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Chart of the Day: Trump Right to Aim at China

This chart from ‘The Euchre’ shows why the President-elect Donald Trump is right to take aim at China, with which the United States run the biggest of the deficits.

In 2015, the United States ran goods trade deficit of $348 billion with China, the next closest is Japan, which runs a surplus of just $69 billion.

The material has been provided by InstaForex Company –

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DOE issues notice of sale from SPR sites

The US Department of Energy formally announced that it will sell as much as 8 million bbl of sweet crude oil from three Strategic Petroleum Reserve storage sites at competitive prices.

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Richmond Fed’s “Uber-Hawkish” President Jeffrey Lacker To Retire

Just three months after Atlanta Fed president Dennis Lockhart announced he would step down as president effective February 28, moments ago another (non-voting) FOMC member, the uber-hawkish president of the Richmond Fed, Jeffrey Lacker, 61, also decided to call it quits as well, and on Tuesday said he will retire as president and chief executive officer of the Federal Reserve Bank of Richmond on Oct. 1, after 28 years at the Richmond Bank.

“It’s been an honor to serve the Federal Reserve,” Lacker said. “I feel fortunate to have spent time throughout the Fifth District learning first-hand about people’s economic experiences, and to have participated in some of the most extraordinary policy deliberations in our nation’s history. It’s been my deepest privilege to lead the Richmond Fed and the dedicated people who work here.”

Lacker joined the Richmond Fed in 1989, where he served in various positions prior to his appointment as president in August 2004. Previously, Lacker was an assistant professor of economics at Purdue University, and also previously worked at Wharton in Philadelphia.

Continuing his hawkish ways, Lacker, who is not a policy voter in 2017, on Friday said that recent data supports further Fed rate hikes, when he said that improvement in inflation compensation measures, strong employment growth, and possible fiscal stimulus support case for higher rates. 

“Improvement in measures of inflation compensation were underway well before the election,” he says in prepared remarks at a speech in Baltmore last Friday, adding that the “Fed’s interest rate target is exceptionally low. Upward adjustment is needed” He also cautioned that “monetary policy rates are likely to increase, and my view is that they may need to increase more briskly than markets appear to expect, depending on developments as the year unfolds.”

On ther other hand, in a Fed in which at least half the members now take their dot plot cues from the Trump policies, which are yet to be finalized, it appears that increasingly more regional Fed president are willing to step into the spot of biggest Fed hawks, if only until the next downturn in risk assets.

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Full Richmond Fed Statement below.

Richmond Fed President Jeffrey Lacker Announces Retirement

Jeffrey M. Lacker, president and chief executive officer of the Federal Reserve Bank of Richmond, announced today that he will retire on October 1, 2017, after 28 years of public service at the Richmond Bank. Dr. Lacker joined the Richmond Fed in 1989 and served in various leadership positions prior to this appointment in August 2004.

Before joining the Federal Reserve, Lacker was an assistant professor of economics at the Krannert School of Management at Purdue University and previously worked at Wharton Econometrics in Philadelphia. He earned his doctorate in economics from the University of Wisconsin and received a bachelor’s degree in economics from Franklin & Marshall College.

“It’s been an honor to serve the Federal Reserve,” Lacker said. “I feel fortunate to have spent time throughout the Fifth District learning first-hand about people’s economic experiences, and to have participated in some of the most extraordinary policy deliberations in our nation’s history. It’s been my deepest privilege to lead the Richmond Fed and the dedicated people who work here.”

Margaret Lewis, chair of the Richmond Fed’s Board of Directors and former president of HCA’s Capital Division, said, “Jeff has been an outstanding leader for the Richmond Fed and has made many contributions to the Federal Reserve System. He led the Federal Reserve’s centennial commemoration and understands how the lessons of the past inform the future. He readily and easily delivers Fed history lessons while providing a better understanding of the Fed’s roles and responsibilities. His views on monetary policy are well known. And, throughout his career, Jeff has maintained a strong focus on the Fed’s role in the payments system. It’s the context of his passion and his sincere curiosity that have made him an effective ambassador for greater understanding of America’s central bank.”

The Board of Directors formed a search committee that will be led by Lewis. The search firm of Heidrick & Struggles has been engaged to assist the committee in conducting a nationwide search to identify a broad, diverse and highly qualified candidate pool for this leadership role. Individuals from both inside and outside the Federal Reserve System can apply. The public can make submissions directly to the search firm through the Bank’s public website.

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PwC Advising Saudis On $20B In Cut Projects

PricewaterhouseCoopers is advising Saudi Arabia on US$20 billion worth of projects it could cancel in order to reduce the budget deficit it had amassed with the low oil prices of the past two years, Bloomberg reports, quoting two sources in the know. The Saudi Ministry of Economy and Planning has hired PwC to see which one-third of US$69 billion worth of government projects it could kill. The projects that the ministry and the global consultancy firm are reviewing include housing, health, education and transport contracts. PwC is also said to be…

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Analysis: Syria shatters Obama’s Middle East legacy

Tue, 2017-01-10

WASHINGTON, DC: As he takes the stage to deliver his farewell speech from Chicago in a few hours, do not expect US President Barack Obama to delve into his Middle East accomplishments, partly because in the view of experts they are either non-existent, drowned by chaos or greatly diminished.
US experts who closely watched Obama’s rhetoric fall apart in the region, or served in his administration and saw first-hand how indecision and half-measures created an unprecedented void and chaos, tell Arab News that Syria is the epicenter of his administration’s train wreck in the Middle East.

The “leading from behind” doctrine
Even before the Arab Spring started in 2011, Obama’s larger doctrine for the Middle East and North Africa was defined by the “US stepping back so others can step in,” and doing so “regional actors can rise to the occasion and take responsibility,” said Shadi Hamid, a senior fellow at the Brookings Institution in Washington.
The “leading from behind” approach shaped the early thinking of the Obama administration by prioritizing the withdrawal from Iraq, cutting civil society aid programs to Egypt, allowing the Gulf Cooperation Council (GCC) to take a lead role in Yemen, and later leading to Russia’s intervention in Syria.
There was a small caveat that the Obama team missed: This approach “doesn’t work in the Middle East,” said Hamid, because “the US has the misfortune of having bad actors in the region, so while it’s true that others stepped in, they were countries that didn’t share our interests or values.”
Frederick Hof, director of the Rafik Hariri Center for the Middle East at the Atlantic Council, says Obama’s main pitfall was the Syrian war. Hof, who served as a special adviser on Syria and coordinator for regional affairs at the State Department in Obama’s first term, tells Arab News that Obama’s failure over Syria “transcends the Middle East.”
The former US official said: “By combining florid rhetoric with dogged inaction in the face of civilian slaughter in Syria, Obama facilitated a humanitarian catastrophe that spilled into Europe, undermining the continent’s political unity and compromising its trans-Atlantic relationship with the US.”
Hof blames Obama’s “enormous gap between talk and action” in Syria, by calling on Syrian President Bashar Assad to step down in 2011 without a Plan B. It was also by drawing a red line for the Syrian regime over the use of chemical weapons, which Obama altered in 2013.
These levers “emboldened a Russian president to alter European boundaries and to intervene militarily in Syria… and are behind the loss of confidence in Washington by long-time regional partners of the US,” said Hof.

From Syria to Brexit and Trump
Hamid, the author of “Islamic Exceptionalism: How the Struggle Over Islam is Reshaping the World,” links the crisis in Syria to an “undermined liberal order” across Europe, and a wave of instability that has shaken not just the country’s neighbors but also the UK, Germany and France.
“Syria was never just about Syria, and while Obama assumed it can be contained, not only has it not been contained, the spill-over effects of Syria have threatened the stability of the entire Middle East and the very European project,” says Hamid.
According to the UN High Commissioner for Refugees, more than half of Syria’s population of 22 million has been displaced, with more than 5 million having fled the country, creating a massive refugee influx into Turkey, Jordan, Lebanon and Europe.
The influx into Europe, coupled with the rise of Daesh during Obama’s second term, has translated into fear and a rapid spike in identity politics across the Continent and the United States. “The Brexit outcome could not have happened had it not been for fears of Muslim immigration, and (US President-elect Donald) Trump might not have won if it were not for Syria,” said Hamid. “What happens in the Middle East has reshaped and undermined the entire liberal order as we know it.”

Prioritizing the Iran nuclear deal
Hof and Hamid agree that Obama’s political capital was entirely spent in the Middle East on negotiating and later promoting the Iran nuclear deal, designed to curb the country’s nuclear program and possibly breaking the decades of animosity between Tehran and Washington.
Hof said between 2012 and 2015, “what seemed to motivate the administration’s inaction in Syria more than anything else was fear of alienating the regime’s closest ally Iran.” The deal with Iran in July 2015 “was, and is seen by Obama, as the jewel in his legacy crown.”
However, the nuclear deal did little to nothing to slow Tehran’s expansionist policies, says Hamid, while cutting the number of centrifuges did not relate to citizens of the region witnessing bloodshed across Syria, Yemen, Libya and Iraq. The Syria death toll reached 470,000 last February, according to the Syrian Center for Policy Research, more than double the Algerian and Lebanese civil wars, which lasted 11 and 15 years, respectively.
But beyond the humanitarian suffering, it is also the geopolitical implications of the Syria conflict that have sunk Obama’s Middle East legacy, said Hof. History will recognize “a president and senior aides who spoke movingly, eloquently, and often about human suffering and its political consequences, but who did next to nothing about it.” 


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Australia, Timor Leste scrap Timor Gap oil and gas treaty

Australia and Timor Leste have jointly announced an agreement to abandon the temporary treaty that regulates maritime boundaries in the Timor Sea and has given rise to a long-running dispute over sharing revenues from oil and gas.

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Despite OPEC Cuts, Iraq To Boost February Oil Exports To Record High

One month ago, we were surprised to report that while oil traders and analysts were expecting OPEC member nations to, at least initially, pretend to comply and affirm their adherence to the production cuts as per the Vienna meeting (before eventually cheating on their quotas), a very aggressive Iraq was not only not cutting output, but according to Iraq’s national oil company, the State Organization for Marketing of Oil (SOMO), had disclosed plans as of December 8, nine days after agreeing to cut production, to increase deliveries of its…

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Gun battle in the Turkish city of Gaziantep

An attacker has been killed in the Turkish city of Gaziantep after what officials believe was an attempted suicide bombing of a police station. A second attacker is believed to be on the run as police mount a manhunt. Turkish police say they have killed an armed man who tried to enter the main police station in the southeastern city of Gaziantep, reported Al-Jazeera. Local news reports also confirmed that clashes erupted in front of city’s police station in which a suicide bomber was shot dead. Al Jazeera‘s reporters in Gaziantep said the attack took place “in an area where ISIL [Daesh] recruits have been very active in the past”. Mehmet Simsek, Turkey’s deputy prime minister, said the attacker was […]

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Torture is unlawful and unnecessary, retired US generals tell Trump

Agence France Presse
Tue, 2017-01-10

WASHINGTON: Dozens of retired top military brass have written to President-elect Donald Trump urging him not to follow through on campaign pledges to reinstate waterboarding, the New York Times reported Tuesday.
Trump said while campaigning that “waterboarding is fine, but it’s not nearly tough enough” and said he would “bring back a hell of a lot worse than waterboarding.”
In a letter dated January 6 and obtained by the Times, a group of 176 retired officers from across the US military, including 33 four-star generals and admirals, said they were concerned by such rhetoric.
“The use of waterboarding or any so-called ‘enhanced interrogation techniques’ is unlawful under domestic and international law,” they wrote.
Those signing the letter include General Stanley McChrystal and General John Allen, who oversaw the war effort in Afghanistan, and former special operations commander Admiral William McRaven.
“Torture is unnecessary,” the letter continues. “Based on our experience — and that of our nation’s top interrogators, backed by the latest science — we know that lawful, rapport-based interrogation techniques are the most effective way to elicit actionable intelligence.”
Trump has also claimed that even if waterboarding doesn’t work, terror suspects “deserve it anyway for what they do to us.”
Since his election, Trump appears to have modified his views on waterboarding — a change that may reflect the influence of his nominee to head the Pentagon, retired Marine general James Mattis.
In an interview with the Times, Trump recounted how Mattis had said that winning a prisoner’s trust is a far more effective way of prying information.
“’Give me a pack of cigarettes and a couple of beers and I’ll do better,’” Trump said Mattis had told him.
The signatories of the letter, who said they have “over six thousand years” of combined military leadership experience, noted that torture is counterproductive because it violates US values and serves as “a propaganda tool for extremists who wish to do us harm.”
“Our greatest strength is our commitment to the rule of law and to the principles embedded in our Constitution. Our servicemen and women need to know that our leaders do not condone torture or detainee abuse of any kind.”

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Martinez named as Venezuela’s minister of petroleum

Nelson Martinez has been named Venezuela’s minister of petroleum, according to Petroleos de Venezuela SA. He succeeds Eulogio Del Pino, who was named petroleum minister in 2015 in addition to serving as president of PDVSA. Del Pino has been president since 2014 and retains that role.