Fri, 20th January 2017

Anirudh Sethi Report


Archives of “United States Constitution” Tag

Priebus: Trump “Accepts” That Russia Played A Role In Election Hacking

In a surprising twist, incoming White House chief of staff Reince Priebus said Sunday on Fox News that President-elect Donald Trump accepts that Russia played a role in hacking the Democratic National Committee and Clinton campaign Chairman John Podesta.

Priebus, the former RNC chairman, said Trump understands that Moscow was behind the intrusions into the Democratic Party organizations. “He accepts the fact that this particular case was entities in Russia so that’s not the issue” and added that Trump “is not denying that entities in Russia were behind this particular hacking campaign.”

“But here’s the thing that I think everyone needs to understand — when this whole thing started, it started from the Russians 50 years ago … This is something that’s been going on in our elections for many, many years.” Priebus said it “happens every election period.”

“In this particular case, it started way back in 2015 before either nominee of either party was chosen,” Priebus said. “And it started … as a spearfishing expedition over many different institutions.”

Additionaly, Priebus blasted the Democratic National Committee (DNC) for its lack of IT defenses. The DNC was warned multiple times by the FBI before being hacked, Priebus added, and officials didn’t respond. “So yes, we have bad actors around the world,” Priebus said.”But we also have a problem when we have a major political institution that allows foreign governments into their system with hardly any defenses or training.”

As Reuters notes, Priebus’ comments marked a major shift in the official Trump narrative: the president elect has repeatedly dismissed claims that the Russians were trying to help him, arguing that those charges are the product of his political opponents trying to undermine his victory. 

So far, Trump has only indirectly acknowledged the intelligence community’s conclusion that Russia interfered in the election and has consistently downplayed its significance — and the president-elect has a history of later contradicting what his surrogates tell the media.

On Friday morning, shortly before being briefed by US intelligence, Trump tweeted that “Gross negligence by the Democratic National Committee allowed hacking to take place.The Republican National Committee had strong defense!” He then tweeted two follow-up comments, first that “Intelligence stated very strongly there was absolutely no evidence that hacking affected the election results. Voting machines not touched!” followed by “Only reason the hacking of the poorly defended DNC is discussed is that the loss by the Dems was so big that they are totally embarrassed!”

After the briefing, Trump stated, “While Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organizations including the Democrat National Committee, there was absolutely no effect on the outcome of the election including the fact that there was no tampering whatsoever with voting machines.”

Emerging Markets -An Update

Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term.
Korea’s parliament voted 234-56 to impeach President Park.
Czech National Bank raised the possibility of negative rates to help manage the currency.
A Brazilian Supreme Court justice removed Senate chief Renan Calheiros from his post, but was later overturned by the full court.
Brazil central bank signaled a possibly quicker easing cycle.

In the EM equity space as measured by MSCI, UAE (+6.2%), Poland (+6.0%), and Mexico (+5.9%) have outperformed this week, while Czech Republic (-0.6%), Hong Kong (-0.2%), and China (+0.6%) have underperformed.  To put this in better context, MSCI EM rose 2.8% this week while MSCI DM rose 2.8%.
In the EM local currency bond space, Brazil (10-year yield -60 bp), the Philippines (-59 bp), and Indonesia (-40 bp) have outperformed this week, while India (10-year yield +20 bp), China (+5 bp), and Czech Republic (-1 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 3 bp this week to 2.41%. 
In the EM FX space, BRL (+3.1% vs. USD), COP (+2.9% vs. USD), and CLP (+2.8% vs. USD) have outperformed this week, while EGP (-2.3% vs. USD), CNH (-0.8% vs. USD), and SGD (-0.7% vs. USD) have underperformed.
Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term.  He cited family reasons.  The next chief executive will be selected in March by a committee of 1,200.  China has veto power over the final selection, and so it’s clear that another establishment leader will be chosen. 

Italy’s Approval of Constitutional Reform to Put EU Integration Back on Track

In case Italian voters approve constitutional changes in a referendum, it will stimulate the European integration process as a “yes” vote will boost positions of Prime Minister Matteo Renzi’s center-left government in Europe against the Italian populists and right-wing parties, Alessandro Maran, a lawmaker from Renzi’s Democratic Party (PD), told Sputnik on Saturday.

On Sunday, Italy is due to hold the referendum on constitutional changes primarily aimed at eliminating equal powers of two parliament’s chambers and thus avoiding political instability and frequent fall of governments. As far as Renzi staked his future on the outcome of the referendum, the opposition tried to use a vote on reforms as a tool to express overall dissatisfaction with PD policies and the prime minister’s record in office. “If, as I hope, the Yes camp prevails, Renzi’s government and PD will play a vital role in Europe. It would be a great opportunity for our country and could bring the European integration process back on track,” Maran, the Senate’s Constitutional Affairs Committee member, said. Polls cannot be published in the last two weeks of campaigning, but most polls before this time limit predicted that Renzi-lobbied reforms were unlikely to pass. A poll conducted by Ixe for Agora-Rai3 TV station showed that 42 percent of voters did not want constitutional changes, 37 percent are in favor of them, and over 20 percent of respondents remained undecided.

Odds of a December rate rise hit 100%

100ppSo it’s a sure thing then?

Federal fund futures — or the contracts that investors use to bet on interest rate movements — currently imply a 100 per cent chance of a rate rise next month, compared with 96 per cent on Thursday.

The move comes as New York Fed president Bill Dudley on Friday said that “inflation expectations are well anchored”, adding that “we should be increasingly optimistic that we will reach our inflation objectives over the next few years”.

His remarks arrived a day after Fed chair Janet Yellen said that an increase in short-term interest rates could “become appropriate relatively soon”.

Supreme Court directs central government committe to file report on NPAs in various banks

Following accusations from oppositons, claiming that the main objective behind the implementation of the demonetisation policy by the Narendra Modigovernment is to bail out the non performing assets (NPA) of banks, the Supreme Court had today asked the central government committee to file a comprehensive report regarding NPAs in various banks. With the next hearing for the issue is set to be on December 3, the apex court had directed the committee to submit recovery process with in three weeks. however, the SC didn’t stress on disclosing any names but ordered for a probe to figure out the root cause of bad loans.

Earlier, representing the Conngress Party, senior leader Kapil Sibal, had alleged the center for making attempts to bail out NPAs of banks, owed by many industrialists. The senior Congress leader said, “Out of the roughly 16,000 crore rupees in the market, the government hopes to see 10,000 crores placed in the banks. The balance 6,000 would be generated by the RBI and placed at the disposal of the government and the real objective of that fund was to pay off the non performing assets of banks.”

While Sibal claimed that, through the demonetisation policy, the money of the common people of the country will be used by the government, in the interest of rich industrialists, Union Minister and senior BJP leader N Venkaiah Naidu criticized the opposition for attempts to politicise the anti-graft policy.

Trump: US Government Will ‘Grind to Halt’ if Clinton Elected Due to FBI Probes

If Democratic nominee Hillary Clinton wins the US presidential election next Tuesday it would set off a constitutional crisis that would paralyze the workings of government as she faces criminal investigations, Republican Donald Trump said at a rally in Wisconsin.

“If she [Clinton] were to be elected, it would create an unprecedented crisis and the work of government would grind to an unbelievably inglorious halt,” Trump said on Tuesday. Clinton is likely to face years of investigation from the Federal Bureau of Investigation following the latest revelations from WikiLeaks and the discovery of a cache of 650,000 of her emails and looks likely to eventually have to face criminal prosecution, Trump warned. “She is likely to be under investigation for many years likely to conclude in a…criminal trial,” he said. Trump also noted media reports earlier the same day that the FBI had also started inquiries probing into the activities of several of her closest lieutenants and most trusted staffers.

Assange Predicts Trump Will Lose, Accuses Clinton Campaign Of Trying To Hack Wikileaks

In an amusing twist, Julian Assange whose Wikileaks has now had 20 individual releases of hacked John Podesta emails over the past three  weeks and who has been accused by Hillary Clinton of collaborating with the Russians in an attempt to disrupt and subvert the US electoral process, accused the Clinton campaign of attacking the servers used by WikiLeaks. Speaking via telephone at a conference in Argentina on Wednesday, RT reported that Assange claimed the daily email release ritual has “whipped up a crazed hornet’s nest atmosphere in the Hillary Clinton campaign” leading them to attack WikiLeaks.

“They attacked our servers and attempted hacking attacks and there is an amazing ongoing campaign where state documents were put in the UN and British courts to accuse me of being both a Russian spy and a pedophile,” he added.

Assange described Ecuador’s decision to shut down his internet for the duration of the presidential campaign as a “strategic position” so that its “policy of non-intervention can’t be misinterpreted by actors in the US and even domestically in Ecuador.” He said he was sympathetic with Ecuador, insisting they face the dilemma of having the US interfere with their elections next year if they appear to interfere with the US elections next month. He also said that he did not agree with Ecuador’s decision but did understand it. WikiLeaks will not be affected by the decision as they do not publish from Ecuador, he said.

He did, however, reject the idea that WikiLeaks is interfering with the US election, claiming, “this is not the interference of electoral process, this is the definition of electoral process – for media organizations and, in fact, everyone to publish the truth and their opinion about what is occurring. It cannot be a free and informed election unless people are free to inform.”

Odds of 2016 Federal Reserve rate rise climb to near 5-month high

Market expectations of a 2016 Federal Reserve rate rise have climbed to the highest level since early June amid growing anxiety among policymakers over the potential side-effects of historically low interest rates and easing tension about the US election.

The odds of at least one rate increase this year rose on Monday to 70 per cent, up from 67 per cent at the end of last week, according to Bloomberg data on federal funds futures.

Expectations have been slowly rising this month, from about 60 per cent at the end of September, as Fed policymakers have taken a slightly more hawkish tone, inflation has continued to heat-up and uncertainty stemming from the US election has cooled.

Several top Fed policymakers who have spoken this month have pointed to the rising risk of a potentially caustic overshoot in inflation as a key reason to add to the December 2015 rate increase sooner rather than later.

Emerging Markets: An Update

Fitch upgraded Taiwan by a notch.
Thailand has a new king.
South Africa’s Finance Minister Gordhan has been summoned to appear in court to face charges.
Brazil’s Congress voted to approve a constitutional amendment to freeze government spending in real terms for at least the next 10 years.
Brazil’s Petrobras cut fuel prices and introduced a new pricing mechanism.

In the EM equity space as measured by MSCI, Brazil (+2.8%), Mexico (+2.6%), and Czech Republic (+1.6%) have outperformed this week, while the Philippine (-2.7%), South Africa (-2.7%), and China (-2.4%) have underperformed.  To put this in better context, MSCI EM fell -1.7% this week while MSCI DM fell -0.5%.

In the EM local currency bond space, Colombia (10-year yield -18 bp), the Philippines (-17 bp), and Brazil (-10 bp) have outperformed this week, while Turkey (10-year yield +27 bp), Russia (+22 bp), and South Africa (+13 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 5 bp this week to 1.77%. 
In the EM FX space, MXN (+2.2% vs. USD), BRL (+1.4% vs. USD), and COP (+0.5% vs. USD) have outperformed this week, while ZAR (-1.9% vs. USD), KRW (-1.5% vs. USD), and THB (-1.1% vs. USD) have underperformed.

Putin Ally Warns Americans To Vote For Trump Or Face Nuclear War

The name of what is arguably Russia’s most flamboyant, ultra-nationalist politician, and according to some the local incarnation of Donald Trump,  Vladimir Zhirinovsky, a deputy in the state Duma and leader of the nationalist LDPR party, is familiar to frequent readers: he most recently made an appearance on these pages two months ago, when he warned Germany that it risks utter destruction if it continued on its present track of operating Bundeswehr forces in the Baltics. Zhirinovsky also shares another feature with Donald Trump: both are outspoken to a fault. Which is why we were not surprised to read that as Reuters reported earlier, Zhirinovsky urged Americans to vote for Donald Trump as president or “risk being dragged into a nuclear war.”

In an interview with Reuters, Vladimir Zhirinovsky, known in Russia and Europe for his fiery rhetoric, said that Trump was the only person able to de-escalate dangerous tensions between Moscow and Washington.

On the other hand, Hillary Clinton could spark World War Three, said the Russian who received a top state award from Putin after his pro-Kremlin Liberal Democratic Party of Russia (LDPR) came third in Russia’s parliamentary election last month.