week ending May 19th

"There Will Soon Be A Terrible Price To Pay For This Hubris..." - According to the Federal Reserve, it began normalizing its balance sheet, comprised of mortgage backed securities and US Treasury debt, in late 2017. In particular, the Federal Reserve holdings of US Treasury's have been reduced by nearly $70 billion since peak holdings.  This is about a 2.7% reduction in the Fed's Treasury holdings, so far.  The Fed plans to continue rolling off Treasury holdings as they mature, at somewhere between $30 to $50 billion monthly, in a "data dependent" fashion likely until they halve their current holdings (give or take hundreds of billions). But, the make-up of the maturity held by the Fed has really radically changed since Operation Twist ended, even before QE was finally tapered out in late 2014.  The chart below shows the rise and maintenance of long bonds (over 10yrs), the rise and fall of middle duration (5 to 10yrs), especially the emergence of short durations (under 5yrs) and now the surging holdings of the shortest durations of under 1 year. Below, detailing the holdings by maturity.  The impact of the 2011 Operation Twist (selling everything under 1 year and hundreds of billions in under 5 year duration to fund purchases of mid and long duration) was clear. Interestingly, when Operation Twist concluded...the holdings of middle duration began falling, and have never stopped falling in what I have termed "Operation Twist-Off". From '09 through early '13 (through QE2), the Fed increased their 5 to 10 year holdings by nearly $800 billion (from $100 billion to $900 B...or a 900% increase...likewise, about a $550 billion increase in long duration, or about 550% increase).  QE 3, essentially beginning in 2013, was used to fund the surge in 1 to 5 year debt as well as top off the "over 10 year" holdings...and adding nothing to the 5 to 10 year bucket.  Then, the Fed began reducing its 5 to 10 year holdings beginning in 2014 ("Operation Twist-off"...lol) and from that time on, the Fed has persistently sold off nearly $600 billion (or 66%) of its 5 to 10 year holdings.  Meanwhile, the Fed has rolled off less than 7% of its long duration, just 3% of its 1 to 5 year duration portfolio, and increased its holdings of less than a year maturity Treasury's by about $400 billion.  At this rate, the Fed will be back to its pre-GFC level of 5 to 10 year holdings sometime in 2019 (the Fed's holdings of under 1 year maturity are already back to their pre-GFC level).  At that point, the Fed will have nothing to roll off or sell but short and/or extremely long duration if it intends to further shrink its balance sheet.

Fed picks vow independence, but regulatory views remain unclear -  A pair of nominees to the Federal Reserve Board vowed Tuesday to protect the independence of the agency if confirmed, amid concerns by some that President Trump may object to future central bank monetary policy.  Trump last month nominated Michael Clarida, a managing director at PIMCO and Columbia University economist, to serve as the Fed’s vice chairman, and at the same time tapped Kansas Banking Commissioner Michelle “Miki” Bowman to serve as the Fed Board’s designated member with community banking experience. At a Senate Banking Committee hearing, Sen. Sherrod Brown, the top Democrat on the committee, pressed the nominees on their independence from the president, noting that Commissioner Bowman did not meet with Trump before her nomination, while Clarida did have such a meeting.  “Do you believe the Federal Reserve is intended to be independent from the pesident of the United States?” Brown asked.“Absolutely,” Bowman said.  “Absolutely,” Clarida echoed. “It’s essential.” Brown went on to ask Clarida whether he got the impression during his interview with Trump that he viewed the Fed differently.“Let me just state definitively that I have a number of meetings over several months with a number of officials, including the president, and at no meeting, at no time, did I have any reason to question the independence of the Federal Reserve,” Clarida said.  Trump hinted last month that he may oppose future interest rate increases by the Federal Open Market Committee.

U.S. 10-year yield reaches highest since 2011 as rout deepens - The 10-year U.S. Treasury yield rose to its highest level since 2011, extending a selloff in the world’s biggest bond market and raising fresh questions about how high America's borrowing costs will climb. The dollar reached the strongest point since December. The global borrowing benchmark surpassed 3.0516%, the intraday peak from Jan. 2, 2014, and reached almost 3.06% on Tuesday in New York after a report showed retail sales rose in April. Bond traders are pricing in an even-more hawkish Federal Reserve, with the market-implied probability of three additional rate hikes this year now above 50%. That's more than central bankers themselves have projected. On top of Fed tightening, Treasuries have come under siege from a flood of new issuance as the nation's budget deficits widen. And inflation expectations are hovering near the highest since 2014, after years of doubts about whether prices and wages would increase. The new high-water mark for the 10-year yield matters because few obvious levels of support exist that would impede a further selloff. Traders are now looking at the 3.2% area, which would match highs seen in mid-2011. The Bloomberg Barclays U.S. Treasury Index has lost about 2.2% in 2018. Meanwhile, the greenback extended gains and was up against all of its major peers Tuesday, with emerging-market currencies the biggest laggards. The Bloomberg Dollar Index, which touched its highest level this year, climbed 0.8% and was on track for its biggest one-day gain since April 23. The dollar's strength and higher yields follow from traders' willingness to price in a quicker pace of Fed rate increases. They’re now expecting about 2.5 additional quarter-point hikes in 2018, even more than the central bank's "dot plot" indicates, according to fed funds futures data compiled by Bloomberg. 

What Is the Yield Curve Telling Us About the U.S. Economy? -- Pam Martens -- On November 9 of last year, a mere six months ago, we asked the question: “Does Jerome Powell Hear the Alarm Bells from Flattening Yield Curve?” Jerome Powell is, of course, the new Chairman of the Federal Reserve — the U.S. central bank and the body in which the United States has entrusted its monetary policy, for better or worse. We wrote at the time:“the spread between the 10-year Treasury Note (yielding 2.33 percent) and 30-year Treasury Bond (yielding 2.81 percent) is even smaller, at a meager 48 basis points or less than half of one percent.“It is a serious commentary on the bizarre financial times in which we live that a fixed income investor would be rewarded with less than half a percent of additional income to add 20 years of risk to the maturity date on his bond.”Buckle up your seat belt because things have gotten a lot dicier since we penned that commentary. As of this morning at 6:41 a.m., the 10-year U.S. Treasury was trading at a yield of 3.06 percent while the 30-year U.S. Treasury was yielding a feeble 3.19 percent. The spread, meaning the difference between the two yields, has shrunk from 48 basis points on November 9 to a startling 13 basis points today. We say “startling” because at this rate, we could be looking at an inverted yield curve faster than the Fed has factored into its thinking. An inverted yield curve, where short-term interest rates on Treasuries are higher than long-term rates, is typically a precursor to a recession. We saw this phenomenon ahead of the 2001 recession and in 2006-2007 ahead of the epic financial downturn in 2008-2009.

R.I.P. bond bull market, 1981-2016 --On September 30, 1981, the 10 year US Treasury bond yielded 15.84%. It has not been that high since.  On July 8, 2016, it fetched only 1.37%.  It is unlikely to see that low rate again for a very, very long time.  Those two dates likely mark the birth and death dates for perhaps the biggest bond bull market in history.Here (from CNBC) is the relevant graph: Today the 10 year closed at 3.067%, having hit an intraday high of 3.09%.  In the 1990s it twice made 3 year highs.  In 2006 it made a 4 year high. By contrast, the last time it was as high as it closed at today was 7 years ago in 2011.The immediate cause of death for the bond bull market was likely the ill-conceived multi-$Trillion GOP tax giveaway to the wealthy enacted in December, in the midst of an economy operating near full capacity.Perhaps of more immediate importance, CNBC also reported  (via Mortgage News Daily) that 30 year mortgage rates had risen to 4.875% today. That is also a 7 year high. Mortgage rates had been as low as 3.30% in 2013 and 2016.A few months ago I estimated that it would take a minimum of a Treasury yield of 3.25% and a mortgage rate of 5%, for at least 6 months, to overcome the demographic tailwind underpinning the housing market.  We are now close to both of those rates. And refinancing debt at lower rates, which did so much to help keep the middle and working classes afloat during the last 30+ years, is now dead.In the longer term, I believe we have now entered an interest rate period similar to the late 1950s-1980, where each economic expansion saw higher and higher interest rates. Meanwhile, the time to rebuild our worn-out infrastructure at ultra-low interest rates has been completely wasted. I can see the future, and it makes me sick to my stomach.

The Pentagon Can’t Account for $21 Trillion (That’s Not a Typo) Twenty-one trillion dollars.  The Pentagon’s own numbers show that it can’t account for $21 trillion. Yes, I mean trillion with a “T.” And this could change everything.   Let’s stop and take a second to conceive how much $21 trillion is (which you can’t because our brains short-circuit, but we’ll try anyway).

• 1. The amount of money supposedly in the stock market is $30 trillion.
• 2. The GDP of the United States is $18.6 trillion.
• 3. Picture a stack of money. Now imagine that that stack of dollars is all $1,000 bills. Each bill says “$1,000” on it. How high do you imagine that stack of dollars would be if it were $1 trillion. It would be 63 miles high.
• 4. Imagine you make $40,000 a year. How long would it take you to make $1 trillion? Well, don’t sign up for this task, because it would take you 25 million years (which sounds like a long time, but I hear that the last 10 million really fly by because you already know your way around the office, where the coffee machine is, etc.).

The human brain is not meant to think about a trillion dollars. And it’s definitely not meant to think about the $21 trillion our Department of Defense can’t account for. These numbers sound bananas. They sound like something Alex Jones found tattooed on his backside by extraterrestrials.  But the 21 trillion number comes from the Department of Defense Office of Inspector General—the OIG. Although, as Forbes pointed out, “after Mark Skidmore began inquiring about OIG-reported unsubstantiated adjustments, the OIG’s webpage, which documented, albeit in a highly incomplete manner, these unsupported “accounting adjustments,” was mysteriously taken down.” Luckily, people had already grabbed copies of the report, which—for now—you can view here.

Trump welcomes N. Korea plan to blow up nuke-site tunnels - WaPo— North Korea said Saturday that it will dismantle its nuclear test site in less than two weeks, in a dramatic event that would set up leader Kim Jong Un’s summit with President Donald Trump next month. Trump welcomed the “gracious gesture.” In a statement carried by state media, North Korea’s Foreign Ministry said all of the tunnels at the country’s northeastern testing ground will be destroyed by explosion, and observation and research facilities and ground-based guard units will also be removed. Kim had already revealed plans to shut the test site by the end of May during his summit with South Korean President Moon Jae-in last month. Analysts say that while the closure of the site is important, it doesn’t represent a material step toward full denuclearization. “A ceremony for dismantling the nuclear test ground is now scheduled between May 23 and 25,” depending on weather, the Foreign Ministry’s statement said, adding that journalists from the United States, South Korea, China, Russia and Britain will be invited to witness the dismantling. The ministry said the North will continue to “promote close contacts and dialogue with the neighboring countries and the international society so as to safeguard peace and stability on the Korean Peninsula and over the globe.” Trump, in a tweet Saturday, thanked North Korea for its plan to dismantle the nuclear test site, calling it “a very smart and gracious gesture!” Following the Moon-Kim meeting, Moon’s office said Kim was willing to disclose the process to international experts, but the North’s statement Saturday didn’t address allowing experts on the site. South Korea had no immediate response to the statement. The North’s announcement comes days after Washington announced that the historic summit between Kim and Trump will be held June 12 in Singapore. 

John Bolton Once Sabotaged A Deal With North Korea – He Will Try To Repeat That - The Washington Post published a half-truth story today about the U.S. occupied al-Tanf border station between Syria-and Iraq. Downplaying the possibility of military action around al-Tanf it inserts this strange nugget: Mattis’s main focus of late has been preparing for possible conflict with North Korea. Why is the Defense Secretary Mattis preparing for conflict with North Korea? Why is this his "main focus"? Ain't we all gonna have peace and love after Donald Trump and Kim Jong-un meet on June 12 in Singapore? No? Why am I not surprised? I suspected all along that the whole theater between Trump and Kim Jong-un is a setup designed to fail. North Korea offers a phased denuclearization in exchange for a peace treaty and (partial?) U.S. withdrawal from South Korea. The U.S. is unlikely to accept that. For U.S. hawks nothing less than total capitulation is acceptable. But even if North Korea offers all its nukes at once the U.S. will demand more. It will likely ask for intrusive verification access to all North Korean military facilities and the like.  North Korea will surely reject such inspections as a danger to its defense capabilities and as a breach of its sovereignty. The Trump administration will spin that into a reason to heat up the conflict. That would be a replay of the situation in 2008. Following the six-party-talks North Korea blew up (vid) the cooling tower of its sole reactor. It submitted information about its nuclear program as had been agreed. The U.S. did not fulfill its part of the deal, taking North Korea off the "terrorist supporter" list, but demanded additional verification access. That ended the deal.

North Korea cancels talks with South, and hints it could do the same with US - North Korea has abruptly cancelled high-level talks with Seoul and threatened to pull out of a planned summit with Donald Trump if the US continues to insist on the regime giving up all of its nuclear weapons. A North Korean official said the country had no interest in a summit with US if it was based on “one-sided” demands to give up nuclear weapons, according to state media. Citing first vice minister of foreign affairs Kim Kye-gwan, North Korea’s central news agency also said the fate of the US summit as well as bilateral relations “would be clear” if Washington speaks of a Libya-style denuclearisation for the North. The statement added Trump would remain as a “failed president” if he followed in the steps of his predecessors. “We will appropriately respond to the Trump administration if it approaches the North Korea-US summit meeting with a truthful intent to improve relations,” Kim said. He added: “But we are no longer interested in a negotiation that will be all about driving us into a corner and making a one-sided demand for us to give up our nukes and this would force us to reconsider whether we would accept the North Korea-US summit meeting.” The statement came after North Korea cancelled a meeting with South Korean officials just two hours before it was due to start on Wednesday, in protest at joint US-South Korean military exercises, codenamed Max Thunder. The drills, which began on Friday, involve about 100 warplanes from the US and South Korea, including eight F-22 stealth fighters and an unspecified number of B-52 bombers. Max Thunder is one of several annual exercises involving the US and South Korean military that are routinely condemned by the North as preparation for an invasion. For North Korea, the presence of bombers in joint US-South Korea drills triggers painful memories of the 1950-53 Korean war. According to US air force estimates, bombing raids by US B-29s caused more damage to North Korea’s urban centres during that conflict than that seen in Germany or Japan during the second world war, with the US dumping 635,000 tons of bombs on Korea compared with 503,000 tons during the entire Pacific war. 

North Korea threatens to pull out of Trump-Kim summit over denuclearization demands - North Korea signaled early Wednesday that it is not interested in a “one-sided” summit with the U.S. in which it would be pressured to give up its nuclear weapons, the Associated Press reported, citing a top North Korean official. The statement from Kim Kye Gwan, North Korea’s first vice foreign minister, was issued through the North’s state-run Central News Agency. It came just hours after the Yonhap News Agency, the Seoul-based media outlet, reported that the North had abruptly canceled a high-level meeting with South Korea scheduled for Wednesday and was considering withdrawing altogether from the highly anticipated meeting between President Donald Trump and the North Korean leader, Kim Jong Un, over ongoing military exercises between the U.S. and South Korea.It was unclear Tuesday night whether North Korea might seriously contemplate canceling the summit, tentatively set for June 12 in Singapore, or whether it is simply venting over U.S. rhetoric and perhaps also seeking a stronger bargaining position.In his statement, Kim Kye Gwan criticized comments from Trump’s national security adviser, John Bolton, and other U.S. officials who have been talking about how the North should provide a “complete, verifiable and irreversible dismantlement” of its nuclear weapons program, according to the AP. “We will appropriately respond to the Trump administration if it approaches the North Korea-U.S. summit meeting with a truthful intent to improve relations,” Kim Kye Gwan said, adding: “But we are no longer interested in a negotiation that will be all about driving us into a corner and making a one-sided demand for us to give up our nukes, and this would force us to reconsider whether we would accept the North Korea-U.S. summit meeting.”There was no immediate response from the White House to the North’s reported dispute with the terms of denuclearization. Earlier on Tuesday, the administration said it would “independently” evaluate North Korea’s reported threat to pull out of the summit because of the military exercises. The North’s Central News Agency had called the exercises between South Korea and the U.S. a “provocation,” Yonhap and Reuters reported.

North Korea: We Don’t Want Summit Focused Only on Denuclearization -- A senior North Korean official said Pyongyang isn’t interested in a summit with the U.S. focused solely on denuclearization and accused Washington of trying to “impose on our dignified state the destiny of Libya or Iraq.” ​In a Wednesday statement attributed to Kim Kye Gwan, a senior foreign ministry official, North Korea said it doesn’t want to deal away its nuclear weapons for economic compensation or benefits. That cast doubt on the North’s willingness to proceed with a planned June 12 summit with President Donald Trump in Singapore. “If the U.S. is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue and cannot but reconsider our proceeding to the DPRK-U. S. summit,” Mr. Kim was quoted as saying, using the acronym for North Korea’s formal name, the Democratic People’s Republic of Korea. Kim Kye ​Gwan, a longtime North Korean diplomat who has met frequently with U.S. negotiators and high-level officials over the years, ​singled out national security adviser John Bolton and his demands, which include a Libya-style denuclearization process and the disposal of biological and chemical weapons. Libyan dictator Moammar Gadhafi was killed in 2011 after agreeing to give up his country’s nuclear program. In contrast, the North said, “our country is neither Libya nor Iraq which have met [a] miserable fate.” Top diplomats and government officials discuss risks, hopes and the future of North Korean relations at the WSJ CEO Council in Tokyo ahead of the planned Trump-Kim meeting in Singapore. .“It is absolutely absurd to dare compare the DPRK, a nuclear weapon state, to Libya which had been at the initial stage of nuclear development,” Mr. Kim, who is the first vice minister at the Ministry of Foreign Affairs, was quoted as saying. 

North Korea denounces US “provocation” and threatens to cancel talks with Trump --The North Korean Central News Agency (KCNA) published a bitter statement this morning, denouncing the joint US-South Korean “Max Thunder” air force exercise that began on May 11 as an “undisguised challenge” to the peace talks held last month and a “rude and wicked provocation.” The KCNA specifically referred to “commentary” that has described the “Max Thunder” war games as part of the US policy of “maximum pressure and sanctions.” The Trump administration has continued to insist that the US will not end its military threats or economic embargo until North Korea agrees to the “complete” and “verifiable” dismantling of a small arsenal of nuclear weapons.In retaliation, the KCNA announced that Pyongyang was “suspending” top-level talks with South Korean officials scheduled for today. It warned that Washington “will have to carefully contemplate” the fate of the planned June 12 summit between its leader Kim Jong-un and US President Donald Trump. Pyongyang would “closely watch the ensuing behaviour of the US and the South Korean authorities.”  North Korea’s reaction to the annual military exercise, which has been long scheduled, appears to have taken both the Trump administration and the South Korean government somewhat by surprise. In media interviews last weekend, Pompeo and other administration figures continued to build up expectations that Pyongyang would submit to Washington’s demands. Throughout the US political and media establishment, however, Pompeo’s upbeat assessment was criticised and even ridiculed as “naïve” and “Pollyannaish.” The Trump administration has, to a great extent, boxed both itself and North Korea into a corner.To mollify opponents and critics in the American ruling class, Trump has vowed to walk out on planned talks unless Pyongyang agrees, in Pompeo’s words, to “permanent, verifiable, irreversible dismantling of North Korea’s weapons of mass destruction program … without delay.” At the same time, to appease domestic critics and the US military-intelligence apparatus, as well as Japan and factions of the South Korean establishment, Trump has ruled out any withdrawal of American military forces from South Korea—a condition that North Korea has traditionally linked with its agreement to give up its weapons programs and sign a peace treaty to formally end the 1950–53 Korean War.

U.S. Brushes Off Pyongyang’s Tough Talk, Proceeds With Planning for Summit -- President Donald Trump is still planning to hold a summit meeting in Singapore with North Korean leader Kim Jong Un, U.S. officials said, brushing off sharp comments by one of Pyongyang’s senior diplomats that caught the Trump administration by surprise.While proceeding apace with summit plans, Mr. Trump and his foreign-policy team on Wednesday also refrained from firing back with tough words of their own. Mr. Trump previously has called North Korean leader Kim Jong Un “rocket man” and warned of American “fire and fury.”  Secretary of State Mike Pompeo spoke to his South Korean counterpart as part of a broader effort to coordinate for the June 12 summit, and called Singapore’s foreign minister to thank his government for agreeing to host the summit, the State Department said. “This is something we fully expected,” White House press secretary Sarah Sanders said of the North Korean warning. “The president is very used to and ready for tough negotiations.” The administration’s uncharacteristically subdued response followed North Korea’s angry denunciation of the Max Thunder air exercise in South Korea, which involve F-22s, some of the most-advanced U.S. fighters.Most significant were the comments of Kim Kye Gwan, North Korea’s first vice minister at the Ministry of Foreign Affairs, who objected to U.S. assertions that Pyongyang should quickly dismantle its nuclear arsenal in return for economic benefits. John Bolton, Mr. Trump’s national-security adviser, has suggested that the dismantlement of North Korea’s nuclear arsenal should be based on Libya, where leader Moammar Gadhafi agreed to give up his nascent nuclear program. “It is absolutely absurd to dare compare the DPRK, a nuclear-weapon state, to Libya, which had been at the initial stage of nuclear development,” Mr. Kim said. Some U.S. experts said North Korea’s comments may be an effort to strengthen its bargaining position after Trump administration officials asserted their “maximum pressure” campaign had driven the North Korean leader to the bargaining table.

US Scrapped B-52 Military Drill With South Korea After Kim Jong Un Complained - Earlier this week we reported that in response to North Korea's decision to suspend talks with the South and threatening to cancel the historic June 12 summit between Kim Jong-Un and Donald Trump, the US was considering withholding its B-52 bombers from joint exercises with South Korea taking place this week. The move, if confirmed, would demonstrate a rare capitulation by a president who has traditionally relished browbeating his opponents with his leverage from a position of force.This morning, it was indeed confirmed that the North Korean leader had managed to outbluff his adversaries when the WSJ reported that a training exercise involving U.S. B-52 bombers and South Korean planes was scrapped earlier this week when as we reported, "the South Korean government expressed concerns that it could generate tensions before the summit meeting between President Donald Trump and North Korean leader Kim Jong Un."The move follows repeated assertions by the Trump administration that it is keeping up a campaign of maximum economic and military pressure until North Korea gives up its nuclear-weapons programs and that the U.S. has not changed the scope of its exercises. It is worth noting, however, it wasn't Trump that "folded" in this case, but rather his South Korean colleague: But the South Koreans asked not to participate in what was intended to be a three-nation air drill involving the U.S., South Korea and Japan, the U.S. officials said. The U.S., which has sought to maintain political solidarity with Seoul during a turbulent period of diplomacy with North Korea, has not commented publicly on the South Korean decision.

Bolton Emerges as Potential Wrecking Ball for Trump’s Kim Summit - John Bolton’s desire to turn North Korea into the next Libya isn’t going over so well in Pyongyang, where Kim Jong Un’s government has threatened to cancel upcoming talks with the U.S. in part because of the U.S. national security adviser’s remarks. Bolton drew the ire of the North Korean government for saying that the country’s nuclear disarmament should follow the “Libya model” embraced by Muammar Qaddafi, who was later overthrown and killed in a U.S.-backed uprising. That history is well understood by Kim’s regime. In a blistering statement Wednesday, North Korea’s vice foreign minister and a top disarmament negotiator, Kim Kye Gwan, said his government felt “repugnance” toward Bolton. “World knows too well that our country is neither Libya nor Iraq which have met miserable fate,” he said in the statement, released by the state-run Korean Central News Agency. The White House on Wednesday distanced itself from Bolton’s remarks, while experts wondered why Bolton would make such an indelicate comparison just weeks before the planned June 12 meeting between Trump and Kim in Singapore. “The diplomacy with North Korea is going very well and Bolton threw a spanner in the works. ” It may have been intentional. Bolton has long taken a hard line with North Korea, and had called for regime change in the country, rationalized preemptive military action and opposed direct talks with Kim’s government before joining the White House last month.

Ahead of Vote on Gina Haspel, Senate Pulls Access to Damning Classified Memo - The Intercept - As the Senate prepares for a Wednesday vote on whether to confirm Gina Haspel as director of the CIA, the Senate Intelligence Committee has restricted access to a classified memo that Democratic staff put together, detailing Haspel’s role in advocating for torture and later destroying related evidence. On Monday morning, Elizabeth Falcone, a senior aide for Virginia Sen. Mark Warner, the top-ranking Democrat on the intelligence committee, announced the decision to restrict access in an email to Democratic legislative directors. The memo had previously been available for senators and staff with security clearances to review in a Secure Compartmented Information Facility housed within Congress. Staff will no longer be able to review the document, and senators will only be able to do so upon request. It has been removed from the SCIF. In Falcone’s email, which a Senate source shared with The Intercept, she said that the memo was “unable to be viewed.” (NBC reported Monday afternoon that the memo had been removed from the Senate’s secure space.) Folks – the classified Intel staff memo that has been available on haspel ?is currently not at senate security and unable to be viewed. If you have urgent need to read it, please call me or have your chief call mine. Thx. The decision to restrict access to the memo is especially unusual given that Warner just last week criticized the CIA for an “unacceptable” lack of transparency in the run-up to Haspel’s hearing.   “Given that we are only two days from the date of your confirmation hearing on May 9, 2018, this lack of transparency for the American people about someone nominated for a cabinet-level position is unacceptable,” Warner wrote.

Two Senate Democrats assure Haspel’s confirmation as CIA director -- Democratic Senator Joe Donnelly announced Saturday that he would vote to confirm Gina Haspel as director of the CIA, virtually assuring that her nomination will be confirmed by the Senate when it is brought to a vote sometime in the next two weeks.The Senate Intelligence Committee is to vote Wednesday at a closed-door session to approve Haspel’s nomination and send it to the full Senate. Haspel was assured of a favorable vote from the committee, which has an 8-7 Republican majority, when Republican Susan Collins of Maine and Democrat Joe Manchin of West Virginia announced they would support her nomination.Both Donnelly and Manchin are running for reelection this year in states that President Trump carried easily in 2016, and Donnelly, in particular, was being attacked for his supposed opposition to Haspel as late as Thursday, when Trump spoke at a campaign rally in Elkhart, Indiana and called for a vote for his Republican opponent, millionaire businessman Mike Braun.Donnelly, who had been publicly “undecided” on Haspel, announced his support less than 48 hours after the Elkhart rally. Referring to Haspel’s role in overseeing torture and then ordering the shredding of videotapes of torture sessions, Donnelly said, “I believe that she has learned from the past and that the CIA under her leadership can help our country confront serious international threats and challenges.” He also cited the support for Haspel by former CIA directors under the Obama administration, Leon Panetta and John Brennan, and General Michael Hayden, first appointed director of the National Security Agency by Democratic President Bill Clinton and later CIA director under George W. Bush. While Manchin’s vote made the outcome of the Intelligence Committee vote a certainty, Donnelly’s public support was more important, because it means that the two Republican senators opposed to the nomination, John McCain of Arizona and Rand Paul of Kentucky, are now offset by two Democrats. With the Republican Party holding only a 51-49 margin in the Senate, cut to 50-49 in practice because of McCain’s long absence due to terminal brain cancer, the shift of even one senator had the potential to torpedo the nomination.

Senate Intelligence Committee approves “black site” torturer to head CIA --The imminent Senate confirmation of veteran Central Intelligence Agency operative Gina Haspel to head Washington’s main spy agency is a new milestone in the collapse of American democracy.On Wednesday, the Senate Intelligence Committee voted 10-5 to recommend Haspel’s confirmation by the full Senate. Two Democrats joined all eight Republicans on the panel in approving President Trump’s pick to succeed Mike Pompeo, who just three weeks ago was confirmed as the new secretary of state. The Democrats have already supplied a sufficient number of “yes” votes to assure Haspel’s confirmation by the full Senate as early as this week, just as they ensured the confirmation of Pompeo.While Pompeo is notorious as a defender of the Bush administration’s use of “enhanced interrogation techniques,” i.e., torture, against terror suspects, Haspel ran a secret CIA torture prison in Thailand for two years. In addition, she drafted a 2005 memo ordering the destruction of videotapes of torture sessions at the Thailand “black site” in the face of demands that the evidence be turned over to congressional investigators. The Intelligence Committee vote in her favor, coming just two days after the virtually unanimous defense from Democrats and Republicans of Israel’s murder and wounding of hundreds of unarmed Palestinian protesters, exposes the criminality that pervades the American ruling class and its state. The American capitalist class has endorsed the mass killing of civilians and the use of torture as tools of both foreign and domestic policy.

Gina Haspel confirmed as CIA director after key Democrats vote in favor - The Senate confirmed Gina Haspel on Thursday as the first female director of the CIA following a difficult nomination process that reopened an emotional debate about brutal interrogation techniques in one of the darkest chapters in the spy agency’s history. The 54-45 vote split both parties, with six Democrats joining most Republicans in support. Republican senator John McCain, who has undergone treatment for brain cancer, was absent for the vote. Mitch McConnell, the Senate majority leader, called Donald Trump’s choice of Haspel to lead the agency “the right woman at the right time”. McConnell steered the confirmation swiftly past opponents, including McCain, whose long-distance rejection of the nominee over her role in the CIA’s torture program hung over an impassioned debate. Supporters cited Haspel’s 33-year career at the agency. Former top intelligence officials said she earned the chance to take the helm of the intelligence agency. But Haspel’s nomination was contentious because of her role in a former CIA program to brutally detain and interrogate terror suspects at covert sites abroad following 9/11. Her opponents said it wasn’t right to promote someone who supervised a black site in Thailand. They said the US needs to close the book forever on the program that marred America’s image with allies abroad.

Haspel Could Be Subject to Arrest Abroad Under Universal Jurisdiction - Gina Haspel is the new CIA Director after the Senate voted on Thursday 54-44 to confirm her, with six Democrats agreeing. Francis Boyle is professor of international law at the University of Illinois College of Law. He is the author of many books on International Law and an outspoken critic of US policy in the Middle East. Boyle’s books include Foundations of World Order and the sequel, Destroying World Order. In the following interview with Pacifica Radio host Dennis J Bernstein, Boyle warns that, among other things, given her background as key implementer of the US torture program, Gina Haspel is vulnerable to be arrested for war crimes and crimes against humanity if she travels abroad.In this interview, Francis Boyle explains why Haspel could be at risk of arrest on trips abroad.  

Trump blasts White House leakers as ‘traitors’ - President Trump blasted so-called White House “leakers” as “traitors” and vowed to hunt them down, even as he denied the West Wing has a problem with leaks. “The so-called leaks coming out of the White House are a massive over exaggeration put out by the Fake News Media in order to make us look as bad as possible,” Trump tweeted Monday afternoon.The president, however, indicated an investigation is underway into who in the White House is sharing information with the press. “With that being said, leakers are traitors and cowards, and we will find out who they are!” he wrote. The so-called leaks coming out of the White House are a massive over exaggeration put out by the Fake News Media in order to make us look as bad as possible. With that being said, leakers are traitors and cowards, and we will find out who they are! — Donald J. Trump (@realDonaldTrump) May 14, 2018   The comments come days after The Hill first reported that White House aide Kelly Sadler made off-color comments about Sen. John McCain’s (R-Ariz.) cancer diagnosis. Sadler said during an internal meeting that McCain’s opposition to CIA director nominee Gina Haspel “doesn’t matter” because “he’s dying anyway,” according to sources familiar with her comments. The White House has refused to offer a public apology for the remarks and Trump’s response is almost certain to further fuel the controversy surrounding them.

Iran Nuclear Deal and U.S. Pullout Reflect Epic Bipartisan Failures - Scott Ritter -- President Trump made it official Tuesday, announcing that he would be withdrawing from the Iran nuclear agreement, officially known as the Joint Comprehensive Program of Action, or JCPOA. “The agreement,” he said in his speech, “was so poorly negotiated that even if Iran fully complies, the regime can still be on the verge of a nuclear breakout in just a short period of time. The deal’s sunset provisions are totally unacceptable.” The sunset provisions of the JCPOA are among the least understood aspects of that agreement. Prior to signing the JCPOA, Iran operated more than 20,000 centrifuges for enriching uranium to use in its indigenous nuclear program. The level of enrichment attained—3.7 percent for nuclear power reactors and under 20 percent for use in a medical research reactor—was well below that needed for use in a nuclear weapon. However, the international community, led by the United States, was concerned that Iran would be able to use its large number of centrifuges to rapidly increase the level of enrichment of its uranium stockpile to more than 90 percent, allowing Iran to have the fissile material needed for a nuclear bomb (or bombs) in a very short time. The collective wisdom in the arms control community was that Iran needed to be kept to a breakout time of no less than one year. Under the JCPOA, this would be done by limiting the number of centrifuges it could operate to just over 5,000, while limiting the amount of 3.7 percent-enriched uranium it could have stored at any given time to no more than 300 kilograms. The so-called sunset clause of the JCPOA holds that after 15 years—meaning by 2030—all restrictions on the number of centrifuges Iran is allowed to operate, as well as the amount of enriched uranium it is permitted to store, will be lifted.   The JCPOA allows for Iran to begin phasing out its older centrifuges with more capable models between years 11 and 13 of the agreement. Given the improved performance characteristics of these newer centrifuges, the one-year breakout time would be reduced to around four months sometime between years 11 and 13 of the JCPOA, or as early as 2026. It is this inevitable demise of the 12-month breakout window that prompted Trump to walk away from the JCPOA on the grounds that it no longer served U.S. national security interests.

Former Obama Officials Suggest European Allies Expel American Diplomats -- Two former Obama administration officials suggested that America’s European allies should punish President Donald Trump for withdrawing from the Iran deal and levying additional sanctions on the Islamic republic.The European Union and individual European countries are obligated to take aggressive steps to preserve the Iran deal, in order to avoid becoming Trump’s “doormat,” Steven Simon and Jonathan Stevenson argued in an op-ed that ran in The New York Times Thursday. Both Simon and Stevenson were directors on former President Barack Obama’s National Security Council (NSC). “The European Union could, for instance, announce the withdrawal of member-states’ ambassadors from the United States. Isn’t this what states do when diplomatic partners breach solemn agreements, expose them to security risks and threaten to wreak havoc on their economies? That is, after all, what the administration is threatening to do by courting the risk of a Middle Eastern war and applying secondary sanctions to European companies,” they argued.“Depending on the American response, European capitals might even follow up with expulsion of American ambassadors.”“It would be hard to fault these moves as irresponsible, given that they would not impair vital security functions like intelligence-sharing and law enforcement coordination. They would, however, symbolize a stark diplomatic breach that could extend to other areas in which the Trump administration needs allied support,” the former Obama officials wrote. Simon and Stevenson conceded it would be “radical” for Europe to sanction American companies in order to protect the Iran deal, but claimed that “it would arise in response to correspondingly egregious American behavior.”

Trump's Pyrrhic Victory: The US Opts For A Path That Can Only Lead To War - Nearly everyone loses by President Donald Trump’s decision on Tuesday to withdraw from the Joint Comprehensive Plan of Action (JCPOA) relating to Iran’s nuclear energy program and to reinstate the “highest level” of sanctions while also threatening secondary sanctions on any country that “helps” the Iranians. The whole world loses because nuclear proliferation is a disaster waiting to happen and Iran will now have a strong incentive to proceed with a weapons program to defend itself from Israel and the United States. If Iran does so, it will trigger a regional nuclear arms race with Saudi Arabia and Egypt undoubtedly seeking weapons of their own. Iran and the Iranian people will lose because their suffering economy will not now benefit from the lifting of sanctions and other economic inducements that convinced it to sign the agreement in the first place. And yes, even the United States and Israel will lose because an agreement that would have pushed back by ten or fifteen years Iran’s timetable if it were to choose to develop a weapon will now be reduced to a year or less. And the United States will in particular lose because the entire world will understand that the word of an American president when entering into an international agreement cannot be trusted. The only winners from the withdrawal are President Donald Trump and Prime Minister Benjamin Netanyahu, who will enjoy the plaudits of their hardline supporters. But their victory will be illusory as the hard reality of what they have accomplished becomes clear. Failure of JCPOA definitely means that war is the only likely outcome if Tel Aviv and Washington continue in their absurd insistence that the Iranians constitute a major threat both to the region and the world. A war that might possibly involve both the United States and Russia as well as Iran, Saudi Arabia and Israel would devastate the region and might easily have potential to escalate into something like a global conflict.  

Gearing Up for the Third Gulf War - Michael Klare - With Donald Trump’s decision to shred the Iran nuclear agreement, announced last Tuesday, it’s time for the rest of us to start thinking about what a Third Gulf War would mean. The answer, based on the last 16 years of American experience in the Greater Middle East, is that it won’t be pretty.The New York Times recently reported that U.S. Army Special Forces were secretly aiding the Saudi Arabian military against Iranian-backed Houthi rebels in Yemen. It was only the latest sign preceding President Trump’s Iran announcement that Washington was gearing up for the possibility of another interstate war in the Persian Gulf region. The first two Gulf wars — Operation Desert Storm (the 1990 campaign to drive Iraqi forces out of Kuwait) and the 2003 U.S. invasion of Iraq — ended in American “victories” that unleashedvirulent strains of terrorism like ISIS, uprooted millions, and unsettled the Greater Middle East in disastrous ways. The Third Gulf War — not against Iraq but Iran and its allies — will undoubtedly result in another American “victory” that could loose even more horrific forces of chaos and bloodshed.Like the first two Gulf wars, the third could involve high-intensity clashes between an array of American forces and those of Iran, another well-armed state. While the United States has been fighting ISIS and other terrorist entities in the Middle East and elsewhere in recent years, such warfare bears little relation to engaging a modern state determined to defend its sovereign territory with professional armed forces that have the will, if not necessarily the wherewithal, to counter major U.S. weapons systems. A Third Gulf War would distinguish itself from recent Middle Eastern conflicts by the geographic span of the fighting and the number of major actors that might become involved. In all likelihood, the field of battle would stretch from the shores of the Mediterranean, where Lebanon abuts Israel, to the Strait of Hormuz, where the Persian Gulf empties into the Indian Ocean. Participants could include, on one side, Iran, the regime of Bashar al-Assad in Syria, Hezbollah in Lebanon, and assorted Shia militias in Iraq and Yemen; and, on the other, Israel, Saudi Arabia, the United States, and the United Arab Emirates (UAE).  If the fighting in Syria were to get out of hand, Russian forces could even become involved.

By ending the Iran deal, Trump has put America on the path to war – Bernie Sanders - Last week, Donald Trump made one of the most reckless moves of his presidency: withdrawing from the Joint Comprehensive Plan of Action (JCPOA), also known as the Iran nuclear agreement. With this decision, the president discarded years of hard work by our diplomats, who had obtained an extremely rigorous set of restrictions and inspections guaranteeing that Iran would not obtain a nuclear weapon. He also slammed the door on a once-promising possibility of detente between the US and Iran.  It’s important to understand that the JCPOA is not just an agreement between the US and Iran, but one negotiated alongside our partners in the P5+1 – the UK, France, China, Russia and Germany – and endorsed by the United Nations security council. Trump’s withdrawal further deepens tensions with our most important democratic allies, France, the UK and Germany, who all continue to support the agreement and have consistently said that it is in their own national security interests to see it upheld.  Trump also rejected the advice of his own top national security officials like the joint chiefs chairman, Gen Joseph Dunford, and defense secretary, James Mattis, both of whom have repeatedly stated that staying in the agreement is in the national security interests of the US. Nuclear non-proliferation and national security professionals around the world share that assessment. Just as he has done on the issue of climate change with his withdrawal from the Paris climate accord, Trump has chosen to ignore the overwhelming expert consensus and sided instead with a small ideological faction, with disastrous consequences for our global security.  Withdrawing from the JCPOA also seriously harms the US’s ability to negotiate future non-proliferation agreements, such as one with North Korea. Why would any country in the world sign such an agreement with the US and make the tough concessions that any such agreement requires if they thought that a reckless president might simply discard that agreement a few years later?  Bluster and Iran-bashing will not get us to a better future. We need to continue to try to talk with Iran’s government, seek a better relationship with the Iranian people, and a more constructive role for Iran in the region. Trump’s approach makes achieving those goals more difficult. It has already emboldened the regime’s hardliners, who are much more comfortable dealing with a hostile America than with a reasonable, peace-seeking one.

Iran And Syria: Why Regime Change In One Means Regime Change In Both - Cailtin Johnstone - Probably the weirdest, dumbest, most annoying thing about writing on US foreign policy right now is the fact that regime change in Iran and regime change in Syria have been falsely spun into the illusion of two separate issues along partisan lines. People who are more aligned with America’s Democratic Party are a lot more opposed to the overthrow of the Iranian government and a lot more sympathetic to the idea of getting rid of Assad, and with those who are more aligned with the Republican party it’s the exact opposite. Partisan politics turn people into such drooling idiots.Democratic Party-aligned Americans oppose Trump’s withdrawal from the Iran deal because it was Obama’s baby, while Republican-aligned Americans support it for the exact same reason. This is a deliberate provocation designed to enable crushing economic sanctions, which the US-centralized war machine always uses as a prelude to war, to weaken and destabilize the nation. Plan A will be for imperial intelligence agencies to stage a coup or fund a violent uprising in order to either throw Iran into impotent chaos or replace its government with a puppet regime (either one satisfies Plan A). Plan B will be something more direct.We’re seeing the reverse in Syria: Democratic Party-aligned Americans are virulently opposed to Assad because Russia is actively fighting on his side, and the Russiagate psyop has Democrats hating anyone who they suspect might have anything to do with Vladimir Putin. They also need to justify the fact that the Obama administration helped stage a premeditated violent uprising and flooded Syria with terrorists with the goal of destabilization or regime change. Trump supporters, meanwhile, oppose regime change in that nation largely because it’s a secular government besieged by violent deep state-funded jihadists.  I’m getting liberals agreeing with me about Iran who’ve aggressively denounced my writings on Syria, and a bunch of conservatives who supported my Syria writings now loudly objecting to my writings on Iran. Which is absolutely insane, because it’s the same goddamn war.

U.S. Media Whitewashes Gaza Massacre - Typical of the mindset of corporate media reporting on what happened in Gaza on Monday as Israeli soldiers killed more than 50 protesting Palestinians, is this tweet from CNN. It says: “Death toll rises to at least 52 people during clashes along the border fence between Israel and Gaza, Palestinian officials say. More than 2,400 people have been injured.” CNN’s new slogan is “#FactsFirst.”Adam Johnson, who writes for the media watchdog Fairness and Accuracy in Reporting, responded to CNN with a tweet of his own: “This one’s got it all:

• ‘death toll rises’ — no one was killed and no one specific party did the killing, the death toll just mysteriously ‘rises’
• ‘clashes’ — launders all power asymmetry
• ‘2,400 people have been injured’ — all 2,400 are Palestinian but lets go with ‘people’.”

Craig Murray, a former British ambassador to Uzbekistan, said on his blog that he did a Google News search for the word “massacre” and found not one reference to Gaza.      A New York Times headline on Monday said: “Dozens of Palestinians have died in protests as the U.S. prepares to open its Jerusalem Embassy.” Journalist Glenn Greenwald responded: “Most western media outlets have become quite skilled – through years of practice – at writing headlines and describing Israeli massacres using the passive tense so as to hide the culprit. But the all-time champion has long been, and remains, the New York Times.#HaveDied.” Yet another CNN headline simply read: “Dozens die in Gaza.” Journalist Max Blumenthal responded: “Maybe they were old. Perhaps they were very sick. They just up and died! Who will solve the mystery behind these deaths?”Blumenthal later offered a possible solution to the mystery: “According to the White House, Khhamas launched 41 protesters into unsuspecting Israeli bullets.”

Giuliani Was Wrong: Even Children are “Disposable” in Gaza --Donald Trump’s lawyer, Rudy Giuliani, made the bizarre remark on Fox News recently that Jared Kushner might be “disposable” because men, in general, are disposable. Kushner is Trump’s son-in-law who was safely protected as he delivered a speech at the opening of the U.S. Embassy in Jerusalem yesterday. What played out in Gaza yesterday was very different: under the Trump administration, all Palestinians in Gaza are “disposable,” even children.According to news reports this morning, more than 60 Palestinians died in Gaza yesterday with more than 2,000 injured. The United Nations reports that eight of those dead are children under the age of 16. The massacre was the direct result of the Israeli military firing live bullets at protesters.But Donald Trump’s White House doesn’t see it that way. At a press briefing yesterday, White House Deputy Press Secretary Raj Shah was asked about Israel’s “kill at will” policy toward the demonstrators. Shah replied: “We believe Hamas, as an organization, is engaged in cynical action that’s leading to these deaths.”As the outrage grew in the U.S. and internationally against the grotesque images yesterday of Ivanka Trump leading the celebrations occurring at the U.S. Embassy and the dead children being carried out in Gaza, anger spilled out across social media.Israel has been successful heretofore in effectively using a propaganda sound bite to brush away those who challenge its most horrific human rights violations. If you are a journalist criticizing its massacres, you’re an “anti-semite.” If you’re a prominent Jew criticizing it, you’re a “self-hating” Jew. If you’re a human rights organization assessing its massacres of unarmed protesters as a violation of international law, you’re opposing Israel’s right to defend itself. But after Israel’s outrageous conduct yesterday, challenges to its propaganda war have gained momentum.Hollywood producer, Judd Apatow, an American Jew,  struck back at a person on Twitter who attempted to defend Israel’s actions. Apatow wrote on his Twitter page: “You have lost your humanity. You watch these images and see a game, not the death of children. This provocation and the killing of the Iran deal is going to set fire to the region. This is like Bush thinking he was going to spread freedom but he opened a Pandora’s Box.”

Iran Sanctions: A Reminder Of How America Militarized The Financial System - Only CNN was surprised by Donald Trump’s recent announcement that he was pulling the United States out of the Iran Deal negotiated by his predecessor. Following the same failed approach of the last Republican administration, the President opted for confrontation with the Iranian regime rather than uplifting more moderate factions within the country through trade. The decision has already increased tensions in the volatile region, with Iran and Israel exchanging fire in Syria. Meanwhile European leaders are meeting Iranian officials to try to design a way to bypass new American sanctions. Others have vocally attacked Trump’s actions and attacked the US playing the role of “economic policeman.” As French Finance Minister Bruno Le Maire said after the decision:Do we want to be vassals who obey decisions taken by the United States while clinging to the hem of their trousers? Or do we want to say we have our economic interests, we consider we will continue to do trade with Iran?According to reports, European officials are looking at a few different options to help salvage their economic relationship with Iran. One is by reviving “blocking statues” such as the ones the EU threatened in response to sanctions on Cuba, Libya, and Iran in the 1990s. The mechanism works similar to the anti-commandeering doctrine, ordering European officials to refuse to comply with US sanctions. As Reuters notes, blocking statues have “never been used and is seen by European governments more as a political weapon.” They were successful in the past because the Clinton Administration simply backed down, something that seems unlikely with President Trump. The other is to establish new financial institutions with no connection to the US financial system. Iran has already made the euro the official reporting currency for foreign exchange, so on the surface this seems like a viable alternative.The problem European decision makers face, however, is that the US has gone to great lengths to militarize the banking industry in recent years. No financial institution is going to want to risk being blackballed from the US banking system, no matter how firmly worded a blocking statute is. As such, the first proposed policy tool has little chance of success.

Was There Ever an Iranian Nuclear Weapons Program? - Donald Trump’s decision to pull out of the Joint Comprehensive Plan of Action (JCPOA), which has set the stage for another Iran crisis, has opened a new round of domestic political struggle, as Democrats in Congress, the anti-Trump television networks, and the tattered remains of the old anti-war movement try to push back. But that effort has a fatal weakness at its core. It concedes to Trump and opponents of the Iran deal an effective argument: that the Iranians have been lying when they say they’ve never had a covert nuclear weapons program. The theme of Iran’s duplicity has been the emotional core of the assault on the JCPOA. It is no accident that the title and consistent theme of Benjamin Netanyahu’s melodramatic YouTube slideshow was “Iran lied.” As I detail in my investigative history of the Iran nuclear issue, the Obama administration itself fell for a false narrative about a secret Iranian nuclear weapons program allegedly in operation from 2001 to 2003.  But both the real provenance of the apparently incriminating documents and specific details about the documents themselves indicate that they are fraudulent. A major clue about the papers’ true origins was made public in November 2004, when Karsten Voigt, the coordinator for German-North American cooperation in the German Foreign Office, was quoted by the Wall Street Journal warning that the documents had been provided by “an Iranian dissident group,” and that the United States and Europe “shouldn’t let their Iran policy be influenced by single-source headlines.”

The Iran Deal Isn’t Dead—Yet - When President Donald Trump announced on May 8 that America would be withdrawing from the Iranian nuclear deal—officially known as the Joint Comprehensive Plan of Action (JCPOA)—he created an international furor. Tensions have flared in the Middle East after both Trump’s announcement and America’s official opening of its embassy to Israel in Jerusalem. The withdrawal from the JCPOA saw crowds of Iranians protesting against America and the embassy move saw protests, rioting and the shooting of fifty-eight Palestinians who attempted to cross the border into Israel. To assess the implications of the American withdrawal from the Iran deal, the Center for the National Interest convened a panel moderated by Zalmay Khalilzad, the former ambassador to the United Nations, Afghanistan and Iraq. The panel discussed a variety of topics, including the possibility of salvaging the JCPOA, if Iran would leave it, whether war is likely, if United States would impose sanctions on European companies in Iran and how that might impact transatlantic relations. Maintaining the JCPOA would require the reentrance of the United States or a lot of heavy-lifting by the parties still in the agreement to keep it going. The permanent members of the Security Council—Russia, China, the United Kingdom and France—are the remaining parties, including Germany. Some experts have argued that any number of these remaining signatories could seek to prompt Iran to adhere to the nuclear deal, especially if they offered major financial incentives or made side agreements that addressed some of Iran and America’s mutual security concerns. For instance, Pillar believes that Europe is determined to make the JCPOA work since the deal “has been working as certified by the IAEA, ” and that is sufficient for the Europeans. Another approach might be for European allies to seek agreements that reduce Iran’s ballistic missile program or that extend the sunset clauses in the original JCPOA.

EU wants to 'replace' US after it ditched Iran nuclear deal. But can it? - Europe needs to replace the US as the world leader as Washington is no longer fits this role, the EU Commission head said following Donald Trump's withdrawal from the Iran nuclear deal. Whether the EU can do it is another matter. "At this point, we have to replace the United States which as an international actor has lost vigor, and because of it, in the long-term, influence," President of the European Commission Jean-Claude Juncker said while speaking to Belgium's Flemish regional parliament on Wednesday. He went on to say that Washington had been turning away from constructive international relations "with a ferocity that can only surprise us." The top European official accused the US of being unwilling "to cooperate with other parts in the world." His words came just days after the US President Donald Trump announced that he would pull the US out of the Iranian nuclear agreement, which he repeatedly denounced as the "worst deal ever negotiated." Despite facing criticism from other parties to the deal, as well as some other members of the international community, the US leader seems to be sticking to his decision.Juncker never addressed whether Europe is actually capable of overtaking the US at the top, though. Meanwhile, the latest attempt from EU leaders to exercise their influence – by convincing Trump to stay in the Iran deal – was a spectacular failure. Now, the European leaders vow to work together and do their best to keep the Iranian deal in place. It remains to be seen if they can do it, even with the help of Russia, China and Iran itself, who all reaffirmed their commitment to the agreement.

Europe stares down Trump over Iran - The EU won’t walk away from the Iran nuclear deal even if Donald Trump wants to kill it, the bloc’s top diplomat said.“We reaffirmed together our resolve to continue to implement the nuclear deal in all its parts in good faith and in a constructive atmosphere,” Federica Mogherini told a press conference late Tuesday after talks with the foreign ministers of France, Germany, the U.K. and Iran.“We are working on finding a practical solution,” the EU’s foreign policy chief said. “We are talking about solutions to keep the deal alive.”The message from Europe came just over a week after U.S. President Donald Trump announced he would pull out of the 2015 deal, officially known as the Joint Comprehensive Plan of Action, under which Iran pledged to limit its nuclear program in exchange for sanctions relief.The move by Trump dismayed key European allies, who had spent months urging Trump not to walk away from the agreement. It also came over the opposition of China and Russia, which are also party to the 2015 deal. Supporters of the deal say that Iran has complied with its requirements, and insist it is the only realistic alternative to military force as a means of halting Tehran’s nuclear program. But Trump has described it as  a “terrible deal.” On Tuesday, the EU reaffirmed its commitment to the pact.

European Leaders Revolt Against US Sanctions In Bid To Preserve Iran Deal - European leaders gathered in Sofia on Thursday to hash out a plan for shielding Iran from the brunt of US economic sanctions as they try to convince Iranian President Hassan Rouhani to continue abiding by the terms of the deal, while proposing levying tariffs on US goods in response to Trump decision to impose sanctionson Iran. Shortly after President Trump announced that the US would pull out of the deal, Rouhani promised that his country would continue abiding by its terms only if Iranian businesses could continue operating normally. In an interview with Germany's Deutschlandfunk radio, European Union budget commissioner, Guenther Oettinger discussed several options for preserving the deal, including using the European Investment Bank to offset the impact of sanctions by extending loans to firms with financing problems. In an example of one more-extreme measure under discussion, the EU has also considered "imposing its own tariffs" on the US that would make it much harder for US firms to sell their goods and services in the trade bloc. Of course, the US has important goods and services in the industrial sector that it would like to offload in Europe, Oettinger said. While sanctions weren't the EU's first choice for preserving the deal, few other actions would be strident enough to get President Trump's attention, as Oettinger made clear: "We want to resist that. We have limited possibilities," he said. "Trump despises weaklings. If we back down step by step, if we acquiesce, if we become a kind of junior partner of the US then we are lost." And while the EU would like to protect its largest companies from US sanctions, French President Emmanuel Macron said on Thursday that companies would be responsible for deciding whether they will still do business with Iran. 

Why Germans Are Getting Fed Up with America - Germans have never liked U.S. President Donald Trump, and the backlash against his actions is stronger than ever after he pulled the U.S. out of the Iran nuclear deal last week. But there’s a growing gap between the German establishment and German voters: The former may be anti-Trump, but the latter are increasingly anti-American. German Chancellor Angel Merkel vented her frustration with Trump in a speech in the North Rhine-Westphalia city of Muenster on Friday, saying his Iran decision “undermines trust in the international order.” “If everybody does just what they want, that’s bad news for the world,” Merkel said. This outburst coincided with one of the most provocative covers Germany’s highly respected weekly Der Spiegel ever published — an outstretched middle finger bearing Trump’s likeness, with the English caption, “Goodbye, Europe!” Spiegel’s editorial to go with this image called on Europe to join the anti-Trump resistance: The West as we once knew it no longer exists. Our relationship to the United States cannot currently be called a friendship and can hardly be referred to as a partnership. President Trump has adopted a tone that ignores 70 years of trust. He wants punitive tariffs and demands obedience. It is no longer a question as to whether Germany and Europe will take part in foreign military interventions in Afghanistan or Iraq. It is now about whether trans-Atlantic cooperation on economic, foreign and security policy even exists anymore. The answer: No. These are strong words. But of course, there was nothing in Merkel’s speech about dissolving Germany’s alliance with the U.S., and the Spiegel editorial only calls on Europe to “begin preparing for a post-Trump America and seek to avoid provoking Washington until then.” The German establishment appears to believe that Trump is the problem and that the time-honored European approach — waiting for the problem to go away, as Europe is already doing with its conciliatory plan to stave off Trump’s threatened steel and aluminum tariffs — is the best bet. 

Europe May Fold, But China And Russia See Opportunity -- Although European leaders are talking a big game about keeping the Iran deal (JCPOA) alive following Trump’s unilateral withdrawal, there’s a good chance nations across the pond, especially the UK and France, will ultimately fold to U.S. demands. This is despite the fact these countries stand to lose far more economically than America. Acquiescing to U.S. imperial demands as submissive client states is simply what Europe does. On the other hand, China and Russia sense opportunity for major geopolitical gains and will not back down.Political leaders in China and Russia must be licking their chops at the short-sighted stupidity of Donald Trump’s decision to ditch the Iran deal. As mentioned in previous pieces, the Trump administration isn’t just saying the U.S. will sanction Iran from its end, but that it could leverage the global financial system and its dependency on the USD, to punish those who dare defy U.S. policy.  As discussed in the recent post, The Road to 2025 (Part 3) – USD Dominated Financial System Will Fall Apart, this unilateral move against Iran is likely to be a key catalyst in the planet transitioning away from a financial system completely and totally dominated by the USD into a more multi-polar currency world. Trump’s essentially willing to trade away U.S. global geopolitical and financial dominance because he’s obsessed with taking out the Iranian regime. While Europe may not be willing to make a huge fuss about all this right now, its leaders, and more importantly its citizenry, know exactly what this means. As long as the global financial system is totally dominated and controlled from the U.S. via the USD, no country on earth can be truly sovereign, in terms of economic or foreign policy. In case you still aren’t getting how serious this is, let me point you to a few comments recently made by Russian leader Vladimir Putin:

Is Putin's Strategy Finally Beginning To Work? -- Paul Craig Roberts - I have explained Russian President Vladimir Putin’s Christian practice of turning the other cheek to Western provocations as a strategy to convey to Europe that Russia is reasonable but Washington is not and that Russia is not a threat to European interests and sovereignty but Washington is. By accommodating Israel and withdrawing from the multi-nation Iran nuclear-nonproliferation agreement, US President Donald Trump might have brought success to Putin’s strategy. Washington’s three main European vassal states, Britain, France, and Germany have objected to Trump’s unilateral action. Trump is of the opinion that the multi-nation agreement depends only on Washington. If Washington renounces the agreement, that is the end of the agreement. It doesn’t matter what the other parties to the agreement want. Consequently, Trump intends to reimpose the previous sanctions against doing business with Iran and to impose additional new sanctions. If Britain, France, and Germany continue with the business contracts that have been made with Iran, Washington will sanction its vassal states as well and prohibit activities of British, French, and German companies in the US. Clearly, Washington thinks that Europe’s profits in the US exceed what can be made in Iran and will fall in line with Washington’s decision, as the vassal states have done in the past. And they might. But this time there is a backlash. Whether it will go beyond strong words to a break with Washington remains to be seen. Trump’s neoconservative pro-Israel National Security Advisor John Bolton has ordered European companies to cancel their business deals in Iran. Trump’s ambassador to Germany Richard Grenell has ordered German companies to immediately wind down their business operations in Iran. The bullying of Europe and blatant US disregard of European interests and sovereignty has made Europe’s long vassalage suddenly all too apparent and uncomfortable. Germany’s Chancellor Angela Merkel, previously a loyal Washington puppet, said that Europe can no longer trust Washington and must “take its destiny into its own hands.”  European Commission President Jean-Claude Juncker said that Washington’s leadership had failed and it was time for the EU to take over the leadership role and to “replace the United States.” Various French, German, and British government ministers have echoed these sentiments. The cover story of the German news magazine Der Spiegel, “Goodbye Europe,” has Trump giving Europe the middle finger. The magazine declares that it is “Time for Europe to Join the Resistance.”

US State Department accuses China of “economic blackmail” - The virulent US-driven campaign in the Australian corporate media against China rose another notch this week. Fairfax Media’s Australian Financial Review (AFR) ran a front-page lead on Monday, followed by an editorial on Tuesday, citing an unpublished US State Department report that accuses Beijing of using a combination of loans and economic coercion to take control of the Indo-Pacific region.The 40-page document reportedly warns that “Chinese loans worth hundreds of billions of dollars are saddling Australia’s smaller regional neighbours with unsustainable debts and giving Beijing crucial economic leverage to gain strategic and military power.”These charges follow a succession of similar warnings by Washington think tanks and visiting US representatives over the past several years—most recently the defeated Democratic Party president candidate Hillary Clinton.The anti-China offensive has three purposes. The first is to condition public opinion in Australia and throughout the region in preparation for trade war and war against China. The second is to beat down those within Australian corporate circles who seek to avert or stall a confrontation with Beijing because of the massive profit interests at stake in China, the country’s largest export market. The third is to ratchet up the pressure from the US, on which Australian capitalism depends for foreign investment and military backing, for much more aggressive participation by Australian governments in military and economic operations against purported Chinese influence. The provocative report alleges that 16 states are vulnerable to Chinese “debtbook diplomacy” and economic blackmail, including Papua New Guinea, Vanuatu, the Philippines, Cambodia, Laos, Thailand, Malaysia, Sri Lanka, Tonga and Micronesia.

The Double Standard of America’s China Trade Policy - A high-profile United States trade delegation appears to have returned empty-handed from its mission in China. The result is hardly a surprise, given the scale and one-sided nature of the US demands. The Americans pushed for a wholesale remaking of China’s industrial policies and intellectual property rules, while asking China’s government to refrain from any action against Trump’s proposed unilateral tariffs against Chinese exports. This is not the first trade spat with China, and it will not be the last. The global trading order of the last generation – since the creation of the World Trade Organization in 1995 – has been predicated on the assumption that regulatory regimes around the world would converge. China, in particular, would become more “Western” in the way that it manages its economy. Instead, the continued divergence of economic systems has been a fertile source of trade friction. There are good reasons for China – and other economies – to resist the pressure to conform to a mold imposed on them by US export lobbies. After all, China’s phenomenal globalization success is due as much to the regime’s unorthodox and creative industrial policies as it is to economic liberalization. Selective protection, credit subsidies, state-owned enterprises, domestic-content rules, and technology-transfer requirements have all played a role in making China the manufacturing powerhouse that it is. The fact that many of China’s policies violate WTO rules is plain enough. But those who derisively call China a “trade cheat” should ponder whether China would have been able to diversify its economy and grow as rapidly if it had become a member of the WTO before 2001, or if it had slavishly applied WTO rules since then. The irony is that many of these same commentators do not hesitate to point to China as the poster boy of globalization’s upside – conveniently forgetting on those occasions the degree to which China has flouted the global economy’s contemporary rules.

Trump Backs Down On China Threat: Instructs Commerce Dept To Rescue ZTE - It appears the impact of "unintended consequences" has hit the Trump administration once again. Following the 'rescue' of Rusal - driven almost into the ground by Trump's aluminum tariffs and oligarch sanctions (which sent aluminum prices skyrocketing, crushing margins for end-users); it appears China's threats of retaliation against Trump's ban on giant Chinese telecoms company ZTE have sunk in. As a reminder, in response to Trump's 7-year ban of component sales by US companies to China's ZTE (in retaliation for "tech IT theft and distribution"), a tide of angry populist rhetoric swept across China's social media and press, amid warnings from Chinese officials (and the company itself) that "The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies." President Trump appears to have backed down from his most vociferous threats this morning, tweeting that he and President Xi "are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast." Trump went on to explain that "too many jobs in China [had been] lost," perhaps noting subliminally that the same may apply to American workers, as Trump then concluded that the " Commerce Department has been instructed to get it done!"President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!— Donald J. Trump (@realDonaldTrump) May 13, 2018   Whether this is some quid pro quo to Xi for his help with Kim is unclear but it sure makes things awkward for some US allies who have voiced extremely strong negative opinions about ZTE in the vassal manners... Last month UK warned business not to use ZTE equipment or services as it would have a “long term negative effect on the security of the UK," and UK's Cyber security chief warned "the use of ZTE equipment or services would present risk to UK national security that could not be mitigated effectively or practicably." So does that mean that Washington is now supporting the rescue of a company that represents a threat to UK security? For now the response is positive - as the editor of the Global Times, unofficial PRC mouthpiece, called it a good decision...

Trump Willing to Give a China a Break on Sanctions Against ZTE Electronics. What Gives? -  Yves Smith - The financial press is all agog about this Trump tweet on Sunday:President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done! — Donald J. Trump (@realDonaldTrump) May 13, 2018    ZTE is China’s biggest publicly traded telecommunications supplier, with roughly $17 billion in revenues and 75,000 employees. It makes smartphones and other electronic stuff and buys a lot of parts from US companies including Qualcomm and Micron Technology. Even Australia’s Telstra sold ZTE phones under Telstra’s brand name. The US had fined ZTE $1.2 billion for violating US sanctions by selling product to North Korea and Iran and also imposed a seven-year ban sales by US companies to ZTE, but had suspended the ban based on ZTE paying most of the fine plus agreeing to punish the employees who hid the sales to Iran. The US found out that ZTE was defying the sanctions and gave managers who had been involved in the Iranian-related operations bonuses. In April, the Administration reversed its suspension of the US sales ban. ZTE halted production last week as a result. The theorizing on what Trump’s tweet signifies is over the map. But we’ll try to narrow down the possibilities, if nothing else, because it might give some early clues as to what if anything will come of Trump’s trade threats against China. Given that the English language reporting has been at its usual less than stellar level, please pipe up with information and considerations we may have missed.However, keep one thing in mind: Trump likes to think of himself as above all a dealmaker. One of the basic rules of negotiating is never never never give a free concession. You always get something when you give something up.That is one reason for Trump’s “Oh, I’m helping Xi out,” to make Trump not look like the weak party, since he sure looks like one with this action.

Lawmakers stunned by Trump push to help Chinese company | TheHill: Images President Trump’s abrupt decision to offer a potential lifeline to Chinese phone-maker ZTE is sending shockwaves through Washington, sparking criticism from lawmakers who have pushed for tighter restrictions on Chinese telecommunications companies. Trump stunned Republicans and Democrats on Sunday when he tweeted that he had ordered federal officials to get Chinese phone-maker ZTE “back into business, fast” after the company shuttered its operations due to U.S. penalties. “Too many jobs in China lost,” Trump wrote. The sentiment was a far cry from the hard line the president has drawn on China since the start of his administration, with his officials accusing Beijing of unfair trade practices and intellectual property theft. Republicans on Capitol Hill, who had been pressing for further restrictions on Chinese telecommunications companies in the U.S. market, pushed the administration to hold the line it had previously taken against ZTE. “Problem with ZTE isn’t jobs & trade, it’s national security & espionage,” Sen. Marco Rubio (R-Fla.) tweeted on Monday. “We are crazy to allow them to operate in U.S. without tighter restrictions.” “One of the few areas where the president and I agreed, and I was vocally supportive, was his approach towards China,” Senate Minority Leader Charles Schumer (D-N.Y.) said in a statement. “But even here he is backing off, and his policy is now designed to achieve one goal: make China great again.” Trump’s stated desire to help ZTE comes less than a month after his Commerce Department barred American firms from selling components to the Chinese phone-maker. The administration said ZTE violated sanctions on Iran by selling equipment to the country. ZTE is fighting the ban, which, if it stands, promises to cripple the company’s operations. The company has already halted its production in reaction to the penalties. 

ZTE and the Iran Nuclear Deal -- The whiplash that many observers have felt on learning of President Trump’s about-face on China’s ZTE telecom company from condemning it as violating US national security and violating sanctions rules by selling to North Korea and Iran has been pretty easily explained by our soon thereafter learning that China has provided a mere half a billion dollars to a project in Indonesia where Trump interests are deeply involved.  This is probably the most blatant violation of the Emoluments Clause of the US constitution yet, but do not hold your breath that anything formal will come of it, despite widespread outrage.  Rather his backers will accept that this is necessary for obtaining Chinese support in dealing with Kim Jong-In in the possible forthcoming summit.  This is supposed to trump all other considerations.Of course the supposed forthcoming summit and related events, such as the  recent release of hostages held by North Korea, have been trumping Trump’s withdrawal from the JCPOA nuclear deal with Iran, which has been praised by his supporters as an action that “fulfills a campaign promise” and thus just simply wonderful.  However, a little noticed aspect of this in the US is triggering considerable reverberations abroad. It is the hypocrisy that while Trump seems to be blithely forgiving ZTE for breaking already in-place sanctions against Iran, he and members of his administration such as John Bolton have been unyielding to the Europeans that all of their companies must cease any economic dealings with Iran ASAP now that Trump has scuttled US participation in the deal, even though it is widely accepted in Europe that Iran is in full compliance with the deal.  The spectacle of the freshly arrived US ambassador issuing an immediate “order” to German companies to immediately comply with US demands on this has raised especial hackles.  Pretty clearly the Europeans need to identify some budding Trump Organization project somewhere on the planet that they can dump a pile of money into so that their companies can get exemptions like ZTE has from having their markets in the US cut off if they continue to operate in Iran.

Is This Why Trump Folded: China Holds Up U.S. Pork, Auto Imports President Trump surprised pundits and assorted watchers of the ongoing simmering trade war between China and the US on Sunday, when he pledged to help China’s telecom giant ZTE Corp “get back into business, fast” after a U.S. ban crippled the technology company, offering a job-saving concession to Beijing ahead of high-stakes trade talks this week. What surprised most, however, is that Trump appears to make this concession out of the blue, without any obvious pressure out of China which has been patiently biding its time until the US implements sanctions under Section 301. Maybe not: according to Reuters, on Monday China’s customs said it had ramped up inspections of U.S. pork and had taken unspecified regulatory steps on high-risk waste imports. In a move that could potentially cripple another group of exporting US farmer, China’s General Administration of Customs said it has increased inspections of U.S. pork imports "after finding problems recently", according to a fax it sent to Reuters.Today's news confirms a report from Reuters which last week, according to which Beijing had stepped up inspections of pork imported from the United States, a move that many saw as a warning by Beijing in response to sweeping U.S. trade demands made on China.And while China’s customs administration denied that it was targeting the US, saying it had not taken extra steps to check imports of U.S. agricultural products, instead giving equal treatment to inspections of agricultural products from all countries and districts, the U.S. had become the largest exporter of waste that failed checks, the customs said. Surely this was purely a coincidence.The pork halt was merely the latest quiet escalation in China's response arsenal: the North American unit of a Chinese customs inspection firm said on May 4 it would suspend checks on cargoes of scrap metal from the United States for a month, effectively halting all imports of U.S. scrap.

China Contributing $500 Million to Trump-Linked Project in Indonesia - The Chinese government is extending a $500 million loan to a state-owned construction company to build an Indonesian theme park that will feature a Trump-branded golf course and hotels.A subsidiary of Chinese state-owned construction firm Metallurgical Corporation of China (MCC) signed a deal last week with the Indonesian firm MNC Land to build an “integrated lifestyle resort,” as part of Beijing’s global influence-expanding “Belt and Road” infrastructure initiative.The project will include a number of Trump-branded hotels, a golf course, and a residence. While the $500 million loan will not be directly allocated to any of the Trump-branded features, Beijing’s contribution of half the project’s total operating budget ensures the success of the broader theme-park venture.The Trump properties are considered flagship elements of the theme park, according to MNC marketing materials, and internal documents obtained by Agency France-Presse show Trump’s sons have been directly involved in its planning. Though negotiations began prior to Trump’s election and his pledge to cease engaging in new business dealings with foreign governments, the project raises questions about the extent to which the Trump organization is dependent on Beijing amid contentious trade negotiations with the U.S.  Trump refused to divest his Trump Organization holdings upon taking office, much to the consternation of government-ethics experts, opting instead to place his holdings in a blind trust and hand over control of the business to his sons.

U.S., China Discussing Deal on ZTE, Agricultural Tariffs - The U.S. and China are closing in on a deal that would give China’s ZTE Corp. a reprieve from potentially crippling U.S. sanctions in exchange for Beijing removing tariffs on billions of dollars of U.S. agricultural products, said people in both countries briefed on the deal.  The negotiations also would ease roadblocks in China faced by U.S. semiconductor company Qualcomm Inc., whose proposed acquisition of NXP Semiconductors NV of the Netherlands has been held up by Beijing. China’s Commerce Ministry has pledged to immediately restart its review of the acquisition, a person close to the agency said. The ministry has held up a number of multibillion-dollar, cross-border deals being pursued by U.S. companies over the past few months.ZTE is a Shenzen-based telecommunication-equipment producer that has been hamstrung by a U.S. ban on component sales to the firm. A deal isn’t completed and could fall apart as discussions continue, particularly since the U.S. side is sharply divided over how to deal with China.   On Sunday, President Donald Trump said in a tweet that he was working with Chinese President Xi Jinping to get ZTE “a way to get back into business, fast. Too many jobs in China lost.” He said the Commerce Department has been instructed to “get it done!” Mr. Trump’s tweet took many in his inner circle by surprise, said people involved in the discussions, and wasn’t preceded by interagency discussions on the policy. Commerce Secretary Wilbur Ross said at the National Press Club on Monday that he is considering alternative punishments for ZTE, potentially opening the door to a reprieve for the telecom company. Mr. Ross said the Commerce Department would consider the question of easing ZTE penalties “very, very promptly.”

A World Apart: Charting the Gulf Between Chinese and U.S. Tariffs -- The Trump administration’s campaign to reduce trade imbalances with China highlights a gulf between the world’s two largest economies over import duties on everything from aircraft to electric toothbrushes. Senior White House economics officials visited Beijing this month to kick off negotiations in the trade dispute, in which the U.S. is pressuring China to reduce its bilateral trade surplus by $100 billion a year. Vice Premier Liu He is expected to arrive in Washington to pursue talks Tuesday, coinciding with the first of three days of U.S. hearings for companies affected by tariffs on Chinese imports. .Among the American officials’ demands was for China to reduce tariffs on non-strategic imports to levels no higher than corresponding products in the U.S. The U.S.’s concern reflects China’s anomalous rise in the global economy. Governments and economists accept that developing economies tend to have higher tariffs than the developed world. But China’s heft, rapid growth, and industrial policies have brought its tariff asymmetries into focus—handing the U.S. a means to reduce a glaring trade deficit, along with leverage over other sore spots, like China’s attempts to gain advantage in global technology. China joined the World Trade Organization in 2001, and its tariffs fell about 60% from 1996 to 2005. They have since hovered some three times higher than U.S. levels. .The average American tariff in recent years, under most-favored-nation terms, was around 3.7%—compared with China’s at about 10%, according to the WTO. The MFN rule, which aims to create fairness in global trade, is when one country extends to another a tariff level no higher than what it has made available to any other nation. A Wall Street Journal review of comparable tariffs found Beijing has lots of room to whittle down tariffs on key products to U.S. levels. China maintains its highest tariffs on agricultural imports, including a 65% duty on corn beyond an annual state-controlled quota of 7.2 million metric tons. Washington, meanwhile, charges no duty on corn imports. Beijing is vowing to slap on another 25% on corn, retaliation for President Donald Trump’s tariff threats against Chinese goods. ..American soybean exports, another Farm Belt target facing retaliation by Beijing, enjoy relatively low Chinese tariffs of 3%—but likely not for long. Beijing has said it will add 25% to that tariff, and is trying to line up alternative soybean suppliers.

US, China still 'very far apart' on trade: ambassador Terry Branstad | South China Morning Post: The United States wants China to give a timetable on how it will open up its markets to US exports as the two countries are still “very far apart” on resolving trade frictions, US Ambassador to China Terry Branstad said on Tuesday. Washington and Beijing have proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains and dent business investment plans. A US delegation led by Treasury Secretary Steven Mnuchin presented China earlier this month with a list of demands to tackle allegations of intellectual property theft and other trade policies Washington considers unfair. The two countries failed to reach an agreement on the long list of US demands and decided to resume talks in Washington. Branstad, who was present at the meeting, said the Chinese appeared to be “taken back” by the significance of the list. “The Chinese have said ‘we want to see the specifics.’ We gave them all the specifics in terms of trade issues. So they can’t say they don’t know what we’re asking for,” he said. “We’re still very far apart,” Branstad said, adding that China has not met pledges to open up its insurance and financial services area, as well as reduce car tariffs. “There are many areas where China has promised to do but haven’t. We want to see a timetable. We want to see these things happen sooner than later,” he said at a conference in Tokyo. Branstad also said US President Donald Trump would like to see a “dramatic increase” in food exports to China. “We’d like to see China being just as open as the United States,” he said. 

Peter Navarro Excluded From China Talks After Exploding At Steven Mnuchin, Wilbur Ross -- Back in late February, we noted something that few at the time noticed: Trump had just promoted "populist" trade-hawk Peter Navarro to the rank of assistant to the president. What happened shortly thereafter shook the administration, as first Gary Cohn resigned in very short order, and just days later Trump launched trade war against China and many other nations with which the US has had a trade deficit.We went so far as to declare a victory for the populists over the globalists in the Trump inner circle.Well, not even three months later, following some behind the scenes discussions between Trump and Beijing which have yet to be disclosed, it appears that the globalists are back in control as Trump's main China trade adviser, author of  "Death by China" and "Crouching Tiger: What China's Militarism Means for the World" and unrepentant trade hawk, Peter Navarro, has been excluded from talks tomorrow with China’s top economic envoy aimed at defusing a brewing trade war with the U.S., Bloomberg reported citing two administration officials.As we reported this morning, Vice Premier Liu He, who is also Xi Jinping's special envoy, will meet with Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross.So why is Navarro, arguably the architect of Trump's entire China trade policy, being left out? According to Bloomberg's sources, Navarro has "lately behaved erratically and unprofessionally" and "his exclusion from the meeting marks another downturn in his White House career, where he was long isolated by other top officials before the president promoted him earlier this year to his top rank of aides." According to Axios, during the US delegation's trip to Beijing two Fridays ago, Navarro "blew up" at Mnuchin over his decision to participate in one-on-one talks with his Chinese counterpart Liu He. Navarro cursed at Mnuchin and fumed about being shut out of the talks, the sources said.

Liu’s conundrum will be to square the circle in Washington | Asia Times: As economic envoy Liu He prepares to touch down in Washington, he faces what can only be described as the China conundrum. Ahead of him will be four days of trade talks littered with challenges and contradictions. Key to this will be addressing White House concerns about the ballooning trade deficit, which was a record US$375.2 billion last year, and demands by the United States to cut it by $200 billion by the end of 2020. Along with that herculean task, Liu must also tackle the problem of Chinese subsidies for advanced technology industries. The topic became a major stumbling block during the opening discussions with Treasury Secretary Steven Mnuchin in Beijing a few weeks ago. This was hardly surprising as it strikes at the very heart of one of President Xi Jinping’s big picture programs, ‘Made in China 2025’, which aims to turn the world’s second-largest economy into a technological powerhouse. “There are things China listed and said, ‘We’re going to take technology, spend several hundred billion dollars, and dominate the world’,” Robert Lighthizer, the US Trade Representative, told senators at a Washington hearing in March. “And these are things that if China dominates the world, it’s bad for America.” Putting together a loose understanding is highly possible when Liu discusses the broad issues with Mnuchin, but the core differences are likely to remain. The ZTE saga has highlighted the diplomatic minefield ahead after a US sanctions ban on components crippled the telecom giant. Even Trump’s U-turn at the weekend to help the group “get back into business” was seen as just another bargaining ploy.

Trade War: How Tensions Have Risen Between China, the EU and the US - Since the beginning of the year, the multilateral trading system has been challenged with a number of decisions and announcements on tariffs. The trade conflict between the United States and China may be escalating, while the European Union finds itself in a precarious position in responding to the US’ challenges.  So what has and what has not yet happened this year? We focus on the measures taken and announcements made by China, the EU and the US in terms of trade policy. Here is the timeline:

• January 11: US secretary of commerce reports results of an investigation into the effect of imports of steel mill articles on national security.
• January 19: US secretary of commerce reports results of an investigation into the effect of imports of aluminium on national security.
• January 22: President Trump approves recommendations to impose safeguard tariffs on imported large residential washing machines and solar cells and modules.
• February 28: President Trump’s policy agenda and annual report “for free, fair, and reciprocal trade” are released.
• March 6: the European Commission (EC) extends anti-dumping measures on Chinese steelproducts.
• March 7: the  EC outlines EU plan to counter US trade restrictions on steel and aluminium.
• March 8: proclamation of US’ tariffs on imported steel (25%) and aluminium(10%), effective from March 23, without prejudice to (temporarily) exempted countries.
• March 16:  the EC launches a public consultation on the US’ tariffs and possible EU retaliatory measures (EU list of products), considering the US tariffs as de facto safeguard measures.
• March 21: Commissioner Malmström met US Secretary of Commerce Ross, “with a view to identifying mutually acceptable outcomes as rapidly as possible”.
• March 22: following the Office of the U.S. Trade Representative (USTR) investigation on “China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation”, President Trump announces his decision to take actions on China.
• March 22: the Chinese Ministry of Commerce (MOFCOM) decides to launch anti-dumping measures for imports of photographic paper from the EU, US, and Japan, from March 23 and for 5 years.
• March 23: USTR launches a WTO challenge to address China’s technology licensing requirements.
• March 23: MOFCOM issues a list of discontinuation concessions against the US’ steel and aluminium tariffs, involving approximately US$3 bln worth of trade, and solicited public comments on tariffs to be imposed on certain products imported from the US.
• March 26: the EC launches a safeguard investigation on imports of steel products to prevent trade diversion into the EU, in response to the US’ steel and aluminium tariffs.
• March 27: MOFCOM launches an anti-dumping investigation against phenol products imported from the US, the EU, the Republic of Korea, Japan, and Thailand.
• April 3: USTR publishes a proposed list of products imported from China that could be subject to 25% tariffs. A public hearing will be held on May 15.
• April 5: MOFCOM publishes a list of US’ products potentially affected by 25% import tariffs of its own, in response to recent US’ announcements. On the same date, it files a request for consultation at the WTO, claiming that US’ steel and aluminium tariffs are actually safeguards.
• April 17: MOFCOM decides to launch provisional anti-dumping measures for grain sorghum originating in the US, starting from April 19.
• April 20: MOFCOM launches provisional anti-dumping measures against the imported halogenated butyl rubber originating in the US, the EU, and Singapore;
• April 24-27: President Macron (April 24) and President Merkel (April 27) meet President Trump, holding talks that included trade relations.
• April 27: USTR releases 2018 Special 301 report on intellectual property rights, identifying 36 countries on the Priority Watch List or Watch List (Greece and Romania are the only EU Member States included, in the Watch List; China is in the Priority Watch List).
• May 1: extension until 1 June of the EU’s exemption from US tariffs on steel and aluminium imports.
• May 3-4: US’ trade delegation meets Chinese officials on the US-China economic relationship, providing a “draft framework” in advance. A second round of trade talks is scheduled to start on May 15th.
• May 8: President Trump and President Xi discuss bilateral trade over phone call.

The result of those is the looming prospect of continuous trade restrictions and retaliation measures involving a variety of products. Apart from steel and aluminium, the US targeted over 1,300 imported Chinese products worth around $50 billion, possibly aiming at China’s high-tech and industrial sectors.

Top Trump Adviser Peter Navarro to Take Part in China Talks After All   - President Donald Trump’s trade adviser Peter Navarro will take part in talks this week with China’s top economic envoy aimed at defusing a brewing trade war with the U.S., a White House official said, indicating a shift from earlier plans. Navarro had initially been excluded from the negotiations with Chinese Vice Premier Liu He over concerns about his behavior on a trip to Beijing two weeks ago as part of the trade delegation, two administration officials said. It isn’t clear why the administration decided to reinstate him in the talks or what role he’ll play. Navarro wasn’t listed among the U.S. officials who will take part in this week’s talks in a statement released by the White House earlier Wednesday. He had been listed as part of the delegation to Beijing, according to a statement issued at the time. Following a Bloomberg News report Wednesday that Navarro had been excluded, the White House official -- speaking on condition of anonymity -- said that Navarro would indeed participate. Isolation, Then Elevation Navarro, 68, who once published a book entitled “Death by China,” has long been hostile to the country. Navarro had previously been isolated by other senior officials before the president promoted him earlier this year. Navarro didn’t respond to a request for comment. Treasury Secretary Steven Mnuchin will lead the talks with Liu in Washington on Thursday and Friday. U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross will also participate. The White House official said Larry Kudlow, director of the National Economic Council, will attend as well. The administration officials said Navarro wasn’t a team player when the U.S. sent a delegation led by Mnuchin earlier this month to Beijing to meet with Liu. The officials would not elaborate on Navarro’s behavior.

U.S., China talks focus on cutting trade gap, $200 billion target disputed (Reuters) - China is “meeting many” Trump administration demands to cut its trade surplus with the United States, but a definitive deal to resolve deep trade differences could take a while to develop, White House economic adviser Larry Kudlow said on Friday. “China has come to trade,” Kudlow told reporters at the White House as U.S. officials met with a Chinese trade delegation for a second day in Washington. “They are meeting many of our demands. There is no deal yet to be sure, and it’s probably going to take a while to process, but they’re coming to play.” Kudlow said the Chinese had offered a package of U.S. goods purchases and other steps to cut China’s annual U.S. trade surplus by some $200 billion, contradicting a Chinese foreign ministry spokesman who denied that such a reduction had been offered. “This rumour is not true. This I can confirm to you,” Chinese foreign ministry spokesman Lu Kang told a regular news briefing on Friday, adding that consultations in Washington “are constructive.” Kudlow said the Chinese offer included energy and farm commodities purchases, adding “the number is a good number,” adding that China would also need to lower non-tariff barriers and agree to a “verifiable process whereby the technology transfers and the theft of intellectual property stops.” U.S. President Donald Trump has threatened to impose tariffs on up to $150 billion of Chinese goods to combat what he says is Beijing’s misappropriation of U.S. technology through joint venture requirements and other policies. Beijing has threatened equal retaliation, including tariffs on some of its largest U.S. imports, including aircraft, soybeans and autos. 

Calling China A Liar, Kudlow Says Beijing Offered To Reduce Trade Deficit By "At Least $200 Billion" -- Trump's top economic advisor, Larry Kudlow (it's still a shock) did not get the memo that Beijing vocally denied last night's "fake news" report that it was ready to slash the US trade deficit with China, and speaking to reporters at the White House, the former CNBC commentator said China offered to reduce its trade surplus with the U.S. by “at least $200 billion” in talks to head off a possible trade war, according to Bloomberg.As a reminder, this is patently false as China's foreign ministry spokesman Lu Kang politely told a news briefing this morning, flatly stating that "this rumor is not true. This I can confirm to you" adding "the question is about some US officials who said China will cut the deficit. As I understand, the relevant consultations are ongoing and they are constructive." Commentary posted bu Xinhua News Agency and People’s Daily overseas edition was less polite and said that the offer to cut China's trade surplus with the U.S. is "nonexistent" and that reports that China accepted the U.S. demand to narrow the trade gap are “purely a misreading." also known as fake news.The article said that China will "never negotiate under the conditions set by the U.S." and added that "two sides made progress in areas such as the U.S. allowing more exports of technology products including semiconductors, as well as lifting restrictions on energy exports" but stressed that "China won’t make unilateral concessions."  However, none of these facts bothered Larry, who boldly continued making up stuff: "The number’s a good number,” Kudlow said. "I think just as important, they have to lower their tariff rates, they have to lower their non-tariff barriers. We have to have a verifiable process whereby the technology transfers and the theft of intellectual property stops."

Trump’s Goal for Nafta Rewrite Looks Unattainable in 2018 -- President Donald Trump’s plans to rewrite the North American Free Trade Agreement this year looked unattainable Tuesday after negotiators appeared too far apart to strike a deal before a deadline this week. U.S. House Speaker Paul Ryan had set this Thursday as an informal deadline if the administration were to push a pact through the Republican-controlled Congress before a new slate of lawmakers arrives in Washington next year, possibly led by Democrats. The U.S. and Mexican governments had hoped to reach at least the general terms of an agreement this week to allow enough time for legislative approval before year’s end. Negotiators had sought to avoid complications stemming from July 1 presidential and congressional elections in Mexico and U.S. congressional midterm elections in November. Canada, by contrast, faces little pressure to rush. Negotiators from the U.S., Canada and Mexico are scrambling to reach a Nafta deal by July, but two proposals involving autos are complicating the talks. WSJ’s Shelby Holliday explains. .Mexican Economy Minister Ildefonso Guajardo said Tuesday that a deal was unlikely by Thursday, voicing frustration at U.S. demands for a five-year sunset clause and the elimination of Nafta’s dispute-resolution mechanisms. The deadline was a soft one, but each day after that date without an accord makes U.S. ratification of an accord this year more difficult to achieve. Negotiators showed willingness to continue pursuing an agreement in the weeks and months ahead, although that suggests Mr. Trump’s promise to rewrite the 24-year-old trade pact will take much longer than his administration had hoped. Mr. Trump repeatedly has threatened to withdraw from Nafta, and had sought to leverage those threats to get a deal done quickly. Mr. Trump briefed lawmakers Tuesday, underscoring the need for the deal, but conceded such a rewrite would be difficult, according to lawmakers who attended the meeting.

WTO Ruling Advances U.S. and Boeing in Case Against Airbus - A World Trade Organization ruling handing the U.S. a victory over the European Union in their multibillion-dollar jetliner fight may test Europe’s efforts to defend global trade rules from Trump administration criticism.  The WTO on Tuesday brought the U.S. a step closer to imposing potentially billions of dollars worth of trade retaliation against the EU over subsidies provided to plane maker Airbus SE that Washington says have harmed Boeing Co.  The EU and members France, Germany, Spain and the U.K. “failed to comply with an earlier WTO panel ruling by maintaining illegal subsidies for the European aircraft manufacturer Airbus," the WTO said.  Those violations are linked to favorable loans European governments have granted Airbus for its A380 superjumbo and the A350 long-range jet that compete respectively with Boeing’s 747 jumbo jet and 787 Dreamliner. The U.S. can now take steps to establish the level of sanctions it can impose on European exports under WTO rules.  The ruling comes at a tense time for trans-Atlantic trade relations. U.S. President Donald Trump has threatened to levy tariffs on EU exports of steel and aluminum. He pulled the U.S. out of the 2015 Iran nuclear deal last week despite European allies who are parties to the accord.  The U.S. was quick to embrace the WTO ruling in the airliner-subsidy case. “President Trump has been clear that we will use every available tool to ensure free and fair trade benefits American workers,” Robert Lighthizer, the U.S. Trade Representative, said in a statement. The U.S. would move forward with “countermeasures,” he said, unless the EU comes into compliance with trade rules.

Japan Considers Retaliation Against U.S. Steel Tariffs —Japan is looking into retaliating against the U.S. over steel tariffs, officials said, a break from the more conciliatory approach Tokyo initially adopted toward its closest ally. The officials said Japan may tell the World Trade Organization that it believes it has the right to immediately impose tariffs on U.S. goods equivalent to the damage it is suffering from the steel tariffs—a step China has taken. The move reflects Japan’s irritation about its steel being labeled a national-security threat by the Trump administration and could be intended to send a message ahead of two-way trade talks with Washington set to start in June. President Donald Trump imposed a 25% tariff on imported steel in March, saying a flood of imports threatened U.S. national security by undermining American steelmakers. Mr. Trump gave many U.S. allies an exemption from the tariffs either temporarily or permanently, but not Japan. Tokyo’s response initially focused on persuading Mr. Trump to change his mind, but he hasn’t. Instead, the U.S. wants to put the steel issue on the table in two-way talks with Japan aimed at winning broader trade concessions in areas such as autos. WTO rules allow nations in some circumstances to impose retaliatory tariffs right away if they believe they have been wronged. A formal case at the trade body can take more than a year to resolve. “We tried to persuade the U.S. by saying we are friends, and it has not worked. The EU is preparing retaliation. China is retaliating. I still hope discussions between Japan and the U.S. will have a fruitful result, but if not we may have to resort to WTO measures,” said a top Japanese official involved in international economic relations. The Trump administration says its steel tariffs are legal. When China asserted its right to retaliate immediately—the same move Japan is studying—the administration said China’s actions “have no basis under WTO rules.” The steel problem puts Japan in an awkward situation because Prime Minister Shinzo Abe has built a close relationship with Mr. Trump and the two have pledged to work together to ensure that North Korea dismantles its nuclear and missile programs. The two leaders have played golf together three times. Tokyo fears it will be pressed to make major concessions at cabinet-level talks led by U.S. Trade Representative Robert Lighthizer and Japanese Minister Toshimitsu Motegi. The talks are set to begin as soon as mid-June, Mr. Motegi has said. 

Wilbur Ross Wakes Up From His Friday Nap Just Long Enough To Prove That He Doesn’t Know What The Commerce Secretary Does - We don’t want to shock or alarm you guys, but it really seems hard to ignore that Wilbur Ross either does not know or does not care what the job of the Commerce Secretary is…which is troubling since he’s supposed to be the Commerce Secretary.  The animate remains that now constitute Mr. Ross spend an inordinate amount of time napping, worrying about foot comfort and thinking about how to monetize and dominate the actual moon. Unfortunately for American businesses, Wilbur does not seem to allot much of his precious little awake time to the “Promoting American businesses” part of the gig. Whatever you might think of Wilbur’s old career, or the man himself, it’s become impossible to argue that he is anything other than a wrinkly, monotoned square peg in a round hole job. Even his boss has admitted that Wilbur’s something of a mess. If it wasn’t for the legion of other Trump cabinet members who are so glaringly fucking incompetent and brazenly corrupt, Wilbur’s performance at Commerce thus far would be a precedent-setting example of how not to do a government job. In terms of the Trump administration though, Wilbur has been but a middling failure. While Scott Pruitt takes a retinue of armed guards on double overtime just to take a dump and then charges it to taxpayers, Ben Carson turns his office into an even tackier Versailles with public funds, and Steve Mnuchin behaves like…well, Steve Mnuchin, Wilbur just goes about his short work day talking about how tariffs are dope and the moon is a gas station.

US plans to detain minors on military bases as Trump calls immigrants “animals” -- US authorities are surveying American military bases for sites for concentration camps to house thousands of children that the government intends to seize from their parents at the US border under a draconian new policy announced by the Trump administration.The plans for the mass detention of child refugees—in some cases infants ripped from the arms of their mothers—at sites secured by armed troops have emerged amid a steady escalation of anti-immigrant policies and rhetoric that has assumed an increasingly fascistic character.The conceptions driving immigration policy were spelled out by Donald Trump during a right-wing propaganda event staged at the White House Wednesday in which the US president met with roughly a dozen Republican mayors, sheriffs and other officials from California who are opposed to the state’s so-called “sanctuary law.”The Trump administration and the Republican right have cast the legislation passed last year as an unconstitutional challenge to federal control over immigration policy. In reality, far from protecting immigrants, California merely demands that Immigration and Customs Enforcement (ICE), a thuggish national police agency accustomed to carrying out warrantless searches and riding roughshod over constitutional rights, follows due process in order to obtain cooperation of local and state police. Fulminating over a non-existent crime wave supposedly caused by the law preventing the round-up of “criminal aliens,” Trump declared: “We have people coming into the country, or trying to come in, and we’re stopping a lot of them, but we’re taking people out of the country. You wouldn’t believe how bad these people are. These aren’t people. These are animals.”

Immigration crackdown shifts to employers as audits surge (AP) — Immigration officials have sharply increased audits of companies to verify that their employees are authorized to work in the country, signaling the Trump administration's crackdown on illegal immigration is reaching deeper into the workplace to create a "culture of compliance" among employers who rely on immigrant labor.Expansive plans also have been drafted for a long-term push to scrutinize employers' hiring practices more closely.Under a 1986 federal law, companies must verify their employees are authorized to work in the United States by reviewing their documents and verifying to the government the employees' identity and work authorization. If employers are found to hire someone without proper documents, the employers may be subject to administrative fines and, in some cases, criminal prosecution.The recent focus on employers comes after a surge of deportation arrests of workers that started immediately after Trump took office in January 2017. The crackdown is likely to please immigration hawks among Trump's supporters but may alienate industries and companies that rely on immigrant labor. There were 2,282 employer audits opened between Oct. 1 and May 4, U.S. Immigration and Customs Enforcement said Monday, nearly a 60 percent jump from the 1,360 audits opened between October 2016 and September 2017. Many of those reviews were launched following the January ICE audits and employee interviews at about 100 7-Eleven franchises in 17 states.

Farm bill revolt could fuel Dreamer push - Republican immigration reformers said Friday’s defeat of the GOP farm bill will generate more support for the upstart effort to force House action on "Dreamer" legislation. Rep. Jeff Denham (R-Calif.), a leading voice in the effort to revive the Deferred Action for Childhood Arrivals (DACA) program, said the conservatives who opposed the farm bill essentially reneged on an agreement with GOP leaders to lend their farm bill support in return for promised action next month on a conservative immigration proposal. Twenty-nine Republicans opposed the GOP agriculture proposal Friday morning — many of them members of the conservative House Freedom Caucus — sinking the bill and delivering an embarrassing defeat to Speaker Paul Ryan (R-Wis.) and his leadership team. The bill’s failure, some Republicans predicted, will cause a backlash against the Freedom Caucus agitators by compelling more GOP lawmakers to endorse a procedural gambit, known as a discharge petition, that would force floor votes on four separate DACA bills against the wishes of Republican leaders. The Freedom Caucus opposes the discharge petition and has sought ways to sink it. Denham said caucus members' actions on Friday will instead make his lobbying effort easier. “Given the breaking of the agreement that was made today, you’re going to see more Republicans that are frustrated and angry enough to sign on to something that they’ve never signed on to before,” Denham said after the farm bill failed. 

Take the money and run -- Via PR Watch for the Center for Media and Democracy points to the impact of tax cuts for nine companies:The Center for Media and Democracy just concluded an analysis of nine companies that are major players in ALEC, showing that even with the tax cut, those corporations have laid off or will lay off employees. Comcast, for example, said it will save $128 million from the tax cut, and announced 500 layoffs. Caterpillar reported that it will pay 9 percent less in income taxes, but also announced it is closing facilities.Eli Lilly reported that it lowered its corporate income tax rate by almost one-third but announced 3,500 layoffs at the end of 2017, layoffs that are still taking place. Energy companies are expected to be major beneficiaries of the tax cut; but two ALEC energy companies, Chevron, and Marathon Petroleum, reported large tax savings as well as layoffs for the year.The Center for Media and Democracy did not cherry-pick companies to find those that announced both tax savings and layoffs. Excluded were coal companies, for example, such as ALEC members Dominion Resources and Peabody Energy, which are downsizing as coal sales continue to decline. Nor did we choose companies that saved money on income taxes because they lost money. The nine companies analyzed below all made large profits. What the companies did with the profits was a corporate choice. In most cases companies bought back shares, a practice which then increases the earnings per share and the dividends paid to shareholders. The boards of these companies vote for these share repurchases, and directors which own large numbers of shares greatly benefit from this repurchasing.

Trump speech on prescription drug prices cheers pharmaceutical giants --On Friday, President Donald Trump gave a long-anticipated speech on soaring prescription drug prices that made clear he will not take any significant action to address the issue, despite his populist rhetoric.Having previously assailed the pharmaceutical industry for “getting away with murder,” in his Rose Garden remarks Trump proposed a few tepid palliatives such as increasing competition.With his typical braggadocio, Trump framed his plan as the “most sweeping action in history to lower the price of prescription drugs for the American people.” In reality, it is entirely in line with the financial interests of the drug companies and health insurers and will do virtually nothing to stop their profit-gouging.Trump denounced the “tangled web of special interests” that have kept drug prices high, but went out of his way to ensure that this web remains undisturbed. There will be no real effort to “derail the gravy train for special interests,” as Trump put it.While there had been some initial anxiety among pharmaceutical investors before the speech, their concerns were quickly laid to rest. “We have not seen anything about that speech which should concern investors,” Ronny Gall, a security analyst at Sanford C. Bernstein & Company, told the New York Times. He added that Trump’s speech was “very, very positive to pharma.” The stocks of major drug companies and pharmacy benefits managers rose immediately following the speech. Health insurer Aetna rose 2.3 percent and UnitedHealth gained almost 2 percent. Drug maker Pfizer’s shares rose 1.3 percent, while Merck’s stock increased 2.8 percent.

A near-universal health-care plan that wouldn’t break the bank - Editorial Board, WaPo - SINCE THE day Obamacare passed, as Republicans have sought to sabotage it, Democrats have hoped for more. Their hopes have taken them ever closer to pushing a radical upending of the health-care system, exemplified in Vermont independent Sen. Bernie Sanders’s plan for a European-style single-payer program, which a growing list of prospective Democratic presidential candidates has endorsed. But there are options that are neither as cruel as the GOP’s miserly repeal-and-replace nor as disruptive as the more sweeping left-wing proposals. In other words, they are compassionate and realistic.  Economists at the Urban Institute, an independent research group, released on Sunday a proposal that would get the nation to near-universal health-care coverage and relieve many of the financial burdens some people face under the current system — and cost the federal treasury far less than more radical plans. It would leave in place Medicare and the employer-based health-care system, whereby most Americans get their insurance. But it would create a new health-care marketplace for most everyone else — those on Medicaid and the Children’s Health Insurance Program, which are government initiatives for low-income people, and those buying insurance on their own in the individual market.  As under Obamacare, insurance companies could not deny people essential care. But the federal subsidies helping people buy coverage would be more generous, pegged to the “gold” tier of plans in the current system. The subsidies would scale with income; some people would get free coverage; even at the high end, no one would pay more than 8.5 percent of their income in premiums for a gold plan. People could take this money and buy into a new, government-run plan, or they could purchase coverage from private insurers. Crucially, doctors, hospitals and other providers would be barred from charging private insurers in the new market more than they charge Medicare, which could lower costs dramatically in areas of the country served by only a few providers whose market power allows them to set high rates.

Trump administration to ban abortions at facilities receiving federal family planning funds --President Donald Trump’s plans to propose a new rule that would bar abortions at facilities that receive federal family planning funds marks an escalation of the administration’s attack on a woman’s constitutionally protected abortion rights. At the same time, the move will punish low-income women in particular from receiving family planning services, increasing the likelihood of unwanted pregnancies and births.Though the exact language of the proposed rule has not yet been released publicly by the White House, Trump is expected to issue new guidelines for Title X, the only federal program dedicated to paying for birth control. The new rule would require a “physical as well as financial separation” between entities that receive Title X funds and those that provide abortions.Trump’s rule stands in direct contradiction to the 1973 US Supreme Court decision in Roe v. Wade, which said that states cannot ban abortions before viability of the fetus. The rule would not affect federal funding through Medicaid, which is already barred from using federal funds for abortions. The move is the latest chapter in the Republican Party’s years-long crusade to end funding to Planned Parenthood, the women’s health care provider that currently uses Title X funding to provide contraceptives to an estimated 40 percent of the 4 million people receiving it for family planning services. Planned Parenthood stands to lose an estimated $50 million in funding.

Trump to ban Title X federal funding of abortion clinics  - “The Trump administration wants to effectively pull Title X funding from family planning clinics providing abortion services” as reported in Modern Healthcare.Planned Parenthood while offering other healthcare services would not receive federal funding if they provided any abortion services or referred patients to other facilities that did perform abortions.The Washington Post “For Planned Parenthood abortion stats, ‘3 percent’ and ’94 percent’ are both misleading”Planned Parenthood would say abortions are just 3% of total health services.The Susan B Anthony would argue abortions are 94% of all Planned Parenthood Pregnancy Services.  I would argue it is better to have an abortion in a controlled medical area rather than in a back alley with a coat hanger.   Of course let us not forget the person signing this rule has paid a $million for one Playboy Bunny to have an abortion and somewhere in the files are probably more hidden payments made. The fact that he would even bring himself to sign such a bill after what he has done and talked about is ludicrous.

 CHIPS Funding - CBO Director Keith Hall responded to a request from House Majority Leader Kevin McCarthy to project the impact of the $7 billion CHIP rescission package. The CBO letter estimates that the rescission “would not affect outlays, or the number of individuals with insurance coverage.”Well this is good news, I guess? Except, the key here is this is based upon the present number of children enrolled in CHIPS. However, “In its estimates, CBO doesn’t (and can’t) assume recessions or natural disasters will happen. So while the CBO expects that the Contingency Fund dollars being rescinded will not be needed by some states, it is critical for sufficient funding to remain available in the event of an unforeseen recession or natural disaster.”Part of the funds being clawed back by Trump and Republicans are in the Contingency Fund which is maintained the same as what states do in establishing a rainy-day fund. It is a reserve set aside to meet economic or catastrophic events. If we depended upon Congress to allocate funding immediately after catastrophic events, we would be waiting a long time. Even Texas was complaining about a slow response by Congress after a hurricane hit recently. And Puerto Rico, Puerto Rico is the result of deliberate negligence on the part of the President. Neither Dems or Repubs will protest the president’s discrimination.Joan Akers at the Georgetown University Center for Children and Families had this to say: “Two billion dollars in cuts would come from the Child Enrollment Contingency Fund.” As I said, the Contingency Fund is a reserve put in place to help and prevent states from running out of money. In a case of disaster or shortfall, there is little time to react. Unforeseen disasters and shortfalls do not wait for the politics of Congress to turn. Having a reserve available to cover unforeseen circumstance makes sense.

‘This Bill Is Killing Us’: 9 Sex Workers On Their Lives In The Wake Of FOSTA - On April 11, the Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA), which says websites can be held legally liable if their users post ads for prostitution, was signed into law. In the lead-up to its passage, the bill was responsible for the closure of a host of advertising and review sites used by sex workers, most prominently Craigslist Personals and Backpage, the latter of which was seized and shut down by the FBI. The bill was intended to fight sex trafficking, but it has had a dangerous effect on the many sex workers who have consensually chosen the profession and who relied on the internet and its tools to keep themselves safe and make a living.  For many consensual sex workers, losing these free or low-cost advertising platforms means losing the ability to work indoors and the ability to screen clients ― two major factors that contribute to a sex worker’s overall safety. (People being forced or coerced into prostitution also benefit from client screening and not having to work on the streets, the bill’s opponents point out.)Sex workers also rely on the safety tool of communal “bad date lists” ― websites where sex workers share information on bad or dangerous clients. Sex workers say these too are being shut down in the wake of FOSTA’s passage.Many of the dozens of sex workers I spoke with for this feature said opportunistic clients and pimps are taking advantage of the rapid changes, hoping to prey on the stressed community and on the workers they assume are desperate. “This bill will and already has been responsible for the murder, rape [and] arrest of sex workers and will further push trafficked people underground,” says Arabelle Raphael, a 29-year-old sex worker in California.  Below, nine sex workers explain in their own words what it’s like living and working post-FOSTA.

Supreme Court Strikes Down Federal Sportsbetting Ban - In a decision that could rob the American Mafia of one of its few remaining sources of income - and potentially save the ailing Atlantic City - the Supreme Court on Monday struck down a federal ban on sportsbetting, saying states should be free to decide whether to legalize the business. The decision, according to the Washington Post "is sure to set off a scramble among the states to find a way into a billion-dollar business." It could also negatively impact revenues in Las Vegas because, until Monday, betting on live sporting events was only legal in Nevada - though a few other states have sports lotteries. For example, the state of New Jersey, famously the setting of the landmark television series "the Sopranos," could use the ruling to help revitalize its ailing Atlantic City casinos by legalizing sportsbetting at the facilities.  Indeed, the bankrupt city that was once the only alternative to Las Vegas on the east coast could reap a badly needed windfall from the decision (which is great news for anybody who threw caution to the wind and bought the city's debt). WaPo estimates that the underground sportsbetting economy - an underworld that is dominated by various criminal groups - could be worth as much as $150 billion a year (give or take a few kneecaps). Former New Jersey Gov. Chris Christie spearheaded efforts to legalize sportsbetting.

The FCC says net neutrality changes June 11. We’ll see. - Circle June 11 on the calendar – that’s the day the Federal Communications Commission says it will start enforcing the new net neutrality regulations. Odds are, nothing will change that day. Remember, there’s still a lawsuit to be settled and nothing ever happens according to the calendar in Washington.“I strongly support a free and open internet,” said free-and-open internet killer Ajit Pai, the FCC’s chairman. “That’s exactly what we had for decades, starting with the Clinton Administration.” That’s the MO here, by the way – point to something a Democrat did in order to say hey, we’re cool kids too, we’re with what the youngsters dig and if a Dem supported it, it must be good!“The internet wasn’t broke in 2015, when the prior FCC buckled to political pressure and imposed heavy-handed Title II rules on the internet economy. It doesn’t make sense to apply outdated rules from 1934 to the internet, but that’s exactly what the prior administration did,” Pai said.Ok, that’s just not true – the section of the Telecommunications Act that the Obama-era net neutrality rules are based on actually dates back to the ‘60s, not the ‘30s, and regulates utilities to ensure fairness. The Obama regs also ensure that companies like Comcast can’t force websites and services like Netflix to pay more in order to have the same speed and ease of access as its own partner sites. By the way, Comcast did that and essentially extorted Netflix, throttling their service and slowing streaming capabilities for its customers. So much for the Obama net neutrality regs being a solution in search of a problem, as many opposed to it claimed.

 Senate Votes To Protect Net Neutrality, But What’s Next? -- Obama-era net neutrality rules were upheld by the Senate in a 52-47 vote today, but there is still a long way to go for the opposition of the Federal Communication Commission’s Restoring Internet Freedom Order. But what are net neutrality rules in the first place? Broadly speaking, the rules are meant to prevent internet services providers (ISPs), especially big fish like Comcast, AT&T, Verizon and their ilk, from favoring certain services and apps by allowing them higher rates for quicker speeds and throttling others who don’t pay up.  Under the current rules, a company cannot charge users more to access certain websites or make certain online services faster than others. The FCC is set to scrap those old rules, which could plausibly affect how services like Netflix run. For starters, ISPs might decide to start charging extra to stream movies on Netflix. Alternatively, they might impose a data cap that limits how much a consumer can stream in a month or restrict HD content to higher-tier customers. That's already happening in some countries:  In an even more ominous outcome, users might find themselves with little choice other than to subscribe to a streaming service owned by the cable giants themselves. This is not as far-fetched as it sounds when you consider that a tie-up between AT&T and Time Warner remains on the cards, something that would leave them in control of much-loved HBO. Overall, this does not sound like a very good deal for the American consumer, so why on earth would the FCC want to do that?  The organization's main argument against the 2015 rules is that they are too overbearing and stifle innovation and investment. As such, the internet will be reclassified as an information service instead of its current status as a utility. ISPs will be allowed to act as toll keepers, prioritize and control traffic, and even block sites. The only major caveat for ISPs is that they will be required to disclose whether they engage in such practices.

Facebook Reveals It Removed 2.5 Million Pieces Of "Hate Speech" - In the aftermath of the recent Congressional Kangaroo Court in which Mark Zuckerberg had to explain to various House Reps and Senators why 85% of them were recipients of Facebook's generous donations,  the company has been forced to inject some more transparency into its operations, and open the books, so to say, and this morning, for the first time, Facebook published its enforcement numbers for the first time, three weeks after the company published the internal guidelines its uses to enforce its Community Standards. As part of today's disclosure, Facebook's numbers show i) How much content people saw that violates FB standards; ii) How much content was removed; and iii) How much content was detected proactively using technology — before people who use Facebook reported it.Facebook also reported that 85% of U.S. law enforcement data requests from July to December 2017 produced some data, when the company received 32,742 total requests on 53,625 users/accounts in 2H 2017. So, as part of its effort in showing the public "how much bad stuff is out there" here is what Facebook reported:

• We took down 837 million pieces of spam in Q1 2018 — nearly 100% of which we found and flagged before anyone reported it; and
• The key to fighting spam is taking down the fake accounts that spread it. In Q1, we disabled about 583 million fake accounts — most of which were disabled within minutes of registration. This is in addition to the millions of fake account attempts we prevent daily from ever registering with Facebook. Overall, we estimate that around 3 to 4% of the active Facebook accounts on the site during this time period were still fake.
• We took down 21 million pieces of adult nudity and sexual activity in Q1 2018 — 96% of which was found and flagged by our technology before it was reported. Overall, we estimate that out of every 10,000 pieces of content viewed on Facebook, 7 to 9 views were of content that violated our adult nudity and pornography standards.
• For graphic violence, we took down or applied warning labels to about 3.5 million pieces of violent content in Q1 2018 — 86% of which was identified by our technology before it was reported to Facebook.

But the most problematic category for Facebook remains hate speech, where the company admits that "our technology still doesn’t work that well and so it needs to be checked by our review teams." And since "hate speech" means whatever one decide it should mean, it is here that wholesale censorship will take place, in the form of blanket muting or the more subtle "shadow banning" which Facebook has repeatedly used in the past to ban conservatives. Here Facebook reveals that "We removed 2.5 million pieces of hate speech in Q1 2018 — 38% of which was flagged by our technology." This means that 62% of the "hate speech" that Facebook took down was the result of complaints by outside readers who found the content of said "hate speech" unpleasant or disagreeable and demanded it be taken down.

Trump personally pushed postmaster general to double rates on Amazon, other firms - President Trump has personally pushed U.S. Postmaster General Megan Brennan to double the rate the Postal Service charges Amazon.com and other firms to ship packages, according to three people familiar with their conversations, a dramatic move that probably would cost these companies billions of dollars. Brennan has so far resisted Trump’s demand, explaining in multiple conversations occurring this year and last that these arrangements are bound by contracts and must be reviewed by a regulatory commission, the three people said. She has told the president that the Amazon relationship is beneficial for the Postal Service and gave him a set of slides that showed the variety of companies, in addition to Amazon, that also partner for deliveries. Despite these presentations, Trump has continued to level criticism at Amazon. And last month, his critiques culminated in the signing of an executive order mandating a government review of the financially strapped Postal Service that could lead to major changes in the way it charges Amazon and others for package delivery. Few U.S. companies have drawn Trump’s ire as much as Amazon, which has rapidly grown to be the second-largest U.S. company in terms of market capitalization. For more than three years, Trump has fumed publicly and privately about the giant commerce and services company and its founder Jeffrey P. Bezos, who is also the owner of The Washington Post. Trump alleges that Amazon is being subsidized by the Postal Service. He has also accused The Post of being Amazon’s “chief lobbyist” as well as a tax shelter — false charges. He says Amazon uses these advantages to push bricks-and-mortar companies out of business. Some administration officials say several of Trump’s attacks aimed at Amazon have come in response to articles in The Post that he didn’t like. 

Russian firm pleads not guilty to election meddling charge  — A Russian company accused of funding a conspiracy to meddle in the 2016 presidential election pleaded not guilty Wednesday in federal court in Washington. The court appearance was the first by any of the Russian defendants accused by special counsel Robert Mueller of participating in a covert social media campaign aimed in part at helping Donald Trump defeat Hillary Clinton. The indictment against the company, Concord Management and Consulting LLC, and 15 other defendants was the first brought by Mueller's team to directly attach criminal charges to Russian attempts to interfere in the election. The company is controlled by Yevgeny Prigozhin, a wealthy businessman who was placed on a U.S. sanctions list earlier this year and who has ties to Russian President Vladimir Putin. During a brief afternoon hearing, attorney Eric Dubelier, who represents the company, entered the not guilty plea to one count of conspiracy to defraud the United States, but neither Prigozhin nor a company representative appeared. Dubelier told U.S. Magistrate Judge G. Michael Harvey that he did not represent any other defendants, including Prigozhin or another company identified as "Concord Catering," which he said didn't exist during the time period laid out in the indictment. "We're dealing with the government indicting the proverbial ham sandwich," Dubelier said, referring to the inclusion of the other company in the indictment. 

Brennan Was Feeding Obama Unverified Info From Steele Dossier, Contradicting 2017 Testimony - Two former colleagues of ex-CIA Director John Brennan have contradicted his claim that the unverified "Steele Dossier" was not part of the US Intelligence Community Assessment (ICA) on Russian interference in the 2016 election, reports Paul Sperry of RealClear Investigations. Central to the controversy is a statement by recently retired National Security Agency Director Michael Rogers, who stated in a classified letter to Congress that the anti-Trump memos which made up the dossier did factor in to the IC assessment - which was reinforced in a CNN interview by James Clapper, former Director of National Intelligence who said that the assessment was based on "some of the substantive content of the dossier," and that the IC was "able to corroborate" certain dossier allegations. In a March 5, 2018, letter to House Intelligence Committee Chairman Devin Nunes, Adm. Rogers informed the committee that a two-page summary of the dossier — described as “the Christopher Steele information” — was “added” as an “appendix to the ICA draft,” and that consideration of that appendix was “part of the overall ICA review/approval process.”His skepticism of the dossier may explain why the NSA parted company with other intelligence agencies and cast doubt on one of its crucial conclusions: that Vladimir Putin personally ordered a cyberattack on Hillary Clinton’s campaign to help Donald Trump win the White House. -RealClear InvestigationsWhat's more, Brennan was feeding some of the dossier material to President Obama and passing it off as credible, reports Sperry. “Brennan put some of the dossier material into the PDB [presidential daily briefing] for Obama and described it as coming from a ‘credible source,’ which is how they viewed Steele,” said the source familiar with the House investigation. "But they never corroborated his sources.” -RCI

Brennan "Needs Very Good Lawyer" Says DiGenova; "He's Going To Be In Front Of A Grand Jury Shortly" - Veteran D.C. attorney Joe diGenova - who President Trump initially wanted to hire to represent him in the Mueller probe, only to have to step aside due to conflicts - sat down on Fox News on Thursday where he put a bow on what many believe was a high-stakes gamble by various members within the Obama Intelligence Community (IC) and others to infiltrate the Trump campaign and frame Donald Trump with Russiagate. Key among the participants in this alleged plot is former CIA director John Brennan, whose involvement is thought to have dovetailed with the FBI's recently disclosed "operation Crossfire Hurricane" - the code name given to the agency's earliest counterintelligence investigation into the Trump campaign. The FBI says the operation was launched following a drunken conversation between a Clinton-linked Australian ambassador and a low-level Trump associate, George Papadopoulos, who may have been set up from the start after being fed information by a professor named Joseph Mifsud, who is currently missing. It’s becoming more and more clear John Brennan ran a Russian false flag operation against the Trump campaign, using elements associated with the DOJ, the DNC, and MI6 — Jack Posobiec (@JackPosobiec) May 16, 2018 When Carlson asked diGenova for an update on recent developments, the former federal prosecutor (and special counsel to boot) said:

• We know that Hillary Clinton was illegally exonerated
• We know that there was a substantial effort to frame the current President of the United States with crimes by infiltrating his campaign and then his administration with spies that the FBI had set upon them
• We have learned that the crimes were committed by the FBI, senior members of the Department of Justice, John Brennan, Mr. Clapper, Mr. Comey, and others associated with the Democratic party
• Donald Trump and his associates committed no crimes

Mueller’s Investigation Crosses the Legal Line – WSJ -- T.S. Ellis has expressed skepticism about the scope of special counsel Robert Mueller’s investigation. “What we don’t want in this country is... anyone with unfettered power,” Judge Ellis, who is to preside over the trial of former Trump campaign manager Paul Manafort, told prosecutor Deputy Solicitor General Michael Dreeben May 4. “So it’s unlikely you’re going to persuade me that the special prosecutor has unlimited powers.”Judge Ellis is right to be skeptical. Mr. Mueller’s investigation has crossed a constitutional line, for reasons the U.S. Supreme Court made clear in the 1988 case Morrison v. Olson. That case is best known for Justice Antonin Scalia’s powerful lone dissent arguing that the post-Watergate independent counsel statute was unconstitutional. But Chief Justice William Rehnquist’s opinion for the court, while upholding the statute, set forth limits that the Mueller investigation has exceeded.At issue is the Constitution’s Appointments Clause, which provides that “principal officers” must be appointed by the president with the Senate’s consent. Rehnquist wrote that independent counsel Alexia Morrison qualified as an “inferior officer,” not subject to the appointment process, because her office was “limited in jurisdiction” to “certain federal officials suspected of certain serious federal crimes.”Mr. Mueller, in contrast, is investigating a large number of people and has already charged defendants with many different kinds of crimes, including - as in Mr. Manafort’s case - ones unrelated to any collaboration between the Trump campaign and Russia. That’s too much power for an inferior officer to have. Only a principal officer, such as a U.S. attorney, can behave the way Mr. Mueller is behaving. Mr. Mueller is much more powerful today than any of the 96 U.S. attorneys. He is behaving like a principal officer.

Mueller Tells Trump Team He Won't Indict President: Giuliani - Rudy Giuliani, President Trump's attorney and longtime associate, told Fox News on Wednesday that special counsel Robert Mueller has notified Trump's legal team that he will follow Justice Department guidance and not seek an indictment against Trump. "All they get to do is write a report," said Giuliani. Giuliani, himself a former federal prosecutor and mayor of New York City, also told Fox that Mueller's investigators have not responded to five information requests from the president's team. That has forced Trump's legal team to push off making a decision about whether the president will sit for an interview with the special counsel -- a decision they had hoped to reach by Thursday. -Fox News Federal prosecutors are barred from indicting a sitting president, as laid out in a Justice Department memo. Giuliani says that Mueller has no choice but to follow its guidance. Meanwhile, the special counsel's office and Trump's legal team continue to hash out the conditions under which the President will communicate with investigators. Giuliani joined Trump's legal team last month and has repeatedly warned that an in-person interview of the president by the special counsel's team would constitute a "perjury trap." Complicating matters, Trump himself has refused to rule out agreeing to an interview with Mueller.  Giuliani said last week that the president's legal team would oppose any subpoena unless they could "reach agreement on the ground rules." He argued that Trump could invoke executive privilege, and the team would point to Justice Department opinions in fighting a subpoena and "on both law and the facts, we would have the strongest case you could imagine.”  Giuliani has pointed to the fact that the Trump team has handed over 1.2 million documents to Mueller as evidence of cooperation with the probe - which marks its one-year anniversary on Thursday.

 Senate Releases Transcripts From Don Jr.'s Trump Tower Meetings   - In what appears to be yet another ill-advised attempt to revive the Russia hysteria of early 2017, the Senate Judiciary Committee has released more than 1,800 pages of interview transcripts with Donald Trump Jr. and others who attended a June 2016 meeting at Trump Tower that has become a key focus of the Mueller probe. However, instead of damning the Trumps, the transcripts offer more proof that Don Jr.'s account of the meeting - that Russian lawyer Natalia Veselnitskaya used the opportunity to lobby against the Magnitsky Act, prompting Trump, who had been promised dirt on Hillary Clinton, to end the meeting after 20 minutes - is, in fact, what happened. Indeed, an excerpt published by the Washington Post notes that the attendees who answered the committee's request to testify largely corroborated Trump's story.The excerpted testimony shows that attendees at the June 9, 2016 Trump Tower meeting largely agreed with Trump Jr.’s long-standing contention that the lawyer, Natalia Veselnitskaya, did not transmit dirt about Clinton. She has denied she was acting on behalf of the Russian government.According to the Associated Press, Trump Jr. appeared to evade questions about discussions he'd h ad with the president - including whether the two men ever discussed the Russia probe. he also said he didn't think it was wrong to seek "dirt" on his father's rival, Hillary Clinton, even if the information came from Russian sources.

U.S. judge refuses to dismiss ex-Trump aide Manafort’s criminal case (Reuters) - A federal judge dealt President Donald Trump’s former campaign manager Paul Manafort a major blow on Tuesday by refusing to dismiss criminal charges brought by Special Counsel Robert Mueller, after Manafort claimed that Mueller’s probe has run amok and should be reined in. In a sharp rebuke of those claims, Judge Amy Berman Jackson of U.S. District Court for the District of Columbia ruled that Deputy Attorney General Rod Rosenstein had followed all the Justice Department’s rules when he hired Mueller and Mueller’s case against Manafort is not overly broad or improper. Rosenstein “expressly approved the Special Counsel’s investigation of the facts alleged in the indictment, so there has been no violation of the regulations, and the Special Counsel did not act without authority,” wrote Jackson, who was appointed by Democratic President Barack Obama. In response to the ruling, Manafort spokesman Jason Maloni said: “Paul Manafort maintains his innocence and looks forward to prevailing in this matter.” A spokesman for the Special Counsel declined to comment. Manafort, who performed lobbying work for a pro-Russian former Ukrainian president before serving as Trump’s campaign chairman in 2016, is facing two indictments brought by Mueller in federal courts in Washington and Alexandria, Virginia. The charges against him in the Washington case include conspiring to launder money, conspiring to defraud the United States and failing to register as a foreign agent. In Virginia, he faces charges that include bank fraud and filing false tax returns.

Exclusive: Manafort’s former son-in-law cuts plea deal, to cooperate with government – sources(Reuters) - The former son-in-law of Paul Manafort, the one-time chairman of President Donald Trump’s campaign, has cut a plea deal with the Justice Department that requires him to cooperate with other criminal probes, two people with knowledge of the matter said. The guilty plea agreement, which is under seal and has not been previously reported, could add to the legal pressure on Manafort, who is facing two indictments brought by Special Counsel Robert Mueller in his probe of alleged Russian meddling in the 2016 presidential election. Manafort has been indicted in federal courts in Washington and Virginia with charges ranging from tax evasion to bank fraud and has pleaded not guilty to the charges. Jeffrey Yohai, a former business partner of Manafort, was divorced from Manafort’s daughter last August. Yohai has not been specifically told how he will be called on to cooperate as part of his plea agreement, but the two people familiar with the matter say they consider it a possibility that he will be asked to assist with Mueller’s prosecution of Manafort. Legal experts have said that Mueller wants to keep applying pressure on Manafort to plead guilty and assist prosecutors with their probe. Manafort chaired the Trump campaign for three months before resigning in August 2016. Both Trump and Russia have denied allegations they colluded to help Republican Trump win the election. 

Giuliani Inserts Foot In Mouth, Says Trump "Denied" AT&T Merger -- The ever-affable Rudy Giuliani has once again stuck his foot in his mouth regarding his old friend and new boss, Donald Trump.In a Friday interview with the Huffington Post, Giuliani - seemingly in an attempt to defuse the Michael Cohen "consultancy" scandal - claimed that Trump "denied the merger" between AT&T and Time Warner, despite long-standing protocol designed to keep DOJ decisions independent from the executive branch in order to keep the department free of political influence by the White House. Apparently the previous administration didn't get the memo either.Giuliani's statement comes on the heels of revelations that Trump's personal attorney, Michael Cohen, accepted a $600,000 payment from AT&T right after the inauguration for "insights" into President Trump's thinking. "The president had no knowledge of it." Giuliani told the Post, adding "Whatever lobbying was done didn’t reach the president... He did drain the swamp ... The president denied the merger. They didn't get the result they wanted.”Cohen received $600,000 from AT&T, $1.2 million from Swiss pharmaceutical giant Novartis and $500,000 from an investment bank affiliated with a Russian oligarch, all following Trump’s unexpected election win in 2016.Giuliani said Cohen’s business relationships did not contradict Trump’s campaign promises to end “pay-to-play” schemes and to “drain the swamp” because Cohen did not get for his newfound clients what they wanted. –HuffPo  Earlier in the week, AT&T said that they hired a company created by Cohen right after the inauguration - when it sorely needed government approval for the Time Warner deal, it hired a company created by Cohen in order to glean insights into the Trump administration.

Giuliani: If Mueller subpoenas us, we will challenge it President Trump's attorney Rudy Giuliani said on Wednesday that if special counsel Robert Mueller subpoenas Trump, their team will challenge it. "We're going to see what legal remedies are available to us, including if they [Mueller's team] subpoena us, challenge the subpoena," Giuliani told Fox News's Laura Ingraham Wednesday night. Giuliani said the president cannot be subpoenaed because his position guarantees him immunity based on the Constitution. However, no federal laws or rulings from the high court have barred a sitting president from being subpoenaed. Giuliani also said the president would not fire Mueller if he didn't conclude the federal probe into alleged ties between the Trump campaign and Russian meddling in the 2016 presidential election. According to Giuliani, Trump's legal team has met with Mueller's team once. Earlier on Wednesday, Giuliani said Mueller informed him that Trump cannot be indicted because he is a sitting president. Mueller's team can only write a report at the conclusion of its investigation, he said. “They can’t indict. At least they acknowledged that to us after some battling. They acknowledged that to us,” Giuliani told CNN.  Giuliani also told the network that he believes the Constitution prevents the indictment of a sitting president. The Constitution does not explicitly prevent the indictment of a sitting president, but most legal experts agree that sitting presidents are granted immunity from prosecution implicitly by the document.

Giuliani Rejects "Fishing Expedition", Mueller Agrees To Reduce Scope Of Trump Questions - While it's unclear whether he has the authorization to do so, Rudy Giuliani has just proposed a new timeline for the Mueller probe - which celebrated its one-year anniversary on Thursday - saying an interview with President Trump could happen by July, with a final report issued by Mueller by Labor Day.In an interview with the Washington Times, Giuliani said that Mueller has agreed to avoid a "fishing expedition" by narrowing the subject of questions that he might ask President Trump during a possible interview. Giuliani added that he believes James Comey "is not going to be worth anything as a witness," and wouldn't be a threat to the president."He’s eliminated a lot of subjects that would have indicated he was fishing," Mr. Giuliani told The Times on Thursday. "He’s eliminated those and he’s into a much more relevant area where we know the answers and we know the answers really can’t be effectively contradicted." He has contended from the start that there is no evidence of Trump collusion in Russian election interference. The other two major topics: whether the president somehow obstructed justice in the firing of Mr. Comey, a Mueller friend, and whether he might commit perjury in answering questions under oath.

Mueller aside, Trump now faces legal peril from a host of sources - President Trump and his supporters have grown increasingly critical of the expanding nature of special counsel Robert Mueller’s criminal investigation into possible collusion between the Trump campaign and Russia. But the president and his associates are facing an even wider array of civil lawsuits involving multiple allegations from a variety of lawyers investigating various aspects of Mr. Trump’s alleged conduct. These cases are independent of Mr. Mueller’s probe, yet they could wind up being somewhat symbiotic, depending on what they unearth. And for Trump, they could potentially be even more consequential. “In each of those cases, I anticipate that the president is going to have to give depositions, and those will be done under oath,” says Andrew Wright, a law professor and former White House lawyer during both the Clinton and Obama administrations. Some of these depositions, he adds, will likely cover topics of interest to Mueller: “There’s certainly nothing stopping coordination between Bob Mueller and other people’s counsel where there are areas of overlap.”

How Michael Avenatti Got Michael Cohen's Emails - Over the past few days, Michael Avenatti, the attorney for Stormy Daniels, has been steadily releasing what appear to be private communications between Michael Cohen, Donald Trump’s longtime attorney, and Keith Davidson, who represented Daniels when she inked a $130,000 hush-money agreement that was facilitated through a shell company set up by Cohen.These emails are evidence of questionable, if not unethical, collusion between Cohen and Davidson, who are ostensibly representing opposing sides of the dispute. One email, released by Avenatti on Twitter on Thursday, shows that Cohen was communicating with Davidson in the days after the FBI raided his home and office and seized his phones. This email suggests an ongoing collaboration between Davidson and Cohen, even though the two are not known to be involved in any current legal matter.On April 9, the FBI raided Mr. Cohen’s home, office and hotel room. Within 48 hours, Mr. Cohen sent the below email to Mr. Davidson. Why? They had no ongoing legal matter at the time. Was it part of an attempt by Mr. Cohen to obstruct justice or worse? #basta pic.twitter.com/e7DfLSxG4x— Michael Avenatti (@MichaelAvenatti) May 10, 2018 On Friday, Avenatti posted another email between Davidson and Cohen, from February, in which Cohen argues that Davidson should not forward part of the hush money agreement to Davidson’s new lawyer. (This didn’t work, as Avenatti obtained the “Side Letter Agreement” and released it as part of Daniels lawsuit against Cohen and Trump, filed in March.)Knowing what we know now, no wonder Mr. Cohen was doing everything he could to interfere with Ms. Daniels' efforts to get new counsel. He was desperate to avoid the cover-up from surfacing and was afraid that competent counsel would expose him and Mr. Trump. #MoreToCome #Basta pic.twitter.com/FCzzFwcEsP — Michael Avenatti (@MichaelAvenatti) May 11, 2018 This second email is not actually new and was released to NBC News in March. But it raises the question: How is Avenatti getting these emails? As a matter of practice, lawyers maintain case files for the benefit of their clients. If the client decides to seek new representation, the information in the case file is generally deemed to belong to the client, and it’s then forwarded to the new attorney. In this case, it appears that Davidson turned over these communications to Avenatti as part of Daniels’ case file.

Treasury watchdog probing how Stormy Daniels lawyer got Cohen's bank records | TheHill -- The Treasury Department’s inspector general is investigating how Stormy Daniels’s lawyer, Michael Avenatti, obtained confidential banking records concerning a company controlled by President Trump’s personal attorney, Michael Cohen.The inspector general’s counsel, Rich Delmar, told The Hill that the office is looking into allegations that federally mandated reports filed about Cohen’s banking transactions were “improperly disseminated.”News of the Treasury investigation, which is focused on the release of Suspicious Activity Reports filed by banks that hosted accounts for Cohen, was first reported Wednesday by The Washington Post.  Delmar told The Hill that the Treasury probe is based on a New York Times report from Tuesday that revealed that a shell company set up by Cohen received more than $1 million from an American company linked to a Russian oligarch and several corporations with business before the Trump administration.Cohen's shell company, Essential Consultants LLC, struck a $130,000 nondisclosure agreement with Daniels, an adult-film star who claims she had an affair with Trump years ago. Avenatti on Tuesday went public with detailed claims about Cohen’s banking history, including allegations that he received a $500,000 payment from a company controlled by a Russian oligarch in the months following the 2016 presidential election.

The man who leaked Michael Cohen’s financial info did so because other information on Trump’s lawyer mysteriously disappeared - A whistleblower who leaked financial information to the media about the one of President Donald Trump's lawyers did so because files about the lawyer, Michael Cohen, were missing from a government database, sparking concerns about a potential cover-up, according to a new report from The New Yorker's Ronan Farrow. Farrow spoke with the law-enforcement official who leaked the documents; the person has not been publicly identified. The documents in question are Suspicious-Activity Reports filed by First Republic Bank, a bank used by Cohen. There are believed to be three of these reports written, but the official was able to find only one of them in Fincen, a database operated by the Treasury Department, the report said. The two SARs the whistleblower couldn't find detail larger quantities of money being paid to Cohen, according to the report: one for "a little over a million dollars" and another for "suspect transfers totaling more than two million dollars."

Stormy's Lawyer Drops Mysterious Tweet Linking Qatari 'Royalty', Ice Cube, Cohen, Flynn, Bannon, & Trump -  Michael Avenatti, porn star Stormy Daniels' lawyer, likely managed to dominate the more liberal-leaning media's news cycle on this Sunday evening when he dropped two tweets and three images. Avenatti - who may face disbarrment - began by tweeting that his "warning [was] ignored" adding "so here it goes..."  Avenatti then shows three images of Cohen, Flynn, and a mysterious bald, bearded gentleman getting into the levators at Trump Tower, allegedly on December 12, 2016 (note - after the election results). Avenatti gave timestamps of the video watching who was coming in and out of Trump Tower during the transition on C-SPAN: Stormy's lawyer then dropped another cryptic tweet trying to explain the images..."Why was Ahmed Al-Rumaihi meeting with Michael Cohen and Michael Flynn in December 2016 and why did Mr. Al-Rumaihi later brag about bribing administration officials according to a sworn declaration filed in court?"  And that is where the fun and games begin. First things first - who is Ahmed Al-Rahaihi? He is the former Qatari diplomat, alleged member of the royal family, and current head of a division of Qatar’s massive sovereign wealth fund. But where it gets even more Alice-in-Wonderland is the fact that he is being sued by hip-hope legend Ice Cube (and his business partner Jeff Kwatinetz) alleging that they were both used (along with their BIG3 basketball league) as pawns by the Qataris in a bid to get sympathy from people in Washington.  NYPost reports that the Middle Eastern investors, instead, chose to use their money and connections with Cube to “get positive public relations for Qatar,” the affidavit says. Their real target was Bannon and other prominent figures in Washington, the affidavit says.

Swiss Prosecutors Looking Into Novartis' Payments To Cohen - For Trump personal attorney Michael Cohen - and the companies that elected to pay him a sizable consulting fee for "insights" into the president's thinking - the hits just keep coming.  After the Wall Street Journal revealed over the weekend that the special counsel's office had contacted every company that had paid Cohen through his Essential Consulting LLLC setup (the paper also quoted Mark Cuban calling Cohen "a hustler", adding "this is what he does"), Bloomberg reported Monday night that Swiss prosecutors might be looking into the payments made by the Basel-based pharmaceutical company. Switzerland’s Attorney General is in discussions with local prosecutors in the hometown of Novartis AG about payments the drugmaker made to Michael Cohen, the troubled lawyer for Donald Trump. The Office of the Attorney General and Basel Prosecutor’s Office are both aware of the payments and are in contact about the matter, spokespeople for the agencies said in separate statements Monday. The Attorney General said it hasn’t opened any criminal proceedings in relation to the issue. Of course, as we pointed out shortly after Stormy Daniels attorney Michael Avenatti first published his now-infamous dossier on Cohen, one need only take one look at the dollar amount of the Novartis payments that totaled some $1.2 million for a clue as to the Swiss regulator's intentions.

Michael Cohen Got $3 Million More from Unnamed Sources; Records Vanish -  Pam Martens - The intrepid investigative reporter Ronan Farrow published an article last night at The New Yorker that should alarm every American. It turns out that it was a law enforcement official who leaked the confidential  government file on Donald Trump’s lawyer Michael Cohen out of concern that someone in the government was making other undisclosed files on Michael Cohen’s funny money transactions involving an additional $3 million disappear. Cable news has breathlessly been reporting for days now on the financial file that the law enforcement official leaked to Michael Avenatti, attorney for porn star Stormy Daniels, who was paid $130,000 from Cohen’s secret account – a limited liability corporation established in Delaware with the name Essential Consultants LLC. . The file leaked to Avenatti came from the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) database where banks and Wall Street brokerage firms are mandated to file Suspicious Activity Reports (SARs). The one SAR located by the law enforcement official and provided to Avenatti revealed that $500,000 came into Cohen’s First Republic Bank account from Columbus Nova, a company tied to the Russian oligarch, Viktor Vekselberg, who is now on a U.S. sanctions list and closely tied to Russian president Vladimir Putin. Another $600,000 came from U.S. telecommunications company AT&T; $1.2 million came from Swiss pharmaceutical company Novartis; and $150,000 came from Korea Aerospace Industries in November 2017,   Farrow now reveals at The New Yorker that in addition to the one SAR that was leaked to Avenatti showing the AT&T, Novartis, Columbus Nova and Korea Aerospace Industries payments, there are two more SARs showing millions more paid to Cohen from unknown sources. Farrow writes that these two additional and heretofore unseen SAR reports “detail more than three million dollars in additional transactions—triple the amount in the report released last week.” Unfortunately, those two SARs have vanished from the FinCEN database.

Michael Cohen seeks to keep Stormy Daniels’ lawyer out of N.Y. case (Reuters) - Michael Cohen, a longtime personal lawyer of U.S. President Donald Trump, on Friday asked a judge to bar adult film star Stormy Daniels’ lawyer from intervening in Cohen’s legal attempt to limit prosecutors’ review of documents seized from his home and office.  Michael Avenatti had asked U.S. District Judge Kimba Wood in Manhattan for permission to appear in the case in order to represent the interests of his client, whose real name is Stephanie Clifford. Daniels has said she was paid $130,000 by Cohen to keep a sexual encounter with Trump secret. In a court filing on Friday, however, Cohen’s lawyers said Avenatti should not be allowed to appear in the case because he had made numerous “inaccurate statements” in public about Cohen, violating court rules. The filing also said Avenatti had publicized information about Cohen’s financial transactions that was “accurate” but had “no lawful source.” The New Yorker reported on Wednesday that a law enforcement official had leaked financial records relating to Cohen.  “Mr Avenatti appears to be primarily focused on smearing Mr Cohen publicly in his efforts to further his own interest in garnering as much media attention as possible,” Cohen’s lawyers said in the filing. They said Avenatti had appeared on national television and talked about Cohen 147 times in the past 10 weeks, sometimes making inaccurate statements.

Chinese Bank Offered Clients Chance to Dine With Trump for $150000 - China’s second-largest state-owned bank offered wealthy clients the opportunity to have dinner with the American president for $150,000 a ticket, spurring a complaint from Donald Trump’s re-election campaign to the U.S. Department of Justice. A branch of China Construction Bank Corp. invited high-net-worth clients willing to pay the ticket price to a May 31 dinner in Dallas, according to an invitation seen by Bloomberg News and confirmed with bank staff. Chinese participants would have the opportunity to communicate with U.S. “tycoons,” take photos with Trump and get his autograph, according to the invitation. While Trump was expected to host a $50,000-a-head fund-raising dinner with the Republican National Committee in Dallas that night, it’s illegal for U.S. political campaigns to accept donations from foreign nationals or from corporations. That means only the Chinese bank’s customers with U.S. passports would be eligible to attend. Officials with Trump’s campaign and the RNC said they had no knowledge of the Chinese bank’s advertisement before Bloomberg News asked about it. The campaign alerted U.S. Attorney General Jeff Sessions’ office about the solicitation, said a person familiar with the matter, who asked not to be identified discussing a potential law enforcement matter. 

“Pence Is Not Stupid”: As Trump Sinks, G.O.P. Insiders See a Shadow Campaign -  “There is no shadow campaign,” a senior political adviser to Mike Pence told me Monday, pouring cold water on the persistent speculation that Donald Trump’s broad-shouldered vice president has been anything less than faithful to his volatile boss. “The president tasked the vice president with being the tip of the spear for the midterm elections. Our actions have the full support of the president’s re-election team,” the adviser explained, referring to Pence’s recent cross-country expeditions on behalf of Republican congressional candidates—an expansive political role that has put Pence in contact with some of the most prominent fund-raisers in states across the country. “If there was a shadow campaign,” the adviser continued, “we certainly wouldn’t ask for $5,000 contributions and disclose them publicly. It lacks credibility.” Talk of a “shadow campaign” isn’t the sort of thing with which vice presidents typically contend when supporting their boss’s re-election efforts. But Trump isn’t a typical president, and Pence, G.O.P. strategists say, would be stupid not to be preparing various contingencies. Indeed, buzz about Pence’s political aspirations has become something of a parlor game in Washington. While Trump remains the alpha and omega of Republican politics, Pence has quietly taken the lead on virtually all the midterm drudgery usually overseen by the president—making endorsements, conferring with party power brokers, meeting with voters in battleground states. Those in Pence’s orbit cooly dismiss the notion that there is anything to see here beyond perfectly innocent fund-raisers and other voter turnout activities. Trump, after all, is not particularly interested in the machinery of Republican politics, which is now more diffuse than ever.

Rex Tillerson warns of "growing crisis of integrity and ethics - Former Secretary of State Rex Tillerson argued Wednesday that the U.S. is experiencing a "growing crisis of integrity and ethics" in his first public speech since leaving the Trump administration almost two months ago."When we as people, a free people, go wobbly on the truth even on what may seem the most trivial of matters, we go wobbly on America," Tillerson told the graduating class of cadets at the Virginia Military Institute. While he did not mention President Trump by name, Tillerson did reference an "accepting of alternate realities" and warned that the country is in danger if Americans can't agree on basic facts."If our leaders seek to conceal the truth and we as people become accepting of alternative realities that are no longer grounded in facts, then as an American people we are on a pathway to relinquishing our freedom," Tillerson said.Tillerson emphasized that what makes America different from Iran, China, Russia and other adversaries is its commitment to fact-based truths. And he expects doomsday if the U.S. starts accepting alternate realities not based on a set of facts."If we do not as Americans confront the crisis of ethics and integrity in our society and among our leaders in both private and public sector, and regrettably at times even the nonprofit sector, then American democracy as we know it is entering its twilight years," Tillerson said. Tillerson always emphasized the importance of following a moral compass and maintaining personal integrity when he gave remarks to employees at the State Department. He pressed that sentiment in his short departing remarks.

House reg relief vote now in sight | American Banker - The House is expected to hold a vote next week on a Senate bill that would overhaul key aspects of the Dodd-Frank Act, ending an impasse between the two chambers. A spokesperson for House Majority Leader Kevin McCarthy, R-Calif., confirmed that the House will take up the legislation next week. The vote could come as early as Tuesday. The bill, authored by Senate Banking Committee Chairman Mike Crapo, R-Idaho, makes several key changes to Dodd-Frank, including raising the threshold for banks to be automatically designated as "systemically important financial institutions" from $50 billion to $250 billion. It would also revise new Home Mortgage Disclosure Act data reporting requirements for smaller banks and exempt community banks from the Volcker Rule ban on proprietary trading.  The bill garnered support from moderate Democrats in the Senate, including Sens. Heidi Heitkamp of North Dakota, Mark Warner of Virginia, Jon Tester of Montana and Joseph Donnelly of Indiana. Eleven Democrats ultimately voted for the bill, which passed the Senate by a vote of 67-31 on March 13.But the bill stalled in the House, in part because of concerns from House Financial Services Committee Chairman Jeb Hensarling, R-Texas, that the measure did not go far enough in amending Dodd-Frank. Senate Democrats, who were key to helping the pending legislation pass the upper chamber, vowed to vote down any House amendments to the bill, effectively stalling the measure. Hensarling’s opposition showed signs of fading, however, amid vocal pressure from the banking industry, particularly community banks. The House is expected to approve the bill, at which point it will be sent to the president's desk for signing.

Volcker Rule Rewrite Is Said to Drop Key Trading Burden on Banks - Wall Street is poised to get a big reprieve from the Volcker Rule, as U.S. agencies prepare to scrap a restrictive presumption that most short-term trades violate the post-crisis regulation, three people with knowledge of the matter said. In a much-anticipated overhaul, the Federal Reserve and other regulators are planning to drop an assumption written into the original rule that positions held by banks for less than 60 days are speculative -- and therefore banned, the people said. Instead, banks would have leeway to conclude that their trades comply with the rule, putting the onus on regulators to challenge such judgments, the people said. Regulators Prep New Volcker Rule. Traders Salivate: QuickTake The change is one of many that regulators appointed by President Donald Trump are expected to propose in the coming weeks when they unveil their revamp, known internally as “Volcker 2.0,” said the people who requested anonymity because it hasn’t been made public. The release will mark a key milestone in the Trump administration’s push to roll back regulations that it blames for stifling financial markets and economic growth. The rule was included in the 2010 Dodd-Frank Act as a way to limit excessive risk-taking by restricting speculative trading by banks, and curtailing lenders’ investments in hedge funds and private-equity firms. But the industry argues that it has dried up market liquidity, is overly complex and is difficult to comply with. The Fed has led the rewrite, though there is broad agreement on how to proceed among all five agencies responsible for the rule. The other watchdogs involved in the process are the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Commodity Futures Trading Commission. Additional changes the regulators intend to propose include making it easier for banks to stockpile assets that their customers may want to buy in the near term and dialing back compliance burdens for smaller lenders, the people said. The agencies expect to release the proposal by the end of the month -- a timeline confirmed publicly by Joseph Otting, the former banker who leads the OCC. Spokesmen for the five agencies declined to comment. 

Volcker Rule Revamp Adds to Trump's Steady, Bit-by-Bit Deregulation - Bit by bit, the Trump administration is making headway in its push to loosen Wall Street’s leash. The latest target is the Volcker Rule, a landmark constraint that was key to Washington’s drive to make the industry safer after the 2008 financial crisis. Regulators handpicked by President Donald Trump will propose a makeover of Volcker in the coming weeks, adding to efforts already underway to ease rules that have put government watchdogs in control of everything from bank capital to what lenders can do with their profits. Most of the changes have been described as tweaks, not an evisceration of the post-crisis rule book. But the cumulative effect for banks could be higher earnings, lower compliance costs and trading desks feeling emboldened to ramp up the risk. Volcker, named for former Federal Reserve Chairman Paul Volcker, restricted banks from making speculative market bets for their own benefit, rather than on behalf of clients. Dialing it back has been near the top of Wall Street’s wish list for years as the industry argues that it has dried up market liquidity, is overly complex and is difficult to comply with. In a much anticipated rewrite that’s expected to be released by the end of the month, the Fed and other agencies are poised to address some of those concerns. The regulators plan to scrap a restrictive presumption that short-term trades -- those held by banks for less than 60 days --- automatically violate Volcker, said three people familiar with the matter. Instead, banks would have leeway to conclude that their trades comply with the rule, putting the onus on regulators to challenge such judgments, said the people who asked not to be named because the revamp hasn’t been made public. 

Prop Trading Returns As Volcker Rewrite Allows Banks To Engage In Short-Term Trades - And just like that, after a ten year hiatus, prop traders are about to become the most desired job on Wall Street (now that hedge funds are replacing their trading desks with algos). As a reminder, the main component of Volcker Rule which was implemented in 2010 in response to perceived shortcoming from the financial crisis to limit risk-taking by commercial bank trading desks, had banned prop trading, which contrary to "flow", allowed banks to trade for their own accounts rather than for clients. Well, as Bloomberg reports, Wall Street is set to win the biggest reprieve since the implementation of the Volcker Rule nearly a decade ago, as U.S. regulators are set to scrap the key restrictive presumption that most short-term trades violate the post-crisis regulation. Specifically, as part of the anticipated overhaul of Volcker, the Fed and other regulators will drop an assumption written into the original rule that positions held by banks for less than 60 days are speculative, and therefore banned. Instead, it will be up to banks to determine and conclude that their trades comply with the rule, putting the onus on regulators to challenge such judgments; the architect? A former Goldman banker of course: Steven Mnuchin. Many of the Volcker revisions under consideration adhere to a blueprint issued last year by Trump’s Treasury Department, which advised doing away with many of the rule’s more subjective demands. Asking banks to figure out the purpose of each purchase or sale of an asset “effectively requires an inquiry into the trader’s intent at the time of the transaction, which introduces considerable complexity and subjectivity,” Treasury argued. Its report said the rule’s complexity had caused banks to be overly conservative in their trading activity, a contention also made by industry lobbyists.

Hensarling is steadfast: Senate bill not the end of financial reforms  — House Financial Services Committee Chairman Jeb Hensarling insisted Thursday that a targeted Senate package to reform provisions of the Dodd-Frank Act will not be the final word on financial services policy while he still holds the gavel. The House is expected to vote next week on the Senate bill, known as S. 2155, sponsored by Senate Banking Committee Banking Chairman Mike Crapo, R-Idaho. But Hensarling, a Texas Republican who will leave Congress at the end of this year, said the Senate is preparing to consider a series of House bills aimed at "capital formation" once Congress sends the Crapo bill to the president's desk. “I have a commitment from [Senate Majority Leader Mitch McConnell] that we’re going to get a vote on the Senate floor for a trailing package of bills,” said Hensarling. “We do expect to be heard.” “I have a commitment from [Senate Majority Leader Mitch McConnell] that we’re going to get a vote on the Senate floor for a trailing package of bills,” said Rep. Jeb Hensarling, R-Texas. Bloomberg News The next round of bills Hensarling is gearing up to push through Congress focus on “the capital formation space as opposed to the deregulatory space" he said, calling it akin to a "Jobs Act 3.0." Hensarling had previously attempted to pass significant changes to the Dodd-Frank that included restructuring the Consumer Financial Protection Bureau. But his reg relief proposals did not draw sufficient support from Senate Democrats. Instead, the House is expected to consider the Senate bill, which largely provides regulatory relief to community banks and credit unions, as is. Yet Hensarling was steadfast that the Senate bill would not be the end of the conversation. "I had told everybody" that the Senate bill was, "in my opinion ... a great floor," Hensarling said. "We wanted to work on the ceiling."

Think you’ve seen the Trump effect on regulation? Just wait. - The banking industry has sought to reduce its regulatory burden for years — and it’s now finally poised to see some tangible results.  The House is expected to take up a sizable regulatory relief package on Tuesday, while the Senate is readying a vote to confirm Jelena McWilliams as chair of the Federal Deposit Insurance Corp., rounding out the Trump administration’s bank regulatory team.  Of course, banking insiders have been talking about reforms to the Dodd-Frank Act and the changing of the guard at the banking agencies since President Trump’s upset victory in 2016. And while officials including acting Consumer Financial Protection Bureau Director Mick Mulvaney have been working quickly to reopen some Obama-era rules, the wave of changes is just beginning. Having these two pieces fall into place simultaneously is a big milestone for an industry that’s come under heightened scrutiny and tougher rules for the better part of a decade.  Republican lawmakers are said to be pursuing an additional package of regulatory changes, but it’s unclear whether that will gain serious momentum before the closely watched midterm elections. Yet with the McWilliams confirmation moving forward, the groundwork is being laid for more deregulatory efforts at the agencies. That’s where the industry’s focus — and influence — is likely to turn from here. Already, the Federal Reserve and the Office of the Comptroller of the Currency, now overseen by Trump-appointed officials, have taken steps to reduce capital constraints on some of the country’s largest banks. With McWilliams, a former Fifth Third attorney, installed at the FDIC, regulators will be able to go even further in making multi-agency changes to Dodd-Frank measures, likely starting with highly anticipated reforms to the Volcker Rule, a ban on proprietary trading.   “Her confirmation is a game-changer,” said J.W. Verret, a professor of law at George Mason University, who previously served as chief economist and senior counsel on the House Financial Services Committee. “I imagine it's been a challenge to move forward with one of the three major regulators remaining in the hands of an Obama appointee.”

Fed's Mester warns against dismantling post-crisis bank reforms - Federal Reserve Bank of Cleveland President Loretta Mester warned against dismantling core reforms that have made U.S. banks better able to withstand a financial crisis. "It would be a mistake to unwind the steps taken since the financial crisis that have led to a more resilient financial system," Mester said in the text of a speech she'll deliver Friday at a European Central Bank conference in Frankfurt. "I would like to see how the new settings perform throughout the cycle before making major changes." Loretta  Her remarks come as the Fed's new leadership, under Chairman Jerome Powell, is working on adjustments to financial rules aimed, they say, at tailoring them to the risks of specific institutions and making them more efficient. That has provoked protest from some Democrats in Congress worried the Fed and other regulators are forgetting the lessons of the crisis in their desire to ease the regulatory burden on banks. Mester said the best way to prevent or contain the next financial crisis is to make sure financial institutions are strong, which regulators have done by raising capital and liquidity requirements, subjecting banks to stress tests and requiring them to create plans for their own unwinding. "Given some of the limitations on macroprudential tools and the complexity of financial system regulation, ensuring the structural resilience of the financial system throughout the cycle is the first line of defense in promoting financial stability," Mester said. Macroprudential tools — which aim to limit system-wide risks — are limited in the U.S. and of questionable effectiveness, Mester said. For that reason, the Fed must keep open the option of using interest rates to stifle financial instability, while developing a playbook for such an scenario. "Monetary policy should be on the table as a possible defense," she said. "If we assessed the risks to financial stability to be sufficiently great, achieving our dual mandate monetary policy goals would also be in jeopardy over the medium run."

Fed's Quarles weighs easing how foreign banks in U.S. must gird for crisis -- The Federal Reserve should think about dialing back its demand that foreign banks in the U.S. have an especially amplified ability to absorb losses, Vice Chairman Randal Quarles said at a Wednesday conference. The Fed's bank-supervision chief said he'll recommend the agency re-examine whether what's known as total loss-absorbing capacity, or TLAC, should be reduced for foreign banks operating in the U.S. Doing so would move the Fed closer to the lower levels that non-U.S. regulators have set. Quarles said the Fed's current demand is at the top end of the standard established by global regulators, and lowering it — "without adversely affecting resolvability and U.S. financial stability" — could prompt a quid pro quo from international watchdogs that helps U.S. banks overseas. "Willingness by the United States to reconsider its calibration may prompt other jurisdictions to do the same," Quarles said in a speech made at a Harvard Law School event. The vice chairman, appointed by President Donald Trump, has been on a campaign to revise rules put in place after the 2008 financial crisis — arguing they can be made more efficient without making them weaker. He's focused some of that attention on the many regulations that require big banks to be able to withstand another crisis. On Wednesday, he also said the Fed expects to seek public comments on its previous industry guidance for how to write so-called living wills — elaborate plans meant to plot a failure for each firm without endangering the financial system. Quarles specifically said the regulator is considering how it directs banks to position capital and liquidity in individual units of their companies. The agency may also write a rule to make those needs more predictable and transparent, he said

Orphan CDS, Manufactured Credit Events, Insufficient Deliverables: What The Hell Is Going On In The CDS Market? - Long gone are the days when the CDS market was naively seen as merely a simple hedge to long cash bond positions for vanilla investors (negative basis), or more conspiratorially, a means to naked short the bonds of distressed companies (as many alleged happened during the financial crisis) without being subject to squeezes, margin calls, or regulatory scrutiny courtesy of (what was once) a far more liquid and deep CDS market. Of particular note in recent months has been rapid, and often confounding, propagation of manufactured credit events in which a CDS is triggered - usually after some collusion between the issuing company and one or more hedge funds - without causing an acceleration in the issuer's debt obligations, as discussed recently in the case of Hovanian, in which the CDS surges benefiting one or more hedge funds and/or the company while impairing others, or a manufactured CDS "orphaning", as was the case more recently with McClatchy, in which a CDS suddenly found itself with no reference securities and plunged to 0, in the process sparking a profit bonanza for hedge fund Chatham which had sold the CDS. And while manufactured credit events remain niche events for a very select group of highly sophisticated investors, several recent events have prompted Barclays to write an extensive analysis looking at the details and motivations for such events, while addressing potential changes to the ISDA Definitions to reduce their likelihood, including adding a multiple holder requirement and excluding missed affiliate payments from the definition of a Failure to Pay credit event. [...] Finally, and perhaps most interesting to the hedge funds who are already intimately familiar with the recent synthetic CDS triggers, is which companies are likely to pursue similar strategies, most likely in collusion with one or more hedge fund longs (or shorts) in their CDS universe. For the answer to this, we suggest skipping to the very end of this article.

Time to wipe out the absurd credit default swap market -- There was a time when the credit default swap market was a giant, incomprehensible and terrifying threat to the global economy. Think of the barely controlled panic in the phone calls between the US Treasury and the Federal Reserve Bank of New York in 2008. Now it is a gigantic, incomprehensible global joke. Once it could be argued (by some) that the CDS market was a way to efficiently price and trade credit risk among institutions with illiquid instruments, such as corporate loans or infrequently traded sovereign bonds. And, of course, it was a way for dealing desks to make money in ways customers could not understand. Since then, CDS documentation and market practice has been tweaked almost beyond recognition, Under the basilisk gaze of compliance officers and regulators, those on the front line of the dealing desks cannot pull in the bonuses or cover the expense allowances that once came with the job. For that matter, their banks and dealers are more constrained by capital requirements and accounting guidelines than in the good old days. The CDS business is still big but at a time when most markets have been growing (or just inflating), it has been steadily shrinking in notional size. According to the Bank for International Settlements, the notional value of all CDS has declined from about $25tn at the start of 2013 to less than $10tn today.

Pope Pans "Ticking Time Bomb" Derivatives Markets, Calls CDS "Unethical" - Warren Buffett famously called them "weapons of mass destruction," and The Pope has damned the derivatives markets as a "ticking time bomb" warning of the “ethical void,""...which becomes more serious as these products are negotiated on the so-called markets with less regulation (over the counter) and are exposed more to the markets regulated by chance, if not by fraud, and thus take away vital life-lines and investments to the real economy.” In a sweeping critique of global finance released by the Vatican on Thursday, that the Holy See singled out credit-default swaps for particular scorn. “A ticking time bomb,” the Vatican called them.“The market of CDS, in the wake of the economic crisis of 2007, was imposing enough to represent almost the equivalent of the GDP of the entire world. The spread of such a kind of contract without proper limits has encouraged the growth of a finance of chance, and of gambling on the failure of others, which is unacceptable from the ethical point of view." As Bloomberg's Sridhar Natarajan reports,  the unusual rebuke - derivatives rarely reach the level of religious doctrine - is in keeping with Francis’s skeptical view of unbridled global capitalism. The Holy See then put the sinning shadow bankers in his sights... It is no longer possible to ignore certain phenomena in the world, such as the spreading of the collateral banking systems (Shadow banking system). These, although well understood within themselves, and also the types of intermediaries whose functioning does not immediately appear disapproved, in fact have led to the loss of control over the system on the part of various authorities of national securities. Hence, they have knowingly favored the use of the so-called creative financing in which the primary aim of the investment of the financial resources is above all speculative in character, if not predatory, and not a service to the actual economy. 

Vatican Assails Wall Street for Creating an “Amoral Culture” -- Pam Martens -  The Vatican released a lengthy report yesterday on how the drive for accumulating money at any cost has turned Wall Street and much of the global financial system into an “amoral culture,” noting that the idea that markets will be self-policing is pure bunk. The Vatican has apparently decided to keep the debate alive that Senator Bernie Sanders started during the presidential campaign of 2016 when he repeatedly railed against Wall Street for having a “business model of fraud.” The Vatican’s entry into this critical conversation would be much more meaningful if each time it or the Pope lectures the world on the meaning of morality they would acknowledge the Catholic Church’s own moral failings over decades in protecting sexual predators of children, refusing to report the assaults to law enforcement and moving the predators from parish to parish — not all that dissimilar to the private justice system run by Wall Street as predator brokers move from firm to firm. That being said, there were some interesting and profound nuggets in both the press conference held by the Vatican to release the report and in the report itself, which was titled: “Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic-Financial System.” H.E. Msgr. Luis Francisco Ladaria Ferrer, S.J., prefect of the Congregation for the Doctrine of the Faith had this to say at the press conference:“The purpose of these Considerations is to state clearly that, at the root of the spread of dishonest and predatory financial practices, there are first of all an anthropological myopia and a progressive crisis of the human that have been achieved. Man, today, no longer knowing who he is, and what he is doing in the world, does not even know how to act well, ending up remaining at the mercy of the convenience of the moment and of the interests that dominate the market.“The profit of the strongest has taken over from the authentic good and has become the real dominant factor in economic and social relations. In this way, the common good has disappeared in many environments from the horizons of living, the conflict of relationships has increased and inequalities have become more pronounced. “The strongest economic subjects have become Superstars who seize huge amounts of resources, resources that are ever less evenly distributed and increasingly concentrated in the hands of a few. It is incredible even to think that ten people may hold almost half of the world’s wealth: today this fact is now a reality!”

Weakest link in Fincen's AML rule? Bank customers -- After a two-year implementation period, the Financial Crimes Enforcement Network’s customer due diligence rule goes into effect today. The objective of the rule is to make it easier for law enforcement to follow illegitimate money trails — but the question is whether financial institutions are able to follow the rule’s myriad new requirements, which require significant levels of customer cooperation. In addition to identification of beneficial owners, banks also must develop customer risk profiles and keep close tabs on changes in customer ownership and control. Yet the big hurdle for financial institutions will be getting customers to comply. Canadian banks have had a similar rule for some time, and there has been difficulty obtaining and verifying detailed personal information on parties who are not directly involved in establishing or using the banking relationship. Under Fincen’s rule, personal information must be obtained on all parties identified as beneficial owners, including names, Social Security numbers, dates of birth and addresses. Problems are likely to surface when beneficial owners balk at providing this information to the employee opening the account. Collecting this type of information on non-U.S. citizens could be particularly tricky. Financial institutions won’t be able to use traditional means of obtaining ownership information on customers, such as legitimate third-party or public databases. Similarly, in cases where existing customers open new accounts, banks can’t rely on previously gathered information, which, according to the final rulemaking, Fincen considers outdated and uncertified. Further, financial institutions will have to ask the employee of a legal entity to personally certify ownership information. In addition to personal information, financial institutions must verify the identity of beneficial owners and control parties, which may be the most difficult hurdle of the rule.

The one area where banks and fintechs want more regulation — Banks, fintech firms and data aggregators are asking regulators to provide more clarity on how to handle consumer data and who is responsible for leaks when it is shared between firms — a request that’s seemingly a reversal from the deregulatory approach the industry often takes. The potential liability stemming from consumer data has become a critical concern for the financial industry as more data aggregators and fintech firms rapidly enter the space, seeking access to customers' bank account information in order to offer loans and other products. While banks, fintechs and aggregators are working to develop their own standards, there is a growing recognition that regulators also need to step in. “It’s all well and good for us to have contractual agreements even amongst the banks and the fintechs” but “ultimately there will have to be regulatory involvement here to spell out what the expectations are from a regulator safety and soundness standpoint,” said Steve Boms, president of public policy strategist Allon Advocacy LLC, during a Federal Deposit Insurance Corp. conference this week. FDIC Chairman Martin Gruenberg said regulators want “to gain a deeper understanding of emerging technologies” being used by banks and the potential risks, including cybersecurity. Boms was speaking on behalf of the Consumer Financial Data Rights Group, a consortium of data aggregators and fintech firms who are backing a set of data sharing standards just launched by three leading aggregators: Envestnet’s Yodlee, Quovo and Morningstar’s ByAllAccounts. The four standards announced Thursday are meant to encourage data sharing without creating safety and soundness concerns across parties. Other groups have launched similar standards. 

Initial Coin Scams - Nouriel Roubini- Initial coin offerings have become the most common way to finance cryptocurrency ventures, of which there are nownearly 1,600 and rising. In exchange for your dollars, pounds, euros, or other currency, an ICO issues digital “tokens,” or “coins,” that may or may not be used to purchase some specified good or service in the future. Thus it is little wonder that, according to the ICO advisory firm Satis Group, 81% of ICOs are scams created by con artists, charlatans, and swindlers looking to take your money and run. It is also little wonder that only 8% of cryptocurrencies end up being traded on an exchange, meaning that 92% of them fail. It would appear that ICOs serve little purpose other than to skirt securities laws that exist to protect investors from being cheated.If you invest in a conventional (non-crypto) business, you are afforded a variety of legal rights – to dividends if you are a shareholder, to interest if you are a lender, and to a share of the enterprise’s assets should it default or become insolvent. Such rights are enforceable because securities and their issuers must be registered with the state.Moreover, in legitimate investment transactions, issuers are required to disclose accurate financial information, business plans, and potential risks. There are restrictions limiting the sale of certain kinds of high-risk securities to qualified investors only. And there are anti-money-laundering (AML) and know-your-customer (KYC) regulations to prevent tax evasion, concealment of ill-gotten gains, and other criminal activities such as the financing of terrorism. In the Wild West of ICOs, most cryptocurrencies are issued in breach of these laws and regulations, under the pretense that they are not securities at all. Hence, most ICOs deny investors any legal rights whatsoever.  Jay Clayton, the chairman of US Securities and Exchange Commission, recently made it clear that he regards all cryptocurrencies as securities, with the exception of the first mover, Bitcoin, which he considers a commodity. The implication is that even Ethereum and Ripple – the second- and third-largest crypto-assets – are currently operating as unregistered securities. Gary Gensler, a former chairman of the Commodities and Futures Trading Commission who now teaches a course on blockchain (the technology underlying cryptocurrencies) at MIT, has also suggested as much.

Watch: Fed's Bullard Bashes Cryptocurrencies, Holds Q&A - In an odd convergence, a sworn protector of the fiat currency regime, St. Louis Fed president James Bullard is presenting on the topic of cryptocurrencies, or rather "Non-Uniform Currencies and Exchange Rate Chaos" at the blockchain tech conference in New York. Bullard notes that while he is "a fan of technological innovation as a driver of economic growth, and blockchain and related technologies are promising", he is far less enthused by the concept of cryptocurrencies, for an obvious reason: cryptocurrencies, unlike fiat, are not created by any central bank; cryptocurrencies, like fiat, are only worth whatever someone believes they are worth. In other words, in a time when central bankers are losing credibility by the day, there is no a legitimate platform to express this loss of faith, i.e. by purchasing bitcoin and other cryptos. Which is also why central banks are doing everything in their power to suppress the rise of cryptos, just as they did the same to gold several years ago. Predictably, Bullard's conclusion is hardly crypto-friendly: 'Cryptocurrencies may unwittingly be pushing in the wrong direction in trying to solve an important social problem, which is how best to facilitate market-based exchange."

The Wealthy Are Hoarding $10 Billion of Bitcoin in Bunkers -- Behind the guards, the blast doors and down corridors of reinforced concrete, sit the encrypted computer servers -- connected to nothing -- that hold keys to a vast digital fortune.Argentine entrepreneur Wences Casares has spent the past several years persuading Silicon Valley millionaires and billionaires that Bitcoin is the global currency of the future, that they need to buy some, and that he’s the man to safeguard it. His startup, Xapo, has built a network of underground vaults on five continents, including one in a decommissioned Swiss military bunker. In the rarefied world of wealth management, Xapo is known for a client list studded with family offices, and for occasionally letting a journalist peek into a stronghold to write about its security. But one secret has proven elusive: how much digital cash does it really hold?Two Xapo clients said it houses roughly $10 billion of Bitcoin. Another person close to the venture called the figure an accurate approximation. Bitcoin’s price, after all, is hardly steady. Even in the colorful world of crypto the cache is remarkable -- amounting to about 7 percent of the global Bitcoin supply. It would mean Xapo, just 4 years old, has more “deposits” than 98 percent of the roughly 5,670 banks in the U.S. But as a custodian it’s regulated differently. The Swiss subsidiary is overseen by the self-regulating Financial Services Standards Association, which audits members to ensure they comply with anti-money-laundering rules. Xapo serves U.S. customers through a Delaware corporation that’s registered with the U.S. Treasury Department’s Financial Crimes Enforcement Network and is licensed in several states.

Can a mature blockchain industry emerge from the hype? - Consensus lived up to its billing as a cryptocurrency circus, with 8,500 conference attendees treated to surprise announcements, celebrity performers and even a three-Lamborghini sideshow. But underneath the hype, fintechs large and small attending the three-day event at the New York Hilton Midtown said they found promise for a market still trying to find a path to unified operations and wider acceptance within financial services. "In the early days of bitcoin … we thought we were solving the problem of silos, we thought we could connect the different global payments systems together using a digital currency,” said David Schwartz, Ripple’s chief cryptographer, who presented in a session titled “The race for interoperability.”"However, in the following years we ended up building more silos — a bitcoin silo, an ethereum silo and so on. Now, as an industry, we are working to create protocols that allow us to make payments across all of those silos."One major announcement came from Amazon Web Services, which announced it was partnering with the blockchain software firm Consensys to speed up deployment of enterprise blockchains.Former JPMorgan Chase blockchain head Amber Baldet debuted a decentralized app store called Clovyr, which will initially support public and enterprise ethereum applications.  On the conference's third day, Twitter and Square CEO Jack Dorsey endorsed cryptocurrencies. “The internet deserves a native currency; it will have a native currency,” he told audiences. Blockchain technology also received a strong endorsement from FedEx CEO and founder Frederick W. Smith during a panel. “Blockchain has the potential to completely revolutionize trade across borders,” Smith said. “We think this is potentially a profound technological change.”

Wells Fargo Employees Altered Information on Business Customers’ Documents - Some employees in a Wells Fargo unit that handles business banking improperly altered information on documents related to corporate customers, according to people familiar with the matter. The behavior again raises questions about Wells Fargo’s risk-management practices and controls. The bank has been sanctioned in recent months by federal regulators for problems in these areas and as a result can’t grow its balance sheet. The employees in Wells Fargo’s so-called wholesale unit, which is separate from its retail bank, added or altered information without customers’ knowledge, according to the people familiar with the matter. The information added varied from social security numbers to addresses to dates of birth for people associated with business-banking clients, the people said. While the information in some cases can seem routine, employees are supposed to follow specific processes for how information is obtained or inputted into documents that are part of a regulatory process, some of the people said. Pulling information from older documents can also result in incorrect information being included, they added. The behavior took place in 2017 and early 2018 as Wells Fargo was trying to meet a deadline to comply with a regulatory consent order related to the bank’s anti-money-laundering controls, the people said. The employees were also working to get documents in order prior to new requirements from another regulator for disclosures related to proof of beneficial ownership of businesses, the people added. Wells Fargo became aware of the behavior in recent months from employees, the people said. After investigating, the bank discovered the behavior wasn’t an isolated incident, the people added. 

Wells Fargo Employees Caught Improperly Altering Business Customers' Docs -  Just when you thought that after the last criminal offense by Wells Fargo (which as a reminder was pushing customers into higher-fee retirement accounts), surely there was no way Warren Buffett's favorite criminal organization would be caught again engaging in some even more bizarre criminal activity. Alas, it was not meant to be as Wells somehow always finds a way, and moments ago the WSJ reported that in the latest scandal involving America's largest mortgage lender, "some employees" in Wells Fargo’s business banking, aka "wholesale" unit and is separate from Wells' retail division, improperly altered information on documents related to corporate customers without their knowledge. The Information adjusted by Wells employees varied from social security numbers to addresses to dates of birth for people associated with business-banking clients, with the bulk of incidents reportedly taking place in 2017 and early 2018, as Wells Fargo was trying to meet a deadline to comply with a regulatory consent order related to the bank’s anti-money-laundering controls.In other words, to comply with regulations against fabricating client data, Wells... fabricated client data. The employees were also working to get documents in order prior to new requirements from another regulator for disclosures related to proof of beneficial ownership of businesses, the WSJ added. Wells Fargo only became aware of the behavior in recent months from employees and is still investigating the matter.

Subprime Auto Loan Default Rates Are Now Higher Than During The Financial Crisis - One month ago, when discussing the most recent trends in the US subprime auto loan space, we revealed how despite a virtual halt in direct loans by depositor banks to subprime clients following the financial crisis, the US banking sector now has over a third of a trillion dollars in indirect subprime exposure, in the form of loans to nonbanks financial firms which in the past decade have become the most aggressive lenders to America's sub-620 FICO population. As we further explained, the banks' total indirect exposure to subprime loans – not just auto loans, but also subprime mortgages, and subprime consumer loans – could be pieced together through public filings, and according to FDIC reports, bank loans to nonbanks subprime lenders soared this decade, with the following 5 names standing out:

• Wells Fargo: $81 billion, up from $13.4 billion in 2010
• Citigroup: $30 billion, up from $4.1 billion in 2010
• Bank of America: $30 billion, up from $2.8 billion in 2010
• JP Morgan: $28 billion, up from $10.4 billion in 2010
• Goldman Sachs: $22 billion
• Morgan Stanley: $16 billion

But while the supply side of the subprime equation is clearly firing on all cylinders - as only the next crash/crisis will stop desperate yield chasers - things on the demand side are going from bad to worse, and according to the latest Fitch Autoloan delinquency data, consumers are defaulting on subprime auto loans at a higher rate than during the 2008-2009 financial crisis. The highly seasonal rate for subprime auto loans more than 60 days past due reached the highest in 22 years - since 1996 - at 5.8%, according to March data; this is well over 2% higher than the comparable March default rate in the low 3%s hit during the peak of the financial crisis a decade ago.The more recent April data, showed a delinquency rate of 4.3%, higher than the 4.1% last year, and the second highest April on record. Keep in mind, April is the "best" month of the year from a seasonal perspective as that is when the bulk of tax refunds hit, which are then promptly used to repay outstanding bills - it's all downhill from there... or rather uphill as the chart shows ever higher default rates.

Lenders retreat from subprime consumer credit as losses - U.S. consumers with subpar credit scores are borrowing at a more modest pace in recent months, a sign that lenders are trimming their sails amid mounting losses. Data released by the Federal Reserve Bank of New York on Thursday showed that 30.4% of car loan borrowers had credit scores below 660 in the first quarter of 2018, the lowest percentage in more than seven years. At its peak in 2015, that figure hit 39.4%. The result is that originations of subprime car loans slumped to $39.8 billion in the quarter, down 7% from the prior quarter and nearly 22% from just nine months earlier, according to the New York Fed’s latest data. It is a similar story in credit card lending, with lenders providing less credit to subprime borrowers and focusing more heavily on better qualified applicants. 

Tension escalates at annual meetings as banks wade into social issues -- You could have easily mistaken JPMorgan Chase’s annual shareholder meeting on Tuesday for the type of testy town hall gathering that lawmakers hold with their constituents when they return home from Washington.  Held this year in Plano, Texas — in a corporate office that's home to roughly 6,000 employees — JPMorgan’s annual meeting included the usual orders of business, such as votes to approve the company’s roster of directors. But once the company opened the floor to commentary, the meeting took on a markedly heated tone.  Shareholders once again criticized JPMorgan for financing for private prisons, a big focus at last year’s meeting. They also attacked the company’s track record on environmental issues; its investments in companies with ties to government-sponsored genocide in Sudan and Syria; and even its perceived lack of attention to affordable housing issues in Plano.  JPMorgan Chase chief Jamie Dimon, who has called annual meetings a "complete waste of time," took heat Tuesday over the bank's donations, human rights and environmental records, and its commitment to poorer communities.  At one point, Juleon Robinson, a representative from the nonprofit New Economy Project, accused the company of redlining in its hometown of New York and of failing to do enough for minority communities in neighborhoods such as the South Bronx.  “You seem like a bright young man who is highly misinformed,” Dimon said in response, outlining a host of ways the company gives back to local communities.

Just what banks need — another hot-button issue in sports gambling - U.S. credit card issuers are already caught in the middle of intense debates over guns, marijuana and cryptocurrencies. Gambling on sports is next. A Supreme Court decision this week set off a race among states to legalize sports betting, which under federal law has long been banned outside of Nevada.Numerous states, including New Jersey, Delaware, West Virginia and Mississippi, are eyeing the substantial tax revenue that stands to be collected from action-hungry fans. Americans place at least $50 billion in illegal sports bets each year, according to an estimate last year by Eilers & Krejcik Gaming. The firm said that it expects 32 states to legalize such wagers by 2023.Sports fans may initially be required to place their bets in person — Monmouth Park, a 148-year-old racetrack on the Jersey Shore, said Monday that it is nearing the finishing touches on an expanded gaming area, which were started in anticipation of the Supreme Court’s decision.But over time, there will be substantial economic pressure to allow wagers over the internet, since the market will be far larger if bettors are able to place wagers on their mobile phones.And once fans can make bets from the comfort of the couch, they will surely want to pay with their credit and debit cards, the fuel of e-commerce.That looming eventuality will force banks to make tough decisions over whether, and under what circumstances, to allow gambling transactions.“Just because something is legal doesn’t mean that it has to be allowed,” noted Elliot Berman, a risk management consultant to banks.Legal gambling over the internet is not entirely new — online poker is currently allowed in three states — and banks have generally been reluctant to embrace it. However, the large size of the revenue opportunity in sports gambling could change bankers’ thinking.

Senate to vote next week on Trump pick for FDIC— The Senate is expected to vote next week on the confirmation of Jelena McWilliams to become the chair of the Federal Deposit Insurance Corp.The nomination of McWilliams, the chief legal officer at Fifth Third Bancorp, was approved by the Senate Banking Committee in February by a vote of 24 to 1, with only Sen. Elizabeth Warren, D-Mass., opposing the confirmation. On Thursday, Senate Majority Leader Mitch McConnell filed a cloture motion that sets up debate by the full Senate on the nomination. Once that debate takes place, she is expected to be approved by the full Senate by a significant margin. Once in office, however, she will face significant challenges at the FDIC.  McWilliams was first named in November as the Trump administration’s choice to succeed FDIC Chairman Martin Gruenberg, but her nomination has been pending for months as picks to lead other banking agencies — including the Federal Reserve Board and Office of the Comptroller of the Currency — have already been confirmed.Before joining Fifth Third, McWilliams held positions as a Senate Banking Committee aide to Sen. Richard Shelby, R-Ala., and as an attorney at the Federal Reserve Board.

Return to sender: Here's what's wrong with postal banking – BankThink -Last month Sen. Kirsten Gillibrand, D-N.Y. introduced the Postal Banking Act, proposing the U.S. Postal Service offer small-dollar loans, checking and savings accounts, debit cards, ATMs, check cashing, bill payment and mobile banking. With this measure, Gillibrand aims to steal some of progressive heartthrob Sen. Elizabeth Warren’s thunder — and to score points with the postal union. But postal banking is a horrendous idea. For starters, it would further politicize America’s already overpoliticized banking system by Washington directly designing, setting credit for and pricing financial services.   Moreover, the USPS already faces challenges fulfilling its constitutional mandate. First-class mail volume declined 38.7% from 2007 to 2017. The service is sustained by taxpayers, and since 1971 it’s accumulated a $62 billion deficit. Gillibrand’s bill would open the floodgates for the USPS to gain massive additional subsidies to offer financial services it has no business offering.  By statute and political pressure, financial products would be priced below market and what’s commercially sustainable. The Postal Banking Act would cap interest rates at 101% of the Treasury one-month constant maturity rate — which from 2008 through 2016 hovered just above zero. In April it was 1.62%. Making unsecured loans of several hundred dollars to subprime borrowers at these rates is a losing proposition, and would spur overconsumption of credit. Government agencies seek to expand their roles and power. Gillibrand would give the USPS carte blanche to provide other financial services it “determines appropriate to the public interest.” Political pressure would mount to cut credit standards and fees, and offer more money-losing services. Postal banking would be a powerful vehicle for laundering subsidies to political constituencies Gillibrand is cultivating, rather than cutting them government checks outright. Those constituencies include progressives and brass-collar Democrats, the postal union, community activists and organizers and low-income families and minorities. In one fell swoop she would check a lot of boxes.

Financial industry petitions FCC to make robocall lawsuits harder to win -- If a financial industry petition to the Federal Communications Commission on the use of autodialers is successful, it could make Telephone Consumer Protection Act cases more difficult to prove for consumer attorneys. But a favorable ruling likely won't halt the proliferation of these suits.There are 17 signatories to the petition, including the American Bankers Association, Credit Union National Association, Mortgage Bankers Association and other banking, credit union and mortgage industry groups. They are seeking a declaratory ruling that follows up an appellate court win that vacated much of a 2015 FCC ruling on the use of autodialers to call cell phones. That ruling said any device capable of making an automated call was subject to the TCPA, whether or not that capability was being used.In March, the D.C. Circuit struck down that interpretation. But, "the court didn't say this is what the standard ought to be," said Michael Goodman, an attorney with Hudson Cook, who specializes in regulations about customer communications with various types of businesses, including mortgage lenders. "The court said what the FCC came up with isn't good enough, isn't sensible enough," and left it to the agency to come up with a new standard. It is quite likely the FCC will agree with what the petitioners are seeking, said Sarah-Nell Walsh, an attorney with Baker Donelson, who represents mortgage companies, based on a statement that FCC Chairman Ajit Pai made in opposition to the 2015 ruling when he was a commissioner of the agency. "In short, we should read the TCPA to mean what it says: Equipment that cannot store, produce, or dial a random or sequential telephone number does not qualify as an automatic telephone dialing system because it does not have the capacity to store, produce, or dial a random or sequential telephone number," Pai said.

Former NBA Player Accuses Merrill Lynch of Forged Signatures and "Stealing" $17.4 Million - The list of athletes that the mainstream media has covered going broke over the last couple of decades always seems to chalk up a couple of new victims each year..The latest victim of either his own actions or a corrupt investment banking system - it remains to be seen - was Kwame Brown, the first overall pick in the 2001 NBA draft, who went on to play for 7 different NBA teams.  Brown is now suing Merrill Lynch, who he alleged "stole" $17.4 million of his money that he left under management. Bloomberg reported last week:Former professional basketball player Kwame Brown is crying foul on Merrill Lynch, saying the brokerage stole $17.4 million of his investments.Brown said in a lawsuit that his signature was forged on various authorization forms and agreements, allowing his financial adviser to make investments and stock trades without his consent.  The fact that Brown alleges that his signature was forged on documents changes this story from a "mismanaged money" story to a "possible full on fraud" story. How did Brown find out about this mismanagement? He made a routine request for a list of his investments with Merrill Lynch and instead of being told about the fixed income his $17.4 million was making him in ETFs, he was simply told that he didn't have any money at all with Merrill Lynch.When Brown sought an accounting of his investments last year, he was told he had no monies with Merrill Lynch, according to his complaint filed Thursday in Los Angeles. That must have been an interesting phone call. Complex had more details of the lawsuit, which also alleges his money manager, Michelle Marquez, failed to pay off loans that Brown requested, traded stock without his consent, and opened bank accounts under Brown's name: Official documents show that Brown is suing Merrill Lynch, Bank of America, and his financial advisor Michelle Marquez. He claims to have been a client from 2004 and 2017 during which time she handled his income from playing in the NBA, as well as invested and traded stocked under his consent. The problem is that Marquez was allegedly trading and investing Brown's money into various stocks and projects without being granted permission from the former center. Brown also alleges that Marquez opened various bank accounts under his name as well where she would deposit the money for investing purposes.

Government accuses LendingClub of misleading borrowers -- LendingClub, the Silicon Valley firm that blazed a trail in digital lending, has long contended that its online consumer loans do not carry hidden fees. But that advertising claim is now under attack in a lawsuit filed Wednesday by the Federal Trade Commission. The suit tees up an unlikely fight between the Trump administration and one of the fintech sector’s best-known names over the reach of longstanding consumer protection rules. In the lawsuit, the FTC alleges that LendingClub has been using deception to lure prospective borrowers, who are often surprised to be charged an origination fee that may be $1,000 or more. “This case demonstrates the importance to consumers of having truthful information from lenders, including online marketplace lenders,” Reilly Dolan, acting director of the FTC’s bureau of consumer protection, said in a press release. “Stopping this kind of conduct will help consumers make informed choices about loan offers.” 

Illegal Repo Practices - Adam Levitin, Credit Slips - The Washington Post has an interesting piece about the coming of big data to the auto repossession world. But of particular note is the end of the article, wherein the repo man profiled says that he will return ransom the defaulted borrower's personal goods found in the car back to the buyer for a $50 flat fee (with child car seats given back for free).  That's probably illegal. The auto lender's security interest extends only to the car, not to personalty that happens to be in the car (were it otherwise, it would violate the FTC Credit Practices Rule).  So the repo man, as the lender's agent, holds that personalty in the car as a bailment; there's no security interest interest in it.  The repo man can't simply destroy it or throw it away--that'd be conversion, and ransoming it back would seem to be some flavor of tort, making the repo many vulnerable to a trover action (for value) or replevin action (for the stuff itself), as well as a UDAP violation. Now it's possible that there's contractual language in the loan agreement authorizing a storage and inventory fee or the like. But auto loan agreements aren't standardized and that language won't be in all agreements, so a blanket policy like the one described in the article surely isn't right. As it happens state law in a handful of states (Connecticut, Florida, Maine) authorizes repo man storage fees, but I can't find anything like that in the Ohio Revised Code.  So the repo's practice looks like it's illegal to me.   Whether or not anyone's going to litigate over this is another matter. 

Expanded reporting for ‘credit invisibles’ could do more harm than good -  Recently, the CEO of Experian urged the Senate to take up the Credit Access and Inclusion Act to help the tens of millions of so-called credit invisibles get affordable loans. Similarly, the sponsors of the House version of this bill have touted it as a way to help consumers with little or no credit history, sometimes called “no files” or “thin files.”  This is a well-intentioned goal, but there is a massive problem: The bill tries to achieve it by nullifying state and federal privacy protections when it comes to reporting utilities or rental housing payment information. Whatever its ostensible purpose, the actual language of the bill has one objective — to preempt state and federal laws that protect consumers. Some states, for instance, require consumers’ consent when electric or gas utility companies, telephone companies and public housing authorities want to send their payment information to credit bureaus. This kind of payment information can already be reported under the Fair Credit Reporting Act, but it is the individual’s choice in several states. Of course, Experian’s CEO, Craig Boundy, fails to mention that his company, as well as Equifax and TransUnion, will benefit greatly from this bill. All three credit bureaus would be happy to vacuum up more data without having to comply with state laws that prevent certain gas, electric or telephone companies from sharing customer data without the customer’s permission. The credit bureaus would also be happy to override federal privacy protections for subsidized housing tenants that require similar consumer consent.. It is far from clear that more credit reporting will assist vulnerable households obtain credit. In particular, gas and electric companies reporting payments may result in negative marks for millions of families — disproportionately families of color — who struggle to pay huge winter heating or summer cooling bills, but catch up on their debts in subsequent months. At present, gas and electric utility companies typically only report accounts that are seriously late, such as those that are written off or sent to collection agencies. These accounts are a small fraction of the total number of accounts with late payments.

Industry Lawyer Expected to Head F.T.C. Consumer Protection - NYT — The Federal Trade Commission is expected to appoint an industry lawyer who has represented Facebook, Uber and Equifax to lead the agency’s consumer protection bureau tasked with policing those companies. The lawyer, Andrew M. Smith, would recuse himself from any potential investigations or enforcement involving dozens of companies he has worked for over the past two years while at Covington & Burling in Washington, including many banks, lenders, credit-reporting agencies and technology companies, according to two people familiar with his proposed appointment but were not authorized to speak publicly. Those recusals would force Mr. Smith to step aside from his bureau’s most prominent investigations: the investigations into incidents at Facebook and Equifax that leaked the personal data of tens of millions of people. He also would not be involved in enforcing a F.T.C. settlement with Uber over a data breach. Joseph J. Simons, the F.T.C.’s chairman, has put Mr. Smith’s appointment up for a vote, causing debate among the five commissioners, one person close to the F.T.C. said. Such appointments are typically perfunctory votes. Four of the commissioners, including Mr. Simons, were sworn in this month. Mr. Simons and the two other Republican commissioners are expected to approve Mr. Smith’s appointment, the person said. Richard Blumenthal, a Democratic senator from Connecticut and the ranking member of the Senate’s consumer protection subcommittee, said in an interview that regardless of his recusals, Mr. Smith had the wrong résumé to run the nation’s top consumer protection office. . “I can imagine worse choices, but not many.” 

Mick’s Progress in Taking Apart the Consumer Financial Protection Bureau -- February of this year and Mick Mulvaney already started to dismantle the CFPB by stripping the agency’s fair-lending office of enforcement powers reducing oversight and penalties for firms that discriminate against borrowers. Enforcement of fair-lending laws is governed by the 2010 financial reform law. Taking away the agency’s enforcement powers creates a vacuum making it unclear as to what happens now. Senator Elizabeth Warren sees Mulvaney’s actions as an attempt to gut the agency’s power in regulating fair lending practices. Also in February, Mick Mulvaney scrapped an investigation into payday lender Golden Valley Lending . Golden Valley Lending contributed to Mulvaney’s congressional campaign, according to NPR. Michigan resident 27-year-old Julie Bonenfant took out a $900 loan from Golden Valley. In less than 12 months, her scheduled payments will total $3,735. Apparently, 950% interest is ok to Mick Mulvaney.  In March as reported by AP, Janet Matricciani, former CEO of payday lending company World Acceptance, contacted Mick Mulvaney on his personal email account suggesting she be made CFPB director. World Acceptance has been under investigation by the CFPB for three years. Reportedly, it trapped its customers in debt they could not repay and charged higher than normal interest rates than what was disclosed.  In April; Mick Mulvaney lectured the American Bankers Association, the same group “Showdown in Chicago” protested in the Loop a few years back and which I attended. In May; “Mick Mulvaney will close down the CFPB Student Lending Office, according to a bureau-wide memo written by Mr. Mulvaney. The student loan office at the CFPB has been responsible for returning $750 million in relief to students. The office had been responsible for investigating the troublesome student lender Navient. The CFPB sued Navient last year for unfair and abusive practices.

Congress Fails to Repeal CFPB’s Crack Down on Predatory Payday Lenders – Today, the Consumer Financial Protection Bureau’s (CFPB) important rule protecting 12 million American consumers from the underhanded business practices of payday lenders, survived an attempted repeal in Congress when the U.S. Senate failed to pass a Congressional Review Act resolution (S.J. Res. 56) sponsored by Sen. Lindsay Graham (R-SC), who has received more than $35,000 from the industry. The deadline for repealing the rule using this obscure legislative procedure was today, although media reports in recent weeks indicated it was likely to survive such attempts due to a lack of support. For example, the measure had no Senate co-sponsors until yesterday when Sens. Ted Cruz (R-TX), Joni Ernst (R-IA), and Pat Toomey (R-PA) signed on — the trio has received at least $124,260 from payday lenders over the course of their careers.

The real fight over CFPB's payday rule is just beginning - Congress has lost its chance to toss out the Consumer Financial Protection Bureau’s payday lending rule, but bigger fights over the rule’s fate are still brewing. The Senate’s deadline for approving an override of the rule under the Congressional Review Act expires Wednesday night, according to the Stop the Debt Trap campaign, a coalition of consumer advocates, labor groups and other activists. A spokesman for Majority Leader Mitch McConnell did not respond for comment on the deadline. While calculating the final end point for a Congressional Review Act bid can be tricky — it’s based on a somewhat technical tally of “legislative days”— any specific expiration date belies a large problem for the industry: lack of congressional momentum. The lack of movement on the measure is significant given how widely used the legislative tool has become this term. Lawmakers have overturned 16 agency actions with the help of the Congressional Review Act since last year — including the hotly debated mandatory arbitration and indirect auto lending restrictions, both promulgated by the CFPB. Why didn’t payday make the cut? Perhaps most crucially, the rule affects a much narrower slice of the financial industry, limiting support for its appeal from outside groups. As of Wednesday, the resolution, introduced by Sen. Lindsey Graham, R-S.C., was co-sponsored by just three additional lawmakers, Sens. Pat Toomey, R-Pa., Ted Cruz, R-Texas, and Jodi Ernst, R-Iowa. The indirect auto lending resolution, meanwhile, had 24 co-sponsors, along with sponsor Sen. Jerry Moran, R-Kansas, who spearheaded the effort.  But that hardly means the rule will remain in place as it’s written today.  While acting Director Mick Mulvaney said last year that modifying the payday rule was a task for Congress, he’s since indicated that he will reopen the rule for further consideration. This is likely to be a lengthy process — one bound by notice-and-comment procedures — and one that is likely to be fiercely debated by industry advocates and consumer groups alike.  “It's a battle that's going to be fought tooth and nail by both sides,” Kaplinsky said.

McWatters' CFPB bid hasn't even been announced. Is it already in trouble?  - J. Mark McWatters has not yet been named to head the Consumer Financial Protection Bureau, but he’s already finding himself in the hot seat. The Washington Post published a stinging investigative story late last week about the top credit union regulator’s history of telecommuting from his home in Dallas — roughly 1,200 miles from the National Credit Union Administration’s headquarters in Alexandria, Va.The report could complicate expectations that the White House plans to name McWatters as permanent head of the CFPB next month.  McWatters has reportedly conducted the bulk of his work out of Dallas for several years, after being appointed to the NCUA as a Republican board member in 2014. But the arrangement seems to have caused some friction among top officials even before he took over as chairman last year, according to the Post, which described a heated exchange between McWatters and former Chair Debbie Matz over the issue at an agency board meeting in early 2016.  “I couldn’t imagine doing the job as chairman effectively if I wasn’t in the office every day interacting with the regulatory staff, attorneys, and other regulators at other financial services agencies,” Matz told the paper recently. On top of that, despite working out of his home the majority of the time, McWatters spent $22,000 on furniture for his Alexandria office, the Post reported. He is also alleged to have contracted limousine services “dozens” of times for travel and spent an estimated $12,000 to fly from Dallas to Barcelona for a conference last year. The question now is whether these findings — which did not seem to gain widespread attention over the weekend — present a roadblock to his potential nomination as CFPB director.

Mulvaney vows to 'bring sanity' to Qualified Mortgage rule - One of the most significant regulations to come out of the financial crisis — the Qualified Mortgage rule — could face significant changes under new leadership at the Consumer Financial Protection Bureau. CFPB Acting Director Mick Mulvaney indicated Tuesday during a real estate convention that the rule, which took effect in 2013, painted all institutions with the same brush and needed to be reworked. "Our duty is to look at unduly and overly burdensome regulations and our statutory interest is to see markets function,” Mulvaney said at the National Association of Realtors conference in Washington. “You’re going to see us try to bring some sanity to the larger market, including QM.”The industry has long argued the rule was written assuming all mortgages were the same without taking into account the different types of lenders and mortgage products. Mulvaney appeared to agree with this criticism, specifically contrasting the widely popular digital Rocket Mortgage from Quicken Loans Inc. to getting a home loan from a small credit union.  “If you think you can have a one-size-fits-all rule for every single mortgage, you don’t understand the mortgage business,” Mulvaney said.“There’s a difference between the mortgage that goes out on Quicken, or Rocket Mortgage . . . and the one that my local credit union does for someone that they’ve known for three generations. Those are not the same thing, and to think that we’re going to try and force a square peg into a round hole impairs the ability of the market to function properly.”

From overdraft to HMDA, rulemaking has new look at Mick Mulvaney’s CFPB - Acting Consumer Financial Protection Bureau Director Mick Mulvaney has overhauled the agency’s spring agenda, dropping several long-time goals of his predecessor, including a rule on overdraft programs, checking accounts and student loan servicing. Notably, Mulvaney also apparently scrapped plans to extend CFPB supervision to a wider group of nonbanks, such as large marketplace lenders. The changes are yet another boon for corporations as Mulvaney seeks to reshape the agency. "The bureau is considerably narrowing its footprint in the market," said Isaac Boltansky, director of policy research at Compass Point Research & Trading. Following is a summary of where the CFPB is changing gears: The CFPB's agenda no longer includes any reference to a rulemaking for overdraft programs on checking accounts, student loan servicing or so-called “larger participants.” Banks had preemptively opposed further efforts to crack down on overdraft programs, arguing that rules that took effect in 2010 which required customers to opt-in to such programs had proven effective. But former CFPB Director Richard Cordray had continued to sound the alarm on overdraft, suggesting that customers weren’t necessarily aware of the risks involved. The agenda’s lack of mention is a concrete sign that Mulvaney is not interested in pursuing that course, which many had expected given his desire to ease regulations. The CFPB also dropped mention of any reference to oversight of the $1.3 trillion student loan servicing industry. Mulvaney last week also stripped the student lending office of all its functions except consumer education. Taken together, the moves show the CFPB is not likely to engage in rulewriting or significant supervision of that area. Finally, the CFPB dropped plans to release a larger participant rule to give it oversight of large installment lending firms, including marketplace lenders which are not directly subject to any federal supervision for consumer protection. 

HMDA measure in reg relief bill is misunderstood | Amer -- With the House of Representatives preparing to take up bipartisan legislation to ease the regulatory burden on community banks, one provision of the bill continues to be misrepresented on Capitol Hill. As minority community bankers ourselves, we want to set the record straight. Opponents of the Economic Growth, Regulatory Relief and Consumer Protection Act falsely claim the bill would disrupt data collection and reporting on the ethnicity, race and sex of borrowers under the Home Mortgage Disclosure Act. We live in and serve communities of color, so we want to be clear that the bill would do no such thing. The truth is this legislation maintains these and other longstanding HMDA data fields. Community banks that have been required to collect and report HMDA data on covered mortgage loans will continue to do so. This process has been in place for decades, with lenders collecting and reporting 23 HMDA data fields. They would be completely unaffected by the legislation. Instead, the pending legislation would reform only the dramatic expansion of reporting mandates imposed by the Consumer Financial Protection Bureau in 2015. It would exempt certain low-volume community banks with satisfactory or better Community Reinvestment Act ratings only from the 25 additional data fields mandated by the 2015 rule. Due to the concentration of the banking system in the hands of the nation’s largest financial firms, the vast majority of mortgage loans would continue to be reported under the 2015 standards. Applying these same standards to minority and other community banks, however, only discourages locally based lending and exacerbates industry consolidation. Like the rest of the bill, the idea is to take a more common-sense approach to regulatory mandates. This important provision would ensure substantial HMDA data will continue to be reported without overburdening low-volume lenders that are already strained by a CFPB rule that more than doubled the workload. 

Trump taps ex-Corker aide as head of Ginnie Mae -- President Trump has nominated Michael Bright, the acting president and chief operating officer of Ginnie Mae, to head the agency full time.Ginnie has been without a permanent head since January 2017 when Ted Tozer left the agency after seven years as president.  Bright was the front-runner to lead Ginnie, which he joined in mid-2017 as executive vice president and COO. He currently manages Ginnie's $1.8 trillion portfolio of mortgage-backed securities.

MBA: Mortgage Delinquency Rate decreased in Q1 --From the MBA: Mortgage Delinquencies Down in 1st Quarter of 2018 - The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally-adjusted rate of 4.63 percent of all loans outstanding at the end of the first quarter of 2018. The delinquency rate was down 54 basis points from the previous quarter, and was eight basis points lower than one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The percentage of loans on which foreclosure actions were started during the first quarter was 0.28 percent, up three basis points from the last quarter, but down two basis points from one year ago. Mortgage delinquencies dropped across all stages of delinquency in the first quarter of 2018 compared to the fourth quarter of 2017. The 30-day delinquency dropped 27 basis points from the previous quarter, while the 60-day and 90-day delinquency buckets dropped by 9 and 18 basis points respectively. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 1.16 percent, down 3 basis points from the fourth quarter of 2017 and 23 basis points lower than one year ago. This was the lowest foreclosure inventory rate since the third quarter of 2006. In addition to the strong economy and increasing home equity levels, extended storm-related foreclosure moratoria continue to play a factor in keeping foreclosure inventory at historic lows. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.61 percent in the first quarter of 2018, a decrease of 30 basis points from last quarter, and a decrease of 15 basis points from last year.

Seriously underwater properties see smallest annual decline yet -  As the number of equity-rich properties falls from its peak, the volume of seriously underwater properties saw its smallest annual decline, according to Attom Data Solutions.In the first quarter, more than 5.2 million properties were seriously underwater. This is down by 291,000 properties from a year ago, marking the smallest drop since the first quarter of 2013, the earliest this data is available.  The properties seriously underwater made up 9.5% of all properties with a mortgage, down slightly from 9.7% from a year ago but still up from 9.3% in the prior quarter. "We've reached a tipping point in this housing boom where enough homeowners have regained both sufficient equity and sufficient confidence to tap into their home equity — resulting in a noticeably slower decline in seriously underwater properties and slower growth in equity-rich properties," Daren Blomquist, senior vice president at Attom, said in a press release.  Homeownership tenure has nearly doubled since early 2000s levels, so this notable drop could signal some mobility for the housing market. This is a good sign for homebuyers as they continue suffering from limited housing inventory.About 13,841,082 properties were equity rich in the first quarter, down from their peak hit in last year's second quarter when 14,038,372 properties were equity rich. Equity-rich properties are still up by over 122,000 from the first quarter of 2017.At the end of this year's first quarter, more than 19.5 million properties had between 20% and 50% equity, which is an 8% decline from last year.

"Mortgage Rates Jump to 7-Year Highs" --From Matthew Graham at Mortgage News Daily: Mortgage Rates Push Farther Into 4-Year Highs: Mortgage rates spiked in a big way today, bringing some lenders to the highest levels in nearly 7 years (you'd need to go back to July 2011 to see worse). That heavy-hitting headline is largely due to the fact that rates were already fairly close to 7-year highs, although today did cover quite a bit more distance than other recent "bad days." [30YR FIXED - 4.75-4.875%]  Here is a table from Mortgage News Daily:  Home Loan Rates  View More Refinance Rates

10 year Treasury yield over 3% puts average mortgage rate at 7 year high --Mortgage rates have reversed course and reached a new high last seen seven years ago as the yield on the 10-year Treasury crossed the 3% threshold this week, according to Freddie Mac.  The 30-year fixed-rate mortgage averaged 4.61% for the week ending May 17, up from last week when it averaged 4.55%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.02%. "Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week," Sam Khater, Freddie Mac's chief economist, said in a press release.  "While this year's higher mortgage rates have not caused much of a ripple in the strong demand levels for buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5% could begin to hit the psyche of some prospective buyers." The 15-year fixed-rate mortgage this week averaged 4.08%, up from last week when it averaged 4.01%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.27%.The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.82% this week with an average 0.3 point, up from last week when it averaged 3.77%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.13%.

Fannie Mae cuts its origination forecast as mortgage rates rise - Fannie Mae reduced its mortgage origination volume forecast for 2018 and 2019 as rising interest rates are affecting refinancings now, and will curtail purchase activity going forward.The 2018 forecast was cut to $1.667 trillion from April's forecast of $1.69 trillion. In 2019, Fannie is now projecting $1.67 trillion of originations, down from its prior forecast of $1.686 trillion.Where Fannie Mae previously expected rates for the 30-year fixed loan to average 4.4% for the second and third quarters and then rising 4.5% through the end of 2019, the May update has the average for the current quarter rising to 4.5%, before increasing to 4.6% for the following three quarters and 4.7% in the last three quarters of next year. In the fourth quarter of 2017, the average rate was 3.9%.  There were $372 billion of mortgages originated in the first quarter, Fannie Mae said in its May Housing Forecast, with $218 billion in purchase volume and $154 billion in refis. That was $14 billion lower than what Fannie Mae projected in April's forecast; it thought the quarter would end with $386 billion in volume, with $219 billion of purchase loans and $167 billion of refi loans.

MBA: Mortgage Applications Decrease in Latest Weekly Survey, Refi Index lowest since August 2008 - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey  Mortgage applications decreased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 11, 2018.  ... The Refinance Index decreased 4 percent from the previous week to its lowest level since August 2008. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 4 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.77 percent from 4.78 percent, with points remaining unchanged at 0.50 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The first graph shows the refinance index since 1990.

 Mortgage applications fall for the sixth straight week - Mortgage applications decreased by 2.7% and fell for the sixth straight week as key interest rates fell slightly, according to the Mortgage Bankers Association."Treasury rates increased very slightly over the week, as the general sentiment was that inflation in April was not as strong as expected, despite a solid economic outlook," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.The MBA's Weekly Mortgage Applications Survey for the week ending May 11 found that the refinance index decreased 4% from the previous week to its lowest level since August 2008. The refinance share of application activity decreased to 35.9% from 36.3% the previous week. The seasonally adjusted purchase index decreased by 2% from one week earlier and the unadjusted purchase index decreased by 2% compared to the previous week and was 4% higher than the same week one year ago. The market composite index decreased by 2.7% on a seasonally adjusted basis from one week earlier. Adjustable-rate loan activity remained unchanged at 6.5% of total applications, while the share of Federal Housing Administration-guaranteed loans increased to 10.3% from 10.1% the week prior.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased 1 basis point to 4.77%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 8 basis points to 4.73%.

Median-Priced Home In San Francisco Requires $333,000 Annual Income - San Francisco County Real Estate is so hot right now that in order to afford a median priced home of $1,610,000, a household needs to bring in around $333,000 in annual income, according to a quarterly survey by the California Association of Realtors.  Nearby San Mateo county isn't much better - where a $1,575,000 median priced home requires an income of $326,000.  The good news, at least for well off San Franciscans, is that more households - 15% - were able to buy a median-priced single-family home in the first quarter of 2018 vs. the fourth quarter of 2017, thanks to rising incomes which rose faster than the increase in home prices and interest rates.  Six out of nine bay area counties (Alameda, Contra Costa, Napa, San Francisco, San Mateo, and Santa Clara) were responsible for the majority of the affordability gains, according to the CAR, while affordability decreased in two counties (Solano and Sonoma).  Statewide the situation is much more reasonable:

• Thirty-one percent of California households could afford to purchase the $538,640 median-priced home in the first quarter of 2018, up from 29 percent in fourth-quarter 2017 but down from 32 percent a year ago.
• A minimum annual income of $111,500 was needed to make monthly payments of $2,790, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.44 percent interest rate.
• Thirty-nine percent of home buyers were able to purchase the $449,720 median-priced condo or townhome. An annual income of $93,090 was required to make a monthly payment of $2,330.

"CAR: California Existing Single-Family Home Inventory Shows First YOY Gain in a Long While" -From housing economist Tom Lawler: CAR: California Existing Single-Family Home Inventory Shows First YOY Gain in a Long While.   From the California Association of Realtors monthly home sales report for April:“Statewide active listings (of existing single-family homes) finally reversed nearly three years of decreases after rising 1.9% (YOY) in April.”CR Note: Here is a table from housing economist Tom Lawler showing the year-over-year (YoY) change for National inventory from the NAR, and the YoY change for California from the CAR. It appears the YoY declines are slowing nationally, and inventory has started to increase YoY in California.

New York Rents Plunge 12% In Queens - Today in "free-market capitalism actually benefits consumers" news, rents are being slashed across the board in Queens as landlords make concessions to deal with a supply glut and keep tenants renting. This lowering of rents taking place in Queens - to the tune of 12% YOY – was reported on by Bloomberg on Thursday morning:For New York City apartment hunters, April was another good month to find a deal on rents. But no one fared better than those in northwest Queens. Rents there dropped 12 percent from a year earlier, to a median of $2,646 a month after landlord giveaways were subtracted, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Those giveaways were offered on 65 percent of all new leases signed in the area, excluding renewals, a record share in data going back to the beginning of 2016.The result from the price deflation that our Fed pins as the devil incarnate? More renters, more business and higher quality tenants:The enticements brought in more renters. New leases in northwest Queens -- Long Island City, Astoria, Sunnyside and Woodside -- jumped 11 percent to 272, the firms said.“More customers who were originally looking in Manhattan and Brooklyn are considering Queens,” said Hal Gavzie, Douglas Elliman’s executive manager of leasing. “It used to be just 100 percent a different consumer.”New York City tenants are crossing borders to compare deals in a market groaning under the weight of new supply. Landlords, who’ve accepted they need to compete to keep their units filled, are working to attract new tenants and offering sweeter renewal terms to keep the ones they have, Gavzie said.

How Many D.C. Suburban Office Parks Became Ghost Towns  While at the hotel, I noticed something that seemed unusual in the adjacent lot: an entirely abandoned five-floor commercial building with a large parking area. As I’ve driven around the Washington, D.C. Metropolitan Area.since then, I’ve noticed a significant number of similarly vacant or mostly empty commercial buildings.  This situation seems odd—Northern Virginia boasts five of the 13 richest counties in the country, and southern Maryland has two more of them. Why does one of the wealthiest areas of the United States possess such an abundance of vacant commercial real estate? It’s a complicated story, with perhaps one overarching theme: As a report of the Stephen S. Fuller Institute at George Mason University in Fairfax, Va., assesses, “the Washington region remains overly dependent on the federal government.” Many developers, realtors, and economists once thought that the region was impervious to recession—but current real estate trends suggest that is not the case. In 2014, Northern Virginia had about 40 large buildings with at least 50,000 square feet “ready for use,” meaning with few or no current tenants. In tml?utm_term=.41d5ec3d396b">the District alone, there was “more than 14 million square feet of unused commercial property downtown, about double the vacancy rate of a decade ago” in 2017. The numbers are comparable in Maryland, and they are far higher in Virginia. This is a remarkable amount of unused property across the region, especially given that some lease contracts require entire buildings to continue utility payments. This is the case even in booming Tysons, one of the wealthiest areas of Northern Virginia, with its marriage of extravagant wealth and seemingly incoherent planning or design. Currently in Tysons, commercial buildings are between 18 and 22 percent vacant. Healthy vacancy rates are supposed to be at about 10 percent, a figure that allows for enough flexibility for current tenants to expand their office space as needed, and for property owners to have some flexibility with space for potential new clients when contracts with older tenants expire.

Housing Starts decreased to 1.287 Million Annual Rate in April -- From the Census Bureau: Permits, Starts and Completions:  Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,287,000. This is 3.7 percent below the revised March estimate of 1,336,000, but is 10.5 percent above the April 2017 rate of 1,165,000. Single-family housing starts in April were at a rate of 894,000; this is 0.1 percent above the revised March figure of 893,000. The April rate for units in buildings with five units or more was 374,000.  Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,352,000. This is 1.8 percent below the revised March rate of 1,377,000, but is 7.7 percent above the April 2017 rate of 1,255,000. Single-family authorizations in April were at a rate of 859,000; this is 0.9 percent above the revised March figure of 851,000. Authorizations of units in buildings with five units or more were at a rate of 450,000 in April.  The first graph shows single and multi-family housing starts for the last several years.Multi-family starts (red, 2+ units) decreased in April compared to March.   Multi-family starts were up 18.7% year-over-year in April.Multi-family is volatile month-to-month, and  has been mostly moving sideways the last few years.Single-family starts (blue) increased slightly in April, and are up 7.2% year-over-year.  The second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically fairly low). Total housing starts in April were below expectations, however starts for February and March were revised up.

New Residential Housing Starts Down in April, Worse Than Forecast --The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential housing starts. The latest reading of 1.287M was below the Investing.com forecast of 1.310M and a decrease from the previous month's revised 1.336M. Unadjusted figures were revised going back to January 2012 and seasonally adjusted figures were revised going back to January 2013.Here is the opening of this morning's monthly report:  Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,287,000. This is 3.7 percent (±11.4 percent)* below the revised March estimate of 1,336,000, but is 10.5 percent (±9.7 percent) above the April 2017 rate of 1,165,000. Single-family housing starts in April were at a rate of 894,000; this is 0.1 percent (±11.8 percent)* above the revised March figure of 893,000. The April rate for units in buildings with five units or more was 374,000. [link to report] Here is the historical series for total privately-owned housing starts, which dates from 1959. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

New Residential Building Permits: 1.35M in April --The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential building permits. The latest reading of 1.352M was an increase from a revised 1.377M in March and slightly above the Investing.com forecast of 1.347M. Unadjusted figures were revised going back to January 2012 and seasonally adjusted figures were revised going back to January 2013. Here is the opening of this morning's monthly report:Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,352,000. This is 1.8 percent (±1.3 percent) below the revised March rate of 1,377,000, but is 7.7 percent (±0.9 percent) above the April 2017 rate of 1,255,000. Single-family authorizations in April were at a rate of 859,000; this is 0.9 percent (±1.4 percent)* above the revised March figure of 851,000. Authorizations of units in buildings with five units or more were at a rate of 450,000 in April. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Comments on April Housing Starts -- Bill Mcbride - Earlier: Housing Starts decreased to 1.287 Million Annual Rate in April. The housing starts report released this morning showed starts were down 3.7% in April compared to March, and starts were up 10.5% year-over-year compared to April 2017. The decrease in starts was mostly due to the volatile multi-family sector. This first graph shows the month to month comparison between 2018 (blue) and 2017 (red). Starts were up 10.5% in April compared to April 2017. Note that starts in March, April and May of 2017 were weaker than other months, so this was a fairly easy comparison. Through four months, starts are up 8.0% year-to-date compared to the same period in 2017. Single family starts were up 7.2% year-over-year, and up 0.1% compared to March 2018. Multi-family starts were up 18.7% year-over-year, and down 11.3% compared to March 2018 (multi-family is volatile month-to-month). Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment). These graphs use a 12 month rolling total for NSA starts and completions. The blue line is for multifamily starts and the red line is for multifamily completions. The rolling 12 month total for starts (blue line) increased steadily over the last few years - but has turned down recently. Completions (red line) have lagged behind - and completions have caught up to starts (more deliveries). It is likely that both starts and completions, on rolling 12 months basis, will now move mostly sideways. As I've been noting for a few years, the growth in multi-family starts is behind us - multi-family starts peaked in June 2015 (at 510 thousand SAAR). The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions. Note the low level of single family starts and completions. The "wide bottom" was what I was forecasting following the recession, and now I expect a few more years of increasing single family starts and completions.

NAHB: Builder Confidence Increases to 70 in May --The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 70 in May, up from 68 in April. Any number above 50 indicates that more builders view sales conditions as good than poor.From NAHB: Builder Confidence Climbs to 70 in MayBuilder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May after a downwardly revised April reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the fourth time the HMI has reached 70 or higher this year.“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.” “Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly-built single-family homes,” The HMI chart gauging current sales conditions increased two points to 76 in May while the indexes measuring buyer traffic and expectations in the next six months remained unchanged at 51 and 77, respectively.Looking at the three-month moving averages for regional HMI scores, the West and Northeast held steady at 76 and 55, respectively. Meanwhile, the South and Midwest each edged down one point to respective levels of 72 and 65.  This graph show the NAHB index since Jan 1985.
This was at the consensus forecast, and another solid reading.

Household Debt And Credit Report: Up $536B in Q1, Another Peak --The latest household debt for Q1 2018 was up 0.5% from Q4 and currently at $13.21T and at its peak. Here is an excerpt from the latest press release: The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit,, which shows that total household debt increased by $63 billion (0.5%) to $13.21 trillion in the first quarter of 2018. It was the 15th consecutive quarter with an increase, and the total is now $536 billion higher than the previous peak of $12.68 trillion, from the third quarter of 2008. Further, overall household debt is now 18.5% above the post-financial-crisis trough reached during the second quarter of 2013. The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data. Read more As a result of the housing and mortgage crisis of the Great Recession, economists have been paying more attention to the liabilities portion of household balance sheets. Among the New York Federal Reserve Board's many economic reports is the Household Debt and Credit report, which is released quarterly with data going back to 2003. Data is collected through the NY Fed's Consumer Credit Panel which is constructed from a nationally representative random sample of Equifax credit report data resulting in a sample size of over 40 million individuals quarterly. Here is some background on the report from the NY Fed: […] The chart below shows total debt balance nation-wide by composition in trillions of dollars. The current total is $13.21T, well exceeding the 2008 peak.

NY Fed Q1 Report: "Total Household Debt Rises for 15th Straight Quarter, Led by Mortgages, Student Loans" -- From the NY Fed: Total Household Debt Rises for 15th Straight Quarter, Led by Mortgages, Student Loans The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt increased by $63 billion (0.5%) to $13.21 trillion in the first quarter of 2018. It was the 15th consecutive quarter with an increase, and the total is now $536 billion higher than the previous peak of $12.68 trillion, from the third quarter of 2008. Further, overall household debt is now 18.5% above the post-financial-crisis trough reached during the second quarter of 2013. The Report is based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data. Mortgage balances—the largest component of household debt—rose by $57 billion during the first quarter, to $8.94 trillion. Balances on home equity lines of credit (HELOC) continued their downward trend, declining by $8 billion, to $436 billion. The median credit score of newly originating mortgage borrowers increased from 755 to 761. "While housing wealth is at an all-time high, it has shifted into the hands of older and more creditworthy borrowers, in part because of tight mortgage lending standards," said Andrew Haughwout, senior vice president at the New York Fed. "An increased amount of available home equity should make the household balance sheet more resilient in the event of a financial shock, though that may not be an option for lower-credit-score borrowers."

Retail Sales increased 0.3% in April --On a monthly basis, retail sales increased 0.3 percent from March to April (seasonally adjusted), and sales were up 4.7 percent from March 2017. From the Census Bureau report: Advance estimates of U.S. retail and food services sales for April 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $497.6 billion, an increase of 0.3 percent from the previous month, and 4.7 percent above April 2017. ... The February 2018 to March 2018 percent change was revised from up 0.6 percent to up 0.8 percent This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 0.3% in April. The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Year-over-year change in Retail Sales Retail and Food service sales, ex-gasoline, increased by 4.0% on a YoY basis. The increase in April was at expectations, and sales in February and March were revised up.

April Retail Sales: Up 0.3% MoM, Slightly Worse Than Forecast --  The Census Bureau's Advance Retail Sales Report for April was released this morning. Headline sales came in at 0.3% month-over-month to one decimal and was slightly below the Investing.com consensus of 0.4%. Core sales (ex Autos) came in at 0.35% MoM (to two decimals). February and March figures were revised. Here is the introduction from today's report:  Advance estimates of U.S. retail and food services sales for April 2018, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $497.6 billion, an increase of 0.3 percent (±0.4 percent)* from the previous month, and 4.7 percent (±0.5 percent) above April 2017. Total sales for the February 2018 through April 2018 period were up 4.6 percent (±0.5 percent) from the same period a year ago. The February 2018 to March 2018 percent change was revised from up 0.6 percent (±0.5 percent) to up 0.8 percent (±0.2 percent).Retail trade sales were up 0.4 percent (±0.5 percent)* from March 2018, and 4.8 percent (±0.5 percent) above last year. Gasoline Stations were up 11.7 percent (±1.6 percent) from April 2017, while Nonstore Retailers were up 9.6 percent (±1.4 percent) from last year. [view full report] The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

Fake News No Problem: Internet Totally Dominates Advertising in the US -- Wolf Richter -You might think you never look at these ads or click on them, and you might think they’re the biggest waste of money there ever was, but reality is that internet advertising revenues in the US are surging, and are blowing all other media categories out of the water. But only two companies divvy up among themselves nearly 60% of the spoils.Internet advertising revenues in the US soared 21.4% in 2017 from a year earlier to a record of $88 billion, thus handily demolishing TV ad revenues, which declined 2.6% to $70.1 billion, according to annual ad revenue report by the Interactive Advertising Bureau (IAB). It was the second year in a row that internet ad revenues beat TV. In 2016, internet ad revenues (or “ad spend”) had surpassed TV ad revenues for the first time in US history. And 2017 was the first year in the data series going back to 2010 that TV advertising actually declined. That formerly unstoppable growth industry is now a declining industry. Of the $254 billion spent on advertising in 2017 in the US, online ads obtained a share of 35%. In the chart below, there are two big media categories: Internet and TV. The rest are also-rans. Newspapers (print) are still on the list, if in much diminished form, down about 25% from 2010, but still nearly double the ad spend of OOH (out-of-home advertising, such as billboards, ads inside public transit, etc.):

LA area Port Traffic Increases YoY in April - Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic. The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.On a rolling 12 month basis, inbound traffic was up 0.2% compared to the rolling 12 months ending in March.   Outbound traffic was up 1.0% compared to the rolling 12 months ending in March.The 2nd graph is the monthly data (with a strong seasonal pattern for imports).  Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year.

Industrial Production Increased 0.7% in April --From the Fed: Industrial Production and Capacity Utilization Industrial production rose 0.7 percent in April for its third consecutive monthly increase. The rates of change for industrial production for previous months were revised downward, on net; for the first quarter, output is now reported to have advanced 2.3 percent at an annual rate. After being unchanged in March, manufacturing output rose 0.5 percent in April. The indexes for mining and utilities moved up 1.1 percent and 1.9 percent, respectively. At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier. Capacity utilization for the industrial sector climbed 0.4 percentage point in April to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972–2017) average. This graph shows Capacity Utilization. This series is up 11.3 percentage points from the record low set in June 2009 (the series starts in 1967). Capacity utilization at 78.0% is 1.8% below the average from 1972 to 2017 and below the pre-recession level of 80.8% in December 2007.Note: y-axis doesn't start at zero to better show the change. The second graph shows industrial production since 1967.  Industrial production increased in April to 107.3. This is 23% above the recession low, and 2% above the pre-recession peak.

The Big Four Economic Indicators: Industrial Production Up 0.7% in April -- Today's report on Industrial Production for April shows a 0.7% increase month-over-month, which was better than the Investing.com consensus of 0.5%. The year-over-year change is 3.46%, down slightly from last month's YoY increase. Annual revisions were made to the entire series incorporating new benchmark data and monthly and seasonal factor revisions. The indicator is currently at an all-time high. Here is the overview from the Federal Reserve:Industrial production rose 0.7 percent in April for its third consecutive monthly increase. The rates of change for industrial production for previous months were revised downward, on net; for the first quarter, output is now reported to have advanced 2.3 percent at an annual rate. After being unchanged in March, manufacturing output rose 0.5 percent in April. The indexes for mining and utilities moved up 1.1 percent and 1.9 percent, respectively. At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier. Capacity utilization for the industrial sector climbed 0.4 percentage point in April to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972–2017) average. [view full report] The chart below shows the year-over-year percent change in Industrial Production since the series inception in 1919, the current level is lower than at the onset of 8 of the 17 recessions over this time frame of nearly a century.

Empire State Manufacturing Survey: Growth Strengthened in May - This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 20.1 was an increase of 4.3 from the previous month's 15.8.The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state. Here is the opening paragraph from the report.Business activity grew strongly in New York State, according to firms responding to the May 2018 Empire State Manufacturing Survey. The headline general business conditions index climbed four points to 20.1, indicating a faster pace of growth than in April. [source] Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Earlier: Philly Fed Manufacturing Survey "Suggest a pickup in growth" in May  --  From the Philly Fed: May 2018 Manufacturing Business Outlook Survey Results from the May Manufacturing Business Outlook Survey suggest a pickup in growth of the region’s manufacturing sector. The survey’s indexes for general activity, new orders, shipments, and employment increased from their readings in April. A notable share of firms also reported higher prices for their own manufactured goods this month. The survey’s future indexes, measuring expectations for the next six months, reflected continued optimism.The diffusion index for current general activity increased 11 points, from 23.2 in April to 34.4 this month. Over 43 percent of the manufacturers reported increases in overall activity this month, while 9 percent reported decreases. ... The firms continued to report overall increases in employment. Nearly 37 percent of the responding firms reported increases in employment, while 6 percent reported decreases this month. The current employment index edged 3 points higher to 30.2, its highest reading in seven months. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Investors Are Wary as Companies Ramp Up Capital Spending  - U.S. companies are ramping up spending on their businesses at the fastest pace in years, a long-awaited development following years of tepid growth.Spending on factories, equipment and other capital expenditures by companies in the S&P 500 is expected to have risen 24% in the first quarter to $166 billion, on track for the fastest quarterly pickup since 2011 and a record for the first quarter of a year, according to Credit Suisse data going back to 1995. The jump has been aided by a tax-code overhaul that is putting more cash in companies’ pockets.The biggest spenders run the gamut, from technology behemoths such as Google parent Alphabet Inc. to auto maker General Motors Co. and oil firm Exxon Mobil Corp. Investors and economists agree capex is good for long-term corporate profits and the broader economy, which has languished for years without such spending. Yet history suggests it could also pressure share prices—leaving investors questioning whether it is worthwhile to bet on companies with costly projects that may not pan out, especially at a time when many are wondering whether corporate earnings are as good as they will get in this cycle. The jump in capital spending comes as companies whittle away at massive stockpiles of cash—something that has allowed them to funnel money into their businesses and increase their dividends, as well as buy back their shares at a record pace. Buybacks often provide a short-term boost to stock prices, although they have been maligned by critics who feel that, unlike capex, they do little to boost long-term profitability. But data suggest shares of companies with large and growing capex tend to underperform the broader market—which could weigh on returns just as the stock market has become more volatile.

Weekly Initial Unemployment Claims increase to 222,000, 4-week average lowest since 1969 - The DOL reported:In the week ending May 12, the advance figure for seasonally adjusted initial claims was 222,000, an increase of 11,000 from the previous week's unrevised level of 211,000. The 4-week moving average was 213,250, a decrease of 2,750 from the previous week's unrevised average of 216,000. This is the lowest level for this average since December 13, 1969 when it was 210,750. 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.

 Official Unemployment Is at 3.9%? Economist Robert Pollin Says It Is More Like 12% (video & transcript) Yves here. While quite a few economists have thrown cold water on the rosy message of the latest drop of the headline unemployment stat to below 4%, this Real News Network interview with Robert Pollin of PERI does the useful service of providing a more realistic estimate.

BLS: Unemployment Rates Lower in 4 states in April; California, Hawaii and Wisconsin at New Series Lows -- From the BLS: Regional and State Employment and Unemployment Summary Unemployment rates were lower in April in 4 states and stable in 46 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Twelve states had jobless rate decreases from a year earlier and 38 states and the District had little or no change. The national unemployment rate edged down from March to 3.9 percent and was 0.5 percentage point lower than in April 2017.  Hawaii had the lowest unemployment rate in April, 2.0 percent. The rates in California (4.2 percent), Hawaii (2.0 percent), and Wisconsin (2.8 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 7.3 percent.This graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red).  Currently only one state, Alaska, has an unemployment rate at or above 7% (light blue); And only Alaska is above 6% (dark blue).

WATCH: Agribusiness Devastating Family Farmers, Rural Communities, Environment -- For many family farmers, farming is not just a job, it’s a way of life. Family farms take care of the environment, produce healthy foods, and support strong rural families and communities. But these family farms are disappearing across the United States. Policies that supported farmers have been replaced by policies that support agribusiness, and since the 1970s, farmers have had to “get big or get out.” The results have been disastrous. To understand what has happened to farmers and rural communities in the U.S., we only need to look at Iowa, perhaps the most important and most productive farm state in the country. Today, boarded-up buildings line main streets of small towns across Iowa as small businesses, churches, and schools have closed. Families have been leaving rural areas for decades because there are no longer any jobs or other ways to earn a decent living. And all of this has been caused by the decline of family farms and the rise of agribusiness. Iowa has lost almost a third of its farms since the late 1970s: about 40,000 farming families. Instead of small, diversified family farms, Iowa – and most of rural America – is today made up of bigger and bigger farms planted “fencerow to fencerow,” producing just one or two crops: corn or soybeans.    Over 99% of Iowa farmland is sprayed with chemical pesticides and fertilizers. As a result of runoff, Iowa’s waterways are some of the most polluted in the country. These chemicals are also destroying the organic matter in soil, one of the state’s most important natural resources.

Google workers resign in protest as AI experts call for end to autonomous weapons project - Artificial intelligence researchers have called on Google to abandon a project developing AI technology for the military, warning that autonomous weapons directly contradict the firm’s famous ‘Don’t Be Evil’ motto.   The experts join more than 3,100 of Google’s own employees, who signed an open letter last month protesting the company’s involvement in a controversial Pentagon program called Project Maven.The partnership between the technology giant and the US Military involves using customised AI surveillance software to analyse data from drone footage in order to better recognise target objects, such as distinguishing between a human on the ground and a vehicle.Around a dozen employees have reportedly resigned in protest at Google’s refusal to cut ties with the US military, each one citing ethical concerns to Gizmodo. Google did not respond to a request for comment from The Independent. In their letter last month to Google CEO Sundar Pichai, the employees wrote: "We believe that Google should not be in the business of war... We cannot outsource the moral responsibility of our technologies to third parties."

Employers are monitoring computers, toilet breaks – even emotions. Is your boss watching you? - Last year an American company microchipped dozens of its workers. In a “chip party” that made headlines around the world, employees lined up to have a device the size of a grain of rice implanted under the skin between their thumb and forefinger. At first, Todd Westby, the CEO of Three Square Market, thought only about five or six people – him and a couple of directors, some of the people who worked in the IT department – would volunteer. But of the 90 people who work at the headquarters, 72 are now chipped; Westby has a chip in each hand. They can be used to open security doors, log on to computers and make payments at the company’s vending machines.Can he see it taking off at lots of other companies? “Not necessarily,” he says. Or at least not yet. It’s partly a generational thing, he believes. “You may never want to be chipped but if you’re a millennial, you have no problems. They think it’s cool.” There are other uses for it – two months ago, the company (whose core business is selling vending machines and kiosks) started chipping people with dementia in Puerto Rico. If someone wanders off and gets lost, police can scan the chip “and they will know all their medical information, what drugs they can and can’t have, they’ll know their identity.” So far, Three Square Market has chipped 100 people, but plans to do 10,000.The company has just launched a mobile phone app that pairs the chip with the phone’s GPS, enabling the implantee’s location to be tracked. Last week, it started using it with people released from prison on probation, as a replacement for ankle tags, which Westby describes as “intimidating and degrading”. Could he ever see the company using GPS to track its chipped employees? “No,” he says. “There’s no reason to.”

Guaranteed jobs in America: Motivations and limitations - Jared Bernstein -- Here are five facts for understanding the argument that follows.

• • For most of the past four decades, the U.S. labor market has not been at full employment, meaning there have often been too few job opportunities for job seekers. Even today, as we close in on full employment, pockets of weak labor demand persist.
• • Since we’ve been keeping such data, starting the 1970s, the unemployment rate for African Americans has been twice that of whites.
• • This differential contributes to large and persistent wage, income and wealth differences.
• • For decades, Democrats and Republicans have argued that work must be a ladder out of poverty. Most recently, conservatives have been adding work requirements to anti-poverty programs.
• • The Federal Reserve, when it judges inflation to be a risk, raises the unemployment rate (or prevents it from falling) to offset that risk.

Against these five facts, consider that Democratic policymakers are thinking seriously about government programs to create decent jobs for people who live in places where too few exist. As noted, even in year nine of the current expansion that boasts a 17-year low on the unemployment rate, there are far too many people and communities left behind. This, along with the black/white unemployment differential and its impact on minorities’ living standards and future opportunities, is a classic market failure, providing a clear rationale for government intervention.

Bullshit jobs: why they exist and why you might have one - Do you have a job that you secretly believe is pointless?If so, you have what anthropologist David Graeber calls a “bullshit job.” A professor at the London School of Economics and a leader of the early Occupy Wall Street movement, Graeber has written a new book called Bullshit Jobs: A Theory.He argues that there are millions of people across the world — clerical workers, administrators, consultants, telemarketers, corporate lawyers, service personnel, and many others — who are toiling away in meaningless, unnecessary jobs, and they know it.It didn’t have to be this way, Graeber says. Technology has advanced to the point where most of the difficult, labor-intensive jobs can be performed by machines. But instead of freeing ourselves from the suffocating 40-hour workweek, we’ve invented a whole universe of futile occupations that are professionally unsatisfying and spiritually empty.This, at least, is the story he tells in his book. Much of it is persuasive, some of it overly simplistic, but nearly all of it is interesting. I reached out to Graeber to talk about the book and the broader phenomenon of “bullshit jobs.”I wanted to know how we got to this place, if there are any real alternatives, and what, if anything, people can do about it. A lightly edited transcript of our conversation follows.

 Ending individual mandatory arbitration alone fails most workers: For real worker power, end the ban on class and collective action lawsuits -- Uber made news yesterday when the company announced that it will end mandatory arbitration for sexual harassment and assault complaints. Lyft quickly followed suit and said that it would also do away with mandatory arbitration agreements for sexual misconduct claims. These companies are the latest in a growing number of corporations that have moved to eliminate mandatory arbitration agreements for sexual harassment claims. There is no doubt that these companies are being driven to action by the power of #MeToo and #TimesUp. And, while a move away from mandatory arbitration by firms like Uber and Microsoft should be celebrated as a victory for these movements, it is important to recognize that for women in low-wage jobs, challenging workplace sexual harassment and assault remains largely impossible, unless companies also end bans on class and collective action. Workers depend on class and collective actions to enforce many workplace rights. Employment class action cases have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards. Without the ability to aggregate claims, it would be very difficult, if not impossible, for workers to find legal representation in these matters. This is particularly true for low-wage workers, whose cases are unlikely to involve large enough awards to attract attorneys to invest time in the case. That is the power of class and collective action suits: they let workers pool their claims, making it possible for an attorney to earn enough to make the case worth pursuing.

California Officials Are Spying On Their Citizens With Chinese Drones - Residents of Sacramento, California, are furious about a secret government drone spying program they say is surveilling their neighborhood from evening hours through the early morning, Sacramento (CBS13) reported. The mysterious drone(s) is/are “hovering over residential neighborhoods and looking down on homes” in Sacramento’s upper Land Park neighborhood between 6 p.m. and 6 a.m., according to CBS13.“It just doesn’t feel good,” said Ben Allen. “It hovers around. You don’t know what they’re looking at and monitoring.”Neighbors say they have heard the drone(s) buzzing overhead at all hours of the night, and well before sunrise.“The drone would fly over here, come over my neighbor’s house, fly over our house right here,” resident John Mattox told CBS13. “You come home from work, it would be operating, go to bed it was still operating, and this would repeat day after day.” Earlier this week, residents discovered the drone is operated by the Sacramento Housing and Redevelopment Agency (SHRA). “It manages two nearby housing communities, Alder Grove and Marina Vista,” said CBS 13. Both complexes have seen a surge in violent crime, including a fatal shooting earlier this year and a triple homicide in 2016. “We initiated the drone program in order to enhance the safety and security of our residents,” said LaTanna Jones, the assistant director for the housing agency.

Amazon threatens to move jobs out of Seattle over new tax - Amazon has threatened to move jobs out of its hometown of Seattle after the city council introduced a new tax to try to address the homelessness crisis. The world’s second-biggest company has warned that the “hostile” tax, which will charge firms $275 per worker a year to fund homelessness outreach services and affordable housing, “forces us to question our growth here”.Amazon, which is Seattle’s biggest private sector employer with more than 40,000 staff in the city, had halted construction work on a 17-storey office tower in protest against the tax.Pressure from Amazon and other big employers, including Starbucks and Expedia, had forced councillors to reduce the tax from an initial proposal of $500 per worker. The tax will only effect companies making revenue of more than $20m-a-year. The tax is expected to raise between $45m and $49m a year, of which about $10m would come from Amazon. The company said it would restart building work on the tower but may sublease another new office block to reduce its tax bill.

Texas school shooting at Santa Fe High School today; suspect ID'd as Dimitrios Pagourtzis - live updates -- Ten people were killed in a shooting Friday morning at a high school south of Houston, Texas Gov. Greg Abbott said. School district Police Chief Walter Braun said that explosive devices were found in Santa Fe High School and the surrounding area.According to law enforcement sources, nine students and a teacher were killed in the shooting, CBS News senior investigative producer Pat Milton reports. At an afternoon press conference, Abbott said that another 10 people were wounded.The suspect in custody was identified as Dimitrios Pagourtzis, 17, Galveston County Sheriff Henry Trochesset said in a statement. He was being held without bond on a charge of capital murder. Harris County Sheriff Ed Gonzalez said the suspect was believed to be a student at the school.Abbott said that two people in interest were being interviewed by authorities. He didn't identify them.The suspect had said that he wanted to commit suicide after the shooting, Abbott said. "He gave himself up and admitted at the time that he didn't have the courage to commit the suicide," Abbott said.

Ten killed in mass shooting at Texas high school - A 17-year-old carrying a shotgun and a revolver opened fire at a Houston area high school Friday morning, taking the lives of nine students and one teacher and injuring ten others. The horrific shooting was the deadliest such incident since the massacre of 17 students and teachers in February at Marjory Stoneman Douglas High School in Parkland, Florida, which sparked a nationwide wave of student-led protests and walkouts against school violence. The suspect, identified as Dimitrios Pagourtzis, opened fire in an art class in Santa Fe High School around 7:45 a.m., killing nine students and one teacher. According to authorities, Pagourtzis said he had intended to take his own life after the initial shooting but surrendered to officers and stated that he did not have the courage to shoot himself. Attacks on schools in the United States, typically by a current or former student armed with a gun, occur with a terrifying regularity across the country. According to CNN, there have been 22 school shootings this year, with an average of one shooting incident per week. The shooting at Santa Fe was the third in just the last eight days. On Thursday, 19-year-old Matthew Milby opened fire in the gymnasium of Dixon High School in Dixon, Illinois. He was quickly chased off by an officer and arrested before hurting anyone. Last week, a 14-year-old boy went to Highland High School in Palmdale, California and fired ten rounds from a semiautomatic rifle shortly before classes were scheduled to begin, hitting and wounding a 15-year-old student. The student was eventually detained by police and charged with attempted murder.

Alleged shooter at Texas high school spared people he liked, court document says - The teenager who allegedly used a shotgun and a revolver to kill 10 people and wound 10 others at a Texas high school Friday admitted he didn't shoot people he liked and meant to kill the ones he did target, a probable cause affidavit says.Suspect Dimitrios Pagourtzis, 17, has cooperated with police, said Galveston County Magistrate Mark Henry said. Henry denied bail for the student, who is accused of capital murder of multiple people and aggravated assault on a public servant.  Students at Santa Fe High School, not far from Houston in southeastern Texas, scrambled for safety after they heard shots just after class began Friday morning. Nine students and one teacher were killed, a law enforcement official told CNN. Pagourtzis said little during a video court appearance, answering "Yes, sir" when asked whether he wanted a court-appointed attorney. He was not asked to enter a plea.  The probable cause affidavit says he told an investigator he spared people he liked because he wanted his story told.

The Gun Controversy Is Smaller Than You Think -- Ten people died in a Texas school shooting today, and another 10 were wounded. Those numbers are grievous, and they add to grievous milestones. This was:

• America’s 16th school shooting this year, by the Washington Post’s count, the most in any year since 1999, with seven months to go; 
• The deadliest school shooting since the one in Parkland, Florida – which only happened on February 14, unbelievably;
• The 101st mass shooting 1 this year, according to the Gun Violence Archive.

The people currently running the country – namely, President Donald Trump, Vice President Mike Pence and most importantly the National Rifle Association – quickly offered thoughts, prayers and a denunciation of “evil.” What they didn’t offer were solutions. But there are plenty of solutions on the table. And most Americans support them, even if the people leading them don’t, note Bloomberg’s editors, citing a new American Public Health Association poll. Here are some more numbers, from that survey:

• 87.8 percent of Americans (including gun owners) want universal background checks;
• 84.8 percent support making arms dealers account for missing guns;
• 83.6 percent want states to report people who shouldn’t have guns to a background-check system;
• 81 percent want to keep people under domestic-violence restraining orders from getting guns;
• 78.9 percent want to let families ask courts to take guns from people deemed to be a risk of harming themselves or others.

The NRA opposes even these regulations (note there’s nothing here about, say, banning assault-style rifles, which is supported even by 40 percent of gun owners, according to the APHA). As long as the NRA opposes these laws, so do our leaders.Those same leaders also say it’s crass to talk about gun laws so soon after a shooting, that we shouldn’t politicize gun deaths. But given the depressing regularity of such violence, there will never be a “right” time to talk about this problem by that standard. And the solutions won’t spring forth on their own; leaders must take action. As the cycle continues, the death toll of young Americans keeps growing.

‘No Way To Prevent This,’ Says Only Nation Where This Regularly Happens —In the hours following a violent rampage in Texas in which a lone attacker killed eight individuals and seriously injured several others, citizens living in the only country where this kind of mass killing routinely occurs reportedly concluded Friday that there was no way to prevent the massacre from taking place. “This was a terrible tragedy, but sometimes these things just happen and there’s nothing anyone can do to stop them,” said Ohio resident Erica Webb, echoing sentiments expressed by tens of millions of individuals who reside in a nation where over half of the world’s deadliest mass shootings have occurred in the past 50 years and whose citizens are 20 times more likely to die of gun violence than those of other developed nations. “It’s a shame, but what can we do? There really wasn’t anything that was going to keep this individual from snapping and killing a lot of people if that’s what they really wanted.” At press time, residents of the only economically advanced nation in the world where roughly two mass shootings have occurred every month for the past eight years were referring to themselves and their situation as “helpless.”

Flint high school teachers criticize deteriorating working conditions -- Educators and students at public schools in Flint, Michigan face deteriorating conditions as a critical teacher shortage forces staff to work overtime without compensation and leaves many students in classes without teachers each day.Despite virtual silence from the Superintendent and the United Teachers of Flint union (UTF) on the conditions in Flint’s public schools, multiple students and teachers have reported to the WSWS that Southwestern Academy high school has held dozens of classes without teachers for months at a time over the course of the current school year.Multiple students told the WSWS that sometimes they are left in classes without supervision. Other times they have been sent to the library to play on their phones, or to other classes where they sit on counters and participate in the class regardless of whether it is different subject, or even a different grade.The office of Flint School District Superintendent Gregory Witherspoon failed to return calls from the WSWS Monday regarding the state of Flint public schools. Responding to a request for comment, a representative of the UTF said only the president, Karen Christian, could comment on the issues. Christian could not be reached and did not return phone calls Monday. The attack on public education has been decades in the making in Flint. Once the nation’s model for public education, the Flint School District has been in steady decline since its peak in 1968 when almost 48,000 students were enrolled. By 2003, district enrollment had dropped to 21,007, and by 2017 was down to just 4,883. Flint Community Schools had 2,448 full-time staff on its payroll in 2011 and just 874 full-time workers by 2017.

Colorado Teachers Are Mad as Hell—And Now They’re out on Their First Strike in Decades - Teachers in Pueblo, Colorado have been on strike for the past five days in a historic work action. They’re calling for 2 percent cost-of-living increases—a demand supported by a neutral fact-finder who determined that the school district could afford such raises.It’s the first teachers’ strike in Colorado since 1994, and it comes just weeks after some of the largest teacher organizing efforts in the state in decades.Teacher pay in Colorado ranks 31st in the country, with the average educator earning just under $53,000, according to the state’s education department. As Chalkbeat Colorado notes, some school districts in the state have average salaries above $70,000, while others are closer to $30,000.On April 26 and 27, thousands of teachers from across Colorado poured into Denver, the state capital, to call on legislators to increase funding for teachers and schools. Those rallies weren’t technically strikes—educators prefer the term “walkouts”—since school districts closed beforehand and many teachers used their personal days to attend. The Colorado Education Association, the state’s largest teacher union, says that public schools are underfunded by $822 million, and that per-pupil spending stands at $2,700 less than the national average.Mike Maes, executive vice president of the Pueblo Education Association, told In These Times that over the course of the past week their strike has really evolved “into a  community movement.” On Wednesday roughly 1,000 teachers, students and parents marched for miles around the city. “There’s almost no words to describe it,” said Maes. More than 470 teachers voted to strike, and just 24 voted against it.

Wave of US educator walkouts hits North Carolina today --Tens of thousands of teachers and school employees are assembling today in Raleigh, the state capital of North Carolina, for demonstrations to demand funding for crumbling school infrastructure, wages, benefits and reduced class sizes, and to oppose more than a decade of deep cuts to public education spending.The walkout, which has already forced the closure of at least 40 of the state’s 115 school districts at time of writing, is the latest in a wave of teacher strikes and demonstrations across the US, in West Virginia, Kentucky, Oklahoma, Arizona, New Jersey, Puerto Rico and Colorado.  The rally follows yesterday’s release of a report by the National Center for Education Statistics, based on a 2015-2016 survey, which found that 94 percent of teachers across the US were forced to spend their own money on school supplies, including chalk, to cover budget shortfalls.The median amount spent was $297 per year, and this number increased in areas with higher levels of poverty. For schools where three quarters or more of students qualified for government-funded lunch programs, almost one in ten teachers spent more than $1,000 every year on basic classroom supplies.As in previous walkouts, the initiative for the strike has come from rank-and-file teachers, not the union officials. The unions are opposed to any extended walkout and are seeking to send teachers back to school after a single day of rallying. The North Carolina Association of Educators (NCAE) is promoting the rally with the hash tag #itspersonal, calling on teachers to take a personal day off school and pay $50 for a substitute teacher if their school remains open. The union is presenting the walkout as a run-up to the main action of voting for Democrats in the November elections. NCAE president Mark Jewell declared at a rally yesterday that “all of this will be fruitless unless we take this energy and passion to the ballot box and change those who make this policy.” The reality, however, is that the Democrats, no less than the Republicans, have overseen the assault on public education in North Carolina as throughout the US. Former Democratic governor Bev Perdue oversaw the largest cuts to school funding from 2009 to 2011, slashing more than $1 billion from annual expenditure in current dollar terms.

20,000 teachers rally in North Carolina - An estimated 20,000 teachers rallied in North Carolina’s capital of Raleigh yesterday, closing schools for two-thirds of the state’s 1.5 million students to demand increased funding and wage increases.For the sixth time in three months, tens of thousands of teachers and school employees have descended on a US state capital. The protest follows walkouts in West Virginia, Kentucky, Oklahoma, Colorado and Arizona. Many students, parents and other workers also joined the demonstration. The ongoing wave of teacher strikes is part of an  upsurge in working class struggle across the US and internationally since the start of 2018. Teachers who spoke to World Socialist Web Site reporters expressed widespread support for a united struggle in opposition to the unions’ isolation of teacher strikes on a state-by-state basis. Rochelle Maignan, a pre-Kindergarten teacher from the Charlotte-Mecklenburg district, said, “It’s about time we all came together and started fighting.”WSWS reporters distributed hundreds of copies of the May 16 statement by the WSWS Teacher Newsletter, and won widespread support for their call for the preparation of a nation-wide strike to oppose the decades-long bipartisan war on public education and school workers.Teachers also expressed anger over the union’s opposition to call a statewide strike.“Other states are doing it, so why shouldn’t we?” said Yaschia, a teacher with 20 years’ experience who said she quit the union because when she needed help, “they weren’t there for me.”“Teachers put up with a lot because they are dedicated to their job. But now it’s time to fight,” she said. “Because the elite don’t want to give up their money.” This sentiment was diametrically opposed by the rally organizers in the National Education Association (NEA) and its state affiliate, the North Carolina Association of Educators (NCAE),  The NCAE transformed the protest into an unofficial Democratic Party election rally. The state’s governor, Roy Cooper, was invited to address the crowd and posture as an ally of teachers.

North Carolina teachers oppose unions’ shutting down of walkout --In the wake of Thursday’s one-day teacher walkout in North Carolina, there is immense sentiment among rank-and-file teachers for expanding their struggle and opposition to the shutting down of the walkout by the North Carolina Association of Educators (NCAE).On Thursday afternoon, teachers returning from the rally posted statements calling for a continuation of the walkout on the North Carolina Teachers United Facebook group, which more than 38,000 teachers joined in the lead-up to the walkout. A number of statements opposed the NCAE’s channeling of the struggle behind the election of Democrats in the November 2018 elections.Katherine said, “So are we really satisfied with waiting until November to hopefully vote in politicians that will listen? Are there planned and coordinated action steps already that haven’t been widely communicated? A lot of my peers feel like ‘well now what?’ And certainly aren’t satisfied with just campaigning and waiting until November to make their votes heard. What’s the ‘now what’ piece? Is there real talk of a grass roots organized labor union, and not just whispers?” Another teacher, Trish, posted the comment: “By November, a budget will be passed and we will have no leverage. I’m disappointed that today’s efforts won’t continue. The North Carolina General Assembly will be laughing at us tomorrow.”

South Carolina teachers to rally for better pay and funding for schools - Teachers and other state employees will gather at the State House in Columbia, South Carolina today to protest low wages and poor working conditions. The demonstration follows Wednesday’s rally of 20,000 teachers in North Carolina and is part of an ongoing wave of teacher strikes and demonstrations across the US and internationally.  Salaries and working conditions for educators in South Carolina are abysmal. The average salary stands at $10,000 below the national average, while the minimum starting salary is only $30,113 a year.  Working conditions are extremely poor. Among the worst are those schools located in the 36 districts along Interstate 95, exposed in the award-winning 2005 documentary, Corridor of Shame: The Neglect of South Carolina’s Rural Schools. Raw sewage mixed with worms and insects flowed into the hallways of Ridgeland Elementary in Jasper County, where it was tracked into classrooms by students. In other schools, holes in the floors of some classrooms allowed students to see into the classrooms below them. Teachers used old rags and sandbags to prevent a flood of rainwater coming in through cracks in the walls. Libraries were filled with shockingly few books, and those on hand were so outdated that one teacher recalled finding a book that predicted, “One day man will land on the moon.” Low pay and poor conditions have produced an exodus of teachers. The Center for Educator Recruitment, Retention & Advancement reported that 4,900 teachers left the school system in 2016-2017, and that there were 500 vacant positions at the start of the school year, an increase of 16 percent over the previous year.

Teachers Are Leading the Revolt Against Austerity -- In less than three months, rank-and-file teachers and educational support staff in five states—West Virginia, Kentucky, Oklahoma, Colorado and Arizona—have turned the entire country into their classroom. They haven’t just pushed for—and won—better pay and working conditions for themselves. They’ve also mounted a direct challenge to decades of bipartisan tax cuts for corporations, helping us all understand what austerity means. And by championing a raft of policy proposals to redistribute wealth away from the 1 percent and back to the working and middle-class, they’ve shown us how austerity can be defeated. As Emily Comer, a middle-school Spanish teacher who was a leader in the strikes in West Virginia, put it, “The phase we are in now—to win a real, progressive solution to the health-insurance crisis—forces us to dream bigger. This isn’t just about our healthcare plan. It’s about rebalancing the power of workers and corporations in our state.”  Remarkably, these strikes have garnered overwhelming support from the public, despite years of well-funded attacks on teachers unions. In a recent NPR/Ipsos poll, just one in four respondents said they think teachers are paid enough, and three-quarters said teachers have the right to strike. Remarkably, this support cut across party lines. “Two thirds of Republicans, three-quarters of independents and nearly 9 in 10 Democrats” support the teachers’ right to strike, the poll showed.  The most recent walkouts have shifted to western states. On April 26, 50,000 teachers and their supporters march through Phoenix in 100 degree heat. That same day, thousands of protesters descended on the capitol of Colorado. Every walkout has resulted in victories, some more than others. In Kentucky, educators forced the governor’s veto of new taxes to be overturned, providing some additional funds for schools. But they fell short of preventing the conservative legislature from weakening their pension plan. In Oklahoma, while educators failed to stop a raft of tax cuts and increase overall funding, they still won their first raise since 2007 by $6,000 a year, which by is huge by local standards. In Arizona, the teachers won a 9 percent immediate raise, with Governor Doug Ducey pledging 11 percent more to achieve what he calls the 2020 deal, a 20 percent pay raise for all teachers by 2020.

Deals by unions to end US teacher strikes funded by regressive taxes, more budget cuts - With rank-and-file teachers increasingly raising the demand for a nationwide strike, the unions are doing everything they can to prevent the outbreak of new strikes and to dissipate anger by directing teachers to “lobby” state legislatures and elect supposedly “pro-education” Democrats in November. A May 8 article in Vox shows that the pitiful wage and funding increases in these states are being financed by new regressive taxes on the working class and cuts in other essential programs. While the deals hailed by the unions gave a little with one hand and took more with the other, the energy giants and other corporate interests, which have received decades of tax cuts, escaped unscathed.The charts in the article underscore the fraudulence of the worn-out claim “there is no money” for schools and other social services and that educators, parents and students have no choice but to accept attacks on their rights. The six-day strike of 60,000 educators, which featured the unity of both union and non-union teachers and school workers across the state, was shut down on May 4 when the Arizona Education Association and its front group, Arizona Educators United, sent teachers back to work.The agreement was packaged as a “20 percent wage increase.” However, Governor Doug Ducey signed a deal that funds only a small part of that. The actual wage increases in the deal are expected to amount to 4 or 5 percent. Arizona is ranked 50th in elementary school teacher pay and 49th for high school teachers. Educators were also demanding the full restoration of more than $1.1 billion in cuts to lower class sizes and provide school supplies, something neither the governor nor the legislature would consider. To fund these inadequate increases, Ducey and the legislators will impose a new $18 car registration fee, costing residents a total of $149 million a year, and shift costs for the state’s desegregation plan from the treasury to homeowners. Originally, the governor had called for reducing aid for people with developmental disabilities and money to hire skilled nurses for Medicaid patients.

More states introduce bills to interfere with science education -- At the start of this month, we covered a bill making its way through the South Dakota legislature. I Should the bills pass, teachers would be immune to punishment for using outside material in instruction, as long as the teacher believes the material is scientific—even if it has overtly religious origins. But in the intervening time, similar bills have appeared in three other states, and a fourth state is considering eliminating references to climate change in its teaching plan. Science education appears to be facing a busy year in the statehouses. We can start with Indiana, where Senate Resolution 17 has now cleared the Education Committee. The resolution approvingly quotes a proposed amendment to the No Child Left Behind Act to challenge evolution: "Where topics are taught that may generate controversy (such as biological evolution), that the curriculum should help students to understand the full range of scientific views that exist, why such topics can generate controversy, and how scientific discoveries can profoundly affect society."  Based on the earlier language, the "diverse" nature would presumably involve different views on evolution. Continuing on the theme of controversy, we move on to Oklahoma, where Senate Bill 393 has been passed by the Education Committee. This bill follows the script of the legislation outlined above: the State Board of Education, school district boards of education, school district superintendents, and school principals are all forbidden from disciplining teachers who critique the "strengths and weaknesses of existing scientific theories."  A resolution in Alabama covers similar ground, noting subjects required to be taught in that state, including "biological evolution, the chemical origins of life, global warming, and human cloning," are all the subject of controversy.

Teenage Wasteland --  Using dozens of graphs, Twenge shows the reader how teenagers today drink less, go out less, socialize less, are less motivated to get their driver’s license, work less, date less, and even have sex less.  At first glance, the data seem counterintuitive, because the social pressures to abstain from alcohol and casual sex have never been more relaxed. But, on further reading, it appears that young people’s avoidance of adult behaviors has at least something to do with the addictive and distracting nature of smartphones and social media. Of course, Twenge is careful to point out that this is all “correlational.” She does not have a smoking gun and cannot prove causality. But the speculation seems plausible. All of the changes she observes started accelerating after 2007, when smartphones became ubiquitous. She writes: I asked my undergraduate students what I thought was a very simple question: “What do you do with your phone while you sleep? Why?” Their answers were a profile in obsession. Nearly all slept with their phones, putting them under their pillows, on the mattress, or at the very least within arm’s reach of the bed. They checked social media websites and watched videos right before they went to bed and reached for their phones again as soon as they woke up in the morning (they had to—all of them used it as their alarm). Their phone was the last thing they saw before they went to bed and the first thing they saw when they woke up. If they woke up in the middle of the night they often ended up looking at their phones. They talked about their phones the way an addict would talk about crack: “I know I shouldn’t, but I just can’t help it.”

Study shows increase in youth suicide attempts -- The number of school-age children and adolescents hospitalized for suicidal thoughts or attempts has more than doubled since 2008, according to a new Vanderbilt-led study published today in Pediatrics.  The study, "Hospitalization for Suicide Ideation or Attempt," looked at trends in emergency room and inpatient encounters for suicide ideation and attempts in children ages 5-17 years at U.S. children's hospitals from 2008 to 2015. Preliminary information from the study was initially presented last spring at the annual meeting of the Pediatric Academic Societies.  During the study period, researchers identified 115,856 encounters for suicide ideation and attempts in emergency departments at 31 children's hospitals. Nearly two-thirds of those encounters were girls. While increases were seen across all age groups, they were highest among teens ages 15-17, followed by ages 12-14.  Just over half of the encounters were children ages 15-17; another 37 percent were children ages 12-14; and 12.8 percent were children ages 5-11. Seasonal variation was also seen consistently across the period, with October accounting for nearly twice as many encounters as reported in July.   "To our knowledge, this is one of only a few studies to report higher rates of hospitalization for suicide during the academic school year," Rates were lowest in summer, a season which has historically seen the highest numbers in adults, suggesting that youth may face increased stress and mental health challenges when school is in session.  Suicide is the third leading cause of death among adolescents in the United States, preceded only by accidents and homicides, according to the U.S. Centers for Disease Control and Prevention.

Schools are removing analogue clocks from exam halls as teenagers 'cannot tell the time' -- Schools are removing analogue clocks from examination halls because teenagers are unable to tell the time, a head teachers’ union has said.  Teachers are now installing digital devices after pupils sitting their GCSE and A-level exams complained that they were struggling to read the correct time on an analogue clock.  Malcolm Trobe, deputy general secretary at the Association of School and College Leaders (ASCL), said youngsters have become accustomed to using digital devices. “The current generation aren’t as good at reading the traditional clock face as older generations,” he told The Telegraph. “They are used to seeing a digital representation of time on their phone, on their computer. Nearly everything they’ve got is digital so youngsters are just exposed to time being given digitally everywhere.”Mr Trobe, a former headmaster, said that teachers want their students to feel as relaxed as possible during exams. Having a traditional clock in the room could be a cause of unnecessary stress, he added.He said that schools are trying to make everything as “as easy and straightforward as possible” for pupils during their exams. “You don’t want them to put their hand up to ask how much time is left,” he said.

Climate change is conspicuously absent from college textbooks - Rachel Yoho was concerned about the apparent absence of information about climate change in college textbooks. So, while pursuing her doctorate at Arizona State University, she decided to look into the matter. Yoho and her collaborator, Bruce Rittmann, director of ASU’s Swette Center for Environmental Biotechnology, examined introductory textbooks in physics, biology and chemistry. They focused on introductory books in specific fields because “in a cutting-edge research lab, we are used to looking at things across disciplines,” she said. Moreover, introductory textbooks “represent the intersection of teaching to non-scientists and training for future scientists,” she added.Their results were disturbing. They found that less than four percent of the pages in the textbooks they examined discussed climate change, renewable energy or related environmental issues — a sign that universities are doing too little to educate students about the defining issue of their generation. The findings appear in the journal Environmental Communication.“I think climate change is an absolutely essential scientific topic,” Yoho said. “It’s a socio-scientific issue and one of the biggest problems facing society today. Climate change is something that we find in the news, on social media and in conversation with others on a regular basis. Discussion of climate change impacts our lives and our students’ lives in many ways.”Yet climate change still remains among the most polarizing issues in society today. Despite virtual unanimity among scientists that climate change is real, and that it is caused by human activities, people who cast doubt on climate science continue to dominate the debate.

Economist Trolls School By Getting Them To Investigate If Clubs With "Girl" Violate Title IX - The University of Michigan (UM) is reviewing 11 school programs for potential Title IX violations resulting from favoring one gender over the other. American Enterprise Institute (AEI) scholar Mark Perry drew the university’s attention to the programs, pointing out each could be in violation of federal law, as well as the Michigan State Constitution and UM’s Nondiscrimination Policy.Campus clubs such as the “Girls in Engineering, Math and Sciences Camp,” “Girls in Science and Engineering Camp” and “Girls Code Camp” favor the female gender over all others, Perry pointed out in an email to Pamela Heatlie, UM associate vice-provost for Academic and Faculty Affairs and senior director for Institutional Equity and Title IX coordinator.  Women graduating from high school and entering college are generally of higher academic standing than men when it comes to STEM fields and classes, according to The College Board’s 2016 data.  Therefore, if any gender should be given preferential treatment, it should be men, Perry posits. Perry was “inspired” by the national club formerly known as the Boy Scouts for becoming “gender inclusionary” and changing its name to Scouts BSA to reflect its progressive step forward, he noted in an AEI blog post. “If, like the Boy Scouts, UM is really committed to offering programs that are truly welcoming to students of all genders after ending its previous gender apartheid practices, then perhaps those programs would respectfully consider name changes that would communicate publicly our institution’s commitment to full gender equity, fairness and justice,” Perry wrote to Heatlie. “I am doubtful that most boys will ever really feel welcome in a program that was historically girls-only and exists today with a name that reflects that history of gender apartheid and gender discrimination against them,” Perry noted.

Catholic U. Plan, Which Could Result in Layoffs of Tenured Profs, Moves Ahead - A controversial cost-cutting plan that would allow Catholic University of America to lay off tenured professors has cleared a major hurdle.  The university’s Academic Senate, which includes faculty members and administrators, voted 35 to 8 last week to send the so-called academic-renewal proposal to the Board of Trustees for a final vote. The plan, designed to close a $3.5-million budget gap and stem enrollment declines, has generated fierce debate on the campus, in Washington, D.C., about the strategic direction of the university, the marketability of its Catholic identity, and the fragility of tenure in the face of financial challenges.Andrew V. Abela, the university’s provost, has said he hopes to cut 35 full-time professors, or about 9 percent of the faculty, through voluntary retirements and buyouts. He has argued, however, that the plan’s approval would authorize the university to eliminate full-time, tenured professors, if need be.   The Faculty Handbook prescribes that the university can lay off tenured professors only in the event of program eliminations, for cause, or after a declaration of financial exigency. None of those circumstances apply to this plan, which has been billed as a strategy for simultaneously raising the university’s prestige and reducing costs. The senate’s vote is consultative, and some professors stressed that approving the plan’s referral to the board was not the same as an endorsement. Still, the vote was seen by supporters as an important step in legitimizing a plan that has generated pockets of vociferous opposition. A faculty committee had described the plan’s approach to cutting tenured professors as “playing with fire,” and the provost responded by accusing critics of “spreading half-truths and fear” about the proposal.

Education plus ideology exaggerates rejection of reality -- We like to think that education changes people for the better, helping them critically analyze information and providing a certain immunity from disinformation. But if that were really true, then you wouldn't have low vaccination rates clustering in areas where parents are, on average, highly educated. Vaccination isn't generally a political issue. (Or, it is, but it's rejected both by people who don't trust pharmaceutical companies and by those who don't trust government mandates; these tend to cluster on opposite ends of the political spectrum.) But some researchers decided to look at a number of issues that have become politicized, such as the Iraq War, evolution, and climate change. They find that, for these issues, education actually makes it harder for people to accept reality, an effect they ascribe to the fact that "highly educated partisans would be better equipped to challenge information inconsistent with predispositions."The researchers looked at two sets of questions about the Iraq War. The first involved the justifications for the war (weapons of mass destruction and links to Al Qaeda), as well as the perception of the war outside the US. The second focused on the role of the troop surge in reducing violence within Iraq. At the time the polls were taken, there was a clear reality: no evidence of an active weapons program or links to Al Qaeda; the war was frowned upon overseas; and the surge had successfully reduced violence in the country.On the three issues that were most embarrassing to the Bush administration, Democrats were more likely to get things right, and their accuracy increased as their level of education rose. In contrast, the most and least educated Republicans were equally likely to have things wrong. When it came to the surge, the converse was true. Education increased the chances that Republicans would recognize reality, while the Democratic acceptance of the facts stayed flat even as education levels rose. In fact, among Democrats, the base level of recognition that the surge was a success was so low that it's not even clear it would have been possible to detect a downward trend.

Education Department Unwinds Unit Investigating Fraud at For-Profits — Members of a special team at the Education Department that had been investigating widespread abuses by for-profit colleges have been marginalized, reassigned or instructed to focus on other matters, according to current and former employees.The unwinding of the team has effectively killed investigations into possibly fraudulent activities at several large for-profit colleges where top hires of Betsy DeVos, the education secretary, had previously worked.During the final months of the Obama administration, the team had expanded to include a dozen or so lawyers and investigators who were looking into advertising, recruitment practices and job placement claims at several institutions, including DeVry Education Group.The investigation into DeVry ground to a halt early last year. Later, in the summer, Ms. DeVos named Julian Schmoke, a former dean at DeVry, as the team’s new supervisor. Now only three employees work on the team, and their mission has been scaled back to focus on processing student loan forgiveness applications and looking at smaller compliance cases, said the current and former employees, including former members of the team, who spoke on the condition of anonymity because they feared retaliation from the department. In addition to DeVry, now known as Adtalem Global Education, investigations into Bridgepoint Education and Career Education Corporation, which also operate large for-profit colleges, went dark.Former employees of those institutions now work for Ms. DeVos as well, including Robert S. Eitel, her senior counselor, and Diane Auer Jones, a senior adviser on postsecondary education. Last month, Congress confirmed the appointment of a lawyer who provided consulting services to Career Education, Carlos G. Muñiz, as the department’s general counsel. The investigative team had been created in 2016 after the collapse of the for-profit Corinthian Colleges, which set off a wave of complaints from students about predatory activities at for-profit schools. The institutions had been accused of widespread fraud that involved misrepresenting enrollment benefits, job placement rates and program offerings, which could leave students with huge debts and no degrees.

I’ve Paid $18,000 To A $24,000 Student Loan, & I Still Owe $24,000 ---It all became real the summer before my senior year of college. It was 2010, and my home phone still had a cord, which I wrapped around my fingers as I waited not-so-patiently for the apathetic representative on the other end to tell me the bad news about my student loan debt. My father was in front of me, his typically ruddy face redder than usual. “A 9.25 percent interest rate?” he yelled, “How can you put that on a kid?” It was clear he was worried, and he had every right to be — as the cosigner of my loans, my debt would be his responsibility, too. The loan, ironically called a "Smart Option" loan, has a variable interest rate that fluctuates based on changes in the financial market — which may have been explained to me at the time (I truly don't remember), but I know I didn't fully grasp what that meant. Either way, neither of my parents wanted me to take it — I could tell that much. The concept of attending a private college, let alone paying for it, was completely foreign to them. They wanted me to chase something bigger than they ever had access to. They just didn’t want “bigger” to mean drowning for the next 20 years in an all-consuming pile of debt. Now, eight years later, that loan — one of nine that left me $95,000 in debt upon graduation (because, yes, interest does accrue while you’re in school) — very clearly marks the exact moment when I lost control of my own financial destiny.

There’s no denying it — a student loan crisis is coming - As we come to the end of another academic year, college seniors across the country don their caps and gowns to walk down the aisle to receive their degree celebrating years of effort while representing their transition from a student into the national workforce. But that “sheepskin” comes at a cost; a financial burden that some may take an entire lifetime to recover from. In their report “Trends in Student Aid 2016,” the College Board informs us that “In 2014-15, the 61% of bachelor’s degree recipients from public and private nonprofit institutions who borrowed graduated with an average of $28,100 in debt.”    As the graduation parties fade into distant memories the prospects for these graduates securing good paying jobs may not meet their expectations or cover their ability to repay these student loans. Judith Scott-Clayton writing for Brookings in “The looming student loan default crisis is worse than we thought” informs us that:“Trends for the 1996 entry cohort show that cumulative default rates continue to rise between 12 and 20 years after initial entry. Applying these trends to the 2004 entry cohort suggests that nearly 40 percent may default on their student loans by 2023.” A CBS News article paints a bleak picture quoting Elise Gould, senior economist at the Economic Policy Institute. It reports that more than 1-in-10 college graduates are “underemployed,” working in jobs that don’t use their skills. “As a result, nearly four in 10 recent graduates don't think it's likely they'll be able to pay off their student loan debt within 10 years according to a separate report by NerdWallet.” 

An "Audible Gasp" Was Heard When The Chicago Fed Unveiled Its "Solution" To The Pension Problem - An audible gasp went out in the breakout room I was in at last month’s pension event cosponsored by The Civic Federation and the Federal Reserve Bank of Chicago. That was when a speaker from the Chicago Fed proposed levying, across the state and in addition to current property taxes, a special property assessment they estimate would be about 1% of actual property value each year for 30 years.Evidently, that wasn’t reality-shock enough. This week the Chicago Fed published that proposal formally. It’s linked here.It surely ranks among the most blatantly inhumane and foolish ideas we’ve seen yet.Homeowners with houses worth $250,000 would pay an additional $2,500 per year in property taxes, those with homes worth $500,000 would pay an additional $5,000, and those with homes worth $1 million would pay an additional $10,000.Is the Chicago Fed blind to human consequences? Confiscatory property tax rates have already robbed hundreds of thousands, maybe millions, of Illinois families of their home equity — probably the lion’s share of whatever wealth they had.Property taxes in many Illinois communities already exceed 3%, 4% and even 5% of home values. Across Illinois, the average is a sky-high 2.67 percent, the highest in the nation. In south Cook County they already average over 5%. Most of those communities are working class, often African-American. The Fed says maybe you could make the tax progressive by exempting lower values, but that’s very difficult to do and, if you did somehow exempt the poor and working class, the bill pushed to the others would be astronomical.Those rates have already plunged many communities into death spirals, demanding an immediate solution, but the Chicago Fed apparently wants to pour on more of the accelerant.Don’t they understand that people won’t build on or improve property when property taxes are that high? When taxes are 3 percent to 6 percent, any value you add to your home is going to be taxed at that high rate forever. Have they never been to our communities with countless disrepaired, abandoned homes and commercial properties, which are the result?

 Births plunge to record lows in United States -- - Births in the United States have plunged to record lows not seen in decades, marking a profound cultural shift that could have ramifications for the future economy, experts said Thursday. The overall fertility rate, which essentially shows how many babies women are having in their childbearing years, and indicates whether the population is replenishing itself, fell to 1.76 births per woman last year, down three percent from the rate of 1.82 in 2016. That marks "the lowest total fertility rate since 1978," said the report by the National Center for Health Statistics, part of the US Centers for Disease Control and Prevention. Meanwhile, the US birth rate plunged to a 30-year low. The 3.85 million US births in 2017 were the fewest since 1987, as American women under 40 continued to delay childbearing. About 77,000 fewer babies were born last year than in 2016 -- about a two percent drop year-on-year. The latest downward trend began around the onset of the global financial crisis in 2007 and 2008, but has not abated even as US jobs rebounded and the economy has improved. 

What’s the Matter With Kansas Medicaid? - Spoiler alert in one word: Privatization. Here is a brief description of the privatized Kansas Medicaid program, “KanCare,” from the Kansas state legislature’s Legislative Division of Post Audit (DPA). Page 7 of the PDF:Launched in January 2013, KanCare is the program through which the State of Kansas administers Medicaid. KanCare offers health care for people with limited income, which may include pregnant women, children, and low-income families with children. The Kansas Department of Health and Environment (KDHE) and the Kansas Department for Aging and Disability Services (KDADS) jointly administer KanCare. KDHE maintains financial management and contract oversight of the KanCare program. KDADS administers the Medicaid waiver programs for people with disabilities, mental health conditions, and substance abuse problems, and oversees the state hospitals and institutions.As the state’s Medicaid program, KanCare focuses on providing person-centered care coordinated through contracts with three private managed care organizations [MCOs]: Amerigroup of Kansas Inc., Sunflower Health Plan, and United Healthcare Community Plan of Kansas. The state also contracts with Maximus [hmm…], a company that processes the state’s Medicaid applications and provides support services during the eligibility process.Or in short form:[KanCare is depends on] a federal waiver that allows the state to contract with three private companies to operate KanCare, a $3 billion program that covers more than 420,000 low-income, elderly and disabled Kansans.And let’s not forget Maximus, the fourth company!I’m sure the KanCare story is a lot more complicated and horrid than this superficial survey will reveal — Kansas readers please chime in! — but even so things look pretty bad. (Note that KanCare is for existing Medicaid, not Medicaid expansion.) I’m going to start with the story on KanCare’s data debacle, move through their eligibility determination debacle, and close, for a change, with a bit of good news.

Michigan Medicaid Waiver - The State of Michigan Legislature is applying for an ACA Waiver as I pointed out in my post Why States Should Not Be Allowed to Alter the ACA with Waviers  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% and sits in Wayne County does not qualify for a Medicaid exemption because it is not a county. Neither would the other Michigan cities in other counties with low unemployment rates qualify. Set this aside for a moment. The waiver strips predominantly Black populated Michigan cities of Medicaid if the county in which the city resides has an unemployment rate lower than 8.5% even though the city has an unemployment rate higher than 8.5%. Additionally and besides a work requirement of 29 hours per week, the bill will end Medicaid and expanded eligibility for residents after they’ve been on Medicaid for 48 months for those earning between 100% and 133% FPL and eliminate the option to extend coverage by completing healthy behaviors. To force the issue with lame duck governor Rick Snyder, the Senate on Thursday (May 7th) approved a $56.6 billion budget which includes a suspension of the salaries of Health and Human Services Director Nick Lyon and other top officials in the department if Governor Snyder does not request and secure a federal waiver to implement the Republican legislation passed Medicaid work requirement, and other proposed parts of the legislation.

Exercise is good for you – unless it’s part of your job - Men who work as labourers or in other physically demanding roles have a greater risk of dying early than those with more sedentary jobs, researchers say. The finding, from scientists in the Netherlands, reveals an apparent “physical activity paradox” where exercise can be harmful at work but beneficial to health when performed in leisure time. Pieter Coenen, a public health researcher at VU University medical centre in Amsterdam, said the reason for the disparity is unclear, but he believes it may reflect the different types of exercise people get at work compared with those in their free time. “While we know leisure-time physical activity is good for you, we found that occupational physical activity has an 18% increased risk of early mortality for men,” Coenen said. “These men are dying earlier than those who are not physically active in their occupation.” Other researchers say the finding may simply reflect a greater likelihood for people in manual labouring jobs to have unhealthier lifestyles in which diet, smoking and alcohol consumption all conspire to reduce life expectancy. But Coenen believes other factors are at play. “If you go out for a run for half an hour in your leisure time,” he said, “that increases your heart rate and you feel well afterwards, but when you are physically active at work, it’s a very different type of activity. You are working for eight hours a day and have limited rest periods. You are lifting, doing repetitive movements, and manual handling. “Our hypothesis is that these kinds of activities actually strain your cardiovascular system rather than help you to improve the fitness of your cardiovascular system.” 

BPA Could Harm Developing Hearts, Research Suggests - One of the major health concerns associated with the widespread use of plastics is exposure to bisphenol A(BPA). BPA is an endocrine disruptor, meaning it mimics the effects of estrogen on the body and has been linked to the growth of tumors in the breast, uterus and prostate, impacts on pregnancy and fertility and disruption of the sexual development of the fetus that can cause cancer later in life.Now, a new study indicates that BPA might also have a negative impact on the developing hearts of children.According to a press release for the study published Monday in Phys.org, 8 million pounds of BPA are produced every year, and 90 percent of the population interacts with it through consumer or medical goods. BPA is commonly found in plastic bottles and the lining of canned food and has been known to leach into groundwater from landfills. Plastics have also increasingly been used in medical devices, the press release noted.The study, published May 9 in Scientific Reports , looked at the impact of BPA exposure on neonatal rat heart cells. It found exposure could lead to a lower heart rate, irregular cardiac rhythms and calcium instabilities that can increase skipped heart beats.The study comes after other studies have found that BPA exposure is associated with abnormal heart beats, chest pain and coronary artery disease in adults."Current research explores the impact endocrine disruptors, specifically BPA, have on adults and their cardiovascular and kidney function," study co-author and Children's National Heart Institute and George Washington University Assistant Professor Nikki Gillum Posnack said in the press release."We know that once this chemical enters the body, it can be bioactive and therefore can influence how heart cells function. This is the first study to look at the impact BPA exposure can have on heart cells that are still developing."

Scientists have transplanted memory from one snail to another. So, what does it mean for humans? - It's the kind of study science fiction dreams are made of: A team of neurobiologists at UCLA "transplanted" a memory from the nervous system of one snail into another.In order to do this, the team repeatedly "trained" a snail with electric shocks.  When the snails were good and jumpy, the team extracted RNA from their nervous systems and injected it into untrained snails."Twenty-four hours later, we tested the reflexes of those snails, and they showed the same reflexes of those that had been given electrical shocks," Glanzman said.  But just because it works on snails doesn't mean we'll soon be living in the realm of "Westworld" or "The Eternal Sunshine of the Spotless Mind." Actually, the human applications are much more practical -- and helpful."We were able to transfer the memory using RNA," Glanzman said. "So if you think about human disorders of memory like dementia, Alzheimer's and PTSD, if we can identify some of the RNA that produces learning like alterations, it is possible we could use that knowledge to create new and more effective treatments."In other words, a better understanding of how memories are physically formed in the components of the nervous system (which includes the brain) could lead to a better understanding of memory-related diseases and disorders."The findings also challenges some popular understandings of how memory is stored. "The dominant model of learning and neuroscience today is that when an animal learns something, there is growth in new synaptic connections or change in existing ones," Glanzman said. "So essentially, memory is stored in synapses. Our study suggests that can't be true."

Trump officials feared PR 'nightmare' from drinking water standards | TheHill: Officials at the White House and Environment Protection Agency (EPA) fretted about a public relations "nightmare" from an agency’s expected move to change suggested standards for fluorinated chemicals in drinking water, according to internal emails. The Agency for Toxic Substances and Disease Registry (ATSDR), which is part of the Centers for Disease Control, is currently readjusting its standards for acceptable levels of the chemical in drinking water and is expected to propose that safe levels be almost six times stricter than EPA's current recommendation. Internal Trump administration emails, that the Union of Concerned Scientists obtained through a Freedom of Information Act lawsuit, paint a picture of an administration bracing for the heightened standards, fearing the conflicting guidance's impact on other parts of the federal government. In one of the emails obtained and first reported by Politico on Monday, an unnamed White House intergovernmental affairs official called the expected fallout from the stronger recommendations "extremely painful." “The public, media and Congressional reaction to these new numbers is going to be huge,” the official wrote in a letter forwarded to the EPA. “The impact to EPA and DoD [the Department of Defense] is going to be extremely painful. We (DoD and EPA) cannot seem to get ATSDR to realize the potential public relations nightmare this is going to be.” Fluorinated chemicals are used by a number of industries, including in products such as hoses to reduce emissions for cars and planes, sterile equipment used in pharmaceuticals, and stain resistance in clothing and nonstick cookware. But the chemicals are also associated with serious health risks, including kidney and testicular cancer. 

Trump Admin. Blocked Toxic Chemicals Study Fearing 'Public Relations Nightmare' - Officials with the White House and the U.S. Environmental Protection Agency ( EPA ) tried to block a critical report on a class of toxic chemicals after a White House aide warned that a "public relations nightmare" would follow after its release, according to emails reported by POLITICO on Monday.The Agency for Toxic Substances and Disease Registry (ATSDR)—a unit within the Department of Health and Human Services—was poised to release a report on per- and polyfluoroalkyl substances (PFAS) polluting watersupplies in sites around the country , including chemical plants and military bases.The ATSDR draft assessment on PFAS chemicals concludes that they "pose a danger to human health at a far lower level than EPA has previously said was safe." The ATSDR recommends a safety level for PFAS exposure in drinking water that's six times lower than the EPA's current recommendations."The public, media and Congressional reaction to these new numbers is going to be huge," the unidentified Trump aide wrote in an email obtained by the Union of Concerned Scientists through the Freedom of Information Act. "The impact to EPA and [Department of Defense] is going to be extremely painful. We [DoD and EPA] cannot seem to get ATSDR to realize the potential public relations nightmare this is going to be."

Across U.S., Toxic Algal Blooms Threaten Lakes and Other Waterways - Across the U.S., a growing epidemic of toxic algal blooms is polluting lakes and other waterways, according to a new report by the Environmental Working Group . Toxic algal blooms occur when chemical pollution from farms and other sources runs off into waterways, forming a thick, green, soup-like substance on the surface. The blooms are hazardous to human health and can even kill pets. And they can make tap water unsafe to drink, as residents of Toledo, Ohio, learned in 2014, when a massive bloom blanketed Lake Erie and invaded the city's water supply."Toledo was a wake-up call for many people," said Craig Cox, EWG's senior vice president for agriculture and natural resources. "It was the first major city to declare its water supply unsafe for human consumption due to a toxic algal bloom. But many more Americans are experiencing the damage these blooms can wreak—and the problem is getting worse."No government entity tracks blooms nationwide, but EWG's analysis of news coverage and satellite imagery found that, since 2010, nearly 300 blooms have been recorded in lakes, rivers and bays in 48 states. The problem has grown exponentially during that period: 169 toxic blooms were reported in 40 states in 2017, compared to only three blooms in 2010.The EWG report includes an interactive map of 288 blooms, as well as before-and-after satellite photos of 24 blighted lakes in 12 states and a short video about the Lake Erie bloom, which is now an annual phenomenon. And Lake Erie isn't the only place with a reliable yearly bloom—in recent years federal regulators began issuing an annual "bloom forecast" for some coastal states and plan to expand the program.

Are we ready for an epidemic this summer? - Summer is coming. And if you think a warm-weather surge of mosquitoes and ticks is not as frightening as the fictional winter’s White Walkers from “Game of Thrones,” you haven’t read this week’s report by the Centers for Disease Control and Prevention on the rapidly escalating danger of infectious diseases spread by insects. The CDC’s key findings: The number of Americans infected with such diseases, including Zika, West Nile and Lyme, has more than tripled in a decade, jumping from about 30,000 cases a year in 2006 to almost 100,000 in 2016. This total includes nine types of infections never before seen in the United States, including Zika and chikungunya. Looking ahead, 80 percent of state and local health departments are not ready for the insect-borne threat we are facing in just a few weeks.Why the surge? Global travel is a major cause; as commerce, culture and tourism spread rapidly, so do diseases. Scientists also identify more infections, thanks to new research tools. But there’s another factor slipped into the CDC report: Certain mosquitoes and ticks are “moving into new areas.” This anodyne language refers to the fact that, as temperatures and moisture rise across the United States, disease-bearing insects expand their reach. Thus, we face another risk posed by the threat that Trump administration officials dare not speak aloud: climate change.   Coincidentally,  Bill Gates went public with a recent conversation he had with President Trump.  As Gates reminded the president, nearly a year and a half into his tenure, Trump still does not have a science adviser. John Bolton’s purge at the National Security Council pushed out the official there overseeing pandemic preparation, Tom Bossert. Trump’s controversial CDC director, Robert Redfield, has been busy explaining why he will, or won’t, get paid double what his predecessors made.

WHO Prepares For "Worst Case" As Congo Ebola Outbreak Spreads - In the week since we first noted the new outbreak of Ebola in the Democratic Republic of Congo, the number of cases has risen by 50%, and The World Health Organization has now said it is preparing for "the worst case scenario." The WHO has tallied 32 suspected or confirmed cases in the northwestern area of Bikoro, on the shores of Lake Tumbathe near the border with the Republic of Congo, including 18 deaths, between April 4 and May 9. The outbreak, declared by the DRC health ministry on Tuesday, is the DRC's ninth known outbreak of Ebola since 1976, when the deadly viral disease was first identified in then-Zaire by a Belgian-led team. Scientists are greatly concerned that this outbreak in the remote Bikoro region will travel 175 miles to the city of Mbandaka - the capital of Equateur province and home to around 1.2 million residents.We've updated this map. Turns out that the provincial capital of Equateur, Mbandaka, is home to roughly 1M people. It's less than 300 km or 175 miles from Bikoro and reachable by water. pic.twitter.com/3Q3PwAAdsh — Helen Branswell (@HelenBranswell) May 11, 2018     What's worrisome is that the most recent WHO update says that there are two probably cases at Wangata - which is very close to Mbandaka.#EbolaDRC: This news gives me pause. @WHO's latest update says there are 2 probable cases at Wangata, which is adjacent to the provincial capital, Mbandaka. Population of Mbandaka = 1.2 million. https://t.co/LwlMGcAL7J pic.twitter.com/RVVO15m2F9— Helen Branswell (@HelenBranswell) May 14, 2018Peter Salma, head of emergency response at the World Health Organization (WHO) said last week: "If we see a town of that size infected with Ebola, then we are going to have a major urban outbreak," adding "We are very concerned, and we are planning for all scenarios, including the worst-case scenario."

 "We Now Have Urban Ebola" In Congo, WHO Warns Of "Potentially Explosive Increase" In Cases - Experts fear an "explosive increase" in Ebola cases after an outbreak in Congo entered a "new phase" and spread from the countryside to a city. The BBC reports that Health Minister Oly Ilunga Kalenga confirmed a case in Mbandaka, a city of a million people about 130km (80 miles) from the area where the first cases were confirmed earlier this month.The city is a major transportation hub with routes to the capital Kinshasa.Forty-four people have been infected and 23 people are known to have died.Senior World Health Organization (WHO) official Peter Salama said the spread to Mbandaka meant there was the potential for an "explosive increase" in cases."This is a major development in the outbreak," he told the BBC. "We have urban Ebola, which is a very different animal from rural Ebola. The potential for an explosive increase in cases is now there."Mr Salama, the WHO's deputy director-general for emergency preparedness and response, said Mbandaka's location on the Congo river, widely used for transportation, raised the prospect of Ebola spreading to surrounding countries such as Congo-Brazzaville and the Central African Republic as well as downstream to Kinshasa, a city of 10 million people."This puts a whole different lens on this outbreak and gives us increased urgency to move very quickly into Mbandaka to stop this new first sign of transmission," he said. The BBC adds that the WHO said it was not recommending any trade or travel restrictions either within DR Congo, for example between Mbandaka and Kinshasa, or internationally. But Mr Salama said that 13 countries in the region were boosting border screening measures and said DR Congo itself was increasing exit screening measures.

An antibiotic-resistant strain of 'super gonorrhea' is spreading around the globe - A strain of antibiotic-resistant gonorrhea has arrived — the first three cases were recorded between February and April of this year.  Two Australian men and one British man contracted the sexually transmitted infection in Southeast Asia, likely after engaging in unprotected sex, according to the European Center for Disease Control (ECDC). The 'super gonorrhea' strain, a bug called Neisseria gonorrhoeae, is highly difficult to treat given its resistance to the antibiotics that are often used to treat the infection.Gonorrhea is a bacterial infection that's the second most commonly diagnosed STI in the world.  There was a total of 468,514 gonorrhea cases in the US alone in 2016, according to the Center for Disease Control.  Gonorrhea is normally treated with one of two commonly used antibiotics: azithromycin or ceftriaxone. The infected British man is now undergoing treatment with an experimental drug called ertapenem that's usually used to treat infections after colon and rectal surgery. He reportedly has a girlfriend back home in the UK, but his partner hasn't tested positive for the disease, reports National Geographic. The super gonorrhea is one of many diseases that's becoming increasingly able to resist traditional antibiotics. In some parts of Southeast Asia, mosquitoes carry a strain of malaria that's becoming more resistant to treatment. And in some cases, superbugs — like MRSA, a type of staph infection — are untreatable, leaving doctors with few options for patients. Superbugs can also spread their genes to other bacteria as they evolve, according to the CDC. According to some studies, antibiotic-resistant bugs could lead to 10 million deaths by 2050 if doctors and policymakers cannot figure out a way to address the problem.

EU To 'Completely Ban' Outdoor Use Of Pesticides Blamed For Devastating Bees -- An EU committee approved the plan to tightly restrict use of the insecticides, acting upon scientific advice from the European Food Safety Authority to tighten existing restrictions and protect bees, crucial pollinators.The EFSA said in February that it had confirmed risks to both honeybees and to wild bees such as bumblebees posed by neonicotinoid pesticides."There is variability in the conclusions, due to factors such as the bee species, the intended use of the pesticide and the route of exposure," the head of EFSA's pesticides unit, Jose Tarazona, said at the time. "Some low risks have been identified, but overall the risk to the three types of bees we have assessed is confirmed."Reacting to Friday's decision, Bayer CropScience, the biggest seller of neonicotinoids, called it "a sad day for farmers and a bad deal for Europe." Bayer added that the new rules "will not improve the lot of bees or other pollinators."Bayer and another pesticide company have already challenged the EU's existing restrictions on neonicotinoids that were enacted in 2013. A verdict in that case is due next month.Neonicotinoids work by becoming integrated throughout a plant's structure — instead of just coating the surface of leaves, for instance, the poison is sent to flowers, pollen and nectar. When insects encounter the material, their nervous systems come under a devastating attack.Widely used in U.S. agriculture, neonicotinoids coat the seeds of corn, soybean, canola and other crops, as NPR's Dan Charles has reported, and the insecticide has also been found to rub off and get blown into the air, creating a dust that's been blamed for killing colonies of both wild bees and honeybees.

Pesticide Regulation Not Part of EPA’s New ‘Scientific Transparency’ — U.S. Environmental Protection Agency Administrator Scott Pruitt’s controversial plan for disclosing the underlying data supporting its regulatory science has a big blind spot –pesticides. An analysis released today by Beyond Pesticides and Public Employees for Environmental Responsibility (PEER) points out that under Pruitt’s plan the public will still lack access to key data about the effects and efficacy of commercial poisons approved for sale and application in their communities and homes. The proposed policy posted on April 30 in the Federal Register declares that it will “help ensure that EPA is pursuing its mission of public health and the environment in a manner that the public can trust and understand” yet it only applies to a very limited set of studies used to support certain EPA regulations.It does not cover pesticide registrations, warning labels, use restrictions, or proof of effectiveness. In the current process, the pesticide manufacturer produces the underlying data for these EPA approvals and controls access to it. Thus, despite Pruitt’s sweeping claims of “transparency in regulatory science” –

• The public does not have access to the underlying data provided by the manufacturer to justify registering a new pesticide for commercial distribution;
• Industry will not have to provide the data used to assess health and environmental effects and farmworker impacts to set allowable dietary and non-dietary exposure limits; and
• On the product’s efficacy, the public also does not have access to the underlying data nor does EPA even review manufacturer data on product effectiveness, except for very limited purposes.

“To ensure full review, it is critical that the public and independent scientific community have complete access to safety testing data before poisonous pesticide products enter the marketplace,” said J. Routt Reigart, M.D., president of Beyond Pesticides. “Furthermore, the failure to label all ingredients in pesticide products used by the public runs contrary to the basic principle of informed decision making.”

Farm Bill Would Allow Mass Killing of Endangered Species With Pesticides - The newest version of the 2018 Farm Bill, set for a vote on Friday, includes an unprecedented provision allowing the widespread killing of endangered plants and animals with pesticides .The bill launches the broadest attack on the Endangered Species Act in 45 years, eliminating the requirement that federal agencies analyze pesticides' harm to the nation's 1,800 protected species before approving them, greatly increasing the risk of extinctions."House Republicans are putting salmon, killer whales and other wildlife on the fast track to extinction," said Lori Ann Burd, director of the Center for Biological Diversity's environmental health program. "This is a stunning gift to the pesticide industry, with staggering implications for endangered species."Earlier this year the National Marine Fisheries Service released a "biological opinion" showing that three widely used insecticides— chlorpyrifos , malathion and diazinon—are putting killer whales and 37 differentsalmon and sturgeon species on a path to extinction.In response the pesticide industry has sought to exempt pesticides completely from the Endangered Species Act. During this session of Congress, the pesticide industry has spent more than $43 million on congressional lobbying to achieve that goal.  In addition to the attacks on endangered species, H.R. 2 weakens Clean Water Act protections from pesticides, includes a sweeping provision that would gut protections for forests , and has 46 different provisions that would curtail public input and common-sense protections provided by the National Environmental Policy Act. Late additions to the legislation would also roll back virtually all protections for old-growth forests in Alaska. "This farm bill should be called the Extinction Act of 2018," said Burd. "If it becomes law, this bill will be remembered for generations to come as the one that drove the final nail in the coffin of some of America's most vulnerable species."

A Single Discarded Fishing Net Can Keep Killing for Centuries - Divers off the coast of the Cayman Islands last month came face to face with a ghoulish sight: a gigantic mass of abandoned fishing gear and its catch . The monstrous net, as wide and deep as the Hollywood sign is tall, drifted just below the water's surface with tendrils that teemed with hundreds of dead and dying fish and sharks.The divers attempted to cut some of the trapped souls from the tangled mess of netting and buoys, but most of them were already lost. Many more had been dead for so long, the divers said, that it was impossible to tell what species they were. The men tried to haul the massive net back to shore but said it was much too heavy for their boat to tow. So this marine blob is still out there.It's not alone. In fact, this knot of ruin is completely unremarkable in the context of the global "ghost gear" crisis. A new report from the international nonprofit World Animal Protection (WAP) estimates that at least700,000 tons of new ghost gear enter the sea each year. Once it's there, the flotsam can harm all kinds of sea life, including turtles, penguins, sea lions, dolphins, whales and diving shorebirds. The report found that 45 percent of all the marine mammals listed on the International Union for Conservation of Nature's Red List of Threatened Species have been killed or harmed by abandoned fishing gear.  "These nets are huge. You can see gill nets out there over two miles long." Ghost gear masses like the Caribbean discovery are essentially giant fish traps that perpetually re-bait themselves. The trapped animals attract predators and scavengers who then become ensnared themselves. After death, their rotting carcasses draw in still more victims and the cycle goes on and on, basically forever.

Study finds alarming decline in biodiversity worldwide -- A recently released United Nations-supported study presents a grim picture of the accelerating decline in biodiversity (the variety of plant and animal species) across the globe and its dire implications for the not-too-distant future of life on Earth, including humans.The study, composed of multiple reports by over 550 researchers, was conducted by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). It contends that the increasingly rapid loss of plant and animal species due to habitat degradation, invasive species, and pollution is happening in tandem with climate change. Together, these processes, if not halted, will soon have catastrophic environmental consequences, amounting to a sixth mass global extinction, which will threaten the very survival of humanity.Biological ecosystems are a complex, dialectical interaction of plant, animal, and microbial life forms with each other and their physical environment, evolving over millennia. These systems are not static. They change over time due to the dynamic of unity and conflict of opposites of their myriad biological and physical constituents. In general, the greater the species diversity (number of different species) within an ecosystem, the more stable it is, barring external perturbations (e.g., the impact that caused the mass extinction, including dinosaurs, about 66 million years ago) and the more slowly change takes place.By contrast, the lower the species diversity, the greater is the tendency toward instability and the more vulnerable an ecosystem is to catastrophic collapse. High diversity will generally buffer the degree to which changes in any particular constituent of the system will affect the system as a whole. The role of one species, known as its ecological niche, may gradually be filled by one or more other species, leading to gradual change.With lower diversity, however, ecosystems tend to be more fragile. The loss of any one species will likely have a much greater impact on the system as a whole, creating instability and possible catastrophic collapse. It is less likely that another species will evolve or adapt with sufficient rapidity to fill the “gap” in the system, potentially resulting in a cascading series of disruptions. If the trends documented in the IPBES reports continue, the world’s biological systems are likely to go into this kind of severe crisis within the next few decades.

 NASA Satellites Detect Seriously Weird Changes in Earth’s Freshwater – A fascinating new study from NASA reveals how the amount of freshwater in certain regions changed over the years due to various factors, including human water management and climate change.A joint mission between NASA and the German Aerospace Center — called the Gravity Recover and Climate Experiment (GRACE) mission — observed from 2002 to 2016 the amount of freshwater available across the globe through the use of satellites, precipitation measures, and other available data. What the mission found was wetland areas are getting wetter while drylands are getting drier. Some of the changes, both positive and negative, were due to humans activity, while other factors like climate change played a part as well.Areas that saw a large decrease in freshwater were California and Greenland. A severe drought for most of the state began taking its toll on the amount of freshwater available starting in 2011. Due to reduced snow and river flows, there was a heavy reliance on aquifers for watering crops as well as for human consumption. In Greenland, melting glaciers fall into the ocean, thus reducing the amount of freshwater on the land. As for areas that saw an increase, the Okavango Delta region in southern Africa saw the amount of freshwater improve due to increased rainfall. Saudi Arabia’s water storage shrank until the country ended a domestic wheat farming program in 2015, which led to an increase in available water. Even though the Earth is covered in water, only two to three percent is naturally occurring water, known as freshwater. It comes from water sources such as rivers and lakes, but also from snowfields and glaciers. This study showed how significantly the available water can change in a matter of 15 years as well as that with action, it could be improved.

Unprecedented Colorado River Water Shortage Could Be Declared in 2020 -  After years of unrelenting drought , federal forecasters reported there are better-than-even odds that the nation's largest reservoir will decline into shortage conditions by 2020, forcing Arizona, Nevada and Mexico to reduce their Colorado River water use. Millions of U.S. residents and farmers are served by the Lake Mead reservoir that's supplied by the Colorado. However, water levels have dropped consistently after years of back-to-back drought. The reservoir is considered full at 1,220 feet above sea level, which has not been seen since 1983.If the lake's surface elevation falls below 1,075 feet in January of any given year, it would trigger the first-ever federal shortage declaration. Worryingly, the latest projections from the the U.S. Bureau of Reclamation show there's a 52 percent chance that could happen in two years.Once a shortage is declared, Arizona's annual water allocation from the Colorado River would be cut by 11 percent. Nevada would face a 4 percent reduction and Mexico will see a 3 percent cut. As Arizona public radio station KNAU noted, "A shortage declaration is unprecedented."Marlon Duke of the U.S. Bureau of Reclamation explained that 19 years of drought have depleted water supplies. "This is the worst drought in at least the last 100 years of our recorded history, and as we look back further than that, we can see signs that this one of the worst droughts probably the last 1,200 years of the paleo-record," Duke told KNAU. If the water level drops even further, it could prompt cuts for other states. Unfortunately, the chances of shortfall rise even higher in the following years, with 64 percent in 2021 and 68 percent in 2022, the bureau projected.

A billion-dollar fortune from timber and fire -  One of the largest fires to burn in California's Sierra Nevada mountain range, the Rim Fire tore through 257,000 acres on the edge of Yosemite National Park in 2013. Not long after firefighters doused the flames, a fleet of bulldozers and trucks arrived, sent by billionaire Archie Aldis "Red" Emmerson. Workers began ripping up the trees even as the brush nearby was still smoldering. "We'll be in there before the smoke is out," Emmerson boasts in a rare, three-hour interview from his Douglas-fir-paneled boardroom in tiny Anderson, California, which is wedged between the Shasta-Trinity and Lassen National Forests, about two hours north of Sacramento. Emmerson recalls the Fountain Fire of 1992 in Shasta County, 50 miles northeast of Anderson, that burned 64,000 acres and 272 homes: "We had trucks coming down the road that had flames on the back." At 89 years of age he walks slowly but has no problem piloting his silver Dodge pickup truck to work before 8 a.m., six days a week. Adds his son Mark, who is CFO, "We get in, and we are very aggressive after a fire." Nicknamed "Red" as a teen for his hair color, Emmerson is happy to reminisce about the many fires from which his Sierra Pacific Industries has profited. Wearing jeans held up by a belt buckle emblazoned with the insignia he brands on his ranch's cattle, the feisty tycoon, who runs the business with his two sons, George, 61, and Mark, 58, makes more money from logging after forest fires than any person in America. When the government sells contracts to cut down trees after fires in national forests—a controversial practice known as post-fire salvage logging—Emmerson buys in at a steep discount, often paying one half to one fourth the price for traditional wood. Sierra Pacific then turns the usable lumber (about 90%) into boards and other wood products to sell to homebuilders and lumber retailers like Home Depot, Menards and Lowe's.

La Niña is Gone; Severe Weather in Late-Spring Mode -- La Niña conditions no longer existed in the tropical Pacific Ocean, with cool-neutral conditions prevailing in April, said NOAA’s Climate Prediction Center (CPC) in its May 10 monthly advisory. The weak La Niña event that began in August 2017 is now over, something the Australian Bureau of Meteorology concurred with in their April 13 biweekly report. The bureau uses a more stringent threshold than NOAA for defining La Niña: sea-surface temperatures in the Niño3.4 region of the tropical Pacific must be at least 0.8°C below average, vs. the NOAA benchmark of 0.5°C below average. Over the past week, sea surface temperatures (SSTs) in the benchmark Niño 3.4 region (in the equatorial Pacific) were about 0.4°C below average, which is outside the 0.5°C to 1.0°C-below-average range that is required to qualify as a weak La Niña. Odds for an El Niño event to form are predicted to increase as we head towards the fall and winter of 2018, with the latest CPC/IRI Probabilistic ENSO Forecast calling for a 38% chance of an El Niño event during the August-September-October peak of the Northern Hemisphere hurricane season. El Niño events typically reduce Atlantic hurricane activity, due to an increase in wind shear over the tropical Atlantic.We’re still in the midst of the spring predictability barrier, the time of year when forecasting the future of El Niño and La Niña is toughest. Recent climatology (see Figure 2 below) suggests that it’s more likely for a second-year La Niña event like 2017-18 to segue into either neutral or El Niño conditions than to be followed by a third winter of La Niña conditions. The CPC/IRI outlook reflects this split: by the winter of 2018–19 (December through February), it predicts a roughly 50% chance of El Niño, a 40% chance of neutral conditions, and a 10% chance of La Niña.

We Just Experienced 400 Straight Months of Unusual Warmth - April 2018 was the 400th consecutive month of global temperatures above the 20th century average, the National Oceanic and Atmospheric Administration ( NOAA ) announced Thursday.That means the last time Earth was cooler than that average was December 1984—the same month Band Aid released "Do They Know It's Christmas."This three-decade streak is not some fluke, NOAA scientists remarked."It's mainly due to anthropogenic (human-caused) warming," NOAA climatologist Ahira Sanchez told CNN . "Climate change is real, and we will continue to see global temperatures increase in the future."The rising temps could be explained by natural causes such as an El Niño, but as Sanchez noted, "if you were to remove the human factor, you would still see a variability, but it would be up and down."For instance, the cooling effects of a La Niña or a volcanic eruption would have brought temperatures down on some years. But it's clear that humans are influencing Earth's temperature and the climate by burning fossil fuels .NOAA announced yesterday that April 2018 was the third warmest April in the agency's global temperature dataset record, which dates back to 1880. What's more, the period between January to April was the fifth warmest in the 139-year record.

Battered by bleaching, Florida's coral reefs now face mysterious disease -  Joey Mandara tends to thousands of baby corals, growing in large, shallow tanks called raceways.  Mote has been doing this work for five years, raising corals from embryos into adult colonies, then planting them on Florida's reefs. Now, the emergence of a new, debilitating coral disease makes his work more important than ever.  Around the world, coral reefs are facing trouble. Coral bleaching, due in part to rising ocean temperatures, has stressed reefs, leaving them weakened and susceptible to disease. Now, in Florida, scientists are struggling to combat a mysterious disease that's threatening the future of the world's third largest coral reef. In just four years, the so-far unidentified disease has already had a dramatic impact on Florida's reef tract, which extends some 360 miles down the state's Atlantic coast. Muller says it appears to be a bacterial disease, and for about half of the state's species of coral it's deadly.  "When they're affected by this, the tissue sloughs off the skeleton," she says. "And we see that once a coral is infected, it usually kills the entire coral, sometimes within weeks. And it doesn't seem to stop." William Precht was one of the first scientists to spot the outbreak and the impact it was having on corals. In 2014, he was hired by the state to monitor the health of reefs off the port of Miami, where a dredging project was underway. He saw the disease move from one patch of coral to another. Precht says it's proved especially deadly for species of brain and star coral, which form the foundation for many reefs. In some areas now, he says almost all of those corals are dead. "This is essentially equivalent to a local extinction, an ecological extirpation of these species locally," he says. "And when you go out and swim on the reefs of Miami-Dade County today, it would be a very rare chance encounter that you'd see some of these three or four species." Since it was first discovered, it's moved north, affecting reefs all the way up to the St. Lucie inlet. It's now moving south, through the Florida Keys.

Unusually severe Indian weather kills at least 66; more storms on the way (Reuters) - Severe storms were likely to hit northern India on Monday, the weather office warned, a day after at least 66 people were killed as unusually powerful dust storms, torrential rain and lightning battered large parts of the country. Storm uprooted trees, knocked down power poles, grounded flights and disrupted trains across northern, eastern and southern states, including the capital, New Delhi, on Sunday evening. Storms with strong winds were "very likely" in most parts of the northern state of Uttar Pradesh on Monday, India's most populous state, the India Meteorological Department said in its latest forecast. Storms are common at this time of the year, the beginning of the rainy season in South Asia, but the severity of the weather this year, and the human cost, have been unusual. At least 34 people were killed and 47 injured when thunderstorms swept Uttar Pradesh on Sunday, displacing hundreds of people, Sanjay Kumar, relief commissioner for the state, told Reuters by telephone from Lucknow, the state capital, adding that the casualty figures might rise. Five people were killed in New Delhi and the surrounding region, largely due to falling trees, authorities said. At least 11 people, including five children, were killed in the eastern state of West Bengal, said S. Suresh Kumar, principal secretary at the state disaster management department, while four people were killed in the eastern state of Odisha, said Prabhat Mohapatra, deputy special relief commissioner. In Andhra Pradesh state in the south, at least 12 people were killed by lightning, said M.V. Sheshagiri Babu, the state's relief commissioner. Hail and rain storms killed more than 78 people in northern and western India at the beginning of this month. 

2016 Arctic heat would have been virtually impossible without global warming -- In the fall of 2016, the Arctic experienced heat that was so extreme that one expert called it a black swan event. That warmth helped set a new annual temperature record that was double the magnitude of the record set the year before. New NOAA-led research confirms that the event could not have happened without human-caused global warming and sea ice loss.These maps compare the observed differences from average temperature in 2016 (left) to two computer simulations of 2016 (right). The top right map shows results from models that included only natural climate influences, using estimated conditions from the late nineteenth century. The bottom right map shows results from models in which things like  greenhouse gases, sea surface temperatures, and sea ice were allowed to change as they have in the real world due to human activities.None of the simulations using only natural climate influences were able to reproduce the extreme warmth that overtook the Arctic in 2016. Instead, those models projected that there would have been some areas that were cool and some that were warm, but not extremely so. Only the simulations that mirrored human-caused changes in greenhouse gases and the resulting sea ice loss were able to generate a realistic picture of the extreme heat. The most realistic simulations were generated by models in which sea ice was not only allowed to shrink in area, but also to thin—just as it has in the real world. The scientists concluded that there was virtually zero chance that such an extreme heat event would have occurred without human influence on the climate. But they also concluded that its severity—exactly how far above average the temperatures were— was partially due to natural variability, including the influence of the strong 2015-16 El Niño event in the tropics.

Mysterious rise in banned ozone-destroying chemical shocks scientists -- A sharp and mysterious rise in emissions of a key ozone-destroying chemical has been detected by scientists, despite its production being banned around the world.  Unless the culprit is found and stopped, the recovery of the ozone layer, which protects life on Earth from damaging UV radiation, could be delayed by a decade. The source of the new emissions has been tracked to east Asia, but finding a more precise location requires further investigation. CFC chemicals were used in making foams for furniture and buildings, in aerosols and as refrigerants. But they were banned under the global Montreal protocol after the discovery of the ozone hole over Antarctica in the 1980s. Since 2007, there has been essentially zero reported production of CFC-11, the second most damaging of all CFCs. The rise in CFC-11 was revealed by Stephen Montzka, at the US National Oceanic and Atmospheric Administration (NOAA) in Colorado, and colleagues who monitor chemicals in the atmosphere. “I have been doing this for 27 years and this is the most surprising thing I’ve ever seen,” he said. “I was just shocked by it.” “We are acting as detectives of the atmosphere, trying to understand what is happening and why,” Montzka said. “When things go awry, we raise a flag.”  Erik Solheim, head of UN Environment, said: “If these emissions continue unabated, they have the potential to slow down the recovery of the ozone layer. It’s therefore critical that we identify the precise causes of these emissions and take the necessary action.” CFCs used in buildings and appliances before the ban came into force still leak into the air today. The rate of leakage was declining steadily until 2013, when an abrupt slowing of the decline was detected at research stations from Greenland to the South Pole. Scientists then embarked on an investigation, published in the journal Nature, to find out the cause.

Someone, somewhere, is making a banned chemical that destroys the ozone layer, scientists suspect -- Emissions of a banned, ozone-depleting chemical are on the rise, a group of scientists reported Wednesday, suggesting someone may be secretly manufacturing the pollutant in violation of an international accord.Emissions of CFC-11 have climbed 25 percent since 2012, despite the chemical being part of a group of ozone pollutants that were phased out under the 1987 Montreal Protocol.“I’ve been making these measurements for more than 30 years, and this is the most surprising thing I’ve seen,” said Stephen Montzka, a scientist with the National Oceanic and Atmospheric Administration who led the work. “I was astounded by it, really.”It’s a distressing result amid what is widely seen as a global environmental success story, in which nations — alarmed by a growing “ozone hole” — collectively took action to phase out chlorofluorocarbons.The finding seems likely to prompt an international investigation into the mysterious source. Officially, production of CFC-11 is supposed to be at or near zero — at least, that is what countries have been telling the U.N. body that monitors and enforces the Montreal Protocol. But with emissions on the rise, scientists suspect someone is making the chemical in defiance of the ban.

New lava fissure opens as Hawaii awaits explosive eruption -- New lava fissures, ground deformation and abundant volcanic gases indicate eruptions on the eastern flank of Hawaii's Kilauea volcano are likely to continue. Authorities said three new fissures opened Saturday and early Sunday, ramping up the amount of lava outbreaks in and around Leilani Estates to more than a dozen.Officials had said an 18th fissure opened up, but because no lava was seen spewing from it, they are documenting 17 total active fissures so far on Hawaii's Big Island.Hawaii County Civil Defense officials urged residents of Halekamahina Loop Road to evacuate as well as two nearby community centers that were serving as shelters for people and pets. It was there that officials found the new fissure along the road. They numbered fissure 18, but later renamed it No. 17.Popping, exploding and sloshing sounds could be heard from the fissure as far as 1,500 yards away. Observatory scientist Steve Brantley says this most recent fissure measures 1,000 feet but is not acting vigorously. There is some intermittent spatter but no substantial lava flow.The U.S. Geological Survey reports that the 17th fissure, which opened Saturday night, was spattering but no lava flow had yet formed. The 16th fissure opened and spilled lava into an open field earlier in the day.The Hawaiian Volcano Observatory reported the fissures opened just east of the Puna Geothermal Venture energy conversion plant, where steam and hot liquid are brought up through underground wells and the steam feeds a turbine generator to produce electricity. Plant workers last week as a precaution removed 50,000 gallons of a flammable gas (pentane) stored at the site. Geologists warn that Kilauea's summit could have an explosive steam eruption that would hurl rocks and ash miles into the sky. The fissures have allowed molten rock to burst through the ground, destroying more than two dozen homes and structures and resulting in evacuation orders for almost 2,000 people.

1000-foot-long fissure opens on Hawaii's Kilauea volcano amid fears of an explosive eruption - Two new fissures cracked open on Hawaii’s Kilauea volcano over the weekend, and magma and rock burst into the air. Local Mark Clawson, who hadn’t evacuated, told Reuters, “It is a near-constant roar akin to a full-throttle 747 interspersed with deafening, earth-shattering explosions that hurl 100-pound lava bombs 100 feet into the air.” The eruptions have destroyed almost 40 buildings and one fissure threatens to disrupt a nearby geothermal plant. Meanwhile, the lava lake in Kilauea has been dropping, and experts are warning of a possible explosive eruption. A new fissure that looks to be around 1,000 feet long is one of the biggest, Reuters said. Hawaii’s Civil Defense ordered more evacuations over the weekend as Kilauea continues erupting. Over 10 days, almost 2,000 people have been told to evacuate. The Hawaiian Volcano Observatory said in an update on Sunday evening local time the eruption “is still evolving and additional outbreaks of lava are possible.” They warned communities downslope of the fissures “could be at risk from lava inundation” and that “activity can change rapidly.” Toxic gases continue to spew as well; Reuters said trees withered and vegetation turned brown in places with strong sulfur dioxide emissions. All this prompted some officials to prepare residents for the possibility of an eruption. “We’ve got all the warning signs we need,” said Steve Brantley, deputy scientist-in-charge at the Hawaiian Volcano Observatory to the Honolulu Star-Advertiser. “There may not be any additional warning before the magma actually starts moving up to the surface.”

Kilauea's eruption is big, but not big enough to cool the planet  - Hawaii’s Kilauea volcano has ruptured the Earth in at least 17 places, burning homes with super-hot lava. More than 2,000 Hawaiians have evacuated, and the U.S. Geological Survey has issued warnings that “potentially lethal concentrations of sulfur dioxide gas” may leak downwind as far as a kilometer (0.6 mile) from the lava vents. President Donald Trump has declared a state of emergency.But it’s not yet big enough to slow global warming, as past volcanic eruptions have.In much larger doses, volcanic gases can temporarily change the global atmosphere. Sulfur dioxide—the same chemical regulated by the U.S.  Environmental Protection Agency as a pollutant from coal-fired power plants—can, in sufficient quantities, at a high-enough altitude, scatter enough sunlight to lower global average temperatures slightly for months,even for a couple of years. “Barring a violent explosion or eruption, Kilauea won’t affect our climate. You have to blast particles high into the stratosphere to cool the Earth. That’s the only way the dust stays in the air long enough to cool the planet,” said Rob Jackson, professor and chair of the Earth System Science department at Stanford University.

Hawaii volcano erupts anew, spews huge plume of ash into sky - (AP) — Hawaii's Kilauea volcano erupted anew early Thursday with little sound and only modest fury, spewing a steely gray plume of ash about 30,000 feet (9,100 meters) into the sky that began raining down on a nearby town. The explosion at the summit came shortly after 4 a.m. following two weeks of volcanic activity that sent lava flows into neighborhoods and destroyed at least 26 homes. Scientists said the eruption was the most powerful in recent days, though it probably lasted only a few minutes. Geologists have warned that the volcano could become even more violent, with increasing ash production and the potential that future blasts could hurl boulders the size of cows from the summit. Toby Hazel, who lives in Pahoa, near the mountain, said she heard "a lot of booming sounds" Thursday. Those came after days of earthquakes. "It's just time to go — it really, really is," she said, preparing to leave town. "I feel so sorry for the people who don't go, because they don't have the money, or don't want to go to a shelter and leave their houses." Some people in the community closest to the volcano slept through the blast, said Kanani Aton, a spokeswoman for Hawaii County Civil Defense, who spoke to relatives and friends in the town called Volcano.  

Hawaii Kilauea volcano erupts explosively and shoots ash five miles high early Thursday — Hawaii's Kilauea volcano erupted explosively early Thursday, tossing boulders hundreds of feet and sending a plume of ash about 30,000 feet into the predawn sky.A webcam at the Hawaii Volcano Observatory caught the aftermath of the short-lived eruption: an onslaught of wet, dusty ash raining on a darkened landscape. From the summit of Mauna Loa volcano, 20 miles away, cameras photographed an anvil-shaped plume billowing on the horizon.In a news conference, scientist Michelle Coombs of the U.S. Geological Survey said the activity could become explosive again.“It's a real dynamic situation up there,” she said of the summit.Scientists had warned for days about a major eruption as the lava lake that once filled the crater at Kilauea's summit began draining back into the ground. Their concern was that the sinking molten rock would create steam as it interacted with the water table and that the steam would then jet upward, hurling heavy rocks and ash into the sky in a phenomenon known as a phreatic eruption. “This is the sort of explosive activity that was anticipated,” said USGS geophysicist Mike Poland, who was based at Kilauea from 2005 to 2015. “It's not going to be the only one. Very likely there will be additional events.”  Wind is already carrying the plume from the eruption northeast, raining ash into nearby communities.  Residents were instructed to shelter in place if they found themselves in the path of the plume. Depending on weather conditions, the USGS said, ash might fall as far as Hilo, 30 miles to the northeast.The observatory also warned that vog — a noxious smog formed when sulfur dioxide from eruptive vents interacts with water vapor and oxygen in the air — has been reported in the community of Pahala, southwest of the volcano.

Republican lawmaker: Rocks tumbling into ocean causing sea level rise - The Earth is not warming. The White Cliffs of Dover are tumbling into the sea and causing sea levels to rise. Global warming is helping grow the Antarctic ice sheet. Those are some of the skeptical assertions echoed by Republicans on the U.S. House of Representatives Science, Space and Technology Committee yesterday. The lawmakers at times embraced research that questions mainstream climate science during a hearing on how technology can be used to address global warming. A leading climate scientist testifying before the panel spent much of the two hours correcting misstatements. The purpose of the hearing was to focus on how technology could be deployed for climate change adaptation. But the hearing frequently turned to the basics of climate science. Many of the questions by Republicans and Democrats alike were directed to Philip Duffy, president of the Woods Hole Research Center in Massachusetts and former senior adviser to the U.S. Global Change Research Program. Rep. Dana Rohrabacher (R-CA) said he was bothered that established climate science has not been questioned more by the committee, which has accused federal climate scientists of fraudulently manipulating climate data and subpoenaed their records. Rep. Lamar Smith (R-TX), chairman of the committee, entered into the record an opinion piece published in The Wall Street Journal yesterday that claimed sea levels are not rising because of climate change, a view that rejects thousands of scientific studies. The piece was written by Fred Singer, who is affiliated with the Heartland Institute in Chicago, Illinois, which promotes the rejection of mainstream climate science.   Rep. Mo Brooks (R-AL) said that the California coastline and the White Cliffs of Dover tumble into the sea every year, and that contributes to sea-level rise. He also said that silt washing into the ocean from the world's major rivers, including the Mississippi, the Amazon and the Nile, is contributing to sea-level rise.

EPA’s climate change website went down a year ago for ‘updating.’ It’s still not back. - The news came on a Friday evening in late April last year: The U.S. Environmental Protection Agency had removed an informational website about climate change, taking down a page that had been up, in some form, for nearly two decades and under three presidents.  Before its removal, the page had plainly stated a position on climate change: It is caused by humans, and there’s no significant doubt about that. But that position contradicted statements by the new EPA chief, Scott Pruitt, who had expressed doubts about human activity being the dominant driver of climate change.  EPA said at the time that the site had been taken down for review and that it had been archived and was still available as part of a “snapshot” of the state of the site on Jan. 19, 2017, just as the new administration took command. But a year later, the agency’s climate page is still down, and would-be visitors are redirected to a notice saying that “this page is being updated.”  The removal of EPA’s main page on climate change (though it also has a number of others that remain online), an extensive informational resource, is significant because it underscores the ambivalence about climate change science within the Trump administration. From Trump to Pruitt, there are many who have called into question the scientific consensus on climate change. Inside the agency and out, skepticism is rising that the agency’s main climate page will ever go back online. Two EPA employees familiar with the site, who spoke on the condition of anonymity to share internal agency information, said they were unaware of any sign that the page is being updated to bring it back online. “There’s definitely no progress on the website. I’m not sure anyone’s even addressing it,” one employee said.

Trump Kills NASA Carbon Monitoring Program as CO2 Levels Soar Past 'Troubling' 410 ppm Threshold --As the Trump administration charges forward with its war on science by canceling a " crucial " carbon monitoring system at NASA, scientists and climate experts are sounding alarms over atmospheric concentrations of carbon dioxide (CO2) that just surpassed a " troubling " threshold for the first time in human history."The reading from the Mauna Loa Observatory in Hawaii finds that concentrations of the climate-warming gas averaged above 410 parts per million [ppm] throughout April," Chris Mooney wrote for the Washington Post. "The first time readings crossed 410 at all occurred on April 18, 2017, or just about a year ago." While the planet's concentrations of carbon dioxide fluctuated between roughly 200 ppm and 280 ppm for hundreds of thousands of centuries, as the NASA chart below details, CO2 concentrations have soared since the start of the industrial revolution—and, without urgent global efforts to significantly alter human activities that produce greenhouse gas emissions , show no sign of letting up. "As a scientist, what concerns me the most is not that we have passed yet another round-number threshold but what this continued rise actually means: that we are continuing full speed ahead with an unprecedented experiment with our planet, the only home we have," Katharine Hayhoe, a climate scientist at Texas Tech University, told Mooney.  While CO2 levels have passed 400 ppm in the Earth's history, "it has been a long time. And scientists are concerned that the rate of change now is far faster than what Earth has previously been used to," as Mooney explained:

Methane, Climate Change, and Our Uncertain Future - The greenhouse gas, methane, is produced by both natural processes and human activities. While there has been much attention paid to curbing anthropogenic emissions, a changing climate will likely increase the production of natural methane. In an open access article recently published in Reviews of Geophysics, Dean et al. [2018] describe the ways in which biological, geochemical, and physical systems influence methane concentrations and explore how methane levels in natural systems may alter in a warming climate. Here the authors answer some questions about the sources and significance of methane, and indicate some future research directions.Methane (CH₄) is a greenhouse gas that is much stronger than carbon dioxide (CO₂), 34 times stronger if compared over a 100-year period. While concentrations of methane in the atmosphere are about 200 times lower than carbon dioxide, methane was responsible for 60% of the equivalent radiative forcing caused by carbon dioxide since the onset of the Industrial Revolution. Methane’s presence in the atmosphere can also affect the abundance of other greenhouse gases, such as ozone (O₃), water vapor (H₂O), and carbon dioxide.The main natural sources of methane are wetlands and freshwater systems (rivers and lakes). The main sources of anthropogenic methane are agriculture (such as cattle farming) and waste (such as landfills), and methane derived from the fossil fuel industry. Anthropogenic sources are slightly larger emitters of methane to the atmosphere compared to natural sources.Direct records of atmospheric methane concentrations only go back about 800,000 years. During this time methane concentrations have generally varied between 300 and 800 parts per billion. Since the onset of the Industrial Revolution in about 1750, however, atmospheric methane concentrations shot up to about 1800 parts per billion and are continuing to rise. Between 2000 and 2007, atmospheric methane concentrations appeared to stabilize, leading to sustained debate regarding the main drivers of atmospheric methane. Crucially, after 2007 atmospheric methane concentrations began to rise again and current measurements suggest that atmospheric methane concentrations will continue to increase. It remains vital that we are able to identify the cause(s) of this rise in order to address emissions of this critical greenhouse gas. Particularly important is curbing emissions from human activities, namely agriculture and the fossil fuel industries. One key example of this, currently, is the identification and mitigation of leaking natural gas infrastructure.

Pruitt sought 24-7 security from first day, EPA watchdog says -- Scott Pruitt sought round-the-clock security from his first day in office at EPA, the agency's inspector general said on Monday, casting doubt on whether the EPA administrator had faced serious security threats before he received the expanded protection. In letters sent to two Senate Democrats, EPA IG Arthur Elkins also said the watchdog never conducted assessment of the security threats against Pruitt, despite his contention last month that the IG had justified his spending. Elkins told Sens. Tom Carper (Del.) and Sheldon Whitehouse (R.I.) investigators do not proactively search for threats against Pruitt or other EPA officials, and his office “played no role” in the security team’s decision to provide Pruitt with unprecedented security. A separate set of emails obtained by POLITICO shows a Trump EPA transition official, Don Benton, was first to request 24/7 security for Pruitt in early February 2017 due to what he anticipated would be significant controversy stemming from several early policy announcements. "There will be several Executive Orders signed when he is sworn in that will likely stir the hornets [sic] nest and with the security issue in the Atlanta office last week as well as the lady who threatened former administrator [Gina] McCarthy not showing up for court and at large in DC it is best to be on the safe side,” he wrote in a Feb. 11 email. 

Scott Pruitt admits top aide helped him search for housing but 'on personal time' - Environmental Protection Agency Administrator Scott Pruitt acknowledged Wednesday that one of his top aides helped him search for housing last year — a potential violation of federal law — but said she had done so “on personal time.”The admission came during a Senate budget hearing, which included sharp questions from Democrats about the administrator’s ethics and spending decisions. Republicans on the Senate Appropriations Interior, Environment and Related Agencies Subcommittee focused largely on the agency’s policy actions.Three Democratic senators — Tom Udall (N.M.), Chris Van Hollen (Md.) and Patrick J. Leahy (Vt.) — devoted the bulk of their time to asking Pruitt about actions that have prompted more than a dozen probes by the EPA’s Office of Inspector General, the Government Accountability Office and the White House itself.Leahy belittled Pruitt’s claim that he needed to fly first class because of security concerns. “Nobody even knew who you were … You have to fly first class? Oh come on,” Leahy said. Such decisions had made Pruitt and the EPA “a laughingstock,” he added. Udall, describing Pruitt’s management of the agency as “disastrous,” again called on Pruitt to resign. The former Oklahoma attorney general, he said, has treated his “position of public trust as a golden ticket for extravagant travel and fine dining.”

Has EPA’s Pruitt Finally Gone Too Far? - Environmental Protection Agency boss Scott Pruitt has a few issues hanging over him: the controversial use of first class flights, lavish office renovations, unauthorized raises to key aides, trips of a questionable nature on taxpayers’ dime and efforts to quash scientific research into the environment – his agency’s remit.If those issues don’t cost Mr. Pruitt his job, it may be something more mundane – giving environmental waivers for the use of ethanol to small refineries. While he isn’t breaking any rules and is pleasing some Republican donors, allowing them to avoid purchasing vouchers to comply with ethanol rules, this infuriates the corn lobby because it is the main raw material for ethanol. Now he really has gone too far in the eyes of powerful Iowa Republican senator Chuck Grassley who said Tuesday that he would call for Mr. Pruitt to resign if he keeps it up.

 Trump, top car executives meet amid struggle over climate rules for automobiles - Executives from top car companies visited the White House on Friday amid a looming legal conflict between the Trump administration and primarily Democratic-led states over climate rules for automobiles.The Trump administration is readying a proposal to freeze auto-efficiency standards beginning in 2021, rather than continuing to strengthen them as originally outlined by the Obama administration. At the same time, that proposal would challenge the ability of California, long a national leader when it comes to vehicle standards, to set its own rules. California and other states supportive of stronger standards have already sued the EPA over its move to change course.At the meeting, President Trump referred to a prior meeting with the executives from early 2017 and noted his administration’s efforts to roll back the Obama-era rules.“We’ve made a lot of progress in the last year and a half,” Trump said as he sat in the Roosevelt Room at the White House with the chief executives of major auto companies before their meeting, saying he planned to discuss with them “environmental control, CAFE standards and manufacturing millions of new cars within the United States.” CAFE standards are federal regulations that seek to improve vehicles’ average fuel efficiency. But the sweeping nature of such moves has caused concern in the auto industry, and after the meeting, the industry released a statement suggesting that they had discussed with the president the possibility of some form of negotiation with California.

Trump Administration Won’t Consult California on Vehicle Emissions Rules -  —The Trump administration doesn’t intend to give any special treatment or outreach to California while it drafts new federal rules on vehicle emissions, according to people familiar with the matter. President Donald Trump had suggested last week that his team would work on a deal with the state, and past federal overhauls have included advanced collaboration with California, which has unique power to police vehicle pollution. But Mr. Trump’s Environmental Protection Agency is sticking with a plan to finalize its proposal before taking input from the state, the people said. The strategy is likely to disappoint auto makers hoping to head off a brewing conflict they fear could result in two sets of environmental rules for cars and trucks in the U.S. Just days ago executives from the world’s biggest auto makers emerged from a White House meeting touting Mr. Trump’s “openness” to expedited talks with California. The administration’s strategy hasn’t changed in response to the meeting, the people said. Washington and Sacramento have been heading toward a face-off because of opposing views on vehicle emissions standards. The administration wants to drastically ease tightened Obama-era emissions targets. But California has a special waiver to set higher standards than the federal government, and a dozen states follow its lead. California is also encouraging the production of more zero-emission vehicles such as electric cars to slow climate change. Mr. Trump’s team has made only a tentative outreach so far, and EPA leaders don’t plan to make any more or share any technical details with California before advancing their proposal in the weeks to come, the people said. 

Trump biofuel policy overhaul to include fewer refinery waivers: source - The Trump administration will scale back the use of biofuels waivers for small refineries and count ethanol exports toward federal biofuels usage quotas as part of a broad overhaul of the nation’s renewable fuel policy, a source briefed on the plans said on Friday. The changes are aimed at easing tensions between the oil and corn industries, rivals that have been clashing for months over the future of the U.S. Renewable Fuel Standard - a law that requires refiners to add increasing amounts of biofuels into the nation’s gasoline and diesel. While the RFS has helped farmers by creating a 15 billion gallon a year market for corn-based ethanol, oil refiners have increasingly complained that complying with the law costs them a fortune and threatens the very blue-collar jobs President Donald Trump has promised to protect. After hosting several meetings between representatives of the corn and refining industries, the administration is in the “last stages” of formally proposing changes to the biofuels law intended to appease both sides, the source said on Friday. A White House announcement is imminent, the source said, but did not have a timetable. The changes would be subject to the federal rule-making process, added the source, who was not authorized to speak publicly. 

Are electric cars worse for the environment?  - If you believe the headlines, traditional automobiles are speeding toward a dead end. All those V8s, V6s and turbocharged vehicles we’ve grown to love will soon be replaced by squadrons of clean, whisper-quiet, all-electric vehicles. And if you believe the headlines, the environment will be much better off.  All of this might make sense if electric vehicles, as their supporters claim, were truly likely to reduce air pollution and tackle climate change. But are they?  To answer that question, I used the U.S. Energy Information Administration’s most recent long-term forecasts for the number of new electric vehicles through 2050, estimated how much electricity they’d use, and then figured out how much pollution that electricity would generate, looking at three key pollutants regulated under the U.S. Clean Air Act—sulfur dioxide (SO₂), oxides of nitrogen (NO_X), and particulates—as well as CO₂ emissions. I compared them to the emissions of new gasoline-powered vehicles, using the EIA’s “real world” miles-per-gallon forecast, rather than the higher CAFE standard values. What I found is that widespread adoption of electric vehicles nationwide will likely increase air pollution compared with new internal combustion vehicles. You read that right: more electric cars and trucks will mean more pollution. That might sound counterintuitive: After all, won’t replacing a 30-year old, smoke-belching Oldsmobile with a new electric vehicle reduce air pollution? Yes, of course. But that’s also where many electric vehicle proponents’ arguments run off the road: they fail to consider just how clean and efficient new internal combustion vehicles are. The appropriate comparison for evaluating the benefits of all those electric vehicle subsidies and mandates isn’t the difference between an electric vehicle and an old gas-guzzler; it’s the difference between an electric car and a new gas car. And new internal combustion engines are really clean. Today’s vehicles emit only about 1% of the pollution than they did in the 1960s, and new innovations continue to improve those engines’ efficiency and cleanliness.

Bitcoin Energy Use Growing Much Faster than Previously Thought -- Bitcoin’s energy footprint has more than doubled since Grist first wrote about itsix months ago. It’s expected to double again by the end of the year, according to a new peer-reviewed study out Wednesday. And if that happens, bitcoin would be gobbling up 0.5 percent of the world’s electricity, about as much as the Netherlands.  That’s a troubling trajectory, especially for a world that should be working overtime to root out energy waste and fight climate change. By late next year, bitcoin could be consuming more electricity than all the world’s solar panels currently produce — about 1.8 percent of global electricity, according to a simple extrapolation of the study’s predictions. That would effectively erase decades of progress on renewable energy.  Although the author of the study, Alex de Vries, an economist and data consultant based in the Netherlands, has shared these calculations publicly before, this is the first time that an analysis of bitcoin’s energy appetite has appeared in a peer-reviewed journal. Bitcoin continues to soar in popularity — mostly as a speculative investment.   Beyond its tentative success as a get-rich-quick scheme, bitcoin has an increasingly real-world cost. The process of “mining” for coins requires a globally distributed computer network racing to solve math problems — and also helps keep any individual transaction confidential and tamper-proof. That, in turn, requires an ever-escalating arms race of computing power — and electricity use — which, at the moment, has no end in sight. A single bitcoin transaction is so energy intensive that it could power the average U.S. household for a month. A fluctuating bitcoin price, along with increases in computer efficiency, has slowed the cryptocurrency’s energy footprint growth rate to “just” 20 percent per month so far in this year. If that keeps up, bitcoin would consume all the world’s electricity by January 2021.

Bitcoin estimated to use half a percent of the world’s electric energy by end of 2018 - Bitcoin's burgeoning electricity demands have attracted almost as much attention as the cryptocurrency's wildly fluctuating value. But estimating exactly how much electricity the Bitcoin network uses, necessary for understanding its impact and implementing policy, remains a challenge. In the first rigorously peer-reviewed article quantifying Bitcoin's energy requirements, a Commentary appearing May 16 in the journal Joule, financial economist and blockchain specialist Alex de Vries uses a new methodology to pinpoint where Bitcoin's electric energy consumption is headed and how soon it might get there.   "We've seen a lot of back-of-the-envelope calculations, but we need more scientific discussion on where this network is headed. Right now, the information available is pretty poor quality overall, so I'm hoping that people will use this paper as a foundation for more research," says de Vries, who works at the Experience Center of PwC in the Netherlands and is the founder of Digiconomist (@DigiEconomist), a blog that aims to better inform cryptocurrency users. His estimates, based in economics, put the minimum current usage of the Bitcoin network at 2.55 gigawatts, which means it uses almost as much electricity as Ireland. A single transaction uses as much electricity as an average household in the Netherlands uses in a month. By the end of this year, he predicts the network could be using as much as 7.7 gigawatts--as much as Austria and half of a percent of the world's total consumption. "To me, half a percent is already quite shocking. It's an extreme difference compared to the regular financial system, and this increasing electricity demand is definitely not going to help us reach our climate goals," he says. If the price of Bitcoin continues to increase the way some experts have predicted, de Vries believes the network could someday consume 5% of the world's electricity. "That would be quite bad."

India wants to maximise renewables production with solar-wind-hybrid plants -- The Indian government has given the country’s booming renewable energy sector a boost. On May 14, the ministry of new and renewable energy released a draft policy for setting up wind-solar-hybrid plants—where both windmills and solar panels are put up on the same piece of land.One of the major drawbacks of both wind and solar farms today is that power is produced only during certain intervals—when the sun shines during the day, or when there are strong enough winds, typically during the evening. A hybrid project reduces this variation and power can be generated from a plant nearly round the clock.“It is a great combination because then you have steady power coming from six in the morning to six in the evening from the solar, and then have wind which starts around 12 and goes on till about two or three in the morning,” said Ramesh Kymal, CEO of wind turbine maker Siemens Gamesa’s India business.Hybrid plants also allow power producers to tap into multiple energy sources simultaneously, and generate more power from a given site. “A new market is emerging… to capitalise on the synergies (of wind and solar power plants across India). Hybrid has become a very important factor in the way forward,” Kymal added. And this push towards hybrids has come just as the wind energy and solar power sectors in India are stabilising after a rough year battling policy changes and regulatory issues, even as the country targets renewable energy capacity of 175,000 megawatts (MW) by 2022, up from around 70,000 MW currently.

Has Tesla’s Big Australian Battery Killed the Business Case for More? -- Figures show that Tesla’s “big battery” in South Australia is so good at delivering frequency control ancillary services (FCAS) there might not be much room left for copycat projects. In its first four months the 100-megawatt, Neoen-owned Hornsdale Power Reserve, built with Tesla batteries, snapped up 55 percent of all FCAS revenues in South Australia, according to an analysis by consulting firm McKinsey & Company. In addition to gobbling up FCAS revenues, the McKinsey research showed that Hornsdale’s arrival cut ancillary services prices by 90 percent across South Australia’s eight FCAS markets. Exactly how much Hornsdale makes for its owners is not clear. However, it is clear that a 90 percent drop in FCAS pricing is going to make things hard for any future players looking to make their money from ancillary services.

The Myth Of An Imminent Energy Transition -- Within a year, world oil consumption will top 100 million barrels of oil per day. Over the same time period, close to 100 million new piston-firing vehicles will be bought by petroleum-thirsty customers. I hate to say it, but any notion of imminent “energy transition” or “decarbonization” is folly.  In fact, the percentage of fossil fuels in the world’s energy mix—coal, oil and natural gas—is still lingering well above 80 percent, a figure that has changed little in 30 years. That remains so, despite being challenged by serious environmental policies, financial pressures, viable alternative systems, public awareness and social activism.  It’s true that wind and solar are being deployed quickly, at an exponential rate in fact. But impressive as it all is, renewable energy installations are far too slow to catch the still-hardy appetite for fossil fuel consumption. Such energy obesity is not virtuous, but it’s a fact needing acknowledgement in a world of over seven billion people, each of whom are wanting for more light, heat, mobility and a panoply of mostly useless gadgetry.  Oil and gas are growing especially fast. Recently published data reminds us that we’re consuming hydrocarbons faster than ever, at robust rates on a global absolute basis (see Figure 1). Market share for oil and gas is holding steady at just under 60 percent.   The resilience of fossil fuels is sobering, even after massive capital assault.  Over the past decade, the world has spent US$ 3.0 trillion on renewable energy, according to the International Energy Agency (Figure 2). For that expenditure, the clean cadre has taken a couple of points of share away from coal, the black stuff that seems to have nine lives (Figure 3).  That’s a pricy calculus to date: some trillion-and-a-half dollars has been the ticket to steal only a percentage point of market share from an easy, reviled target.

The world wants air-conditioning--that could warm the world - The number of air-conditioners worldwide is predicted to soar from 1.6 billion units today to 5.6 billion units by midcentury, according to a report issued Tuesday by the International Energy Agency. If left unchecked, by 2050 air-conditioners would use as much electricity as China does for all activities today.Greenhouse gas emissions released by coal and natural gas plants when generating electricity to power those air-conditioners would nearly double, from 1.25 billion tons in 2016 to 2.28 billion tons in 2050, the report says. Those emissions would contribute to global warming, which could further heighten the demand for air-conditioning.Right now air-conditioning is concentrated in a handful of countries, mainly in the United States and Japan, and increasingly in China.While 90 percent of American households have air-conditioning, “When we look in fact at the hot countries in the world, in Africa, Asia, Latin America and the Middle East, where about 2.8 billion people live, only about 8 percent of the population owns an air-conditioner,” said Fatih Birol, executive director of the energy agency.As incomes in those countries rise, however, more people are installing air-conditioners in their homes. The energy agency predicts much of the growth in air-conditioning will occur in India, China and Indonesia.Some of the spread is simply being driven by a desire for comfort in parts of the world that have always been hot. But other factors are at play. For example, as household wealth increases, so does the presence of household appliances like refrigerators and televisions, the report notes. These appliances generate heat, making homes warmer. And because air-conditioners work in part by venting hot air outside, they also make the surrounding neighborhood warmer. By some estimates air-conditioning can raise overnight temperatures by about two degrees Fahrenheit (one degree Celsius) in some cities, the report said. Practically speaking, if enough of your neighbors buy an air-conditioner it may increase the temperature in your home enough to drive you to do the same.

In February, no fossil fuels-based generation was added to US grid  -- In the US, two types of electricity generation are on the rise: natural gas and renewables. If one of those is set to make a bigger mark than the other this year, it's natural gas: in 2018, natural gas-burning capacity is expected to outpace renewable capacity for the first time in five years, according to data from the Energy Information Agency.All that additional natural gas capacity—approximately 21GW expected this year—could spell trouble for the already-troubled coal and nuclear industries. Once a new gas facility is built, it makes it easier to close down older, inefficient coal plants, even if the price of natural gas rises a little. Coal plant closures have been happening for years already, and the Trump administration has made a point of promising to bring coal back. But officials are having trouble finding a legal and politically acceptable way of boosting coal at the expense of natural gas, which is also a big US-based industry.For nuclear, the problem is similar. The EIA wrote this week that the US nuclear energy industry is fighting not just against the falling cost of natural gas and renewable energy, but also against the "limited growth in electric power demand." Although natural gas additions are expected to overtake renewable energy additions in 2018, forecasts for renewable energy additions to the grid roughly match what we saw in 2017. Natural gas is overtaking renewables not because renewable energy adoption is slowing, but more because natural gas facilities are seeing a considerable boom. In fact, barring any changes in the EIA numbers, natural gas, wind, and solar generation are the only electricity generation sources that will be added to the US grid in any consequential manner in 2018. Battery, hydroelectric, and biomass facilities make up the small percentage of "other" sources that are expected to come online this year.

Targeting power grid is too easy, Energy Department says -  Energy Secretary Rick Perry warned Monday that the electric grid is easier to attack than ever as he issued a comprehensive cybersecurity strategy."The frequency, scale and sophistication of cyber threats have increased, and attacks have become easier to launch," the department's plan says. "Nation-states, criminals, and terrorists regularly probe energy systems to actively exploit cyber vulnerabilities in order to compromise, disrupt, or destroy energy systems."The cybersecurity plan was released as federal and industry experts say Iran could target U.S. infrastructure in response to Trump's scuttling of the nuclear deal. The Pentagon’s cyberwarfare unit has been closely monitoring Internet traffic in Iran since Trump announced his decision to leave the Obama-era agreement last week, the New York Times reportedFriday.The sophistication of the electric grid creates a situation of "growing interdependence among the nation’s energy systems," which "increases the risk" of energy disruptions cascading from one state to the next, according to the Energy Department plan."Reliable energy and power is the cornerstone of our advanced digital economy and is essential for critical operations in transportation, water, communications, finance, food and agriculture, emergency services, and more," the plan points out. "As nation-states and criminals increasingly target energy networks, the federal government must help reduce cyber risks that could trigger a large-scale or prolonged energy disruption." The plan outlines steps the agency plans to take in line with the creation of an already announced cybersecurity office that will centralize federal activities to protect the grid from attack.

Sulfur dioxide damages lungs, and Scott Pruitt is letting more of it in our air -  Nearly a quarter of the nation’s coal-fired power plants in 2017 lacked pollution controls limiting emissions of lung-damaging sulfur dioxide, even though some of their counterparts have been using the controls for almost 40 years. Now, as the public focuses on multiple investigations into US Environmental Protection Agency Administrator Scott Pruitt’s spending habits and personnel choices, Pruitt is moving swiftly to grant one of industry’s major policy wishes: He’s making it easier for plant operators to sidestep equipment upgrades in the future. “Broad industry trends provide no consolation to families living next to a plant without [controls],” said John Walke, a former EPA attorney and director of the Natural Resources Defense Council’s Clean Air Project. “If EPA is taking steps to make that situation worse…then that’s reckless and counter to the mission of the agency.” Last year, only 17 percent of the power generated by burning coal in the United States came from plants without advanced sulfur-dioxide controls, known as scrubbers, a Center for Public Integrity analysis shows. But those plants—or units, which comprise overall generating facilities—accounted for close to 44 percent of the SO₂ emissions from that industry sector. On average, plants without scrubbers discharged more than twice the amount of SO₂ as their cleaner counterparts.  There are federal standards for sulfur dioxide, dating to 1971. “Strictly speaking, the standards are never enough” to protect everyone, said Edward Avol, a University of Southern California professor of clinical preventive medicine who helped review SO₂ literature as a member of an EPA Clean Air Scientific Advisory Committee expert panel. Even small amounts of SO₂ can set off asthma attacks or otherwise harm the lungs, Avol said, and scrubbers help limit these risks. Running a coal plant without scrubbers isn’t necessarily illegal; some operators have never made the sorts of alterations that would have triggered New Source Review. But the EPA has found that hundreds of old plants made changes that should have forced them to get permits under the program.  The permits likely would have required the plants to install scrubbers, which can cost hundreds of millions of dollars.

Fossil Fuel Funds Have Unlikely Investors: Environmental Icons - From a 34-foot tall Tyrannosaurus Rex skeleton to a herd of taxidermy elephants forever poised to charge, the American Museum of Natural History is a celebration of nature. Through its exhibits, website and other public education efforts, the New York City institution regularly encourages conservation and protecting the planet from climate change.But, at least since 2009, the museum’s endowment fund has quietly invested millions in the oil and gas industry through an undisclosed stake in a private equity fund, reveals a report by NBC News, which joined the International Consortium of Investigative Journalists in a new Paradise Papers investigation examining the offshore investments of nonprofit organizations.The museum invested $5 million in a fund run by Denham Capital, a private equity firm that invests in oil and gas, mining and power plants. That fund has pumped money into fracking for shale oil in Ohio and Pennsylvania and made an unsuccessful bid to invest in coal in Mongolia.The museum is one of several prominent environmental nonprofits and foundations, including the World Wildlife Fund, whose investments in fossil fuels were uncovered by NBC and other partners in a collaboration with ICIJ in a new look at the Paradise Papers, a leaked trove of 13.4 million documents, obtained by the German newspaper Süddeutsche Zeitung and shared with ICIJ. The files revealed how endowments, foundations and other nonprofits use offshore companies and undisclosed investments to obscure where their tax-exempt dollars are flowing. The investigation showed nonprofits repeatedly making investments that contradict their missions and lobbying in state legislatures to increase the secrecy surrounding their investments.

Wyoming steps into legal fight over Washington coal port - Wyoming and five other states say Washington is violating the Constitution by barring a coal export terminal on the West Coast. The states filed a joint amicus brief Tuesday to act as a “friend of the court,” on behalf of Lighthouse Resources’ proposed Millennium Bulk Terminals. The export terminal would provide Powder River Basin coal a faster, cheaper trip to Asia, but Lighthouse has struggled for six years to secure the right to build along the Columbia River given some environmental concerns by state regulators. Supporters of the port, including the states that filed the amicus brief Tuesday, argue that Washington is not weighing the coal terminal on its own merits, but acting out of an anti-coal sentiment. “The defendants are trying to force on other states their policy preferences regarding the use of coal as a source of fuel, and thus, they are impeding the free flow of commerce,” the brief states. In January, Lighthouse, which owns the Black Butte mine in Wyoming, filed suit against Washington Gov. Jay Inslee and two other state officials for withholding permits for its proposed port. The desire to sell Wyoming coal to Asia has increased in recent years. Though the regulatory battle over Millennium Bulk has dimmed immediate hopes of reaching overseas markets, diminishing coal demand nationally has raised the stakes on the future of Powder River Basin coal. Wyoming’s Attorney General Peter Michael said the state of Washington’s actions threaten Wyoming’s economic gain. “(Gov. Matt) Mead and I believe that this case has broad implications for the export of commodities that are important to the economies and people of many states,” he said in a statement Wednesday. “Our federal system depends on evenhanded access to markets, and we are participating to vindicate Wyoming’s right to engage in interstate and international trade.” 

Federal judge strikes down Oakland’s ban of coal facility operations - In a blow to Oakland and its environmental agenda, a federal judge in San Francisco on Tuesday cleared the way for a company to export coal from a port in the city.U.S. District Judge Vince Chhabria said city officials breached a contract with developer Phil Tagami and his Oakland Bulk and Oversized Terminal, or OBOT, project when they instituted a prohibition on coal handling and storage within city limits two years ago and then retroactively applied the ban to the marine terminal project.In 2013, OBOT signed an agreement with the city giving the company the rights to build a $250 million shipping terminal near the Bay Bridge toll plaza. City officials said they had gotten assurances from the company that coal wouldn’t be stored or shipped there.The contract was executed prior to the city passing any ban on coal, but it contained an exception that allowed the city to impose future regulations if they were necessary for health and safety reasons. Chhabria, however, said there was insufficient evidence to support the City Council’s contention that coal and petroleum coke operations “pose a substantial danger to people in Oakland.”  “In fact, the record is riddled with inaccuracies, major evidentiary gaps, erroneous assumptions, and faulty analyses, to the point that no reliable conclusion about health or safety dangers could be drawn from it,” he wrote. “Perhaps a more thorough investigation could result in a lawful determination that coal operations may be restricted at the facility, but in this case, the record was inadequate.”

Countries in and around the Middle East are adding coal-fired power plants - EIA - Planned coal-fired capacity additions from a number of countries in and around the Middle East will add 41 gigawatts (GW) of new electric generating capacity over the next decade, based on announced projects and projects currently in the permitting process. Another 3 GW of coal-fired capacity is currently under construction in these countries. About 12 GW of coal-fired generating capacity—or about half of the region’s coal-fired generating fleet—has come online since 2006.  Coal capacity in the region is typically less than that of other fuels, particularly compared with liquefied natural gas or petroleum-based fuels, because coal accounts for less than 1% of primary energy production in the region. Turkey is the heaviest user of coal-fired power among these countries with a capacity of approximately 18.5 GW, followed by Israel (4.9 GW) and Pakistan (2.5 GW). Turkey and Pakistan both plan to add more coal capacity over the next decade.  Egypt, Oman, Iran, Jordan, and the United Arab Emirates (UAE) have no current coal-fired electricity generation, but they each plan to build coal capacity in the near future. New coal capacity is currently under construction in the UAE, Iran, and Jordan. In addition, Egypt and Oman have announced plans for new coal-fired generators.  In the UAE, new coal-fired capacity will come from Dubai’s Hassyan Project. The project consists of 3.6 GW of ultra-supercritical generating capacity, 2.4 GW of which is currently under construction and expected to become operational between 2020 and 2022. Another 1.2 GW was announced for a total of 6 units (with an average size of 600 megawatts (MW) expected to come online in 2023. The $3.4 billion project is sponsored by several investors, including Chinese and domestic banks.

Our Nukes, Ourselves - For many if not most Americans, there is no clear understanding of nuclear danger, and the way that danger is inextricably linked to our nuclear heritage. But we can start to tally the legacy at home: It means we are born the stewards of a great many terrible things. Roughly 6,800 specific warheads, divided between roughly 1,400 deployed, 2,800 retired, and the remainder stockpiled in some form. It also means ownership of the legacy of everything that came with nuclear testing, development, mining, and waste disposal. In New Mexico in particular, that means acknowledging how the same industry created the labs at Los Alamos, propped up the Albuquerque economy, and left the predominantly Navajo, rural, poor uranium miners with booms, busts, and lingering health struggles.  North Korean nuclear tests and ICBM flights dominated headlines in 2017, but the technology behind the weapons is at least as old as the 1960s, and whatever handful of North Korean missiles are capable of reaching the United States, there are hundreds of other missiles, already in place across the globe, that can reach the continental U.S. too. And there is the fact of the United States’ own nuclear arsenal, which still keeps several hundred weapons ready to launch and destroy vast swathes of the world within an hour of receiving the order.

United States : Dangerous Bill Allowing Sale of Fracking Waste Passes Committee in OH State House - A bill that would allow oil and gas waste, including fracking fluids, to be sold as a commodity passed through the Ohio House Energy & Natural Resources Committee. The bill -- HB 393 -- would allow fracking waste to be sold in local stores without meeting any safety standards or requirements to protect public health, and would expand the use of this hazardous waste as a road deicer by the Ohio Department of Transportation.  The bill passed without any Democratic support in the committee, which also rejected an amendment that would have required the states Department of Natural Resources to test for radioactive materials in the waste. The bill is expected to come for a full vote in the House in the coming weeks.  In response, Sierra Club Beyond Dirty Fuels Organizer Cheryl Johncox released the following statement: Every Ohioan should be concerned that this dangerous idea is one step closer to reality. Fracking waste contains hundreds of toxic pollutants and high levels of radioactivity. The idea that it should be sold in stores and sprayed onto more of our roadways is shockingly misguided. We should be stopping this dangerous practice altogether, not expanding it across our state. We urge our representatives to protect Ohioans health and reject this toxic legislation.

  Appalachia’s Toxic Dumping Ground -Ohio residents speak out about the state’s influx of fracking waste- Twenty-four hours a day, seven days a week the trucks stream through eastern Ohio’s rolling landscape along Highway 50. Most come from West Virginia and Pennsylvania. All bear a placard with the designation “BRINE,” which doesn’t begin to describe the toxic, radioactive liquid slipping past motorists.  Felicia Mettler, a local resident, counted 108 brine trucks in one 24-hour period in 2016 at the K&H fracking waste injection well site in Torch, Ohio. The town is so small it doesn’t have a grocery store, but it’s home to one of the largest injection well sites in the state.  The underground injection wells store waste produced during the process of fracking, a shale gas extraction technique that forces fluid laden with heavy metals and other contaminants underground to fracture rock and free trapped oil or natural gas. The K&H site’s three wells received 2.16 million barrels of frack waste in 2016. That figure more than doubled to 4.42 million barrels in 2017. Each barrel contains 42 gallons, making a staggering 185.57 million gallons injected last year at the K&H site alone. In total, Ohio dumped 36.26 million barrels in 2017, the equivalent of 2,307 Olympic-sized swimming pools. Roughly half of that was shipped from Pennsylvania and West Virginia.  “Ohio has become [Appalachia’s] dumping ground for toxic waste,” Mettler says. “Most of the [fracking] waste comes from out of state. West Virginia and Pennsylvania are where we get most of the waste from. It’s just sad that you hear people say, ‘Oh, Ohio, that’s the new toxic toilet bowl.”

Study Finds No Groundwater Contamination from Fracking - Editor’s Note: Story submitted by Jackie Stewart from Energy in Depth, an industry trade group. YOUNGSTOWN, Ohio — The first ever and award winning Utica Shale study to examine the root source of methane linked to fracking has finally been published in a scientific journal. The long awaited multi-year University of Cincinnati groundwater study that found no impacts from fracking was finally published last week in the peer-reviewed journal Environmental Monitoring Assessment – more than two years after researchers first announced its findings. The study was also blessed by the Ohio Environmental Council in 2014 as its recipient for the “Science and Community Award.” Notably, the study’s topline conclusions echo comments made by the report’s lead researcher and a master thesis that was uncovered by Energy in Depth two years ago  stating: “We found no relationship between methane concentration or source in groundwater and proximity to active gas well sites.” “… our data do not indicate any intrusion of high conductivity fracking fluids as the number of fracking wells increased in the region.” “We hypothesized that CH4 [methane] concentration would increase as the number of shale gas wells in the area increased, with the isotopic composition of CH4 reflecting an increasingly fossil fuel derived natural gas source, and that pH of groundwater would decrease and electrical conductivity would increase due to the presence of acidic, salty hydraulic fracturing fluids in groundwater. We also predicted that groundwater wells located within 1 km of active shale gas wells would have elevated levels of dissolved CH4 with isotopic ratios reflecting a natural gas source, and that groundwater within this ‘active zone’ would have decreased pH and increased electrical conductivity.” But the data collected from 25 water wells in Carroll, Harrison, Stark, Belmont and Columbiana counties between 2012 and 2015 simply did not support that hypothesis, the study found.

Appalachian boom: Potholes, landslides and shattered peace - As in so many other communities in the rocky hills where West Virginia, Ohio and Pennsylvania come together over the intersection of the Marcellus and Utica shale formations, the area around Mobley turned out to be rich with shale gas. The first wells were drilled nearly a decade ago, and the three states now pump more natural gas than Texas. That production surge has been followed with a build-out of pipelines and other infrastructure. Trucks have taken over the narrow two-lane roads as production companies and pipelines have moved in. Faced with an unprecedented workload, the local, state and federal agencies that oversee pipeline construction in the region are already struggling to keep up. Critics say the regulators in charge of policing pipelines' environmental and public safety aspects are understaffed and unfocused. Some residents are already frustrated by what they see as state laws that are slanted to favor the gas industry, and they are worried about the current wave of pipeline work. Wetzel County is home to dozens of shale gas wells, and in Mobley, the homes have been emptied and demolished to make way for a facility that strips byproducts and impurities out of natural gas to prepare it for the national pipeline network. Lee Martin, who lives nearby on 104 acres with her husband, Chuck, said her young grandchildren used to have free rein of the fields near the house. Now, heavy trucks rumble up the rural driveway throughout the day en route to a well pad up the hill from the house; she keeps the kids inside or under close watch. The Martins had limited input on the placement of a well pad on their property thanks to the severance more than 100 years ago of the plot's mineral rights, which they said are now owned by a lawyer in town. The installation also includes a 1,025-foot run of pipeline that required clearing a 50-foot-wide swath through their back woods.   Two major pipelines, the Ohio Valley Connector and the Mountain Valley pipelines, both have their "milepost zero" just up the road from Mobley. They're among at least 11 pipelines worth about $25 billion that will carry gas from the Marcellus and Utica shales to market. Each of those projects will require a network of connectors, compressor stations, gathering lines and other equipment that will add to the natural gas industry's impact.

Kentucky Regulators Agree Illegal Radioactive Waste Should Stay In Blue Ridge Landfill -  Radioactive waste illegally dumped in an Estill County landfill will likely stay in the ground after state regulators approved a corrective action plan last week.The plan laid out two options: enclose the low-level radioactive material in the landfill, or excavate it and dump it somewhere else.Environmental advocates say the only safe long-term plan is to remove the waste, but state regulators agreed with landfill operators.Keeping the radioactive waste in the ground provides the greatest short-term and long-term protectiveness to human health and the environment, said John Mura, a spokesman for the Energy and Environment Cabinet.“The Cabinet carefully considered all of the responses to the [Corrective Action Plan] and truly believes that this alternative is the best way forward,” Mura said. The fallout comes three years after radioactive waste from natural gas drilling operations in West Virginia ended up in the Blue Ridge Landfill near Irvine, Kentucky.The landfill operator, Advanced Disposal Services, said it didn’t knowingly accept the illegal material. And now, it’s not clear where the radioactive waste is buried in the landfill, according to Energy and Environment Cabinet comments on the corrective action plan.The Cabinet said it would be “difficult if not impossible” to find the radioactive waste because it’s mixed and spread throughout the seven-acre site.And the contractor who performed the risk assessment didn’t test the landfill core, citing health risks to workers and the public, records show. State regulators concluded the results would “likely not improve the characterization of the waste,” according to state records. Instead, the contractor collected samples from a similarly processed oil and gas waste and made conservative estimates. That worst case scenario — which assumed the landfill has no cap and no liner — estimates the radioactive waste could contaminate groundwater next to the landfill for the next 2,700 years. In practice, the landfill does have a liner. But the current liner has an estimated service half-life of less than 450 years, far less than that of the radioactive isotopes likely found in the waste.

Rex Energy will file for bankruptcy - Pittsburgh Post-Gazette - After months of trying to find another way, Rex Energy Corp. is filing for bankruptcy.The State College-based oil and gas company whose major holdings are leases and shale wells in Butler County, disclosed in its quarterly report with the Securities & Exchange Commission that it could not come to an agreement with its lenders after missing a debt payment in late April.  Rex said it would be seeking protection under Chapter 11 of the bankruptcy code imminently.As of the end of last year, the company had 105 full-time employees. Only 17 of them work in the field as Rex uses independent contractors and consultants to do a lot of the drilling, fracking and associated work. Founded in 2007, Rex has been shedding assets and looking for capital for some time now. Last year, it sold a substantial portion of its Ohio acreage to Antero Resources Corp. Earlier this year, it sold its interest in wells in Westmoreland, Centre and Clearfield counties.Last month, the company’s stock was delisted from the Nasdaq. In its quarterly report, Rex disclosed that it defaulted on its loan not just by skipping an interest payment, but also by failing to provide its lenders with timely financial statements and other information. The company still plans to drill and complete several wells for the remainder of the year, it said.

Church with $2K in gas driller’s stock wins methane vote - A church with a minuscule stake in Range Resources has won shareholder approval of a resolution to force Pennsylvania’s largest natural gas driller to produce a report on its effort to scale back methane emissions. The Unitarian Universalist Association, which owns Range stock valued at about $2,000, sought to force the energy giant to produce a report that “reviews the company’s policies, actions and plans related to methane emissions management.” Range’s board opposed the measure, saying the Fort Worth, Texas-based company already discloses that information to stockholders as well as to federal and state environmental regulators. A board statement that urged shareholders to reject the proposal archly noted that it was “submitted on behalf of a stockholder who holds 130 shares.” Shareholders at the company’s annual meeting on Wednesday approved the activist church’s resolution by the slimmest of margins, giving it just over 50 percent of the vote. A similar measure offered by the church in 2014 was withdrawn after getting just 8 percent. Environmentalists hailed shareholders’ change of heart. “This vote provides further proof that the public is increasingly concerned about the impact of oil and gas pollution,” said Andrew Williams, director of legislative and regulatory affairs at the Environmental Defense Fund. The Boston-based Unitarian Universalist Association wants Range and other drillers to limit emissions from methane, a powerful greenhouse gas that contributes to global warming. It said Range had not provided “adequate disclosure” of its mitigation strategy. The resolution approved by shareholders demands that Range produce a report by September on its efforts to stop methane leaks. 

Northeast region slated for record natural gas pipeline capacity buildout in 2018 - EIA expects construction of new natural gas pipeline capacity in the United States to continue in 2018, in particular in the northeastern United States. By the end of 2018, if all projects come online by their scheduled service dates, more than 23 billion cubic feet per day (Bcf/d) of takeaway capacity will be online out of the Northeast, up from an estimated 16.7 Bcf/d at the end of 2017 and more than three times the takeaway capacity at the end of 2014.Currently, the growth of natural gas production in the Marcellus and Utica basins in Pennsylvania, Ohio, and West Virginia is constrained by the lack of available takeaway pipeline capacity to move it to new markets. As new pipeline projects come online, they will create an outlet for increased production, providing natural gas to demand markets in the Midwest, the Southeast, eastern Canada, and the Gulf Coast. Currently, no major pipeline capacity expansions in advanced development are slated to come online in New England because of stakeholder concerns raised in the development process.Of the projects scheduled to be in service by the end of 2018, most are associated with four major interstate pipelines: Columbia Pipeline Group (TCO), which includes both Columbia Gas and Columbia Gulf Transmission; Transcontinental Gas Pipeline (Transco); Rover Pipeline; and NEXUS Pipeline.   The Columbia Pipeline Group (TCO) has two expansion projects intended to add 4.2 Bcf/d of takeaway capacity out of the Northeast: Leach Xpress and Mountaineer Xpress. The Leach Xpress project, which entered service on January 1, 2018, supplies an additional 1.5 Bcf/d of capacity out of West Virginia and Ohio, and the Mountaineer Xpress project, which is scheduled to enter service in late 2018, will increase takeaway out of West Virginia by an additional 2.7 Bcf/d.  Three projects associated with the Transcontinental Gas Pipeline (Transco) are intended to add more than 3 Bcf/d of capacity out of Pennsylvania and West Virginia: Atlantic Sunrise, Mountain Valley Pipeline, and Equitrans Expansion. Atlantic Sunrise, the first phase of which was completed in 2017, is a nearly $3 billion project that will provide 1.7 Bcf/d of bidirectional capacity on the Transco System.  The Mountain Valley Pipeline (2.0 Bcf/d), a new pipeline from West Virginia to the Transco system in southern Virginia, and the Equitrans Expansion Project (0.6 Bcf/d), which brings natural gas from northwest Pennsylvania to an interconnection with the Mountain Valley Pipeline, are also scheduled to come online in 2018.  The first phase of Rover Pipeline was completed in late 2017, and Phase 2 is expected to come online in mid-2018. Phase 2 includes 3.25 Bcf/d of new capacity into Midwestern markets and the Dawn hub in Ontario, Canada. NEXUS Pipeline, which follows a similar route to Rover, will add 1.5 Bcf/d of new capacity. Natural gas from the Marcellus and Utica basins will be delivered to this pipeline by the 950 MMcf/d Appalachian Lease Project, also scheduled to come online in 2018.

Mountain Valley Pipeline cited for failing to control sediment, erosion -- The Mountain Valley Pipeline has been cited for environmental violations that critics repeatedly warned might occur. The 300-mile pipeline also received a noncompliance report from an inspection company that works for the U.S. Forest Service. The Notice of Violation from the West Virginia Department of Environmental Protection and the noncompliance report say Mountain Valley Pipeline failed to control erosion and allowed sediment into water, among other things — problems that critics and residents along the pipeline’s route have expressed concern about. “The genesis of this issue was when the state decided not to evaluate every crossing and didn’t do a thorough enough evaluation of the project in the first place,” said Bill Price, organizing manager for the Sierra Club in the Appalachian region. Last year, West Virginia regulators waived the project’s Section 401 certificate, a permit issued under the Clean Water Act that gives states the authority to make sure proposed projects, like the Mountain Valley Pipeline, comply with state water quality standards. The state had previously issued it, but remanded it when it was challenged by a citizen group. “Things are happening, and we told you we had concerns about it in the first place,” Price said. The Notice of Violation stems from a partial inspection on April 3 in Wetzel County, where the buried pipeline begins before transporting natural gas to Pittsylvania County, Virginia. The week before the inspection, the county got at least 4 inches of rain, and someone reported a slip to the pipeline’s hotline, according to documents filed with the Federal Energy Regulatory Commission.

NLG Condemns Forest Service For Blocking Food & Water To Pipeline Protester –The Environmental Justice Committee of the National Lawyers Guild stated it condemns the actions of the United States Forest Service in denying basic necessities to a Virginia protester in violation of international law and 18 USC §2340(2)(b).  The protester, a pod-sitter, with the forest name of “Nutty,” has sat in a pod since March 28, 2018, on a 50-foot pole in the Giles county section of Jefferson National Forest challenging the construction of the Mountain Valley Pipeline (MVP). The 50-foot pole is attached by guy wires to a gate on a road. MVP, having already started the construction of a 300-mile pipeline scheduled to carry fracked liquid natural gas, has commenced tree-cutting in the county in preparation for pipeline construction. The US Forest Service has closed off areas near Nutty and her pod, denying access to water protectors who support her, but more importantly, denying her food and water and subjecting her to smoke, bright lights and noise in an attempt to force her down from her perch atop of the pod. A pod-sitter has a civil and human right to life. A police duty to protect has been created. By preventing others from providing food and water, the Forest Service has created a situation where the pod-sitter’s safety and well-being are at risk under the Deshaney Standard. See Deshaney v. Winnebago County Dept. of Social Services, 489 U.S. 189 (1989). The Forest Service in conjunction with the State Police has exhibited deliberate indifference to the protector’s serious medical needs, violating the 8th Amendment under Deshaney. Denial of food and water is also a violation of both domestic and International Law, including The Rome Statute, Article 7. 18 USC §2340(2)(b) expressly forbids citizens of the United States from “the administration and application of procedures calculated to disrupt profoundly the senses or the personality” and section (c) of the same forbids threats of imminent death or bodily harm. The denial of food and water and the continuing use of smoke, bright lights and excessive noise is both a threat and perpetration of bodily harm. Similarly, the denial of food and drinking water, and subjecting the pod sitter to smoke, bright lights and excessive noise has been calculated to disrupt the senses of this pod-sitter.

Lawsuit aims to give medical care to tree-sitter - As a woman calling herself simply “Nutty” is in her 50th day of a tree-sit in Giles County, there’s a new lawsuit filed Wednesday on her behalf. Lawyers have brought a suit against the Forest Service demanding that the government allow a physician to give Nutty medical care at her position in the Jefferson National Forest. The woman protesting construction of the Mountain Valley Pipeline hasn’t had access to supplies, as Forest Service workers blocked off the area around her so-called monopod more than a month ago. She said earlier this month she still has water and some food with her.   People close to the protester have said workers have blocked medical personnel from accessing Nutty.   Additionally, the lawsuit alleges Forest Service workers have directed smoke at her, shined bright lights on her and placed noisy generators near her location in the way of pipeline workers.  “The actions of the Forest Service are tantamount to torture at this point. I’m not exaggerating. I’m not using hyperbole,” said Alan Graf, a lawyer based in Floyd.   The Rutherford Institute filed the lawsuit arguing that Forest Service agents have violated the rights of a physician. The lawsuit says Dr. Greg Gelburd wants to examine the 28-year-old protester and has legal access under the Religious Freedom Restoration Act and First Amendment.   Supporters have set up a camp with tents just outside of the blocked-off zone. As many as 100 people have come through the area to show support. Just to get to the location, a 10 News crew hiked with supporters for more than an hour, because the Forest Service has closed a nearby road.  One other tree-sitter is still protesting in the natural gas pipeline’s route in Virginia. While the person’s identity is unknown, he or she is positioned in the middle of a Franklin County family’s farm. A judge ruled Tuesday that two landowners will face a total of $2,000 in fines for allowing tree-sitters to take three positions in the pipeline’s path, blocking construction workers.

Pipeline protesters take to the trees -  . Generators are flicked on and prison-style floodlights blast the campers, as well as the protester they are guarding, a young woman in a tree who goes by “Nutty.”  On March 28th, "Nutty" planted herself atop a fifty-foot pole – the timber of a tulip poplar tree – in Virginia's Jefferson National Forest to block the path of a proposed natural gas pipeline. She has now been living in a makeshift tent rigged to the pole for an astonishing 49 days, surviving on an assortment of initial supplies, catching her drinking water straight from the clouds and going to the bathroom in a bucket. To give her food or water, the U.S. Forest Service has determined, is illegal. At least three people have been arrested trying to do so, including one man that, according to Outsideonline.com was "handcuffed and put in leg shackles." Last Saturday, when two Charlottesville physicians hiked the steep two-mile path to a support camp that had been established near Nutty's "monopole" to perform a wellness check they were denied access. "It was shocking," says pediatrician Paige Periello, one of the two physicians. "That just doesn't seem like the way we want to treat people in Virginia, or anywhere in this country."  Nutty has positioned herself at a particularly strategic location – it's here that a pipeline backed by Con Ed and Pittsburg-based EQT, among other partners, and carrying fracked gas 300 miles from an especially gas-rich quadrant of the Marcellus Shale in northwestern West Virginia, will bore six-hundred feet beneath the Appalachian Trail.  Across the ridge, in Monroe County, West Virginia, a man named Deckard is living in a tree-sit that has been occupied since February 26th. About 80 miles east, in Franklin County, Virginia, a three-person tree-sit was established in April to block the Mountain Valley Pipeline. On Bent Mountain, outside of Roanoke, Theresa "Red" Terry and her daughter "Minor," who own a 1,700-acre rural homestead that was partially snatched by pipeline companies using eminent domain, gained national attention for camping out in trees on their own land for 34 days before court-imposed-fines and the threat of forced removal brought them down. In central Pennsylvania, 62-year-old Ellen Gerhart faces six months in prison for her part in establishing a series of tree sits to block the Mariner East 2 and 2X pipelines from crossing part of her family farm. A resistance camp known as the Three Sisters Camp has sprung up on a plot of lush woods adjacent to the James River, in Central Virginia, to block the Atlantic Coast Pipeline. In North Carolina, where an arm of the Atlantic Coast Pipeline ends, farmer Tom Clark recently told a local paper that, if pipeline construction commences, he will climb a deer stand and stay for, "as far as I can go."

Blocking the pipeline path: Tree sitter continues vigil on Peters Mountain; Caravan shows support - At the top of Peters Mountain in Monroe County, a tree sitter continues his vigil in the path of a natural gas pipeline.For 76 days, the anonymous man has lived in a makeshift treehouse, less than a stone’s throw from where the work clearing trees for the pipeline had to stop in order not to cut down the tree he is living in.The plan is to run the pipeline through the mountain near his perch to avoid disturbing the nearby Appalachian Trail, which runs along the top of Peters Mountain between Monroe and Giles County in Virginia. From the tree sitter’s vantage point, he can look down over a valley near Lindside, where narrow roads snake through farmland. During his stay about 30 feet up the tree, once a week one of those roads has been the scene of a caravan of vehicles.They drive just as night is falling, showing the tree sitter a string of lights, and an act of support. “All of these people care about this place and care about the land and what is going on,” the tree sitter said in a recent interview.  On Monday night last week, about 20 cars and trucks, driven mostly by Monroe County residents, gathered at the Lindside United Methodist Church to leave for the trip.   The 303-mile, 42-inch diameter line, which is slated to run from north central West Virginia to Chatham, Va., is a $3.5 billion project that will cut a swath through National Forest as well as private land about 125 feet wide as it is being buried through Monroe County and Giles County in Virginia. But many of the property owners have been forced through the courts to allow the energy companies, headed by EQT of Pittsburgh, an easement through their land. The tree sitter is on National Forest land through which an easement has been granted.

FERC lets Atlantic Coast Pipeline construction begin in West Virginia - Atlantic Coast Pipeline LLC can begin actual construction of the up to $6.5 billion project in specific parts of West Virginia, according to a “notice to proceed” from the Federal Energy Regulatory Commission. The notice issued Friday involves just sections where the company — a partnership of Dominion Energy Inc., Duke Energy Corp. and The Southern Co. — has obtained right of way and where tree clearing has been completed or is unnecessary. It does not as yet include any lands controlled by the National Forest Service. ACP and the Dominion division that is in charge of construction applied for the permit in April. The notice covers about 50 miles through Harrison, Lewis, Randolph, Upsher and Pochantas counties in West Virginia, says Dominion spokeswoman Jen Kostyniuk. The application says it includes a 300-foot-wide survey corridor for the pipeline. ‘Full construction’ Dominion has done some tree-felling and reconstruction work in Virginia and North Carolina. But the notice issued by the Office of Energy Projects is the first order that allows Dominion “to commence full construction” of any section of the pipeline. The Atlantic Coast Pipeline is designed to transport shale gas mined by fracking from the Marcellus and Utica fields in New York, Pennsylvania, Ohio and West Virginia southeast to coastal Virginia and along the Interstate 95 corridor in North Carolina as far south as Lumberton. Dominion is the dominant partner, owning 48% of the project. Charlotte-based Duke owns 47%, including a portion owned by subsidiary Piedmont Natural Gas, and Southern owns 5% of the project. The project was initially forecast to cost $4.5 billion to $5 billion, when it was first proposed in 2014. It has met stiff opposition from environmental and community heritage groups, particular in the mountains of Virginia. There has been environmental opposition in eastern North Carolina as well. The project is slated to be completed at the end of next year. 

Atlantic Coast Pipeline opponents file civil rights complaint vs. DEQ -- Thirteen environmental justice groups and their affiliates allege the state Department of Environmental Quality discriminated against communities of color when it approved permits for the Atlantic Coast Pipeline.The organizations, including Clean Water for North Carolina, the Blue Ridge Environmental Defense League, NC WARN, and many of the groups’ chapters, filed the Title VI civil rights complaint today against DEQ with the Environmental Protection Agency.Title VI complaints can be filed only against entities that receive federal funding.  DEQ spokesperson Megan Thorpe issued a statement, saying the agency “conducted extensive public outreach in communities along the ACP route. The public input we received allowed us to strengthen our decisions within the scope of our authority.”“The failure to assess the environmental justice impacts of the proposed ACP on communities of color along the route led to the improper actions taken by DEQ,” the complaint reads. The procedures for issuing the permit “were not fair and impartial.”

Atlantic Coast Pipeline opponents say state ignored minorities' civil rights -- A coalition of environmental organizations opposed to the Atlantic Coast Pipeline filed a complaint Tuesday claiming Gov. Roy Cooper's administration failed to protect residents' civil rights when it issued permits for the project. The environmentalists are calling on the U.S. Environmental Protection Agency's civil rights division to require the N.C. Department of Environmental Quality to rescind the permits and conduct a more thorough analysis. Duke Energy, which is one of the partners in the pipeline project, disputes the allegations.The complaint is "rife with misinformation and reflects basic misinterpretation of complex and thoughtful federal and state processes," Duke spokeswoman Tammie McGee said in an email.  Megan Thorpe, communications director for the state environmental agency, defended state regulators."DEQ conducted an extensive public outreach in communities along the ACP route," Thorpe emailed. "The public input we received allowed us to strengthen our decisions within the scope of our authority."The complaint is the latest legal tactic environmental groups have used to stop or delay the interstate pipeline. It comes in the form of a letter to the EPA by an attorney for 13 groups from seven counties where the natural gas pipeline is planned. The public-interest groups allege the state failed to consider the disproportionate impact the pipeline will have on communities where a large number of people of color live.

Federal appeals court nullifies key permit for Atlantic Coast Pipeline; construction could be halted - A federal appeals court on Tuesday invalidated a key U.S. Fish and Wildlife Service review of the Dominion Energy-led Atlantic Coast Pipeline, a decision environmental lawyers who argued the case say should halt construction of the contentious natural gas project. Dominion vowed to continue to press forward on the project, asserting Tuesday night that the ruling covers only portions of the proposed route for the 600-mile pipeline. A three-judge panel of the Richmond-based 4th U.S. Circuit Court of Appeals sided with pipeline opponents, who argued that the federal review known as an incidental take statement — meant to set limits on killing threatened or endangered species during construction and operation — was so vague as to be unenforceable. “We conclude, for reasons to be more fully explained in a forthcoming opinion, that the limits set by the agency are so indeterminate that they undermine the incidental take statement’s enforcement and monitoring function under the Endangered Species Act,” the judges wrote in an order Tuesday. “Accordingly, we vacate the Fish and Wildlife Service’s incidental take statement.” The Southern Environmental Law Center argued the case on behalf of the Sierra Club, the Defenders of Wildlife and the Virginia Wilderness Committee. “This puts a stop to any work that could threaten rare and endangered species and that’s much of the pipeline route,” said D.J. Gerken, an attorney with the center who argued the case before Chief Judge Roger L. Gregory and Judges Stephanie D. Thacker and James A. Wynn Jr.

BREAKING: Fourth Circuit Court of Appeals Ruling Deals Dominion Huge Blow In Its Efforts to Build Risky, Unnecessary, Destructive Atlantic Coast Pipeline -- — Yesterday, the U.S. Court of Appeals for the Fourth Circuit threw out a key permit granted to Dominion Energy’s Atlantic Coast Pipeline, finding that the U.S. Fish and Wildlife Service’s “Incidental Take Statement,” meant to protect threatened and endangered species, was inadequate. The court found that the limits set by the agency were “so indeterminate that they undermine the [permit’s] enforcement monitoring function under the Endangered Species Act.” Without this permit, all on-the-ground construction must stop in North Carolina, Virginia, and West Virginia because other federal permits are contingent on the FWS permit. The Southern Environmental Law Center argued the case on behalf of the Sierra Club, Defenders of Wildlife, and Virginia Wilderness Committee.  Anne Havemann, General Counsel at the Chesapeake Climate Action Network, stated in response: “This decision is a validation of what we’ve been saying for years: The environmental impacts of the Atlantic Coast Pipeline are huge and unacceptable. The only way we know we can protect our environment and our climate is to stop the pipeline from being built. “The impacts of Dominion’s aggressive push to get regulators to approve this unwanted and unnecessary pipeline without the proper reviews are finally catching up to the company. In addition to yesterday’s court decision, state regulators in Virginia who were pushed to approve the Atlantic Coast Pipeline without complete environmental plans from Dominion have opened up yet another public comment period on stream crossings. Yesterday’s decision is just one in what we expect will be a long line of setbacks for Dominion’s reckless pipeline plans.”

Enbridge: damaged oil pipeline was dented less than 1 inch  (AP) — The company that operates twin oil pipelines in the Straits of Mackinac says one of the lines suspected of being struck by a tugboat anchor was dented more than three-fourths of an inch. Enbridge Inc. official Peter Holran told the Michigan Pipeline Advisory Board in Lansing Monday about the April 1 damage to the pipelines running between Lake Michigan and Lake Huron.Company spokesman Ryan Duffy says each pipeline is about 20 inches in diameter with walls nearly an inch thick — but the thickness of the walls did not decrease. Holran says the other pipe suffered two dents of just under three-quarters of an inch and less than a half-inch.The suspected anchor strike also caused about 600 gallons (2,270 liters) of mineral oil insulation fluid to leak from two electric cables.  A previous version of the story stated the thickness of the pipelines' walls decreased from the dents, with the first dent being two-hundredths of an inch from rupturing. The dents did not decrease the wall thickness; they only pushed the walls in.

Haynesville Shale making major production comeback - The Haynesville Shale is back. Natural gas production in the dry gas shale play jumped in both 2017 and 2018. The U.S. Energy Information Administration is projecting Haynesville gas production in May 2018 to reach 8.54 billion cubic feet per day (Bcf/d), up from April’s 8.33 Bcf/d. Production was roughly 6.00 Bcf/d in January 2017. If the May projection is reached, that would be a 42.3% increase in Haynesville dry gas production in just the last 17 months, a feat that has been quietly achieved, Kallanish Energy reports. The Haynesville is again one of the top shale gas plays in the U.S., behind only the Appalachian and Permian basins. The Haynesville Shale is producing roughly 13% of U.S. shale gas production, according to EIA. That production is comparable to the Haynesville production five years ago in the play that covers 9,000 square miles in western Louisiana, eastern Texas and southwestern Arkansas, where nearly 30 drilling companies are at work.  The Haynesville rig count has jumped from 16 in April 2016, to 39 a year ago, to 54 as of May 11. Houston-based Tellurian has reportedly had discussions with Chesapeake Energy, one of the biggest players in the Haynesville Shale. Tellurian is interested in acquiring Haynesville gas assets for its planned Driftwood liquefied natural gas export facility at Lake Charles, La. Chesapeake gets 25% of its natural gas production from the Haynesville, 833 million cubic feet per day (MMcf/d), or 139,000 barrels of oil-equivalent per day (BOE/d), the Oklahoma-based company recently reported. That production has jumped 22.1%, from 682 MMcf/d in Q1 2017. It has three rigs at work in the Haynesville and expects to complete up to new 25 wells in full-year 2018. Production in the Haynesville has jumped 25% from early 2016 to early 2018. That is more than the production increase of 20% in the same timeframe in the Marcellus Shale in Pennsylvania and West Virginia, according to EIA.  

Fracking is Coming Back in a Big Way - The price of crude oil is rapidly on the rise. Oil recently broke past $70 per barrel for the first time since 2014 after President Trump pulled out of the Iran deal. And many believe the black stuff is set to top $100 per barrel again shortly. Here's a long-term look at oil prices: The obvious winners in a $100 oil environment are the crude producers, refiners, transporters... pretty much the entire global energy industry. But there's one specific sector that I believe is going to grab headlines and investor interest again with higher oil prices this summer: fracking. Between 2013 and 2015, fracking was a big deal. It was everywhere. And everyone was talking about it... financial media, Twitter, and protesters. . High oil prices, as well as a continuing push for American energy independence, made fracking both profitable and politically possible. And there was a big rush into the fracking business back then. What most people recall about fracking, however, is probably the controversy surrounding the whole thing.   Yet the benefits of fracking seemed to end up outweighing the costs. The fracking boom between 2013 and 2015 helped lessen oil prices and increased America's energy independence. By that measure, fracking worked. After falling for decades, U.S. oil production now stands near a 50-year high. Since 2014, the price of oil has fallen quite a bit. Back in early 2016, oil price were under $30 a barrel. (Again, take a look at that first chart.) In a bit of an ironic twist, lower prices all but killed profitability for frackers, as well as investor interest. And since then, fracking has mostly fallen by the wayside. But with crude prices back on the rise to $100 a barrel, fracking is coming back into the spotlight. 

As oil prices surge, U.S. service providers eye growing labor shortage (Reuters) - Finding roughnecks remains a challenge for oil drillers as rising crude prices increase demand for their services, oilfield executives said on Thursday at a conference in Houston. Oilfield service suppliers cut tens of thousands of workers following the 2014 oil-price collapse, and skilled employees have moved to other industries or are no longer interested. A worker shortage is helping drive up service costs for oil producers, especially in the hottest shale fields. “Recruitment and staffing is a big challenge. We’re aggressively focused on recruiting people,” said Kevin Neveu, chief executive at Precision Drilling Corp. The Calgary, Alberta-based company added about 2,000 workers last year. U.S. oil prices CLc1 have rebounded to over $70 a barrel from lows of around $26 a barrel in 2016, aided by rising global demand and supply cuts from OPEC-member countries and other exporters. That has spurred a rush to drill new wells in the Permian Basin of West Texas and New Mexico and the Bakken Shale of North Dakota. In Texas, the unemployment rate was 4 percent in March, near its historic low, versus 4.6 percent a year ago, according to the Bureau of Labor Statistics. “I was quite shocked at how fast we ran out of people from our recall list,” said Mike Nuss, an executive vice president at driller Ensign Energy Services Inc. “We’ve had to scramble and resurrect our training,” he said in an interview at the International Association of Drilling Contractors’ conference. A study led last year by the University of Houston found 25 percent of dismissed workers had moved to another industry and 55 percent were considering it. While drillers hustle to secure more workers, they also need employees with high-tech skills. Noble Corp and General Electric, for example, recently announced plans for a fully digitized drilling vessel. “We’re moving to an era where the machines do the work. They run the analysis and they ultimately do the learning,” 

How Trump’s EPA Is Moving to Undo Fracking Wastewater Protections - Back in 2008, residents of Pittsburgh, Pennsylvania, and surrounding areas received a notice in the mail advising them to drink bottled water instead of tap water—a move that U.S. Environmental Protection Agency ( EPA ) internal memos at the time described as "one of the largest failures in U.S. history to supply clean drinking water to the public." The culprit: wastewater from oil and gas drilling and coal mines. This included fracking wastewater that state officials had allowed to be dumped at local sewer plants—facilities incapable of removing the complex mix of chemicals, corrosive salts and radioactive materials from that kind of industrial waste before they piped the "treated" water back into Pennsylvania's rivers.The levels of corrosive salt in some of the oil and gas wastewater was so high that at some sewage plants , it was suspected of killing off the "good bacteria" that removes fecal coliform and other dangerous bacteria from raw sewage. State and federal regulators responded with a mix of voluntary requests and, eventually, rules designed to stop drillers from bringing their wastewater to ill-equipped water treatment plants.  Eight years after the Pittsburgh incident, in 2016, the EPA finished writing the rules that would stop that kind of failure from reoccurring, specifically forbidding sewage treatment plans from accepting untreated wastewater from fracked wells.  Now, the Trump administration's EPA is announcing that it wants to study the industry's wastewater all over again. The Trump-era study will examine oil and gas wastewater, asking, in the administration's words, "whether any potential federal regulations that may allow for broader discharge of treated produced water to surface waters are supported." In other words, Trump's EPA is questioning whether the rules should be changed, allowing wastewater from oil and gas wells, including fracked wells, to make its way into America's rivers, streams, lakes and reservoirs after some treatment.

BLOG: Poor Mental Health in Oil, Gas Industry 'At All-Time High' - - Poor mental health in the oil and gas industry is at an all-time high.That is the opinion of David Steward, an ex-oil and gas recruitment boss and current managing director at wellbeing provider The Sober Advantage.“Over the last three and a half years, the oil industry has experienced its deepest downturn since at least the 1990s. This means less investment into new projects and a squeeze on available jobs in the sector,” Steward told Rigzone.“With new opportunities scarcely available some oil workers have felt forced to accept work in less favorable territories, taken a step down or reduced their rates considerably just to ensure they are on the project,” he added.Steward said the impact these actions can have on the mental health of an individual should not be underestimated.“Behind these decisions there remains concern, anxiety, stress, feelings of being overwhelmed by circumstances larger than you, lack of control and potentially isolation and loneliness,” he stated.“Some are feeling forced to work in countries which follow alternative cultural or religious beliefs to them. This internal struggle can be an exhausting daily experience for someone to endure, all the while maintaining a perceived ‘strong’ and ‘all together’ demeanor,” he added.Offering potential solutions to anyone in the industry struggling with their mental health, Steward suggested that people with these afflictions should not focus on things that were out of their control. Instead, they should focus on themselves and the way in which they respond to challenging circumstances.

From the folks that brought us Dakota Access: Another fraught pipeline battle -- It’s a familiar scenario: Locals fight back against a pipeline permitting process that they say ignores their health and right to a clean environment. The courts intervene, throwing the future of the community and the pipeline into question. In this case, Energy Transfer Partners, the company behind the hotly contested Dakota Access Pipeline, wants to finish building a pipeline from Louisiana to the Gulf Coast. The company owns a majority stake in the Bayou Bridge Pipeline, a 162-mile addition to the oil infrastructure it’s building across the nation. Currently there are two major cases challenging the pipeline. Late last month, a local judge found that a permit didn’t evaluate potential negative impacts of the pipeline on coastal residents. Another legal battle surrounds the U.S. Army Corps of Engineers’ permit to allow the pipeline to go through the Atchafalaya Basin, where crawfishermen say a spill could destroy their livelihoods. In the April decision, Judge Alvin Turner Jr. found the Louisiana Department of Natural Resources broke state law*. Among other offenses, the permit proposal didn’t have an emergency response plan in the case of an accident, according to the decision. The pipeline is set to go through St. James Parish, an area with a mostly African-American community that’s part of “Cancer Alley,” a highly industrialized area stretching between Baton Rouge and New Orleans. There, residents worry about high rates of cancer due to rampant pollution. In one town in the area, Desmog reports that the wealthy have sold property to industry, leaving mostly lower-income black residents behind to deal with cancer and respiratory illnesses.  Anti-pipeline groups saw a temporary victory against the pipeline in February, too. A district judge ordered construction in the Atchafalaya Basin to stop until a lawsuit over the pipeline’s Army Corps permit concludes. But construction resumed after a decision in an appeals court. The groups recently made their arguments in a federal appeals court and are waiting on a decision.

Judge's order expected to halt Bayou Bridge Pipeline construction -- A state district court judge signed an order Thursday (May 17) that's expected to halt construction of the controversial Bayou Bridge Pipeline through the Atchafalaya Basin. Judge Alvin Turner Jr., of the 23rd Judicial District Court in Ascension Parish, had ruled last month that the state Department of Natural Resources violated a law designed to protect the public and environment when it issued a permit for the pipeline. The order effectively halts the work underway on the 162-mile pipeline, said Elizabeth Livingston de Calderon, an attorney representing environmental and community groups that filed suit challenging the permit. "We expect (the pipeline company) to immediately stop construction and to start working on an emergency and evacuation plan that will resolve the dangerous situation this community is in," she said in a statement. The Gulf Restoration Network, Atchafalaya Basinkeeper and other environmental groups say the pipeline will permanently harm ancient cypress forests and disrupt water flows through the Atchafalaya River Basin. The groups also claim that the potential for oil spills is significant. Bayou Bridge Pipeline is jointly owned by Energy Transfer Partners and Phillips 66. Its route runs from Lake Charles to St. James Parish, including a long segment that crosses the Atchafalaya Basin.

Rising USGC sour prices prompt more imports: In the LOOP - US crude imports into the Louisiana Offshore Oil Port appear to be on an upswing in May alongside the recent increase in regional sour crude prices. About 3.95 million barrels of crude was imported into LOOP in the first decade of May, or roughly 395,000 b/d, according to the most-recent US Customs Bureau and S&P Global Platts Analytics data, compared with an average of 327,000 b/d in the first four months of 2018. Roughly half of those barrels were Basrah Light and Basrah Heavy imported from Iraq while the balance comprised Argentinian Escalante, Kuwait Export Crude and Mexican Maya barrels. Marathon imported 2.4 million barrels of that amount while ExxonMobil and Trafigura imported about 975,000 barrels and 545,000 barrels, respectively. The uptick in crude imports at LOOP coincides with a recent increase in regional sour crude prices. By midday Monday, the US Gulf of Mexico offshore grade Mars was heard bid-ask at a 65 cents/b-$1/b premium to cash West Texas Intermediate at Cushing, Oklahoma. That put its value somewhere around plus 70 cents/b to cash WTI compared with plus 45 cents/b at the beginning of May and minus 60 cents/b at the beginning of March. The increases have been due in part to scheduled maintenance on Shell’s US Gulf of Mexico Mars and Ursa platforms, which began in late March and continued into at least mid-April. Other regional sour grades similarly have risen. The medium sour blend LOOP Sour ended last week 75 cents/b above its value at the beginning of March while Southern Green Canyon is up $1.35/b over the same time period, S&P Global Platts data show. The hike in prices and increasing refinery runs ahead of the driving season are likely boosting regional imports, particularly of heavy and medium sour grades, favored by regional refiners despite booming production of light sweet crude in the US. 

U.S. Gulf Coast port limitations impose additional costs on rising U.S. crude oil exports --U.S. crude oil exports averaged 1.1 million barrels per day (b/d) in 2017 and 1.6 million b/d so far in 2018, up from less than 0.5 million b/d in 2016. This growth in U.S. crude oil exports happened despite the fact that U.S. Gulf Coast onshore ports cannot fully load Very Large Crude Carriers (VLCC), the largest and most economic vessels used for crude oil transportation. Instead, export growth was achieved using smaller and less cost-effective ships. Each VLCC is designed to carry approximately 2 million barrels of crude oil. Because of their large size, VLCCs require ports with waterways of sufficient width and depth for safe navigation. All onshore U.S. ports in the Gulf Coast that actively trade petroleum are located in inland harbors and are connected to the open ocean through shipping channels or navigable rivers. Although these channels and rivers are regularly dredged to maintain depth and enable safe navigation for most ships, they are not deep enough for deep-draft vessels such as fully loaded VLCCs. To circumvent depth restrictions, VLCCs transporting crude oil to or from the U.S. Gulf Coast have typically used partial loadings and ship-to-ship transfers. The ship-to-ship transfer process known as lightering refers to a larger vessel partially unloading onto a smaller vessel. Reverse lightering occurs when smaller vessels load onto a larger vessel. These transfers take place in designated lightering zones and points that exist outside many of the largest U.S. petroleum ports.  Data from the U.S. Maritime Administration (MARAD) for 2015, the latest year for which data are available, indicate that the two largest ports of call for tankers carrying crude oil and petroleum products in the United States are lightering zones. The South Sabine Point and Southtex lightering zones each had nearly 250 million deadweight tons of tanker traffic volume in 2015. Deadweight tons are a measure of a vessel’s capacity to carry cargo by weight. The number of barrels per ton varies based on the density of the petroleum product or crude oil cargo.

Steps toward making Louisiana a crude-exporting powerhouse - U.S. crude oil exports have averaged a staggering 1.6 MMb/d so far in 2018, up from 1.1 MMb/d in 2017, and the vast majority of these export volumes — 85% in 2017 — have been shipped out of Texas ports, with Louisiana a distant runner-up. The Pelican State has a number of positive attributes for crude exporting, though, including the Louisiana Offshore Oil Port (LOOP), the only port in the Lower 48 that can fully load the 2-MMbbl Very Large Crude Carriers (VLCCs) that many international shippers favor. It also has mammoth crude storage, blending and distribution hubs at Clovelly (near the coast and connected to LOOP) and St. James (up the Mississippi). In addition, St. James is the trading center for benchmark Light Louisiana Sweet (LLS), a desirable blend for refiners. The catch is that almost all of the existing pipelines at Clovelly flow inland — away from LOOP — many of them north to St. James. That means infrastructure development is needed to reverse these flows southbound from St. James before LOOP can really take off as an export center. Today, we consider Louisiana's changing focus toward the crude export market and the future of regional benchmark LLS.

U.S. oil shipments to Asia may hit new high in July, cool Mideast crude prices (Reuters) - The volume of U.S. crude oil arriving in Asia is expected to hit a new high in July as Asian refiners sought arbitrage supplies to replace Middle Eastern crude after prices for Gulf grades rose, traders said on Wednesday. U.S. crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon. The volume dips to about 19 million barrels in June, but is set to rebound again in July after U.S. crude futures slipped to the widest discount in three years against Brent this week, according to traders and Eikon data. CL-LCO1=R The drop in U.S. crude prices coincides with rising values for Middle East oil in Asia and has opened the arbitrage window, traders said. Close to 10 supertankers, each carrying 2 million barrels of crude, have been lined up to load oil in the U.S. Gulf Coast for Asia, two of the traders said. These are expected to arrive in July, they said. “WTI Midland is coming across,” a third trader said, adding that refiners such as JXTG Nippon, SK Energy and Cosmo Oil have bought U.S. crude. Last week, Indian state-refiner Indian Oil Corp (IOC) bought 3 million barrels of U.S. crude for loading in June. Some of the popular U.S. grades in Asia such as WTI Midland, Mars and Southern Green Canyon can now compete with Middle East grades such as Murban and Oman in Asia, traders said. WTI Midland crude delivered to North Asia are priced at a premium of close to $5 a barrel to Dubai quotes, comparable with Abu Dhabi’s Murban, while Mars crude cargoes are being offered at $1.50 a barrel above Dubai quotes, competitive with Oman, they said. Light sweet WTI Midland comes from the Permian basin, a region which was a key contributor to record shale oil production in June. The grade’s cash discount WTC-WTM hit the lowest in four years earlier this month. 

Most of America’s propane exports go to countries in Asia -- In 2017, the United States exported 905,000 barrels per day (b/d) of propane, with the largest volumes going to supply petrochemical feedstock demand in Asian countries. Four of the top five countries receiving U.S. propane exports are in Asia—Japan, China, South Korea, and Singapore. They collectively imported 452,000 b/d of U.S. propane in 2017, or approximately half of total U.S. propane exports. Overall, propane accounted for 17% of all U.S. petroleum product exports in 2017.  U.S. propane exports to these four countries doubled between 2015 and 2017, displacing some of the region’s propane supplies from the Middle East as well as regional production of propane from refineries and natural gas processing plants.  Investments in petrochemical facilities that use propane as a feedstock in Asia have created an export outlet for U.S. propane supplies. This source of demand, combined with a large and sustained U.S. price discount to the international market, encouraged large investments in U.S. propane export capacity. Propane exports tend to be shipped from ports in the Gulf Coast region. This area (defined by Petroleum Administration for Defense District, or PADD 3) accounted for 90% of all U.S. propane exports in 2017.

The Panama Canal Expansion Has Helped U.S. Exports, But Will It Be Enough? -- The new, larger locks along the Panama Canal have been in operation for almost two years now, enabling the passage of larger vessels between the Atlantic and the Pacific. The timing couldn’t have been better — when the expanded canal locks came online in June 2016, exports of U.S. LPG, crude oil, gasoline and diesel were about to take off, and Cheniere Energy had only recently started shipping out LNG from its Sabine Pass export terminal in Louisiana, with Asian markets in its sights. Hydrocarbon-related transits through the canal soared through the second half of 2016, in 2017 and so far in 2018.As we said in our Run Through the Jungle blog series a couple of years back, the “old” Panama Canal was off-limits to vessels larger than 965 feet long and 106 feet wide; and ship drafts (or depth below water level) were capped at just under 40 feet. (Ships up to this size and draft are known as “Panamax” vessels — see Figure 1.) When the new canal locks opened for business, the dimensional limits of ships using the canal increased to 1,200 feet in length, 160 feet in width, and nearly 50 feet of draft. (These larger vessels are classified as “Neopanamax.”)   But the gains are mostly tied to LPG and LNG — even the expanded canal isn’t big enough for the Suezmax-class vessels and Very Large Crude Carriers (VLCCs) favored for Gulf Coast-to-Asia crude shipments. And there already are indications that the canal’s capacity may not be sufficient to meet future LNG needs. Today, we consider the expanded canal’s current and future role in facilitating U.S. hydrocarbon exports.

All clear given after pipeline leak creates chemical fog in St. Mary Parish - A tractor collision Monday morning resulted in a chemical pipeline leak that produced a dangerous vapor cloud over the Baldwin-Franklin area. The collision occurred in a field in the vicinity of Yokley Road. About 45 residents in the area were evacuated, according to the St. Mary Parish Sheriff's Office and State Police. Emergency crews closed a valve in the pipeline and an all clear was given shortly before noon, allowing evacuees to return to their homes. The plume, which contained a mixture of propane and butane, was gone when the all clear was given, and there was no remaining risk to public health, said Traci Landry, spokeswoman for the Sheriff's Office. "We got everybody out pretty quickly. (We) started going door to door immediately," Landry said. The leak did not result in any injuries or hospitalizations, she said. The tractor hit an above-ground valve connected to an underground pipeline, said Rick Rainey, spokesman for Enterprise Products Co., the pipeline owner. The valve was surrounded by a fence, Rainey said. “It’s not like there was a situation where they ran over a buried pipeline," Rainey said. “This will all be part of the investigation, but obviously this guy would have had to have gone through the fence to get to the valve.” The pipeline was carrying a mixture of ethane, propane and butane that had been separated from liquid natural gas, Rainey said, adding that the potential for an explosion was the biggest threat to public safety. 

The efficiency of US shale oil drilling and production - In my recent Oil Production Vital Statistics post, commenter rjsigmund posted a link to this EIA update on shale oil production efficiency which in my opinion contains some astonishing data on how the industry has drilled better and better wells, year on year, for a decade. US production is heading higher. At the same time turbulence has gripped the global oil market sending Brent above $77 / barrel as fresh sanctions loom for Iran and Venezuelan production continues to free fall. The charts in Figure 3 show that over the past 5 years peak initial production has grown significantly in each area apart from the Niobrara. The fall in production over time reflects natural production decline where decline rates are notoriously high in shale oil plays. Other key observations include:

• The Bakken has the highest initial flow rates
• The Eagle Ford is a close second for initial flow but suffers from more rapid declines that will result in a lot less oil produced per well
• The Permian comes third but notably has lower decline rates that will probably result in higher ultimate production per well which explains why it is The Permian that is currently the drillers’ favourite play.

Figure 4 shows how drilling and production efficiency has risen year on year for a decade. When the frackers first drilled The Bakken wells produced 150 barrels per day initially. By 2017 that had grown to near 700 barrels per day. Following the 2014 oil price crash, the number of active rigs declined (Figure 5). The slowdown in drilling was compensated by this improved efficiency and did not produce the reversal in US oil production that many had expected. The improved efficiency comes down to a number of “technology improvements” some of which are as mundane as drilling longer wells, increasing the number of frack intervals and pumping in greater quantities of proppants.  At the end of last year the respected Rystad Energy forecast rampant US production. At the time I was sceptical saying: The Rystad view on US oil production and future oil price is very different to my own. They see US oil production up 2 Mbpd and a virtually static oil price from 2017 to 2018. Rystad has a vast data base of relevant data and so I would not bet against them being right. It’s just that I cannot see any evidence for their forecast in the data I review. Today, Brent was above $69/bbl and the Rystad view is mean $55 / bbl in 2018. So they are forecasting another oil price crash. My forecast for December 2018 was >$80 / barrel for Brent. While Rystad may turn out to be right on US production I remain confident of being more correct on price.

A lesson from the Permian Basin: Infrastructure investment or bust --U.S. energy markets are beginning to experience the flip side of the past two decades’ remarkable shale development. After years of growth that exceeded the most optimistic forecasts, and which has almost entirely revised our country’s energy outlook, infrastructure shortages are beginning to cap production capabilities.Energy developers in the Permian Basin in West Texas, the largest continuous oil and gas deposit in America, report that insufficient pipeline options are creating bottlenecks between production fields and consumers. As a result, a glut of supply has begun to accumulate despite plenty of demand from all across the country, including from nearby markets.  This buildup at the source has depressed prices, which in turn is discouraging speculators from investing resources that are necessary to sustain continued energy production and transportation. The Wall Street Journal reported last fall that natural gas prices at West Texas’s trading hub fell 20 percent below the national benchmark. Regrettably, aside from a few refiners in the immediate vicinity, most consumers aren’t reaping the benefits of those cheap prices because the products are trapped in the region.   Consumers across the country shouldn’t be fooled into thinking that midstream infrastructure shortages in Texas won’t affect them. The Permian Basin is the biggest source of oil and natural gas in the United States, and the region’s output could single-handedly rival that of Iran or Iraq. Its supplies have largely propelled America’s transformation onto a path of energy independence, which has brought down consumer costs and helped to mitigate fluctuations on the global stage.

Shale Drillers Look Beyond Texas as Prices Rise – WSJ -  Shale drillers are ramping up production in the U.S. as oil prices rise, moving beyond the West Texas oil field that became the country’s drilling center.From Oklahoma to North Dakota, companies are increasing investment in oil fields that fell out of favor several years ago, as $70-a-barrel crude prices make fracking and horizontal drilling economical in more places again.While the Permian Basin in Texas and New Mexico remains the fastest-growing shale spot, congested pipelines and shortages of labor and materials there are crimping profits, making other fields attractive alternatives. EOG Resources Inc., one of the shale sector’s leaders, is active in the Permian but also in Colorado, North Dakota and Oklahoma. In Wyoming, the company has built up larger lease holdings and expanded production over the past two years. Some of the oil fields that are growing, notably the Bakken and Eagle Ford, had been popular among shale drillers and experienced their own bottleneck problems before prices started dropping in 2014. After topping out at more than $100 a barrel in June 2014, oil prices plunged, falling below $30 in early 2016 before slowly recovering. The current prices above $70 are the highest in more than three years. Continental Resources Inc., which is focused in North Dakota and Oklahoma, is benefiting from improved pipeline capacity in those areas. It sold crude produced in North Dakota at a discount to the main U.S. oil benchmark, West Texas Intermediate, of just $4.31 a barrel, executives told investors this month. In parts of Oklahoma, that figure was less than $2.  Price differentials in the Bakken had become as wide as $28 a barrel six years ago, according to the EIA, as production outstripped pipeline capacity. “We are having infrastructure catch up with development in North Dakota and in Oklahoma,”

Boulder City Council extends fracking moratorium by 2 years via emergency vote - It was a rare sight in Boulder: Council chambers were nearly empty as members unanimously passed an emergency ordinance to extend the city's moratorium on oil and gas applications for an additional two years.The room had emptied out earlier Tuesday evening after the council voted lock-step to implement a ban on assault weapons, high-capacity magazines and bump stocks. Fewer than a dozen attendees remained for the decision on the temporary moratorium, in place since 2013. It was first instituted by the council; voters overwhelmingly supported an extension the same year.Mayor Suzanne Jones cited that voter support as motivation for the council to act rather than waiting for a ballot measure. No companies have publicly expressed interest in drilling here — an application hasn't been received in a decade. But city staff has recommended an extension to the moratorium, which was set to expire June 3, as a "cautionary step.""There are reserves/mineral interests," said Scott Prestidge, spokesperson for industry group Colorado Oil and Gas Association (COGA).Prestidge said he couldn't speak to any potential operator plans for Boulder; "I don't have that information." But, in an emailed statement, COGA President and CEO Dan Haley noted the failure of similar measures in surrounding communities. "In 2016, Colorado's Supreme Court ruled unanimously against bans and moratoria in cases involving Longmont and Fort Collins. Those bans, unfortunately, cost local taxpayers thousands of hard-earned tax dollars," he wrote. "Boulder's resources would be much better spent by working with stakeholders and mineral property owners in advance of any potential development, so that a thoughtful plan may be put in place ahead of any activity."

Powder River Basin sees 10,000 permit drilling battle -  The volume of applications for permits to drill at the Wyoming Oil and Gas Conservation Commission over the last year — about 10,000 — has eclipsed even the coal-bed methane days. The agency can't process that many permits even if it was the sole job of the 44 people working for the commission, and Watson doesn't want to hire a slew of new engineers to do the job, he said. For one, there is a hiring freeze in the state. For another, the prospect of laying off state employees after the blaze dies down is not appealing. For Watson, now the supervisor of the state agency that regulates oil and gas development, this too shall pass. What's happening in Wyoming is that operators are jockeying for position, particularly in the Powder River Basin. The play started to attract this kind of activity in 2013 and 2014, but the bust in oil prices slowed down what was happening in the basin. With oil prices steadily improving, operators are back at it — not because they are all ready to drill, but because they want to get control. Wyoming has a first-come, first-served approach to "drilling and spacing units." "We've always had the attitude in the state, whoever wants to drill, whether you have 5 percent or 95 percent (ownership), you should be able to drill," Watson told the Casper Star-Tribune. That means the company that gets drilling permits first controls a drilling and spacing unit that may have a handful of other owners. That can allow a minority owner to subsidize his drilling plan with the majority owner's money, simply because his application to drill a well was approved first. 

Lawsuit contends energy lease sales will affect environment (AP) — Environmental groups and three Montana landowners sued Tuesday to cancel hundreds of recent oil and gas lease sales, saying the U.S. government's leasing of public lands is skyrocketing without understanding how all that drilling will affect water quality and climate change.WildEarth Guardians, Montana Environmental Information Center and the three landowners filed their lawsuit in U.S. District Court in Great Falls over the 287 leases sold in December and March that cover nearly 234 square miles (606 square kilometers) across central and eastern Montana.Those leases and others the U.S. government has sold and plans to sell in Montana, North Dakota, Colorado, Wyoming and other western states together "will have significant cumulative environmental impacts," according to the lawsuit.The environmental organizations said the U.S. Bureau of Land Management within the Interior Department has sold energy leases on public lands nationwide this year totaling more than 1,562 square miles (4,045 square kilometers), which is nearly double last year's pace of lease sales. "The American West is currently under attack from corporate oil and gas interests set on committing us to another 40 years of dirty fossil fuels," said Becca Fischer of WildEarth Guardians. "We need to take action now to protect our climate and keep federal fossil fuels in the ground."

 1,400 Tons of Contaminated Soil Hauled From Montana Reservation Oil Spill Site - Trucks have removed more than 1,400 tons of contaminated soil following a large oil spill on the Fort Peck Reservation in Montana, The Billings Gazette reported.Cleanup is still ongoing. So far, more than 50 large dump trucks full of soil have been removed with more to come, the publication noted.An estimated 600 barrels of oil and 90,000 barrels of brine (production water) leaked from an Anadarko Minerals Inc. wellhead that was shut in and last inspected in December. It is believed that the wellhead might have frozen and cracked over the winter, leading to the spill.The spill was discovered on April 27 by a farmer doing a flyover in the area. The exact date of the release is unclear.The wellhead is located near Lustre, in the central region of the Fort Peck Reservation. Oil and brine from the leak traveled roughly 200 yards downhill to a stock pond used by tribal entities to water livestock. About three to six inches of oil sat on top of the water.

EIA: US Shale Output To Rise To Record 7.18MMpd In June (Reuters) - U.S. shale production is expected to rise by about 145,000 barrels per day to a record 7.18 million bpd in June, the U.S. Energy Information Administration said on Monday.A majority of the increase is expected to come from the Permian basin, the biggest U.S. oil patch, where output is expected to climb 78,000 bpd to a fresh record of 3.28 million bpd, the EIA said in its monthly drilling productivity report.Soaring Permian crude production has already outpaced pipeline takeaway capacity, depressing prices in the region and leaving traders scrambling for alternatives to get crude to market.Bakken output is expected to rise 20,000 bpd to 1.24 million bpd, the highest since June 2015, while Eagle Ford production is set to rise 33,000 bpd to 1.39 million bpd, the highest since February 2016.Production in the United States has surged thanks to the shale boom, helping send U.S. crude futures' discount to international benchmark Brent crude futures to the widest in six months.Meanwhile, U.S. natural gas production was projected to increase to a record 68.1 billion cubic feet per day (bcfd) in June. That would be up almost 1.1 bcfd over the May forecast and would be the fifth monthly increase in a row.A year ago in June output was just 56.4 bcfd.The EIA projected gas output would increase in all of the big shale basins in June.Output in the Appalachia region, the biggest shale gas play, was set to rise almost 0.4 bcfd to a record high of 28.1 bcfd in June. Production in Appalachia was 23.5 bcfd in the same month a year ago. EIA said producers drilled 1,297 wells and completed 1,242 in the biggest shale basins in April, leaving total drilled but uncompleted wells up 55 at a record high 7,677, according to data going back to December 2013.

US unconventional oil output estimated to jump to 7.178 million b/d in June --The US Energy Information Administration estimates US unconventional oil output will increase by a record 144,000 b/d in June. In its Drilling Productivity Report released Monday, the EIA forecasts production to increase to 7.178 million b/d in the biggest month-on-month increase in the four-and-a-half years since the agency has published the report. The Permian Basin of West Texas and New Mexico is slated for the largest increase by far at 78,000 b/d, for a total 3.277 million b/d of oil output, EIA said. Trailing the Permian by less than half is the Eagle Ford Shale in South Texas at 33,000 b/d of projected oil production growth next month, for a total 1.387 million b/d. Following the two big plays is the Bakken Shale of North Dakota and Montana, which is expected to show 20,000 b/d higher oil output in June, for a total 1.238 million b/d. The Permian is by far the largest oil play in the US and is also the most active drilling basin with 463 rigs as of Friday, out of a total 844 oil rigs working last week. In addition, the number of drilled but uncompleted wells in US unconventional plays appears to be slowing down. Those so-called DUCs rose by 55 to 7,677 in April, half the increase of 110 seen in March. Domestic DUCs have risen gradually, but steadily, by more than 2,100 wells since November 2016 when they numbered 5,495. Permian DUCs increased by 111 in April to 3,086 against a jump of 122 in March. One reason why there is a build of DUCs is timing, James Williams, president of WTRG Economics, said. Operators drill more wells per pad, all in a batch, and similarly batch-complete them. That delays completions because none will occur until all wells are drilled. 

Oil Is Above $70, but Frackers Still Struggle to Make Money - WSJ  - American shale drillers are still spending more money than they are making, even as oil prices rise. Of the top 20 U.S. oil companies that focus mostly on fracking, only five managed to generate more cash than they spent in the first quarter, according to a Wall Street Journal analysis of FactSet data. Shale companies have helped propel U.S. oil output to all-time highs, surpassing 10 million barrels a day and rivaling Russia and Saudi Arabia. But the top 20 companies by market capitalization collectively spent almost $2 billion more in the quarter than they took in from operations, largely due to bad bets hedging crude prices, as well as transportation bottlenecks, labor and material shortages that raised costs. Many of the producers did better to start this year than at any point since 2014, when oil prices began a crash that the industry is fully recovering from only now. Still, the companies spent about $1.13 for every $1 they took in. Oasis Petroleum Inc. spent $3.27 for every $1 it made in cash, while Parsley Energy Inc . spent almost $2 for every $1 it made in cash, according to FactSet. While many shale operators have positive net income this year, many shareholders have begun paying closer attention to how much the companies are spending, as they seek to compel them to live within their means and begin to produce stronger returns. Some companies are already adjusting their strategies because of higher oil prices. Parsley Energy, which is focused on the Permian Basin, the oil field in Texas and New Mexico that is currently the center of U.S. shale-drilling activity, hedged most of its 2018 production. It plans to change that going forward, and expects to generate more cash relative to spending in coming quarters. Continental Resources Inc., which is primarily active in shale formations in North Dakota and Oklahoma, didn’t hedge its oil production for 2018. It raked in almost $258 million in cash after expenses in the first quarter, best among its peers. If U.S. crude prices stay at about $70 a barrel for the rest of 2018, energy consultant Wood Mackenzie estimates that hedging strategies would reduce annual revenue by an average of 7% for six companies focused on the Permian basin. 

 For Big Oil, reserve size matters less than ever - (Reuters) - A decade ago, the news that the world’s top oil and gas companies had less than 12 years of production left in their reserves might have caused a panicked sell-off in their shares. But as consumers try to move away from fossil fuels to cleaner and cheaper energy sources, investors and executives say reserve size is no longer the gold standard for measuring the value and health of a company. The cost of developing existing reserves and the amount of carbon those reserves produce has now become more important, they say. This is leading to a profound shift in company strategies. The sector is emerging from one of its longest and deepest downturns after an oil price slump that started in 2014. The largest publicly-traded oil companies — Exxon Mobil, Royal Dutch Shell, Chevron, ConocoPhillips, France’s Total, BP, Equinor (formerly Statoil) and Italy’s Eni — have adapted. They saved money by cutting jobs and increasing technology spending and now make more money with oil at $60 a barrel than they did at $100. But they also cut spending on exploration for new resources and development of new fields. This led to a decline in reserves. An analysis by Reuters and Guinness Asset Management of the annual reports of those eight companies shows that the size of their oil and gas reserves, when added together, fell to 91 billion barrels in 2017. That was the lowest since the same amount in 2005. The reserves of Exxon Mobil, the largest company, shrank by 16 percent since the slump began in 2014. Shell’s reserves fell 6.5 percent since then despite the $54 billion acquisition of BG Group in 2016. BP and Chevron’s oil and gas reserves increased by a small 5 percent since 2014. Eni was the only one to significantly boost its reserves by over 20 percent thanks to the discovery of the giant Zohr gas field off the coast of Egypt. The cumulative reserve life - the number of years a company can sustain its current production levels with existing reserves - of the eight companies fell to 11.7 years in 2017. That was the lowest level in at least 20 years although that drop is also the result of a sharp increase in production. Reuters does have access to data going back beyond 1998.  To view a graphic on Oil majors' reserves life, click: reut.rs/2rxoqFz  

Canada is divided over expanded oil pipeline from tar sands to Pacific (AP) — A pipeline project that would vastly expand Canadian oil exports to Asia is dividing the country, pitting indigenous groups and people who fear damage to the scenic coastline near Vancouver against the central government and the influential energy industry. The Trans Mountain pipeline expansion would triple the capacity of an existing pipeline to ship oil extracted from the inky black tar sands north of Alberta across the snow-capped peaks of the Canadian Rockies. It would end at a terminal outside Vancouver, resulting in a seven-fold increase in the number of tankers in an environmentally sensitive area dependent on tourism and fishing. “It just boggles my mind that people are willing to risk Vancouver to a catastrophic oil spill,” said Stewart Phillip, the grand chief of the Union of British Columbia Indian Chiefs, which represents 115 aboriginal groups that oppose the expansion. Many indigenous people see the 620 miles of new pipeline as a threat to their land, echoing concerns raised by the Keystone XL project in the U.S. Many in Canada say it also raises broader environmental concerns . The project also has strong support in a country where energy production has become a key part of the economy. Prime Minister Justin Trudeau’s government approved the expansion, arguing that it was “economically necessary” and enabling him to overcome opposition to a carbon tax plan that will help Canada cut its greenhouse emissions.   Facing legal challenges filed by the government of British Columbia, the company that would build the pipeline, U.S.-based Kinder Morgan Inc., halted essential spending on the project last month and said it would cancel it altogether if Ottawa and British Columbia could not ensure that they would be able to go forward. Those who make an economic case for the project point out that Canada has the world’s third largest oil reserves but is overwhelmingly dependent on refiners in the U.S., where a barrel of Canada’s heavy oil is sold at a discount of between $15 and $30 per barrel. Canada wants to diversify oil exports to Asia, where oil commands a higher price. 

Canada ready to compensate Kinder Morgan for pipeline losses —In a bid to protect Canada’s reputation as an attractive destination for energy investment, the Liberal government pledged Wednesday to cover Kinder Morgan Inc.’s losses on the Trans Mountain pipeline expansion caused by British Columbia’s efforts to delay and potentially kill the project. The extraordinary promise from Canada’s Finance Minister, Bill Morneau, underlines the importance the project represents for the government, the economy and the country’s energy sector. The Trans Mountain expansion, with a price tag of 7.4 billion Canadian dollars (US$5.75 billion), marks a last chance to significantly increase the amount of crude oil Canada’s energy producers can get to faster-growing Asian markets via the Pacific Coast. Canada houses the third-largest proven oil reserves in the world after Venezuela and Saudi Arabia, but most of it is trapped in landlocked Alberta. Canadian Prime Minister Justin Trudeau approved the project in late 2016, after going through additional oversight to ensure it posed limited environmental risk and the appropriate indigenous groups were consulted. Yet the province of British Columbia has vowed to use policy and legal levers to block the project until its own worries over environmental risk are addressed, and municipalities within the province have appealed to Canada’s top court to overturn regulatory decisions in favor of the pipeline. In response, Kinder Morgan has threatened to walk away from the project on May 31 unless the political and legal uncertainty the project faces is removed. Mr. Morneau said during a news conference in Ottawa the delays faced by Kinder Morgan marked an “exceptional” situation, and British Columbia was acting in an “unconstitutional” way. He said it isn’t reasonable to expect companies like Kinder Morgan to deal with disputes between governments. He didn’t address how much in losses the government is willing to cover, or whether Canada is considering an equity stake in the project.

 The B.C. pipeline project you've never heard of — and why it may succeed - You've likely never heard of the Eagle Spirit Energy pipeline, but for the past five years the project's leader has been quietly working on the plan to build the next pipeline across northern B.C. "We are now putting together a very solid commercial plan for how we are going to do this," said CEO Calvin Helin earlier this week. Helin is a member of the Lax Kw'alaams First Nation located on the north coast near Prince Rupert. That's where the proposed pipeline linking Alberta's oil sands with the West Coast would terminate. At 1,500 kilometres in length, the pipeline would carry up to two million barrels of medium to heavy crude oil a day from Fort McMurray to tide water on the West Coast.Estimates put the cost of the project, which has the backing of the Vancouver's Aquilini Investment Group, at $16 billion.While such a proposal might seem foolhardy given the current politics in B.C., Helin is confident his proposal will succeed where others have stumbled or failed of late.One obstacle any northern pipeline would face is the federal Liberals' oil tanker ban. Bill C-48 is expected to pass final reading in the House of Commons next week.That ban was first announced in November 2016, when the Liberal government halted Enbridge's proposed Northern Gateway pipeline across northwestern B.C. The Eagle Spirit project has been framed as an alternative to Northern Gateway. If the tanker ban becomes law sometime later this year, it would seemingly render pointless any future crude oil pipelines with terminals on the North Coast.But Helin says he has two possible solutions to bypass the ban.First, his brother John Helin, who is the elected leader of the Lax Kw'alaams Band, has already launched a constitutional challenge in B.C. Supreme CourtThat lawsuit claims First Nations were not properly consulted on the tanker ban, which he claims is discriminatory and infringes on their Aboriginal title. If the court challenge fails, Eagle Spirit Energy has a plan to avoid the tanker moratorium entirely, Calvin Helin says.He said the group has signed a memorandum of understanding (MOU) with a landowner across the U.S. border in Hyder, Alaska. The tiny town wants to host the pipeline as an alternative location for the port terminal, Helin said. That landowner is Walter Moa, the president of Roanan Corp, who confirmed he's ready to do a deal to put the terminal on his land if necessary.

Like it or not, crude oil is the biggest reason for Canada’s prosperity | Financial Post: The oil industry looms large in the Canadian economy and, in many ways, pays the rent in Canada. Yet many Canadians appear unaware of how critically important the oil industry is to the national economy, a fact often lost in the debate over the Trans Mountain pipeline expansion. Canada is a trading nation. We owe our economic prosperity and relatively high per-capita income to trade — and crude oil dominates that trade. In 2014, before the oil-price downturn, crude oil alone generated a $70-billion trade surplus for Canada — excluding smaller surpluses in refined petroleum products and natural gas — far outstripping any other export category (the closest is metals and minerals) and helping to offset large, chronic deficits in autos and parts, industrial machinery, electronic goods and consumer products. Even at the bottom of the oil-price correction in 2016, crude oil remained the largest positive contributor to Canada’s merchandise trade, generating a $33-billion surplus. In 2017, net oil exports increased again to $46 billion and will likely climb to over $50 billion this year, alongside the recent recovery in West Texas Intermediate (WTI) oil prices to the $70 mark. We owe our economic prosperity and relatively high per-capita income to trade — and crude oil dominates that trade.

Arctic oil 'undrillable' amid global warming: U.N.'s ex-climate chief (Reuters) - An architect of the Paris climate agreement urged governments on Tuesday to halt oil exploration in the Arctic, saying drilling was not economical and warming threatened the environmentally fragile region. Christiana Figueres, formerly head of the U.N. Climate Change Secretariat when the Paris accord was reached by almost 200 nations in 2015, told Reuters by telephone “the Arctic has been rendered undrillable.” The past three years have been the hottest since records began in the 19th century, and Figueres said the heat was a threat to everything from Australia’s Great Barrier Reef to ice in Antarctica. The former Costa Rican diplomat who campaigns for a peak in global emissions by 2020 said it made no economic sense to explore in the Arctic, partly because it was likely to take years to develop any finds. Capital investment would be better used developing renewable energies such as solar and wind to cut emissions, she said. “The stakes are visibly higher than they were just a few years ago,” she said. Many governments and companies favor Arctic drilling. Last month, Trump’s administration began environmental reviews for oil and gas drilling in a section of the Arctic national Wildlife Refuge. In Norway, Statoil and other companies plan to keep up exploration in the Arctic Barents Sea, which is ice-free further north than other parts of the Arctic thanks to the warm Gulf Stream.. “This area is actually less challenging in terms of weather and waves than many other parts of Norway ... We have drilled more than 100 wells, and never had any significant accidents or discharges to sea,” 

Investors urge fossil fuel firms to shun Trump's Arctic drilling plans - Investors managing more than $2.5tn have warned oil firms and banks to shun moves by the US president, Donald Trump, to open the Arctic national wildlife refuge (ANWR) to drilling. Companies extracting oil and gas from the wilderness area in Alaska would face “enormous reputational risk and public backlash”, the investors say in a letter sent on Monday to 100 fossil fuel companies and the banks that finance them. Exploiting the area would also be an “irresponsible business decision”, the group argues, as global action on climate change will reduce oil demand and mean such projects have a high risk of losing money. An accompanying letter from the indigenous Gwich’in people say it would be “deeply unethical” to destroy their homelands. The 19m-acre refuge is one of wildest places left on Earth and the largest area of publicly owned land in the US. It is home to a huge range of animals, including polar bears, snowy owls and the porcupine caribou on which the Gwich’in rely for food. In April, the Trump administration began the process of opening the ANWR for oil and gas drilling, the first such move since 1980. Significant oil and gas reserves are thought to lie under the ANWR coastal plain and Prudhoe Bay, a major oil centre, lies close to the refuge’s western boundary. The Gwich’in name for the coastal plain is “Sacred place where life begins”, as it is the breeding ground of the caribou. “Drilling in the ANWR is an exceedingly high-risk gamble that companies and investors should avoid,” said New York state comptroller, Thomas P DiNapoli, trustee of the New York State Common Retirement Fund, one of the investors that signed the letter. “A global low-carbon economy is emerging, driven by the growing opportunities for cleaner energy. We want the companies [we invest in] to help build that future, not destroy one of America’s last truly wild places.” 

NYMEX June natural gas futures up 1.5 cents at $2.821/MMBtu on higher power burn -- NYMEX June natural gas moved higher in overnight US trading as building heat across major portions of the US is likely to boost power-burn demand. At 7:15 am EDT (1115 GMT) the contract was 1.5 cents higher at $2.821/MMBtu after trading a tight $2.810-$2.830/MMBtu range. The latest forecasts from the National Weather Service show above-average temperatures across most of the Eastern and Western US in the six-to-10-day period, leaving normal temperatures across portions of the central and Southwest and below-average temperatures confined to an area of southern California and Arizona in the West, as well as Nebraska. Above-average temperatures overtake all but small areas of the Northeast and north central US in the eight-to-14-day period. The US Energy Information Administration said higher temperatures in the week to May 9 meant power burn was up 14% week on week. 

NYMEX June natural gas futures slip to $2.835/MMBtu in profit-taking amid mixed outlook -- NYMEX June natural gas futures slipped in profit-taking in the US overnight ahead of Tuesday's open. After ending the week's opening session with a 3.6 cent gain, the contract was 0.7 cent lower at $2.835/MMBtu at 6:45 am ET (1045 GMT). Natural gas inventories continue to rebuild, as the US Energy Information Administration's latest storage data outlined a robust 89 Bcf injection for the week ended May 4 that bested both the 75 Bcf five-year-average addition and the 49 Bcf prior-year build. Total working gas stocks currently sit at 1,432 Bcf, still 863 Bcf below the year-ago level and 520 Bcf below the five-year average of 1,952 Bcf. Lingering storage deficits are feeding bullish sentiments in the market, but a steadily rising rig count implying growth in production has kept downside risks viable. Adding to the uncertainty, recent and projected warm weather suggests destruction of heating demand but also the building of cooling load, which should have a mixed impact on the rate of subsequent storage injections. Warmer weather during week ended May 9 drove a 14% increase in power burn week on week but also a 37% drop in residential/commercial-sector demand, according to the EIA's latest Natural Gas Weekly Update. Total US gas consumption was down 4% on the week. Additional warm weather is in store in the coming weeks and months. Midrange National Weather Service outlooks reflect above-average temperatures over nearly the entire country through both the upcoming six-to-10-day and eight-to-14-day periods, while the longer-range projection from AccuWeather call for warmer-than-normal weather over a large part of the US for April through June.

June NYMEX gas edges lower to $2.818/MMBtu on warm weather and robust production - NYMEX June natural gas futures edged lower overnight in US trading ahead of Wednesday's open, as warmer weather and robust production are keeping inventories on track to a healthy level ahead of the next major demand period. At 6:40 am ET (1040 GMT) the contract was 1.8 cents lower at $2.818/MMBtu. Recent and anticipated warm weather looks to encourage additional large builds to storage, as an early uptick in cooling demand meets a sharp decline in heating demand. During the week ended May 9, warmer weather triggered a 14% increase in power burn week on week but also a 37% drop in residential/commercial sector demand, according to the EIA's latest Natural Gas Weekly Update. Total US gas consumption was down 4% on the week. Warmer weather is in store further out, as the latest National Weather Service projections for both the six-to-10-day and eight-to-14-day periods continue to reflect above-average temperatures across nearly the entire country.

NYMEX June gas rises to $2.838/MMBtu as EIA reports higher-than-expected injection - The NYMEX June natural gas futures contract climbed in US morning trading Thursday, as the US Energy Information Administration reported a higher-than-expected storage build for the week ended May 11. As of 11:22 EDT (1522 GMT), the front-month contract was up 2.3 cents to $2.838/MMBtu, trading in a range of $2.780/MMBtu-$2.840/MMBtu. The EIA announced an estimated 106 Bcf injection into national storage stocks Thursday, for the week ended May 11, just above the 104 Bcf build expected by a consensus of analysts surveyed by S&P Global Platts, and well above the 87 Bcf build averaged over the past five years during that time. Currently, national gas stocks sit at an estimated 1.538 Tcf, down 34.8% from the year prior and a 24.6% deficit to the five-year average of 2.039 Tcf, according to EIA data.  Though stocks currently sit at a large deficit to the five-year average, near record level production could begin to produce above average injections.  Year to date, US dry gas production has averaged 77.2 Bcf/d, a 5.9 Bcf/d increase from the 71.3 Bcf/d averaged this time last year, based on S&P Global Platts Analytics data. Total US demand is expected to fall 600 MMcf day on day to 69.5 Bcf, as nominal gains in Texas and the Northeast were offset by reduced demand in the Southeast and the Midcon Market. According to Platts Analytics, much of the demand drop was due to decreased power burn in the Southeast. Looking ahead, demand is expected to climb over the coming weeks, with Platts Analytics projecting total demand to average 70.5 Bcf/d over the next seven days and 71.2 Bcf/d over the next eight to 14 days. The most recent six-to-10-day weather outlook from the National Weather Service calls for a likelihood of warmer-than-average temperatures for much of the country, which could give support to power demand.

 Fracking planning laws should be relaxed say ministers - BBC News: The government has proposed a relaxation in the planning laws which apply to fracking. Under the plans, preliminary drilling could be classed as permitted development - the same law that allows people to build a small conservatory. Ministers are also proposing a shale environmental regulator and a new planning brokerage service. Opponents of fracking say it shows the government is desperate to encourage fracking. They call the proposed relaxation of planning law an outrageous subversion of the planning process. Energy Minister Claire Perry said: "This package of measures delivers on our manifesto promise to support shale and it will ensure exploration happens in the most environmentally responsible way while making it easier for companies and local communities to work together." She said shale gas had the potential to lower energy prices, although opponents of the technology say there is no evidence this will happen in the UK.The proposed changes were applauded by the shale gas firm Cuadrilla. Its chief executive Francis Egan said: "We welcome the measures the government has introduced on making the planning process faster and fairer and providing additional resources to help local authorities. "Our permission to drill and test just four shale gas exploratory wells in Lancashire was granted after a lengthy and costly three year process. These timelines must improve if the country is to benefit from its own, much needed, indigenous source of gas." Since test fracking triggered a small earthquake in Blackpool seven years ago, no commercial fracking has been started. Ministers hope to make fracking easier by allowing the early stages under permitted development. A government spokesman confirmed that this would include drilling but not fracturing the rock. 

UK Government unveils support package for fracking industry - - The UK Government today unveiled a new package of support measures for shale gas developments, including the creation of a £1.6million fund. The move, announced as part of the government’s modern industrial strategy, was praised by trade unions and natural resource developers, but condemned by environmentalists. The Scottish Government imposed an “effective ban” on fracking last year, having placed a moratorium on the extraction technique in 2015. The UK Government vowed to “streamline and improve” the regulation process for shale applications.A shale environmental regulator and a planning brokerage service will be established to focus on the planning process. And the shale support fund will have £1.6million at its disposal over the next 2 years to build capacity and capability in local authorities dealing with shale applications. Energy and Clean Growth Minister Claire Perry said: “British shale gas has the potential to help lower bills and increase the security of the UK’s energy supply while creating high quality jobs in a cutting-edge sector. “This package of measures delivers on our manifesto promise to support shale and it will ensure exploration happens in the most environmentally responsible way while making it easier for companies and local communities to work together. GMB national office Stuart Fegan said: “We welcome the written ministerial statement which confirmed the Government’s commitment to exploring the potential of shale gas.” “Shale gas production should be permitted, alongside the development of the UK’s renewable and nuclear capacity, benefiting the security of our energy, the economy and the environment.” 

Fracking mogul Jim Ratcliffe becomes UK’s richest person - Fracking and chemicals billionaire Jim Ratcliffe increased his wealth by more than £15bn last year to take the crown as Britain’s richest person, with a £21bn fortune. Ratcliffe, 65, has overtaken the Hinduja brothers, to take the Sunday Times Rich List title thanks to a huge increase in value of his petrochemical company Ineos, the UK’s biggest fracking firm. Ratcliffe, who was brought up in a council house near Manchester, the son of a joiner and office manager, founded Ineos in 1998 and still owns 60% of the firm that made profits of more than £2.2bn last year and employs 18,500 people. Ratcliffe, who lives in a mansion near Beaulieu in the New Forest and owns two superyachts called Hampshire and Hampshire II, jumped from 18th to first place in the rich list. Ratcliffe is among a record 145 billionaires in the list – 11 more than recorded in the 2017 edition. The 1,000 richest people in the UK now share a record total wealth of £724bn, up 10% on last year’s figure. It now takes £115m to join even the richest 1,000 people. 

Back to the Future with Empire Oil -- As Britain heads for an uncertain post-Brexit future, the prospect of a deregulated corporate global free-for-all operating from offshore accounts with damaging environmental impact is the nightmare envisaged by many. But that future may be closer than people realise.DeSmog UK has identified a hub of a dozen companies based around Mayfair, drilling for oil in Africa, and making use of tax-havens in British overseas territories and crown dependencies such as the British Virgin Islands, the Cayman Islands and Jersey.This is Empire Oil, a neocolonial snapshot of the future simultaneously revisiting Britain’s Imperial past in countries such as Somaliland, Kenya, Zambia, Tanzania, Nigeria and South Africa – and forging a new path for Global Britain. At the centre of it is the Alternative Investment Market (AIM), London’s junior stock exchange. AIM operates ‘light touch regulation’, leading it to be described as a ‘casino’. It’s a system where nominee advisors – or ‘nomads’ – can act as both regulators of the system and brokers, potentially creating serious conflicts of interest.Companies are using London’s reputation as a financial powerhouse to raise funds, while taking advantage of rules that allow them to keep ownership details hidden in offshore accounts. This makes public scrutiny challenging and once again demonstrates the value of independent media. With no corporate-backing, DeSmog UK is free to pursue stories the mainstream press often shy away from.

Statoil to become Equinor, dropping 'oil' to attract young talent   (Reuters) - Shareholders in Norway’s largest company, Statoil STL.OL, will approve on Tuesday the board’s proposal to drop “oil” from its name as its seeks to diversify its business and attract young talent concerned about fossil fuels’ impact on climate change. From Wednesday, the majority state-owned company will change its 46-year-old name to Equinor and trade on the Oslo Exchange under the new ticker EQNR. The Norwegian government, which has a 67 percent stake in the firm, has said it will back the move. The oil and gas company said the name change was a natural step after it decided last year to become a “broad energy” firm, investing up to 15-20 percent of annual capital expenditure in “new energy solutions” by 2030, mostly in offshore wind. “The key reason for a company to change its name is when it wants to widen the scope of its activity or direction. Another reason would be because it is in trouble, and it has a reputational problem,” 

EU Wants to Boost LNG Imports From US in Exchange of Lifting US Aluminum Tariffs - - The European Commission proposes to boost the EU imports of the liquefied natural gas (LNG) from the United States in exchange for scrapping the US tariffs on steel and aluminum imported from the EU member states, a diplomatic source told Sputnik.“The European Commission proposed a number of measures to settle the situation, including the increase in volume of the LNG supplies to the European Union by the US companies and expansion of relevant infrastructure,” the source said.The United States has been increasing its LNG deliveries to European Union countries and has become the sixth largest LNG supplier of the 28-nation bloc in the first quarter of 2017. According to the International Energy Agency, the United States will become one of the leading LNG exporters in five years.  In late March, the United States imposed 25-percent and 10-percent tariffs on imported steel and aluminum, respectively. US President Donald Trump decided to postpone the talks on the tariff issue earlier this month. The move provoked a backlash from China, which has introduced its own tariffs on goods produced in the United States. Both countries have suggested they might implement further mutual restrictions.

US warns of sanctions risk to Germany-Russia gas pipeline - The Nord Stream 2 project will double the amount of natural gas Russia can funnel directly to the heart of Europe from newly tapped reserves in Siberia, intentionally skirting Eastern European nations like Poland and Ukraine. It also promises much-needed jobs in this poor German backwater, some three hours' drive north of Berlin.The United States and some other German allies have bristled at the project, warning that it could give Moscow greater leverage over Western Europe.Energy-poor Germany already relies heavily on Russian gas and so far Chancellor Angela Merkel has deftly kept the new $11 billion pipeline off the table while imposing sanctions against Russia for its actions in Ukraine.But as plans become closer to reality, the pressure has increased on her, and last month after meetings with Ukrainian President Petro Poroshenko she acknowledged that Nord Stream 2 was more than just a business project, saying that "political factors have to be taken into account."With Merkel heading to Sochi on Friday for talks with Russian President Vladimir Putin, a senior U.S. diplomat warned that proceeding with the project could result in sanctions for those involved."We would be delighted if the project did not take place," U.S. Deputy Assistant Secretary Sandra Oudkirk, an energy policy expert in the State Department, told reporters in Berlin on Thursday.She said Washington is concerned Nord Stream 2 could increase Russia's "malign influence" in Europe. Oudkirk said the new pipeline would divert gas flows away from Ukraine, which depends heavily on transit fees, and could become a pathway for Russia to install surveillance equipment in the Baltic Sea, a sensitive military region.She said the U.S. is "exerting as much persuasive power" as it can to stop the project, and noted that Congress has given the U.S. administration explicit authority to impose sanctions in connection with Russian pipeline projects if necessary.

Trump Gives Merkel An Ultimatum: Drop Russian Gas Pipeline Or Trade War Begins - It became clear just how important it is to the US for Russia's Nord Stream 2 gas pipeline project to fail two months ago when, as we described in "US Threatens Sanctions For European Firms Participating In Russian Gas Pipeline Project", the U.S. State Department warned European corporations that they will likely face penalties and sanctions if they participate in the construction of Russia's Nord Stream 2 on the grounds that "the project undermines energy security in Europe", when in reality Russia has for decades been a quasi-monopolist on European energy supplies and thus has unprecedented leverage over European politics, at least behind the scenes.  “As many people know, we oppose the Nord Stream 2 project, the US government does,” State Department spokeswoman, Heather Nauert said during a late March press briefing adding that "the Nord Stream 2 project would undermine Europe's overall energy security and stability. It would provide Russia [with] another tool to pressure European countries, especially countries such as Ukraine." Nauert also said that Washington may introduce punitive measures against participants in the pipeline project - which could be implemented using a provision in the Countering America's Adversaries Through Sanctions Act (CAATSA). Fast forward to today, when the dreadfully named CAATSA act just made a repeat appearance; around the time Europe made it clear it would openly defy Trump's Iran sanctions, the WSJ reported that Trump told Merkel that if she wants to avoid a trans-Atlantic trade war, the price would be to pull the break on Nord Stream 2, according to German, U.S. and European sources. The officials said Mr. Trump told German Chancellor Angela Merkel in April that Germany should drop support for Nord Stream 2, an offshore pipeline that would bring gas directly from Russia via the Baltic Sea. This would be in exchange for the U.S. starting talks with the European Union on a new trade deal. While it had long been suspected that Trump would push hard to dismantle Nord Stream 2 just so US nat gas exporters could grab a slice of the European market pie, the aggressive push comes as a surprise, and as the WSJ notes, "the White House pressure reflects its hard ball tactics on trade, moves that have contributed to rising tensions between Europe and the U.S. and raised fears in export-dependent Germany of a tit-for-tat on tariffs that could engulf its car industry."

Expected LNG surplus evaporates, scramble for new projects looms (Reuters) - Liquefied natural gas (LNG) producers around the globe are once again considering new investments as expectations of a glut in supply wither away in the face of strong, China-led demand growth in Asia.  Given it takes several years to go from a Final Investment Decision (FID) to producing cargoes of the super-chilled fuel, however, the industry may be acting too late to prevent a supply shortfall by the middle of next decade. Much of the focus this week at an annual oil and gas conference in Australia - which is about to become the world’s top exporter of LNG - was on what projects are viable and how quickly can they be developed.   The forecasts for a global glut were based on the market being swamped by eight new Australian LNG projects, plus at least four in the United States, as well a handful of others in frontier countries such as Mozambique. But the narrative of industry over-investment in capacity has been turned on its head by the spectacular growth of Chinese demand, which leapt 46 percent last year to 38.1 million tonnes. China is now the world’s second-biggest LNG buyer, behind Japan, and its demand has continued to grow rapidly, with first-quarter imports up 59 percent from a year ago to 12.4 million tonnes.

Australia looks to brownfield projects as LNG boom peaks - Australia is unlikely see any new greenfield liquefied natural gas projects in coming years due to low global LNG prices and no discoveries of major gas fields, but the next wave of brownfield expansions could easily dwarf existing projects. The last of Australia's initial wave of LNG export projects were set t to start operations by end-2018, making it the world's largest LNG exporter by the end of the decade, surpassing Qatar, in a feat set for the record books. A spike in Chinese gas demand due to fuel switching and growing domestic gas shortages in Australia have tightened the market earlier than expected, prompting calls for exploration and production companies to seek new capacity. However, it is unlikely that Australian E&P companies will see any new projects built from scratch, and they are focused instead on expansion of existing facilities, which include backfilling declining capacity as well as tapping into known reserves. "There's no other accumulation out there in my view that supports a greenfield project," Woodside Energy's managing director and chief executive officer Peter Coleman said. "There's discovered gas that supports what we are doing but there is not enough discovered gas to support a greenfield project," 

Europe Keeps Buying Iran Oil, But Banks May Hinder Trade - In the days following the U.S. withdrawal from the Iran nuclear deal, Iran’s European customers continue to buy Iranian oil and are in no immediate rush to replace volumes, but some refiners and traders have flagged financing issues as having the potential stop to crude trade with Iran. After the U.S. walked out of the Iran deal, the U.S. will be targeting Iran’s crude oil sales, and sanctions previously lifted under the deal will be re-imposed following a 180-day wind-down period, the U.S. Treasury said.  European buyers are not in an immediate rush to replace Iranian supplies due to that wind-down period, with sanctions expected to kick in in November. All buyers report that they are complying and will comply with any sanctions imposed on Iranian trade, and some of them expect that banking issues will arise from the sanctions, such as the availability of trade finance.Marta Llorente, a spokeswoman for Spanish oil company Cepsa, one of Iran’s customers in Europe, told Reuters:“At this moment, our trading activity is business as usual.”  Italy’s Eni also continues to buy Iranian oil and it is buying 2 million barrels of oil per month from Iran under a deal that expires at the end of the year. “We’re doing nothing,” said the head of trading at another European customer of Iran’s. “It’s wait and see. If we’re forced to reduce, we will. Iranian is not the only crude,” the manager told Reuters.Sources at trading companies tell Reuters that “It looks like you can still go on for six months,” but traders expect the banks to be the key in determining whether Iran’s customers in Europe can buy oil, and even if the U.S. grants waivers to European buyers, whether they will need to reduce their volumes during the wind-down period.

Total Stops Iran Gas Project as Risk From Sanctions Too High - Total SA said it will not risk investing in Iran following the return of U.S. sanctions, unless it can secure a waiver. Continuing to do business in Iran would be too great a risk as the company has large operations in the U.S. and depends on the country’s banks for financing its operations, Total said in a statement Wednesday. So the French energy giant won’t commit any more funds to Iran’s South Pars 11 project, in which it took a controlling stake last year. The comments from Total -- the first Western oil company to sign binding agreements to develop Iran’s oil and gas fields following the end of a previous round of sanctions in 2015 -- illustrate the challenge posed by renewed U.S. restrictions. While the French company was speaking about a natural gas project, its reluctance to continue operating there could equally apply to others that rushed back into sectors from automobiles to aviation and engineering to the oil trade. “The risks of being on the wrong side of the U.S. government are not worth the benefits of trading with Iran once the sanctions are in place,” said Jason Gammel, a London-based analyst at Jefferies LLC. “Oil companies are not going to be able to invest in the upstream sector, traders and purchasers of Iranian crude are going to have to find other sources, or seek an exemption from the U.S. government to be able to continue buying.”

Total's Iran Halt Shows Oil Buyers Will Face Sanctions Trouble - Total SA’s decision to stop investing in Iran shows that international companies are going to have trouble doing any business with the Persian Gulf nation, including buying its oil. Continuing to do business in Iran would be too great a risk as Total has large operations in the U.S. and depends on the country’s banks for financing, it said in a statement Wednesday. The comments from Total -- the first Western oil company to sign binding agreements to develop Iran’s oil and gas fields following the end of a previous round of sanctions in 2015 -- illustrate the challenge posed by renewed American restrictions. The French energy giant, which also buys crude oil for its refineries from the Islamic Republic, won’t commit any more funds to Iran’s South Pars 11 project, in which it took a controlling stake last year. While it is planning to seek a waiver for the Iran project, the company also said it has much more to lose should it be penalized for breaching sanctions. “The risks of being on the wrong side of the U.S. government are not worth the benefits of trading with Iran once the sanctions are in place,”   “Oil companies are not going to be able to invest in the upstream sector, traders and purchasers of Iranian crude are going to have to find other sources, or seek an exemption from the U.S. government to be able to continue buying.”  Total could be exposed to so-called secondary sanctions if it continues to do business with Iran, it said. That could affect, among other things, the company’s funding in dollars. U.S. banks are involved in more than 90 percent of Total’s financing operations, American shareholders represent upward of 30 percent of its investors and the company has more than $10 billion of capital employed in the country, according to the statement.

Iran Sanctions Fallout: China Set To Replace Total In Giant Iran Gas Project, As Beijing Launches New Iran Train Route - Last week, when commenting on the world's response to Trump's decision to pull out of the Iran nuclear deal, we said that while Europe still remains in no-man's land - after all Putin still remains the biggest supplier of Europe's energy needs, especially in the winter, Trump's decision to withdraw has officially pitted the US, Israel and Saudi Arabia against not only both Russia, but also China, whose interests in the region were until now, mostly dormant. And, as a next step, we said that "we now look forward to China deploying troops and military equipment to Syria and Iran as the inevitable next step in this escalating global proxy war."But first, China will deploy a far more nuanced Iranian invasion force consisting of... its mega corporations. According to Iran's PressTV, China’s state-owned CNPC - the world's third largest oil and gas company by revenue behind Saudi Aramco and the National Iranian Oil Company - is set to take over a leading role held by Total in a huge gas project in Iran should the French energy giant decide to quit amid US sanctions against the Islamic Republic.Industry sources quoted by Reuters siad that while it was not clear if CNPC had received approvals from Beijing to take over from Total, they said chances that the move could strain relations between the US and China were already high."The possibility of Total's pullout is quite high now, and in that scenario CNPC will be ready to take it over fully," Reuters quoted a senior state oil official with knowledge of the contract as saying. The news wire also quoted an executive with direct knowledge of the project as adding that planning began "the day the  investment was approved.""CNPC foresaw a high probability of a reimposition of (US) sanctions," the executive said. Last December, Reuters reported that CNPC had already started talks with Iran over replacing Total in South Pars. Under the alleged terms of the agreement to develop Phase 11 of South Pars, CNPC could take over Total's 50.1% stake and become operator of the project. CNPC already holds a 30% stake in the field, while Iranian national oil company subsidiary Petropars holds the remaining 19.9%.  So far, Reuters said, the Chinese oil giant, which already operates two oil fields in Iran, has spent about $20 million on planning to develop the field.

China's crude oil futures boom amid looming Iran sanctions (Reuters) - A U.S. decision to reimpose sanctions on Iran is supporting China’s newly established crude oil futures, and may spur efforts to start trading oil in yuan rather than dollars, traders and analysts said. Since launching in March, Shanghai crude oil futures ISCc1 have seen a steady pick-up in daily trading, while open interest - the number of outstanding longer-term positions and a gauge of institutional interest - has also surged. Traded daily volumes hit a record 250,000 lots last Wednesday, more than double the day before, spurred by news of the Iran sanctions. The jump helped the front-month Shanghai futures contract account for 12 percent of the global oil market last week, up from just 8 percent in week one. “The contract is thundering into action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore. The world’s biggest importer of crude oil, China hopes the Shanghai contract will eventually rival international benchmarks Brent LCOc1 and benchmark WTI CLc1. The ascent of Shanghai crude is aided by China’s voracious demand for oil, with imports hitting a record in April of 9.6 million barrels per day. China is also the biggest buyer of Iranian crude oil, and the recent boost in trading volume at least in part flowed from the sanctions decision, said Barry White, senior vice president for derivatives in Singapore at financial services firm INTL FCStone. “The sanctions... can potentially accelerate this process of establishing a 3rd (oil) benchmark,” 

China data: Apr crude stocks rise 38 mil barrels from end-Mar - China saw a build of 37.84 million barrels in crude oil stocks over April, from end-March, which was 65.3% higher than the previous month due to heavy crude imports and lower throughput, S&P Global Platts' calculations based on latest official data showed Wednesday. Crude stocks are likely to continue to rise in May as imports are likely to remain strong. China does not release official data on stock. Platts calculates the country's net build or draw on crude stocks by subtracting the official refinery throughput data from the country's crude supply data. The latter takes into account net crude imports and domestic production. The General Administration of Customs data showed that crude imports hit a record high of 9.64 million b/d in April, jumping 14.7% from a year ago, and rising 4.1% month on month. Last month, the heavy inflow pushed the country's crude supply up by 5.4% from March to 13.38 million b/d. The country's refinery throughput in April, however, edged down 0.5% month on month to 12.11 million b/d, the National Bureau of Statistics' data showed. The decline was driven mainly by scheduled maintenance at PetroChina's Sichuan refinery, Sinopec's Gaoqiao and Zhenhai refinery last month, while independent refiners had cut their average run by about one percentage point. With the decline in refinery throughput and the strong growth in supply, the stockbuild of 37.84 million barrels in April was more than the 22.88 million barrels of crude that ended up in storage in March. However, on a year on year basis, the 11.5% increase in crude throughput last month, was 5.1% lower compared with April 2017. 

Iran asks Chinese oil buyers to maintain imports after U.S. sanctions - sources (Reuters) - A senior official at Iran’s state-owned oil supplier met Chinese buyers this week to ask them to maintain imports after U.S. sanctions kick in, three people familiar with the matter said, but failed to secure guarantees from the world’s biggest consumer of Iranian oil.  The sources told Reuters Saeed Khoshrou, director of international affairs at the National Iranian Oil Company (NIOC), held separate meetings in Beijing on Monday with top executives at Chinese oil giant Sinopec’s trading unit and state oil trader Zhuhai Zhenrong Corp to discuss oil supplies and seek assurances from the Chinese buyers. Khoshrou was accompanying Iran’s foreign minister Javad Zarif in the first stop of a tour of world powers before traveling on to Europe. Tehran is mounting a last-ditch effort to save a 2015 nuclear deal that Washington has abandoned, with plans to impose unilateral sanctions including strict curbs on Iran’s oil exports. “During the meeting, Mr. Khoshrou conveyed Mr. Zarif’s message that Iran hopes China will maintain the levels of imports,” said one person briefed on the meetings. China, the world’s top crude oil buyer, imported around 655,000 barrels a day on average from Iran in the first quarter of this year, according to official Chinese customs data - equivalent to more than a quarter of Iran’s total exports. Chinese executives did not make firm commitments but said as state oil companies they will fall in line with Beijing’s wishes, the person said. The visit was the NIOC marketing chief’s second to Beijing this year - he also met with Chinese customers about a month ago. A second person with direct knowledge of the discussion, said Chinese firms “shared the same hope to maintain purchases”, adding companies are still assessing the possible impact of the new sanctions. 

S Korea data: Iranian crude imports fall 25% on year to 9.09 mil barrels in Apr - South Korea's crude oil imports from Iran fell 24.9% year on year to 1.24 million mt (9.09 million barrels or 303,000 b/d) in April, from 12.11 million barrels in the year-ago month, according to preliminary data released by the Korea Customs Service Tuesday. This marks the sixth consecutive decline since November last year when imports fell 26.8% year on year to 10.37 million barrels. The April imports were also down 21.6% from 11.6 million barrels in March. For the first four months, Iranian crude imports fell 36.1% year on year to 37.59 million barrels, from 58.84 million barrels in same period last year. In 2017, Iranian crude oil imports increased 32.1% to 147.87 million barrels. The country's monthly imports of Iranian crude had increased since January 2016 when the US and EU lifted sanctions on Iran. The sharp decrease in crude imports from Iran was largely attributable to fewer condensate shipments following the startup of new condensate splitters in the Persian Gulf nation. In order to fill the gap, South Korean importers have increased light sweet crude imports from alternative sources such as Russia, the US and Kazakhstan. Imports of Iranian crude are expected to further slide in the wake of the reimposition of US sanctions on Iran. South Korea's crude oil imports from its biggest supplier Saudi Arabia also fell 7.6% year on year to 3.317 million mt, or 24.31 million barrels, last month, from 26.3 million barrels a year earlier. It marks the second consecutive decline following rises for three months in a row. But the April imports were up 11.4% from 21.82 million barrels in March. 

Iran sanctions and the showdown in East Asia  - Platts Capitol Crude podcast -- US sanctions against Iranian oil buyers go back into force in early November, and the Treasury Department has instructed countries to make significant cuts to their imports in the next six months to be considered for potential sanctions relief. But much is unknown about how the Trump administration will review those requests, especially at a time of rising oil prices going into the peak summer driving season in the US.  Elizabeth Rosenberg, director of the energy program at Centerfor a New American Security and a former senior sanctions adviser at the Treasury Department, talks with Meghan Gordon to sort out those uncertainties.

UAE state oil giant ADNOC plans to invest $45 bln in downstream expansion (Reuters) - Abu Dhabi National Oil Company (ADNOC) plans to invest $45 billion over the next five years to expand its refining and petrochemicals operations, it said on Sunday. Striving to become a global player in the downstream sector, the state oil giant wants to double its refining capacity and triple petrochemicals output potential by 2025 as it looks to capture new growth markets, ADNOC’s Chief Executive Sultan al-Jaber told Reuters on Saturday. On Sunday al-Jaber presented ADNOC’s downstream expansion strategy at an industry conference in Abu Dhabi, alongside CEOs of oil majors such as BP, Total and Eni , which have secured long-term oil production deals in the United Arab Emirates, a key Gulf OPEC member. The centrepiece of ADNOC’s strategy is the Ruwais industrial complex, which ADNOC wants to turn into the largest integrated refining and petrochemicals complex in the world, al-Jaber said at the conference. ADNOC plans to expand refining and petrochemical operations at Ruwais by adding a third refinery to boost capacity by 600,000 barrels per day (bpd) by 2025, lifting total refining potential to 1.5 million bpd. “We are extending an invitation to existing and new partners to join with us in building a world-leading refining and petrochemicals complex and manufacturing ecosystem here in Ruwais,” al-Jaber said. The company, a major Middle East producer that pumps about 3 million bpd, will also make overseas investments to secure access to growth markets, it said on Sunday. 

UAE expects next OPEC meeting to focus on inventory not sanctions (Reuters) - OPEC is more focused on identifying the right level of oil inventory at its next meeting than the impact on supplies of new U.S. sanctions on Iran, the United Arab Emirates said. President Donald Trump said last week that the United States was exiting an international nuclear deal with Iran and would impose new sanctions on OPEC’s third-largest producer. Asked on Sunday about oil supply worries as a result of the sanctions UAE energy minister Suhail bin Mohammed al-Mazroui told reporters: “That’s not what we are concerned about now”. “What we are concerned about in the next (OPEC) meeting is what is the right level of inventory that we should see, and (how) can we put this group together for longer,” he said. OPEC has a self-imposed goal of bringing inventories in industrialized countries down to their five-year average. The exporting group needs to identify that inventory target in June to gauge the success of the deal, OPEC officials have said. A decline in Iranian oil exports would add upward pressure on prices, which have already gained this year due to a global supply cut deal between OPEC and non-OPEC producers. Brent crude rose further after Trump’s announcement on Tuesday and settled at $77.12 on Friday. OPEC is set to meet in June to set oil policy together with non-OPEC producers participating in the supply cut deal. Mazroui said there was no reason to worry about supply, adding that this was not the first time an OPEC member had been in such a situation. “We managed to solve the supply issue but we still believe we have the buffer (in oil supplies)... We will meet in June to discuss it,” he said. “If history tells us, (when) this happens the whole organization will get together and they can find a solution.” 

 With glut almost gone, OPEC still cuts more than oil pact demands(Reuters) - A global oil glut has been virtually eliminated, figures published by OPEC showed on Monday, thanks to an OPEC-led pact to cut supplies that has been in place since January 2017 and due to rising global demand. Despite this, OPEC’s latest report said producers were cutting more than required under the deal, while producers not party to the agreement, such as U.S. shale companies, were starting to face constraints on future output. Saudi Arabia, the world’s biggest oil exporter and de facto leader of the Organization of the Petroleum Exporting Countries, told OPEC it cut output in April to its lowest level since the supply deal began in January 2017. The OPEC report said oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017. “The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand,” OPEC said in its report. The deal between OPEC, Russia and other non-OPEC producers has helped oil prices LCOc1 rise 40 percent since it took effect. Oil reached $78.28 a barrel on Monday, the highest since November 2014, after the OPEC report was published. The main goal of the supply deal was to reduce excess oil stocks to the five-year average. But oil ministers have since said other metrics should be considered such as oil industry investment, suggesting they are in no hurry to end supply cuts. Indeed, the report showed OPEC for now is cutting more supply than the group has pledged under the pact. OPEC output rose by just 12,000 barrels per day (bpd) to 31.93 million bpd in April, according to figures OPEC collects from secondary sources. That is roughly 800,000 bpd less than the amount OPEC says the world needs from the group this year. Figures reported directly from OPEC members showed even deeper declines in production. Venezuela, whose output has plunged due to an economic crisis, told OPEC its production fell to 1.505 million bpd in April, believed to be the lowest in decades. Top exporter Saudi Arabia told OPEC it cut output by 39,000 bpd to 9.868 million bpd, which is the lowest since the supply cut deal began, based on figures Riyadh reports to the group.

Analysts: Risk of OPEC, NOPEC Output Deal Compliance Slippage Increases - The OPEC, non-OPEC production cut deal will hold in its current form until December 2018, but the risk of compliance slippage has materially increased with U.S. President Trump's decision to withdraw from the Iranian nuclear accord.That is the view of oil and gas analysts at BMI Research, who said that the US’ decision to end all nuclear-related sanctions waivers for Iran would smooth the re-entry of cut OPEC, non-OPEC barrels to market in 2019.“Crucially, it will allow OPEC and Russia to shift their narratives on production from restraint to growth, without derailing the global recovery in oil prices. Key producers can frame increases in their output as a response to any (perceived) gap in the market created by the barrels lost from Iran,” the analysts said in a brief report sent to Rigzone.BMI said it was unclear how far Iranian exports would be impacted by the withdrawal but said its current forecast is for a 500,000 barrel per day (bpd) year on year decline in crude and condensate exports for 2019. “The forecast 500,000 bpd drop in exports is dwarfed by the volumes currently being held out of the market by participants in the OPEC, non-OPEC production cut deal. The volume cut has averaged 1.32 million bpd over the life of the deal and stood at 1.92 million bpd as of March,” BMI analysts said.

If Saudi Arabia decides to increase oil production it could kill OPEC - As has been widely discussed in the aftermath of President Trump’s decision to withdraw from the Iran nuclear deal, the return of sanctions on Iran could disrupt oil shipments, with estimates ranging from essentially nothing to as much as 1 million barrels per day of Iranian supply going offline. But the decision also could put an end to the OPEC agreement. Saudi Arabia could be the biggest beneficiary of Trump’s decision, not just because from a geopolitical perspective (Saudi Arabia has long wanted the U.S. to confront Iran), but because any decline in Iranian supply will push up prices, dealing a financial windfall to Riyadh without any sacrifice. Saudi Arabia needs higher oil prices to fill budget gaps, and it also wants to ratchet up prices ahead of the Aramco IPO. Just as with Venezuela’s plunge in output, any unexpected outage in Iran will be a boon for Saudi Arabia.There seems to be some sort of agreement between the U.S. and Saudi Arabia that if Washington takes the fight to Iran, Saudi Arabia would step in to prevent a crude oil price spike, a perennial problem for U.S. politicians. U.S. Secretary of Treasury Steven Mnuchin said on Tuesday that he does not expect an increase in oil prices because "we have had conversations with various parties ... that would be willing to increase oil supply." He omitted which parties he was referring to, but it is safe to say that he was talking about Saudi Arabia.But if Saudi Arabia ramps up output, it would essentially have to back out of the OPEC agreement. Any unilateral increase in supply would violate the spirit of the pact, and would likely lead to less restraint from other members. Recognizing the risk here, a source told the FT on Wednesday that Saudi Arabia would not increase supply on its own, and would instead work with OPEC and Russia to coordinate their action.

OPEC says global upstream oil investment outside US needs to pick up --OPEC Monday said it is concerned about a lack of upstream investment in the oil industry outside of the US despite forecasting that the increase in 2018 non-OPEC crude supply would outpace global demand growth. In its closely watched monthly oil market report that largely kept its fundamental projections steady from April, OPEC said non-OPEC spending in 2017 to bring new projects online was down 42% from 2014. Related feature -- Iran Sanctions: Global Energy Implications It would have been lower without the contributions of US tight oil companies, who raised investment by more than 42% year-on-year in 2017, OPEC said. "Timely spending on project implementation is a key concern," OPEC said, which in recent weeks has indicated it will continue with its output cut agreement -- and maybe even extend it past its expiry at the end of 2018 -- to encourage more upstream spending despite tightening fundamentals. OPEC has said new projects will be needed to fill a potential supply gap in the coming years, with demand expected to be robust. The report comes just over a month from OPEC's next ministerial meeting, June 22, in Vienna. The output cut agreement, which went into force in January 2017 after more than two years of a bruising market share battle, commits OPEC and 10 non-OPEC producers, led by Russia, to slash 1.8 million b/d of supply to support prices and reduce the global overhang of oil in storage. In its report, OPEC forecast that non-OPEC investment would increase by just 3.5% year on year in 2018, rising to 8.1% in 2019. A major portion of that will come from US shale investment, which is projected to increase by 20% year on year in 2018 and then ease to 16% in 2019. US production will account for 89% of the projected 1.72 million b/d in non-OPEC output growth in 2018, OPEC said.

Hedge funds take profits after oil rally: Kemp (Reuters) - Hedge funds have continued to pare their bullish positions in petroleum despite the continued rise in prices and the prospect of renewed sanctions reducing exports from Iran. The net long position of hedge funds and other money managers in the six most important petroleum futures and options contracts was cut by a further 21 million barrels in the week to May 8. The combined net long has now been reduced by a total of 55 million barrels in the three most recent weeks, according to position reports published by regulators and exchanges. As in previous weeks, the liquidation last week was concentrated in crude, while funds' exposure to refined products was increased slightly (https://tmsnrt.rs/2rFWRdl ).  For all the bullish commentary around the outlook for oil prices, fund managers appear to be taking profits after a strong rally in crude oil rather than adding new positions.   The exception is middle distillates, such as diesel and heating oil, where global consumption is growing fast, inventories are declining and the market is looking increasingly tight. Fund positioning remains stretched, with longs outnumbering shorts by 12:1 across the whole petroleum complex and by as much as 14:1 in the case of Brent. While fundamentals still appear supportive, higher oil prices are likely to restrain consumption growth and stimulate more supply in the second half of 2018 and into 2019. Against this backdrop, the extremely lopsided positioning could become a significant source of downside risk if and when portfolio managers try to exit some of their positions. 

Brent oil reclaims 3 ½-year highs as Middle East violence feeds oil-flow concerns -- Global benchmark Brent crude jumped back Monday to its highest level in 3½ years, as violence in the Middle East fed concerns over the flow of oil in the region.The gain for U.S. benchmark oil prices weren’t quite as impressive with traders wary of OPEC’s ability to offset crude supply declines and growing U.S. production.On the New York Mercantile Exchange, June West Texas Intermediate crudeCLM8, +0.06%  tacked on 26 cents, or 0.4%, to settle at $70.96 a barrel after trading as high as $71.26. July Brent crude oil LCON8, +0.09% the European and global benchmark, surged by $1.11, or 1.4%, to end at $78.23 a barrel on ICE Futures Europe—the highest finish since late November 2014.Concerns over violence in the Middle East “are having overseas buyers bid up Brent as they are more reliant on the European Benchmark,” said Phil Flynn, senior market analyst at Price Futures Group. “Brent is on a tear.”Palestinians clashed Monday with the Israeli military at the fence dividing the Gaza Strip and Israel, reportedly leaving dozens of protesters dead as the U.S. opened its embassy in Jerusalem. Last week, futures prices for WTI rose by 1.4% and Brent added 3%, buoyed by the Trump administration’s move to abandon the 2015 international agreement aimed at curbing Iran’s nuclear program. The decision paved the way for the reimposition of the U.S. economic sanctions on Tehran after a six-month winddown period.“The bottom line for oil is that global supply will fall by some unknown amount as a result of the U.S. leaving the Iran deal, and that is bullish given the backdrop of high OPEC compliance, strong global demand expectations, geopolitical uncertainty and stabilizing U.S. production growth” in the second quarter, analysts at the Sevens Report said on Monday.

Oil Prices Turn Higher As Traders Digest OPEC Report - Oil prices shook off earlier weakness to trade higher on Monday, after OPEC said a global glut has been virtually eliminated thanks in part to ongoing OPEC-led supply cuts and fast-rising global demand. OPEC said in its monthly report published earlier that oil inventories in developed nations in March fell to 9 million barrels above the five-year average. That's down from 340 million barrels above the average in January 2017. "The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand," OPEC said in the report. As well as OPEC's voluntary cuts, a plunge in Venezuelan oil output due to economic crisis and the United States' departure from a nuclear deal with OPEC member Iran have supported prices. OPEC signaled it was ready to step in should "geopolitical developments" impact supply. Brent crude futures, the global benchmark, tacked on 31 cents, or 0.4%, to $77.44 a barrel by 8:50AM ET (1250GMT). It fell to as low as $76.56 earlier. ,Meanwhile, New York-traded WTI crude futures inched up 10 cents to $70.81 a barrel, after hitting an intraday low of $70.28. Oil was on the backfoot earlier as a rise in U.S. drilling for new production dampened sentiment. U.S. drillers added 10 oil rigs in the week to May 11, bringing the total count to 844, the highest number since March 2015, General Electric's Baker Hughes energy services firm said in its closely followed report on Friday. That was the sixth consecutive weekly increase in the rig count, underscoring worries about rising U.S. output.

Oil gains while U.S. crude's discount to Brent deepens (Reuters) - Oil prices rose on Monday as OPEC reported that the global oil glut has been virtually eliminated, while U.S. crude's discount to global benchmark Brent widened to more than $7, its deepest in five months. Global benchmark Brent gained $1.11 to settle at $78.23 a barrel. West Texas Intermediate crude rose 26 cents to settle at $70.96. WTI's discount to Brent was as much as $7.28, its widest since Dec. 12 on surging U.S. output. U.S. shale production is expected to hit a record 7.18 million barrels per day (bpd), the Energy Information Administration said. The production growth may be far from over, contributing to U.S. crude's discount to Brent, analysts said. "You have the threat that a high enough price will start to activate the 7,700 drilled but uncompleted wells in the Lower 48 states," said Walter Zimmerman, chief technical analyst at ICAP TA. Contrastingly, OPEC's latest report was more bullish. "That absolute plunge in Venezuelan production ... just highlights how tenuous the market is in terms of the supply-and-demand balance," said John Kilduff, a partner at Again Capital LLC. Even so, OPEC and its allies were still trimming output more than their supply-cutting pact required. Meanwhile, output from third-largest OPEC producer Iran is uncertain on renewed U.S. sanctions. "If Iranian crude is really taken off the water, it's going to impact Brent much more than it's going to impact WTI," Zimmerman said. It is unclear how U.S. sanctions will affect Iranian oil. Much will depend on how other major oil consumers respond to Washington's action against Tehran, which will take effect in November. 

Rising oil prices boost U.S. economy: Kemp (Reuters) - U.S. net petroleum imports have fallen to the lowest level in more than half a century as a result of the shale revolution, which is profoundly changing the impact higher oil prices have on the economy. Since the 1860s, the United States has been the world’s largest producer and consumer of oil, which means it has a complicated relationship with oil prices. Rising oil prices benefit some businesses and workers at the expense of others, and the same has been true about a sharp price fall. Until after World War Two, the country was a net exporter to the rest of the world, the first era of U.S. energy dominance.  But from the late 1940s and especially the 1950s, the United States turned into an increasingly major oil importer. Since then, the principal effect of a rise in oil prices has been to transfer income from consumers and businesses in the United States to oil-producing countries in Latin America, the Middle East and Africa. Rising prices have put pressure on the U.S. balance of payments and the dollar’s value, contributing to an occasionally negative relationship between the price of oil and the exchange rate.But as net imports have declined in the last decade, the picture has changed again, and the main transfers of income are now occurring within the United States rather than with the rest of the world. The impact of oil prices on the U.S. trade deficit and the exchange rate is becoming much less significant than before.Instead, rising prices are transferring income from net consuming states such as California, Florida, New York and Illinois to net producing states including Texas, Oklahoma, New Mexico and North Dakota.

WTI/RBOB Drop After Surprise Crude Build After clinging to the green all day, despite a strong dollar, WTI/RBOB slipped into the red after API reported a much bigger than expected (and surprise) crude build (+4.854mm vs -1.75mm exp). API

• Crude +4.845mm (-1.75mm exp)
• Cushing +62k (+550k exp)
• Gasoline -3.369mm
• Distillates -768k

After drawing down last week, expectations were for crude draw this week but API reported a large surprise crude build... Crude inventories are 2.4% below the five-year norm, while Cushing stockpiles are about 30.5% below the average.WTI/RBOB managed gains today (RBOB highest since Oct 2014)  - despite the dollar strength - heading into API...but kneejerked notably lower on the print... As Bloomberg reports, a large number of drilled-but-uncompleted wells in shale plays and the potential for rising output have weighed on American prices, said Walter Zimmermann, chief technical analyst at ICAP-TA. “You are probably seeing some serious producer hedging into these lofty levels here, whereas I don’t see anybody keen to hedge against Brent given these geopolitical fears.” Notably, the Brent-WTI spread blew out to $8 today...

Get ready for $100 a barrel oil and the conflict it represents -- It's time to prepare for $100 oil. A price of $150, taking out the 2008 high, may also be a real possibility if events in the Middle East continue to escalate, as we have witnessed in recent days.While I believe that oil, given the vast supplies available around the world, has an economic value of about $20 per barrel, it's becoming increasingly impossible to ignore a world that seems to want higher prices for crude.Through a production agreement, OPEC and Russia have successfully offset the glut of crude oil being pumped every single day in the United States. Rising demand for oil in a synchronized global economic recovery has also helped bring supply and demand in better balance over the last year-and-a-half.Having said that, U.S. oil output approaches 11 million barrels per day, and crude oil production exceeds that of Saudi Arabia and could surpass the world's largest producer, Russia, sometime next year.Despite that, the geopolitical risk premium in oil has driven crude prices to nearly four-year highs and shows no signs of abating. And so many interests benefit from higher oil prices; it appears there is a part of the world ready, and willing, to accept much more expensive energy.This array of developments comes just as the summer driving season begins in the U.S., meaning that consumers should expect higher prices at the pump, certainly in excess of $3 per gallon, on average, and possibly much higher. The U.S. exit from the Iranian nuclear deal, the unprecedented exchange of rocket attacks between Iranian and Israeli forces and the general belief among the U.S., Saudi Arabia and Israel that Iran's regional expansion needs to be stopped all argue for a continued rise in the price of crude.

WSJ Sounds The Alarm: "There's No Getting Over" Gas At $4 A Gallon - Consumers, who are already being squeezed by rising interest rates (even as the return on their cash deposits remains anchored near zero), are facing another potential constraint on their already limited purchasing power. And that constraint is  rising gasoline prices, which, as we pointed out last month, could erode the stimulative impact of President Trump's tax plan as they sop up what little money the middle class has been saving.As prices rise and banks scramble to update their forecasts, the Wall Street Journal has become the latest publication to sound the alarm over what is, in our view, one of the biggest threats facing the US economy in the ninth year of its post-crisis expansion. In its story warning about $3 a gallon oil (of course, we're already seeing $4 a gallon in parts of California and other high-tax states), WSJ cited Morgan Stanley's latest projection that rising gas prices could wipe out about a third of the annual take-home pay generated by the tax cuts Rising fuel costs can also feed inflation and pressure interest rates. Even though the Federal Reserve typically looks past volatile energy prices in the short term, higher energy costs help shape consumer confidence. And with the central bank poised to be more active this year, rising energy costs pose an additional risk to the economy. Morgan Stanley estimates that if gas averages $2.96 this year, it would take an annualized $38 billion from spending elsewhere, an upward revision from the bank’s $20 billion estimate in January. That would wipe out about a third of the additional take-home pay coming from tax cuts this year, the analysts said. .."Three dollars is like a small fence. You can get through it, you can get over it," said   "But $4 is like the electric fence in Jurassic Park. There’s no getting over that." And in a report published in April, Deutsche Bank illustrated how rising fuel costs will disproportionately squeeze the most vulnerable among us - a cohort of consumers who already shoulder an outsize share of the country's household debt.

Oil climbs on Middle East unrest, with Brent notching another multiyear high - Oil settled higher Tuesday, with supply concerns tied to political unrest in the Middle East lifting prices for the global crude benchmark to its highest finish in 3½ years.Growth in U.S. output, meanwhile, has tamed price moves for U.S. benchmark crude in recent sessions, preventing it from notching a fresh multiyear high. On the New York Mercantile Exchange, June West Texas Intermediate crude added 35 cents, or 0.5%, to settle at $71.31 a barrel. It had settled at $71.36 on Thursday, its highest since Nov. 26, 2014. July Brent crude oil the European and global benchmark, climbed by 20 cents, or 0.3%, to $78.43 a barrel, marking another finish on ICE Futures Europe at the highest since late November 2014. “European and Asian buyers of Brent are pricing in the risks and realities of the fallout from sanctions on Iran to increased tensions in the Gaza strip, as well as the inability of traditional Brent oil producers to fill that void,”  The price spread between U.S. benchmark WTI and Brent has widened to more than $7 a barrel. “The spread between the two contracts is basically Europe and Asia screaming for more oil from the United States to fill the potential void and feed their ravenous oil demand,” he said. “For WTI, while it is under performing at this point, it is not by any means bearish for the U.S. benchmark,” said Flynn. “The strong global demand for WTI will keep us supported, and even if some of the global risks get reduced, WTI will benefit from the unwinding of the Brent versus WTI spread that is reflecting most of the geopolitical risks.” The Organization of the Petroleum Exporting Countries reduced its forecast for global oil production in its most recent report. Although the group said its crude output inched up in the previous month, investors interpreted the minimal increase as a sign of OPEC’s continued commitment to rebalancing the market, especially from its de facto leader Saudi Arabia.

Oil Inches Closer To $80 - Brent topped $79 per barrel in early trading on Tuesday, closing in on the psychological threshold of $80 per barrel. However, benchmark prices posted modest losses by mid-morning. The oil market continues to tighten with OPEC keeping barrels off of the market and reducing inventories down to the five-year average. The near-term tension between bulls and bears will continue to be dominated by geopolitical risk, with fears of outages in Iran pushing prices up. . Oil prices at $100 per barrel would reduce U.S. GDP by 0.4 percent in 2020 compared to if oil was priced at $75 per barrel, according to Bloomberg. But that economic hit is not as strong as it used to be because the U.S. economy has become less energy intensive and the U.S. also exports more oil than ever before. “$100 oil won’t feel like it did in 2011,” and could end up feeling “more like $79” per barrel, economists Jamie Murray, Ziad Daoud, Carl Riccadonna and Tom Orlik concluded. “With the U.S. still firing on close to all cylinders, the rest of the world would suffer less as well – global output would be down by 0.2 percent in 2020.” As Venezuela’s oil production and exports continue to fall off a cliff, the case for higher oil prices is strong. A decline in Iranian oil exports, which will occur alongside plunging output from Venezuela, would create the “perfect cocktail” for oil to hit $100 per barrel this year or next, according to PVM. At that point, OPEC would be under a great deal of pressure to lift the production limits. ConocoPhillips’ (NYSE: COP) seizure of PDVSA assets in the Caribbean threatens to accelerate production declines in Venezuela.   OPEC said the oil supply surplus is virtually gone, with inventories standing just 9 million barrels above the five-year average in March, which means that by the time data is published for May, inventories will have already fallen below average levels. The OPEC report showed a slight increase in output, rising by 12,000 bpd, driven by higher output from Saudi Arabia but also revealing deep declines in Venezuela.    Oil prices are at three-year highs, and hedge funds and other money managers have pocketed some profits over the past week. For the week ending on May 8, investors cut their bullish bets. The positioning is still overwhelmingly on the long side, exposing the market to downside risk if sentiment sours.

Oil Market Report – IEA - OMR Public

• Global oil demand growth for 2018 has been revised slightly downwards from 1.5 mb/d to 1.4 mb/d. While recent data confirms strong growth in 1Q18 and the start of 2Q18, we expect a slowdown in 2H18 largely attributable to higher oil prices. World oil demand is expected to average 99.2 mb/d in 2018.
• Global oil supplies held steady in April at close to 98 mb/d. Robust non-OPEC output offset lower OPEC production. Strong non-OPEC growth, led by the US, pushed global supplies up 1.78 mb/d on a year ago. Non-OPEC output will grow by 1.87 mb/d in 2018, a slightly higher rate than seen in last month's Report.
• OPEC crude production eased by 130 kb/d in April, to 31.65 mb/d, on further declines in Venezuela and lower output in Africa. Compliance with the Vienna Agreement reached a record 172%. The call on OPEC crude and stocks will average around 32.25 mb/d for the remainder of 2018, nearly 0.6 mb/d higher than April output.
• OECD commercial stocks declined counter-seasonally by 26.8 mb in March to 2 819 mb, their lowest level since March 2015 and 214 mb below year-ago levels. In the process, they fell 1 mb below the five-year average.
• ICE Brent and NYMEX WTI futures prices rose to multi-year highs in recent days, and both are up by more than $10/bbl since the start of the year. Solid oil demand, reduced OPEC output and geopolitical developments continue to underpin price gains.
• Global refining throughput is on the rise with runs expected to hit a record 83 mb/d in July-August. Throughput growth, however, is not sufficient to cover all refined products demand, with stock draws expected to persist through 2Q18 and 3Q18.

IEA lowers 2018 oil demand growth estimate to 1.4 million b/d on higher prices The International Energy Agency warned Wednesday a potential supply shortfall from Iran and Venezuela could become a "major challenge" forother big oil producers if they are to fend off sharp price rises and fill the gap, and reiterated its readiness to act if needed to ensure adequate supplies. The IEA also said OECD oil stocks had fallen below the five-year average level in March for the first time since 2014, by 1 million barrels, representing the main benchmark for the success of OPEC/non-OPEC production cuts agreed in 2016 and raising pressure for a rethink by those behind the cuts, chiefly Russia and Saudi Arabia. The total OECD stock figure was down 26.8 million at 2.82 billion barrels, the lowest level since March 2015, the IEA said in its latest monthly report. Market reaction to the report was muted however, following indications earlier of rising US crude oil stocks from the American Petroleum Institute. Also mitigating the IEA's concern, it unusually lowered its estimate for growth in world oil demand this year, by 30,000 b/d to 1.44 million b/d, to reflect the effect of higher oil prices on consumption, although it said it was "confident" of underlying demand growth around the world, citing economic findings from the International Monetary Fund. Its new estimate included an upward revision for the first half of the year as a result of cold weather in the US and Europe and new petrochemical capacity in the US. Lower OPEC output and lower demand prospects were also accompanied by an upward revision to the IEA's US oil supply estimate, as shale drillers received a boost from higher prices. It raised its estimate of this year's increase in non-OPEC supply by 80,000 b/d to 1.87 million b/d.

Why IEA, OPEC and EIA have such different outlooks for energy consumption - Predicting future energy consumption trends is a hazardous science. It is plagued with guesswork related to ‘known unknowns’ and ‘unknown unknowns’.  An assessment of this troubled political and scientific landscape from UMS Group, a boutique energy and utilities management consulting firm, compares four major predictions of how energy consumption will change over the next 25 years. These four separate analyses of future energy trends have been developed by the planet’s leading organisations and institutions in the energy sector. Two distinct predictive models come from the International Energy Agency’s (IEA) World Energy Outlook 2018 report. One is a Sustainable Development Scenario (SDS), which is a ‘what if’ analysis based on the successful implementation of the Paris Climate Accord, the other a New Policies Scenario (NPS) which reflects a more realistic projection. Models from the US government’s Energy Information Administration (EIA), and OPEC – the Organization of Petroleum Exporting Countries – make up the other two projections assessed by UMS Group. Yet as noted by Mart Vos, a Consultant at UMS Group, they are a drop in the ocean compared to the thousands of other reports released by actors ranging from Shell and BP, to Bloomberg New Energy Finance and several climate change departments like the DECC. What unifies this web of conflicting reports, according to Vos’ analysis, is that they are all different from one another. . Consider the varied expectations for future consumption of the traditional fossil fuels – oil, gas and coal. The EIA expects oil demand to increase by 17% in 2040, almost identical to the 16% projected by OPEC. The IEA’s NPS model offers a slightly lower estimate of 10%. The idealistic SDS model projects a huge 25% drop in oil demand if dream policies are implemented. Main reasons for EIA’s more optimistic outlook on oil demand are the rapid industrial growth that will be witnessed in high population countries like India and China  and increased demand for transportation as upcoming nations continue their shift to urbanised living

Crude futures ease back after bearish IEA report; Brent at $77.97/b, WTI at $71.10/b - Crude oil futures edged down in European morning trading Wednesday in the wake of the International Energy Agency trimming its estimate for global oil demand growth in 2018. At 1005 GMT, ICE July Brent crude futures were trading at $77.97/b, down 46 cents from Tuesday's settle, while NYMEX June WTI crude futures were 21 cents lower at $71.10/b. In its monthly oil market report, released Wednesday morning, the IEA lowered its estimate for growth in world oil demand this year to 1.4 million b/d from 1.5 million b/d due to higher oil prices. "At the same time, non-OPEC supply is growing more strongly than previously anticipated, thereby reducing the call on OPEC to 32.25 million barrels per day (previously estimated at 32.5 million barrels per day). Thus the market is less tight than hitherto assumed," said Commerzbank analysts in a morning note. A downward movement in the demand estimate, combined with the American Petroleum Institute reporting Tuesday a 4.85 million barrel weekly increase in US crude oil inventories, when the market was expecting a drawdown, has brought a bearish sentiment to the market despite concerns over supply from Iran and Venezuela. The US Energy Information Administration publishes its more closely watched weekly numbers later today. The IEA warned Wednesday a potential supply shortfall from Iran and Venezuela could present a "major challenge" for oil producers if they are to fend off sharp price rises and fill the gap, and reiterated its readiness to act if necessary to ensure a well-supplied market.

U.S. crude stocks fall, exports hit a record high: EIA (Reuters) - U.S. crude oil stockpiles fell last week as exports hit a record high and refinery ramped up output, while gasoline inventories dropped more than expected ahead of the summer driving season, the Energy Information Administration said on Wednesday. Crude inventories fell 1.4 million barrels in the week to May 11, compared with analysts’ expectations for a decrease of 763,000 barrels. Net U.S. crude imports fell 411,000 barrels per day as exports rose to a record 2.6 million bpd, benefiting of late from the widening spread between U.S. crude oil and global benchmark Brent, which responds more to world supply outlook. Crude production continued to grow to record highs, rising 20,000 bpd to 10.72 million bpd last week, the EIA said, though weekly figures are considered less reliable than monthly data. The United States in February produced 10.3 million bpd, a record. Refining activity rose, particularly in the Midwest, as maintenance season ebbs as summer driving season heats up. Refinery crude runs rose by 149,000 bpd, while refinery utilization rates rose by 0.7 percentage points to 91.1 percent of overall capacity. U.S. Midwest refinery utilization rates increased last week to 96 percent of capacity, the highest since at least 2010 seasonally. Still, gasoline stocks were down sharply, falling by a surprise 3.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel drop. Gasoline demand is up 0.7 percent from last year over the past four weeks to 9.4 million bpd. That demand is anticipated to increase as summer driving season kicks in. Prices were little changed after the data. U.S. crude fell 15 cents to $71.16 a barrel as of 10:45 a.m. EDT (1445 GMT), while Brent lost 20 cents to $78.22 a barrel. 

US Crude Oil Inventories Decline By 1.4 Million Bbls -- Price Of WTI Unchanged - May 16, 2018 -- Link here.

• US crude oil inventory: decreased by 1.4 million bbls (complete opposite of API data posted yesterday
• US crude oil inventory: now at 432.5 million bbls; the EIA says this is in the lower half of the average range for this time of year
• for newbies: I first stared paying close attention to this in November, 2016, when Saudi Arabia said it was going to cut production and start to drawdown global supplies. At that time, it certainly appeared to me that in modern times (i.e., the last 20 years) the US got along just fine with 350 million bbls of crude oil in storage. Even adjusting for increased demand over the past 20 years, it was hard for me to see a crude oil inventory of more than 400 million bbls as anything but "bearish" for those trading WTI.

US crude oil inventories over the past year or so:

• April 26, 2017: 529 million bbls (when I first started tracking this data and posting it on a weekly basis)
• December 28, 2017, week 35: 432 million bbls
• January 24, 2018, week 39: 412 million bbls -- this was the point; since then it has crept back up
• April 11, 2018, week 50: 429 million bbls -- the last time I posted the data, and quit tracking on my spreadsheet; it was clear, the "drawdown" was over
• today, May 16, 2018: 433 million bbls
• price of WTI today: $71.10, down 29 cents from previous report;

So, clearly, when we started this process, 530 million bbls in US crude oil inventory was "outta sight"; something needed to be done. Apparently, getting to 430 million bbls was just fine. Let's see how this plays out.

WTI/RBOB Bounce After Crude Draw Despite New Record Production WTI/RBOB prices traded lower since last night's API-reported surprise crude draw but a 1.404mm draw (and bid gasoline draw) reported by DOE prompted a buying knee-jerk in prices. Production continued to rise to a new record high.  Ahead of the data, Bloomberg explained that the number to watch today will be gasoline exports, which can typically drift lower this time of year as more product goes to domestic customers in advance of the summer driving season. If growing U.S. production and high refinery runs churning out gasoline are met with clues that domestic demand isn't matching up to expectations, the crude price that has a lot of geopolitics baked in may falter still.  DOE:

• Crude -1.404mm (-2.00mm exp.. BBG users +1.13mm exp)
• Cushing +53k (+550k exp)
• Gasoline -3.79mm
• Distillates -92k

DOE reports a draw - smaller than expected, but dramatically different from API's surprise build. Gasoline stocks continued to slide but distillates draw seems to have stalled..

Oil prices rise as U.S. crude stockpiles drop - Xinhua | English.news.cn: (Xinhua) -- Oil prices traded higher on Wednesday after a U.S. crude oil report showed the country's crude stocks continued to decline. U.S. crude oil inventories decreased in the week ending May 11, and the refining sector increased 149,000 barrels per day, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report on Wednesday. U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 1.4 million barrels during the week ending May 11. At 432.4 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year, the report said. Analysts said the EIA's latest weekly petroleum report has fueled the bullish sentiment on the oil market, adding that geopolitical concerns, tightening product inventories and robust demand would continue to provide support for prices. The West Texas Intermediate for June delivery rose 0.18 U.S. dollar to settle at 71.49 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery increased 0.85 dollar to close at 79.28 dollars a barrel on the London ICE Futures Exchange.

Oil prices could rise to $85 a barrel by July, warns energy expert Dan Yergin -- Oil prices may continue to rally past 3½-year highs and all the way to $85 a barrel as soon as July, according to Pulitzer Prize-winning author and closely followed energy analyst Dan Yergin. Prices in the oil market have been steadily rising since last year, fueled by strong demand and output caps imposed by major producers aimed at draining a global crude glut. More recently, oil futures have rallied faster than expected as geopolitical tensions rattle the market. Brent crude, the international benchmark for oil prices, rose toward $80 a barrel on Tuesday after hitting its highest level since November 2014. Yergin said the cost could continue to climb due to the combined impact of falling output in crisis-stricken Venezuela, renewed U.S. sanctions on Iranian crude exports, and wars in Yemen and Syria that involve major oil-producing nations. "We could see oil prices in July when demand is high ... several dollars higher than it is. We could see it as high as $85 at least for a short period of time," Yergin, vice chairman of IHS Markit, told CNBC's "Squawk Box" on Wednesday. Yergin's remarks add an influential voice to a chorus of analysts warning about prices spikes. Goldman Sachs last week said Brent crude could spike above its $82.50 summer forecast, while Bank of America Merrill Lynch warned Brent could hit $100 a barrel by next year. Yergin said he is particularly concerned about Venezuela, where the fundamentals of the oil market and geopolitics are both at play. Venezuelan output has fallen from almost 2.5 million barrels a day a couple of years ago to roughly 1.4 million barrels a day today, and could drop to 800,000 barrels a day by next year, he said. "The screws are really tightening on Venezuela," said Yergin, who notes that ConocoPhillips is seeking to seize assets owned by state oil giant PDVSA and warns Sunday's presidential election threatens to draw fresh U.S. sanctions.

IEA: High Oil Prices “Taking A Toll” On Demand -- Geopolitics has taken over the oil market, driving oil prices up to three-year highs. The inventory surplus hasvanished, and more outages could push oil prices up even higher. Yet, there are some signs that demand is starting to take a hit as oil closes in on $80 per barrel.In the IEA’s May Oil Market Report, the agency said that OPEC might be needed to step in and fill the supply gap if a significant portion of Iran oil goes offline. Saudi Arabia suggested shortly after the U.S. announced its withdrawal from the Iran nuclear deal that OPEC would act to mitigate any supply shortfall should it occur.But while geopolitical fears helped push Brent up to $79 per barrel in recent days, the underlying fundamentals are also mostly bullish. Venezuela’s production is plummeting, and output is 550,000 bpd below its agreed upon target as part of the OPEC deal. Conservative estimates suggest that the country could lose several hundred thousand barrels per day over the course of 2018, but there are several massive threats to PDVSA’s operations that could make that forecast look optimistic. The big question is if supply will be lost in Iran, which, coupled with the supply losses in Venezuela, could severely tighten the oil market. “The potential double supply shortfall represented by Iran and Venezuela could present a major challenge for producers to fend off sharp price rises and fill the gap, not just in terms of the number of barrels but also in terms of oil quality,” the IEA wrote in its report. However, the cure for higher oil prices tends to be higher oil prices. The IEA lowered its demand forecast for 2018 by 40,000 bpd – not a massive revision, but notable because it offers some signs that demand will slow as prices rise. Some other reports back up this notion. There are reportedly spot cargoes for oil from West Africa, Russia and Kazakhstan that are going unsold, forcing steep discounts. “While recent data continue to point to very strong demand in 1Q18 and the start of 2Q18, we expect a slowdown in growth in 2H18.” Up until now, demand growth looked strong, but “the recent jump in oil prices will take its toll.”

Rising oil prices herald next phase in cycle: Kemp (Reuters) - Oil prices are now in the top half of the cycle, with benchmark Brent on Thursday trading above $80 per barrel for the first time since November 2014. In real terms, prices averaged $75 per barrel over the course of the last full cycle, which lasted from December 1998 to January 2016. The recent rise in prices sends a strong signal about the need for more production and slower growth in oil consumption. In the next few months, the narrative will increasingly turn to boosting supply and restraining demand in order to stabilise inventories and return the market to balance. Between 2014 and 2017, oil market “rebalancing” meant restricting production, stimulating demand and cutting excess inventories. For the rest of 2018 and 2019, rebalancing will mean precisely the opposite. The oil industry has always been subject to deep and prolonged cycles of boom and bust, and there is no reason to think the next few years will be any different. (https://tmsnrt.rs/2wUWBvY ) Cyclical behaviour is the single most important distinguishing characteristic of oil markets and prices, and is deeply rooted in the industry’s structure. The price cycle is driven by the low responsiveness of production and consumption to small changes in prices, at least in the short term. The behaviour of many oil producers and consumers exhibits a strong backward-looking component, so decisions tend to be based on where prices have been recently rather than where they are likely to go. But most importantly, the oil markets are a complex adaptive system which is subject to multiple feedback mechanisms operating at different speeds and timescales. The price cycle is driven by the interaction of positive feedback mechanisms (which magnify shocks) and negative feedback mechanisms (which dampen them).   In the short run, positive feedback mechanisms are more influential and tend to push the market even further away from balance following an initial disturbance. In the medium and long term, however, negative feedback mechanisms dominate and will eventually force production and consumption back into alignment.

Oil Jumps Above $80 For The First Time Since Nov. 2014 - Two weeks after Saudi Arabia said it was targeting $80/bbl oil, this morning Riyadh got its wishes early when Brent hit the Saudi target, jumping as much as 1% to $80.18, following the latest drop in U.S. crude inventories and as traders continued to fret about the consequences of renewed sanctions on Iran.  This was the highest price since November 2014. Today's jump followed a reported from Goldman titled simply "The case for commodities strengthens " according to which America’s surging shale output won’t be able to replace the potential drop in Iranian oil shipments after the U.S. reimposed sanctions on OPEC’s third-largest producer. US shale cannot solve the current oil supply problems. Even if only 200-300 kb/d of Iran exports are at risk by year-end, OPEC is not likely to preempt this loss, only react to it. Further, any response will reduce spare capacity in an increasingly tighter market. The erosion in Venezuela and Angola oil output is accelerating at the same time ex-US growth is stalling. Only the US has seen supply surprises, but is facing growing pains with filled pipeline capacity, constraining US growth into 2019.    The paradox, of course, is that rising oil prices crush the benefit to the middle class of Trump's tax cuts; crude has rallied this month to the highest level in more than three years after U.S. President Donald Trump withdrew from a 2015 pact between Iran and world powers that had eased sanctions on the Islamic Republic in exchange for curbs on its nuclear program. As we noted yesterday, while the International Energy Agency said a global glut’s been eliminated thanks to output curbs by OPEC, it warned high prices may hurt consumption and cut forecasts for demand growth.

OPEC sees oil rally towards $80 as short-term spike, not supply-driven (Reuters) - OPEC sees oil’s rally towards $80 a barrel as a short-term spike driven by geopolitics rather than any supply shortage, four OPEC delegates said, a sign the group is not rushing yet to rethink its supply-cutting agreement. The view of top exporter Saudi Arabia is that any brief, speculator-driven jump in oil prices is not sufficient grounds for producers to boost output, an OPEC source familiar with the kingdom’s thinking said. For such a decision to occur, the rally would need to be driven by data pointing to a supply impact, the source said. The four OPEC delegates said the latest rise in prices stemmed more from concern about U.S. sanctions on Iran and tension in the Middle East, rather than a suddenly tighter balance between oil supply and demand. “Prices are high just because of the tensions,” one of the OPEC delegates, who declined to be identified, said. Since last year, oil has been supported by a deal by the Organization of the Petroleum Exporting Countries, plus Russia and other non-members, to cut output. Prices have risen about 40 percent since the accord began in January 2017. Global benchmark Brent crude LCOc1 on Tuesday hit $79.47, the highest since November 2014, before easing below $78 on Wednesday and settling at $79.28 a barrel. Prices could rally further before declining, according to some in OPEC. “It may exceed $80 and then go down,” one of the sources said. In any case, the extent of the rally has yet to cause any real concern. “Not yet,” said another delegate, asked whether oil at $79 was too high. 

U.S. oil rig count holds steady after six weeks of gains -Baker Hughes (Reuters) - The U.S. oil rig count held steady this week after rising for six weeks in a row even as crude prices soar to multi-year highs, prompting drillers to extract record amounts of oil, especially from shale. The total oil rig count held at 844 in the week to May 18, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.  The U.S. rig count, an early indicator of future output, is much higher than a year ago when 720 rigs were active as energy companies have been ramping up production in tandem with OPEC’s efforts to cut global output in a bid to take advantage of rising prices. U.S. crude futures traded over $72 a barrel this week on concerns that Iranian exports could fall because of renewed U.S. sanctions, their highest since November 2014. Looking ahead, crude futures were trading around $70 for the balance of 2018 and $66 for calendar 2019. Shale production is expected rise to a record high 7.2 million barrels per day (bpd) in June, with the majority of the increase from the Permian basin, the biggest U.S. oil patch, where output is forecast to climb to a fresh high of 3.3 million bpd, the Energy Information Administration (EIA) this week projected. Earlier this month, the EIA forecast average annual U.S. production would rise to a record high 10.7 million bpd in 2018 and 11.9 million bpd in 2019 from 9.4 million bpd in 2017. In anticipation of higher prices, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies they track have provided guidance indicating a 13 percent increase this year in planned capital spending. Cowen said those E&Ps expect to spend a total of $81.2 billion in 2018, up from an estimated $72.1 billion in 2017. 

US Oil Rig Count Flat As Prices Stabilize -  US drillers added 1 rig to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs holding steady and gas rigs adding one. The oil and gas rig count now stands at 1,046—up 145 from this time last year.Meanwhile, neighboring Canada gained 4 oil and gas rigs for the week—the first gain in weeks.Both the Brent and WTI benchmark were trading up on the day at 9:46am EST with Brent crude surpassing the $80 mark at one point on Thursday. The shaky geopolitical landscape in major oil-producing regions has sent oil prices to near four-year highs, as the market grows increasingly wary over possible supply crunches ala US sanctions on Iran, Venezuela’s colossal mess that has sent PDVSA production fall month after month with no end in sight, and OPEC’s almost too-good adherence to its production cut deal.In the wake of the higher oil prices, Saudi Arabia and the UAE have made public statements that promised to fill any supply gaps, should they in fact materialize, although this has done little to calm the market. WTI was trading up 0.06% at $71.53, with Brent trading up 0.39% at $79.60. Western Canada Select (WCS) was trading flat at $56.44—a massive discount to WTI.   Working the other side of the push/pull for oil prices, US oil production rose again in the week ending May 11, reaching 10.723 million bpd—the twelfth build in as many weeks—and less than 300,000 bpd shy of the 11.0 million bpd forecast that many are predicting for 2018.US production has steadily increased since OPEC engaged in a supply cut deal that sought to remove 1.8 million bpd from the market. At the time the deal was announced, the US was producing 8.6 million bpd. Today, the US is producing more than 2.0 million bpd over that figure, while OPEC/NOPEC continues to curb supply on its end. At 5 minutes after the hour, WTI was trading down 0.36% at $71.23, with Brent trading down 0.24% at $79.06.

Oil Breaks $80 And Gasoline Prices Spike --Oil prices took a breather on Friday, with Brent sitting just shy of $80 per barrel. The Venezuelan election on Sunday could be the next near-term catalyst for the oil market. . Brent briefly breached $80 per barrel this week, although it is facing resistance at that level. Still, oil prices are at their highest in three and a half years. “There’s the Iran story which continues to develop and the general talk about a tighter market. It will be interesting to see if we make a clean break of $80 next week. It seems like that’s the direction we are going,” Jens Pedersen, a senior analyst at Danske Bank A/S, said in a Bloomberg interview. Average retail gasoline prices in the U.S. have climbed to $2.90 per gallon this week, but with Brent hitting $80 per barrel, more pain at the pump could be on the way. Peak summer demand unofficially begins during the Memorial Day holiday at the end of May, and this year motorists will see the highest gasoline prices in more than three years. The average motorist will pay an additional $100 for gasoline this summer compared to last year. . Costs for oilfield services are on the rise as companies struggle to find enough workers. “Recruitment and staffing is a big challenge. We’re aggressively focused on recruiting people,” Kevin Neveu, chief executive at Precision Drilling Corp., said at a conference in Houston. He said they hired about 2,000 people in 2017. A study last year estimated that about 25 percent of the workers laid off during the downturn have moved on to other industries. . Saudi oil minister Khalid al-Falih said that OPEC and Russia were discussing price volatility and the health of the oil market. Al-Falih has said that OPEC would step in to mitigate and supply losses, although for now, the preference seems to be to leave the production limits unchanged. OPEC officials have said the price rally is being driven by fear and not based on the fundamentals.

Oil prices fall, Brent set for sixth week of gains (Reuters) - Oil prices fell on Friday, but Brent crude was on track for a sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming U.S. sanctions on Iran. Brent futures for July delivery fell 26 cents, 0.3 percent, to $79.04 a barrel, by 1:08 p.m. EDT (1708 GMT). The global benchmark on Thursday broke through $80 for the first time since November 2014, and investors anticipate more gains due to supply concerns, at least in the short-term. Brent has gained about 20 percent since the start of the year. U.S. West Texas Intermediate (WTI) crude futures for June delivery dropped 21 cents to $71.28 a barrel, a 0.3 percent loss. The contract was on track for a third straight week of gains. “Oil prices are in overbought territory, which has prompted some profit taking in today’s trading session ahead of the weekend,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. Traders were looking ahead to Venezuela’s election on Sunday, which could then trigger additional U.S. sanctions if President Nicolas Maduro is re-elected for a six-year term, though the opposition party has largely boycotted and two of his most popular opponents have been banned from running. The process has been has been criticized by the United States, the European Union and major Latin America countries. Further sanctions could hurt Venezuelan oil supply further, already reeling from lack of maintenance and state-run PDVSA’s inability to pay its bills. Most recently, the company elected to close its refinery in Curacao after ConocoPhillips has seized oil as it seeks to collect on a $2 billion court award.  

The Regulations That Could Push Oil Up To $90 - International regulations on the fuels used in shipping could tighten the oil market and push prices up to $90 per barrel in the next two years. The International Maritime Organization (IMO) has new rules coming into effect at the start of 2020 requiring shipowners to dramatically lower the concentration of sulfur used in their fuels. Ships plying the world’s oceans tend to use heavy fuel oil, a bottom-of-the-barrel fuel that is especially dirty. The IMO regulations are targeting this fuel because of its high sulfur content. Current rules allow sulfur concentrations of 3.5 percent, but by 2020 ships must slash that to just 0.5 percent.  Shipowners have several options to achieve this goal, and there probably won’t be a single approach. They could install scrubbers to remove sulfur from the fuel, switch to low-sulfur fuels, or switch to LNG. . LNG is also an expensive route. But a lot of shipowners will switch over to lower-sulfur fuels such as gasoil, a distillate similar to diesel. The IEA says that by 2020, demand for gasoil will shoot up to 1.74 million barrels per day (mb/d), an increase of over 1 mb/d relative to 2018. That will displace the heavy fuel oil that is currently widespread. The IEA says that high-sulfur fuel oil demand will crater from 3.2 mb/d in 2019 to just 1.3 mb/d in 2020. The switchover will have enormous ramifications for the oil market. The shipping industry represents about 5 percent of the global oil market, using about 5 million barrels of oil per day. Swapping out one form of oil for others will have ripple effects across the refining industry, awarding some and dealing losses to others. Refiners processing middle distillates – diesel and gasoil – will see a windfall. Meanwhile, refiners that churn out heavy fuel oil will be left with surplus product on their hands.  “We foresee a scramble for middle distillates that will drive crack spreads higher and drag oil prices with it,” Morgan Stanley analysts said in a note.

Shiite cleric Sadr leads in Iraq’s initial election results (AP) — The political coalition of influential Shiite cleric Muqtada al-Sadr took an early lead in Iraq's national elections in partial returns announced late Sunday by the Iraqi electoral commission. An alliance of candidates linked to Iraq's powerful Shiite paramilitary groups was in second. The alliance is headed by Hadi al-Amiri, a former minister of transport with close ties to Iran who became a senior commander of paramilitary fighters in the fight against the Islamic State extremist group. Prime Minister Haider al-Abadi performed poorly across majority Shiite provinces that should have been his base of support. The announcement came just over 24 hours after polls closed across the country amid record low voter turnout. It included full returns from only 10 of the country's 19 provinces, including the provinces of Baghdad and Basra. Members of the national election commission read out vote tallies for each candidate list in each of the 10 provinces on national TV. By the end of the announcement, al-Sadr's list had the highest popular vote, followed by al-Amiri's. Seats in parliament will be allocated proportionately to coalitions once all votes are counted. The commission gave no indication on when further results would be announced. 

Shi'ite cleric's election win puts Iran to the test in Iraq - (Reuters) - Already pressured by the U.S. withdrawal from the nuclear deal, Iran faces a major test in managing Shi’ite cleric Moqtada al-Sadr, a formidable opponent who beat Tehran’s longtime allies to achieve a shock victory in Iraq’s parliamentary election. But If Tehran overplays its hand by squeezing Sadr out of a coalition government dominated by its allies, it risks losing influence by provoking conflict between Iranian-backed Shi’ites and those loyal to Sadr. Populist Sadr all but won Iraq’s parliamentary election by tapping into growing public resentment directed at Iran and what some voters say is a corrupt political elite that has failed to help the poor. But Iran is unlikely to relinquish influence in Iraq, its most important ally in the Middle East, and will push for a coalition that will preserve its interests. “Iran will do everything in its power to remain strong in Iraq and to apply pressure,” said independent Iraqi analyst Wathiq al-Hashimi. “It’s a very critical situation.” Before the election, Iran publicly stated it would not allow Sadr’s bloc - an unlikely alliance of Shi’tes, communists and other secular groups - to govern. For his part, Sadr has made clear he is unwilling to compromise with Iran by forming a coalition with its main allies, Hadi al-Amiri, leader of the Badr paramilitary group and perhaps the most powerful man in Iraq, and former prime minister Nuri al-Maliki. After the election results were announced, he said he would only cooperate with Prime Minister Haider al-Abadi, Kurds and Sunnis.

Is Russia About To Abandon The OPEC Deal? - OPEC and Russia are meeting in a little more than a month to discuss the progress of their oil production deal and what’s next. On the face of things, there will be no surprises: every country taking part in the deal is still committed to the cuts until the end of the year. But Russia pumped more than its quota in both March and April. But Energy Minister Alexander Novak hinted that Russia might like to see a gradual easing of the cuts following the June meeting. But Iran sanctions will remove a certain amount of Iranian crude from international markets, making space for more from other producers, and Russia may just surprise its partners in the deal.Citigroup commodity analysts this week estimated that Russia has 408,000 bpd in idled capacity, which constitutes 4 percent of its total, which stands at 11.3 million bpd. That’s a lot less than Saudi Arabia’s idle capacity, which stands at 2.12 million bpd, but is apparently still a significant enough portion of the total.Some of Russia’s biggest oil players made it clear long ago that they have ambitious production plans for the future, which the production cuts are restraining. Even with this restraint, however, some are actually expanding production, including Gazprom Neft, which last year produced 4.1 percent more oil than in 2016 despite the cuts. The increase came on the back of new fields in the Arctic and the company’s Iraqi ventures. Rosneft pumped 7.6 percent more oil last year despite the cuts. For the first quarter of this year it reported a 1.2-percent decline in production because of the cuts, but it has also said that it could return to pre-cut production levels within two months. An advisor to the company’s president told Russian media this week the cuts were implemented with a view to a quick return to production when cutting was no longer necessary, so Rosneft had taken care to ensure the return to pre-cut levels is indeed quick.

Russia’s Sukhoi Plans to Supply SSJ100R Planes to Iran Despite US Sanctions -- Russia's Sukhoi Civil Aircraft said it would continue to cooperate with Iranian airlines in the framework of interim agreements on the delivery of SSJ100R passenger aircraft, despite the resumption of US sanctions on Iran."The Sukhoi Civil Aircraft will continue to work with Iranian airlines under the preliminary agreements signed at the Eurasia Air Show in April 2018. According to the agreements, the parties are studying in detail the possibility of supplying an updated version of the aircraft — SSJ100R, which is implemented under the program of import substitution of the SSJ100 components," the company's press service said.According to Sukhoi Civil Aircraft President Alexander Rubtsov, the SSJ100R modification will be built without US-made components to avoid contract obstacles posed by potential US sanctions. The Russian company has recently signed memorandums of understanding on deliveries of 40 Sukhoi SSJ100R passenger planes to two Iranian airlines until 2022.  Despite concerns about the US withdrawal from the Iran nuclear deal, which will probably lead to the loss of upwards of $40 billion in contracts for Boeing and Airbus, Russian airplane manufacturers have a historic opportunity to gain a new foreign market for its latest designs.

Clear thinking required as sanctions loom for Iran - UAE National - The high oil price predictions have started re-emerging in response to the US’s abandonment of the Iran nuclear deal. Saudi Arabia has quietly sounded out $80 or $100 per barrel, Bank of America has put forward $100 for 2019, and hedge fund manager Pierre Andurand suggested $300. Opec needs a strategy to prevent the market running away. Iran exports about 2.5 million barrels per day (bpd) of crude oil and condensate (derived from natural gas), although April sales were higher as it sought to drain storage ahead of the sanctions announcement. The Obama-era sanctions, which did not include condensate, reduced its exports by about 1 million bpd. The current unilateral measures, not supported by the EU, China or Russia, should have less impact. The market has already been going through a supply shock more consequential, so far, than the constraints on Iran. Venezuela, producing 2.1 million bpd in January 2017, was down to 1.5 million bpd in April and is now pegged at 1.41 million bpd as its economy collapses and oil workers go hungry or walk off the job. In pursuit of a $2 billion arbitration award, ConocoPhillips has begun seizing Venezuelan oil storage and terminals in the Caribbean, further hampering its exports. The combination of Venezuela’s travails with a so-far strong global economy, Saudi Arabia’s voluntarily under-producing its allocation and Angola’s falling below target as its fields mature has pushed up prices sharply. Now, the American abandonment of the Joint Comprehensive Plan of Action nuclear deal clouds the current accord between the “Vienna Group” of Opec, Russia and some other leading non-Opec producers. Political opinion in the amalgamation is divided between Tehran allies, notably Russia; those without a dog in the fight, such as Nigeria; those that have sought to steer a middle course, including Iraq, Oman and Kuwait; and those, led by Saudi Arabia and the UAE, that have been pushing the US for tougher action against Tehran. Iran will probably consider itself no longer bound by the deal if sanctions begin to bite, although that doesn’t matter practically if its exports are hampered below its allocated level of production.

In the Middle East right now, all sides in this complex battle are staring at each other with increasing concern - Robert Fisk - In the West, it’s easy to concentrate on each daily drama about the Middle East and forget the world in which the real people of the region live. The latest ravings of the American president on the Iran nuclear agreement – mercifully, at last, firmly opposed by the EU – obscure the lands of mass graves and tunnels in which the Muslim Middle East now exists. Even inside the area, there has now arisen an almost macabre disinterest in the suffering that has been inflicted here over the past six years. It’s Israel’s air strikes in Syria that now takes away the attention span.  Yet take the discovery of dozens of corpses in a mass grave in Raqqa, Isis’s Syrian “capital”. It garnered scarcely three paragraphs in Arab papers last month, yet the 50 bodies recovered were real enough and there may be another 150 to be recovered. The corpses lay under a football pitch near a hospital which Isis fighters used before they fled the city – under an agreement with Kurdish forces – and could only be identified by markings which gave only their first names (if they were civilians) or their nom de guerre if they were jihadis. Who killed them? Even less space was given to another gruesome discovery last month in tunnels beneath the Syrian town of Douma, east of Damascus. This vast stone warren of underground streets wide enough for cars and trucks was found to contain 112 bodies, 30 of them Syrian soldiers, the rest probably civilians, many killed long ago, presumably by the Jaish al-Islam group which fought for the town for many years. Were they hostages for whom the Islamists wished to exchange prisoners? And then murdered when no deal was struck?   My colleague Patrick Cockburn investigated an even more terrible mass killing outside Mosul which occurred in 2014, most of the victims Shia Iraqi soldiers. We know this because Isis filmed their appalling end, shot in the head and then tossed carelessly into the blood-stained waters of the Tigris, some of them floating far south towards Baghdad.  Like the vast mass graves of Europe after the Second World War – especially in the Soviet Union – the memory of this savagery will not be forgotten. Which is why the Iraqi authorities (largely Shia in the case of “judicial” trials which meet no international standards) have been hanging Isis suspects like thrushes on prison gallows, 30 at a time, in the south of the country.  And so it goes on.

Syria Imposes New Rules of Engagement on Israel - On Thursday 10^th May 2018, an unprecedented exchange of strikes happened between Israel and Syria. The mainstream media, as well as some “alternative” media like Russia Today, were quick to relay the Israeli army version, according to which the Zionist entity “retaliated” to an “Iranian attack by Revolutionary Guards’ Al-Quds Force” consisting of “twenty rockets” fired at Israeli positions in the occupied Golan, four of which were “intercepted by the Iron Dome” and the others “crashed into Syrian territory”, no damage being recorded in Israel. Israel has reportedly responded to this unprecedented “act of aggression” by a “large-scale operation” that would have destroyed “the entire Iranian infrastructure in Syria”, in order to deter the Islamic Republic from any stray impulse of future strikes. This narrative takes for granted the postulates, data and myths of the Zionist entity’s propaganda – which imposes permanent military censorship on the Israeli media, exposing any offender to a prison sentence; and reading the international media, one might get the idea that, like American economic sanctions, this censorship is extraterritorial – but none of them can withstand scrutiny. The aggressor is undoubtedly Israel, who carried out more than a hundred strikes against Syria since the beginning of the conflict. After Duma’s chemical stage attacks, this aggresion intensified with attacks on the Syrian T-4 base on April 9, which killed 7 Iranian Revolutionary Guard. Following the US announcement of withdrawal from the Iran nuclear deal, new Israeli strikes targeted Syrian positions on Tuesday (May 8th) in the southern suburbs of Damascus, and Wednesday (May 9th) in Quneitra, in the south of the country. Undeniably, Syria has only responded to yet another aggression, with a firmness that has shaken Israel and forced it out of the muteness to which it usually confines itself. The Syrian – and not Iranian – response consisted of more than fifty – and not twenty – rockets against four sensitive Israeli military bases in the occupied Golan, which caused material damage and even casualties according to Al-Manar, Hezbollah’s media. These were not reported by the Israeli press because of the draconian military censorship forbidding mentioning Israel’s initial aggression, more than twenty rockets fired on Israel, the identification of their targets and any hint to the damage inflicted, in order to reassure the population inside and allow the vassal Western capitals to shout their sickening refrain of the sacrosanct-right-of-Israel-to-defend-itself. The Lebanese channel Al-Mayadeen specifically identified the military posts struck:

Get Ready for the New Middle East Battlefield: The Golan - The exchange of missiles last week on the Syrian-Israeli border was anything but normal. This firefight established new rules of engagement in the Levant, and made the Israeli-occupied Golan Heights an “operational theater” in the Syrian conflict overnight.The mainstream media’s version of events began with Israel retaliating against Iranian missile strikes, and the IDF (Israeli Defense Forces) destroying Iran’s military capabilities inside Syria. But that information is questionable: it comes almost exclusively from Israelis who rarely miss an opportunity to beat the “Iranian threat” war drum. A check of the actual conflict chronology shows that Israel initiated the incident by striking Syrian military targets in Kisweh (the Damascus suburbs) and Baath city (Quneitra) over the two preceding days. Russia had warned both Syria and Iran of the impending Israeli strike with the result that neither Iranian military personnel nor weapons systems appear to have been hit. The Syrian military (and not the IRGC) retaliated by firing 55 rockets at Israeli military outposts and installations in the occupied part of the Golan. Local Arab media identified these targets as key Israeli surveillance centers that crippled Israel’s “eyes and ears” along that vital demarcation line. Israel’s vaunted “Iron Dome” defense system failed to intercept most of these rockets, while the Syrian military intercepted more than half of Israel’s missiles, according to Russian military officials. What is undisputed: the military back-and-forth was the first major firefight between Syria and Israel in the occupied Golan Heights since 1973—making the Golan an operational theater for the first time in over four decades. This is also the first time during the Syrian  War that the Syrian military has retaliated against Israeli strikes by hitting Israeli military installations—not just the incoming missiles and the Israeli warplanes firing them. And finally, Israel must contend for the first time with the fact that any battle it initiates can be waged in its own backyard.

Israel Kills 55, Wounds 2,000 Gazans In "Terrible Massacre" As US Opens Jerusalem Embassy --The Israeli military continued its violent repression of Palestinian protesters on Monday when soldiers once again gunned down unarmed demonstrators whom it claimed were trying to penetrate the border fence separating Israel from the Gaza Strip. According to Italian newspaper Il Sole 24 Ore, Israeli soldiers said they were "provoked into violence" when small groups of Palestinians began throwing stones at IDF soldiers from the other side of the border fence. The soldiers responded by gunning down demonstrators; by the time the demonstrations had quieted down, at least 28 Palestinians had been killed, and another 600 had been wounded, according to the Hamas-controlled Health Ministry.The Wall Street Journal reported that a 12-year-old and a 14-year-old had been counted among the dead.At least 10,000 Palestinians had gathered early Monday local time along more than 10 locations along the border fence, which is one of several closed borders that has effectively cut off Gaza from the rest of the world (though Hamas has been known to dig tunnels to help people move in and out of the territory), Il Sole 24 Ore reported. The international community has widely condemned President Trump's decision to move the US embassy to Jerusalem (though, as Trump has correctly pointed out, every US president since at least Bill Clinton had promised to move the embassy). The UK reiterated Monday that it doesn't intend to move its embassy, adding that it doesn't agree with President Trump's decision. Update IV (4 pm ET): The death toll is now 55. The number wounded has climbed to more than 2,000.

Erdogan Blasts: "Terrorist State" Israel Is "Guilty Of Genocide", Withdraws US Ambassador - While Turkish officials on Monday condemned Israel's mass slaughter of Palestinian resident, Turkish President Recep Tayyip Erdogan offered perhaps his most scathing criticism yet, according to the Anadolu News Agency.In a scathing declaration, Erdogan blasted Israel's killings as tantamount to genocide.He also declared that Israel is a "terrorist state" following the murder of 55 Palestinians, while also describing the killings as a "humanitarian tragedy.""What Israel is doing is genocide," he said. "We will continue to stand with the Palestinian people with determination. "We will not allow today to be the day the Muslim world loses Jerusalem..."After blasting the US for moving its embassy in Tel Aviv to Jerusalem on Monday - a decision that many foreign leaders have said will only further inflame tensions between Palestinians and Israelis - Erdogan, who is visiting the UK this week, also declared a three-day period of national mourning in solidarity with the captive residents of that Gaza Strip, who were fired on en masse during Monday's demonstration, which led to more than 55 being killed at last count. Meanwhile, nearly 2,000 had been wounded.Turkey also called for an emergency meeting of the Organization of Islamic Cooperation to be held on Friday, according to Deputy Prime Minister Bekir Bozdag.Bozdag, who made the announcement after a Council of Ministers meeting in Ankara, said the US had "violated" United Nations Security Council resolutions by opening its embassy in Jerusalem on Monday."Today will go down in the history as Bloody Monday for Muslims and Islamic countries," Bozdag said. "Jerusalem's historic and spiritual status will never change. As it was before, Jerusalem will continue to be independent Palestine's capital." Turkey also withdrew its ambassadors from Tel Aviv and Washington so they can attend the meeting.

Tension in Gaza as Palestinians begin to bury 58 dead - BBC News: Funerals are being held in Gaza after the deadliest day of violence there since a war in 2014. On Monday, 58 people were killed when Israeli troops opened fire during Palestinian protests. Tuesday is the 70th anniversary of what Palestinians call the Nakba - a mass displacement after Israel's creation. Israel's military said it was preparing for further confrontations on Tuesday ,but Palestinian groups indicated they intended to rein in the protests. Monday's violence came as the US inaugurated its first embassy in Jerusalem, a controversial move that broke with decades of US policy and incensed Palestinians. Palestinians claim East Jerusalem as the capital of a future Palestinian state. Many see the US move as backing Israeli control over the whole of the city, which Israel regards as its indivisible capital. Palestinian officials said that as well as those killed, about 2,700 people had been injured in what they called a massacre. Israeli Prime Minister Benjamin Netanyahu said his military was acting in self-defence against Gaza's Islamist rulers, Hamas, who seek to destroy Israel. Israel's military said it had only fired at "targets of terrorist activity". The UN human rights office was heavily critical of Israel's use of force. "The mere fact of approaching a fence is not a lethal, life-threatening act, so that does not warrant being shot," spokesman Rupert Colville told reporters in Geneva. "How much threat can a double amputee be making from the other side of a large fortified fence?" he asked - referring to a widely shared report that a wheelchair user was killed during the violence. 

Doctors Without Borders Condemns the ‘Bloodbath’ in Gaza as a Result of Israel’s ‘Disproportionate Use of Violence’ -- Doctors Without Borders released a statement Monday condemning the brutal attacks on unarmed protesters in Gaza by the Israeli military as demonstrations broke out at the border. Protesters opposed the opening of a new U.S. embassy for Israel in the city of Jerusalem, a move ordered by President Donald Trump."What happened today is unacceptable and inhuman," said spokeswoman Marie-Elisabeth Ingres. "The death toll provided this evening by Gaza health authorities—55 dead and 2,271 wounded—including 1,359 wounded with live ammunition, is staggering. It is unbearable to witness such a massive number of unarmed people being shot in such a short time."The organization has been treating victims of the violence since the protests began last month, but Ingres said that the doctors have been overwhelmed by the number of people needing care: "Our teams carried out more than 30 surgical interventions today, sometimes on two or three patients in the same operating theater, and even in the corridors. Ingres also made it clear that, despite the White House's blaming of the killings on Hamas, Doctors Without Borders believes Israel's policies are the cause of the brutality. "This bloodbath is the continuation of the Israeli army’s policy during the last seven weeks: shooting with live ammunition at demonstrators, on the assumption that anyone approaching the separation fence is a legitimate target," she said. "As new demonstrations are announced for tomorrow, the Israeli army must stop its disproportionate use of violence against Palestinian protesters."

Britain calls for investigation into Gaza violence  (Reuters) - Britain called on Tuesday for an investigation after Israeli troops shot dead dozens of Palestinian protesters on the Gaza border. “There should be an investigation into this,” junior foreign office minister Alistair Burt told parliament. “The United Kingdom has been clear in calling for urgently a need to establish the facts of what happened, including why such a volume of live fire was used ...” “There are different forms of inquiry that are possible through the United Nations and we have to find the right formula, but it is important to find out all the facts.”  Burt also called for an easing of restrictions on movement in Gaza and international support for infrastructure and development projects there.

Protests across UK against Israel’s massacre of Palestinians --Protests were held throughout the UK Tuesday evening over Monday’s systematic massacre by the Israel Defense Forces of over 60 unarmed men, women and children, and the wounding of thousands more. The World Socialist Web Site spoke to demonstrators Tuesday evening in a number of cities.In London, several hundred people protested outside Downing Street. Kirk attended with his cousin and her daughter. He said, “We were gutted by what we saw on the news, with the very harsh repression against the protesters in Palestine. The children getting hit and maimed by the Israeli military, it shocked me, just the scale of it over the past days.“Those responsible should be arrested and brought before a war crimes tribunal. They committed atrocities against civilians who were in a peaceful protest.” Around 200 people protested outside Manchester Central Library in St Peter’s Square. Replica coffins were laid out with names on them of some of the victims of the massacre. After holding a minute’s silence, demonstrators marched down the city’s Oxford Road, where students at the University of Manchester joined the protest.

More Palestinian deaths as Israel attacks protests in Gaza and West Bank -- Israeli troops opened fire on several thousand Palestinians rallying along Gaza’s border with Israel Tuesday, killing two people.The demonstration marked the 70th anniversary of the establishment of the state of Israel, the day Palestinians call the “Nakba” or “catastrophe.”More than 700,000 Palestinians fled or were expelled from their homes following the 1947 UN vote to partition Palestine and during the 1948-49 war between Israel and her Arab neighbours.The rally followed the funerals in Gaza of some of the 60 killed on Monday in a mass slaughter of unarmed Palestinian demonstrators by Israel Defence Forces (IDF), in the bloodiest day since the 2014 war. Shops across Gaza are closed for three days of mourning.Tens of thousands of peaceful and defenceless protestors met with a brutal, pre-planned assault by the IDF, with more than 2,800 wounded, more than half by live fire. Five boys and a girl were among those massacred. The death toll rose above the 58 announced yesterday, due to two additional shootings and the death of an eight-month-old baby due to gas inhalation during Monday’s IDF attacks. Monday’s demonstrations against Washington’s moving of its embassy from Tel Aviv to Jerusalem, in breach of international law, were the culmination of the rallies held since the start of the Great March of Return nearly seven weeks ago.

IDF has 'enough bullets for everyone,' senior MK says of deadly Gaza clashes - As the Palestinian death toll in clashes with Israeli soldiers on the Gaza border mounted on Monday, a senior lawmaker from the ruling Likud party said that he was unconcerned at the prospect of a border breach, because “the IDF has enough bullets for everyone.” Gaza’s Hamas-run health ministry said 52 Palestinians were killed and more than 2,400 were wounded in the violence, the largest riots by far in a weeks-long campaign of protests against Israel. It was also the deadliest day in Gaza since the 2014 war. The army’s primary worry during the riots was that dozens or hundreds of Palestinians, including Hamas members, would manage to break through the Gaza security fence and wreak havoc on the other side, including attacks on Israeli soldiers and civilians. The IDF’s spokesman said later Monday that Hamas deployed 12 separate terrorist “cells” to try to breach the border at different locations, and that all were rebuffed. In an interview by Hadashot TV news early Monday afternoon, when the death toll in Gaza stood at 18, MK Avi Dichter, who chairs the powerful Foreign Affairs and Defense committee, brushed aside a question about the prospect of the number of dead mounting and Palestinians storming the border.  “[Security forces] won’t let anyone put soldiers, and certainly not civilians, in danger,” he said. “The IDF has enough bullets for everyone. I think that ultimately, the means that the IDF prepared, whether non-lethal, or if needed, lethal, in cases where it’s justified by the open-fire regulations — there’s enough ammunition for everyone.”

Trudeau 'appalled' Canadian doctor was wounded in Gaza - BBC News: Canadian Prime Minister Justin Trudeau has called for an investigation into the reported shooting of a Canadian doctor in Gaza. Tarek Loubani says he was shot in the leg while providing medical services to protesters along the border between the Gaza Strip and Israel. Dr Loubani said paramedics had worn fluorescent high visibility jackets to identify themselves as medics. Mr Trudeau said Canada "deplores" the recent violence. In a statement on Wednesday, the prime minister said his country is "gravely concerned by the violence in the Gaza Strip that has led to a tragic loss of life and injured countless people". "We are appalled that Dr Tarek Loubani, a Canadian citizen, is among the wounded - along with so many unarmed people, including civilians, members of the media, first responders, and children". He called for an "immediate independent investigation to thoroughly examine the facts on the ground - including any incitement, violence, and the excessive use of force".

Israel, Like the Nazis, Values “Postenpflicht” -- While you might be inclined to think that my title is a cheap shot, it is not. It is a disgusting reality. Postenpflicht was part of a written order for the SS guards in German concentration camps during World War II:  It required SS guards to shoot prisoners who tried to escape or engage in resistance and to do so without verbal warning or a warning shot. This was relevant for example regarding the so-called "death strip" next to camp fences. The area next to these fences was off-limits and anyone getting too close to it was, in accordance with the Postenpflicht, killed without warning.  73 years since the Nazis were defeated we are witnessing the Israelis shooting largely unarmed protestors for having the audacity to approach a border fence:  Israel's use of live fire (ball ammunition) has drawn international criticism but the Israeli government says it is protecting its borders and takes such action when protesters come too close to the border fence.  The Israeli military said that around 3,000 Palestinians were involved in the latest protest, and that its troops responded "with riot dispersal means and are firing in accordance with the rules of engagement." The UN had a different take on the events: “Shocking killing of dozens, injury of hundreds by Israeli live fire in #Gaza must stop now. The right to life must be respected. Those responsible for outrageous human rights violations must be held to account. The int'l community needs to ensure justice for victims” – #Zeid.

Chinese state councilor, Iranian foreign minister hold talks -  (Xinhua) -- Chinese State Councilor and Foreign Minister Wang Yi held talks with Iranian Foreign Minister Mohammad Javad Zarif in Beijing on Sunday.Wang said China attaches importance to the traditional friendship with Iran, as well as the comprehensive strategic partnership between the two countries.China regards Iran as an important partner in the Belt and Road construction, Wang said, noting that China is willing to work with Iran to implement the consensus reached by leaders of the two countries to promote various cooperation.Wang said China firmly safeguard multilateralism and international agreements.The Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), was hard-earned and the deal helped to safeguard the international system of non-proliferation and maintain the peace and stability in the Middle East, Wang said.As an important party, China made a lot of work in the process of reaching and implementing the JCPOA, Wang said."China will take an objective, fair and responsible attitude, keep communication and cooperation with all parties concerned, and continue to work to maintain the deal," Wang said.

As Rosneft's Vietnam unit drills in disputed area of South China Sea, Beijing issues warning  (Reuters) - Rosneft Vietnam BV, a unit of Russian state oil firm Rosneft, is concerned that its recent drilling in an area of the South China Sea that is claimed by China could upset Beijing, two sources with direct knowledge of the situation told Reuters on Wednesday.  Rosneft said on Tuesday its Vietnamese unit had started drilling at the LD-3P well, part of the Lan Do “Red Orchid” offshore gas field in Block 06.1, 370 kms (230 miles) southeast of Vietnam. The block is “within the area outlined by China’s nine-dash line,” according to energy consultancy and research firm Wood Mackenzie.   When asked about the Reuters report of the drilling, China’s foreign ministry spokesman said that no country, organisation, company or individual can, without the permission of the Chinese government, carry out oil and gas exploration or exploitation activities in waters under Chinese jurisdiction.  “We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” the spokesman, Lu Kang, told a regular news briefing on Thursday. China’s U-shaped “nine-dash line” marks a vast expanse of the South China Sea that it claims, including large swathes of Vietnam’s Exclusive Economic Zone. Maps of the area indicate the block is around 85 kms (53 miles) inside the contested area. A series of dashes, the line is not continuous making China’s claims often ambiguous. In recent years, though, China has increasingly patrolled and enforced the area, claiming historic rights to the resources and features within it. In March, Vietnam halted an oil drilling project in the nearby “Red Emperor” block following pressure from China, sources told Reuters. That block is licensed to Spanish energy firm Repsol, which has asked Vietnam to pay compensation over the issue.  The Vietnamese foreign ministry did not respond to a request from Reuters for comment.

China says no one can carry out oil, gas activities in the South China Sea Without Beijing's Permission (Reuters) - China’s Foreign Ministry said on Thursday that no country, organization, company or individual can carry out oil and gas exploration or exploitation in Chinese waters without permission from Beijing.  Ministry spokesman Lu Kang made the comment at a regular news briefing when asked about recent drilling by Rosneft Vietnam BV, a unit of Russian state oil firm Rosneft, in an area of the South China Sea that is claimed by China.   “We urge relevant parties to earnestly respect China’s sovereign and jurisdictional rights and not do anything that could impact bilateral relations or this region’s peace and stability,” Lu said.

China’s south-east Asia push threatened by new Malaysia regime --Chinese president Xi Jinping and former Malaysian prime minister Najib Razak thought they had devised the perfect “win-win” deal.Beijing pledged tens of billions of dollars in loans and investments to support Malaysia’s economy and Mr Najib promised to roll out Chinese rail and port developments, as other Belt and Road projects stalled across south-east Asia.However, the Malaysian people got in the way, last week voting out the ruling party headed by Mr Najib for the first time in 60 years, in part because of accusations that their graft-tainted leader was selling out the country. Riding the wave of anger at Mr Najib, new prime minister Mahathir Mohamad has promised to review all Chinese projects and renegotiate any “unequal treaties”, threatening to destroy the image of Malaysia as the posterchild for Mr Xi’s Belt and Road Initiative and upset China’s position in the country, a strategic crossroads for Asia. “China had a long experience in dealing with unequal treaties and China resolved it by renegotiation,” Mr Mahathir said. “So, we feel we are entitled to study and, if necessary, renegotiate the terms.”

Japan maneuvering to prevent being left out on North Korean negotiations - Tensions in East Asia remain high despite the planned summit between US President Donald Trump and North Korean leader Kim Jong-un on June 12 in Singapore. Whatever comes out of such a meeting—if it even takes place—will not resolve the great power tensions in the region.In this context, Tokyo is maneuvering to stake out its economic and military interests.On Tuesday, Prime Minister Shinzo Abe’s cabinet adopted its third “Basic Plan on Ocean Policy,” which is updated every five years. While previous policies focused on economic development, the latest document has shifted to national security.The new policy calls for militarizing areas around disputed islands claimed by China, South Korea, and Russia, including the Senkaku/Diaoyu Islands, Takeshima/Dokdo Islets, and the Northern Territories/Kuril Islands, respectively.This means stepped-up radar coverage, satellite surveillance and military operations in the vicinity of these often uninhabited islands. This third measure in particular could be used to shift Japanese military attention more openly from North Korea to China, which has always been the true target of Tokyo and Washington. If some sort of rapprochement is reached with North Korea, the maritime policy could provide the rationale for a continued arms build-up in the region and lead to sharpening tensions as imperialism sets its sights on China as well as Russia.

India’s BJP government creates new category of workers who can be fired at will --India’s pro-big business, Hindu supremacist Bharatiya Janata Party (BJP) government recently expanded “fixed-term employment”—a form of contract-work under which employers can fire workers at will—to all sectors of the economy.Hitherto, “fixed-term employment” had been restricted to the textile industry.Under the “fixed-term” designation, Indian businesses can hire workers on a “non-permanent” basis, for any length of time of their choosing, whether for days, months, years, or the duration of a project. However, the “fixed-term” appellation is a complete misnomer, since an employer can terminate a worker’s contract at any time, claiming changed business conditions, and the laid-off worker is entitled to no severance pay or compensation whatsoever.The BJP government implemented this sweeping regressive change to India’s labour laws by fiat in mid-March. Bypassing parliament, it issued a notification in the government Gazette that “Fixed Term Employment has now been introduced irrespective of the industry,” thereby amending the “Industrial Employment (Standing Order) Act, 1946.”  Indian big business has hailed this change and with good reason, since it fulfills one of their major demands. For years Indian and foreign investors have been complaining about labour law restrictions on the laying off of workers. Now in one fell swoop they have been provided a mechanism under which all future hires can be dismissed at will and without having to provide any financial compensation, even if they break the “fixed term” or the laid-off workers have been in their employ for years.

How the rise in crude oil price will affect Indian economy - Brent crude oil prices on Thursday hit $80 per barrel for the first time since November 2014 on supply deficit concerns. With India meeting more than 80% of its oil needs through imports, the world's third-largest oil consumer after US and China will feel the heat of the global development. Here's how the Indian economy will be affected due to the surge in oil prices. India, world's third-largest oil consumer after US and China, imports about 1,575 million barrels of crude oil on an annualised basis and a dollar increase in oil prices would increase the import bill by roughly $1.6 billion (Rs 10,000 crore) on an annual basis, said CARE Ratings. India relies more than 80 per cent on imports to meet its oil needs. Every dollar per barrel change in crude oil prices impacts the import bill by Rs 823 crore ($0.13 billion). The same is also the impact when currency exchange rate fluctuates by Re 1 per US dollar. Every $10 per barrel rise in the price will worsen India's fiscal balance by 0.1% and current account balance by 0.4% of GDP, according to estimates of global financial services major Nomura. Chief Economist Adviser to the government Arvind Subramanian too has said every $10 per barrel rise in oil price brings down GDP growth by around 0.2-0.3 percentage points and worsens the CAD (Current Account Deficit) by about $9-10 billion dollars.  Nomura said economy is affected as rise in inflation due to higher prices could lower real disposable incomes of households and therefore hurt consumer discretionary demand.  Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said crude has risen by more than $10 a barrel since April. RBI had assumed a rate of $68 for 2018 but Brent crude is now hovering around $80. Every $10 rise in crude prices raises India's inflation by 10 bps.  Fuel prices primarily of petrol and diesel have been deregulated and are linked to the international crude oil prices. With oil marketing companies raising petrol, diesel prices on a daily basis after the announcement of Karnataka Poll results, now there are more chances that oil marketing companies (OMCs) will have to raise prices of petrol and diesel on a daily basis. They are estimated to have lost about Rs 500 crore on absorbing higher costs resulting from the spike in international oil rates and fall in rupee against the US dollar.

Watchdog: Pentagon gave inaccurate numbers on size of Afghan forces | TheHill: The Pentagon gave a government watchdog incorrect figures on the size of Afghan security forces earlier this month, the watchdog said Tuesday. The Pentagon recently informed the Special Inspector General for Afghanistan Reconstruction (SIGAR) that the Afghan National Defense and Security Forces (ANDSF) have 313,728 military personnel as of Jan. 31 — not the 296,409 the Pentagon previously told the inspector general, according to the watchdog's report, released Tuesday. "This is the latest in a series of problems SIGAR has faced over the last three quarters with [Department of Defense] DOD’s responses to our requests for ANDSF information," the report said. "SIGAR respectfully requests the appropriate congressional committees and the secretary of Defense remind all DOD components of their statutory duty to provide accurate and timely data concerning the ANDSF for SIGAR’s quarterly reports." The new figure means that a 10-percent drop in the size of Afghan forces cited as alarming by critics of the 16-year-old war is not as steep, though the watchdog noted it still shows force “strength declined sharply.” According to the new figures, Afghan security forces dropped by 17,980 from 2017 to 2018. The previous figures would have meant a 35,999-person decline.

Australia Bans Cash For All Purchases Over $10,000 Starting July Of 2019 - Australia's Liberal Party government has announced that it will soon be illegal to purchase anything over $10,000 with cash. The government says it's "encouraging the transition to a digital society" and cracking down on tax evasion. But not everyone is happy with the move. "This will be bad news for criminal gangs, terrorists, and those who are just trying to cheat on their tax or get a discount for letting someone else cheat on their tax," Treasurer Scott Morrison said in a speech announcing the government's new budget. "It's not clever. It's not OK. It's a crime." The ban starts on 1 July 2019 and any payment over $10,000 will have to be made by check or credit/debit card. The government will enforce the measure by allocating roughly $300 million for what it calls the Black Economy Standing Taskforce. The goal is to drum up about $3 billion in new tax revenue over the next four years. As The Guardian points out, one of the biggest targets for the new task force will be the illicit tobacco trade. Australia has the highest tax on cigarettes in the world, with an average pack costing about $40. But there's a huge black market for cigarettes, which comes from both stolen goods and smuggling from outside the country. Taxes aren't paid on cigarettes until the point of sale, so theft from tobacco warehouses is unusually common in Australia. Australians have a strange relationship with cash - strange in the sense that they still use it. Roughly 37 per cent of all commercial transactions in Australia are made using cash. That number is just 32 per cent in the US and 15 per cent in Sweden. Many Swedes are angry about its slow move to a cashless society, arguing that going completely digital causes security concerns. And India began phasing out a whopping 86 per cent of its currency in November of 2016 by invalidating ₹500 and ₹1000 notes as legal tender. 

Who’s Most Afraid of a Latin American Debt Crisis (Apart from Latin America)? - Economic history appears to be rhyming once again in Latin America. Perennial credit-basket-case Argentina was one of the first countries to suffer a major currency crisis this century. Now, its government has asked the IMF for a brand-new bailout. But if this classic last-gasp fix was meant to calm the markets, it isn’t working.Previous Latin American debt crises have taught us two things:

1. The direct impact on the general populace, already suffering from sky-high poverty rates, is devastating;
2. Once the first domino falls, contagion can spread like wildfire.

But it’s not just countries that are at risk of contagion; so, too, are global companies with a big stake in the affected markets. Few companies are more exposed to Latin America than large Spanish ones. Some were already burnt in Argentina’s last crisis and default. But in the aftermath of Spain’s real estate collapse, opportunities at home dried up to such an extent that access to Latin America’s fast-growing economies became a godsend. But it could soon become a curse.Among the Spanish firms with most to lose are Telefónica, with €3.5 billion of revenues at stake in Argentina. It also generates €12 billion of its revenues in Brazil. There’s supermarket chain Dia with €1.74 billion of its in revenues in Argentina. Or Gas Natural with €574 million of its revenues in Argentina. Spanish infrastructure group Abertis, which was just acquired in a joint takeover by Italian rival Atlantia and Spanish construction firm ACS, has €400 million of revenues in Argentina.Spain’s two biggest banks, Santander and BBVA, also have sizable stakes in the country, with Santander earning 4% of its group profits there and BBVA, 6%.While Latin American markets have provided welcome diversification effects for the two big banks, they could also have significant implications for inward and outward spillovers. The subsidiaries of Santander and BBVA are “systemically important” for a number of key banking systems in Latin America, accounting for about 38% and 25% of Mexico and Chile’s banking sector assets, respectively.In the case of BBVA, its Mexico operations account for almost half of the group’s global profits. For Santander its biggest source of lucre is Brazil, providing 27% of the group’s global profits in 2017. As the IMF cautioned last year, this “high reliance on foreign subsidiaries in profit generation could imply significant vulnerabilities if the economic and financial conditions in host countries were to deteriorate.”

Venezuela seizes Kellogg cereal factory after closure - BBC News: Authorities in Venezuela have seized a plant owned by the American cereal manufacturer Kellogg. It comes after the firm announced it was pulling out of the country because of the worsening economic situation. President Nicolas Maduro, who has previously accused the US of waging economic war against his government, called the closure "absolutely unconstitutional and illegal". He said the factory had been handed to workers and would continue production. Earlier, workers had said they had been prevented from entering the plant in the central city of Maracay on Tuesday. The announcement comes ahead of Sunday's presidential elections. "We've begun judicial proceedings against the business leaders of Kellogg's because their exit is unconstitutional," Mr Maduro told cheering supporters in the central state of Carabobo. "I've taken the decision to deliver the company to the workers in order that they can continue producing for the people."

Bolivian President Evo Morales Warns of Plan 'to Invade Venezuela by U.S. -- Bolivian President Evo Morales said Sunday that the United States and the Organization of American States are implementing a plan with the purpose of defeating the Bolivarian Revolution in Venezuela. "Before the elections they will carry out violent actions supported by the media and after the elections they will try a military invasion with Armed Forces from neighboring countries," President Morales said on his official Twitter account.Earlier this week U.S. Vice President Mike Pence requested that the OAS suspend Venezuela in during a speech at the Permanent Council of the OAS, comments that were rejected by the Venezuelan government calling such statements an aggression to disturb the peace in the country and further explaining that Venezuela is already in the process of leaving the “colonial” group.Morales further explained that "the empire acts out of fear of the sovereign vote and knows that it will never again subject the free people." In February, the Bolivian leader had warned of the U.S. military presence in the Colombian department of Tumaco, warning that "any imperialist military threat against peace in sister Venezuela and our region will be thwarted by the dignity, sovereignty and unity of our democratic peoples.”

Mexico’s education reforms flounder as more spent on PR than teachers - It was a flagship policy of Mexico’s president Enrique Peña Nieto: an ambitious reform programme which would revolutionize the country’s education system, improve standards, tame an all-powerful teachers’ union and crack down on rampant corruption – such as wages for non-existent “ghost teachers”. 'The help never lasts': why has Mexico's education revolution failed? Read more Five years after it was launched, the plan has barely affected standards: Mexico still ranks last in education among the 35 Organization for Economic Cooperation and Development (OECD) countries. And the ministry which is overseeing the reform has now been plunged into controversy after an investigation by the news website Animal Político revealed that that last year, the public education secretariat (SEP) spent more money on communications than on teacher training. A separate exposé in the newspaper Reforma found the SEP spent nearly 2700% more on communications last year than was budgeted – even as rural schoolhouses were commonly left without roofs, electricity or water connections. “This undermines the credibility of the reform,” said Marco Fernández, a professor in the school of government at Tecnológico de Monterrey. Fernández added that the SEP did not spend what was budgeted last year for teacher development, but has exceeded its communications budget by a factor of 10 between 2013 and 2017. The controversy has once again implicated the ruling Institutional Revolutionary Party (PRI) in a scandal at a time when the educational reform has become an electoral issue ahead of 1 July presidential vote. The current frontrunner Andrés Manuel López Obrador has promised to kill the reform as he seeks to secure the support of teachers – important election organisers in rural Mexico where schools are often used as poling stations. 

To pay for a ‘Russia first’ agenda, Putin takes ax to military spending -- With the tensions between Russia and the West so high – often being described as “a new cold war” – one might understandably assume that there is a corresponding arms race going on. But in fact, Russia's military spending is on the decline. In the first strategic program of his new and possibly final presidential term, Vladimir Putin announced plans for a relentless focus on domestic development, to be partially paid for by sharp cuts in defense spending. Recent opinion polls suggest that Mr. Putin's priority shift coincides with a war weariness on the part of Russians. A survey last month found that at least half of Russians appreciate their country's return to great power status, but 45 percent fault Putin for “failing to ensure an equitable distribution of income in the interests of ordinary people.” “It's time for a domestic focus,” says Andrei Kolesnikov, an analyst with the Carnegie Moscow Center. “The plan looks quite cautious and rational. It balances various interests and appeals to different lobbies. Military spending is still very important. And how these grand declarations will be brought to life is still an open question.”

EU top diplomats agree to follow through Iran nuclear deal - (Xinhua) -- European top diplomats on Tuesday agreed to follow through the landmark Iran nuclear deal despite U.S. President Donald Trump's decision to withdraw last week, EU foreign policy chief Federica Mogherini told reporters on Tuesday.To this end, the EU will launch intensive discussion at all levels with Iran in next few weeks, Mogherini said at a press conference following a meeting with foreign ministers of Britain, Germany, France and Iran.The discussion will focus on, among others, how to maintain economic relations and effective banking transactions with Iran in the context of renewed U.S sanctions, according to Mogherini."We reaffirm our resolve to continue to implement the nuclear deal in all its parts, in good faith, and in a constructive atmosphere," said Mogherini."We are determined to ensure that Iran Deal stays in place. We know it's a difficult task but we are determined to do that," Mogherini noted, adding "we started to work to put in place measures that help ensure that this happens."She proclaimed that she will brief leaders of EU members states on Wednesday in Sofia, Bulgaria, which is about to host the EU-Western Balkan summit.

Europe Is Seeking "Practical Solution" To Salvage Iran Deal - Much to President Trump's chagrin, The European Union's top diplomat, Federica Mogherini, said on Tuesday that the bloc would seek avenues for protecting businesses operating in Iran - even as the US threatens to impose tighter sanctions on any company that dares to continue operating in Iran after the US has revived its economic sanctions. While it couldn't provide any economic or legal guarantees to the Islamic Republic, Mogherini said they would find a way to keep badly needed investment flowing into Iran. A series of experts have been assigned to the issue, and they're expected to propose a few options in the coming weeks.  "We are working on finding a practical solution," Mogherini told a news conference."We are talking about solutions to keep the deal alive," she said, adding that measures would seek to allow Iran to keep exporting oil and for European banks to operate.The EU has already warned the US that it's prepared to impose "counter-sanctions" if the US interferes with European firms who choose to maintain their business relationships in Iran, as President Trump threatened to do in a phone call with European leaders shortly before he announced the US's withdrawal from the agreement, according to Reuters.Iranian President Hassan Rouhani surprised the other signatories of the Joint Comprehensive Plan of Action last week when he said Iran would continue to abide by the terms of the deal - for now, at least - and give the other signatories a chance to salvage it.Both Russia and China have expressed regret over the US's decision. Both have vowed to maintain ties with Iran in accordance with the deal.

EU Launches Rebellion Against Trump's Iran Sanctions, Bans European Companies From Complying - Following our discussion of Europe's angry response to Trump's unilateral Iran sanctions, in which European Union budget commissioner, Guenther Oettinger made it clear that Europe will not be viewed as a vassal state of the US, stating that "Trump despises weaklings. If we back down step by step, if we acquiesce, if we become a kind of junior partner of the US then we are lost", moments ago Reuters reported that the European Commission is set to launch tomorrow the process of activating a law that bans European companies from complying with U.S. sanctions against Iran and does not recognise any court rulings that enforce American penalties."As the European Commission we have the duty to protect European companies. We now need to act and this is why we are launching the process of to activate the ‘blocking statute’ from 1996. We will do that tomorrow morning at 1030,” European Commission President Jean-Claude Juncker said.Speaking at news conference after a meeting of EU leaders in Bulgaria, Juncker added that he "also decided to allow the European Investment Bank to facilitate European companies’ investment in Iran. The Commission itself will maintain its cooperation will Iran."Europe's hardline position will infuriate Trump, as Brussels effectively nullifying US sanctions will prompt a violent outburst from Trump, who needs Europe on his side for US sanctions of Iran to have any chance of succeeding.Perhaps sensing what is coming, French President Emmanuel Macron took a slightly softer tone, and said that the French defense of Iran nuclear accord is based on concerns about security and stability, not commerce, and that the deal should be supplemented and it is necessary to continue negotiations, including on missile program. The French president said that "the European Union decided to preserve the nuclear deal and defend EU companies" adding that "our main interest in Iran is not in trade, but in ensuring stability in the region, at the same time, we will not become an ally of Iran against the US."

How Europe Can Keep Money Flowing to Iran - The determination of European nations, Russia and China to keep the 2015 nuclear agreement with Iran alive isn’t necessarily futile. Europe has more influence than the U.S. on SWIFT, the Brussels-based global payments network. SWIFT is owned by its members and provides the backbone of modern international banking, carrying more than 30 million transaction-related messages a day among 11,000 banks. Because it is based in Brussels, it is subject to European Union laws. In 2012, the EU imposed sanctions on Iranian banks, and SWIFT expelled 30 Iranian members, including the country’s central bank. . With the loss of access to SWIFT in 2012, Iran lost the ability to be paid for its exports and to pay for imports. Domestically, Iranian companies had to revert to the old, slow and expensive hawala transfer system — a major inconvenience for ordinary people as well as merchants.  Even though President Donald Trump announced earlier this month that the U.S. was withdrawing from the 2015 pact that eased sanctions in exchange for Iran’s commitment to curb its nuclear program, the EU, Germany, France, the U.K., China and Russia remain parties to the deal. This means SWIFT isn’t required to kick Iranian banks off its network again. The cooperative says it’ll be consulting with regulators on both sides of the Atlantic, but it’s highly unlikely it will act unless the EU does.  The U.S. sanctions will inevitably bite and multinationals with U.S. operations won’t be able to invest in Iran, but the Islamic Republic wouldn’t be under life-threatening pressure if it can keep exporting oil.  This means Europe — already locked in a dispute with the U.S. because of a threat to impose high tariffs on European steel and aluminum exports — doesn’t have to take Trump’s Iran move lying down. If the EU refrains from excluding Iran from SWIFT, the U.S. could sanction the cooperative, but that could prove harmful to American interests as it would have major consequences for the global financial system. If SWIFT becomes unreliable, there would be huge demand for alternative transaction information systems such as those offered by blockchain startups and authoritarian states to fill the void.

Maersk to Cut Services as It Battles Shipping Glut - A.P. Moller-Maersk said it would cut back on capacity to combat falling freight rates and rising fuel costs, after the Danish shipping giant reported a weak first quarter that sent its shares down about 8%. The world’s biggest container operator said its underlying loss widened to $239 million from a loss of $139 million a year earlier, with Chief Executive Soren Skou blaming rampant overcapacity as the main culprit and warning that a trade war between the U.S. and China would dash any hopes of a recovery in the shipping industry after a long down cycle.“In the short term we will be closing down some services,” Mr. Skou said in an interview. “Overcapacity is the biggest defect.”.  Maersk reported a net profit of $2.75 billion, compared with a profit of $245 million in the same period last year, but the gain came from the sale of two units, Maersk Oil and Maersk Tankers. Mr. Skou said higher fuel prices had added $70 to the cost of shipping a container from Asia to Europe and across the Pacific. Maersk currently moves more than 4 million containers, or 19% of global capacity. Freight rates between Asia and Europe hover around $780 per box, about half the $1,500 break-even level.   Maersk reiterated previous guidance that it expects 2018 underlying profit to be above the 2017 figure of $356 million, but Mr. Skou said that depends on growing geopolitical risks.“A trade war between the U.S. and China would be very, very bad,” he said, adding that new U.S. sanctions on Iran are “a driver” for rising oil prices.

Italian Coalition Takes Shape: Platform Includes Parallel Currency – Mish - A reader informed me yesterday that Five Star was pro-Europe and not Eurosceptic. Compared to what? Certainly Five Star leader Luigi Di Maio is a far cry from former Five Star leader, Beppe Grillo. But some of that change in positioning was little more than political expediency to win votes. The platform now in the works includes a parallel currency, reduced immigration, and flat taxes. Eurointelligence Comments: This is what real coalition negotiations look like. The leaders meet and set the agenda for sub-committees to talk about specific policy issues. That process will start in Italy tomorrow, when the deputy leaders of the two parties come together, but some of the outlines have already been drawn up by the leaders themselves. What do we know so far? Five Star and Lega are very different political parties, but they have enough in common for a radical legislative agenda. The two sides seem to be inching towards a neutral prime minister, in other words neither Di Maio nor Salvini. The name mentioned by Italian newspapers this morning is that of Giampiero Massolo, a career diplomat who seems to be acceptable to both parties. Massolo will clearly only be the frontman. Power will rest with Di Maio and Salvini. It will be interesting to see how the two sides will legislate together on issues that might affect Silvio Berlusconi personally. We don’t think he accepted to step aside and let Salvini run the show himself without any clandestine conditions. Any undertaking Salvini might have given him would be difficult for Five Star politically, though. Corriere della Sera lists the following as the main legislative priorities. If implemented it would be the biggest shake-up of the Italian economic system in modern times.

Italy’s 5-Star, League Reach Deal Clearing Way For "Anti-establishment" Government -  Back on March 4, the Euro was spooked and Italian bonds tumbled, if only briefly, following the shocking outcome from the Italian elections which saw the eurosceptic 5-Star party and the anti-immigrant League party win an outright majority. The only thing that prevented an even more violent reaction was the market's "expert" take that a joint Italian government between these two forces was highly unlikely. Well, as of this moment, a coalition government between the anti-establishment 5-Star Movement and right-wing League party is no longer not only likely, but appears to be a virtual certainty after the two political forces reached an agreement on a government program, one which was catalyzed by Sylvio Berlusconi's blessing late last week, greenlighting what may be the biggest shock in European politics since Brexit. As the WSJ frames it, "the formation of a new government—which is expected in the coming days—between the two groups marks one of the biggest wins yet for the political insurgencies shaking Europe’s establishments." The alliance between the two parties follows more than two months of bickering among political leaders following March elections that handed no clear majority to any single party or coalition.And since both parties have, at their core, an anti-immigrant platform, Angela Merkel can pat herself on the back for yet another job well done, by unleashing the unprecedented anti-immigrant, populist revulsion wave which swept across Europe with the chancellor's "open door" policy to admit over 1 million mostly Syrian refugees inside Germany's, and Europe's, borders. As the WSJ details, the two parties struck a deal Sunday evening on a pact that would underpin a government coalition between the two. Leaders of the two groups, however, are still negotiating the members of a government cabinet, including the prime minister. An announcement of those names should come early this week, according to weekend statements by leaders of both groups.With the general agreement now reached, leaders of 5 Star and League will meet on Monday with Italy's President Sergio Mattarella, who will guide the formation of a new government. And while the coalition must then win votes in both houses of parliament, that shouldn't be a problem as the League and 5 Star together enjoy a comfortable majority in each house.

Italy election: Five Star and League to propose PM to president - BBC News: Italy's President, Sergio Mattarella, has been meeting two populist party leaders, after the pair agreed a deal on most of their coalition programme. One key element that the anti-establishment Five Star Movement and right-wing League are yet to decide is who will become prime minister. Luigi Di Maio of Five Star does not want the job, nor does The League's Matteo Salvini. But the two men have not yet revealed who they want as leader. It is the president's task to appoint the government and prime minister and he met the two leaders separately on Monday at the presidential palace, the Quirinale. He has been trying to end the deadlock that has stymied Italian politics since a general election on 4 March.The parties' expensive economic plans could prompt a clash with the EU if they defy the previous government's agreements to reduce Italy's budget deficit. Both have called for a renegotiation of EU fiscal rules and Mr Salvini has in the past condemned the introduction of the euro as an error. Mr Di Maio has made clear that the prime minister will be a politician and not a technocratic figurehead. The Five Star leader said on Monday that he and Mr Salvini had agreed they would not be publicly naming anyone. After talks with the president on Monday, Mr Di Maio said he had asked for more time to complete a deal. Even if a final agreement is concluded, his anti-establishment movement will insist on it being put to members in an online vote. 

The Ink Is Almost Dry on Italy’s 15% Flat Tax Rate - Italy’s populist duo has all but completed a governing plan that includes a flat tax as low as 15 percent, a guaranteed income for the poor and a lower retirement age as they prepare to seek a green light from the president on Monday. Luigi Di Maio, 31, of the anti-establishment Five Star Movement said he and Matteo Salvini, 45, of the anti-immigrant League have refined the last details of their “Contract for the Government of Change” in a late evening meeting in Milan on Sunday, news agency Ansa reported. Campaign pledges about the spending and tax plans have fueled investor concerns that a populist administration could jeopardize state finances and slow growth in the euro zone’s third-biggest economy -- which is already the most sluggish among countries that share the common currency. Plans to reconsider treaties with Europe also prompted worries that Italy could undermine efforts for EU reform. The parties’ economic program costs between 65 billion euros ($78 billion) and 100 billion euros, according to an estimate in newspaper Corriere della Sera on Monday, adding that the flat tax is the most expensive measure. The government plan will feature the full citizen’s income that Five Star pushed in the run up to elections and scrap an earlier pension reform that had raised the retirement age, Five Star lawmaker Laura Castelli told reporters after officials ended their policy session. 

Italian Bonds Tumble Amid Political Chaos, Debt Writedown Fears -  The Northern League and Five Star Movement (M5S), who have been struggling to form a government since the country's March elections, are on the cusp of reaching a deal that would open the door to a joint government, and that appears to finally be shocking Italian markets which are not happy this morning.Matteo Salvini, the head of the League, said negotiations were in the "final straight," and that an agreement would likely be reached Wednesday. A M5S representative offered similar assurances. A "government contract" will likely be released tomorrow, they said.And while representatives for both parties have since denied that it was ever part of their platform, reports that the new government had been planning to ask the European Central Bank to cancel 250 billion euros in Italian debt have rattled the country's sovereign bond market, pushing yields on the 10-year BTPs over 12 basis points higher, the biggest one-day move since July 2017.The long-overdue BTP selling, previewed by Goldman one week ago in "Italy's political risk increases, and yet the markets remain complacent", has sent the Italy-Germany 10Y spread to 147 bps, the widest since the March 4 elections.

Italy's populists deny they'll ask for debt forgiveness after clinching  power... The Italian right-wing Lega party denied reports that it's seeking a 250 billion euro ($ 296.16 billion) debt write-off if it becomes part of a power-sharing deal with the anti-establishment Five Star Movement (M5S).Lega and the left-wing M5S have been locked in negotiations for more than two months, trying to find a political deal that would allow them to jointly govern Italy. This comes after a stalemate at national elections back in March where no party gained enough votes to go it alone.According to the Huffington Post Italy, which cited a draft of their negotiations dated May 14, the two parties were seeking to ask theEuropean Central Bank (ECB) for a debt haircut of 250 billion euros. It also included a request for a mechanism that would allow member states to exit the euro zone. However, an economics spokesman for Lega denied Wednesday that the request was ever in the draft program.The report drove Italian borrowing costs higher earlier on Wednesday morning, meaning investors grew concerned about lending to the country's government. The yield on the 10-year paper hit a two-month high at 2.003 percent and the two-year bond yield also rose to 0.007 percent. Investors have been monitoring the political developments in Italy on concerns that a populist government will bring further fiscal slippage. Italy is the euro zone country with the second-highest level of public debt at about 130 percent of its GDP (gross domestic product). Following Lega's comment, the 10-year bond yield slipped from two-month highs. Speaking on Wednesday morning, Lega leader Matteo Salvini said that he is not intimidated by changes in bond yields. During a Facebook live session, Salvini said that there's been a lot of progress in talks with M5S, adding that the government program should be completed by the end of Wednesday and the new executive should be formed by Monday at the latest. The Italian banking index was down 3.7 percent by early afternoon in Europe and was on track for its worst day in five

Five Star Movement and Lega unveil coalition agreement to form right-wing Italian government - The far-right Lega (formerly the Northern League) and the protest Five Star Movement presented a 58-page coalition agreement in Rome on Thursday. It is the programme of a reactionary government with semi-fascist characteristics.The proposed coalition plans to impose the dictates of the financial markets and reduce state indebtedness in a country racked by poverty and unemployment. Both parties explicitly confirmed this in the coalition agreement. The agreement states, “The government’s actions will be based on a programme to reduce the debt burden.”To achieve this, tax rates on the wealthy are to be radically cut. A so-called “flat tax” at levels of 15 and 20 percent is planned. According to the theory of the agreement, the reduced burden on business will result in an increase in gross domestic product.Asked how reduced tax revenues will be offset, both Lega and the Five Star Movement have declared they will sharply reduce the expenditure for the “state bureaucracy.” In addition, they insist that special measures for the south, the “Mezzogiorno,” will be eliminated. This is necessary in the interest of “homogeneous economic development throughout the entire country.”This already gives a sense of the extent of the attacks on the working class contained within the coalition agreement. Tens of thousands of jobs in the public sector are threatened, as well as jobs in businesses in southern Italy previously subsidised by the state. At the same time, reduced tax revenues will lead to cuts in social spending. These attacks are barely concealed by the promise of a basic citizens’ income (“Reddito di cittadinanza”). In reality, the basic income is restricted to €780 (US$ 920) per month and tied to strict conditions, much like Germany’s Hartz IV welfare benefit. Anyone who fails to cooperate or refuses a job offer will be denied any state support. In addition, only people with Italian passports will receive the basic income.

French students blockade universities in struggle against selective admissions - After the March 22 protest of rail and public workers against the privatisation of railways, on the 50th anniversary of the initial youth protests that ultimately triggered the May-June 1968 general strike, students began a movement to occupy and blockade universities across France.The student movement is largely carried out in solidarity with the striking workers, and amid broad opposition to Middle East wars, and its immediate target is the ORE (Student Orientation and Success) reform, commonly known as the Vidal law. The law, named after Minister of Higher Education Frédérique Vidal, would transform the university admissions process in France.The Vidal law—which has already been legally declared on March 8—will require universities to take into greater consideration high school grades, the quality of the high school students have attended, and their academic activities and related training. In effect, this law will favour privileged layers who have greater access to higher-quality education, travel, and job and cultural opportunities than most working-class youth. It will put pressure on students as young as 14 to decide which career they will choose in order to start padding their CVs for university applications. Over the last two months, student occupations spread rapidly across France. On March 26 the Tolbiac campus in Paris was blockaded, on April 3 the campus of Saint-Denis (Paris VIII), Paris III and Paris IV (Clignancourt) on April 8, and the campus of Nanterre on April 17, following the intervention of militarized police the previous week on the campus. Blockades also emerged in major cities outside Paris: Limoges (start of April), Rennes (April 5), Toulouse (mid-March), Metz (April 11), Nantes (April 4), and Marseille (April 19).On occupied campuses, the students are demanding the withdrawal of the Vidal law and the resignation of the university president, if he or she sent in police to attack student blockades.

German Chancellor Merkel announces major rearmament program --Facing a deepening conflict with the United States, Berlin is massively upgrading its military capacity to enable Germany to use its armed forces to pursue its economic and geo-strategic interests around the world. Chancellor Angela Merkel and Defence Minister Ursula von der Leyen made this clear on Monday at the Bundeswehr (Armed Forces) conference in Berlin.The biennial gathering saw the civilian and military leaders of the Bundeswehr meet with representatives from politics and business to discuss the strategic direction of the army. For the first time in six years, the Chancellor took part in the discussion.Merkel used her opening speech to announce a massive rearmament programme and campaign for new and brutal wars. She justified this by referring to the growing conflicts between the US and the European powers. She described the unilateral termination of the Iran Agreement, the US exit from the Framework Convention on Climate Change and the “rise in protectionism” as the expression of a “crisis-ridden multilateralism.”It is therefore more important that Germany comply with its commitment to NATO and increase defence spending by 2024 to two percent of its gross domestic product, said Merkel. That would amount to an increase from the current total of 37 billion to between 70 and 75 billion euros, and would far exceed the increase of 5.5 billion euros previously set in the budget over the next four years. This is the biggest expansion of German military spending since the end of World War II. Merkel emphasized that “the fulfilment of the tasks—our international operations plus alliance and national defence—makes this value necessary.” For the Bundeswehr to function, it needs more equipment. “That’s just the truth,” said Merkel. In her speech, the defence minister also advocated a massive rearmament and declared that “operationally ready forces,” i.e. military power, was the “central instrument enabling us to act in foreign and security policy.”

A dozen Cabinet ministers set to block Theresa May’s ‘customs partnership’ plan - At least a dozen members of Theresa May’s Cabinet are lining up to block her plans for a new “customs partnership” with the European Union, The Telegraph can disclose.Two pro-Remain ministers say they were among a growing number of figures around the Cabinet table who opposed the proposals described by Boris Johnson, the Foreign Secretary, as “crazy”. The Telegraph has now established that 12 out of a total of 28 individuals who sit in Cabinet alongside Mrs May oppose her favoured plans for Britain’s post-Brexit customs relationship with the EU. However, government sources believe the total could be as high as 15.The disclosure, which is likely to unnerve the Prime Minister and Julian Smith, her Chief Whip, comes after Sajid Javid, the Home Secretary, and Gavin Williamson, the Defence Secretary, became the first Remain voters to switch sides to join Brexiteer opposition to the plans, in a meeting of the Cabinet’s Brexit sub-committee.The full Cabinet is significantly weighted in favour of those who supported the Remain campaign in the 2016 referendum, leading Mrs May’s allies to believe until now that she could obtain formal approval for the plans despite objections by six out of 11 members of her Brexit sub-committee.In other developments:

• The Telegraph can disclose that pro-Leave ministers, including three from outside the sub-committee, gathered for a dinner less than a fortnight ago at which they voiced objections to the customs partnership plan;
• A Whitehall source said fears that Mrs May’s plan would hamper Britain’s ability to strike trade deals with non-EU countries were already being played out, adding: “Several potential important partners have said, ‘why would we do this’?” Another source said US officials found the plan “laughable”;
• Mrs May also faced warnings from grassroots Tories over the proposals, with senior activists warning in a letter to The Telegraph that the party “will not be trusted for a generation” if she “fudges” Brexit;
• And amid a mounting campaign of opposition by Brexiteers in the Government and Parliament, Mrs May issued a declaration that she could be trusted to deliver a good deal.

Last week Mrs May ordered the two factions to find ways to solve the problems identified with each of the two customs plans by their critics, in an attempt to form a consensus.   Mrs May supported plans for a customs partnership, under which Britain would collect tariffs on behalf of the EU and companies would have to claim back rebates to benefit from any lower rates on goods that end up in this country. Senior Brexiteers backed a so-called “maximum facilitation” solution, which would combine “trusted trader” schemes with technology and exemptions for small businesses.

Brexit: Brussels set to push for six-month extension to UK’s transition period out of EU - The EU is to push for an optional six-month extension to theBrexit transition period to be built in to the UK’s withdrawal agreement, The Independent understands.European Commission officials will seek the extension to give the EU added flexibility, but it comes as key figures in the UK also look to extend the transition to give time to implement new customs arrangements.Next week a crunch meeting will see Theresa May’s top ministers try to agree what kind of customs relations to seek in negotiations, with both of her proposed options potentially needing more time than the current transition allows. The Independent has been told by two sources in Brussels that the EU wants the six-month extension to protect its own interests, as Brexit negotiations come to their most critical phase. One said: “Of course they are aware of the sensitivity around the issue in London, but it is about giving the commission more leeway if needed, at the end of the transition to get things in place.”A second official in Brussels said it would be normal for the commission to seek the added time, simply as a safety precaution given the uncertainty surrounding the British position.The commission is expected to try to put the optional six-month extension into the withdrawal agreement late on in the negotiations process, in order to maximise the chance of it being accepted. According to the current withdrawal agreement text, the transition period is set to last around 21 months from the end of March 2019 until December 2020 – to give time for both sides to get their houses in order before new legal and trade systems come into play.

Theresa May asks to “trust her” on delivering Brexit - In an article for the Sunday Times, Prime Minister Theresa May writes, “You can trust me to deliver [Brexit]… I will ensure that we take back control of our borders…our money…[and] our laws.” May explains that a post-Brexit customs arrangement with the EU has to fulfill three tests: “protect our precious Union and also honour the agreements that were reached in the historic Northern Irish peace process… create as little friction as possible for trade to protect jobs… and must not constrain [the UK’s] ability to negotiate trade agreements with other countries around the world by being bound into a customs union.” The Prime Minister concludes, “Of course, the details are incredibly complex, and as in any negotiation, there will have to be compromises…I will need your help and support to get there. And in return, my pledge to you is simple: I will not let you down.” Elsewhere, government sources told the Guardian that the customs arrangements divisions in the Brexit “war Cabinet” sub-committee could take another week or more to resolve. Meanwhile, speaking about the two working groups studying the two customs proposals, the Prime Minister’s spokesman said on Friday, “The groups reflect the issues that have been raised in relation to the two models. The groups are working through these issues of priority and need to come up with the right solution,” adding, “We are not setting any further deadlines for ourselves apart from October.” This comes as the Cabinet working groups will meet today to discuss the proposals. Separately, Shadow Brexit Secretary Sir Keir Starmer yesterday warned, “This is a government in paralysis. We need a new approach and fast. First, the prime minister should abandon her two flawed customs options and accept that it is in our economic and national interest to be in a customs union with the EU… Next, the prime minister needs to give parliament the chance to vote on a substantive motion on a customs union,” adding, “Now is the time for the prime minister finally to face down the fantasy Brexiteers in her party and her cabinet.”

Corbyn Backs Hard Brexit -- Yves Smith -  UK based readers who know the ins and outs of party infighting no doubt will have plenty more to offer, but the short version of the story is that Labour leader Jeremy Corbyn is now officially backing a hard Brexit. During the Brexit referendum, Corbyn was a not-terribly-enthusiastic Remain supporter. In the tumultuous fight in Lords over the nowhere-near-as-important-as-everyone-made-out fight over whether the UK should try to stay in a customs union with the EU, Corbyn instructed Labour Lords to abstain. About 80 defied him and voted for a customs union. Yesterday, Corbyn rejected the so-called Norway or EEA option, which is tantamount to supportig a hard Brexit. From the Guardian: Jeremy Corbyn has told Labour MPs that a Norway-style option cannot be considered by the party, but faces a party split after rebel Lords passed an amendment to the EU withdrawal bill which would keep membership of the European Economic Area (EEA) as an option.Speaking at a private meeting of MPs in parliament, Corbyn told them there were significant issues with the Norway-option, which could leave Britain as “rule taker” without influence at EU level. He emphasised the need to unite both leave and remain supporters, according to a senior Labour source. EEA membership, often described as the Norway option gives countries full access to the EU’s internal market, allowing it to trade goods with EU states without customs fees, except food and drinks which are subsidised by the EU. Iceland and Liechtenstein are also members of the EEA, but the terms mean accepting freedom of movement and, as a non-EU state, the UK would have to accept EU regulations with no seat at the table in Brussels. Richard North has roundly dismissed the idea that the UK would be a mere “rule taker” in the EEA Sadly, not only do we get this low drone of ignorance, it embellished by the the same tedious mantra, that the UK “also would have to fully implement EU laws and regulations – while losing any say in drafting or vetoing them” – again an egregious untruth.  It is also important to yet again note, that the “hard” versus “soft” Brexit debate of recent weeks is completely unhinged from a policy standpoint. So I worry about reinforcing confused political and press discussions.

Theresa May’s Brexit customs plans could be illegal  — Theresa May has been privately warned by her own Brexit Secretary that her plans for new customs relations with the European Union after Brexit may be illegal. David Davis has reportedly written to the prime minister warning that her plans for a "customs partnership" with the EU, in which Britain would collect EU customs union tariffs and track goods on Brussels' behalf, could be blocked under international trade law, forcing the UK to remain in the EU customs union. Under the prime minister's plans, goods destined for the EU would be tracked once they arrive in the UK to establish whether they are eligible for rebates from EU-wide tariffs. However, Davis is concerned that the UK would be hit by World Trade Organisation anti-discrimination laws which state that "imported and locally produced goods should be treated equally after the foreign goods have entered the market." He is supported by other Brexit-supporting members of May's Cabinet, who have warned her that her plans may be struck down in international courts. "In that scenario, you'd end up staying in the customs union because you'd have no other choice," one senior government source told the Times. Senior government figures also believe that the alternative "maximum facilitation" proposal being backed by Davis may also run into legal problems. As a result, May's government is urgently examining the legality of both proposals. "There are potential legal problems with both plans as they stand," a senior government source told the Times. "The attorney-general has been asked to provide an assessment that will then be fed into the cabinet discussions. The so-called "max-fac" option would require some form of new border checks with the EU, which its backers insist would be made as "frictionless as possible" through the use of as yet undefined technologies.

Scottish parliament decisively rejects EU withdrawal bill - The Scottish parliament has voted against Theresa May’s Brexit legislation by a large margin, putting the UK on the brink of a major constitutional dispute. Holyrood rejected the UK government’s EU withdrawal bill by 93 votes to 30 on Tuesday after Labour, the Liberal Democrats and Scottish Greens backed Nicola Sturgeon’s decision to oppose proposals on post-Brexit power sharing set out in clause 11 of the bill. The vote is not legally binding but it will force the prime minister to make a high-risk decision to impose those power-sharing plans on Scotland or make further concessions to the Scottish government to avoid a crisis. Imposing powers on Scotland would be unprecedented and fuel Sturgeon’s demands for a second independence referendum, potentially providing the Scottish National party with a further justification for staging one. The two governments have been at loggerheads for months over how to manage 24 EU powers that will return to the UK after Brexit, including over state aid for industry, genetically modified crops policy, fishing quotas and farm subsidies, after ministers in London made a series of concessions brokered by the Scottish Conservatives. Both governments agree those policies should operate uniformly across the UK, shared between the four governments in London, Edinburgh, Cardiff and Belfast. The UK says it will consult the Scottish government on all changes to those policies, and try to seek agreement. Sturgeon, the first minister and SNP leader, has decided that consultation is not enough, and insists that her government or Holyrood should be given the legal power to block any changes they disagree with. UK ministers have rejected this stance as an unacceptable veto. 

Yet More Brexit Idiocy: Cabinet Thinks Begging to Stay in Customs Union Will Solve Irish Border Problem -  Yves Smith  --I should have anticipated the latest Brexit move by the ever-more-desperate Government, but it still boggles the mind.Per the Torygraph, the Cabinet has now latched onto the idea of staying in the customs union beyond the transition period will buy the UK the time it needs to set up a techno-fantastical seamless solution on the land border between the Republic of Ireland and Northern Ireland by, say 2023.One of the things we’ve been saying for a while, and poor Richard North has been saying on virtually a daily basis for weeks, is the pols and pundits fixation on a “customs union” as a Brexit magic sparkle pony is utterly misguided. Repeat after us: a customs union is only about tariffs. It has absolutely nothing to do with the other elements of being inside an “internal market,” such as needing to verify if goods meet safety standards or other requirements. So being inside a customs union by itself does zero to alleviate the need for a hard border. On top of that, this idea, even if it did solve the expressed problem, is an administrative nightmare. Customs is already behind in getting a systems upgrade done by January of next year. As of Brexit, it will need to handle a huge number of additional goods it did not have to process before. Even a transition period will not fully solve this problem because the UK will become a “third country” with respect to all sorts of countries where the UK’s former trade relations were via EU treaties. The EU can extend its arrangements with the UK, but it can’t with respect to the UK’s dealings with, say, South Korea. And no, the UK can’t just act as if the EU treaty is in force, since most deals had quotas for certain products and the numbers won’t transition over to a wink and nod bilateral fudge. Anyone who wants to take advantage of the UK’s weak position probably will. And expecting the customs system to make all sorts of yet to be specified changes by Brexit day….and then change again when the customs union interim deal is over? Good luck with that. Let us turn the mike over to Richard North, who shellack the customs union insanity du jour longer form in today’s post, Brexit: not even at the starting gate:

Lords inflict 15th defeat on government over EU withdrawal bill - Peers have inflicted a 15th defeat on the government’s key Brexit bill, underlining the acute political challenge Theresa May faces in seeking a deal that both parliament and her warring ministers can live with. The latest amendment, aimed at bolstering environmental protection after Brexit, was carried by 294 to 244 votes on Wednesday. Peers argued that enforcement measures proposed in a consultation document published last week were inadequate and that the environment had been subordinated to housing and economic growth. With her cabinet still deadlocked over customs arrangements, the prime minister must now decide when to bring the legislation back to the House of Commons and seek to undo the changes made by peers. Martin Callanan, the Conservative leader in the Lords, said: “During the bill’s journey through the House of Lords, some changes have been made that conflict with its purpose or are designed to frustrate the entire exit process, and so we are considering the implications of those decisions.” The backbench pro-Brexit European Research Group, chaired by Jacob Rees-Mogg, wants to see the votes brought forward as soon as possible to scotch the idea that there is a majority against hard Brexit among MPs. They point to a pair of recent Commons victories, over the release of Windrush documents and a second Leveson-style inquiry, as evidence that the government’s majority is more secure than moderate backbenchers claim. But some of the Lords amendments, including those on a customs union and on the meaningful vote, received significant Conservative support on the Lords, which could strengthen the convictions of waverers in the Commons. 

PM set to nominate 10 Tory peers in attempt to overcome Brexit defeats - Theresa May is expected to approve the creation of about 10 Conservative peers and at least one for the Democratic Unionist party, perhaps as early as Friday, in an attempt to improve her position in the House of Lords, which has voted 15 times against her government over Brexit.  The elevations were immediately criticised by the high-profile remain Labour peer Lord Adonis as a desperate attempt by the prime minister to enlist people to help her against in the unelected upper house. Tories tipped for elevation include former ministers Sir Eric Pickles and Peter Lilley. Adonis said: “This is a classic example of packing the Lords to try and make Brexit easier to endorse.” May’s spokeswoman gave no comment on the speculation, saying: “Any announcements of that nature will be made in the usual way.” A report last year recommended the Lords should be reduced in size by a quarter, which is backed by May, though this does not preclude the creation of new peers. May’s spokeswoman said: “She has been clear that there should be restraint on new appointments, combined with an increased cross-party takeup of retirements.”

‘It looks like a shameless bribe’: Almost three-quarters of grammar schools to benefit from Theresa May’s £50million handout are in Tory seats -Theresa May’s £50million fund for grammar schools has been branded a “shameless bribe” - as nearly three-quarters of them are in Tory seats. Mirror analysis shows 117 of the 163 selective schools in England (72%) are in Conservative-held constituencies. Almost half, 77, are in safe Tory seats with a majority of more than 10,000. Of the others, 41 are in Labour seats, four in Lib Dem seats and one in the seat of Speaker John Bercow. Shadow Education secretary Angela Rayner said: “This announcement looks like a desperate attempt to buy off Tory MPs with a shameless bribe for a handful of schools in their seats - while the vast majority are left facing relentless cuts. “Unable to meet their own election pledge of new grammars, they’ve resorted to a back door bung instead.” The government announced on Friday that it will offer good and outstanding-rated grammars the chance to apply to a £50million expansion fund. But because Mrs May was forced to ditch a vow to build new grammars, only the 163 existing ones - mostly in Tory areas - can benefit. Meanwhile 500 headteachers have warned cuts will force them to lay off staff, cut subjects and end after-school activities.