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Trump Lashes Out At John Kerry’s “Possibly Illegal Shadow Diplomacy” With Iran

Following reports over the weekend that Obama’s Secretary of State, John Kerry and a group of his former State Department officials, had been busy being unofficial diplomats in recent weeks, sneaking around the world trying to salvage the Iran nuclear deal he presided over, ahead of its May 12 renewal deadline, it appears President Trump has a few things to say about these actions.

As we previously noted,

John Kerry’s bid to save one of his most significant accomplishments as secretary of state took him to New York on a Sunday afternoon two weeks ago, where, more than a year after he left office, he engaged in some unusual shadow diplomacy with a top-ranking Iranian official.

He sat down at the United Nations with Foreign Minister Javad Zarif to discuss ways of preserving the pact limiting Iran’s nuclear weapons program. It was the second time in about two months that the two had met to strategize over salvaging a deal they spent years negotiating during the Obama administration, according to a person briefed on the meetings. –Boston Globe

Kerry has also met with leaders from Europe, including German President Frank-Walter Steinmeier, EU official Federica Mogherini and French President Emmanuel Macron in both Paris and New York, where they discussed sanctions and regional nuclear threats in both French and English. 

This type of “rogue” diplomacy is very rare for a former Secretary of State.

As The Globe notes, the effort to salvage the Iran deal “highlight the stakes for Kerry personally, as well as for other Obama-era diplomats who are dismayed by what they see as Trump’s disruptive approach to diplomacy, and who view the Iran nuclear deal as a factor for stability in the Middle East and for global nuclear nonproliferation.”

“It is unusual for a former secretary of state to engage in foreign policy like this, as an actual diplomat and quasi-negotiator,” said foreign policy expert Michael O’Hanlon of the Brookings Institution.

“Of course, former secretaries of state often remain quite engaged with foreign leaders, as they should, but it’s rarely so issue-specific, especially when they have just left office.”

Which leads us to President Trump’s twitter exclamation that

“The United States does not need John Kerry’s possibly illegal Shadow Diplomacy on the very badly negotiated Iran Deal.”

And Trump explains why – very simply…

“He was the one that created this MESS in the first place!”

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Arctic About-Face: Oil-Opposing Alaska Natives Now Lead Charge To ‘Drill, Baby, Drill’

Authored by Tim Bradner via Platts’ Oil Barrel blog,

For years indigenous people living in small villages along Alaska’s Arctic coast fiercely fought offshore drilling. Now they want a piece of the action.

When Shell first showed up in 2007 with a fleet of drillships and support vessels, and parked them in the migration path of the bowhead whale in the eastern Alaska Beaufort Sea, the Inupiats went to court. An injunction from the US Ninth Circuit stopped the company and started a chain of problems that would ultimately defeat Shell’s multibillion dollar Arctic initiative.

Fast-forward to 2018. The Inupiats have now taken over Shell’s offshore Beaufort Sea leases, where there were also earlier oil discoveries, and intend to develop them, most likely by partnering with larger firms.

In a decade, indigenous people in northern Alaska have come full circle, from hostility to cautious embrace of offshore drilling.

Arctic Slope Regional Corporation, owned by all Inupiats of the North Slope, is playing its cards close on its plans for 20 former Shell OCS leases off Camden Bay, in the Eastern Beaufort.

The US Bureau of Safety and Environmental Enforcement approved the transfer of Shell’s leases to ASRC April 13.

The area is highly prospective and includes Union Oil’s small “Hammerhead” oil discovery made in 1986 and two Shell prospects, Sivulliq and Torpedo, outlined in 2012. A well was partly drilled by Shell at Sivulliq but not completed.

A PIECE OF THE ACTION

It helps to have an economic stake.

Over several years Alaska Native-owned development corporations – ASRC isn’t alone – have gradually become dominant players in industry support and service work on the North Slope.

Doyon, Ltd., owned by Athabascans of Interior Alaska, owns Doyon Drilling, the largest Alaska drilling contractor on the North Slope.

Bristol Bay Native Corp. and Calista Corp., of southwest Alaska have stakes in oil field services and drilling. Even tiny Nuiqsut, an Inupiat village of 300 near the Alpine oil field west of Prudhoe Bay, owns a drilling company.

Nuiqut’s Kuukpik Drilling is working this year for ConocoPhillips and also works in Cook Inlet, in south Alaska.

ASRC began working in oil field construction on the slope and expanded over several years into a variety of technical service fields.

It’s all about owning the resource The big money is in owning the resource, however.

It is here that Arctic Slope has played its cards shrewdly. Alaska’s Native corporations were formed in 1971 when the US Congress resolved long-standing land claims that had become an impediment to securing rights-of-way for construction of the Trans Alaska Pipeline System.

Congress transferred 45 million acres of Alaska to Native ownership and paid a cash settlement of $962 million to twelve regional Native development corporations that were also formed.

It seemed logical for the new Native corporations to invest in businesses and services to the fast-growing Alaska oil industry, and it turned out to be a successful strategy.

The initial moves into catering, facilities management and services in the 1970s evolved into drilling and construction.

ASRC pursued a similar path in oil field services but also had different cards to play.

As a landowner on the North Slope, ASRC held part of the mineral rights in the Alpine field and began splitting royalties with the state of Alaska when that field began production in 2000.

ASRC is now a working interest owner in the small Badami field east of Prudhoe Bay, which is producing, and it has a working interest in Liberty, a small deposit in shallow offshore waters near Prudhoe.

The corporation also acquired its own onshore state leases in lease sales and has done exploration drilling on the acreage.

ANWR OWNERSHIP IS KEY

Its biggest coup, however, was in securing mineral rights in a 92,000-acre inholding in the Arctic National Wildlife Refuge’s coastal plain, which is prime real estate after Congress approved exploration in ANWR in the 2017 tax act.

ASRC made its move in the 1980s, years before the national spotlight focused on ANWR.

The inholding was held by Kaktovik Inupiat Corp., the Native village corporation for Kaktovik.

ASRC was able to swap land it owned in areas where the US wanted to preserve parkland for mineral rights under some vilage-owned land in ANWR.

The Native corporation went on to do a deal with Chevron and BP to drill an exploration well, KIC No.1. Because no development of the Native-owned land could occur until Congress voted to open the entire coastal plain, the results of that well were held confidential, and have been for decades.

Chevron and BP still hold rights under the deal, but the terms are also confidential.

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Why the Trump Administration Keeps Losing in Court on Sanctuary Cities

In January 2017, President Donald Trump issued an executive order granting the attorney general of the United States broad discretion “to ensure” that “sanctuary jurisdictions…are not eligible to receive federal grants.” Six months later, Attorney General Jeff Sessions wielded that power by declaring the Byrne Memorial Justice Assistance Grant Program, which provides a wealth of federal dollars to local law enforcement agencies, to be off-limits to any jurisdiction that refuses to “comply with federal law, allow federal immigration access to detention facilities, and provide 48 hours notice before they release an illegal alien wanted by federal authorities.”

It was an aggressive move. Unfortunately for the Trump administration, it also happened to be an unconstitutional one. The executive branch, of which the attorney general is a part, has no lawful authority to unilaterally impose such conditions on federal spending. The federal spending power rests in Article I of the Constitution, which is the section that lays out the enumerated powers of Congress. The enumerated powers of the executive are spelled out separately in Article II. Sessions’ maneuver, in other words, usurped congressional authority and thus violated the separation of powers. Trump can issue all of the executive orders he wants, but he cannot alter this basic fact about the American constitutional system.

In a ruling issued last month, the U.S. Court of Appeals for the 7th Circuit recognized the Trump administration’s malfeasance for what it is. “The Attorney General in this case used the sword of federal funding to conscript state and local authorities to aid in federal civil immigration enforcement,” the 7th Circuit observed in Chicago v. Sessions. “But the power of the purse rests with Congress, which authorized the federal funds at issue and did not impose any immigration enforcement conditions on the receipt of such funds. In fact,” the court pointed out, “Congress repeatedly refused to approve of measures that would tie funding to state and local immigration policies.” To allow the Trump administration to act in this manner, the 7th Circuit concluded, would be to remove a “check against tyranny.”

This was not the first time that the Trump administration’s attack on sanctuary cities has received a well-deserved judicial rebuke. In November 2017, the U.S. District Court for the Northern District of California found Trump’s executive order to be in violation of both the separation of powers (because it sought to expropriate congressional spending authority) and the 10th Amendment (because it tried to force local police into administering a federal regulatory program).

Make no mistake, these cases are about much more than just immigration policy. The Trump administration seeks to impose its will on this issue by aggrandizing the executive, trashing federalism, and subverting the separation of powers. Such unconstitutional tactics should always lose in court.

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Trump Defends Gina Haspel As “Most Qualified Person” To Lead The CIA

President Trump is stepping up to defend Gina Haspel, his nominee to lead the CIA following Secretary of State Mike Pompeo’s exit, after reports surfaced that she offered to withdraw her nomination during a meeting at the White House over the weekend.

Blaming Democrats for obstructing Haspel’s nomination because she was “too tough on terrorists”, Trump insisted that his pick is the “most qualified person, a woman, who Democrats want OUT because she is too tough on terror” before ending his tweet with “Win Gina!”

Questions about Haspel’s suitability for the role have centered around the harsh interrogation techniques, which many have likened to torture, despite their continued defense by neocons like National Security Advisor John Bolton. Haspel – who is widely believed to be the inspiration behind one of the main characters from “Zero Dark Thirty” – ran a black site in Thailand that used waterboarding and other controversial techniques on detainees who’d been captured in the CIA’s rendition program.

Haspel

Gina Haspel, chatting with Trump son-in-law Jared Kushner

Haspel is facing a difficult confirmation hearing on Wednesday. Despite her 33 years of service, Democratic lawmakers are expected to zero in on her service during the war on terror, which they say should disqualify her from the top job at the agency. Haspel has said she would oppose reintroducing the techniques used in these programs. Furthermore, Haspel has also been accused of destroying evidence of the near fatal waterboarding of terror suspect and Guantanamo detainee Abu Zubaydah.

The Hill reported last week that the Trump administration had drafted a 27-page memo of “talking points” meant to bolster the standing on Gina Haspel during her nomination hearing.

Supporters of Haspel have been pressed to vouch that “she is an ‘intelligence and national security expert’ who follows the law as written, and has demonstrated strong and clear leadership in very challenging positions.”

In a recent reality check, Truth in Media’s Ben Swann looked at the allegations that are being scrutinized by Democrats, including Haspel’s supervision of “Cat’s Eye,” the CIA black-site program.

Of course, if Haspel does withdraw, it’d be a terrible embarrassment to the Trump administration, which also saw another of its nominees, former White House doctor Ronny Jackson, withdraw his nomination to lead the Department of Veteran’s Affairs.

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Court Rejects Mueller’s Request to Delay Russian Troll Farm Case While Giuliani Suggests Mueller Is Trying to Set Up Trump for Perjury: Reason Roundup

Playing catch-up on Russian trolls, porn-star payouts, and presidential liability. Possible payouts to President Donald Trump’s ex-lovers, potential Russian propaganda on Facebook, and leftover 2016 election drama were mingling in full force this past weekend.

On Saturday, a federal court rebuffed special counsel Robert Mueller’s request to further delay a court hearing in the alleged Russian “troll farm” case. This is the one where the Internet Research Agency, Concord Management, and Concord Catering—along with 13 of their (Russian citizen) employees—were charged for spreading so-called “fake news” during the 2016 U.S. elections. A scheduled Wednesday arraignment of Concord must go forward, ruled U.S. District Court Judge Dabney Friedrich.

None of the indicted firms or citizens were expected to play along with the U.S. legal proceedings, but lawyers for Concord Management unexpectedly came forward in April. Politico says “the move appeared to be a bid to force Mueller’s team to turn over relevant evidence to the Russian firm and perhaps even to bait prosecutors into an embarrassing dismissal in order to avoid disclosing sensitive information.” So far, Concord’s lawyers have asked for “a slew of discovery requests demanding nonpublic details” about Mueller’s special investigation.

On Sunday, pro- and anti-Trump forces took to the cable news circuit for their regularly scheduled proxy battle. On ABC’s This Week, lawyer Michael Avenatti—who is representing Stormy Daniels in her case against Trump and his personal lawyer, Michael Cohen—told host George Stephanopoulos that other women had been approaching him with tales of Trump payoffs.

Women have come forward and contacted our office, George, as I’ve stated in the past. And we haven’t completed vetting those stories, but I think at the end of the day there’s going to be evidence of such payments.

Meanwhile, Rudy Giuliani—the latest sap to play legal adviser to President Trump—told This Week that it was still possible Trump would take the Fifth in the Russia investigation. “We don’t have to testify” if subpoenaed, Giuliani said. Trump is “the president of the United States,” and “we can assert the same privileges other presidents have.”

Later Sunday, Giuliani suggested that the only reason Mueller wanted Trump to testify was to set up the president for perjury, a la investigators’ tack with Martha Stewart. And showing off that anti-elitist flair for which folks so admire the Trump administration, Giuliani also mocked the idea that Americans were getting so worked up over a mere $130,000, which is “not a lot of money.”

“I never thought $130,000 was a real payment,” said Giuliani. “It’s a nuisance payment.” If Daniels had “a meritorious claim,” he suggested, she wouldn’t have settled for such a small amount of money.

FREE MINDS

Airbnb is running up against local laws that may be prohibited under Section 230 of the Communications Decency Act—and now it’s fighting back. Along with the similar home- and room-rental site Homeaway, Airbnb has sued the cities of San Francisco and Santa Monica over ordinances that target not just residents who use these digital platforms to illegally rent out space in their homes but also the platforms themselves. “Unfortunately both efforts to enjoin them have resulted in federal district court decisions saying that Section 230 does not shield them from their reach, meaning that these local jurisdictions are fully able to hold these platforms liable if people use them to rent homes they aren’t supposed to,” explains Cathy Gellis at Techdirt.

The Santa Monica case is now before the Ninth Circuit Court of Appeals.

Gellis, who works for the Copia Institute, wrote a brief backing Homeaway and Airbnb’s position that Section 230 prevents Santa Monica from holding them liable if some locals go against city laws and use these platforms to rent out their homes. “It was important to say so, not just to support Airbnb and Homeaway,” writes Gellis, “but because if Section 230 can’t apply to them, then it won’t be able to apply to a lot of other platforms that depend on it.” She continued:

The crux of the problem appears to stem from courts not seeing how what is at stake in these cases is actually speech, perhaps because the kind of speech sites like Airbnb and Homeaway intermediate is so specific. But even if the only expression these platforms intermediates is, “I have a home to rent,” it’s still speech, speech created by someone other than the platform, and Section 230 therefore still applies.

FREE MARKETS

Calorie counts coming today. Starting today, chain restaurants across the U.S. are required to post calorie information on their menus and menu boards. Other nutritional information, such as fat and salt content, must be made available if customers want it.

The requirements were part of the Affordable Care Act, passed under Barack Obama. There was speculation that the Trump administration may try to block the calorie labeling rule, but that hasn’t happened.

The law applies to food-serving establishments that have 20 or more locations. Fancy restaurants and fast-food chains alike are obviously implicated, but so are convenience stores, bodegas, movie theaters, vending machines, and even food delivery services.

QUICK HITS

  • Family members of four people killed in a March drone strike in Yemen are protesting the U.S. Department of Defense’s assertion that their relatives were al Qaeda terrorists, insisting that they were innocent civilians erroneously targeted by the Pentagon.
  • A former Kentucky judge who worked on Trump’s campaign in Kentucky has been sentenced to 20 years in prison for child sex trafficking.
  • Reanimated pig brains are now a thing.
  • The “number of hate crimes in Chicago dropped 16 percent in 2017 from the year before,” according to new data.
  • “Arguments about who should, and shouldn’t, be given a platform are hardly new.”
  • Extreme anti-abortion activism is on the rise in America. While 2017 saw a decrease in vandalism against abortion clinics, it saw a significant increase in incidents of trespassing (from 247 in 2016 to 823 last year), obstruction, and threats involving clinic protesters.
  • NXIVM leader Keith Raniere pleaded not guilty to federal sex trafficking charges on Friday. Raniere’s lawyer said everything Raniere’s sex “slaves” did was consensual. “There are well-known groups of men who brand themselves,” his attorney, Marc Agnifilo, told the court. “A group of women do that and suddenly they’re victims.”
  • “The Trump administration’s crusade against illegal immigration tends to grab the headlines, but it obscures the equally concerted attack on the legal variety,” laments the Washington Post editorial board.
  • Here is the latest barely coherent morning Twitter rant from our glorious leader:

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Gartman: “We Covered The Short Position We Had As Quickly As We Could”

On Friday, with traders scratching their heads to explain why the Dow Jones surged as much as 400 points after a poor payrolls report, where both jobs and hourly earnings missed, the answer was once again to be found in what Dennis Gartman had said earlier in the session, which was the following: “the only thing we did yesterday was to sell a bit of the US market short late in the session… a very, very little bit… via the derivatives market”

Everyone know what happened next.

So what is the world’s most consummate momentum chaser doing this morning? If you said he covered his short and is once again bullish, take a bow. From Gartman’s latest note:

In Friday’s “letter” we had the charts of the Nikkei and the S&P with trend lines drawn on both indicating that the former’s trend since late March was up while the latter trend over the same period was down. This morning we have the chart of the Euro STOXX 50 and the S&P and the trend of the former since late March is also “from the lower left to the upper right” while the chart of the latter is “from the upper left to the lower right” definitively.

Regarding our retirement fund, we made some modest changes on Friday following the release of the Employment  Situation Report. We moved to cover the very small short position we had via derivatives as quickly as we could, and we added to our short bond market position… not materially but just in the consistent manner of “doing more of that which has been working and less of that which has not.”

What is amusing is that Gartman is pretending he was not stopped out on his 10Y short, which as we showed on Friday, dropped clearly below 2.92% , his stop loss point.

Today, he repeated his reco:

Short of One Unit of the US Ten Year Note future: The bond market has rallied ever-so-slightly the past several days, going from being aggressively over-sold to neutrality and in protracted bear markets neutrality is all one can  ask. Wednesday, May 2nd…remembering that the bond market is now two years into a bear market and that the supposed line-in-the-sand at 3% will prove ephemeral as the ten year trades to 4% and perhaps 5% over the course of the next two or three years… we were sellers of the ten year note future, willingly risking the yield to drop to 2.92 from 2.98, and stating further that when the yield moves upward through 3.02 again we shall add to short positions. As we wrote, the ten-year note future was trading 119 11/32nds. It is 119 11/32nds presently so we are breaking perfectly even at the moment. For those who cannot trade futures, the Short Bond ETF… TBT… opened on the NYSE on Wednesday at $38.00 and closed Friday at $37.80.

Which, of course, is good news for bond bulls.

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Key Events This Week: CPI, BOE, Fed Speakers

While economic data reporting enters a brief lull in the post-payrolls week, which coupled with the trailing end in Q1 earnings season… 

… means things should slow down substantially if only for a few days, there are still market-moving catalysts this week, and none more important than this week’s US CPI print, among other data including PPI, import & export prices U. Michigan sentiment and a murder of central bank speakers.

Coming off the back of a Fed meeting where the most interesting statement changes were those acknowledging the pickup in inflation, Deutsche Bank notes that it’s hard to look past next week’s US CPI report as being the main focus for markets. Away from the US, the Bank of England policy meeting – where analysts are torn whether Mark Carney will/won’t hike rates – will also be a closely watched event, while there is plenty of Fedspeak front loaded into the week including Fed Chair Powell.

On the tail end of the week, the Iran nuclear accord deal deadline also looms for President Trump while NAFTA talks also resume.

Elsewhere:

  • In the Eurozone, a quiet week with factory orders and industrial production for Germany.
  • In the UK, beyond the BoE rates meeting, we have the inflation report, trade balance, industrial & manufacturing production and construction output.
  • In Japan, we have current account balance, money supply M2 & M3 and the BoJ meeting minutes.
  • In Canada, we have housing starts, building permits, labor market report and central bank speakers.
  • In China, we get foreign reserves, trade balance, PPI, CPI, money supply, new yuan loans and aggregate financing.
  • In Australia, we have business confidence, retail sales and investment lending.
  • In New Zealand, we have the RBNZ rates meeting, finance minister pre-budget speech and PMI Manufacturing.

Also, there are monetary policy meetings in Malaysia, Romania, Peru and The Philippines. Sovereign rating review in Egypt and Oman. CPI data will be released in China and Mexico.

A full visual summary of the week’s key events:

Some more details on the week’s key events, courtesy of DB’s Craig Nicol, who notes that with regards to the US CPI report on Thursday, the current market consensus for the April data is a +0.3% mom headline reading – which would push the annual rate up to +2.5% yoy from +2.4% – and a +0.2% mom core print which would also push the annual rate up one-tenth to +2.2% and the highest since February last year.

Also notable, the market consensus for the monthly core reading is the 31st consecutive month that the consensus has been +0.2% which is a remarkable statistic: “You have to go back to September 2015 to find the last time it wasn’t +0.2%. It’s worth noting that of the 30 previous monthly estimates, only 17 have matched the consensus while just 6 out of the last 15 have done so.”

The other big event next week comes on the same day with the Bank of England MPC meeting. This meeting perhaps takes on a little more focus given the big changes in market pricing for the event, with the probability of a hike falling from as high as 80% to less than 10% now following Carney’s dovish comments and some soft in the UK of late. Indeed the market consensus is for no policy change next week however Deutsche Bank believes that the BoE will still hike due to concerns about tight supply and domestically generated inflation. However they note that this is a low conviction view particularly since the weak Q1 growth reading and slowdown in underlying wages. Indeed they remain of the view that tightening would be a policy mistake and a May hike will be the last one this year, with a hiking cycle only resuming when growth improves in 2019 and Brexit risks diminish.

In addition to the CPI, the US we’ll also get some more inflation data with the April PPI report on Wednesday where current market expectations is for a +0.2% mom headline reading and +0.3% mom core reading. Also worth highlighting next week in the US is the April monthly budget statement on Thursday and preliminary May University of Michigan consumer sentiment print on Friday.

With the FOMC meeting now out of the way the Fedspeak diary picks up again next week and it’s likely to be closely watched for clues of how the Fed views some of the recent data, given the statement changes in the FOMC statement. On Monday we have Fed Governor Quarles (neutral/voter) speaking overnight followed by Atlanta Fed President Bostic (neutral/voter) in the afternoon, and then new Richmond Fed President Barkin (unknown/voter),  Dallas Fed President Kaplan (neutral/non-voter) and Chicago Fed President Evans (dove/ non-voter) in the evening. Fed Chair Powell (neutral/voter) will then speak on Tuesday at a SNB/IMF conference on the topic of monetary policy influences on global financial conditions and international capital flows (Q&A is also expected). Then on Wednesday evening Bostic is due to speak again. Over at the ECB we’re also due to hear from Chief Economist Praet on Monday and Governing Council member Liikanen on Tuesday, before ECB President Draghi speaks on Friday in Florence at the ADEMU conference.

Finally, other potentially market sensitive events next week worth flagging include the resumption of NAFTA talks in Washington on Monday, however big questions marks remain about whether or not a consensus will be formed, EU27 envoys gathering in Brussels on Tuesday for Brexit state of play talks, Japan PM Abe meeting with South Korea President Moon Jae-in and Chinese Premier Li Keqiang on Wednesday and the 12th May deadline for President Trump to decide on whether or not to stick with the Iran nuclear accord.

A breakdown of key events by day:

  • Monday: With it being a Bank Holiday in the UK, and markets subsequently closed, it’s likely to be a quiet start to the week with the only data due in Europe being March factory orders in Germany and the May Sentix investor confidence reading for the Eurozone. In the US, March consumer credit is due while in Asia we’ll get the latest BoJ meeting minutes along with April foreign reserves data in China. The Fedspeak diary is fairly packed on Monday with Quarles speaking overnight, followed by Bostic, Barkin, Kaplan and Evans during the day. The ECB’s Praet is also scheduled to speak while NAFTA talks will resume in Washington.
  • Tuesday: The early focus on Tuesday will be in Germany with March trade data due along with the March industrial production print. In the UK the April Halifax house price index is due while in the US the NFIB small business optimism reading for April is due along with March JOLTS data. In China the April trade data stats are also due at some stage. Away from the data Fed Chair Powell is due to speak in the morning in Zurich at a SNB/IMF event while the ECB’s Liikanen is due to speak in the afternoon. EU27 envoys are also due to gather in Brussels to discuss the state of play in Brexit talks.
  • Wednesday: The main focus on an otherwise quite day next Wednesday is likely to be the April PPI report in the US. March wholesale trade sales and inventories data will also be released while in Europe the only data of note is the March industrial production print in France. The Fed’s Bostic is also due to speak again, later in the evening. It’s worth noting that Japan PM Abe is also due to host South Korean President Moon Jae-in and Chinese Premier Li Keqiang.
  • Thursday: A busy day, highlighted by the April CPI report in the US in the afternoon. Prior to that we have the BoE meeting (which includes a Carney press conference and the latest inflation report) while in the morning in China the latest April CPI and PPI prints are due. Other data worth watching on Thursday is the March trade balance in Japan and UK, March industrial production in the UK and weekly initial jobless claims and April monthly budget statement in the US.
  • Friday: It’s a quiet end to the week on Friday with the only significant data coming from the US with the April import price index and preliminary May University of Michigan consumer sentiment report. ECB President Draghi is also due to address an audience at the ADEMU conference in Florence.

* * *

Finally, a detailed look at events in just the US, courtesy of Goldman, which also lists consensus estimated:

Monday, May 7

  • 08:25 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will give welcoming remarks at the Atlanta Fed’s annual Financial Markets Conference in Amelia Island, Florida.
  • 02:00 PM Senior Loan Officer Survey, 2018Q2: The Fed will release results and a memo from its quarterly Senior Loan Officer Opinion Survey on bank lending practices. The 2018Q1 release showed a modest easing in standards and terms for C&I loans in the fourth quarter of last year, while standards for CRE loans tightened somewhat. US bank loan growth accelerated slightly since the last survey but remains fairly weak.
  • 02:00 PM Richmond Fed President Barkin (FOMC voter) speaks: Richmond Fed President Thomas Barkin will participate in a town hall event at George Mason University in Fairfax, Virginia. Audience Q&A is expected. This is President Barkin’s first public appearance since being elected president of the Bank.
  • 03:00 PM Consumer credit, March (consensus $16.0bn, last $10.6bn); 03:30 PM Chicago Fed President Evans (FOMC non-voter) and Dallas Fed President Kaplan (FOMC non-voter) speak: Chicago Fed President Charles Evans and Dallas Fed President Robert Kaplan will speak on a panel on machine learning at the Atlanta Fed’s annual Financial Markets Conference in Amelia Island, Florida.

Tuesday, May 8

  • 06:00 AM NFIB small business optimism, April (consensus 105.0, last 104.7)
  • 10:00 JOLTS job openings, March (last 6,052k)

Wednesday, May 9

  • 08:30 AM PPI final demand, April (GS +0.2%, consensus +0.2%, last +0.3%); PPI ex-food and energy, April (GS +0.2%, consensus +0.2%, last +0.3%); PPI ex-food, energy, and trade, April (GS +0.2%, consensus +0.3%, last +0.4%): We estimate a 0.2% increase in headline PPI in April, reflecting firm core prices, offset by a decline in food prices and modestly higher energy prices. We expect a 0.2% increase in the core PPI and the PPI ex-food, energy, and trade services categories. In the March report, the producer price index was firmer than expected, reflecting strength in the core measure as well as in upstream prices.
  • 10:00 AM Wholesale inventories, March final (consensus +0.6%, last +0.5%)
  • 01:15 PM Atlanta Fed President Bostic (FOMC voter) speaks: Federal Reserve Bank of Atlanta President Bostic will speak at a luncheon hosted by the World Affairs Council of Jacksonville in Jacksonville, Florida.

Thursday, May 10

  • 08:30 AM CPI (mom), April (GS +0.30%, consensus +0.3%, last -0.1%); Core CPI (mom), April (GS +0.19%, consensus +0.2%, last +0.2%); CPI (yoy), April (GS +2.51%, consensus +2.5%, last +2.4%); Core CPI (yoy), April (GS +2.22%, consensus +2.2%, last +2.1%): We estimate a 0.19% increase in April core CPI (mom sa), which would boost the year-over-year rate a tenth to 2.2% on a rounded basis. Our forecast reflects a slight pullback in apparel prices. We expect increases in owner’s equivalent rent and medical services to be relatively firm.
  • 08:30 AM Initial jobless claims, week ended May 5 (GS 215k, consensus 218k, last 211k); Continuing jobless claims, week ended April 28 (consensus 1,810k, last 1,756k): We estimate initial jobless claims rebounded 4k to 215k in the week ending May 5. We note that the level of claims still looks relatively low in New York and New Jersey, possibly related to the timing of school holidays. Continuing claims—the number of persons receiving benefits through standard programs—fell sharply last week and reached a cycle low.

Friday, May 11

  • 08:30 AM Import price index, April (consensus +0.5%, last flat)
  • 08:30 AM St. Louis Fed President Bullard (FOMC non-voter) speaks: St. Louis Fed President James Bullard will give a presentation at the Springfield Business Development Corporation Meeting in Springfield, Missouri. Audience Q&A is expected.
  • 10:00 AM University of Michigan consumer sentiment, May preliminary (GS 98.5, consensus 98.3, last 98.8).: We estimate the University of Michigan consumer sentiment index edged 0.3pt lower in the preliminary estimate for May, reflecting small declines in the stock market and in high-frequency consumer confidence measures. The report’s measure of 5- to 10-year inflation expectations remained at 2.5% in April, near the middle of its 12-month range.

Source: Goldman, Deutsche, BofA

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Ex-Venezuela Oil Boss: PDVSA Is Collapsing

Authored by Tsvetana Paraskova via OilPrice.com,

The man who ran Venezuela’s state oil company PDVSA for a decade after 2004 says that the country’s oil firm is on the cusp of total collapse and expects oil production to drop by 600,000 bpd each year amid lack of investment.

Rafael Ramirez, who has long been a rival of Venezuela’s incumbent leader Nicolas Maduro within Hugo Chavez’s inner circle, told Bloomberg in a phone interview that “PDVSA may fall into an accelerated spiral downward.”

According to OPEC’s secondary sources, Venezuela’s oil production averaged 2.154 million bpd in 2016 and 1.916 million bpd in 2017. In March 2018, its production plunged to 1.488 million bpd.

Ramirez became oil minister in 2002 and then head of PDVSA in 2004. During his ten-year tenure at the company, Venezuela’s production dropped by 10 percent. Since Ramirez left PDVSA, oil production has lost another 30 percent, with the steepest drops occurring over the past two years amid total economic collapse and lack of investment.

At the end of last year, Venezuela said that it would launch a criminal investigation into Ramirez over alleged corruption in a wider graft probe that ended with dozens of oil executives arrested.

Ramirez is currently in a self-imposed exile in a European city.

Some analysts saw the corruption purge at the end of 2017 as politically motivated with Maduro getting rid of opponents and tightening his grip over the oil industry – Venezuela’s only foreign exchange income source. Maduro also named a National Guard major general – Manuel Quevedo – as the new head of PDVSA and the country’s oil ministry. Quevedo’s lack of any oil industry experience further worried analysts that mismanagement would continue and even increase.

The lack of knowledge and experience among the top oil men in Venezuela, together with infighting within the oil circles, has led to PDVSA’s plunging production, Ramirez told Bloomberg.

He also thinks that Venezuela may need to increasingly give control of PDVSA to international companies operating there.

“Under the argument that we destroyed the company, PDVSA will be de facto privatized,” Ramirez told Bloomberg. “It’s being taken out of the control of the Venezuelan state.”

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Trump Rips Mueller’s “13 Angry Democrats”, Hints At Coming Revelation About DOJ “Conflicts Of Interest”

As we anticipated late last week, President Donald Trump has seized the opportunity to gloat about a pair of legal victories last week that raised questions about the Mueller probe’s credibility in an official setting.

During hearings about a potential dismissal of the charges against Paul Manafort and Mueller’s request for a delay in his Russian troll farm case, judges articulated doubts about the special counsel’s investigation that appeared to be almost ripped from the president’s previous tweets.

In a series of early morning tweets, Trump declared that the Russian “Witch Hunt is rapidly losing credibility” after the “House Intelligence Committee found No Collusion, Coordination or anything else with Russia.”

Trump

He also lashed out at the “13 Angry Democrats” – a group that includes people involved with the Mueller probe, including Special Agent Peter Strzok, who was removed after sending anti-Trump texts to his mistress.

But most importantly, Trump also hinted that there might soon be another embarrassing revelation about conflicts of interest involving Mueller and his investigators.

As of Friday, three separate Judges have now delivered serious setbacks to the Mueller investigation. They’ve demanded – if you can believe it – facts and evidence to back up the Special Counsel’s claims in unredacted format as one Judge demands, or risk having the cases tossed out altogether.

The first major setback occurred in February, when the federal judge assigned to the criminal case against Trump’s former National Security Judge Emmet G. Sullivan asked Mueller’s team to turn over any “exculpatory evidence” to Flynn’s defense. Strangely, Flynn’s legal team never made this request. Instead, Judge Emmet G Sullivan issued the order “sua sponte” – or at his legal discretion – by invoking the Brady rule.

Despite some potentially problematic comments last week from the newest member of Trump’s legal team, former New York City Mayor Rudy Giuliani, it appears Trump is finally making some headway in his battle against Mueller.

If anything, recent leaks about questions Mueller would like to ask Trump have only suggested that Trump is biding his time before he rejects Mueller’s interview request – effectively daring the special counsel to subpoena a sitting president.

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Dollar Index Positive For 2018 As Euro Tumbles

The Dollar Index has erased all of 2018’s losses and is now green from the 12/29/17 close…

 

Helped by Euro weakness, driven by soft economic data, especially the reading for Sentix investor confidence…

 

This dollar strength is happening as the massive dollar short position begins to unwind…

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