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11/10/2018

For the week 11/5-11/9

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.

Edition 1,022

Last Saturday, Maj. Brent Taylor, the mayor of North Ogden, Utah, was killed in Kabul, Afghanistan, while serving as a member of the Utah National Guard, the victim of an insider attack by an Afghan commando.

Taylor had taken a leave from his position as mayor of North Ogden, a city of about 20,000, to serve in Afghanistan for what was to be a year’s deployment.  Just before he left for the Afghan theatre, he wrote on Facebook, “Service is really what leadership is all about.”

It was Maj. Taylor’s fourth deployment, as part of an advisory team training an Afghan commando battalion.  The attacker was immediately killed by other Afghan forces.

So-called insider attacks have long been a problem for coalition forces in Afghanistan. At their peak in 2012, 61 coalition soldiers died in such incidents.

A week before his death, in what appeared to be his last Facebook post, Maj. Taylor called on all Americans to vote.

Referencing the recent election in Afghanistan:

“It was beautiful to see over 4 million Afghan men and women brave threats and deadly attacks to vote in Afghanistan’s first parliamentary elections in eight years.  The strong turnout, despite the attacks and challenges, was a success for the long-suffering people of Afghanistan and for the cause of human freedom. I am proud of the brave Afghan and US soldiers I serve with.  Many American, NATO allies, and Afghan troops have died to make moments like this possible; for example, my dear friend Lieutenant Kefayatullah who was killed fighting the Taliban the day before voting began.

“As the USA gets ready to vote in our own election next week, I hope everyone back home exercises their precious right to vote. And that whether the Republicans or the Democrats win, that we all remember that we have far more as Americans that unites us than divides us.  ‘United we stand, divided we fall.’  God bless America.”

Trump and the Midterm Election

So we went to the polls and I was struck that despite the incredibly divisive nature of the campaign, from sea to shining sea, there were no major disturbances at the polling places, no acts of violence, just Americans fulfilling their civic duty in record numbers for a mid-term.

And then the next day, President Trump held a wild press conference, where a few members of the press corps acted like total a-holes (namely Jim Acosta of CNN...more below), but the president was hardly a model of decorum, while claiming a sweeping victory that just wasn’t there.

Yes, as I go to post it looks like we may end up 53-47 Republicans in the Senate, but at 226-198 in the House (11 still technically undecided) it is likely to end up around 230-205 Democrats, which is, no matter how you slice it, victory...but not for Donald Trump.

The ugliness of the press conference then carried over Wednesday night into a Washington, D.C., suburb where Fox News host Tucker Carlson’s home was invaded by a mob, thought to be Antifa, in a totally reprehensible act and here we go again.  It is depressing to think about the next two years. And it’s Mueller time...Special Counsel Robert Mueller’s probe coming to some kind of conclusion in the near future, you would think.

Hopefully your favorite sports teams provide a diversion because otherwise we’re all going to go nuts.

Opinion...all sides....

Editorial / Wall Street Journal

“America’s deep political divisions revealed themselves again on Tuesday, as Democrats regained control of the U.S. House while Republicans picked up seats in the Senate.  Add their gains in the statehouses, and it was a better night overall for the Democrats, if less than the ‘blue wave’ they advertised.

“The extent of GOP House losses weren’t clear as we went to press, but they were extensive enough for Fox News to call the battle for control before 10 p.m.  Democrats will retake the House for the first time in eight years and deal a major blow to Donald Trump’s Presidency. The possibilities for conservative policy reform are dead for the next two years, and the siege of investigations will begin.

“The Senate was still undecided as we went to press, though it appeared Republicans would be able to hold a minimum of 53 seats and maybe more.  They gained seats in the GOP strongholds of Indiana, North Dakota and Missouri, and perhaps in Florida with Gov. Rick Scott narrowly leading incumbent Democrat Bill Nelson.  This will make it easier to confirm judicial and political nominees and will give the GOP more leverage in spending fights.

“Democrats also made substantial gains in the states, especially in the upper Midwest that was crucial to Donald Trump’s 2016 victory. They picked up governorships in Michigan, Illinois and Kansas and were leading in others.  Michigan was a particular washout for the GOP with Democrat Gretchen Whitmer winning in a rout, despite a strong economic recovery.  A decade of GOP reform on taxes, school choice and public unions is in jeopardy.

“One theme in these results is the re-assertion of the urban-rural divide.  Republicans held their own for the most part in rural districts and Trump states from 2016, while Democrats romped in the cities. Republicans lost the House because they also lost significant ground in the suburbs, especially relatively affluent areas with college-educated voters.

“They also lost in the longtime GOP stronghold of Staten Island.  One lesson is that Republicans can’t build a House majority with the Freedom Caucus alone, as perhaps North Carolina Rep. Mark Meadows might now appreciate as he enjoys life in the minority.

“The House defeat is also a message to Donald Trump from moderate Republicans, especially women.  Nearly four of 10 voters said they wanted to vote against Mr. Trump in the AP-Fox voter analysis.  Most of these were Democrats but also many traditionally GOP voters put off by Mr. Trump’s rancorous style.  The Democratic smears against Brett Kavanaugh brought enough Republicans home to save the Senate in GOP-leaning states, but not enough to save the House in swing districts.

“This is largely Mr. Trump’s failure, and the nearby table from the October Wall Street Journal-NBC poll puts his problem in sharp relief.  While 44% of voters approve of Mr. Trump’s policies, nearly half of them dislike him personally. That 20% is five times the percentage who disliked George W. Bush but liked his policies when he lost the House in 2006, and 10 times the share that disliked Barack Obama in 2013.

“More glaringly, the share of voters who dislike Mr. Trump personally but like his policies increased in the past two years. This is extraordinary for a new President and shows the extent of his missed opportunity. Some two-thirds of voters on Tuesday expressed satisfaction with the state of the economy, and these are people he’d win if he didn’t alienate them with his persona.

“Unlike Richard Nixon or Ronald Reagan, Mr. Trump has made no effort to build a larger coalition than the minority who helped win the Presidency narrowly over Hillary Clinton. Instead he has played constantly to his base who are already loyal.  If he wants to be re-elected, he will have to win over more of those suburban Republicans and independents.

“Mr. Trump’s closing argument on immigration also looks to have been a bust.  It didn’t help in suburban districts and may have cost Republican Carlos Curbelo his House seat in South Florida.  White House aide Stephen Miller bears much of the responsibility for this misjudgment. He advised Mr. Trump to walk away from a potential deal trading legalization for the so-called Dreamers in return for money for border security and ‘the wall.’  Then he urged the border crackdown that became the fiasco of family separation that further turned off suburban voters.

“Mr. Trump could have improved his chances to hold the House by accepting a deal and declaring a border victory. Suburban Republicans want border security, but they also want a humane and generous immigration policy. Mr. Trump needs to rethink his immigration strategy for 2020.

“The other liability for Republicans was their failure to repeal and replace health care.  Democrats played on voter fears of repeal but the GOP could never point to the benefits of a replacement they didn’t pass. Then too many Republicans simply ran away from the subject, giving Democrats an open field. The late Senator John McCain delivered the final blow against reform, but the general GOP incoherence on the subject was also to blame.

“Mr. Trump and the GOP can console themselves by pointing to statehouse victories in the key swing states of Ohio and Florida, and to their Senate gains.  But two years ago, before the 2016 election, we wrote that the Republican gamble with Donald Trump was that he would govern in such a way that would cost the House in 2018 and set Democrats up to create a new progressive government in 2020. After Tuesday, and without a Trump course correction, they are halfway there.”

Editorial / New York Times

“With the House of Representatives in Democrats’ control, the next two years will give them the opportunity to show that there’s a better model of legislating, that Congress is capable of doing more for Americans than cutting taxes for the wealthy and menacing everyone else’s health care.  Now and again Democratic leaders may need to play constitutional hardball – and they’ll have a chance to do it in a more constructive fashion than Mitch McConnell and his team, who have dominated Congress since 2014.

“Even as Democratic House members are picking the confetti from their hair, one thought should be foremost in their minds: How do they avoid screwing things up?

“For the midterms, Democrats adopted a trio of policy goals: lowering health care costs, creating jobs by investing in infrastructure, and cleaning up politics via a comprehensive reform package that would tighten ethics laws and shore up the integrity of our electoral system. These are popular causes with bipartisan appeal.

“They are also causes for which the president has explicitly expressed his own enthusiasm, whether real or feigned. This gives Democrats the chance to press President Trump about whether he is interested in making progress on his stated goals or is a hypocrite intent on waging partisan trench warfare for the remainder of his term....

“It has been a long two years for Democrats, watching Republicans fail to check Trumpian excesses. Which means the new majority might be tempted to overreach and, like Mr. Gingrich’s self-styled revolutionaries, wind up coming across as more partisan and prurient than public-spirited.  Investigations should be strategic and methodical and clearly in the public interest – for instance, looking into corruption among cabinet officials or waste of taxpayer dollars, rather than targeting more lascivious matters, like hush-money payments to former mistresses.

“The trick will be finding the right balance in both tone and topic.  Many Trump-hating Democrats might be in the mood for payback, but most Americans could easily be turned off by overt political games. And, let’s not forget, this is ultimately not about scoring points – Americans deserve better from their government.

“The topic of Mr. Trump’s tax returns will be especially ticklish. The president’s refusal to follow his predecessors’ example and release such basic information raises too many questions about conflicts of interest to ignore.  But things could get ugly.    The chairman of the House Ways and Means Committee has the right to request a copy, at which point the White House must decide if it wants to mount a legal challenge. Democrats need to be ready to make a cogent case – persuasive to the public as well as the courts – for why Mr. Trump’s taxes are a matter of critical concern.

“For now, Democratic representatives are making properly judicious noises about oversight. They are holding meetings among themselves to determine which issues should be priorities and how to avoid overlap among the committees. But once the new chairmen take over, the leadership will need a firm hand to minimize the wilding....

“Love her or hate her, nobody herds the cats better than Ms. Pelosi.

“That said, the Democratic leadership is staler than week-old toast. And while victory tends to cool intracaucus griping, if Ms. Pelosi becomes speaker, she owes it to the institution and her colleagues to set about raising a new generation of leaders, helping prepare such up-and-comers as Cheri Bustos, Hakeem Jeffries, Linda Sanchez, Ruben Gallego, Joseph Kennedy III, Ben Ray Lujan, Eric Swalwell and Seth Moulton, among others.

“Given the dismal example set so far by President Trump, Democratic leaders now have a political opportunity, and also a heavy responsibility. Winning the House is one thing.  Restoring some sanity to American politics and a sense of higher, common purpose to American governance is yet another.”

Editorial / Washington Post

“The Democrats’ return to control over the House of Representatives is much more than a victory for one party. It is a sign of health for American democracy.

“Distrustful of untrammeled majorities, the authors of the Constitution favored checks and balances, including, crucially, the check that the legislative branch might place upon the executive.  Over the past two years, the Republican majorities in the House and Senate have failed to exercise reasonable oversight.  Now the constitutional system has a fresh chance to work as intended.

“The Democratic victory is also a sign of political health, to the extent it is a form of pushback against the excesses, rhetorical and in terms of policy, committed by the Trump administration and propounded by President Trump during this fall’s campaign.  Turning against the dominant party in Washington even in a moment of economic prosperity, voters from Key West to Kansas refused to accept the continued degradation of their nation’s political culture.  Republicans retained control of the Senate, where the map this year favored their defense.  But voters nationwide refused Mr. Trump’s invitation to vote on the basis of fear of immigrants; they did not respond to his depiction of his opposition as dangerous enemies....

“Tuesday was a good day for Democrats.  It may also be a good day for Republicans, if they take the lessons of their House defeat to heart and reconsider the devil’s bargain they have made with Mr. Trump.  Indeed, if the results help lead to a reemergence of that party’s better angels, then it will have been a good day for America as a whole.”

Gerald F. Seib / Wall Street Journal

“President Trump didn’t need to win in Tuesday’s midterms so much as he needed to avoid disaster.  And that’s pretty much what happened.

“The country now stands not far from where it was when Mr. Trump won his shocking victory in 2016: deeply divided in its politics as well as its views of the 45th president.  The difference now is that the country appears even more deeply split, with blue Democratic areas moving further away from the president and red Republican sectors growing more loyal to him.

“That’s the picture that emerged Tuesday night as a raucous campaign season ended and the votes rolled in to produce a split verdict in the race for congressional control. The Democrats were poised to take control of the House of Representatives; that outcome casts a significant cloud over the next two years of the Trump presidency given the House’s ability to launch investigations of the administration and stop policy initiatives.  Moreover, the power of suburban voters hostile to Mr. Trump, particularly suburban women, came to bear not just in the battle for the House but in several Midwest governor’s races as well.  In one shocker, Kris Kobach of Kansas, a Republican who won a presidential endorsement, lost the governor’s race to a Democratic woman, Laura Kelly, in a state Mr. Trump carried by 21 percentage points.

“Yet there were silver linings aplenty for Mr. Trump as well in the night’s showing – even in the dark cloud of a House takeover by Democrats.  House Democrats now will provide a foil for the president, providing him with an enemy to blame for any policy failures – and in particular for any economic decline that might ensue after years of steady economic growth.

“Mr. Trump likes to call himself a master counterpuncher, and House Democrats now emerge as his main sparring partner – as well as a potential check on some of his more controversial tendencies.  It also is possible that Mr. Trump might now feel compelled to find, at least for a while, a bipartisan side that has been largely missing in his first two years.  In particular, there might be room for progress on infrastructure spending before policy paralysis sets in.

“Meanwhile, Mr. Trump and his Republican colleagues maintained control of the Senate, which was their top priority all along.  Though the Senate map was always going to be favorable to the Republicans, Mr. Trump can and will claim some credit for the results.

“By ginning up energy and turnout among his core voters, he likely helped the GOP take over a Senate seat in Indiana, for example, and to easily hang onto one in Tennessee that once appeared in peril.

“For Mr. Trump and his business allies, keeping control of the Senate means there is no danger that the tax cuts and deregulatory measures of the first two years of his term will be rolled back.  Crucially, the Republican campaign to redraw the federal courts with a steady stream of conservative judges can and will continue.

“Moreover, the Senate that emerges from Tuesday’s voting will be more friendly to the president than was the version of the last two years. The GOP Senators who were most vexsome to the president – Sen. Jeff Flake of Arizona and Sen. Bob Corker of Tennessee, neither of whom sought re-election – are gone, and those who remain owe Mr. Trump a debt of gratitude.

“The verdict, in short, was a mixed one, with the losses not much different from those a president normally suffers in the first midterm after taking office.

“Mr. Trump met a powerful force in the form of women voters, who made up 52% of the voters and went for Democrats by an 18-point margin overall, according to AP VoteCast, a pre-election and Election Day survey of 90,000 voters.  That force, as well as Democrats’ improved standing in key Midwest industrial states, will help shape the landscape as both parties move toward the 2020 presidential race.

“The contours of that race will begin forming almost immediately, in part because of the power Democrats have won. They will use their perch in the House to launch inquiries into the Trump administration; an early push for release of the president’s tax returns seems particularly likely.  Mr. Trump’s promise of additional personal tax cuts will go out the window, and the national fight over immigration will grow even more shrill.

“But at the same time, Mr. Trump used the 2018 campaign to strengthen his hold over the Republican party.  Some of his efforts on behalf of Republican candidates were controversial, particularly in the demonization of immigrants that marked the last two weeks.

“Yet Mr. Trump also invested far more time and effort on behalf of his party’s candidates than have many past presidents, and that won’t soon be forgotten.  Mr. Trump once seemed almost estranged from his own party; after Campaign 2018, that is hardly the case any longer.”

Editorial / USA TODAY

“The 2018 election was more a modest rebuke of President Donald Trump than a massive repudiation.

“Trump’s Republicans held on to the Senate and overperformed expectations in several Senate and governor races, giving the GOP something to crow about.  Indeed, Trump tweeted about ‘tremendous success tonight.’

“But Democrats took control of the House of Representatives, which will bring big – and much needed – change in Washington.  By putting Democrats in charge of one chamber of Congress, voters expressed their desire to place some restraints on a vitriol-spewing president that, according to surveys of voters leaving the polls, 55 percent of them disapprove of.

“The party in the White House typically loses seats in midterm elections.  What makes Tuesday’s House outcome even more significant, however, is that it occurred in a strong economy and on a map that has been rigged to the Republicans’ advantage through gross gerrymandering of congressional districts in multiple states. Going forward, weak Republican performance in suburban House districts that used to be reliably theirs should be a wake-up call for the party.

“If disgust with Trump’s behavior was not enough to turn many voters off, his attacks on health insurance certainly were.  An Election Day survey by The Associated Press showed health care to be the most important issue on the mind of voters.

“The switch in control of the House means that efforts to repeal the Affordable Care Act, also known as Obamacare, are dead, as are a new round of tax cuts.

“The new House majority also means that the many conflicts of interest in the Trump administration will get the congressional investigations that they deserve, and that the cause of law enforcement will get an ally on at least one side of Capitol Hill.

“With election results still trickling in, the message is emerging that many voters are not happy with the way things have been going in the past two years. But the nation, and the Congress, remain as bitterly divided as ever, if not more so.”

Editorial / Wall Street Journal, Part II

“President Trump’s political credo is never admit a mistake or setback, and on cue Wednesday he called the midterm election results a ‘tremendous success.’  Perhaps he even believes it, but he shouldn’t. The results weren’t the ‘blue wave’ of media and Democratic desire, but they were overall a GOP defeat with warnings for 2020.

“Democrats won the House for the first time in eight years, meaning that the possibilities for conservative policy reform are dead for the next two years. The siege of investigations will begin, and anti-growth mistakes are all too possible.

“The Senate gains are consolation, especially because they show Democrats paid a considerable price for their mugging of Brett Kavanaugh.  This will make it easier to confirm judicial and political nominees and will give the GOP some leverage in spending fights.  But except for Florida and still undecided Arizona, the Senate gains came in Trump-friendly states. GOP Senate candidates were wiped out across the upper Midwest, Northeast and Nevada.

“Democrats also made substantial gains in the states, notably those that were crucial to Donald Trump’s 2016 victory. They picked up seven governorships, including Michigan, Illinois, Wisconsin, Kansas and Nevada.  A decade of GOP reform on taxes, school choice and public unions is in jeopardy.  GOP victories in Florida, Ohio and perhaps Georgia are compensations, but Democrats in those states also nominated candidates too far to the left....

“The GOP lost House seats in the suburbs of Denver, Dallas, Houston, Des Moines, Minneapolis (two seats), Kansas City, Chicago, Richmond, Phoenix, and even Oklahoma City. They also lost in the longtime GOP stronghold of Staten Island.

“At his media melee on Wednesday, Mr. Trump read the names of some of these House Members with vindictive delight because he said “they didn’t want the embrace.”  He meant his. This was petty and not smart. Erik Paulsen in the Twin Cities, Peter Roskam west of Chicago and Barbara Comstock in northern Virginia understood that Mr. Trump is unpopular in their districts. They were trying to save seats that the GOP will now have to win back if they want another majority in 2020....

“Two years ago, before the 2016 election, we wrote that the Republican gamble with Donald Trump was that he’d govern in such a chaotic way that he’d lose the House in 2018 and set Democrats up to create a new progressive government in 2020.  If he doesn’t expand his coalition, that is what Mr. Trump will deliver.”

---

Finally, I continue to believe that Americans are hopelessly naïve to the dangers on the geopolitical front, and the following opinion piece from Kevin Bacon of Defense News encapsulates my views.

“Not one.  Not one reporter from the main White House press corps asked President Donald Trump during his day-after-midterm-elections press conference a single question about national security or the state of global affairs. Tens of thousands of U.S. troops are at war or involved in violent conflicts in Afghanistan, Iraq, Syria, Somalia, Yemen, Niger, Mali, and beyond. Russian warplanes are nearly kissing the wings of American aircraft.  Iranian vessels are harassing U.S. warships.  Special operators are killing impoverished terrorists across North Africa.  North Korea still has nuclear weapons.

“Why? This country couldn’t care less.

“At least, that’s what you’d think, this week.  The U.S. midterm elections were a referendum on many things: on Trump’s behavior, on his record, on the new liberals, on all the standard Democrat-vs.-Republican stock issues. And they were exciting. The nation’s post-Trump political awakening has been inspiring on both sides of the aisle.  Liberals are rising up and organizing for women’s issues, gun control, multiculturalism and all things not Trump.  Conservatives are rallying to save what they believe in, as best as they can define it, despite Trump.  Trump backers are living their best life. There’s a fight for the nation’s soul underway that is so visceral, so pervasive, so violent and divisive that it is beginning to be reminiscent of the great historical schisms of our history, from the Constitutional Convention to the Civil Rights era.

“But there’s one thing hardly anybody on TV is talking about right now. American leadership abroad.  Everything is domestic. Everything is internal. Everything is aimed at each other. Everything is what Trump wants it to be....

“Inside the national security community, there is a sense that today’s changes are shaping humanity’s very future. There are fears that 20th-century-style dictatorships could emerge, buoyed by their own angry electorates. There are calls for a complete realignment of the international system, one equal to the great organizing moments for the West that followed the world wars.  Trump and populists call for new, revised, or destroyed international organizations to reflect a wider burden sharing.  Inherent to that is a decline of American power and influence (and expense) in exchange for the rise of the same from Europe, Asia, and the Middle East. Some call for keeping the U.S. fighting in all corners of the earth, and some call for pulling U.S. troops home from great swaths of the earth’s surface, leaving terrorist homelands to their regional vices.  There is a sense that America, once the closest thing to an end-of-history shining city on the hill, is now rapidly losing its standing. And among the traditional internationalists of America’s national security elite, there is a sense that America is about to lose it all.

“But we didn’t hear about any of this in the run-up to the midterms. I watched hours of coverage on Election Night and the day after. I heard a lot of talk about the country’s divisions...I heard about pre-existing conditions and Obamacare.  I heard about immigration.  I heard a lot about border politics and Trump’s pre-election stunt that has sent thousands of body armor-clad troops to the Mexico border and his claim they would shoot rock-throwing migrants.  And I heard the revelation that most of those troops were going to be maintenance workers and propagandists, and the top U.S. general’s belated admission that in fact no American troops would be shooting at anyone anywhere near the U.S. border.

“But outside those circles and their immediate press, I heard next to nothing about America’s world leadership, the state of the globe, and its place in it.  I heard nothing about how any of these candidates are going to keep or return America to being the indispensable and singular leader of the free and democratic world....I heard nothing about how Democrats taking back the House helps or hurts America’s chances against things like China’s unflinching rise, Afghanistan’s future, or the Middle East.  I heard nothing about the future of the Iran deal, the Geneva peace process for Syria, the INF Treaty with Russia, the calls to completely reimagine the international system....

“I heard hardly anything of the U.S. military’s countless interventions encircling the globe.

“The good news for national security watchers is that the incoming House freshmen include record numbers of veterans and a few built-in national security leaders, perhaps most notably in Rep.-elect Elissa Slotkin, who flipped a conservative Michigan district to blue.  Under Obama, Slotkin occupied what is arguably the third-highest ranking civilian policy job in the pentagon: assistant defense secretary for international security affairs.  Before that, she did three tours in Iraq as a policy analyst for CIA and briefed President George W. Bush.  The woman is a qualified internationalist....

“If America’s divisiveness is the easy issue, what will it take for anyone to get down the list to the harder ones like the security of the border, or even harder, what lies beyond it: America’s global leadership for the next 100 years?”

Trump World

--President Trump fired Attorney General Jeff Sessions and replaced him, on an interim basis, with Matthew Whitaker, who will now oversee Special Counsel Robert Mueller’s investigation; Whitaker having openly criticized his Russia probe. Whitaker now has the power to constrain it or end it, just as President Trump wishes.

Trump never forgave Sessions for recusing himself from overseeing the Mueller probe, and the president wasted no time in doing something about it once the midterms were over.

Whitaker became Sessions’ chief of staff last year.  In July 2017, during an interview on CNN, he said he could envision a scenario where an acting attorney general doesn’t fire Mueller but “just reduces his budget to so low that his investigations grind to almost a halt.”

Whitaker the following month posted an opinion piece on CNN’s website wherein he called Mueller’s investigation a “witch hunt,” embracing one of the president’s favorite descriptions.

Senate Minority Leader Chuck Schumer, citing Whitaker’s “previous comments advocating defunding and imposing limitations on the Mueller investigation,” and protecting it “is paramount.”

Republican Sen. Lamar Alexander (Tenn.) said he was certain Mueller’s probe will be allowed to “continue to its end” because the Senate won’t confirm a new attorney general otherwise.

Both Democrats and many Republicans argue that interference with the Mueller probe would “constitute a constitutional crisis.”

--Tonight the Wall Street Journal is reporting that Donald Trump intervened directly to suppress stories about his alleged sexual encounters with women, “according to interviews with three dozen people who have direct knowledge of the events or who have been briefed on them, as well as court papers, corporate records and other documents.

“Taken together, the accounts refute a two-year pattern of denials by Mr. Trump, his legal team and his advisers that he was involved in payoffs to (Karen) McDougal and former adult-film star (Stormy Daniels).  They also raise the possibility that the president of the United States violated federal campaign-finance laws.

“The Wall Street Journal found that Mr. Trump was involved in or briefed on nearly every step of the agreements.  He directed deals in phone calls and meetings with his self-described fixer, Michael Cohen, and others. The U.S. attorney’s office in Manhattan has gathered evidence of Mr. Trump’s participation in the transactions.”

The thing is scores of former Trump associates, such as media executive David Pecker, and Cohen, have been granted immunity and they’ve been singing.

This is where President Trump should be worried about the Democrats taking over the House.

--President Trump on Friday signed an executive order effectively suspending the granting of asylum to migrants who cross the U.S.-Mexico border illegally, seeking fresh ways to block thousands of Central Americans traveling in caravans from entering the United States.  The order, which goes into effect on Saturday, means that migrants will have to present themselves at U.S. ports of entry to qualify for asylum.

--Wednesday’s presser, starring the aforementioned Jim Acosta of CNN, devolved to the point where the White House revoked Acosta’s press privileges.

Trump, badgered by Acosta, at one point aggressively pushed back: “CNN should be ashamed of itself, having you working for them.  You are a rude, terrible person.”

But to PBS News Hour’s Yamiche Alcindor, who asked the president about white nationalists emboldened by Trump labeling himself a “nationalist,” Trump said he was insulted.

“That’s such a racist question,” said the president.

It didn’t help that White House press secretary Sarah Huckabee Sanders then tweeted an edited video of the exchange between Acosta and an administration intern from her official account to justify the White House’s decision to revoke Acosta’s press pass afterwards.  The video was apparently first created by banned conspiracy theory website Infowars.

Sanders accused Acosta of “placing his hands on a young woman just trying to do her job as a White House intern” and of preventing other reporters from asking questions.

CNN’s vice president of communications and digital partnerships, Matt Dornic, said it was “absolutely shameful” for Sanders to share the video.  “History will not be kind to you,” Dornic tweeted.  Newsweek’s Nicole Goodkind tweeted, “This is a video that Infowars made. They sped it up so that it seems more violent than it is.”

Michael Goodwin / New York Post

“By producing a split decision, the election that was supposed to end all elections turned out to be fairly predictable. But it’s the day after that was unlike any other.

“The Republican president, the likely speaker of the Democratic-controlled House and the Senate’s Republican majority leader each started Wednesday by talking about working together to get things done. They talked to each other privately and talked separately in public about what they thought they could accomplish for the country.

“For most Americans, that would make for a very good day. Given the overheated environment leading up to the midterms and the fear among many that we are drifting toward an era of disunion and spreading political violence, bipartisan pledges to work together for the common good were like the sudden emergence of a bright candle flickering in the wind.

“Alas, it was the last thing some members of the White House press corps wanted, so they tried to snuff it out.

“The conduct of a handful of so-called reporters during President Trump’s news conference was disgraceful beyond measure. This is not journalism, this is narcissism.

“Naturally, the boorish Jim Acosta of CNN was the instigator. As is his habit, Acosta doesn’t ask questions – he makes accusations and argues. Almost daily, he does with the press secretary; Wednesday, he did it with the president.

“ ‘I want to challenge you,’ Acosta began after Trump called on him. Trump realized he’d made a mistake, murmuring, ‘Here we go’ and Acosta didn’t disappoint.

“He insisted that despite the president’s use of the word ‘invasion,’ the caravan of Central America migrants ‘is not an invasion.’

“He adopted a lecturing, I-know-best tone to declare that ‘they’re hundreds and hundreds of miles away; that’s not an invasion.’

“Trump’s response should not have been necessary: ‘Honestly, I think you should let me run the country, you run CNN.’

“After more back-and-forth, he called Acosta ‘a rude, terrible person’ and said ‘CNN should be ashamed of itself.’

“That should have been enough – Acosta got the attention he wanted and got Trump’s goat, giving his network video it could make hay out of for days.  Besides, there were scores of other reporters raising their hands to be called on.

“But Acosta wouldn’t give up the microphone and kept talking over Trump, trying to lob another grenade.

“The president, clearly angry now and stepping away from the podium as if he might bolt the room, pointed at him and said forcefully, ‘That’s enough, that’s enough.  Put down the mic.’

“Finally, Acosta sat down, then stood up to argue again, interrupting another reporter....

“There was a time not long ago when young journalists were taught not to become the story. Apparently, many news organizations have flipped that lesson on its head.”

--Some Trump tweets....

“Just out – in Arizona, SIGNATURES DON’T MATCH. Electoral corruption – Call for a new Election?  We must protect our Democracy!”

[speaking for myself, my signature from when I first registered, which is what is in the voters’ registrar, looks nothing like my signature of today...funny, before the election I was talking to a friend about that...]

“In the 2016 Election I was winning by so much in Florida that Broward County, which was very late with vote tabulation and probably getting ready to do a ‘number,’ couldn’t do it because not enough people live in Broward for them to falsify a victory!”

“Mayor Gillum conceded on Election Day and now Broward County has put him ‘back into play.’  Bill Nelson conceded Election – now he’s back in play!?  This is an embarrassment to our Country and to Democracy!”

“Rick Scott was up by 50,000+ votes on Election Day, now they ‘found’ many votes and he is only up 15,000 votes.  ‘The Broward Effect.’  How come they never find Republican votes?”

“You mean they are just now finding votes in Florida and Georgia – but the Election was on Tuesday?  Let’s blame the Russians and demand an immediate apology from President Putin!”

“In all fairness, Nancy Pelosi deserves to be chosen Speaker of the House by the Democrats. If they give her a hard time, perhaps we will add some Republican votes.  She has earned this great honor!”

“If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!”

“To any of the pundits or talking heads that do not give us proper credit for this great Midterm Election, just remember two words – FAKE News!”

“Those that worked with me in this incredible Midterm Election, embracing certain policies, and principles, did very well. Those that did not, say goodbye!  Yesterday was such a very Big Win, and all under the pressure of a Nasty and Hostile Media!”

“Received so many Congratulations from so many on our Big Victory last night, including from foreign nations (friends) that were waiting me out, and hoping, on Trade Deals.  Now we can all get back to work and get things done!”

[I’d love to see a list of foreign leaders who called to congratulate the president.  I’m sure it’s a short one...like covering an eighth of a post-it.]

Wall Street and China Trade

As expected, there was no change in interest rates as the Federal Reserve wrapped up a two-day policy meeting on Thursday.  In holding rates steady, the Fed said: “The labor market has continued to strengthen and...economic activity has been rising at a strong rate.”  The vote was 9-0 to keep the federal funds rate (the benchmark) at its current level.

The statement reflected little change in the central bank’s outlook for the economy since the last policy meeting in September, with inflation running near its 2 percent target, unemployment falling and risks to the economic outlook appearing to be “roughly balanced.”

But the Fed did note that fixed business investment (or cap-ex) “has moderated from its rapid pace earlier in the year.”  In recent months, the Fed had stated that spending was growing “strongly.”

However, the Fed will raise rates again at its December 18-19 meeting, of this there is much consensus across the Street, and it is still looking to raise its key benchmark another three times in 2019 to push the funds rate to over 3% from its current 2% to 2.25% range.  Chairman Jerome Powell and the gang want to ensure they have some ammunition for the next downturn and I continue to believe it’s the right policy, regardless of what President Trump will say.

On the economic front this week, just a few items.  The ISM October non-manufacturing reading came in at a robust 62.5 (50 being the dividing line between growth and contraction).

And the October producer price index was hotter than forecast, 0.6%, 2.9% year on year, with the core number, ex-food and energy, 0.5% and 2.6% yoy.

While it is early to forecast fourth-quarter GDP, the Atlanta Fed’s GDPNow barometer pegs it at 2.9%, which would be a continuing decline from the 4.2% reading in Q2 and the 3.5% for Q3.

On the Trade Front....

Former chief economic adviser for President Trump, Gary Cohn, speaking in Singapore, warned the trade battle between China and the U.S. will simply hurt the back pocket of many American consumers – which will in turn hurt the U.S. economy.

“We are not a manufacturing economy,” he said.  “So if U.S. citizens can buy products cheaply, they have more money to spend on goods, and once they spend on goods they can take the additional money they have and they can save it – and we do need a higher savings rate in the U.S.

“I look at tariffs as a bit of a consumption tax [and] we do not want to tax our consumers when they’re going to spend their disposable income on what we produce, which is services.”  [BBC News]

Cohn was a former Goldman Sachs executive.  Another Goldman alum, former Treasury secretary Henry Paulson, also delivered a speech in Singapore, with Paulson warning of an “economic Iron Curtain” that may soon descend between the U.S. and China.

Paulson warns China that its behavior has alienated American friends and unified the American public against it.  At the same time he says the United States has unrealistic expectations of China and of its own allies, and that if neither side changes course, the result will be “a long winter in U.S.-China relations” and “systemic risk of monumental proportions.”

Paulson, going back to his Goldman days, has a deep history in China and his comments are important.  As Greg Ip of the Wall Street Journal notes, Paulson “is unsparing in his criticism of China’s current direction.  Seventeen years after joining the World Trade Organization, he says, it still ‘has not opened its economy to foreign competition in so many areas,’ using joint-venture requirements, ownership limits, technical standards, subsidies, licensing procedures and regulation to block foreign competition.  ‘This is simply unacceptable.’”

Paulson said that when Xi Jinping took over in 2013, Paulson took him at his word that markets and private enterprise would drive Chinese development.  They haven’t, which is all about Xi tightening his grip on the Communist Party.

In a separate interview, Paulson said: “Jiang Zemin talked about the party being a big tent.  His view was, ‘We need to bring the elites into the party’: business leaders, academics, and others.  Xi Jinping views the party itself as the elite, and the party, not the bureaucracy, would be the organization through which he governed.”

Paulson said the centralization of power in the Communist Party and continued discrimination against foreign companies has unified American leaders across the political spectrum in the belief that China is a strategic rival whose rise “has come at America’s expense.”

And Paulson adds that China is alienating those very interests in the U.S. disposed to defend it, i.e., business.

“How can it be,” Paulson argues, “that those who know China best, work there, do business there, make money there, and have advocated for productive relations in the past, are among those now arguing for more confrontation?”  True, some have accepted the “Faustian bargain” of profits today over competitiveness tomorrow, “but that does not mean they are happy about it,” said Paulson.  [Greg Ip / WSJ]

So speaking of Xi Jinping, he gave a much-anticipated speech at a Shanghai trade fair this week, which virtually every major business leader blew off, let alone world leader, and Xi hit back against President Trump’s “America First” policies with some pointed language, denouncing the “law of the jungle” and “beggar-thy-neighbor” trade practices.  But at the same time he didn’t outline any new proposals that would suggest he was prepared to meet Trump’s demands, such as halting forced technology transfers or rolling back support for state-owned enterprises.

“All countries should strive to improve their business environment and solve their own problems,” Xi told the inaugural China International Import Expo.  “They shouldn’t always whitewash themselves and blame others, or act like a flashlight that only exposes others, but not themselves.”

Xi didn’t mention Trump or the U.S. by name in the speech, but instead, he stepped up warnings that protectionism would harm global growth while pledging to boost domestic consumption, strengthen intellectual property protection and advance trade talks with Europe, Japan and South Korea.

In other words, a total crock.  That’s all Xi does.  He stands up at such forums, says China is prepared to open up its markets and that it wants foreign investment, but in actuality it is more of the same, exactly what Paulson argues above.  He gets it.  I get it, having lived it.  Yes, President Trump gets it.  And increasingly American and European business leaders get it.

Many global brands from Adidas to Walmart, Procter & Gamble to Uniglo, sent only country heads to the expo, not the CEO.  Starbucks Corp. CEO Kevin Johnson apparently didn’t attend, even though he was going to be in Shanghai, Starbucks opening a store in China every 15 hours.

But Xi nonetheless, as always, cast himself as one of the world’s chief defenders of globalization. “As globalization deepens, the practices of law of the jungle and winner take all are a dead end,” he said.

China ranks 59th out of the 62 countries evaluated by the Organization for Economic Cooperation and Development in terms of openness to foreign direct investment.  Almost half the companies surveyed in June by the European Chamber of Commerce in China said they missed out on business opportunities due to regulatory barriers or market access restrictions, and they expected obstacles to increase during the next five years.

Following Xi’s speech, the European Chamber warned that the lack of details about fulfilling previous promises was rapidly eroding European confidence in Chinese market opening.

In a statement, the Chamber said: “This constant repetition, without sufficient concrete measures or timelines being introduced, has left the European business community increasingly desensitized to these kinds of promises.”

Europe and Asia

We had our huge slug of economic data for both Europe and Asia last review. This week the eurozone (EA19) reported its PMIs for October non-manufacturing (services) and for the EA19 as a whole, the reading was 53.7 vs. September’s 54.7.  [The final Euro Comp reading was 53.1 vs. 54.1]

Other service sector PMIs:

Germany 54.7 in October vs. 55.9 prior month; France 55.3 vs. 54.8; Italy 49.2 vs. 53.3 (yuck); Spain 54.0 vs. 52.5 (good). [IHS Markit]

One other, eurozone retail sales volumes were flat in September compared to August, and growth over the year fell to 0.8 percent, the lowest annual change since October last year, according to Eurostat.  Just further ammo for the slowdown camp.

European Central Bank President Mario Draghi urged eurozone governments on Thursday to pay down their national debts to strengthen the currency bloc against potential economic shocks such as Brexit.  This comes amid a tussle between the EU and Italy, discussed below.

Addressing Ireland’s parliament on Thursday, Draghi said he expects the region’s five-year-old economic recovery to continue, but cited rising trade protectionism, weaknesses in emerging markets, and financial-market volatility as notable risks.

“Given the current buoyant economy, it’s time to rebuild fiscal [budgetary] buffers,” he said.

Draghi, despite the risks, said the ECB expects to begin phasing out its 2.5 trillion euro bond-buying program, quantitative easing, in December as planned.

The European Union issued its latest forecast on GDP for the 19 countries that use the euro and it expects the eurozone to grow by 2.1% this year, after 2.4% in 2017, which was the best year for the euro area in a decade.  The EU cut its 2019 forecast to 1.9% previously this year and now projects 1.7% in 2020.

The EU warned that the U.S. Federal Reserve’s interest rate hikes could spread “turmoil” through global financial markets and weaken growth in both developing and developed economies.

Well, yeah, EU.  Our Fed is normalizing interest rates after years of free money, and you guys (and Japan) are stuck in your zero, or negative, rate regimes that will indeed lead to chaos when the day inevitably comes that you have to begin tightening as well.  I mean, seriously, the German 10-year is still at about 0.40%.

Brexit: It’s crunch time but not too much news this week, just a lot of warnings that a no-deal on Brexit would be disastrous.

The key issue remains the border between Northern Ireland and the Republic.  The Northern Irish party that props up Prime Minister Theresa May’s government, DUP, cast her Brexit negotiation as a betrayal and cautioned it could not support a deal that divided the United Kingdom.

The warning underscores the huge problems that May faces in getting any Brexit divorce deal, which London, and Brussels, insist is 95 percent done, approved by both her fractious Tories and by the Northern Irish lawmakers whose ten seats keep her in power.

Less than five months before the drop-dead date (thus far) of March 29, negotiators still can’t reach a consensus on a backup plan for the border should the EU and the UK fail to clinch a trade deal (negotiations for which start after March 29).  The Democratic Unionist Party interpreted a promise Mrs. May made in a letter that she would never let a division of the UK “to come into force” as an admission that such a clause would be included in a final deal, the Sunday Times reported.

DUP leader Arlene Foster said: “The prime minister’s letter raises alarm bells for those who value the integrity of our precious union and for those who want a proper Brexit for the whole of the United Kingdom. From her letter, it appears the prime minister is wedded to the idea of a border down the Irish Sea with Northern Ireland in the EU single market regulatory regime,” Foster said.

The DUP has been a thorn in May’s side before.  It was a year ago that it refused to sign off on a deal on the border, causing a temporary collapse in talks at a crucial stage.

Both the EU and Britain need an agreement to keep trade flowing between the world’s largest trading bloc and the world’s fifth-largest economy.  The other 27 members of the EU combined have about five times the economic might of Britain.

But ever since the prime minister triggered exit talks in March 2017, negotiators have struggled to find a solution to the 310-mile land border on the island of Ireland.  It’s imperative to both that customs posts be avoided, which some fear, with good reason, could reignite The Troubles, the violence in Northern Ireland that was ended with 1998’s Good Friday Accord.

At issue is a fallback option for the border.  Prime Minister May’s negotiators argue that the whole of the United Kingdom should stay inside a temporary customs arrangement with the EU, though it is unclear for how long and what would happen after exiting that.  The EU is insisting on an insurance policy – or a backstop to the backstop – which is so freakin’ complicated, admittedly.  The EU demands that London sign a treaty clause that would  leave Northern Ireland inside the EU customs space.

For good reason, this is unacceptable to the DUP in Northern Ireland, as well as other “Unionists" whose political ideology is based on defense of Northern Ireland’s place in the United Kingdom.

So Arlene Foster is saying, “We will not support arrangements that leave Northern Ireland separated from the rest of the United Kingdom and tied to the European Union’s customs or regulatory regimes.”

Any backstop has to have a clear expiration date.  And, if Mrs. May can clinch a deal with the EU, she still needs to get it approved by parliament.  Around 320 votes would be needed, but after May botched the snap election in 2017, she lost her majority, and has relied on the DUP to govern.  The prime minister’s Conservatives have 315 lawmakers, so May needs the 10 DUP members.

Then late today, a minister in the British government stepped down to protest Theresa May’s Brexit plan and is backing calls for a second referendum on whether the country should leave the European Union.

Jo Johnson, younger brother of former Foreign Secretary Boris Johnson, said the withdrawal agreement being discussed by EU and British leaders would greatly weaken Britain and require the country to follow EU rules without having any say. The only alternative on the table, he said, is a no-deal Brexit that would “inflict untold damage” on Britain.

Older brother Boris resigned in July to protest May’s Brexit plan, but Boris did so as a staunch supporter of a hardline Brexit, while Jo Johnson backed the “remain’ camp during the June 2016 referendum.

Separately, Britain’s economy did pick up steam during the third quarter, growing at the fastest rate since late 2016, but most believe this is a high watermark prior to Brexit.

GDP rose 0.6 percent over the prior quarter, 1.5 percent higher than a year earlier, up from an annual rate of growth of 1.2 percent in the second quarter.

Italy: The government in Rome said it will stand by the main pillars of its budget, even though the EU Commission said it must be revised.  The Commission rejected Italy’s fiscal plan for 2019 last month, saying it flouted a previous commitment to lower the deficit and that it did not guarantee a reduction in the country’s 130 percent debt to GDP ratio, the second highest in the EU next to Greece.

The European Union gave Italy until Nov. 13 to present a new plan and can start taking disciplinary action against Rome later in the month, though European Economics Commissioner Pierre Moscovici said the EU wouldn’t immediately follow through with penalties and that “We want a dialogue with Italy.”

Italy’s Economy Minister Giovannia Tria said today that the answer to the European Commission with regards to the most contentious points of the budget would confirm its “main pillars,” and that it would respect a maximum deficit of 2.4 percent of GDP in 2019 and that the economic slowdown made an expansionary budget even more necessary.

But the EU Commission believes Rome’s calculations are based on an overly rosy scenario.  The Commission rep responsible for the euro, Valdis Dombrovskis, said, “Basically the assumption is that if they...increase public spending, it will stimulate the economy and thus will help to reduce the budget deficit.  We see that this is actually not materializing.”

The EU raised its forecasts for Italy’s budget deficit to 2.9% next year and 3.1% in 2020, well above the government’s estimates.

To be continued....

France: As he prepares to host a big World War I commemoration this weekend in Paris, French President Emmanuel Macron stuck his foot in his mouth again, praising Marshal Philippe Petain for his efforts in World War I, though Petain was convicted of treason for his actions as leader of Vichy France from 1940 to 1944, and is despised for his complicity in the Holocaust.

“I pardon nothing, but I erase nothing of our history,” Macron said.  But any praise for Petain triggers outrage among French Jews.

Macron has been sliding in the polls and Wednesday’s remarks don’t help in a nation that has lived through two world wars and only in recent decades has acknowledged its collaborationist past.

Meanwhile, campaigning for the May 2019 European Parliament elections has begun and an Ifop poll published Sunday showed the centrist Republic on the Move (LREM), Macron’s party, had 19 percent, but that far-right leader Marine Le Pen’s RN (Rassemblement National, formerly the National Front) was at 21 percent, ahead of Macron for the first time.  Together with the seven percent for sovereignist Nicolas Dupont-Aignan and one percent each for “Frexit” parties led by former Le Pen associates, far-right parties thus won a combined 30 percent of voting intentions, up from 25 percent end of August.

Macron has been warning this week that if someone suggests that far-right nationalists  are less threatening nowadays than they were in the past, one runs the risk of becoming complacent towards them.  “I would suggest that you reread what was said at the time,” he said.  ‘Well-educated, well-informed people said that we could get along with the nationalists.  As I recall, nobody, not even the wealthiest and the best educated, blocked the rise of Hitler in one country and Mussolini in another.”

In a YouGov poll published last week, Macron’s popularity fell to its lowest level since his 2017 election, with only 21 percent of those polled saying they were satisfied with him.  Macron has been dealing with scandals in his cabinet and a punk labor picture.

Turning to Asia, China’s service sector PMI for October fell from 53.1 to a putrid 50.8, according to the private Caixin reading. [The government figure for last month was 53.9 on non-manufacturing; a far bigger difference between the two readings than normal.]

China’s factory-gate (producer price) inflation slowed for the fourth month in October on cooling domestic demand and manufacturing activity, which probably means Beijing will roll out more growth-boosting measures in the face of the trade frictions with the United States.

The PPI rose 3.3 percent from a year earlier, easing from September’s 3.6 percent pace.  The consumer price index rose 2.5 percent in October from a year earlier, same as September’s rate. The core rate, ex-food and energy, was 1.8 percent.  China’s inflation target is 3 percent.

But despite the aforementioned trade issues with the United States, Chinese exports grew 15.6 percent in October, compared to a year earlier, defying predictions the U.S. tariffs would hit demand for Chinese-made goods.

The performance marked an acceleration from the 12.2 percent annual growth in the January-to-September period. Imports grew 21.4 percent last month compared to 20 percent for the year through September.

In Japan, the non-manufacturing PMI for October came in at 52.4 vs. 50.2 in September.

Street Bytes

--Stocks finished up a second consecutive week, with the Dow Jones adding 2.8%, the S&P 500 2.1% and Nasdaq a more modest 0.7%.  The bulk of the gains were Wednesday, with the Dow Jones jumping more than 500 points on the election results, namely Republicans keeping the Senate, which means tax cuts and deregulation remain in place.

Historically, the post-mid-term election period is strong for equities as well.

--U.S. Treasury Yields

6-mo. 2.51%  2-yr. 2.92%  10-yr. 3.18%  30-yr. 3.38%

The yield on the 10-year Treasury hit a seven-year closing high Thursday, after the Fed’s policy statement, 3.232%, which beat the recent previous closing high of 3.227% established on Oct. 5 and marked its highest settlement since May 2011.  [The yield on the 10-year fell back to 3.18% today on a little flight to safety with the equity markets sliding a bit.]

--The weekly oil inventory reports continue to show far greater builds than expected, as noted by the Energy Information Administration, the statistics arm of the U.S. energy department.

At 431.8m barrels, the EIA said crude oil inventories are about 3 percent above the five year average for this time of year.

Gasoline stocks also rose when a decline was expected, as demand has fallen.  The national average for unleaded regular gasoline at the pump is $2.74, 17 cents less than last month.

So all this staunched a mid-week rally in oil prices, again easing fears of a global supply shortfall after the U.S. reimposed sanctions on Iran, though as explained below, there are major exemptions...for now.

And by week’s end, oil was cratering, in a bear market, a decline of over 20 percent from a high of just five weeks ago, which in turn was the highest level since 2014.  The five-week slide has seen the price of West Texas Intermediate go from $74.29 to $59.87.

This has rattled OPEC, whose members meet this weekend, amid the supply glut, exacerbated by the waivers granted on Iran’s production.  Remember, Saudi Arabia had pledged to pump more just weeks ago, to make up for any Iranian shortfall, and now we have record U.S. supply as well.

All of this is great news for consumers, a true tax cut at the pump just in time for the holiday shopping season.

But now expect the Saudis to reverse course on production.

--And we had another important story in the energy market at week’s end.  A U.S. District Court in Montana ruled that the long-troubled Keystone XL oil pipeline project would have to wait for further environmental review, a big blow to the Trump administration.

The 1,200-mile long project is designed to connect Canada’s tar sands crude with refineries on the Texas Gulf Coast.

President Trump had attacked the Obama administration for failing to move ahead in the face of protests based largely on environmental concerns.  Trump then signed an executive order two days into his presidency setting in motion a course reversal on both the Keystone XL pipeline and the Dakota Access pipeline.

The decision by District Judge Brian Morris does not permanently block a  permit but requires a more detailed environmental impact review, including potential adverse impacts related to cultural resources and endangered species.  The Trump administration had claimed, without supporting evidence, that the environmental impacts established by the Obama administration “would prove inconsequential.”

Well, with this you can see the consequences of federal appointments to the courts, as Morris was appointed to the bench by President Obama.

--Boeing Co. is sending out a bulletin to 737 MAX jet operators as soon as Wednesday warning erroneous readings from a flight-monitoring system could cause a dramatic dive. The warning is based on preliminary information gathered in the investigation of a Lion Air flight that crashed in Indonesia last week, killing all 189 on board.  The flight data recorder was recovered, but last I saw, not the cockpit voice recorder.  The prior four flights of this particular aircraft had problems as described in the bulletin Boeing is sending out.

A story in the Wall Street Journal noted: “Airline pilots are routinely trained to deal with unreliable airspeed indicators and such defects by themselves aren’t considered imminent threats to safety of flight. Typically, the response is to maintain or slightly increase thrust, while avoiding dramatic climbs or descents.”

--Canadian plane and train maker Bombardier Inc. announced it was laying off another 5,000, as it has decided to shed its turboprop plane-making and pilot-training units.

Bombardier has been under financial pressure for several years as a big bet to compete with Boeing and Airbus with a brand new single-aisle jetliner fell flat.

Bombardier sold its turboprop-aircraft programs and the “de Havilland” trademark to a unit of Longview Aviation Capital Corp., the parent of Canadian aircraft-maker Viking Air Ltd.  The deal includes the Dash 8 Series aircraft.

The business aircraft-training activities were sold to CAE Inc. for $645 million.

--Lowe’s, in its effort to more closely compete with rival Home Depot, announced it was closing 51 underperforming stores in the U.S. and Canada over the next three months.

As a result of the restructuring, it sharply cut its profits outlook for the fiscal year ending in February 2019 to $4.50 to $4.60, down from $5.40 to $5.50.

--Wendy’s Company reduced its 2018 financial guidance and reported revenue that missed expectations, though earnings were better than projected.  Revenue came in at $400.6 million from $391.3m a year ago, but this was shy of the Street’s estimates.  Importantly, same-restaurant sales dipped 0.2% in the quarter, against 2% growth during the same quarter last year.

For the full year, comp sales are expected to grow just 1% in North America, down from a prior forecast of 2% to 2.5%.

But the shares, after an initial dip on the move, rallied back on word the company was increasing its share buyback program.

--CVS Health reported third-quarter earnings that beat expectations, owing to lower taxes and a jump in prescriptions.  The nation’s second-largest drugstore chain said Tuesday that prescription volume in stores open at least a year jumped 9 percent, which helped lead to an increase in revenue for its retail-long-term care business of more than 6 percent to about $20.9 billion.

CVS also booked a $268-million drop in income taxes due to federal tax cuts.  The company runs more than 9,800 retail locations and processes over a billion prescriptions annually.

The shares rose more than 3 percent on the news.

--Shares in Papa John’s fell as the company reported punk earnings and revenue for the third quarter.

Revenue sank to $364 million from $431.71 million a year ago, the fourth consecutive quarter of declining sales.  System-wide North America comparable sales registered a decrease of 9.8%, as the negative publicity surrounding its brand continues to adversely impact the top line.

For the year, the company was looking for same-store sales drops of 6.5% to 8.5%, which is just huge, as these things go.

--Ryanair Holdings said traffic surged 11% to 13.1 million in October, with a 96% load factor, despite a cancellation of more than 300 flights during the month, due to a five-day airport baggage handler strike in Brussels, adverse weather and “continuing Air Traffic Control staff shortages in the UK, Germany and France,” according to the company.

Ryanair is one of the more fascinating companies in the world and I was just struck by the traffic surge and the load factor.  The airline isn’t without its major labor issues, I hasten to add, particularly with pilots and flight crews.

--Amazon.com will choose two locations for its new second headquarters, rather than one, according to the Wall Street Journal, which cited an unidentified source on the matter; the new jobs split evenly between the two.

Amazon probably wants to avoid criticism that its arrival in a new town overwhelms the area. While its current headquarters has fueled an economic boom in Seattle, it is also often blamed for traffic problems and skyrocketing housing costs that squeeze some residents out of the city.

Previously, the Washington Post said Amazon was looking at Crystal City, Va., a suburb of Washington, while others say Amazon is looking specifically at Long Island City, N.Y., which is part of the Big Apple (Queens), though there are still other locations in the running.

But when a decision is finally made, a lot of cities are going to feel screwed, not because they lost their bid, but because Amazon told them one thing and, after no doubt spending a lot of money putting together a proposal, it was in the end just for half of what they had been told they were bidding on. 

--According to the latest federal data, through mid-October, American soybean sales to China have declined 94 percent from last year’s harvest, which has led to huge stockpiles of potentially rotting beans unless there is a quick resolution to the U.S./China trade war.  “The U.S. exported $26 billion in soybeans last year, and more than half went to China.”  [Binyamin Appelbaum / New York Times]

--Walt Disney Co. reported record profits with massive success for movie releases like “Black Panther,” as CEO Robert Iger predicted an accelerated timeline for its takeover of major assets of 21st Century Fox Inc., amid the company’s continued drive to shape its digital future.

The tie-up with Fox will allow Disney to launch a direct-to-consumer service in which shows based on Disney franchises like “High School Musical” will stream alongside programming from Fox’s National Geographic brand, as Disney, and other traditional studios, look to take on new competitors and Netflix Inc.  Iger, on an earnings call Thursday, revealed the digital service’s name would be Disney+.

Meanwhile, Disney’s profit for the three months ended Sept. 29 rose 33% to $2.32 billion, or $1.55 a share, while revenue was up 12% to $14.31 billion.

Disney has released five of the 10 highest-grossing movies of 2018, including “Black Panther,” “Avengers: Infinity War” and “The Incredibles 2.”

--Follow-up to my diatribe on Facebook last time. This week, the UK’s data watchdog referred Facebook to Europe’s lead regulator to investigate how the company targets, monitors and shows adverts to users, saying it was concerned about some of the practices at the social network.  Britain’s Information Commissioner has been investigating the use of data analytics to influence politics after Cambridge Analytica obtained the personal data of 87 million Facebook users from a researcher.

Under the EU’s Global Data Protection Regulation (GDPR), a firm found to have broken data processing and handling rules can be fined up to 4 percent of their global revenue of the prior financial year, or $23 million (20 million euros), whichever is higher.  FB had total revenue in 2017 of $40.7 billion.

“Citizens can only make truly informed choices about who to vote for if they are sure that those decisions have not been unduly influenced,” Britain’s Information Commissioner Elizabeth Denham said in a report to lawmakers published on Tuesday.  “We have uncovered a disturbing disregard for voters and personal privacy.”

Separately, and also in keeping with what I wrote last week, Facebook said Monday that a human rights report it commissioned on its presence in Myanmar showed it had not done enogh to prevent its social network from being used to incite violence.

The report by the San Francisco-based nonprofit Business for Social Responsibility recommended that Facebook more strictly enforce its content policies, increase engagement with both Myanmar officials and civil society groups and regularly release additional data about its progress in the country.

“The report concludes that, prior to this year, we weren’t doing enough to help prevent our platform from being used to foment division and incite offline violence.  We agree that we can and should do more,” Alex Warofka, a Facebook product policy manager, said in a blog post.

BSR said FB must be prepared to handle an onslaught of misinformation during Myanmar’s 2020 elections.

Facebook’s reaction is like that of the company insiders provided to PBS’ “Frontline” program.

“We are having an ongoing conversation....”

--Ben Protess, Robert Gebeloff and Danielle Ivory / New York Times

“In the final months of the Obama administration, Walmart was under pressure from federal officials to pay nearly $1 billion and accept a guilty plea to resolve a foreign bribery investigation....

“Federal prosecutors and the Securities and Exchange Commission have yet to charge Walmart...

“Across the corporate landscape, the Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance, according to analyses of government data and interviews with more than 60 former and current federal officials. The approach mirrors the administration’s aggressive deregulatory agenda throughout the federal government.

“The New York Times and outside experts tallied enforcement activity at the SEC and the Justice Department, the two most powerful agencies policing the corporate and financial sectors. Comparing cases filed during the first 20 months of the Trump presidency with the final 20 months of the Obama administration, the review found:

“ –A 62 percent drop in penalties imposed and illicit profits ordered returned by the SEC, to $1.9 billion under the Trump administration from $5 billion under the Obama administration;

“ –A 72 percent decline in corporate penalties from the Justice Department’s criminal prosecutions, to $3.93 billion from $14.15 billion, and a similar percent drop in civil penalties against financial institutions, to $7.4 billion;

“ –A lighter touch toward the banking industry, with the SEC ordering banks to pay $1.7 billion during the Obama period, nearly four times as much as in the Trump era, and Mr. Trump’s Justice Department bringing 17 such cases, compared with 71.”

Yes, former Republican officials from the regulatory agencies told The Times they largely welcomed the change, “though some are concerned that the Trump administration’s softer approach toward banks could open the door to the sort of reckless Wall Street behavior that spurred the financial crisis,” particularly as some Obama-era rules adopted after the crisis are eased.

--Wisconsin Republican Gov. Scott Walker lost his bid for a third term to Democratic challenger Tony Evers on Tuesday, 49.6 percent to 48.4.  I have no idea the extent to which the story of Foxconn played into Walker’s defeat, but it surely influenced many voters.

Dan Kaufman of the New Yorker had a detailed report on the world’s largest contract electronic manufacturer that chose to build a massive new plant in Wisconsin, the contract signed in September 2017 and touted by President Trump ever since as an example of his efforts to bring manufacturing jobs back into the U.S.

Foxconn, based in Taiwan, makes products for Apple, Sony, Microsoft and Nintendo, among others, and is in the process of building a 21.5-million-square-foot manufacturing campus, investing up to ten billion dollars in the state, while hiring 13,000 workers at an average wage of $54,000 a year.

But what was first seen as a crucial boost to his reelection efforts became a liability, particularly among voters outside southeastern Wisconsin where the plant is being built.  The costs include taxpayer subsidies to the company totaling more than $4.5 billion, the largest subsidy for a foreign corporation in American history, as reported by Dan Kaufman.

Foxconn, which generated $158bn in revenue last year, “will receive much of this subsidy in direct cash payments from taxpayers.  Depending on how many jobs are actually created, taxpayers will be paying between $220,000 and more than a $1 million per job. According to the Legislative Fiscal Bureau, a nonpartisan agency that provides economic analysis to the Wisconsin state legislature, the earliest citizens might see a return on their Foxconn investment is in 2042.”

There are other costs (benefits for Foxconn) such as relaxation of environmental rules and special legislation granting Foxconn court privileges allowing the company to make multiple appeals of unfavorable rulings in a single case, but the worst was the actual acquisition of the 2,800 acres of land, roughly four square miles, necessary to build out the Foxconn campus, involving moving out tenants under threat of eminent domain, among other things.  The residents of the town of Mt. Pleasant are now living under a huge $18,000 cost per household, creating a further heavy burden for taxpayers.

According to political experts in the state, queried prior to the election, Foxconn “is one of the main reasons Walker has trailed his Democratic opponent...in nearly every poll since the August primaries,” and now he has been defeated.

Separately, as reported by the Wall Street Journal, Foxconn is considering bringing in personnel from China to help staff the Wisconsin facility. The company said its “Wisconsin first commitment remains unchanged,” in a written statement to the Journal in response to questions about its hiring plans.  A tight labor market is making recruiting difficult.  Wisconsin’s jobless rate is just 3.0%, below the national average of 3.7%.

Foxconn’s original estimate was for 9,817 hourly operators, 2,363 engineers and 820 business support staff, according to an economic impact statement prepared for the company in 2017.

So if you’re an engineer, or about to finish school with a degree in same (the plant isn’t going to be ready for a while), and you like good cheese, brats (personally, I recommend Usinger’s), great beer, and NFL and college football, with an entertaining baseball team in Milwaukee, then start getting your applications in.  [Actually, the plant is just 20 miles from the Illinois border, so you can expand your choices in athletic teams if you want.]

--Former Goldman Sachs CEO Lloyd Blankfein has been linked to a global corruption investigation tied to Malaysia and its sovereign wealth fund, 1MDB.  Goldman Sachs Group arranged bond deals now at the heart of the probe and Blankfein was the previously unidentified high-ranking Goldman exec referenced in U.S. court documents who attended a 2009 meeting with the former Malaysian prime minister who is part of the probe.

A high-level gathering in ’09 at the Four Seasons hotel in New York laid the groundwork for a relationship that would prove to be most profitable for Goldman, as it raised $6.5 billion for 1MDB.  The bank has said it believed proceeds from the debt sales were for development projects and that a former Goldman partner, Tim Leissner, withheld information from the firm.

There is no indication Blankfein was aware of the identities of all present at the meeting, which included a Malaysian businessman Jho Low who is a central figure.

The U.S. has since accused Low of teaming up with Goldman bankers to pilfer money from the fund.  Leissner pleaded guilty to conspiring to launder money and violating the Foreign Corrupt Practices Act by paying bribes. Goldman received about $600 million in fees.

Blankfein, who is still chairman, said at a conference in New York last week that he’s not aware of senior managers missing red flags in the 1MDB dealings and instead said the matter was an issue of a few employees dodging bank controls and lying about it.

--Sears announced 40 more store closings, including some Kmart locations, in February, on top of the 142 locations it previously announced would be closing by the end of this year.

It’s hard to keep up on all these announcements.  Attorneys for Sears told the U.S. Bankruptcy Court at an initial hearing that it may make an announcement on even more closings by Nov. 15.  Sears hopes to have its reorganization plan filed by late December and confirmed in March 2019.

--Finally, like many of you who heard the following, I was shocked this kind of thing was still allowed, having long ago approved the expenses of people working under me.  But Under Armour Inc. employees received an email earlier this year (just recently revealed), as reported by Khadeeja Safdar of the Wall Street Journal, wherein “they could no longer charge visits to strip clubs on their corporate cards.”

Good lord.

True, I’m not naïve.  I can understand, as the Journal reported, that executives, including CEO Kevin Plank, would entertain athletes in such venues, but there was clearly a pattern of paying for countless other folks to go to these joints. 

Plank said in a statement: “(We) will embrace this moment to accelerate the ongoing meaningful cultural transformation that is already under way at Under Armour.  We can and will do better.”

So lame.  But, guys...don’t forget to tip the barmaids, they work hard too.

Foreign Affairs

Iraq: More than 200 mass graves containing thousands of bodies have been found in areas of Iraq that were once controlled by ISIS, a UN investigation has found.  A report said the graves could contain as many as 12,000 victims.

202 mass graves have been documented thus far, including 95 in Nineveh and 37 in Kirkuk.

Investigators estimate between 6,000-12,000 are buried at the sites, including women, children, the elderly, people with disabilities, foreign workers, and members of the Iraqi security forces.

Of the 202 documented, only 28 have been excavated and 1,258 bodies exhumed by Iraqi authorities.

According to Iraq’s high commission on human rights, more than 3,000 Yezidis remain missing in Nineveh, in addition to another 4,000 people.

Understand that Iraqis are still searching for answers on the more than one million people who went missing during the reign of strongman Saddam Hussein, which ended in the U.S.’s invasion in 2003.

Separately, Iraq announced it was increasing its oil output and export capacity in 2019, with the bulk of the oil exported via its southern terminals, which accounts for more than 95 percent of state revenue.

Iran: Turkey’s President Recep Tayyip Erdogan said Tuesday that his country would ignore sanctions the U.S. introduced against Iran this week – which could complicate Ankara’s recent efforts to defuse tensions with the White House.  Erdogan said the sanctions risked disrupting the world order.

“We do not want to live in an imperialist world,” Erdogan told reporters.  “We will absolutely not abide by such sanctions.”

Erdogan said that without natural-gas imports from Iran, Turkey wouldn’t be able to get through the winter.  “We cannot let our people freeze in the cold.”

President Trump and Erdogan are expected to meet in Paris this weekend at the World War I commemorations.  Turkish officials have said they expected more support from the U.S. to force Saudi Arabia to come clean on who ordered the murder of the Saudi journalist, Khashoggi, in Istanbul last month.

But Turkey was included on a list of eight countries the U.S. is granting waivers, exempting them from the new sanctions on Iranian oil.  Erdogan didn’t mention the exemption in his comments Tuesday.

Turkey imports about half its oil and a fifth of its gas needs from Iran.

On Monday, the United States reintroduced sanctions against Iranian oil, but it granted exemptions to eight nations in total, including South Korea, Japan, India, China, Italy, the United Arab Emirates, Turkey and Taiwan (which is not a major buyer).  It’s possible some European countries may also receive exemptions.  [The U.S. didn’t formally announce which countries received the waivers, and Iraq is on some unofficial lists I have seen...so it’s not totally clear if it’s more like eight, plus Taiwan, since its imports are said to be minimal.]

Exports of Iranian crude peaked at 2.8 million barrels per day in April, but have fallen to 1.8m bpd since then, according to some experts.  But it will be interesting to see the true total, say, early next year, when we might receive accurate figures showing the impact of the exemptions granted thus far.

The Trump administration claims that with the one million reduction, the regime’s revenues have been reduced by more than $2 billion.  But U.S. Special Representative for Iran Brian Hook gave no explanation for the figures, only that he seemed to be using a number everyone else is using, rather than hard facts, of which there are few.

Hook told reporters on a call Monday, though, “The Iranian people have had 39 years of economic mismanagement... They know very well that their economic problems are caused by the Iranian regime and not the United States.”

Iranian Foreign Minister Mohammad Javad Zarif said on Monday the sanctions were “backfiring,” making Washington more isolated, not the Islamic Republic.

“Today, US defied UN top court and Security Council by reimposing sanctions on Iran that target ordinary people. But US bullying is backfiring... The US, not Iran, is isolated,” Zarif tweeted.

Iran greeted the re-imposition of sanctions with air defense drills and an acknowledgement from President Hassan Rouhani the nation faces a “war situation.”

Supreme Leader Ayatollah Ali Khamenei said last weekend that President Trump “disgraced” U.S. prestige and would be the ultimate loser from renewing sanctions on the Islamic republic.

“This new U.S. president...has disgraced the remnant of America’s prestige and that of liberal democracy.  America’s hard power, that is to say their economic and military power, is declining too,” he said on his Persian Twitter account.

“The challenge between the U.S. and Iran has lasted for 40 years so far and the U.S. has made various efforts against us: military, economic and media warfare,” he said.

“There’s a key fact here: in this 40-year challenge, the defeated is the U.S. and the victorious is the Islamic republic.”

The sanctions do end all the economic benefits from Tehran’s signing of the 2015 nuclear accord with the P5+1 (the five permanent members of the UN Security Council plus Germany), though Iran for now continues to abide by the deal that limits its enrichment of uranium.  Iranian officials have in recent months made a point to threaten that they could resume higher enrichment at any time.

Editorial / Wall Street Journal

“Iranian President Hassan Rouhani reacted as expected on Monday to the reimposition of U.S. sanctions, saying that ‘unfair sanctions are against the law, UN resolutions and international accords. Therefore, we will proudly break the sanctions.’  He’s wrong about international law because the U.S. is merely reimposing American sanctions. Barack Obama never submitted the Iran nuclear deal to the U.S. Senate as a treaty, so President Trump can withdraw from it as he wishes. But no doubt Mr. Rouhani believes Iran can evade sanctions and wait out the Trump Presidency.

“The real man to watch in Tehran, however, is Qasem Soleimani, who runs the Quds Force that is responsible for supporting terrorist proxies around the world.  He’ll decide how and when to retaliate against U.S. interests, perhaps violently, and the Trump Administration will have to be ready to respond.”

David E. Sanger / New York Times

“(Even) with the sanctions fully in place on Monday, it is far from clear that Iran will move to renegotiate the deal with the United States.  Mr. Rouhani insisted during his visit to New York that the United States would first have to come back into compliance with the nuclear deal.

“For his part, Mr. Trump will have to navigate two other major hurdles. The first is justifying the growing pressure on Iran when the major ally it is depending on to contain that country, Saudi Arabia, is admitting that a 15-member hit squad killed the dissident Jamal Khashoggi and is so far refusing to stop its bombing in Yemen.

“(Sec. of State) Pompeo has vowed to follow the Khashoggi investigation wherever it goes, but American diplomats note that he has refused to call the killing an act of terrorism.  Iran gets different treatment: On Sunday, Mr. Pompeo accused Iran of plotting assassinations in Europe as part of his claim that the country is the largest exporter of terrorism.

“Mr. Trump’s biggest long-term challenge may be explaining how he can invoke new sanctions on Iran – which the International Atomic Energy Agency has declared is abiding by its commitments to halt nuclear production – while declaring that North Korea is ‘no longer a nuclear threat.’

“Unlike Iran, the North already has nuclear weapons, and by the account of American intelligence agencies is continuing to produce them.”

Saudi Arabia: The kingdom sent a toxicologist and a chemical expert to its consulate in Istanbul after Jamal Khashoggi was killed, Turkey said this week.  The Saudi accounts on what happened continue to be all over the place, and the Saudis refuse to tell Turkey where the body is.

This week, two of Khashoggi’s sons pleaded for their father’s body in an interview with CNN.

Saudi Arabia allegedly sent a chemist and toxicology expert as part of a delegation tasked with erasing evidence in the consulate, as reported in Turkey’s daily Sabah newspaper. The paper alleges the team visited the building every day from Oct. 12 until Oct. 17, before leaving the country days later.

The Saudis claim 18 men have been arrested by authorities in the kingdom in connection with the death, and Turkey wants them extradited, but Saudi Arabia maintains they will be brought to justice in the kingdom.

President Erdogan, in an op-ed for the Washington Post, said, “We know that the order to kill Khashoggi came from the highest levels of the Saudi government,” but, stressing Turkey’s “friendly” ties with Saudi Arabia, he added that he did not believe King Salman was involved.

Erdogan called for “the puppet masters behind Khashoggi’s killing” to be exposed.

“No one should dare to commit such acts on the soil of a NATO ally again,” he said.  “If anyone chooses to ignore that warning, they will face severe consequences.”

Afghanistan: Taliban militants attacked a border outpost in western Afghanistan on Tuesday, killing 20 government soldiers in another assault that compounds fears the security forces are facing an unsustainable casualty toll.

The area, Farah, on the border with Iran, has seen months of heavy fighting resulting in the deaths of hundreds of police and soldiers, as reported by Reuters.

At this particular border outpost, there were 50 Afghan soldiers and an officer in the region conceded that they don’t know where the remainder are after losing contact with the base during the attack.

The Defense Ministry reported that in September alone, more than 500 Afghan soldiers were killed, hundreds more wounded.

Yemen: Iranian-backed Houthi rebels have been battling coalition forces in Yemen’s port city of Hodeida and on Thursday, Amnesty International said the rebels posted gunmen on the roof of a hospital, leaving doctors and patients in the line of fire, what AI called “a stomach-churning development that could have devastating consequences for the hospital’s medical workers and dozens of civilian patients, including many children,” if you wanted an idea of just how awful this war has been.

The Arab coalition has been battling to push the Houthis out  of the city they have held since 2014.  A surge in fighting in recent weeks has trapped thousands of civilians in the crossfire and coalition air raids.

Hodeida is the entry point for 80 percent of Yemen’s food imports and aid relief, and the UN has been warning an all-out attack on the city could trigger a famine across the country.

The United Nations hasn’t updated the death toll in Yemen since it first said in August 2016 that according to medical centers, at least 10,000 people had been killed, and that is the figure everyone has been using since, including yours truly, but it is obviously way too low at this point.

North Korea: Pyongyang suddenly canceled talks with the United States slated for Thursday.  Secretary of State Mike Pompeo had been due to meet North Korean officials in New York yesterday, along with the new special envoy for North Korea, Stephen Biegun, but the State Department gave no reason for the delay.  The meeting was to be a pivotal step toward having a second summit.

President Trump told reporters on Wednesday that he expects another summit meeting with Kim next year and won’t relax the economic-pressure campaign he has imposed on Pyongyang.

U.S. Ambassador to the United Nations Nikki Haley said Thursday that North Korea canceled “because they weren’t ready.”

Haley also criticized Russia for trying to lift banking restrictions that are intended to curb the North’s nuclear program.  The Russian UN mission issued a statement saying North Korea faces “serious humanitarian problems” due to the UN sanctions resolutions and urged the Security Council to fix the problem. China and Russia have said the Security Council should reward Pyongyang for “positive developments” this year.

North Korean leader Kim Jong Un and President Trump pledged to work toward denuclearization at their landmark summit in Singapore in June, but the agreement was short, to say the least, on specifics and negotiations since then have yielded little.

China: Yang Jiechi, a Communist Party Politburo member, said China and the United States must work for a solution to end their trade war and ensure an expected meeting later this month between President Xi Jinping and President Trump yields results.

Yang met with National Security Adviser John Bolton at the White House this week.  Bolton, seen as being hostile to China, vowed last month to intensify Washington’s tough approach, saying Beijing was a “major issue this century.”

Yang said the two countries had to properly manage their differences to ensure the effectiveness of talks between the two leaders in Buenos Aires at the G20 summit.

“The nature of the China-U.S. trade relationship is mutually beneficial. Both sides have to work out an acceptable solution through negotiations on an equal and mutually beneficial basis,” Yang said.

But Yang also described Taiwan as the most important and sensitive issue of China-U.S. relations, adding that Washington should abide by the one-China principle.  So there’s your clue that Trump better be prepared to be barraged by Xi on the topic in a few weeks.

U.S. National Security Agency official Rob Joyce accused China on Thursday of violating an agreement aimed at stopping cyber espionage through the hacking of government and corporate data.  The 2015 agreement was between President Xi and President Barack Obama.

Joyce did say that while the U.S. believes China is violating the pact, the quantity had dropped “dramatically.”

China’s Foreign Ministry office rejected the allegations. And the agreement stopped short of any promise to refrain from traditional government-to-government cyber spying for intelligence purposes.

That could include the massive hack of the federal government’s personnel office this year, which compromised the data of more than 20 million people.  That was traced back to China, but the administration has not said if they believe the Chinese government was responsible.

On a different topic...David Ignatius / Washington Post

“Corporate and government leaders agree that China’s rapid application of AI (artificial intelligence) to business and military problems should be a ‘Sputnik moment’ to propel change in America. As a top-down command economy, China is directing money and its best brains to develop the smart systems that will operate cars, planes, offices and information – along with the transformation of warfare. 

“The United States is struggling to respond to this world-changing challenge. What’s underway is frail and exists mostly on paper.  Congress this year passed legislation calling for a national AI commission, but so far it’s just a concept. The Pentagon in June established a new Joint Artificial Intelligence Center that will spend $1.75 billion over six years, but critics fear it will be far short of what’s needed.

“ ‘There is no quarterback’ for AI, says Amy Webb, author of a forthcoming book called ‘The Big Nine’ about the top U.S. and Chinese AI companies. The United States started with a technology lead, but U.S. efforts are dispersed and decentralized.  Companies have trouble sharing the structured data that machines can learn on.  ‘China is the OPEC of data,’ argues Webb.  In a totalitarian society, every human and social interaction feeds a vast pool of structured data for machines to ingest. The Chinese government can then commandeer companies and people, as needed.

“America may need an ‘AI czar,’ argues Ashton B. Carter, former secretary of defense for President Barack Obama. That’s because no current agency or White House office is empowered to coordinate an effort as complicated as the Manhattan Project, which built a nuclear weapon, or the ‘space race’ that put a man on the moon.  But mobilizing resources in this way requires political vision and leadership, which are lacking today in both parties....

“An awkward problem for America now is that the employees of the biggest and best AI companies seem reluctant to work with the U.S. government....

“After the midterm elections, the country will begin a heated debate about the best candidate to lead the nation in the 2020 elections.  One way to assess potential leaders is to ask how they would meet the AI challenge of refashioning our economic and strategic foundations. A bitterly divided country with a dysfunctional political system isn’t going to win the race anywhere, except down.

“Ask yourself who could lead a national push to capture the high ground of technology, and you may come up with the name of the man or woman who should be our next president.”

I know.  Michael Bloomberg.

Brazil: President-elect Jair Bolsonaro, a disciple of Donald Trump, has vowed to wage war on “fake news” media, threatening to hit the bottom lines of critical press outlets.  Bolsonaro has half a billion dollars in public-sector marketing budgets coming under his discretion, and he is threatening to slash ad buys with adversarial media groups, striking at the very foundation of Brazil’s free press.

During the campaign, Bolsonaro dismissed investigative reporting as “fake news’ invented by a corrupt establishment and his supporters went after individual journalists.  Needless to say, the threats are sending a chill through the country’s newsrooms.  Bolsonaro this week said that the largest circulation daily, Folha de S.Paulo, “is done.”

I told you during the presidential campaign, though, that it was Bolsonaro’s supporters who spread fake news and conspiracy theories through WhatsApp and other social media outlets.

Venezuela: The annual inflation rate accelerated to 833,000% in October.  Just a weee bit hot, as we say.

A monthly report released by Venezuela’s legislature showed the 12-month inflation rate rose from 488,000% in September.  The IMF is estimating the rate for 2018 will top 1.3 million percent.

So don’t worry about a 2.6% producer price print on core for the U.S. this week.

Random Musings

--Presidential tracking polls....

Gallup: 40% job approval for President Trump, 54% disapproval (same as prior week); 88% Republicans approve, 39% Independents (Nov. 4).
Rasmussen: 48% approval, 50% disapproval (Nov. 9)

For the archives, some other readings just prior to the vote, Tuesday.

CNN/SSRS: 39% approval of Trump, 53% disapproval.
Wall Street Journal/NBC News: 46% approval, 52% disapproval.
Washington Post/ABC News: 40% approval, 53% disapproval.

The exit poll then put it at 44% approval of President Trump, 55% disapproval.

Importantly, on the question of ‘right’ or ‘wrong’ direction, 41% said the country was headed in the right direction, 56% said it was headed in the wrong direction, and that’s not good for President Trump and 2020, because I believe the economy may have peaked in the second quarter.

--I’m glad Mitt Romney is in the Senate.

--At least 95 women, last I saw, had been elected to the House, surpassing the record of 84 set by the current Congress.  The number of women in the Senate is going to be 24 (if I remember right), beating the record of 23 now in the chamber.  This is good.

According to a Reuters/Ipsos Election Day poll, 55% of women said they backed a Democrat for the House this year, compared with 49% in 2014.

--According to the same Reuters/Ipsos survey, among voters ages 18 to 34, 62% backed Democrats, 34% Republicans.  In 2014, the spread was 54-36.

Hispanic voters went Democrat by 33 points, vs. 18 points in 2014.  [I didn’t see a margin for the African-American vote as yet.]

--I have lived in New Jersey most of my life, and in all my time have never had a congressman who was a Democrat, until now, Tom Malinowski, who defeated moderate Republican Leonard Lance (whom I supported) 50% to 48% in NJ 7.

I’ve noted the congressional district that literally starts a block away from me, NJ 11 (Morris County) has never had a Democratic representative in the time I’ve been alive...until now; Mikie Sherrill whipped a miserable Republican challenger Jay Webber, 56% to 43%. This seat was being vacated by a retiring, long-time Republican fixture, Rodney Frelinghuysen, whose family roots literally go back to the time of George Washington, whose famous headquarters was in the district, one stormy, cold winter (Jockey Hollow).

[New Jersey is now down to one Republican out of 12 congressional seats.  Eegads.]

Former Celgene CEO, Bob Hugin, wasted at least $36 million of his own money running against the hopelessly corrupt Democratic incumbent Sen. Bob Menendez, and lost bigly, 54% to 43%.  Hugin never should have run his overly deceitful campaign ad.

But going back to the two congressional districts, I told you months ago these two races would be telling nationally and the press and pundits didn’t give them enough coverage...because they sure were telling.  They are largely classic white suburbia (though admittedly with changing demographics like with most of the country), but white suburban women no doubt voted Democrat in these two districts in huge numbers, and, talking to local politicos in the know, it was all about Trump, and distaste of him.  Just stating a fact, sports fans.

Meanwhile, in New York, Democratic Gov. Andrew Cuomo cruised to victory, 59% to 37% over Republican challenger Marc Molinaro.  No doubt Cuomo harbors thoughts of grandeur in 2020.  He should focus on the job he was just re-elected to for a third time instead.

--Craig Timberg and Tony Romm / Washington Post

“Former FBI agent Clint Watts was among the first to ring the alarm bell about Russia’s audacious disinformation campaign during the 2016 U.S. election. Two years later, as voters head to the polls in another hotly contested national election, Watts has more bad news. When it comes to spreading lies and stoking division online, Watts said, ‘it’s Americans in 2018.’

“Such is the consensus among lawmakers, tech company officials and independent experts who study hate speech and related disinformation: Even as Silicon Valley has become more aggressive in battling foreign efforts to influence U.S. politics, it is losing innumerable cat-and-mouse games with Americans who are eagerly deploying the same techniques used by the Russians in 2016.

“ ‘Everyone’s witnessed the playbook playing out,’ explained Watts, a fellow at the Foreign Policy Research Institute.  ‘Now they don’t need Russia so much. They’ve learned that the tactic is devastatingly effective.’

“He and other experts point to a rampant online spread of misleading reports and images about the migrant caravan in Mexico, for example – and especially the demonstrably false allegations that billionaire George Soros is funding a violent ‘invasion’ of the United States.

“Accounts controlled by Russians probably helped amplify such misleading narratives, experts say, but the evidence so far is that they started with American political activists who are increasingly adept at online manipulation techniques but enjoy broad free-speech protections that tech companies have been reluctant to challenge.”

Monday, Facebook announced it had removed 30 accounts from the site – and another 85 on Instagram, which it owns – that “may be engaged in coordinated inauthentic behavior.”  Facebook didn’t attribute the accounts to any particular foreign government but noted many Facebook pages were in Russian or French, while many Instagram accounts used English.

Facebook’s head of cybersecurity policy, Nathaniel Gleicher, said in a visit to Washington last month that its biggest challenge remains detecting and policing the many Americans spreading disinformation.

“If you’re talking about volume, the majority of the volume we see is domestic. And that doesn’t just mean in the United States; it means around the world,” Gleicher said.

Harvard University researchers said Monday that they had seen major spikes in outright fabrication and misleading information proliferating online over the past six months; a “significant portion” of it coming from Americans, not foreigners, the Harvard researchers said.

A study out of Oxford University, released last week, said disinformation was at a higher level in 2018 than for the 2016 election and that it was reaching a broader audience, outpacing the spread of authentic reports from mainstream, "professional" news organizations.  [Washington Post]

--Fox News host Sean Hannity’s on-stage appearance at President Trump’s Missouri rally on the eve of the election, Monday, was seen as an egregious breach of standards for a news organization, even though Hannity is an open cheerleader for Donald Trump. 

Hannity had promised earlier that he was only in the state to do his show, but then Trump invited him on stage, praising him as one of the “incredible people” who had “done an incredible job for us.”

Hannity said on stage after shaking Trump’s hand: “Mr. President, I did an opening monologue today and I had no idea you were going to invite me up here. And the one thing that has made and defined your presidency more than anything else: promises made, promises kept.”

Right before, Hannity pointed to the media pool at the back of the room and said: “By the way, all those people in the back are fake news.”

The thing is, before the rally, Hannity had tweeted: “In spite of reports, I will be doing a live show from Cape Girardeau and interviewing President Trump before the rally.  To be clear, I will not be on stage campaigning with the President.  I am covering final rally for my show.  Something I have done in every election in the past.”

According to various stories, the network’s top Washington journalists complained to senior Fox executives on Tuesday.

Fox News publicly rebuked the actions of Hannity and weekend host Jeanine Pirro, who also appeared at the rally.  But no disciplinary measures are being taken, it seems.

“Fox News does not condone any talent participating in campaign events,” the company said in a statement.  “We have an extraordinary team of journalists helming our coverage tonight and we are extremely proud of their work. This was an unfortunate distraction and has been addressed.”

Anchor Bret Baier told the Los Angeles Times that Hannity’s actions were the main topic during a previously scheduled lunch with Fox News chief executive Suzanne Scott and president of news Jay Wallace, prior to the network presenting its midterm election coverage.

“There was a lot of concern about it and making sure that we as a network were...sending the right signals and...there was a commitment to show the importance of news,” said Baier.

Fox News’ coverage was watched by more than 7.8 million viewers, more than any other broadcast or cable network.

Baier said he had a personal discussion with Hannity about the Missouri appearance but didn’t reveal any details.

“Going forward I think things will be a little different,” Baier told the L.A. Times.  “What he does and what I do are two different things but on an event like that it obviously bleeds into our news coverage and he acknowledges that....I’ve had a long relationship with him and he’s always been great with me.  But this is a moment that needed to be dealt with.”

As for Hannity, he issued a statement on Tuesday claiming he did not know Trump would call him onstage at the rally.

“What I said in my tweet yesterday was 100% truthful. When the POTUS invited me on stage to give a few remarks last night, I was surprised, yet honored by the president’s request. This was NOT planned.”

But this was at odds with a news release issued by the Trump campaign on Sunday touting the appearances of Hannity and radio host Rush Limbaugh at the event.

Hannity, attempting to cover his ass, also tweeted: “To be clear, I was not referring to my journalist colleagues at FOX News in those remarks (about the fake news media).  They do amazing work day in and day out in a fair and balanced way and it is an honor to work with such great professionals.”

--Supreme Court Justice Ruth Bader Ginsburg, 85, was released today from a Washington, D.C., hospital after fracturing three ribs in a fall in her office.  Justice Ginsburg is the court’s eldest member and the most senior of its liberal minority.  President Clinton appointed her in 1993.

Ginsburg has previously vowed to stay through the Trump presidency so that he can’t name her replacement.

--It was another dark week for the state of California, with deadly wildfires scorching towns and neighborhoods and killing at least nine people, while a decorated Marine Corps machine gunner deployed in Afghanistan who had issues of some kind, shot up a popular bar in the Los Angeles suburb of Thousand Oaks, killing 12 mostly young people just out for a good time.

Back in April, police had responded to a minor disturbance at the suspect’s home, Sheriff Geoff Dean said he appeared to be acting a little irrationally, police called in a team of mental health specialists who decided the suspect did not qualify to be involuntarily detained for mental health evaluation under state law, and that was it, until late Wednesday night.

--Researchers announced there has been a remarkable global decline in the number of children women are having.  The study out of the Institute for Health Metrics and Evaluation at the University of Washington found fertility rate falls meant nearly half of countries were now facing a “baby bust” – meaning there are insufficient children to maintain their population size. Researchers added there would be profound consequences for societies with “more grandparents than grandchildren.”

In 1950, women were having an average of 4.7 children in their lifetime.  The fertility rate all but halved to 2.4 children per woman by last year.

But there are huge variations between nations, such as a fertility rate in Niger, west Africa, of 7.1, but on the Mediterranean island of Cyprus, women are having one child, on average.

2.1 is the breakeven point, though populations are impacted by the death rate and migration as well.

--Brad K. first passed along the story, via Reuters, that a motorized wheelchair used by the late British physicist Stephen Hawking sold at auction for over $390,000, while a dissertation raised nearly twice that at a sale to raise money for charity.

Hawking’s 117-page dissertation “Properties of expanding universes” from 1965 sold for $767,000.

---

Pray for the men and women of our armed forces...and all the fallen.

We honor our Veterans this Sunday. 

God bless America.

---

Gold $1210
Oil $59.87

Returns for the week 11/5-11/9

Dow Jones  +2.8%  [25989]
S&P 500  +2.1%  [2781]
S&P MidCap  +1.1%
Russell 2000  +0.1%
Nasdaq  +0.7%  [7406]

Returns for the period 1/1/18-11/9/18

Dow Jones  +5.1%
S&P 500  +4.0%
S&P MidCap  -1.0%
Russell 2000  +0.9%
Nasdaq  +7.3%

Bulls 42.5
Bears
19.8

Have a great week.

Brian Trumbore



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Week in Review

11/10/2018

For the week 11/5-11/9

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.

Edition 1,022

Last Saturday, Maj. Brent Taylor, the mayor of North Ogden, Utah, was killed in Kabul, Afghanistan, while serving as a member of the Utah National Guard, the victim of an insider attack by an Afghan commando.

Taylor had taken a leave from his position as mayor of North Ogden, a city of about 20,000, to serve in Afghanistan for what was to be a year’s deployment.  Just before he left for the Afghan theatre, he wrote on Facebook, “Service is really what leadership is all about.”

It was Maj. Taylor’s fourth deployment, as part of an advisory team training an Afghan commando battalion.  The attacker was immediately killed by other Afghan forces.

So-called insider attacks have long been a problem for coalition forces in Afghanistan. At their peak in 2012, 61 coalition soldiers died in such incidents.

A week before his death, in what appeared to be his last Facebook post, Maj. Taylor called on all Americans to vote.

Referencing the recent election in Afghanistan:

“It was beautiful to see over 4 million Afghan men and women brave threats and deadly attacks to vote in Afghanistan’s first parliamentary elections in eight years.  The strong turnout, despite the attacks and challenges, was a success for the long-suffering people of Afghanistan and for the cause of human freedom. I am proud of the brave Afghan and US soldiers I serve with.  Many American, NATO allies, and Afghan troops have died to make moments like this possible; for example, my dear friend Lieutenant Kefayatullah who was killed fighting the Taliban the day before voting began.

“As the USA gets ready to vote in our own election next week, I hope everyone back home exercises their precious right to vote. And that whether the Republicans or the Democrats win, that we all remember that we have far more as Americans that unites us than divides us.  ‘United we stand, divided we fall.’  God bless America.”

Trump and the Midterm Election

So we went to the polls and I was struck that despite the incredibly divisive nature of the campaign, from sea to shining sea, there were no major disturbances at the polling places, no acts of violence, just Americans fulfilling their civic duty in record numbers for a mid-term.

And then the next day, President Trump held a wild press conference, where a few members of the press corps acted like total a-holes (namely Jim Acosta of CNN...more below), but the president was hardly a model of decorum, while claiming a sweeping victory that just wasn’t there.

Yes, as I go to post it looks like we may end up 53-47 Republicans in the Senate, but at 226-198 in the House (11 still technically undecided) it is likely to end up around 230-205 Democrats, which is, no matter how you slice it, victory...but not for Donald Trump.

The ugliness of the press conference then carried over Wednesday night into a Washington, D.C., suburb where Fox News host Tucker Carlson’s home was invaded by a mob, thought to be Antifa, in a totally reprehensible act and here we go again.  It is depressing to think about the next two years. And it’s Mueller time...Special Counsel Robert Mueller’s probe coming to some kind of conclusion in the near future, you would think.

Hopefully your favorite sports teams provide a diversion because otherwise we’re all going to go nuts.

Opinion...all sides....

Editorial / Wall Street Journal

“America’s deep political divisions revealed themselves again on Tuesday, as Democrats regained control of the U.S. House while Republicans picked up seats in the Senate.  Add their gains in the statehouses, and it was a better night overall for the Democrats, if less than the ‘blue wave’ they advertised.

“The extent of GOP House losses weren’t clear as we went to press, but they were extensive enough for Fox News to call the battle for control before 10 p.m.  Democrats will retake the House for the first time in eight years and deal a major blow to Donald Trump’s Presidency. The possibilities for conservative policy reform are dead for the next two years, and the siege of investigations will begin.

“The Senate was still undecided as we went to press, though it appeared Republicans would be able to hold a minimum of 53 seats and maybe more.  They gained seats in the GOP strongholds of Indiana, North Dakota and Missouri, and perhaps in Florida with Gov. Rick Scott narrowly leading incumbent Democrat Bill Nelson.  This will make it easier to confirm judicial and political nominees and will give the GOP more leverage in spending fights.

“Democrats also made substantial gains in the states, especially in the upper Midwest that was crucial to Donald Trump’s 2016 victory. They picked up governorships in Michigan, Illinois and Kansas and were leading in others.  Michigan was a particular washout for the GOP with Democrat Gretchen Whitmer winning in a rout, despite a strong economic recovery.  A decade of GOP reform on taxes, school choice and public unions is in jeopardy.

“One theme in these results is the re-assertion of the urban-rural divide.  Republicans held their own for the most part in rural districts and Trump states from 2016, while Democrats romped in the cities. Republicans lost the House because they also lost significant ground in the suburbs, especially relatively affluent areas with college-educated voters.

“They also lost in the longtime GOP stronghold of Staten Island.  One lesson is that Republicans can’t build a House majority with the Freedom Caucus alone, as perhaps North Carolina Rep. Mark Meadows might now appreciate as he enjoys life in the minority.

“The House defeat is also a message to Donald Trump from moderate Republicans, especially women.  Nearly four of 10 voters said they wanted to vote against Mr. Trump in the AP-Fox voter analysis.  Most of these were Democrats but also many traditionally GOP voters put off by Mr. Trump’s rancorous style.  The Democratic smears against Brett Kavanaugh brought enough Republicans home to save the Senate in GOP-leaning states, but not enough to save the House in swing districts.

“This is largely Mr. Trump’s failure, and the nearby table from the October Wall Street Journal-NBC poll puts his problem in sharp relief.  While 44% of voters approve of Mr. Trump’s policies, nearly half of them dislike him personally. That 20% is five times the percentage who disliked George W. Bush but liked his policies when he lost the House in 2006, and 10 times the share that disliked Barack Obama in 2013.

“More glaringly, the share of voters who dislike Mr. Trump personally but like his policies increased in the past two years. This is extraordinary for a new President and shows the extent of his missed opportunity. Some two-thirds of voters on Tuesday expressed satisfaction with the state of the economy, and these are people he’d win if he didn’t alienate them with his persona.

“Unlike Richard Nixon or Ronald Reagan, Mr. Trump has made no effort to build a larger coalition than the minority who helped win the Presidency narrowly over Hillary Clinton. Instead he has played constantly to his base who are already loyal.  If he wants to be re-elected, he will have to win over more of those suburban Republicans and independents.

“Mr. Trump’s closing argument on immigration also looks to have been a bust.  It didn’t help in suburban districts and may have cost Republican Carlos Curbelo his House seat in South Florida.  White House aide Stephen Miller bears much of the responsibility for this misjudgment. He advised Mr. Trump to walk away from a potential deal trading legalization for the so-called Dreamers in return for money for border security and ‘the wall.’  Then he urged the border crackdown that became the fiasco of family separation that further turned off suburban voters.

“Mr. Trump could have improved his chances to hold the House by accepting a deal and declaring a border victory. Suburban Republicans want border security, but they also want a humane and generous immigration policy. Mr. Trump needs to rethink his immigration strategy for 2020.

“The other liability for Republicans was their failure to repeal and replace health care.  Democrats played on voter fears of repeal but the GOP could never point to the benefits of a replacement they didn’t pass. Then too many Republicans simply ran away from the subject, giving Democrats an open field. The late Senator John McCain delivered the final blow against reform, but the general GOP incoherence on the subject was also to blame.

“Mr. Trump and the GOP can console themselves by pointing to statehouse victories in the key swing states of Ohio and Florida, and to their Senate gains.  But two years ago, before the 2016 election, we wrote that the Republican gamble with Donald Trump was that he would govern in such a way that would cost the House in 2018 and set Democrats up to create a new progressive government in 2020. After Tuesday, and without a Trump course correction, they are halfway there.”

Editorial / New York Times

“With the House of Representatives in Democrats’ control, the next two years will give them the opportunity to show that there’s a better model of legislating, that Congress is capable of doing more for Americans than cutting taxes for the wealthy and menacing everyone else’s health care.  Now and again Democratic leaders may need to play constitutional hardball – and they’ll have a chance to do it in a more constructive fashion than Mitch McConnell and his team, who have dominated Congress since 2014.

“Even as Democratic House members are picking the confetti from their hair, one thought should be foremost in their minds: How do they avoid screwing things up?

“For the midterms, Democrats adopted a trio of policy goals: lowering health care costs, creating jobs by investing in infrastructure, and cleaning up politics via a comprehensive reform package that would tighten ethics laws and shore up the integrity of our electoral system. These are popular causes with bipartisan appeal.

“They are also causes for which the president has explicitly expressed his own enthusiasm, whether real or feigned. This gives Democrats the chance to press President Trump about whether he is interested in making progress on his stated goals or is a hypocrite intent on waging partisan trench warfare for the remainder of his term....

“It has been a long two years for Democrats, watching Republicans fail to check Trumpian excesses. Which means the new majority might be tempted to overreach and, like Mr. Gingrich’s self-styled revolutionaries, wind up coming across as more partisan and prurient than public-spirited.  Investigations should be strategic and methodical and clearly in the public interest – for instance, looking into corruption among cabinet officials or waste of taxpayer dollars, rather than targeting more lascivious matters, like hush-money payments to former mistresses.

“The trick will be finding the right balance in both tone and topic.  Many Trump-hating Democrats might be in the mood for payback, but most Americans could easily be turned off by overt political games. And, let’s not forget, this is ultimately not about scoring points – Americans deserve better from their government.

“The topic of Mr. Trump’s tax returns will be especially ticklish. The president’s refusal to follow his predecessors’ example and release such basic information raises too many questions about conflicts of interest to ignore.  But things could get ugly.    The chairman of the House Ways and Means Committee has the right to request a copy, at which point the White House must decide if it wants to mount a legal challenge. Democrats need to be ready to make a cogent case – persuasive to the public as well as the courts – for why Mr. Trump’s taxes are a matter of critical concern.

“For now, Democratic representatives are making properly judicious noises about oversight. They are holding meetings among themselves to determine which issues should be priorities and how to avoid overlap among the committees. But once the new chairmen take over, the leadership will need a firm hand to minimize the wilding....

“Love her or hate her, nobody herds the cats better than Ms. Pelosi.

“That said, the Democratic leadership is staler than week-old toast. And while victory tends to cool intracaucus griping, if Ms. Pelosi becomes speaker, she owes it to the institution and her colleagues to set about raising a new generation of leaders, helping prepare such up-and-comers as Cheri Bustos, Hakeem Jeffries, Linda Sanchez, Ruben Gallego, Joseph Kennedy III, Ben Ray Lujan, Eric Swalwell and Seth Moulton, among others.

“Given the dismal example set so far by President Trump, Democratic leaders now have a political opportunity, and also a heavy responsibility. Winning the House is one thing.  Restoring some sanity to American politics and a sense of higher, common purpose to American governance is yet another.”

Editorial / Washington Post

“The Democrats’ return to control over the House of Representatives is much more than a victory for one party. It is a sign of health for American democracy.

“Distrustful of untrammeled majorities, the authors of the Constitution favored checks and balances, including, crucially, the check that the legislative branch might place upon the executive.  Over the past two years, the Republican majorities in the House and Senate have failed to exercise reasonable oversight.  Now the constitutional system has a fresh chance to work as intended.

“The Democratic victory is also a sign of political health, to the extent it is a form of pushback against the excesses, rhetorical and in terms of policy, committed by the Trump administration and propounded by President Trump during this fall’s campaign.  Turning against the dominant party in Washington even in a moment of economic prosperity, voters from Key West to Kansas refused to accept the continued degradation of their nation’s political culture.  Republicans retained control of the Senate, where the map this year favored their defense.  But voters nationwide refused Mr. Trump’s invitation to vote on the basis of fear of immigrants; they did not respond to his depiction of his opposition as dangerous enemies....

“Tuesday was a good day for Democrats.  It may also be a good day for Republicans, if they take the lessons of their House defeat to heart and reconsider the devil’s bargain they have made with Mr. Trump.  Indeed, if the results help lead to a reemergence of that party’s better angels, then it will have been a good day for America as a whole.”

Gerald F. Seib / Wall Street Journal

“President Trump didn’t need to win in Tuesday’s midterms so much as he needed to avoid disaster.  And that’s pretty much what happened.

“The country now stands not far from where it was when Mr. Trump won his shocking victory in 2016: deeply divided in its politics as well as its views of the 45th president.  The difference now is that the country appears even more deeply split, with blue Democratic areas moving further away from the president and red Republican sectors growing more loyal to him.

“That’s the picture that emerged Tuesday night as a raucous campaign season ended and the votes rolled in to produce a split verdict in the race for congressional control. The Democrats were poised to take control of the House of Representatives; that outcome casts a significant cloud over the next two years of the Trump presidency given the House’s ability to launch investigations of the administration and stop policy initiatives.  Moreover, the power of suburban voters hostile to Mr. Trump, particularly suburban women, came to bear not just in the battle for the House but in several Midwest governor’s races as well.  In one shocker, Kris Kobach of Kansas, a Republican who won a presidential endorsement, lost the governor’s race to a Democratic woman, Laura Kelly, in a state Mr. Trump carried by 21 percentage points.

“Yet there were silver linings aplenty for Mr. Trump as well in the night’s showing – even in the dark cloud of a House takeover by Democrats.  House Democrats now will provide a foil for the president, providing him with an enemy to blame for any policy failures – and in particular for any economic decline that might ensue after years of steady economic growth.

“Mr. Trump likes to call himself a master counterpuncher, and House Democrats now emerge as his main sparring partner – as well as a potential check on some of his more controversial tendencies.  It also is possible that Mr. Trump might now feel compelled to find, at least for a while, a bipartisan side that has been largely missing in his first two years.  In particular, there might be room for progress on infrastructure spending before policy paralysis sets in.

“Meanwhile, Mr. Trump and his Republican colleagues maintained control of the Senate, which was their top priority all along.  Though the Senate map was always going to be favorable to the Republicans, Mr. Trump can and will claim some credit for the results.

“By ginning up energy and turnout among his core voters, he likely helped the GOP take over a Senate seat in Indiana, for example, and to easily hang onto one in Tennessee that once appeared in peril.

“For Mr. Trump and his business allies, keeping control of the Senate means there is no danger that the tax cuts and deregulatory measures of the first two years of his term will be rolled back.  Crucially, the Republican campaign to redraw the federal courts with a steady stream of conservative judges can and will continue.

“Moreover, the Senate that emerges from Tuesday’s voting will be more friendly to the president than was the version of the last two years. The GOP Senators who were most vexsome to the president – Sen. Jeff Flake of Arizona and Sen. Bob Corker of Tennessee, neither of whom sought re-election – are gone, and those who remain owe Mr. Trump a debt of gratitude.

“The verdict, in short, was a mixed one, with the losses not much different from those a president normally suffers in the first midterm after taking office.

“Mr. Trump met a powerful force in the form of women voters, who made up 52% of the voters and went for Democrats by an 18-point margin overall, according to AP VoteCast, a pre-election and Election Day survey of 90,000 voters.  That force, as well as Democrats’ improved standing in key Midwest industrial states, will help shape the landscape as both parties move toward the 2020 presidential race.

“The contours of that race will begin forming almost immediately, in part because of the power Democrats have won. They will use their perch in the House to launch inquiries into the Trump administration; an early push for release of the president’s tax returns seems particularly likely.  Mr. Trump’s promise of additional personal tax cuts will go out the window, and the national fight over immigration will grow even more shrill.

“But at the same time, Mr. Trump used the 2018 campaign to strengthen his hold over the Republican party.  Some of his efforts on behalf of Republican candidates were controversial, particularly in the demonization of immigrants that marked the last two weeks.

“Yet Mr. Trump also invested far more time and effort on behalf of his party’s candidates than have many past presidents, and that won’t soon be forgotten.  Mr. Trump once seemed almost estranged from his own party; after Campaign 2018, that is hardly the case any longer.”

Editorial / USA TODAY

“The 2018 election was more a modest rebuke of President Donald Trump than a massive repudiation.

“Trump’s Republicans held on to the Senate and overperformed expectations in several Senate and governor races, giving the GOP something to crow about.  Indeed, Trump tweeted about ‘tremendous success tonight.’

“But Democrats took control of the House of Representatives, which will bring big – and much needed – change in Washington.  By putting Democrats in charge of one chamber of Congress, voters expressed their desire to place some restraints on a vitriol-spewing president that, according to surveys of voters leaving the polls, 55 percent of them disapprove of.

“The party in the White House typically loses seats in midterm elections.  What makes Tuesday’s House outcome even more significant, however, is that it occurred in a strong economy and on a map that has been rigged to the Republicans’ advantage through gross gerrymandering of congressional districts in multiple states. Going forward, weak Republican performance in suburban House districts that used to be reliably theirs should be a wake-up call for the party.

“If disgust with Trump’s behavior was not enough to turn many voters off, his attacks on health insurance certainly were.  An Election Day survey by The Associated Press showed health care to be the most important issue on the mind of voters.

“The switch in control of the House means that efforts to repeal the Affordable Care Act, also known as Obamacare, are dead, as are a new round of tax cuts.

“The new House majority also means that the many conflicts of interest in the Trump administration will get the congressional investigations that they deserve, and that the cause of law enforcement will get an ally on at least one side of Capitol Hill.

“With election results still trickling in, the message is emerging that many voters are not happy with the way things have been going in the past two years. But the nation, and the Congress, remain as bitterly divided as ever, if not more so.”

Editorial / Wall Street Journal, Part II

“President Trump’s political credo is never admit a mistake or setback, and on cue Wednesday he called the midterm election results a ‘tremendous success.’  Perhaps he even believes it, but he shouldn’t. The results weren’t the ‘blue wave’ of media and Democratic desire, but they were overall a GOP defeat with warnings for 2020.

“Democrats won the House for the first time in eight years, meaning that the possibilities for conservative policy reform are dead for the next two years. The siege of investigations will begin, and anti-growth mistakes are all too possible.

“The Senate gains are consolation, especially because they show Democrats paid a considerable price for their mugging of Brett Kavanaugh.  This will make it easier to confirm judicial and political nominees and will give the GOP some leverage in spending fights.  But except for Florida and still undecided Arizona, the Senate gains came in Trump-friendly states. GOP Senate candidates were wiped out across the upper Midwest, Northeast and Nevada.

“Democrats also made substantial gains in the states, notably those that were crucial to Donald Trump’s 2016 victory. They picked up seven governorships, including Michigan, Illinois, Wisconsin, Kansas and Nevada.  A decade of GOP reform on taxes, school choice and public unions is in jeopardy.  GOP victories in Florida, Ohio and perhaps Georgia are compensations, but Democrats in those states also nominated candidates too far to the left....

“The GOP lost House seats in the suburbs of Denver, Dallas, Houston, Des Moines, Minneapolis (two seats), Kansas City, Chicago, Richmond, Phoenix, and even Oklahoma City. They also lost in the longtime GOP stronghold of Staten Island.

“At his media melee on Wednesday, Mr. Trump read the names of some of these House Members with vindictive delight because he said “they didn’t want the embrace.”  He meant his. This was petty and not smart. Erik Paulsen in the Twin Cities, Peter Roskam west of Chicago and Barbara Comstock in northern Virginia understood that Mr. Trump is unpopular in their districts. They were trying to save seats that the GOP will now have to win back if they want another majority in 2020....

“Two years ago, before the 2016 election, we wrote that the Republican gamble with Donald Trump was that he’d govern in such a chaotic way that he’d lose the House in 2018 and set Democrats up to create a new progressive government in 2020.  If he doesn’t expand his coalition, that is what Mr. Trump will deliver.”

---

Finally, I continue to believe that Americans are hopelessly naïve to the dangers on the geopolitical front, and the following opinion piece from Kevin Bacon of Defense News encapsulates my views.

“Not one.  Not one reporter from the main White House press corps asked President Donald Trump during his day-after-midterm-elections press conference a single question about national security or the state of global affairs. Tens of thousands of U.S. troops are at war or involved in violent conflicts in Afghanistan, Iraq, Syria, Somalia, Yemen, Niger, Mali, and beyond. Russian warplanes are nearly kissing the wings of American aircraft.  Iranian vessels are harassing U.S. warships.  Special operators are killing impoverished terrorists across North Africa.  North Korea still has nuclear weapons.

“Why? This country couldn’t care less.

“At least, that’s what you’d think, this week.  The U.S. midterm elections were a referendum on many things: on Trump’s behavior, on his record, on the new liberals, on all the standard Democrat-vs.-Republican stock issues. And they were exciting. The nation’s post-Trump political awakening has been inspiring on both sides of the aisle.  Liberals are rising up and organizing for women’s issues, gun control, multiculturalism and all things not Trump.  Conservatives are rallying to save what they believe in, as best as they can define it, despite Trump.  Trump backers are living their best life. There’s a fight for the nation’s soul underway that is so visceral, so pervasive, so violent and divisive that it is beginning to be reminiscent of the great historical schisms of our history, from the Constitutional Convention to the Civil Rights era.

“But there’s one thing hardly anybody on TV is talking about right now. American leadership abroad.  Everything is domestic. Everything is internal. Everything is aimed at each other. Everything is what Trump wants it to be....

“Inside the national security community, there is a sense that today’s changes are shaping humanity’s very future. There are fears that 20th-century-style dictatorships could emerge, buoyed by their own angry electorates. There are calls for a complete realignment of the international system, one equal to the great organizing moments for the West that followed the world wars.  Trump and populists call for new, revised, or destroyed international organizations to reflect a wider burden sharing.  Inherent to that is a decline of American power and influence (and expense) in exchange for the rise of the same from Europe, Asia, and the Middle East. Some call for keeping the U.S. fighting in all corners of the earth, and some call for pulling U.S. troops home from great swaths of the earth’s surface, leaving terrorist homelands to their regional vices.  There is a sense that America, once the closest thing to an end-of-history shining city on the hill, is now rapidly losing its standing. And among the traditional internationalists of America’s national security elite, there is a sense that America is about to lose it all.

“But we didn’t hear about any of this in the run-up to the midterms. I watched hours of coverage on Election Night and the day after. I heard a lot of talk about the country’s divisions...I heard about pre-existing conditions and Obamacare.  I heard about immigration.  I heard a lot about border politics and Trump’s pre-election stunt that has sent thousands of body armor-clad troops to the Mexico border and his claim they would shoot rock-throwing migrants.  And I heard the revelation that most of those troops were going to be maintenance workers and propagandists, and the top U.S. general’s belated admission that in fact no American troops would be shooting at anyone anywhere near the U.S. border.

“But outside those circles and their immediate press, I heard next to nothing about America’s world leadership, the state of the globe, and its place in it.  I heard nothing about how any of these candidates are going to keep or return America to being the indispensable and singular leader of the free and democratic world....I heard nothing about how Democrats taking back the House helps or hurts America’s chances against things like China’s unflinching rise, Afghanistan’s future, or the Middle East.  I heard nothing about the future of the Iran deal, the Geneva peace process for Syria, the INF Treaty with Russia, the calls to completely reimagine the international system....

“I heard hardly anything of the U.S. military’s countless interventions encircling the globe.

“The good news for national security watchers is that the incoming House freshmen include record numbers of veterans and a few built-in national security leaders, perhaps most notably in Rep.-elect Elissa Slotkin, who flipped a conservative Michigan district to blue.  Under Obama, Slotkin occupied what is arguably the third-highest ranking civilian policy job in the pentagon: assistant defense secretary for international security affairs.  Before that, she did three tours in Iraq as a policy analyst for CIA and briefed President George W. Bush.  The woman is a qualified internationalist....

“If America’s divisiveness is the easy issue, what will it take for anyone to get down the list to the harder ones like the security of the border, or even harder, what lies beyond it: America’s global leadership for the next 100 years?”

Trump World

--President Trump fired Attorney General Jeff Sessions and replaced him, on an interim basis, with Matthew Whitaker, who will now oversee Special Counsel Robert Mueller’s investigation; Whitaker having openly criticized his Russia probe. Whitaker now has the power to constrain it or end it, just as President Trump wishes.

Trump never forgave Sessions for recusing himself from overseeing the Mueller probe, and the president wasted no time in doing something about it once the midterms were over.

Whitaker became Sessions’ chief of staff last year.  In July 2017, during an interview on CNN, he said he could envision a scenario where an acting attorney general doesn’t fire Mueller but “just reduces his budget to so low that his investigations grind to almost a halt.”

Whitaker the following month posted an opinion piece on CNN’s website wherein he called Mueller’s investigation a “witch hunt,” embracing one of the president’s favorite descriptions.

Senate Minority Leader Chuck Schumer, citing Whitaker’s “previous comments advocating defunding and imposing limitations on the Mueller investigation,” and protecting it “is paramount.”

Republican Sen. Lamar Alexander (Tenn.) said he was certain Mueller’s probe will be allowed to “continue to its end” because the Senate won’t confirm a new attorney general otherwise.

Both Democrats and many Republicans argue that interference with the Mueller probe would “constitute a constitutional crisis.”

--Tonight the Wall Street Journal is reporting that Donald Trump intervened directly to suppress stories about his alleged sexual encounters with women, “according to interviews with three dozen people who have direct knowledge of the events or who have been briefed on them, as well as court papers, corporate records and other documents.

“Taken together, the accounts refute a two-year pattern of denials by Mr. Trump, his legal team and his advisers that he was involved in payoffs to (Karen) McDougal and former adult-film star (Stormy Daniels).  They also raise the possibility that the president of the United States violated federal campaign-finance laws.

“The Wall Street Journal found that Mr. Trump was involved in or briefed on nearly every step of the agreements.  He directed deals in phone calls and meetings with his self-described fixer, Michael Cohen, and others. The U.S. attorney’s office in Manhattan has gathered evidence of Mr. Trump’s participation in the transactions.”

The thing is scores of former Trump associates, such as media executive David Pecker, and Cohen, have been granted immunity and they’ve been singing.

This is where President Trump should be worried about the Democrats taking over the House.

--President Trump on Friday signed an executive order effectively suspending the granting of asylum to migrants who cross the U.S.-Mexico border illegally, seeking fresh ways to block thousands of Central Americans traveling in caravans from entering the United States.  The order, which goes into effect on Saturday, means that migrants will have to present themselves at U.S. ports of entry to qualify for asylum.

--Wednesday’s presser, starring the aforementioned Jim Acosta of CNN, devolved to the point where the White House revoked Acosta’s press privileges.

Trump, badgered by Acosta, at one point aggressively pushed back: “CNN should be ashamed of itself, having you working for them.  You are a rude, terrible person.”

But to PBS News Hour’s Yamiche Alcindor, who asked the president about white nationalists emboldened by Trump labeling himself a “nationalist,” Trump said he was insulted.

“That’s such a racist question,” said the president.

It didn’t help that White House press secretary Sarah Huckabee Sanders then tweeted an edited video of the exchange between Acosta and an administration intern from her official account to justify the White House’s decision to revoke Acosta’s press pass afterwards.  The video was apparently first created by banned conspiracy theory website Infowars.

Sanders accused Acosta of “placing his hands on a young woman just trying to do her job as a White House intern” and of preventing other reporters from asking questions.

CNN’s vice president of communications and digital partnerships, Matt Dornic, said it was “absolutely shameful” for Sanders to share the video.  “History will not be kind to you,” Dornic tweeted.  Newsweek’s Nicole Goodkind tweeted, “This is a video that Infowars made. They sped it up so that it seems more violent than it is.”

Michael Goodwin / New York Post

“By producing a split decision, the election that was supposed to end all elections turned out to be fairly predictable. But it’s the day after that was unlike any other.

“The Republican president, the likely speaker of the Democratic-controlled House and the Senate’s Republican majority leader each started Wednesday by talking about working together to get things done. They talked to each other privately and talked separately in public about what they thought they could accomplish for the country.

“For most Americans, that would make for a very good day. Given the overheated environment leading up to the midterms and the fear among many that we are drifting toward an era of disunion and spreading political violence, bipartisan pledges to work together for the common good were like the sudden emergence of a bright candle flickering in the wind.

“Alas, it was the last thing some members of the White House press corps wanted, so they tried to snuff it out.

“The conduct of a handful of so-called reporters during President Trump’s news conference was disgraceful beyond measure. This is not journalism, this is narcissism.

“Naturally, the boorish Jim Acosta of CNN was the instigator. As is his habit, Acosta doesn’t ask questions – he makes accusations and argues. Almost daily, he does with the press secretary; Wednesday, he did it with the president.

“ ‘I want to challenge you,’ Acosta began after Trump called on him. Trump realized he’d made a mistake, murmuring, ‘Here we go’ and Acosta didn’t disappoint.

“He insisted that despite the president’s use of the word ‘invasion,’ the caravan of Central America migrants ‘is not an invasion.’

“He adopted a lecturing, I-know-best tone to declare that ‘they’re hundreds and hundreds of miles away; that’s not an invasion.’

“Trump’s response should not have been necessary: ‘Honestly, I think you should let me run the country, you run CNN.’

“After more back-and-forth, he called Acosta ‘a rude, terrible person’ and said ‘CNN should be ashamed of itself.’

“That should have been enough – Acosta got the attention he wanted and got Trump’s goat, giving his network video it could make hay out of for days.  Besides, there were scores of other reporters raising their hands to be called on.

“But Acosta wouldn’t give up the microphone and kept talking over Trump, trying to lob another grenade.

“The president, clearly angry now and stepping away from the podium as if he might bolt the room, pointed at him and said forcefully, ‘That’s enough, that’s enough.  Put down the mic.’

“Finally, Acosta sat down, then stood up to argue again, interrupting another reporter....

“There was a time not long ago when young journalists were taught not to become the story. Apparently, many news organizations have flipped that lesson on its head.”

--Some Trump tweets....

“Just out – in Arizona, SIGNATURES DON’T MATCH. Electoral corruption – Call for a new Election?  We must protect our Democracy!”

[speaking for myself, my signature from when I first registered, which is what is in the voters’ registrar, looks nothing like my signature of today...funny, before the election I was talking to a friend about that...]

“In the 2016 Election I was winning by so much in Florida that Broward County, which was very late with vote tabulation and probably getting ready to do a ‘number,’ couldn’t do it because not enough people live in Broward for them to falsify a victory!”

“Mayor Gillum conceded on Election Day and now Broward County has put him ‘back into play.’  Bill Nelson conceded Election – now he’s back in play!?  This is an embarrassment to our Country and to Democracy!”

“Rick Scott was up by 50,000+ votes on Election Day, now they ‘found’ many votes and he is only up 15,000 votes.  ‘The Broward Effect.’  How come they never find Republican votes?”

“You mean they are just now finding votes in Florida and Georgia – but the Election was on Tuesday?  Let’s blame the Russians and demand an immediate apology from President Putin!”

“In all fairness, Nancy Pelosi deserves to be chosen Speaker of the House by the Democrats. If they give her a hard time, perhaps we will add some Republican votes.  She has earned this great honor!”

“If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level. Two can play that game!”

“To any of the pundits or talking heads that do not give us proper credit for this great Midterm Election, just remember two words – FAKE News!”

“Those that worked with me in this incredible Midterm Election, embracing certain policies, and principles, did very well. Those that did not, say goodbye!  Yesterday was such a very Big Win, and all under the pressure of a Nasty and Hostile Media!”

“Received so many Congratulations from so many on our Big Victory last night, including from foreign nations (friends) that were waiting me out, and hoping, on Trade Deals.  Now we can all get back to work and get things done!”

[I’d love to see a list of foreign leaders who called to congratulate the president.  I’m sure it’s a short one...like covering an eighth of a post-it.]

Wall Street and China Trade

As expected, there was no change in interest rates as the Federal Reserve wrapped up a two-day policy meeting on Thursday.  In holding rates steady, the Fed said: “The labor market has continued to strengthen and...economic activity has been rising at a strong rate.”  The vote was 9-0 to keep the federal funds rate (the benchmark) at its current level.

The statement reflected little change in the central bank’s outlook for the economy since the last policy meeting in September, with inflation running near its 2 percent target, unemployment falling and risks to the economic outlook appearing to be “roughly balanced.”

But the Fed did note that fixed business investment (or cap-ex) “has moderated from its rapid pace earlier in the year.”  In recent months, the Fed had stated that spending was growing “strongly.”

However, the Fed will raise rates again at its December 18-19 meeting, of this there is much consensus across the Street, and it is still looking to raise its key benchmark another three times in 2019 to push the funds rate to over 3% from its current 2% to 2.25% range.  Chairman Jerome Powell and the gang want to ensure they have some ammunition for the next downturn and I continue to believe it’s the right policy, regardless of what President Trump will say.

On the economic front this week, just a few items.  The ISM October non-manufacturing reading came in at a robust 62.5 (50 being the dividing line between growth and contraction).

And the October producer price index was hotter than forecast, 0.6%, 2.9% year on year, with the core number, ex-food and energy, 0.5% and 2.6% yoy.

While it is early to forecast fourth-quarter GDP, the Atlanta Fed’s GDPNow barometer pegs it at 2.9%, which would be a continuing decline from the 4.2% reading in Q2 and the 3.5% for Q3.

On the Trade Front....

Former chief economic adviser for President Trump, Gary Cohn, speaking in Singapore, warned the trade battle between China and the U.S. will simply hurt the back pocket of many American consumers – which will in turn hurt the U.S. economy.

“We are not a manufacturing economy,” he said.  “So if U.S. citizens can buy products cheaply, they have more money to spend on goods, and once they spend on goods they can take the additional money they have and they can save it – and we do need a higher savings rate in the U.S.

“I look at tariffs as a bit of a consumption tax [and] we do not want to tax our consumers when they’re going to spend their disposable income on what we produce, which is services.”  [BBC News]

Cohn was a former Goldman Sachs executive.  Another Goldman alum, former Treasury secretary Henry Paulson, also delivered a speech in Singapore, with Paulson warning of an “economic Iron Curtain” that may soon descend between the U.S. and China.

Paulson warns China that its behavior has alienated American friends and unified the American public against it.  At the same time he says the United States has unrealistic expectations of China and of its own allies, and that if neither side changes course, the result will be “a long winter in U.S.-China relations” and “systemic risk of monumental proportions.”

Paulson, going back to his Goldman days, has a deep history in China and his comments are important.  As Greg Ip of the Wall Street Journal notes, Paulson “is unsparing in his criticism of China’s current direction.  Seventeen years after joining the World Trade Organization, he says, it still ‘has not opened its economy to foreign competition in so many areas,’ using joint-venture requirements, ownership limits, technical standards, subsidies, licensing procedures and regulation to block foreign competition.  ‘This is simply unacceptable.’”

Paulson said that when Xi Jinping took over in 2013, Paulson took him at his word that markets and private enterprise would drive Chinese development.  They haven’t, which is all about Xi tightening his grip on the Communist Party.

In a separate interview, Paulson said: “Jiang Zemin talked about the party being a big tent.  His view was, ‘We need to bring the elites into the party’: business leaders, academics, and others.  Xi Jinping views the party itself as the elite, and the party, not the bureaucracy, would be the organization through which he governed.”

Paulson said the centralization of power in the Communist Party and continued discrimination against foreign companies has unified American leaders across the political spectrum in the belief that China is a strategic rival whose rise “has come at America’s expense.”

And Paulson adds that China is alienating those very interests in the U.S. disposed to defend it, i.e., business.

“How can it be,” Paulson argues, “that those who know China best, work there, do business there, make money there, and have advocated for productive relations in the past, are among those now arguing for more confrontation?”  True, some have accepted the “Faustian bargain” of profits today over competitiveness tomorrow, “but that does not mean they are happy about it,” said Paulson.  [Greg Ip / WSJ]

So speaking of Xi Jinping, he gave a much-anticipated speech at a Shanghai trade fair this week, which virtually every major business leader blew off, let alone world leader, and Xi hit back against President Trump’s “America First” policies with some pointed language, denouncing the “law of the jungle” and “beggar-thy-neighbor” trade practices.  But at the same time he didn’t outline any new proposals that would suggest he was prepared to meet Trump’s demands, such as halting forced technology transfers or rolling back support for state-owned enterprises.

“All countries should strive to improve their business environment and solve their own problems,” Xi told the inaugural China International Import Expo.  “They shouldn’t always whitewash themselves and blame others, or act like a flashlight that only exposes others, but not themselves.”

Xi didn’t mention Trump or the U.S. by name in the speech, but instead, he stepped up warnings that protectionism would harm global growth while pledging to boost domestic consumption, strengthen intellectual property protection and advance trade talks with Europe, Japan and South Korea.

In other words, a total crock.  That’s all Xi does.  He stands up at such forums, says China is prepared to open up its markets and that it wants foreign investment, but in actuality it is more of the same, exactly what Paulson argues above.  He gets it.  I get it, having lived it.  Yes, President Trump gets it.  And increasingly American and European business leaders get it.

Many global brands from Adidas to Walmart, Procter & Gamble to Uniglo, sent only country heads to the expo, not the CEO.  Starbucks Corp. CEO Kevin Johnson apparently didn’t attend, even though he was going to be in Shanghai, Starbucks opening a store in China every 15 hours.

But Xi nonetheless, as always, cast himself as one of the world’s chief defenders of globalization. “As globalization deepens, the practices of law of the jungle and winner take all are a dead end,” he said.

China ranks 59th out of the 62 countries evaluated by the Organization for Economic Cooperation and Development in terms of openness to foreign direct investment.  Almost half the companies surveyed in June by the European Chamber of Commerce in China said they missed out on business opportunities due to regulatory barriers or market access restrictions, and they expected obstacles to increase during the next five years.

Following Xi’s speech, the European Chamber warned that the lack of details about fulfilling previous promises was rapidly eroding European confidence in Chinese market opening.

In a statement, the Chamber said: “This constant repetition, without sufficient concrete measures or timelines being introduced, has left the European business community increasingly desensitized to these kinds of promises.”

Europe and Asia

We had our huge slug of economic data for both Europe and Asia last review. This week the eurozone (EA19) reported its PMIs for October non-manufacturing (services) and for the EA19 as a whole, the reading was 53.7 vs. September’s 54.7.  [The final Euro Comp reading was 53.1 vs. 54.1]

Other service sector PMIs:

Germany 54.7 in October vs. 55.9 prior month; France 55.3 vs. 54.8; Italy 49.2 vs. 53.3 (yuck); Spain 54.0 vs. 52.5 (good). [IHS Markit]

One other, eurozone retail sales volumes were flat in September compared to August, and growth over the year fell to 0.8 percent, the lowest annual change since October last year, according to Eurostat.  Just further ammo for the slowdown camp.

European Central Bank President Mario Draghi urged eurozone governments on Thursday to pay down their national debts to strengthen the currency bloc against potential economic shocks such as Brexit.  This comes amid a tussle between the EU and Italy, discussed below.

Addressing Ireland’s parliament on Thursday, Draghi said he expects the region’s five-year-old economic recovery to continue, but cited rising trade protectionism, weaknesses in emerging markets, and financial-market volatility as notable risks.

“Given the current buoyant economy, it’s time to rebuild fiscal [budgetary] buffers,” he said.

Draghi, despite the risks, said the ECB expects to begin phasing out its 2.5 trillion euro bond-buying program, quantitative easing, in December as planned.

The European Union issued its latest forecast on GDP for the 19 countries that use the euro and it expects the eurozone to grow by 2.1% this year, after 2.4% in 2017, which was the best year for the euro area in a decade.  The EU cut its 2019 forecast to 1.9% previously this year and now projects 1.7% in 2020.

The EU warned that the U.S. Federal Reserve’s interest rate hikes could spread “turmoil” through global financial markets and weaken growth in both developing and developed economies.

Well, yeah, EU.  Our Fed is normalizing interest rates after years of free money, and you guys (and Japan) are stuck in your zero, or negative, rate regimes that will indeed lead to chaos when the day inevitably comes that you have to begin tightening as well.  I mean, seriously, the German 10-year is still at about 0.40%.

Brexit: It’s crunch time but not too much news this week, just a lot of warnings that a no-deal on Brexit would be disastrous.

The key issue remains the border between Northern Ireland and the Republic.  The Northern Irish party that props up Prime Minister Theresa May’s government, DUP, cast her Brexit negotiation as a betrayal and cautioned it could not support a deal that divided the United Kingdom.

The warning underscores the huge problems that May faces in getting any Brexit divorce deal, which London, and Brussels, insist is 95 percent done, approved by both her fractious Tories and by the Northern Irish lawmakers whose ten seats keep her in power.

Less than five months before the drop-dead date (thus far) of March 29, negotiators still can’t reach a consensus on a backup plan for the border should the EU and the UK fail to clinch a trade deal (negotiations for which start after March 29).  The Democratic Unionist Party interpreted a promise Mrs. May made in a letter that she would never let a division of the UK “to come into force” as an admission that such a clause would be included in a final deal, the Sunday Times reported.

DUP leader Arlene Foster said: “The prime minister’s letter raises alarm bells for those who value the integrity of our precious union and for those who want a proper Brexit for the whole of the United Kingdom. From her letter, it appears the prime minister is wedded to the idea of a border down the Irish Sea with Northern Ireland in the EU single market regulatory regime,” Foster said.

The DUP has been a thorn in May’s side before.  It was a year ago that it refused to sign off on a deal on the border, causing a temporary collapse in talks at a crucial stage.

Both the EU and Britain need an agreement to keep trade flowing between the world’s largest trading bloc and the world’s fifth-largest economy.  The other 27 members of the EU combined have about five times the economic might of Britain.

But ever since the prime minister triggered exit talks in March 2017, negotiators have struggled to find a solution to the 310-mile land border on the island of Ireland.  It’s imperative to both that customs posts be avoided, which some fear, with good reason, could reignite The Troubles, the violence in Northern Ireland that was ended with 1998’s Good Friday Accord.

At issue is a fallback option for the border.  Prime Minister May’s negotiators argue that the whole of the United Kingdom should stay inside a temporary customs arrangement with the EU, though it is unclear for how long and what would happen after exiting that.  The EU is insisting on an insurance policy – or a backstop to the backstop – which is so freakin’ complicated, admittedly.  The EU demands that London sign a treaty clause that would  leave Northern Ireland inside the EU customs space.

For good reason, this is unacceptable to the DUP in Northern Ireland, as well as other “Unionists" whose political ideology is based on defense of Northern Ireland’s place in the United Kingdom.

So Arlene Foster is saying, “We will not support arrangements that leave Northern Ireland separated from the rest of the United Kingdom and tied to the European Union’s customs or regulatory regimes.”

Any backstop has to have a clear expiration date.  And, if Mrs. May can clinch a deal with the EU, she still needs to get it approved by parliament.  Around 320 votes would be needed, but after May botched the snap election in 2017, she lost her majority, and has relied on the DUP to govern.  The prime minister’s Conservatives have 315 lawmakers, so May needs the 10 DUP members.

Then late today, a minister in the British government stepped down to protest Theresa May’s Brexit plan and is backing calls for a second referendum on whether the country should leave the European Union.

Jo Johnson, younger brother of former Foreign Secretary Boris Johnson, said the withdrawal agreement being discussed by EU and British leaders would greatly weaken Britain and require the country to follow EU rules without having any say. The only alternative on the table, he said, is a no-deal Brexit that would “inflict untold damage” on Britain.

Older brother Boris resigned in July to protest May’s Brexit plan, but Boris did so as a staunch supporter of a hardline Brexit, while Jo Johnson backed the “remain’ camp during the June 2016 referendum.

Separately, Britain’s economy did pick up steam during the third quarter, growing at the fastest rate since late 2016, but most believe this is a high watermark prior to Brexit.

GDP rose 0.6 percent over the prior quarter, 1.5 percent higher than a year earlier, up from an annual rate of growth of 1.2 percent in the second quarter.

Italy: The government in Rome said it will stand by the main pillars of its budget, even though the EU Commission said it must be revised.  The Commission rejected Italy’s fiscal plan for 2019 last month, saying it flouted a previous commitment to lower the deficit and that it did not guarantee a reduction in the country’s 130 percent debt to GDP ratio, the second highest in the EU next to Greece.

The European Union gave Italy until Nov. 13 to present a new plan and can start taking disciplinary action against Rome later in the month, though European Economics Commissioner Pierre Moscovici said the EU wouldn’t immediately follow through with penalties and that “We want a dialogue with Italy.”

Italy’s Economy Minister Giovannia Tria said today that the answer to the European Commission with regards to the most contentious points of the budget would confirm its “main pillars,” and that it would respect a maximum deficit of 2.4 percent of GDP in 2019 and that the economic slowdown made an expansionary budget even more necessary.

But the EU Commission believes Rome’s calculations are based on an overly rosy scenario.  The Commission rep responsible for the euro, Valdis Dombrovskis, said, “Basically the assumption is that if they...increase public spending, it will stimulate the economy and thus will help to reduce the budget deficit.  We see that this is actually not materializing.”

The EU raised its forecasts for Italy’s budget deficit to 2.9% next year and 3.1% in 2020, well above the government’s estimates.

To be continued....

France: As he prepares to host a big World War I commemoration this weekend in Paris, French President Emmanuel Macron stuck his foot in his mouth again, praising Marshal Philippe Petain for his efforts in World War I, though Petain was convicted of treason for his actions as leader of Vichy France from 1940 to 1944, and is despised for his complicity in the Holocaust.

“I pardon nothing, but I erase nothing of our history,” Macron said.  But any praise for Petain triggers outrage among French Jews.

Macron has been sliding in the polls and Wednesday’s remarks don’t help in a nation that has lived through two world wars and only in recent decades has acknowledged its collaborationist past.

Meanwhile, campaigning for the May 2019 European Parliament elections has begun and an Ifop poll published Sunday showed the centrist Republic on the Move (LREM), Macron’s party, had 19 percent, but that far-right leader Marine Le Pen’s RN (Rassemblement National, formerly the National Front) was at 21 percent, ahead of Macron for the first time.  Together with the seven percent for sovereignist Nicolas Dupont-Aignan and one percent each for “Frexit” parties led by former Le Pen associates, far-right parties thus won a combined 30 percent of voting intentions, up from 25 percent end of August.

Macron has been warning this week that if someone suggests that far-right nationalists  are less threatening nowadays than they were in the past, one runs the risk of becoming complacent towards them.  “I would suggest that you reread what was said at the time,” he said.  ‘Well-educated, well-informed people said that we could get along with the nationalists.  As I recall, nobody, not even the wealthiest and the best educated, blocked the rise of Hitler in one country and Mussolini in another.”

In a YouGov poll published last week, Macron’s popularity fell to its lowest level since his 2017 election, with only 21 percent of those polled saying they were satisfied with him.  Macron has been dealing with scandals in his cabinet and a punk labor picture.

Turning to Asia, China’s service sector PMI for October fell from 53.1 to a putrid 50.8, according to the private Caixin reading. [The government figure for last month was 53.9 on non-manufacturing; a far bigger difference between the two readings than normal.]

China’s factory-gate (producer price) inflation slowed for the fourth month in October on cooling domestic demand and manufacturing activity, which probably means Beijing will roll out more growth-boosting measures in the face of the trade frictions with the United States.

The PPI rose 3.3 percent from a year earlier, easing from September’s 3.6 percent pace.  The consumer price index rose 2.5 percent in October from a year earlier, same as September’s rate. The core rate, ex-food and energy, was 1.8 percent.  China’s inflation target is 3 percent.

But despite the aforementioned trade issues with the United States, Chinese exports grew 15.6 percent in October, compared to a year earlier, defying predictions the U.S. tariffs would hit demand for Chinese-made goods.

The performance marked an acceleration from the 12.2 percent annual growth in the January-to-September period. Imports grew 21.4 percent last month compared to 20 percent for the year through September.

In Japan, the non-manufacturing PMI for October came in at 52.4 vs. 50.2 in September.

Street Bytes

--Stocks finished up a second consecutive week, with the Dow Jones adding 2.8%, the S&P 500 2.1% and Nasdaq a more modest 0.7%.  The bulk of the gains were Wednesday, with the Dow Jones jumping more than 500 points on the election results, namely Republicans keeping the Senate, which means tax cuts and deregulation remain in place.

Historically, the post-mid-term election period is strong for equities as well.

--U.S. Treasury Yields

6-mo. 2.51%  2-yr. 2.92%  10-yr. 3.18%  30-yr. 3.38%

The yield on the 10-year Treasury hit a seven-year closing high Thursday, after the Fed’s policy statement, 3.232%, which beat the recent previous closing high of 3.227% established on Oct. 5 and marked its highest settlement since May 2011.  [The yield on the 10-year fell back to 3.18% today on a little flight to safety with the equity markets sliding a bit.]

--The weekly oil inventory reports continue to show far greater builds than expected, as noted by the Energy Information Administration, the statistics arm of the U.S. energy department.

At 431.8m barrels, the EIA said crude oil inventories are about 3 percent above the five year average for this time of year.

Gasoline stocks also rose when a decline was expected, as demand has fallen.  The national average for unleaded regular gasoline at the pump is $2.74, 17 cents less than last month.

So all this staunched a mid-week rally in oil prices, again easing fears of a global supply shortfall after the U.S. reimposed sanctions on Iran, though as explained below, there are major exemptions...for now.

And by week’s end, oil was cratering, in a bear market, a decline of over 20 percent from a high of just five weeks ago, which in turn was the highest level since 2014.  The five-week slide has seen the price of West Texas Intermediate go from $74.29 to $59.87.

This has rattled OPEC, whose members meet this weekend, amid the supply glut, exacerbated by the waivers granted on Iran’s production.  Remember, Saudi Arabia had pledged to pump more just weeks ago, to make up for any Iranian shortfall, and now we have record U.S. supply as well.

All of this is great news for consumers, a true tax cut at the pump just in time for the holiday shopping season.

But now expect the Saudis to reverse course on production.

--And we had another important story in the energy market at week’s end.  A U.S. District Court in Montana ruled that the long-troubled Keystone XL oil pipeline project would have to wait for further environmental review, a big blow to the Trump administration.

The 1,200-mile long project is designed to connect Canada’s tar sands crude with refineries on the Texas Gulf Coast.

President Trump had attacked the Obama administration for failing to move ahead in the face of protests based largely on environmental concerns.  Trump then signed an executive order two days into his presidency setting in motion a course reversal on both the Keystone XL pipeline and the Dakota Access pipeline.

The decision by District Judge Brian Morris does not permanently block a  permit but requires a more detailed environmental impact review, including potential adverse impacts related to cultural resources and endangered species.  The Trump administration had claimed, without supporting evidence, that the environmental impacts established by the Obama administration “would prove inconsequential.”

Well, with this you can see the consequences of federal appointments to the courts, as Morris was appointed to the bench by President Obama.

--Boeing Co. is sending out a bulletin to 737 MAX jet operators as soon as Wednesday warning erroneous readings from a flight-monitoring system could cause a dramatic dive. The warning is based on preliminary information gathered in the investigation of a Lion Air flight that crashed in Indonesia last week, killing all 189 on board.  The flight data recorder was recovered, but last I saw, not the cockpit voice recorder.  The prior four flights of this particular aircraft had problems as described in the bulletin Boeing is sending out.

A story in the Wall Street Journal noted: “Airline pilots are routinely trained to deal with unreliable airspeed indicators and such defects by themselves aren’t considered imminent threats to safety of flight. Typically, the response is to maintain or slightly increase thrust, while avoiding dramatic climbs or descents.”

--Canadian plane and train maker Bombardier Inc. announced it was laying off another 5,000, as it has decided to shed its turboprop plane-making and pilot-training units.

Bombardier has been under financial pressure for several years as a big bet to compete with Boeing and Airbus with a brand new single-aisle jetliner fell flat.

Bombardier sold its turboprop-aircraft programs and the “de Havilland” trademark to a unit of Longview Aviation Capital Corp., the parent of Canadian aircraft-maker Viking Air Ltd.  The deal includes the Dash 8 Series aircraft.

The business aircraft-training activities were sold to CAE Inc. for $645 million.

--Lowe’s, in its effort to more closely compete with rival Home Depot, announced it was closing 51 underperforming stores in the U.S. and Canada over the next three months.

As a result of the restructuring, it sharply cut its profits outlook for the fiscal year ending in February 2019 to $4.50 to $4.60, down from $5.40 to $5.50.

--Wendy’s Company reduced its 2018 financial guidance and reported revenue that missed expectations, though earnings were better than projected.  Revenue came in at $400.6 million from $391.3m a year ago, but this was shy of the Street’s estimates.  Importantly, same-restaurant sales dipped 0.2% in the quarter, against 2% growth during the same quarter last year.

For the full year, comp sales are expected to grow just 1% in North America, down from a prior forecast of 2% to 2.5%.

But the shares, after an initial dip on the move, rallied back on word the company was increasing its share buyback program.

--CVS Health reported third-quarter earnings that beat expectations, owing to lower taxes and a jump in prescriptions.  The nation’s second-largest drugstore chain said Tuesday that prescription volume in stores open at least a year jumped 9 percent, which helped lead to an increase in revenue for its retail-long-term care business of more than 6 percent to about $20.9 billion.

CVS also booked a $268-million drop in income taxes due to federal tax cuts.  The company runs more than 9,800 retail locations and processes over a billion prescriptions annually.

The shares rose more than 3 percent on the news.

--Shares in Papa John’s fell as the company reported punk earnings and revenue for the third quarter.

Revenue sank to $364 million from $431.71 million a year ago, the fourth consecutive quarter of declining sales.  System-wide North America comparable sales registered a decrease of 9.8%, as the negative publicity surrounding its brand continues to adversely impact the top line.

For the year, the company was looking for same-store sales drops of 6.5% to 8.5%, which is just huge, as these things go.

--Ryanair Holdings said traffic surged 11% to 13.1 million in October, with a 96% load factor, despite a cancellation of more than 300 flights during the month, due to a five-day airport baggage handler strike in Brussels, adverse weather and “continuing Air Traffic Control staff shortages in the UK, Germany and France,” according to the company.

Ryanair is one of the more fascinating companies in the world and I was just struck by the traffic surge and the load factor.  The airline isn’t without its major labor issues, I hasten to add, particularly with pilots and flight crews.

--Amazon.com will choose two locations for its new second headquarters, rather than one, according to the Wall Street Journal, which cited an unidentified source on the matter; the new jobs split evenly between the two.

Amazon probably wants to avoid criticism that its arrival in a new town overwhelms the area. While its current headquarters has fueled an economic boom in Seattle, it is also often blamed for traffic problems and skyrocketing housing costs that squeeze some residents out of the city.

Previously, the Washington Post said Amazon was looking at Crystal City, Va., a suburb of Washington, while others say Amazon is looking specifically at Long Island City, N.Y., which is part of the Big Apple (Queens), though there are still other locations in the running.

But when a decision is finally made, a lot of cities are going to feel screwed, not because they lost their bid, but because Amazon told them one thing and, after no doubt spending a lot of money putting together a proposal, it was in the end just for half of what they had been told they were bidding on. 

--According to the latest federal data, through mid-October, American soybean sales to China have declined 94 percent from last year’s harvest, which has led to huge stockpiles of potentially rotting beans unless there is a quick resolution to the U.S./China trade war.  “The U.S. exported $26 billion in soybeans last year, and more than half went to China.”  [Binyamin Appelbaum / New York Times]

--Walt Disney Co. reported record profits with massive success for movie releases like “Black Panther,” as CEO Robert Iger predicted an accelerated timeline for its takeover of major assets of 21st Century Fox Inc., amid the company’s continued drive to shape its digital future.

The tie-up with Fox will allow Disney to launch a direct-to-consumer service in which shows based on Disney franchises like “High School Musical” will stream alongside programming from Fox’s National Geographic brand, as Disney, and other traditional studios, look to take on new competitors and Netflix Inc.  Iger, on an earnings call Thursday, revealed the digital service’s name would be Disney+.

Meanwhile, Disney’s profit for the three months ended Sept. 29 rose 33% to $2.32 billion, or $1.55 a share, while revenue was up 12% to $14.31 billion.

Disney has released five of the 10 highest-grossing movies of 2018, including “Black Panther,” “Avengers: Infinity War” and “The Incredibles 2.”

--Follow-up to my diatribe on Facebook last time. This week, the UK’s data watchdog referred Facebook to Europe’s lead regulator to investigate how the company targets, monitors and shows adverts to users, saying it was concerned about some of the practices at the social network.  Britain’s Information Commissioner has been investigating the use of data analytics to influence politics after Cambridge Analytica obtained the personal data of 87 million Facebook users from a researcher.

Under the EU’s Global Data Protection Regulation (GDPR), a firm found to have broken data processing and handling rules can be fined up to 4 percent of their global revenue of the prior financial year, or $23 million (20 million euros), whichever is higher.  FB had total revenue in 2017 of $40.7 billion.

“Citizens can only make truly informed choices about who to vote for if they are sure that those decisions have not been unduly influenced,” Britain’s Information Commissioner Elizabeth Denham said in a report to lawmakers published on Tuesday.  “We have uncovered a disturbing disregard for voters and personal privacy.”

Separately, and also in keeping with what I wrote last week, Facebook said Monday that a human rights report it commissioned on its presence in Myanmar showed it had not done enogh to prevent its social network from being used to incite violence.

The report by the San Francisco-based nonprofit Business for Social Responsibility recommended that Facebook more strictly enforce its content policies, increase engagement with both Myanmar officials and civil society groups and regularly release additional data about its progress in the country.

“The report concludes that, prior to this year, we weren’t doing enough to help prevent our platform from being used to foment division and incite offline violence.  We agree that we can and should do more,” Alex Warofka, a Facebook product policy manager, said in a blog post.

BSR said FB must be prepared to handle an onslaught of misinformation during Myanmar’s 2020 elections.

Facebook’s reaction is like that of the company insiders provided to PBS’ “Frontline” program.

“We are having an ongoing conversation....”

--Ben Protess, Robert Gebeloff and Danielle Ivory / New York Times

“In the final months of the Obama administration, Walmart was under pressure from federal officials to pay nearly $1 billion and accept a guilty plea to resolve a foreign bribery investigation....

“Federal prosecutors and the Securities and Exchange Commission have yet to charge Walmart...

“Across the corporate landscape, the Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance, according to analyses of government data and interviews with more than 60 former and current federal officials. The approach mirrors the administration’s aggressive deregulatory agenda throughout the federal government.

“The New York Times and outside experts tallied enforcement activity at the SEC and the Justice Department, the two most powerful agencies policing the corporate and financial sectors. Comparing cases filed during the first 20 months of the Trump presidency with the final 20 months of the Obama administration, the review found:

“ –A 62 percent drop in penalties imposed and illicit profits ordered returned by the SEC, to $1.9 billion under the Trump administration from $5 billion under the Obama administration;

“ –A 72 percent decline in corporate penalties from the Justice Department’s criminal prosecutions, to $3.93 billion from $14.15 billion, and a similar percent drop in civil penalties against financial institutions, to $7.4 billion;

“ –A lighter touch toward the banking industry, with the SEC ordering banks to pay $1.7 billion during the Obama period, nearly four times as much as in the Trump era, and Mr. Trump’s Justice Department bringing 17 such cases, compared with 71.”

Yes, former Republican officials from the regulatory agencies told The Times they largely welcomed the change, “though some are concerned that the Trump administration’s softer approach toward banks could open the door to the sort of reckless Wall Street behavior that spurred the financial crisis,” particularly as some Obama-era rules adopted after the crisis are eased.

--Wisconsin Republican Gov. Scott Walker lost his bid for a third term to Democratic challenger Tony Evers on Tuesday, 49.6 percent to 48.4.  I have no idea the extent to which the story of Foxconn played into Walker’s defeat, but it surely influenced many voters.

Dan Kaufman of the New Yorker had a detailed report on the world’s largest contract electronic manufacturer that chose to build a massive new plant in Wisconsin, the contract signed in September 2017 and touted by President Trump ever since as an example of his efforts to bring manufacturing jobs back into the U.S.

Foxconn, based in Taiwan, makes products for Apple, Sony, Microsoft and Nintendo, among others, and is in the process of building a 21.5-million-square-foot manufacturing campus, investing up to ten billion dollars in the state, while hiring 13,000 workers at an average wage of $54,000 a year.

But what was first seen as a crucial boost to his reelection efforts became a liability, particularly among voters outside southeastern Wisconsin where the plant is being built.  The costs include taxpayer subsidies to the company totaling more than $4.5 billion, the largest subsidy for a foreign corporation in American history, as reported by Dan Kaufman.

Foxconn, which generated $158bn in revenue last year, “will receive much of this subsidy in direct cash payments from taxpayers.  Depending on how many jobs are actually created, taxpayers will be paying between $220,000 and more than a $1 million per job. According to the Legislative Fiscal Bureau, a nonpartisan agency that provides economic analysis to the Wisconsin state legislature, the earliest citizens might see a return on their Foxconn investment is in 2042.”

There are other costs (benefits for Foxconn) such as relaxation of environmental rules and special legislation granting Foxconn court privileges allowing the company to make multiple appeals of unfavorable rulings in a single case, but the worst was the actual acquisition of the 2,800 acres of land, roughly four square miles, necessary to build out the Foxconn campus, involving moving out tenants under threat of eminent domain, among other things.  The residents of the town of Mt. Pleasant are now living under a huge $18,000 cost per household, creating a further heavy burden for taxpayers.

According to political experts in the state, queried prior to the election, Foxconn “is one of the main reasons Walker has trailed his Democratic opponent...in nearly every poll since the August primaries,” and now he has been defeated.

Separately, as reported by the Wall Street Journal, Foxconn is considering bringing in personnel from China to help staff the Wisconsin facility. The company said its “Wisconsin first commitment remains unchanged,” in a written statement to the Journal in response to questions about its hiring plans.  A tight labor market is making recruiting difficult.  Wisconsin’s jobless rate is just 3.0%, below the national average of 3.7%.

Foxconn’s original estimate was for 9,817 hourly operators, 2,363 engineers and 820 business support staff, according to an economic impact statement prepared for the company in 2017.

So if you’re an engineer, or about to finish school with a degree in same (the plant isn’t going to be ready for a while), and you like good cheese, brats (personally, I recommend Usinger’s), great beer, and NFL and college football, with an entertaining baseball team in Milwaukee, then start getting your applications in.  [Actually, the plant is just 20 miles from the Illinois border, so you can expand your choices in athletic teams if you want.]

--Former Goldman Sachs CEO Lloyd Blankfein has been linked to a global corruption investigation tied to Malaysia and its sovereign wealth fund, 1MDB.  Goldman Sachs Group arranged bond deals now at the heart of the probe and Blankfein was the previously unidentified high-ranking Goldman exec referenced in U.S. court documents who attended a 2009 meeting with the former Malaysian prime minister who is part of the probe.

A high-level gathering in ’09 at the Four Seasons hotel in New York laid the groundwork for a relationship that would prove to be most profitable for Goldman, as it raised $6.5 billion for 1MDB.  The bank has said it believed proceeds from the debt sales were for development projects and that a former Goldman partner, Tim Leissner, withheld information from the firm.

There is no indication Blankfein was aware of the identities of all present at the meeting, which included a Malaysian businessman Jho Low who is a central figure.

The U.S. has since accused Low of teaming up with Goldman bankers to pilfer money from the fund.  Leissner pleaded guilty to conspiring to launder money and violating the Foreign Corrupt Practices Act by paying bribes. Goldman received about $600 million in fees.

Blankfein, who is still chairman, said at a conference in New York last week that he’s not aware of senior managers missing red flags in the 1MDB dealings and instead said the matter was an issue of a few employees dodging bank controls and lying about it.

--Sears announced 40 more store closings, including some Kmart locations, in February, on top of the 142 locations it previously announced would be closing by the end of this year.

It’s hard to keep up on all these announcements.  Attorneys for Sears told the U.S. Bankruptcy Court at an initial hearing that it may make an announcement on even more closings by Nov. 15.  Sears hopes to have its reorganization plan filed by late December and confirmed in March 2019.

--Finally, like many of you who heard the following, I was shocked this kind of thing was still allowed, having long ago approved the expenses of people working under me.  But Under Armour Inc. employees received an email earlier this year (just recently revealed), as reported by Khadeeja Safdar of the Wall Street Journal, wherein “they could no longer charge visits to strip clubs on their corporate cards.”

Good lord.

True, I’m not naïve.  I can understand, as the Journal reported, that executives, including CEO Kevin Plank, would entertain athletes in such venues, but there was clearly a pattern of paying for countless other folks to go to these joints. 

Plank said in a statement: “(We) will embrace this moment to accelerate the ongoing meaningful cultural transformation that is already under way at Under Armour.  We can and will do better.”

So lame.  But, guys...don’t forget to tip the barmaids, they work hard too.

Foreign Affairs

Iraq: More than 200 mass graves containing thousands of bodies have been found in areas of Iraq that were once controlled by ISIS, a UN investigation has found.  A report said the graves could contain as many as 12,000 victims.

202 mass graves have been documented thus far, including 95 in Nineveh and 37 in Kirkuk.

Investigators estimate between 6,000-12,000 are buried at the sites, including women, children, the elderly, people with disabilities, foreign workers, and members of the Iraqi security forces.

Of the 202 documented, only 28 have been excavated and 1,258 bodies exhumed by Iraqi authorities.

According to Iraq’s high commission on human rights, more than 3,000 Yezidis remain missing in Nineveh, in addition to another 4,000 people.

Understand that Iraqis are still searching for answers on the more than one million people who went missing during the reign of strongman Saddam Hussein, which ended in the U.S.’s invasion in 2003.

Separately, Iraq announced it was increasing its oil output and export capacity in 2019, with the bulk of the oil exported via its southern terminals, which accounts for more than 95 percent of state revenue.

Iran: Turkey’s President Recep Tayyip Erdogan said Tuesday that his country would ignore sanctions the U.S. introduced against Iran this week – which could complicate Ankara’s recent efforts to defuse tensions with the White House.  Erdogan said the sanctions risked disrupting the world order.

“We do not want to live in an imperialist world,” Erdogan told reporters.  “We will absolutely not abide by such sanctions.”

Erdogan said that without natural-gas imports from Iran, Turkey wouldn’t be able to get through the winter.  “We cannot let our people freeze in the cold.”

President Trump and Erdogan are expected to meet in Paris this weekend at the World War I commemorations.  Turkish officials have said they expected more support from the U.S. to force Saudi Arabia to come clean on who ordered the murder of the Saudi journalist, Khashoggi, in Istanbul last month.

But Turkey was included on a list of eight countries the U.S. is granting waivers, exempting them from the new sanctions on Iranian oil.  Erdogan didn’t mention the exemption in his comments Tuesday.

Turkey imports about half its oil and a fifth of its gas needs from Iran.

On Monday, the United States reintroduced sanctions against Iranian oil, but it granted exemptions to eight nations in total, including South Korea, Japan, India, China, Italy, the United Arab Emirates, Turkey and Taiwan (which is not a major buyer).  It’s possible some European countries may also receive exemptions.  [The U.S. didn’t formally announce which countries received the waivers, and Iraq is on some unofficial lists I have seen...so it’s not totally clear if it’s more like eight, plus Taiwan, since its imports are said to be minimal.]

Exports of Iranian crude peaked at 2.8 million barrels per day in April, but have fallen to 1.8m bpd since then, according to some experts.  But it will be interesting to see the true total, say, early next year, when we might receive accurate figures showing the impact of the exemptions granted thus far.

The Trump administration claims that with the one million reduction, the regime’s revenues have been reduced by more than $2 billion.  But U.S. Special Representative for Iran Brian Hook gave no explanation for the figures, only that he seemed to be using a number everyone else is using, rather than hard facts, of which there are few.

Hook told reporters on a call Monday, though, “The Iranian people have had 39 years of economic mismanagement... They know very well that their economic problems are caused by the Iranian regime and not the United States.”

Iranian Foreign Minister Mohammad Javad Zarif said on Monday the sanctions were “backfiring,” making Washington more isolated, not the Islamic Republic.

“Today, US defied UN top court and Security Council by reimposing sanctions on Iran that target ordinary people. But US bullying is backfiring... The US, not Iran, is isolated,” Zarif tweeted.

Iran greeted the re-imposition of sanctions with air defense drills and an acknowledgement from President Hassan Rouhani the nation faces a “war situation.”

Supreme Leader Ayatollah Ali Khamenei said last weekend that President Trump “disgraced” U.S. prestige and would be the ultimate loser from renewing sanctions on the Islamic republic.

“This new U.S. president...has disgraced the remnant of America’s prestige and that of liberal democracy.  America’s hard power, that is to say their economic and military power, is declining too,” he said on his Persian Twitter account.

“The challenge between the U.S. and Iran has lasted for 40 years so far and the U.S. has made various efforts against us: military, economic and media warfare,” he said.

“There’s a key fact here: in this 40-year challenge, the defeated is the U.S. and the victorious is the Islamic republic.”

The sanctions do end all the economic benefits from Tehran’s signing of the 2015 nuclear accord with the P5+1 (the five permanent members of the UN Security Council plus Germany), though Iran for now continues to abide by the deal that limits its enrichment of uranium.  Iranian officials have in recent months made a point to threaten that they could resume higher enrichment at any time.

Editorial / Wall Street Journal

“Iranian President Hassan Rouhani reacted as expected on Monday to the reimposition of U.S. sanctions, saying that ‘unfair sanctions are against the law, UN resolutions and international accords. Therefore, we will proudly break the sanctions.’  He’s wrong about international law because the U.S. is merely reimposing American sanctions. Barack Obama never submitted the Iran nuclear deal to the U.S. Senate as a treaty, so President Trump can withdraw from it as he wishes. But no doubt Mr. Rouhani believes Iran can evade sanctions and wait out the Trump Presidency.

“The real man to watch in Tehran, however, is Qasem Soleimani, who runs the Quds Force that is responsible for supporting terrorist proxies around the world.  He’ll decide how and when to retaliate against U.S. interests, perhaps violently, and the Trump Administration will have to be ready to respond.”

David E. Sanger / New York Times

“(Even) with the sanctions fully in place on Monday, it is far from clear that Iran will move to renegotiate the deal with the United States.  Mr. Rouhani insisted during his visit to New York that the United States would first have to come back into compliance with the nuclear deal.

“For his part, Mr. Trump will have to navigate two other major hurdles. The first is justifying the growing pressure on Iran when the major ally it is depending on to contain that country, Saudi Arabia, is admitting that a 15-member hit squad killed the dissident Jamal Khashoggi and is so far refusing to stop its bombing in Yemen.

“(Sec. of State) Pompeo has vowed to follow the Khashoggi investigation wherever it goes, but American diplomats note that he has refused to call the killing an act of terrorism.  Iran gets different treatment: On Sunday, Mr. Pompeo accused Iran of plotting assassinations in Europe as part of his claim that the country is the largest exporter of terrorism.

“Mr. Trump’s biggest long-term challenge may be explaining how he can invoke new sanctions on Iran – which the International Atomic Energy Agency has declared is abiding by its commitments to halt nuclear production – while declaring that North Korea is ‘no longer a nuclear threat.’

“Unlike Iran, the North already has nuclear weapons, and by the account of American intelligence agencies is continuing to produce them.”

Saudi Arabia: The kingdom sent a toxicologist and a chemical expert to its consulate in Istanbul after Jamal Khashoggi was killed, Turkey said this week.  The Saudi accounts on what happened continue to be all over the place, and the Saudis refuse to tell Turkey where the body is.

This week, two of Khashoggi’s sons pleaded for their father’s body in an interview with CNN.

Saudi Arabia allegedly sent a chemist and toxicology expert as part of a delegation tasked with erasing evidence in the consulate, as reported in Turkey’s daily Sabah newspaper. The paper alleges the team visited the building every day from Oct. 12 until Oct. 17, before leaving the country days later.

The Saudis claim 18 men have been arrested by authorities in the kingdom in connection with the death, and Turkey wants them extradited, but Saudi Arabia maintains they will be brought to justice in the kingdom.

President Erdogan, in an op-ed for the Washington Post, said, “We know that the order to kill Khashoggi came from the highest levels of the Saudi government,” but, stressing Turkey’s “friendly” ties with Saudi Arabia, he added that he did not believe King Salman was involved.

Erdogan called for “the puppet masters behind Khashoggi’s killing” to be exposed.

“No one should dare to commit such acts on the soil of a NATO ally again,” he said.  “If anyone chooses to ignore that warning, they will face severe consequences.”

Afghanistan: Taliban militants attacked a border outpost in western Afghanistan on Tuesday, killing 20 government soldiers in another assault that compounds fears the security forces are facing an unsustainable casualty toll.

The area, Farah, on the border with Iran, has seen months of heavy fighting resulting in the deaths of hundreds of police and soldiers, as reported by Reuters.

At this particular border outpost, there were 50 Afghan soldiers and an officer in the region conceded that they don’t know where the remainder are after losing contact with the base during the attack.

The Defense Ministry reported that in September alone, more than 500 Afghan soldiers were killed, hundreds more wounded.

Yemen: Iranian-backed Houthi rebels have been battling coalition forces in Yemen’s port city of Hodeida and on Thursday, Amnesty International said the rebels posted gunmen on the roof of a hospital, leaving doctors and patients in the line of fire, what AI called “a stomach-churning development that could have devastating consequences for the hospital’s medical workers and dozens of civilian patients, including many children,” if you wanted an idea of just how awful this war has been.

The Arab coalition has been battling to push the Houthis out  of the city they have held since 2014.  A surge in fighting in recent weeks has trapped thousands of civilians in the crossfire and coalition air raids.

Hodeida is the entry point for 80 percent of Yemen’s food imports and aid relief, and the UN has been warning an all-out attack on the city could trigger a famine across the country.

The United Nations hasn’t updated the death toll in Yemen since it first said in August 2016 that according to medical centers, at least 10,000 people had been killed, and that is the figure everyone has been using since, including yours truly, but it is obviously way too low at this point.

North Korea: Pyongyang suddenly canceled talks with the United States slated for Thursday.  Secretary of State Mike Pompeo had been due to meet North Korean officials in New York yesterday, along with the new special envoy for North Korea, Stephen Biegun, but the State Department gave no reason for the delay.  The meeting was to be a pivotal step toward having a second summit.

President Trump told reporters on Wednesday that he expects another summit meeting with Kim next year and won’t relax the economic-pressure campaign he has imposed on Pyongyang.

U.S. Ambassador to the United Nations Nikki Haley said Thursday that North Korea canceled “because they weren’t ready.”

Haley also criticized Russia for trying to lift banking restrictions that are intended to curb the North’s nuclear program.  The Russian UN mission issued a statement saying North Korea faces “serious humanitarian problems” due to the UN sanctions resolutions and urged the Security Council to fix the problem. China and Russia have said the Security Council should reward Pyongyang for “positive developments” this year.

North Korean leader Kim Jong Un and President Trump pledged to work toward denuclearization at their landmark summit in Singapore in June, but the agreement was short, to say the least, on specifics and negotiations since then have yielded little.

China: Yang Jiechi, a Communist Party Politburo member, said China and the United States must work for a solution to end their trade war and ensure an expected meeting later this month between President Xi Jinping and President Trump yields results.

Yang met with National Security Adviser John Bolton at the White House this week.  Bolton, seen as being hostile to China, vowed last month to intensify Washington’s tough approach, saying Beijing was a “major issue this century.”

Yang said the two countries had to properly manage their differences to ensure the effectiveness of talks between the two leaders in Buenos Aires at the G20 summit.

“The nature of the China-U.S. trade relationship is mutually beneficial. Both sides have to work out an acceptable solution through negotiations on an equal and mutually beneficial basis,” Yang said.

But Yang also described Taiwan as the most important and sensitive issue of China-U.S. relations, adding that Washington should abide by the one-China principle.  So there’s your clue that Trump better be prepared to be barraged by Xi on the topic in a few weeks.

U.S. National Security Agency official Rob Joyce accused China on Thursday of violating an agreement aimed at stopping cyber espionage through the hacking of government and corporate data.  The 2015 agreement was between President Xi and President Barack Obama.

Joyce did say that while the U.S. believes China is violating the pact, the quantity had dropped “dramatically.”

China’s Foreign Ministry office rejected the allegations. And the agreement stopped short of any promise to refrain from traditional government-to-government cyber spying for intelligence purposes.

That could include the massive hack of the federal government’s personnel office this year, which compromised the data of more than 20 million people.  That was traced back to China, but the administration has not said if they believe the Chinese government was responsible.

On a different topic...David Ignatius / Washington Post

“Corporate and government leaders agree that China’s rapid application of AI (artificial intelligence) to business and military problems should be a ‘Sputnik moment’ to propel change in America. As a top-down command economy, China is directing money and its best brains to develop the smart systems that will operate cars, planes, offices and information – along with the transformation of warfare. 

“The United States is struggling to respond to this world-changing challenge. What’s underway is frail and exists mostly on paper.  Congress this year passed legislation calling for a national AI commission, but so far it’s just a concept. The Pentagon in June established a new Joint Artificial Intelligence Center that will spend $1.75 billion over six years, but critics fear it will be far short of what’s needed.

“ ‘There is no quarterback’ for AI, says Amy Webb, author of a forthcoming book called ‘The Big Nine’ about the top U.S. and Chinese AI companies. The United States started with a technology lead, but U.S. efforts are dispersed and decentralized.  Companies have trouble sharing the structured data that machines can learn on.  ‘China is the OPEC of data,’ argues Webb.  In a totalitarian society, every human and social interaction feeds a vast pool of structured data for machines to ingest. The Chinese government can then commandeer companies and people, as needed.

“America may need an ‘AI czar,’ argues Ashton B. Carter, former secretary of defense for President Barack Obama. That’s because no current agency or White House office is empowered to coordinate an effort as complicated as the Manhattan Project, which built a nuclear weapon, or the ‘space race’ that put a man on the moon.  But mobilizing resources in this way requires political vision and leadership, which are lacking today in both parties....

“An awkward problem for America now is that the employees of the biggest and best AI companies seem reluctant to work with the U.S. government....

“After the midterm elections, the country will begin a heated debate about the best candidate to lead the nation in the 2020 elections.  One way to assess potential leaders is to ask how they would meet the AI challenge of refashioning our economic and strategic foundations. A bitterly divided country with a dysfunctional political system isn’t going to win the race anywhere, except down.

“Ask yourself who could lead a national push to capture the high ground of technology, and you may come up with the name of the man or woman who should be our next president.”

I know.  Michael Bloomberg.

Brazil: President-elect Jair Bolsonaro, a disciple of Donald Trump, has vowed to wage war on “fake news” media, threatening to hit the bottom lines of critical press outlets.  Bolsonaro has half a billion dollars in public-sector marketing budgets coming under his discretion, and he is threatening to slash ad buys with adversarial media groups, striking at the very foundation of Brazil’s free press.

During the campaign, Bolsonaro dismissed investigative reporting as “fake news’ invented by a corrupt establishment and his supporters went after individual journalists.  Needless to say, the threats are sending a chill through the country’s newsrooms.  Bolsonaro this week said that the largest circulation daily, Folha de S.Paulo, “is done.”

I told you during the presidential campaign, though, that it was Bolsonaro’s supporters who spread fake news and conspiracy theories through WhatsApp and other social media outlets.

Venezuela: The annual inflation rate accelerated to 833,000% in October.  Just a weee bit hot, as we say.

A monthly report released by Venezuela’s legislature showed the 12-month inflation rate rose from 488,000% in September.  The IMF is estimating the rate for 2018 will top 1.3 million percent.

So don’t worry about a 2.6% producer price print on core for the U.S. this week.

Random Musings

--Presidential tracking polls....

Gallup: 40% job approval for President Trump, 54% disapproval (same as prior week); 88% Republicans approve, 39% Independents (Nov. 4).
Rasmussen: 48% approval, 50% disapproval (Nov. 9)

For the archives, some other readings just prior to the vote, Tuesday.

CNN/SSRS: 39% approval of Trump, 53% disapproval.
Wall Street Journal/NBC News: 46% approval, 52% disapproval.
Washington Post/ABC News: 40% approval, 53% disapproval.

The exit poll then put it at 44% approval of President Trump, 55% disapproval.

Importantly, on the question of ‘right’ or ‘wrong’ direction, 41% said the country was headed in the right direction, 56% said it was headed in the wrong direction, and that’s not good for President Trump and 2020, because I believe the economy may have peaked in the second quarter.

--I’m glad Mitt Romney is in the Senate.

--At least 95 women, last I saw, had been elected to the House, surpassing the record of 84 set by the current Congress.  The number of women in the Senate is going to be 24 (if I remember right), beating the record of 23 now in the chamber.  This is good.

According to a Reuters/Ipsos Election Day poll, 55% of women said they backed a Democrat for the House this year, compared with 49% in 2014.

--According to the same Reuters/Ipsos survey, among voters ages 18 to 34, 62% backed Democrats, 34% Republicans.  In 2014, the spread was 54-36.

Hispanic voters went Democrat by 33 points, vs. 18 points in 2014.  [I didn’t see a margin for the African-American vote as yet.]

--I have lived in New Jersey most of my life, and in all my time have never had a congressman who was a Democrat, until now, Tom Malinowski, who defeated moderate Republican Leonard Lance (whom I supported) 50% to 48% in NJ 7.

I’ve noted the congressional district that literally starts a block away from me, NJ 11 (Morris County) has never had a Democratic representative in the time I’ve been alive...until now; Mikie Sherrill whipped a miserable Republican challenger Jay Webber, 56% to 43%. This seat was being vacated by a retiring, long-time Republican fixture, Rodney Frelinghuysen, whose family roots literally go back to the time of George Washington, whose famous headquarters was in the district, one stormy, cold winter (Jockey Hollow).

[New Jersey is now down to one Republican out of 12 congressional seats.  Eegads.]

Former Celgene CEO, Bob Hugin, wasted at least $36 million of his own money running against the hopelessly corrupt Democratic incumbent Sen. Bob Menendez, and lost bigly, 54% to 43%.  Hugin never should have run his overly deceitful campaign ad.

But going back to the two congressional districts, I told you months ago these two races would be telling nationally and the press and pundits didn’t give them enough coverage...because they sure were telling.  They are largely classic white suburbia (though admittedly with changing demographics like with most of the country), but white suburban women no doubt voted Democrat in these two districts in huge numbers, and, talking to local politicos in the know, it was all about Trump, and distaste of him.  Just stating a fact, sports fans.

Meanwhile, in New York, Democratic Gov. Andrew Cuomo cruised to victory, 59% to 37% over Republican challenger Marc Molinaro.  No doubt Cuomo harbors thoughts of grandeur in 2020.  He should focus on the job he was just re-elected to for a third time instead.

--Craig Timberg and Tony Romm / Washington Post

“Former FBI agent Clint Watts was among the first to ring the alarm bell about Russia’s audacious disinformation campaign during the 2016 U.S. election. Two years later, as voters head to the polls in another hotly contested national election, Watts has more bad news. When it comes to spreading lies and stoking division online, Watts said, ‘it’s Americans in 2018.’

“Such is the consensus among lawmakers, tech company officials and independent experts who study hate speech and related disinformation: Even as Silicon Valley has become more aggressive in battling foreign efforts to influence U.S. politics, it is losing innumerable cat-and-mouse games with Americans who are eagerly deploying the same techniques used by the Russians in 2016.

“ ‘Everyone’s witnessed the playbook playing out,’ explained Watts, a fellow at the Foreign Policy Research Institute.  ‘Now they don’t need Russia so much. They’ve learned that the tactic is devastatingly effective.’

“He and other experts point to a rampant online spread of misleading reports and images about the migrant caravan in Mexico, for example – and especially the demonstrably false allegations that billionaire George Soros is funding a violent ‘invasion’ of the United States.

“Accounts controlled by Russians probably helped amplify such misleading narratives, experts say, but the evidence so far is that they started with American political activists who are increasingly adept at online manipulation techniques but enjoy broad free-speech protections that tech companies have been reluctant to challenge.”

Monday, Facebook announced it had removed 30 accounts from the site – and another 85 on Instagram, which it owns – that “may be engaged in coordinated inauthentic behavior.”  Facebook didn’t attribute the accounts to any particular foreign government but noted many Facebook pages were in Russian or French, while many Instagram accounts used English.

Facebook’s head of cybersecurity policy, Nathaniel Gleicher, said in a visit to Washington last month that its biggest challenge remains detecting and policing the many Americans spreading disinformation.

“If you’re talking about volume, the majority of the volume we see is domestic. And that doesn’t just mean in the United States; it means around the world,” Gleicher said.

Harvard University researchers said Monday that they had seen major spikes in outright fabrication and misleading information proliferating online over the past six months; a “significant portion” of it coming from Americans, not foreigners, the Harvard researchers said.

A study out of Oxford University, released last week, said disinformation was at a higher level in 2018 than for the 2016 election and that it was reaching a broader audience, outpacing the spread of authentic reports from mainstream, "professional" news organizations.  [Washington Post]

--Fox News host Sean Hannity’s on-stage appearance at President Trump’s Missouri rally on the eve of the election, Monday, was seen as an egregious breach of standards for a news organization, even though Hannity is an open cheerleader for Donald Trump. 

Hannity had promised earlier that he was only in the state to do his show, but then Trump invited him on stage, praising him as one of the “incredible people” who had “done an incredible job for us.”

Hannity said on stage after shaking Trump’s hand: “Mr. President, I did an opening monologue today and I had no idea you were going to invite me up here. And the one thing that has made and defined your presidency more than anything else: promises made, promises kept.”

Right before, Hannity pointed to the media pool at the back of the room and said: “By the way, all those people in the back are fake news.”

The thing is, before the rally, Hannity had tweeted: “In spite of reports, I will be doing a live show from Cape Girardeau and interviewing President Trump before the rally.  To be clear, I will not be on stage campaigning with the President.  I am covering final rally for my show.  Something I have done in every election in the past.”

According to various stories, the network’s top Washington journalists complained to senior Fox executives on Tuesday.

Fox News publicly rebuked the actions of Hannity and weekend host Jeanine Pirro, who also appeared at the rally.  But no disciplinary measures are being taken, it seems.

“Fox News does not condone any talent participating in campaign events,” the company said in a statement.  “We have an extraordinary team of journalists helming our coverage tonight and we are extremely proud of their work. This was an unfortunate distraction and has been addressed.”

Anchor Bret Baier told the Los Angeles Times that Hannity’s actions were the main topic during a previously scheduled lunch with Fox News chief executive Suzanne Scott and president of news Jay Wallace, prior to the network presenting its midterm election coverage.

“There was a lot of concern about it and making sure that we as a network were...sending the right signals and...there was a commitment to show the importance of news,” said Baier.

Fox News’ coverage was watched by more than 7.8 million viewers, more than any other broadcast or cable network.

Baier said he had a personal discussion with Hannity about the Missouri appearance but didn’t reveal any details.

“Going forward I think things will be a little different,” Baier told the L.A. Times.  “What he does and what I do are two different things but on an event like that it obviously bleeds into our news coverage and he acknowledges that....I’ve had a long relationship with him and he’s always been great with me.  But this is a moment that needed to be dealt with.”

As for Hannity, he issued a statement on Tuesday claiming he did not know Trump would call him onstage at the rally.

“What I said in my tweet yesterday was 100% truthful. When the POTUS invited me on stage to give a few remarks last night, I was surprised, yet honored by the president’s request. This was NOT planned.”

But this was at odds with a news release issued by the Trump campaign on Sunday touting the appearances of Hannity and radio host Rush Limbaugh at the event.

Hannity, attempting to cover his ass, also tweeted: “To be clear, I was not referring to my journalist colleagues at FOX News in those remarks (about the fake news media).  They do amazing work day in and day out in a fair and balanced way and it is an honor to work with such great professionals.”

--Supreme Court Justice Ruth Bader Ginsburg, 85, was released today from a Washington, D.C., hospital after fracturing three ribs in a fall in her office.  Justice Ginsburg is the court’s eldest member and the most senior of its liberal minority.  President Clinton appointed her in 1993.

Ginsburg has previously vowed to stay through the Trump presidency so that he can’t name her replacement.

--It was another dark week for the state of California, with deadly wildfires scorching towns and neighborhoods and killing at least nine people, while a decorated Marine Corps machine gunner deployed in Afghanistan who had issues of some kind, shot up a popular bar in the Los Angeles suburb of Thousand Oaks, killing 12 mostly young people just out for a good time.

Back in April, police had responded to a minor disturbance at the suspect’s home, Sheriff Geoff Dean said he appeared to be acting a little irrationally, police called in a team of mental health specialists who decided the suspect did not qualify to be involuntarily detained for mental health evaluation under state law, and that was it, until late Wednesday night.

--Researchers announced there has been a remarkable global decline in the number of children women are having.  The study out of the Institute for Health Metrics and Evaluation at the University of Washington found fertility rate falls meant nearly half of countries were now facing a “baby bust” – meaning there are insufficient children to maintain their population size. Researchers added there would be profound consequences for societies with “more grandparents than grandchildren.”

In 1950, women were having an average of 4.7 children in their lifetime.  The fertility rate all but halved to 2.4 children per woman by last year.

But there are huge variations between nations, such as a fertility rate in Niger, west Africa, of 7.1, but on the Mediterranean island of Cyprus, women are having one child, on average.

2.1 is the breakeven point, though populations are impacted by the death rate and migration as well.

--Brad K. first passed along the story, via Reuters, that a motorized wheelchair used by the late British physicist Stephen Hawking sold at auction for over $390,000, while a dissertation raised nearly twice that at a sale to raise money for charity.

Hawking’s 117-page dissertation “Properties of expanding universes” from 1965 sold for $767,000.

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Pray for the men and women of our armed forces...and all the fallen.

We honor our Veterans this Sunday. 

God bless America.

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Gold $1210
Oil $59.87

Returns for the week 11/5-11/9

Dow Jones  +2.8%  [25989]
S&P 500  +2.1%  [2781]
S&P MidCap  +1.1%
Russell 2000  +0.1%
Nasdaq  +0.7%  [7406]

Returns for the period 1/1/18-11/9/18

Dow Jones  +5.1%
S&P 500  +4.0%
S&P MidCap  -1.0%
Russell 2000  +0.9%
Nasdaq  +7.3%

Bulls 42.5
Bears
19.8

Have a great week.

Brian Trumbore