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The chess player and his needy friend: What Putin really wants from Trump

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The chess player and his needy friend: What Putin really wants from Trump Chess players are a particularly rare bird in the political risk ecosystem. The only major aim of such chess playing – and it is certainly an important one – is the acquisition and retention of political power over the long term.

Chess players’ dogged, patient, rational, long-term pursuit of coherent strategic, political and geopolitical ends flies in the face of the fruit fly-like attention spans of most people in the modern world. In our own time, a mass media which gives me the constant choice of reading literally hundreds of foreign policy articles on any given day means that the endless churn of the short-term news cycle provides a perfect hiding place for political actors with more fixed policy strategies.

Russian President Vladimir Putin is the living archetype of the chess player as decision-maker, even as his new best friend Donald Trump epitomises all that is wrong with the modern era, in his preternatural neediness, mania for instant gratification, and lack of depth. While Trump is petulantly lambasting the US intelligence services for letting him in on the inconvenient truth that the Russian FSB tried to tilt the election in his favour (it is important to note that there is absolutely no evidence this was determinative in any way), the Kremlin is eloquently silent.

*Read more*: Russian hacking is a "fact" in post-truth strategy says government minister

But despite the difficulty in spotting them, it is well worth the time trying to game out chess players. For once analytically brought to ground, the fixed, rational patterns that chess players exemplify mean a true understanding of them is possible, as well as a far better understanding of the world in which they live. It begs the question, what does Putin actually want from the new American administration?

Putin’s aims are simple, though achieving them is not. He wants to, in Tsar-like fashion, utterly dominate and control Russian politics. Second, he wants to – much as De Gaulle did in France after the war – restore his proud country to great power status. Everything else is secondary, merely means serving these two overriding ends.

It is in this basic chess playing context that the rise of a startlingly pro-Russian American President must be viewed. First and foremost, Putin wants to cajole the new administration into dropping America’s former rock-solid support for the sanctions placed on the Kremlin, following Russia’s successful meddling in Ukraine. The sanctions have proven surprisingly effective, with the Russian finance ministry estimating they have cost the country $40bn a year. With pro-Russian Francois Fillon likely to become the new President of France and Italy’s support for the sanctions flagging, the constellation of power is right for Putin to do away with this serious economic wound.

*Read more*: Donald Trump and Vladimir Putin want to "normalise US-Russia ties"

Second, Putin wants the Trump White House to codify what is already happening, be it the settlement of the Syrian War on Russia’s terms or the annexation of Crimea. Given the strong impulse in the Trump cabinet (emanating from both prospective national security adviser Michael Flynn and defence secretary designate James Mattis) for combating Isis as a priority, a deal over Syria – wherein the US accepts Assad staying in power in return for joint Russian-American efforts to eradicate Isis in Raqqa – seems eminently doable. And while the taking of Crimea is unlikely to be formally recognised, neither is it likely to be much contested by the Trump White House.

Third, Trump – in line with the hapless EU and the Obama administration – must be kept from coming to the aid of a beleaguered Ukraine. As we have written before, Putin’s strategic interest in Kiev is not in taking over the place, but rather in seeing that it does not emerge as a successful, prosperous, pro-Western alternative to Great Russian nationalism on the Kremlin’s doorstep.

*Read more*: The problem with Ukraine and Iraq isn’t Putin and Islamic State

Given the venal, incompetent Ukrainian government this task has been made easier. But at all costs, Putin wants both America and Brussels to accept the present status quo in Ukraine, where a semi-failed, castrated state serves as a constant reminder to the Russian-dominated region of the fecklessness of western promises.

Lastly, and perhaps above all, Putin wants to stay out of the disastrous Trump’s way. The first rule of politics is that when an enemy is about to commit suicide, don’t stand between them and the bullet. As Trump provokes China over trade and tilts away from any form of cooperation with Beijing, and as he demeans the western allies (who admittedly have brought this largely on themselves over decades due to an immoral refusal to pay a fair share for the common western defence), Russia can merely stand by and watch, as Trump antagonises both the past (Europe) and the future (China). Chess players know how to be patient. Reported by City A.M. 5 hours ago.

CES 2017 Catapults a Connected World

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CES 2017 Catapults a Connected World *Business Wire India*CES® 2017, the 50th anniversary of the largest global gathering of innovation and connectivity, concluded today, introducing ground-breaking products, providing opportunities for companies in every major global industry to conduct business, and shattering records.   CES 2017 showcased the connected future of technology. With more than 3,800 exhibiting companies and exhibit space of more than 2.6 million net square feet, CES 2017 was a record-breaker, welcoming the world’s biggest companies in addition to hosting more than 600 startups at the Eureka Park Marketplace. More than 175,000 industry professionals, including 55,000 from outside the U.S., convened in Las Vegas to drive the ever-evolving global technology industry forward. A highlight video announcing official show stats can be found here.   “CES 2017 shifted to a new level as large and small companies from around the globe gathered to reveal solutions for many of our world’s most challenging problems,” said Gary Shapiro, president and CEO, Consumer Technology Association (CTA)^TM. “Our industry is bettering the world through connectivity and innovation, touching literally every facet of our lives. Today’s connected world was on full display this week at CES 2017 – our largest, boldest show in history.”   “From startups to established businesses, traditional tech companies, along with those in new industries like travel and sports, came together and vigorously embraced technology for the 50th anniversary of CES,” said Karen Chupka, senior vice president, CES and corporate business strategy, CTA. “This year’s show was all about connectivity – both in the form of the technologies unveiled and in the valuable face-to-face business connections happening throughout the show.”   “CES is the world’s most important technology trade show, but now it is so much more,” said John Penney, chief strategy officer, Starz. “By gathering the world's great innovators, companies, technologies, products and entrepreneurs in one place, CES is now an integral part of the global innovation system. CES and its attendees are working to build a better future for us all.”   “CES 2017 was a global showcase that demonstrated that we are in a new era of innovation where technology is valued not just for the devices it produces but for the experiences it makes possible,” said Bridget Karlin, managing director, IOT, Intel.   Connectivity was everywhere at CES 2017 – enabling nearly every product category, from self-driving cars and smart cities to digital health and 5G – and a major focus throughout CES conference tracks. 5G will revolutionize our connected world, and the entire connected ecosystem came together at CES 2017.   “CES 2017 was a coming out party for the future of 5G which we estimate will generate a net 20 million new jobs,” said Dr. Jim Mault, vice president and chief medical officer, Qualcomm Life.   CES 2017 welcomed government officials from around the world. U.S. government leaders in attendance included three members of the Federal Trade Commission, three members of the Federal Communications Commission, U.S. Department of Transportation Secretary Anthony Foxx, along with U.S. Senator Dean Heller and seven members of the U.S. House of Representatives. Other top level U.S. government attendees included representatives from the Federal Aviation Administration, Department of Energy, Department of Homeland Security, International Trade Commission and Patent and Trademark Office.   Notable global political leaders in attendance included His Royal Highness Prince Constantijn of the Netherlands; Franҫois Fillon, French presidential candidate; Axelle Lemaire, France’s Deputy Minister for Innovation and Digital Affairs; Henk Kamp, Dutch Minister of Economic Affairs; Jaime Reyes Robles, Secretary of Innovation, Science and Technology, Government of the State of Jalisco, Mexico; Adebayo Shittu, Nigeria's Honourable Minister of Communications; Navdeep Bains, Canada’s Minister of Innovation, Science and Economic Development; Brad Duguid, Canada’s Ontario Minister of Economic Development and Growth; and Matt Hancock MP, Minister of State for Digital and Culture, Department for Culture, Media and Sport, UK Government.   “CES educates public officials about our industry,” said John Godfrey, senior vice president of public policy, Samsung Electronics. “It was great to see so many key officials at this year’s show.”   CES is the global stage for innovation, with attendees from more than 150 countries and more than 100 official national delegations.   “This is the one show where I can see all of my international partners in one place. It is the one event where I invite them and they all come,” said John Ivey, president and CEO, MiTek Corp. and AtlasIED8.   CES 2017 drew world-famous celebrities from Hollywood, sports, eSports and music to Las Vegas to experience the latest in tech. CES Ambassador Aisha Tyler; Major League Baseball All-Star Bryce Harper; NBA Hall-of-Famer Shaquille O’Neal, U.S. Olympian Michael Phelps and actress Octavia Spencer were among the many stars participating in the show. See a full list of celebrities attending CES 2017.   With more than 6,500 members of the media in attendance, CES 2017 garnered worldwide media coverage. The show also received impressive social media momentum, including nearly 1.4 million mentions using #CES2017 hashtags.   CES 2017 also hosted competitive contests, including the Best of CES awards, presented by Engadget, and the Mobile App Showdown, presented by Living in Digital Times. The semi-finals for Richard Branson’s Extreme Tech Challenge (XTC) also returned to CES for a chance to compete in the final round of competition at Branson’s Nekar Island. Be sure to check out all the winners.   Now in its third year, the annual CES Asia™ will run June 7-9, 2017 in Shanghai, China, showcasing the latest ideas and innovations from global brands and promising startups. Companies interested in applying to exhibit can find more details at CESAsia.com.   CTA will release final CES 2017 attendance figures after the show’s independent audit late this spring. CES will return to Las Vegas Tuesday, Jan. 9 through Friday, Jan. 12, 2018.   *Note to Editors:**The official name of the global technology event is “CES*^*®**.”**Please do not use “Consumer Electronics Show” or “International CES” to refer to the event.*   *High-definition video b-roll from CES is available for easy download on **CESbroll.com**.*   *About CES:*   CES is the world’s gathering place for all who thrive on the business of consumer technologies. It has served as the proving ground for innovators and breakthrough technologies for 50 years—the global stage where next-generation innovations are introduced to the marketplace. As the largest hands-on event of its kind, CES features all aspects of the industry. Owned and produced by the Consumer Technology Association (CTA)^TM, it attracts the world’s business leaders and pioneering thinkers. Check out CES video highlights. Follow CES online at CES.tech and on social.  

         
*UPCOMING EVENTS*        
• ​​*Winter Break*
      • *Digital Patriots Dinner*
March 9-12, Snowmass, CO       April 4, National Portrait Gallery, Washington, DC
• *CES on the Hill*       • *Innovate! and Celebrate*
April 5, Washington, DC       October 9-11, San Francisco, CA
• *CES Asia 2017*       • *CES 2018*
June 7-9, Shanghai, China       January 9-12, Las Vegas, NV
• *CEO Summit*        
June 21-24, Amalfi Coast, Italy        

   
  View source version on businesswire.com: http://www.businesswire.com/news/home/20170108005060/en/ Reported by Business Wire India 5 hours ago.

Big chill sweeps through Europe causing death and mayhem

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Heavy snowfall and below-freezing temperatures have continued to sweep the European continent, causing more than a dozen deaths, grounding aeroplanes and crippling ferries in Italy and Turkey. Reported by Brisbane Times 3 hours ago.

Italy’s 5 Star divorces UKIP, begins relationship with ALDE

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Italy’s 5 Star divorces UKIP, begins relationship with ALDE Italy's maverick 5 Star Movement should cut ties with the anti-European Union UK Independence Party (UKIP) and consider hooking up with the Liberals in the European Parliament, 5 Star founder Beppe Grillo said yesterday (8 January). Reported by EurActiv 4 hours ago.

Arsenal’s £55 million bid for Andrea Belotti rejected by Torino

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Torino have rejected a bid from Arsenal for Italy striker Andrea Belotti believed to be in the region of £55 million.

The post Arsenal’s £55 million bid for Andrea Belotti rejected by Torino appeared first on Firstpost. Reported by Firstpost 3 hours ago.

3SBio Inc. Appoints Dr. Zhenping Zhu as President of Research & Development and Chief Scientific Officer

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SHENYANG, China, Jan. 9, 2017 /PRNewswire/ -- 3SBio Inc., (HKEX:1530) ("3SBio" and together with its subsidiaries the "3SBio Group") is pleased to announce that Zhenping Zhu, MD, PhD, has joined 3SBio as its new President of Research & Development and Chief Scientific Officer.

"We are pleased to welcome Dr. Zhu to 3SBio where he will be responsible for the 3SBio Group's research and development platform, leading a team of experienced researchers and scientists," commented Dr. Jing Lou, Chairman and CEO of 3SBio. He continued, "Dr. Zhu's deep expertise in immunology and world-class track record of successful innovation in antibody development is well-aligned with our work in oncology, auto-immune and nephrology diseases, where we are working to accelerate potential breakthrough therapies to fill the tremendous unmet needs of patients worldwide."

"I'm very excited to be joining the 3SBio team and look forward to contributing to its continued development as a leading biopharmaceutical company focused on innovative drug development," commented Dr. Zhu.

Dr. Zhu has extensive research and development experience within the biotechnology industry. Prior to joining 3SBio, He served as Executive Vice President, Global Biopharmaceuticals, Kadmon Corporation, and President of Kadmon China. Prior to joining Kadmon, Dr. Zhu was Vice President and Global Head, Protein Sciences and Design, at Novartis and was responsible for the discovery, design and selection of novel biologics medicines that address various human diseases. Prior to Novartis, Dr. Zhu worked for over 12 years at ImClone Systems as Vice President of Antibody Technology and Immunology, and has led multiple teams responsible for the  successful discovery and early development of  several FDA-approved novel antibodies for various oncology indications, including cetuximab (Erbitux®), ramucirumab (Cyramza®), necitumumab (Portrazza®), and olaratumab (Latruvo®). Dr. Zhu is the inventor of both ramucirumab and necitumumab, and one of the major contributors to cetuximab and olaratumab.

Dr. Zhu has been working in the field of antibody therapeutics for over 30 years, including 23 years of research and management experience in global biopharmaceutical industry. He earned his medical degree from Jiangxi Medical College, passed USMLE and is certified by US ECFMG. He received his MSc in Pharmacology from the Institute of Hematology, Chinese Academy of Medical Sciences (CAMS) and Peking Union Medical College (PUMC), and his PhD in Immunology and Pathology from Dalhousie University. Dr. Zhu performed his postdoctoral work in antibody and protein engineering at Genentech Inc.. From 1996 to 2006, Dr. Zhu held an adjunct professorship at the Institute of Hematology, CAMS & PUMC. Dr. Zhu has published over 190 peer-reviewed scientific papers, and is listed as the inventor or co-inventor of more than 50 US and international patents and patent applications.

*About 3SBio*

3SBio is a fully-integrated biotechnology company in China with market-leading biopharmaceutical franchises in oncology, auto-immune diseases and nephrology.  TPIAO, the only commercialized recombinant human thrombopoietin ("rhTPO") product in the world; Yisaipu, the first-to-market recombinant human tumor necrosis factor-α receptor II (TNFR) – IgG Fc fusion protein for the treatment of rheumatoid arthritis; and EPIAO and SEPO, recombinant human erythropoietin ("rhEPO") products.  3SBio is focused on building an innovative product pipeline, with over 16 National Class 1 candidates under development. 3SBio manufacturing capabilities include recombinant proteins, monoclonal antibodies and chemically synthesized molecules, with production centers in Shenyang, Shanghai, Hangzhou, Shenzhen and Como, Italy. 3SBio is actively pursuing international expansion through acquisition, licensing and partnerships.

Please visit www.3sbio.com for additional information.

*Contacts*

Rachel You
Director, Finance
3SBio Inc.
Suite 3529 35/F Central Plaza
18 Harbour Road, Wanchai
Hong Kong
Tel: +852 2593-1243
Email: youfei@3sbio.com

Tom Folinsbee
Director, Corporate Development
3SBio Inc.
Suite 3529 35/F Central Plaza
18 Harbour Road, Wanchai
Hong Kong
Tel: +852 2593-1243
Email: tomfolinsbee@3sbio.com

  Reported by PR Newswire Asia 1 hour ago.

Manchester United target is considering future, confirms chief

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Juventus chief executive Giuseppe Marotta has confirmed Patrice Evra was left out of the squad as he is weighing up a move away from Italy.

The post Manchester United target is considering future, confirms chief appeared first on teamtalk.com. Reported by Team Talk 1 hour ago.

Arsenal transfer news: Gunners have not made a £56m offer for Torino striker Andrea Belotti despite claims in Italy

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Arsenal deny Torino director Gianluca Petrachi's claim that they have offered €65m to sign the Italian international Reported by Independent 39 minutes ago.

Africa Eco race: Paolo Ceci clinches stage 6

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Italy’s Paolo Ceci produced a stunning performance to clinch the 6th stage of the Africa Eco race on Sunday. Reported by euronews 2 hours ago.

Sufjan Stevens Working On Film Score Project

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Call Me By Your Name will debut this month...

*Sufjan Stevens* is set to provide the score for new drama Call Me By Your Name.

*The Hollywood Reporter* states that the songwriter is working on the soundtrack for the film, which will premiere at Sundance Film Festival on January 22nd.

The film is a gay love story set in Northern Italy, and is based on Andre Aciman’s novel of the same name.

Directed by Luca Guadagnino, Call Me By Your Name stars Armie Hammer, Timothee Chalamet, and Michael Stuhlbarg.

The film is Sufjan Stevens' first new project since his wonderfully moving 2015 album 'Carrie & Lowell'.

****B*uy Clash Magazine*** Reported by Clash 3 hours ago.

The Folly of Trumponomics

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This article appears in the Winter 2017 issue of The American Prospect magazine. Subscribe here. 

Donald Trump’s administration will implement large tax cuts and substantial financial deregulation. President Trump may also change U.S. policies on trade, although precisely what he will do is less clear—and the shift may be more rhetorical than real. Trump is also likely to substantially cut or privatize federal spending. To the extent that his policies add up to a coherent economic strategy, they are reminiscent of Ronald Reagan’s, but with an extra dose of cronyism and the wild card of economic nationalism.

Trump himself and several of his key appointees are also poster children for oligarchy and even kleptocracy—government operated to serve the business interests of elites, including top officials. The intermingling of business, family, and government as the Trump administration takes shape unfortunately parallels what I have observed in corrupt developing countries over the past 30 years, including during my time as chief economist for the International Monetary Fund.

Despite emerging contradictions between his presidency and who he purported to be during the campaign, President Trump is likely to please his supporters in the short run. His tax cuts, promoted by supporters for their supposed supply-side benefits, could provide a temporary Keynesian jolt to demand. His gestures on trade, like pressuring Carrier to keep jobs in Indiana, will strike a tough posture and save a very small number of jobs. But over time, Trump supporters—and the rest of the country—will become profoundly disappointed as economic security, opportunity, and prosperity are undermined for most Americans.

 

*Taxing, Spending, and Obfuscating*

Amid this muddle, one thing is clear. There will be a big tax cut for upper-income Americans—this is the implication of Trump’s pledges during the presidential campaign, and this is also what Senate and House Republicans want. Steven Mnuchin, the nominee for Treasury secretary, says there will be no reduction in the amount of tax actually paid by rich Americans—arguing there will also be a limit on the deductions they can take. But the math of Trump’s proposals is quite straightforward, and the result of the planned reductions in personal, corporate, capital gains, and inheritance taxes is that the rich will undoubtedly pay less.

In other words, we will re-run a version of the economic experiment previously conducted in the 1980s under Reagan and again under George W. Bush. James Kwak and I wrote a book, White House Burning, on this issue, and there is really very little disagreement among careful analysts on what happened over the past 30 years. Lower taxes on rich people led to higher post-tax income for them and not much by way of higher incomes for others; inequality went up. Despite supply-side claims, reduced revenues increased budget deficits, giving Republicans a pretext for deeper spending cuts. During the same time period, manufacturing jobs declined, the median wage stagnated, and the job market became increasingly polarized.

Albin Lohr-Jones/picture-alliance/dpa/AP Images

Steven Mnuchin arrives at Trump Tower, in New York.

As for economic insecurity—an issue emphasized by Mr. Trump—this is about to get much worse. Health insurance will be stripped away and partly privatized at the behest of House Republicans, who also hope to turn Medicare into some form of voucher program—effectively reducing benefits for older and lower-income Americans. They may face some resistance from their colleagues in a closely divided Senate, but Medicare already has a (voluntary) voucher component, the so-called Medicare Advantage program, which enrolls about a third of Medicare recipients. To provide greater space for tax cuts, Medicaid and the Supplemental Nutrition Assistance Program (previously known as food stamps) will likely become some form of block grant (a preset transfer amount to state and local government)—which is really just a way to cut these forms of assistance to people in need (many of whom have jobs, but are paid very low wages).

It is literally impossible to have a rational conversation—either about the data or about what happened in our recent economic history—with some leading House Republicans. Now this House Republican belief system appears likely to motivate and guide economic policy—Trump needs their support to pass legislation, and he is working closely with them, including Mike Pence, formerly a leading House Republican, as vice president, and Representative Tom Price, the nominee to be Secretary of Health and Human Services.

As for measuring potential loss of revenue from tax cuts, not to worry—the House Republicans have already changed the rules to reflect so-called “dynamic scoring.”  The Tax Policy Center estimates that under Trump’s tax plan, “federal revenues would fall by $6.2 trillion over the first decade before accounting for added interest costs. Including interest costs, the federal debt would rise by $7.2 trillion over the first decade and by $20.9 trillion by 2036.” But the official scoring by the Congressional Budget Office will likely show no such loss of revenue—because the Republican Congress has already mandated that tax cuts will stimulate economic growth by an enormous (and implausible) amount. The alternative (i.e., distorted) reality of Trump’s campaign rhetoric is about to show up also in the driest possible budget documents.

Watch carefully what happens on “infrastructure.” During the campaign, Trump seemed to support upgrading our national road, rail, and air transportation systems—and the need for renewal across the country goes much deeper. But as more detailed plans become evident, it seems likely that the actual Trump infrastructure program will just be a cover story for tax credits and privatizations—not genuine public infrastructure.

Expect a very large increase in our budget deficit and national debt, exactly as was forecast by reputable analysts during the election campaign. This might provide some short-term stimulus to the economy, as my colleague Olivier Blanchard suggests. In that scenario, there are longer-term problems in the form of higher deficits and more debt. As Blanchard points out, inequality is very likely to increase.

And in light of what has happened since the election, it’s not entirely clear that economic growth will pick up—keep in mind we are already in a recovery and the job creation numbers have been good for a long while (nearly 200,000 net new jobs per month since early 2010). And in recent weeks, stock prices have increased, but the yield on bonds has also jumped higher (up to 2.2 percent on the ten-year Treasury bond on November 15 and now around 2.4 percent; compared with 1.8 percent immediately before the election). This is a big and unexpected move, signaling that investors are worried about the potential impact on inflation.

It has been a long time since we had significant inflation in the United States, and many people seem to have forgotten how unpopular it is. Ronald Reagan told Americans they should care about the “misery index”—the sum of inflation and unemployment. And inflation is almost always bad for people on lower incomes, including pensions (which will not be fully indexed to rising costs). Trump’s supporters will not be so delighted once the full implications of his tax cuts and other macroeconomic policies begin to sink in.

Any Trump boom could also be short-circuited by the deepening crisis in Europe, even without the added assault of Trump-style protectionism. With the fall of the Italian government and Italy on the verge of a banking crisis—on top of the UK’s Brexit (planning to leave the European Union), and the rise of far-right Marine Le Pen in France—the European Union and its elements are coming under increasing pressure.

Ironically, the instigators of Europe’s latest economic crisis are Trump-style populists—and they draw explicit inspiration from Trump’s political brand. But their success will weaken the European economy, and hurt the U.S. economy and Trump’s brand at home.

 

*Financial Deregulation*

House Republicans are dead set on repealing financial regulation—rolling back the rules to what they were before 2008. Excessive financial deregulation leads to a predictable cycle of boom-bust-bailout, in which rich people do very well, and millions of people lose their jobs, their homes, and their futures.

During the last crisis, presumptive Treasury Secretary Mnuchin bought IndyMac, a distressed bank, receiving a great deal of help from the government—and then sold it at a large profit. At the same time, millions of Americans lost everything in the housing crash and their appeals for assistance of any kind fell on deaf ears. In fact, appeals for the reasonable restructuring of loans made by IndyMac were apparently also turned down; this lender has a reputation as ruthless (and careless) in its foreclosure practices.

If the Treasury Department ends up being headed by someone who gains from economic volatility, how careful would officials really want to be? Trump himself spoke of the housing crisis as a great opportunity—for him, that is. Rich and powerful people often do well from extreme booms and busts; most Americans do not.

Deregulating finance is always sold with the claim that it will boost growth, and in the short run perhaps the headline numbers will improve—but only because we do not measure the economy with any regard for macroeconomic risk. If we had risk-adjusted employment and output (and corporate profits) during the George W. Bush years, we would have realized that economic expansion was based on unsustainable risk-taking in the financial sector—manifest in the crisis of September 2008 and the deepest recession since the Great Depression.

respres/Creative Commons

Trump himself spoke of the housing crisis as a great opportunity—for him, that is. If the Treasury Department ends up being headed by someone who gains from economic volatility, how careful would officials really want to be? 

In the House Republican mantra, honed over six years of refusing to cooperate with President Barack Obama, financial deregulation did not contribute to the meltdown of 2008. These congressional representatives fervently believe that growth has been slow because of a supposedly high burden of regulation on business—despite the fact that the United States is one of the easiest places in the world to do business.

In reality, growth has been slow in recent years precisely because the financial crisis was so severe—and deregulation will set us up for another crisis. The question is just how long this will take to become evident to voters.

On finance, as well as on taxes, Trump and the House Republicans are likely to work hard and effectively together—creating what will become a more extreme version of the unequal and unstable George W. Bush–era economy. Expect consequences that are similar to what happened during and after the Bush regime.

 

*Trade*

There were some defects in the Trans-Pacific Partnership (TPP), as both presidential candidates discussed during the election campaign. But refusing to implement the TPP agreement or altering the North American Free Trade Agreement (NAFTA) is not likely to bring back manufacturing jobs—just as gutting the Environmental Protection Agency would not bring back coal.

There is a defensible version of economic nationalism, which includes investing in people (education and opportunities), building public infrastructure, and working to ensure that new technology creates jobs. Transitioning to a lower-carbon and greener economy can create both jobs and exports.

But Trump’s strategy is very far from this. In the short run, Trump may score some points with his supporters by talking tough on trade, although his corporate allies are likely to reduce that to mostly rhetoric. The president is likely to have a number of high-profile photo ops, when he strong-arms (or pays) a few corporations to keep a small number of jobs in the United States. 

The key part of reality missing from Trump’s vision is that manufacturing jobs have disappeared in recent decades primarily because of automation—not because of trade agreements or the supposedly high burden of taxation and regulation on business; again, the United States is one of the best and easiest places in the world to start and run a company.

The surge in imports from China in the early 2000s did have a negative impact on manufacturing, but this effect is hard to undo—and threatening a trade war (or talking on the phone with the president of Taiwan) will either have no significant effect or prove disruptive. Imposing tariffs on Chinese imports will result in retaliation; trade wars do not typically lead to higher growth or better jobs.

And one impact of Trump—a sharp appreciation of the dollar since his election—runs directly against what he wants to achieve. A stronger dollar means it is harder for firms to export from the United States, while imports become cheaper. The U.S. trade deficit (exports minus imports) will increase if the dollar remains at its current level.

If Trump’s fiscal policies push interest rates higher, as currently seems likely—either because of the market reaction or how the Federal Reserve feels compelled to respond—that will further strengthen the dollar and undermine manufacturing jobs in the United States. Again, the question is how long it will take his supporters to notice that Trump oversold them on what he would do. At some point, perhaps, this tips over into the perception that they—and everyone else—have actually been deceived.

 

*Special Interests and Crony Capitalism*

For now, Trump will retain some popularity, courtesy of a fiscal stimulus and economic nationalism. But over a longer period of time, reality will catch up with him. And at the heart of what will go wrong with the Trump administration—in perception and reality—is the role of special interests.

Candidate Trump made a big deal of wanting to “drain the swamp,” by which he meant reducing the power of special interests, including corporate lobbyists. Perhaps his highest-profile pledge in this regard was to introduce term limits for members of Congress—in fact, this was the first in a long list of commitments made in his Gettysburg speech on October 22, 2016. But one day after the election, Mitch McConnell, Republican leader in the Senate, said that there will be no such term limits. This takes the issue completely off the table.

On swamp-related issues more broadly, lobbyists were running Trump’s transition team, and the appointment process looks like a feeding frenzy for special interests, as they compete to get industry-friendly people into key positions and to advance their legislative agenda.

The bad news for the broader economy is that the Trump circle could allocate to themselves tens of billions of dollars, through government contracts, insider trading, and other mechanisms. The U.S. Constitution cleverly creates an intricate set of checks and balances precisely to put constraints on executive authority. But with Republicans in control of the executive branch, the legislature, and much of the judiciary (including the Supreme Court), there will not be much by way of disclosure, let alone effective oversight.

Representative Jason Chaffetz, chair of the powerful House Committee on Oversight and Government Reform, says he will further investigate Hillary Clinton’s use of a private email server. How exactly that will help ensure good governance over the next four years is unclear. The potential self-dealing of President Trump, his family, and his colleagues will cry out for serious investigations, but there will be no congressional venue for that unless Democrats take back the House or the Senate in 2018.

The United States is a rich nation, with the most advanced economy, military, and technology the world has ever seen. We also have its most advanced oligarchy. In the Trump iteration, special interests seem likely to focus a great deal of attention on enriching themselves and their friends—“the rules are for other people” seems likely to become the motto of this presidency.

Trump has already indicated that he may pursue foreign policy in ways that advance his (or his family’s) private business interests. And of course, Trump is famously proud of how he legally manipulates the bankruptcy system—a skill he shares with Wilbur Ross (incoming commerce secretary) and Steven Mnuchin (Treasury secretary).

None of these people inspire confidence in the outcomes for the broader economy. Most likely their policies will further enrich powerful insiders, cut effective worker earnings, and add little if anything to the productive economy.

All oligarchs always say the same thing—their projects are good for the country. And in the end, the outcomes are always identical: They have the yachts and the offshore accounts; everyone else gets nothing.

In Why Nations Fail, Daron Acemoglu and James Robinson documented the myriad ways in which powerful people around the world help themselves to economic riches and, along the way, undermine political institutions. There is often some short-term growth, seen in the headline numbers, but oligarch-centric economies are never inclusive—and lasting benefits always prove elusive. In fact, as those authors emphasize, oligarchic control is often a prelude to nations running into serious crisis and state failure.

If, by the time of his inauguration, Trump refuses to divest himself from his business interests—and if he continues to refuse to publish his tax returns (which would presumably show the full extent of his foreign relationships)—then we are just another profoundly oligarchic country, albeit with nuclear weapons.

What would be the U.S. role in the world if this happens? Probably we will have little sway. How can you lead other democracies when you are a laughingstock? Some other corrupt countries might want to cooperate, but this is worth very little. We are in the world of G-Zero. No one is in charge and there is chaos in many places. Only people who thrive on chaos will do well. Reported by The American Prospect 3 hours ago.

Pope to diplomats: when it comes to politics, peace must be more than a theory

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Vatican City, Jan 9, 2017 / 04:29 am (CNA/EWTN News).- Following a year marred by war and terrorism, Pope Francis told diplomats Monday that for 2017, peace has to be more than just an idea or a nice theory, but must be actively pursued with concrete policies aimed at promoting the common good and the dignity of the human person.

“Peace is a positive good...it is more than the absence of war. Nor can it be reduced to the maintenance of a balance of power between opposing forces,” the Pope said Jan. 9. Instead, peace “demands the commitment of those persons of good will who thirst for an ever more perfect reign of justice.”

While some nations seem to take for granted long periods of peace enjoyed since the close of the First World War, for millions of others peace “remains merely a distant dream.”

“Millions of people still live in the midst of senseless conflicts,” he said, noting that we are frequently bombarded “by images of death, by the pain of innocent men, women and children,” as well as by the grief of those who have lost loved ones due to violence and the “drama” of forced migration.

In the current global climate of fear, apprehension, uncertainty and anxiety for both the present and future, “a word of hope” is needed, he said, which is capable of indicating a path on which to move forward.

Pope Francis spoke to the Diplomatic Corps Accredited to the Holy See as part of his traditional exchange of New Year’s greetings with the diplomats. There are currently 182 ambassadors of other countries to the Holy See, 88 of whom reside in Rome.

For the Pope, part of the peace-building process means eradicating the causes of violence and injustice, one of which is the “deplorable arms trade and the never-ending race to create and spread ever more sophisticated weaponry,” which he has frequently condemned.

In his speech, Francis said that one “particularly disturbing” example of negative effects of the arms trade “are the experiments being conducted on the Korean Peninsula.”

The nuclear tests that are continually being conducted there “destabilize the entire region and raise troubling questions for the entire international community about the risk of a new nuclear arms race,” he said.

Quoting St. John XXIII, the Pope stressed that “justice, right reason and the recognition of human dignity cry out insistently for a cessation to the arms race.”

“The stockpiles of armaments which have been built up in various countries must be reduced all round by the parties concerned. Nuclear weapons must be banned,” he said, adding that the Holy See seeks to promote “an ethics of peace and security that goes beyond that fear and closure which condition the debate on nuclear weapons.”

Francis also threw in what seemed to be a plug for tighter gun control. Turning to the sale of conventional weapons, he said that easy access to arms, “including those of small caliber,” not only “aggravates various conflicts, but also generates a widespread sense of insecurity and fear.”

“This is all the more dangerous in times, like our own, of social uncertainty and epochal changes,” he said.

On the topic of different forms of fundamentalism that have gripped the global scene over the past year, the Pope said that when it comes to religion, “every expression of religion is called to promote peace.”

“There has been no shortage of acts of religiously motivated violence, beginning with Europe itself, where the historical divisions between Christians have endured all too long,” he said, noting that healing the wounds of the past means above all “journeying together toward common goals” on a path of genuine dialogue.

However, he noted that “sadly” religion has been used as “a pretext for rejection, marginalization and violence.”

Over the past year, fundamentalist terrorism “has also reaped numerous victims throughout the world,” he said, pointing to Afghanistan, Bangladesh, Belgium, Burkina Faso, Egypt, France, Germany, Jordan, Iraq, Nigeria, Pakistan, the United States of America, Tunisia and Turkey as just a few examples.

“We are dealing with a homicidal madness which misuses God’s name in order to disseminate death, in a play for domination and power,” the Pope said, renewing his appeal for all religious authorities “to join in reaffirming unequivocally that one can never kill in God’s name.”

“Fundamentalist terrorism is the fruit of a profound spiritual poverty, and often is linked to significant social poverty,” he said, noting that the only way for it to be fully defeated is with “the joint contribution of religious and political leaders.”

Pope Francis insisted that political authorities ought to focus not just on the security of their own citizens, “a concept which could easily be reduced to a mere ‘quiet life,’” but are also concerned with working “actively” for the growth of peace on a global level.

Peace, he said, “is an active virtue, one that calls for the engagement and cooperation of each individual and society as a whole.”

Turning to the Jubilee of Mercy, Francis said part of building “a culture of mercy” means eliminating indifference and striving to become societies that “are open and welcoming toward foreigners and at the same time internally secure and at peace.”

“This is all the more needed at the present time, when massive waves of migration continue in various parts of the world,” he said, calling for a “common commitment” to offering migrants and displaced persons “a dignified welcome.”

On the topic of migrants, the Pope stressed that respect must be given both right of every person to migrate while at the same time ensuring that incoming foreigners are fully integrated into their new society without feeling “their security, cultural identity and political-social stability are threatened.”

However, he also said incoming migrants must “not forget that they have a duty to respect the laws, culture and traditions of the countries in which they are received.”

For public authorities to have prudence “does not mean enacting policies of exclusion vis-à-vis migrants,” but rather entails “evaluating, with wisdom and foresight, the extent to which their country is in a position, without prejudice to the common good of citizens, to offer a decent life to migrants, especially those truly in need of protection,” he said.

The issue of migration isn’t one that just some countries have to face while others are indifferent, he said, stressing that “all should feel responsible” for pursuing international policies aimed at promoting solidarity and the common good.

Pope Francis then voiced his thanks to the countries who have taken on the bulk of the burden of the migration crisis, naming Italy, Germany, Greece and Sweden in particular.

He called for a quick and peaceful resolution to the “brutal conflict” in Syria, asking the international community “to make every effort to encourage serious negotiations for an end to the conflict, which is causing a genuine human catastrophe.”

“Each of the parties must give priority to international humanitarian law, and guarantee the protection of civilians and needed humanitarian aid for the populace,” he said, voicing his hope that the recently-signed truce “will be a sign of hope for the whole Syrian people, so greatly in need of it.”

The Pope also urged swift resolutions to the conflicts in Ukraine, Iran and Yemen, and renewed his appeal for Israel and Palestine to resume dialogue aimed at “a stable and enduring solution that guarantees the peaceful coexistence of two states within internationally recognized borders.”

“No conflict can become a habit impossible to break. Israelis and Palestinians need peace. The whole Middle East urgently needs peace!”

Francis closed his speech saying peace is “a gift, a challenge and a commitment.” True peace, he said, “can only come about on the basis of a vision of human beings capable of promoting an integral development respectful of their transcendent dignity.”

“This, then, is my prayerful hope for the year just begun: that our countries and their peoples may find increased opportunities to work together in building true peace.”

He reaffirmed the commitment on the part of the Holy See and the Secretariat of State, saying they will “always be ready to cooperate with those committed to ending current conflicts and to offer support and hope to all who suffer.” Reported by CNA 1 hour ago.

Italy: Sale Of Serie A Broadcasting Rights, The Regional Administrative Court Of Lazio Annuls The Decision Of The Italian Competition Authority - McDermott Will & Emery

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The broadcasting rights for the Italian Premier League "Serie A" are allocated, according to Legislative Decree No. 9 of 9 January 2008, through a tender issued by the Lega Calcio. Reported by Mondaq 1 hour ago.

Party Like The Dow Is 19,999: US Futures Dip As Global Currencies Stumble; Oil Down, Gold Up

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Party Like The Dow Is 19,999: US Futures Dip As Global Currencies Stumble; Oil Down, Gold Up European, Asian stocks fall and U.S. equity-index futures traded mixed on Monday with fresh memories of the Dow Jones rising to under 1 point of 20,000 on Friday. The dollar has rebounded on fresh geopolitical concerns, while the pound extends its decline from Friday and has slide to 10 week lows on a Sunday interview from Theresa May which suggested a "Hard Brexit" may be in the cards. Oil dropped below $54 a barrel on Iran supply concerns, while gold rose 0.6% to $1,180. 

Top stories include potential candidates to head the Federal Reserve in 2018 suggest they would pursue tighter policy; McDonald’s selling control of China business to Citic, Carlyle; Air Products looking to buy China’s top industrial gas maker.

A key focus for the week will be a news conference on Wednesday at which Donald Trump may give more details of his policies before his Jan. 20 inauguration. Expectations of more economic stimulus from a Trump administration have helped push U.S, stocks and bond yields higher since his victory in the Nov. 8 election.

Political risks have emerged as the week begins, rippling across FX markets with the pound, Turkish lira and South Korean won leading declines, while gold rose on haven demand and Chinese buying.

The dollar edged higher on Monday, boosted by robust U.S. wage growth data strengthening the case for more Federal Reserve interest rate increases, while Britain's pound fell on Prime Minister Theresa May's hint at no membership of the EU's single market. Still, Britain's blue-chip FTSE 100 index nonetheless hit a record high, continuing its streak of all time highs, as the first full trading week of 2017 on London markets began. The pan-European STOXX 600 index dropped 0.4% in early deals.

Sterling dropped to a 10-week low after the Prime Minister Theresa May indicated she prioritized regaining control of immigration during Brexit negotiations, while tensions between North and South Korea and debates on constitutional changes in Turkey put an index of developing currencies on track for the steepest drop in three weeks. Telecoms and real estate were among the biggest losers in European shares, while oil dropped for the first time in four days. Gold rose as investor holdings posted the first back-to-back increase since the U.S. election.

"The rise in the FTSE is really down to the weakness in sterling, but the Brexit news is not great so I don't see the FTSE gaining too much," said Ipek Ozkardeskaya, market strategist at London Capital Group.

The Turkish lira dropped to new record lows after a warning from Moody's about the country's bad loan situation, while deputy PM Canikli blamed an "unacceptable campaign" to move interest rates higher.

As Bloomberg notes, currencies, not bonds, have emerged as the preferred way for investors to express displeasure with political developments, because "they are seen as less vulnerable to intervention", which may be true in most places except China where after this weekend's report that Chinese reserves dropped by another $41 billion, all eyes are on how Beijing responds to the relentless capital flight. The offshore yuan was down 0.4 percent following Friday’s 0.9 percent retreat. The central bank set the onshore yuan reference rate 0.9 percent weaker against the dollar, though still stronger than some bank models predicted. 

Meanwhile, British PM May said Sunday that negotiations on Brexit will be about “getting the right relationship, not about keeping bits of membership.”  A so-called hard Brexit may push the Bank of England to keep rates lower for longer, while weakening the pound and supporting foreign-focused companies in the main stock index, Bloomberg added. As a result, the pound fell to $1.2159, the lowest since Oct. 31, at 11:04 a.m. in London.

"Since October it's become clear that sterling has a very binary relationship with political news, and anything which suggests a 'hard Brexit' sends sterling down, and anything that suggests a 'soft Brexit' sends sterling up. That’s been the case since the party conference in October," said Rabobank currency strategist Jane Foley.

“Politics is a much more important factor these days for currency markets than it used to be,” said Adam Cole, head of global foreign-exchange strategy in London at Royal Bank of Canada. “There is a lot more political uncertainty now.”

In light of the geopolitical uncertainty, after dipping in initial trade, the Bloomberg Dollar Spot Index rebounded from an earlier loss and was up 0.2%.

In Asia, MSCI's ex-Japan Asia-Pacific shares index was flat on the day, having risen as much as 0.5 percent after posting a rare loss in the previous session. Australia's S&P/ASX200 rose 0.9 percent while Hong Kong shares rose 0.2%. Trading was light because Japan is shut for a holiday.

In Europe, the Stoxx Europe 600 Index fell 0.5%, on course for its biggest decline in almost four weeks. The main outperformer was the U.K. market, with the FTSE 100 Index heading for a 10th consecutive daily increase, as stronger economic data combined with a declining pound spurred buying.

· Deutsche Lufthansa AG tumbled as much as 5.6 percent after analysts were underwhelmed by the airline’s guidance update.
· Swedish bank Svenska Handelsbanken AB dropped after a downgrade at Credit Suisse Group AG.

The S&P 500 futures were little changed. The underlying gauge rose 0.4 percent to a record close of 2,276.98 on Friday in New York.

In rates, German 10-year government bond yields last traded at 0.29%, down 0.5 basis points on the day. It earlier rose close to 0.33 percent, its highest since Dec. 19, after data showed German exports rose 3.9 percent in November, their strongest monthly gain since May 2012 and far ahead of forecast.

* * *

*Market Snapshot*

· S&P 500 futures down less than 0.1% to 2271
· Stoxx 600 down 0.4% to 364
· FTSE 100 up 0.2% to 7228
· DAX down 0.4% to 11555
· German 10Yr yield down less than 1bp to 0.29%
· Italian 10Yr yield down 6bps to 1.9%
· Spanish 10Yr yield down 6bps to 1.48%
· S&P GSCI Index down 0.8% to 395.1
· MSCI Asia Pacific down 0.2% to 138
· Hang Seng up 0.2% to 22559
· Shanghai Composite up 0.5% to 3171
· S&P/ASX 200 up 0.9% to 5807
· US 10-yr yield down 2bps to 2.4%
· Dollar Index up 0.23% to 102.45
· WTI Crude futures down 1.7% to $53.06
· Brent Futures down 1.7% to $56.11
· Gold spot up 0.3% to $1,176
· Silver spot down less than 0.1% to $16.49

*Top Headline News*

· Potential Fed Chairs Suggest They Would Pursue Tighter Policy: potential candidates to head the Fed in 2018 suggested that monetary policy would be tighter if they were in charge
· McDonald’s Sells Control of China Business to Citic, Carlyle: McDonald’s in agreement to sell 80% of its operations in China and Hong Kong to a consortium including Citic and Carlyle Group
· Air Products Looks to Buy China’s Top Industrial Gas Maker: target shares jump in Hong Kong trading after intent letter
· Morgan Stanley, UBS Said to Plan Boosting China JV Stakes: banks plan to boost holdings to regulatory threshold of 49%
· Frozen in Detroit: Trump Stumps Builders of Cars in Age of SUVs
· Fiat Chrysler Spends $1 Billion on U.S. Amid Trump Squeeze
· VW Taps Hippie Heritage With Electric Microbus Amid Revamp
· Volvo Cars Plans to Export Half of South Carolina Plant’s Output
· FBI Said to Have Arrested Ex-VW Exec on Conspiracy Charges: NYT
· ‘Rogue One’ Cruises to Fourth Weekend Atop Box Office

*Asian equity markets traded higher *after a strong close in the US on Friday, where all 3 major US equities posted gains and DJIA came within 0.37 points of the 20,000 level. ASX 200 (+0.9%) outperformed to trade in the green for the fifth consecutive day, with the IT sector taking the impetus from its US counterparts to lift the index higher after a flat open. However, gains were capped as a slightly stronger AUD, and lower government iron ore demand predictions weighed on mining names. KOSPI (flat) lagged amid uncertainty in the country as the parliamentary committee held its last hearing for the case surrounding impeached President Park, with South Korean heavyweight SK Hynix shares trading higher by over 3% to help keep the index afloat. In China, markets were mixed with Shanghai Comp (+0.5%) boosted by a relatively firmer liquidity operation by the PBoC and Hang Seng (+0.3%) choppy initially as China's CSRC stated it will increase the importance of risk prevention in the stock market this year, however rallied as the session progressed to conform to the upbeat tone. Nikkei 225 was closed due to the Coming of Age Holiday.

Top Asian News

· North Korean Nukes Seen Hurting Trump Re-Election Prospects: nation will probably claim with credibility within four years that it can hit U.S. with a nuclear weapon
· Singapore Demands Hong Kong Return Seized Military Vehicles: City-state yet to open direct dialog with China on carriers
· Rubber Prices Climb as Deadly Floods Damage Thai Plantations: Inundation set to affect rubber supplies in weeks ahead

*European equities (-0.4%) trade broadly lower this morning, *with the energy sector the most notable laggard. In terms of a stock specific basis, Volkswagen (+4%) are the best performer in the DAX after reporting FY 2016 brand sales +2.8%. Elsewhere, the FTSE 100 bucks the trend to trade in positive territory (+0.1%), with exporters benefitting from the softness in GBP, with some also talking about whether more monetary easing may be necessary after Theresa May indicated over the weekend that single market membership may not be achievable in Brexit talks.

European Econ data

· German Nov. Ind. Production Rises 0.4% M/m; Est. +0.6% M/m
· German November Exports +3.9% M/m; Est. +0.5% M/m
· Bank of France December Business Sentiment Rises to 102 vs 101
· Italy Unemployment Rate Rose to 11.9% in November; Est. 11.6%
· Eurozone January Sentix Investor Confidence 18.2 vs Est. 12.8
· Eurozone Nov. Unemployment Rate 9.8%; Est. 9.8%

Top European News

· German Industrial Output Climbs in Sign of Economic Strength: output gained 0.4% in November vs estimated 0.6% increase; Economy Ministry sees solid output growth in winter half
· May Signals U.K. to Quit Single Market to Curb Immigration: May denies “muddled” thinking, pledges Brexit details in weeks; Pound weakens as May’s comments indicate hard Brexit
· Christmas Sports Bets Bring Tough End to Year for William Hill: profit will be about 20 million pounds less then expected
· Euro-Area Unemployment Holds at 7-Year Low as Growth Strengthens: joblessness remains at 9.8%, in line with estimate; unemployment lowest in Germany, highest in Greece and Spain
· Italian Unemployment Rate Rises to Highest Since June 2015
· Lufthansa Forecasts ‘Clearly Negative’ Trend in Yields for 2017: shares decline; outlook underwhelming, analysts say
· Fresenius Medical Care Shares Slump After Patient-Aid Subpoena: shares down the most in almost 2 months
· Italy Clears Hurdle in Monte Paschi Rescue Without Even Trying: European Commission has to approve application for state aid

*In currencies, *the pound fell to a 10-week low, or $1.2159, the lowest since Oct. 31, at 11:04 a.m. in London. The Bloomberg Dollar Spot Index rebounded from an earlier loss and was up 0.2 percent. The offshore yuan was down 0.4 percent following Friday’s 0.9 percent retreat. The central bank set the onshore yuan reference rate 0.9 percent weaker against the dollar, though still stronger than some bank models predicted.  The won fell 1.3 percent and the lira 2.2 percent, dragging the MSCI Emerging Markets Currency Index 0.4 percent lower for the biggest drop since Dec. 15. The yen fell 0.2 percent to 117.28 per dollar and the won slid 1.3 percent, the most in two months.

*In commodities*, West Texas Intermediate crude oil dropped 1.5 percent to $53.16, halting its advance below $54 a barrel as an increase in U.S. drilling offset signs OPEC members are sticking to planned output cuts. Adding to the pressure was the Friday report of a surge in Iranian exports and selling from its offshore inventory, as well as the addition of more rige by US producers.  Gold rose 0.4 percent to $1,176.7 an ounce.

*US Government:*

· Senate in session, plans consideration of budget resolution; House in session and could consider bills related to regulations and investing in startups
· 10am: Supreme Court hears oral arguments
· 11:30am: HUD Sec. Julian Castro delivers remarks on housing market and protections for HUD-assisted residents

*US Event Calendar*

· 9am: Fed’s Rosengren Speaks in Hartford, Connecticut
· 2pm: Fed’s Lockhart Speaks to the Rotary Club of Atlanta
· 3pm: Consumer Credit, Nov., est. $18.400b (prior $16.018b)

* * *

*DB's Jim Reid concludes the overnight wrap*

As my year starts I wanted to recap for my own benefit the key early moves seen so far in 2017. The most significant have probably been those in rates and FX. 10y Treasury yields are 2.5bps lower compared to where we finished 2016 at 2.420% although that masks what has been an 18.4bps intraday high-to-low range over the week. At 0.294%, 10y Bund yields on the other hand are 9.3bps higher while in the periphery 10y yields in Italy, Spain and Portugal are 14.8bps, 15.7bps and 28.5bps higher respectively. In fact the latter crept over 4% for the first time since last February after the latest ECB PSPP holdings data revealed a much slower than expected rate of purchases in Portugal last month relative to its implied capital key. With the ECB tapering discussion clearly still topical last week’s European data and in particular the inflation numbers were all fairly supportive too. In fact our European economists noted that their SIREN-Momentum and SIREN-Surprise indicators are currently above 85% and 90% of their respective readings over the past decade. Their combined reading stands close to the top two percent of historical observations.

Meanwhile in FX the USD index ended the week pretty much unchanged but again with a notable 2.43% range. Indeed there were fairly sizeable daily moves as investors balanced the FOMC minutes with Trump’s appointments and tweets and also the big move for the Chinese Renminbi which saw the offshore currency rally +1.81% last week. More on that shortly. EM currencies on the whole had a fairly decent week (Russian Ruble and Colombia Peso stand out after rallying nearly 3% each) while the MSCI EM equity index returned +2.18% as commodities – and in particular metals – started the year by building on recent highs. Elsewhere credit markets have started positively. In the US CDX IG is 3bps tighter at 64.7bps and close to the recent tights while in Europe the iTraxx Main is 4bps tighter at 69bps with that index also creeping in on last year’s tights.

Financials have also gotten off to a decent start with the iTraxx senior and sub fins indices 7bps and 23bps tighter respectively. The big news in credit though has been the incredible start for primary markets. Indeed the US IG market stands out in particular with total issuance of over $60bn last week, making it one of the biggest weeks on record. Even more impressive is the fact that there was no one or two bumper offerings, unlike other record weeks. Finally, where it’s been a bit quieter is equity markets. That said it’s still been a decent start with the S&P 500 (+1.70%) and Dow (+1.02%) both up (the latter within a whisker of the 20,000 level) following further gains on Friday while the Stoxx 600 turned in a +1.12% return last week. European Banks also rallied to the tune of +3.79%.

*The highlight of the upcoming first full week of 2017 might well be President-elect Trump's first news conference on Wednesday since his election win. *His tweets continue to be market moving events for the stocks and sectors it influences and very soon there will be more and more macro consequences of his musings and actual policy decisions. So watch out for things to hot up after Wednesday. Remember also that the inauguration is a week on Friday and we'll soon be into the well watched first 100 days.

China won't be far from Mr Trump's crosshairs in 2017 and as mentioned earlier the big story here so far this year has been the +1.81% strengthening of the offshore RMB last week. At one stage on Friday the currency was as much as +2.78% stronger in 2017 before it gave back some of those gains on Friday. It’s given back another -0.48% this morning too with offshore lending rates also notably lower (CNH Hibor down to a still elevated 14% from 69% on Friday) and in fact it’s now on course for the biggest two-slide since June last year. So China is ruffling a few feathers again at the start of a New Year. It’s worth also noting that the weekend data showed that China’s foreign reserves fell for a six month in a row in December and to a five-year low of $3.01tn, albeit pretty much bang on consensus.

On a related topic, over the weekend our China economists published a report discussing their view of the Dec-31 Decree issued by the PBoC stipulating new reporting regulations regarding large/suspicious financial transactions. They highlight that the Decree could potentially pose a severe hit to “capital flight without cross-border fund flows”. They also note that the Decree is an “infrastructure building” effort with regulatory implications far beyond capital control. Better tracing of large/suspicious financial transactions will not only serve for anti money laundry, but also help with, for instance, regulation of shadow banking activities.

Elsewhere this morning equity markets in Asia are generally off to a decent start to the week. The Shanghai Comp (+0.56%), ASX (+0.93%), Hang Seng (+0.04%) and Kospi (+0.12%) have all edged higher while markets in Japan are closed for a public holiday. There’s been some interesting corporate news too with the announcement that McDonald’s is to sell 80% of its China franchise for about $2bn with Chinese state-backed conglomerate Citic Group to take a 52% stake. Meanwhile Sterling (-0.38%) has weakened following a Sky News interview yesterday with UK PM Theresa May in which she said the eventual exit of the UK from the EU will be about “getting the right relationship” and “not about keeping bits of membership”. May also played down Ivan Rogers’ comments last week when he criticised the government’s “muddled thinking”, while May added that the government “will be setting out some more details in coming weeks as we look ahead to triggering Article 50”.

Moving on. For those that missed it, Friday was all about the final US employment report of 2016. While headline nonfarm payrolls may have appeared a touch disappointing at first glance having come in slightly below consensus (156k vs. 175k expected), there was also a cumulative 19k of net positive revisions to the prior two months. That was a similar story for private payrolls (144k vs. 170k expected) where the November reading in particular was revised up to 198k from 156k at the first reading. Meanwhile the rest of the report was generally supportive. The U-3 unemployment rate ticked up as expected to 4.7% although the broader U-6 rate dropped one-tenth to 9.2% and in doing so hit a new postfinancial crisis low. The labor force participation rate nudged up one-tenth to 62.7% while average weekly hours held steady at 34.3hrs. The report might however be best remembered for the +0.4% mom gain in average hourly earnings (vs. +0.3% expected) which has helped the YoY rate to accelerate to +2.9%  from +2.5% - the highest since June 2009.

As noted earlier US equities took heart from the report, helping the S&P 500 to rise +0.35% while 10y Treasury yields reversed a decent part of the moves in the previous two days to close 7.5bps higher. The  USD index (+0.69%) also rallied back while Gold (-0.63%) nudged lower. The other data in the US on Friday didn’t offer too much to the debate. The November trade balance revealed a further widening in the deficit to $45.2bn from $42.4bn. Finally factory orders weakened a little bit more than expected in November (-2.4% mom vs. -2.3% expected). Following all that the Atlanta Fed left their Q4 GDP forecast unchanged at 2.9% while the NY Fed raised their growth forecast to 1.9% from 1.8%.

There was also some Fedspeak to take stock of on Friday. The Philadelphia Fed’s Harker said that “I’m pencilled in for 3 rate increases” this year. The Dallas Fed’s Kaplan confirmed that the December SEP, which had a median projection of 3 rate hikes this year “gives you a sense of my views” but that the Fed needs to be nimble to revise forecasts as events unfold. Finally the usually dovish Chicago Fed’s Evans confirmed that 2 hikes this year is “not an unreasonable expectation” and that 3 hikes is “not implausible”.

Before we look at the week ahead, for completeness in Germany on Friday the hard data was a little bit disappointing with both November factory orders (-2.5% mom vs. -2.4% expected) and retail sales (-1.8% mom vs. -0.9% expected) declining more than expected. The European Commission’s index of economic sentiment was however reported as rising 1.2pts in December to 107.8 and more than expected.

Moving now to this week’s calendar. We’re kicking off the week in Europe this morning with Germany where the latest industrial production and trade data is due. Business sentiment data in France follows along with the latest house price data in the UK, before we get then get the Sentix investor confidence reading for the Euro area and also the November unemployment rate reading. Over in the US we’ve got the usual post-payrolls lull but the November consumer credit reading will be out this evening. We’re kicking off Tuesday in China where the December CPI and PPI prints will be due. In Europe the only data due out is the latest industrial production numbers in France while in the US the NFIB small business optimism reading is due for last month, along with the November wholesale inventories and trade sales report and also the November JOLTS job openings report. Wednesday kicks off in the UK with the November trade data and also industrial and manufacturing production prints. There’s no data of note in the US on Wednesday. Japan gets things going on Thursday with November trade data. During the European session we’ve got inflation data in France, GDP in Germany and industrial production data for the Euro area all due. Over in the US the data includes initial jobless claims, import price index and the December monthly budget statement. During the Asia session on Friday the highlight is likely the December trade report in China. It’s a quiet end to the week in Europe with no notable releases due. In the US we finish the week with the December PPI report and retail sales, November business inventories and finally a first look at the January University of Michigan consumer sentiment reading.

Away from the data the Fedspeak this week consists of Rosengren and Lockhart today, Harker, Evans, Bullard and Kaplan on Thursday and Fed Chair Yellen early on Friday morning when she is due to host a town hall meeting with educators from across the country. Q&A is however expected. The ECB will also release the minutes from the December policy meeting on Thursday. Meanwhile, this week earnings season will start to kick into gear with JP Morgan, BofA and Wells Fargo all reporting on Friday. Perhaps the most hotly anticipated event this week however will be President-elect Trump’s aforementioned general news conference on Wednesday, the first since his election victory. That will also come one day after President Obama’s televised farewell speech from Chicago. Reported by Zero Hedge 1 hour ago.

Leicester City Transfer News: boss Claudio Ranieri plays waiting...

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Leicester City Transfer News: boss Claudio Ranieri plays waiting... Claudio Ranieri is waiting to see if Leicester City's pursuit for Sassuolo defender Francesco Acerbi will end in success.However, the Italian club's sporting director has appeared to quash any City hopes of landing the Italy international.The City are understood to have had one bid of around £8 million rejected by the Italian club for their centre back and City are expected to increase their offer in a bid to land the 28-year-old, who is also wanted by Inter Milan, say reports in... Reported by Leicester Mercury 10 minutes ago.

10 things you need to know before the opening bell (SPY, SPX, QQQ, DIA, MCD, AAPL)

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Here is what you need to know.

*Theresa May is aiming for a "Hard Brexit." *In a Sky News interview on Sunday, UK Prime Minister May said Brexit will be about "getting the right relationship" with the European Union and "not about keeping bits of membership." The British pound is at a three-month low, down 0.9% at 1.2173 versus the dollar.

*Beppe Grillo is changing his tune in Italy. *The leader of Italy's populist Five Star movement wants to end its euro-skeptic alliance with Britain's UKIP party and enter into a pro-EU alliance, AFP says.

*China spent around $72 billion defending the yuan in December. *While China's FX reserves fell by about $41 billion to $3.01 trillion, the amount of net capital outflows, and subsequent intervention from the PBOC, was nearly twice as much, Wei Li, China and Asia economist at Commonwealth Bank of Australia , wrote in a note to clients.*Goldman Sachs says there are 3 big risks for 2017. *Goldman Sachs Chief Economist Jan Hatzius is optimistic for 2017, but said in a speech in London on Monday that trade protectionism, European politics, and China are the three risks to his outlook.

*McDonald's unloads its business in China.* The fast food giant sold 20-year rights to the majority of its business in Hong Kong and China to Citic and Carlyle Group for up to $2.1 billion, Reuters reports.

*The first iPhone was unveiled 10 years ago Monday. *Check out Steve Jobs on-stage at the Macworld conference in 2007, announcing the first iPhone.

*The Detroit auto show begins. *The 2017 North American International Auto Show in downtown Detroit opens on Monday, and runs until January 22.

*Stock markets around the world trade mixed. *China's Shanghai Composite (+0.5%) led in Asia and France's CAC (-0.8%) lags in Europe. The Dow Jones Industrial Average is on track to open slightly lower near 19,945.

*Earnings reporting is light. *Apollo Education reports after markets close.

*US economic data trickles out. *Consumer credit will be released at 3 p.m. ET. The US 10-year yield is down 3 basis points at 2.39%.

 

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NOW WATCH: Watch Yellen explain why the Federal Reserve decides to raise rates Reported by Business Insider 28 minutes ago.

Italy Five Star Eurosceptics vote to break link with UKIP

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Italy Five Star Eurosceptics vote to break link with UKIP Italy's powerful anti-establishment Five Star Movement (M5S) votes to break its alliance with UKIP. Reported by BBC News 58 minutes ago.

MoD strikes £271m Wildcat helicopter deal saving "hundreds of jobs"

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MoD strikes £271m Wildcat helicopter deal saving The Ministry of Defence (MoD) has announced a £271m deal with Leonardo Helicopters to safeguard around five hundred jobs, the majority of which will be in Yeovil.

The five-year deal will deliver a range of support and training services for the UK's fleet of 62 AW159 Wildcat helicopters, used by the Royal Navy and Army Air Corps.

The MoD said "the overwhelming majority" - over 80 per cent - of the 500 jobs sustained, will be at Leonardo's facilities in Yeovil and Royal Naval Air Station Yeovilton, which is the home of Wildcat training and maintenance in the UK.

*Read more*: Mike Ashley says he commutes by helicopter because it's more efficient

Another 100 jobs will be maintained in Leonardo's supply chain.

Minister for defence procurement, Harriett Baldwin, said: "This Wildcat deal delivers a key capability for the Royal Navy and Army, and supports vital high-skilled jobs in Somerset, where there's a proud tradition of supporting UK helicopter operations."

She added that the Wildcat was "one of the world's most advanced helicopters" and an important part of the government's ten-year £178bn plan to "provide our Armed Forces with the equipment they deserve".

The new Wildcat support and training contract will also support jobs in Edinburgh and Luton, where Leonardo manufactures defensive aids systems, as well as Crawley.

*Read more*: Unite urges government to step in over GKN job losses

Late last year, GKN said it would close a plant making helicopter components, after Leonardo said it had planned to take production back in-house, meaning over 200 jobs were on the chopping block.

Leonardo is owned by Italy's Finemccanica, which bought Britain's only helicopter business Westland from GKN back in 2004 for £1bn. Reported by City A.M. 33 minutes ago.

Italy's populist 5-Star eyes anti-populist power play

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ROME (AP) " Italy's populist 5-Star Movement has voted to join the liberal ALDE group in the European Parliament in an about-face power play that has sent shockwaves through the European Union legislature.In an online ballot ending... Reported by New Zealand Herald 12 minutes ago.

ALDE rebuffs Italy’s 5 Star bid to join parliamentary group

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ALDE rebuffs Italy’s 5 Star bid to join parliamentary group The Liberals in the European Parliament have turned down a request from the anti-establishment 5 Star Movement to join their group, putting Italy's second-largest party in an awkward position as it had already left its former partners. Reported by EurActiv 8 hours ago.
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