reported, and 17 of those are now deceased.  The government of the Democratic Republic of Congo declared the outbreak of Ebola hemorrhagic fever, a rare and deadly disease, on Tuesday, the World Health Organization reported.   The declaration of an outbreak came after laboratory results confirmed two cases of the disease in the province of Bikoro in the northwestern part of the country. Bikoro is situated on the shores of Lake Tumba near the border with the Republic of the Congo. The new cases were reported from a small health facility about 30 kilometers (19 miles) from Bikoro.  The average case fatality rate for Ebola hemorrhagic fever is around 50%. The deadly virus most commonly affects people and nonhuman primates (monkeys, gorillas, and chimpanzees) and is caused by one of five Ebola viruses.“We will gather more samples, conduct contact tracing, engage the communities with messages on prevention and control, and put in place methods for improving data collection and sharing,” said Dr. Matshidiso Moeti, the WHO’s regional director for Africa.“WHO will work closely with health authorities and partners to support the national response.”  Upon learning of the confirmed cases, the WHO alerted neighboring countries and set up its Incident Management System to fully dedicate staff and resources to the response. A government statement released Tuesday stated that the Ministry of Health has “taken all necessary measures to respond promptly and effectively to this new epidemic of Ebola in the DRC’s national territory.”

    Don’t charge your brain implant during thunderstorms, docs warn after incident  -- Doctors in Slovenia report that a 66-year-old woman with an existing brain implant experienced a close call with the device after lightning struck her apartment building. The strike ruined the woman’s television and air conditioning unit and managed to switch off her brain implant. Luckily, the woman and her device were not otherwise harmed.   But in a report published this week in the Journal of Neurosurgery, the doctors say the situation could have easily been much worse, possibly zapping her brain or destroying her implant. They call for more precautions, such as surge protectors, as well as better awareness of the risks of lightning strikes with such implants—or deep brain stimulation (DBS) devices.“In the future, DBS manufacturers’ safety recommendations should specifically mention the possibility of hazards from naturally generated electromagnetic interference, such as during thunderstorms,” they conclude. DBS devices, such as the woman’s, are increasingly used to help treat neurological conditions like Parkinson’s, tremors, muscle spasms, epilepsy, and obsessive compulsive disorders.  Luckily, at the time of the thunderstorm, the woman wasn’t charging her pulse generator or charging the recharger system, so none of her equipment was damaged. But the tremor in her neck—which the brain implant was effectively treating—returned about an hour after the storm. When she checked her device, she realized it wasn’t on and went to a clinic, fearing her device had been fried by the jolt.

     EPA to Test Southeast Chicago Yards for Dangerous Neurotoxin - The U.S. Environmental Protection Agency ( EPA ) announced it would start testing the soil in residential yards in Chicago's Southeast Side for the dangerous neurotoxin manganese, The Chicago Tribune reported Thursday . The EPA will also explain the soil sampling at a community discussion from 5:30 to 7:30 p.m. Thursday.The yards to be tested are located in a low-income, majority Latino neighborhood near a storage facility belonging to S.H. Bell Co. According to The Chicago Tribune, the EPA's recent decision comes after the Chicago Department of Public Health tested 27 yards on the city's East Side and found that 70 percent of them had manganese levels above state safety limits. Most of the contaminated yards were close to the S.H. Bell storage terminal. Manganese exposure can cause a disorder called manganism that has Parkinson's-like symptoms. Children exposed to manganese near an S.H. Bell plant in Liverpool, Ohio were found to have lower I.Q. scores and difficulties with learning and memory. Unpublished research by the University of Illinois at Chicago discovered higher levels of manganese in East Side children than in children in other Chicago neighborhoods.

    EPA to move 'shortly' on chemical in paint stripper blamed for accidental deaths -  The Environmental Protection Agency announced Thursday that it will move forward on a rule related to paint stripping chemicals that have been blamed for dozens of deaths from people who inhaled the toxic fumes from the chemical.  On Thursday the agency announced in a press release that it will go back to its finding that the chemical is dangerous and move forward on a rule, but did not provide specifics on whether that rule would include a previously proposed ban on the chemical. The decision comes days after EPA Administrator Scott Pruitt met Tuesday with family members of two young men who died after inhaling methylene chloride fumes last year. One of those victims, 21-year-old Tennessee resident Kevin Hartley of Tennessee after he collapsed at work while refinishing a bathtub, according to the Tennessean. The EPA first documented the risks from methylene chloride use in 2014 and proposed in January 2017 that the agency ban the chemical in products intended to remove paint. But later in 2017 the agency reversed course and delayed the rule, leading to criticism from advocacy groups, members of Congress, and families whose loved ones died after inhaling the chemical's fumes. A 2015 investigation from a nonprofit journalism group the Center for Public Integrity found at least 56 deaths from accidental exposure to methylene chloride since 1980.  Wendy Hartley, Kevin Hartley's mother, said in a statement after that meeting that the family was disappointed Pruitt did not take immediate action to ban the chemical.

    Saga of the Toxic Ball Fields - NYT - On a warm Saturday in April, most of the baseball diamonds and soccer fields in Red Hook were deserted. Vast tracts of brown grass sat empty behind locked gates, four-foot-high weeds blowing in the wind. Just a few years ago, if you came down here on a Saturday, there were hundreds, sometimes thousands, of adults and children — some playing soccer, baseball or softball, others taking part in the shot put and long jump, crowds of parents and friends cheering them on. But since 2015, most of the Red Hook fields have been closed because of lead contamination in the soil. A $107 million cleanup by the New York City parks department has been delayed, leaving residents, coaches and parents anxious and confused. Problems started in 2012 when the parks department and the city’s health department learned of a dissertation by an environmental scientist who identified close to 500 lead-smelting sites around the country. One of the smelters once stood in Red Hook, right across the street from the housing projects and right on top of some of the playing fields. In the late 1920s and ’30s, Columbia Smelting and Refining Works operated on the corner of Hicks and Lorraine Streets, leaving lead in the soil that would eventually become Fields 5, 6, 7 and 8 — the same fields that Mr. Bazemore and generations of children once played on. The parks department and the health department tested the soil in 2012, finding lead levels four times the safe limit on the surface and nearly 10 times the limit further underground. They quickly closed them. A concrete pad to guard against the lead was laid down. The fields and grass were hydroseeded.

    Fluorinated Chemicals Taint Water at Scores of Military Bases, Neighboring Communities: DOD Discloses Locations for First Time - The Defense Department has for the first time disclosed the locations of military installations where tap water or groundwater on or off base is contaminated with highly toxic fluorinated chemicals. But the list is incomplete, naming only locations where water is polluted above the U.S. Environmental Protection Agency's ( EPA ) "safe" level for tap water, which is well above levels found safe by independent scientists and regulations in a growing number of states. In a report to the House Armed Services Committee , the Pentagon listed 36 installations in 23 states and territories, as well as in five nations overseas, where tests found on-base drinking water contamination exceeding the EPA's lifetime health advisory for the fluorinated compounds PFOS and PFOA. In addition, the Pentagon identified 90 U.S. installations where PFOS or PFOA released on-base has contaminated groundwater. In many of these places, the contaminated water has migrated off-site, polluting nearby communities' tap water with fluorinated chemicals in concentrations above the EPA advisory level. Maureen Sullivan, a deputy assistant secretary of defense, provided the list to the Armed Services Committee in March. It was first reported April 27 by The Military Times , which said the list includes 50 Air Force bases, 49 Navy or Marine Corps bases, 25 Army bases and two Defense Logistics Agency sites. Some of the bases on the list are now closed and have been converted to civilian uses. The disclosure adds to the rapidly expanding number of known sites of fluorinated chemical contamination. Last month, the latest update of an interactive map from EWG and Northeastern University detailed fluorinated chemical contamination at 94 military or industrial sites in 22 states, and in public water systems serving 16.1 million Americans in 33 states and Puerto Rico.

    Is Chemical Sunscreen About to Go the Way of Microbeads? - Last week, Hawaii passed legislation that would ban the use of two common chemical sunscreen ingredients in all sunblocks sold in the state beginning in 2021. The law specifically targets octinoxate and oxybenzone, UV blockers which have been linked with the phenomenon known as coral bleaching, a form of coral death that has plagued coral reefs worldwide in recent decades. With an estimated 14,000 tons of sunscreen being sloughed off into the world's oceans yearly, particularly in popular reef-swimming areas like, you guessed it, Hawaii, it's hardly a surprise that the state is the first to make a dramatic declaration against these chemicals. If you've ever read through the ingredients list on the back of a sunscreen bottle, odds are, you're familiar with the names octinoxate and oxybenzone. Often teamed with other chemical blockers like avobenzone, octocrylene and homosalate, these ingredients provide added UVA protection, making them a popular choice for broad-spectrum formulations. UVA protection is essential, dermatologist Dr. Annie Chiuexplains, because "UVA contributes to photoaging and increased skin cancer rates." In other words, all of the reasons your mom (and Frank Ocean's) has always hassled you to wear s unscreen. This UVA boost is where some skin-care experts, however oceanographically minded they may be, argue that there could be cause for concern with the new ban. While there are other ingredients on the market that offer UVA protection — Chiu notes that common physical blockers like zinc oxide and titanium dioxide, none of which are covered by the new ban, cover UVA exposure — the risk for casual SPF users conflating these particular chemical blockers with all chemical sunscreens is high. 

    Florida sea turtles face a new threat from microplastics: hotter sand - With nesting season opening this week, Florida's sea turtles may face yet another threat from the plastic pollution choking the world's oceans.According to a new study from Florida State University researchers, tiny, sesame seed-sized microplastics in sand could be heating up beaches and changing the balance of male and female sea turtles. Researchers sampling sand at loggerhead nesting sites along the Gulf Coast found the beads at every location they tested, with the concentration higher in dunes where turtles nest.Plastic can absorb and retain more heat, leading researchers to worry that the beads could crank up sand temperature, which determines turtle sex as eggs incubate."Changes in incubation temperatures might modify the sex," Mariana Fuentes, coauthor of the study published Monday in the journal Marine Pollution Bulletin, said in a statement. "But at this stage we don't know how much microplastic is needed to see those changes." For their study, FSU researchers headed to the 10 most productive loggerhead nesting sites on beaches along the Panhandle's Gulf Coast. They found microplastic in every sample they collected, with higher amounts in sand from dunes. Turtle researchers have already determined that rising temperatures are starting to influence hatchlings. Earlier this year, researchers confirmed that increasing temperatures near the Great Barrier Reef had led to a dramatic change in green sea turtle hatchlings, with 99 percent on one beach born female. Florida Atlantic University researchers looking at Boca Raton nests since 2002 also have reported females dominating hatchlings.

    New Interior guidance prohibits telling developers Endangered Species Act permits are mandatory | TheHill: Fish and Wildlife Service (FWS) staff can no longer advise builders they need to obtain a permit mandated by law to maintain endangered species habitat, according to new Interior Department guidance. An April 26 memorandum sent from FWS Principal Deputy Director Greg Sheehan to regional directors wrote that it was "not appropriate" for personnel to tell private parties when it's required under the law for them to seek an incidental take permit (ITP).Businesses and individuals must request an ITP if they believe their developments could interfere with the habitat of endangered species, under the 1973 Endangered Species Act (ESA). Sheehan writes in the memo: "It is also vital that staff recognize that whether to apply for a section 10(a)(1)(B) permit is a decision of the applicant. Service staff can and should advise non-federal parties on the law, our regulations and guidance, and the potential for take of listed species incidental to their activities, but it is not appropriate to use mandatory language (e.g. a permit is 'required') in the course of that communication." A section under the ESA allows owners the ability to develop on land they believe might affect the habitat of endangered species if they create a habitat conservation plan and get an ITP. The memo says that when FWS employees advise owners on when they might need to get an ITP, they can no longer say it is a need and that "whether to seek a permit belongs with the private party." "They may proceed (at their own risk) as planned without a permit, modify their project and proceed without a permit, or prepare and submit a permit application," Sheehan's letter reads. "The biological, legal, and economic risk assesment regarding whether to seek a permit belongs with the private party determining how to proceed." 

    Interior Department tells staff to shut up about mandatory endangered species permits - New guidelines issued by the U.S. Department of the Interior now prohibit staff members from informing private interests when they must obtain a permit before they can develop properties where activities may affect habitats of endangered species. A memorandum issued last month by the Fish and Wildlife Service principal deputy director, Greg Sheehan, declared that it’s “not appropriate” for staff to tell developers when they need to obtain such a permit — even though it may be required by law in many circumstances. Under a section of the 1973 Endangered Species Act, businesses and individuals must request what’s called an “incidental take permit” if they believe their developments could interfere with the habitats of endangered species. Sheehan insists in his memo that it’s the “decision of the applicant” whether or not to apply for such a permit. Staff members should not use “mandatory language (e.g., a permit is ‘required’),” the memo warns. “The biological, legal, and economic risk assessment regarding whether to seek a permit belongs with the private party determining how to proceed,” Sheehan said. Staffers will still be able to provide “critical technical assistance” when it’s requested, according to the memo. The memo also appears to sharply limit situations where such permits may be required. That includes only cases “where a non-federal project is likely to result in a ‘take’ of a listed species of fish or wildlife ... habitat modification, in and of itself, does not necessarily constitute take,” 

    New Farm Bill Contains Sneak Attack on the Environment With Toxic Pesticides - If fish could wail, they would scream over the lethal powers granted to the U.S. Environmental Protection Agency ( EPA ) in part of the draft farm bill recently rolled out by the House Agriculture Committee. The bill, passed out of committee by Chairman Mike Conaway (R-TX) on a party-line vote last month, desperately fails farmers and low-income families. It also contains a number of sneak attacks on the environment. One such provision would allow the EPA to approve new pesticides with no assessment of their potential impact on fish and wildlife covered under the Endangered Species Act.  That means that EPA would no longer need to wait for independent research on the toxicity of pesticides in rivers , wetlands and prairies from the U.S. Fish and Wildlife Service in the Interior Department, or in estuaries and coastal waters from the National Marine Fisheries Service in the Commerce Department. The bill chillingly specifies that the EPA administrator "shall not be required to consult or communicate with the Secretary of the Interior or the Secretary of Commerce."  To date, most of the national publicity about the House farm bill has understandably focused on its potentially devastating effect on America's poor, with expanded work requirements that the Congressional Budget Office estimates would eliminate 1.2 million people from the Supplemental Nutrition Assistance Program rolls. The CBO also estimates that 400,000 households would lose benefits under higher income thresholds, eliminating free school lunch for 265,000 children. The bill also slashes child support and home heating and cooling assistance. When it comes to wildlife, the bill envisions an EPA that pays no heed to environmental science , potentially wreaking a different kind of devastation.

    NTP Scientist: Glyphosate Formulations 'Much More Toxic' Than Chemical Itself - Amid conflicting scientific studies and growing public concern over the impacts of the world's most widely used herbicide, the U.S. National Toxicology Program (NTP) has launched research to examine the health risks ofglyphosate and glyphosate-formulations."Due to the multiple interpretations of evidence on the potential health risks of glyphosate exposure, major public concern about exposure risks, and reported differences in the toxicity of different glyphosate products, NTP is conducting more research on glyphosate and its formulations," according to the NTP website .The NTP's initiative was first reported by Carey Gilliam in The Guardian . Gilliam is an author, investigative journalist and research director for U.S. Right to Know .Glyphosate, the star ingredient in Monsanto's Roundup, is sprayed on agricultural fields around the world and helps beat back weeds in home gardens, golf courses and parks.Gilliam noted, "Monsanto introduced its glyphosate-based Roundup brand in 1974. But it is only now, after more than 40 years of widespread use, that the government is investigating the toxicity of 'glyphosate-based herbicides' on human cells."  Jennifer Sass, a scientist with the Natural Resources Defense Council , commented to The Guardian, "This testing is important, because the EPA has only been looking at the active ingredient. But it's the formulations that people are exposed to on their lawns and gardens, where they play and in their food."

     In Blow to Monsanto, India's Top Court Upholds Decision That Seeds Cannot Be Patented - In an another legal blow to Monsanto , India's Supreme Court on Monday refused to stay the Delhi High Court's ruling that the seed giant cannot claim patents for Bollgard and Bollgard II, its genetically modifiedcotton seeds, in the country.Monsanto's chief technology officer Robert Fraley, who just announced that he and other top executives are stepping down from the company after Bayer AG 's multi-billion dollar takeover closes, lamented the news.Fraley tweeted , "Having personally helped to launch Bollgard cotton in India & knowing how it has benefited farmers ... it's sad to see the country go down an anti-science/anti-IP/anti-innovation path..."Monsanto first introduced its GM-technology in India in 1995. Today, more than 90 percent of the country's cotton crop is genetically modified. These crops have been inserted with a pest-resistant toxin called Bacillus thuringiensis, or Bt.Citing India's Patents Act of 1970, the Delhi High Court ruled last month that plant varieties and seeds cannot be patented, thereby rejecting Monsanto's attempt to block its Indian licensee, Nuziveedu Seeds Ltd., from selling the seeds. Because of the ruling, Monsanto's claims against Nuziveedu for unpaid royalties have been waived, as its patents are now invalid under Indian law. Royalties will now be decided by the government. Indian environmentalist Vandana Shiva , who is known for her fierce activism against corporate patents on seeds, called the top court's move a "major victory" that opens the door "to make Monsanto pay for trapping farmers in debt by extracting illegal royalties on BT cotton." "The Earth will win. Seed will win, Monsanto will lose," Shiva added.

    490,000 Pounds of Toxic Pesticides Sprayed on National Wildlife Refuges - America's national wildlife refuges are being doused with hundreds of thousands of pounds of dangerous agricultural pesticides every year, according to a first-of-its-kind analysis by the Center for Biological Diversity.The Center for Biological Diversity report, No Refuge , reveals that an estimated 490,000 pounds of pesticides were dumped on commodity crops like corn, soybeans and sorghum grown in national wildlife refuges in 2016, the most recent year for which data are available. The analysis was conducted with records obtained by the Center for Biological Diversity under the Freedom of Information Act.
    "These refuges are supposed to be a safe haven for wildlife, but they're becoming a dumping ground for poisonous pesticides," said Hannah Connor, a senior attorney at the Center for Biological Diversity who authored the analysis. "Americans assume these public lands are protected and I think most people would be appalled that so many pesticides are being used to serve private, intensive agricultural operations."The pesticides include the highly toxic herbicides dicamba and 2,4-D , which threaten the endangered species and migrating birds that wildlife refuges were created to protect. Refuge pesticide use in 2016 was consistent with pesticide applications on refuges over the previous two years, the Center for Biological Diversity analysis showed.America's 562 national wildlife refuges include forests, wetlands and waterways vital to thousands of species, including more than 280 protected under the Endangered Species Act. Yet intensive commercial farming has become increasingly common on refuge lands, triggering escalating use of highly toxic pesticides that threaten the long-term health of these sensitive habitats and the wildlife that depend on them.

    Insect farms gear up to feed soaring global protein demand  (Reuters) - Layers of squirming black soldier fly larvae fill large aluminum bins stacked 10-high in a warehouse outside of Vancouver. They are feeding on stale bread, rotting mangoes, overripe cantaloupe and squishy zucchini. But this is no garbage dump. It’s a farm. Enterra Feed, one of an emerging crop of insect growers, will process the bugs into protein-rich food for fish, poultry - even pets. After being fattened up, the fly larvae will be roasted, dried and bagged or pressed to extract oils, then milled into a brown powder that smells like roasted peanuts.  The small but growing insect farming sector has captured attention and investments from some heavyweights in the $400 billion-a-year animal feed business, including U.S. agricultural powerhouse Cargill Inc, feed supplier and farm products and services company Wilbur-Ellis Co and Swiss-based Buhler Group, which makes crop processing machinery.  Fast food giant McDonald’s is studying using insects for chicken feed to reduce reliance on soy protein.

    In Cities, Wildlife Evolves Astonishingly Fast -- Most naturalists turn up their noses at cities, regarding them as anti-nature—sterile wastelands of concrete and steel. But evolutionary biologist Menno Schilthuizen, author of Darwin Comes to Town, takes the opposite view: Urban environments are in fact “powerhouses of evolution,” where animals as diverse as blackbirds and bobcats are adapting to their new surroundings, with startling results. Speaking from his home in Leiden, Netherlands, Schilthuizen explains why mosquitoes on the Piccadilly Line in London’s Underground are genetically different from those on the Bakerloo Line; why cities accelerate evolution in ways Darwin could not have imagined; and why sex in the city is helping urban blackbirds evolve into a new species. Q: Of all the adaptations you describe, the most extraordinary is surely the London Underground mosquito. Tell us how it evolved. Despite its name, the London Underground mosquito is not restricted to London. It’s the name that has caught on for a species that lives in human-constructed, underground spaces all over the world—including the Amsterdam Metro—and cellars and basements all over the world.  It is called the London Underground mosquito because it affected people who hid there during the Blitz in 1940. What’s special about it is that it seems to be a species that has evolved very recently. Its ancestor was culex pipiens, a common mosquito that lives above ground, feeds only on birds, and forms large mating swarms.  This new species, culex pipiens molestus, is different. It feeds on human blood, mates one on one, and the female doesn’t require a blood meal before it lays eggs, as an aboveground mosquito does. On top of that is the fact that it has recently evolved: Because the mosquitoes are confined to separate subway lines, they don’t mix and so have specific genes, which may be an adaptation to conditions in that particular subway line. The only way they would become a unified species is if they all changed trains at Oxford Circus. [laughs]

    U.S. Cities Lose Tree Cover Just When They Need It Most - Scientific evidence that trees and green spaces are crucial to the well-being of people in urban areas has multiplied in recent decades. Conveniently, these findings have emerged just as Americans, already among the most urbanized people in the world, are increasingly choosing to live in cities. The problem—partly as a result of that choice—is that urban tree cover is now steadily declining across the U.S. A study in the May issue of Urban Forestry & Urban Greening reports metropolitan areas are experiencing a net loss of about 36 million trees nationwide every year. That amounts to about 175,000 acres of tree cover, most of it in central city and suburban areas but also on the exurban fringes. This reduction, says lead author David Nowak of the U.S. Forest Service (USFS), translates into an annual loss of about $96 million in benefits—based, he says, on “only a few of the benefits that we know about.” The economic calculation involves several such benefits that are relatively easy to express in dollar terms—the capacity of trees to remove air pollution, sequester carbon, conserve energy by shading buildings and reduce power plant emissions. Nowak and a USFS colleague, co-author Eric Greenfield, found tree cover had declined in metropolitan areas across 45 states. The biggest losses on a percentage basis were in Rhode Island, Georgia, Alabama and Nebraska, together with the District of Columbia. Only three states—Mississippi, Montana and New Mexico—saw increased metropolitan tree cover, all by “nonsignificant” amounts. (State-by-state figures are available here.) The research team used Google Earth imagery to examine 1,000 randomly chosen points in each state for a before-and-after comparison over a five-year period, generally ending in 2014 or 2015.

    How Scott Pruitt Helped Arkansas Poultry Giants Pollute One of Oklahoma’s Prettiest Rivers --Scott Pruitt, the embattled head of the Environmental Protection Agency, took the side of poultry companies and other businesses in Arkansas in a dispute over the pollution of an ecologically sensitive and economically vital watershed, environmental groups say. While he was representing Oklahoma as its attorney general, Pruitt helped to slow the implementation of a plan, forged years ago by both states, to clean a river in his home state.Even before he was appointed to head the EPA, Pruitt faced questioning about his failure, as Oklahoma attorney general, to implement a standard for phosphorus levels in the Illinois River, which flows from Arkansas into Oklahoma. The river had high levels of phosphorus from animal waste, and poultry producers in Arkansas opposed the standard. In 2013, after receiving contributions from poultry companies that benefited from his inaction, Pruitt agreed to a three-year delay in the implementation of the standard, as was reported when he was first nominated to be EPA administrator.Now, it’s become clear that under Pruitt’s leadership, the EPA has taken actions that could further undermine Oklahoma’s longstanding efforts to clean up water pollution in the Illinois River. Last July, the EPA approved the removal of a segment of the river, and three tributaries that flow into it, from a list of pollution-impaired waterways in Arkansas. The list, which is required under the Clean Water Act, creates a legal obligation to address the pollution. Although the Arkansas Department of Environmental Quality, or ADEQ, tried to have the waterways removed from the list in previous years, the EPA had refused. But last year, without providing any new data, the EPA changed course. According to a July 17 letter, the federal agency removed four parts of the watershed from the list and retroactively approved lists that Arkansas had previously submitted in 2010, 2012, 2014, and 2016.

    Colorado River: The Water War That Will Decide the Fate of 1 in 8 Americans --Lake Mead is the country’s biggest reservoir of water. Think of it as the savings account for the entire Southwest. Right now, that savings account is nearly overdrawn.For generations, we’ve been using too much of the Colorado River, the 300-foot-wide ribbon of water that carved the Grand Canyon, supplies Lake Mead, and serves as the main water source for much of the American West.The river sustains one in eight Americans — about 40 million people — and millions of acres of farmland. In the next 40 years, the region is expected to add at least 10 million more people, as the region’s rainfall becomes more erratic.An especially dismal snowpack this past winter has forced a long-simmering dispute over water rights to the fore, one that splits people living above and below Lake Mead.  Users of Colorado River water below Lake Mead — including the cities of Phoenix, Los Angeles, Las Vegas (collectively referred to as the “lower basin”) — rely on the reservoir as a lifeline. The people in the lower basin exist partly at the mercy of what happens in the upper basin, an area encompassing the snowcapped peaks of Wyoming, Utah, Colorado, and northern New Mexico, the source region of the river.  Big water users in the upper basin — Salt Lake City, Denver, Albuquerque, among others — are also getting nervous because snowpack in the Rockies has been dwindling, and there’s no physical way for them to store the water they depend on. There are no big reservoirs in the Rockies. In recent weeks, tensions are rising after states in the upper basin sent a strongly worded letter to one of the river’s biggest users, the Central Arizona Water Conservation District, or CAWCD, which supplies water to Tucson and Phoenix. The upper basin states accused the utility of manipulating the complex system that governs Lake Mead in order to get more water. The Arizona utility denied the charges.

    One Man Has A Cunning Plan To Solve Cape Town's Water Crisis --Just weeks after Cape Town began preparing for "day zero" - when the South African runs dry of water...  Marine salvage experts are floating a plan to solve the city's worst water crisis in a century... by tugging icebergs from Antarctica... Reuters reports that salvage master Nick Sloane is looking for government and private investors for a scheme to guide huge chunks of ice across the ocean, chop them into a slurry and melt them down into millions of litres of drinking water. “We want to show that if there is no other source to solve the water crisis, we have another idea no one else has thought of yet,” said Sloane, who led the refloating of the capsized Italian passenger liner Costa Concordia in 2014. As his detailed presentation shows, this is how much water Cape town uses in one year... ...and this is how big an iceberg would need to be to provide the required 135 million litres of water every single day for a year: Cape Town-based Sloane told Reuters his team could wrap passing icebergs in fabric skirts to protect them and reduce evaporation. Large tankers could then guide the blocks into the Benguela Current that flows along the west coast of southern Africa. A milling machine would then then cut into the ice, producing a slurry and forming a saucer structure that will speed up the natural process, he said. A single iceberg “could produce about 150 million litres per day for about a year,” around 30 percent of the city’s needs, said Sloane, a director at the U.S. marine salvage firm Resolve Marine. The ocean currents could help push it towards South Africa. Assuming the capture is done in a location westward of South Africa, the combined impact of the Circumpolar and the Benguela currents, as well as the Coriolis effect (the impact of Earth's rotation on weather patterns and ocean currents) may assist in reducing the towing power required.

    Massive wave is southern hemisphere record, scientists believe -- Scientists in New Zealand have documented what they believe is the largest wave ever recorded in the southern hemisphere. The 23.8m (78ft) wave was measured by a buoy on New Zealand's Campbell Island in the Southern Ocean on Tuesday, the country's weather authority said. It eclipses a 22.03m wave that was identified south of the Australian state of Tasmania in 2012. Larger waves have been recorded in the northern hemisphere. The Meteorological Service of New Zealand (MetService) installed its solar-powered buoy in March. The area is known for big storm activity, but waves had been previously difficult to measure. The "eight-storey high" wave was generated by a deep low pressure system and 65-knot winds, said MetService senior oceanographer Dr Tom Durrant. The buoy operates for 20 minutes every three hours. Dr Durrant said it was possible that even bigger waves were generated by the storm but not recorded. The World Meteorological Organization does not hold official records on individual wave heights. Instead, it records an average of successive swells - a measure known as the "significant wave height". During the storm recorded by New Zealand, the significant wave height was 14.9m. That is a record for the Southern Ocean but below a 19m mark measured by a buoy in the North Atlantic in 2016, Dr Durrant said. 

    California is due for a mega-flood that could force 1.5 million people to evacuate and cause $725 billion in damage — and it would hit Silicon Valley hard In California, earthquakes are common, and most residents understand the risks of powerful reverberations destroying their homes and streets.But according to a new book from LA's most famous seismologist, Lucy Jones, the state faces an even bigger threat: a megaflood that would pummel inland California.Jones' book, "The Big Ones: How Natural Disasters Have Shaped Us (and What We Can Do about Them," looks at the history of the world's biggest earthquakes, floods, tsunamis, hurricanes, and volcanic eruptions — as well as disasters we could experience in coming years.One nightmare scenario investigated by the US Geological Survey, dubbed ARkStorm, would bring a series of heavy rains in a short timespan to California. The state could suffer extreme rainfall that overwhelms flood-control systems, forces 1.5 million people to evacuate, inundates 25% of California's land, and causes $725 billion in damage.Bringing as much as 15 times the water flowing out of the Mississippi River's mouth, an ARkStorm could devastate several areas in California, including Silicon Valley. According to Jones and the USGS, a major flood like this could strike in any future winter. California has also seen an ARkStorm before.

    ‘Sunny day flooding’ worsens at NC beaches — a sign sea rise is decades too soon, studies say - Some parts of the Earth are seeing sea levels rise far beyond average, and it's just a waiting game before some areas are inundated with sea water, studies show. The East Coast of the U.S. is experiencing "sunny day flooding" that scientists didn't expect for decades yet.  Sea levels are rising at a rate of about an inch per year (5 inches from 2011-15) in some areas along the East Coast, from North Carolina to Florida, according to one study — that's faster than researchers expected.  Residents of coastal communities most often feel the effects of sea level rise during tidal flooding. Tidal flooding, also known as "sunny day flooding" is the temporary inundation of low-lying areas, such as roads, during high-tide events — especially during "king tides," the highest tides of the year.  King tides aren't caused by sea level rise in and of themselves, but because they are the annual peak tides, they demonstrate how sea level has already risen over the past 100 years. Sea levels aren't rising equally "like water in a bathtub," according to a report from Yale Environment 360. "The oceans are more akin to a rubber kiddie pool where the water sloshes around unevenly, often considerably higher on one side than another." Climate scientists view sea level rise as one of the most obvious signals of a warming planet. Sea water expands as it warms, and melting land-based ice sheets adds to rising water levels.There are neighborhoods that now flood on sunny days, but didn’t years ago even during especially high tides, according to the National Oceanic and Atmospheric Administration.  And as sea levels continue to rise, the frequency, depth and extent of coastal flooding will continue to worsen, according to NOAA.

    Low-lying atolls could become ‘uninhabitable’ earlier than thought -- Low-lying coral islands across the tropical oceans could become “uninhabitable” in the coming decades because of the combined impacts of sea level rise and large waves, a new study suggests.Earlier research, based on sea level rise alone, suggested this wouldn’t happen until at least the end of this century.  But regular inundation from coastal flooding could push islands beyond a “tipping point” where groundwater resources cannot recover from infiltration by salty seawater, leaving residents with no drinkable water.The study focuses on one atoll of the Marshall Islands, but the warning also applies to other populated atolls in the Pacific and Indian oceans, the researchers say – including those in the Cook Islands, Maldives, Seychelles and Hawai’i. However, the study may be giving an overly-pessimistic outlook, other scientists tell Carbon Brief. This is partly down to the sea level rise scenarios used, but also because many other atolls still support residents without usable groundwater.

    No one lives on this remote Pacific island — but it’s covered in 38 million pieces of our trash - Henderson Island, an uninhabited atoll in the South Pacific, is so isolated that it’s one of the few places in the world “whose ecology has been practically untouched by a human presence.”That is, at least, according to its description by a United Nations group, which named Henderson Island a UNESCO World Heritage site in 1988.“The inhospitable nature of the island, together with its remoteness and inaccessibility, has so far effectively ensured its conservation,” UNESCO stated. “As a near-pristine island ecosystem, it is of immense value for science.”In reality, the remote island has become the final resting place for an estimated 38 million pieces of garbage, according to researchers who arrived on its shores in 2015 and were stunned to find the atoll’s once-undisturbed white-sand beaches littered with trash. Nearly all of it was made of plastic.Researchers believe that about 3,500 pieces of trash are continuing to wash up there daily, and that Henderson Island now has the highest density of plastic waste in the world, according to a report published Tuesday in the scientific journal Proceedings of the National Academy of Sciences. “The quantity of plastic there is truly alarming,” Jennifer Lavers, a co-author of the report, told the Associated Press. “It’s both beautiful and terrifying.”

    ‘A very fast-moving situation’: Lava shoots through Hawaii neighborhood as new fissures form --Less than a week ago, Leilani Estates was the picture of serenity on Hawaii’s Big Island, a subdivision in the island’s eastern Puna district filled with wooden homes nestled in tropical plant-filled lots.The eruption of the island’s most active volcano changed everything.Shortly after Kilauea erupted Thursday, the ground split open on the east side of Leilani Estates, exposing an angry red beneath the lush landscape. From the widening gash, molten rock burbled and splashed, then shot as high as 80 to 100 feet in the air.The Hawaii County Civil Defense Agency called it “active volcanic fountaining.” Some residents insisted it was Pele, the Hawaiian volcano goddess, come to reclaim her land. Residents there were ordered to flee amid threats of fires and “extremely high levels of dangerous” sulfur dioxide gas. Soon, another such fissure had formed less than three streets to the west. Then another, and another. From the vents, hot steam — and noxious gases — rose, before magma broke through and splattered into the air. As of Sunday morning local time, at least 10 such fissure vents were reported in the neighborhood, includingtwo that had opened anew late Saturday night. The fissures are forming along a northeast-southwest line in the rift zone, and not all of the older fissures are actively spewing lava, said Wendy Stovall, a volcanologist with the U.S. Geological Survey.  . “Some of the outer vents along this fissure line will start to close up and congeal because the lava is going to essentially harden.” Once that happens, lava fountains from the remaining open vents can shoot even higher — reaching up to 1,000 feet, Stovall said. On Saturday, lava from one of the newer fissures spurted as high as 230 feet into the air, according to the Geological Survey. More outbreaks are likely to occur along the rift zone, officials said.

    "This Is As Bad As It Gets" - Magma Flowing From Hawaii's Kilauea Forces Thousands To Flee - After first erupting on Thursday, Hawaii's Kilauea volcano has continued to send molten magma up through the eight fissures that have now opened up in the ground in a part of Hawaii that is home to several ritzy neighborhoods, including the tony Leilani Estates, where residents have been forced to flee as the eruptions, as well as several powerful earthquakes, have destroyed power lines and disrupted and left parts of the surrounding area without water. One area resident summed up the neighborhood's plight in a statement to the Los Angeles Times."This is as bad as it gets," said John Bennett, 61, a resident of the Leilani Estates neighborhood forced to evacuate. "We can't go back in yet. I feel lost. I don't know what to think. I've never been in this situation before."The estimated 1,800 people who live in the affected area have sought temporary respite in government shelters. Others have moved in friends on other islands.  At least nine house have been destroyed in Leilani Estates a the fissures have continued to spew lava through the lower Puna subdivision, according to the Honolulu Star Advertiser.  Some have said they don't know whether the pets that they left behind will survive the natural disaster, according to the Washington Post. Bennett, the man quoted above, said the eruption took him by surprise. He first learned what was happening when he came home Thursday and noticed that a fissure had opened up in his front yard.

      "We've Never Seen Anything Like This" - Hawaii Officials Warn Residents Of Dangerous Volcanic Smog - More than four days after the first fissures opened up in the ground surrounding Hawaii's Mt. Kilauea, the volcano's destructive eruptions continued on Monday, destroying more buildings in the island's tony Leilani Estates neighborhood, CNN reported. Lava and hazardous gases are bubbling up through the cracks in the volcano's East Rift Zone, a situation that has been exacerbated by a series of powerful Earthquakes that rocked the area late last week.  High levels of dangerous sulfur dioxide has been released into the air, forcing the government to issue a warning to residents living downwind from the volcano.  But while the lava has caught the attention of photographers who've snapped thousands of pictures of the glowing red substance devouring homes, the Washington Post reports that an unseen danger has been threatening visitors and residents alike. They're calling it "vog" - short for volcanic smog. Though the smog isn't a killer, it has made tens of thousands of Hawaiians during previous eruptions, and could make thousands more ill this time around. Unfavorable winds could spread far from the volcano on the Big Island to affect people as far away as Oahu, 200 miles to the northwest. Similar patterns emerged in 2008 and 2016.Vog, which mainly consists of water vapor, carbon dioxide and sulfur dioxide, can appear as “hazy air pollution.” It can also contain several other compounds such as hydrogen sulfide, hydrogen fluoride and carbon monoxide, all of which are harmful to people, according to the Geological Service. However, of the three primary gases, sulfur dioxide, which has an acrid smell reminiscent of fireworks or a burning match, is the “chief gas hazard in Hawaii,” the service reported.[...] Vog is nothing new to people living on the Big Island or the surrounding islands. The summit of Kilauea has been emitting high levels of sulfur dioxide for the past 10 years, Babb said.  Experts say vog exposure symptoms include headache, soar throat and lethargy. government is also warning that the smog can't be totally filtered out with store-bought gas masks - especially in high concentrations.

      Days, Weeks, Years? Scientists Say Hawaii's Erupting Volcano Has No End In Sight -- The eruption at Hawaii's Kilauea volcano continues. The lava has now destroyed at least 35 structures and covered the equivalent of more than 75 football fields.Scientists have been tracking this event since it started last week — but there are still big unanswered questions, the biggest of which is when it will end. The Kilauea volcano on Hawaii's Big Island has been erupting for more than 30 years. Lava levels in the Pu'u O'o crater and the volcano's summit rose in recent weeks, says Wendy Stovall, a volcanologist with the U.S. Geological Survey. They were "inflating like a balloon, because magma was getting backed up from below," she says. Then last week, the magma at Pu'u O'o plummeted. "The whole bottom of the crater floor dropped out and the magma completely drained away from that system," says Stovall.  Scientists don't know what started this latest event, but there are two possibilities, says Stovall: "Either there's an increase in magma supply, or something blocked the system, something blocked the pathway out of the system."  In other words, suddenly more molten rock shot up from deep inside the Earth, or there was a clog. Whatever the cause, the pressurized magma had to go somewhere. It turned away from the crater, heading underground, flowing into spaces between the rocks along what's known as the volcano's East Rift Zone.That set off a series of earthquakes, including a 6.9 magnitude temblor that hit on Friday and could be felt across the island. Stovall said that by tracking the earthquakes and deformations in the ground, they could see the direction the magma was heading.  "Honestly it was pretty frightening to see where the magma was going," says Stovall. That's because it was headed toward a lush residential area — Leilani Estates, where more than 1,700 people were ordered to evacuate. Video posted on social media by Demian Barrios shows flaming lava gushing out, destroying a road. Scientists are tracking earthquakes and the composition of gas coming out of the cracks in the ground, which hints at whether the eruption will intensify. But what will happen longer-term is much more difficult to predict, says Bill Chadwick, a volcanologist at NOAA.  "We can't really peer through the ground and see it exactly in all its details and intricacies," Chadwick says. Scientists can't predict when this eruption will end. "It could last days, weeks, years. All that's possible. It's hard to say, unfortunately.

      Hawaii volcano could start spewing big rocks, smog, ash (Reuters) - A large explosion in Hawaii’s Kilauea volcano on Wednesday may mark the beginning of more violent, explosive eruptions that could spray rocks for miles (kilometers) and dust nearby towns in volcanic ash and smog, the U.S. Geological Survey said. Kilauea, Hawaii’s most active volcano, erupted on Thursday, and a powerful earthquake shook the crater the next day. Lava flows from fissures on its flank have destroyed at least 36 homes and other buildings, and caused the evacuation of some 2,000 residents. The USGS warned that more violent eruptions at the crater could begin mid-May, shooting rocks weighing several tons for over half a mile (1 km), hurling pebble-sized projectiles several miles (km) and dusting areas up 20 miles (32 km) away with ash. “This is the first of perhaps more events like that to come,” Tina Neal, the scientist in charge of the USGS Hawaiian Volcano Observatory said on a conference call of Wednesday’s blast which shot projectiles from the crater. The town of Hilo some 25 miles (40 km) northeast of Kilauea on Hawaii’s Big Island and the village of Pahoa 24 miles (39 km) east, could be exposed to volcanic air pollution, or so-called vog, and a layer of ash should explosive eruptions begin and prevailing wind directions shift, Neal said. Such steam-driven explosions would be triggered by water running into the crater’s falling lava lake should it drop below the level of groundwater. Geologists cautioned that Kilauea’s past explosions had been relatively small on a global scale, and while ash from the volcano posed a nuisance as an eye and respiratory irritant, it was not a serious health hazard. “We don’t anticipate there being any wholesale devastation or evacuations necessary anywhere in the state of Hawaii,” said Donald Swanson of the Hawaiian Volcano Observatory.(USGS) Hawaii County Civil Defense said all 1,900 residents of the Leilani Estates and Laipuna Garden areas, around 25 miles (40 km) east of the crater, had been evacuated. Lava oozing from two new fissures in the area had paused but sulfur dioxide gas was still a hazard. Exposure to very high levels of the gas, which causes acid rain, can be life-threatening, according to the Agency for Toxic Substances and Disease Registry.

      Volcanic activity threatens Hawaii geothermal plant long at center of resident concerns –— The dangers of building a home on the skirt of an active volcano have become quite clear in recent days, as residents here have needed to evacuate from neighborhoods around Kilauea to avoid the lava flows and toxic gases that have emerged from numerous fissures.   But the advancing molten rock — and the potential for future eruptions and ejections of boulders — threatens more than the homes. Nearby, nestled between two neighborhoods, is a geothermal plant that is home to thousands of gallons of flammable chemicals and deep wells that pose serious risks if they overheat or are breached. Long a concern for residents and the target of lawsuits challenging its placement on an active volcano, the Puna Geothermal Venture (PGV) is a major safety issue in the wake of the eruptions and earthquakes that have shaken the Big Island for days, government officials say. Authorities worry that the seismic activity could cause gas leaks or explosions at the plant, which is near fissures that have broken the surface. Before dawn Thursday, PGV employees removed a large reserve of pentane — 60,000 gallons of highly flammable solvent used in the powering of wind turbines — because of fears that it could leak and ignite. PGV officials and those of its parent company, Reno, Nev.-based Ormat Technologies, did not respond to requests for comment. Residents and officials remain concerned about potential explosions and toxic gas leaks from the underground wells that provide heat for energy production. If the wells break, they could release dangerous gas — including colorless, flammable and toxic hydrogen sulfide — into the area around Leilani Estates and Lanipuna Gardens, the evacuated neighborhoods that already are choked with volcanic fumes.  Ruggles noted that if a leak were to happen, winds could disperse the gas for miles. She suggested that everyone living within two to three miles of the PGV have an evacuation plan.Some neighbors argue that a geothermal plant that uses dangerous chemicals never should have been built in Pahoa. “This is one of the most unstable pieces of land on the entire planet, and they knew that,” said Robert Petricci, president of the Puna Pono Alliance watchdog group, who lives near the plant. “They built it anyway to make money.”

      Trump opened Bears Ears monument to mining, so we went to stake a claim   — Forty miles as the crow flies west of Blanding, Utah, just up the road from the former uranium boomtown of Fry Canyon and a dirt airstrip, is a parcel of federal land historically valued for its radioactive metal and other hardrock minerals.  Here is where I decided to stake my claim, the first step a prospector takes to mine public lands.For a year, this remote and magnificent desert landscape was part of Bears Ears National Monument and off-limits to new mining claims. That changed in December when President Donald Trump reduced the 1.35 million-acre monument by 85 percent. The more stringent protections the Obama-era monument designation afforded officially lifted in early February, leaving sites like this once again open for business. The Bureau of Land Management (BLM) braced for a potential influx of new claims/ The process of staking a claim is still governed by the General Mining Act of 1872, which itself is based on an acquisition system prospectors used around the time of California’s Gold Rush. A prospector goes out on public land, pickax, gold pan or, preferably, some more advanced technology in hand, and locates a valuable mineral. He or she drives a stake in the ground and erects posts or rock piles at each corner of the parcel they want to call dibs on. The prospector writes a name, address and information about the claim on a piece of paper, stuffs it in a tin can or plastic bag attached to one of the corner markers, and then files a notice with Uncle Sam, for the bargain price of just $212 for a 20-acre parcel.And then, voila! The prospector has the rights to the valuable hard-rock minerals contained therein. This bizarrely outdated system allows not only U.S. citizens but foreign companies to extract minerals from public lands and turn a profit without ever paying a dime in royalties to the federal government.  While I had no intention of launching a new career in the extractive mineral industry, I wanted to see how easy it really was to declare part of an area so recently protected from new mining as my very own, and the implications that might have for an archaeologically rich landscape considered sacred to many Native Americans.

      Greenhouse gas concentrations hit highest level in human history -  The Earth's atmosphere is more saturated with greenhouse gases now than at any other time in human history. For the first time on record, the average amount of carbon dioxide — the main long-lived gas responsible for global warming — in the air passed 410 parts per million (ppm) for an entire month.  Data collected at the Mauna Loa Observatory in Hawaii had already shown carbon dioxide readings that temporarily exceeded that threshold for a time in 2017 but not for a whole month. The new data collected for the month of April and released on May 2, underscore how quickly carbon dioxide levels continue to rise despite global attempts to reduce emissions. The new record demonstrates that despite gains made in renewable energy and energy efficiency, heat-trapping greenhouse gases continue to build in the atmosphere, altering the odds and intensity of many extreme weather events, causing sea levels to rise, and a myriad of other effects.  "We know exactly where that CO2 is coming from, and we're pretty clear on what it does," said Kate Marvel, a climate scientist at NASA's Goddard Institute for Space Studies, in an email.  "Combustion —  the chemical reaction we use to generate most of the energy we use — gives off CO2 as a byproduct. We've been doing a lot of combusting since the Industrial Revolution, and all that extra CO2 has to go somewhere. Essentially, we've been treating the atmosphere as a dumpster for over 150 years."

      Humans have pushed Earth to a terrifying new milestone, and it could have deadly effects on our health - The concentration of carbon dioxide in Earth’s atmosphere hasn’t been as high as it is now since long before humans existed. Just recently, CO2 levels topped 410 ppm, according to according to observations made at the Mauna Loa Observatory in Hawaii.There’s good reason to think this will have catastrophic effects on human health. Carbon dioxide levels don’t necessarily have direct effects on our ability to breathe (at least, at these concentrations). But by transforming the planet, these CO2 levels will still dramatically increase pollution and related diseases, potentially slow human cognition, cause extreme weather events (including deadly heat waves), and broaden the ranges of disease-carrying creatures like mosquitoes and ticks. Right now, CO2 levels are still climbing rapidly. They could be on track to hit 550 ppm by the end of the century, which would cause average global temperatures to rise by 6 degrees Celsius. (The goals of the Paris Agreement are to try to limit warming to less than 2 degrees C, which would help limit the severity of some of these effects – we’d still see some, but it’s considered to be the best we can do.)

      While the US shivered, the rest of the world simmered in planet’s third-hottest April - What happened in the back yard of many Americans last month was not at all representative of the experience elsewhere in the world.While it was freezing cold and snow fell over much of the eastern United States, it was the third-warmest April on record for most of the rest of the planet.The map of temperature differences from normal in April tells the story. Shades of orange, signifying warmer-than-normal temperatures, cover almost the entire planet. Chilly shades of blue fill much of North America. [The Midwest and Great Lakes just endured a historically cold April] Minneapolis, Chicago and Green Bay all posted one of their top-five coldest Aprils on record. Many lakes in Minnesota did not see all of their ice melt until May’s first week, the latest on record.  Because of this tremendous cold in the Upper Midwest and Great Lakes, it was probably the coldest April for the Lower 48 since 1997.  Lower 48 temperatures were anomalously cold across much of the central & eastern USA. Monthly temp of 48.5°F is more than 3°F below the last 30-years average. Coolest April since 1997 (47.5°F) and almost 5°F cooler than last year (53.2°F). pic.twitter.com/JL8faZuVSS  — Ryan | weather.us (@RyanMaue) May 1, 2018Across the pond, it was Europe’s warmest April on record. Australia notched its second-warmest April on record.The Arctic and surrounding land areas were also substantially warmer than normal, according to the European Centre for Medium Range Weather Forecasts’ Copernicus Climate Change Service that produced this global temperature analysis.

      Another extreme heat wave strikes the North Pole -   In four of the past five winters, the North Pole has witnessed dramatic temperatures spikes, which previously were rare. Now, in the lead up to summer, the temperature has again shot up to unusually high levels at the tip of the planet.Scientists say this warming could hasten the melt of Arctic sea ice, which is already near record low levels.In just the past few days, the temperature at the North Pole has soared to the melting point of 32 degrees, which is about 30-35 degrees (17-19 Celsius) above normal. Much of the entire Arctic north of 80 degrees latitude is abnormally warm. The temperature averaged over the whole region appears to be the warmest on record for the time of year, dating back to at least 1958. It is about 18 degrees (10 Celsius) above the normal of 4 degrees (minus 16 Celsius).As the warm air intruded the Arctic, sea ice melted suddenly. The Norway Ice Service tweeted the sea ice area near Svalbard, the small island chain between Norway and the North Pole, fell by about 32,000 square miles (82,000 square kilometers) to the second lowest area on record. The amount of ice lost is enough to cover the entire state of South Carolina.

      PIOMAS May 2018 --Arctic Sea Ice - Another month has passed and so here is the updated Arctic sea ice volume graph as calculated by the Pan-Arctic Ice Ocean Modeling and Assimilation System (PIOMAS) at the Polar Science Center:The maximum for sea ice volume was reached during April. According to the PIOMAS model, it peaked on April 16th at 22,376 km3, which is the second lowest maximum on record, 1594 km3 above last year's stunning record low maximum, and 301 km3 below 2011's maximum. The total freeze during the 2017/2018 freezing season was the highest since 2013, but not all that much above the 2006-2017 average. This bar graph shows total freeze for the 2006-2018 period: So, that's the maximum. After the maximum was reached, the trend line flattened, with sea ice volume going down by a meagre 91 km3 from the 16th to the end of the month, which can clearly be seen on Wipneus' version of the PIOMAS graph:In the end, total sea ice volume grew by 373 km3 during April, which is the largest increase in the 2007-2018 period, almost 200 km3 above average. This means that the gap with years that had more volume than 2018 has become smaller, and the gap with 2017 -the only year with less volume than 2018 so far - has grown some more. In fact, 2011 has swooped below 2018 by 3 km3. It's safe to say they're on a par, but 2016 isn't that far off either, and, of course, 2012 is about to have some very large drops. Here's how the differences with previous years have evolved from last month:

      Pentagon revised Obama-era report to remove risks from climate change – Internal changes to a draft Defense Department report de-emphasized the threats climate change poses to military bases and installations, muting or removing references to climate-driven changes in the Arctic and potential risks from rising seas, an unpublished draft obtained by The Washington Post reveals. The earlier version of the document, dated December 2016, contains numerous references to “climate change” that were omitted or altered to “extreme weather” or simply “climate” in the final report, which was submitted to Congress in January 2018. While the phrase “climate change” appears 23 separate times in the draft report, the final version used it just once. Those and other edits suggest the Pentagon has adapted its approach to public discussion of climate change under President Trump, who has expressed doubt about the reality of a phenomenon that scientists agree presents an increasing danger to the planet. While military leaders have said they see a changing climate as a driver of instability worldwide, they have also sought to stay out of a politically charged debate about its causes. Heather Babb, a Pentagon spokeswoman, declined to comment on the draft report, which outlines the results of the department’s first-ever survey of officials at different installations about the effects of climate change. The Post was not able to verify who made the changes reflected in the two documents. “As highlighted in the report, the effects of climate are a national security issue with potential impacts to missions, operational plans, and installations,” Babb said in a statement. “DOD continues to focus on ensuring its installations and infrastructure are resilient to a wide range of threats, including climate. The Department has a proven record of planning and preparing for such threats.” 

      U.S. One of Five Countries to Oppose UN Environment Pact - The U.S. was one of only five countries to vote against a UN move towards establishing a Global Pact for the Environment on Thursday, The Associated Press reported .The pact, the brainchild of French President Emmanuel Macron , would be "the first international legally binding document, gathering and harmonizing all environmental laws in one single document," according to the Permanent mission of France to the UN.The resolution, approved by 143 of the 193 members of the UN General Assembly, with seven countries abstaining, called on Secretary-General Antonio Guterres to produce a report for September's General Assembly session outlining any gaps in international environmental law. It also empowered a working group to prepare recommendations for filling those gaps to be presented in 2019.Supporters see the pact as a way to continue the work of the Paris agreement and the 2030 UN goals for fighting poverty and protecting the Earth.French Ambassador Francois Delattre, who spoke before the vote on behalf of the resolution's more than 90 co-sponsors, raised concerns about climate change , water and air pollution and biodiversity loss, saying these problems were already impacting the world's most vulnerable populations."If we don't act decisively, we are exposing ourselves to dire consequences: the exhaustion of natural resources, migrations, and an upsurge in conflicts," he said. But President Donald Trump's appointee for U.S. UN Ambassador, Nikki Haley, disagreed. In a statement reported by Fox News on Wednesday, Haley said she would vote against the resolution.

      Taking climate change seriously: from adaptation to transformation, Stockholm Resiliance Centre. Seminar with professor Karen O'Brien, University of Oslo, – 43:54 Adaptation has been increasingly promoted as a key strategy for reducing risk and vulnerability to the impacts of climate change. Yet what qualifies as successful adaptation when the impacts are the result of human activities? Who decides the future to which we must adapt? In this talk, Karen O'Brien distinguish between technical problems and adaptive challenges and discuss why successful adaptation to climate change will only be realized through social transformations. The talk will draw on research from the AdaptationCONNECTS project, which focuses on the role of creativity, collaboration, empowerment and flexibility in realizing adaptation through transformation.

      Analysis: How much ‘carbon budget’ is left to limit global warming to 1.5C?  - In 2015, by signing up to the Paris Agreement on climate change, nearly every country pledged to keep global temperatures “well below” 2C above pre-industrial levels and to “pursue efforts to limit the temperature increase even further to 1.5C”. Limiting warming to 1.5C requires strictly limiting the total amount of carbon emissions between now and the end of the century. However, there is more than one way to calculate this allowable amount of additional emissions, known as the “carbon budget”. While calculations based on Earth System Models (ESMs, see below) used in the last Intergovernmental Panel on Climate Change (IPCC) report suggest that we have only a few years left at our current rate of emissions before we blow the 1.5C carbon budget, some recent studies have suggested that the remaining carbon budget is much larger. In this article, Carbon Brief assesses nine new carbon budget estimates released by different groups over the past two years. Most show larger allowable emissions than were featured in the last IPCC report. A number of studies suggest that carbon budgets estimates based on ESMs may be on the low side as a result of limitations with how some models represent the carbon cycle. However, there is still a wide range of variation in these new carbon budgets, arising from differences in approaches, timeframes, estimates of warming to-date and other factors. Recent studies suggest the remaining carbon budget to limit warming to “well below” 1.5C might have already been exceeded by emissions to-date, or might be as large as 15 more years of emissions at our current rate.

      It’s time to think seriously about cutting off the supply of fossil fuels -  David Roberts - There is a bias in climate policy shared by analysts, politicians, and pundits across the political spectrum so common it is rarely remarked upon. To put it bluntly: Nobody, at least nobody in power, wants to restrict the supply of fossil fuels.Policies that choke off fossil fuels at their origin — shutting down mines and wells; banning new ones; opting against new pipelines, refineries, and export terminals — have beenembraced by climate activists, picking up steam with the Keystone pipeline protestsand the recent direct action of the Valve Turners.But they are looked upon with some disdain by the climate intelligentsia, who are united in their belief that such strategies are economically suboptimal and politically counterproductive. Now a pair of economists has offered a cogent argument that the activists are onto something — that restrictive supply-side (RSS) climate policies have unique economic and political benefits and deserve a place alongside carbon prices and renewable energy supports in the climate policy toolkit. To understand it, it helps to have a framework for classifying climate policies. Climate policies can apply to the supply side (production of fossil fuels) or the demand side (consumption of FF), and they can be restrictive or supportive. That creates a grid with four quadrants:

      1. Restrictive supply side: policies that cut off FF supply, including declining quotas, supply taxes, and subsidy reductions
      2. Restrictive demand side: policies that restrict demand for FF, including carbon prices and declining emission caps
      3. Supportive supply side: policies that support the supply of FF alternatives, like renewable energy subsidies and mandates
      4. Supportive demand side: policies that support demand for FF alternatives, like subsidies for purchase of energy-efficiency appliances or favorable government procurement policies

      Here it is as a visual:

      California to require solar panels on most new homes -- There's no question that solar power is entering the mainstream, but California is about to give it a giant boost. The state's Energy Commission is expected to approve new energy standards that would require solar panels on the roofs of nearly all new homes, condos and apartment buildings from 2020 onward. There will be exemptions for homes that either can't fit solar panels or would be blocked by taller buildings or trees, but you'll otherwise have to go green if your property is brand new.The plan doesn't require that a home reach net-zero status (where the solar power completely offsets the energy consumed in a year). However, it does provide "compliance credits" for homebuilders who install storage batteries like Tesla's Powerwall, letting them build smaller panel arrays knowing that excess energy will be available to use off-hours.The new standards are poised to hike construction costs by $25,000 to $30,000 (about half of which is directly due to solar), but the self-produced energy is estimated to save owners $50,000 to $60,000 in operating costs over the solar technology's expected 25-year lifespan.Short of a surprise rejection at the Energy Commission's May 9th vote, this will make California the first state to have a solar panel requirement. It's relatively easy to do this in the region given California's abundance of warm, sunny days and high real estate prices -- it's hard to see this happening in the American Midwest, where winter and lower home prices could make solar decidedly less practical. Critics have complained that this could make California's housing shortage worse by pricing people out of those homes that are available, and note that most people in the state only really draw on non-renewable energy when they come home from work and strain the electrical grid. Even so, this could change the landscape for both California's energy and the market as a whole. Right now, no more than 20 percent of new single-family homes in California include solar power. Boost that by five times and that's a lot more business for panel makers and installers. That, in turn, could reduce the costs of panels and make solar more affordable in many places, not just in California or even the US.

      California heads toward requiring solar panels on all new houses - California is set to become the first state to require solar panels on all newly built single-family houses. The mandate is expected to save buyers money in the long run but also raise their upfront costs at a time many are already struggling to afford a mortgage. The state's Energy Commission is scheduled to vote Wednesday on the rules, which are expected to pass and take effect in 2020. The regulations, which would also apply to new multifamily buildings of three stories or fewer, don't need the approval of the Legislature.The new building standards — which also include updated insulation mandates — are a piece of California's ambitious plan to slash greenhouse gas emissions in coming decades. That will require sweeping policy changes to promote renewable energy, electric vehicles and even denser neighborhoods where people have to drive less for daily trips."This is going to be a significant increase in the solar market in California," Kelly Knutsen of the trade group California Solar & Storage Assn. said of the new requirement. "We are also sending a national message that … we are a leader in the clean energy economy."The rules should result in more jobs in the state's solar industry and promote emerging technology by letting builders meet other energy efficiency requirements through batteries that store a home's solar-generated power, Knutsen said. At the moment, about a fifth of new houses in California come with solar panels, one business group estimates.

      U.S. Wind Energy Demand Surges -- Strong demand for wind power has boosted the development projects in United States to new heights.The pipeline of wind farms under construction or in advanced development in the United States exceeded 30 gigawatts in the first quarter of 2018, a 40-percent surge over Q1 2017, the American Wind Energy Association (AWEA) said in a new report.Across the U.S., a total of 36 wind projects of a combined 5,523 MW announced that they either began construction or entered advanced development, AWEA said in its U.S. Wind Industry First Quarter 2018 Market Report.The newly announced developments in Q1 boosted the total development pipeline of wind projects to 33,449 MW, up by 40 percent over the first quarter of 2017 and the highest level since this statistic was first measured at the beginning of 2016, according to AWEA.This past quarter, customers also signed the highest ever quarterly long-term contracts—the so-called power purchase agreements (PPAs)—more than 3,500 MW.“That’s the highest volume of PPA announcements in any quarter since AWEA began tracking them in 2013,” the association said.“Our industry is consistently growing the wind project pipeline as leading companies, including utilities and brands like AT&T and Nestle, keep placing orders. Strong demand for wind power is fueling an economic engine supporting a record 105,500 U.S. wind jobs in farm and factory towns across the nation,” Tom Kiernan, CEO of AWEA, said.Despite the announced development projects, actual installation of wind power was significantly lower than in Q1 2017. In Q1 2018, seven new wind farms came online across seven states, totaling 406 MW. This compares to 2,000 MW of capacity installed in the first quarter last year, which saw the U.S. wind industry’s strongest start in installation in eight years. Currently, there are 89,379 MW of installed wind capacity in the United States—thanks to more than 54,000 wind turbines operating in 41 states plus Guam and Puerto Rico and enough installed capacity to power more than 27 million American homes, according to AWEA.

      Tesla’s giant battery in Australia reduced grid service cost by 90% - Tesla’s giant Powerpack battery in Australia has been in operation for about 6 months now and we are just starting to discover the magnitude of its impact on the local energy market. A new report now shows that it reduced the cost of the grid service that it performs by 90% and it has already taken a majority share of the market.   When an issue happens or maintenance is required on the power grid in Australia, the Energy Market Operator calls for FCAS (frequency control and ancillary services) which consists of large and costly gas generators and steam turbines kicking in to compensate for the loss of power.Electricity rates can be seen reaching $14,000 per MW during those FCAS periods.  Tesla’s 100MW/129MWh Powerpack project in South Australia can provide the same service cheaper, quicker, and with zero-emissions, through its battery system.It is so efficient that it reportedly should have made around $1 million in just a few days in January, but Tesla complained last month that they are not being paid correctly because the system doesn’t account for how fast Tesla’s Powerpacks start discharging their power into the grid. The system is basically a victim of its own efficiency, which the Australian Energy Market Operator confirmed is much more rapid, accurate and valuable than a conventional steam turbine in a report published last month.

      Tesla to announce a record-breaking 1 GWh energy storage project Tesla has recently deployed several very large energy storage projects, but a new one could apparently dwarf them all. There was an important detail that came out of Tesla’s Q1 conference call but was mostly overlooked: Elon Musk teased a potential giant 1 GWh energy storage project, which would make it the biggest in the world by a wide margin, to be announced soon. We published plenty of articles about the things that came out of the conference call, but I forgot about that particular comment until Galileo Russel reminded me of it during our podcast this week. When Russel asked Musk about the impact of bringing online the giant 129 MWh Powerpack project in South Australia, the CEO answered:“I think it had quite a profound effect. South Australia took a chance on doing the world’s biggest battery,and it’s worked out really well. If you read the articles, it worked out far beyond their expectations because the battery is able to respond at the millisecond level – far faster than any hydrocarbon plant. So, its grid stabilization was much greater actually than even a gas turbine plant, which normally respond quite fast.Musk is referring to the grid services that the battery pack has been performing for the South Australian grid. As we previously reported, the giant battery system made around $1 million in just a few days back in January though frequency response and it is already eating away at ‘gas cartel’s’ profits, according to a recent report.  Musk continued: The utilities that we’ve worked with thus far have really loved the battery pack and I feel confident that we’ll be able to announce a deal at the gigawatt-hour scale within a matter of months. So, it’s 1,000-megawatt-hours…” That comment is extremely important, but it sort of fell through the cracks.

      Every Google search results in CO2 emissions. This real-time data viz shows how much - Every Google search comes at a cost to the planet. In processing 3.5 billion searches a day, the world’s most popular website accounts for about 40% of the internet’s carbon footprint.Despite the notion that the internet is a “cloud,” it actually relies on millions of physical servers in data centers around the world, which are connected with miles of undersea cables, switches, and routers, all requiring a lot of energy to run. Much of that energy comes from power sources that emit carbon dioxide into the air as they burn fossil fuels; one study from 2015 suggests internet activity results in as much CO2 emissions as the global aviation industry.“Data is very polluting,” says Joana Moll, an artist-researcher whose work investigates the physicality of the internet. In 2015, to illustrate the environmental consequence of Google searches, Moll created a data visualization called CO2GLE: “Almost nobody recalls that the internet is made up of interconnected physical infrastructures which consume natural resources,” Moll writes as an introduction to the project. “How can such an evident fact become so blurred in the social imagination?”CO2GLE uses 2015 internet traffic data, Moll says, and is based on the assumption that Google.com “processes an approximate average of 47,000 requests every second, which represents an estimated amount of 500 kg of CO2 emissions per second.” That would be about 0.01 kg per request. She says these numbers are approximations, though when Quartz shared CO2GLE with Google, the company didn’t contest the math. In fact, in a 2009 estimate, Google said each query causes 0.2 grams of CO2 emissions. A spokesperson also tells Quartz that providing one user with one month of Google services generates about the same amount of the greenhouse gas emissions as driving a car for one mile. (An average gasoline-powered car typically emits 8.91 kg of CO2 per gallon. In the US, cars average 24.7 miles per gallon, which would mean a car emits 360.7 grams of CO2 per mile.)

      Scott Pruitt wants to freeze fuel economy standards. Here’s what that would do. - Last month, Environmental Protection Agency Administrator Scott Pruitt announced that the agency will abandon the long-term fuel economy standards developed by the Obama administration for 2022-2025, declaring, without evidence, that they are “too high.”More recently, EPA announced that it plans to replace Obama’s standards with ... nothing. Instead, it will simply freeze the standard at the 2020 level through 2026.What’s more, it looks increasingly likely that the EPA will attempt to revoke the Clean Air Act waiver that allows California to set its own air quality standards (and thus its own fuel economy standards). That would force California and the 13 states (and DC) that follow its lead on fuel economy to conform to a federal standard that is certain to be weaker than they’d like.It is signature Pruitt: a crude sledgehammer to regulations, with only desultory gestures at justification. To be sure, many barriers stand between Pruitt and his vision of higher tailpipe emissions. The EPA will have to do a whole new rulemaking process, which could take up to a year and be subject to legal challenge. A coalition of 17 states and DC filed suit against the administration on Tuesday, charging that it acted arbitrarily and capriciously in tossing out Obama’s standards, which were the result of years of research, stakeholder meetings, and public engagement. But let’s say Pruitt gets everything he wants — standards are frozen at 2020 levels and California loses its waiver. What effect would it have?  The analysts at Rhodium Group just sent out a short research note on that very question. While acknowledging that enormous uncertainty remains around the fate of the standards, they set out to model a world where Pruitt gets what he wants. “Under Obama-era standards, fleetwide fuel economy rises from 32 mpg today to between 44 and 46 mpg in 2025, depending on the price of oil,” Rhodium writes.  “Without updated standards after 2025, fuel economy improvements level off at lower oil prices and grow modestly at higher oil prices. If the Administration proceeds to freeze CAFE standards at 2020 levels, the fleetwide average reaches only about 38 mpg in 2025 under AEO 2018 reference oil prices, 36 mpg in a low oil price environment and 42 mpg under high oil prices.”

       Automakers believe EPA boss Pruitt went too far with CAFE slash -  Automakers expressed concern in 2011 over the fuel economy targets set by the Obama administration, believing that meeting them may be expensive and difficult. These same automakers went to President Donald Trump and Pruitt asking if anything could be done to ease the requirements -- thus setting Pruitt, the mechanism, in motion.Now, apparently when the manufacturers asked the EPA to look at adjusting the guidelines, what they meant, Automotive News reported on Monday, was that they wanted the target of 46.8 miles per gallon, average, to remain in place for 2025 but they wanted the ramp up to that target to be more gradual and for the EPA to offer a bit more flexibility when it came to compliance. That's not what they got.Pruitt gutted the guidelines and now 17 states including California (now the world's fifth-largest economy, sorry-not-sorry UK) are suing the EPA to reinstate the targets and protect the California waiver, as implemented by the Clean Air Act. The automakers are mortified because this litigation and potential legislative nightmare could prove extremely expensive for them when it comes to developing vehicles to meet a variety of emissions and CAFE requirements.Things start to get really interesting when you consider that the California Air Resources Board controls vehicle emissions guidelines for the state thanks to the California waiver and has no authority over fuel economy standards. That honor falls to the National Highway Traffic Safety Administration (NHTSA) thanks to the Energy Policy and Conservation Act, and NHTSA has, according to some legal experts, no authority to override the California emissions waiver.  Legally speaking, Pruitt may be set for a righteous wipeout, and it seems unlikely at this point that he'll have the support of industry to break his fall.

       Maryland to other states: stop sending US your dirty air – From a grassy hilltop in western Maryland, a high-tech spying operation tracks the source of pollution and ozone coming into the state. The state’s regulators use such automated air-monitoring stations to distinguish if pollutants are coming from cars or power plants. Combining the measurements with federal data, Maryland has analyzed the emissions of every coal-fired power plant east of the Mississippi River and identified 36 in five states as top contributors to Maryland’s smog-producing ozone. “We are literally in a position where we can’t control ozone in our own state,” said Tad Aburn, director of Maryland’s Air & Radiation Administration. “The only thing we can do is try to force upwind states to reduce emissions.” The Frostburg lab, set amid dairy farms and wind turbines, is helping to bolster Maryland’s argument in a multistate legal battle that coal-fired power plants in other states are to blame for ozone problems in Baltimore and elsewhere. The state’s air-monitoring effort also deploys airplanes, balloons and lasers. Maryland, Connecticut, Delaware and New York have petitioned or sued the Environmental Protection Agency in the past several years to step in to cut emissions in the Midwest and Appalachia. The EPA, under both the Obama and Trump administrations, has declined to do so. East Coast states say they must spend more than their fair share because the air has already been polluted before it reaches them. States including Maryland—which has seven coal-fired power plants of its own—say that makes it tougher for them to comply with federal ozone standards.  Midwest power producers argue that federal rules and some issued by the state, such as a rule adopted last year by Pennsylvania to cut nitrogen oxides emissions, are already causing ozone levels to fall fast enough that states will be able meet the 70 parts per-billion standard that takes full effect in 2023.

      Global Energy Consumption Appears To Have Begun The Inescapable Process Of Rolling Over  - (25 graphs) Global energy consumption appears to be in the process of a secular roll over in demand...and this very much includes China.  However, due to the multitude of dynamics impacting price (beyond demand), I have no strong sense as to which way the price of energy will be heading.  I'm solely focused on the demand side.  To make the case for decelerating consumption, alongside innovation and conservation, I show total primary energy consumption (by region and by type) as well as the changing 15 to 64 year old population.  Make of it what you will. Global Primary Energy Consumption by region in the chart below.  The story since 2005 has been declining consumption in North America, Europe, Eurasia offset by soaring Chinese consumption, rising Asia (x-China) and the Middle East, and far slower growth in Central / South America and Africa.  But since the chart below is too busy to glean much from, I'll break out each region below to show how this narrative is changing... I show each region's total energy consumption (yellow line, quadrillion BTU's) versus the annual change in the 15 to 65 year old population (blue columns...this is no estimation through 2030 as this population has already been born and will simply take the current generations place.  These numbers also assume current rates of immigration/emigration are maintained). North America...Total energy consumption has been stagnating since 2000, when core population growth began decelerating.  Despite ZIRP, all the debt undertaken, and the massive growth in central bank balance sheets...total energy consumption (the best proxy for real economic activity) continues declining.   2008 was just the start of the trouble, according the continually decelerating population growth and likewise for energy consumption. Europe...Decelerating and now declining core population since '05 going hand in hand with declining energy consumption...and is likely to accelerate on the downside.  The population growth (chart below) already anticipates ongoing trend immigration...and absent a fast growing jobs base, high rates of immigration aren't likely to spur much economic activity or energy consumption growth.  Europe is in trouble with a capital "T".  Europe year over year change in energy consumption by energy type, 1984 through 2015.  The declines since '08 are a secular trend likely picking up speed.  Asia/Oceania (x-China)...again, a deceleration of core population growth being met with a stalling energy consumption.  A stall in total energy consumption is likely while the core population growth continues decelerating and the primary importers of the world (N. America/Europe/Japan) are outright declining. Eurasia...pretty much the former Soviet Union and the post Soviet rebound has ended with the now declining core population. Middle East...Likely the most dynamic and positive region despite the clear, but relatively smaller, deceleration in core population growth.

      The One Nation Returning To Coal - As the developed world moves farther and farther away from coal-fired energy, one major economy is breaking the trend. Japan, in a move that few could have foreseen, has opened at least eight brand new coal-burning power plants in the last two years and has plans for at least 36 more in the next ten years.This ambitious return to coal far outstrips any other developed nation, and it’s only speeding up. Last month the Japanese government made major advancements to officially adopt a national energy plan that would see 26 percent of the country’s total electricity come from coal in 2030, directly contradicting a previous directive to cut back coal usage to just 10 percent of total electricity.One major reason for the stark turnaround in policy is the 2011 meltdown at the Fukushima Daiichi Nuclear Power Station. The tragedy provided a huge blow to the Japanese public’s support for nuclear energy. After the Fukushima disaster, all 54 of Japan’s nuclear reactors were shut down as they awaited new rigorous safety standards. To date, just seven of the 54 have reopened for business. In order to fulfill demand, the nation has turned to natural gas and, more surprisingly, coal. However, despite all the love lost for nuclear, there are also plenty of critics to Japan’s new direction, who say that the government is being weak on renewables and that the return to coal guarantees a major rise in air pollution, standing in direct conflict with Japan’s pledges to cut its greenhouse gas emissions. As it stands now, the country is responsible for a whopping 4 percent of global emissions, and that’s before the impending construction of 36 coal plants over the next decade.  In addition to its bullish building plans, Japan is also backing off on previous promises to shutter existing coal facilities. Instead of moving forward with their plans to construct two 600-megawatt (MW) coal-fired power generation units local power company Electric Power Development Co Ltd. recently announced that they would continue to use facilities that are now nearly 50 years old.

      Idaho school can’t find small bit of weapons-grade plutonium (AP) — A small amount of radioactive, weapons-grade plutonium about the size of a U.S. quarter is missing from an Idaho university that was using it for research, leading federal officials on Friday to propose an $8,500 fine.The U.S. Nuclear Regulatory Commission said Idaho State University can't account for about a 30th of an ounce (1 gram) of the material that's used in nuclear reactors and to make nuclear bombs.The amount is too small to make a nuclear bomb, agency spokesman Victor Dricks said, but could be used to make a dirty bomb to spread radioactive contamination."The NRC has very rigorous controls for the use and storage of radioactive materials as evidenced by this enforcement action," he said of the proposed fine for failing to keep track of the material. Dr. Cornelis Van der Schyf, vice president for research at the university, blamed partially completed paperwork from 15 years ago as the school tried to dispose of the plutonium."Unfortunately, because there was a lack of sufficient historical records to demonstrate the disposal pathway employed in 2003, the source in question had to be listed as missing," he said in a statement to The Associated Press. "The radioactive source in question poses no direct health issue or risk to public safety."

      US House votes to advance Yucca Mountain nuclear waste project - The Nuclear Waste Policy Amendments Act, sponsored by Rep. John Shimkus (R-Ill.), passed by an overwhelming bipartisan margin of 340-72. It would set a path forward for the Department of Energy (DOE) to resume the process of planning for and building the southern Nevada site, transfer land to the DOE for it, ease the federal funding mechanism and allow DOE to build or license a temporary site to store waste while the Yucca project is being planned and built. “The bill we’re considering today reinforces a promise that the United States Congress, on behalf of the entire federal government, made to our constituents a generation ago. Today, we’re keeping that promise,” Rep. Greg Walden (R-Ore.), chairman of the House Energy and Commerce Committee, said on the House floor.

      Cracks in Hunterston nuclear reactor will hit EDF Energy with £120m bill -  The six month closure of one of Britain’s oldest nuclear reactors will burn a £120m hole in the revenues of owner EDF Energy and has raised questions over the reliability of the country’s ageing nuclear fleet. EDF said this week that it was taking reactor 3 of Hunterston B in Scotland offline for half a year, after inspections found more cracks than expected in the graphite bricks at the reactor’s core. EDF maintains that the prospect of more old reactors having a sustained outage is highly unlikely, but experts said it would pose a significant challenge to power supplies if they did. The Hunterston outage is the longest yet over the graphite issue, which EDF calls a “unique challenge”, and company presentations concede the cracking “will probably limit the lifetime for the current generation of AGRs”.

      EMP Commission Warns Of Year-Long Blackout And A Massive Death Toll - A federal EMP commission report warns that even the smallest EMP attack on our grid system would down it for about a year, if not longer.  A year-long blackout would certainly be coupled with a massive death toll that would devastate entire populations. The so-called EMP Commission report said that this threat is very real, jeopardizes “modern civilization,” and would set back living conditions to those last seen in the 1800s. As a result of the chaos, millions would likely die, according to the report titled “Assessing the Threat from Electromagnetic Pulse (EMP),” from the recently re-established Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack.“The United States — and modern civilization more generally — faces a present and continuing existential threat from naturally occurring and man-made electromagnetic pulse assault and related attacks on military and critical national infrastructures. A nationwide blackout of the electric power grid and grid-dependent critical infrastructures — communications, transportation, sanitation, food and water supply — could plausibly last a year or longer. Many of the systems designed to provide renewable, stand-alone power in case of an emergency, such as generators, uninterruptible power supplies, and renewable energy grid components, are also vulnerable to EMP attack,” said the 27-page report.“A long-term outage owing to EMP could disable most critical supply chains, leaving the U.S. population living in conditions similar to centuries past, prior to the advent of electric power,” said the July 2017 report provided Secrets.“In the 1800s, the U.S. population was less than 60 million, and those people had many skills and assets necessary for survival without today’s infrastructure. An extended blackout today could result in the death of a large fraction of the American people through the effects of societal collapse, disease, and starvation,” added the executive summary.

       Fairmount Santrol another step closer in moving headquarters to Independence - cleveland.com --Sand-mining company Fairmount Santrol, Inc., is a step closer to relocating its headquarters from Chesterland, in Geauga County, to Independence.The Cuyahoga County Community Improvement Corp. has recommended that the county grant $500,000 in economic development loans to Fairmount Santrol, Inc., for its proposed new headquarters. Fairmount Santrol plans to take over office space at 3 Summit Park Road in Independence. The term of the loan will be seven years, and the estimated annual tax benefit from this project totals $389,381, according to a press release from the Greater Cleveland Partnership. It is not clear, at this time, when the move would officially take place. The move will bring 79 jobs to Cuyahoga County, including 52 jobs from Fairmount Santrol, according to the Greater Cleveland Partnership. The remaining jobs come from Unimin, which has merged with Fairmount Santrol. In February, the Ohio Tax Credit Authority approved an eight-year job-creation tax credit valued at $1.46 million to support what's described as a headquarters move and consolidation. Read that story here. Fairmount Santrol mines sand used for fracking in the oil-and-gas industry, and has facilities throughout North America, Europe and Asia.

       Fracking amendment goes down again — Vindicator - For the seventh straight time Youngstown voters have rejected a charter amendment to ban fracking.   The final but unofficial vote was 3,589 against and 2,857 in favor.

      Is there proof that fracking for oil and natural gas can by itself cause earthquakes? - Geologists used to believe that “fracking”—or hydraulic fracturing, the process of drilling down into the earth and injecting water, chemicals and sand at high-pressure to release and capture the gas or oil contained in the rock—couldn’t actually cause earthquakes. But conventional wisdom started to change in 2009 when the ground started shaking across Oklahoma in the wake of that state’s new fracking boom. Today it is not uncommon for upwards of 1,000 magnitude 3.0 or higher earthquakes to rock the Sooner State during a given year—and no one doubts that they are a result of fracking and related activities.According to the U.S. Geological Survey (USGS), earthquakes in Oklahoma are now hundreds of times more common than just a decade ago. Meanwhile, seven other midwestern and southern states have experienced similar rises in the incidence of earthquakes since fracking commenced in recent years.  Defenders of fracking insist that it’s not so much the fracking that’s to blame as it is the wastewater disposal activities that come afterwards. “Wastewater disposal wells typically operate for longer durations and inject much more fluid than hydraulic fracturing, making them more likely to induce earthquakes,” reports USGS, adding that less than two percent of the earthquakes in Oklahoma can be directly linked to fracking itself. “The remaining earthquakes are induced by wastewater disposal.” “In Ohio, some of the larger earthquakes are from fracking itself,” report Miami University geologists Michael Brudzinski and Brian Currie, who are trying to pinpoint causation on fracking-related seismicity across the central U.S. “Fracking by larger, older, deeper fault lines has a higher risk of triggering bigger earthquakes, like the 4.0 quake around Youngstown in 2011.” By studying the “fingerprint” of these quakes, Brudzinski and Currie, whose recent findings were published in the peer-reviewed journal Proceedings of the National Academy of Sciences (PNAS), hope to help prevent future quakes and minimize the damage from ones they can’t prevent

      Mariner East pipeline fined $355K for spills in Lancaster, 8 other counties - The state has fined the builders of the Mariner East 2 pipeline $355,000 for pollution of streams in Lancaster County and eight other counties.The penalty is on top of a $12.6 million fine the state Department of Environmental Protection levied against pipeline builder Sunoco Pipeline LP in February on separate violations.The fine was announced Thursday, the same day that the Pennsylvania Public Utility Commission voted unanimously to allow the pipeline to be restarted. The pipeline has been shut down since March after sinkholes opened in Chester County adjacent to the pipeline construction.The PUC’s Bureau of Investigation recommended restarting the pipeline, noting that it is “of the opinion that the integrity of the (existing) ME1 pipeline has not been compromised by the soil subsidence events that triggered this investigation.”The most recent fine is for spillage of drilling fluids into wild trout streams, wetlands and streams rated as high quality.Included were seven spills in West Cocalico Township. Drilling fluids were discharged into streams, a wetland adjacent to endangered bog turtle habitat and on the Middle Creek Wildlife Management Area.The $3 billion, 350-mile-long Mariner East 2 pipeline is to carry natural gas liquids from the Marcellus Shale and Utica Shale regions of western Pennsylvania and Ohio to a refinery in Marcus Hook, near Philadelphia. In Lancaster County, the pipeline has already been built through 6.5 miles in West Cocalico and Clay townships.

      DEP hits Sunoco with another fine for mariner east 2 pipeline construction - The Department of Environmental Protection fined Sunoco/Energy Transfer Partners an additional $355,622 for drilling mud spills during construction of the Mariner East 2 pipeline.The multiple violations along the 350-mile long line occurred between May 3, 2017 and February 27, 2018. The fine is on top of the $12.6 million penalty issued by the DEP in February for similar violations of the state’s Clean Streams Law.“No violations are acceptable,” said DEP Secretary Patrick McDonnell in a statement. “Cleaning up a spill does not excuse Sunoco, or any other company, from complying with the law or paying an appropriate penalty.”The DEP says Sunoco discharged drilling fluids into wetlands, wild trout streams and High-Quality Waters at locations in Allegheny, Blair, Cambria, Cumberland, Dauphin, Huntingdon, Indiana, Lancaster, and Washington counties. The agency ordered the company to halt construction and clean up the spills, as well as to submit proposed changes to construction methods.  DEP has issued Sunoco more than 50 notices of violations for construction of the Mariner East 2 pipeline.

      With sinkholes patched and PUC approval, Sunoco Pipeline restarts Mariner East 1 - The Pennsylvania Public Utility Commission on Thursday lifted an emergency order and allowed Sunoco Pipeline to restart operations on the Mariner East 1 pipeline, two months after sinkholes appeared in Chester County, exposing the pipe’s bare steel. The PUC voted unanimously to allow Sunoco to resume pumping Marcellus Shale natural gas liquids such as propane through the 87-year-old pipeline. The commission ordered the shutdown on March 7 after sinkholes opened up while the company was constructing the new Mariner East 2 pipeline along the same route.Gladys M. Brown, the commission’s chair, said PUC’s Bureau of Investigation and Enforcement was satisfied that the pipeline “can resume operations safely.” The bureau sought the emergency shutdown in March after expressing concern about potentially catastrophic consequences of a pipeline rupture. Sunoco said Thursday that it would resume operations immediately.A few hours after the PUC’s decision, another arm of state government, the Pennsylvania Department of Environmental Protection, announced that it fined Sunoco $355,622 for reported spills of drilling fluids over 10 months in connection with construction of the Mariner East 2 pipeline. The incidents it cited are unrelated to the West Whiteland sinkholes.The new fine comes on top of a $12.6 million penalty that Sunoco agreed to pay in February for “egregious and willful violations,” including unauthorized drilling to install the ME2 pipeline and failing to notify the agency of discharges.  Sunoco, a subsidiary of Energy Transfer Partners LP, is building two new adjacent pipelines to expand the capacity of its Mariner East system to deliver Marcellus Shale gas liquids to a terminal in Marcus Hook, where much of the material will be exported. Sunoco is spending $5.1 billion in Pennsylvania on the energy infrastructure project. Sunoco said it had complied with the PUC’s emergency order and the pipeline was now “fit for reinstatement of service” after underground cavities were filled with grout and the pipeline was inspected. Sunoco said that tests showed the subsidence did not impair the pipeline where it passes less than 50 feet from houses through backyards on Lisa Drive in West Whiteland Township, near Exton. The sinkholes developed about 300 feet from Amtrak’s mainline corridor from Philadelphia to Harrisburg.

      Fracking riles residents in Pittsburgh’s northeast suburbs --Greg DeMedio first learned of hydraulic fracturing activity under way in Indiana Township when he and his wife took their daughter to play at Emmerling Community Park.  “And we saw well pad signs branded with Range Resources, and we couldn't believe it. Our jaws dropped,” said DeMedio, owner of a small insurance agency and co-owner of a cybersecurity firm. “My concern is about transparency.” Environmental activist Dianne Peterson of O'Hara Township found out about the eight approved natural gas wells because she happened to see a post about it on Facebook.  “But many people I know found out by looking up from a soccer game and seeing the well pad standing there — pretty shocking,” Peterson said.  Elissa Weiss, 64, a 28-year resident of Indiana Township, lamented that she saw nothing about planned fracking activity in the municipality's quarterly newsletters and didn't learn about it until nearly two years after the permitting process began. The three concerned residents of Pittsburgh's northeastern suburbs joined about 60 other residents and environmental activists Tuesday night in a protest against fracking shortly before the Indiana Township's board of supervisors meeting. Protesters outlined a litany of concerns about fracking activity within two miles of parks, schools, homes and day cares, arguing that drilling should be limited to industrial-zoned areas. They cited fears over the potential negative impacts on the environment and public health and questioned whether the people of the communities being affected have received enough information and had enough opportunities for meaningful input.  “Fox Chapel School District-area residents are demanding transparency and accountability from their elected officials,”   “Residents believe that their state constitutional rights have been violated ... in an effort to expedite natural gas development in their community.”

      Jessup frustrated with DEP response to yellow smoke, health complaints at gas power plant - Residents of Jessup say they are not satisfied with the response from the state Department of Environmental Protection, after a new natural gas power plant spewed yellow-colored smoke and prompted health complaints earlier this month.The Invenergy plant being built in Lackawanna County started emitting noxious smoke on March 3. According to Jessup Borough Council President Jerry Crinella, DEP sent two people to investigate on March 6, but after they walked around, they said they couldn’t see or smell anything.“I’m disappointed concerned citizens are not getting the information they’re asking for. We want to know what the readings were from the air monitors,” Crinella said. “The DEP is supposed to be there to protect the public, not the company.”DEP spokeswoman Colleen Connolly declined to discuss the incident, and instead sent emailed statements.“Department believes plume is excess NOX [nitrogen oxides] as Invenergy is beginning to start up its turbines. No issues were reported to us,” Connolly wrote. “Department has asked Invenergy to provide a report on this. We are still waiting for the report.” Connolly added there have been no complaints from residents since the original incident, and said she could not discuss specifics until the department receives the report from Invenergy.

      Ground around Marcellus drilling producing more than gas - When Marcellus Shale drilling came to Pennsylvania state forests, it brought a few hitchhikers along — invasive plants. They got a free ride into remote northcentral interior forests that previously had been spared the influence of heavy truck traffic. Yes, truck traffic. One does not generally associate deep forest interiors with lumbering construction vehicles, but with about 700,000 acres of state-owned forest land open to gas and oil exploration (about half of the total that is underlaid by shale deposits), a lot of ad hoc roads have been cut through those woods. It’s the only way drilling companies can get to well sites and lay concrete gas-drilling pads, which often sprawl over several acres. In the process, the trucks bring in the seeds of nonnative plants — in their tire treads, on their undercarriages or in loads of gravel and other materials. The cleared land around the pad is exactly what nonnative plants need to get a firm foothold — soft, recently disturbed soil with lots of sunlight and drastically fewer native plants to compete with. Invasions of nonnative plants can be as destructive to a northeastern forest as a wildfire is to those in the West. Invasives love edge habitat, including the sides of roads through forests and mown grass in recreational areas. With no natural disease or predators to slow them down, the foreigners can quickly colonize land where dispersed, crowding out native species. Studies have shown that invasives can even halt forest regeneration. For example, if only a handful of oak or maple seedlings manage to break through thick mats of Japanese stilt grass or mile-a-minute weed, the deer that feed on such saplings may eat the scant new growth and wipe out a new generation of trees. 

      Pennsylvania Lawmaker Advancing Pro-Fracking Legislation Profits from Leasing his Land to Drillers - A Pennsylvania state senator, who is responsible for a slew of legislation favoring the oil and gas industry, leases his own land to fracking companies, recent disclosure documents show. Last year, veteran lawmaker Gene Yaw of Lycoming County profited from royalties he received from several different drillers.  Yaw, who chairs the key senate environmental resources and energy committee, has been serving in the state legislature since 2008. In recent years he’s positioned himself as a champion of the oil and gas industry by advancing various pro-industry measures. The counties in the district he represents, located squarely on top of the Marcellus Shale, have thousands of active oil and gas wells.In late 2016, Yaw co-sponsored a bill to bolster the rights of property owners leasing their land to oil and gas developers. Soon after, he introduced the “Pennsylvania Natural Gas Expansion and Development Initiative,” a bill that aims at dramatically expanding the production and transportation of natural gas in the state.“We have an abundant natural resource beneath us,” Yaw wrote in support of the bill, “which can be used to help consumers lower their energy heating costs.”   At the same time, Yaw benefits personally from Pennsylvania’s fracking boom. According to his most recent financial disclosure, last year he received income from five different drilling companies: Anadarko, Statoil, Alta Marcellus Development, Mitsui E&P, and Chesapeake.

      Challenging the 'rule of capture' - Farm and Dairy  — The Pennsylvania Superior Court has made a landmark decision, ruling that a drilling company cannot remove hydrocarbons from the shale formations beneath your property without your permission. The decision, which was appealed April 16, clarifies an aspect of Pennsylvania oil and gas law, stating the “rule of capture” does not apply to fractured fissures that extend under unleased parcels.Some of these horizontal fissures could extend 5,000 to 10,000 feet from a well. In the case, Briggs vs. Southwestern Energy Production Co., the owners of an unleased, 11-acre parcel in Susquehanna County, Pennsylvania, claimed that a horizontal well bore drilled in November 2015 under a neighboring parcel by Southwestern Energy Production Co. was unlawfully draining hydrocarbons from their property. Since their property was not under lease with Southwestern, the Briggs argued that Southwestern had trespassed.  Southwestern used the “rule of capture” as its defense to the subsurface trespass claim. The rule has been recognized in Pennsylvania since the 1880s and generally precludes liability for drainage of oil and gas from under another’s land. Chadsey said there is such a rule in all 30 plus states that produce oil and gas. The difference is spacing laws. (See sidebar below.) The trial court agreed with Southwestern and granted its motion for summary judgment and dismissed the plaintiff’s complaint. The trial court held that, as a matter of law, the “rule of capture” precluded any claim of subsurface trespass. On appeal, the Pennsylvania Superior Court reversed and held that the “rule of capture” didn’t apply to hydraulic fracturing: “In light of the distinctions between hydraulic fracturing and conventional gas drilling, we conclude that the rule of capture does not preclude liability for trespass due to hydraulic fracturing. “Therefore hydraulic fracturing may constitute an actionable trespass where subsurface fractures, fracturing fluid and proppant cross boundary lines and extend into the subsurface estate of an adjoining property for which the operator does not have a mineral lease, resulting in the extraction of natural gas from beneath the adjoin landowner’s property,” said the ruling.

      Frackers Feeling Shaken Up by Pennsylvania Court Decision - Anxiety is building around a court ruling in Pennsylvania that could potentially upend long-standing oil and gas arrangements, and affect hydraulic fracturing efforts nationwide. Natural gas driller Southwestern Energy Production Co. has asked Pennsylvania’s Superior Court to rehear the case with more judges after a two-judge panel ruled April 2 that hydraulic fracturing could create liability when fluids released from the fracking process flow onto adjoining properties. The case, Briggs v. Southwestern Energy Production Co., in Pennsylvania’s Superior Court, has caught the attention of energy companies, oil and gas attorneys, and legal scholars nationwide, attorneys from around the country told Bloomberg Environment. The ruling could have a chilling effect on oil and gas development because it overturns a long-standing, seemingly settled legal principle known as the “rule of capture,” they said. According to the rule of capture, a driller on one parcel of land may extract oil and gas from underneath adjoining properties as long as the driller doesn’t physically trespass over the property line. So far, a half-dozen energy associations, business and industry groups, a geologist, and a Texas-based professor of oil and gas law have asked to file friend of the court briefs in the case, an indication of the consequences the industry fears should the ruling stand. The ruling holds potential for a significant economic impact for companies invested in gas development, because it increases the possibility that energy companies could face trespass claims in connection with their fracking operations that they otherwise wouldn’t have been exposed to,  The case also could affect litigation in states that that don’t have a well-developed body of case law governing oil and gas,  “Many states will look to other states for precedent to reach their opinion,”  “The worry is that other states looking at this issue that are facing it for the first time may look to Briggs for precedent.”

      New Info on Human Health and Fracking – OHVEC - The information in this blog may be overwhelming. It is, however, critical that we all keep up on current information regarding health effects of living near unconventional oil and gas drilling operations, (UOGD, aka fracking operations), compressor stations, pipelines and other associated processing facilities. If we are informed about the risks of such operations, we can better speak to public officials about the necessity of monitoring them and/or preventing them from coming into our communities. We can also take personal precautions to try to minimize these risks to our family’s health. Following are three very important recently published resources:

      • I. Physicians for Social Responsibility, including Sandra Steingraber, have recently released this compendium, titled “Compendium of Scientific, Medical, and Media Findings Demonstrating Risks and Harms of Fracking – Fifth Edition.” This important resource updates the rapidly expanding evidence indicating harm to health from fracking and methane infrastructure.
      • II. WV Public Radio recently aired a report on endocrine disruption and UOGD sites. This report, titled “Exploring the endocrine activity of air pollutants associated with unconventional oil and gas extraction” is available on the WVPB website and here.  In this study, the following important correlation is made: Compounds associated with UOG activity have been linked to adverse reproductive and developmental outcomes in humans and laboratory animal models, which is possibly due to the presence of endocrine active chemicals.
      • III. The League of Women Voters of Pennsylvania has updated their Shale Gas Extraction and Public Health Resource Guide. This is a great resource because of the broad range of health effects examined in the publication. These include air and water borne environmental hazards. methane migration, and seismic activity. This important resource can be downloaded here.

      If you live near a fracking operation, a pipeline, or a compressor station or other fracking-related facility, and you or a family member has experienced health problems, please inform your attending physicians of these resources, and—if you are willing to share your story—let us know by contacting info@ohvec.org.

      West Virginia allows ETP to resume work on Rover natgas pipeline (Reuters) - Environmental regulators in West Virginia said Energy Transfer Partners LP could restart work on its $4.2 billion Rover natural gas pipeline after ordering the company to stop some work in the state due to permit violations:

      • * The West Virginia Department of Environmental Protection (DEP) said last week it lifted the March 7 cease and desist order on the Rover Sherwood Lateral on May 2.
      • * Rover is the biggest gas pipe under construction in the United States. It is designed to carry up to 3.25 billion cubic feet per day (bcfd) of gas from the Marcellus and Utica shale fields in Pennsylvania, Ohio and West Virginia to the U.S. Midwest and Canada’s Ontario province.
      • * One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.
      • * The latest cease and desist order was not the first time West Virginia stopped ETP from work on Rover. The DEP also ordered the company to halt some work from July 17 to Aug. 9 due to violations of storm water rules.
      • * In addition, the U.S. Federal Energy Regulatory Commission (FERC) stopped ETP from horizontal drilling in Ohio from May 10 to Sept. 18 after an estimated 2 million gallons of drilling fluid spilled into a wetland near the Tuscarawas River.
      • * Energy companies use horizontal drilling to cross under obstacles such as rivers and highways.
      • * Before those stop work orders, ETP expected to finish Rover in November. ETP said it still expects to complete the project by the end of the second quarter of 2018. Rover has been partially in service since August and is now able to transport up to 1.7 bcfd.
      • * Major producers signed up to use Rover include units of privately held Ascent Resources, Antero Resources Corp, Range Resources Corp, Southwestern Energy Co, Eclipse Resources Corp and EQT Corp.

      Pipeline protesters in Virginia come down from trees after 5 weeks - A mother and daughter who had been camped high in trees for five weeks to protest a natural-gas pipeline near Roanoke, Virginia, climbed down from their roosts Saturday after a federal judge threatened to start levying heavy fines.Theresa “Red” Terry, 61, and her daughter, Theresa Minor Terry, 30, had perched on platforms in trees on the family’s Bent Mountain property since April 2 to protest construction of the Mountain Valley Pipeline.The women endured subfreezing temperatures, high winds, snow and rain in their efforts to stop tree-clearing and to rally opposition against the 303-mile pipeline, which will carry gas from West Virginia through the mountainous southwest section of Virginia.Late Friday, a federal judge said the pipeline company had legal authority to be on the land, found the women to be in contempt and gave them until 11:59 p.m. Saturday to come down. If they didn’t, U.S. District Judge Elizabeth Dillon would have imposed a $1,000 fine against each woman for every day they continued to defy the court. In her order, the judge said that the Terrys were free to express their opposition to the project but noted that they had contested it in court and lost. The pipeline therefore has a legal right to do the work on its right of way through the family’s property.Dillon also authorized U.S. marshals to take command of the situation and bring them down by force if necessary or practical. In addition, the judge found Coles Terry III, Red Terry’s husband and Minor Terry’s father, in contempt for his continued support of the women’s efforts. She fined him $2,000. After the ruling, Coles Terry said the women would come down. Even if they didn’t mind paying the fines, he said, the judge had directed that the money be paid to the pipeline builders, a notion that disturbed the Terrys.

      Treetop protesters take anti-pipeline demonstration on the road - A pair of tree-sitting protesters stopped in Charlottesville on Monday to demand action against two natural gas pipelines that are poised to cross the state. “This is our land, we need to protect it and our representatives need to step up to the plate and quit letting the gas and oil companies run the United States,” said Theresa “Red” Terry. “It’s supposed to be for the people by the people, not for the profit.” Red Terry and her daughter, Theresa Minor Terry, on April 2 perched in protest of the Mountain Valley Pipeline, which is set to run through the family’s Bent Mountain property. U.S. District Court Judge Elizabeth Dillon last week ruled that they would face daily $1,000 fines if they did not come down by 11:59 p.m. Saturday. Dillon also authorized U.S. marshals to remove the Terrys from the trees by force, if necessary, and fined Red Terry’s husband, Cole Terry III, $2,000 for his support of the women’s efforts. The Terrys said they ended their demonstration because Dillon ordered the fines to be paid to builders of the Mountain Valley Pipeline, which angered them. Back on the ground, they now are demanding action from Gov. Ralph Northam and a Virginia Department of Environmental Quality study on the impact that the Mountain Valley and Atlantic Coast pipelines will have on streams and waterways. The Mountain Valley Pipeline, planned to be built from West Virginia through the southwestern part of the state, is led by EQT Midstream Partners of Pittsburgh. The Atlantic Coast Pipeline is a Dominion Energy-led project planned to run from West Virginia through Virginia to North Carolina. Both will be built through some of Virginia’s most mountainous terrain and cross hundreds of rivers and streams. 

      At Charlottesville stop, tree-sitting pipeline protesters demand action from governor, DEQ against the work -  A pair of tree-sitting protesters stopped in Charlottesville on Monday to demand action against two natural gas pipelines that are poised to cross the state. “This is our land, we need to protect it and our representatives need to step up to the plate and quit letting the gas and oil companies run the United States,” said Theresa “Red” Terry. “It’s supposed to be for the people by the people, not for the profit.” Red Terry and her daughter, Theresa Minor Terry, on April 2 perched in protest of the Mountain Valley Pipeline, which is set to run through the family’s Bent Mountain property. U.S. District Judge Elizabeth K. Dillon last week ruled that they would face daily $1,000 fines if they did not come down by 11:59 p.m. Saturday. Dillon also authorized U.S. marshals to remove the Terrys from the trees by force, if necessary, and fined Red Terry’s husband, Cole Terry III, $2,000 for his support of the women’s efforts. The Terrys said they ended their demonstration because Dillon ordered the fines to be paid to builders of the Mountain Valley Pipeline, which angered them. Back on the ground, they now are demanding action from Gov. Ralph Northam and a Virginia Department of Environmental Quality study on the impact that the Mountain Valley and Atlantic Coast pipelines will have on streams and waterways. The Mountain Valley Pipeline, planned to be built from West Virginia through the southwestern part of the state, is led by EQT Midstream Partners of Pittsburgh. The Atlantic Coast Pipeline is a Dominion Energy-led project planned to run from West Virginia through Virginia to North Carolina. Both will be built through some of Virginia’s most mountainous terrain and cross hundreds of rivers and streams. Michael Payne, of Indivisible Charlottesville, said the pipeline issue has become a moral line that he believes scared the Northam administration into pushing for the removal of the Terrys. “This was just two people sitting in trees on their own property, but they’re terrified of it because they know what the moral choice is, they know how clear and obvious it is,” he said. 

      Federal appeals court hears 2 pipeline cases — The legal fight against the Mountain Valley Pipeline ramped up Tuesday, with lawyers in two cases asking a federal appeals court to slow down the project’s run through Southwest Virginia. In back-to-back oral arguments, the 4th U.S. Circuit Court of Appeals was first asked to reverse a decision by the State Water Control Board, which issued a water quality certification after finding a “reasonable assurance” that the natural gas pipeline would not pollute the 500-some streams and wetlands it will cross. The same three-judge panel then heard a challenge of the U.S. Forest Service’s approval for the buried pipeline to cut through the Jefferson National Forest. Both cases are being brought by a variety of conservation groups and individuals who say that building the largest such pipeline ever seen in Virginia will wreak environmental havoc. Written decisions are expected in the coming weeks. Although tree-cutting for the 303-mile pipe is well underway, opponents are hoping for at least a delay as the judicial system catches up with about a half-dozen legal attacks, filed months ago during a regulatory process that has granted approval for the pipeline at every step. One judge wondered from the bench whether is was too late to stop the train. “I’m just not sure what the process is,” Judge William Traxler said during arguments about the water board’s key vote last December that moved the project forward. “It seems to me we are in no-man’s land.” But later, during arguments in the second case, Chief Judge Roger Gregory raised pointed questions about the process used by the Forest Service to evaluate a 3.5-mile route the pipeline will take across steep mountain slopes and under the Appalachian Trail.  

      We're All Trespassers Now In The Face Of The Government's Land Grabs - All across the country, power companies have been given the green light to build massive gas and oil pipelines that crisscross the country, cutting through private and public lands, as well as unspoiled wilderness. “Yet despite oft-repeated claims by politicians and oil executives about the danger of relying on foreign oil, this U.S. petroleum renaissance never was designed to make America energy self-sufficient,” points out journalist Sandy Tolan. “A growing amount of that oil will end up in China, Japan, the Netherlands, even Venezuela.”So much for the public use, huh? These pipeline projects which are getting underway in a dozen states have stirred up a hornet’s nest of protests. Not all of the protests that have arisen in response to these pipeline projects hinge on environmental concerns. Some of the protesters are landowners, simple farmers and homeowners who merely want the government and its corporate partners-in-crime to keep their grubby paws off their personal property.In Virginia, for instance, activists have taken to tree sitting—living for weeks on end in platforms suspended above the ground in trees—as a form of protest over the devastation that is being wrought by these pipelines. These acts of civil disobedience come at a costly price. Pipeline and forestry officials have been working hard to make life as difficult as possible for the protesters, allegedly blocking their access to food and water and medical supplies, shining floodlights into the trees at all hours of the night, creating ground disturbances to dislodge their nests, and urging the courts to levy heavy fines for each day that the work to clear the forests for the pipeline is delayed. It takes a lot of gall to trespass onto someone’s private property, tear up their land, cut down their trees, pollute their air and water, prevent them from moving freely on their own property, threaten them with fines and arrests for challenging the intrusion, and then force them to pay (by way of taxes) to retain ownership of the property or sell it cheaply or at a loss so it can be torn down and used for some purpose that the government deems more beneficial to its bottom line.  That’s how little respect the government has for our rights.

      Protesters of fracking erect tower in Duke Energy CEO's driveway - (video) Protesters with the group Beyond Extreme Energy upset with Duke Energy's involvement in the Atlantic Coast Pipeline, which will cut across North Carolina, took their concerns to the front yard of CEO Lynn Good's Charlotte home Wednesday.

      At Dominion shareholder meeting, pipeline opponents address CEO directly -— Opponents of the Atlantic Coast Pipeline have organized dozens of meetings, protests and marches in an effort to stop the project since it was announced in 2014. But there’s just one time a year they’re guaranteed an audience with the pipeline’s lead developer, Dominion Energy, as well as its CEO, Thomas Farrell: the company’s annual shareholder meeting, where anyone who owns stock in the company or is representing someone who does is entitled to take to the microphone and unload for a few minutes. And this year, Wednesday was the big day. “Mr. Farrell, do you feel Dominion’s profits are more important than people’s lives and the planet?” asked Deborah Kushner, a resident of Nelson County who lives near the proposed path of the pipeline — one of about 10 pipeline opponents who traveled to Richmond to address Farrell in person. Farrell responded briefly to each of them. “Obviously, I don’t,” he told Kushner, adding that the various facts she had laid out, in his view, “just don’t comport with reality.” The annual meeting took place under heavy security at the Greater Richmond Convention Center downtown, where a group of about 50 protesters gathered on a corner outside. Among them was Red Terry, who spent five weeks camped in a tree on her land protesting the Mountain Valley Pipeline, another natural gas pipeline project that would slice through part of the state. There were no disruptions and the actual business portion of the meeting was brisk. Farrell gave a high-level overview of the company’s operations and plans. The first and only whiffs of dissent came when Farrell opened the floor for the question-and-answer portion of the meeting. All but two of the roughly half-dozen speakers focused on concerns about the Atlantic Coast Pipeline, which would cut through the state on its way from West Virginia to North Carolina, with a spur to Hampton Roads. Utilities in Virginia and North Carolina, mostly affiliates of pipeline partners Duke Energy and Dominion Energy, have contracted for most of the gas. 

      Actors were paid to support Entergy’s gas-fired power plant at New Orleans City Council meetings - Last October, about 50 people in bright orange shirts filed into City Hall for a public hearing on Entergy’s request to build a $210 million power plant in eastern New Orleans. Their shirts read, “Clean Energy. Good Jobs. Reliable Power.”The purpose of the hearing was to gauge community support for the power plant. But for some of those in the crowd, it was just another acting gig.At least four of the people in orange shirts were professional actors. One actor said he recognized 10 to 15 others who work in the local film industry.“It was very shady, very secretive, especially when we got paid. They literally paid us under the table.”  They were paid $60 each time they wore the orange shirts to meetings in October and February. Some got $200 for a “speaking role,” which required them to deliver a prewritten speech, according to interviews with the actors and screenshots of Facebook messages provided to The Lens.“They paid us to sit through the meeting and clap every time someone said something against wind and solar power,” said Keith Keough, who heard about the opportunity through a friend.He said he thought he was going to shoot a commercial. “I’m not political,” he said. “I needed the money for a hotel room at that point.” They were asked to sign non-disclosure agreements and were instructed not to speak to the media or tell anyone they were being paid.

      June Natural Gas Gets a Jolt as EIA Storage Build Leaner Than Expected -- The Energy Information Administration (EIA) on Thursday reported a weekly natural gas storage injection that came in on the low side of expectations, and futures picked up some bullish momentum on the news.EIA reported an 89 Bcf injection into Lower 48 gas stocks for the week ending May 4, slightly tighter versus consensus estimates for a build in the low- to mid-90s. Last year, EIA recorded a 49 Bcf injection. The five-year average is a build of 75 Bcf.Shortly after the 10:30 a.m. ET release of the final number, the June contract popped about 3 cents to trade above $2.785 after already gaining a few cents earlier in the session. By 11 a.m. ET, June was trading around $2.795, up about 5.8 cents from Wednesday’s settle.Prior to Thursday’s report, consensus estimates had the market looking for an injection somewhat larger than the actual figure.A Reuters survey of traders and analysts on average had predicted a 91 Bcf build, with responses ranging from 75 Bcf to 114 Bcf. A Bloomberg survey had produced a median 90 Bcf injection, with a range of 62 Bcf to 114 Bcf. IAF Advisors analyst Kyle Cooper had called for a 96 Bcf build, while Intercontinental Exchange EIA storage futures settled Wednesday at an injection of 94 Bcf. Bespoke Weather Services had estimated a 94 Bcf build and said it viewed Thursday’s report as “slightly bullish” for a market that could see further support from cooling demand if recent above normal temperatures persist into late May or early June. Total working gas in underground storage ended the period at 1,432 Bcf, versus 2,295 Bcf a year ago and five-year average inventories of 1,952 Bcf. The year-on-year deficit shrank week/week from minus 903 Bcf to minus 863 Bcf, while the year-on-five-year deficit decreased slightly from minus 534 Bcf to minus 520 Bcf, EIA data show.

      Pentagon warns against offshore drilling in eastern Gulf of Mexico | TheHill: Offshore oil and natural gas drilling in the eastern part of the Gulf of Mexico would likely be incompatible with military training and testing, the Pentagon is warning lawmakers. In a report sent this week to a pair of House committees, the Defense Department’s Undersecretary for Research and Engineering Michael Griffin called the eastern Gulf “irreplaceable,” and said that any drilling there would need significant restrictions in order to not disturb military operations. The Navy and Air Force use the eastern Gulf to test laser weapons, long-range strike weapons, new vessels and mine warfare, among other activities, and drilling rigs could hamper operations. The eastern Gulf, the report said, “is an irreplaceable national asset used by [the Department of Defense] DOD to develop and maintain the readiness of our combat forces, and is critical to achieving the objectives contained in the National Defense Strategy.” “Simply stated, if oil and gas development were to extend east of the [Military Mission Line], without sufficient surface limiting stipulations and/or oil and gas activity restrictions mutually agreed by the DOD and [Department of the Interior], military flexibility in the region would be lost and test and training activities would be severely affected,” it stated. The report is likely to provide significant fodder to Florida leaders, Democrats and others who want to keep the eastern Gulf closed to oil and gas drilling. 

      Pipeline firms must pay minimal damages, repair only 10 acres of wetlands: federal judge -  A federal judge on Friday (May 4) awarded only $1,102 in damages to Plaquemines Parish landowners who filed suit against major national pipeline companies for eroding their wetlands, and only ordered the companies to restore 9.6 acres of wetlands that she found they had allowed to erode.U.S. District Judge Jane Triche Milazzo reaffirmed her August 2017 ruling that found that Tennessee Gas Pipeline Co. LLC and Southern Natural Gas. Co. LLC, both subsidiaries of Kinder Morgan, and the privately owned High Point Gas Transmission LLC and High Point Gas Gathering LLC, had to repair some of the erosion that had occurred since 1953 along the paths of their canals through property largely owned by New Orleans-based Vintage Assets Inc. in the Breton Sound basin in Plaquemines Parish.The closely-watched lawsuit was believed to have the potential of setting a precedent for other suits filed against oil and gas production companies on whether or how damages should be tallied for the effects of pipeline or other production work on coastal wetlands. There are several dozen suits pending in state courts that have been filed by a half-dozen Louisiana parishes in an attempt to force restoration or recoup damage payments.A spokesman for Kinder Morgan said the company planned on appealing the ruling, despite the potentially small costs the company would face.

      Louisiana State Court Declares Bayou Bridge Pipeline Permit Illegal - A Louisiana judge recently ruled that the state regulators violated guidelines when it issued Energy Transfer Partners ' controversial Bayou Bridge pipeline a coastal use permit.  The permit was issued for the last 18-mile stretch of the fracked oil pipeline that would have run through the riverside town of St. James Parish, where dozens of refineries and industrial facilities are already fueling a public health crisis in the mostly African-American community.  The proposed 162-mile Bayou Bridge pipeline would connect the contentious Dakota Access Pipeline to the Gulf of Mexico.  As noted by the Bridge the Gulf Project , the judge ruled that the permit granted by the state's Department of Natural Resources (DNR) was illegal because it did not take into consideration the impacts the project would have on the town.  In his April 30 decision, made public on Monday, 23rd Judicial District Court Judge Alvin Turner Jr. held, "Once constructed, this pipeline has the potential to impact some of Louisiana's most coveted and ecologically sensitive areas such as the Atchafalaya Basin, as well as other wetlands through Louisiana."  He also wrote, "the permit application does not include an emergency response plan nor does it address potential spills that may occur after construction once the pipeline is operational."  Among other decisions, the court ordered DNR to require the pipeline builders "to develop effective environmental protection and emergency or contingency plans relative to evacuations in the event of a spill or other disaster."

      Court to hear challenge to Winona County's sand mining ban - Winona County, Minnesota's only county to ban the mining of silica sand for use by the oil and gas industry in hydraulic fracturing, goes to court Monday to defend the ban. Minnesota Sands LLC, which holds extensive mineral rights in southeastern Minnesota, is challenging the legality before the Minnesota Court of Appeals.  Southern Minnesota and western Wisconsin have rich deposits of a form of silica that's in high demand for hydraulic fracturing. The pure quartz sand from the region's soft sandstone is strong enough to prop open cracks without being crushed, and the round grains are ideal to let oil and gas flow through. The Winona County Board adopted the ban in 2016 after public hearings that drew large crowds. The Land Stewardship Project spearheaded a 17-month grassroots campaign, citing risks to public health, air and water; damage to the scenic landscape of southeastern Minnesota; the impact on roads from heavy truck traffic and the loss of farmland. Minnesota Sands LLC sued, arguing it was an unconstitutional restraint on interstate commerce and it made worthless the company's mineral rights leases on nearly 2,000 acres of land in the county. The company says the silica sand there is worth between $3.6 billion and $5.8 billion. Winona County District Judge Mary Leahy rejected those arguments last November, so the company appealed.  Minnesota Sands says the ban violates the Commerce Clause of the U.S. Constitution, which gives Congress the power to regulate interstate commerce. The clause historically has been viewed as a restriction against state laws that discriminate against or unduly burden interstate trade. The company's lawyers note that Winona County's ordinance allows sand mining for local use in construction, landscaping and agriculture, but not for uses outside the local area. 

      Texas Residents Urge Rejection of World's Largest Plastics Plant: 'Millions of Gallons of Toxic Wastewater a Day' Would Be Dumped Into Corpus Christi Bay -- The Center for Biological Diversity and more than 1,100 Texas residents are demanding that Texas regulators reconsider issuing a wastewater permit to a project that would be the world's largest plastics plant. The facility, funded by ExxonMobil and the Saudi Arabian government, would discharge more than 13 million gallons a day of toxic wastewater. It will exceed legal pollution standards, as the Center for Biological Diversity notes in a petition filed Wednesday with the Texas Commission on Environmental Quality.  The plant, which would receive more than $1 billion in state tax breaks, would "crack" the ethane in natural gas to produce almost 2 million tons of ethylene and polyethylene annually. Polyethylene pellets are the basic building blocks of plastic products. The Texas plant is part of a multibillion-dollar push by the fossil fuelindustry to increase global plastic production by 40 percent over the next decade. "This facility will dump millions of gallons of toxic wastewater a day into beautiful Corpus Christi Bay. That's right in the middle of critical habitat for endangered whooping cranes," said Emily Jeffers, an attorney with the Center for Biological Diversity. "Texas and its wildlife will pay a heavy price just to produce more cheap plastic that will litter our oceans and landscapes. Texans don't want toxins in their bays and rivers, and they don't want plastics polluting our oceans and seafood."

      Visualizing the Oil Boom in the Permian Basin - The Permian Basin is a booming shale-oil producing region in the United States, which is located in western Texas and southeastern New Mexico. According to a 24 April 2018 article in Bloomberg, the region could very well grow into the largest oil patch on Earth in the next decade.  The Permian shale play is all about setting records. Now, the region may even become the world’s largest oil patch over the next decade.  Output in the basin is forecast to reach 3.18 million barrels a day in May, according to the Energy Information Administration. That’s the highest since the agency began compiling records in 2007. By 2023, the basin may produce 4 million barrels a day, according to the International Energy Agency. The Ghawar field in Saudi Arabia is currently the world’s biggest oil field, with capacity of 5.8 million barrels a day, according to a 2017 EIA report. This is all thanks to the size of the oil deposits, coupled with increased technology and efficiencies. “The technology is the biggest driver,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “The basin in and of itself could end up being the largest oil field in the world, even bigger than Ghawar in Saudi Arabia." By contrast, top-producing members of OPEC such as Iran and Iraq pump less than 5 million barrels a day. Iran produced about 3.81 million barrels day in March, according to data compiled by Bloomberg.   “If the Permian was part of OPEC, it would be the fourth-largest OPEC member, right behind Saudi Arabia, Iran and Iraq,” Thummel said. “By the end of the year, the Permian probably overtakes Iran.”  We've been playing with NASA's Worldview application, and specifically with the filters that allow access to the nighttime lights imagery that NASA has created for its "Black Marble" projects for 2012 and 2016, and also the real-time imagery captured by NASA's Suomi National Polar-orbiting Partnership (NPP) satellite. In the following animated image, we'll show you how nighttime lights in the Permian Basin has changed from 2012 to 2016 and then on to a snapshot from 26 April 2018, which makes for a nice companion image to go along with Bloomberg's article.

      Permian gas prices collapsing as production tests takeaway capacity limit - Production of crude oil and associated gas in the Permian continues to rise, despite pipeline takeaway constraints that have widened crude spreads and depressed natural gas prices at the Waha Hub. But while oil can be — and is being — transported by trucks and railroads when crude pipelines are full, natural gas needs to be either piped away or flared, and Permian gas production is now approaching the effective maximum takeaway capacity out of the basin. While a slew of new projects have been announced to relieve the Permian gas takeaway problem, the new capacity won’t arrive soon enough to keep Permian production from hitting the takeaway-capacity wall sometime in 2019.  Today, we begin begins a series examining Permian production trends and their implications for pipeline flows and pricing in Texas.We’ve been beating the drum for some time now in the RBN blogosphere about the coming onslaught of crude and associated gas production out of the Permian and the need for more pipeline takeaway capacity from the basin (see Omaha, Help on the Way, Witchy Waha, and It Was Good Living With You, (W)aha). More recently, in our All Dressed Up With Nowhere to Go blog series on Permian crude, we’ve been discussing takeaway constraints on the oil side and their deleterious effect on the crude price at Midland versus destination markets like the Cushing, OK, hub and the Gulf Coast. But with West Texas Intermediate (WTI) prices at close to $70/bbl — and Permian breakeven costs south of $40/bbl for many producers — differentials of $10, $15 or even $25/bbl probably would do little more than slow the pace of Permian production growth for crude and associated gas.

      US oil producers battle to meet Iran shortfall - As President Donald Trump’s decision to reinstate sanctions on Iran sends oil prices higher, consumers and the administration might hope that US producers could come to the rescue with increased production.But logistical constraints, in particular insufficient pipeline capacity at the heart of the US shale boom in west Texas, are limiting how quickly American companies will be able to replace any lost Iranian crude exports taken off the global oil market.The difficulties being experienced in shale country help explain why the US has talked to large oil producers abroad about ways to increase supply and offset any impact from its exit from the Iran nuclear deal. The talks were revealed by Steven Mnuchin, Treasury secretary, hours after Mr Trump’s announcement on Tuesday.Oil produced in the Permian Basin of Texas and New Mexico, the white-hot centre of the shale boom, is becoming trapped with no easy route to a refinery or an export terminal.The hectic pace of drilling and the productivity gains have boosted output from the Permian Basin by 60 per cent in the past two years, to 3.2m barrels a day. The problem is that the pace of the boom is straining the ability of the region to keep up, with workers, with equipment and with pipelines.  “There is a huge capacity issue,” says John Zanner of RBN Energy, a research firm. “For all intents and purposes, pipelines are full.”

       Exclusive: US official appeared to delay protections for endangered species at behest of oil group -- The Texas hornshell is a sleek green-grey mussel that once thrived in the Rio Grande watershed,  Amid a long-term decline in its range, the Obama administration in 2016 proposed to declare the mussel an endangered species. Upon taking office, however, the Trump administration changed tack.A top interior department official, Vincent DeVito, appears to take credit for helping to delay federal protections for the species at the behest of fossil-fuel industry groups, one of several examples of his willingness to prioritize the needs of extractive industries with business before the government, according to public records obtained by the Guardian and Pacific Standard as well as Documented and the Western Values Project, both watchdog groups.DeVito, a Boston energy lawyer and the former co-chair of Donald Trump’s presidential campaign in Massachusetts, is a little-known figure in the US government. He is one of a host of political appointees hired by Ryan Zinke, the interior secretary whose department oversees well over 400m acres of public land and can determine the fate of species that inhabit them. Yet DeVito is now emerging as a critical player. At a speech last summer to Americans for Prosperity, a political advocacy group backed by the Koch brothers, DeVito described his role at the department as “the office of energy dominance”. Officially, there is no such office, though “energy dominance” has become a slogan for the interior department’s fossil-fuel-first policy agenda.  “The war on American energy is over,” DeVito told the activists, according to a recording of the speech obtained by the Guardian. “And, matter of fact, if there is a war, we’re going to win it and we’re going full bore,” he said, before adding that the administration’s approach would be a “responsible” one.

      Pipeline Spews Raw Crude Oil in Oklahoma City -Raw crude oil spewed from a ruptured Sunoco pipeline in Oklahoma on Thursday. The Oklahoma City Fire Department and hazmat crews responded to the situation after receiving reports of a " yellow liquid " shooting into the air near an oil and gas well site in Edmond, a suburb outside of Oklahoma City.Officials briefly closed off a section of road on Pennsylvania Avenue and denied access to some homes in the neighborhood north of the release. The neighborhood was not evacuated."This is all taken care of now," the fire department tweeted later that afternoon. Cleanup efforts are underway.News 4 reported that the leak from Sunoco's pipeline occurred in the area of a natural gas booster plant operated by Colorado-based DCP Midstream.The release occurred in a well-populated area, with many houses surrounding the facility. Some residents expressed dismay after their property was coated in oil. One tweeted to DCP Midstream, "a massive leak at your facility in Edmond, OK, just coated my entire house and my neighborhood with crude. What are you going to do to clean it up?!?" A DCP spokesperson told News 4 it has no control over the Sunoco pipeline but is assisting with cleanup.

      Lawsuit: Energy company cut safety budget before fatal blast — A shareholder lawsuit alleges Anadarko Petroleum was focused on keeping oil and gas flowing from older wells, not fixing potential safety problems, in the months before a fatal house explosion in Colorado linked to an Anadarko well. The lawsuit cites former company employees as saying Anadarko had slashed its safety budget and staff and had only a skeleton crew for refurbishing wells. “A well’s potential safety risks, and whether it was located in a residential area or near a school, played no part in whether it was chosen for remediation,” the lawsuit said. The claims are in court documents filed last year. They were first reported Tuesday by the Colorado Independent. Company spokeswoman Jennifer Brice said Anadarko does not comment on pending lawsuits. The lawsuit said Anadarko’s actions caused stock prices to fall, hurting investors. The lead plaintiff is the pension fund for the Philadelphia Iron Workers union, which owns Anadarko stock. The lawsuit was filed in federal court in Texas, where Anadarko is based. Two people died and a third was injured in the April 2017 explosion in the town of Firestone, about 30 miles (50 kilometers) north of Denver. Investigators said the explosion was caused by odorless, unrefined natural gas from a pipeline that was severed about 10 feet (3 meters) from the house. The line was believed to be abandoned but was still connected to an operating Anadarko well with the valve turned to the open position, investigators said. Authorities said the gas seeped into the home’s basement. The investigation is still underway. 

      Landowners, Environmentalists Unite to Stop Gas Export Facility - Sierra Magazine - When Clarence Adams learned that a Canadian company could use eminent domain to seize his land in order to move fracked gas through a pipe en route to Asia, he was outraged.“I’ve spent 27 years trying to pay off my land,” says Adams, gesturing at the mature oaks and conifers gracing his eight-and-a-half-acre property outside of Tenmile, Oregon. “If there’s a break in that pipe and a fire, my house is toast.” Adams is part of a stubborn contingent of holdouts who are refusing to sell easements for the Pacific Connector Gas Pipeline—a proposed gas conduit that, if built, would move fuel to Jordan Cove, a proposed liquefied natural gas (LNG) facility in Coos Bay, Oregon. Once there, the gas would be super cooled, loaded into tankers, and shipped to markets in Asia.  The project has met with fierce local resistance since it was first introduced in 2004 as an import project. When the North American fracking boom led to a glut of gas domestically, project planners flipped Jordan Cove into an export terminal—one of many LNG terminal projects proposed for the United States and Canada over the past several years. Opponents say the Pacific Connector pipeline route is ill considered. The proposed route crosses 400 known waterways and much of it is forested. The pipeline would require a 95-foot temporary and a 50-foot permanent easement along its length, and local residents say simply building it could degrade water quality and further fragment the forest.   The proposed Jordan Cove LNG terminal would be built on Coos Bay’s sandy north spit, well within the tsunami zone. Eighteen million cubic yards of sediment would be removed just to widen and deepen the channel, destroying clamming beds and fish habitat. If built, the LNG facility and supporting pipeline would help fuel global climate change, as they would incentivize the drilling of new gas wells in the American West and in Canada.

      Pembina says market fundamentals offer hope for Jordan Cove LNG project - Pembina Pipeline executives said Friday they are more confident than in the past of being able to advance the Jordan Cove LNG export project in Oregon, thanks to stronger netbacks on shipments to Asia and expectations of tighter global supply by early next decade. Pembina, which took control of the five-year-old project following its acquisition of Veresen in October 2017, has yet to reach a final investment decision on the terminal and Pacific Connector Pipeline, which would deliver feedgas to the facility. But it continues to talk to prospective buyers to secure long-term contracts. It also is spending money on development and seeking regulatory permits. Among the second wave of US export projects, Jordan Cove is currently the only one being developed on the West Coast, a location that would offer buyers a shorter route to Asia than from other facilities concentrated largely on the Gulf Coast. During a conference call with investors to discuss first-quarter financial results, executives said competition from LNG Canada's proposed export terminal in British Columbia, which is expected to reach FID by October, won't interfere with Jordan Cove's plans. And, they said, recent market fundamentals point to a stronger case for the need for Jordan Cove. "It certainly has its challenges, but with the run-up in prices in Tokyo, and now I think there is pretty broad consensus that we'll be short LNG capacity in the 2020-2023 timeframe, it's kind of shined a light on that project," CEO Michael Dilger said on the call. It was Jordan Cove's failure to show sufficient demand for its project that was cited by the US Federal Energy Regulatory Commission as a key reason for the agency's denial in March 2016 of the operator's first permit application. Less than two weeks later, the project secured a preliminary agreement covering key commercial terms with one Japanese firm, Jera, and the next month it reached a preliminary agreement with another, Itochu. 

      Trans Mountain Pipeline protesters arrested in downtown Seattle - Police arrested 14 demonstrators protesting tar-sands development and the proposed Trans Mountain Pipeline in Canada on Monday after they occupied the lobby of the Russell Financial Center and shut down traffic at Second Avenue and Pine Street with four tepees erected in the middle of the road.Police diverted traffic around the area. Interim Police Chief Carmen Best was present, and protesters were eventually told to disperse or face arrest. More than a dozen remained in the street, and they were peacefully placed in restraints and loaded onto a police van.Chase Bank in particular was targeted for its investment in the Trans Mountain Pipeline.The pipeline project — an expansion of an existing pipeline — would run from Alberta to British Columbia, where its oil would be loaded onto tankers that would travel the Strait of Juan de Fuca, tripling traffic and further endangering the already critically endangered southern resident killer whale population.  Opposition to the expansion has been fierce, and has included the provincial government in British Columbia, as well as many First Nations leaders. Developer Kinder Morgan curtailed spending on the $7.4 billion expansion in April, blaming opposition and delays in British Columbia, and setting a May 31 deadline for the federal and provincial governments to find a solution or risk canceling the project.That would suit opponents fine. “The message to JPMorgan Chase is they are contributing to climate disaster,” Rachel Heaton, a member of the Muckleshoot Indian Tribe, said during Monday’s demonstration. “We will continue taking over banks until we are heard.”

      An Arctic about-face: Alaska natives, who fought offshore oil projects, now leading the charge to drill - For years indigenous people living in small villages along Alaska’s Arctic coast fiercely fought offshore drilling. Now they want a piece of the action.When Shell first showed up in 2007 with a fleet of drillships and support vessels, and parked them in the migration path of the bowhead whale in the eastern Alaska Beaufort Sea, the Inupiats went to court. An injunction from the US Ninth Circuit stopped the company and started a chain of problems that would ultimately defeat Shell’s multibillion dollar Arctic initiative.Fast-forward to 2018. The Inupiats have now taken over Shell’s offshore Beaufort Sea leases, where there were also earlier oil discoveries, and intend to develop them, most likely by partnering with larger firms. In a decade, indigenous people in northern Alaska have come full circle, from hostility to cautious embrace of offshore drilling.Arctic Slope Regional Corporation, owned by all Inupiats of the North Slope, is playing its cards close on its plans for 20 former Shell OCS leases off Camden Bay, in the Eastern Beaufort.The US Bureau of Safety and Environmental Enforcement approved the transfer of Shell’s leases to ASRC April 13. The area is highly prospective and includes Union Oil’s small “Hammerhead” oil discovery made in 1986 and two Shell prospects, Sivulliq and Torpedo, outlined in 2012. A well was partly drilled by Shell at Sivulliq but not completed.

      How Wall Street Enabled the Fracking ‘Revolution’ That’s Losing Shale Oil Companies Billions --The U.S. shale oil industry hailed as a “revolution” has burned through a quarter trillion dollars more than it has brought in over the last decade. It has been a money-losing endeavor of epic proportions. In September 2016, the financial ratings service Moody’s released a report on U.S. oil companies, many of which were hurting from the massive drop in oil prices. Moody’s found that “the financial toll from the oil bust can only be described as catastrophic,” particularly for small companies that took on huge debt to finance fracking shale formations when oil prices were high. And even though shale companies still aren’t turning a profit, Wall Street continues to lend the industry more money while touting these companies as good investments. Why would investors do that? David Einhorn, star hedge fund investor and the founder of Greenlight Capital, has referred to the shale industry as “a joke.” “A business that burns cash and doesn’t grow isn’t worth anything,” said Einhorn, who often goes against the grain in the financial world. Aren’t investors supposed to be focused on putting money toward profitable companies? While, in theory, yes, the reality is quite different for industries like shale oil and housing. If the U.S. financial crisis of 2008 has revealed anything, it is that Wall Street isn’t concerned with making a “shitty deal” when it means profits and bonuses for its traders and executives, despite their roles in the crash. Wall Street makes money by facilitating deals much like a Vegas bookie makes money by taking bets. As the saying about Las Vegas goes: “The house always wins.” What’s true about casinos and gambling also holds true for Wall Street.

      E&P's return to profitability in 2017 tied largely to post-crash discipline and focus -  It’s no surprise that the plunge in crude oil prices between mid-2014 and early 2016 was a five-alarm wake-up call for the 44 exploration and production companies we follow. To deal with the trauma of the crude price collapse — and generally soft natural gas prices to boot — the industry undertook a dramatic strategic and operational transformation that enabled it to climb out of a huge hole and return to profitability in 2017. Key factors driving this impressive turnaround included the high-grading of portfolios, intense capital discipline and a heightened focus on operational efficiencies. However, the trajectory of recovery has varied from company to company because of the pace of their portfolio transformations, their geographic focus and, most significantly, the commodity mix of their production. Today, we look at how specific E&Ps within our three peer groups — Oil-Weighted, Diversified, and Gas-Weighted — have been working their way back to black. In Part 1 of this two-part series, we noted that our universe of 44 E&P companies went through a major rough patch mid-decade, swinging from $57 billion in pre-tax operating profits in 2014 to $131 billion in losses in 2015. They clawed their way back, though, trimming their losses to $31 billion in 2016 and reporting $1.6 billion in pre-tax operating profits in 2017. Thirty-seven of the 44 companies vaulted into the black in 2017, compared with just four reporting pre-tax operating profits in 2016. They generated more than $81 billion in pre-tax operating cash flow in 2017, compared with the $49 billion they posted in 2016. And while oil prices have risen to near $70/bbl in recent weeks, our E&Ps have not let down their guard. We estimate that cash flows for these companies will increase another $30 billion — or 37% — in 2018, to $111 billion. Now we kick-off our deeper dive into the 44 companies we cover, through the prism of our three peer groups.

      As Rest of World Moves Towards Renewables, US Keeps Offering Exclusive Tax Breaks for Fossil Fuels: About a half decade ago, as the shale drilling rush was sweeping across the US, drillers needed upfront cash -- and quick -- to let them snap up acreage, drill and frack exploratory wells, and hone their skills at the horizontal drilling and hydraulic fracturing (fracking) that fueled an oil and gas boom. Bankers and financiers began attending shale industry conferences, marketing a clever idea. By dusting off an obscure part of the tax code, drillers and pipeline builders could attract a different class of investor than would usually look at a boom-and-bust prone industry, an investor hunting for stability and predictability. Form a Master Limited Partnership, or MLP, shale drillers and pipeline builders were advised, and you'll be able to access that capital.The pitch for investors on MLPs was hard to resist: They "offer high yields and low taxes," as the Financial Times described them in 2013. The tax benefits were a huge part of the draw, especially for wealthy investors (not just individuals, but also pension funds, which poured in billions).The biggest benefit: a tax loophole that lets MLPs dodge so-called "double taxation," paid by regular corporations and much-hated by investors, in which tax is paid both by the corporation on earning money and by investors as personal income. No corporate income tax, more money to go around for everyone but the government.In 2000, MLPs had a total market value of less than $14 billion; by 2014, they had drawn over $500 billion in investments and some people were breathlessly predicting MLPs could wind up a trillion-dollar asset class.And MLPs offer another quirk that investors found exciting. Holders not only stand to collect "distributions," or a percentage of profits every three months, they can also trade MLP shares like stocks, meaning there were two ways to profit during the sector's rapid expansion. Meanwhile, the tax benefits were substantial -- from 2009 to 2012, MLPs shaved $13 billion dollars off their beneficiaries' tax bills, one 2013 report calculated.

      Trouble On The Way As Implementation Of IMO's Low-Sulfur Bunker Rule Looms -- Shipowners and refiners are struggling with how to prepare for January 1, 2020, when all vessels involved in international trade will be required to meet significantly stricter limits on emissions of sulfur oxides (SOx), either by using fuel with a sulfur content of less than 0.5% or by “scrubbing” the exhaust of ship engines when using the much higher-sulfur bunker fuel that most ships now rely on. The International Maritime Organization’s (IMO) new sulfur rule isn’t a minor tweak. It’s a game changer that already is causing widening spreads on the futures market between 3.5%-sulfur heavy fuel oil (HFO) — the traditional global bunker fuel — and rule-compliant low-sulfur distillates. The rule also promises to be a boon to complex Gulf Coast and other refineries that can break down residual-based HFO into higher-value, lower-sulfur distillates. Today, we begin a new series on how shipowners, refiners and the markets for HFO and low-sulfur marine fuel are responding (or not) to the coming change in global bunker requirements.

      Ex-Venezuela Oil Boss: PDVSA Is Collapsing - The man who ran Venezuela’s state oil company PDVSA for a decade after 2004 says that the country’s oil firm is on the cusp of total collapse and expects oil production to drop by 600,000 bpd each year amid lack of investment. Rafael Ramirez, who has long been a rival of Venezuela’s incumbent leader Nicolas Maduro within Hugo Chavez’s inner circle, told Bloomberg in a phone interview that “PDVSA may fall into an accelerated spiral downward.” According to OPEC’s secondary sources, Venezuela’s oil production averaged 2.154 million bpd in 2016 and 1.916 million bpd in 2017. In March 2018, its production plunged to 1.488 million bpd. Ramirez became oil minister in 2002 and then head of PDVSA in 2004. During his ten-year tenure at the company, Venezuela’s production dropped by 10 percent. Since Ramirez left PDVSA, oil production has lost another 30 percent, with the steepest drops occurring over the past two years amid total economic collapse and lack of investment.At the end of last year, Venezuela said that it would launch a criminal investigation into Ramirez over alleged corruption in a wider graft probe that ended with dozens of oil executives arrested.The lack of knowledge and experience among the top oil men in Venezuela, together with infighting within the oil circles, has led to PDVSA’s plunging production, Ramirez told Bloomberg. He also thinks that Venezuela may need to increasingly give control of PDVSA to international companies operating there. Ramirez is currently in a self-imposed exile in a European city.

      Conoco aims to seize PDVSA oil inventories in Curacao: sources (Reuters) - ConocoPhillips is trying to seize PDVSA’s [PDVSA.UL] oil assets at the 335,000-barrel-per-day (bpd) Isla refinery in Curacao, which would expand its control over the Venezuelan state-run company’s barrels for export, according to sources close to the matter. Under court orders to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC), the U.S. oil firm last week temporarily seized about 4 million barrels of crude that PDVSA had stored on the Dutch Caribbean island of St. Eustatius and took control of a terminal on Bonaire, prompting PDVSA to move several oil tankers away from the region. Conoco’s actions could affect PDVSA’s ability to export some 400,000 bpd shipped from the Caribbean, or about a third of its total exports, according to Reuters calculations based on the state firm’s internal reports. The legal maneuvers further imperil PDVSA’s declining oil revenue and Venezuela’s economy, which is in deep recession with shortages of medicine and food. OPEC-member Venezuela is almost completely dependent upon crude exports, which slid 29 percent to 1.19 million bpd in the first quarter, according to Thomson Reuters Trade Flows data. Its refineries ran at just 31 percent of capacity from January through March. Piling pressure on Venezuela, Canadian mining company Rusoro is seeking the attachment of assets belonging to Citgo as part of an arbitration dispute, according to a Monday filing in the Southern District of Texas. In 2016, Rusoro was awarded more than $1.2 billion in damages awarded by a World Bank tribunal that ruled that Venezuela had unlawfully seized the company’s gold mine, but Venezuela has yet to pay. Conoco’s writs of attachments, served through at least two court orders on facilities in Aruba, Bonaire, Curacao and St. Eustatius, are seen as a legal maneuver to temporarily retain assets — from stored oil, to cargoes and facilities — and could empower the U.S. company to sell them later. 

      ConocoPhillips Appears Ready To Take Control Of Venezuelan Oil Sector Assets To Enforce $2 Billion Arbitration Award -- May 7, 2018 -- From SeekingAlpha:

      • ConocoPhillips has moved to take Caribbean assets of Venezuela’s PDVSA oil company to enforce a $2B arbitration award, actions that could further harm PDVSA's declining oil production and exports
      • COP has targeted facilities on the islands of Curacao, Bonaire and St. Eustatius that accounted for ~25% of Venezuela’s oil exports last year and play key roles in processing, storing and blending PDVSA’s oil for export
      • COP’s actions could further impair PDVSA’s declining oil revenue and Venezuela's collapsing economy; the country is almost completely dependent on oil exports, which have fallen by a third since its peak and its refineries ran at just 31% of capacity in Q1
      See post, May 5, 2018, just two days ago.

      Why Russian Gas Is Critical For The UK - Although some companies have learned to ride the waves of geopolitics quite efficiently, still in most cases political tensions only complicate the dealings of energy companies. The Skripal poisoning case has driven a massive political wedge between the United Kingdom and Russia (nations whose relations are historically strained already) and is on the verge of blighting their energy ties. The UK Government’s threats to ban Russian gas imports altogether would be a very short-sighted step, the harm of which would take many years to undo. As opposed to the usual rhetoric of ‘‘safeguarding energy security“ and ‘‘countering Russian influence“, both London and Moscow have a lot to win from a good energy relationship.The Skripal case is slowly turning into a whodunnit where no one will tell you what really happened and you have to reconstruct everything by yourself – why was the allegedly lethal nerve agent not that lethal, who perpetrated the poisoning and how exactly. Usually when analyzing foreign affairs‘ scandals, it is imperative to look at who could benefit from such a deterioration. One thing is for sure – energy companies only stand to lose. Firstly, British companies might see their maneuvering space narrowed down, especially against the background of Brexit jeopardizing Britain’s adherence to the internal energy market (IEM) of Europe. Although the May government wishes to remain in the IEM, so as not to risk the potential $700 million per year expenses it could bear in a worse-case scenario breakup. Even if a disaster can be averted and the United Kingdom would stay, regardless if in a limited or full-fledged manner, in the IEM, infrastructure funding from EU funds will almost certainly evaporate. This could be one of the Brexit’s most serious energy consequences, since 16 EU projects of common interest are UK-related, without funding from Brussels, many fall into the risk category of not being implemented. Continental Europe might turn out to be more resolute vis-à-vis UK Brexit demands than expected, for instance, it might justifiably ask whether the €9 billion invested in British electricity and gas projects in 2012-2017 under EIB auspices could have been allocated someplace else. But the risk of relinquishing on Paneuropean trade preferences and investment is not the only specter haunting the UK’s energy specialists.

      Europe Buys More Russian Gas Despite Strained Relations - The West-Russia relations have reached a new low since the Cold War amid the spy poisoning scandal in the UK, allegations of Russian meddling in elections, and fresh U.S. sanctions on Russia. Yet European countries continue to buy increased amounts of Russian gas, and Russia’s state-held gas giant Gazprom is boosting production and exports, and is obtaining approvals in individual countries for its Nord Stream 2 gas pipeline that has divided the EU over fears of a tightening Russian grip on gas supplies. In recent months and weeks, Gazprom has taken advantage of high demand in Europe and of decreased gas supplies to Europe from Russia’s competitors, Maxim Rubchenko writes for Russian news agency RIA Novosti. Russia—which already supplies around one-third of Europe’s gas—boosted deliveries in the winter, one of the coldest winters in Europe in the past decade, and continues to ship higher volumes even after the winter, as gas importing countries replenish gas storage supplies that had been drained amid the cold snaps.  Gazprom gas deliveries to Europe reached an all-time high in March, beating a previous record from January 2017, the Russian company says. In the first quarter of this year, Gazprom’s gas supply to Europe increased by 6.6 percent compared to the same quarter last year. Gazprom’s gas deliveries to European countries in April, even after the winter heating season ended. Demand in Europe has stayed high after the winter ended. First, because gas storage levels were low, and second—because some of the other traditional gas-supplying countries have decreased supplies over issues or maintenance at facilities.Norway, Russia’s closest competitor, had to cope with an unplanned outage at the Skarv gas field and Kollsnes processing plant in April. Flows to Europe were reduced after a compressor at the Skarv field in the Norwegian Sea failed. In the south, Libyan gas flow from the Greenstream pipeline to Italy was stopped on April 2 due to maintenance to integrate gas from a new phase of development at the offshore gas field Bahr Essalam. The maintenance was initially expected to be completed in two weeks, on April 18, but the resumption of gas supplies has been postponed several times, so Italy received no gas from Greenstream for the whole month of April.

      European pipeline constraints could limit Russian natural gas imports An increase in Europe's natural gas import requirements in the next two years could test the transit network for Russian gas, potentially even leading to Gazprom being unable to meet European demand and a spike in gas prices during high-consumption periods, analysts at the Oxford Institute for Energy Studies (OIES) have warned. The colder-than-average weather in Europe in February and March saw increased European demand for Russian gas, with the monthly utilization rate rising to 86% in March, the OIES said in a paper published Wednesday. Gazprom supplies to the Far Abroad (Europe plus Turkey, but not the countries of the former Soviet Union) hit an all-time daily record of 713 million cu m on March 2. "The system is approaching full utilization during winter months," the OIES said."Any further increase in Russian gas deliveries to Europe -- northwest Europe in particular -- in 2018/2019 could see a greater number of days on which the system is full should Europe experience another cold winter in the context of a continued decline in European gas production," it said."If the rise in European import demand is substantial enough, this bottleneck could be sufficient to cause a 'shortage' of Russian gas relative to demand, and price surges on the European spot gas market."

      Is Australia running out of fuel? PM orders supply review - BBC News: The Australian government has ordered a review of fuel security after experts warned the country only has weeks of petrol, diesel and aviation fuel supplies left in its reserves. The country's energy minister, Josh Frydenberg, said it was the "prudent and proper thing to do" but should not be interpreted as Australia having a fuel security problem. The International Energy Agency expects countries to have 90-days worth of fuel in reserve, but Australia has not met those levels since 2012.  In January this year, the latest data available, Australia held just under 50 days worth of fuel stocks. Five years ago, it had nearly double that amount.The Australian Petroleum Statistics 2018 cites Australia as having 23 days worth of petrol, 20 days aviation fuel and 17 days diesel oil in reserve to use in an emergency. The remainder would come from overseas credits - a system that would allow Australia to buy from overseas if things went badly wrong.Australia is currently dependent on imports for more than 90% of its fuel needs. The crude oil comes from the Middle East and is processed at refineries in South Korea, China and Singapore.  It is then shipped to Australia as diesel, aviation fuel and petrol.  Mr Frydenberg says Australia's reliance on imported fuel has increased in the last 10 years because "three of Australia's seven domestic refineries have closed and our domestic oil production has declined by a third as existing fields become exhausted".

      China issues 19.33 mil mt oil export quotas under general trade route --China has allocated 19.33 million mt of oil product export quotas under the general trade route to the country's five state-owned oil companies -- CNPC, Sinopec, CNOOC, Sinochem and China National Aviation Fuel, market sources said late Sunday. The new allocations bring the total oil product quotas allocated, comprising the processing trade route and the general trade route, to 39.33 million mt to date this year, equating to 96% of the actual products outflow volume in 2017 and 91.5% of the total quotas allocated last year. This is the second round of allocations for oil products export this year. Market sources expected additional quotas for gasoil and jet fuel would be released under the processing trade route soon. This is because export demand for both products is estimated to be strong in 2018, while the year-to-date quota allocations are below those for the full 2017 year. In contrast, gasoline quotas issued to date this year are 6% higher than the 2017 quota. Moreover, "the barrels exported from bonded storage, which for refueling airplanes or vessels for international voyage, are required to be exported under the processing trade route," said a Beijing-based trader. Beijing issued 120,000 mt of export quota for gasoil under the processing trade route in the first round, and 3.56 million mt for jet fuel. Market sources said it was possible there would be only two quota allocation rounds this year, with the total volume similar to that for the whole of last year. 

      Ways India could be affected by U.S. decision to pull out of Iran nuclear deal - Despite United States President Donald Trump’s decision to pull out of the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal itself won’t be scrapped as long as Iran and the other signatories: the U.K., France, Russia, China, Germany and the European Union remain committed to it.Even so, India could face the impact of the U.S. decision on the deal as well as instituting the “highest level of economic sanctions” in several ways:

      • 1. Oil prices: The impact on world oil prices will be the immediately visible impact of the U.S. decision. Iran is presently India’s third biggest supplier (after Iraq and Saudi Arabia), and any increase in prices will hit both inflation levels as well as the Indian rupee, which breached ₹67 to the U.S. dollar this week. In the past week alone, crude prices have crossed $70/bbl (barrel) level, touching a four-year high. After Iranian President Hassan Rouhani’s visit to New Delhi in February, India committed to increasing its oil imports from Iran, which were expected to double to about 396,000 bpd (barrels per day) in 2018-19 from about 205,000 bpd in 2017-18. Non-oil trade with Iran, which stood at about $2.69 billion of the total trade figures of $12.89 billion in 2016-17 may not be impacted as much, as New Delhi and Tehran have instituted several measures in the past few months, including allowing Indian investment in rupees, and initiating new banking channels, between them.
      • 2. Chabahar: India’s moves over the last few years to develop berths at the Shahid Beheshti port in Chabahar was a key part of its plans to circumvent Pakistan’s blocks on trade with Afghanistan, and the new U.S. sanctions could slow or even bring those plans to a halt depending on how strictly they are implemented. India has already committed about $85 million to Chabahar development with plans for a total of $500 million on the port, while a railway line to Afghanistan could cost as much as $1.6 billion. Last year, the U.S. took a lenient line on India’s wheat consignment of 1.1 million tonnes sent via Chabahar, with the former U.S. Secretary of State, Rex Tillerson, saying the U.S. wanted to target the regime, not the Iranian people. His replacement, Mike Pompeo, and the new U.S. National Security Adviser, John Bolton, have a much tougher line on Iran and any further restrictions they place will make India’s Chabahar plans more expensive and even unviable.

      Hedge funds hold fire as oil prices hit multi-year highs: Kemp (Reuters) - For all the bullish commentary around oil prices at the moment, hedge fund managers have made only minor changes to their overall position in petroleum futures and options in the last few weeks. To the extent they have made any changes at all, fund managers have been reducing rather than adding to bullish positions since the middle of April (https://tmsnrt.rs/2ImLn8d ). Hedge funds and other money managers cut their net long position in the six most important petroleum futures and options contracts by 28 million barrels in the most recent week. Fund managers have reduced their net long position for two consecutive weeks, to 1.376 billion barrels by May 1 from a recent peak of 1.411 billion barrels on April 17. In a repeat of the week before, the liquidation last week was concentrated in crude oil, while portfolio managers increased their exposure to refined products slightly.  The fundamental outlook remains fairly bullish with strong growth in oil consumption, continued output restraint by OPEC and a draw down in oil inventories below the five-year average. Production and exports from Venezuela are declining and the United States is threatening to withdraw from the Iran nuclear agreement which could cut that country’s exports in the coming months. But hedge fund managers have already amassed a near-record bullish position in futures and options contracts linked to crude and fuels. Positioning has become exceptionally stretched and lopsided across the petroleum complex, with hedge funds’ long positions outnumbering short ones by a ratio of almost 12:1 (and as much as 17:1 in the case of Brent). Fund managers show no inclination to add substantially to their existing longs, which may indicate they are fully invested for the time being. 

      WTI Tops $70 For First Time Since Nov 2014 As Iran Deal Deadline Looms - With the Iran Deal looking increasingly fragile, front-month WTI futures have just traded above $70 for the first time since Nov 2014.  $70 just happens to be the 50% retracement from the Aug 2013 highs to the Feb 2016 lows...  As OilPrice.com's Tsvetana Paraskova notes, US President Donald Trump has another week to decide whether to waive the sanctions against Iran. Expectations that he would not waive the sanctions this time around have supported the price of oil over the past month, with Brent briefly breaching above $75 to its highest price level since November 2014.Analysts are still struggling to quantify the impact of possible fresh sanctions on Iran and prices are expected to be volatile as the deadline for President Trump’s decision is getting closer.The month of May could be a very important one for oil prices with geopolitical risks stacked and too close to call. Apart from the Iran sanctions waiver, the market will be looking to the Venezuela presidential election that socialist leader Nicolas Maduro has scheduled for May 20.“The geopolitical landscape will therefore remain tense and price conditions volatile,” Stephen Brennock, an analyst at PVM Oil Associates, told Platts on Friday.Commenting on the Iran sanctions waiver, Commerzbank analysts said in a note:“This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a backseat until this has been resolved”.Even more worrisome, as OilPrice.com's Kent Moors writes, is that Trump walking away from the deal, and possibly re-imposing sanctions on Iran could throw the oil market into chaos.

      ICE Brent rises above $75/b, set to climb higher -- Crude oil futures were higher during Asia mid-morning trade Monday, with front month ICE Brent July futures hitting above $75, while the prompt month NYMEX crude oil June futures stood above $70/b, mainly on the back of the ongoing geopolitical tension between US and Iran coupled with trade war tensions between US and China being back on the table. Investors had shrugged-off higher rig counts and the stronger US dollar, saying that prices were set to hit new highs amid an increase in demand for crude oil. At 11:05 am Singapore time (0305GMT), July ICE Brent crude futures were up 46 cents/b (0.61%) from Friday's settle to $75.33/b, while the NYMEX June light sweet crude contract was up 53 cents/b (0.76%) at $70.25/b. In light of the recent gains in crude oil prices, rig counts in the US rose by nine to 834 for the week ending May 4, marking the fifth consecutive weekly rise, Baker Hughes reported. "The lack of any progress on the US-Iran nuclear waiver is precisely what is pushing oil prices higher as West Texas Intermediate crude oil traded above the $70 mark for the first time since November 2014 on Friday," OANDA's head of trading Stephen Innes said. "We're in the thick of it now as the president has until May 12 to decide whether the US will stay in a deal with Iran or not," Innes added. Meanwhile, industry sources expected a reversal in the recent crude builds in inventory as the impending driving season in US should bolster a healthy demand for gasoline, Mitsubishi Corp.'s senior advisor Tony Nunan said. "On the JCPOA, all signals point to Trump wanting to pull out from the deal but it could be extended one more time. I feel that China and Russia will not re-impose the sanctions ," Nunan added. 

      Oil surges on Venezuela-Conoco dispute, Iran sanction worries  (Reuters) - Oil prices rose for the fourth straight day on Monday to hit levels not seen since late 2014, boosted by the latest trouble for Venezuelan oil company PDVSA and the possibility that the United States could re-impose sanctions on Iran.  U.S. West Texas Intermediate (WTI) crude futures rose $1.01, or 1.5 percent, to settle at $70.73 a barrel. This was the first time since November 2014 that WTI had climbed above $70. Brent crude futures jumped $1.30, or 1.7 percent, to settle at $76.17 a barrel. U.S. oil major ConocoPhillips moved to take Caribbean assets of Venezuela’s state-run PDVSA to enforce a $2 billion arbitration award. “If ConocoPhillips is successful, then it will limit the revenues PDVSA will have and give them even more problems paying their bills and producing their oil,” . In total, the company’s actions would affect about 400,000 barrels per day (bpd) typically shipped from the three locations, about a third of its exports. In the first quarter, PDVSA exported 1.19 million bpd of crude from its terminals in Venezuela and the Caribbean, a 29-percent decline versus the same period last year, according to Thomson Reuters data. Venezuela’s oil output has halved since the early 2000s. U.S. President Donald Trump said a decision on whether to remain in the Iran nuclear deal or to impose sanctions would be announced at 2:00 p.m. EDT (1800 GMT) on Tuesday, four days earlier than expected. “I think it’s a sign that he’s planning on reimposing sanctions, and the only question for oil markets is how soon,” . “I think they would as quickly as possible try to implement the sanctions.” The agreement has a dispute resolution clause that provides at least 35 days to consider a claim that any party has violated its terms. That can be extended if all parties agree.

       Trump Tears Up The Iran Deal - Oil markets saw extreme volatility on Tuesday, with prices originally crashing on rumors that the Iran deal would remain in place before Trump tore it up. On Monday, oil prices jumped to their highest level since late 2014, with WTI jumping above $70 per barrel for the first time in years. Oil gave up some of those gains on Tuesday morning as various media outlets confused the markets with contradictory statements, but as soon as the press conference started, prices started to recover as President Trump announced the end of the nuclear deal and promised to re-impose economic sanctions against the Islamic Republic of Iran.   President Trump said he would announce his decision on the Iran nuclear deal today at 2 pm ET. Oil prices fluctuated in anticipation of President Trump's speech and were down about 2.5% before the broadcast. President Trump mentioned in the conference that his country will re-impose economic sanctions of the ''highest level'' and that they will be instituted in the next couple of months. Analyst estimates vary on the implications, ranging from zero impact to knocking as much as 800,000 bpd offline. French oil giant Total, one of the few western companies with big plans for Iran, is hoping that U.S. action won’t derail its $1 billion deal to help develop the South Pars gas field. "The geopolitical consequences of a possible dismantling of the JCPOA would likely to play a larger and long-lasting role in pushing oil prices higher than short-term policy uncertainty," Michael Cohen, Barclays director of energy market research, said in a research note Monday.  OPEC production dipped in April yet again, falling to a one-year low. According to S&P Global Platts, output fell to 32.0 million barrels per day (mb/d), a decline of 140,000 bpd from March, and crucially, 730,000 bpd below the group’s stated target. The over-compliance is the result of a rapid and ongoing deterioration in Venezuela’s production, plus Iraq’s output dipped for the first time in months.

      WTI Tumbles On CNN Report Trump Won't Withdraw From Iran Deal   WTI Crude is testing a $67 handle, down over 4% this morning, and accelerating lower as CNN reports that Trump will announce new sanctions on Iran but will not withdraw from the nuclear deal...Despite earlier reports that Mike Pompeo has already briefed European leaders on Trump's decision to withdraw, CNN claims he will not and that has sparked more selling in WTI...And Energy Stocks...  And commodity currencies (RUB and CAD getting hit hard)  Perhaps President Trump noticed how soaring oil (and gasoline) prices were eating into his tax cuts? However, CNN also reports that Trump will announce additional sanctions on Iranian oil exports (which should counter the current drop in price) and is expected to allow a grace period to offer Iran Deal proponents an opportunity to renegotiate.

      Oil cuts losses as Trump plans 'powerful' sanctions on Iran, withdraws from nuclear deal - Oil prices cut some of their losses by the closing bell on Tuesday, following President Donald Trump’s announcement that he will impose “powerful” sanctions on Iran as the U.S. withdraws from the Iran nuclear deal.The deal between Iran and a group of world powers had lifted most U.S. and international sanctions on Tehran in return for its agreement to curb its nuclear activities. Some analysts have said the reinstatement of sanctions could lead to tighter global oil supplies as they make it more difficult for Iran to export oil.Iranian production, however, “is unlikely to be significantly impacted by pulling out of the agreement unless [Trump] can convince other allies to reimpose sanctions,”   June West Texas Intermediate crude oil fell by $1.67, or nearly 2.4%, to settle at $69.06 a barrel on the New York Mercantile Exchange. It hit a low of $67.63, marking a drop of as much as 4.3% from Monday’s finish. Futures closed 1.5% higher at $70.73 a barrel on Monday, the highest settlement for a front-month contract since Nov. 26, 2014, according to FactSet data.International benchmark July Brent crude fell $1.32, or 1.7%, to $74.85 a barrel on ICE Futures Europe. On Monday, the contract finished up 1.7% to $76.17—also the highest finish since late November 2014.Trump on Tuesday called the 2015 Iran deal “defective at its core” and said he would institute “the highest level of economic sanctions.” The sanctions come into effect after a “wind-down” period, according to the U.S. Treasury Department. For now, the current oil price movement has reflected a “buy on the rumor, sell on the news” reaction

      Why oil prices didn't rally after Trump announced 'powerful' Iran sanctions - President Donald Trump’s decision to pull the U.S. out of the Iran nuclear agreement and to impose “powerful” economic sanctions on Tehran wasn’t enough to turn oil prices positive on Tuesday.Oil futures did cut some of their earlier losses to finish off session lows. June West Texas Intermediate crude, the U.S. benchmark, settled at $69.06 a barrel on the New York Mercantile Exchange, down $1.67, or nearly 2.4%, for the session, but up from the day’s low of $67.63. It was trading at around $68.68 before the announcement. July Brent crude the global benchmark, ended at $74.85 on ICE Futures Europe, down $1.32, or 1.7%, for the day, after a low at $73.10. Prices for both WTI and Brent had settled Monday at 3 1/2-year highs. Iranian production “is unlikely to be significantly impacted by pulling out of the agreement unless [Trump] can convince other allies to reimpose sanctions,”  He forecasts a range of between $60 and $70 per barrel for WTI this year, and expects “that oil prices could pull back as it becomes obvious that Iranian production is not likely to decline significantly.” In a monthly report issued Tuesday, the Energy Information Administration raised its 2018 and 2019 forecasts on U.S. crude-oil production. Notably, the agency increased its 2019 domestic crude production forecast by 3.6% to 11.86 million barrels a day. Gerald Bailey, president of Petroteq Energy Inc., expected an initial dip in oil prices following Trump’s decision, “because people don’t know whether the trade stopping will hurt businesses or not.” “The U.S. is not dependent on Iran unlike Europe, who will not back out because Iran buys a lot from Europe,” he said. “Europe will not want to upset Iran.” But prices are poised to turn higher again. In the long run, the U.S. decision will lead to less available oil, so prices will go up, Bailey said. “We’re not talking about big spikes, but there is some uncertainty here.”

      Here Are The Countries That Buy Iran's Oil, And What They May Do Next -- With Trump having started the 6 month process of pulling out from the Iranian nuclear deal (or rather as Steven Mnuchin admitted, Trump's true intention is merely renegotiating the existing deal and "entering a new agreement") the biggest concern among traders and analysts is what impact the Trump decision will have on Iran's oil exports.As a reminder, some such as Barclays have suggested that Iran's oil production may not be affected at all; others such as UBS predict the sanctions could lead to the reduction of oil exports by 200-500kb/d over the next 6 months. Meanwhile, Deutsche Bank notes that because of the 180-day wind down period, neither Iranian oil production nor exports will drop before the 5 November 2018 effective date. In fact, if behavior follows the example from 2012, there is the possibility of a short spike in Iranian exports just before the effective date, after which a slow decline may set in.As Goldman explains this morning, the final impact on Iran oil will likely be somewhere inbetween, with the ultimate impact on Iran production rather negligible for the foreseeable future. The reason for that is that following the announcement, other signatories of the deal reiterated their support for the agreement as well as their desire to revisit it. President Macron said that France, Germany and the UK regretted the decision and the EU vowed to uphold the Iran nuclear accord. Russia announced that the US alone would not be able to overturn the deal and its Deputy Foreign Minister said it was willing to support France's proposal for new negotiations.  At the same time, Iran announced that it will remain in the nuclear deal and will start talks with European nations, China, and Russia.So with the support of the other deal signatories in place, Goldman's Damien Courvalin writes that the impact on Iranian production may be more limited than implied by the US secondary sanctions, and certainly less than the 1mmb/d decline seen in 2012-15 which many use a benchmark for what happens next. After all, as shown in the chart below, the bulk of Iranian exports is shipped to Asian countries - most of whom have already said they will continue importing Iranian oil - while the handful of European nations that received Iran crude will likely continue to do so in the future, once they request, and are granted, sanctions waivers.

      WTI/RBOB Extend Rebound After Surprise Crude Inventory Draw - WTI/RBOB prices ended the day lower but bounced a little after Trump's statement, running flat into API but a pushed WTI briefly back above $70 following a surprise crude draw (and large product draws). API

      • Crude -1.85mm (+1mm exp)
      • Cushing +1.653m
      • Gasoline -2.055mm
      • Distillates -6.674mm - biggest draw since 2004

      Surprise crude draw and big product draws broke the trend of the last two weeks... Of course, all eyes are focused on Iran more than inventories. The U.S. decision to reinstate “the highest level of economic sanctions” on Iran will lead to gradually and modestly reduced oil production by the world’s fifth-largest producer, according to Oxford Economics.Heading into the API data, WTI/RBOB prices were flat line after the swings around Trump's statement and CNN's fake news... and both popped a little after - with WTI tagging $70 once again...Oil VIX tumbled after Trump -erasing yesterday's protection bid...

      Oil Prices Rise After EIA Reports Draw Across The Board - Amid rising oil prices following President Trump’s withdrawal from the Iran nuclear deal, the Energy Information Administration added to the bullish sentiment by reporting a draw of 2.2 million barrels in U.S. crude oil inventories.Analysts polled by IG had expected a moderate build of 160,000 barrels, while a Reuters poll suggested inventories would be down by 1.2 million barrels.In the prior week, the EIA had reported a substantial build in crude oil stockpiles, which pressured prices, albeit moderately, even though it was coupled with yet another weekly increase in production and a surprise build in gasoline inventories.In the week to May 4, gasoline inventories fell by 2.2 million barrels, the EIA reported, which compares with a 1.2-million-barrel increase a week earlier. Gasoline production averaged 9.9 million barrels per day last week, down from the prior week, when refineries produced 10 million bpd.Distillate inventories were also down, by 3.8 million barrels, after a decline of 3.9 million barrels a week earlier. Distillate production last week averaged 5 million barrels daily, unchanged from a week earlier. West Texas Intermediate was trading at US$70.91 a barrel at the time of writing, with Brent crude at US$76.93, both up by more than 2 percent after Trump’s Iran announcement.U.S. oil production likely continued to rise, after hitting 10.62 million bpd two weeks ago. This should be bearish for oil but not in the current circumstances, with the market expecting a substantial drop in Iranian oil exports and with Venezuelan oil production at a 70-year low.

      WTI Tops $71 After Surprise Crude Draw, Production Spikes - WTI/RBOB extended gains overnight (WTI at 3.5yr highs) following Trump's Iran decision and a surprise crude draw reported by API, and DOE data confirmed the draw (even larger) along with gasoline and distillate draws. US crude production jumped to a new record high. “It’s the time of year when you expect oil draws because refiners start coming back fairly soon from maintenance season,” says James Williams, president of energy researcher WTRG Economics. DOE

      • Crude -2.197mm (+1mm exp)
      • Cushing +1.388mm
      • Gasoline -2.174mm
      • Distillates -3.791mm

      Over the last couple of weeks, U.S. crude inventories have built up, in part helped by an unusual drop in refining activity, at least compared with last year's trends, but that trend is over this week with crude surprisingly drawing down 2.197mm barrels... Distillate inventories are near their five-year lows on a seasonal basis...very unseasonal! Additionally, Bloomberg reports that gasoline demand soared at its fastest rate since Feb 2016.Bloomberg's Javier Blas notes a key statistic: Year-to-date, U.S. crude inventories have risen by ~11.5 million barrels. To put that into perspective, consider that over the same period in 2017 they built ~48.8 million barrels.

      EU Fights to Keep Iran Nuclear Deal Alive After Trump’s exit - Donald Trump didn’t kill the Iran nuclear deal. He just shrank its membership by one. That was the line taken by the European Union immediately after the U.S. president announced his withdrawal from the 2015 accord. Germany, France and the U.K. all said they’ll stick to their commitments. Iran’s Supreme Leader Ayatollah Ali Khamenei said he wants to see them deliver. “I don’t trust these three countries either,” Khamenei said on his website. “If you want to have a deal, we need practical guarantees otherwise they will do the same as the U.S. If they can’t give definitive guarantees, it won’t be possible to continue.” But it’s not clear whether the EU, China and Russia will be able to ensure Iran receives the promised economic benefits -- including free access to international oil markets and accelerating flows of trade and investment -- that persuaded the Islamic Republic’s leaders to sign up to an agreement capping its nuclear program. Before Trump’s announcement Tuesday that he’ll pull the U.S. out of the deal, Western businesses had already been reluctant to take the plunge into a country still subject to multiple curbs imposed by Washington. The exit throws billions of dollars of European investments that had been planned into disarray. President Hassan Rouhani said Iran will push to make the deal work but may step up uranium enrichment again if the efforts of the remaining parties don’t yield tangible results. “The international reach of U.S. sanctions makes the U.S. the economic policeman of the planet, and that is not acceptable,” French Finance Minister Bruno Le Maire said Wednesday in an interview on France Culture radio. He branded Trump’s decision a “major mistake” and said he’ll lobby Treasury Secretary Steven Mnuchin this week to grant exemptions for European firms. French President Emmanuel Macron is due to speak to Rouhani later in the day. 

      U.S.Treasury's Mnuchin does not see Iran sanctions hiking oil prices (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Tuesday he does not anticipate major oil price hikes after renewed sanctions hit Iranian production because some countries are willing to increase output to offset such losses. Steven Mnuchin, Secretary, U.S. Department of the Treasury, speaks at the Milken Institute's 21st Global Conference in Beverly Hills, California, U.S. April 30, 2018. REUTERS/Lucy NicholsonMnuchin, speaking to reporters at a news briefing, declined to identify countries which may add output, saying there had been conversations with “different parties that would be willing to increase oil supply to offset this. So my expectation is not that oil prices will go higher - to a certain extent, some of this was already in the market on oil prices.” Mnuchin said that licenses for Boeing Co (BA.N) and Airbus (AIR.PA) to sell aircraft and components to Iran will be revoked as a result of the reimposed sanctions on Tehran. “Under the original deal, there were waivers for commercial aircraft, parts and services and the existing licenses will be revoked,” Mnuchin said. 

      Crude Oil Price Jumps on Iran, Lower Inventories - The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning showing that U.S. commercial crude inventories decreased by 2.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 433.8 million barrels. The commercial crude inventory remains in the lower half of the average range for this time of year. Tuesday evening, the American Petroleum Institute (API) reported that crude inventories fell by about 1.9 million barrels in the week ending May 4. Gasoline inventories declined by about 2.1 million barrels, and distillate stockpiles decreased by 6.7 million barrels. For the same period, analysts expected crude inventories to decrease by about 720,000 barrels and gasoline inventories to drop by 450,000 barrels. Diesel inventories are seen down about 1.3 million barrels. Total gasoline inventories decreased by 2.2 million barrels last week, according to the EIA, and remain in the upper half of the five-year average range. U.S. refineries produced over 9.9 million barrels of gasoline a day last week, down by about 100,000 barrels compared to the prior week. Total motor gasoline supplied (the agency’s proxy for demand) averaged 9.5 million barrels a day for the past four weeks, up about 2.2% compared with the same period a year ago.Before the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 2.6% at around $70.88 a barrel, and it rose about 3% to around $71.29 shortly after the report’s release. WTI settled at $69.06 on Tuesday and opened at $70.11 Wednesday morning. The 52-week range on June futures is $44.54 to $71.25, and the high was posted this morning.The U.S. withdrawal from the nuclear non-proliferation deal with Iran is having its expected effect of pushing crude oil prices higher. Brent crude for July delivery traded up around 3% Wednesday morning at $77.20 a barrel, about $6 a barrel more than WTI. The reimposition of U.S. sanctions on Iran is almost certainly due in part to an agreement between the United States and Saudi Arabia to ease, if not lift entirely, the production cuts imposed by OPEC and its partners, including Russia, that began last year. That is the only way that the president could have avoided a sharp increase in crude oil prices that he already has declared are too high.

      Oil prices hit three-and-a-half-year high after US exits from Iran deal - Crude oil prices rose to three-and-a-half-year highs following the news that the Trump administration revoked the nuclear deal with Iran. Brent crude oil prices, the global benchmark, and US West Texas Intermediate rallied above $77 and $71 per barrel, respectively, in the aftermath of the announcement. The rise came after the treasury secretary, Steven Mnuchin, told reporters he did not expect a major oil price hikes because other countries would increase output to offset such losses. Although Donald Trump’s decision to withdraw from the Joint Comprehensive Plan of Action was not a surprise, reinstating all US nuclear-related sanctions was more than expected, said Barclays analysts in a research note. Bart Melek, global head of commodity strategy at TD Securities, said this announcement comes at a time where there are increased geopolitical tensions in the Middle East and global crude oil inventories are normalizing after being in a supply glut for the past few years. In the US inventory levels are now below the five-year average. “There’s a broad consensus that [supplies are] going to rebalance and tighten up, but you throw the possibility of disruptions of flows from Iran, and the markets started to worry,” he said. The reimposition of US sanctions will be phased in over the next 90-180 days to give companies time to wind down operations. Does this mean oil prices will return to the $100-plus days of a few years ago? It’s unlikely for now. Melek said he sees WTI and Brent crude oil prices not going much higher than $72 and $78, respectively, saying the price rise this week reflects a temporary risk premium rather than actual supply shortages. Even if some Iranian oil is off the market, Melek said there was capacity for members of the Organization of Petroleum Exporting Countries (Opec) to increase production to make up for the shortfall. 

       Sanctions spell the end of OPEC output deal: Kemp (Reuters) - President Donald Trump’s decision to withdraw from the nuclear agreement with Iran marks the end of the current output agreement between OPEC and its allies. OPEC is likely to insist the current agreement remains in effect, at least for now, but the prospective removal of several hundred thousand barrels per day of Iranian exports from the market will require a major adjustment. Saudi Arabia has already promised to "mitigate" the impact of any potential supply shortages, in conjunction with other suppliers and consumer countries, in a statement released immediately after the sanctions decision. The kingdom is customarily coy about how it might respond but the prospective removal of Iranian crude from the market will send oil prices sharply higher unless other producers step up to fill the gap. As a practical matter, only Saudi Arabia, the United Arab Emirates, Kuwait, Russia and the United States have the ability to raise production and exports in the short term. Saudi Arabia and its close allies Abu Dhabi and Kuwait hold almost all the spare capacity that could respond quickly to a reduction in Iranian exports. U.S. shale producers could also increase their output but it would take time and their light crude is not a good substitute for heavier Iranian oil. Russian firms may also hold spare capacity and could certainly increase output over a 12-month horizon. Their crude is a close equivalent to Iranian grades. The United States and Saudi Arabia appear to have reached a high-level political understanding in which the United States will intensify pressure on Iran in exchange for Saudi Arabia agreeing to help avoid a spike in oil prices. The existence of an understanding was confirmed by the U.S. Treasury Secretary who told reporters on Tuesday that "we have had conversations with various parties ... that would be willing to increase oil supply".   In effect, the United States agreed to implement tough sanctions, and Saudi Arabia agreed to limit the impact on oil prices.   U.S. gasoline prices are already averaging just under $3 per gallon, the highest level since late 2014, up from $2.50 a year ago.   Assuming the U.S. sanctions are effective in curbing Iran's crude exports, Saudi Arabia and its OPEC allies will have to raise their production to make up the shortfall, or risk being blamed for a further rise in motoring costs. 

      Saudi Arabia stands to win most from Trump ditching Iran deal: Russell (Reuters) - Saudi Arabia is in pole position to be the major beneficiary of U.S. President Donald Trump’s decision to walk away from the Iranian nuclear deal and reimpose sanctions on the Islamic Republic. It’s little surprise that one of the few voices of support for Trump’s move was from Saudi Arabia, the main rival to Iran in the volatile Middle East. The Saudis stand to enjoy a double-whammy windfall as crude oil prices may remain strong and state producer Saudi Aramco will also likely to be able to pump more oil to replace any Iranian barrels lost because of the reimposed sanctions. A cherry on top of this is that customers who had been turning away from Saudi crude, such as the world’s top importer China, may be forced to buy more from the Kingdom. This would allow the Saudis to regain market share lost since the 2016 deal between the Organization of the Petroleum Exporting Countries (OPEC) and allies, such as Russia, to reduce output in order to tighten global oil markets. The main risk for the Saudis is that the U.S. decision inflames an already tense situation in the Middle East, resulting in increased conflict and even the possibility of outright war. However, the Saudis are probably taking a calculated risk that the conflict situations won’t worsen much, and in the meantime they stand to gain a financial windfall and weaken their key rival at the same time. Whether the eventual reality aligns with what the Saudis hope for is inherently uncertain, but there are some points worth noting. Firstly, despite the usual flourish of belligerence and flamboyance in Trump’s announcement, not much is likely to happen for several months. This is because the U.S. Treasury Department has indicated that sanctions won’t be reimposed immediately, rather that it will take up to 180 days to allow Iranian oil customers and other companies involved in doing business with Tehran to make plans. It’s also not clear what sanctions will be reimposed and in what form, with the main risk being the so-called secondary sanctions that would target companies that do business with other entities involved with Iran. 

      Middle East teeters on brink of region-wide war after US withdrawal from Iran deal -- Tuesday’s decision by President Donald Trump to withdraw from the Iranian nuclear agreement has pushed the Middle East to the brink of a catastrophic regional conflict that could rapidly draw in the major powers.Within minutes of Trump’s announcement, Israeli fighter jets violated Syrian airspace to launch a missile strike on a government base close to Damascus. The strikes caused the deaths of 15 people, including at least seven Iranian military personnel stationed in the country to support the regime of Syrian President Bashar al-Assad.The situation escalated further late Wednesday, as reports emerged of Israeli shelling of Syrian army positions from the Golan Heights. Rocket sirens sounded in the north and explosions were heard. According to the Golan Regional Council, several towns in the region were targeted by rocket fire.The Israeli military released a statement early Thursday accusing Iran’s Revolutionary Guard Corps’ Quds force of firing 20 rockets at army border posts in the Golan. It claimed several projectiles had been intercepted and reported no injuries.According to the Syrian state news agency, Sana, Israeli war planes began firing missiles at targets near Damascus early Thursday, soon after the alleged Iranian attack. As of this writing, the extent of these air raids and whether they caused any casualties remain unclear. Tel Aviv justified Tuesday’s air strike with the unsubstantiated claim that Tehran was preparing to strike Israel in retaliation for a raid on the T4 airbase in April that claimed the lives of nine Iranians. The absurdity of such allegations is obvious, given that Iran would have nothing to gain from being the first to launch an attack just as Trump was set to announce his decision on the Iran nuclear agreement. Everything points to the Israeli attack having been closely coordinated with the US. On Sunday, Israeli media began reporting unverified allegations of an Iranian plot to strike targets in Israel. Then on Tuesday, CNN reported that the Pentagon was concerned about alleged preparations for an Iranian strike.

      Israel Struck ‘Almost All of the Iranian Infrastructure in Syria,’ Defense Chief Says -- Defense Minister Avigdor Lieberman said on Thursday that Israel struck ''almost all of the Iranian infrastructure in Syria" overnight in response to a rocket barrage at its military outposts in the Golan Heights. He confirmed that no rockets landed in Israeli territory.  Lieberman said that Israel won't allow Iran to turn Syria into a "forward base" against Israel and that, as opposed to the Iranians, Israel has no desire to expand their military presence to create new proxies and fronts. "I hope we finished this chapter and everyone got the message," Lieberman said, adding that Israel does not want the situation to escalate. He added a warning: “If it rains on us, it will pour on them.”  "Iran is truly the only country today that represents extremism, not just ideologically but also in its willingness to sacrifice its citizens, sacrifice its future for this same extremist ideology, the defense chief said.

      Trump’s Iran Sanctions to Shake Up Global Oil Supply Lines - Washington’s decision to reinstate Iranian sanctions is likely to slowly cut off a chunk of the world’s crude supply—a shift that could redraw global supply lines and require Iran’s big customers to find alternative sources.The Trump administration’s move rattled oil markets, sending international crude up sharply after bouncing wildly in the lead-up to the decision. Midday in Europe, international crude was up 2.7% to $76.87 a barrel on London’s Intercontinental Exchange, trading at its highest level in 3½ years.In an effort to limit short-term pressure on prices, the U.S. said buyers will have until November to stop shipments, and Washington held out the prospect of exemptions for countries that reduced their Iranian purchases significantly, without providing specifics.Treasury Secretary Steven Mnuchin said Tuesday the U.S. negotiated ahead of time with oil-producing allies to boost output and keep prices in check. Saudi Arabia, a longtime regional rival of Iran and a fierce competitor for global oil market share, said late Tuesday it was ready to step in to stabilize markets.Still, some big global buyers will need to find new supplies. Iranian oil exports amounted to about 2.7 million barrels a day in April, or almost 3% of global demand.While no U.S. entities buy Iranian crude, Washington’s sanctions would extend to foreign firms that do, if they conduct significant dollar transactions, use U.S. banks, or have other business in the U.S.China is the biggest buyer of Iranian crude, taking more than 700,000 barrels a day in March. Chinese buyers traditionally haven’t heeded U.S. or European sanctions in the past, and aren’t expected to curtail purchases now. But they will likely need to scrutinize whether the new sanctions could ensnarl them. Asked at a regular weekday media briefing if China would continue to purchase oil and other products from Iran, a Chinese Foreign Ministry spokesman said that “normal, transparent and pragmatic cooperation with Iran” would continue. “The Chinese government has consistently opposed the imposing of unilateral sanctions by any country and the long-arm jurisdiction on other countries based on its domestic law,” said the spokesman, Geng Shuang.  European and Asian buyers will likely have to find new suppliers as they comply with Washington’s time line for ending purchases, or apply for exemptions. France’s Total SA, which buys Iranian oil mostly for its own refineries, bought about 158,000 barrels a day of Iranian crude last year. Total declined to comment about the new sanctions Wednesday.

      How The World's Oil Powers Will Seize The Iran Deal - Despite President Trump’s clear signals over the last month, his decision to leave the JCPOA nuclear deal has still managed to shock the market. It appears that the market, and most European politicians, didn’t believe that Washington would take the step to unilaterally leave the deal. In spite of intense European efforts to convince Washington to stay in the JCPOA deal and try to renegotiate with Iran, the U.S. president has presented the world with a clear message: The President will fulfill his electoral pledges regarding Iran. The global oil market had partially factored in a withdrawal by Washington, but the true impact of the deal remains unclear. In the coming months, Washington will reinstate all of the former sanctions on Iran, starting with the lighter ones, which are mainly meant to curtail Iranian oil exports. If all sanctions, as indicated by Washington after Trump announced the withdrawal from JCPOA on TV, are put in place then the global geopolitical landscape with change dramatically.If a complete reimposition of sanctions become a reality, which would include the threat of action against European and Asian companies dealing with Iran, the oil market could hit a brick wall. Looking at current fundamentals, demand and supply are already reaching a point where additional changes in supply could lead to supply shortages. The removal of a potential 1 million bpd of Iranian oil before the end of 2018 would surely lead in the short-to-midterm to higher prices. Asian and European clients already expect such a price spike before the end of 2018. There is a chance that the market could mitigate some aspects of this supply shock, with Asian refiners already trying to shift purchases to other exporters. The key Asian importers of Iranian oil are China, India and Japan, all of whom are now eagerly targeting Iraq, Saudi Arabia and Russia for new supply options. The implementation of new sanctions on Iran and its customers will force the Islamic Republic to reassess its options. The same will be true for European oil importers, who have been very active on the Iranian front in recent years. The real effects of decisions made by Trump will be felt within 180 days, as this is the official timeframe. However, based on remarks made by the U.S. Ambassador to Germany yesterday, straight after decision, Washington could decide to speed up the implementation time-frame. In a ceteris paribus situation, the removal of Iranian oil exports would be hitting the market at present very hard. Price volatility could be extreme, leading to price levels between $80-100 per barrel. The latter would, however, result in possible demand destruction in Asia, and lower economic growth in most Western countries, including the U.S.

      Iran Crisis Warps OPEC Equation as Saudis Signal More Supply - The international nuclear agreement with Iran might not be the only deal U.S. President Donald Trump has unraveled. On Monday, Saudi Arabian Energy Minister Khalid Al-Falih was repeating his mantra that production cuts by OPEC and its allies must keep going. Within 48 hours, the kingdom had raised the prospect of increasing output.Between the two pronouncements came Trump’s decision to scrap the Iran deal, re-imposing sanctions on the world’s fifth-biggest oil exporter.“There is a good chance the current OPEC deal will end by end-2018, if not before,” said Ed Morse, head of commodities research at Citigroup Inc. in New York. For the past 16 months, the Organization of Petroleum Exporting Countries, Russia and other allies have been constraining output to eliminate a global glut. They’ve largely achieved that goal, but the Saudis -- keen for higher prices -- have insisted the curbs should continue to drive oil stockpiles even lower.That policy may falter in the wake of Trump’s Iran sanctions. While it’s still uncertain how much he intends to curtail Iranian oil shipments, most analysts predict a cutback.“The Iranian sanctions may change the OPEC June meeting completely,” said Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London. “It’s no longer about extending the production cuts, but rather about when to start raising output gradually.” When the international sanctions were last in force on Iran from 2012 to 2015, it removed about 1 million barrels a day from the market. This time, America’s allies in Europe want to keep the nuclear accord alive and are resisting joining any U.S. embargo. Estimates vary from “little impact” anticipated by Barclays Plc, to a potential loss of more than 50 percent of the country’s 2.7 million barrels of daily shipments predicted by consultant FGE. Reduced flows from Iran would compound escalating losses in troubled OPEC member Venezuela, further draining global oil inventories while demand remains strong, according to Goldman Sachs Group Inc. Brent oil futures rose to a three-year high of $78 a barrel on Thursday. This presents the Saudis with a dilemma: Should they retain their focus on higher prices and keep output steady? Or should they offer political and economic support to Trump, and take market share away from their regional rival, by raising production to fill the gap?

      Saudi Arabia will not act alone to fill any Iran oil shortfall: OPEC source (Reuters) - Saudi Arabia is monitoring the impact of the U.S. withdrawal from the Iran nuclear deal on oil supplies and is ready to offset any shortage but it will not act alone to fill the gap, an OPEC source familiar with the kingdom’s oil thinking said. FILE PHOTO: The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria September 21, 2017. REUTERS/Leonhard Foeger/File PhotoU.S. President Donald Trump on Tuesday abandoned a nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member. The original agreement had lifted sanctions in exchange for Tehran limiting its nuclear program. Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia and Iraq. During the last round of sanctions, Iran’s oil supplies fell by around 1 million barrels per day (bpd), but the country re-emerged as a major oil exporter, especially to refiners in Asia, after sanctions were lifted in January 2016. “People shouldn’t take it for granted that Saudi Arabia will produce more oil single-handedly. We need to assess first the impact if there is any, in terms of disruption, in terms of a reduction of Iran’s production,” the OPEC source said on Wednesday. “We have managed to put together this new alliance between OPEC and non-OPEC. Saudi Arabia will not in any way act independently of its partners.” Riyadh is working closely with the United Arab Emirates (UAE), which holds OPEC’s presidency in 2018 and non-OPEC producer Russia for “coordination and market consultations,” the OPEC source said. He said any action would be taken in coordination with all OPEC and non-OPEC partners, if needed. 

      World oil prices reach maximum since 2014 - World oil prices on May 10 are trading at their highest levels since November 2014 on the decision of U.S. President Donald Trump to withdraw from the nuclear deal with Iran. Brent crude oil futures were at $77.78 per barrel, up 0.73 percent, U.S. West Texas Intermediate (WTI) crude futures were up 0.77 percent, at $71.69 a barrel, according to RIA Novosti. Oil prices have renewed their highs for 3.5 years after Trump announced that the U.S. is withdrawing from an agreement with Iran on the nuclear program reached by the six international mediators (Russia, the United States, Britain, China, France, Germany) in 2015. In addition, the U.S. president announced the restoration of all sanctions, the effect of which was suspended as a result of the deal. The imposition of sanctions against Iran could lead to a reduction in world oil reserves. At present, Iran accounts for about 4 percent of the global supply in the oil market, according to Reuters. Analysts at Goldman Sachs note that U.S. sanctions against Iran are likely to have a “high level of efficiency.” According to their forecasts, in the summer the price of Brent crude oil could reach $82.5 per barrel. Support for the growth of world prices also provided data on the reserves of raw materials in the U.S. The Energy Ministry of the country reported that commercial oil reserves in the U.S. (excluding the strategic reserve) for the week ended on May 4 decreased by 2.2 million barrels, or 0.5 percent - to 433.8 million barrels, while the reduction was projected only 0.2 million barrels. OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices. OPEC agreed to slash the output by 1.2 million barrels per day from January 1. 

      Oil prices hit highest in years as markets adjust to looming sanctions on Iran (Reuters) - The oil price rose on Thursday, heading for its largest weekly increase in a month, as the market prepared for potential disruption to crude flows from major exporter Iran in the face of U.S. sanctions. The United States plans to impose new sanctions against Iran, which produces about 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 that curbed Tehran's nuclear activities in exchange for removal of U.S. and European sanctions. Brent crude futures rose 27 cents to $77.48 a barrel by 1200 GMT, having gained 3.5 percent so far this week. U.S. West Texas Intermediate crude futures were up 45 cents at $71.59. The oil price is at its highest since late 2014 and on track for its fourth consecutive quarterly gain, the longest such stretch for more than 10 years. Analysts had little hope that opposition to the U.S. action would prevent sanctions from going ahead. "Europe and China will not fight against the U.S. sanctions. They will grumble and accept it. There is no one who will realistically choose Iran over the U.S.," said energy consultancy FGE. "We believe the previous 1 million bpd limit for exports (imposed during previous sanctions) will be reimposed. As before, it may take several rounds of reductions to reach target levels," FGE's founder and chairman Fereidun Fesharaki wrote in a note. Even without disruption to Iran's crude flows, the balance between supply and demand in the oil market has been tightening steadily, especially in Asia, with top exporter Saudi Arabia and No.1 producer Russia having led efforts since 2017 to cap output to prop up prices. Saudi Arabia is ready to offset any supply shortage but it will not act alone to fill the gap, an OPEC source familiar with the kingdom’s oil thinking said on Wednesday. "What the full impact on Iranian flows will be is still difficult to estimate," Petromatrix strategist Olivier Jakob said. "One thing that has changed and which I think is clearly a new development is that it seems to me that the White House administration has really pushed Saudi Arabia to do something about price and to put supply back into the market to make sure prices do not run up ... before (when sanctions were last in place) Saudi Arabia was driving its own oil policy."

      Oil Cartel Member Complains U.S. President Is Driving Up Prices -- It’s not often that an OPEC producer accuses the U.S. of driving up oil prices.But that’s exactly what Iran Oil Minister Bijan Namdar Zanganeh said on state television Thursday. Two days after Donald J. Trump decided to withdraw from the Iran nuclear agreement, Zanganeh said the U.S. president is engaging in “shenanigans” in the oil market -- and that he’s cut a deal with some members of the Organization of Petroleum Exporting Countries to keep production down and prices high.Higher oil prices boost the U.S. economy and employment and increase taxes the federal government collects, according to Zanganeh. Iran has become a new voice for moderation in oil markets, with the minister saying Sunday that a “suitable price” is $60 to $65 a barrel -- below the reported $80 that the Saudis are seeking.Oil prices have climbed to a three-year high as the market prepares for Iranian exports to fall. Bank of America Corp. said Thursday that $100 a barrel for Brent crude, the international benchmark, is a possibility next year.Meanwhile, Saudi Arabia -- which has long called for sanctions to be re-imposed on Iran -- has pledged to “mitigate” the effects of the sanctions. That may put in jeopardy an existing agreement among OPEC and non-OPEC nations to curb output.“There is a good chance the current OPEC deal will end by end-2018, if not before,” said Ed Morse, head of commodities research at Citigroup Inc. in New York. As far as boosting the U.S. economy, the old rule of thumb was that a sustained $10 a barrel rise in oil prices would shave about 0.3 percent off of U.S. GDP the following year. Now, says Mark Zandi, chief economist at Moody’s Analytics, the hit is around 0.1 percent.

      Iran Accuses US Of Pushing Up Oil Prices - U.S. President Trump has made a deal with some OPEC producers to keep prices high as they support the U.S. economy and boost federal taxes. This is what Iran’s Energy Minister Bijan Zanganeh said on state TV this week as quoted by Bloomberg, adding that Trump was engaging in “shenanigans” on the oil market.  It’s not too hard to guess which the OPEC producers Zanganeh mentioned are...Saudi Arabia has been a strong opponent of the Iran nuclear deal and was now quick to offer to fill any gap that new U.S. sanctions would leave on international oil markets by curbing Iran’s abilities to export its crude.Saudi Arabia is also the most vocal supporter of ever-higher prices, as it prepares to list its state energy giant Aramco and struggles with a much too high breakeven price for its crude.Iran, on the other hand, has repeatedly called for more “reasonable” prices, which for the Tehran officials are prices between US$60 and $65 a barrel. Like many analysts, Iran is concerned that pricey crude oil will start affecting demand, and not in a good way.Now, some forecast oil could reach US$100 a barrel by next year, with one hedge fund manager, notorious Pierre Andurand, going as high as US$300 a barrel. Apparently, according to the bull camp, oil can reach US$300 without hurting demand enough to start sliding back down.This stance is questionable, to say the least. Already some experts, such as Reuters’ John Kemp, are warning that the imposition of new U.S. sanctions on Iran would spur other OPEC members into increasing their production levels, which would effectively put an end to the OPEC production cut deal. Should this happen, prices will not get even close to US$100, they will start sliding back to US$60. Another group of people tracking events in the oil world believes that sanctions will not have a serious negative effect on Iranian oil shipments to its biggest clients. China has stated its commitment to Iranian imports, and as an added benefit for both, is ready to settle these imports in yuans, undermining the dominance of the greenback. Other importers, including staunch U.S. allies Japan and South Korea, are also looking for ways to keep on buying Iranian crude.

      Oil price rise poses challenge for sanctions policy: Kemp (Reuters) - The United States and Saudi Arabia seem to have an understanding to keep the oil market well supplied and avoid a significant price rise after the U.S. re-imposition of sanctions on Iran. But exactly what this involves is not clear to the market, and may not even be clear to the two governments themselves, sowing uncertainty in the weeks ahead. “We have had various conversations with various parties about different parties that would be willing to increase oil supply to offset [the impact of sanctions]” U.S. Treasury Secretary Steven Mnuchin told reporters on May 8. “My expectation is not that oil prices go higher. To a certain extent some of this was already in the market, on oil prices,” Mnuchin added. He declined to name the countries or companies involved but since Saudi Arabia holds most of the world’s spare production capacity it is likely to have been included. In retrospect, the U.S. president's April 20 tweet blaming OPEC for high oil prices can be seen as part of the negotiating. The basic bargain appears to be that the United States will impose tough sanctions that curb Iran’s oil exports and in return Saudi Arabia will avoid a damaging and politically controversial spike in prices. Saudi Arabia appeared to confirm the existence of an understanding by committing to maintain “the stability of oil markets” and more specifically to “mitigate the impact of any potential supply shortages”. The kingdom committed to “work with major producers within and outside OPEC as well as major consumers” to limit the impact from possible supply disruptions. The comments were made in an unusual statement issued by the kingdom’s ministry of energy and carried by the official news agency shortly after the sanctions were announced. They were subsequently confirmed by the energy minister in a statement on Twitter and in briefings with news organisations.

        US Rig Count Increases Sharply Amid Rising Crude Output - US drillers added 13 rigs to the number of oil and gas rigs this week, according to Baker Hughes, adding 10 active oil rigs and 3 active gas rigs. The oil and gas rig count now stands at 1,045—up 160 from this time last year.Meanwhile, neighboring Canada lost 7 rigs for the week—the latest in a string of losses. Gas rigs in Canada are now fewer in number than they were a year ago.Both the Brent and WTI benchmark were trading down on the day at 10:00am EST after reaching almost three-year highs earlier in the week over U.S. President Donald Trump’s announcement that the US would withdraw from the nuclear deal, combined with Venezuela’s falling production. WTI was trading down 0.32% at $71.13, with Brent trading down 0.30% at $77.24. Western Canada Select (WCS) was trading down a staggering 4%, increasing its discount to WTI.Oil prices seem to be stuck in a perfect storm, a culmination of several geopolitical factors which include Iraq’s election scheduled for Sunday, the likes of which could see delays for project approvals and licensing awards; Venezuela’s election scheduled for May 20 which may prompt the United States to up the sanctions against Maduro’s socialist regime; the nuclear deal announcement which could restrict Iran’s exports, and OPEC comments that it would ramp up production to fill the void left by Iran if necessary. US oil production rose again in the week ending May 04, reaching 10.703 million bpd—the eleventh build in as many weeks—about 300,000 bpd shy the 11.0 million bpd forecast that many are predicting for 2018. Earlier this week, the EIA raised its US production forecast for 2018 and 2019, anticipating that the full-year production for the United States will be 10.7 million bpd, with 11.9 million bpd forecast for 2019—a 400,000 bpd increase over its forecast last month. At 8 minutes after the hour, WTI was trading down 0.42% at $71.06, with Brent trading down 0.10% at $77.39.

        Brent crude hits $78 as oil prices remain at multi-year highs on looming U.S. sanctions - Oil prices on Friday held multi-year highs reached the previous session as looming U.S. sanctions against major oil producer and OPEC-member Iran threatened to tip an already tight market into undersupply. The United States plans to re-introduce sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 that limited Tehran’s nuclear ambitions in exchange for removing U.S.-Europe sanctions.The sanctions come amid an oil market that has been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and top producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices. Brent crude futures, the international benchmark for oil prices, were at $77.47 per barrel at 0057 GMT, unchanged from their last close. Brent hit $78 a barrel, its highest since November 2014, the previous day. U.S. West Texas Intermediate (WTI) crude futures were at $71.42 a barrel, also not far off Thursday’s November 2014 high of $71.89 per barrel.Many analysts expect oil prices to rise to $80-$100 per barrel later this year, once U.S. sanctions start to bite and Iran’s exports start sinking. There are, however, signs that other suppliers from within the Organization of the Petroleum Exporting Countries (OPEC) will step up output in order to counter the Iran disruption. “The market is now focused on OPEC and other producers’ ability to react to this potential supply disruption,” ANZ bank said on Friday. “Investors are increasingly viewing Kuwait and Iraq as the producers with the best ability to raise output quickly in response to any fall in Iranian exports,” it added.

        U.S. diplomats face tough task imposing new Iran oil curbs - (Reuters) - By restoring sanctions against Iran, U.S. President Donald Trump has tasked a little-known State Department office with convincing companies and governments worldwide to cut imports of Iranian crude - even if that means paying more to buy oil from other suppliers. The Bureau of Energy Resources got the job done during the Iran sanctions that spanned 2012 to 2015, when President Barack Obama had the cooperation of European leaders in choking off Iran’s main revenue source to pressure it to curb its nuclear program. This time around, the office faces steeper challenges: Europe’s leaders now oppose Trump’s aggressive stance on Iran and are considering ways to block the sanctions; the U.S. Senate has yet to confirm a leader for the bureau; and the State Department already has its hands full managing sanctions on Venezuela, trade disputes with China, and looming talks with North Korea. “It’s going to be a lot harder this time,” . “There’s going to be a lot less good will.”   Under Trump’s renewed sanctions, foreign firms will have 180 days to make reductions or face penalties that can include fines and restrictions on doing business in the United States. Washington can identify the buyers, sellers, traders, shippers, insurers and financial institutions involved in Iranian oil purchases because all foreign transactions in U.S. dollars are cleared by the Federal Reserve. The work is harder if trades are done in other currencies. The United States has banned Iranian oil imports to its own shores for decades, so Washington’s ability to squeeze the exports will rely on convincing foreign governments and companies to pressure the Islamic Republic back to the negotiating table for a “better deal” - as Trump has said he expects. 

        Short-Term Oil Glut Softens Iran Sanctions Impact -- Oil prices have risen on the back of U.S. sanctions on Iran, but a short-term glut in the physical market is softening the blow -- for now. The market, however, is starting to price a more dire situation by year-end. Oil refiners have plenty of crude at hand right now, with unsold cargoes in north-west Europe, the Mediterranean, China, and West Africa, according to physical traders who asked not to be named discussing market movements. The overhang is reflected in Brent nearby time-spreads, which are fast narrowing -- a sure sign of an oversupplied market. The July-August price spread for example has fallen from a peak of 63 cents per barrel in mid-April to a five-month low of 24 cents now despite U.S. President Donald Trump withdrawing from the Iran nuclear deal and announcing a raft of new sanctions that threaten to cut crude supplies. Deferred oil spreads are widening, however. The November-December Brent spread rose to 56 cents per barrel on Wednesday, its strongest ever, suggesting that traders are starting to price tightness despite the current excess.  One indicator of the overhang in the prompt market is Vitol Group, the world’s top independent oil trader, offering on Thursday a cargo of Angolan Kissanje crude for delivery to China as early as May 20. With the vessel currently near Singapore and well on its way to its final destination, this represents a sharp contrast to the more typical trade of cargoes bought even before they have loaded in West Africa. Moreover, U.S. crude exports that at times have surged above 2 million barrels a day are reinforcing the oversupply. Add seasonal refinery maintenance and the combination has "barrels without a home, creating a prompt overhang," said Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London. For weeks, physical oil traders wondered whether the weakness in the physical oil market could bring down the paper -- or derivatives -- market. The U.S. sanctions on Iran have changed the picture, with the market pricing that physical prices will ultimately track the paper market higher.

        How Much Iranian Oil Can Trump Disrupt? - Oil prices surged following President Trump’s withdrawal from the Iran nuclear deal. So, what happens next?Trump did not offer any new justification for how Iran was violating the nuclear accord – the IAEA confirmed on May 9 that Iran is in compliance with its nuclear commitments – and offered no Plan B or even a coherent strategy on what comes next. For now, Washington is pursuing confrontation with Iran, and hoping that “maximum pressure” will force Iran to not only abandon any hint of a nuclear weapons program, but also agree to concessions on a range of non-nuclear issues. If history is any guide, there is little chance of this happening, so we are now on a course of escalating confrontation. The U.S. will re-impose all nuclear related sanctions on Iran, which could begin to disrupt oil flows from the country. There will be a 90-day and 180-day wind down period before sanctions really start to bite, which puts the deadline at early November. However, there is a great deal of disagreement and uncertainty over how quickly and how severely the impact of U.S. confrontation will be. The U.S. will not have the coalition that shut in 1 million barrels per day (mb/d) of Iranian oil exports prior to the 2015 agreement. The EU, China and Russia have said they are sticking with the deal. Still, U.S. sanctions will loom over private companies from those nations, which could keep them from doing business with Iran. The EU has vowed to protect its companies, and could even pursue trade retaliation if the U.S. Treasury moves to penalize European companies. However, U.S. sanctions will almost certainly deter large-scale investment in Iran’s oil and gas sector for years to come.  The big question at this point is how disruptive unilateral sanctions from the U.S. will be to Iranian oil flows. The U.S. has advised other countries to “significantly reduce” their purchases of oil from Iran. In theory, some countries could receive waivers from sanctions if they reduce their oil purchases from Iran by some unspecific amount. A 20 percent reduction was an unofficial rule of thumb during the Obama era.

        Bank of America: World oil price could hit $100 a barrel next year: Is $100 oil on its way back? Bank of America thinks so. The bank's analysts wrote Thursday that collapsing oil production in Venezuela and potential export disruptions in Iran could push the price of Brent crude as high as $100 per barrel in 2019. The analysts said their target price for Brent, the global benchmark, was $90 for the second quarter of next year. But they warned there was a risk that deteriorating conditions in Iran would push prices to $100, a level not seen since 2014. They expect West Texas Intermediate, the most commonly cited US contract, to trade $6 below the price of Brent in 2019. President Donald Trump's decision to exit the Iran nuclear deal has already pushed Brent prices above $77 per barrel. Prices have gained over 8% over the past month and 15% since the beginning of the year. Investors are worried that renewed sanctions on Iran, a major oil producer, could lead to supply disruptions. Trump vowed on Tuesday to impose "powerful" sanctions on the OPEC nation, which has the fourth largest crude oil reserves in the world. After sanctions were eased as part of the nuclear agreement, Iran ramped up production to about 3.8 million barrels a day. That's about 1 million barrels a day more than in early 2016.Another factor that's helping to reduce supply is an agreement between OPEC and other major producers including Russia to slash output.  The deal is set to expire at the end of 2018, but the Bank of America analysts said that OPEC and Russia are likely to continue working together to prevent prices from falling.

        OPEC in no hurry to decide if extra oil needed to offset Iran: sources - (Reuters) - OPEC is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran after the imposition of new U.S. sanctions, four sources familiar with the issue said, saying any loss in supply would take time. The Organization of the Petroleum Exporting Countries has a deal with Russia and non-OPEC producers to cut supplies that has helped erase a global glut and boosted oil prices to their highest since 2014. Officials are considering whether a drop in Iranian exports and a decline in supply from another OPEC member, Venezuela, demands adjusting the deal that runs to the end of 2018. Ministers meet in June to review the policy. U.S. sanctions on Iran will have a six-month period during which buyers should “wind down” oil purchases, meaning any loss of supply will not be immediately felt in the market. “I think we have 180 days before any supply impact,” an OPEC source said when asked about any plans for action. A second OPEC source said that, while the need to add extra supply was being considered, the safest thing for the group to do for now was to sit tight and monitor the situation. Oil LCOc1 reached $78 a barrel on Thursday, its highest since November 2014, two days after President Donald Trump said the United States was abandoning an international nuclear deal with Iran and would impose new sanctions. Iran, which pumps about 4 percent of the world’s oil, exports about 450,000 barrels per day (bpd) to Europe and around 1.8 million bpd to Asia. Sales to Europe are seen by analysts as the more likely to be reduced by the sanctions. “It’s too early to know now the impact,” said a third OPEC source. “We need to wait and see what China will do, what Japan will do. Who will buy Iranian oil and who will side with Trump.” 

        Azerbaijani oil price approaches to $78 a barrel -- The price of Azerbaijan's oil Azeri LT CIF on the world market has grown by $2.99 (3.99%). Cost of oil grade Azeri LT CIF is now $77.84 a barrel. The lowest price for Azeri LT CIF was fixed in December 2001 - $19.15 and highest price in July 2008 - $149.66. At the London ICE (InterContinental Exchange Futures) the cost of one barrel of Brent crude rose by $0.56 up to $77.77. At the New York exchange NYMEX (New York Merchant Exchange) the value of WTI crude rose by $0.57 up to $71.71 a barrel.

        The Saudi Coalition’s Starvation of Yemen Hasn’t Ended - The AP has published an extensive, important report on the dire and worsening conditions in Yemen. The report focuses on the widespread malnutrition and starvation in the country caused in large part by the Saudi coalition blockade:Around 2.9 million women and children are acutely malnourished [bold mine-DL]; another 400,000 children are fighting for their lives, in the same condition as Mizrah.Nearly a third of Yemen’s population — 8.4 million of its 29 million people — rely completely on food aid or else they would starve. That number grew by a quarter over the past year.Aid agencies warn that parts of Yemen could soon start to see widespread death from famine. More and more people are reliant on aid that is already failing to reach people. As the report says, more than eight million are on the brink of famine, and millions more are malnourished and therefore much more vulnerable to illness. The crisis in Yemen is entirely man-made, and the Saudi coalition bears a huge share of the responsibility for creating it. Each day that they impede the delivery of commercial goods and humanitarian aid is another day that Yemen’s civilian population can’t get the food and other essential goods they need to live. In addition to the threat of massive loss of life, the long-term destructive effects on the health and development of an entire generation of Yemenis will be severe.   Both the U.S.-backed coalition bombing campaign and blockade are to blame:The war has shattered everything that kept Yemen just above starvation. Coalition warplanes blasted hospitals, schools, farms, factories, bridges and roads. The coalition has also clamped a land-sea-and-air embargo on Houthi-controlled areas, including the Red Sea port of Hodeida, once the entry point of 70 percent of Yemen’s imports. Now far less gets in as coalition ships off shore allow through only UN-inspected and approved commercial ships and aid, often with delays. What little that does get in is often so expensive that it isn’t affordable for most Yemenis. Humanitarian aid can’t substitute for normal commercial imports, and as long as the blockade is in place Yemen can’t import nearly enough of what it needs.  Most of the deaths from Yemen’s humanitarian crisis are invisible to the outside world because they go uncounted:

        Yemeni Rebels Begin Attacking Saudi Oil Infrastructure: You Know What That Means -- The Houthi rebels in Yemen, officially known as Ansurallah, have vowed to intensify rocket attacks on Saudi Arabia’s critical oil infrastructure, warning that they are now manufacturing their own ballistic missiles to achieve those aims, the Financial Times reports. The threat comes at a time when Houthi attacks on Saudi Arabia have begun to increase. Just this Saturday, Saudi Arabia’s air defense system intercepted four ballistic missiles over the southwestern region of Jizan. The debris of those missiles reportedly killed one person. Just a week prior, two other missiles were launched at the Saudi Arabian Oil Company (Aramco) facilities on the Red Sea.At the beginning of April, the London-based IHS Jane’s Terrorism and Insurgency Center noted that the Houthis claimed to have carried out three separate rocket attacks on Aramco facilities in ten days, including an attack on a Saudi oil tanker, which suffered some damage and led to the intervention of a coalition naval vessel, which in turn repelled the attack.The Houthis also unveiled their new Badr-1 surface-to-surface weapon system (a heavy artillery rocket system) approximately a week prior, which the rebels claimed they had used to attack Aramco facilities. Mohammed al-Boukhaiti, a member of the Houthi political council, also told the Financial Times that these attacks were “only the beginning of the response” to the death of Houthi leader Saleh al-Samad, who was killed by Saudi air strikes in April. “Yemenis will not pass on the death of Samad easily and they will do their best to take revenge for him,” Mr. Boukhaiti said. Boukhaiti also dismissed allegations that Iran has supplied the Houthis with sophisticated missiles, claiming instead that the rebels have been developing and manufacturing their own rockets and drones.

        Saudi team in Socotra as UAE presence angers Yemen -- A first meeting between a Saudi delegation and representatives of the Yemeni government on the Yemeni island of Socotra has ended without results, a Yemeni source told Al Jazeera.The delegation met Ahmed Obeid bin Daghr, Yemen's prime minister, on Friday after the United Arab Emirates (UAE) deployed four military craft and more than 100 troops to Socotra, reportedly without first consulting Yemen's government.On Friday, a Yemeni government official said UAE forces had occupied sea and airports on Socotra, in a move the official called an "act of aggression".A Yemeni minister told Anadolu news agency on Friday that the Yemeni people would not give up any sovereign territory. "Yemenis will safeguard their land, islands and coastland. We will not surrender one grain of sand," Nayef al-Bakri, the minister for youth and sports affairs, was quoted as saying.

        Saudi Arabia Will Build Christian Churches After Striking Deal With Vatican -  First he let women drive. Then he loosened rules surrounding public interactions between men and women. Now, in his latest act of progressive benevolence (in a country that still chops people's heads off for committing adultery), Saudi Crown Prince Mohammed bin Salman will allow the Vatican to build Christian churches in Saudi Arabia.The historic deal was signed by the Secretary General of the Muslim World League Sheikh Mohammed bin Abdel Karim Al-Issa and the President of the Pontifical Council for Inter-religious Dialogue in the Vatican, Cardinal Jean-Louis Tauran following a meeting last month, according to Breitbart.  The decision is part of KSA's shift to an ever more open stance as it seeks to recruit technology firms and other industries to help diversify its economy away from oil.During a visit to Riyadh in April, Cardinal Tauran was received at the royal palace by King Salman bin Abdulaziz Al Saud, who in addition to nominally running the country is also the custodian of the Two Holy Mosques, as well as his son MbS.In his address to Saudi officials, Tauran spoke about the difficulties faced by the "hundreds of thousands of Christians in the Saudi Kingdom" despite the fact that the country is the only state in the Arab world without even a single church.Tauran insisted that Pope Francis follows their plight "with close attention." The cardinal also reaffirmed the Vatican's view on the equal treatment of all citizens regardless of their religion, including those who are atheist or agnostic.

        UK drones in Syria using controversial 'vacuum' bombs | Middle East Eye: Britain's defence ministry have acknowledged using controversial thermobaric missiles in Syria that rights groups have described as "indiscriminate". Royal Air Force drones used the weapons, often called "vacuum" bombs because they suck oxygen into the powerful blast, against targets in Syria in January and February of this year, an FOI request sent by Drone Wars UK, a campaign group, has revealed. The missiles work by sucking in oxygen from the environment to create a high-temperature explosion with an extremely powerful blast radius. Unlike conventional explosives that cause injuries through shrapnel, the blast effect of thermobaric weapons causes internal organ damage including to the lungs. RAF MQ-9 Reaper drones fired 19 AGM-114N missiles in January and February of this year. The 'N' variant of the AGM-114 missile, known as Hellfire missiles, contains a thermobaric warhead which is particularly effective at targeting people inside enclosed spaces such as buildings, fortifications or tunnels. The exact cause of death from being hit by a thermobaric weapon would be multiple injuries to various organs including the lungs - Justin Bronk, RUSI air power expertThe British government has in the past refused to acknowledge whether it has used the weapons in combat saying it could harm the effectiveness of the armed forces. The revelations came on the same day that the British government admitted for the first time that its bombing campaign against Islamic State in Syria and Iraq killed civilians.

        It’s not clear if Trump and Netanyahu want a war with Iran – but they may fall into one all the same - - Iran has an exaggerated reputation in the Middle East for Machiavellian cunning and an ability to outmanoeuvre its enemies. Britain used to be regarded in the same light in the region: its most ill-considered actions were admired as devilishly clever plots when all it was doing was taking advantage of the blunders of its opponents.The Islamic Republic is similarly seen as the sinister hidden hand behind many developments with which it has little to do. It is accused of creating a corridor of pro-Iranian states from Tehran to the Mediterranean, posing an existential threat to Israel and the Gulf monarchies. The Iran nuclear deal of 2015 is to be dropped by Donald Trump because it has supposedly done nothing to avert these dangers, possibly leaving military action as the only option. Iranian influence has certainly expanded but only thanks a series of disastrous US-led military interventions since the start of the millennium. In early 2001 Iran was isolated with Afghanistan to the east under the rule of the Taliban, whose Sunni sectarianism inspired them with hatred of Shia  Iran whose diplomats they casually murdered. Iran’s neighbour to the west was Saddam Hussein’s Iraq, with whom it had fought a ferocious eight-year war. Western debacles in the Middle East since 9/11 have not produced a learning curve; or there is such a curve, it points down rather than up. In the wake of the popular uprising in Syria in 2011, the US and its regional allies – Saudi Arabia, Turkey and Qatar – backed the armed opposition to president Bashar al-Assad. Whatever they supposed they were doing, they ensured that for Assad to survive he needed maximum engagement of Russia and Iran in Syria.Are we about to see Iranian influence expand once again as the US and Israel gear up for a confrontation – and quite possibly a war – with Iran? Trump is likely to reimpose sanctions on Iran on 12 May, thereby sinking the nuclear deal negotiated by Barack Obama. It is a self-harming decision, pillorying Iran for being a great and threatening power while oddly weak enough to be brought to heel by economic sanctions and possible airstrikes. Sanctions will not work any better against Iran than they did against Iraq in the 1990s or against Syria today. If they do not, then the only alternative is military action by the US or by the US “green-lighting” an Israeli attack. But what happens then? This is the question that was never properly answered when the US intervened directly or indirectly in Afghanistan, Iraq and Syria. Supporters of these ventures had no clear vision of what a US victory would look like and, in so far as they did have a strategy, it rested on wishful thinking.

        Iran Claims Israel Attack Was A False Flag - In the aftermath of one of the most severe Israeli attacks on Syria "in decades," Iranian lawmakers said Thursday that Iran had no role in the attack, and that Shia nation doesn't operate any bases in Syria.  Mohammad Javad Jamali Nobandegani, a member of the Iranian Parliament’s national security and foreign policy committee, said Israel’s claim that Iran had provoked Israel by firing first was "a lie," adding that "Israel's history of carrying out unprovoked attacks in Syria has been well-documented.""Iran does not have military base in Syria," Nobandegani added.And while Iran maintains that last night's skirmish between the Israeli Defense Force and Syrian Army forces was a false flag, and that the IDF struck first (continuing its pattern of airstrikes and other military assaults in Syria), the IDF boasted Thursday morning that Tehran "will need a lot of time to recover" from the most extensive Israeli attack in Syria since 1974.  Meanwhile, Israel said Iran paid a "heavy price" for its (nonexistent) aggression following multiple Israeli airstrikes against what Tel Aviv said were targets belonging to the Iranian Revolutionary Guard Corp’s Quds Force.

        Iran: Israeli claims are 'fabricated' and 'baseless' -- Iran has denied Israel's allegations that it launched rocket attacks on its forces in the occupied Golan Heights, calling the claims "fabricated" and "baseless". On Thursday, Israel launched a wave of attacks on what it called Iranian targets in Syria in response to alleged Iranian attacks that targeted the Israeli-occupied Syrian territory of Golan Heights for the first time. It was the most extensive military exchange ever between the two adversaries. "The Zionist regime's frequent attacks on Syria under fabricated and baseless excuses is a breach of the national sovereignty and territorial integrity of Syria and in defiance of all international laws and regulations," Iranian Foreign Ministry spokesperson Bahram Qasem said. Israel says it hit dozens of Iranian military targets, as well as five Syrian anti-aircraft installations in response to Iranian forces allegedly launching 20 rockets in the occupied Golan Heights.Syrian state media reported that Syrian air defences had intercepted most of the incoming rockets over the capital, Damascus, but also confirmed that a radar station and a weapons storage site were struck.

        The US-Israeli Plan To Assassinate Iran's Elite Revolutionary Guard Commander -- The United States gave Israel the green light to assassinate Iran's top military officer, Iranian Revolutionary Guards al-Quds Force commander Maj. Gen. Qassem Soleimani, according to a widely circulated report in Kuwaiti newspaper Al-Jarida published earlier this year. News of the agreement, first published in Arabic in January, is now resurfacing in both Russian and Middle East regional media the day after Syria and Israel engaged in a massive overnight exchange of fire in what constitutes the most sustained Israeli attack on Syria in decades.  In the Arab world Al-Jarida is generally considered to be a platform through which Israel circulates news and its perspective to neighboring countries in the region. The newspaper first published report based on an Israeli government source who was cited as saying, "there is an American-Israeli agreement" that Soleimani is a "threat to the two countries' interests in the region"—which reportedly led to a Washington green-light for the Israelis to assassinate him.  General Soleimani, as leader of Iran's most elite force, also coordinates military activity between the Islamic Republic and Syria, Iraq, Hezbollah, and Hamas - a position he's filled since 1998 - and as Quds Force commander reports directly to the Supreme Leader of Iran, Ali Khamenei, and oversees Iran's covert operations in foreign countries.Israeli officials initially "leaked" the story after days of internal Iranian anti-government protests gridlocked the country in late December and early January, bringing international media attention and discussions in Tel Aviv and Washington of a potential coup attempt in the works. Whether or not there actually ever was such a green-light given by the American side, Al-Jarida report ultimately served the purpose of a semi-official threat issued through the media by the Israelis.

        Iran cleric threatens destruction of Israeli cities - A prominent Iranian cleric on Friday threatened two Israeli cities with destruction if the Jewish state "acts foolishly" and attacks its interests again, while thousands of protesters demonstrated against President Donald Trump's withdrawal from the Iranian nuclear deal with world powers. The comments by Ayatollah Ahmad Khatami followed a week of escalating tensions that threaten to spill over into a wider conflict between the two bitter enemies, who have long fought each other through proxies in Syria and Lebanon. Israeli airstrikes struck Iranian military installations inside Syria on Thursday — its biggest coordinated assault on Syria since the 1973 Mideast war — in retaliation for an Iranian rocket barrage on Israeli positions in the occupied Golan Heights. It was the most serious military confrontation between the two rivals to date.   "The holy system of the Islamic Republic will step up its missile capabilities day by day so that Israel, this occupying regime, will become sleepless and the nightmare will constantly haunt it that if it does anything foolish, we will raze Tel Aviv and Haifa to the ground," he said, according to state television. His remarks drew chants of "Death to America!" from those gathered for Friday prayers in Tehran. Thousands later demonstrated across the country to protest Trump's withdrawal from the nuclear deal.   In a lengthy government statement on Friday, the Iranian government warned that it would take "whatever reciprocal measures it deems expedient" if it is not fully compensated for the U.S. withdrawal from the nuclear agreement as provided for in the accord. It called on the other parties to the agreement — especially Britain, France and Germany — to safeguard the accord, adding that no provisions or timeframes in the 2015 agreement "are negotiable in any manner." At the same time, the government said it has tasked the president of the Atomic Energy Organization of Iran with "taking all necessary steps in preparation for Iran to pursue industrial-scale enrichment without any restrictions." 

        Russia, after Netanyahu visit, backs off Syria S-300 missile supplies (Reuters) - Russia is not in talks with the Syrian government about supplying advanced S-300 ground-to-air missiles and does not think they are needed, the Izvestia daily cited a top Kremlin aide as saying on Friday, in an apparent U-turn by Moscow. The comments, by Vladimir Kozhin, an aide to President Vladimir Putin who oversees Russian military assistance to other countries, follow a visit to Moscow by Israeli Prime Minister Benjamin Netanyahu this week, who has been lobbying Putin hard not to transfer the missiles. Russia last month hinted it would supply the weapons to President Bashar al-Assad, over Israeli objections, after Western military strikes on Syria. Foreign Minister Sergei Lavrov said the strikes had removed any moral obligation Russia had to withhold the missiles and Russia’s Kommersant daily cited unnamed military sources as saying deliveries might begin imminently. But Kozhin’s comments, released so soon after Netanyahu’s Moscow talks with Putin, suggest the Israeli leader’s lobbying efforts have, for the time being, paid off. “For now, we’re not talking about any deliveries of new modern (air defense) systems,” Izvestia cited Kozhin as saying when asked about the possibility of supplying Syria with S-300s. The Syrian military already had “everything it needed,” Kozhin added.  The Kremlin played down the idea that it had performed a U-turn on the missile question or that any decision was linked to Netanyahu’s visit. “Deliveries (of the S-300s) were never announced as such,” Kremlin spokesman Dmitry Peskov told reporters on a conference call, when asked about the matter.

        The Banal Hypocrisy Of Western Coverage of Israel - So, I see the usual suspects, in response to a large attack by Israel on Iranian targets in Syria, are saying the usual, “I support Israel’s right to defend itself.” Really what they mean, of course, is “I’m scared of the Israeli lobby in my country, and of being called an anti-semite if I dare say the truth.” The truth is that Israel attacks other countries far more than other countries attack Israel. The truth is that the attack to which the Israelis were responding was actually in response to routine Israeli attacks on Syria. The truth is that Iran is an invited guest in Syria and Israel is not.Modern Iran has not attacked multiple neighbours over the course of its history. Israel has, and taken territory from them to boot.The Golan Heights was taken from Syria, by Israel. Our entire “conversation” about Israel and the region around it is based on hypocrisy, fear and guilt over the holocaust, as if because Germany killed millions of Jews, it’s ok for Israel to treat Palestinians and everyone else in the neighbourhood monstrously. Israel should remember that “the powerful do as they will, the weak suffer what they must” was replied to “what you do to us, will one day be done to you, because seeing how you treat us, no one will trust you or have mercy on you.”

        U.S. Exit From Nuclear Deal Would Help Iran, Former Israeli General Says - Iran would 'drive a wedge between the world powers,' Amos Gilad tells Haaretz, making it harder to monitor Tehran's nuclear program  Maj. Gen. (res.) Amos Gilad, the former research chief at Military Intelligence, told Haaretz that a U.S. withdrawal from the 2015 nuclear agreement with the big powers would mainly help Iran. Gilad, also the former director of the political-security division at the Defense Ministry, said over the weekend that although he had reservations about the nuclear agreement when it was signed, he now believed that an American commitment to the deal remained the least bad option. Referring to last Monday’s presentation by Prime Minister Benjamin Netanyahu on Iran’s nuclear program, Gilad said the material obtained by the Mossad did not prove that the Iranians were violating the nuclear agreement.   “Israel needs to prioritize the threats against it,” said Gilad, who is also a former coordinator of government activities in the territories. “If Iran now continues to suspend its nuclear project for eight or 10 years, in accordance with the agreement, that will let us focus on more urgent threats relating to the Iranian army establishing a presence in Syria, and preparing the Israeli army for the possibility that, in the future, we’ll have to deal with the nuclear [issue] if a confrontation erupts.”

        Reimposing Iran Oil Sanctions May Spell Trouble for Turkish Lira -  Turkey’s currency is already having a rough year, but if the U.S. reimposes sanctions on Iranian oil exports it could fall even further.That’s because the lira, along with the yen and the Swiss franc, is more at risk of declining than most major peers should Iranian shipments be curtailed, according to an analysis from Danske Bank’s Jens Pedersen that maps different currencies’ sensitivity to oil-price moves. The Canadian dollar, Norwegian krone and ruble are among those seen as most likely to benefit. Crude oil is trading near the highest since 2014 in advance of the May 12 expiration of the waiver on U.S. sanctions on Iran. President Donald Trump said in a tweet Monday that he’ll announce his decision on Tuesday on whether the U.S. will remain in the Iran nuclear accord. The lira has already lost 10 percent this year against the euro amid concern that monetary policy is too loose to anchor inflation. The report, released Monday, used the euro as its base. It found that the euro-lira, euro-yen and euro-franc pairs have upside risk should the price of Brent oil rise to $80 to $85 per barrel in a scenario where Iranian oil sales are hampered, from about $75 now. Traders focusing on the euro-dollar rate need not be worried, according to the report, as the pair “maintains a minuscule sensitivity to oil, which means that an oil spike should not be able to derail the current negative momentum in the cross.”

        China’s Position on the Iran Nuclear Deal – Earlier this month, China underlined its commitment to the Iran nuclear deal (also known as the Joint Comprehensive Plan of Action or JCPOA). In a statement by Foreign Ministry Spokesperson Hua Chunying following Prime Minister Netanyahu’s “Iran Lied” presentation, China reiterated the role of the UN Security Council and the International Atomic Energy Agency (IAEA) in the agreement. China rightly pointed out that the IAEA had verified Iran’s compliance with the accord on no fewer than 10 occasions, that the JCPOA put in place the strictest monitoring and verifications measures on the Iranian nuclear program, and that all parties should implement and safeguard the accord. Last month, both China and Russia in the Preparatory Committee of the 2020 NPT Review Conference issued a joint statement on the JCPOA. In addition to confirming their support, the two countries said that the JCPOA contributed to strengthening the global non-proliferation regime and demonstrated that non-proliferation issues can only be addressed through diplomacy—in marked contrast to Donald Trump’s approach. They emphasised the need for all parties to implement their commitments under the accord and to refrain from actions that undermine implementation of commitments.

        China Junk Bonds May See More Losses After Yields Jump to 8% - The average yield on China’s junk-rated dollar bonds rose above the 8 percent mark, fueling concerns of further gains amid a bulging issuance pipeline and the absence of a strong demand from mainland investors.Yields on dollar junk bonds from Chinese firms rose to the highest since April 2016, while those from the broader region yielded 7.4 percent, according to ICE BofAML Indexes. It took just 43 days for China’s average yield to rise from 7 percent to 8 percent, after having taken more than four months for the move from 6 percent to 7 percent. BNP Paribas Asset Management expects credit spreads in the region to widen by a further 25-50 basis points. “There is a pipeline for supply in Asia yet to materialise,” said Alaa Bushehri, London-based head of global EM corporates at BNP Paribas Asset Management. As issues price at wider spreads, there is a knock on effect to the secondary market which results in weaker sentiment and the expectation of higher rates this year, she said. Chinese high-yield borrowers have seen their funding costs increase as much as 2 percentage points so far in 2018. The last time the yield on Chinese dollar junk bonds rose over 8 percent was after a equity rout in early 2016 that wiped out $5 trillion in market valuation.

        Beijing is going to have to start making a lot of life or death decisions about the Chinese economy -- A private Chinese manufacturer, DunAn Group, has sent a letter begging the Chinese government to help it out with its $7 billion of debt.Expect to hear more companies cry for help as the government attempts to ween the country off of the easy credit that has lubricated its corporate sector since the Global Financial Crisis in 2008.Watch the government's response to this closely. On the one hand, if Beijing doesn't bail out companies like DunAn, it could strike fear into C-suites across the nation and send stocks roiling.On the other hand, if Beijing bails out companies like DunAn, it will remove the moral hazard of bankruptcy. Everyone will expect a bailout. Investors would do well to pay attention to how exactly companies are bailed out (if they are so lucky) too. A healthy Peter could get robbed to pay for an ailing Paul.That's how the system works. "If a credit default happens, it will deliver a serious blow to many financial institutions in Zhejiang and may even cause systemic risks," said DunAn's letter according to the Financial Times. The letter also blamed the company's troubles on China's tepid effort to tighten credit conditions and rein in corporate debt. According to analysts at Standard & Poor's, the credit profiles of manufacturers like DunAn have deteriorated significantly over the last two years. This is just the beginning of companies finding their situation going from dire to desperate.

        China’s Xi Meets Kim Jong Un for Second Time in Two Months -- Chinese President Xi Jinping met with North Korean leader Kim Jong Un in the port city of Dalian over the past two days, the second meeting between top officials of the allies in less than two months.The summit came after Kim’s surprise two-day visit to Beijing in late March, his first known trip abroad since taking power in 2011. The most recent talks follow Kim’s meeting with President Moon Jae-in of South Korea on April 27 and an expected one with U.S. President Donald Trump, possibly next month.Trump said on Twitter he would speak to Xi by phone this morning to discuss trade and North Korea.Kim’s meetings with Xi in quick succession show that ties are improving rapidly as North Korea seeks talks over its nuclear program. The neighbors, which fought together during the Korean War, had grown apart last year after China backed United Nations sanctions crimping North Korea’s energy imports and sources of foreign cash to pressure it to halt its nuclear and missile tests. Now China and North Korea’s interests are becoming more aligned. North Korea needs China to boost its economy, while Xi can use closer ties with Kim as leverage in his talks with Trump about trade, according to Zhu Feng, professor of international relations at Nanjing University.

        Short of war, China now controls South China Sea | Asia Times: Tensions in the South China Sea are on the boil again amid new reports that China has deployed advanced missiles to land features in the disputed maritime area. According to new reports, China has installed several Surface-to-Air Missiles (SAMs) and Anti-Cruise Ballistic Missiles (ACBMs) systems across the Paracel and Spratly island chains, parts of which are claimed by multiple regional states including the Philippines and Vietnam. Weeks earlier, China also deployed electronic jamming equipment to the maritime area, giving it the ability to disrupt the command-and-control communications of rival states’ military assets operating in the South China Sea. China’s neighbors and rivals fear that the Asian powerhouse is slowly but surely establishing the foundation of an Air Defense Identification Zone (ADIZ) in one of the world’s most important and busy waterways. Over US$5 trillion worth of global trade traversed the sea last year. Boosting China’s missile defense system in the area would allow it to progressively restrict the movement as well as squeeze the supply lines of smaller claimant states, all of which maintain comparatively modest military capabilities to fortify their sea claims. The reports immediately rekindled tensions between China and key Southeast Asian claimant states, including the Philippines. Crucially, it has also reignited an ongoing debate between doves and hawks within the Philippine government.In recent days, images of Chinese military assets in Philippine-claimed features, namely the Fiery Cross, Mischief and Subi reefs, have dominated news headlines in Manila. Senior Filipino defense officials have repeatedly expressed concerns over China’s militarization of the disputed area. Earlier this year, Philippine Defense Secretary Delfin Lorenzana claimed that China promised not to deploy more military assets to Philippine-claimed land features. The recent reports will thus likely be interpreted by Filipino top brass as a betrayal of trust while giving new ammunition to already strong anti-China rally cries among nationalistic Filipinos. 

        As Push for Global E-Commerce Rules Gain Pace, India Starts Taking a Stand - Even as multinational retailers like Amazon and Walmart take over e-retailing space in India, swallowing domestic players, the Modi government remains opposed to multilateral negotiations at the World Trade Organisation (WTO) for framing rules to govern global e-commerce. India has maintained its resistance on the hope that it would be able to stop or stall the multilateral trade body from formulating rules on e-commerce. Unfortunately, it appears as if this strategy may not be working out.Push for WTO negotiations on e-commerce is gaining traction with members, giving rise to the fear that India could isolate itself. If that happens, it could be a failure of Modi government’s trade diplomacy.Nearly half of the 164 WTO members are already in favour of bringing e-commerce within the WTO ambit and their ranks are swelling. At the WTO Ministerial Conference in Buenos Aires last December, as many as 71 members came out in support of starting negotiations on e-commerce and issued a joint statement to formalise their stand. When this group held its first meeting on March 14 in Geneva, some 80 members participated. The grouping is expected to meet again later this month and yet again in June, in the expectations of roping in more countries.

        A Second Teenager Has Been Raped and Set on Fire in the Same Indian State, Police Say - A 17-year-old girl in India was raped, sprayed with kerosene, and set on fire, in the second such case in the country this week.The teen is battling to survive with 70% first-degree burns after the attack in the eastern state of Jharkhand, Agence-France Presse reports.There is a chance that she will survive,” Shailendra Barnwal, police superintendent of Pakur district, told AFP. A 19-year-old man has been arrested in connection with the attack.The brutal incident occurred on Friday, the same day another teenage girl, a 16-year-old, was raped and burned to death in the same state. Fifteen people have been detained in connection with that case, which took place in Jharkhand’s Chatra district.  The girl’s family approached the village council to seek justice on Friday, CNN reports. The council reportedly ordered the accused men to do 100 sit-ups and pay a $750 fine. Angered by the penalty, the suspects allegedly retaliated by attacking the teenager’s parents and setting the house on fire, with the girl inside.

        11 Farm Attacks in 100 hours, SA descending into Chaos - In this video by Willem Petzer the crisis pertaining to farm murders and farm attacks is looked at. With a country that has about 30 000 farmers there were eleven farm attacks and three farm murders. Do the maths. And this highlights the astonishing claim by the DA overseas condemning those who protest against farm murders. The chaos raining in South Africa is a fact as was seen in the recent looting, burning, destruction and chaos during the riots in the North West province. The video brings to light the situation as it is and no denying by the ANC government can change this. Details of a recent attack and murder are revealed in a heartbreaking look into what transpired that fateful night.

        Who is Losing the Nile? -- The construction by Ethiopia of the Grand Renaissance Dam on the Blue Nile has exacerbated tensions between the riverside countries. Egypt is worried for fear its share of the river waters may be seriously diminished but seems incapable of standing in the way of Addis-Abeba’s project which has now gained the support of Sudan. Before the end of the year, the construction on the Blue Nile of the huge Renaissance dam will be finished and Ethiopia will be in complete control of the flow of waters. “We’ve lost,” an Egyptian official reluctantly admits. “We were unable to stop them from building the dam; we couldn’t get them to change any part of their plans, especially to reduce its capacity. Our only hope, and it’s a slim one, is that filling the reservoir will take longer than the three years planned by Addis-Abeba.” Otherwise, Egypt is likely to experience water shortages, perhaps as early as next year.  Use of the waters of the Nile is a complex issue, involving international law (how should the waters of a transnational river be allotted?), regional history (the many treaties signed over the years), a rhetoric of the “unalienable rights” of the different parties and the power relations between the riverside countries. At the risk of simplification, let us try to outline the basic elements of this dispute. The Nile rises in Ethiopia as the Blue Nile, and in Burundi as the White Nile. The two join together at Khartoum, the Sudanese capital, with the former supplying 90% of the total volume of water. Since the beginning of the 20th century, Egypt has obtained through various treaties the recognition of its water rights, all the more crucial as it depends for 97% of its needs on the Nile, unlike the other riverside countries like Ethiopia where there is plenty of rain.

        Argentina raises interest rates to 40% - BBC News: Argentina's central bank has raised interest rates for the third time in eight days as the country's currency, the peso, continues to fall sharply. On Friday, the bank hiked rates to 40% from 33.25%, a day after they were raised from 30.25%. A week ago, they were raised from 27.25%. The rises are aimed at supporting the peso, which has lost a quarter of its value over the past year. Analysts say the crisis is escalating and looks set to continue. Argentina is in the middle of a pro-market economic reform programme under President Mauricio Macri, who is seeking to reverse years of protectionism and high government spending under his predecessor, Cristina Fernandez de Kirchner. Inflation, a perennial problem in Argentina, was at 25% in 2017, the highest rate in Latin America except for Venezuela. This year, the central bank has set an inflation target of 15% and has said it will continue to act to enforce it.

        Venezuela annual inflation nears 14,000 pct –legislature - Venezuela’s annualized inflation reached nearly 14,000 percent in April, according to figures released on Monday by the country’s opposition-led National Assembly, which publishes its own economic indicators amid silence at the central bank. The OPEC nation’s socialist-run economy has collapsed, leaving the country withering under hyperinflation, constant shortages of food and medicine, and a growing exodus of Venezuelans seeking better conditions elsewhere. President Nicolas Maduro says the country is victim of an “economic war” by opposition leaders that he says has been fueled by financial sanctions imposed by Washington. Consumer prices rose 80 percent in April, compared with 67 percent in March, according to the legislature’s figures, and rose 13,779 percent in the 12 months ending in April. The central bank did not respond to an email seeking comment. It has not published inflation data in more than two years. Maduro’s critics say the principal problem is an unchecked expansion of the money supply, which has grown by close to 3,000 percent in a year. That in turn has made the local bolivar currency increasingly worthless. The exchange rate for the bolivar on the black market, which is tolerated despite being illegal, has plummeted by 99 percent since Maduro took office in 2013. The government is planning a currency overhaul for June that would remove three zeroes from prices. Critics have questioned whether authorities will be able to print new bills in time. 

        Canada sued over years of alleged experimentation on indigenous people - A class action lawsuit has been filed in a Canadian court on behalf of the thousands of indigenous people alleged to have been unwittingly subjected to medical experiments without their consent. Filed this month in a courtroom in the province of Saskatchewan, the lawsuit holds the federal government responsible for experiments allegedly carried out on reserves and in residential schools between the 1930s and 1950s. The suit also accuses the Canadian government of a long history of “discriminatory and inadequate medical care” at Indian hospitals and sanatoriums – key components of a segregated healthcare system that operated across the country from 1945 into the early 1980s. “This strikes me as so atrocious that there ought to be punitive and exemplary damages awarded, in addition to compensation,” said Tony Merchant, whose Merchant Law Group filed the class action. The lawsuit, which has not yet been tested in court, alleges that residential schools – where more than 150,000 aboriginal children were carted off in an attempt to forcibly assimilate them into Canadian society – were used as sites for nutritional experiments, where researchers tested out their theories about vitamins and certain foods.  “The wrong here is that nobody knew it was happening. Their families didn’t know it was happening,” Merchant said. As the diet at the schools was known to be nutritionally deficient, the children were considered “ideal experimental subjects”, according to court documents. It cites six schools, stretching from Nova Scotia to British Columbia, and links them to experiments carried out from 1948 to 1953. 

        Dmitry Medvedev Confirmed As Russia's Prime Minister - In a clear signal that President Vladimir Putin has chosen to maintain Russia's political status quo, damn the western sanction torpedoes, today the lower house of the Russian Parliament approved longtime Putin ally (and former president) Dmitry Medvedev, as chairman of Putin's cabinet, cementing his tenure as prime minister for another term, RT reports. Of 433 lawmakers present at the Tuesday session of the State Duma, 374 voted in favor of Medvedev’s candidacy while 56 voted against it. There were no abstentions. In accordance with Russian law, Medvedev's government was dismissed after Vladimir Putin was sworn in as president on Monday, though all of its members will continue in their roles until a new government is formed. The prime minister now has a week to present his plans for forming his new cabinet. As it turns out, he already has a few people in mind.According to the Russian media, Medvedev will expand the power of Finance Minister Anton Siluanov, elevating him to deputy prime minister in charge of economic development. Meanwhile, former Deputy Defense Minister Yuri Borisov is being considered for the position of deputy prime minister in charge of defense.  Tatyana Golikova, the head of the Russian Audit Chamber, has been picked for the position of deputy prime minister in charge of social policy, labor and healthcare, replacing Olga Golodets who will become deputy prime minister in charge of culture and sports. For now, Medvedev has said he's only proposing ministers for key posts, but noted that other nominations will follow.

        Save the Iran nuclear deal, Ms. Merkel - Handelsblatt editorial - Brokered largely by the Europeans in 2015, the Joint Comprehensive Plan of Action (JCPOA), better known as the Iran nuclear deal, was neither seen nor sold as perfect. It does not address Iran’s efforts to build ever fancier ballistic missiles, nor its meddling in Syria, Iraq, Yemen and elsewhere. Instead, it was meant to prevent Iran from getting the weapons-grade uranium and plutonium to build nuclear bombs, under the constant monitoring of international auditors. At that, the JCPOA appears to be succeeding. But Mr. Trump keeps calling this arrangement a “terrible deal.” On April 30, Israel’s prime minister, Benjamin Netanyahu — channeling the hapless Colin Powell in 2003 — gave a presentation about Iran’s past nuclear programs, implying that Iran must be breaching the 2015 deal in all sorts of ways even today. But the International Atomic Energy Agency says Iran is complying. European spy agencies agree. This time Britain, France and Germany are united in wanting to save the Iran deal, and thus united in being ready to oppose Donald Trump. So what happens when Trump does pull out? In the worst scenario, the hardliners in Iran would see themselves vindicated and push aside the moderates. Iran would then sprint for a “breakout” and actually build nukes. Saudi Arabia, Iran’s bitter enemy, would start its own nuclear program. The Israelis and Americans would launch preemptive attacks on Iran, igniting another conflagration. Hundreds of thousands would die, suffer or flee to Europe. North Korea, meanwhile, where Kim Jong-un is making all sorts of uncharacteristically conciliatory gestures about his own nuclear program, would conclude that making concessions to America such as Iran’s in 2015 would be — how else to put it — a “terrible deal.”This is why Europe — and especially its most populous nation, Germany, that sleeping giant of world diplomacy — must now step up and lead the West as America apparently no longer wants to do. The Europeans should offer immediate economic relief to Iran after Trump’s pull-out, argues Mark Leonard of the European Council on Foreign Relations. Oliver Meier of the German Institute for International and Security Affairs goes even further: He wants Europe to invoke its so-called “blocking statute” against America as soon as the US imposes secondary sanctions against European firms still doing business with Iran.

         Merkel: "Trump's Decision Damages Trust In The International Order" -- One day after Angela Merkel said Europe can no longer rely on the US "to protect it" in the aftermath of Trump's unilateral withdrawal from the Iran nuclear accord, stating that "It’s no longer the case that the United States will simply just protect us. Rather, Europe needs to take its fate into its own hands, that's the task of the future", the  German Chancellor has doubled down, and said President Trump’s decision to scrap the Iran nuclear accord was “not right.”"It’s not right to unilaterally cancel an accord that was negotiated, that was unanimously approved in the UN Security Council," Merkel said in a speech at a Catholic religious conference in Muenster, Germany "That damages the trust in the international order.""What we’re seeing at the moment, which is probably the most alarming, is that multilateralism is in a real crisis" she added. She then echoed her prior warning: "I’ve said this about the U.S. decision on the Iran accord, I could say the same thing about the climate accord, the WTO - if we always say that something doesn’t suit us, and we don’t get a new international order, and everybody simply does what they want - then that’s bad news for the world."Or it could simply be bad news for Europe, or rather everyone but the US, and since Trump's promise was "America first" it should hardly come as a surprise. Perhaps what Angela should be more worried about is that her disastrous "open door" immigration policy has ushered in not only Brexit but - as of yesterday - laid the groundwork for the first populist, anti-establishment government in Italy where the Five Star and League are about to form a government, which will have immigration as its key talking point. Alas, none of this was discussed and instead Merkel kept hammering on the Iran situation, questioning whether the Iran Nuclear accord can be saved: "The extent to which we can keep this accord alive when one huge economic power isn’t taking part is something that’ll have to be discussed with Iran,” Merkel said. "We hope so, but many factors are in play and we shouldn’t pretend to be stronger than we are. That can lead to severe miscalculations."

        Five Star Leader Rejects "Neutral" Government, Demands 2nd Vote In July - M5S leader Di Maio is pushing back against President Mattarella's appeal for the parties with the most parliamentary seats to support a "neutral" prime minister and government to run the country until fresh elections can be held early next year.Instead, Di Maio is sticking with the party's initial request to hold a second election as early as July.In a tweet, the five-star leader said "no one is responsible for a neutral government. Same as a technical government. Go for the vote in July!."Nessuna fiducia a un governo “neutrale”, sinonimo di governo tecnico. Si vada al voto a luglio!— Luigi Di Maio (@luigidimaio) May 7, 2018A twitter account associated with a Milanese chapter of the Northern League said it also opposed the "neutral" prime minister, saying the last time there was a technical government, it gave money away to troubled Italian lender Monte dei Paschi while repeatedly hiking taxes.L'ultimo governo tecnico ci ha regalato la Fornero, i soldi regalati a Monte dei paschi e tasse tasse e ancora tasse. No ad un governo tecnico! https://t.co/aj4a7ApwrF— Lega Nord Canegrate (@LNCanegrate) May 7, 2018 Meanwhile, Forza Italia, the League's largest coalition partner, said it wouldn't immediately rule out Mattarella's suggestion, saying it would prefer to hold elections in the fall.

        No solution to Italian government crisis -- Two months after the Italian elections, all attempts to form a majority government have failed. President Sergio Mattarella announced on Monday night that he will try to form a “neutral” caretaker government to prepare new elections by the beginning of next year. If such a government is not supported by the political parties, new elections could take place in autumn or as soon as July.On May 3, the second attempt to form a government failed when the leadership of the Democratic Party rejected a coalition with the Five Star Movement.The March 4 election saw the Five Star Movement (M5S) emerge as the single largest party. Party leader Luigi Di Maio first tried to form a coalition with the Lega. The Lega is the strongest force in the right-wing alliance of Silvio Berlusconi, which also includes Forza Italia and the fascist FdI (Brothers of Italy).However, a coalition of M5S and Lega failed due to the inclusion of Silvio Berlusconi: the Five Star Movement did not want to be part of government involving a man whom they had referred to as the epitome of corruption for years. But Lega leader Matteo Salvini did not want to leave out Berlusconi, because without the entire right-wing alliance backing the coalition he would have to let Luigi Di Maio take the post of prime minister.As a result, the second option, a coalition of M5S and the Democrats, was explored last week. It failed on Thursday night, when Maurizio Martina, interim PD leader, declared this chapter “over” after a brief party congress. Former PD chief Matteo Renzi, who vehemently rejects a coalition with the Five Star Movement, had prevailed. In the TV show “Che Tempo Che Fa,” he had strictly excluded participation in a government with the party of Beppe Grillo. He set up a website with the slogan “Senzadime” (without me). PD deputies were encouraged to sign up to make clear that they would not support such a coalition.

        POLITICO - Brussels Playbook --THE PRESIDENT'S PREROGATIVE: On Monday evening, Italian President Sergio Mattarella proposed a “non-political government” as the temporary solution to Italy’s post-election impasse. That move indicates he’s not going to give a mandate to someone who’ll run at the next election, whenever that may happen. Deciphering the president’s statement, there are now three options (and Mario Monti’s quite explicitly isn’t among them).

        • 1. A presidential government that survives a vote of confidence, which stays in place while political parties sort out their differences and find an agreement for a new, political government.
        • 2. A presidential government that gets parliament’s confidence and a built-in shelf life until December or so, which would be enough time to present a 2019 budget and possibly a new electoral law that Italian politics has been so obsessed with.
        • 3. That presidential prime minister fails to get the votes in parliament, which would mean a very early election. Both the League and the 5Star Movement called for a vote as early as July, but Mattarella said a summer vote “has so far been possible to avoid” — indicating in presidential Italian that he prefers to keep things that way and not ruin Italians’ summer with tutti al mare.

        While 5 Stars leader Luigi Di Maio struggles for survival at the helm of his party, the real winner — who needn’t fear either new elections or internal uprising — is the League’s Matteo Salvini. POLITICO’s Jacopo Barigazzi lays out Italy’s new reality.

        Italian Yields Surge As New Elections Loom - Having perplexed traders for months with their honey badger-like gains even as Italy exhibited its traditional political chaos, decision-making gridlock and a delightful inability to form a coalition government pushing the country to the verge of new elections, overnight Italian bonds were finally rattled, as the risk of a fresh Italian vote as soon as July and political uncertainty were finally appreciated by traders, sending the yield on 10Y BTPs 10bps higher to 1.87%, set for biggest selloff since December, and rising to the the highest level since March 28. Traders are also keenly watching the 10Y Italy-Germany spread, which recently hit the narrowest level in two years. Meanwhile, as Bloomberg notes, there's room for Italy to further underperform its periphery peers too, especially with largely positive catalysts still in place for Portugal and Spain. Will today's rout impact demand in the primary market? Watch Friday's sale of 3- and 7-year bonds for signs of a potential buyer's strike.As Bloomberg adds, the weakness in BTPs has also spilled over to other peripherals: Spanish, Portuguese 10y are both 3-4bps wider, though move is met with dip-buying demand, a London trader told Bloomberg; the long-end Austria under pressure as concession builds into supply, helping core curves edge steeper.The contagion also hit Italian stocks, with Italy’s FTSE MIB benchmark sliding as much as 2.4% after leaders of the Five Star Movement and the League rejected the idea of a non-partisan prime minister and called for elections.  The drop accelerated after Finance Minister Pier Carlo Padoan told lawmakers that a lingering period of political uncertainty in Italy could become a brake for a widespread recovery in investments; this sent the FTSE MIB to session lows, and was down 2.1% as of 7:20am ET...

        Berlusconi Opens Door To Anti-Establishment Coalition In Italy - In a statement published Wednesday night in Italy, flamboyant former Prime Minister Silvio Berlusconi said he'd be open to an agreement between the League and the Five-Star Movement (otherwise known as M5S) to form a ruling coalition that wouldn't include his center-right party, Forza Italia. M5S - an anti-establishment populist movement that emerged several years ago and has since become the dominant political force on the peninsula, winning a plurality of votes during the March federal elections - can now move to join the League - a right-wing anti-immigrant party that teamed up with Forza Italia to create a "center-right coalition" during the runup to the March vote - to form a government.If successful, the coalition government would avert the appointment of a "neutral" technocratic prime minister that would've been tasked with governing Italy until another election could be held - a scenario that was suggested by Italian President Sergio Mattarella during an announcement earlier this week, where he asked Italian lawmakers to back the idea for the good of the country.At the time, Mattarella said the technocrats would run the country until another vote to be held early next year, or until a coalition could be formed. His suggestion was immediately denounced by Italian politicians from across the political spectrum, who tend to believe technocrats lack the accountability necessary to reform Italy's political system.Here's a summary of the statement courtesy of Bloomberg:

        • Says cannot “give our consent to a government which includes the Five Star Movement”
        • Adds that if another force of the center-right creates a government with Five Star, will respect that choice
        • “Certainly not up to us to impose vetoes”
        • Says will assess individual measures taken by administration

         Berlusconi denies he may take step back to let Italy form government (Reuters) - Silvio Berlusconi denied he may stand aside to let his ally the League form a government with the anti-establishment 5-Star Movement, after senior sources from his Forza Italia party said on Tuesday he was considering it.  Italy has been stuck in political limbo since inconclusive elections in March, with 5-Star offering to form a government with the far-right League but only on condition that it breaks clear from its veteran partner, Berlusconi. Italian markets fell sharply earlier on Tuesday as investors feared a new election would further benefit the League and 5-Star at the expense of mainstream groups. Forza Italia has so far refused to withdraw and allow the League to launch a government with 5-Star alone, but three senior party sources told Reuters on Tuesday it may now be ready to change its position. “Berlusconi is thinking about it,” one source said. Shortly afterwards the 81-year-old former prime minister issued a statement saying he “firmly denied” media reports that he could step aside, adding that his party “can accept no vetoes” against its participation in government. Prospects are growing of an unprecedented summer re-vote which opinion polls suggest would see Forza Italia haemorrhaging vote to the increasingly buoyant League, which is the dominant partner in the conservative bloc. The March 4 election saw the centre-right alliance winning the most seats, while 5-Star was the biggest single party. Both groups fell well short of a majority, and while 5-Star says it is willing to hook up with the League, it has refused to deal with the scandal-plagued Berlusconi, seeing him as a symbol of political corruption. The League has refused to abandon its old ally, but it is putting increasing pressure on him to stand aside voluntarily. 

        Lega and Five Star Movement prepare a joint government in Italy --In Italy, the right-wing extremist Lega and the Five Star protest movement are negotiating the formation of a joint government. The negotiations are said to be progressing rapidly, with a result expected at the beginning of next week.As late as Monday, President Sergio Mattarella had declared that his efforts to form a new government had failed. He proposed the formation of a government of experts and the holding of early elections.On Wednesday, Silvio Berlusconi paved the way for renewed negotiations between the Lega and the Movimento 5 Stelle (Five Star Movement—M5S). These had previously failed because the M5S did not want to govern together with Berlusconi’s party Forza Italia, which had participated in the parliamentary elections in an alliance with the Lega. On Wednesday, Berlusconi signaled his willingness for the Lega to form a government alone with the M5S.If such a government is established, the far-right Lega will set its political agenda. Although the Lega is only slightly more than half as strong as the M5S in terms of the votes it received, the M5S spokesman Vincenzo Spadafora has already stated that his party is not insisting on the post of prime minister.It is likely that neither Lega leader Matteo Salvini nor M5S leader Luigi Di Maio will become prime minister, but rather a third person who was “in line with our government programme,” Spadafora told Corriere della Sera. In discussion as a possible candidate for prime minister, in addition to two non-partisan figures, is the leading Lega politician Giancarlo Giorgetti.The task of such a government would be to impose the dictates of the international financial markets in a country characterized by high levels of poverty and unemployment, a deep banking crisis and extremely high levels of public debt. In an interview with Corriere della Sera, Spadafora emphasized that the future prime minister had to be a  “person of high standing, who enjoys the trust of both Italian citizens and international partners.” By “international partners” he meant the European Union.

        Rome Has A Big Problem With Burning Buses -- Yesterday, a public bus caught fire on Rome's Via del Tritone. The number 63 bus quickly become engulfed in flames but thankfully, the driver and passengers escaped unhurt. Interestingly, as Statista's Martin Armstrong notes, the sight of a burning bus in central Rome is nothing new with people blaming Atac, the capital's transport authority, for the unusual phenomenon. So far this year, nine buses have caught fire in the city while there were 22 incidents last year. In 2016, there were 14 in total. The blazes have become so common that they even have their own social media hashtag - #flambus, which rhymes with Trambus, Atac's previous name. Unions have said the buses suffer from a lack of maintenance and internal investigations have failed to stop the fires. Officials have also warned that Atac services are unsafe and there is a growing risk to travellers. La Repubblica has reported that preliminary investigations say the Mercedes Citaro bus suffered a short circuit before it became engulfed in flames. 

         Hundreds of flights between UK and Italy grounded by strikes -  More than 100 flights between the UK and Italy have been grounded on Tuesday ahead of a strike by air-traffic controllers and ground staff. Over 20,000 passengers have seen their journeys cancelled. The controllers are walking out between 10am and 6pm, Italian time, in protest against privatisation plans. At the same time, a wider series of stoppages are taking place at airports across the country. Ground staff are engaged in a long-running pay dispute. While intercontinental flights to and from Italy, overflights and some services to and from the Italian islands are unaffected, many short-haul departures will be delayed or cancelled. Ryanair, which carries far more passengers on flights to and from Italian airports than any other carrier, has cancelled dozens of flights, including many services to and from Bergamo near Milan. Two round-trips from Stansted, and one each from Bristol, East Midlands and Manchester have been grounded.

        Brexit: banging the drum - It was not inevitable that Brexit talks would collapse into chaos, writes Booker in this week's column, sharing a joint concern with this blog about the bellicose attitude of the government. "How telling that the Cabinet's Brexit sub-committee has in recent months come to be known as the 'War Cabinet'", he observes. "Instead of being so confrontational, what we should have done was try to work out with the EU, as amicably as possible, the most practical way to solve the incredibly complex problem of how to extricate Britain in a way which does least harm to all involved". "Instead of which", Booker adds, "last week, this 'War Cabinet' found itself discussing two options for our future trade, both of which have been repeatedly shown by the EU to be wholly unworkable". Mrs May's preference is for her "customs partnership", which the cabinet committee itself rejected, while the "ultra" tendency in the cabinet wants to rely on some fanciful "smart technology" which has acquired the description "maximum facilitation" or "max fac" for short. Either or both have been rejected by the Commission as "magical thinking" and while we hear vague talk of a "hybrid solution, nothing substantive seems to be on the table. Meanwhile, the countdown continues and the EU is looking to a resolution in time for the June European Council. Yet, Booker says. it is precisely the complexity of this problem which long ago led some of us to conclude that the only practical solution would have been for us to join Norway in the European Free Trade Association and remain in the European Economic Area. Contrary to the assertions of the ignorati, it is that very solution which allows us completely to leave the EU, at the same time retaining "frictionless" trading with the single market members. Booker has been nothing if not consistent in banging the drum for the Efta/EEA option – which puts him in conflict with his own newspaper. It has become a home the "ultras" forsaking news for overt propaganda with no pretence at objective reporting. In its own insidious way, not only does the newspaper fail to enforce its own comments policy, allowing vociferous ad hominem attacks on Booker, it publishes almost weekly a dismissive reader's letter, in what we have come to know as a genre of its own – the "Booker is wrong" letter.

        Brexit: Crisis Nigh - Yves Smith -  Brexit watching has become an exercise in waiting for inescapable realities to start penetrating the astonishing delusion and fundamental incomprehension of the UK ruling classes and the media. What is remarkable is that the denialsm persists despite the EU having said “No” as many ways as it possibly could on certain basic issues.  Our best guess is that the EU is going to stick to its plans of forcing a crisis in June over the Irish border issue. Our view is that EU’s chief negotiator Michel Barnier erred in giving May breathing room last December by signing the so-called Joint Agreement. That reaffirmed the UK’s commitment to the Good Friday Agreement, while in remarkably flabby language, set forth three options for the border. The problem is that the two that appeared to offer political escape routes for the UK were never going to work and the EU and everyone who hadn’t swallowed a lot of Brexit Kool-Aid knew that.. The only rationale for the EU to have saved the Government from rule-by-the-even-more-stupid was to spare the EU the costs and disruption of a crash-out Brexit.  But as we discuss below, a crash-out is now the most likely outcome. And if that is indeed the case, the EU has strong incentives to make that clear as soon as possible so as to give businesses as much time as possible to assume the brace position.   May adopts rigid targets and keeps trying to beat everyone around her into compliance. That can work in the narrow sense of achieving your immediate goal (irrespective of ignoring warning signals that point to long-term costs) if you are in control of your environment. Ironically, May’s snap election backfire has had the perverse effect of giving her more short-term control over the party, since having a fragile coalition has meant neither the soft nor hard Brexit faction has been willing to press its case too hard and risk a crisis that would result in new elections. The Cabinet is in the midst of yet another row that is dominating most UK media coverage on May’s “customs partnership” idiocy. The caliber of the political debate suggests that what passes for the British elite had better have some excuse like having contracted mad cow disease en masse to explain this pathetic performance to posterity.  The most embarrassing part is that it isn’t even hard to explain why the UK is wasting huge amount of its most important resource, time left to Brexit, on non-starters.

        Brexit Britain’s satellite threat falls flat with Brussels Politico. The U.K.’s threat to launch its own version of the Galileo navigational satellite system over a Brexit spat with Brussels has one big black hole: Any alternative version is unlikely to match the value of sticking with the EU’s program. London’s access to the encrypted part of Galileo, called the Public Regulated Service and needed by the military to guide missiles and plan operations, is emerging as a key conflict in talks over the U.K.’s impending departure, with the EU saying that as a third country Britain would no longer have access to such sensitive data. That prompted Business Secretary Greg Clark to warn earlier this month that the government will set up a task force to “develop options for an independent satellite navigation system using the world-beating expertise of Britain’s thriving space sector.” The threat of a new British system to power location services for civilian use while providing a secure data signal for armies isn’t causing Brussels to lose much sleep. “It’s completely pointless,” an EU official who worked on the Galileo project said of Britain’s plans. “It’s a declaration of independence. A needless political statement.” The initiative to work on a British alternative to Galileo that would be compatible with the U.S. Global Positioning System (GPS) comes as the EU shuts U.K. companies out of further contracts for Galileo. A backup facility for receiving military-grade data from Galileo was recently moved from Swanwick in England to Madrid.

        Theresa May facing renewed turmoil over Brexit options Guardian.Theresa May is facing renewed cross-party pressure to accept membership of the European Economic Area (EEA) or risk defeat in the Commons. Peers vote on Tuesday night on a series of amendments as officials work to try to find a deal on May’s preferred option of a customs relationship with Europe that is acceptable to Brexiters and remainers in her cabinet, as well as MPs and EU negotiators. The policy paper rejected by the inner cabinet on the Brexit subcommittee last week has been withdrawn for further work and will not be discussed at this week’s regular meeting. A Downing Street source said: “It was agreed on Wednesday that more work needed to be done to flesh out the general principles agreed – no hard border and as frictionless trade as possible. “We realise the urgency. But as Greg Clark [the business secretary] said on Sunday, it is a crucial question to get right.” EU members (plus Turkey, Andorra, Monaco and San Marino) trade without customs duties, taxes or tariffs between themselves, and charge the same tariffs on imports from outside the EU. Customs union members cannot negotiate their own trade deals outside the EU, which is why leaving it – while hopefully negotiating a bespoke arrangement – has been one of the government’s Brexit goals. See our full Brexit phrasebook. The prime minister also came under pressure from Boris Johnson, who is currently in Washington trying to persuade Donald Trump to stick with the Iran nuclear deal. In an interview with the Daily Mail, the foreign secretary dismissed May’s customs partnership proposal as “crazy” and said it would create massive bureaucracy. The scheme involves the UK levying border tariffs on imports on behalf of the EU and refunding them where the imported goods stay in Britain. Johnson also condemned any system that prevented the UK from establishing its own trade policy and negotiating deals with non-EU countries, which is also the principle objection of Conservatives led by Jacob Rees-Mogg in the European Research Group.

        Brexit: where the fudge goes to die - Richard North - One is increasingly irritated by the media focus on the ongoing Westminster/Whitehall end of the Brexit drama. There is an almost total failure to understand that what happens in these tiny metro village is of extraordinarily little importance in the grander scheme of things. Tellingly, though, we have a report from the Guardian telling us that our revered prime minister, Theresa May, is facing renewed cross-party pressure to accept membership of the EEA or risk defeat in the Commons. This, of course, assumes that the House of Lords vote on Tuesday night isn't a damp squib and that the amendment to the Brexit Bill is carried, requiring the government to enter negotiations on our continued membership of the EEA. Only then would it get to the Commons for the drama to start all over again. Should the amendment get that far, the hope is that there are enough MPs prepared to back Mrs May into a corner. But even in that unlikely event, there are procedural moves that government can make which would put the matter back on the table. That might become crucial ploy as we hear that the ERG with its claimed 60 members, is holding a mass meeting in parliament on Tuesday, concerned that that Britain will never fully leave the EU. But, confronted with a full-blown rebellion, Mrs May can still "do a John Major" and engineer a motion of no confidence. Even with the fixed-term parliament law, this can bring the government down. If the motion is upheld, there must be attempts made to form an alternative government, but if a new government is not confirmed by the Commons within 14 days, that precipitates another general election. Tory MPs will know this and they also know that, following the local elections, Corbyn would be in with a chance.

        Brexit: closer to the edge -  I can't say I was at all impressed by the standard of debate in the Lords on the EEA amendment to the Withdrawal Bill, but in this game you take what you can get.That was a defeat for the government with 245 voting for an amendment requiring the government to include as a negotiating objective an international agreement that will enable the UK to continue to participate in the EEA after exit day. In all, 83 Labour peers defied Jeremy Corbyn's instruction to abstain from the vote, joined by 50 crossbench peers, 17 Conservatives and 84 Lib Dems. With 218 voting against, and that makes for the 13th government defeat in the Lords on this one Bill, but by far the most significant. It strikes at the entire core of Mrs May's Brexit strategy, and puts the Commons on notice. However, with neither Mrs May nor Corbyn supporting the amendment, it would take a remarkable turn of events for it to succeed in the lower house, requiring an independent turn of mind that has rarely been seen in a bovine assembly where tribal loyalties are the driving force.  It would have helped if the Lords had framed their debate in a way that could carry the case through and give the MPs a head start. But, with the motion sponsored by Lord Alli, we had a very poor advocate for the Efta/EEA option – one who did us no favours at all. "The customs union amendment that we passed overwhelmingly a few weeks ago", he started off by saying, "is only one half of the equation", then telling us that: "The customs union deals only with goods". "That", he said, "is very important: it deals only with goods - tangible items such as cars, washing machines and televisions - where we have a £96 billion trade deficit". On the other hand, he averred, "the EEA deals with services - such as retail, tourism, transport, communications, financial services and aerospace, where we have a £14 billion trade surplus". Thus, according to this noble Lord, "the customs union only will benefit our European neighbours in their imports, but without an EEA equivalent, it will damage our profitable export business and therefore the jobs and livelihoods of many thousands of people". For that reason, he concluded, "we need to ensure that any continuation in the customs union must include continuation in the EEA or its equivalent"

        Brexit is a national crisis. We need a compromise solution - Everyone agrees that Brexit must not harm our economy. Everyone also agrees that we will need a customs arrangement that allows frictionless trade, coupled with the ability to access the single market without barriers, if not be a member of it. The problem is that a consensus has not yet emerged as to how this can be achieved. However, there is now a growing acceptance that compromise must be achieved and a dawning reality that the slogans need to be ditched. The House of Lords has passed amendments to the EU withdrawal bill to the effect that a customs union and access to the single market are necessary. This has concentrated the minds of many pragmatic politicians to seek practical solutions that are achievable within the ever-shortening timeframe. The real evidence of this willingness to build a consensus came on Thursday when Daniel Hannan MEP, an arch leaver, backed joining the European Free Trade Association (Efta). This would remove the need to check regulatory compliance and allow goods and services to continue to be traded freely. The UK would be consulted on all new regulations, which is when the real decisions are made. The UK could also restrict the free movement of people, as EU citizenship would not apply, and would be out of the common fisheries and agricultural policies. However, we will need a customs union or partnership-type solution as well to avoid damage to our economy.  The assertion that technology renders a customs union unnecessary to avoid a hard border in Ireland does not survive scrutiny. This is plainly demonstrated by the House of Commons’ Northern Ireland affairs committee, which reported in March that it “had no visibility of any technical solutions, anywhere in the world, beyond the aspirational, that would remove the need for physical infrastructure at the border”. This committee is chaired by a Brexit supporter, but one who is realistic about the challenges we face. But these are not the only barriers that could restrict trade post-Brexit. There are also those that would be caused by different standards and regulations between the UK and EU.  Additionally, the dilemma of potential burdensome “rules of origin” requirements will need to be solved by any new arrangements if excessive costs for businesses are to be avoided.

        UK ‘more racist after Brexit’ - Brexit and Theresa May’s immigration policies have made Britain a more racist country, the United Nations has claimed. A UN inspector provoked a backlash yesterday after arguing that Britain’s decision to leave the European Union had left racial and ethnic minorities “more vulnerable to racial discrimination and intolerance”. Tendayi Achiume, the UN’s special rapporteur on racism and xenophobia, said that hate crimes had risen starkly since the EU referendum in 2016 and that anti-migrant and anti-foreigner rhetoric had become “normalised” even among high-ranking civil servants. Ms Achiume, 36, a law professor at the University of California, also blamed Mrs May for introducing a hostile environment policy for immigrants while home secretary. “This hostile environment applies not only for irregular immigrants, but for racial and ethnic minority individuals with regular status, and many who are British citizens and have been entitled to this citizenship as far back as the colonial era,” she said. She made the comments after a 12-day tour of Britain that began when Amber Rudd resigned as home secretary over the Windrush scandal. Last year the UN asked Britain whether its experts could visit to examine the impact of Brexit on race relations. Iain Duncan Smith, the former work and pensions secretary, said: ‘These visits are completely pointless. They are politically motivated, they are inspired by the extreme left, and the idea is to kick the UK.” Ms Achiume also found that racial profiling was pervasive and tolerated in certain police forces and that ethnic minority children were targeted. “I am shocked by the criminalisation of young people from ethnic minorities, especially young black men,” she said, adding that the false belief that Muslims were inherently violent had “taken firm root in the UK”.   Mrs May’s government rejected the majority of the findings, although it ducked a direct confrontation with the UN. “We note that the special rapporteur commended UK legislation and policy to tackle direct and indirect racial discrimination,” a spokesman said. “We have made great progress, but the prime minister is clear that if there is no rational explanation for ethnic disparities, then we — as a society — must take action to change them.”

        Tens of thousands defy the Conservative government and bring Scotland’s largest city to a standstill - Tens of thousands of people took to the streets of Glasgow yesterday in the biggest ever independence related march in Scotland. Supporters travelled from all across the country to join the march called by grassroots pro-independence umbrella group All Under One Banner (AUOB). Official police estimates put the number of marchers at 35,000, while organisers said there were as many as 90,000 people. It was the largest march in Scotland since the Iraq war protests of 2003. Leaving Kelvingrove Park, the procession weaved through the city centre streets before converging at Glasgow Green. The roads of Scotland’s largest city were brought to a halt, with numbers exceeding organisers’ expectations. Cries of “Tories Out” could be heard all along the route, with drum bands and bagpipes scattered throughout the endless stream of people. From the point the front of the march arrived at the green, it was over 45 minutes till the flow of blue and white clad marchers ceased. Open-top tourist busses revelled at the sight of the saltires and kilts. And while some pockets of opposition were visible at two or three points along the route, the general mood was one of cheer.

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