The Dollar Index has erased its early gains following The Fed statement, and Gold is surging (along with gains in stocks and bonds) apparently signaling a dovish take (removed economic growth sentence)…
And Gold, Stocks, and Bonds are all higher…
All the major equity indices are higher (despite The Fed’s growth concern signal)…
Because…
Stocks rallying because the Fed has admitted the entire time they were hiking was not because of strong econ growth, but to stop or slow the rally in stocks.
— Stalingrad & Poorski (@Stalingrad_Poor) May 2, 2018
After attempts to salvage the company’s reputation – including suspending its controversial CEO Alexander Nix and vehemently denying wrongdoing – apparently failed to pan out, Cambridge Analytica will be shutting down, effective today, according to the Wall Street Journal.
The company had promised to launch an independent investigation into whether it did anything wrong during its work on political campaigns. But it was also facing a probe from UK data regulators and was also losing clients and facing mounting legal fees.
Nigel Oakes, the founder of SCL Group, the British affiliate of Cambridge Analytica, confirmed that both companies were closing down to WSJ.
The moves followed the release of a video that depicted Mr. Nix touting campaign tactics such as entrapping political opponents with bribes and sex. The sales pitch was captured by undercover journalists at British broadcaster Channel 4. Mr. Nix’s suspension also follows reports that the company improperly used data from millions of Facebook Inc. profiles without authorization.
The business had $15 million in U.S. political work in the 2016 election cycle. Since then, Cambridge hadn’t notched a single U.S. federal political client. It lost several commercial clients in recent months.
The closure comes after recordings surfaced of Nix describing the company’s shadowy methods, including entrapping politicians with bribes and sex workers.
Of course, the closure likely won’t put an end to the investigation and continuing fallout – the bulk of which has been borne by Facebook. We imagine this won’t be the last we hear about Cambridge Analytica.
With little expectation for a rate-hike today (66% chance of no change), market participants are scouring every word and nuance for signals that The Fed is more (or less) worried about inflation (PCE hit 2% on Monday) and may hike faster (or slower); and whether recent economic weakness is merely “transitory” or reflexively driven by The Fed’s tightening actually impacting financial conditions.
Bloomberg reports:
*FED KEEPS RATES UNCHANGED, SAYS INFLATION `MOVED CLOSE’ TO 2%
*FED SEES INFLATION RUNNING NEAR ‘SYMMETRIC’ GOAL MEDIUM TERM
Key Takeaways from FOMC lockup:
Change in inflation language: `On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent’
FOMC statement now twice uses the word `symmetric’ to describe its inflation objective, emphasizing they view a persistent overshoot the same way that they view a persistent undershoot
`Risks to the economic outlook appear roughly balanced’
No rate change, as expected, vote unanimous
Interestingly, the sentence from the March statement about a strengthening economic outlook isn’t included in today’s statement
So it seems The Fed is hawkishly monitoring rising inflation and dovishly aware of a slowdown in the economy’s growth.
There is no press conference today.
* * *
Expectations ahead of today’s FOMC statement show an almost even odds of 2 more or 3 more rate hikes in 2018…
Since The Fed hiked rates in March, stocks, bonds, and gold are lower as the dollar has soared 3%, oil is up almost 4% and 2Y yields are up 20bps…
US Macro data has disappointed consistently since The Fed hiked in December…
Rudy Giuliani just dropped an important clue about the fate of a possible meeting between President Trump and Special Counsel Robert Mueller.
In a series of tweets posted just minutes after the New York Times reported that White House lawyer Ty Cobb would be “retiring” from President Trump’s legal team, Washington Post reporter Robert Costa tweeted that he’d just spoken with Trump attorney Rudy Giuliani and that Giuliani insisted that, should Trump decide to sit for an interview with Mueller, that meeting would be two to three hours in length – max. Rumors that Trump would sit for a 12-hour interview with the special counsel just aren’t true, he said.
NEWS-Giuliani, mins after Cobb exit, goes on-rec w/ @WashingtonPost re: Mueller intvw. “Some people have talked about a possible 12-hour interview. If it happens, that’s not going to happen, I’ll tell you that. It’d be, max, two to three hours around a narrow set of questions.”
NEWS – Giuliani just now: “We’ve been talking about this. We are going to ask for a narrowing of the questions… we’d like to know more about what they have, if anything… They are going to need to narrow, to a great extent, the questions.”
Giuliani then added that Trump lead attorney Jay Sekulow was behind Ty Cobb’s ouster. Sekulow purportedly wanted somebody more aggressive on the team, he said.
Giuliani re: Cobb: “[Legal team] had a long talk about it last week. The president let us know he had Emmet coming for an interview and we talked it through. Jay had the most to do with it. Jay felt he need someone that more aggressive.”
All of this would appear to confirm our original theory that Trump’s legal team leaked a batch of questions purportedly proposed by Mueller’s team earlier this week in an effort to discredit the special counsel and push Trump away from granting an interview. The big question now is: Will Trump spurn Mueller entirely? Or will he grant the “compromise” approach apparently being touted by Giuliani?
There are over a million oil and gas wells in the United States. There are also several hundred thousand miles of pipelines. Digitization is on the rise in the notoriously conservative oil and gas industry as companies wake up to the cost and operational efficiency boost that sensors and algorithms can offer them. Meanwhile, cybercriminals are keeping ahead of the learning curve, but oil and gas is largely pretending not to notice them.
Energy companies – including E&Ps, pipeline operators, and utilities – spend less than 0.2 percent of their revenues on cybersecurity, two security consulting firms have calculated. This compares with three times this portion of revenues spent on cybersecurity by financial services providers and banks.
True, banks and their likes deal directly with people’s money, so it would make sense to be extra careful. Also, the financial services industry has been under growing pressure from alternative service providers, so it has had to become flexible and open to new tech to stay ahead of the competition.
Oil and gas producers, on the other hand, don’t seem to see themselves a likely target of a cyberattack even though such attacks against the industry have been growing in frequency. Symantec, according to Bloomberg, is tracking as many as 140 cybercriminal groups that target the energy industry. That’s up from 87 in 2015.
Last year, Deloitte reported that the energy industry was the second most popular target for cyberattacks in 2016. Almost three-quarters of U.S. oil and gas companies, the consultancy said, had a cyber incident in that year, yet only a tiny majority cited cyber risk as a major concern in their annual reports. This is what makes the cybersecurity situation in oil and gas very worrying.
A month ago this worry materialized in the hack attack against the communications system supplier to five pipeline operators. While the consequences of the hacking were not particularly serious, the attack should serve as an urgent warning to the industry: the more reliant it becomes on tech, the more vulnerable it becomes.
There is also the unpleasant fact that oil and gas have had to play catch-up with cybersecurity. As the industry struggled to adapt to the lower-for-longer oil prices with cost cuts, oil companies put investment into boosting cybersecurity on the back burner during the worst of the oil price plunge in 2015 and 2016, while hackers grew increasingly inventive and bolder.
The projects to strengthen the networks and systems against cyber attacks did not receive the necessary attention or funding, and today most security teams are still short of staff or technology to effectively monitor and prevent cyber attacks, security experts explain.
Now that things are looking up with higher prices, it is time to refocus on cybersecurity before a serious attack takes place. Oil and gas pipelines are, after all, critical infrastructure and they deserve due attention from their operators. So do wells and platforms. It’s only a matter of time before someone makes a blockbuster movie about hackers taking over oil producing infrastructure to remotely wreak havoc on the industry. Unfortunately, it may only be a matter of time before something like this happens in real life as well.
Deloitte said as much in its 2017 report: “If a cyber attacker were to manipulate the cement slurry data coming out of an offshore development well, black out monitors’ live views of offshore drilling, or delay the well-flow data required for blowout preventers to stop the eruption of fluids, the impact could be devastating.”
Addressing cybersecurity issues in oil and gas is a difficult job. It’s a very complex industry and there are many cybersecurity aspects that need equally urgent addressing as more and more links of the supply chain become vulnerable to attacks because of digitization. Yet difficult or not this job needs doing now. All cybersecurity experts can’t be wrong, can they?
President Trump in a series of Wednesday morning tweets, lashed out against the Mueller probe and the Department of Justice – threatening to “use the powers granted to the Presidency and get involved.”
A Rigged System – They don’t want to turn over Documents to Congress. What are they afraid of? Why so much redacting? Why such unequal “justice?” At some point I will have no choice but to use the powers granted to the Presidency and get involved!
The complaints follow the leak of approximately four-dozen questions the Special Counsel would like to ask the President, ranging from what Trump knew about alleged Russian efforts to interfere with the 2016 US election, to whether he tried to obstruct justice when he fired former FBI Director James Comey.
Trump and his legal team are engaged in ongoing negotiations with special counsel Robert Mueller’s team over whether the president will agree to be interviewed as part of the Russia (and now Stormy Daniels) investigation. Mueller warned Trump’s lawyers in a March meeting that he could issue a subpoena for the President to testify before a grand jury, according to four people familiar with the situation.
Trump had said previously that he would be willing to have a face-to-face meeting with Mueller or his team, but more recently he has wavered on the prospect. Some of Trump’s advisers have counseled that he could risk being accused of perjury if he submits to open-ended questioning from Mueller and provides meandering answers. –Washington Post
Last year Trump said he would be “100%” willing to testify undre oath, while telling ABC News’s Jonathan Karl in January “I would love to do that…I’d like to do it as soon as possible,” adding “You know I think things are still in a lane, working toward a resolution of the interview issue.”
In an earlier Thursday tweet, Trump quoted former US Attorney Joe diGenova, who recently appeared on SiriusXM’s The Michael Smerconish Program where he described Mueller’s probe as “an outrageous, sophomoric, juvenile intrusion into the president’s unfettered power to fire anyone in the executive branch.”
“The questions are an intrusion into the President’s Article 2 powers under the Constitution to fire any Executive Branch Employee,” tweeted Trump, citing deGenova.
“The questions are an intrusion into the President’s Article 2 powers under the Constitution to fire any Executive Branch Employee…what the President was thinking is an outrageous…..as to the President’s unfettered power to fire anyone…” Joe Digenova, former US Attorney
diGenova and his wife, Victoria Toensing, were tapped last month to represent Trump in the Mueller probe, only to have to withdraw over conflicts. Appearing on Fox News Wednesday, Toensing suggested that Trump might be accused of perjury if something he says conflicts with claims by James Comey.
Toensing, who was recruited for Trump’s legal team but did not join because of client conflicts, recalled the case of I. Lewis “Scooter” Libby, the former chief of staff to Vice President Richard B. Cheney.
Libby, whom Toensing represented, was convicted of obstruction of justice and other charges in 2007 stemming from an investigation of a leak of a CIA officer’s identity. But Libby was never charged with leaking the officer’s identity. –WaPo
Setup & Trap
Earlier in the day, Trump lashed out over the investigation – tweeting “There was no Collusion (it is a Hoax) and there is no Obstruction of Justice (that is a setup & trap).” He then pointed to the progress made over North Korea, the trade deficit with China and negotiations on NAFTA.
There was no Collusion (it is a Hoax) and there is no Obstruction of Justice (that is a setup & trap). What there is is Negotiations going on with North Korea over Nuclear War, Negotiations going on with China over Trade Deficits, Negotiations on NAFTA, and much more. Witch Hunt!
In response to Trump’s threat to flex his Presidential powers, Rep. Chuck “six ways from Sunday” Schumer (D-NY) cautioned not to “go down this road,” tweeting that “the powers of the Presidency do not give you the right to interfere with or shut down the Russia investigation,” adding “Firing the Deputy AG or Director Mueller would create a constitutional crisis.”
Mr. President, the powers of the Presidency do not give you the right to interfere with or shut down the Russia investigation. Firing the Deputy AG or Director Mueller would create a constitutional crisis. Do not go down this road. https://t.co/rqhxKFYYQC
Schumer warned of “severe consequences” in March if Trump moves to shut down the Mueller probe.
Interview Still Possible
In an exclusive interview with ABC’s Powerhouse Politics, White House lawyer Ty Cobb – who we subsequently learned is retiring, set to be replaced with Bill Clinton’s impeachment lawyer Emmet Flood, said that a presidential interview with Mueller’s team has not been ruled out.
“It’s certainly not off the table and people are working hard to make decisions and work towards an interview,” said Cobb, adding “And assuming that can be concluded favorably, there’ll be an interview.”
“Assuming it can’t be… assuming an agreement can’t be reached, you know then it’ll go a different route.”
Cobb, as it turns out, is being replaced by Emmet T. Flood – a veteran Washington lawyer who represented Bill Clinton during his impeachment.
In a phone interview, Mr. Cobb said he informed the president weeks ago that he wanted to retire. He said he planned to stay at the White House, likely through the end of the month, to help Mr. Flood transition into the new job. –NYT
“It has been an honor to serve the country in this capacity at the White House,” he said. “I wish everybody well moving forward.”
Beijing sent the first messaging salvo ahead of the Steven Mnuchin-led delegation to China (which will engage in trade talks over May 3-4) overnight when the PBOC fixed the yuan sharply lower than many expected. The signal was clear: push us hard enough, and we may just launch another devaluation. Or worse.
A little while later, Beijing did its best attempt at managing expectations, when it said that it’s “unrealistic” to expect to solve all issues between the U.S. and China at a single meeting, given the economic sizes of the two countries and their complex economic and trade relationship, foreign ministry spokeswoman Hua Chunying says at daily briefing.
While Hua tried his best to pay the diplomatic “good cop”, saying it was in the mutual interest of both countries to solve trade issues through consultation, just a few hours later, China’s foreign minister Wang Yi was the bad cop, who warned that whereas China would welcome a successful outcome from upcoming trade talks with the United States, it is “fully prepared for all outcomes and will not negotiate on core interests.”
Then the “worst cop” emerged in the form of yet another, unnamed official who according to Reuters said that talks must be held as equals and be mutually beneficial, echoing EU president Jean-Claude Juncker, saying that Beijing would not yield to any trade threats from Washington or accept any preconditions for talks.
He then uttered the most explicit warning yet: “In the event of a trade war, we have a much greater ability to endure (the consequences) than the U.S.,” the official said.
As a reminder, the United States has asked China to reduce its bilateral trade surplus by $100 billion and as reported last night, targeted Beijing’s “Made in China 2025” initiative, which aims to upgrade the domestic manufacturing base with more advanced products.
China – which last year had a record trade surplus of $375 billion with the United States – responded that Beijing would not accept talks with any preconditions.
* * *
Then, just moments ago, the WSJ reported that in response to this latest escalation, the US is considering executive action that would restrict some Chinese companies’ ability to sell telecommunications equipment in the U.S., based on national-security concerns.
As the WSJ points out, this move “would represent a significant escalation of a growing feud between the U.S. and China over tech and telecommunications.” The affected firms likely would include Huawei Technologies Co. and ZTE Corp. , two of the world’s leading telecommunications equipment makers. They have found themselves increasingly in an international crossfire.
Pentagon officials said this week that they are moving to halt the sale of phones made by the two companies on U.S. military bases around the world. U.S. officials are concerned that Beijing could order manufacturers to hack into products they make to spy or disable communications. Huawei and ZTE have said that would never happen.
This latest salvo could come in the form of a Trump executive order, possibly in the next few weeks. One possibility under consideration has been curbing the ability of companies doing business with the U.S. government from using network equipment made by companies that could pose a national-security risk.
* * *
While for now the escalating back-and-forth is nothing more than verbal foreplay, it will last at most three more weeks because the Treasury faces a May 21 deadline to report on restrictions on Chinese investment in the US, as part of the response to the recent Section 301 intellectual property investigation.
And, as Goldman writes this morning, enhanced investment restrictions have fairly broad support in Congress as well, raising the probability that restrictions will be implemented this year.
Goldman’s conclusion: don’t expect any good news until the 11th hour, and if anything, another batch of bad news may be next:
Unlike the NAFTA and steel issues, some additional market-disruptive policy moves regarding US-China trade seem likely. The most immediate focus will be the delegation of Administration officials set to meet with Chinese officials starting May 3 in Beijing. We believe a substantial breakthrough at this meeting is unlikely as the issues the US has raised—intellectual property policies, technology transfer, and the “Made in China 2025” strategy, in particular—are not the type of technical trade issues that can be resolved quickly.
For now, with neither China nor the US willing to back down and compromise, expect the war of words to escalate dramatically over the next 3 weeks as we reach the May 21 deadline.
Some days, it seems like President Trump’s legal team gets more press than he does. And today is definitely one of those days.
We’re referring, of course, to the New York Times‘ latest Trump legal team exclusive (its second in three days) – a report that White House lawyer Ty Cobb is “retiring” from the president’s service.
President Trump is reportedly in talks with Emmet T Flood, the veteran Washington lawyer who represented Bill Clinton during his impeachment, to take Cobb’s place.
Cobb’s retirement was unexpected, and is the latest major shakeup on Trump’s legal team, which is struggling to negotiate with Special Counsel Robert Mueller over the terms of a potential presidential interview.
Just this morning, Bloomberg reported that Cobb is the only person on Trump’s legal team who has a valid security clearance. But since Cobb is technically employed by the White House, he can’t serve as Trump’s lead personal attorney.
Ty Cobb
“It has been an honor to serve the country in this capacity at the White House,” he said. “I wish everybody well moving forward.”
Of course, this isn’t Flood’s first go-round at the Mueller probe media circus. News organizations reported earlier this year that Flood was being courted to join Trump’s team, though he never officially joined.
According to the Times, Flood is expected to take a more adversarial approach with Mueller than Cobb, who had urged the president to embrace a conciliatory path that would end with him sitting for an interview with investigators (and quite possibly walking into a perjury trap).
Mr. Flood is expected to take a more adversarial approach to the investigation than Mr. Cobb, who had pushed Mr. Trump to strike a cooperative tone. Mr. Flood initially spoke with the White House last summer about working for the president, but the talks ultimately fell apart because Mr. Flood did not want to deal with Mr. Trump’s longtime New York lawyer, Marc E. Kasowitz, who was overseeing the president’s dealings with the special counsel at the time.
[…]
It was not clear what prompted Mr. Flood to sign on. The president’s legal team for the special counsel investigation has been marked by turnover and uncertain strategy, complicated by a client liable to dismiss his lawyers’ advice. That factor prompted Mr. Trump’s lead lawyer on the case, John Dowd, to quit this year. Rudolph W. Giuliani, the former mayor of New York who is a longtime confidant of the president, has come on board pledging to negotiate an interview for the president with the special counsel.
Rudy Giuliani, who joined Trump’s legal team last month to take on the “minor role” of negotiating the terms of an interview with Mueller, might now find himself stymied by Flood.
Flood is best-known for his work as a member of Clinton’s legal team during his impeachment proceedings, but Flood did not have a high-profile role.
Cobb’s tenure at the White House was marred by clashes with former Trump lead attorney John Dowd and with White House Chief Counsel Don McGahn, who had warned Cobb that he was rushing to turn over documents requested by Mueller, and that he should take the time to review the documents and weigh whether to assert executive privilege.
But his departure is the surest sign that Trump’s legal team might be leaning toward denying Mueller the in-person interview with Trump that he so desperately craves. Jay Sekulow, the current lead attorney, is said to be in favor of asserting executive privilege to avoid an interview.
Less than three weeks after two black men were arrested in a Philadelphia Starbucks after not ordering anything – causing uproar across the US over accusations of racial profiling – The Associated Press reports that they have settled with the city for a symbolic $1 each Wednesday and a promise from officials to set up a $200,000 program for young entrepreneurs.
The men’s lawyer and Mayor Jim Kenney outlined the agreement to The Associated Press.
As a reminder, the arrest of Rashon Nelson and Donte Robinson on April 12 touched off a furor around the U.S. over racial profiling.
They were led away in handcuffs after the manager called police, saying the men refused to buy anything or leave. After spending hours in jail, they were released and no charges were filed.
The men said they were waiting for a business meeting about a potential real estate deal.
Starbucks CEO Kevin Johnson came to Philadelphia to personally apologize. He also announced Starbucks stores would close May 29 for training on bias.
Despite judge’s ruling, official US report says Iran did not play a direct role in the attacks
A US federal judge in New York ordered Iran to pay billions of dollars in damages to families affected by 9/11, ABC news reported on Tuesday.
Judge George B Daniels found the country liable to more than 1,000 “parents, spouses, siblings and children” involved in the lawsuit. Daniels said the payment amounts to $12.5m per spouse, $8.5m per parent, $8.5m per child and $4.25m for each sibling, according to the ABC report.
The lawsuit claims that Iran provided technical assistance, training and planning to the al-Qaeda operatives that conducted the attacks.
However, the official investigation on the attacks, known as the 9/11 Commission Report, said that Iran did not play a direct role.
In addition, there is no binding mechanism to force Iran to pay, making the judgment symbolic.
The lawsuit is linked to a case filed against Saudi Arabia, which families of 9/11 victims say provided direct support for the attackers.
Back in March, judge Daniels rejected Saudi Arabia’s request to dismiss lawsuits accusing it of being involved in the attacks.
The cases are based on the Justice Against Sponsors of Terrorism Act (Jasta), a 2016 law that provides an exemption to the legal principle of sovereign immunity, allowing families of the victims to take foreign governments to court.
The families point to the fact that the majority of the hijackers were Saudi citizens, and claim that Saudi officials and institutions “aided and abetted” the attackers in the years leading up to the 9/11 attacks, according to court documents.
The Saudi government has long denied involvement in the attacks in which hijacked planes crashed into New York’s World Trade Center, the Pentagon outside Washington, DC, and a Pennsylvania field. Almost 3,000 people died.
Riyadh and its Gulf allies had strongly opposed Jasta, which was initially vetoed by then-President Barack Obama. The US Senate overturned the veto by overwhelmingly adopting the legislation.
Critics of the law say it is politically motivated and an infringement on the sovereignty of foreign nations.
