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Tue, 25th April 2017

Anirudh Sethi Report

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Archives of “United States Constitution” Tag

Erdogan Declares Victory In Turkey’s Constitutional Referendum Tyler Durden’s picture by Tyler Durden

With over 97% of ballots counted, Turkey’s president Erdogan and soon, quasi dictator, declared victory in the Turkish referendum and called the leaders of three political parties supporting changes to the constitution to congratulate them on the victory, Anadolu news agency reported, and added rather comically that “many world leaders send congratulatory messages to President Erdogan.” One wonders who exactly…

Absent some last minute fireworks, Turkey is now set to shift to a presidential system as the outcome of the referendum puts “Yes” votes at 51.3%, according to unofficial sources.

“Yes” votes were ahead at 51.3% or 24.598.880 votes, while “No” votes fell behind at 48.6% or 23,326,636 votes. “Yes” votes prevailed in four of Turkey’s seven regions, including southeastern Anatolia.

The reforms were approved by 339 deputies on January 21st, and Erdo?an signed the amendments on February 10th. Under the proposed changes, the post of prime minister is abolished and the president, vice president(s) and cabinet officials can be investigated by the parliament. The current system has no mechanism that monitors presidential conduct.

LDP passes rule change that could see Abe remain PM until 2021

The ruling Liberal Democratic Party decided Sunday to extend its term limit on party leaders, potentially allowing Prime Minister Shinzo Abe to remain in his role until September 2021.

Abe’s tenure as president of the LDP was set to run out in September next year before the rule change, which would have meant stepping down as prime minister even if the LDP was still in power.

 The party, holding its annual convention at a Tokyo hotel, approved extending the limit to three consecutive three-year terms from the previous two consecutive three-year terms.

This means Abe can stand for re-election in the next party leadership vote in the fall of next year.

Abe, 62, served as prime minister for around a year before resigning in September 2007. He became prime minister again when the LDP returned to power in December 2012 after a three-year period in opposition.

Traders Throw In The Towel On March Rate Hike

As we previously noted, while speculatrs had been reducing their shorts in Treasury futures, they had added to Eurodollar shorts – pushing their bets on Fed rate hikes to record highs. However, as Bloomberg notes, signals are starting to emerge that traders who built up that heavy short, or hawkish, eurodollar base since the start of 2016 could be starting to throw in the towel on a March Fed rate hike.

CME confirmed that Wednesday saw record volume in fed fund futures of 658.7k contracts, beating the previous record of 613k on Nov. 9, the day after the U.S. presidential election. Over the course of Wednesday’s session, a total of 283k Apr fed funds futures contracts traded, largest single-day volume seen in the contract. Open interest in the contract rose by 109k, suggesting some short covering before the minutes and potential new longs after the minutes.

Senate confirms Steven Mnuchin as US Treasury secretary

The US Senate has confirmed President Donald Trump’s nomination for treasury secretary, a former Goldman Sachs banker and hedge fund manager.

The Senate confirmed Steve Mnuchin’s nomination to be secretary of the Department of the Treasury by a vote of 53-47.

Mr Mnuchin spent 17 years at Goldman before becoming a hedge fund manager, film financier and chairman of Pasadena-based OneWest Bank. His confirmation as secretary means that former Goldman employees hold two of the top economic jobs in the US, as former president and chief operating officer Gary Cohn left the bank to become director of the White House’s National Economic Council.

US court refuses to immediately restore Trump travel ban

A U.S. appeal court late on Saturday denied a request from the U.S. Department of Justice to immediately restore a immigration order from President Donald Trump barring citizens from seven mainly Muslim countries and temporarily banning refugees.

The court ruling dealt a further setback to Trump, who has denounced the judge in the state of Washington who blocked his executive order on Friday. In tweets and comments to reporters, the president has insisted he will get the ban reinstated.

 Trump says the temporary immigration restrictions on citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen, and on all refugees, are necessary to protect the United States from Islamist militants. Critics say they are unjustified and discriminatory.

The judge’s order and the appeal ruling have created what may be a short-lived opportunity for travelers from the seven affected countries to get into the United States while the legal uncertainty continues.

In a brief order, the appeals court said the government’s request for an immediate administrative stay on the Washington judge’s decision had been denied. It was awaiting further submissions from Washington and Minnesota states on Sunday, and from the government on Monday.

The government’s appeal says the decision by judge James Robart in Washington poses an immediate harm to the public, thwarts enforcement of an executive order and “second-guesses the president’s national security judgment about the quantum of risk posed by the admission of certain classes of (non-citizens) and the best means of minimizing that risk”.

Trump denounced the “so-called” judge in a series of tweets on Saturday and told reporters: “We’ll win. For the safety of the country, we’ll win.”

IRAQI FAMILY

The president’s Jan. 27 order has drawn criticism even from U.S. allies and created chaos for thousands of people who have, in some cases, spent years seeking asylum in the United States.

Iraqi Fuad Sharef, together with his wife and three children, spent two years obtaining U.S. visas, and had packed up to move to America last week, but were turned back to Iraq after a failed attempt to board a U.S.-bound flight from Cairo.

Federal Judge Grants Partial Block Of Trump Immigration Order

Symbolic war broke out between the Judicial and Executive branches shortly before 9pm on Saturday evening, when federal judge Ann Donnelly in the Eastern District of New York in Brooklyn issued an emergency stay halting Trump’s executive order banning immigrants from seven mostly Muslim nations entering the US, and temporarily letting people who landed in U.S. with valid visa to remain on US territory, saying removing the refugees could cause “irreparable harm”.

The court’s ruling was in response to a petition filed on Saturday morning by the ACLU on behalf of the two Iraqi men who were initially detained at JFK International Airport on Friday night after Trump’s ban, and were subsequently granted entry into the US.

The ACLU issued the following statement following the court ruling:

 A federal judge tonight granted the American Civil Liberties Union’s request for a nationwide temporary injunction that will block the deportation of all people stranded in U.S. airports under President Trump’s new Muslim ban. The ACLU and other legal organizations filed a lawsuit on behalf of individuals subject to President Trump’s Muslim ban. The lead plaintiffs have been detained by the U.S. government and threatened with deportation even though they have valid visas to enter the United States.

Lee Gelernt, deputy director of the ACLU’s Immigrants’ Rights Project who argued the case, said:

“This ruling preserves the status quo and ensures that people who have been granted permission to be in this country are not illegally removed off U.S. soil.”

ACLU Executive Director Anthony D. Romero, had this reaction to the ruling:

“Clearly the judge understood the possibility for irreparable harm to hundreds of immigrants and lawful visitors to this country. Our courts today worked as they should as bulwarks against government abuse or unconstitutional policies and orders. On week one, Donald Trump suffered his first loss in court.

However, while some media reports present the court ruling as a wholesale victory over Trump’s order, the stay only covers the airport detainees and those currently in transit, and it does not change the ban going forward.

Judge Donnelly has ordered the federal government to provide a list of all people currently held in detention. Where the stay falls short is that according to the ACLU’s lawyer, there still can be no new arrivals from countries under the ban, but the ACLU and other organizations are working to file additional suits to roll back other portions of the order.

* * *

A detailed read of Judge Donnelly’s ruling, per Josh Blackman, reveals that the order states that petitioners have shown a “strong likelihood of success” and that their removal would violate the Due Process and Equal Protection clause, and cause irreparable injury. (Note, this order only applies to those already in the country, and thus protected by the Constitution; the same analysis does not apply to those outside the United States).

As a result, the court issues what is effectively a nationwide stay, enjoining all of the named respondents, including President Trump, Secretary Kelly, and the acting director of the CBP, from the “commission of further acts and misconduct  in violation of the Constitution as described in the Emergency Motion for Stay of Removal.

The key part is what they are enjoined from doing:

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”.