Securities Attorney Briefing 21 October 2016

Securities Attorney Tom Krebs

International

First U.S. Combat Death in Fight for Mosul

A U.S. service member was killed in northern Iraq on Thursday when an improvised explosive device detonated as American troops accompanied local forces as they pushed toward Mosul, U.S. Central Command announced. It was the second combat death suffered by American forces battling the Islamic State this month. On Oct. 6, U.S. Army Staff Sgt. Adam Thomas was killed after another improvised bomb went off while his unit was on a foot patrol in Nangarhar, Afghanistan, where U.S. Special Operations forces are fighting ISIS alongside Afghan troops. Thursday’s fatality was also the fourth American combat death in Iraq since U.S. troops deployed last year, and the second for Centcom in two days. On Wednesday, a service member was killed and two others wounded at a military base in Kabul when an Afghan soldier opened fire on them. That incident is still under investigation.  A defense official told Foreign Policy that Thursday’s attack took place northeast of Mosul, an area where both Kurdish Peshmerga and Iraqi Counterterrorism Forces began their push toward the city on Thursday morning. It was not clear with which group the U.S. service member was embedded. Earlier this week, Pentagon spokesman Peter Cook said that U.S. advisers with Iraqi and Kurdish troops advancing on Mosul are “behind the forward line of troops,” but “it’s safe to say there are Americans on the outskirts of the city.” There are “over 100” U.S. military advisors on the ground near Mosul with Kurdish and Iraqi forces, spokesman Capt. Jeff Davis said earlier this week. Officials at the Pentagon who asked for anonymity to speak with reporters said that the U.S. advisors on the ground near Mosul are being given some leeway as to how and where they position themselves on the battlefield in order to help direct American artillery and air strikes.

http://foreignpolicy.com/2016/10/20/first-u-s-combat-death-in-fight-for-mosul/?utm_content=buffer3886b&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

Fight Between Goldman Sachs and Libyan Fund Shadows Lawyer

LONDON — Within days of arriving in Tripoli in July 2008 to work on behalf of Libya’s new sovereign wealth fund, Catherine McDougall, a young Australian lawyer, was swept off on a journey into the desert. Ms. McDougall, a fund official and some of his friends set out early in the morning. Cutting across wide swaths of empty desert, their white station wagon roared down paved roads at nearly 90 miles an hour. The next day, they feasted on camel tagine and took tea on the roof of an ancient house. For Ms. McDougall, then 26, it was the start of a wild and bewildering ride that six weeks later would end up with her being pulled out of Libya by her employer, the powerhouse London law firm Allen & Overy. The law firm told her it would be initiating a disciplinary proceeding against her after a complaint from the Libyan general counsel. Rather than face that, Ms. McDougall says, she resigned. A spokesman for the law firm declined to comment for this article. Eight years later, her assignment in Libya for Allen & Overy continues to shadow her. Her experience, she says, shows the lengths that Western firms will go to keep a new but potentially lucrative client happy. Lawyers, used to working on deals and contracts for companies in London or New York, are whisked to unfamiliar and sometimes hostile surroundings to serve clients in new frontiers of finance. And when a prestigious investment bank and a giant oil-rich wealth fund ultimately came to clash in Libya, Ms. McDougall found herself becoming collateral damage. More:

http://www.nytimes.com/2016/10/21/business/dealbook/fight-goldman-sachs-libyan-fund-shadows-lawyer.html?emc=edit_th_20161021&nl=todaysheadlines&nlid=53476364&_r=0

Donald Trump: Fearmonger in Chief

As human beings, our capacity to forget is astonishing, second only to our capacity to believe just about anything. So in 2016, we find ourselves in a place we never thought we’d be in this century: Witnessing, and in many cases supporting, the rise of leaders proposing such things as restricting freedoms of specific groups of people, sending political opponents to prison, employing crueler methods of torture, killing families for an individual’s crimes, cracking down on the press and scapegoating entire ethnicities.  And unfortunately, it’s not just Donald Trump, who at last night’s debate refused to accept the legitimacy of the sitting President, the FBI, the election process, and, as moderator Chris Wallace put it, “the peaceful transition of power in this country.” Around the Western world, the Great Panic of 2016 is very real and very ugly, with various increasingly popular politicians and parties espousing nationalist policies that threaten democratic freedoms and human rights. One hopes, for example, that Austria’s presidential election is not a mirror for ours. When far-right, anti-migrant candidate Norbert Hofer, who says he carries a Glock because it’s a “natural consequence” of the rise in immigration, lost the presidential election by a narrow margin, his party filed a complaint over voting irregularities and forced a repeat election, due to take place in December. If elected, Hofer has threatened to make his opponents “surprised” by the power a President can have, including dissolving the parliament. In Hungary, something similar has already happened. Prime minister Viktor Orbán, who has been changing the country’s constitution to undermine its democracy and checks-and-balances system, built a fence on the country’s Southern border with Serbia to keep out immigrants, encouraging Hungarians to have “more children” instead. Meanwhile, some of the other politicians on the rise, despite widespread condemnation, include Dutch presidential candidate Geert Wilders, who’s facing his second trial for hate speech after leading followers at a rally to chant for fewer Moroccans in the country. In France, there’s the National Front party, led by Marine Le Pen, who compared Muslims praying in the streets to the Nazi occupation of the country. In Germany, there’s Frauke Petry, nicknamed “Adolfina” and infamous for suggesting the use of firearms to stop illegal border crossers. Her anti-immigrant Alternative für Deutschland party won 21 percent of the vote in the home state of Angela Merkel, beating the chancellor’s own party.  In Australia, the virulently racist Pauline Hanson, whose policies include banning Muslim immigrants, forbidding burkas in public, and temporarily halting new mosque construction, was re-elected for the first time in 20 years, with three members of her anti-Islam One Nation party also landing state Senate seats. Then there’s the anti-immigrant Sweden Democrat party, Danish People’s party, and more claiming seats in their respective parliaments. And, of course, there’s Brexit, and its various slogans urging British citizens to “take back our country” and “take back control of our borders.” More:

http://www.rollingstone.com/politics/news/donald-trump-fearmonger-in-chief-w445869

Amid ‘rigged’ election charges, Russia wants to monitor U.S. vote

In an apparent move to embarrass the United States over Donald Trump’s claims of a “rigged” presidential election, Russia sought to send monitors to U.S. polling stations for the Nov. 8 vote, Russian media revealed Thursday. The bid was sharply rebuffed by the State Department, and one state election official threatened criminal action if Russian monitors showed up, according to state-controlled Izvestia daily and broadcaster RT. State Department deputy spokesman Mark Toner called the Russian effort a “PR stunt” and denied that the United States blocked Russian diplomats from observing the election. A spokeswoman for Louisiana Secretary of State Tom Schedler, who received a request to allow Russian monitors, called it a “propaganda ploy.” “We’ve allowed observers from overseas in the past from other countries, never from Russia,” Meg Casper said. She added that the FBI and Department of Homeland Security also “told us not to do this.” Trump, who is behind in most polls, has complained for weeks about potential election fraud. In Wednesday night’s debate with Democrat Hillary Clinton, the Republican nominee refused to say whether he would abide by the results on Election Day. On Thursday, he said he will “totally accept the results — if I win.” Russia and its president, Vladimir Putin, have become prominent issues in the U.S. campaign and were mentioned during Wednesday’s debate for allegedly interfering in the election. U.S. intelligence officials say Russia is behind a series of computer hacks that leaked embarrassing emails from the Democratic National Committee and top Clinton campaign staffers. Trump was skeptical about Russia’s role in the leaks and deflected Clinton’s charge that he is an admirer of Putin and overlooks the Russian leader’s alleged meddling in the election and other anti-U.S. positions. The United States often sends monitors to observe elections in other countries with a history of voter fraud. Izvestia said Russia made the request for monitors in the U.S. during talks with the State Department and was “categorically rejected.” Russia was invited to participate in routine monitoring conducted by the Organization for Security and Cooperation in Europe, in which Russia is a member, but the level of access was unacceptable to the Russians, according broadcaster RT. The European group said it will observe the U.S. election with a delegation of 439 people from 10 countries deployed nationwide. The delegation includes at least one Russian. Toner noted that U.S. officials participated in a similar observation mission for Russia’s parliamentary elections in September. Russian officials also sought access on the state level in Texas, Louisiana and Oklahoma. Izvestia said Russia was turned down in “harsh” terms. Texas Secretary of State Carlos Cascos wrote a Sept. 28 letter to Alexander Zakharov, Russia’s consul general in Houston, that “only persons authorized by law may be inside of a polling location during voting. All other persons are not authorized and would be committing a Class C misdemeanor crime by entering.” More:

http://www.usatoday.com/story/news/world/2016/10/20/amid-rigged-election-charges-russia-wants-monitor-us-vote/92456558/

Private Security Group Says Russia Was Behind John Podesta’s Email Hack

SAN FRANCISCO — At the start of 2014, President Obama assigned his trusted counselor, John D. Podesta, to lead a review of the digital revolution, its potential and its perils. When Mr. Podesta presented his findings five months later, he called the internet’s onslaught of big data “a historic driver of progress.” But two short years later, as chairman of Hillary Clinton’s presidential campaign, Mr. Podesta would also become one of the internet’s most notable victims. On Thursday, private security researchers said they had concluded that Mr. Podesta was hacked by Russia’s foreign intelligence service, the GRU, after it tricked him into clicking on a fake Google login page last March, inadvertently handing over his digital credentials. For months, the hackers mined Mr. Podesta’s inbox for his most sensitive and potentially embarrassing correspondence, much of which has been posted on the WikiLeaks website. Additions to the collection on Thursday included three short email exchanges between Mr. Podesta and Mr. Obama himself in the days leading up to his election in 2008. Mr. Podesta’s emails were first published by WikiLeaks earlier this month. The release came just days after James R. Clapper Jr., the director of national intelligence, and the Department of Homeland Security publicly blamed Russian officials for cyberattacks on the Democratic National Committee, in what they described as an effort to influence the American presidential election. To date, no government officials have offered evidence that the same Russian hackers behind the D.N.C. cyberattacks were also behind the hack of Mr. Podesta’s emails, but an investigation by the private security researchers determined that they were the same. Threat researchers at Dell SecureWorks, an Atlanta-based security firm, had been tracking the Russian intelligence group for more than a year. In June, they reported that they had uncovered a critical tool in the Russian spy campaign. SecureWorks researchers found that the Russian hackers were using a popular link shortening service, called Bitly, to shorten malicious links they used to send targets fake Google login pages to bait them into submitting their email credentials. The hackers made a critical error by leaving some of their Bitly accounts public, making it possible for SecureWorks to trace 9,000 of their links to nearly 4,000 Gmail accounts targeted between October 2015 and May 2016 with fake Google login pages and security alerts designed to trick users into turning over their passwords.

http://www.nytimes.com/2016/10/21/us/private-security-group-says-russia-was-behind-john-podestas-email-hack.html?emc=edit_th_20161021&nl=todaysheadlines&nlid=53476364

The Cult of Putin — and Trump — Grows in Crimea

From the Russian city of Perm, on the outer edges of the Ural Mountain range, to the peninsula of Crimea, it’s about 1,800 miles. By car, that’s a good 40 hours, give or take a few. Undaunted, the Shvetsovs, Sergey and Irina, loaded their two young kids into the backseat of their Russian-made Lada — a little, ruby-red thing, all faded and rickety — and hit the highway one day early last month. They drove day and night, through the vast European Plain, past Moscow, down to the Black Sea, and finally, by ferry, across the Kerch Strait. They had come, they said, for the same reason that thousands of other Russians are pouring into the peninsula nowadays: To see President Vladimir Putin’s newest acquisition with their own eyes, and, of course, to stock up on cheap souvenirs glorifying the 2014 annexation and tweaking the Western world. The “Crimea Is Ours” T-shirts are wildly popular. The Shvetsovs took three. So too are the Putin-the-Liberator magnets. The couple bought a dozen. Crimea “needs a strong leader,” said Sergey, 41 and slender, with green eyes and a bushy, reddish-brown mustache. “And Putin is a strong leader.” Largely left in disrepair following the collapse of the USSR two decades ago, the peninsula finds itself in the midst of a mini-tourism rush, recapturing in the process a bit of the old glory it had as a one-time summer hot spot for czarist families in the 19th century and, later, for high-ranking Soviet officials. Much of the crowd now is made up of middle-class Russians. On a recent weekday afternoon, they were packed tight into the lone Crimean airport, sitting on suitcases strewn across the floor and waiting restlessly in 40-minute bathroom lines. Along the trendy southern shore, hotels were not only booked solid that week but were even taking reservations for four months out — into the dead of winter.

http://www.bloomberg.com/news/articles/2016-10-20/in-booming-crimea-they-love-vladimir-putin-and-donald-trump

Jewish settlers invited Palestinians over for the holidays. Everything went better than expected.

EFRAT, West Bank — The gathering wasn’t exactly unprecedented. Jewish settlers and their Palestinian neighbors have met quietly before, many times. But not like this. This meeting, this was rare. The settlement of Efrat is a bedroom community of 10,000 affluent Jews, including many Americans, a few miles south of Bethlehem in the Israeli-occupied West Bank. The residents of Efrat live the good life in a growing hilltop community that the United States considers illegal and an obstacle to peace. Efrat’s mayor, Oded Revivi, who is also a lieutenant colonel in the Israeli army reserve, invited Palestinians from surrounding villages to come to his house and celebrate the Jewish holiday of Sukkot, the Feast of Tabernacles, when the faithful gather in palm-roofed huts, a remembrance of the 40 years of wandering landless in the desert back in the time of Moses. A couple of dozen Palestinians accepted the mayor’s invitation this week to share brownies, grapes, cookies, apples and coffee, alongside 30 Israeli settlers. This was a first. The idea? The sides were here to talk, perhaps even to bond — no matter if the dynamic was a little awkward and asymmetrical. For the Palestinians, maybe it was like having Christmas dinner with your boss. The settlers were very welcoming, but they were armed. Among the attendees were an Israeli army general and the top commander of the Israeli national police in the West Bank. The Israeli forces, and some of the civilian settler guests, arrived with rifles slung over their shoulders or pistols jammed into holsters on their belts. The Palestinians, of course, were not armed. Many of them worked or had worked as laborers in the settlement. Everyone was very polite. A Palestinian farmer sat next to an Israeli diplomat. They live a mile and a world apart. A rabbi from the settlement broke bread with a Palestinian stonemason. Guests shook hands, took selfies, patted one another on the back. Both sides seemed a little stunned to be together celebrating a Jewish holiday. More:

https://www.washingtonpost.com/world/jewish-settlers-invited-palestinians-over-for-the-holidays-everything-went-better-than-expected/2016/10/20/fa527250-960d-11e6-9cae-2a3574e296a6_story.html?wpisrc=nl_rainbow&wpmm=1

Thousands of Men to Be Pardoned for Gay Sex, Once a Crime in Britain

LONDON — The men were convicted — tens of thousands of them — of crimes like buggery, gross indecency and loitering with intent. They had been arrested in bars, coffee houses, bars and public bathrooms, and sometimes in the privacy of their homes and with their partners. In many cases, their only offense was seeking intimacy with another man. Decades after homosexuality was decriminalized inBritain, the government announced on Thursday that it would posthumously pardon thousands of gay and bisexual men who were convicted, in essence, of having or seeking gay sex. Since 2012, men with such convictions who are still alive have been able to apply to have their names cleared. The law providing for the pardons, which could take effect in a matter of months now that it has the support of the Conservative government, is named for Alan Turing, the mathematician who made a major contribution to Britain in World War II by cracking Germany’s Enigma coding machine and was a central figure in the development of the computer. Turing was convicted on charges of homosexuality in 1952 and committed suicide in 1954. The government apologized in 2009 for its treatment of him, and in 2013, Queen Elizabeth II formally pardonedhim. In April, the head of Britain’s signals intelligence agency, GCHQ, also apologized, for its past discrimination against gays. More:

http://www.nytimes.com/2016/10/21/world/europe/britain-will-posthumously-pardon-thousands-of-gay-and-bisexual-men.html?emc=edit_th_20161021&nl=todaysheadlines&nlid=53476364

Inside the underground hide-out of an Islamic State leader

A tunnel leading to the underground hide-out of an Islamic State leader killed in the Iraqi forces-led Mosul offensive was outfitted with extremist graffiti, electricity, appliances, stockpiles of food and, potentially, booby traps. “We found some of their mortar shells over there under the tunnels,” Kurdish Brig. Gen. Fayak Hassan Rashid said Thursday from a command post in the village of Shakoli, about 20 miles east of Mosul.  “You can find everything in the tunnels: They put food, mattresses, refrigerators.” Rashid’s Kurdish forces, known as peshmerga, made the discovery after winning a battle against extremists in Shakoli on Monday. They killed more than 50 Islamic State fighters, but two peshmerga charged with clearing mines from the area died when a tunnel exploded, and two more were injured, Rashid said. At least one house across town near another tunnel was booby-trapped, packed with explosives. Peshmerga troops said the explosives were defused Thursday. As the offensive launched by the government Monday to drive Islamic State from its last major Iraqi stronghold advances, militants are leaving a trail of rubble and deadly traps. The destruction does not bode well for Mosul, a densely populated city of 1.2 million, where residents who fled say militants have left trenches filled with burning oil and minefields. The rapid advance has opened a window into how Islamic State rule gripped towns across Iraq, including the takeover of homes to build tunnels and hidden living quarters. The extremist group captured Mosul and the surrounding area in 2014. Since the offensive began Monday, 5,640 people have been displaced, according to the United Nations. Humanitarian groups expect 200,000 to be displaced in the first two weeks of the offensive, with up to a million uprooted by the time it’s over in a region where millions have already been displaced. Iraqi officials have urged civilians to shelter in place, but already several thousand have fled the Mosul area. More:

http://www.latimes.com/world/middleeast/la-fg-iraq-liberated-village-20161020-snap-story.html

National

Hedge Funds Hurt as Investors Remove $28 Billion in 3 Months

It has been a bruising year for hedge funds. Big bets have been disastrous, investors have voiced discontent and some managers have been forced to rewrite their playbooks or call it quits. And now, there is new data to rub salt into the industry’s wounds: Over the last three months, investors pulled $28 billion out of hedge funds, according to the research firm Hedge Fund Research. It is the biggest quarterly outflow of dollars since the depths of the financial crisis in 2009. So far this year, more than $50 billion has flowed out of hedge funds — much of that from the industry’s biggest and best-known hedge funds, Hedge Fund Research said in its latest industry report, released on Thursday. Among this year’s biggest losers are firms tarred in recent months by scandal. In June, the multibillion-dollar hedge fund Visium Asset Management told investors it would wind down after several employees were charged with insider trading and with conspiring to inflate the value of certain stock positions to extract a bigger payout from investors. One of the employees, Sanjay Valvani, was found dead in an apparent suicide one week after the charges were leveled against the firm. Leon G. Cooperman, the acerbic 73-year-old founder of the hedge fund Omega Partners, made news in September when the Securities and Exchange Commission charged him and his firm with insider trading. He has denied the charges. Nevertheless, New Jersey’s State Investment Council said this month that it would redeem $62 million from the firm as part of a broader move to pare back hedge fund investments. And Daniel S. Och, the founder of the $36.9 billion Och-Ziff Capital Management, was forced last month to pay $2.2 million to settle record-keeping charges related to a federal bribery investigation. Och-Ziff’s Africa unit pleaded guilty to paying more than $100 million in bribes to African officials. The firm, which informed investors in 2014 that the government was investigating it over questions of bribery, said in August that it had seen $5.5 billion walk out the door this year alone. This month, New Jersey said it would pull $190 million from Och-Ziff. But it’s not just regulatory action that has irked hedge fund investors. More:

http://www.nytimes.com/2016/10/21/business/dealbook/hedge-funds-hurt-as-investors-remove-28-billion-in-3-months.html?ref=dealbook&_r=0

MetLife Grounds Snoopy. Curse You, Red Baron!

MetLife is firing Snoopy. The “Peanuts” character, one of the most recognizable figures in American pop culture, is being retired after more than 30 years of appearing in print ads, TV commercials, marketing materials and on the sides of MetLife’s blimps at sports events. No more big-nosed beagle in the flight cap and goggles chasing the Red Baron on Metlife’s airship. No more television commercials featuring a smiling Snoopy navigating life’s treacherous waters to sell insurance. Cuddly Snoopy hitting a home run? Out. MetLife, one of the largest insurance companies in the world with 100 million customers worldwide, said the move is part of an effort to update its corporate emblem for international competition. The global chief marketing officer for MetLife, Esther Lee, announced the change on Thursday, saying that Snoopy was adopted as a symbol in 1985 to make the company seem “more friendly and approachable during a time when insurance companies were seen as cold and distant.” “We have great respect for these iconic characters,” Ms. Lee said in the announcement. “However, as we focus on our future, it’s important that we associate our brand directly with the work we do and the partnership we have with our customers.” The company said it wanted a “clean, modern” design that included the colors blue and green to “represent life, renewal and energy.” They form what the company has called “the partnership M.” The broader MetLife brand palette was expanded to include a range of vibrant secondary colors, reflecting “the diverse lives of its customers,” a company statement said. More:

http://www.nytimes.com/2016/10/21/business/media/metlife-grounds-snoopy-curse-you-red-baron.html?ref=dealbook

‘Lions Hunting Zebras’: Ex-Wells Fargo Bankers Describe Abuses

Mexican immigrants who speak little English. Older adults with memory problems. College students opening their first bank accounts. Small-business owners with several lines of credit. These were some of the customers whom bankers at Wells Fargo, trying to meet steep sales goals and avoid being fired, targeted for unauthorized or unnecessary accounts, according to legal filings and statements from former bank employees. “The analogy I use was that it was like lions hunting zebras,” said Kevin Pham, a former Wells Fargo employee in San Jose, Calif., who saw it happening at the branch where he worked. “They would look for the weakest, the ones that would put up the least resistance.” Wells Fargo would like to close the chapter on the sham account scandal, saying it has changed its policies, replaced its chief executiveand refunded $2.6 million to customers. But lawmakers and regulators say they will not let it go that quickly, and emerging evidence that some victims were among the bank’s most vulnerable customers has given them fresh ammunition. This week, three members of the Board of Supervisors in San Francisco, Wells Fargo’s hometown, introduced a resolution calling on the city to cut all financial ties with the bank. They cited both the recent scandal and past cases — particularly the $175 million that Wells Fargo paid in 2012 to settle accusations that its mortgage brokers had discriminated against black and Hispanic borrowers. After the Senate Banking Committee held a blistering hearing last month with the bank’s chief executive, John G. Stumpf, who has since retired, it followed up with a letter containing 58 additional questions for the bank. Among them: What proportion of the harmed customers are old, members of ethnic minorities or military veterans? The committee is still waiting for a response. The Justice Department and California’s attorney general are also investigating the bank. In interviews and lawsuits, Wells Fargo employees have described in vivid detail some of the predatory practices they saw. More:

http://www.nytimes.com/2016/10/21/business/dealbook/lions-hunting-zebras-ex-wells-fargo-bankers-describe-abuses.html?emc=edit_th_20161021&nl=todaysheadlines&nlid=53476364

U.S. mall investors set to lose billions as retail gloom deepens

(Reuters/IFR) – The dramatic shift to online shopping that has crushed U.S. department stores in recent years now threatens the investors who a decade ago funded the vast expanse of brick and mortar emporiums that many Americans no longer visit. Weak September core retail sales, which strip out auto and gasoline sales, provide a window into the pain the holders of mall debt face in coming months as retailers with a physical presence keep discounting to stave off lagging sales. Some $128 billion of commercial real estate loans – more than one-quarter of which went to finance malls a decade ago – are due to refinance between now and the end of 2017, according to Morningstar Credit Ratings. Wells Fargo estimates that about $38 billion of these loans were taken out by retailers, bundled into commercial mortgage-backed securities (CMBS) and sold to institutional investors. Morgan Stanley, Deutsche Bank and other underwriters now reckon about half of all CMBS maturing in 2017 could struggle to get financing on current terms. Commercial mortgage debt often only pays off the interest and the principal must be refinanced. The blame lies with online shopping and widespread discounting, which have shrunk profit margins and increased store closures, such as Aeropostale’s bankruptcy filing in May, making it harder for mall operators to meet their debt obligations. Between the end of 2009 and this July e-commerce doubled its share of the retail pie and while overall sales have risen a cumulative 31 percent, department store sales have plunged 17 percent, according to Commerce Department data. More:

http://www.reuters.com/article/us-usa-property-cmbs-idUSKCN12L0XB

BAT Offers to Buy Rest of Reynolds American for $47 Billion

British American Tobacco Plc offered to pay $47 billion for the 58 percent of Reynolds American Inc. that it doesn’t already own, seeking to create the world’s largest publicly traded cigarette maker by pooling brands including Lucky Strike and Camel. The cash-and-stock proposal values each Reynolds share at $56.50, London-based BAT said Friday, a 20 percent premium to the last closing price. The U.K. company said it hasn’t held prior negotiations with the board of Reynolds and will only pursue the deal with its support. Reynolds said its board will respond after evaluating the offer. The acquisition would be the biggest by a U.K. company since the nation voted in a June 23 referendum to leave the European Union. The move ramps up acquisition activity in a fast-consolidating industry, where companies are also battling to develop the best alternatives to traditional cigarettes to compensate for declining smoking rates in the developed world. “The timing is a surprise, but the strategic rationale makes perfect sense, pivoting BAT further towards the high-value U.S. market, consolidating some strong brands and Reynolds’s position in next generation tobacco,” Guy Ellison, head of U.K. equities at Investec Wealth & Investment, said by e-mail. “The ball is now in the court of Reynolds’ board and shareholders.” More:

http://www.bloomberg.com/news/articles/2016-10-21/bat-plans-to-take-full-control-of-reynolds-in-47-billion-deal

STD rates hit record high in U.S. as screening clinics close

Infections from three sexually transmitted diseases have hit another record high, federal health officials reported. More than 1.5 million cases of chlamydia were reported last year, up 6 percent from the year before. About 400,000 cases of gonorrhea were reported, a nearly 13 percent increase from 2014. The biggest increase, 19 percent, occurred in syphilis cases, with nearly 24,000 reported, according to the annual report on STDs released by the Centers for Disease Control and Prevention. All three diseases are curable with antibiotics, but gonorrhea is growing increasingly resistant to treatment with antibiotics. CDC officials said STD rates are rising at a time when many of the country’s systems for preventing those infections have eroded. In recent years, more than half of state and local STD programs have had their budgets cut, resulting in more than 20 health department STD clinics closing in one year alone, the CDC said. In 2014, the number of chlamydia cases also rose to record levels. “We have reached a decisive moment for the nation,” said Jonathan Mermin, director of CDC’s National Center for HIV/AIDS, Viral Hepatitis, STD and TB Prevention. Most STD cases continue to go undiagnosed and untreated, putting people at risk for severe and often irreversible health consequences, the CDC said. The economic burden to the U.S. health-care system is nearly $16 billion a year, according to the CDC.

Young people and gay and bisexual men face the greatest risk of infection, and there continues to be a troubling increase in syphilis among newborns, who are infected by their mothers. More:

https://www.washingtonpost.com/news/to-your-health/wp/2016/10/20/std-rates-hit-record-high-in-u-s-as-screening-clinics-close/?wpisrc=nl_rainbow&wpmm=1

Obama says his departure may fix what ails Obamacare

President Barack Obama said on Thursday that his departure from office in January might be what it takes to begin to heal the political scars over Obamacare and allow for needed fixes to his signature healthcare law. The 2010 Affordable Care Act tipped off a long and bitter political and legal battle between the White House and Republicans in the U.S. Congress who said the 2010 law creates unwarranted government intervention in personal healthcare and private industry. Republicans have been quick to highlight a recent barrage of negative headlines about rising health insurance premiums and shrinking doctor networks for people participating in subsidized insurance plans offered under the law.

Obama acknowledged the law is not working perfectly, but said the problems could be fixed by legislation, encouraging lawmakers to create a government-run health insurance option to help U.S. states where there is little or no competition among private insurers. “Maybe now that I’m leaving office, maybe Republicans can stop with the 60-something repeal votes they’ve taken and stop pretending that they have a serious alternative … and just work with the next president to smooth out the kinks,” he said in a speech at Miami Dade College. “They can even change the name of the law to Reagancare, or Paul Ryan care,” Obama said, evoking the name of the Republican speaker of the House of Representatives. “I don’t care. I just want it to work.” But Ryan, in a written response, said he would continue to seek to repeal and replace the law. “At this point, one thing is clear: this law can’t be fixed,” Ryan said. Obama was later slated to headline a rally in Florida, a battleground election state, for Hillary Clinton, the Democratic candidate in the Nov. 8 presidential election. Clinton has said she would add a public option and expand tax incentives for healthcare costs. Republican nominee Donald Trump has pledged to repeal and replace the law.

http://www.reuters.com/article/us-usa-obamacare-idUSKCN12K0A9

At charity roast, Donald Trump delivered what might as well be a campaign eulogy

NEW YORK — It was supposed to be his opening joke, but it landed with such heavy bitterness that it prompted scattered, uncomfortable laughter. “A special hello to all of you in this room who have known and loved me for many, many years. It’s true,” Trump said as he took command of the dais at the Alfred E. Smith Memorial Foundation Dinner on Thursday evening, wearing a white tie and a black tuxedo coat that he kept tugging at. “The politicians,” he continued. “They’ve had me to their homes, they’ve introduced me to their children, I’ve become their best friends in many instances. They’ve asked for my endorsement, and they always wanted my money. And even called me really a dear, dear friend. But then suddenly, decided when I ran for president as a Republican, that I’ve always been a no-good, rotten, disgusting scoundrel. And they totally forgot about me.” Over the next 15 minutes, Trump gave a speech that might as well have been a eulogy for his presidential campaign. He joked about the size of his hands and the size of his rival Hillary Clinton’s rally crowds, then compared himself to Jesus. He noted that the debate the night before — which ended with him angrily ripping his notes — has been called “the most vicious debate in the history of politics,” prompting him to reflect: “Are we supposed to be proud of that?” He joked about prosecuting Clinton if he ever gets elected president, accused the media of working for her and brought up the FBI’s investigation into Clinton’s use of a private email server while secretary of state. “Hillary is so corrupt, she got kicked off the Watergate Commission,” Trump said, as the crowd turned on him and started to boo, something that simply doesn’t happen at lavish charity dinners at the Waldorf Astoria hotel. More:

https://www.washingtonpost.com/news/post-politics/wp/2016/10/21/at-charity-roast-donald-trump-delivered-what-might-as-well-be-a-campaign-eulogy/?hpid=hp_hp-top-table-main_no-name%3Ahomepage%2Fstory

Donald Trump: ‘I will totally accept’ election results ‘if I win’

Delaware, Ohio (CNN) Donald Trump said Thursday he will accept the results of next months election — if he wins, a caveat that again threatens to undermine the sanctity of the most fundamental democratic exercise. “I would like to promise and pledge to all of my voters and supporters and to all of the people of the United States that I will totally accept the results of this great and historic presidential election,” the Republican presidential nominee told supporters at a rally in Delaware, Ohio, his first comment since the final presidential debate Wednesday. After pausing for effect, he said, “… if I win.” Trump was widely panned by Republicans and Democrats alike after the debate during which he refused to pledge to accept the results of the election, regardless of the winner. On Thursday, Trump added, “Of course, I would accept a clear election result, but I would also reserve my right to contest or file a legal challenge in the case of a questionable result. Trump again repeated the previously debunked claims of widespread voter fraud as ammunition for why he might not accept the results, and again cited the lack of clarity from 2000’s presidential election. “We want fairness during the election. This is having nothing to do with me but having to do with the future of our country. We have to have fairness,” Trump said.

http://www.cnn.com/2016/10/20/politics/donald-trump-i-will-totally-accept-election-results-if-i-win/index.html

GOP braces for Trump loss, roiled by refusal to accept election results

LAS VEGAS — A wave of apprehension and anguish swept the Republican Party on Thursday, with many GOP leaders alarmed by Donald Trump’s refusal to accept the outcome of the election and concluding that it is probably too late to salvage his flailing presidential campaign. As the Republican nominee reeled from a turbulent performance in the final debate here in Las Vegas, his party’s embattled senators and House members scrambled to protect their seats and preserve the GOP’s congressional majorities against what Republicans privately acknowledge could be a landslide victory for Democratic nominee Hillary Clinton. With less than three weeks until the election, the Republican Party is in a state of historic turmoil, encapsulated by Trump’s extraordinary debate declaration that he would leave the nation in “suspense” about whether he would recognize the results from an election he has claimed will be “rigged” or even “stolen.” The immediate responses from GOP officials were divergent and vague, with no clear strategy on how to handle Trump’s threat. The candidate was defiant and would not back away from his position, telling a roaring crowd Thursday in Ohio that he would accept the results “if I win” — and reserving his right to legally challenge the results should he fall short. For seasoned Republicans who have watched Trump warily as a general-election candidate, the aftermath of Wednesday’s debate brought a feeling of finality. More:

https://www.washingtonpost.com/politics/gop-braces-for-trump-loss-roiled-by-refusal-to-accept-election-results/2016/10/20/6e1de6aa-96dc-11e6-9b7c-57290af48a49_story.html?wpisrc=nl_rainbow&wpmm=1

Good times, bad times: #TrumpBookReport’s hilariously simplified reading list

During the third and final presidential debate, Donald Trump flubbed a question about the Syrian city of Aleppo so badly that an apt metaphor for what viewers had just witnessed began to take shape on Twitter:  See tweets at link below. One tweet in particular, from St. Louis city alderman and popular Twitter commentator Antonio French, quickly went viral and ultimately spawned a hashtag: #TrumpBookReport. Before long, the hashtag — a rare example of a genuinely funny use of the form — had achieved “worldwide trending topic” status, which it retained for the rest of of debate night and much of the next morning. Some of the results are well worth reading. But in the event that you’re too busy to scroll through thousands of tweets, here are the five most frequently (and hilariously) referenced books and their Trumpian interpretations.

http://www.vox.com/culture/2016/10/20/13347234/trumpbookreport-tale-two-cities-mockingbird-gatsby

State/Local

AG: No evidence Gov. Bentley accuser Spencer Collier did wrong

There was nothing there. In an unusual statement Thursday, the Alabama Attorney General’s office refuted claims of improper spending against former Alabama Law Enforcement Agency Secretary Spencer Collier. The AG’s statement -– backing up claims by some within ALEA that Collier was fired after a shoddy and punitive internal investigation -– says a special grand jury in Montgomery found no evidence to prosecute Collier. “No witness established a credible basis for the initiation of a criminal inquiry in the first place,” the AG’s office said in a statement. It went on to say: “The investigation of former Secretary Collier is now closed.” Collier, the first to disclose the existence of provocative texts from Gov. Robert Bentley to his former aide Rebekah Caldwell Mason, was placed on medical leave in February and replaced by current Secretary Stan Stabler, who initiated a probe of Collier. Bentley fired Collier in March – on the same day Collier told of the text messages – citing the report as the reason for dismissal. He said the report indicated a “possible misuse of funds.” “To determine the facts with certainty, the Special Prosecutions Division of the Attorney General’s Office conducted a complete investigation of the ALEA allegations against Collier,” the AG’s statement said. “For efficiency, and to ensure public confidence in the investigation, all of the information from ALEA was presented to the Montgomery County Special Grand Jury. Numerous witnesses, including senior ALEA leadership, were called to testify before the Special Grand Jury. Attorney General Luther Strange presided over the “criminal investigative proceeding.” “In the course of the investigation, no witness provided credible evidence of criminal “misuse of state funds,” the statement said. “No witness provided credible evidence of any other criminal violation on the part of former Secretary Collier. Finally, no witness established a credible basis for the initiation of a criminal inquiry in the first place.” Prosecutors rarely discuss details about grand juries that return “no bills,” or findings of insufficient evidence to prosecute, although they are allowed to do so when details of the case have been made public and clarification is in the public interest.

Details about the Collier accusations became public recently after Gov. Robert Bentley turned over an internal ALEA investigation of Collier to the committee considering Bentley’s impeachment. The document questioned spending by Collier on clothing, guns and sunglasses, and painted a picture of a man on the edge of the law. Several of the people quoted in the investigative document have told AL.com they were misquoted or taken out of context in the ALEA report, and felt the answers they gave investigators were not reflected in the final document. Some called it a “hatchet job” or a “witch hunt.” Collier said today he felt “like an undue burden has been lifted of my shoulders.” He said he believes the investigation was vindictive and punitive from the start. “I feel strongly it was an effort to punish me,” he said. Collier by John Archibald on Scribd. See documents:

http://www.al.com/news/index.ssf/2016/10/ag_no_evidence_gov_bentley_acc.html

What is the Status of Gaming in Alabama?

 A couple of weeks ago, to the surprise of many, Governor Robert Bentley announced at a press conference the formation of a gambling committee to explore the benefits and costs of legalizing some forms of gaming in Alabama. While the move was met mostly with indifference from the majority of the State – a government committee doesn’t exactly inspire great excitement – it also seemed like a curious move from a Governor, who, along with Attorney General Luther Strange, had two weeks earlier signed off on a letter to district attorneys and sheriffs around the State, reminding them that electronic bingo is illegal in Alabama. There were also specific letters to the sheriffs and DAs in Macon and Lowndes counties, where casinos – VictoryLand in Macon and Southern Star and White Hall in Lowndes – are currently operating electronic bingo machines. But, at his press conference to announce the committee, Bentley struck a more understanding tone and was careful to note that the odd bingo laws in the State have resulted in confusion. He said he understood how Macon officials could believe that the electronic games are legal in that county. It seemed to be a sharp turn for the Governor, and according to two sources close to Bentley, there was good reason. Those sources said Bentley was surprised to learn after the letter was released, that his personal attorney, Joe Espy, would be forced to resign because the letter created a conflict. Espy also represents VictoryLand and its owner Milton McGregor. More:

http://www.alreporter.com/what-is-the-status-of-gaming-in-alabama/

Impeachment starter says exoneration of Collier shows Bentley lied

The state representative who started the effort to impeach Gov. Robert Bentley said today the exoneration of former Alabama Law Enforcement Secretary Spencer Collier strengthens the case for impeaching the governor. Attorney General Luther Strange issued a press release today saying that a special grand jury investigation found no credible evidence of “misuse of state funds” by Collier and no credible basis for starting the probe. When Bentley fired Collier in March, the governor said an internal investigation at ALEA had found “possible misuse of state funds.” Rep. Ed Henry, R-Hartselle, who sponsored the impeachment resolution in the House, said the information from Strange shows Bentley has not been truthful. “He’s a liar and a fraud,” Henry said. “Nobody trusts him. Businesses are not going to invest heavily in our state as long as he is our liaison.” Bentley issued a statement tonight through his press office: “Based on concerns presented to me by a member of the Alabama Senate and information that was given to the then Acting Secretary of Alabama Law Enforcement Agency Stan Stabler, when he assumed his position, I felt a new direction in our state law enforcement agency was needed. The information obtained by the ALEA integrity unit was gathered and presented to the Attorney General’s office and a determination has been made.  I am very satisfied with the new direction of ALEA and its leader Secretary Stan Stabler.” The governor has denied breaking any laws or doing anything to warrant impeachment. More:

http://www.al.com/news/birmingham/index.ssf/2016/10/impeachment_initiator_says_exo.html#incart_2box

School funding in Alabama still below pre-recession levels

Alabama is still spending less per student on public K-12 education than it did before the Great Recession, according to a new national report. The report today from the Center on Budget and Policy Priorities, a left-leaning research policy institute, shows that Alabama saw the second biggest drop since 2008. Alabama funding per student is down 14.2 percent since 2008. That trails only Oklahoma, which is down 26.9 percent in spending per pupil since 2008. Figures have been adjusted for inflation.

Reasons for the nationwide cuts include the slow recovery of state revenues since 2008, as well as a decrease in federal dollars for education. But Alabama was one of 28 states to increase funding per student for the current school year. According to the report, per student funding rose by 3.1 percent in Alabama this school year. Total state appropriations for K-12 education in Alabama are $4.4 billion for the current school year, up from $4.2 billion last year. Funding for K-12 peaked at $4.5 billion in 2008.

In Alabama, earlier this week, state officials said revenues for the Education Trust Fund fell short of predictions for the fiscal year that ended Sept. 30 in part due to an unexpected decline in corporate income taxes. The primary way Alabama funds public schools is through the K-12 Foundation Program. The Foundation Program was designed to fund necessities for students, including teacher salaries and benefits, and materials for classrooms, and textbooks.  It also funds school buses, school nurses and operating expenses for buildings. Local systems can augment the state support with local tax dollars, allowing some systems in affluent areas to raise taxes and spend far more per student. But state education officials contend the Foundation Program has not been fully funded by state lawmakers for many years. To fill the gap, school officials have to rely on the local tax support. For the current school year, the Foundation Program is funded at $5,488 per pupil, up from $5,209 last year.

http://www.al.com/news/index.ssf/2016/10/school_funding_still_below_pre.html#incart_river_home

Morning Money

HOW WALL STREET WOULD REACT TO A CLINTON WIN — MM spent some time in Boston on Thursday with a bunch of asset management types, nearly all of whom expect Hillary Clinton to win easily on Nov. 8th. The general consensus is that stocks might stage a bit of a relief rally once the voting is done but that movement should be limited given a Clinton victory is already largely priced into markets. A shock Trump win, however, could spark the kind of panic selling seen after the Brexit vote over the summer. The question is where would money go? SAIS’s Erik Jones, a member of MM’s panel on Thursday put it this way. “If Trump wins, I don’t know what the safe haven asset class would be.”

The general market view that Clinton is going to win could be seen in muted reaction to Wednesday night’s debate, which scientific polls showed the Democratic nominee won easily. Stocks drifted slightly lower Thursday. Previously, they tended to rally on good news for Clinton. And the Mexican peso, sharply correlated with Trump’s fortunes lately given his trade stance, spiked after the debate ended, indicating a Clinton win, but then fell on Thursday. Still, the peso is likely to have a strong night on Nov. 8th if Clinton appears on track for a big win.

KEEP YOUR EYES OUT for a new Justin Wolfers paper, with Dartmouth’s Eric Zitzewitz, on how financial markets react to Clinton and Trump posting today at Brookings. It’s very juicy.

S&P ON TRUMP AND CLINTON PLANS — Via S&P Global analysis: “Mr. Trump’s plan favors high earners, with the top 1 percent getting about 47 percent of the tax cuts … Compared with the middle class and poorer Americans, high-income households save a greater portion of their income than they spend. Therefore, the effect on overall consumer spending would likely be less than if a tax cut was targeted to low-income households, who historically spend more of what they receive.

“The Clinton campaign proposes to raise more than $1.4 trillion in federal receipts over the next decade, largely from top earners … While some have argued that Mrs. Clinton’s plan could weigh on private-sector incentives, 75 percent of the higher taxes would be on high-income individuals, and 25 percent would be on estate taxes and corporate tax revenues, which would reduce the negative effects on private spending.” Full report.

THE BIG MONEY: SUSSMAN GIVES $21M TO HRC SUPER PAC — WP’s Matea Gold: “Hedge fund manager S. Donald Sussman has given a total of $21 million to the top super PAC supporting Hillary Clinton, putting him on track to be the Democratic nominee’s biggest political backer this cycle. In an interview with The Washington Post, Sussman said he gave Priorities USA $6 million in September and another $2 million this month, bringing his total to $21 million.

“The Florida-based investor said he has contributed $40 million to Democratic super PACs and allied groups in 2016, double what he had planned to spend at the beginning of the election. He said he was driven by the desire ‘to leave my children a better country’ by helping elect candidates who will restructure a system that allows such huge donations in the wake of the Supreme Court’s Citizens United decision” Read more.

TRUMP BOOED AT AL SMITH DINNER — POLITICO’s Kenneth P. Vogel: “A Manhattan society crowd on Thursday night turned on Donald Trump as he used his appearance at an annual roast-style fundraiser for Catholic charities to jab Hillary Clinton, seated just a few feet away, as ‘corrupt,’ and to crack that she ‘hates Catholics’ and profiteered from her foundation’s charity work in Haiti. At several points during the white-tie dinner in the ballroom of the Waldorf Astoria hotel, Trump drew boos, and when he made his crack about Catholics, someone yelled from the crowd of 1,500 ‘finish.’

“A night after a fiery debate between the two presidential candidates in Las Vegas, raw feelings crept into an event — Alfred E. Smith Memorial Foundation — typically known for light-hearted political jabs. Clinton also drew some groans with shots at Trump over his comments about women and questions about his net worth, but her routine was far more hokey and self-deprecating, and much better received. As attendees filed out of the white-tie affair, several could be overheard remarking that Trump’s speech seemed badly off-key” Read more. You can hear Trump’s speech here.

MORE ON CLINTON TEAM’S WARREN FEARS — POLITICO’s Zachary Warmbrodt: “Hillary Clinton’s allies carefully charted a Wall Street regulation plan that would survive what they termed ‘the Warren primary,’ according to hacked emails published by WikiLeaks. At issue was the 1933 Glass-Steagall Act, which separated commercial and investment banking until its repeal by former President Bill Clinton. …

“Ron Klain, vice president Joe Biden’s former chief of staff, suggested a way to ‘avoid the flip flop, but survive the Warren primary,’ according to an October 2015 email. He said Clinton ‘should move 95 percent to Warren’ on Glass-Steagall by saying: ‘Of course I wouldn’t bring back Glass Steagall — that’s a law written 80 years ago before we had anything like the current banking system. But I agree with Sen. Warren that — given the ongoing misconduct in the banking industry — we need to erect a wall between banking and non-banking activities’”

“HUGE FLIP FLOP” ON TPP — “Days before … Clinton announced her opposition to the Trans-Pacific partnership, her campaign was divided over whether she could afford to oppose the trade pact she’d long worked to advance, according to hacked emails published by WikiLeaks. … . Klain … warned in October of 2015 that it would be a ‘huge flip flop’ to break with the trade agreement that President Barack Obama was championing.

“‘She has to be for TPP. She called it the ‘gold standard’ of trade agreements. I think opposing that would be a huge flip flop. She can say that as President she would work to change it. She can say that it can be better. But I think she should support it,’ Klain wrote in an email.”

HAPPENING TODAY: MASSAD IN NYC — Via MFA: “Managed Funds Association … will host Commodity Futures Trading Commission Chair Timothy G. Massad at the Outlook 2016 Conference, the Association’s annual leadership conference, on Friday, October 21. … 9:30 a.m. — 10:00 a.m. … The Pierre Hotel”

HAPPENING TODAY IN DC — Brookings’ Hamilton Project hosts a forum on “Second Chances through Successful Reentry.” “The event will take place at the Brookings Institution, and event participants will include: US Deputy Attorney General Sally Yates;Cook County (IL) Sheriff Tom Dart; Mark Holden, SVP and General Counsel, Koch Industries; Sister Donna Markham, President and CEO, Catholic Charities USA”

CYBER READOUT — Treasury Secretary Jack Lew and Assistant to the President for Homeland Security and Counterterrorism Lisa Monaco on Thursday co-hosted a meeting with financial services executives, financial regulators, and Administration officials to discuss cybersecurity and the financial stability implications of a significant cyber incident.

From the readout: “Meeting participants noted the importance of coordinating potential response activities to a significant cyber incident, maintaining resilience in the sector’s core functionality, and ensuring the trust and confidence in individual firms and the sector as a whole during operational stress” Read more.

AT&T EYES TIME WARNER — Bloomberg: “Senior executives at AT&T Inc. and Time Warner Inc. have met in recent weeks to discuss various business strategies including a possible merger … The talks, which at this stage are informal, have focused on building relations between the companies rather than establishing the terms of a specific transaction … Neither side has yet hired a financial adviser …

“Acquiring Time Warner would give AT&T, one of the biggest providers of pay-TV and of wireless and home internet service in the U.S., a collection of popular programming to offer to subscribers, from HBO to NBA basketball to the Cartoon Network. AT&T CEO Randall Stephenson has been looking to add more content and original programming as part of his plan to transform the Dallas-based telecommunications company into a media and entertainment giant” Read more.

BANK REGS HURTING GROWTH? — WSJ’s Katy Burne and Aruna Viswanatha: “A heightened emphasis by banking regulators and law-enforcement officials on financial misconduct may be constraining global growth, some officials warn. Legal expenses are among the burdens weighing on banks, policy makers say. ‘The roughly $275 billion in legal costs for global banks since 2008 translates into more than $5 trillion of reduced lending capacity to the real economy,’ Minouche Shafik, a deputy governor of the Bank of England, told a New York conference of regulators and bankers Thursday.

“Other policy makers have expressed concern that strict crackdowns on banks’ lapses in carrying out anti-money-laundering regulations have led banks to nearly cut off several emerging markets from the global financial system, damping their economies. The International Monetary Fund, in particular, has sounded that alarm repeatedly this year and held a conference highlighting the issue at its annual meeting in early October” Read more.

A SUMMIT THAT’S ALREADY A DEBACLE — POLITICO’s David M. Herszenhorn and Jacopo Barigazzi: “EU leaders set out to think big at their fall summit. Instead, they are on the edge of a big fail, before they even sit down to meet. A step-back discussion on long-term Russia policy has been hijacked by events in Syria. Hopes of sealing a trade deal with Canada have been dashed by regional Belgian lawmakers.

“And an effort to shift the focus of migration policy to Africa risks ignoring warnings from architects of the EU’s migration deal with Turkey, who say it’s a ticking time bomb. As British Prime Minister Theresa May attends her very first European summit on Thursday, the EU could hardly have put on a better display of dysfunction and disarray to justify her country’s decision to bow out of the whole mess” Read more.

THREATS TO ASIA — Mohamed A. El-Erian on Bloomberg View: “It is not easy to keep an orderly house in an unsettled neighborhood. That’s the major hurdle facing Asian economies as the advanced world deals with unusual economic, financial, institutional and political fluidity. Judging from China’s gross domestic product data released this week, Asia is in a relatively favorable position to navigate the challenges. But the battle is far from won.

“In more normal times, Asia only needed to ask two major economic questions about the advanced countries: How strong a locomotive would these nations provide for trade? And to what extent would they supply relatively stable capital flows, a coherent interest rate structure and limited volatility for the dollar, euro and yen … In the past year, a third concern — this one more structural because it pertains to the stability of the world’s trading regimes — has been added” Read more.

COULD RYAN AND MCCONNELL CONCEDE FOR TRUMP? — POLITICO’s Burgess Everett, Rachael Bade, and Heather Caygle: “Donald Trump’s refusal to say he’ll accept a loss on Election Day has raised a jarring possibility: that Paul Ryan or Mitch McConnell, the nation’s top two elected Republicans, will have to do it for him. Just don’t expect the House speaker or Senate majority leader to step in before they absolutely have to.

“The continued silence from Ryan and McConnell in the face of Trump’s stunning pronouncement at the final presidential debate Wednesday speaks volumes about the leaders’ immediate strategy: Avoid Trump and his erratic rhetoric at all costs, and do whatever they can to protect their candidates from having to respond to the nominee.
But if Trump actually refuses to concede a loss on Nov. 8, it will be hard, if not impossible, for Ryan and McConnell to maintain that stance” Read more.

TRUMP PICKS PUTIN — POLITICO’s Michael Crowley: “Trump angrily insisted on Wednesday night that he is not Vladimir Putin’s ‘puppet.’ But at a minimum, in recent months he has often sounded like the Russian president’s lawyer — defending Putin against a variety of specific charges, from political killings to the 2014 downing of a passenger jet ove over Ukraine, despite the weight of intelligence, legal findings and expert opinion. over Ukraine, despite the weight of intelligence, legal findings and expert opinion. …

“National security insiders said Trump’s dismissal of an intelligence consensus sets a troubling precedent. ‘The U.S. intelligence community is normally reticent about making intelligence assessments public,’ said Rajesh De, a former general counsel at the National Security Agency and Obama White House aide. ‘It is stunning that Donald Trump is willing to bring his know-nothing approach to matters of national security and to question the professional judgment of those who defend our security with no apparent basis in reality.’” Read more.

THEIL IS A “HIGH PROFILE GLITCH” — Backchannel’s Khan Shoieb: “Peter Thiel’s $1.25 million contribution to Donald Trump — Silicon Valley’s most conspicuous political act in this campaign — is a high-profile glitch; an aberration that emits a distorted signal about the tech industry’s true place and ambition in political America.
Trump … has been easy for Silicon Valley to oppose uniformly. But Thiel himself adheres to a breed of techno-libertarianism that feels increasingly anachronistic in the Valley.

“Today’s techies, from Mark Zuckerberg to Ellen Pao, are instead more likely to profess a civic-minded mission, chasing pursuits that strive to optimize society as it exists rather than create it anew This is a civic Valleyism that embraces its entanglement in the public sphere, armed with the conviction that it holds a special charge to tackle society’s biggest ills. But in the waning days of a campaign in which tech issues have been muted by questions of race and class, Silicon Valley looks poised to escape this election cycle having endured no real scrutiny” Read more.

CLINTON HAS WIDE MONEY LEAD — POLITICO’s Isaac Arnsdorf: “Hillary Clinton and her allies started October leading the money race by some $80 million, cementing in its final phase the most lopsided race in modern campaign finance. The Clinton campaign finished September with $59.7 million in the bank even after unleashing an $82.6 million volley, much more than in any other month of the campaign, according to a new report filed with the Federal Election Commission.

“Together with her joint fundraising committee and allied super PACs, the Democratic nominee had a whopping $177.9 million to start the last full month of the campaign. That’s within striking distance of lapping Donald Trump, who had $34.8 million in his campaign coffers as of Sept. 30, plus $59.2 million in his joint fundraising ventures and the super PACs supporting him, according to POLITICO’s analysis of the most recent FEC filings” Read more.

POTUS Events

3:10 pm || Meets with NASA Astronaut Scott Kelly
7:35 pm || Delivers remarks at BET’s “Love and Happiness: A Musical Experience;” South Lawn

All times Eastern
Live stream of White House briefing at 11:30 am

Floor Action

The House is out. The Senate meets in a pro forma session at 3 p.m.

AROUND THE HILL— After Wednesday’s press conference with House Minority Leader Nancy Pelosi, things are back to quiet again on Capitol Hill.