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Daily News Briefing: Wednesday, August 29, 2012

Published by: Clark Barrow

Clark Barrow

By CLARK BARROW - Home prices are up, but consumers have soured on the U.S. economy

DAILY BRIEFING - SUMMARY

  • HOUSING MARKET - U.S. home prices bounced higher for a second month in June, with the strongest monthly advance in the more than decade-long history of the price gauge.
  • CONSUMER CONFIDENCE - U.S. consumers soured on the economy in August as their outlook on business and job prospects declined, according to a report released Tuesday.
  • ISAAC - Isaac became a Category 1 hurricane and crashed ashore in southeast Louisiana Tuesday night.
  • CONTROVERSY - Some conservatives are not satisfied with a so-called compromise regarding official rules and delegate within the Republican organization. Despite concern from some conservatives, the Republican National Convention adopted two controversial rules on Tuesday.
  • PLATFORM - Republicans officials on Tuesday approved the party platform at their national convention that would ban all abortions and gay marriages, reshape Medicare into a premium supported program and reject federal spending to improve the economy.
  • REPUBLICAN NATIONAL CONVENTION - Republicans formally nominated Romney and his running mate, Paul Ryan, to challenge Obama in November. The convention themes for Wednesday are included in this briefing.
  • WHITE HOUSE - The Obama administration released final regulations on Tuesday forcing automakers to more than double the fuel economy of cars and light trucks by 2025.
  • ISRAEL - U.S. House Intelligence Committee Chairman Mike Rogers (R-Mich.) on Tuesday said he believes the Israeli government is likely to wait until after the U.S. election to take military action against Iran.

WHAT WE KNOW

ECONOMIC NEWS

  • HOUSING MARKET - U.S. home prices bounced higher for a second month in June, according to an index released Tuesday which showed the strongest back-to-back monthly advance in the more than decade-long history of the price gauge. The S&P/Case-Shiller 20-city composite registered a 2.3% advance in June, matching upwardly revised gains in May and taking the year-on-year move to positive territory for the first time in close to two years with a gain of 0.5%.
    • The additional evidence of a stabilizing U.S. housing market left some on Wall Street downplaying market expectations that the U.S. Federal Reserve will open the door to further easing efforts later this week.
    • Investors are focused on the annual gathering of central bankers at Jackson Hole, with U.S. Federal Reserve chairman Ben Bernanke, set to speak on Friday.
  • CONSUMER CONFIDENCE - U.S. consumers soured on the economy in August as their outlook on business and job prospects declined, according to a report released Tuesday.
    • The Conference Board, a private research group, said its index of consumer confidence fell to 60.6 in August–the lowest reading since November 2011–from a revised 65.4 in July, first reported as 65.9.
    • Consumers were less positive about current labor-market conditions. The board’s survey showed 7.0% of respondents think jobs now are “plentiful,” down from 7.8% thinking that in July. The outlook on jobs deteriorated as well. Those expecting more jobs in the months ahead fell to 15.4%, from 17.6%.
  • The Dow Jones Industrial Average fell 21.68 points, or 0.2%, to 13,102.99.
  • The S&P 500 fell 1.14 points, or 0.1%, to 1,409.30.
  • The Nasdaq Composite edged up 3.95 points, or 0.1%, to 3,077.14.

COMMODITIES

  • GASOLINE - Hurricane Isaac and a deadly blast at Venezuela’s Amuay refinery pushed gasoline to an almost four- month high and threatened to revive a debate about energy costs in the run-up to the presidential election in November.
    • Prices at the pump will be the highest ever for the U.S. Labor Day holiday, AAA said yesterday. Industry experts said this spike spurs speculation that Obama will release supplies from the Strategic Petroleum Reserve to ease prices for consumers.
    • The Hurricane Isaac shut 93 percent of U.S. oil output and 67 percent of natural gas from the Gulf, a U.S. Bureau of Safety and Environmental Enforcement report showed Tuesday. The Gulf of Mexico is home to 44 percent of U.S. refining capacity, 23 percent of oil production and 7 percent of natural- gas output, according to the U.S. Energy Department.
  • The U.S. national average for a gallon of regular gasoline is $3.80.
    • When President Obama was inaugurated, in January 2009, the U.S. national average for a gallon of regular gasoline was $1.85. Average gasoline prices are currently 105 percent higher than they were when Mr. Obama became president.
  • Crude oil for October delivery advanced 86 cents, or 0.9%, to settle at $96.33 a barrel on the New York Mercantile Exchange.
  • Gold for December delivery lost $5.90, or 0.4%, to end at $1,669.70 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • ELECTION - As of today, there are 69 days until the November 2012 presidential election.
  • ISAAC - Isaac became a Category 1 hurricane and crashed ashore in southeast Louisiana Tuesday night. The storm overtopped a levee southeast of New Orleans and knocked down trees and cut power to more than 400,000 homes.
    • On Tuesday, President Obama warned Gulf Coast residents in Isaac's path not to "tempt fate" by ignoring government warnings—including possible calls to evacuate—as he detailed his administration's preparations for the powerful storm
    • Even before the storm hit, Obama declared an emergency exists in Mississippi on Tuesday and ordered federal aid to supplement state and local storm response efforts there. The president declared a state of emergency in Louisiana late Monday, more than 24 hours before the storm was expected to hit the Gulf Coast. The declaration makes federal support available to save lives, protect public health and safety and preserve property in coastal areas.
    • As a result of actions by gulf coast governors and President Obama, thousands of state and U.S. National Guard Troops have been deployed throughout the region.
  • THREAT – More than 500 anarchists and other left-wing activists dressed up as giant vaginas, attacked the Fox News Channel and linked the GOP with America’s biggest terrorist enemy Monday while protesting near the Republican National Convention.
    • Another group of anti-GOP protesters marched from a makeshift camp toward the official protest zone created by the city. Along the way, that group clashed with members of the Westboro Baptist Church, which had been protesting homosexuality.
    • Meanwhile, police in Tampa stopped a dozen anti-war protesters from entering an event attended by former Secretary of State Condoleezza Rice after the group said it intended to arrest her for war crimes.
  • CONTROVERSY - Some conservatives are not satisfied with a so-called compromise regarding official rules and delegate within the Republican organization. Despite concern from some conservatives, the Republican National Convention adopted two controversial rules on Tuesday.
    • At issue: two rules dubbed Rule 16 and Rule 12. The first is a compromise of an earlier proposal, named Rule 15, that was vehemently opposed by many grassroots activists, including many Ron Paul supporters. It addresses delegate selection in future Republican presidential primaries – instituting stronger enforcement mechanisms to compel delegates to vote as they are bound by their states. In the original proposal, future presidential candidates would have had veto power over who could become a delegate. The second rule concerns the RNC's ability to change its rules in between its conventions.
    • Both rules were adopted on the convention floor by a voice vote. Former New Hampshire Gov. John Sununu, chairman of the Rules Committee and a top surrogate for Romney, presented the rules. U.S. House Speaker John Boehner held the audible floor vote to adopt them.
    • The RNC rules committee last week adopted a rule under which states would be required to allocate delegates according to the statewide vote – a move that was pretty clearly aimed at avoiding situation like this year, when Ron Paul supporters effectively took over the delegate-nominating process in a few states that he didn’t win. Some states, like Maine, currently do not allocate delegates based on the statewide vote, but rather through a lengthy and complicated process that follows.
    • In addition, the rules committee adopted another rule that would allow for the committee to changes its rules between conventions. Currently, a full convention vote is needed to change the rules.
  • PLATFORM - Republicans officials on Tuesday approved the party platform at their national convention that would ban all abortions and gay marriages, reshape Medicare into a premium supported program and reject federal spending as a way to heal the nation's ailing job market.
    • The document warns that the American Dream is at risk. It says Republicans will change the way the government spends, taxes and issues regulations.
    • Parties approve platforms at their conventions every four years, and much of their details end up being ignored.
    • Here are key elements of the Republican platform:
      • JOB CREATION: It states that the best jobs program is economic growth. "We do not offer yet another made-in-Washington package of subsidies and spending to create temporary or artificial jobs."
      • SMALL BUSINESS: The GOP pledges to reform the tax code to make it easier for businesses to generate more capital and create more jobs.
      • TAXES: "We reject the use of taxation to redistribute income, fund unnecessary or ineffective programs or foster the crony capitalism that corrupts both politicians and corporations."
      •  
        • It says a Republican administration would extend the Bush tax cuts of 2001 and 2003, pending reform of the tax code. It says the party would strive to eliminate taxes on interest, dividends and capital gains altogether for lower- and middle-income taxpayers. It also would work to repeal the estate tax and the alternative minimum tax.
        • The party backs constitutional amendments to balance the federal budget and require a super majority for any tax increases.
      • MARRIAGE: The platform affirms the rights of states and the federal government not to recognize same-sex marriage. It backs a constitutional amendment defining marriage as the union of one man and one woman.
      • VOTER INTEGRITY: "Voter fraud is a political poison," the platform says. It praises legislation to require photo identification for voting and to prevent election fraud.
      • GUN CONTROL: The party says it opposes legislation intended to restrict Second Amendment rights by limiting the capacity of clips or magazines or otherwise restoring the assault weapons ban passed during the Clinton presidency.
      • ABORTION: The party states that "the unborn child has a fundamental individual right to life which cannot be infringed." It opposes using public revenues to promote or perform abortion or to fund organizations that perform or advocate abortions. It says the party will not fund or subsidize health care that includes abortion coverage.
      • ENERGY: The party is committed to domestic energy independence and an "all-of-the-above" energy policy, backing the exploration and development of the Outer Continental Shelf and the Arctic National Wildlife Refuge, and the construction of the Keystone XL pipeline. It criticizes the Obama administration for picking winners and losers in the energy sector and expresses support for new coal-fired plants that will be low-cost, environmentally responsible and efficient.
        • It adds: "We will end the EPA's war on coal and encourage the increased safe development in all regions of the nation's coal resources." It calls on Congress to prohibit the EPA from moving forward with new greenhouse gas regulations "that will harm the nation's economy and threaten millions of jobs over the next quarter century."
      • MEDICARE and MEDICAID: The platform pledges to move both Medicare and Medicaid away from "the current unsustainable defined-benefit entitlement model to a fiscally sound defined-contribution model." It supports a Medicare transition to a premium-support model with an income-adjusted contribution toward a health plan of the enrollee's choice. Age eligibility in Medicare must be made more realistic in light of longer life spans.
        • Medicaid services for low income people would be transformed into a block grant program in which the states would be given the flexibility to determine the best programs for their residents.
      • IMMIGRATION: The platform makes clear that "we oppose any form of amnesty for those who, by intentionally violating the law, disadvantage those who have obeyed it." It demands that the Justice Department halt lawsuits against Arizona, Alabama and other states that have enacted tough measures against illegal immigrants. It says federal funding should be denied to universities that provide in-state tuition rates to illegal immigrants. It advocates making English the official national language.
      • HEALTH CARE: It states that a Republican president on his first day in office would use his waiver authority to halt progress in carrying out the health care act pushed through by President Barack Obama and that Republican victories in November would guarantee that the act is never implemented. It proposes a Republican plan based on improving health care quality and lowering costs and a system that promotes the free market and gives consumers more choice.
      • EDUCATION: Republicans support consumer choice, including home schooling, local innovations such as single-sex classes, full-day school hours and year-round schools. It says Republicans renew their call for replacing family planning programs for teens "with abstinence education which teaches abstinence until marriage as the responsible and respected standard of behavior."
      • DEFENSE: The platform says Republicans are "the party of peace through strength" and support the concept of American exceptionalism -- "the conviction that our country holds a unique place and role in human history." It criticizes the current administration for its weak positions toward such countries as North Korea, China and Iran and its reductions in military spending. The Republican national military strategy "restores as a principal objective the deterrence using the full spectrum of our military capabilities."
  • REPUBLICAN NATIONAL CONVENTION - Republicans formally nominated Romney and his running mate, Paul Ryan, to challenge President Obama in November 2012.
    • WEDNESDAY - For Wednesday, August 29, 2012, RNC officials said the theme would be "We Can Change it." Additional themes for Wednesday include:
      • Mitt Romney’s “Plan for a Stronger Middle Class” will help restore America as the best place in the world to find a job, start a business, or hire a worker.
      • In his first term as president, Mitt Romney’s plan will lead to a recovery that:
        • Creates 12 million jobs
        • Grows the economy on average by 4 percent per year
        • His plan will work toward energy independence, ensure that middle-class Americans have the skills to succeed, pursue trade that works for America, cut the deficit, and champion small business.
      • As president, Mitt Romney will:
        • Encourage job creation, once again making America the best place in the world to start a business, invest capital, and grow
        • Increase domestic energy production and eliminate job-killing regulations, so that energy will be both affordable and more reliable
        • Give every family access to a great school, quality teachers, and affordable, effective higher-education options
        • Open new markets for American goods and services and strengthen free enterprise around the world
        • Eliminate barriers to job creation by reforming the tax code and lowering individual rates across the board
        • Repeal and replace Obamacare – a $1 trillion federal takeover of health care that will stifle hiring and increase premiums – with real reforms that control costs and improve care
        • Immediately cut spending and root out inefficiencies, making government smaller, simpler, and smarter – and less costly for taxpayers
  • WHITE HOUSE - The Obama administration released final regulations on Tuesday forcing automakers to more than double the fuel economy of cars and light trucks by 2025 — a move that will add at least $1,800 to their price tags.
    • The U.S. Transportation Department and Environmental Protection Agency announced joint mileage and carbon emissions rules for model years 2017 through 2025 that will eventually force automakers to meet a standard equivalent to 54.5 miles per gallon.
    • All told, the new regulations could cost as much as $192 billion, with administration officials estimating that the sticker price of a new vehicle will shoot up by $1,800.
    • The National Automobile Dealers Association (NADA) said in statement they are concerned that model year 2017-2025 mandates, coupled with previous Obama administration fuel economy regulations, will hike the average price of a new vehicle by nearly $3,000 when fully implemented.
    • Administration officials have made the rules a cornerstone of their energy agenda, noting that alongside earlier 2012-2016 rules, the mandate will eventually save consumers an estimated $1.7 trillion in fuel costs and save 12 billion barrels of oil.

PRESIDENT’S SCHEDULE 

  • In the morning, President Obama will depart Fort Collins, Colorado and travel to Charlottesville, Virginia.
  • In the afternoon, the president will attend a campaign event at the Charlottesville nTelos Wireless Pavilion in Charlottesville, Virginia.
  • In the evening, the president will depart Charlottesville, Virginia and travel to Washington, D.C.

HAPPENING IN THE U.S. CONGRESS

U.S. SENATE

  • The U.S. Senate is not in session today.

U.S. HOUSE OF REPRESENTATIVES

  • The U.S. House is not in session today.

TOPICS OF INTEREST

NATIONAL SECURITY

  • PLOT - Four soldiers in Georgia who belonged to an anarchist militia that wanted to overthrow the U.S. government killed a former soldier and his girlfriend because he had learned of their plans, prosecutors said on Monday.
    • The four accused militia members, who were all stationed at Fort Stewart, operated under the name "FEAR," or Forever Enduring Always Ready, the prosecutor said. They plotted to assassinate President Obama and to attack their Army base and a dam in Washington state.
    • They also discussed poisoning the apple crop in Washington state, the prosecutor said, and purchased $87,000 worth of weapons to carry out their attacks.

ENERGY

  • OIL OUTPUT - The finance ministers of the seven leading industrial economies (G7) on Tuesday stopped short of asking the International Energy Agency to release emergency oil inventories but said they were monitoring the situation in oil markets closely.
    • In a statement, the G-7 said there were substantial risks to the global economy from elevated oil prices. The ministers asked oil-producing countries to increase their oil output.
    • "We encourage oil-producing countries to increase their output to meet demand, while drawing prudently on excess capacity," the statement said. They noted that Saudi Arabia had committed earlier in the summer to mobilize spare capacity to ensure adequate supply. The current rise in prices was due to geopolitical concerns and certain supply disruptions, the statement said.

FOREIGN POLICY

MIDDLE EAST

  • ISRAEL - U.S. House Intelligence Committee Chairman Mike Rogers (R-Mich.) on Tuesday said he believes the Israeli government is likely to wait until after the U.S. election to take military action against Iran.
    • Rogers said he’d been left with “no doubt in my mind” that the U.S. election cycle was part of the Israelis’ calculations after a recent trip where he met with Israeli Prime Minister Benjamin Netanyahu and other officials.
    • The government of Iran says it is seeking to develop nuclear technology for peaceful purposes, but the claim is met with deep skepticism by the United States and other members of the international community.
  • IRAN - The Islamic Republic of Iran and its various opposition group are competing to capitalize on U.N. Secretary General Ban Ki-moon's first visit to Iran on Wednesday.
    • Mr. Ban is scheduled to be in Tehran until Friday to participate in this year's conference of the Non-Aligned Movement, which Iran is chairing and hosting. He is expected to meet with Iran's Supreme Leader Ayatollah Ali Khamenei, President Mahmoud Ahmadinejad and other top Iranian officials.
    • Iran's government is portraying Mr. Ban's visit as a public-relations coup to showcase that Iran "is not isolated despite Western propaganda," Foreign Ministry spokesman Ramin Mehmanparast said Tuesday.
  • SYRIA - Representatives from Syria’s political opposition presented a road map Tuesday that they hope will serve as a guide to the democratic transition of power in their country after the expected fall of President Bashar al-Assad.
    • The document is the first of its kind from the Syrian opposition, which has been plagued by infighting and power struggles. It offers recommendations for writing a new constitution and principles for institution building, and cites South Africa’s post-apartheid transition as potentially “instructive.”
    • A key leader of the Syrian opposition criticized the United States Tuesday for failing to endorse calls for rebel groups to form a transitional government.

ASIA 

  • AFGHANISTAN - Taliban fighters beheaded 17 civilians and killed 10 Afghan soldiers in separate attacks in southern Helmand province, officials said, as Afghanistan's forces struggled to assert control over areas where the U.S. is withdrawing surge troops.
    • In another attack late Monday, an explosion targeting the convoy of the powerful police chief of Kandahar province, Gen. Abdul Raziq, killed two civilians and injured 17 others. Gen. Raziq, who worked in close cooperation with U.S. Special Operations Forces during recent offensives against the Taliban in Kandahar, was injured but his life was not in danger, the Kandahar provincial government said.
    • Separately, two U.S. troops were killed in eastern Laghman province on Monday when an Afghan soldier turned his weapon on them, according to a provincial government spokesman.