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Central banks are casinos. They print money as if they were manufacturing endless numbers of chips that they’ll never have to redeem. Actually a casino is an apt description for today’s global monetary policy. There is a well-known “foolproof” system in gambling circles that is sophisticatedly called the “Martingale”. I used to call it “double up to catch up” at my fraternity’s poker table where I was consistently frustrated (loser) – not because I used Martingale but because I wasn’t a good bluffer. Today’s central bankers use both tactics to their success – at least for now. They bluff or at least convince investors that they will keep interest rates low for extended periods of time and if that fails, they use Quantitative Easing (QE) with a Martingale flavor. Martingale theorizes that if you lose one bet, you just double the next one to get back to even, but if you lose that one you do it again and again until you win. Given an endless pool of “chips”, the theory is nearly mathematically certain to succeed, and in today’s global monetary system, central bankers are doing just that. Japan for years has doubled down on its QE and Mario Draghi’s statement of several years past, “Whatever it takes” – is a Martingale promise in disguise. It vows to get the Euroland economy back to “even” and inflation up to 2% by increasing QE and the collateral it buys until the Euro currency declines, the EZ economy improves, and inflation approaches target. Currently the European Central Bank (ECB) buys nearly 55 billion Euros a month, and this Thursday they will up the ante – Martingale or bust! How long can this keep going on? Well, theoretically as long as there are financial assets (including stocks) to buy. Practically the limit is really the value of the central bank’s base currency. If investors lose faith in a reasonable range for a country’s currency, then inflation will quickly hit targets and then some. Venezuela, Argentina, and Zimbabwe are modern day examples. Germany’s Weimar Republic is a great historical one. Theoretically, if the whole developed global economy did this at the same relative pace and stopped at the right time, they could successfully reflate and produce a little bit of inflation and a little bit of growth and save the globe from the dreaded throes of deflation. That is what they are trying to do – Quantitative Easing, Martingale style – and so far, so good, I guess – although no rational observer would call these post Lehman efforts a success. That they haven’t really succeeded is a testament to what I and others have theorized for some time. Martingale QE’s and resultant artificially low interest rates carry distinctive white blood cells, not oxygenated red ones, as they wind their way through the economy’s corpus: they keep alive zombie corporations that are unproductive; they destroy business models such as insurance companies and pension funds because yields are too low to pay promised benefits; they turn savers into financial eunuchs, unable to reproduce and grow their retirement funds to maintain expected future lifestyles. More sophisticated economists such as Kenneth Rogoff and Carmen Reinhart label this “financial repression”. Euthanasia of the saver is the result if it continues too long. But this is theorizing much like Schrödinger’s cat. How many people care about the existence of a quantum feline? (A few, thankfully, but not many.) Market observers say “show me the money” and when they look inside the box, they want to see some, so let’s get down to business. How does all this play out? Timing is the key because as gamblers know there isn’t an endless stream of Martingale chips – even for central bankers acting in unison. One day the negative feedback loop on the real economy will halt the ascent of stock and bond prices and investors will look around like Wile E. Coyote wondering how far is down. But when? When does Martingale meet its inevitable fate? I really don’t know; I’m just certain it will. Doesn’t help you much, does it. Except to argue that much like time is relative to the speed of light, the faster and faster central bankers press the monetary button, the greater and greater the relative risk of owning financial assets. I would gradually de-risk portfolios as we move into 2016. Less credit risk, reduced equity exposure, placing more emphasis on the return of your money than a double digit return on your money. Even Martingale casinos eventually fail. They may not run out of chips but like Atlantic City, the gamblers eventually go home, and their doors close. William (Bill) H. Gross December 3, 2015

You expect better judgement from your Secretary of Defense……….and you should. Carter served as US Assistant Secretary of Defense for International Security Policy during Clinton's first term (1993-1996), Under Secretary of Defense for Acquisition, Technology, and Logistics (2009-2011), and Deputy Secretary of Defense (2011-2013). This employee of the U.S. people is a Harvard graduate, a Rhodes Scholar and studied at Oxford. With all that in mind, he knew better than to use his personal e-mail. The mystery is, why did he like Hillary Clinton do so? --------------------------------------------------------------------------------------------------- Associated Press / December 17, 2015 The Pentagon acknowledged Wednesday that Defense Secretary Ash Carter used a personal email account to do some of his government business during his first months on the job. Carter's press secretary, Peter Cook (not Carter himself), released a statement saying Carter believes his use of personal email for work-related business was a mistake (By that admission, the American people are supposed to be nice and let him off the hook). Cook declined to say whether it was a violation of Pentagon email policies. Cook said Carter stopped the practice, but Cook refused to say when. The Pentagon statement was in response to a report published late Wednesday by The New York Times (http://www.nytimes.com/2015/12/17/us/politics/defense-secretary-ashton-carter-conducted-some-official-business-on-a-personal-email-account.html?_r=0). The newspaper reported it had obtained 72 work-related emails that Carter sent or received from his personal email account. Hillary Clinton came under heavy criticism when it was revealed in March that she had used a personal email account as secretary of state. Carter took office in February. "After reviewing his email practices earlier this year, the secretary believes that his previous, occasional use of personal email for work-related business, even for routine administrative issues and backed up to his official account, was a mistake," Cook wrote. "As a result, he stopped such use of his personal email and further limited his use of email altogether." The Times said the emails it received under the Freedom of Information Act were exchanges between Carter and Eric Fanning, who was his chief of staff at the time and is now the acting secretary of the Army. The emails were on a variety of work-related topics, the Times said, including speeches, meetings and news media appearances. In one such email, Carter discussed how he had mistakenly placed a note card in a "burn bag," the Times reported. Such bags are typically used to destroy classified documents. Cook said Carter "does not use his personal email or official email for classified material. The Secretary has a secure communications team that handles his classified information and provides it to him as necessary." Carter "takes his responsibilities with regard to classified material very seriously," Cook said.

Transport Engineer / December 16, 2015 Michelin Solutions has launched a telematics-based trailer management system, available to any fleet regardless of current or future tyre policy and which Michelin describes as “a quantum leap” for trailer management. Called Effitrailer, the trailer is fitted with telematics kit, featuring an on-board datalink, tyre pressure monitoring system (TPMS) and electronic braking system (EBS) data analysis. Once installed, the equipment enables constant geolocation of every Effitrailer-optimised asset in a fleet. As part of the offer, Michelin is committing to reduce tyre-related trailer breakdowns by up to 50%, with refunds for breakdowns if it does not hit the target. With the offer available to any fleet whatever the tyre policy, Michelin estimates it is suitable for 90% of trailers in Europe which do not currently use telematics. Nearly one-third (32 per cent) of all HGV breakdowns in Europe are linked to the tyres, and in 70 per cent of cases they occur on the trailer – with Michelin’s own research finding the average cost of a trailer breakdown is approximately £1,000. Real-time data is sent to a web portal, where fleet managers can see each trailer’s precise location, mileage, tyre pressure information, the length of periods of wait-time, unhooked or towed status, and more. Paul Davey, commercial director of Michelin Solutions in the UK and Republic of Ireland, says: “Effitrailer is a quantum leap in trailer fleet management and offers a previously unseen degree of control over the day-to-day operations of vital road transport assets. “With large trailer fleets, just knowing where every asset is can be challenging; but thanks to Effitrailer telematics, fleet managers can rest assured that the location of every optimised trailer is available at the touch of a button – and that’s just the tip of the iceberg when it comes to the added value the programme’s data offers.” Customisable alerts can be set up, such as for repeated hard braking, and Michelin provides monthly and quarterly reports. The telematics devices can be fitted on all trailer types equipped with EBS; the unit, cable harness and connection systems are mounted on the trailer’s chassis. Effitrailer is now available in the UK, Ireland, France, Italy, Germany, Switzerland and Austria, and will be offered in other European countries from 2016.

US Army Orders Oshkosh to Resumes JLTV Work Defense Update / December 16, 2015 Lockheed Martin said it is planning to file a new protest to the U.S. Court of Federal Claims by December 17th. Oshkosh is expected to begin production under the Army’s orders and wait for the Federal Claims Court decision. The U.S. Army instructed the Oshkosh Corporation to resume work on the Joint Light Tactical Vehicle (JLTV) following the U.S. Government Accountability Office (GAO) decision to dismiss Lockheed Martin’s protest yesterday. The protest against the Army’s selection of Oshkosh for the $6.7 billion contract was filed September 8, 2015 forced the army to stop work on the program until the GAO’s decision. The GAO announced its decision after Lockheed Martin’s notice that it intends to file another protest in the U.S. Court of Federal Claims by December 17th. Therefore, Oshkosh is expected to begin production under the Army’s orders and wait for the Federal Claims Court decision. According to the JLTV production contract, Oshkosh will begin delivering vehicles within the next 10 months, reaching an expected total volume of nearly 17,000 vehicles, as well as kits and sustainment services over an eight-year period. The release, even if temporary, means that Oshkosh can now proceed with orders to subcontractor, previously prevented by the Army’s the stop work order. “We are pleased that the JLTV production contract, awarded to Oshkosh in August, is now moving forward to deliver the world’s most capable light tactical vehicle,” said U.S. Army Major General (Retired) John M. Urias, executive vice president of Oshkosh Corporation and president of Oshkosh Defense. The JLTV program fills a critical capability gap for the U.S. Army and Marine Corps by replacing a large portion of the legacy HMMWV fleet with a light vehicle that provides unprecedented protection, off-road mobility and transportability. Related reading - http://www.bigmacktrucks.com/index.php?/topic/41515-oshkosh-wins-675-billion-deal-to-replace-us-army-marine-humvees/?hl=jltv

Related reading - http://www.bigmacktrucks.com/index.php?/topic/31959-the-american-chinese-six/?hl=coles

Commercial Motor TV - sponsored by DAF Trucks / December 16, 2015

MAN Truck & Bus Press Release / December 16, 2015 Payload advantage provided by the lightweight MAN TGS 32.400 ready mix chassis The calculation is simple: if you deliver more concrete per day, you increase sales and profit. This is achieved, not with faster round-trip times, but with an increase of approx. 0.5 m³ per load on each round-trip. The permissible weight for four-axle vehicles in Germany is 32 tonnes. Concrete is a heavy cargo - normally calculated at approx. 2.35 tonnes per cubic metre. Vehicles with a drum capacity of 9 m³ are widespread among concrete transport companies in Germany and, in line with this, may be loaded with around 7 to 7.5 m³ of concrete. The greater the payload the chassis provides, the more concrete can be charged into the drum. The four-axle MAN TGS 32.400 8x4 BB is specially designed for this purpose – with no compromise made in terms of driver and passenger, economy and suitability for the industry. It manages around 8 m³ of concrete with the same sized drum. Result of the calculation: Based on 9 round-trips a day, a MAN mobile mixer chassis with optimized payload allows an additional 10 tonnes of concrete to be delivered. The four-axle "twin-steer" MAN TGS 32.400 meets the requirements of the industry perfectly. It provides a weight optimized frame made of high-strength steel, a light-weight but powerful 400 HP engine from the D26 Common Rail series combined with the MAN TipMatic automated gearbox and a wheelbase of 2505 mm between the second and third axles ensuring compact vehicle dimensions and optimal maneuverability both in traffic and on the construction site. It also includes a uniform set of tyres in 315/80 R 22.5 format all round on aluminium rims, tanks for 300 litres of diesel and 35 litres of AdBlue, a spacious and clearly arranged "M" spec cab and a partially raised Euro 6 exhaust system behind the cab. This arrangement reduces dust circulation on the construction site caused by the exhaust gas stream. The chassis therefore has an empty weight of around 9360 kilogrammes with an empty tanks for fuel and water. The payload remains at exactly 8 m³ of concrete in each case for manufacturers of the truck mixer body and tank filled with diesel, AdBlue and 300 litres of water - both designed for 9 m³ - plus the driver, in order to comply with the gross permissible weight of 32 tonnes. The idle speed driving function included in the MAN TipMatic gearbox uses the high torque of the engine at low speeds, providing greater comfort when driving slowly and allowing for greater fuel-savings. Following the bauma trade fair in 2016, the overall weight of the TGS 32.400 8x4 BB will improve again for the better: MAN will introduce a light-weight double hypoid axle with a load capacity of 11,5 tons which further increases payload by ca. 180 kilogrammes compared to the standard hypoid axle which has a load capacity of 13 tons. This MAN chassis is also available as a right-hand drive. In markets which do not have a stipulated maximum permissible gross weight of 32 tonnes, the vehicle weighing up to 34 tonnes is approved. Press Release - http://www.corporate.man.eu/man/media/en/content_medien/doc/global_corporate_website_1/presse_und_medien_1/2015_3/151216_MAN_TGS_Betonmischer_DE.pdf Picture gallery - http://bildarchiv.man.de/index.php/main?level=0&catId=11639&mainCatId=530&catName=Transportmischerchassis〈=en .

It seems that the Kerry-Putin meeting in Moscow resulted in a mutual understanding that Turkey has dirty hands, and that it’s in the best interest of the US and Russia to work together (in annihilating ISIS) for the greater good. “Despite our countries’ differences, we demonstrated that when the United States and Russia pull together in the same direction, progress can be made,” Kerry said. “While we don’t see eye to eye on every aspect of Syria, we see Syria fundamentally similarly. We want the same outcomes, we see the same dangers, we understand the same challenges," Kerry said. “Russia and the United States agree that you can't defeat ISIS without also de-escalating the fight in Syria,” Kerry said, adding that both Moscow and Washington are “focused on political process” and that “Syrians will be making decisions on the future of Syria.” “We don’t seek to isolate Russia as a matter of policy,” Kerry said. “But we have consistently said that the world is better off when Russia and the US find common ground and an ability to be able to work together.” ---------------------------------------------------------------------------------------------- The U.S. is withdrawing a dozen warplanes from a Turkish air base, barely a month after they arrived to help Turkey protect its air space and to conduct strikes against ISIS targets in Syria and Iraq, officials said Wednesday. The move comes less than a month after Turkey shot down a Russian bomber, heightening tensions between Moscow and Ankara and leading Russia to stiffen its air defenses in Syria. The decision was announced by U.S. European Command in Germany one day after Defense Secretary Ash Carter visited Incirlik Air Base, where the 12 F-15s arrived last month from their home base in Britain. During his visit the day before, Carter [oddly] made no mention of the plan to withdraw the F-15s. [On the contrary,] Carter said the U.S. is looking for ways to do more to hasten the defeat of ISIS, including by urging coalition partners to play a greater role. Carter said Turkey and other coalition allies should take a more assertive role in the campaign against ISIS. The U.S. still has 12 A-10 close-air support aircraft based at Incirlik, as well as drone aircraft and refueling planes. The U.S. intends to replace six of the departing F-15s with a like number of A-10s [the legendary and deadly ground-attack aircraft that the Air Force wants to take out of service]. http://www.bigmacktrucks.com/index.php?/topic/42652-paris-under-attack/page-5?hl=a-10#entry312874 When Turkey agreed earlier this year to permit the U.S. to conduct airstrikes against the Islamic State with planes based at Incirlik, the Pentagon touted the decision as an important milestone. It shortened the time and distance required to conduct airstrikes in Syria and Iraq, compared with strikes flown from bases in the Persian Gulf area. Six of the withdrawing aircraft are F-15Cs, designed for aerial combat and deployed in response to a Turkish request for support securing its airspace. The other six are F-15Es.

Clinton says she wants to go beyond 'Buffett rule' on taxes Associated Press / December 16, 2015 With billionaire investor Warren Buffett looking on, Democratic presidential candidate Hillary Clinton said Wednesday she wants to raise taxes on the wealthy and expand upon the so-called "Buffett rule" pushed by the Obama administration to raise tax rates on the richest Americans. "I want to go even further, because Warren is 100 percent right, as usual," Clinton said at a rally in Omaha, Nebraska, that featured a public endorsement from Buffett. "I want to be the president for the struggling, the striving and the successful." Buffett offered a litany of statistics describing a growing chasm between the nation's rich and poor, lamenting, "Millions and millions and millions of Americans have been left behind." Buffett was the namesake for the push by the Obama administration to seek a tax rate of 30 percent on those earning $1 million or more. The so-called "Oracle of Omaha" said he would be "delighted" if Clinton became president, saying she will not forget about middle-class Americans. Buffett said he had watched all of the Republican presidential debates but Clinton was a better choice for voters. "You know, I used to love Abbott and Costello," he said. "Vaudeville was never this good," he added. In her primary campaign against Vermont Sen. Bernie Sanders, Clinton has pushed back against concerns among some liberals that her time in the Senate representing New York left her too close to Wall Street bankers — a notion that Buffett's appearance was aimed at allaying. Republicans sought to brand her as a tax-and-spend liberal, unsympathetic to the economic pains of everyday American families. "Hillary Clinton's economic agenda is more about redistribution than growth," said Republican National committee spokesman Michael Short, in a statement. "Campaigning with the third richest person on the planet is an odd way to communicate that she understands and cares about the needs of millions of Americans." Clinton aides said she would provide more details in the new year on how she would push for higher taxes on the wealthy beyond the framework of the "Buffett rule." Some of her signature domestic spending proposals, including plans to curb student debt and rebuild roads and bridges, would be paid for by raising taxes on the wealthy. Buffett has referred to Clinton as a "hero of mine" in the past and predicted last year that she would succeed President Barack Obama, whom he also supported. Democrats say Buffett carries a rare dual appeal on Wall Street and Main Street. The investment guru's annual shareholder meeting is dubbed "Woodstock for Capitalists" and drew an overflow crowd of more than 40,000 people from around the globe last spring. "What he brings to the table is that he's one of the few highly-respected business people who average people view as one of them," said Marc Lasry, a New York hedge fund manager and Democratic donor, in an interview. "He's liked by lots of different kinds of people." Buffett supported Clinton's first Senate campaign in 2000, raised money for her presidential campaign in 2008 and later endorsed Obama and appeared at fundraisers for the president. The chairman and CEO of Berkshire Hathaway Inc. has long voiced his displeasure with the growth of unlimited money in politics and the emergence of the super PACs. But he made his first donation to a super PAC last year, giving $25,000 to the pro-Clinton Ready for Hillary group, raising hopes among some Democrats that he might open his wallet again and in an even bigger way.

Peterbilt Motors Press Release / December 16, 2015 Peterbilt has added auto-start technology to its SmartAir no-idle system to help keep main and auxiliary batteries charged while running the air conditioning system and using other electronic devices. The auto-start technology monitors the charges of main and auxiliary batteries while the truck ignition is off. If the charge falls below a certain level, the system will automatically start the truck and run the engine until batteries are sufficiently charged. The system performs safety checks before cranking the engine, and interlocks ensure that the system will not unexpectedly start. Auto-start is available as a factory-installed, fully integrated option with Model 579s equipped with SmartAir and either a 72- or 80-inch sleeper. SmartAir has a 7,500 BTU/hour cooling capacity and can operate for up to 10 hours on a single charge. The split-system design is located outside the cab to improve performance and increase under-bunk storage capacity. It is a factory installed option that is integrated into the existing HVAC system that uses existing ducting. The system is controlled through an in-sleeper LCD display.

34-hour restart regs suspension continued by 2016 spending bill Commercial Carrier Journal (CCJ) / December 16, 2015 A 2,000-page House bill unveiled late Tuesday further entrenches the suspension of certain 2013-implemented hours-of-service rules and clarifies what evidence the DOT must submit to bring the rules back into effect. The House is expected to vote on the omnibus spending package on Friday. The Senate has not yet indicated when it might vote on the bill, but lawmakers will likely pass a short-term government funding bill to give themselves until Tuesday, Dec. 22, to clear the major budget and tax agreement. The stay of enforcement applies to two HOS regs that took effect July 1, 2013: (1) The requirement that a 34-hour restart include two 1 a.m. to 5 a.m. periods and (2) the once-per-week limit applied to the restart’s use. Before those rules can be enforced again, FMCSA would be required, under the new legislation, to show that drivers operating under the 2013 regulations “[demonstrate] statistically significant improvement in all outcomes related to safety, operator fatigue, driver health and longevity and work schedules” when compared to drivers who abide by pre-July 1, 2013, regulations. Congress directed the stay of enforcement last year in its 2015 funding package, which also required FMCSA to conduct a five-month field study of truckers and their fatigue level, with half following the 2013 rules and the other half not. Congress did not, however, specifically state in last year’s bill that reimplementation was dependant on the outcome of the study. The new language, however, clarifies misconceptions that could have been drawn from that ambiguity. FMCSA announced in late September it had finished the data collection phase of its study and was set to begin analyzing the data and producing a report on its findings. The House’s 2016 spending bill dictates the agency’s study and subsequent report must be reviewed by the DOT’s Inspector General before a determination on re-implementing the 2013 restart rules can be made.

Heavy Duty Trucking / December 16, 2015 Congress is expected to further nail down the suspension of two restrictions placed on the 34-hour restart provision of the hours of service rules — and to bar the door to legalizing twin 33-foot trailers on highways nationwide. Both measures are contained within the 2,000-page omnibus spending package that leaders on Capitol Hill completed negotiating late on Dec. 15 to avoid a government shutdown. Although the Democratic leaders of the House and Senate said they intend to thoroughly review the text before signing off on it, both chambers are expected to pass the bill by week’s end. In late 2014, Congress ordered the Federal Motor Carrier Safety Administration to suspend enforcement of the provisions of the restart that required drivers to take two 1 a.m. to 5 a.m. periods as part of their 34-hour off-duty period and to wait 168 hours from the beginning of one restart period to the beginning of the next. The suspension was to remain in effect until the Department of Transportation conducted a study of whether or not the more restrictive provisions provided “a greater net benefit for the operational, safety, health and fatigue impacts” and submitted a final report to the House and Senate appropriations committees. That report is still being awaited on Capitol Hill. Strong Language Apparently, what the omnibus bill brings to bear is language that retains the suspension of the 34-hour restart provisions. The text reads that the rule suspension can only be lifted if the Department of Transportation can establish that commercial motor vehicle drivers who operated under the restart provisions in effect between July 1, 2013 (when the new more restrictive restart provisions went into effect), and the day before the restart provisions were suspended "demonstrated statistically significant improvement in all outcomes related to safety, operator fatigue, driver health and longevity, and work schedules, in comparison to commercial motor vehicle drivers who operated under the restart provisions in effect on June 30, 2013.” The American Trucking Associations characterized the wording in the omnibus bill as “retaining” the restart suspension. “We’re pleased that Congress has seen fit to demand that FMCSA ‘show its work’ before imposing unnecessary and onerous restrictions on the use of the 34-hour restart by commercial drivers,” said ATA President and CEO Bill Graves. “FMCSA foisted these restrictions on the industry without doing a proper investigation into how they might impact trucking safety and truck drivers’ health and longevity, so it is completely appropriate for Congress to establish a safety and health standard,” he continued. When FMCSA in 2013 required that drivers using a 34-hour restart to reset their weekly allotment of hours have two periods between 1 a.m. and 5 a.m. in their extended off-duty period and “artificially limited the use of those extended rests to once a week,” ATA said, it believed that “these restrictions would push more truck traffic into riskier daytime hours, thus increasing – not decreasing – the risk of truck-involved crashes.” The trucking lobby said its contention was proved correct by the American Transportation Research Institute’s analysis of FMCSA crash data. ATA also said it holds that “FMCSA’s driver health and longevity theory had no basis in reality.” “We greatly appreciate Congress’ attention into this important matter and their insistence that FMCSA properly vet and support the rules they promulgate,” noted Dave Osiecki, ATA executive vice president and chief of national advocacy. Double Play Allowing longer trailers caught fire back in the spring. In May, the House Appropriations Committee approved a transportation and housing spending bill that included a provision to allow 33-foot-long double trailers to operate on Interstate and other highways— regardless of state laws. That triggered six months of legislative maneuvers and lobbying for and against the measure that even found some trucking groups on opposite sides of the debate. On Nov. 11, the Senate approved a bipartisan motion that instructed Senate conferees to the highway bill to oppose the inclusion of the twin-33 measure. A week later the Senate stripped it out of their DOT funding bill. The provision had remained in the House version of that bill, but the language authorizing twin 33-footers on any highway was stripped out of the omnibus spending bill before it was released by Congressional leaders. The American Trucking Associations said it was “disappointed” that the omnibus bill doesn’t allow for what it termed a “modest increase in tandem trailer length.” ATA Chairman Pat Thomas, senior vice president of state government affairs for UPS, said the truck lobby was “disheartened that Congress allowed itself to be cowed by the fearmongering tactics of anti-truck lobbyists. “By removing language that would have allowed twin 33s on U.S. highways, Congress has passed up a huge opportunity to improve highway safety and trucking’s efficiency," he said. The Coalition for Efficient & Responsible Trucking, a nonprofit organized by leading LTL carriers to lobby for twin 33s, also lamented the action taken. CERT noted that Capitol Hill acted negatively despite the provision having received bipartisan support in a House Appropriations Committee vote and in a Senate Appropriations Committee vote and was “voted on and approved in bipartisan fashion” by the full House. “It’s unfortunate and disappointing that political scare tactics won the day over sound policy,” said CERT spokesman Ed Patru. “In rejecting a modest extension in the length of twin trailers, Congress missed an opportunity to bring long-overdue efficiencies to freight trucking that would have produced tangible safety, economic and environmental benefits at a time when so many roads and bridges have fallen into disrepair after years of neglect.”

Today’s Trucking / December 16, 2015 Late last week the ASTM International’s Automotive Lubricants Subcommittee approved the new Proposed Category 11 (API CK-4 and API FA-4) specifications for the next generation of heavy duty diesel engine oils to be licensed on Dec. 1, 2016. To help prepare the industry for the change, Chevron Lubricants, launched its PC-11 public education campaign dedicated to building awareness and clarity around PC-11, including to explain what the new oil classification category means to truck owners. “Based on our research, awareness of the new category of oil is low, and among those who are aware, there is a lot of confusion,” said Shawn Whitacre, senior staff engineer of engine oil technology at Chevron Lubricants, and chairman of the ASTM Heavy-Duty Engine Oil Classification Panel, which is tasked with the final development of the PC-11 oil requirements. “Once those who rely on these oils are made aware of PC-11, and that the new category is actually two subcategories, there are a lot of questions and concerns. Now is the time to help the industry and our customers get ahead of the change and prepare for it.” According to Chevron, the education campaign includes a new website, PC-11Explained.com, providing expert commentary, multimedia resources, news and insights on issues surrounding the new heavy-duty motor oil (HDMO) categories, including: - An ongoing video series of interviews with the Chevron Delo PC-11 leadership team answering questions and providing updates on PC-11; - A monthly column to dispel any and all misinformation around PC-11; - A weekly question and answer column to provide timely answers to pressing questions; - Webinars for end-users that offer insights and explanations to help them understand the basics about PC-11; - Customized information for those interested in on-highway related topics, as well as off-highway; - Latest news on PC-11 within the media landscape; and - Links to other resources, news articles and commentary related to PC-11. Why the Oil Change? In 2010, the U.S. Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) announced regulations intended to reduce the level of greenhouse gas emissions and mandate fuel economy improvements for medium and heavy-duty engines and vehicles. Diesel engine design is undergoing a period of significant change to meet these requirements, and consequently heavy-duty engine oil is making an upgrade to its current oil category, API CJ-4. For the first time, a new category of heavy-duty engine oils will actually be two: CK-4 and FA-4. CK-4 (aka PC-11A) will be both backward and forward compatible. FA-4 (aka PC-11B), will be specifically for the new engine models. These new categories will help in a number of ways, including: - Enabling new advancements in diesel engine hardware designs; - Increasing fuel economy through lighter viscosity grade and friction modifiers; and - Improving engine durability with new advanced additive chemistry and base oil selection. The new API CK-4 and API FA-4 products are better oils,” said Whitacre. “They will better protect engines, provide better fuel economy, and reduce GHG emission compared to today’s oils.

Trailer/Body Builders / December 16, 2015 Ford-Werke GmbH recently took delivery of 72 new Kögel trailers with a comprehensive list of special options. The trailers will be used primarily in procurement logistics for automotive suppliers to the Ford works and for just-in-time material transport between the Ford factories within Europe. The trailers feature RoRo equipment with four pairs of heavy-duty lashing rings and an eight-millimeter thick compact slide plate for unaccompanied ship and ferry transport. The 13 pairs of lashing rings in the external frame ensure optimum load-securing. Each pair of rings on the cargo trailers and nine pairs on the Mega trailers are reinforced to a tensile force of 4,000 kilograms per ring. In addition, the trailers are equipped with back-up alarms to facilitate an accident-free approach to the ramp, complimented with a rear monitoring system with automatic braking function. This unit indicates the distance to objects behind the trailer and permits control of the programmed EBS and suspension functions. The Ford trailers are also fitted with wheelbase regulation to prevent any damage to the axles caused by overloading and to comply with legal maximum axle weight limits. This uses the trailer EBS to measure the axle load and automatically lifts the last trailer axle if the trailer is not fully loaded or has been partially unloaded. This automatically displaces part of the weight from the king pin on the tractor unit to the first and second axles on the trailer. .

Fleet Owner / December 16, 2015 It is funny (in a very sad way) not only how little understanding the general public has about trucks, the trucking industry, and how both support everyday life in this great country of ours, but also how so much of the opportunity is going begging in this $700 billion sector of the U.S. economy. W. M. “Rusty” Rush (at right), chairman, president, and CEO of $4.7 billion dealership conglomerate Rush Enterprises, knows this all too well and shared some insight on some of those issues during his company’s 10th annual Rush Trucks Centers (RTC) Technician Skills Rodeo held this week here in San Antonio, TX. “This industry is how people put food on the table,” he explained. “Whether they are drilling for oil, hauling freight, delivering ice cream, or picking up the trash, they are putting food on the table for their families and our country.” Yet Rush also knows the backbone of the trucking industry – the people that are its truck drivers and technicians – is changing and in major ways. “Not everyone works on cars like they used to back in the day,” he pointed out during a sit-down with reporters. And working on trucks for a living is “still not historically perceived” to be a good career, he added. Changing that mindset is one reason why Rush said his company has invested heavily in RTC’s annual technician rodeo over the last decade – this year’s event cost north of $1.1 million, with plenty of fiscal help chipped in from a wide range of industry suppliers – and plans to continue doing so. “Go back 15 years and you’ll see that 63% to 64% of our revenues came from truck sales, with the rest from parts and service,” he noted. “Today that is totally flipped and it’s not by happenstance. Because we found out people are what keeps this business [of trucking] up and running.” Rush added that the bump-up in truck driver pay witnessed by the industry over the last several years – an increase of 17% to 20% by his figuring – is another indication that drivers are now being recognized for the hard work they do as well. “There’s no one answer to the shortage we’re facing in both drivers and technicians; there are many,” he said. “The truck driver shortage is always going to be an issue; it’s going to be there.” Yet Rush stressed that, on the technician side, by focusing heavily on recognizing the company’s workforce, through shop amenities such as air conditioning in all southern facilities and radiant heated floors in northern locations, along with the annual technician rodeo, will help with long-term retention. Rush also hopes that the big winnings and cache of RTC’s rodeo will also continue to attract new blood into the truck technician side of the industry as well. “We hope those and other tools will help us recruit and keep the best technicians in the industry and to keep developing them,” he said.

Fleet Owner / December 15, 2015 The chairman, CEO, and president of $4.7 billion Rush Enterprises believes U.S. Class 8 sales have “caught up to replacement demand” and will trend down in 2016 W. M. "Rusty" Rush – chairman, CEO and president of Rush Enterprises – believes U.S. Class 8 sales are slowing and will continue to slow into 2016 as the freight markets keep softening. Yet he retains “all the confidence in the world” that trucking is not falling off a “cliff” but is rather returning to the more cyclical up and down patterns that characterized the industry’s past. “We’ve caught up with the replacement cycle of the last couple of years; the age of the [Class 8] fleet is now as low as it was in 2005,” Rush explained in a wide ranging interview with reporters here at the 10th annual Rush Truck Centers (RTC) Technician Skills Rodeo. “It’s not a cliff, but sales are going down; I felt it coming this summer and [the trucking market] is ending up where I thought it would be.” He expects U.S. Class 8 retail sales will end up around 269,000 units for 2015 and trend down to 230,000 units or below next year. “We were hoping for a 15% [drop] but now I don’t see any way [sales] will be off less than 20%,” Rush said. “Cancellation rates [for Class 8 orders] started this summer and we’re seeing manufacturers cutting back on production. If you look at freight, it’s soft, with spot rates off 20%.” Yet he stressed that things didn’t start “going in that direction” overnight and would gladly take a U.S. Class 8 retail market of 200,000 to 210,000 units in 2016. “And you know 200,000 units is not a bad year. In the past, the industry averaged 190,000 to 200,000 units in good years,” Rush said. “People have gotten caught up thinking the sun is going to shine [in trucking] every day; it’s a cyclical world.” However, Rush emphasized that he thinks Rush Enterprises' overall business won’t be off more that 10% in 2016, largely due to rising Class 4-7 medium-duty truck sales and steady parts and service business. Rush noted some of those trends in the company’s third quarter earnings report back in October, pointing out that aftermarket services accounted for approximately 64% of its gross profits in the third quarter this year, with parts, service and body shop revenues increasing by 5.9% as compared to the third quarter of 2014 – contributing to a quarterly absorption ratio of 116.2%. "Continued demand for repair and maintenance of vehicles in operation, with particular strength on the East and West coasts, fleet and natural gas vehicle modifications and mobile services were the primary drivers of aftermarket revenues in the third quarter," he said back in October. Other observations about the U.S. trucking market Rush shared with reporters this week include: - The oil and gas industry “won’t be back” until 2017, as most companies in the energy sector have already cut back their budgets for 2016. - Rush continues to experience strong demand for trucks from the refuse sector and for medium-duty units from the construction industry. “We’ll see how that [construction demand] works out on the Class 8 side,” he added. - The company will continue to work towards a goal of making 50% of its heavy truck technician workforce “mobile techs” in the years ahead. “About one third on the Peterbilt side are mobile techs; it’s not as high in our Navistar division but we’re working on it,” Rush noted. - The company right now expects greenhouse gas (GHG) emission mandates may increase the cost of Class 8 trucks by $10,000 to $12,000 per unit. - The demise of the owner-operator/small fleet segment continues to be exaggerated. “How many decades have we been saying the small guy will not survive? Yet you look at the growth in truck sales this year and it’s been coming from the small fleets,” Rush stated. “They have prospered.” - Rush remains “extremely confident” in the future of natural gas-powered trucks but said due to the low price of oil, adoption rates by fleets have slowed and will continue to slow. “Right now, with oil at $30 to $35 a barrel, some folks will take that short term deal; that’s to be expected,” he said. “But natural gas in the future will remain cheap because we [the U.S.] have so much of it. I’m very confident in it; we’re just in a little bubble [of low diesel prices] right now.” - Rush remains committed to becoming “a big player” in the U.S. Class 4-7 truck market and will leverage its national network of dealerships accordingly. “The more diversified your revenue stream, the better you can weather this industry’s ups and downs,” he said. - Truck sales data over the next three months – December through February – will give an indication of where the market is truly heading. “November through February are always the toughest months” for truck sales, Rush noted. “We always get seasonal slowness. Let’s get through the next three to four months; then we’ll see where we are.”

US teen rapes and kills high school math teacher CNN / December 16, 2015 A Massachusetts teenager has been convicted of raping and killing his high school math teacher. Philip Chism, 16, followed teacher Collean Ritzer into a school toilet where he strangled her, stabbed her 16 times and raped her two years ago. He was acquitted of a second rape, in which he used a tree branch against her in woodland where he dumped her body, after defense lawyers argued that the teacher was already dead. Chism's defence team has claims he is mentally ill and cannot be held responsible for his actions. A psychiatrist testified on behalf of the defence during the trial and said the teenager was hearing voices and in the midst of a psychotic event when he committed the crimes. The teenager did not have any visible reaction as the verdicts were read in a court in the city of Salem, and his family has refused to speak to reporters. The victim's family, however, spoke of their enduring pain in light of the verdict. "This guilty verdict, while the beginning of justice for Colleen, is certainly no cause for celebrations as there can never be true justice for the crime committed," the victim's father, Thomas Ritzer, said. On surveillance footage presented in the trial, Chism is seen following the teacher to the bathroom, putting on gloves and leaving holding the trousers that Ritzer was wearing. Chism was tried as an adult, and could face life in prison for the first-degree murder conviction. However, because he is a juvenile he could be eligible for parole. Judge David Lowy says he will discuss sentencing at a hearing next week. Separately, Chism is facing charges of assault on a youth services worker. He choked and beat the worker while in a youth detention centre in Boston. .

Arizona man murders brother and nephew Associated Press / December 16, 2015 An Arizona man was sentenced to life in prison Wednesday in the killing of his 6-year-old nephew after the child witnessed him murder his father. 24-year-old Christopher Rey Licon fatally shot his brother, Angel Jaquez, in a 2010 drug dispute. Licon then killed his nephew, Xavier Jaquez, because he was witness to the murder. Licon was convicted of murder in both killings. A jury had previously spared him the death penalty and instead sentenced him to life in prison. Maricopa County Superior Court Judge Sherry Stephens ordered Licon to spend the rest of his life in prison. She also sentenced him to an additional 36 years in prison in his brother's killing, the kidnapping of his nephew and for other convictions in the case. Licon killed his brother at their Phoenix home, kidnapped the child and shot him 20 miles away in an alley. Licon mounted an unsuccessful insanity defense. A prosecutor had argued that Licon was well-aware of his actions when he carried out the killings and took steps to protect himself, such as breaking into an apartment to stash the handgun used in the crimes. .

Update: Reuters / December 16, 2015 A Pennsylvania man and his wife were each sentenced to up to four decades in state prison on Wednesday after pleading guilty to murdering their disabled 9-year-old son, who was found starved to death in a dark, feces-smeared room last year. Judge John Cherry of Dauphin County Court of Common Pleas said Jarrod Tutko Sr., 39, and Kimberly Tutko, 40, were equally culpable in the death of Jarrod Tutko Jr. and the near-death of his sister Arianna, now 12. He sentenced the father to 21 to 42 years in prison, and gave his wife a sentence of 20 to 40 years. Both had pleaded guilty to charges of third-degree murder and related offenses. Cherry castigated both parents, who were sentenced separately, but he reserved particular scorn for Kimberly Tutko. “We don’t even keep animals like that,” he said. “It’s inconceivable that you allowed this to happen," the judge said. Prosecutor Sean McCormack had urged they receive the maximum possible sentence, but Cherry knocked off a few years as credit for their guilty pleas. The couple lived with their six children, all but one of whom was disabled, in a rented home less than three blocks from the Pennsylvania governor’s official residence. Jarrod Jr suffered from Fragile-X Syndrome, a genetic condition that causes intellectual and behavioral disabilities. His parents kept the boy locked in a third-floor room with no bed or lights. A social worker, Carrie Shanahan, testified that the feces had been smeared by little fingers. Police were summoned to the home on Aug. 1, 2014. They found Jarrod Tutko Jr., shrunken and dead, rolled in a blanket. His sister was clinging to life in her own bedroom but has since recovered.

RT / December 16, 2015 Turkey has charged a parliament member with treason for revealing to western journalists that ISIS jihadists delivered deadly sarin gas to Syria through Turkey. Ankara’s Chief Prosecutor's Office has opened the case against Istanbul MP Eren Erdem of Republican People's Party (CHP). "Chemical weapon materials were brought to Turkey and put together in ISIS camps in Syria, which was known as the Iraqi Al-Qaeda at that time." Erdem noted that the chemicals used for the production of weapons did not originate from Turkey. “All basic materials are purchased from Europe. Western institutions should question themselves about these relations. Western sources know very well who carried out the sarin gas attack in Syria,” said Erdem. Erdem has received death threats over social media following his announcement, revealing the Turkish paramilitary organization Ottoman Hearths had published his home address on Twitter to enable an attack on his house. “I am being targeted with death threats because I am patriotically opposed to something that tramples on my country's prestige,” said Erdem. Erdem made his statement based on the results of a Turkish court investigation in 2013. Erdem revealed that five Turkish citizens had been arrested by the Adana Chief Prosecutor's Office as a result of an investigation coded 2013/139. A Syrian national was prosecuted in Turkey for procuring chemical agents for ISIS groups in Syria. Erdem also noted all the persons arrested within the framework of the 2013/139 investigation were released a week later. The most widely-reported chemical attack in Syria took place in the early hours of August 21, 2013, in Ghouta, on the outer fringes of Damascus. Rockets containing sarin gas were fired, killing more than 1,400 people, including over 400 children. It was the same day a UN team of inspectors arrived in the city to investigate the alleged March 19 chemical attack in Khan al-Assal, northern Syria.

Unaccompanied children crossing southern border in greater numbers again, raising fears of new migrant crisis The Washington Post / December 16, 2015 Unaccompanied minors are crossing the U.S. Southwest border in growing numbers again, sparking concerns that the new influx of children could eventually approach the levels that last year prompted the Obama administration to declare a humanitarian crisis. In October and November, more than 10,500 children crossed the U.S.-Mexico border by themselves, the vast majority from El Salvador, Guatemala and Honduras, according to U.S. government data analyzed by the Migration Policy Institute, a nonpartisan think tank. That’s a 106 percent increase over the same period last year, reflecting a steady increase that began in March. The numbers are still far below the peak period last year, when more than 10,600 unaccompanied minors crossed the border just in the month of June, swamping federal resources. And the administration, widely believed to have missed the warning signs before the previous surge, “is certainly a lot more concerned and on top of it than they were two years ago,” said Marc Rosenblum, deputy director of the U.S. immigration policy program at the policy institute. [Influx of minors across border driven by belief that they will be allowed to stay in U.S.] Still, the administration and immigrant advocates are growing increasingly worried, especially because some of the same conditions that drove last year’s surge, including gang and drug-related violence in Central America, have grown even worse. The Department of Health and Human Services, which is required to shelter and care for the children after they are apprehended by the Department of Homeland Security, last week opened a new, 700-bed shelter in Texas and is planning to open another 300-bed facility in Texas as early as Friday. A third, 400-bed facility in California may also be needed, officials said. “This sharp increase in children entering this country is a result of many factors,” HHS Secretary Sylvia Burwell wrote in a letter last week to the House appropriations committee. “While it is impossible to know if these trends will continue for the duration of the fiscal year, we are very concerned about having adequate resources to meet the needs of the unaccompanied children.” The letter urged lawmakers, who are negotiating final details of a year-end spending deal, to grant President Obama’s request for a contingency fund of up to $400 million if the numbers of children continue to grow, beyond the nearly $950 million already requested for the unaccompanied minors program. The concern also extends to the state level, where Texas Gov. Greg Abbott ® 0n Tuesday ordered Texas National Guard troops to remain at the Mexico border, extending a mission that began last year at the height of the surge. It is unclear how many troops will remain. In a joint statement, HHS and DHS said the entire administration “has been closely monitoring these current trends and coordinating across the whole of government to ensure an effective response to any changes in migration flows.” The statement added, “We continue to aggressively work to secure our borders, address underlying causes and deter future increases in unauthorized migration, while ensuring that those with legitimate humanitarian claims are afforded the opportunity to seek protection.” A DHS official, speaking on condition of anonymity because the official was not an authorized spokesman, added that the government “is definitely concerned, but it’s really, really hard to predict what’s going to happen.” “We don’t want a repeat of 2014,” the official added. “Nobody likes to see young children and others sitting in Border Patrol stations because we have nowhere to release them to. Nobody wants to see that situation again.” Before the last surge, the administration did too little to heed warning signs that extended back several years, according to interviews with former government officials, outside experts and immigrant advocates. The result was an inadequate response that contributed to a rapidly escalating crisis in the summer of 2014. [Obama aides were warned of brewing border crisis] But a series of steps by DHS and other federal agencies — including opening new processing centers across the Southwest, reassigning hundreds of Border Patrol agents to the Rio Grande Valley in Texas and amping up a public awareness campaign in Central America about the dangers of border crossing — helped dramatically reduce the numbers through the second half of last year and the first few months of this year. A key factor in the decline was Mexico’s decision to launch a new policy called the Southern Border Program, intended to shore up that country’s porous frontiers with Guatemala and Belize by deploying more police officers and increasing operations and checkpoints. Since then, the number of Central American migrants captured in Mexico and deported has increased substantially. The United States has also provided equipment such as scanners and vehicles to Mexican migration officials working on the southern border. U.S. officials have said they plan to spend about $150 million on two major programs, including a biometric system for Mexico to keep track of the migrants it detains and a series of cellphone towers along the rural border to help government agencies communicate. But the violence that was a key factor in driving people to leave has surged again. El Salvador’s homicide rate, for example, is now at its highest since the country’s civil war ended in 1992, after a truce between two prominent gangs broke down last year. A drought across the region has also helped spur departures, but experts point to violence as the primary cause. “These children are especially vulnerable. They are not fleeing because they can’t find a good-paying job. They are fleeing because of violence,” said Carmen Chavez, executive director of the Casa Cornelia Law Center in San Diego, which has provided legal services to more than 800 unaccompanied minors this year. “It’s a humanitarian crisis that has been building. It blew up last year, and the situation hasn’t changed.” The children still fleeing have been aided by smugglers forced by the heightened enforcement in Mexico to find new routes into the United States. During last year’s migrant surge, the vast majority of children crossed the U.S. border through the Rio Grande Valley region near the southern tip of Texas. But the latest U.S. Customs and Border Protection data shows rapid increases of children and families crossing farther west, such as in the El Paso, Tex., and Yuma, Ariz., areas. Immigration experts say migrants are increasingly traveling in small boats from Central America north along the Pacific and Gulf coasts of Mexico to evade immigration authorities, while also hiding more in tractor-trailers and in secret compartments of vehicles to avoid detection. Wendy Young, president of Kids in Need of Defense, a Washington, D.C., nonprofit that represents unaccompanied minors in deportation proceedings, said smuggling “is a big business, it’s an illicit business, and it’s connected to the same narco-traffickers driving people out of their countries. We do understand that smugglers have adjusted their routes across Mexico.” “For us, it’s kind of deja vu all over again,” Young said. “We’re bracing for another 2014.”

U.S. Businesses Worry Stronger Dollar May Weigh on Growth and Exports The Wall Street Journal / December 16, 2015 American businesses fretted that the first interest rate increase in seven years came at a time when a strong U.S. dollaralready is sapping demand for exports and low energy and commodity prices are weighing on growth in the industrial economy. The Federal Reserve’s move Wednesday to raise short-term rates by a quarter percentage point was hardly a surprise to U.S. executives, but it comes as industrial manufacturers such as 3M Co. and Honeywell International Inc. offer cautious sales forecasts, as agriculture commodities are in their third year of declining prices, as transportation firms contend with sagging freight volumes, and as food and beverage companies struggle with the strong dollar sapping sales growth. In making its move to raise rates, the Fed pointed to a strengthening U.S. labor market, more robust household spending and increasing business investment, while noting that exports have been soft. The Fed officials said they expect more gradual rate increases in the coming years. That assessment, however, didn’t jibe with what some businesses are experiencing. “We’re worried because we’re seeing leading indicators showing the economy is not in great shape,” said Glenn Riggs, senior vice president at Odyssey Logistics & Transportation, which books freight transportation for businesses and operates a fleet of about 300 trucks. “If they raise interest rates and things further slow down, that would be a bigger worry.” Freight volumes sagged this fall, as manufacturing activity slowed and retailers cut back on imports. Further interest rate hikes also could increase the cost of borrowing to upgrade trucking fleets, Mr. Riggs said. Major businesses from AT&T Inc. to Johnson & Johnson to International Flavors & Fragrances Inc. played down the immediate impact of Wednesday’s rate increase on business prospects. “I think to a certain extent, having 10 years with no interest rate increases is unnatural,” said General Electric Co. Chief Executive Jeff Immelt. “And I think what’s difficult is there’s just nothing inflationary. And I think that makes it harder for the regulators to figure out what to do.”​ Longer term, however, further interest rate hikes could add to businesses’ borrowing costs, cool capital spending, and prompt a reassessment of inventory levels. Jane Morreau, chief financial officer at Jack Daniel’s maker Brown-Forman Corp. , said the real effect will be further strengthening the U.S. dollar—an issue that already is weighing on results at beverage alcohol companies. Earlier this month, Brown-Forman said that it expects weakening foreign currencies in markets such as Russia and Australia to negatively affect results by 5 cents per share during its current fiscal year. But Ms. Morreau said she trusts that the rate increase signals “an improving U.S. economy, which could benefit our business.” The U.S. accounts for about 40% of the company’s sales. General Motors Co. and home improvement retailer Lowe’s Cos. said the Fed’s decision reflects the strength in the U.S. economy that the auto and housing industries have been experiencing. “Auto sales are at a new peak,” a GM spokesman said. “We don’t expect the rate hike to have any measurable impact on new vehicles sales given the underlying strength of the U.S. economy.” Lowe’s Cos. Chief Financial Officer Bob Hull said the prospect of higher mortgage and borrowing rates could prompt prospective home buyers to act sooner, and jolt some homeowners to splurge on major renovations. Mr. Hull expects the housing market to only slow after the 30-year fixed mortgage rates exceed 6% from their current level of about 4%. Still, many companies have been citing weak economic growth around the globe. Honeywell forecast sales growth in its core businesses, excluding acquisitions, of just 1% to 2% next year largely due to the troubles in the oil and gas sector. “We’re exiting 2015 at a slower growth rates than we had anticipated at this time last year,” Chief Financial Officer Tom Szlosek said Wednesday before the Fed’s announcement. U.S. farmers already struggling with lower prices of major crops such as corn and soybeans for the third consecutive year could be further hurt. Rising global crop stockpiles and the strengthening of the dollar have weighed on U.S. grain exports. And a string of benchmark rate increases at a time when central bankers in Japan and Europe are easing monetary policy would further fuel the dollar’s rise, analysts said. “If we see a rate increase, it just reinforces the economic health of the U.S. and reinforces the backing of a strong dollar, which is overall a negative for the farm segment,” said Joe Lardy, research manager for the brokerage unit of CHS Inc., the biggest U.S. farm cooperative. Ron DeFeo, executive chairman of Terex Corp. , a maker of cranes and other heavy machinery, said the Fed’s move was positive in that it “takes some uncertainty away.” For now, weak commodity and oil prices have plunged parts of industry into “recession-like conditions,” Mr. DeFeo said, but consumers are doing better and their spending eventually should boost manufacturing. Meanwhile, Ryan Lance, chief executive of ConocoPhillips, said that the interest rate increase, which the Federal Reserve hopes will spur inflation, is at odds with the current reality for energy companies, which are in the midst of aggressive cost cutting. In “our business that’s a concept that is completely out of the radar screen right now,” Mr. Lance told an audience in New York at the Council on Foreign Relations. “I review every week what our deflation capture numbers are.”

The Guardian / December 16, 2015 US central bank signals end to seven years of a monetary policy that began amid the worst financial crisis since the Great Depression The Federal Reserve raised interest rates on Wednesday, ending an extraordinary period of government intervention in the financial markets that started at the height of the recession. After holding its benchmark federal-funds rate near zero for seven years, the Fed increased rates a quarter-percentage point. The move signals the end of a monetary policy that began amid the worst financial crisis since the Great Depression. In a statement, the Fed said economic activity had been “expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further.” Given the economic outlook, and “recognizing the time it takes for policy actions to affect future economic outcomes”, the Fed decided to raise the target range for the federal funds rate a quarter point, the first such rise in close to a decade. The central bank signalled more increases to come “with gradual adjustments in the stance of monetary policy” and argued that “economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen”. At a press conference, Fed chair Janet Yellen said: “This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression.” She said the economy “has come a long way”, though normalization “is likely to proceed gradually”, and “inflation continues to run below our longer-run objective”. The US has now added new jobs every month since October 2010. In November, the economy added 211,000 jobs and has added an average of 237,000 jobs a month over the past 12 months. However, some have expressed concern about the move. Inflation appears to be under control – mitigating an imminent need to slow the economy by raising rates. And there are still signs of weakness in the jobs market, with historically high numbers of people no longer looking for work. Ahead of the meeting, Richard Trumka, president of the US’s largest union federation, the AFL-CIO, urged the Fed to “avoid making a mistake” by raising interest rates. “Too many working people are not feeling the economic recovery because of stagnant wages. In the months to come, the Fed should focus on the policy goal that real wages should rise with productivity. Working people deserve to lead better lives by sharing in the wealth we all create,” he said. After the announcement, Senator Bernie Sanders, a Democratic presidential candidate, denounced the move as “bad news for working families”. “At a time when real unemployment is nearly 10% and youth unemployment is off the charts, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people. The Fed should act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago,” he wrote in a blogpost. Stock markets around the world had risen on anticipation of the move, a clear signal that the US has shaken off the aftermath of the last recession. The zero rate policy was introduced by Yellen’s predecessor, Ben Bernanke, on 16 December 2008, exactly seven years ago. At the time, global stock markets were in turmoil following the bursting of a mortgage-backed financial bubble that triggered a global recession. Bernanke backed the zero rate move with a massive bond buying programme, spending billions to buy Treasury- and mortgage-backed bonds in a move aimed at keeping rates low and encouraging investment, a policy known as quantitative easing (QE). QE ended last October. Gus Faucher, senior macroeconomist at PNC, said the policy had been a success. “If you compare the US to other industrial economies, the recovery in the US has been better,” he said. “You can see proof of that in Japan and Europe now, where they have decided that QE is the way to go.” Video - http://www.theguardian.com/business/2015/dec/16/federal-reserve-us-interest-rate-rise-fed-funds-janet-yellen Related reading - http://www.bigmacktrucks.com/index.php?/topic/43121-us-industrial-heartland-frets-as-fed-rate-rise-looms/ -------------------------------------------------------------------------------------- The Guardian view on the US interest rate rise: risky and premature The Guardian (editorial) / December 16, 2015 It has been eight years since the US slipped into recession, and seven since it dawned upon central bankers that they were not merely enduring a storm, but sailing in uncharted waters. The unthinkable suddenly became the unavoidable: some institutions were left to collapse, others were nationalised, and the electronic printing presses were set whirring. Interest rates were slashed to virtually zero, lower than ever before, and then left there. In the pre-crisis world, this ultra-cheap money would have spurred cavalier investments, wild pay demands, and – soon enough – inflation. But this slump defied the old models. Growth came back only slowly, and even after it did prices and pay remained eerily stagnant. By comparison with the UK and Europe, it is true, the US did enjoy certain advantages. It was spared Osborne-style retrenchment in the aftermath of the crash, and – when a nascent recovery stirred – it wasn’t choked by flawed currency union. Output did grow, unemployment did fall, and America settled into a tolerable if lacklustre new normal. For the Federal Reserve, the question became whether it was normal enough for it to revert to the old maps, which pointed to raising interest rates. For chair Janet Yellen, navigating by an old map must feel more reassuring than steering with no map at all. For market sentiment, too, there is comfort in the symbolic declaration of “emergency over” that a rate rise provides, which is why stock prices rallied ahead of Wednesday’s move, even though the immediate effect of costlier borrowing is negative for profits. So it is reassuring for America to feel like it is back in familiar waters – until it transpires that it is not. The quarter-point rate rise addresses one potentially serious problem, but does so in the wrong way. QE dollars have puffed up the price of some assets, and if that puffing goes unchecked, the next bubble and bust could begin. The right way to tackle speculative investment, however, is through targeted regulatory curbs on lending for speculative purposes, not by raising borrowing costs for all investments, including those that America needs. The justification for higher rates should be a real economy moving at an unsustainable pelt. There’s no sign of that. Unemployment has fallen, but it doesn’t mean what it used to before so many jobseekers became too discouraged to seek; the overall employment rate is low. Inflation is forecast to creep back to target, but that has been true many times since the crash, and it has consistently undershot. Inflation has been stuck below the 2% target for much of the post-2008 era, and so the rate rise should have awaited it bursting through this threshold. But it remains well short on all measures, and close to zero on some. The biggest judgment concerns the recovery’s strength. Growth has recently been respectable, but the bounceback needs to be measured against the crash before, and in that context it is less impressive. Real GDP per head has, on average, inched up by only a fraction of a percent annually since late 2007. By any ordinary standards that represents seven lost years for living standards, and all the more so because the very rich have grabbed so much of such growth as there has been. Even though the Fed was careful to signal that it will tread cautiously in relation to future rate rises, the dollar’s might in the world’s financial system remains such that other countries could be forced to follow suit, with particularly serious implications for some developing economies. Since the crisis other central banks, from Israel to New Zealand, tried raising rates before being forced into reverse. If the chain reaction proves severe the question is whether the US, too, could be beating a retreat. The closest parallel, perhaps, is with Japan, which briefly raised rates from the floor in 2000, a decade into the long stagnation that dogs it still. Japan discovered in 2000 how painfully different its new normal was from its old, a painful lesson that the Fed may yet have to learn.

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Thanks to Olof Persson, he inherited a rocky situation.