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For the week 12/3-12/7
[Posted 1:00 AM ET, Saturday…from Charleston, S.C.]
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I’ve been largely out-of-pocket Thursday and Friday due to travel, including having some fun down in Kiawah, S.C. So when I got back to my hotel near the airport for a flight in the wee hours Saturday morning, I was frantically trying to catch up and then the reports from the special prosecutor and others started rolling in. I can’t do those stories justice, but no doubt we’ll be discussing them next time for sure. Anyway, I know there are some things that I’ve missed in what follows.
Wall Street and China Trade Truce
After the best week on Wall Street in years, this one, only four trading days due to the National Day of Mourning for President George H.W. Bush (whose legacy I report on heavily below), was the worst since March, as there are all kinds of fears, including the seemingly chaotic China-U.S. trade talks, the prospects for global growth (not as good as before), the looming vote on Brexit in the British parliament, U.S. monetary policy, the housing market, and, frankly, the Mueller probe.
The U.S. economy is still doing just fine, with the ISM purchasing managers index for manufacturing in November at 59.3, the 115th consecutive month of growth…50 being the dividing line between growth and contraction. The non-manufacturing/service sector reading was a robust 60.7.
And then we had today’s November jobs report, which came in less than expected at 155,000, the three-month average falling to 170,000, but this is still solid, with average hourly earnings rising at a 3.1% annualized pace for a second straight month. The unemployment rate remained unchanged at 3.7%.
The jobs report also wasn’t ‘too hot’ in terms of the Federal Reserve’s reaction, though there is still a 70% chance, according to the futures markets, of a fourth Fed rate hike come the Dec. 18-19 confab of the Open Market Committee.
But the Atlanta Fed’s GDPNow barometer for fourth quarter growth is down to 2.4%, significantly off the second quarter’s 4.2% and third quarter’s 3.5%.
So Tuesday, the markets plummeted, with the Dow Jones down 799 points, 3.1%, with the S&P 500 and Nasdaq doing worse. I thought it was a significant day for one reason. It was the day that Wall Street, for the first time, called ‘Bulls---’on the president for his lies and misstatements on the track that the China trade talks are on. No one is on the same page in the administration, and his ever-shifting positions are no longer amusing, if you ever found them so. They’re serious. The president should just shut up on some sensitive diplomatic topics, let the trade negotiators do their thing, and then at the appropriate time make a pronouncement, good or bad. But the president’s ‘good cop’ / ‘bad cop’ manic routine has worn thin, especially inside his own White House.
So Trump and Chinese President Xi Jinping had their big dinner down in Buenos Aires, at the G-20 summit, and immediately it was one conflicting statement after another from the White House.
After the dinner, both sides announced different versions of what was agreed to.
The president said he had reached an “incredible deal” to temporarily suspend his trade war. Then days later he declared, “I am a Tariff man.”
A spokesman from the Chinese Ministry of Commerce said: “The meeting [between Xi and Trump] was successful. We are confident in implementing [its outcome].”
The spokesman did not elaborate on what the exact terms were that had been agreed to by the two leaders.
“China will start with implementing the concrete items we have agreed. The earlier the better,” said the unidentified spokesman.
“The economic and trade teams of both nations will actively push for consultations based on the concrete timetable and road map within 90 days,” the spokesman said, without mentioning when the talks would begin.
It was then reported outside China that Beijing was preparing to send a delegation of as many as 30 officials to Washington later this month to begin discussions.
Trump declared in a tweet on Monday:
“China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.”
White House economic adviser Larry Kudlow then said that although there was a general sense from the Trump-Xi meeting that this would happen, there was not yet a formal agreement to do so.
Chinese Foreign Minister Wang Yi said in Argentina that China was willing to “expand imports according to the needs of its domestic market and people, including importing marketable products from the U.S. to gradually ease the trade imbalances,” adding that both sides had agreed to open their markets to each other.
China also announced an array of punishments that could restrict companies’ access to borrowing and state-funding support over intellectual-property theft. It set out a total of 38 different punishments to be applied to IP violations, starting this month. No one believes this.
“My meeting in Argentina with President Xi of China was an extraordinary one. Relations with China have taken a BIG leap forward! Very good things will happen. We are dealing from great strength, but China likewise has much to gain if and when a deal is completed. Level the field!”
“Farmers will be a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!”
After the market fell 800 points on Tuesday, though, we had some scrambling from the president:
“China officially echoed President Donald Trump’s optimism over bilateral trade talks. Chinese officials have begun preparing to restart imports of U.S. Soybeans & Liquefied Natural Gas, the first sign confirming the claims of President Donald Trump and the White House that...
“...China had agreed to start ‘immediately’ buying U.S. products.”
“Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina. Not to sound naïve or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting. ALL subjects discussed!”
“One of the very exciting things to come out of my meeting with President Xi of China is his promise to me to criminalize the sale of deadly Fentanyl coming into the United States. It will now be considered a ‘controlled substance.’ This could be a game changer on what is...
“...considered to be the worst and most dangerous, addictive and deadly substance of them all. Last year over 77,000 people died from Fentanyl. If China cracks down on this ‘horror drug,’ using the Death Penalty for distributors and pushers, the results will be incredible!”
[China has made promises on Fentanyl before…and didn’t keep them.]
“The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina. Bob Lighthizer will be working closely with Steve Mnuchin, Larry Kudlow, Wilbur Ross and Peter Navarro.”
“We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal – either now or into the future….
“….China does not want Tariffs!”
“I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN…
“….But if a fair deal is able to be made with China, one that does all of the many things we know must be finally done, I will happily sign. Let the negotiations begin. MAKE AMERICA GREAT AGAIN!”
For its part, after staying mum, China’s Ministry of Commerce said in a statement on Wednesday that Beijing would start to quickly implement specific items where there’s consensus with the U.S. and will push forward on trade negotiations within the 90-day “timetable and road map.”
Bloomberg then reported that officials began preparing to restart imports of U.S. soybeans and liquefied natural gas – the first sign confirming the claims of Trump and the White House that China had agreed to start buying some U.S. products “immediately.”
The Ministry of Commerce statements described the meeting with the U.S. as “very successful” and said China is “confident” of implementing the results agreed upon at the talks, but didn’t provide any further details on the outcome. It was the first official confirmation from China that there’s a 90-day window for the talks.
Again, no specifics.
Then, out of nowhere, we learned that the daughter of the founder of the Chinese telecom giant Huawei, Meng Wanzhou, who is the company’s chief financial officer, was arrested in Vancouver on Dec. 1 and faces extradition to the U.S.
Canada acted at the request of the White House and there were conflicting reports as to whether President Trump directly knew of the arrest ahead of his dinner with President Xi. Certainly national security adviser John Bolton told NPR in an interview that he knew of the arrest beforehand.
Bolton said that the conduct of Chinese companies – and especially tech companies, is a central issue in the trade dispute with the U.S., including IP theft and forced technology transfers.
China demanded the U.S. and Canada “clarify” the arrest, amid signs of a growing backlash in China towards the U.S. I’ve long told you, for years, that Xi can play the nationalism card at the drop of a hat and this case may have given him an opportunity to do so, though I’d say it’s too soon for him to do that. Whether he can control the populous, and, for example, a nationwide boycott of Apple products, remains to be seen.
The U.S. has alleged that Huawei, who desperately wants to lead in 5G technology, and is already the second-biggest smartphone maker after Samsung, has been cheating on the Iran sanctions. Then today, in a Canadian court, Meng was charged with conspiracy to defraud banks, with Canada’s Crown lawyer, in ruling on bail for Meng, saying she was too great a flight risk. So that’s where we stand at the moment.
I wrote last week that a “pause” of some kind is what might emerge from the dinner last Saturday, but I urged everyone to “wait 24 hours’ if you heard anything positive.
Meanwhile, on the New NAFTA….
Editorial / Wall Street Journal
“President Trump signed his revised NAFTA accord with Mexico and Canada on Friday, and the question now is whether Congress will approve it. Opposition is already appearing from unions and Democrats that U.S. Trade Representative Robert Lighthizer tried to mollify with new protectionist provisions.
“ ‘Unfortunately, as GM’s idling of plants in Ohio, Michigan and Maryland this week showed – the ‘New’ NAFTA, as it stands now, is not strong enough to protect American workers,’ said United Auto Workers President Gary Jones in a statement on Friday. Senate Minority Leader Chuck Schumer chimed in that the accord ‘must have strong labor and environmental protections, which in the present deal are too weak.’ Likely House Speaker Nancy Pelosi has already demanded changes.
“Mr. Lighthizer bet that mandating higher wages for making cars in Mexico, among other provisions, would attract Democratic and union support. But so far those concessions seem only to have increased their demands. This means the trade deal could get even worse as Congress mulls it over, via either implementing legislation or reopening negotiations. And as the deal moves left, it could lose the support of business and free-trade Republicans whose votes will be crucial to passage.
“The White House rejected GOP Sen. Pat Toomey’s proposal in our pages last week to move the deal for a vote in the current Congress before Democrats take charge of the House. Mr. Trump may end up regretting that lost opportunity.”
It was a big week on the Mueller investigation front, as prosecutors from the special counsel’s office released a memo Tuesday detailing the level of cooperation by Michael Flynn, the president’s former national security adviser.
The 13-page document goes through the allegations against Flynn, including his lies to the FBI about contacts with Russia during the presidential transition and all the work Flynn has done behind the scenes to help Mueller’s probe in the year since accepting a plea agreement.
Mueller’s investigators recommended that Flynn receive no prison time and cited his “substantial assistance” since he began cooperating.
But much of the memo is blacked out, redacted, because investigations are ongoing.
Then today, it got busy around 5:00 PM ET…federal prosecutors said President Trump directed illegal payments to ward off a potential sex scandal that threatened his chances of winning the White House in 2016, putting the weight of the Justice Department behind accusations previously made by his former lawyer, Michael Cohen.
The new memorandum also argues for a prison term for Cohen, as prosecutors in Manhattan said he “acted in coordination and at the direction of” an unnamed individual, clearly referring to Trump.
In another filing, prosecutors for special counsel Robert Mueller revealed that as early as November 2015, a Russian citizen offered Cohen “government level” synergy between Russia and Donald Trump’s campaign.
And then in a separate case, prosecutors accused former Trump campaign chairman, Paul Manafort, of lying both about his contacts with administration officials and with an individual they accuse of ties to Russian intelligence.
So you add it all up and there is direct evidence tying Trump to potentially criminal conduct, while further evidence was revealed that Russia was seeking to sway the election in his favor.
Trump tweeted in response tonight: “Totally clears the President. Thank you!”
White House press secretary, Sarah Huckabee Sanders, said in a statement: “The government’s filings in Mr. Cohen’s case tell us nothing of value that wasn’t already known. Mr. Cohen has repeatedly lied and as the prosecution has pointed out to the court, Mr. Cohen is no hero.”
The prosecutors in the Southern District of New York were none too complimentary about Cohen’s character, rejecting his plea to avoid a prison term and saying that he had “repeatedly used his power and influence for deceptive ends.” They argued instead he deserved a “substantial” prison term, roughly four years. He is to be sentenced in Manhattan next week for campaign finance violations, financial crimes, and lying to Congress about the extent of Mr. Trump’s business dealings in Russia.
Mueller’s report revealed something new about Russian efforts to influence the Trump campaign. Cohen told prosecutors about a meeting between a Russian and a campaign adviser in the months after Trump announced his candidacy.
This occurred in November 2015, just as a possible Trump Tower Moscow project was gaining momentum. Cohen told prosecutors he was approached by a Russian claiming to be a “ ‘trusted person’ in the Russian Federation,” who offered “synergy on a government level” with the campaign.
As for Manafort, special counsel Mueller told a judge Friday that he told “multiple discernible lies” during interviews with prosecutors, including about his contacts with an employee who is alleged to have ties to Russian intelligence.
Mueller’s prosecutors said Manafort had told numerous lies in five different areas, including about his contacts with Konstantin Kilimnik, a Russian employee of Manafort’s political consulting firm who prosecutors have said has Russian intelligence ties. Manafort met twice during the campaign with Kilimnik.
--President Trump denounced his first secretary of state, Rex Tillerson, after Tillerson said that the president had regularly pushed him to take actions that were illegal.
Tillerson gave a talk in Houston and said the president was undisciplined, did not like to read and did not respect the limits of his office.
So Trump fired back:
“Mike Pompeo is doing a great job, I am very proud of him. His predecessor, Rex Tillerson, didn’t have the mental capacity needed. He was dumb as a rock and I couldn’t get rid of him fast enough. He was lazy as hell. Now it is a whole new ballgame, great spirit at State!”
“ ‘Michael Cohen asks judge for no Prison Time.’ You mean he can do all of the TERRIBLE, unrelated to Trump, things having to do with fraud, big loans, Taxis, etc., and not serve a long prison term? He makes up stories to get a GREAT & ALREADY reduced deal for himself, and get…
“…his wife and father-in-law (who has the money?) off Scott Free. He lied for this outcome and should, in my opinion, serve a full and complete sentence.”
“ ‘I will never testify against Trump.’ This statement was recently made by Roger Stone, essentially stating that he will not be forced by a rogue and out of control prosecutor to make up lies and stories about ‘President Trump.’ Nice to know that some people still have ‘guts!’”
Many said the above was witness tampering.
Europe and Asia
Markit released the PMI data for the eurozone (EA19), with the EA19 composite coming in at 52.7 for November vs. 53.1 in October. The euro area manufacturing number was 51.8 vs. 52.0, while the services figure was 53.4 vs. 53.7.
Germany: 51.8 manufacturing in November (31-mo. low); 53.3 services
France: 50.8 mfg. (21-mo. low), 55.1 services
Italy: 48.6 mfg. (47-mo. low), 50.3 services
Spain: 52.6 mfg., 54.0 services
Netherlands: 56.1 mfg.
Ireland: 55.4 mfg.
Greece 54.0 mfg.
UK: 53.1 mfg., 50.4 services (28-mo. low)
Separately, October retail sales in the euro area were up 0.3% over September; up 1.7% year-over-year.
Chris Williamson, IHS Markit:
“The final eurozone PMI for November still only points to modest GDP growth of approximately 0.3% in the fourth quarter, suggesting the region remains stuck in a soft-patch.
“Output and order books are growing at the slowest rates for over two years as a manufacturing-led slowdown showed further signs of spreading to the service sector. The survey responses highlighted intensifying headwinds of Brexit and trade war worries, a struggling auto sector and rising uncertainty regarding the economic and political outlook.
“Business optimism is running at its lowest since late 2014, adding to downside risks for growth as we move into 2019. Furthermore, hiring, which has hitherto shown surprising resilience as firms have hoarded labor despite the slowdown in demand, is now also showing signs of weakness. Employment growth in November was the lowest for almost two years.
“Hardest hit has been Italy, where business activity declined for a second successive month in November, suggesting the economy is on course to contract again in the fourth quarter. However, with Germany reporting the weakest growth for nearly four years, the survey raises question marks about the extent to which GDP will rebound in the fourth quarter. Growth looks more resilient in France and Spain, thanks mainly to robust service sector performance.”
--Here’s an interesting tidbit…In 2017, according to Eurostat, 1.043 billion passengers travelled by air in the European Union, up by 7% compared with 2016 and by 39% compared with 2009.
So what are the top five countries in the EU for total number of air passengers?
Ding! Time’s up.
UK (265 million), Germany (212m), Spain (210m), France (154m), and Italy (144m).
London/Heathrow remained the EU’s busiest passenger airport in 2017, with 78 million passengers handled, followed by Paris/Charles de Gaulle (69m) and Amsterdam/Schiphol (68m).
Brexit: This week could be the Big One. Parliament is set to vote on the Brexit proposal worked out between Prime Minister Theresa May and the European Union, but the votes aren’t there and should the proposal be voted down, there is no Plan B. The EU has already told the prime minister that there will be no renegotiations of the basic terms.
The main issue boils down to Northern Ireland and the backstop, should a deal not be negotiated on trade during the transition period, which is slated to go through December 2020.
None of the parties involved want a “hard border” or physical checks between the North and the Republic of Ireland, but after Brexit, and an all-encompassing trade deal, should this come to pass, then you have two different systems and regulatory regimes. So how then do you avoid treating Northern Ireland differently from the rest of the U.K.?
And this leads to the other big issue. Brexiters don’t want to follow EU rules for an indefinite time without having any say over them.
Earlier in the week, Mrs. May suffered a series of humiliating defeats in Parliament, including lawmakers giving Parliament more control of the exit process should her plan be voted down. This could allow them to avoid a “no-deal” Brexit, a disorderly and economically damaging departure from the European Union without any agreement.
And for the first time in history, they voted that the government was in contempt of Parliament for failing to publish its full legal advice on Brexit – the text explaining the legal implications of the deal.
But those hoping that the withdrawal plan could be canceled entirely got a boost when in a legal opinion by Manuel Campos Sanchez-Bordona, the advocate general of the European Court of Justice, he said Britain could unilaterally cancel its withdrawal from the 28-nation bloc before the scheduled date of its departure, on March 29, and without having to obtain the consent of the other 27 member nations.
So now we wait to see what happens Tuesday.
France chaos: Officials in France are very concerned that this weekend will see a return of the violence of the past few weeks, only that this time, the Interior Minister is worried “radical elements” will take over more than ever and that they will be out to kill people.
French President Emmanuel Macron, in an attempt to quell the most serious political crisis of his tenure, let alone the worst riots in Paris in 50 years (spring of 1968), announced he would suspend the gasoline tax increase that had first set off the protests in Paris and around France by the so-called Yellow Vest movement.
It was an extraordinary concession, especially given that Macron hasn’t yielded in the past, when confronted with protests and plummeting poll numbers.
Finance Minister Bruno Le Maire said on Thursday that he was always prepared to step up the government’s tax cutting plans as long as they were accompanied by spending cuts. “If we need to accelerate tax cuts, whether for companies or households, I am in favor.
Le Maire also said he wanted workers’ bonuses to be made tax exempt as soon as possible, in a gesture to the movement protesting against weak purchasing power.
Italy: After talk of compromise, Italy’s ruling League party announced it would accept only a minor reduction to next year’s budget deficit target, conceding little to Brussels, which says the plan breaks European Union public finance rules.
But Italy’s case for an expansionary budget has been strengthened by recent concessions to protesters in France, where League officials say the deficit will now exceed EU limits next year. France’s flouting of the rules will make it harder for Brussels to continue to target Rome, they said, correctly.
Turning to Asia, in China, the private Caixin manufacturing figure for November was 50.2, but the services number jumped to 53.8, up from 50.8.
Japan reported a manufacturing PMI of 52.2 last month, with a 52.3 reading on services.
Taiwan had a manufacturing PMI in November of just 48.4, while South Korea was also in contraction mode at 48.6.
--As noted above it was an ugly week, with the Dow Jones falling 4.5% to 24388, while the S&P 500 lost 4.6% and Nasdaq 4.9%. Both the Dow and S&P are now back in the red for the year with losses of 1.3% and 1.5%, respectively. Nasdaq is up a whopping 1.0% for 2018.
Tuesday, with the big drop in the market averages, the so-called FAANG basket of stocks (Facebook, Amazon, Apple, Netflix and Google/Alphabet) lost more than $140 billion in market value, all but Facebook declining more than 4%.
--U.S. Treasury Yields
6-mo. 2.53% 2-yr. 2.71% 10-yr. 2.85% 30-yr. 3.14%
The yield curve, the difference between the 2-year and 10-year, is at its flattest since July 2007. Historically, this has been a prime indicator of a downturn. The yield curve has “inverted,” the yield on the 2- greater than the 10-year, ahead of every recession since WWII.
--Wednesday, Russia was said to be moving closer to agreeing to production cuts for 2019, ahead of Thursday’s OPEC meeting in Vienna. Saudi Arabia has been seeking to persuade Russia to cut production substantially in a bid to halt a collapse in the price from $75 to $50 on West Texas Intermediate.
Earlier, Qatar, the energy-rich Gulf Arab nation, said it was withdrawing from OPEC. Qatar is the world’s biggest exporter of liquid natural gas.
As for President Trump and his inane comments on the price of oil, appearing to believe the collapse of 33% doesn’t negatively impact the producers, economist Ian Shepherdson said: “He’s living in the old world. That’s the very last thing he should be wishing for.”
Large shale-oil companies such as EOG Resources have characterized the current price around $50 a barrel as an inflection point, below which they would reduce drilling.
The Wall Street Journal noted that “Economic data from the last big downturn in oil prices reflect the new dynamic. Months after oil prices began falling from their mid-2014 peak of $105 a barrel, drilling slowed. By late 2016, private investment in oil and natural gas exploration and wells had fallen by two-thirds, and the oil-and-gas industry had shed nearly 190,000 jobs.”
Well, Friday, Saudi Arabia finally hammered out a deal to reduce production by 1.2 million barrels per day, with the Saudis shouldering the lion’s share of the cuts.
--From the Wall Street Journal:
“Workers at a Boeing Co. plant in Los Angeles are nearing completion of a new satellite, which uses restricted technology relied on by the U.S. military. It was ordered by a local startup that seeks to improve web access in Africa.
“In reality, the satellite is being funded by Chinese state money, according to corporate records, court documents and people close to the project.
“About $200 million flowed to the satellite project from a state-owned Chinese financial firm in a complex deal that used offshore companies to channel China’s money to Boeing. It included a discussion with a longtime friend of China’s president, said the startup’s founders.
“Such technology would help fill in a missing piece of the puzzle for China as it seeks to secure its status as a superpower alongside the U.S. It would bolster China’s burgeoning space program, as well as initiatives to dominate cutting-edge industries and expand its influence in the developing world.
“A web of U.S. laws effectively prohibits exporting satellite technology to China, and its satellites lag far behind those made in America. Current and former U.S. officials, and people close to the startup, called Global IP, fear the satellite could ultimately be used by China’s government or military once in space, or its technology reverse-engineered.”
Of course…that’s what they do.
--Americans continued to abandon passenger cars in November, as the transition into crossovers, SUVs and pickups gained more steam.
Automakers sold slightly fewer vehicles overall in the month, compared with last year, according to analysts’ forecasts.
For the year, sales are expected to be very close to last year’s 17.2 million, which was down from 2016’s all-time high of 17.6 million.
But sales of compact cars in November fell 18.4 percent, with sales of midsize cars declining 15 percent, according to Cox Automotive.
Sales of compact SUVs and crossovers, however, rose 11.6 percent and sales of midsize SUVs and crossovers increased a like amount.
Yes, such trends are driving the likes of General Motors to end sales of most of its passenger cars in the U.S. Earlier, Ford said it was ending sales of most of its passenger cars, including the Fusion and Taurus.
Years ago, Fiat Chrysler announced it would get out of the small-car segment.
Those still committed to passenger cars, like Honda, continue to get hit, down 12.6 percent.
At Toyota, car sales declined 17.3 percent, including sharp drops for the Camry and Prius. Overall, Toyota sales were down 0.6 percent.
For the month, Ford sales fell 6.9 percent.
Fiat Chrysler rose 17 percent, on the heels of strong performance from its Jeep, Ram, Dodge and Alfa Romeo brands, though the Chrysler and Fiat brands declined 20.7 percent and 24.5 percent, respectively.
Nissan’s were down 18.7 percent, and Volkswagen’s down 8.3 percent.
GM and Tesla report quarterly.
--Volkswagen’s CEO said on Tuesday after a meeting at the White Hose that the German automaker was building an alliance with Ford Motor Co. and might use the automaker’s plants to build cars. CEO Herbert Diess said his company was “in quite advanced negotiations and dialog with Ford Corp. “to really build up a global automotive alliance.”
--Meanwhile, Trump economic adviser Larry Kudlow said the administration is looking to eliminate subsidies on electric cars, a threat really directed at General Motors, but the president has to know he can’t target a company like that.
The Obama-era stimulus package granted a 47,500 consumer tax credit for the purchase of electric cars.
--Sales for high-end home builder Toll Brothers Inc. were weaker during the latest quarter, and the company declined to offer guidance for the full year ahead, in yet another sign of a troubled housing market.
The value of Toll contracts for new homes signed declined by 15% in the quarter ending in October. Rising home prices, higher mortgage rates and fewer foreign buyers cut into sales, the company said.
Contracts signed in California were down 40%.
CEO Doug Yearley said on a call with analysts: “Despite a healthy economy we [are] seeing a moderation in demand.”
Yearley also blamed the media in part for fueling a negative narrative as the nationwide sales data has weakened, but they are just doing their job.
--A Treasury-led task force is proposing that the U.S. Postal Service charge more for certain package deliveries, going after Amazon.com Inc. and other online retailers President Trump says profit at the post office’s expense.
The task force noted that the Postal Service hasn’t priced packages with profit in mind in the past, but that the agency should be able to charge market rates for mail and package items that aren’t deemed essential services.
President Trump has claimed Amazon is receiving a sweetheart deal, and thus unfairly hurting bricks-and-mortar retailing. Mr. Trump also has clashed with Amazon founder Jeff Bezos over coverage of his administration in the Washington Post, owned by Bezos.
While Amazon doesn’t spell out what percentage of its packages is delivered by the USPS, some analysts peg it at 45%. It’s presumed to be cheaper to deliver via the Postal Service vs. FedEx or UPS. An online retailer like Amazon is injecting sorted packages into the Postal Service network, paying for only the last leg of delivery.
The Postal Service has said it doesn’t lose money on its shipping contracts, pointing to annual regulatory reviews that show the agency more than covers its costs, as required by regulations.
That said the USPS is already planning on hitting Amazon, FedEx and UPS with significant price increases starting next year.
But the Postal Services’ issues that have it with a current deficit of $62 billion are about pensions and health benefits, and other items of that ilk, which have put it on an unsustainable path.
Separately, Amazon has had issues with workplace safety, and the National Council for Occupational Safety and Health said seven workers nationwide have died in accidents at Amazon warehouses since 2013, tamping down praise the company received for raising its minimum wage to $15 an hour.
“A pay increase is worth a lot more if you come home in one piece at the end of your shift,” said Marcy Goldstein Gelb, the group’s co-executive director.
So Wednesday, at least two dozen workers at Amazon’s Robbinsville, New Jersey, facility were hospitalized after a can of bear repellent fell off a shelf.
The company, while eschewing Newark for its second headquarters in favor of Queens and Northern Virginia, still has 16,000 employees at nine fulfillment centers in the Garden State.
At least we know the bear repellent is pretty effective.
--The New York Times reported that CBS Corp.’s board hired two high-powered law firms with sterling credentials to investigate allegations of sexual misconduct by former Chief Executive Leslie Moonves – but a series of leaks is undermining the probe.
The Times reported it had reviewed a draft report of the investigation’s findings, including that Moonves allegedly destroyed email evidence and sought to mislead investigators in an effort to salvage his reputation and his claims to $120 million in severance pay.
The document is said to allege that Moonves “received oral sex from at least four CBS employees under circumstances that sound transactional and improper” because there was no hint of romance or a relationship.
The thing is the attorneys were going to be submitting their findings to the CBS’ board next week.
--Thomson Reuters announced it would be cutting its workforce 12 percent by 2020, axing 3,200 jobs, as part of an effort to streamline the business and improve operating efficiencies.
The news and information provider said it was reducing its capital expenditure, while targeting revenue growth of 3.5 to 4.5 percent by 2020, ex-acquisitions.
Saudi Arabia: Last week, CIA Director Gina Haspel was absent from a briefing on the murder of Saudi journalist Jamal Khashoggi and senators were none too pleased.
This week they received a briefing from Haspel and all senators were in agreement…they are confident Saudi Crown Prince Mohammed bin Salman (MBS) was linked to Khashoggi’s killing.
Republican Sen. Lindsey Graham (S.C.) said he had “high confidence” MBS knew in advance about the murder, describing the crown prince as “a wrecking ball” and “crazy” and “dangerous.”
Graham added: You have to be willfully blind not to come to the conclusion that this was orchestrated and organized by people under the command of MBS.
New Jersey Democratic Senator Bob Menendez, the top Democrat on the Senate Foreign Relations Committee, said, “The views that I had before have only solidified.” Menendez backs legislation to end all U.S. support for the Saudi coalition waging war in Yemen.
Senator Bob Corker (R-Tenn.), the chairman of the Foreign Relations Committee, said it would take “30 minutes” for a jury to convict MBS.
The Saudis have charged 11 people but deny MBS was involved.
Secretary of State Mike Pompeo and Defense Secretary James Mattis told senators last week there was no direct evidence of the crown prince’s involvement….no smoking gun.
President Trump has said the CIA findings were not conclusive. On November 20 he said: “It could very well be that the crown prince had knowledge of this tragic event – maybe he did and maybe he didn’t.”
Editorial / Washington Post
“President Trump and his top aides keep insisting there is no ‘direct evidence’ or ‘smoking gun’ connecting Saudi Crown Prince Mohammed bin Salman to the murder and dismemberment of journalist Jamal Khashoggi. A new lead from the CIA underlines just how disingenuous those claims are. According to an agency assessment reviewed by the Wall Street Journal, the crown prince had at least 11 exchanges of messages with a top aide around the time a hit team overseen by that aide was entering the Saudi Consulate in Istanbul and ambushing Mr. Khashoggi.
“It was already known that the 15-member hit team was headed by an official, Maher Mutreb, who is close to Mohammed bin Salman, and included at least four other operatives connected to the prince’s personal security detail. It was known that Mr. Mutreb called Saud al-Qahtani, the crown prince’s closest associate, from the consulate and told him to ‘tell your boss’ that Mr. Khashoggi was dead. Now we also know that Mr. Qahtani and Mohammed bin Salman exchanged numerous messages at this time.
“According to the Journal, the CIA assessment says, ‘It is highly unlikely this team of operators…carried out the operation without Mohammed bin Salman’s authorization.’ Its conclusion that the crown prince ‘personally targeted’ Mr. Khashoggi and ‘probably ordered his death’ is labeled as ‘medium-to-high confidence.’
“So, yes, there is no ‘direct evidence’ – but any reasonable assessment must conclude that the crown prince is responsible. That the Trump administration refused to draw that conclusion means its policy toward the kingdom is based on denying reality….
“Saudi Arabia remains a ‘semi-important ally’ of the United States, as Sen. Bob Corker aptly put it last week. But Saudi Arabia and Mohammed bin Salman are not synonymous, and the crown prince is, as Mr. Corker said, ‘out of control’ – a conclusion underlined by the jubilant high-five with which the prince greeted Russian President Vladimir Putin, another murderer of journalists, at the Group of 20 summit in Buenos Aires. If Mohammed bin Salman is not sanctioned and restrained, he will continue to damage U.S. interests in the Middle East – which is why Congress must act.”
Sen. Lindsey Graham / Wall Street Journal
“Last week the Senate voted to advance a resolution ending U.S. support for Saudi Arabia’s military campaign in Yemen. Secretary of State Mike Pompeo warned against the action, saying the U.S. ought not rebuke the Saudi government because doing so would threaten our alliance and empower Iran. But the vote wasn’t even close.
“Sixty-three senators felt we couldn’t remain silent while America’s interests and values are at stake. Regardless of whether this resolution passes, it is important for Congress to signal that there is no excuse for recent Saudi behavior.
“It is wrong to suggest that maintaining U.S. alliances consists of mutually exclusive choices between power and principles. In the long run, America’s power as well as its principles depends on an international system in which strongmen can’t act on their violent whims and the rule of law enables social stability and the free flow of trade.
The Saudi regime’s murder of Jamal Khashoggi, its reckless military campaign in Yemen, its blockade of Qatar, and its effort to remove Lebanon’s prime minister all show astounding arrogance, entitlement, and disregard for international norms. If these actions make Crown Prince Mohammed bin Salman’s Saudi Arabia a ‘source of stability’ in the Middle East, I’d hate to see what destabilizing behavior looks like.”
Iran: Sec. of State Pompeo condemned what he described as Iran’s testing of a medium-range ballistic missile capable of carrying multiple warheads as a violation of the international agreement on Tehran’s nuclear program.
Amid tension between Washington and Tehran over ballistic missiles, Pompeo warned in a statement released on Twitter that Iran is increasing its ‘testing and proliferation’ of missiles and called on the Islamic Republic to ‘cease these activities.’
But a spokesman for Iran’s armed forces was quoted by an Iranian news agency, “Missile tests…are carried out for defense and the country’s deterrence, and we will continue this… This is outside the framework of (nuclear) negotiations and part of our national security, for which we will not ask any country’s permission.”
But the 2015 nuclear accord specifically calls on Iran to refrain for up to eight years from work on ballistic missiles designed to deliver nuclear weapons. Iran denies its missiles are capable of being tipped with nuclear warheads, or that it has any intent of developing nuclear weapons through uranium enrichment.
Iran’s military spokesman, Bahram Qasemi, addressed Pompeo: “It is…ironic that you cite a resolution that you have not only breached through your unilateral and unlawful withdrawal from the (nuclear) accord but that you also encourage others to breach or even threaten to punish and sanction them if they carry it (the accord) out.” [Reuters]
Israel: Israeli police on Sunday recommended indicting Prime Minister Benjamin Netanyahu on bribery charges related to a corruption case involving Israel’s telecom giant, prompting immediate calls for his resignation.
Police say their investigation has established an evidentiary foundation to charge Netanyahu and his wife Sara with accepting bribes, fraud and breach of trust. The case revolves around suspicions that confidants of Netanyahu promoted regulations worth hundreds of millions of dollars to the Bezeq telecom company in exchange for positive coverage of the prime minister on Bezeq’s subsidiary news website, Walla.
Police have already recommending indicting Netanyahu in two other cases.
Netanyahu continued to dismiss the allegations as a witch hunt orchestrated by the media.
The investigations have been going on for years, and the charges are serious, but will he survive?
The opposition has all called on him to resign, but his ruling Likud party has lined up behind him.
Netanyahu’s wife, Sara, has already been charged with fraud and breach of trust for allegedly overspending roughly $100,000 on private meals at the prime minister’s official residence, even as there was a full-time chef on staff.
In 2016, Sara was found guilty of abusing an employee and awarded the man $42,000 in damages. Other employees have accused her of mistreatment and of excessive spending for her private, expensive tastes.
Elections are currently scheduled for November 2019. Some analysts believe Netanyahu should call for a snap vote to try to influence any possible legal proceedings against him.
Afghanistan: A top Taliban leader was killed in a U.S. airstrike in Afghanistan, officials from the Taliban, the Afghan government and the U.S.-led military coalition said, just as Washington is in peace talks with the insurgents.
The death of Abdul Manan was said to be the biggest loss for the Taliban since the group’s leader, Akhtar Mansour, was killed in a U.S. drone strike in western Pakistan in 2016.
North Korea: Pyongyang is expanding military facilities thought to house long-range missiles that can hit the U.S., according to a think-tank, the Middlebury Institute of International Studies at Monterey, Calif. [Not a bad place to think, if that’s your line of work. ‘Boss, I need to play 18 at Cypress Point and do some thinking.’]
The report says: “The missile base at Yeongjeo-dong has long been a concern to U.S. and South Korean officials because of its unique location.”
But seven miles away, North Korea has been building new facilities that appear to be either another missile base or an expansion of the Yeongjeo-dong facility.
North Korea insists it has made significant concessions, including dismantling a missile launch site and a nuclear-weapons test site, which it claims should lead to a lifting of sanctions that severely limit trade in coal, textiles and raw materials. But the Trump administration has refused to ease sanctions until Pyongyang takes more concrete actions toward denuclearization.
The problem is the agreement reached in Singapore between Kim Jong Un and President Trump is too vague, only that the two sides would pursue new relations and “to work toward complete denuclearization.” Nothing has occurred on this front.
President Trump has said another summit between the two could take place early in the new year.
For its part, the South Korean government is encouraging Washington to lift a few of the sanctions to allow for renewed economic engagement between the North and South. But South Korean President Moon Jae-in has continued to support sanctions overall on Pyongyang.
But a day after meeting with Trump at the G-20, President Moon said Trump had asked him to pass on a message to Kim. “The message is that President Trump has very favorable views toward Chairman Kim and he likes him,” Moon told reporters. “As such, he asked me to tell Chairman Kim that he wants to implement the rest of their agreement together and he will fulfill Chairman Kim’s wishes.”
The love affair between Trump and Kim is so touching.
Russia: President Vladimir Putin raised the specter of an arms race with the United States on Wednesday, in response to Washington’s warning it could suspend a Cold War-era treaty that prohibits intermediate and shorter-range nuclear missiles. The end of the pact would severely undermine the decades-old nuclear-arms control architecture built up during the Cold War.
But it would free the Pentagon to develop missiles now banned by the agreement.
The head of Russia’s armed forces threatened to target U.S. missiles sites hosted by allies within striking distance of Russia rather than American soil should there be an armed conflict between the two.
On Tuesday, Secretary of State Pompeo said Washington would freeze its commitments under the treaty in 60 days if Russia didn’t comply with the pact.
Putin said Russia would develop shorter and intermediate-range weapons if the U.S. did so.
“Our American partners apparently believe that the situation has changed to such an extent that the U.S. should have such weapons,” Putin said on state TV. “What answer will they have from our side? It’s simple: we’ll do it too.”
Washington has pointed to Moscow’s 9M729 cruise missile project as evidence Russia is violating the treaty, accusing Moscow of testing a missile within the range barred in the agreement. Under the agreement, missiles with a range between 300 and 3,400 miles are forbidden.
Meanwhile, Petro Poroshenko, president of Ukraine, in an op-ed for the New York Times:
[Following Russia’s “theft of Ukraine’s Crimean peninsula, the building of a 12-mile bridge between Russia’s mainland and Crimea, and then the attack on Ukraine’s navy in the Kerch Strait and the Black Sea on Nov. 25]
“Russia’s objective is obvious: It wants to return to an era where property and land are seized by force. It starts with Ukraine and continues westward as far as the democratic world will allow. Democratic countries must now make a choice: Stand up for what is right or continue appeasing President Vladimir Putin. If history has taught us anything, it is that appeasement has deadly costs. Despite Kremlin propaganda, Mr. Putin is weaker than he would have the West believe. The West can – by raising the cost of his aggression – force him to fall back into line.
“How much more hostility will it take before the West’s words of concern graduate into the hard currency in which the Kremlin trades – strength? Russia has deployed chemical weapons in Britain; undertaken cyberattacks and hacking attempts across the West; bombed civilians in Syria; fomented a war in Eastern Ukraine that has caused more than 10,000 Ukrainian deaths; and spread disinformation to confuse, anger and frighten citizens around the world. Is now not the time to act?
“President Trump showed true leadership by canceling his meeting with Mr. Putin at the G-20 in Argentina over Russia’s seizing of Ukrainian ships and sailors. We have enjoyed tangible support from the White House and Congress, including defensive weapons, stronger sanctions and more secure American energy supplies. Together, partners on both sides of the Atlantic can continue to raise the cost to Russia for threatening our collective security.
“With Crimea and Donbas under occupation, our common task is not to allow Russia to spill its aggression into the Sea of Azov. And an ‘Azov package of sanctions’ against Russia would be the least the world should respond with this time. While the West is speaking, Mr. Putin is acting. It is time to respond.”
Lastly, Russia plans to restrict the passage of foreign warships in the Arctic Ocean next year, a top defense official said in Moscow.
Russia is feverishly working to reassert its military presence in the Arctic frontier and secure access to a strategic northern shipping corridor – the Northern Sea Route – between Asia and Europe. The corridor takes about two weeks less to traverse than the Suez Canal.
Earlier this year, Denmark’s shipping giant Maersk tested the Northern Sea Route, completing a 37-day journey from the Pacific port of Vladivostok to the port of St. Petersburg in September. But the company said afterwards the route was currently only feasible in three months out of the year.
Russia, banking on climate change, is building a new generation of nuclear icebreakers and opening new bases in the biggest Arctic military push since the fall of the Soviet Union. No other country has a nuclear breaker fleet.
Mexico: Andres Manuel Lopez Obrador (AMLO) was sworn into office Saturday as Mexico’s new president, vowing to do away with corruption and launch a sweeping transformation of Mexican society amid widespread disenchantment, the nation faced with rising crime, unchecked official graft and limited economic opportunities.
But among AMLO’s first steps was to cancel his predecessor’s multibillion-dollar plan for a new Mexico City airport, which sent the Mexican market tumbling and sapped business confidence in the new administration.
--Presidential tracking polls....
Gallup: 40% approval of Trump’s job performance, 56% disapproval (Dec. 2); 89% Republicans, 39% Independents.
Rasmussen: 50% approval, 49% disapproval (Dec. 7).
--You should know where I stand on ‘global warming’ by now. I long first said on this site that the debate was being mislabeled. It was ‘global pollution’. If s--- goes in the air, it’s not good for us, period. ‘Fine particulate matter’ is not good.
With that in mind, I just report for the record various items. [I passed on my friend Mark R.’s findings on sunspots and the looming cold wave that then materialized in November, and he mostly agrees with me. Talk pollution, not GW.]
Kendra Pierre-Louis / New York Times
“Greenhouse gas emissions worldwide are growing at an accelerating pace this year, researchers said Wednesday, putting the world on track to face some of the most severe consequences of global warming sooner than expected.
“Scientists described the quickening rate of carbon dioxide emissions in stark terms, comparing it to a ‘speeding freight train’ and laying part of the blame on an unexpected surge in the appetite for oil as people around the world not only buy more cars but also drive them farther than in the past – more than offsetting any gains from the spread of electric vehicles….
“Worldwide, carbon emissions are expected to increase by 2.7 percent in 2018, according to the new research, which was published by the Global Carbon Project, a group of 100 scientists from more than 50 academic and research institutions and one of the few organizations to comprehensively examine global emissions numbers. Emissions rose 1.6 percent last year, the researchers said, ending a three-year plateau….
“China produces 27 percent of global emissions, according to the report. The United States accounts for 15 percent of emissions, the European Union 10 percent and India 7 percent.
“In India, a projected emissions increase of 6.3 percent is linked to the country’s effort to provide electricity to 300 million people who currently lack it.
“Last year, extreme weather disasters cost the United States a record $306 billion.”
--Finally, remembering 41, President George H.W. Bush....
Barack Obama said of Bush and the collapse of the Soviet Union on “60 Minutes”:
“What people don’t appreciate fully – even within his own party – is the degree to which he had to land the plane when the Berlin Wall comes down.
“You have chaos potentially in the former Soviet Union and Russia. And uncertainty in Europe. All those things could have gone haywire at any point. And the restraint, the caution, the lack of spiking the football, (what) they showed was, I think, an enormous achievement.”
Editorial / Wall Street Journal
“It’s hard to believe now, but in 1988 George H.W. Bush was dismissed as a ‘wimp.’ He was then in his eighth year as Vice President; had been CIA director, ambassador to the United Nations and a Congressman; had been shot down in the Pacific as a Navy pilot in World War II; and had left clubby Connecticut after the war to be an oil man in Texas. But Bush was running to succeed Ronald Reagan, and the media were intent on diminishing him.
“Bush responded by defeating a strong GOP primary field and then exposing Michael Dukakis’ liberalism to win a rare third consecutive presidential term for the same party. He died...having been a consequential one-term President who set an example with his integrity and sense of patriotic duty.
“Bush took office at a propitious moment when the results of Ronald Reagan’s two terms were playing out to America’s benefit around the world. The U.S. economy had increased its GDP by the size of Germany in the 1980s, and America had revived its confidence and military strength. Soviet leaders had concluded they could no longer win the Cold War and Mikhail Gorbachev tried to reform.
“Bush’s historic contribution was to use personal diplomacy to navigate the demise of the Warsaw Pact, the reunification of Germany, and the breakup of the Soviet Union. He won the trust of Mr. Gorbachev, in part by refusing to boast about America’s victory. Reagan’s boldness and ideological conviction won the long twilight struggle, but Bush’s cautious temperament and long experience helped to negotiate a transition without firing a shot. Few empires in history have fallen in such peaceful fashion.
“The 41st President also rolled back Iraq’s 1990 invasion of Kuwait, famously saying, ‘This will not stand.’ He deployed the arsenal that Reagan had acquired, and he overcame Democratic opposition at home, to lead an overwhelming military rout and set a standard for the post-Cold War order.
“The blot on that victory was that he let Saddam Hussein stay in power by ending the war too soon and failing to protect the Shiites of southern Iraq as he did the Kurds in the north. Saddam survived by slaughtering the Shiite uprising, but Bush declined to help.
“Twelve years later his son, George W. Bush, would invade Iraq and depose Saddam after 9/11. The conventional wisdom is that Bush 41 was the wiser leader for not having gone to Baghdad. But by ending the war too soon he allowed the weapon of mass destruction that was Saddam to remain a threat, and sooner or later he would have struck again.
“Bush’s caution also caused him to support the single state of Yugoslavia at the end of the Cold War as a source of stability. But the jerry-rigged country was an ethnic cauldron held together by Cold War inertia. Those tensions exploded on Bill Clinton’s watch and required American military action to protect minorities and restore stability in Bosnia and Kosovo.
“The senior Bush’s record on domestic issues was disappointing, in part because he had to deal with a Democratic Congress. Bush won in 1988 by making the election a classic liberal versus conservative choice, and a dividing line then as now was taxes. ‘Read my lips, no new taxes,’ Bush said at the GOP convention, in a self-defining political moment.
“Bush had grown up in an era when compromise was more common and Members of both parties dared to socialize together. He underestimated the partisanship of Senate Majority Leader George Mitchell, whose goal was to make Bush a one-term President.
“Bush played into Mr. Mitchell’s hands by accepting a tax increase before Democrats had agreed to entitlement reform or spending cuts. The final deal included fleeting spending cuts while breaking his tax pledge. ‘I cannot break my ‘Read the Lips’ pledge,’ Bush wrote in his diary in April 1989. ‘I would be totally destroyed if I did.’ He was right.
“The tax increase was all the worse because it hit amid a slowing economy already burdened by Bush’s deals with Democrats that added large new mandates and regulatory burdens on business, and the economy tipped into a mild recession. His Administration did an admirable job of cleaning up the savings-and-loan mess he inherited, and in the fourth quarter of 1992 the economy grew 4.2%.
“Bush’s Supreme Court nominations were mixed: David Souter, who left no mark beyond being a reliable liberal vote, and the principled originalist Clarence Thomas. But the tax increase and recession shattered the Reagan coalition, as Ross Perot entered the 1992 race, paving the way for Bill Clinton to win. Bush won 37% as the incumbent.
“Like all Republican Presidents, Bush 41 is remembered more fondly by media and liberal elites in retrospect than he was at the time. The left never forgave him for letting Roger Ailes and Lee Atwater dismantle Mr. Dukakis, and Bush failed to see the change in America toward deeper partisan divisions.
“George H.W. Bush was by temperament a man of the middle in an age of increasing ideological polarization. He was a gentleman in a culture growing cruder by the year. Above all he was a man of admirable private and public character who believed in government service for the good of the country and not merely for power. Those virtues made him a better President than his critics admitted.”
Editorial / New York Post
“When George H.W. Bush was turned out of office in 1992, this page predicted that history would prove far kinder to him than the voters had been. A quarter-century later, that’s already true.
“The 41st president died...after a remarkably full, vigorous and enormously successful life.
“Few, if any of his predecessors came to the White House better prepared for the job: He’d already served eight years as Ronald Reagan’s vice president plus stints as CIA director, UN ambassador, head of the first U.S. liaison office in Beijing and congressman.
“And of course his public life followed other remarkable service to the nation. He was a combat hero during WWII, lying about his age after Pearl Harbor to enlist as a Navy pilot; shot down over the Pacific, he was plucked from certain death by a patrolling U.S. submarine.
“Though born to New England wealth and privilege, he moved to Texas and made his own fortune as an oilman – then found that public service excited him more. He also instilled that trait in his family, and lived to see one son elected president and another governor of Florida.
“Bush’s single term as president was marked by tremendous accomplishments in foreign policy – but a rocky enough economy that (together with a third-party run by billionaire Ross Perot) voters denied him re-election in favor of Bill Clinton.
“Perhaps the Bush administration’s crowning achievement was assembling an impressive international coalition that drove Saddam Hussein from Iraqi-occupied Kuwait in the first Gulf War. That forceful display of U.S. leadership set an important precedent and standard for dealing with Third World aggression.
“It’s also no accident that the Berlin Wall came down on his watch: His clear commitment to Reagan’s forceful policies helped bring about the final collapse of the Soviet bloc.
“But his actions could be disappointing, too.
“He was far too forgiving of Beijing after the brutal 1989 Tiananmen massacre. And he distanced himself from traditional U.S. support of Israel to a virtually unprecedented degree.
“But his biggest disappointments came on the domestic front, chief among them the abrupt reversal of his signature 1988 campaign pledge: ‘Read my lips – no new taxes.’ His failure to stick to that vow damaged both his personal credibility and the economy, for which he paid a huge political price.
“Bush was burdened politically by the fact that he did not enjoy a natural political base: Conservatives were distrustful of him even before he ran for president in 1980 as the ‘moderate’ alternative to Reagan.
“An even-tempered man not prone to public expressions of emotion, even in partisan battle, he did not excite particularly strong emotion from his followers.
“What George Bush did command, though, throughout his career was respect – and well-earned respect at that.
“The nation was certainly in better shape when he left office than the Democrats’ campaign rhetoric had suggested. It certainly is far better off – more secure and prosperous – for his lifetime of service.
“As the years progress, his stature will only continue to grow. RIP.”
Editorial / USA TODAY
“Though George H.W. Bush’s presidency ended just a quarter-century ago, it seems like a different era altogether. He personified a time when Democrats and Republicans could work together and when careful international diplomacy was not scorned as a sign of weakness.
“Last year, a C-Span survey of historians ranked Bush 20th of 44 presidents considered. A survey of political scientist this year ranked him 17th. Though both polls put him atop the list of presidents turned out of office by the voters, they may be a bit low for a president who looks better and better each year.
“Bush was a thoroughly decent man, in stark contrast to the current occupant of the White House. To him, loyalty to country – whether in serving as the Navy’s youngest aviator in World War II or forging a bipartisan consensus on air pollution – came well before party and self.
“Domestically, his deficit-reduction act of 1990 was one of the most fiscally prudent actions ever taken by the federal government. It put real caps on spending and required Congress to pay for any tax cuts or increased entitlements. It laid the groundwork for future budget surpluses and demonstrated how public servants of good faith could make tough decisions on behalf of the American people.
“But it also set off a rebellion in the GOP, with only 47 House Republicans, out of 173, voting for it. That rebellion, prompted by modest tax increases in the measure, marked the beginning of an evolution in the party toward more partisan and inflexible stances. Those stances are the principal reason behind today’s budget impasses.
“Internationally, his decision to patiently assemble a broad coalition to get Iraqi dictator Saddam Hussein out of Kuwait, and to limit the 1991 Persian Gulf War to that objective, was clearly the right call. The decision by his son, George W. Bush, to launch a full-scale invasion of Iraq in 2003 – one that has cost America dearly in blood, treasure and standing among allies – demonstrated the wisdom of the elder Bush’s restraint.
“He will also go down as an end-of-an-era type leader. He was less polished than his successors and was never a great campaigner. But he always came off as genuine. A product of the Greatest Generation, he enlisted in the Navy the day he graduated from high school and rose in public life by serving country first and letting the politics sort themselves out. Among his few missteps was elevating an ill-prepared and ideologically extreme judge, Clarence Thomas, to the Supreme Court.
“There is, however, an unfortunate postscript to his presidency in the evolution of today’s Republican Party.
“Since the 1990s, the GOP has come to define itself as a party that should never, ever raise taxes, even as part of responsible deficit reduction or to meet pressing national needs. In that regard Bush – who famously said ‘read my lips, no new taxes’ during the 1988 campaign only to realize that some modest tax hikes were necessary – has become a kind of villain to an increasingly strident bloc of lawmakers.
“Fortunately, that view is not shared by many outside of party hard-liners. Most Americans have been developing ever more positive opinions of the 41st president. Considering all that he stood for – and perhaps more important all that he didn’t stand for – that view is right on the mark. George H.W. Bush should be remembered as a great American, a class act and an underrated president.”
Josef Joffe / Wall Street Journal
“What are the three most glorious moments of American diplomacy? One is the Revolutionary War, when the Founding Fathers roped France into an alliance against Britain that saved the novus ordo seclorum from death in infancy. Another is the Louisiana Purchase, by which Thomas Jefferson doubled the size of the country for a mere $15 million (around $300 million today). The third was a triple win engineered by George H.W. Bush: victory in the Cold War, the reunification of Europe and Germany, and the collapse of the Soviet Union on Christmas 1991.
“The 41st president, who couldn’t always get his sentences straight, wasn’t foreordained for history’s hall of fame. Amid rising deficits and unemployment, Bush lost the 1992 election to a little-known Democrat by the name of Bill Clinton. Yet as his secretary of state, James Baker, put it in 2013, Bush ‘was the best one-term president the country has ever had, and one of the most underrated presidents of all time.’
“George H.W. Bush may have stumbled at home, but he was a superstar on the international stage. He made an impossible dream come true. Wasn’t Europe’s partition forever? Why would the Soviet empire, stretching from East Berlin to Vladivostok, disgorge half of Europe, its booty from World War II? On 41’s watch, it did.
“Great powers never die in bed. Think about Rome falling to Germanic tribes or the violent demise of the Wilhelmine, Tsarist, Habsburg and Ottoman empires in World War I. Yet the Soviet Union expired without a shot being fired – a historic first.
“To be fair, Bush had some unwitting help from Mikhail Gorbachev, the Soviet leader. In the tense autumn of 1989, Mr. Gorbachev refused to unleash his army in East Germany while ever-larger demonstrations were hammering the regime. The general secretary thought he could reform his empire without having to relinquish it. A few weeks later, the Berlin Wall fell, emboldening democratic forces throughout the Warsaw Pact. As went East Germany, the empire’s strategic brace in the West, so would the rest.
“This was the moment of maximum danger. Enter Bush, who faced a three-way battle of wits. He had to corral France and Britain, who sought to brake if not forestall German reunification – the ‘Fourth Reich’ was rearing its ugly head – and he had to salve Russian pride. To bring all of Germany into NATO, Bush had to head off a separate German deal with Moscow.
“He did it by taking the lead early and always. Without naming London and Paris, 16 days before the fall of the wall, Bush intoned: ‘I don’t share the concern that some European countries have about a reunified Germany.’ To side with the German Chancellor was to leash him, blocking a German end run to Moscow.
“At the same time, Washington was running interference for Bonn, holding off London and Paris, while frustrating Soviet designs to drag out reunification and dissolve the Atlantic alliance in favor of an all-European security system, a classic of Soviet policy aims since Stalin. The U.S. would ‘not allow the Soviet Union...to create the kind of Germany Moscow might want,’ Bush assured Kohl.
“How to soften the blow to the loser of the Cold War? How to keep the U.S.S.R. from lashing out in desperation? At that point, there were still 400,000 Soviet troops in East Germany alone, plus thousands of tactical nuclear weapons deployed throughout Eastern Europe. Soviet shock divisions were ensconced some 20 miles from Hamburg.
“Managing Mr. Gorbachev’s vanity and vulnerability, Bush told him he ‘admired the way you have handled the burgeoning democratic process in your country.’ In Gorbachev’s Russia, Bush had to deal with a failing state married to a failing economy. Lesser leaders might have crowed, kicking the stumbling giant as he buckled. Instead, Bush let him down gently. The U.S. dispatched food and economic aid to the Soviet Union. The government in Bonn guaranteed Soviet loans worth $3 billion. United Germany’s armed forces were progressively cut to one-third of their former size.
“The Bush administration signed major disarmament treaties and offered Moscow a place in the North Atlantic Cooperation Council – a seat at NATO’s table. Russia could also keep its armies in Eastern Europe for a while; the last troops only went home in 1994.
“It was high-stakes diplomacy at its best. The Bush team knew when to push and when to stop, when to flatter and when to cajole. Paying tribute to Bush, Mr. Gorbachev hailed his ‘contribution to a historic achievement.’ The German foreign minister eulogized Bush as a ‘great statesman and friend of Germany.’
“A look back at George H.W. Bush’s career doesn’t, at first, reveal the mark of greatness. Yet he grew into a towering figure of world politics who will shine among titans like Talleyrand, Palmerston and Bismarck. Mr. Baker was too modest when he mused five years ago: ‘I think history is going to treat him very well.’ In truth, Bush entered history while still alive – when, in his words, he made Europe ‘whole and free’ again.”
David Von Drehle / Washington Post
“We tend to forget how dangerous the world was when Bush became president in 1989 after eight years as Ronald Reagan’s understudy. In Moscow, Mikhail Gorbachev promised openness and reform, but exactly what this meant for the shape of the world was unclear. The changes came fast and furiously. Within less than a year, the Soviets pulled out of Afghanistan; Chinese soldiers massacred protesters in Tiananmen Square; communist governments fell in Poland, Hungary, East Germany, Czechoslovakia and Romania; and the Berlin Wall came down.
“Taken individually, each of these events was welcome news for the United States and its allies; even the bloodshed in China, horrific as it was, bespoke a rising generation with dreams of freedom. Taken together, they threatened to unbalance the world order.
“Bush’s delicate task was to allow the Soviet Union to unwind with a measure of dignity while carefully expanding the Western umbrella. He needed to measure his steps and see around corners. Bush understood how nervous Europeans would be about German unification, for example, and carefully assured the Poles, the French, the Russians and others that the United States, through NATO, could prevent another rise of militaristic nationalism in the new Germany.
“This was unmarked trail. When was the map ever remade and power restructured without the sledgehammer of violence? Bush’s prudent diplomacy led some enemies, and even some friends, to mistake caution for weakness. (‘This is no time to go wobbly!’ British Prime Minister Margaret Thatcher claimed to have scolded him at one point.) They forgot this was a man who, at 18, found it prudent to lead a bomber crew into combat as one of the youngest U.S. Navy aviators of World War II.
“In the summer of 1990, Iraqi dictator Saddam Hussein pressed this error too far, gambling that he could steal neighboring Kuwait and Bush wouldn’t stop him. Over the next seven months, Bush orchestrated a masterpiece of prudent leadership, drawing on the resume that made him perhaps the best-prepared president ever. The former congressman handled the politics of building a bipartisan consensus in Washington. The former U.N. ambassador patiently walked the United Nations through one resolution after another, tightening the screws on Hussein. The former director of the CIA foresaw the intrigues of Middle Eastern politics and cut off Husseins’ attempts to exploit them. The former envoy to China won Beijing’s passive approval of ‘all necessary means’ to liberate Kuwait.
“The global coalition that ultimately joined Operation Desert Storm, stretching from Niger to New Zealand, Poland to Pakistan, was a sign of widespread confidence in Bush’s ability to wield American hegemony with care. And his decision to halt the operation with Hussein still in power vindicated that confidence. For unlike his son and his son’s reckless counselors – Donald Rumsfeld and Dick Cheney most egregiously – the senior President Bush understood that prudence advised against toppling the dictator without a good idea of what could take his place.
“Two years plus six weeks after George H.W. Bush took office, the world was a different place than he found it, and he had demonstrated how well the new world could work. It’s shocking, really, to look back on 1992 and see how little this achievement counted with American voters. Having won some 49 million votes in his 1988 landslide, Bush was sent home after a single term with barely 39 million in his column. The nation apparently wanted something more exciting. Hoo boy, have we gotten it: Oval Office sexcapades, an impeachment, the heedless invasion of Iraq followed some eight years later by the heedless withdrawal of U.S. troops, an economic crash – all leading up to the wild improvisations of President Trump. There are no do-overs in history. But I believe if we’d known then what we know now, we would have said: Not gonna do it.
“Wouldn’t be prudent.”
John Sununu / Washington Post
[Oh Bush’s domestic policy legacy...]
“Bush signed into law more than a dozen major pieces of domestic legislation during his single term, including the 1990 budget bill, energy deregulation, the Clean Air Act, the 1990 farm bill, his crime bill, the 1991 Civil Rights Act and the Americans With Disabilities Act. He personally guided his policy team and sweated out the details just as diligently as he did on foreign policy.
“He also produced the first set of national performance goals to spur the improvement of education in our K-12 schools, and he passed precedent-setting child-care legislation and led the effort to resuscitate the savings-and-loan industry, including an overhaul of the Federal Deposit Insurance Corp. after the system’s collapse. He also helped to reinvigorate the economies of Latin America under the Brady plan and negotiated the North American Free Trade Agreement. His budget and his policies set the stage for our fiscal prosperity of the 1990s.
“And he accomplished all of this despite a heavily partisan, Democratic-controlled Congress. Throughout his term, the opposition dominated the legislative branch, with majorities as high as 260 to 175 in the House and 55 to 45 in the Senate.
“His achievements brought forth a new era of global opportunity dramatically different from the one he and Reagan inherited in 1981. But it was that quiet Bush style that helped make such a dramatic transformation possible....
“As president, George H.W. Bush laid a solid foundation for his successors to build on. Whether we have the fortitude and discipline to eventually do so remains to be seen.”
Former President Bill Clinton:
“On Jan. 20, 1993, I entered the Oval Office for the first time as president. As is the tradition, waiting for me was a note from my predecessor, George Herbert Walker Bush. It read:
When I walked into this office just now I felt the same sense of wonder and respect that I felt four years ago. I know you will feel that, too.
I wish you great happiness here. I never felt the loneliness some Presidents have described. There will be very tough times, made even more difficult by criticism you may not think is fair. I’m not a very good one to give advice; but just don’t let the critics discourage you or push you off course.
You will be our President when you read this note. I wish you well. I wish your family well. Your success now is our country’s success. I am rooting hard for you.
Good Luck – George
“No words of mine or others can better reveal the heart of who he was than those he wrote himself. He was an honorable, gracious and decent man who believed in the United States, our Constitution, our institutions and our shared future. And he believed in his duty to defend and strengthen them, in victory and defeat....
“Even more important, though he could be tough in a political fight, he was in it for the right reasons: People always came before politics, patriotism before partisanship.”
Former Vice President Dan Quayle / Wall Street Journal
“After the inauguration on Jan. 20, 1989, George Bush and I walked over to the east front of the Capitol to say goodbye to Ronald Reagan. A few moments later, as we watched the helicopter carry off the 40th president, I heard the 41st say quietly: ‘There goes a man who was very good to me.’....
“When I heard the news from Houston, along with many others who knew and loved George Bush, I thought: There goes a man who was very good to me – and to his country.”
From Mark R.:
“Back in the late summer of 2000 I had the honor of meeting President George H.W. Bush. It was at a fund raiser for Senator (William) Roth at a private house in Wilmington, Delaware.
“As he arrived in the caravan of limos and Black SUVs (Secret Service) they asked us to form a receiving line at the front door. Since I was down fairly low on the contribution level, my place was in the kitchen near the back door. I waited and noticed that he would give everyone an opportunity to say a few words, upon which he would smile and return the favor.
“As he approached me I figured out what to say. After shaking hands I asked him, “Mr. President, after your son wins the election will you be looking forward to those dinners again in the White House?’ He had a big smile on his face and with a twinkle in his eye he leaned forward to make it seem like we should be the only ones hearing his answer. He said, ‘Not as much as those weekends at Camp David!’ He gave me a pat on the back, and moved on.
“It was an honor and an experience I will always treasure.”
Editorial / Wall Street Journal
“Thursday’s funeral service for George H.W. Bush was full of eloquence, humor and grace, reflecting the man and the family. The media coverage unfortunately chose too often to lament that it reflected some past era that can’t be reclaimed, as if the future isn’t in our own hands.
“But the respect you get is usually the respect you earn, and the Bush family put on a public rite of national mourning that reflected well on the character of their father and the entire Bush clan, and gave the country a moment of shared respect it desperately needs.
“That included the Bush family’s invitation to President Trump and his wife Melania, despite the obvious bad blood from the 2016 presidential campaign. The Bushes rose above that rancor with not a discouraging word the entire week about Mr. Trump. A current U.S. President should attend the funeral of a former head of state for the sake of common national purpose, and thanks to the Bushes for showing such decorum and class.
“Mr. Trump has responded in kind with praise for the 41st President, dispatching the presidential plane to deliver his casket to Washington, and offering former President George W. Bush and Laura Bush a place at Blair House on their visit. These are the grace notes that Americans expect from Presidents, and Mr. Trump and the country would benefit if he showed them more often.
“The eulogies were all well struck, elaborating on the many sides of George H.W. Bush: the war heroism and ambition from biographer Jon Meacham, the personal diplomacy from Brian Mulroney, friendship and wit from Alan Simpson, and the personal reflections of the presidential son. The Bushes are sometimes derided, on the left and right as part of a failed establishment, but on Wednesday they set an example for American to follow.”
George W. Bush…Wednesday, on his father:
“When the history books are written, they will say that George H.W. Bush was a great president of the United States, a diplomat of unmatched skill, a commander in chief of formidable accomplishment, and a gentleman who executed the duties of his office with dignity and honor.
“In his inaugural address, the 41st president of the United States said this: ‘We cannot hope only to leave our children a bigger car, a bigger bank account. We must hope to give them a sense of what it means to be a loyal friend, a loving parent, a citizen who leaves his home, his neighborhood and town better than he found it.
“ ‘What do we want the men and women who work with us to say when we are no longer there? That we were more driven to succeed than anyone around us, or that we stopped to ask if a sick child had gotten better, and stayed a moment, there, to trade a word of friendship.’
“Well, Dad, we’re going to remember you for exactly that and much more. And we’re going to miss you. Your decency, sincerity and kind soul will stay with us forever.
“So through our tears, let us know the blessings of knowing and loving you, a great and noble man, the best father a son or daughter could ask. And in our grief, let us smile, knowing that Dad is hugging Robin and holding Mom’s hand again.”
--A reminder…a C-Span Presidential Historians Survey last year, 2017, had the following ranking. [There were prior surveys in 2009 and 2000.]
1. Abraham Lincoln
2. George Washington
3. Franklin D. Roosevelt
4. Theodore Roosevelt
5. Dwight D. Eisenhower [up from 9 in 2000]
6. Harry S. Truman
7. Thomas Jefferson
8. John F. Kennedy
9. Ronald Reagan [up from 11 in 2000]
10. Lyndon B. Johnson
12. Barack Obama [outrageous…I place him in bottom five]
14. James K. Polk [I place him tenth]
20. George H.W. Bush [I think he’ll settle around 15 over time]
33. George W. Bush [I place him in bottom five as well…though to be fair, the current bottom five is indeed awful]
Pray for the men and women of our armed forces...and all the fallen.
God bless America.
Returns for the week 12/3-12/7
Dow Jones -4.5% 
S&P 500 -4.6% 
S&P MidCap -5.2%
Russell 2000 -5.6%
Nasdaq -4.9% 
Returns for the period 1/1/18-12/7/18
Dow Jones -1.3%
S&P 500 -1.5%
S&P MidCap -6.3%
Russell 2000 -5.7%
Bears 21.5 [Huge jump in bulls from prior 38.3]
We remember Pearl Harbor.
Have a great week.
Dr. Bortrum posted a new column!