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Nov 25, 2018

Venezuela settles $1.2 billion creditor claim to protect Citgo

FILE PHOTO: PDVSA's U.S. unit Citgo Petroleum refinery is pictured in Sulphur, Louisiana, U.S., June 12, 2018. REUTERS/Jonathan Bachman/File Photo
(Reuters) - Cash-strapped Venezuela settled a $1.2 billion arbitration claim that will protect its crown jewel foreign asset, the Houston-based Citgo Petroleum Corp refining business, from being stripped away by a creditor, according to Canadian court documents.
The deal with Crystallex International Corp suspends the Canadian mining company’s push for a court-ordered auction of control of Citgo as a way of collecting on an arbitration award against Venezuela that has grown to more than $1.4 billion with interest.
Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio

Source: Reuters

Trump demands action to reduce deficit, pushes new deficit spending I Politics.

By Josh Dawsey and Josh Dawsey Reporter 

President Trump is demanding top advisers craft a plan to reduce the country’s ballooning budget deficits, but the president has flummoxed his own aides by repeatedly seeking new spending while ruling out measures needed to address the country’s unbalanced budget.
Trump’s deficit-reduction directive came last month, after the White House reported a large increase in the deficit for the previous 12 months. The announcement unnerved Republicans and investors, helping fuel a big sell-off in the stock market. Two days after the deficit report, Trump floated a surprise demand to his Cabinet secretaries, asking them to identify steep cuts in their agencies.
This account of Trump’s deficit stance is based on conversations with 10 current and former officials in the White House and Congress. They spoke on the condition of anonymity to describe internal deliberations or private conversations. The White House has not responded to repeated requests for comment.
Administration officials have, for now, crafted a sparse plan that would recycle past proposals and call on Congress to trim federal spending on a variety of programs, two White House officials said.
But even as he has demanded deficit reduction, Trump has handcuffed his advisers with limits on what measures could be taken. And almost immediately after demanding the cuts from his Cabinet secretaries, Trump suggested that some areas — particularly the military — would be largely spared. 
The president has said no changes can be made to Medicare and Social Security, two of the government’s most expensive entitlements, as he has promised that the popular programs will remain untouched.
When staffers sought to include an attack on Democrats’ Medicare-for-all proposals in Trump’s campaign speeches this fall, he initially blanched, two administration aides said. Medicare is popular, he said, and voters want it. Eventually, he agreed to the attack if he could say Democrats were going to take the entitlement away.
He has suggested that military spending could be curtailed slightly, from $716 billion this year to $700 billion in his next proposal, a smaller reduction than other agencies would face.
The plan is not expected to include large-scale tax increases, which would be a non-starter with congressional Republicans.
In total, government debt has risen roughly $2 trillion since Trump took office, and the federal government now owes $21.7 trillion, according to the Treasury Department. The president’s agenda has contributed to that increase and is projected to continue to do so, both through the GOP tax cut and with bipartisan spending increases.
And Trump’s recent interest in the issue is at odds with his long-standing previous indifference, according to current and former aides.
Three former senior administration officials said the deficit issue was rarely brought up in Trump’s presence because he had no interest in discussing it.
When former National Economic Council director Gary Cohn’s staffers prepared a presentation for Trump about deficits, Cohn told them no. It wouldn’t be necessary, he said, because the president did not care about deficits, according to current and former officials.
Trump also repeatedly told Cohn to print more money, according to three White House officials familiar with his comments.
“He’d just say, run the presses, run the presses,” one former senior administration official said, describing the president’s Oval Office orders. “Sometimes it seemed like he was joking, and sometimes it didn’t.” 
Two current aides said they had not heard Trump make that comment in recent months, and he is changing his tune on the budget in public statements. 
“We’re going to start paying down debt,” Trump said during a White House event last month. “We have a lot of debt.”
Trump often uses “debt” — the total amount the government owes — to refer to the deficit, the annual gap between what the government takes in and what it spends.
Trump also is often not versed in the particulars of the federal budget.
Chief of Staff John F. Kelly has told others about watching television with Trump and asking the president how much the chairman of the Joint Chiefs of Staff earns. Trump guessed $5 million, according to people who were told the story by Kelly, startling the chief of staff. Kelly responded that he made less than $200,000. The president suggested he get a large raise and noted the number of stars on his uniform.
Even as Trump has told aides he’s finally interested in taking steps to reduce deficits, he has floated several ideas that would further expand them. He has proposed a 10 percent tax cut for the middle class, a huge package of infrastructure spending and billions of dollars for a wall along the U.S.-Mexico border. He hasn’t specified how he would pay for any of those things.
Trump repeatedly pushed staffers to spend more on the infrastructure bill this summer, envisioning large projects for many key states. “Infrastructure Week” became a joke in the White House because it often happened during disastrous weeks that were waylaid by guilty pleas, errant tweets or bombshell developments in the Russia probe. Many staffers thought the problem was that it was too expensive. But Trump thought the government was not spending enough, according to current and former officials, and he is looking to revive the pricey plan.
Because the government spends much more than it brings in through taxes, it must borrow money to cover the balance by issuing debt. The U.S. Treasury projects it will issue $1.3 trillion in new debt this year, more than double its borrowing from one year ago. 
Rising interest rates are projected to make the cost of borrowing money much more expensive. The United States will soon spend more money on interest payments than it does for the entire Medicaid program, more than $400 billion.
Trump’s internal contradictions on the budget mirror how conflicted the Republican Party has become on an issue that had been one of its tenets for decades. Speaker Paul D. Ryan (R-Wis.), who campaigned on reducing deficits, has rarely brought up the issue with the president in recent months. 
“Republicans have talked a good game about deficit spending, but in reality, their record shows they haven’t stood up and stopped it,” said Marc Short, the president’s former director of legislative affairs. 
As they prepared a tax bill in 2017, Republicans initially suggested their plan would offset the cuts with tax increases elsewhere, but they abandoned that commitment early in the process. Trump in December signed a law that nonpartisan analyses suggest will add $1.5 trillion to deficits over the next decade. That figure is projected to jump to more than $2 trillion if the law’s temporary cuts to income tax rates are made permanent.
Many Republicans have said the tax cuts will pay for themselves by producing a massive jump in economic growth — a claim rejected at the time by many economists across the political spectrum. Growth has increased moderately since the cuts took effect, but the increases have fallen well short of the level needed to prevent the cuts from adding to deficits.
Trump also signed a bipartisan $1.3 trillion budget bill in March that added new funding for the government’s domestic and military programs. The president criticized the bill at the time and said he would not sign another mass budget measure.
With Democrats set to take control of the House in January, a future deficit-reduction deal would have to be bipartisan, and Hill veterans see that as a stretch.
As of now, the central plank of the White House’s new deficit-reduction push would be a proposal to cut congressionally approved spending by about 5 percent. Some programs would see a much smaller proposed reduction; Trump has said publicly the reduction for the Pentagon could be about 2 percent.
But any of these changes would have to be approved by House Democrats, who are likely to be resistant, especially as many campaigned on large-scale increases to the government.
“Could there be a bipartisan deal on deficits?” asked Avik Roy, a former policy adviser to incoming senator Mitt Romney (R-Utah), former Texas governor Rick Perry and Sen. Marco Rubio (R-Fla.). “You never know, but I don’t think that’s what the Democrats will be itching for in the House.”
The White House is set to detail its new plans in a budget proposal early next year. Some White House officials have considered proposing a major overhaul of Medicaid, but two people briefed on the process said Trump is likely to offer the same changes that the White House has called for unsuccessfully in the past.
It is unusual for budget deficits to expand the way they have during the Trump administration because they typically contract during periods of economic growth. During President Barack Obama’s last year in office, the deficit was $587 billion, a decrease from years when it had reached $1 trillion annually in the aftermath of the financial crisis.
Government spending is largely broken into two categories. There are programs that are automatically funded, such as Medicare and Social Security, and programs that must be funded by Congress each year, such as the military, housing, intelligence and transportation. 
That category is known as discretionary spending, and that’s where Trump has told his Cabinet advisers to seek a 5 percent reduction. But cuts of that magnitude would probably reduce the deficit by about $70 billion, and it’s projected to reach $1 trillion next year, showing the magnitude of the tax cuts and other parts of the budget that have remained untouched.
Over a round of golf at Trump National Golf Club in Virginia last year, Sen. Bob Corker encouraged the president to push for deficit-control measures and to force Republicans to cut spending. 
Trump was dismissive of the Tennessee Republican’s request. “The people want their money,” the president said, according to two people familiar with the exchange. The conversation soon moved on.

Debunking 8 Myths About Technical Analysis

Shobhit Seth

Some traders and investors denounce technical analysis as a superficial study of charts and patterns without any concrete, conclusive or profitable results. Others believe it is a sort of Holy Grail that once mastered will unleash sizable profits. These opposing viewpoints have led to misconceptions about technical analysis and how it is used. 
Some misconceptions about technical analysis are based on education and training. For example, a trader trained in using only fundamentals may not trust technical analysis at all. But that doesn't mean someone who is trained in technical analysis can't use it profitably. Other myths are based on experience. For example, the incorrect use of technical indicators often leads to losses. That doesn't mean the method is necessarily bad – possibly the person just needs more practice and training. Other myths are perpetrated by marketing, promising overnight riches if a simple indicator is bought and used. Rarely is it that easy. (For more, see: Basics of Technical Analysis.)

Technical Analysis Myths Debunked

Here are eight common technical analysis myths. Read opposing viewpoints on why these myths simply aren't true.

1.) Technical analysis is only for short-term trading or day trading. 

It is a common myth that technical analysis is only appropriate for short-term and computer-driven trading like day trading and high-frequency trades. Technical analysis existed and was practiced before computers were common, and some of the pioneers in technical analysis were long-term investors and traders, not day traders. Technical analysis is used by traders on all time frames, from 1-minute charts to weekly and monthly charts.

2.) Only individual traders use technical analysis. 

While individuals do use technical analysis, hedge funds and investment banks make ample use of technical analysis as well. Investment banks have dedicated trading teams that use technical analysis. High-frequency trading, which encompasses a significant amount of the trading volume on the stock exchanges, is heavily dependent on technical concepts.

3.) Technical analysis has a low success rate. 

A look at the list of successful market traders, who have decades of trading experience, debunks this myth. Successful trader interviews have cited significant numbers of traders who owe their success to technical analysis and patterns. For example, "Market Wizards: Interviews With Top Traders" by Jack D. Schwager cites many traders profiting solely from technical analysis. (See also: The Pioneers of Technical Analysis.)

4.) Technical analysis is quick and easy. 

The internet is full of technical analysis courses that promise trading success. Though many individuals enter the trading world by placing their first trade based on simple technical indicators, continued success in trading requires in-depth learning, practice, good money management and discipline. It requires dedicated time, knowledge and attention. Technical analysis is only a tool, only one piece of the puzzle.

5.) Ready-made technical analysis software can help traders make easy money. 

Unfortunately, this is not true. There are many online ads for cheap and costly software that claims to do all your analysis for you. In addition, less-experienced traders sometimes confuse technical analysis tools in broker-provided trading software for trading models that will guarantee profit. Though technical analysis software provides insights about trends and patterns, it doesn't necessarily guarantee profits. It's up to the trader to correctly interpret trends and data. (For additional reading, see: The Best Technical Analysis Trading Software.)

6.) Technical indicators can be applied across all markets.

While  this may be true in many cases, it is not true in all cases. Specific asset classes have specific requirements. Equities, futures, options, commodities and bonds all have differences. There may be time-dependent patterns like high volatility in futures and options nearing expiry, or seasonal patterns in commodities. Don't make the mistake of applying technical indicators intended for one asset class to another.

7.) Technical analysis can provide very accurate price predictions. 

Many novices expect recommendations from technical analysts or software patterns to be 100 percent accurate. For example, inexperienced traders may expect a prediction as specific as, "stock ABC will reach $62 in two months." However, experienced technical analysts usually avoid quoting prices so specifically. Rather they tend to quote a range such as, "stock A could move in the range of $59 to $64 in the next two to three months." Traders betting their money on technical recommendations should be aware that technical analysis provides a predictive range, not an exact number. Technical analysis is also about probability and likelihoods, not guarantees. If something works more often than not, even though it doesn't work all the time, it can still be very effective at generating profits.

8.) The winning rate in technical analysis should be higher. 

It's a common myth that a high percentage of winning trades is needed for profitability. However, that is not always the case. Assume Peter makes four winning trades out of five, while Molly makes one winning trade out of five. Who is more successful? Most people would say Peter, but we don't actually know until we get more information. Proper trade structuring allows for profitability even with few winners. Profitability is a combination of win-rate and risk/reward. If Peter makes $20 on his winners but loses $80 on this loss, he ends up with $0. If molly makes $50 on her win and losses $10 on her losses, she walks away with $10. She is better off, even with fewer wins.

The Bottom Line

Technical analysis provides a large basket of tools and concepts for trading. There are successful traders that don't use it, and there are successful traders that do. Ultimately, it is up to each trader to explore technical analysis and determine if it is right for them. It doesn't guarantee instant profits or 100 percent accuracy, but for those who diligently practice the concepts, it does provide a realistic possibility of trading success. (For additional reading, check out: Technical Analysis Strategies for Beginners.)

Source: Investopedia