Krebs Daily Briefing 26 October 2015


Scores dead as magnitude 7.5 quake strikes Afghanistan

Scores of people have died after a magnitude 7.5. earthquake struck Afghanistan on Monday, causing deaths in neighboring Pakistan and tremors in northern India. The U.S. Geological Survey said the epicenter of the quake was in the far northern Afghan province of Badakhshan, which borders Tajikistan and China. “Significant casualties are likely and the disaster is potentially widespread,” the USGS said. Pakistani rescue officials said the quake caused the deaths of 29 people in northwestern Pakistan, bringing the total death toll to at least 45. the Associated Press reported. Agence France-Presse said at least 70 people were dead following the quake which lasted for at least a minute and whose epicenter is a few hundred miles from the site of a 7.6 magnitude earthquake that killed more than 75,000 people in October 2005. In Afghanistan’s Takhar province, west of Badakhshan, at least 12 students were killed in a stampede  at a girls’ school and at least five people died when homes collapsed in the Khyber Pakhtunkhwa province in Pakistan, the AP reported. At least 194 injured people were taken to a hospital in the Swat district of Pakistan and over 100 were taken to a hospital in Peshawar, northern Pakistan, the website Dawn reported. Arbab Muhammad Asim, district mayor of Peshawar, said: “”Many houses and buildings have collapsed in the city,” AFP said. More:

The Offshore Game of On Line Sports Betting

Hard by the High Line, in a vintage industrial building with a Romanesque arch, lights flash on powerful computers in row after row of metal cabinets and cages. Power lines connect the equipment to diesel generators on the roof. Cables route data through the building to conduits beneath New York City streets. This is one small corner of the Internet, unremarkable except for the confluence of two facts: Sports betting is largely illegal in the United States. And this Manhattan building, on 10th Avenue in Chelsea, is one node in a vast network used by a major offshore sports book — ever faster, ever more sophisticated and harder to track or regulate. The network is traversed by United States customers of, a hugely successful Internet sports-gambling company with headquarters until recently in a shopworn hotel in the tiny Caribbean island nation of Curaçao. The unlikely chief of Pinnacle Sports is a granddaughter of a former North Dakota governor who famously engaged in a bit of Cold War diplomacy with Nikita S. Khrushchev. For years, offshore sports books like Pinnacle have used technology and other means to keep prosecutors at bay. In the United States, field agents are arrested, money is forfeited and the illegal gambling rings are seemingly dismantled. Yet they rise again, with different street soldiers and a new arsenal of deception. The one constant is the Internet, which allows for the electronic brain of these sports books to evolve, beyond the reach of American prosecutors. This pattern raises a persistent question: Are the successes of law enforcement tantamount to cutting off a lizard’s tail only to see it grow again, and if so, is the battle even worth fighting? Is the better way — with gambling increasingly woven into the fabric of American sports — to simply legalize it so it can be regulated?



Valeant calls for SEC investigation into short-seller’s actions

Drugmaker Valeant Pharmaceuticals International Inc (VRX.TO) (VRX.N) said on Monday it has asked U.S. securities regulators to investigate a short-seller’s “completely untrue” allegation that the company used its ties with a specialty pharmacy to inflate revenue, and said it would conduct a review of its pharmacy network. Laval, Quebec-based Valeant fired back in a conference call with investors and analysts after the report by Citron Research, run by Andrew Left, hammered Valeant’s stock last week by 35 percent. “His motivation is the same as one who runs into a crowded theater and falsely yells fire. He wanted people to run,” Valeant Chief Executive Mike Pearson said. “He intentionally designed the report to frighten our shareholders to drive down the price of our stock so he could make money for his short-selling.” Left disputed Pearson’s comment in a statement. “Yelling fire in a crowded theater is a lot different than walking into a theater, smelling smoke and yelling, ‘Hey everyone, there could be a fire.’ “Now the information is out, people have had an opportunity to inspect the theater and they have chosen to leave … maybe there is fire.” Valeant, whose U.S.-listed shares were down as much as 14 percent in premarket trading before paring losses to 10 percent, also said a board review had found that the company was in compliance with the law on revenue recognition from drugs sold through the specialty pharmacy, Pennsylvania-based Philidor Rx Services Llc. It said it would set up an ad-hoc committee to look into allegations related to the company’s association with Philidor. Valeant’s lead director Robert Ingram said the company’s board has “complete and total faith” in Pearson.

The First Time America Tried Mass Deportation It Was a Disaster

Donald Trump says that he would deport all undocumented immigrants in the United States, an estimated 11 million people. American cities and counties in the Southwest and Midwest tried to expel Mexican-Americans once before in the 1930s, with traumatic results for the families affected. But perhaps an even more illuminating comparison is with the mass deportation that the United States sponsored a hundred years earlier, in the 1830s. In that decade, the federal government uprooted some 80,000 Native Americans from their homes and forced them west of the Mississippi, into what is now Oklahoma. It was a humanitarian disaster and remains one of the most shameful episodes in the country’s history. Though few if any Americans are proud of the Trail of Tears, as the Cherokees call their harrowing expulsion from the Southeast and deadly journey westward, politicians are now seriously proposing a similar policy toward undocumented immigrants. “I think it’s worth discussing,” stated Ben Carson, Trump’s closest rival for the Republican presidential nomination. There are some obvious differences between undocumented immigrants today and native peoples in the early 1830s. For one, American Indians had been living in what is now the United States since “time immemorial,” as many people observed in the era, whereas undocumented immigrants are recent arrivals. But there are many similarities too. Just as Indians were a reviled minority, so too undocumented immigrants are victims of vicious racism. Just as Indians occupied a legal netherworld—neither fully sovereign nor accorded the rights of U.S. citizens—so too undocumented immigrants find themselves living in similarly nebulous conditions, subject to unchecked administrative rulings and often left in jail without judicial recourse. Just as state governments passed laws to drive Indians off their lands, so have they done with undocumented immigrants. (Alas, my home state of Georgia led the way in both the 1820s and the 2010s.) The similarities and differences could be debated at length, but undocumented immigrants undeniably face the same threat as Indians in the early 19th century: state-administered deportation. In the 1830s, the United States oversaw the forced emigration of about 0.6 percent of the population within its borders. As a proportion of the current U.S. population, Donald Trump proposes to deport six times as many individuals. More:

Tea party support drops to new low

Nearly five years after Republicans reclaimed control of the House with the help of the nascent tea party movement, support for the group has dropped to its lowest level ever, according to the results of a new national Gallup poll released Monday. And fewer Americans are taking sides on the movement than even before. Just 17 percent of adults said they are currently tea party supporters, compared with 32 percent in November 2010, the peak of support. Opposition to the tea party stands at 24 percent, down from the high of 31 percent last year. But a record 54 percent said they are neither supporters nor opponents. Support for the conservative political movement has not topped 25 percent since August 2012, three months before President Barack Obama’s reelection. Among subgroups, support dropped most dramatically among independents leaning Republican, dropping from 52 percent in 2010 to 23 percent in the two most recent polls from 2014 and 2015. Among conservative Republicans, support dropped 21 points, 63 percent to 42 percent. The poll was conducted Oct. 7-11, surveying 1,015 adults nationwide via landlines and cellphones with an overall margin of error of plus or minus 4 percentage points.

Gowdy: A Private Clinton Interview Would Have Been More Productive

Rep. Trey Gowdy (R-SC), the chair of the House Select Committee on Benghazi, on Sunday said that the panel’s questioning of Hillary Clinton may have been more productive in private. During an interview on NBC’s “Meet the Press,” host Chuck Todd asked Gowdy about his comment last week on Fox News that a private interview with Clinton may have gone better. “It was a voluntary interview, and she wanted it to be in public. I wrote a letter several months ago giving her an option. And she chose public. And that’s well within her right,” Gowdy said in response. “I can just tell you that of the 50-some odd interviews we have done thus far, the vast majority of them have been private. And you don’t see the bickering among the members of Congress in private interviews,” he continued. Gowdy said that the next several interviews by the committee will be done behind closed doors, saying, “The private ones always produce better results.” The Benghazi committee chair said that while Clinton was cooperative during the hearing, he does not believe all of her answers were “accurate.” When asked what he learned from the hearing, Gowdy said the committee uncovered “new information” and “clarifying information.” He then said that he believes Clinton should have personally reviewed security policies. Todd also asked Gowdy why the committee asked so many questions about longtime Clinton ally Sidney Blumenthal, who sent Clinton several emails about Libya during her time as secretary of state. “These are all about Libya and Benghazi,” Gowdy said of Blumenthal’s emails. “And to the extent that he was one of the more prolific emailers to her on the subject matter, how do you not ask? How does this person who has no formal role in government and no expertise in Libya or Benghazi, how does he have unfettered access to you, but the ambassador, there is not a single email to or from him?”

The GOP has a new speaker, but he’s stuck with the same doomed strategy

Even if House Republicans get a new speaker this week in Paul Ryan, they’re not going to get what they really need: a new strategy. The core problem that afflicted John Boehner during his tenure in office remains in place — a band of hard-line conservatives routinely insists that the GOP use routine but critical pieces of must-pass legislation (debt ceiling bills, government funding bills, etc.) as “leverage” to secure ideological concessions from the White House. The plan fundamentally doesn’t make sense and can’t work, which most Republicans know but aren’t willing to say. It’s a recipe for disaster, and it hasn’t changed one bit. And in some ways, things may be worse than ever under Ryan, who isn’t really a practitioner of the kind of crass transactional politics that Boehner used to make it work. So while the personal drama is fascinating on its own terms, it’s irrelevant in terms of the larger structure of American politics or the consequences for ordinary people. Ryan is setting himself up for a world of tumult, intra-caucus conflict, and talk radio denunciations. The country, meanwhile, can expect a continued spell of unnecessary (and economically damaging) political crises, which it’s already endured for the last four and a half years. More:

Bacon, hot dogs and processed meats cause cancer, WHO says

Bacon, sausage and other processed meats cause cancer, and red meat likely causes cancer, the World Health Organization announced today. In a new report, the global health agency rewrites their health guidelines on meat consumption, ranking processed meats as group 1 carcinogens, alongside cigarettes and asbestos. The new investigation involved 22 scientists who were invited by the WHO’s International Agency for Research on Cancer to assess the association between more than 16 types of cancer and the consumption of red meat and processed meat. Over the course of seven days in early October, the scientific panel examined more than 800 epidemiological studies from the U.S., Europe, Japan, Australia and elsewhere. The scope covered multiple ethnicities and global diets, according to the report which was published today in the journal Lancet Oncology. The WHO group “classified consumption of processed meat as ‘carcinogenic to humans’ on the basis of sufficient evidence for colorectal cancer.” Colorectal cancer is the second most lethal form of cancer in the U.S., causing nearly 50,000 deaths per year. Processed meat was also linked to a higher incidence of stomach cancer. Red meat carries a slightly lower risk, the group says, but is still “probably carcinogenic to humans.” Aside from the “strong mechanistic evidence” related to colorectal cancer, the “consumption of red meat was also positively associated with pancreatic and with prostate cancer. As a main line of evidence, the group cites one study from 2011, which combed through 28 studies on meat consumption and cancer risk dating back to 1966. That meta analysis found that colorectal cancer risk jumps by 17 percent for every 100 grams (3.5 ounces) of red meat consumed each day. Meanwhile with processed meat, colorectal cancer risk increases by 18 percent for every 50 grams (1.7 ounces) eaten each day.  The International Agency for Research on Cancer keeps a list of compounds or activities with suspected, probable and definitive links to cancer, with each possible item falling into a designated grouping based on whether or not it causes cancer. Processed meat now falls into “group 1,” meaning it ranks as high as tobacco smoking, the most dangerous variants of human papillomavirus (HPV) and asbestos exposure in terms of causing cancer. Red meat lands in “group 2A” with inorganic lead. Research in rodents and human tissue shows meat consumption increases the production of chemical compounds, including haem iron and its chemical byproduct N-nitroso-compounds (NOCs). NOCs cause oxidative damage to intestinal tissue that is carcinogenic. Curing meats elevates the levels of NOCs as well as carcinogenic compounds called polycyclic aromatic hydrocarbons. Heating meat leads to the formation of heterocyclic aromatic amines, a known mutagen and cancer-causing agent. “High-temperature cooking by pan-frying, grilling, or barbecuing generally produces the highest amounts of these chemicals,” the report states. The new analysis makes a definitive assertion on the connection between eating meat and cancer. In recent years, studies and health policy groups have linked the two activities, but often without explicitly saying meat causes cancer. Take, for example, the American Cancer Society’s position as of this morning:

The Death of the Party

In his 1992 song “Parties in the U.S.A.,” Jonathan Richman lamented what he perceived as a decline in informal social gatherings since his 1960s adolescence. “Could there be block parties ’bout which I don’t know?” he wondered. “Maybe they’re in neighborhoods where I don’t go / Could there be all these parties down some little lane / With potato chips sitting there and guitar playing?” In 2015, Mr. Richman’s plaint seems even more prescient for the millennial generation (the hedonistic video for Miley Cyrus’s 2009 pop confection “Party in the U.S.A.” notwithstanding). The incidence of house parties in America (and sections of Canada) thrown by and for those in their 20s, the prime years for adult socializing, may be dropping for a raft of technological, economic and cultural reasons. “In college, there were way more house parties, but I’ve only been to a handful in my two years since,” said Mitchell Friedman, 24, who lives in Brooklyn. “My roommates and I never threw any parties, either.” Madeleine Watson, 29, a resident of Vancouver, British Columbia, said: “I’ve been to, maybe, three or four house parties in the last couple of years, and they’re always Halloween or New Year’s or a holiday event. And it’s always the same house and the same people throwing it.” Christine Vines, 27, said in her first couple of years in Brooklyn, she and her roommate hosted, maybe, two house parties. “That was a trial,” she said. “We decided it was more effort than it was worth. I went to a handful a year, usually Halloween or New Year’s.”

Daylight Saving Time 2015: Get ready to ‘fall back’ and change your clocks

Get ready: it’s almost time to “fall back.” Daylight Saving Time ends at 2 a.m. Sunday, Nov. 1, which means you will need to turn your clocks back an hour before you go to bed Saturday night Oct. 31. The annual tradition signals the official start of shorter days and, on Nov. 1, sunset will be around 5:08 p.m. CST. The days will get shorter from there.



Justice Department: We will sue Alabama if it doesn’t comply with voting law

The U.S. Department of Justice in September sent a letter to Alabama Attorney General Luther Strange, warning that the state has failed to comply with the National Voter Registration Act  – a two-decades-old law designed to make registering to vote easier — and will be sued by the federal government. Vanita Gupta, principal deputy assistant attorney general, told Strange she has authorized a lawsuit because Alabama did not implement requirements of the 1993 law – known as the Motor Voter Act. The act was meant to allow people to easily register to vote at the same time they get or renew driver licenses, or when they visit offices that provide public assistance. “Our investigation indicates widespread noncompliance with Section 5 in Alabama,” Gupta wrote. “Throughout the state, it appears that applications for an Alabama driver’s license or a non-driver identification card do not serve as applications for voter registration with respect to elections for federal office, and that change of address submissions for driver license purposes do not serve as notification of a change of address for voter registration purposes.” Section 5 requires both those things. More:

ABC closing liquor stores that showed a profit

Ten of the 15 Alabama Alcohol Beverage Control stores scheduled to close statewide showed profits in the previous fiscal year, even as others that will keep their doors open posted losses. ABC officials acknowledged the fact, but said many factors went into the decision, ranging from rent to store availability, particularly for those living in rural areas. “What’s hard to do is close those rural ones,” ABC administrator Mac Gipson said. “They’re losing more money, but (closings) make the customer constituents have to drive further to get a bottle.” ABC blamed the closings on $5.5 million in transfers from the ABC Board’s budget into the General Fund, part of a raft of transfers authorized by the legislators on the final day of the second special session to help close a shortfall in the $1.7 billion budget. State agencies have been critical of the transfers, which they say will impact their ability to carry out their duties required by law. The ABC Board is also transferring $16.8 million to the Alabama Law Enforcement Agency (ALEA) as part of the transfer of agents to ALEA. The 15 stores include three in Montgomery – on Coliseum Boulevard, Atlanta Highway and Mildred Street. Although the Mildred Street store lost about $51,000 last year, the Coliseum Boulevard location posted a small profit of $6,384, while the Atlanta Highway location in the Forest Hills Shopping Center showed a profit of $64,386 while ringing up sales of over $1.2 million. Montgomery will still have 11 ABC stores following the closings. There are over 200 statewide. ABC and developers have looked into the possibility of opening an ABC store in the Dalraida neighborhood. Local residents expressed concerns at Thursday night’s planning commission meeting about the store going into their area. The commission did not vote on the measure. Figures for other statewide stores were not available. Almost all the stores posted improved sales and profit margins over 2014.

Hubbard Evidentiary Hearing Begins Today

MONTGOMERY—Over a year ago, 18 citizens from Lee County found probable cause to believe that House Speaker Mike Hubbard had committed 23 felonies as charged by the State. “Probable cause” simply means the Grand Jury thought it more likely than not that he had commit these crimes. His criminal defense attorney, J. Mark White, has worked tirelessly to keep Hubbard from ever facing a jury of his peers, which is scheduled for March 28, almost 600 days after his indictment. Today’s hearing is just the latest and perhaps boldest attempts to use the justice system to keep Hubbard from ever facing a jury. Hubbard no longer bothers to claim his innocence, only that the prosecution has behaved badly, other lawmakers have done the same things, and by the way, those ethics laws he championed……they were unconstitutional. At today’s hearing, which is scheduled to last two days, Judge Jacob Walker III will allow testimony on prosecutorial misconduct, selective prosecution, and the constitutionality of the State’s ethics laws. In an effort to prove prosecutorial misconduct, Hubbard subpoenaed John Archibald, Tina Belfance, Dick Brewbaker, John Carroll, Baron Coleman, Mark Colson, William Van Davis, Charla Doucet, Hugh Evans, Steve French, Tim Fuhrman, Bennett L. Gershman, Lynn Greer, Claire Haines, Matt Hart, Ed Henry, Stacey Johnson, Gaines Lanier, Bill Lisenby, Sandy McClure, Sonny Reagan, John Rice, Gene Sisson, Luther Strange, Jim Sumner, Amber Turnow, and Kevin Turner. On Friday, Judge Walker issued an order excusing all current employees of the Attorney General Office as well as former staffers Kevin Turner and Tim Fuhrman. This leaves disgraced former Deputy Attorney General Henry T. “Sonny” Reagan,  investigator Howard “Gene” Sisson and Claire Haynes. Both Reagan and Sisson’s testimony has already been rejected at several hearings. Both were forced from the Attorney General’s after it was proven they had tried to undermine the Grand Jury that indicted Hubbard. Journalist John Archibald will not be called to testify after a brief affidavit was accepted by the defense. It is very doubtful Judge Walker would have allowed Archibald to take the stand because of the Alabama Shield Law, The Reporters Privilege law and the First Amendment. Judge Walker also ruled attorney and news radio host Baron Coleman should be on call if his testimony is needed. More:

Morning Money

LEW ON THE DEBT LIMIT: CODE RED — Treasury Secretary Jack Lew in a USA Today op-ed: “[W]ith eight days, as of Monday, until Treasury runs out of borrowing authority on Nov. 3, some in Congress are endangering … progress by once again manufacturing a crisis for our country. By waiting to the last minute to act on the debt limit, Congress could cause a terrible accident. This is not an abstraction; failure to raise the debt limit would mean devastating impacts for taxpayers, consumers and businesses.

“According to the non-partisan Government Accountability Office, the 2013 debt limit impasse cost the American taxpayer between $38 million and $70 million in additional borrowing costs alone”

REAL TALK: RYAN NEEDS A WIN — From a top Dem: “Speaker Ryan can’t agree to a master bargain on the debt limit, etc. without him first having a symbolic point of contention that is a hat-tip to the … Freedom Caucus. Unless he pushes back, in a highly public fashion, he’ll be neutered from day one. The question is … what issue will he choose and will the White House play along?”

WARNING: INDUSTRIAL PROFITS SLOWING — WSJ’s Theo Francis and Kate Linebaugh: “Quarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending. From railroads to manufacturers to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year. Some of them say they are already experiencing a downturn. …

“Caterpillar Inc. last week reduced its profit forecast, citing weak demand for its heavy equipment, and 3M Co., whose products range from kitchen sponges to adhesives used in automobiles, said it would lay off 1,500 employees, or 1.7 percent of its total, as sales growth sagged for a wide range of wares. The weakness is overshadowing pockets of growth in sectors such as aerospace and technology”

FED LIKELY TO HOLD THIS WEEK — Pantheon’s Ian Shepherdson: “A rate hike from the Fed this week would be a gigantic surprise, and the Yellen Fed has not, so far, been in the surprise business. It would be more accurate to describe the Fed’s modus operandi as one of extreme caution, and raising rates when the fed funds future puts the odds of action at close to zero just does not fit the bill. …

“Assuming no action this week, then, Chair Yellen’s view that it likely will be appropriate to raise rates this year either will have to be justified by action in December, or abandoned. Markets expect the latter, with the fed funds future putting the chance of December action at zero, following the recent slowdown in the headline payroll numbers and flat hourly earnings in September.”

WHAT THE FED WILL SAY — Mohamed A. El-Erian on Bloomberg View: “Federal Reserve officials will paint a mixed economic picture at the conclusion of the two-day meeting of the Open Market Committee that begins Tuesday. They will welcome a less alarming international context: The recent disruptions in financial markets outside the U.S. have eased, in particular when it comes to the dislocation in emerging economies.

“At the same time, however, they will point to a somewhat less robust U.S. economy in which solid job creation and slightly higher inflation are offset by weaknesses elsewhere. … In all this, the Fed will refrain from taking any new policy actions. It will not increase interest rates, and it certainly will not embark on a new program of large-scale purchases of securities.”

GOOD MONDAY MORNING — M.M. is on CNBC’s Squawk Box at 6:20 a.m. to talk 2016. And if they let me, Kirk Cousins and the historic Skins comeback win over the mighty Tampa Bay Buccaneers.

DON’T FORGET! WARREN/CORDRAY WEDNESDAY — Join me for a Morning Money Breakfast in DC this Wednesday, Oct. 28th with Sen. Elizabeth Warren (D-Mass.) and CFPB Director Richard Cordray.

MARATHON MAN! — Per Patrick Temple-West: “Congratulations to Jon Prior for breezing through a couple injuries to finish the Marine Corps Marathon today. Great job man!” A tired Prior emails: “Only made it with my running buddy Dallas Morning News’ Tasha Tsiaperas.”

DRIVING THE WEEK — T-minus 12 days till the debt limit deadline. Clean hike remains the likely outcome but getting there could be … scary. … House expected to vote on measure to fund the Ex-Im bank … Treasury Secretary Jack Lew this morning will join Secretary Kerry at the U.S. – Qatar Economic and Commercial Dialogue at the State Department … CNBC debate on Wednesday night in Colorado will focus on jobs and the economy … US Chamber on Tuesday holds its 16th annual Legal Reform Summit … SEC at 09:30 a.m. Tuesday holds a meeting of the Equity Market Structure Advisory Committee … First American Financial at 11:45 a.m. Tuesday hosts the “Achieving the American Dream” leadership forum … Senate Banking at 10:00 a.m. on Wednesday holds a hearing on “The State of Rural Banking: Challenges and Consequences” … New homes sales Monday at 10:00 a.m. expected to dip to 550K from 552K … Case-Shiller home prices at 9:00 a.m. Tuesday expected to rise 0.1 percent … Consumer Confidence at 10:00 a.m. Tuesday expected to dip to 102.8 from 103 … FOMC Announcement at 2:00 p.m. Wednesday expected to feature no rate hike but any change to the growth outlook? … First read on Q3 GDP at 8:30 a.m. Thursday expected to show growth of 1.9 percent …

RYAN: CHAMPION FUNDRAISER — POLITICO’s Jake Sherman and Anna Palmer: “Paul Ryan has been abundantly clear: As speaker of the House, he won’t spend all of his time jetting across the country to keep the National Republican Congressional Committee flush. But far from being concerned, top GOP moneymen believe the Wisconsin Republican will be a major boon financially for the party. The national network he’s amassed as a vice presidential candidate and from coordinating the national party’s spending in presidential elections give him advantages that even the highly prolific John Boehner didn’t enjoy. …

“There’s no question Ryan has big shoes to fill. Boehner has raised $300 million for the NRCC since 2009. … But party officials are already plotting creative ways to compensate for Ryan’s demand for family time. Boehner held a lot of fundraisers on the golf course. Ryan isn’t a golfer. So instead of a five-hour event playing golf, allies say, Ryan can hold two events in the same time and can bring in five times as much money by attracting many more donors. Associates also say he is unusually efficient with his time, even tending to donors on drives between events”

CHINA LOOKS TO LONG-TERM PLAN — Bloomberg: “China’s leaders gathering in Beijing this week to formulate the 13th five-year plan confront an era of sub-7 percent economic growth for the first time since Deng Xiaoping opened the nation to the outside world in the late 1970s. Old drivers such as manufacturing and residential construction are spluttering, and new areas like consumption, services and innovation aren’t picking up the slack quickly enough.

“While President Xi Jinping’s blueprint for 2016-2020 will seek to map out the structural change needed to propel the next leg in China’s march toward high-income status, a more immediate fix has been delivered with the sixth interest-rate cut in a year. … Late Friday, China announced it would cut benchmark interest rates, stepping up the battle against deflationary pressures and easing the financing burden on indebted local governments and companies”

GOP CANDIDATES GET TIGHT WITH SUPER PACS — WSJ’s Beth Reinhard and Christopher S. Stewart: “Republican presidential candidates are largely abandoning the caution of past campaigns in relations with the super PACs backing them, testing legal limits as the independent groups take over more functions from campaigns themselves. Super PACs, independent political organizations that stood on the fringes of the 2012 presidential election, are now moving to the center of the current campaign …

“A super PAC supporting Carly Fiorina, the former Hewlett-Packard CEO, is setting up field operations in battleground states, for example, while groups backing Govs. John Kasich of Ohio and Bobby Jindal of Louisiana have hosted the candidates at town hall meetings. Candidates can appear at super PAC events as long as they don’t ask for more than $5,000. Wisconsin Gov. Scott Walker , before he exited the race, as well as former Florida Gov. Jeb Bush, New Jersey Gov. Chris Christie and Florida Sen.Marco Rubio, all attended events organized by their affiliated super PACs after declaring their candidacy”

FACTORY OBAMA PRAISED TO SHUT DOWN OVER EX-IM — NYT’s Steve Lohr: “When President Obama visited General Electric’s sprawling, red brick engine factory here in January 2014, he praised it as a sign that manufacturing in America could have a promising future. .. On the morning of Sept. 28, however, the Waukesha plant manager gathered the workers on the floor and told them the factory would be shut down. G.E., he said, had decided to shift production of the industrial engines — and the workers’ jobs — to Canada. … What happened in less than two years to change things so much? The answer is a blend of Washington politics, fast-changing markets and corporate self-interest. At the center is a politically charged dispute over a usually obscure agency, the Export-Import Bank. …

“That dispute reaches a turning point on Monday, when supporters from both parties of the now shuttered federal agency will force a vote in the House of Representatives to reopen it — the culmination of a months-long revolt against some of the most powerful Republicans in Congress, who want the bank to remain dead. … But corporate reaction, particularly G.E.’s Waukesha shutdown, has prompted some House Republicans to reconsider, fearing the perception they are sacrificing American jobs for the sake of ideology”

DEUTSCHE BANK FACES BIGGER U.S. PROBE — FT’s Gina Chon in Washington, James Shotter in Frankfurt and Kathrin Hille in Moscow: “Deutsche Bank is facing a major escalation of a US probe into its activities in Russia, as a money laundering investigation of its Moscow unit widens to examine possible sanctions violations, said people familiar with the case. The US Department of Justice and New York’s Department of Financial Services are expanding the scope of their probe into the bank because some of the scrutinised transactions allegedly involved US dollars and a former banker who is a US citizen …

“The probe is one of the first known US investigations of a Wall Street company tied to potential breaches of western sanctions against Russia since the measures were first imposed in the wake of Russia’s 2014 annexation of Crimea. At issue is a series of so-called ‘mirror trades’, in which Russian clients bought securities in roubles through Deutsche Bank’s Moscow office and then sold identical ones for foreign currency, including US dollars, through the bank’s London office. Some of the transactions also involved US dollar clearing.”

MEET RYAN’S CHIEF OF STAFF — IBT has a look lobbying by David Hoppe

IN DEFENSE OF THE CADILLAC TAX — Greg Mankiw and Larry Summers in the NYT: “One of us, a former member of the Obama administration, remains a fan of the president. The other, not so much. But we agree on one thing: The excise tax on high-cost health care plans, the so-called Cadillac tax, is good policy. Congress should side with President Obama and resist calls to scrap it. …

“If people have insurance that pays for too much, they don’t have enough skin in the game. They may be too quick to seek professional medical care. They may too easily accede when physicians recommend superfluous tests and treatments. They may not try hard enough to buy services from the lowest-cost provider. Such behavior can drive national health spending beyond what is necessary and desirable”

POTUS Events

10:00 am || Receives the Presidential Daily Briefing
11:10 am || Meets with teachers and educators on reducing test taking time
12:20 pm || Attends a luncheon hosted by Senator Daschle and Senator Mitchell; Washington
2:40 pm || Meets with President Widodo of Indonesia
4:20 pm || Meets with Secretary of State Kerry

All times Eastern
Live stream of White House briefing at 12:45 pm

Floor Action

Congress faces the ultimate trifecta of deadlines this week: The debt limit, highway funding, and the likely end of Speaker John Boehner’s tenure.

Boehner plans to depart Oct. 30 after 24 years in Congress, one day after the House is scheduled to elect a new Speaker. But in one of his final tasks before heading for the exits, the Ohio Republican is expected to guide the House through the vexing task of raising the debt limit.

Rep. Paul Ryan (R-Wis.), the House Ways and Means Committee chairman and 2012 vice presidential nominee, is expected to emerge as the winner during a closed-door GOP conference election on Wednesday. Then he’ll have to secure 218 votes on the House floor Thursday, a number that eluded

At this point, Ryan appears to have support across the divided House GOP conference to win the Speaker election. Ryan last week secured endorsements from the conservative Republican Study Committee and centrist Tuesday Group, along with support from a  “supermajority” of the hard-line Freedom Caucus.

About 70 percent of the Freedom Caucus is said to be behind Ryan, which fell short of the 80 percent necessary for an official endorsement that Ryan originally demanded as one of his conditions to run for Speaker. But Ryan ultimately concluded that showed enough GOP unity for him to move ahead with a job he has said he never wanted.

Still, there will be a handful of holdouts in the conference election and on the floor. Some conservatives still plan to support long-shot Rep. Daniel Webster (R-Fla.) for Speaker, who remains in the race. And some Tea Party groups have been trying to gin up opposition against Ryan in recent days.

Assuming Ryan clinches the House GOP’s nomination, this week will be just the fifth time in the last century the House has voted to elect a new Speaker midway through a term.

Debt limit

Overseeing the House GOP’s strategy on the debt limit may be a perhaps fitting bookend for Boehner’s tumultuous tenure as Speaker since 2011.

It’s unclear what Republicans will do ahead of the looming Nov. 3 deadline. House GOP leaders last week had to scrap a Republican Study Committee plan to raise the debt limit into 2017 attached to a slew of conservative reforms.

Many rank-and-file GOP lawmakers are increasingly resigned to an endgame of voting on a “clean” debt limit bill without preconditions, but it’s unclear if such a measure could actually pass the House. Most Republicans are loath to hike the debt limit without including any spending reforms.

Senate Republicans are signaling that they could be forced to move first if their counterparts in the House can’t reach an agreement on legislation.

“At some point we probably can’t afford to wait any longer,” Senate Majority Whip John Cornyn (R-Texas) told reporters last week. “I don’t know exactly what the drop-dead date is but something needs to start moving here pretty soon.”

Senate Minority Leader Harry Reid (D-Nev.) has demanded that lawmakers take up a “clean” debt-ceiling bill, though Majority Leader Mitch McConnell (R-Ky.) is opposed to the proposal.

Cornyn added that if the Senate introduces its own legislation it wouldn’t start as a “clean” bill, but that senators would be allowed to offer amendments. McConnell, meanwhile, sidestepped a question last week on whether or not anything besides a “clean” bill would be able to pass the chamber.

White House spokesman Eric Schultz told reporters on Friday that Obama would veto any bill that included spending cuts, adding that “we believe this should be done without negotiation, without drama, without delay.”

Highway funding

Congress is expected to approve yet another short-term patch before the Highway Trust Fund runs out on Thursday.

The Department of Transportation has warned that it will have to stop making payments to states and local governments for infrastructure projects next month if lawmakers miss the deadline.

The House Transportation and Infrastructure Committee approved a bipartisan six-year highway funding bill last week. But lawmakers still have to work out differences with their counterparts across the Capitol, who authored a six-year measure over the summer that provided only three years’ worth of revenue.

Export-Import Bank

The House is expected to vote Monday to reauthorize the Export-Import Bank after its charter lapsed on June 30, following a rare procedural tactic used by centrist GOP lawmakers frustrated by conservatives in their party.

More than 30 Republicans joined with Democrats to secure the 218 supporters necessary to force a vote, a tactic known as a discharge petition.

But it’s unclear if the House vote will be anything more than symbolic. Senate Majority Leader Mitch McConnell (R-Ky.) opposes Ex-Im but has said he would be open to a vote. However, he has said he would prefer attaching it to another bill, such as highway funding.


The Senate is expected to wrap up its work on a controversial cyber bill on Tuesday afternoon.

The legislation—which is aimed at increasing information sharing between the government and businesses on cyber threats—has received pushback from privacy advocates including Sen. Ron Wyden (D-Ore.).

The proposal still has to overcome procedural hurdles before it can get a final vote. The Republican leader also scheduled a final vote on a managers package that includes a slate of amendments, as well as votes on seven separate amendments.

Lawmakers will also need to agree to end debate on the Cybersecurity Information Sharing Act (CISA), which will require the support of 60 senators.

The Obama administration officially endorsed the legislation last week, though it’s been unofficially on board with the proposal for months.

“An important building block for improving the nation’s cybersecurity is ensuring that private entities can collaborate to share timely cyber threat information with each other and the federal government,” said a White House memo.

But it noted that it will “strongly oppose” any push to authorize more exceptions to the DHS “portal,” which could occur under an amendment from Sen. Tom Cotton (R-Ark.).