Off the Wires

Civil rights activists arrested protesting Trump's Attorney General pick

January 4th, 2017  |  Source: Reuters

Police in Alabama arrested six civil rights activists staging a sit-in at Senator Jeff Sessions' office on Tuesday to protest his nomination for U.S. Attorney General, criticizing his record on voting rights and race relations.

Sessions, 70, has a history of controversial positions on race, immigration and criminal justice reform.

Members of the National Association for the Advancement of Colored People (NAACP) had vowed to occupy Sessions' Mobile, Alabama office until the conservative Republican lawmaker either withdrew as a candidate or they were arrested.

In the end, Cornell Brooks, president and CEO of the NAACP, and Stephen Green, national director of the youth division of the NAACP, were among those arrested, according to a post on the Twitter page of the civil rights organization.

The other four protesters arrested by police included Benard Simelton, president of the NAACP's Alabama state conference, according to local news outlet AL.com.

A spokesman for Mobile police could not be reached for comment late on Tuesday.

The six protesters were charged with misdemeanor criminal trespassing, according to CNN.

Brooks before his arrest had posted a photo on Twitter of protesters in suits occupying the senator's Mobile office.

"Senator Sessions has callously ignored the reality of voter suppression but zealously prosecuted innocent civil rights leaders on trumped-up charges of voter fraud," Brooks said in a news release.

A spokeswoman for Sessions called the NAACP's criticisms "false portrayals."

"Jeff Sessions has dedicated his career to upholding the rule of law, ensuring public safety and prosecuting government corruption," spokeswoman Sarah Isgur Flores said in a statement. "Many African-American leaders who've known him for decades attest to this and have welcomed his nomination to be the next Attorney General."

President-elect Donald Trump in November named Sessions to lead the Justice Department and the FBI, and his history could come under scrutiny from fellow senators during a confirmation process.

Sessions was a U.S. prosecutor in 1986 when he became only the second nominee in 50 years to be denied confirmation as a federal judge. This came after allegations that he made racist remarks, including testimony that he called an African-American prosecutor "boy," an allegation Sessions denied.

Sessions denied he was a racist and said at his hearing that groups such as the NAACP and the American Civil Liberties Union could be considered "un-American."

He also acknowledged calling the Voting Rights Act of 1965 "intrusive legislation."


House Republicans abandon controversial changes to ethics office

January 3rd, 2017  |  Source: FT.com

That was fast.

Amid intense blowback, Republicans in the US House of Representatives on Tuesday said they had scrapped planned changes to the independent Office of Congressional Ethics, a non-partisan agency that probes claims of misconduct against House members and staff.

Proponents said the changes would introduce greater due-process into the body’s work, but some Democratic lawmakers and government watchdog groups had criticised the proposed changes, saying they would strip the body of its independence and put it under the oversight of the same politicians subject to its investigations.

Even US President-elect Donald Trump tweeted about it, saying that Congress had “so many things of far greater importance” on which to focus.

Following the outcry, Kevin McCarthy, the House majority leader, on Tuesday morning launched a motion to remove the ethics amendment from a package of legislation, which was quickly passed unanimously, said a Republican aide.

“Some members were expressing that they would have a hard time voting for the package” if it contained the ethics changes, said the aide. The broader package sets the rules for the new Congress, which is due to be sworn in later today.


Trump assails GM over car production in Mexico, threatens tax

January 3rd, 2017  |  Source: Reuters

President-elect Donald Trump on Tuesday threatened to impose a "big border tax" on General Motors Co for making some of its Chevrolet Cruze compact cars in Mexico, an arrangement the largest U.S. automaker defended as part of its strategy to serve global customers, not sell them in the United States.

Trump's comments marked his latest broadside aimed at an American company over jobs, imports and costs before he takes office on Jan. 20, signaling an uncommon degree of intervention for an incoming U.S. president into corporate affairs.

"General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!" Trump said in a post on Twitter.

Trump did not provide further details but previously vowed to hit companies that shift production from America to other countries with a 35 percent tax on their exports into the United States. He also has denounced the North American Free Trade Agreement between the United States, Mexico and Canada.

GM, the world's No. 3 automaker, said it sold about 190,000 Cruze cars in the United States in 2016. All of the sedan versions sold in the United States, or about 185,500, were built at its plant in Lordstown, Ohio. About 4,500 hatchback versions of the Cruze were assembled in Mexico and sold in the United States.

"GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S." it said in a statement posed on its website.

The Cruze is one of GM's best-selling cars, although its sales numbers were down significantly in 2016.

Shares of GM rose 1 percent to $35.19 after falling about 1 percent following Trump's tweet before the market opened.

Since winning the Nov. 8 presidential election, Trump has targeted GM's rival Ford Motor Co, United Technologies Inc, Boeing Co and Lockheed Martin Corp. Trump also has touted decisions by companies to keep some production in the United States, including United's Carrier unit in Indiana.

Last month, Trump announced the formation of a council to advise him on job creation comprised of leaders from a variety of major U.S. corporations including GM Chief Executive Officer Mary Barra.

GM said in 2015 it would build its next-generation Chevrolet Cruze compact in Mexico as automakers look to expand in the Latin American nation to take advantage of low labor costs and free trade agreements. The company said in 2015 it would invest $350 million to produce the Cruze at its plant in Coahuila as part of the $5 billion investment in its Mexican plants announced in 2014, creating 5,600 jobs.

GM said last year it would import some Cruze cars from Mexico.

Trump, a Republican who will succeed Democratic President Barack Obama, campaigned for president using tough rhetoric on trade and promises to protect American workers, and targeted several companies by name.

His latest comments come as a congressional Republican tax proposal meant to boost U.S. manufacturing faces mounting pressure from industries that rely heavily on imported goods or parts.


Read on here: http://www.reuters.com/article/us-usa-trump-gm-idUSKBN14N11K?mod=related&channelName=politicsNews


How the U.S. bobbled Russia's disinformation campaign

December 21st, 2016  |  Source: Reuters

The U.S. government spent more than a decade preparing responses to malicious hacking by a foreign power but had no clear strategy when Russia launched a disinformation campaign over the internet during the U.S. election campaign, current and former White House cyber security advisers said.

Far more effort has gone into plotting offensive hacking and preparing defenses against the less probable but more dramatic damage from electronic assaults on the power grid, financial system or direct manipulation of voting machines.

Over the last several years, U.S. intelligence agencies tracked Russia's use of coordinated hacking and disinformation in Ukraine and elsewhere, the advisers and intelligence experts said, but there was little sustained, high-level government conversation about the risk of the propaganda coming to the United States.

During the presidential election it did - to an extent that may have altered the outcome, the security sources said. But U.S. officials felt limited in investigating Russian-supported propaganda efforts because of free speech guarantees in the Constitution.

A former White House official cautioned that any U.S. government attempt to counter the flow of foreign state-backed disinformation through deterrence would face major political, legal and moral obstacles.  

"You would have to have massive surveillance and curtailed freedom and that is a cost we have not been willing to accept,” said the former official, who spoke on condition of anonymity. "They (Russia) can control distribution of information in ways we don't."

Clinton Watts, a security consultant, former FBI agent and a fellow at the nonprofit Foreign Policy Research Institute, said the U.S. government no longer has an organization, such as the U.S. Information Agency, that provided counter-narratives during the Cold War.

He said that most major Russian disinformation campaigns in the United States and Europe have started at Russian-government funded media outlets, such as RT television or Sputnik News, before being amplified on Twitter by others.

Watts said it was urgent for the U.S. government to build the capability to track what is happening online and dispute false stories.

"Those two things need to be done immediately," Watts said. "You have to have a public statement or it leads to conspiracy theories."

A defense spending pill passed this month calls for the State Department to establish a "Global Engagement Center" to take on some of that work, but similar efforts to counter less sophisticated Islamic State narratives have fallen short.

The U.S. government formally accused Russia of a campaign of cyber attacks against U.S. political organizations in October, a month before the Nov. 8 election.

U.S. 'STUCK'

James Lewis, a cyber security expert at the Center for Strategic & International Studies who has worked for the departments of State and Commerce and the U.S. military, said Washington needed to move beyond antiquated notions of projecting influence if it hoped to catch up with Russia.

"They have RT and all we know how to do is send a carrier battle group," Lewis said. "We're going to be stuck until we find a way deal with that."

Watts, who said he has tracked tens of thousands of pro-Russia Twitter handles since 2014, believes many of the most effective stories stoke fear of war or other calamities or promote a narrative of corrupt Western politicians, media and other elites.

He and others said Sputnik shows the intensity of the Russian effort.

Launched two years ago as a successor to the official Russian wire service and radio network, Sputnik does not merely parrot the Kremlin political line, according to experts. It has gone out of its way to hire outsiders with social media expertise, including left and right-leaning Americans who are critical of U.S. policies.

Sputnik News did not respond to a request for comment.

During the election campaign, one of the most prominent fulltime Sputnik writers and commentators, Cassandra Fairbanks, shifted from an ardent anti-police protestor and supporter of socialist U.S. Senator Bernie Sanders to a vocal backer of Republican Donald Trump.

Fairbanks said in an interview with Reuters that Sputnik had not told her to advocate for Trump, now president-elect. She said she was swayed by Trump's opposition to overseas wars and international trade agreements.

"I did my best to push for him," Fairbanks said, "but that was of my free will."

A woman in her thirties with more than 80,000 Twitter followers, Fairbanks was an activist with the hacking movement known as Anonymous before she joined Sputnik.  

The day before the election, Fairbanks said on a YouTube channel that it was "pretty likely" that the authors of emails hacked from the account of Democratic candidate Hillary Clinton's campaign manager John Podesta were using code words for pedophilia when they spoke about pizza.

The assertion fed the falsehood that Clinton supporters were operating a child sex ring out of a Washington-based pizza parlor. The channel, with 1.8 million subscribers, was run by Alex Jones, a radio host who has said the 9/11 attacks were an "inside job."

Joe Fionda, a veteran of the Occupy protests who worked briefly for Sputnik in 2015, said the organization’s articles and social media efforts overall were aimed at praising Russian President Vladimir Putin's allies such as Syria and dwelling on negative news in the United States, including police misconduct.

Some U.S. officials and political analysts have said Putin could believe businessman Trump would be friendlier to Russia than Clinton, especially when it came to economic sanctions.

Fionda said spreading hacked emails was a priority at Sputnik. He said his job included trying to create viral memes on a Facebook page called Mutinous Media, which did not list a Sputnik connection.

Former workers of the Democratic National Committee, one of the groups infiltrated by Russian-backed hackers, said the U.S. government should consider providing funding for the technological defense of major political parties. They said that once hacked emails began appearing online, party functionaries were constantly behind in responding.

They also said that the staff of Democratic President Barack Obama had been overly concerned about not appearing to defend its own party's candidate.

Obama has asked spy agencies to deliver an analysis of Russian meddling in the election that will include discussion of propaganda operations, Office of the Director of National Intelligence General Counsel Robert Litt told Reuters.

Asked on Tuesday whether he thought the U.S. government had been caught off guard, Litt said: "I'm not touching this with an 11-foot pole. It is a very important issue that the intelligence community is looking at very carefully, and it will issue a report in due time."


Trump taps Exxon's Tillerson as top U.S. diplomat, lawmakers uneasy

December 13th, 2016  |  Source: Reuters

President-elect Donald Trump announced Exxon Mobil Corp Chief Executive Officer Rex Tillerson as his choice for U.S. secretary of state on Tuesday, despite concerns from lawmakers in both political parties over the oilman's ties to Russia.

Tillerson's experience in diplomacy stems from making deals with foreign countries for Exxon, the world's largest energy company, and Trump praised him as a successful international dealmaker who leads a global operation.

"He will be a forceful and clear-eyed advocate for America's vital national interests and help reverse years of misguided foreign policies and actions that have weakened America's security and standing in the world," Trump said in a statement.

Tillerson has been chief executive of Exxon Mobil since 2006 and, like Trump, has never held public office. Tillerson said in a statement that he shared the president-elect's "vision for restoring the credibility of the United States' foreign relations and advancing our country's national security."

Some lawmakers raised concerns about Tillerson's relationship with Moscow. His appointment requires Senate confirmation.

Senator John McCain, a leading Republican foreign policy voice and his party's 2008 nominee for president, told Reuters: "I have concerns. It's very well known that he has a very close relationship with (Russian President) Vladimir Putin."

Trump was poised to add another figure with close ties to the oil industry to his Cabinet.

A source close to the transition said Trump had chosen former Texas Governor Rick Perry, whose state is a leading oil producer, as his nominee for energy secretary, with an announcement expected soon. Perry met Trump on Monday at Trump Tower in New York.

Trump picked Tillerson, 64, after the Texan was backed by several Republican establishment figures, including former Secretary of State James Baker, former Secretary of State Condoleezza Rice and former Defense Secretary Robert Gates, a senior transition official said.

Rice and Gates, who have worked for Exxon as consultants, both issued statements of support on Tuesday.

Their backing is seen as crucial to helping Tillerson get past a possibly contentious Senate confirmation battle likely to focus on his relationship with Putin.

Senate Foreign Relations Committee Chairman Bob Corker said he would hold a confirmation hearing in early January. He called Tillerson "a very impressive individual" with "an extraordinary working knowledge of the world."

Exxon Mobil's board will meet soon regarding its transition, CNBC reported citing a company statement.

RUSSIAN TIES

In 2013, Putin bestowed on Tillerson a Russian state honor, the Order of Friendship, citing his work "strengthening cooperation in the energy sector."

There also has been controversy over alleged Russian interference in the Nov. 8 presidential election, with the CIA concluding Moscow had intervened to help Trump defeat Democrat Hillary Clinton.

Tillerson's "cozy ties to Vladimir Putin and Russia would represent an untenable conflict at the State Department," Representative Eliot Engel, the ranking Democrat on the House of Representatives Committee on Foreign Affairs, said in a statement.

Republican Senator Marco Rubio said in a statement he also had serious concerns.

"The next secretary of state must be someone who views the world with moral clarity, is free of potential conflicts of interest, has a clear sense of America's interests, and will be a forceful advocate for America's foreign policy goals to the president, within the administration, and on the world stage," Rubio said.

Trump is confident that Tillerson can get past questions about his ties to Russia, the transition official said.

"His relationships with leaders all over the world are second to none," Trump's statement said.

There also are concerns among lawmakers about former U.N. Ambassador John Bolton, who has been mentioned as a possible No. 2 State Department official and who has voiced hawkish views on Iraq and Iran, as well as on China and Taiwan.

Republicans and Democrats said they would ask Tillerson, who has met Putin several times, about his contacts with Russia. He won fresh support from Moscow on Tuesday, with a Kremlin foreign policy aide saying Tillerson has good relations not only with Putin but with many other Russian officials as well.

The U.S. business community welcomed Trump's choice of Tillerson, with GE Chairman and CEO Jeffrey Immelt calling him "a great negotiator."

"We are pleased that Rex will bring a business perspective to the State Department," the National Association of Manufacturers added.

Human rights, environmental and other advocacy groups decried the choice, questioning Exxon deals with various governments and environmental impact under Tillerson.

"This sets a very alarming path for the new administration," Global Witness said in a statement.

BUSINESS INTERESTS

While busily filling out his Cabinet, Trump is seeking to answer questions about how he will separate himself from his far-flung business empire before taking office on Jan. 20.

He had planned a news conference on Thursday to lay out the details but delayed it until Tuesday due to what aides said was the crush of picking people to serve in his administration.

In a series of late-night tweets on Monday, Trump said he would be leaving his business before his Jan. 20 inauguration so he can focus full-time on the presidency and that he would leave his two sons, Donald Trump Jr and Eric Trump, to manage it.

He did not mention his daughter Ivanka, who has been a central player in his business affairs, as well as his campaign, and who is said to be considering a move to Washington to help her father.

"No new deals will be done during my term(s) in office," Trump said, adding that he would hold a news conference "in the near future."


Quake magnitude 6.5 reported off coast of Northern California

December 8th, 2016  |  Source: Reuters

An earthquake with a magnitude of 6.5 was reported off the coast of Northern California on Thursday but there were no immediate reports of damage in the nearest town, officials said.

The quake was centered in the Pacific Ocean about 102 miles (165 kilometers) west of Ferndale, California, at a depth of 6.2 miles (10 km), the U.S. Geological Survey said.

The coastal area nearest the quake is sparsely populated.

There was no tsunami warning, advisory or threat in effect following the earthquake, the Pacific Tsunami Warning Center of the National Weather Service said on its website.

In Ferndale, which has a population of about 1,300 people, Mayor Don Hindley said in a phone interview that he had not heard of any damage from the quake. He said he felt the temblor for about 15 seconds.

"It wasn’t that bad at all," Hindley said. He added that he felt more shaking from another quake earlier this week.

The area near Ferndale had a 4.3 magnitude earthquake right on the coastline on Monday, according to the USGS.


U.S. spy chief resigns

November 17th, 2016  |  Source: Reuters

Director of U.S. National Intelligence James Clapper said on Thursday that he submitted his letter of resignation but would stay until the end of the Obama administration.

"I submitted my letter of resignation last night, which felt pretty good. I've got 64 days left," Clapper said during a U.S. congressional intelligence committee hearing.

Clapper, 75, has served as the U.S. top spy since 2010 and has said for months he intended to step down when President Barack Obama leaves office in January.
Clapper's service in government spans six decades, beginning in the 1960s as a U.S. Air Force officer.

Clapper "always exhibited sober judgment and put the fate of the nation first," said Representative Adam Schiff, the top Democrat on the House Intelligence Committee.


Wall St. soars as FBI clears Clinton ahead of Election Day

November 7th, 2016  |  Source: Reuters

U.S. stocks marched higher on Monday, a day before the U.S. presidential election as Democrat nominee Hillary Clinton's prospects brightened after the FBI said it would not press criminal charges related to her use of a private email server.

The gains were broad based, with all 30 Dow components and all 11 major S&P 500 sectors rising. Global markets also rose, while a volatility measure for U.S. stocks was set for its biggest one-day percentage drop since late June.

U.S.-listed iShares MSCI Mexico Capped ETF (EWW.P), known recently as the "Trump ETF", rose 4.7 percent and was on track for its best day in more than five years. The ETF is viewed as a barometer for Republican Donald Trump's chances of winning the election since his policies are considered negative for Mexico.

Wall Street closed lower for nine days in a row through Friday, their longest losing streak in more than 35 years and one that gained momentum after the FBI said on Oct. 28 that it was reviewing some newly found Clinton emails.

The FBI said on Sunday that it stood by its July finding that Clinton was not guilty of criminal wrongdoing.

At least five major polls on Monday showed Clinton had the lead over Trump in the race for the White House, with one showing Clinton enjoying a six percentage-points advantage.

"We're up almost half of what we've lost since then (Oct. 28). So it clearly shows the market prefers a Clinton victory and also improves her likelihood of eventually winning the election and the markets are reacting as a result," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

Investors have tended to see Clinton as a more status quo candidate and expect her victory to clear the path for a U.S. interest rate hike next month. On the other hand, Trump's stance on foreign policy, trade and immigration has unnerved the market.

"As long as the Democrats do not sweep all three houses, it will likely remain a gridlock with no drastic movement in policy and the markets historically tend to do better in that scenario," Frederick said.

The CBOE Volatility index .VIX, dubbed Wall Street's "fear gauge", was down 16.9 percent, on pace for its biggest one-day fall since June 28, a few days after Britain voted to leave the European Union.

At 10:47 a.m. ET (1447 GMT), the Dow Jones Industrial Average .DJI was up 276.54 points, or 1.55 percent, at 18,164.82.

The S&P 500 .SPX was up 36.37 points, or 1.74 percent, at 2,121.55 and the Nasdaq Composite .IXIC was up 98.82 points, or 1.96 percent, at 5,145.19.

The financials' .SPSY 2.2 percent rise lead the gainers among the 11 S&P sectors, while the defensive utilities sector .SPLRCU brought up the rear with a 0.18 percent increase.

Risk assets were back in favor, with Brent crude futures rising for the first time in seven days, also helped by OPEC's commitment to stick to a deal to cut output.


Elite Iraq forces advance into Mosul, face tough resistance

November 4th, 2016  |  Source: AFP

Jihadist fighters unleashed a deluge of bombs and gunfire Friday on Iraqi forces punching into the streets of Mosul for the first time, forcing some units into a partial pullback.

Some armoured vehicles from the elite Counter-Terrorism Service (CTS) returned from the streets of Al-Karamah a few hours after moving in and encountering fierce resistance from the Islamic State group, an AFP correspondent reported.

"We weren't expecting such resistance. They had blocked all the roads," said one officer, as top brass considered whether or not to attempt a fresh foray.

"There are large numbers of jihadists... It was preferable to pull back and devise a new plan," the CTS officer said, speaking on condition of anonymity.

Some CTS forces remained inside the city, however, and there were at least five regiments involved in the operation launched Friday, making it hard to gauge the extent of the pullback.

After daybreak, bulldozers and tanks backed by air strikes pushed into the streets of Mosul from the east for the first time since Iraqi forces launched a broad offensive to retake the city on October 17.

The CTS's "Mosul Regiment", the last to leave the city when the jihadists overran it in June 2014, immediately faced "tough resistance", commander Muntadhar Salem told AFP.

The gunfire was almost uninterrupted for hours and reports from the front crackling into CTS radios said IS had set up barriers and laid bombs all along the streets.

Air strikes by the US-led coalition had intensified over the past two days, despite the smoke from burning tyres set alight by IS in a bid to provide cover.

They ebbed when the ground push got under way, however.

- Back from the dead -

The resistance came despite widespread reports in recent weeks that top IS commanders had left the eastern side of the city and crossed the Tigris river to regroup on its west bank.

An estimated 3,000 to 5,000 IS fighters are scattered across the sprawling city, Iraq's second largest, where a million-plus civilians are believed to be trapped.

There has been an exodus of civilians from outlying villages this week, but few managed to find a safe way out of Mosul itself.

Umm Ali could not hold back tears when she spoke of her constant fear the jihadists would take her young sons.

"They kept coming to our home. Sometimes they'd knock on the door at 10:00 pm," she said. "They took our car, saying: 'This is the land of the caliphate, it belongs to us'."

Civilians seeking refuge in Kurdish-controlled areas east of the city recounted tales of IS brutality.

"We're coming from the world of the dead back to the world of the living," said Raed Ali, 40, who fled the nearby village of Bazwaya.

In a rare audio message released on Thursday, IS leader Abu Bakr al-Baghdadi urged his fighters to defend the city where he proclaimed the "caliphate" in June 2014.

The public announcement he made from the pulpit of Mosul's Great Mosque of al-Nuri heralded the most ambitious and brutal experiment in modern jihad, a period marked by mass murder, attempted genocide and slavery.

But the "caliphate" has been shrinking steadily since mid-2015, and the loss of Mosul would leave Raqa, in Syria, as the group's only major urban stronghold.

- Caliphate 'on defensive' -

IS has been increasingly pragmatic in its tactics this year, falling back in the face of superior force even in emblematic bastions such as Fallujah in Iraq and Dabiq in Syria.

However Baghdadi, in his first message of 2016, called on IS fighters still in Mosul to make a stand.

"Holding your ground with honour is a thousand times easier than retreating in shame," he said.

Aymenn al-Tamimi, a jihadism expert at the Middle East Forum, said the tone of the half-hour speech was "very much of a caliphate on the defensive".

Iraqi forces and their Iranian and US-led coalition allies see the battle for Mosul as capping a two-year recovery from the rout that saw IS sweep through the Sunni Arab heartland north and west of Baghdad.

As they regained ground and the caliphate declined, defections from IS increased, providing intelligence that enabled coalition aircraft to take out key field commanders.

The jihadist group has carried out a series of diversionary attacks elsewhere in Iraq since the Mosul battle began.

On Friday, jihadists infiltrated Sharqat, an area south of Mosul that was recaptured over a month ago, sparking clashes that killed seven Iraqi security personnel, police said.

With colder weather setting in, concern has grown for Mosul's civilian population.

Aid groups say up to a million people could seek to flee as soon as they can, but shelter is available for only a fraction of that number.

The United Nations says it has received credible reports of IS forcing tens of thousands of civilians into Mosul from outlying areas for use as "human shields".


FBI’s Clinton investigation is a ‘black swan’ that could swing the election: Citi

November 1st, 2016  |  Source: Marketwatch.com

The Federal Bureau of Investigation’s bombshell announcement Friday that it is reviewing additional emails as part of its probe into Democratic presidential candidate Hillary Clinton’s use of a private email server is a “black swan” that could be a game changer, a Citibank analyst warned.

“These developments do constitute an ‘October Surprise’ that could have a meaningful impact on the race,” said Tina Fordham, an analyst at Citibank, in a Monday note to clients.

Black swans are by definition events that are highly improbable but have major consequences in retrospect.

As a result of the FBI’s revelation, prediction market odds of a Clinton victory have declined to 75% from 81%, she said. Even before Friday, Clinton’s lead over Republican rival Donald Trump had narrowed to 5.6 percentage points on Oct. 27 from 6.4 percentage points on Oct. 20 in the Real Clear Politics average of major polls. On Monday, Clinton’s average lead was 2.5 percentage points.

Read: Clinton’s unfavorable rating hits new high in poll

http://www.marketwatch.com/story/clintons-unfavorable-rating-hits-new-high-in-poll-trump-targets-democratic-states-in-final-sprint-2016-10-31Also see: Post-FBI poll by Morning Consult shows Clinton keeping 3-point lead

On Friday, news of the probe, revealed in a letter by FBI Director James Comey to Congress, sparked a modest selloff in equities and a flight into haven assets like gold. On Monday, U.S. stocks traded flat to slightly higher. http://www.marketwatch.com/story/cautious-open-ahead-for-us-stocks-as-investors-watch-for-more-fbi-fallout-2016-10-31with investors appearing to pay more attention to falling oil prices, merger news and corporate earnings.

Citi is still betting on Clinton winning the White House on Nov. 8 and left probability of a Clinton presidency at 75%. However, the FBI news could depress voter turnout among Clinton supporters and affect down-ballot congressional races.

“These developments have added a significant obstacle to the Clinton campaign, and are likely to further dent voter confidence,” said Fordham, who had been consistently cautioning against taking a Clinton win for granted.

How exactly the latest news will influence the result is unclear as it takes a few days before such developments are reflected in the polls. But one thing is certain—uncertainty is expected to rise.

The CBOE Market Volatility Index VIX, +8.91% , known as Wall Street’s “fear gauge,” has been trading at elevated levels and is poised for a five-day gain. The index rose 5.2% to 17.03 on Monday, its highest reading since mid-September.

“We continue to emphasize the potential for more Black Swan events emerging, making things more complicated for forecasters and pollsters,” said the analyst.

Fordham said the FBI probe increases the risk that if Trump loses, he won't accept the results. And if Clinton wins, she will have to contend with a Republican-controlled or a divided Congress which raises the chances of additional investigations and “non-negligible” impeachment risk.

In other words, the election is shaping up to be a contest without a true winner.




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