iftttwall

Following yesterday’s news that the White House had radically changed its strategy involving Syrian military intervention, and that it had decided to provide weapons to Kurdish militants in the region, we were curious to see just how livid Turkey would be when it inevitably responded to Trump’s announcement. One day later we got the answer when the Turkish Defense Minister Fikri Isik was quoted by Reuters that the U.S. decision to provide weapons for Kurdish militants in the fight against ISIS “is a crisis” and warned it would not benefit the United States or the region.

Isik also said that Turkey should not be expected to support any potential operations in Syria involving “terrorist groups” which leaves open the question whether Turkey would prevent the US from using the critical for the region Incirlik air base, which is also ground zero for many US combat missions involving ISIS.  As expected, Turkey urged the United States on Wednesday to reverse the decision, saying every weapon supplied to the YPG militia constituted “a threat to Turkey”.

The decision to supply arms to Kurds would have “consequences” and a potentially “negative result” for Washington, warned Turkish Prime Minister Binali Yildirim warned on Wednesday.

“We cannot imagine [the US] making a choice between our strategic-level partnership and a terrorist organization,” Yildirim said, quoted by the Sabah daily. “The US administration still has a chance to consider Turkey’s sensitivities of highest level on the PKK. If the decision is taken otherwise, this will surely have consequences and will yield a negative result for the US as well.”

Turkish Foreign Minister Cavushoglu also chimed in telling reporters that “if we support the territorial integrity of Syria, we should take lessons from the mistakes we made in Iraq and abstain from making any wrong moves. YPG and PKK are the same entity, there’s no difference between them,” Cavushoglu said, according to NTV broadcaster. “Every weapon which gets into their hands represents a threat to Turkey.”

A third warning came from Turkish Deputy PM Nurettin Canikli who told local TV station A Haber  that “we cannot accept the presence of terrorist organizations that would threaten the future of the Turkish state. “We hope the US will put a stop to this wrong and back down from it. This policy will not be beneficial to anyone; you can’t be in the same sack as terrorist organizations.”

Meanwhile, as Turkey was slamming Trump’s decision, the Kurds were praising it, saying it was a “historic” move that greatly expands the group’s capabilities to “fight terrorism.” By now everyone is aware that YPG is a US ally in Syria which Ankara perceives as an extension of the Kurdistan Workers Party (PKK), considered a terrorist group in both Turkey and the US.

Responding to the Turkish laments, U.S. Defense Secretary Jim Mattis said he was confident the United States would be able to resolve tensions with Turkey the decision. “We will work very closely with Turkey in support of their security on their southern border. It’s Europe’s southern border, and we’ll stay closely connected,” Reuters quoted Mattis on Wednesday.

It remains to be seen just how willing Turkey is to “resolve” tensions: an answer will emerge in the next few days when Erdogan is expected to fly to the US. Should he cancel this trip, the answer will be clear. Also, don’t stand below the Turkish Lira when any such news hits.

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Russian foreign minister Sergei Lavrov is holding a press conference following his discussions in The Oval Office with President Trump, who described it as a "very, very good" meeting.

Lavrov commented that they "did not discuss the absurd election interference with Trump."

Putin and Trump “will see each other in July” at the G20 in Germany, says Lavrov.

Lavrov Press Conference Live Feed…

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Written by The Wall Street Journal editorial board

President Trump fired James Comey late Tuesday, and better now than never. These columns opposed Mr. Comey’s nomination by Barack Obama, and the Federal Bureau of Investigation Director has committed more than enough mistakes in the last year to be dismissed for cause.

Mr. Trump sacked Mr. Comey on the advice of Deputy Attorney General Rod Rosenstein, a former U.S. Attorney with a straight-up-the-middle reputation who was only recently confirmed by the Senate. In a memo to Attorney General Jeff Sessions, Mr. Rosenstein cited Mr. Comey’s multiple breaches of Justice Department protocol in his criminal investigation of Hillary Clinton’s mishandling of classified material.

The FBI isn’t supposed even to confirm or deny ongoing investigations, but in July 2016 Mr. Comey publicly exonerated Mrs. Clinton in the probe of her private email server on his own legal judgment and political afflatus. That should have been the AG’s responsibility, and Loretta Lynch had never recused herself.

“It is not the function of the Director to make such an announcement,” Mr. Rosenstein wrote. “The Director now defends his decision by asserting that he believed Attorney General Loretta Lynch had a conflict. But the FBI Director is never empowered to supplant federal prosecutors and assume command of the Justice Department.”

Mr. Rosenstein added that at his July 5 press appearance Mr. Comey “laid out his version of the facts for the news media as if it were a closing argument, but without a trial. It is a textbook example of what federal prosecutors and agents are taught not to do.”

Then, 11 days before the election, Mr. Comey told Congress he had reopened the inquiry. His public appearances since have become a self-exoneration tour to defend his job and political standing, not least to Democrats who blame a “Comey effect” for Mrs. Clinton’s defeat. Last week Mr. Comey dropped more innuendo about the Trump campaign’s alleged ties to Russia in testimony to Congress, while also exaggerating the new evidence that led his agents to reopen the Clinton file.

For all of these reasons and more, we advised Mr. Trump to sack Mr. Comey immediately upon taking office. The President will now pay a larger political price for waiting, as critics question the timing of his action amid the FBI’s probe of his campaign’s alleged Russia ties. Democrats are already portraying Mr. Comey as a liberal martyr, though last October they accused him of partisan betrayal.

The reality is that Mr. Comey has always been most concerned with the politics of his own reputation. He styles himself as the last honest man in Washington as he has dangled insinuations across his career about the George W. Bush White House and surveillance, then Mrs. Clinton and emails, and now Mr. Trump and Russia. He is political in precisely the way we don’t want a leader of America’s premier law-enforcement agency to behave.

As for the Russia probe, if Mr. Trump is trying to cover up anything, firing the FBI Director is a lousy way to do it. Such a public spectacle will make details more likely to leak if agents feel their evidence is being sat on. Mr. Comey’s credibility was also tainted enough that whatever he announced at the end of the probe would have been doubted.

As Mr. Rosenstein put it in his memo, “I agree with the nearly unanimous opinions of former Department officials. The way the Director handled the conclusion of the email investigation was wrong. As a result, the FBI is unlikely to regain public and congressional trust until it has a Director who understands the gravity of the mistakes and pledges never to repeat them. Having refused to admit his errors, the Director cannot be expected to implement the necessary corrective actions.”

A new FBI Director who looks at the Russia evidence with fresh eyes and without the political baggage of the last year will have a better chance of being credible to the American people. Mr. Trump should now devote himself to nominating someone of integrity who can meet that standard.

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I was supposed to give a presentation at the GuruFocus conference in Omaha, a day before Berkshire Hathaway annual meeting. I was more nervous than usual. I agreed to give this presentation because I wanted to push myself to explore a brand new topic. I wanted to zero in on the investment process. GuruFocus seemed to have the right audience for this topic.

I need a looming deadline to build the pressure to unleash creativity. Two days before I was to leave for Omaha, I wrote a nine-page speech titled “How to Stay Rational in Irrational World.” A day later I created a 40-slide PowerPoint, which I was still tweaking an hour before my talk.

The GuruFocus conference was at the DoubleTree hotel in downtown Omaha. There were maybe two hundred attendees in a typical hotel ballroom. A few minutes into my presentation, the lights went out. Though the lights came back a second later, my microphone and projector were dead.

The speech that followed ended up being the best presentation I have probably ever given, and I have given plenty of them over the last ten years. Charlie Tian, who runs GuruFocus, emailed me and said, “Went through the surveys we collected from the attendees and found that you were rated one of the best speakers.”

I am sharing this with you not to brag, not at all. I find that little, often random moments shape the journey of our lives. Before I go further, let me tell you this little story. When I started writing for TheStreet.com in 2004, my writing was dry and incredibly boring. It would make a corporate press release look like a stand-up routine. It was efficient but didn’t have a soul. Then, a few months into my writing “career,” I penned a short, funny article describing my little adventure configuring TiVo.

These were the very early days of artificial intelligence. The layer of TiVo phone technical support consisted of an AI that demanded, “Please speak in complete sentences.” You may or may not know this, but I have a Russian accent. The system could not understand me. After half a dozen tries I came up with an elegant solution. I gave the phone to my then three-year-old son, Jonah. I told him what to say, and he’d repeat in his adorable Disney accent. The TiVo system did not have a problem understanding him.

That was the gist of my article. It was a very short piece. It was funny, and it was by far the most “human” article I had written. And yes, it exposed my frailty, which is obvious to anyone who has ever heard me speak – I have an accent.

I received a few dozen emails from readers who loved the article. I can say that this little article, this little moment, had a huge impact on my life. I realized it’s okay to be myself – funny, sarcastic, and even frail. In other words, I learned that when I write I should be me.

If I hadn’t written that TiVo article, I might have arrived at that conclusion later. Or I could have given up writing all together before I ever arrived at it.

The lights going out at GuruFocus was my “TiVo moment” for public speaking. It was a gift that made me completely rethink how I give speeches.

When the lights came back on and I realized that the projector and mic were out, to my amazement, my blood pressure dropped. I felt calmer than I had ten seconds before. A weight dropped off my shoulders. Suddenly I was not burdened with switching slides. I didn’t have to follow bullet points. I could just talk. Tell a story. My 40 slide presentation had been a huge distraction. Until the lights went out, the attendees weren’t looking at me, they were trying to read my bullet-point-packed slides. Their eye contact was with the screen, not with me.

If I were to redo this presentation, it would have five slides: a “Hello” slide, three slides in between with pictures, and a “Goodbye” slide. That’s it.

I also learned, however that writing out a speech out is important. I was not going to read the speech; I couldn’t have memorized it if I had tried. But writing it created a logical structure for my thoughts, and even more importantly, unearthed the appropriate vocabulary. Speaking is communication in real time, where writing allows you to stop and control the clock. It affords you the luxury of carefully picking each word and gives you the freedom to rewrite ad infinitum and show it to the world when you are ready (or when the deadline arrives, whichever comes first).

I find when I speak on a brand new topic a lot of my energy goes into looking for precise words, the ones that will let me communicate my thoughts clearly. Here is a thought: I (and probably most of us) are horrible at multitasking. My brain is horrible at running multiple processing threads at once. If I can minimize the need for multitasking (no slide flipping, no vocabulary searching) then I can focus the limited processing power of my brain on public story telling – after all, that is what a speech is.

I have read that your state of mind when you get on a stage is completely programmable. James Altucher watches Jerry Seinfeld standup right before he goes on stage – it programs his mood. I found that Bach’s Concerto No. 1 in D Minor does the trick for me. I listened to it for about twenty minutes before I stepped onto the GuroFocus stage – so my blood pressure was probably already a little lower than usual to begin with.

We should pay attention to little moments – they can change our lives. Thank you TiVo and thank you … whatever caused the electricity to go out at the DoubleTree in Omaha.

You can see my presentation, all 40 slides, here.  I don’t want this presentation to be in the public domain for long and will be removing it on May 14, so check it out now.

via http://ift.tt/2qrzEwB Vitaliy Katsenelson

In a mini “mutiny” inside the Senate, moments ago three republicans joined with Senate Democrats to reject overturning an Obama administration rule limiting methane emissions from oil and natural gas drilling, also known as H.J. Res. 36. Only 49 senators voted to move forward with debate on legislation to undo the Bureau of Land Management rule, short of the 51 majority needed to advance the measure.

The vote was the Senate GOP’s last chance to overturn an Obama rule through the CRA, which provides a streamlined method for blocking regulations, but sets a time limit on when Congress can vote.

Senators Lindsey Graham (R-S.C.), Susan Collins (R-Maine) and John McCain (R-Ariz.) joined all 48 members of the Democratic caucus in rejecting the resolution under the Congressional Review Act. It is unclear if this was an ideological objection or – especially in the case of McCain – one seeking to hobble Trump’s agenda. Indeed, Graham and Collins had previously publicized their plans to vote against the legislation. But McCain’s vote came as a surprise, and prevented the need for a tiebreaker from the Vice President.

While final passage of the vote on the Congressional Review Act resolution may happen later today according to Bloomberg, the vote is a major loss for congressional Republicans, who had targeted the methane rule as a prime Obama regulation to undo. They argue that it unnecessarily adds costs to oil and natural gas drilling on federal land.

Some more details From The Hill:

Republicans went into a side room off of the Senate floor after the final vote was submitted, and held the vote open, but no senator changed his or her vote. Vice President Mike Pence also came to the Capitol in case his vote was needed to break a tie.  

 

The methane rule sets standards for what oil and natural gas drillers on federal land must do to stop the waste of methane, the key component of natural gas, through venting or burning it at the well site.

 

It is primarily designed to prevent the waste of a valuable resource that belongs to taxpayers. But since methane is a greenhouse gas as much as 80 times more potent than carbon dioxide, the rule also has climate change benefits. It was part of a wide-ranging strategy by Obama to tackle methane emissions in the final years of his presidency.

While the congressional effort has failed, Trump’s Interior Department nonetheless could repeal the rule itself though an extensive rulemaking process. A Trump executive order in March instructed Interior and other agencies to roll back Obama’s climate agenda and other regulations that impede the production and use of domestic energy resources. Under that order, Interior is considering whether to repeal the BLM methane rule, but has not committed or proposed to do so yet.

via http://ift.tt/2q2YlxT Tyler Durden

In JPM’s initial market comment this morning, reacting to the news of Comey firing, the bank said that “as far as the market is concerned, Comey’s dismissal saps Trump’s political capital and weakens relations w/Congress at the time when he is trying to move an ambitious pro-growth agenda through the Senate and House.” What JPM was referring to was the potential of substantial incremental delays now facing Trump’s parallel reforms, healthcare on one hand and tax reform on the other.

Now, as Axios points out, this concern is starting to materialize when the Senate HELP Committee called off a health care markup this morning after Senate Minority Leader Chuck Schumer asked all Democrats to be in the Senate chamber at 9:30 a.m. to protest President Trump’s firing of FBI Director James Comey.

The committee said it will reschedule the meeting, where senators were set to approve a bill to reauthorize the user fees that help fund the Food and Drug Administration.

This is likely the first of many procedural delays, which will almost certainly delay the Senate’s process on Obamacare Repeal by weeks if not months.

Meanwhile, in a new report released overnight, Goldman’s D.C. analyst Alec Phillips remained modestly more sanguine, and laid out his latest timeline of Fiscal Signposts on the Way to Tax Reform, stating that while the pending health legislation is likely to delay progress on other aspects of fiscal policy, we nevertheless expect several developments over the coming weeks and months.

Here are the highlights from the note:

• In the near term, the White House budget proposal on or around May 22 and a draft budget resolution from House Republicans in early June are likely to include specific dollar amounts for proposed tax cuts. The White House tax cut figure is likely to be large, the House’s is likely to be small, and we expect the Senate to end up somewhere in the middle.
• Since the final figure included in the budget resolution will serve as a limit on the size of the tax cut, it should receive substantial attention in financial markets when released.
• The upcoming budget discussions may also shed some light on the approach that Republican leaders expect to take ahead of the next debt limit increase, which we expect to be necessary by early October, and funding for fiscal year 2018, which must be passed by September 30 to avoid a partial federal shutdown.

And the details:

Fiscal Signposts on the Way to Tax Reform

For most of this year, we have assigned a fairly high probability to the enactment of tax legislation—most likely a tax cut rather than comprehensive reform—by early 2018. However, following last week’s vote in the House on the AHCA, we downgraded our view somewhat, in light of the challenges that congressional Republicans will have in reaching a consensus on health legislation that can satisfy centrists in the Senate and conservatives in the House and the likely delays that could cause. While we still think a tax cut is more likely than not, it is a closer call than it was a few weeks ago and it is likely to take until 2018; enactment by the end of this year now looks quite unlikely, in our view.

Until the Senate passes its health bill, congressional Republicans will be unable to make much progress on other fiscal aspects of the agenda, because the health bill is being considered under the “reconciliation” process in the Senate. The benefit of using this budget-related process is that it allows the bill to pass with only a simple majority in both chambers, i.e., no Democratic support would be needed. The drawback of using this process is that the next steps on fiscal policy cannot be taken until the health bill has at least passed the Senate. Specifically, Congress cannot yet finalize the fiscal year 2018 budget resolution, which would usually have occurred by now, because doing so would remove the protection from filibuster that the health bill has under the previous year’s budget reconciliation process.

Exhibit 1: The Health Debate Drags On

Source: Goldman Sachs Global Investment Research

Since the 2018 budget resolution lays the procedural groundwork for next year’s spending bills as well as tax reform legislation, Congress will have a difficult time moving forward on fiscal issues until the health bill has passed (or is put aside because no agreement can be reached), as shown in Exhibit 1. However, even though the next steps in the budget process cannot be finalized until action on the health bill is complete, we still expect some near term activity that could inform expectations of the type of tax legislation that Congress might ultimately pursue. Over the next several months, there are four substantial budget-related milestones:

• The release of the President’s Budget (May 22): So far this year, the administration has not published much detail regarding its fiscal plans beyond a spending plan for the coming year, which was outlined in the “skinny budget” released in March, and the tax principles released two weeks ago. The budget proposal that the White House is expected to submit to Congress on May 22 should provide the most comprehensive view to date of the fiscal path that the Administration envisions. Of interest will be how much the White House plans to rely on optimistic growth assumptions to offset the cost of its proposals. For example, an assumed long-run real growth rate of 3% versus the CBO baseline projection of around 1.8% over the next ten years would boost receipts by roughly $4 trillion over that period, or roughly the cost of the tax plan that the White House outlined two weeks ago. We note that while the White House can rely on optimistic growth assumptions to offset most of the fiscal effect of the tax proposal, Congress must rely on independent economic projections from the Congressional Budget Office (CBO), and estimates of the growth effect of tax legislation from the Joint Committee on Taxation (JCT). Therefore, while the White House can claim that a “massive tax cut” is also revenue-neutral, congressional Republicans will need to decide to do one or the other.
• The draft FY2018 Budget Resolution (June): This is where decisions on the appropriate size of the tax cut must be made. As noted above, the budget resolution for fiscal year 2018 cannot be finished until health legislation has passed. However, the congressional budget committees in the House and Senate can start the process without interfering with the health legislation. In the House, the Budget Committee is expected to consider its fiscal year 2018 budget resolution within the next several weeks, most likely by June. The Senate Budget Committee is likely to follow with its own budget resolution, but the timing on that side of the Capitol is less clear. These draft budget resolutions are likely to include “reconciliation instructions” that direct the relevant committees—in this case, the House Ways and Means Committee and Senate Finance Committee—to pass legislation reducing revenues by a given amount. This should be of great interest to market participants because the amount of revenue reduction called for in the final version of the 2018 budget resolution will represent a limit on how large a tax cut Congress can pass under the reconciliation process. While we expect the final version of the budget resolution to include an instruction to reduce revenues, the initial draft out of the House committee is more likely to include only a small net tax cut, in our view, given House Republican leaders’ continued insistence on revenue-neutral tax reform. Note that while the budget resolution is likely to include a dollar amount for the net tax cut over ten years, budget resolutions do not include policy detail, which only comes later as part of the tax legislation itself.
• Fiscal year end (September 30): Fiscal year 2018 starts on October 1 and represents a deadline in two respects. First, because the pending health legislation is being considered under the fiscal year 2017 budget process, it is likely to lose its procedural protection in the Senate if it has not passed by then. This represents a backstop of sorts against the possibility that the health bill will take up even more time than already looks likely. Second, spending authority expires after September 30, and Congress will need to extend that authority to avoid a partial shutdown of the federal government. Reaching an agreement on a new package of spending bills by the deadline is likely to be more difficult than it was ahead of the last deadline on April 28; while the recent extension simply funded the remainder of the fiscal year that started before President Trump was elected, the White House and congressional Republicans will be under greater political pressure to enact more of their priorities—funding the border wall or shifting funding from nondefense to defense spending—in the first full fiscal year under the new administration.
• Debt limit (early October): The upcoming debt limit debate looks likely to roughly coincide with the start of the coming fiscal year. It is not yet clear what approach congressional Republicans will take to increase the debt limit, but they have three potential options. First, they could use the budget reconciliation process and rely on only Republican votes. While this is technically possible, there is little reason to expect the near-unanimous Republican support in the House that would be needed to make the strategy work. Second, Republican leaders could couple a debt limit increase with other gestures of fiscal responsibility, like spending cuts. However, any substantial package of spending cuts could lose more support among centrist Republicans than it gains among conservatives. A third possibility would be to simply put a “clean” debt limit increase up for a vote and pass it close to the deadline with a combination of Republican and Democratic votes. This seems the most likely outcome, but it seems unlikely to occur until shortly before the deadline and probably not until other options have been exhausted. There is also a clear possibility that congressional Democrats will seek some type of concession in return for their support, which would further complicate matters.

In summary, over the course of the next several weeks we expect to receive fresh signals on the potential magnitude of tax legislation from the White House, which is likely to propose a large net reduction, and also from House Republicans, who are likely to endorse a minimal net tax cut. The final decision won’t be made until after the health legislation has been passed or put aside, which will probably take another few months. The next several weeks might also provide additional clues as to how congressional Republicans will approach the coming debt limit deadline. While there is little chance that final decisions will be made on any of these issues in the near term, the release of new details is likely to continue to shape expectations about policy outcomes later this year and into 2018.

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WTI and RBOB have rallied since last night's surprisingly large Crude draw (and gasoline build) reported by API, and DOE ata confirmed with inventory draws across the entire complex (including gasoline). WTIO and RBOB prices popped as Crude inventories dropped most since 2016 despite crude production rising above 9.3mm – highest since Aug 2015.

API

• Crude -5.789mm (-2mm exp) – biggest since 2016
• Cushing -133k (+60k exp)
• Gasoline +3.169mm (+350k exp)
• Distillates -1.174mm (-800k exp)

DOE

• Crude -5.247mm (-2mm exp)
• Cushing -438k (+60k exp)
• Gasoline -150k (+350k exp)
• Distillates -1.587mm (-800k exp)

Draws across the board with Crude inventories down most since Dec 2016

Gasoline demand is going against the seasonal norm… declining in the last few weeks when it should be surging iont summer driving season

U.S. crude production continued its steady rise, up 21,000 barrels a day to 9.314 million. That's 12 consecutive increases, 13 in 14 weeks, and 14 in 16 weeks. Production now at the largest since August 2015.

As a reminder, Bloomberg notes that EIA bumped up its estimates and forecasts for U.S. crude production yet again in yesterday's STEO report. It increased its April estimate by 20,000 b/d and May by 40,000 b/d compared with the previous month's forecast. For Lower 48 onshore output, the increase was even bigger — 50,000 b/d for April and 60,000 b/d for May. It now sees output exceeding the April 2015 peak of 9.63 million barrels a day by November, a month earlier than before.

WTI and RBOB both rallied overnight (as the dollar sank) following the big API-reported crude draw, and extended their gaisn after DOE confirmed the draw…

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